The macro-economic rebound effect and the UK economy

This paper examines the macroeconomic rebound effect for the UK economy arising from energy efficiency policies 2000–2010 using the macroeconomic model, MDM-E3. The literature distinguishes between three types of rebound effect: direct, indirect and economy-wide. The macroeconomic rebound effect considered here is the combination of the indirect and economy-wide effects. Policies for the domestic, business, commercial and public, and transport sectors of the economy are analysed for 2000–2010. Overall, the policies lead to a saving of about 8% of the energy, which would otherwise have been used and a reduction in CO₂ emissions of 10% (or 14 mtC) by 2010. There are also favourable macroeconomic effects: lower inflation and higher growth. We find that the macroeconomic rebound effect arising from UK energy efficiency policies for the period 2000–2010 is around 11% by 2010, averaged across sectors of the economy. When this is added to the (assumed) direct rebound effect of around 15%, this gives a total rebound effect of around 26% arising from these policies. Thus, the findings of the study support the argument that energy efficiency improvements for both consumers and producers, stimulated by policy incentives, will lead to significant reductions in energy demand and hence in greenhouse gas emissions.     

The macroeconomic rebound effect and the world economy

This paper examines the macroeconomic rebound effect for the global economy arising from energy-efficiency policies. Such policies are expected to be a leading component of climate policy portfolios being proposed and adopted in order to achieve climate stabilisation targets for 2020, 2030 and 2050, such as the G8 50% reduction target by 2050. We apply the global “New Economics” or Post Keynesian model E3MG, developing the version reported in IPCC AR4 WG3. The rebound effect refers to the idea that some or all of the expected reductions in energy consumption as a result of energy-efficiency improvements are offset by an increasing demand for energy services, arising from reductions in the effective price of energy services resulting from those improvements. As policies to stimulate energy-efficiency improvements are a key part of climate-change policies, the likely magnitude of any rebound effect is of great importance to assessing the effectiveness of those policies. The literature distinguishes three types of rebound effect from energy-efficiency improvements: direct, indirect and economy-wide. The macroeconomic rebound effect, which is the focus of this paper, is the combination of the indirect and economy-wide effects. Estimates of the effects of no-regrets efficiency policies are reported by the International Energy Agency in World Energy Outlook, 2006, and synthesised in the IPCC AR4 WG3 report. We analyse policies for the transport, residential and services buildings and industrial sectors of the economy for the post-2012 period, 2013–2030. The estimated direct rebound effect, implicit in the IEA WEO/IPCC AR4 estimates, is treated as exogenous, based on estimates from the literature, globally about 10%. The total rebound effect, however, is 31% by 2020 rising to 52% by 2030. The total effect includes the direct effect and the effects of (1) the lower cost of energy on energy demand in the three broad sectors as well as of (2) the extra consumers’ expenditure from higher (implicit) real income and (3) the extra energy-efficiency investments. The rebound effects build up over time as the economic system adapts to the higher real incomes from the energy savings and the investments.     

Measuring the relative efficiency of hydrogen energy technologies for implementing the hydrogen economy: An integrated fuzzy AHP/DEA approach

To provide and improve national energy security and low-carbon green energy economy, as a government-supported research institute related to developing new and renewable energy technologies, including energy efficiency, Korea Institute of Energy Research (KIER) needs to establish a long-term strategic energy technology roadmap (ETRM) in the hydrogen economy sector for sustainable economic development. In this paper, we establish a strategic ETRM for hydrogen energy technologies in the hydrogen economy considering five criteria: economic impact (EI), commercial potential (CP), inner capacity (IC), technical spin-off (TS), and development cost (DC). As an extended research, we apply the integrated two-stage multi-criteria decision-making approach, including the hybrid fuzzy analytic hierarchy process (AHP) and data envelopment analysis (DEA) model, to assess the relative efficiency of hydrogen energy technologies in order to scientifically implement the hydrogen economy. Fuzzy AHP reflects the vagueness of human thought with interval values, and allocates the relative importance and weights of four criteria: EI, CP, IC, and TS. The DEA approach measures the relative efficiency of hydrogen energy technologies for the hydrogen economy with a ratio of outputs over inputs.The result of measuring the relative efficiency of hydrogen energy technologies focuses on 4 hydrogen technologies out of 13 hydrogen energy technologies. KIER has to focus on developing 4 strategic hydrogen energy technologies from economic view point in the first phase with limited resources. In addition, if energy policy makers consider as some candidates for strategic hydrogen technologies of the other 9 hydrogen energy technology, the performance and productivity of 9 hydrogen energy technologies should be increased and the input values of them have to be decreased.With a scientific decision-making approach, we can assess the relative efficiency of hydrogen energy technologies efficiently and allocate limited research and development (R&D) resources effectively for well-focused R&D.     

