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An energy service based CGE model to assess the environmental effects of efficiency enhancement: A case study

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  • Zahra Adel Barkhordar

Abstract

Technology policies are one of the options proposed to conserve energy and to stimulate economic growth of Iran. However, the possible rebound effect might negatively affect the effectiveness of energy efficiency policies through partially offsetting the potential energy savings. In this paper, the economy-wide and environmental effects of energy efficiency improvement and the possibility of rebound is investigated for the household sector of Iran. A hybrid framework is developed that consists of an energy service-based dynamic CGE model and a technology choice model. The enhanced CGE model applied in this analysis captures the essence of energy demand through demand for energy services. The combination of end-use technologies to satisfy demand for energy services is obtained through a technology assessment model of the household sector. Therefore, the framework embodies the associated capital and operational cost of providing energy services within household budget constraint. Efficiency enhancement leads to high rebound (more than 90%) and slightly boosts economic growth. Competition among energy services and lower price of useful energy as a result of efficiency improvement and lower final energy price are contributing factors that largely offset the expected energy savings.

Suggested Citation

  • Zahra Adel Barkhordar, 2015. "An energy service based CGE model to assess the environmental effects of efficiency enhancement: A case study," EcoMod2015 8389, EcoMod.
    • Handle: RePEc:ekd:008007:8389
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