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Incorporating macroeconomic feedback into an energy systems model using an IO approach: Evaluating the rebound effect in the Korean electricity system


  • Howells, Mark
  • Jeong, Kiho
  • Langlois, Lucille
  • Lee, Man Ki
  • Nam, Kee-Yung
  • Rogner, Hans Holger


This paper approximates the emissions rebound effects1 associated with substituting expensive and GHG emitting natural gas (LNG) power plants, with apparently cheaper and lower emitting nuclear plant. It then evaluates the effect this has on economy wide electricity use as well as net GHG emissions changes. The analysis is undertaken by combining aspects of an input-output model with an optimizing energy systems model. The scope of the case study is limited to the effects of the electricity sector (and its emissions) on the Korean economy from 2005 to 2030. Its primary basis (in terms of data and assumptions) is the recent national Basic Plan for Long-Term Electricity Supply and Demand (KPX, 2006).2 The cases considered a limited increase of the share of Advanced Pressurised Reactor (APR) nuclear plant at the expense of combined cycle gas turbine (CCGT) plant running on imported liquefied natural gas (LNG). Three scenarios are studied, based on KPX (2006). These include (1) a Reference scenario,3 (2) a Mitigation scenario (where an extra 5000Â MW of nuclear is allowed to enter the system at the expense of LNG plant, but no emissions rebound is calculated) and (3) a Mitigation+rebound scenario (where some emissions savings of the extra nuclear plant are offset by an emissions rebound).4 The modelling approach developed is useful as it provides a method of including and indicating some economic interactions with the energy system in a relatively transparent manner. Stand alone economic models can lack energy system dynamics, while energy systems model are often decoupled from detailed economic interactions.

Suggested Citation

  • Howells, Mark & Jeong, Kiho & Langlois, Lucille & Lee, Man Ki & Nam, Kee-Yung & Rogner, Hans Holger, 2010. "Incorporating macroeconomic feedback into an energy systems model using an IO approach: Evaluating the rebound effect in the Korean electricity system," Energy Policy, Elsevier, vol. 38(6), pages 2700-2728, June.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:6:p:2700-2728

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    References listed on IDEAS

    1. Laitner, Skip & Bernow, Stephen & DeCicco, John, 1998. "Employment and other macroeconomic benefits of an innovation-led climate strategy for the United States," Energy Policy, Elsevier, vol. 26(5), pages 425-432, April.
    2. J. Daniel Khazzoom, 1980. "Economic Implications of Mandated Efficiency in Standards for Household Appliances," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 21-40.
    3. Howells, Mark & Victor, David G. & Gaunt, Trevor & Elias, Rebecca J. & Alfstad, Thomas, 2006. "Beyond free electricity: The costs of electric cooking in poor households and a market-friendly alternative," Energy Policy, Elsevier, vol. 34(17), pages 3351-3358, November.
    4. Dimitropoulos, John, 2007. "Energy productivity improvements and the rebound effect: An overview of the state of knowledge," Energy Policy, Elsevier, vol. 35(12), pages 6354-6363, December.
    5. Barker, Terry & Ekins, Paul & Foxon, Tim, 2007. "The macro-economic rebound effect and the UK economy," Energy Policy, Elsevier, vol. 35(10), pages 4935-4946, October.
    6. Binswanger, Mathias, 2001. "Technological progress and sustainable development: what about the rebound effect?," Ecological Economics, Elsevier, vol. 36(1), pages 119-132, January.
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    Cited by:

    1. Li, Ke & Jiang, Zhujun, 2016. "The impacts of removing energy subsidies on economy-wide rebound effects in China: An input-output analysis," Energy Policy, Elsevier, vol. 98(C), pages 62-72.
    2. Ramlall, Indranarain, 2017. "Internalizing CO2 emissions via central banks’ financials: Evidence from the world," Renewable and Sustainable Energy Reviews, Elsevier, vol. 72(C), pages 549-559.
    3. Li, Ke & Lin, Boqiang, 2015. "Heterogeneity in rebound effects: Estimated results and impact of China’s fossil-fuel subsidies," Applied Energy, Elsevier, vol. 149(C), pages 148-160.
    4. Yu, Xuewei & Moreno-Cruz, Juan & Crittenden, John C., 2015. "Regional energy rebound effect: The impact of economy-wide and sector level energy efficiency improvement in Georgia, USA," Energy Policy, Elsevier, vol. 87(C), pages 250-259.

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