An investment-led approach to analysing the hydrogen energy economy in the UK

The authors propose an alternative, investment-led approach to analysing the potential for the development of hydrogen energy in the UK. The UK economy is relatively sensitive to movements in world fossil fuels markets since the energy sector contributes at least 5% of UK GDP and represents an asset pool of at least £230 billion. Much of the ongoing research to assess possible scenarios for the development of alternatives to existing energy systems, including hydrogen energy, in the UK is built around the cost-optimising MARKAL model. The authors believe that this approach offers an incomplete picture of hydrogen energy deployment since it ignores the mechanisms dictating the flow of commercial capital to the sector and they suggest an alternative model based on the risk-adjusted value proposition. Initial analysis shows that valuation differentials already exist between companies in the fossil fuel, utilities and fuel cell sectors and that this might be exploited to the advantage of investors thus affecting the speed of development in hydrogen energy. It should be noted that the following represents work in progress and the authors intend to publish an extended analysis in due course.     

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

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.     

Carbon emissions,energy consumption and economic growth: An aggregate and disaggregate analysis of the Indian economy

This study investigates the long and short run relationships among carbon emissions, energy consumption and economic growth in India at the aggregated and disaggregated levels during 1971–2014. The autoregressive distributed lag model is employed for the cointegration analyses and the vector error correction model is applied to determine the direction of causality between variables. Results show that a long run cointegration relationship exists and that the environmental Kuznets curve is validated at the aggregated and disaggregated levels. Furthermore, energy (total energy, gas, oil, electricity and coal) consumption has a positive relationship with carbon emissions and a feedback effect exists between economic growth and carbon emissions. Thus, energy-efficient technologies should be used in domestic production to mitigate carbon emissions at the aggregated and disaggregated levels. The present study provides policy makers with new directions in drafting comprehensive policies with lasting impacts on the economy, energy consumption and environment towards sustainable development.     

Negative rebound and disinvestment effects in response to an improvement in energy efficiency in the UK economy

This paper uses a computable general equilibrium (CGE) framework to investigate the conditions under which rebound effects may occur in response to increases in energy efficiency in the UK national economy. Previous work for the UK has suggested that rebound effects will occur even where key elasticities of substitution in production are set close to zero. The research reported in this paper involves carrying out a systematic sensitivity analysis, where relative price sensitivity is gradually introduced into the system, focusing specifically on elasticities of substitution in production and trade parameters, in order to determine conditions under which rebound effects become a likely outcome. The main result is that, while there is positive pressure for rebound effects even where (direct and indirect) demands for energy are very price inelastic, this may be partially or wholly offset by negative income, competitiveness and disinvestment effects, which also occur in response to falling energy prices. The occurrence of disinvestment effects is of particular interest. These occur where falling energy prices reduce profitability in domestic energy supply sectors, leading to a contraction in capital stock in these sectors, which may in turn lead to rebound effects that are smaller in the long run than in the short run, a result that runs contrary to the predictions of previous theoretical work in this area.     

Nuclear energy in France: An economic policy overview

Lack of domestic fossil fuel resources has forced France to pin its hopes on nuclear power. This paper describes the French nuclear programme, the structure of the nuclear industry, progress made and future objectives. Some cost estimates for nuclear power relative to other fuel sources are presented and the effects of the nuclear programme on France's import dependency considered.     

