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What drives the change in UK household energy expenditure and associated CO2 emissions? Implication and forecast to 2020

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Author Info

  • Mona Chitnis

    ()
    (Surrey Energy Economics Centre (SEEC) and Research Group on Lifestyles Values and Environment (RESOLVE), University of Surrey)

  • Lester C Hunt

    ()
    (Surrey Energy Economics Centre (SEEC) and Research Group on Lifestyles Values and Environment (RESOLVE), University of Surrey)

Abstract

Given the amount of direct and indirect CO2 emissions attributable to UK households, policy makers need a good understanding of the structure of household energy expenditure and the impact of both economic and non-economic factors when considering policies to reduce future emissions. To help achieve this, the Structural Time Series Model is used here to estimate UK ‘transport’ and ‘housing’ energy expenditure equations for 1964-2009. This allows for the estimation of a stochastic trend to measure the underlying energy expenditure trend and hence capture the non-trivial impact of ‘non-economic factors’ on household ‘transport’ and ‘housing’ energy expenditure; as well as the impact of the traditional ‘economic factors’ of income and price. The estimated equations are used to show that given current expectations, CO2 attributable to ‘transport’ and ‘housing’ expenditures will not fall by 29% (or 40%) in 2020 compared to 1990, and is therefore not consistent with the latest UK total CO2 reduction target. Hence, the message for policy makers is that in addition to economic incentives such as taxes, which might be needed to help restrain future energy expenditure, other policies that attempt to influence lifestyles and behaviours also need to be considered.

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Bibliographic Info

Paper provided by Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey in its series Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) with number 134.

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Length: 44 pages
Date of creation: Dec 2011
Date of revision:
Publication status: Published in Applied Energy, 94, June 2012, pp. 202–214. (Revised Version)
Handle: RePEc:sur:seedps:134

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Keywords: Household energy expenditure; CO2 emissions; Structural Time Series Model;

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References

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  1. Druckman, Angela & Jackson, Tim, 2009. "The carbon footprint of UK households 1990-2004: A socio-economically disaggregated, quasi-multi-regional input-output model," Ecological Economics, Elsevier, vol. 68(7), pages 2066-2077, May.
  2. David C Broadstock & Lester C Hunt, 2009. "Quantifying the Impact of Exogenous Non-Economic Factors on UK Transport Oil Demand," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 123, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
  3. Lester C. Hunt & Yasushi Ninomiya, 2003. "Unravelling Trends and Seasonality: A Structural Time Series Analysis of Transport Oil Demand in the UK and Japan," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 63-96.
  4. Brännlund, Runar & Ghalwash, Tarek & Nordström, Jonas, 2004. "Increased Energy Efficiency and the Rebound Effect: Effects on consumption and emissions," UmeÃ¥ Economic Studies 642, Umeå University, Department of Economics.
  5. Weber, Christoph & Perrels, Adriaan, 2000. "Modelling lifestyle effects on energy demand and related emissions," Energy Policy, Elsevier, vol. 28(8), pages 549-566, July.
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Cited by:
  1. Broadstock, David C. & Hunt, Lester C., 2010. "Quantifying the impact of exogenous non-economic factors on UK transport oil demand," Energy Policy, Elsevier, vol. 38(3), pages 1559-1565, March.
  2. David C Broadstock & Eleni Papathanasopoulou, 2013. "Gasoline demand in Greece: the importance of shifts in the underlying energy demand trend," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 141, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.

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