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Energy efficiency in general equilibrium with input–output linkages

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  • Blackburn, Christopher J.
  • Moreno-Cruz, Juan

Abstract

Industrial activity periodically experiences breakthrough innovations in energy efficiency, but the estimated impacts of these innovations on aggregate energy use are highly varied. We develop a general equilibrium model to show this variation is in part determined by the structure of the economy’s input–output network. Our results show industrial energy efficiency improvements affect aggregate energy use through adjustments in factor and commodity markets, and a process of structural transformation that alters the way energy is used and produced in the economy. We describe the aggregate impact of these processes using new energy centrality concepts that measure the extent to which an industry implicitly produces or consumes energy resources. In a calibrated simulation, we find variation in these energy centrality concepts explains between 38 and 92% of variation in the rebound effect, which suggests input–output structure is a critical determinant of the aggregate effects of energy efficiency.

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  • Blackburn, Christopher J. & Moreno-Cruz, Juan, 2021. "Energy efficiency in general equilibrium with input–output linkages," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    • Handle: RePEc:eee:jeeman:v:110:y:2021:i:c:s0095069621000887
    DOI: 10.1016/j.jeem.2021.102524
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    Cited by:

    1. Böhringer, Christoph & Rivers, Nicholas, 2021. "The energy efficiency rebound effect in general equilibrium," Journal of Environmental Economics and Management, Elsevier, vol. 109(C).

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    More about this item

    Keywords

    Energy efficiency; Production network; Input–output; Rebound effect;
    All these keywords.

    JEL classification:

    • C67 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Input-Output Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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