Going beyond energy accounting for sustainability: Energy,fund elements and the economic process

The main purpose of this paper is to examine to what extent the widely used energy accounting schemes are useful for dealing with sustainability issues in view of Georgescu-Roegen’s production process and its implications for the evolutionary aspects of the economic process. The first part critically examines the concept of “net energy” in relation to material elements produced and consumed in the economic process in light of Georgescu-Roegen’s bioeconomics. The first part also considers the issue of what is produced in the economic process and emphasizes the importance of matter in bulk. The second part first compares the theoretical basis of embodied energy analysis (EEA) from the point of view of Piero Sraffa, a point of view not examined by Georgescu-Roegen. The second part also examines EEA critically in terms of Georgescu-Roegen’s flow-fund model and compares Sraffa’s analysis and Georgescu-Roegen’s flow-fund model.     

Exploring future energy options: An economic analysis

This paper examines the economic benefits and optimal timing of new sources of electric energy. The focus is on those technologies that offer the promise of a nearly inexhaustible electric energy supply: the fast breeder reactor, solar electric and fusion. Benefits are calculated under varying assumptions regarding capital costs, development lead times, and resource availability. The interdependence between benefits from new technologies is also explored.     

Energy policy and the energy economy in FR Germany : An overview

The article reports on the current status of West German energy policy, and in a sense it is a case study of a predominantly, though not purely, market-oriented approach. It presents some interesting facts and figures on the West German energy economy, and although written in an introductory fashion, leads the reader into the heart of current energy policy issues. The short retrospective demonstrates the remarkable success of the market-oriented approach to energy policy. The main current problems are the implementation of stricter environmental standards and the structural adjustments of the domestic coal and refining industries. A short discussion on future perspectives shows that total primary energy demand up to the end of the century is likely to remain stagnant, while further marked progress in energy efficiency can be expected.     

An ammonia energy vector for the hydrogen economy

This paper proposes the use of ammonia as a multipurpose energy vector. Synthesized from hydrogen produced in a large, centralized facility using nuclear process heat from a high-temperature, gas-cooled reactor (HTGR), the ammonia serves as a low-cost vehicle for energy storage and transmission, via pipeline, to remote demand centers where some of it serves as a clean-burning fuel for local cogeneration and process heat applications, and some of it is used for direct agricultural application or as feedstock for production of nitrogen-based fertilizers or other chemical processes.     

Measuring the benefits from an innovation: An application to energy

Market imperfections mean that the public has to finance research related to improving technologies of energy usage and the finding of new energy sources. The decision to invest in research has to be based on economic criteria and one such criterion is cost-benefit analysis. In this study we present four types of innovation and outline a way in which to evaluate the social benefits derived from them. Specific characteristics, such as exhaustibility of energy resources, are explicitly included in the evaluation framework.     

The outlook for renewable energy in Navarre: An economic profile

This paper describes the outlook and development of renewable energy in Navarre (Spain), which has become one of the leading regions in renewables over the last 10 years. This paper focuses its attention on the key features of the energy policy in Navarre, where there has emerged a dynamic enterprise sector. This sector has enormously increased its employment rates in the region. The success of renewable energy in Navarre is the result of the joint impact of decisive institutional support, industrial initiatives and consensus among social agents with regard to renewables. Tax incentives and local investment programs designed to break down the reluctance of local authorities and a campaign to obtain public support have, moreover, proven more efficient than the prior feed-in tariffs scheme, designed to develop the renewable energy sector and create international companies within it. The paper culminates in a detailed prognosis based on the SRN2003 survey of employment and installed power, which covers the majority of the firms operating in the Navarre renewables sector. Findings, however, suggest that the future of the sector in Navarre could be held back by the shortage of trained workers. This article might serve as a pertinent example for the deployment of renewables at regional level worldwide.     

