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Energy efficiency as an instrument of regional development policy? Trading-off the benefits of an economic stimulus and energy rebound effects

Author

Listed:
  • Gioele Figus

    (CEP, International Public Policy Unit, University of Strathclyde)

  • Patrizio Lecca

    (European Union)

  • Peter McGregor

    (Department of Economics, University of Strathclyde)

  • Karen Turner

    (CEP, International Public Policy Unit, University of Strathclyde)

Abstract

Previous studies show that improving efficiency in household energy use can stimulate a national economy through an increase and change in the pattern of the aggregate demand. However, this may impact competitiveness. Here we find that in an open region, interregional migration of workers may give additional momentum to the economic expansion, by relieving pressure on the real wage and the CPI. Furthermore, the stimulus will be further enhanced by the greater fiscal autonomy that Scotland is set shortly to enjoy. By considering a range of CGE simulation scenarios we show that there is a tension between the economic stimulus from energy efficiency and the scale of rebound effects. However, we also show that household energy efficiency increases do typically generate a “double dividend†of increased regional economic activity and a reduction in carbon emissions.

Suggested Citation

  • Gioele Figus & Patrizio Lecca & Peter McGregor & Karen Turner, 2017. "Energy efficiency as an instrument of regional development policy? Trading-off the benefits of an economic stimulus and energy rebound effects," Working Papers 1702, University of Strathclyde Business School, Department of Economics.
    • Handle: RePEc:str:wpaper:1702
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    References listed on IDEAS

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    1. Colmenares, Gloria & Löschel, Andreas & Madlener, Reinhard, 2019. "The rebound effect and its representation in energy and climate models," CAWM Discussion Papers 106, University of Münster, Münster Center for Economic Policy (MEP).

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    More about this item

    Keywords

    energy efficiency; regional development policy; energy rebound; regional fiscal autonomy; general equilibrium;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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