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Energy Conservation in the United States: Understanding its Role in Climate Policy

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  • Gilbert E. Metcalf

Abstract

Efforts to reduce carbon emissions significantly will require considerable improvements in energy intensity, the ratio of energy consumption to economic activity. Improvements in energy intensity over the past thirty years suggest great possibilities for energy conservation: current annual energy consumption avoided due to declines in energy intensity since 1970 substantially exceed current annual domestic energy supply. While historic improvements in energy intensity suggest great scope for energy conservation in the future, I argue that optimistic estimates of avoided energy costs due to energy conservation are likely biased downward. I then analyze a data set on energy intensity in the United States at the state level between 1970 and 2001 to disentangle the key elements of energy efficiency and economic activity that drive changes in energy intensity.

Suggested Citation

  • Gilbert E. Metcalf, 2006. "Energy Conservation in the United States: Understanding its Role in Climate Policy," NBER Working Papers 12272, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:12272
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    References listed on IDEAS

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    Cited by:

    1. Hodjat Ghadimi, 2007. "Global Impact of Energy Use in Middle East Oil Economies: A Modeling Framework for Analyzing Technology-Energy-Environment-Economy Chain," Working Papers Working Paper 2007-05, Regional Research Institute, West Virginia University.
    2. Arik Levinson, 2009. "Technology, International Trade, and Pollution from US Manufacturing," American Economic Review, American Economic Association, vol. 99(5), pages 2177-2192, December.
    3. P. Chintrakarn, 2013. "Subnational trade flows and state-level energy intensity: an empirical analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 20(14), pages 1344-1351, September.
    4. Auffhammer, Maximilian & Blumstein, Carl & Fowlie, Meredith, 2007. "Demand-Side Management and Energy Efficiency Revisited," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt1hj0983z, Department of Agricultural & Resource Economics, UC Berkeley.
    5. Okajima, Shigeharu & Okajima, Hiroko, 2013. "Analysis of energy intensity in Japan," Energy Policy, Elsevier, vol. 61(C), pages 574-586.
    6. Moreira, João M.L. & Cesaretti, Marcos A. & Carajilescov, Pedro & Maiorino, José R., 2015. "Sustainability deterioration of electricity generation in Brazil," Energy Policy, Elsevier, vol. 87(C), pages 334-346.
    7. Kurt Kratena, 2007. "Technical Change, Investment and Energy Intensity," Economic Systems Research, Taylor & Francis Journals, vol. 19(3), pages 295-314.
    8. Shahiduzzaman, Md. & Alam, Khorshed, 2013. "Changes in energy efficiency in Australia: A decomposition of aggregate energy intensity using logarithmic mean Divisia approach," Energy Policy, Elsevier, vol. 56(C), pages 341-351.
    9. Gilbert E. Metcalf, 2007. "Federal Tax Policy Towards Energy," NBER Chapters, in: Tax Policy and the Economy, Volume 21, pages 145-184, National Bureau of Economic Research, Inc.
    10. Gilbert E. Metcalf, 2008. "Using Tax Expenditures to Achieve Energy Policy Goals," American Economic Review, American Economic Association, vol. 98(2), pages 90-94, May.
    11. Chintrakarn, Pandej & Millimet, Daniel, 2006. "Subnational Trade Flows and State-Level Energy Intensity," Departmental Working Papers 0601, Southern Methodist University, Department of Economics.
    12. Kurt Kratena & Ina Meyer, 2007. "Energieverbrauch und CO2-Emissionen in Österreich. Die Rolle von Energieeffizienz und Energieträgersubstitution," WIFO Monatsberichte (monthly reports), WIFO, vol. 80(11), pages 893-907, November.
    13. Transue, Morghan & Felder, Frank A., 2010. "Comparison of energy efficiency incentive programs: Rebates and white certificates," Utilities Policy, Elsevier, vol. 18(2), pages 103-111, June.
    14. repec:rri:wpaper:200705 is not listed on IDEAS

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    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy

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