Measuring structural change and energy use: Decomposition of the US economy from 1997 to 2002

The steadily increasing focus on energy production and consumption has led to growing research attention to patterns of energy use within economies. Of particular interest has been comparing the driving forces of increasing efficiency and economic structural change. Input–output analysis (IOA) and decomposition analysis have become critical tools for performing such analyses. This study analyzes aggregate energy use in the United States in 1997 and 2002 to discover the causes of changing energy usage and flows. Results show that rising population and household consumption acted to drive up energy demand, but this driving force was offset by considerable structural change within the economy, particularly related to a quickly increasing trade deficit in manufacturing goods. Thus, while total energy intensity, the ratio of energy use to economic output, declined by approximately 12% between 1997 and 2002, changes in the structure of the economy explain this drop more than increased energy efficiency. The level of aggregation at which decomposition analyses are run was identified as a crucially sensitive parameter for the determination of structural change, and future studies should specifically address the amount of detail necessary to adequately measure changes in economic structure.     

Energy productivity improvements and the rebound effect: An overview of the state of knowledge

The ‘rebound effect’ from more efficient use of energy has been well investigated, with plenty of evidence suggesting that the ‘direct’ rebound effect is relatively small for most energy services—typically less than 30%. However, the same conclusion may not apply to ‘indirect’ and ‘economy-wide’ rebound effects. Here, several authors suggest that improved energy efficiency may increase energy consumption in the medium to long term, a view that undermines the rationale for energy efficiency as an instrument of climate-related energy policy and has been ardently debated. One of the main reasons behind the debate is the lack of a rigorous theoretical framework that can describe the mechanisms and consequences of the rebound effect at the macro-economic level. Proponents of the rebound effect point to ‘suggestive’ evidence from a variety of areas including economic history, econometric measurements of productivity and macro-economic modelling. This evidence base is relatively small, highly technical, lacks transparency, rests upon contested theoretical assumptions and is inconclusive. This paper provides an accessible summary of the state of knowledge on this issue and shows how separate areas of research can provide relevant insights: namely neoclassical models of economic growth, computable general equilibrium (CGE) modelling and alternative models for policy evaluation. The paper provides a synopsis of how each approach may be used to explain, model and estimate the macro-economic rebound effect, criticisms that have been suggested against each, and explanations for diversity in quantitative estimates. Conclusions suggest that the importance of the macro-economic rebound effect should not be underestimated.     

Input-output analysis of energy requirements : An application to the Scottish economy in 1973

In this paper the author examines the strategic role that the energy sector - coal, refined oil products, gas and electricity - played within the Scottish economy in 1973, and investigates the structure of energy demand in Scotland. Input-output techniques are used. These give greater insight into the breakdown of energy dependency within different sectors and final demand components than more traditional elasticity studies.     

An overview of energy consumption of the globalized world economy

For the globalized world economy with intensive international trade, an overview of energy consumption is presented by an embodied energy analysis to track both direct and indirect energy uses based on a systems input–output simulation. In 2004, the total amounts of energy embodied in household consumption, government consumption, and investment are 7749, 874, and 2009 Mtoe (million tons of oil equivalent), respectively. The United States is shown as the world’s biggest embodied energy importer (683 Mtoe) and embodied energy surplus receiver (290 Mtoe), in contrast to China as the biggest exporter (662 Mtoe) and deficit receiver (274 Mtoe). Energy embodied in consumption per capita varies from 0.05 (Uganda) to 19.54 toe (Rest of North America). Based on a forecast for 2005–2035, China is to replace the United States as the world’s leading embodied energy consumer in 2027, when its per capita energy consumption will be one quarter of that of the United States.     

An integrated approach to hydrogen economy in Sicilian islands

CNR–ITAE is developing several hydrogen and fuel cell demonstration and research projects, each intended to be part of a larger strategy for hydrogen communities settling in small Sicilian islands. These projects involve vehicle design, hydrogen production from renewable energy sources and methane, as well as implementation strategies to develop a hydrogen and renewable energy economy. These zero emission lightweight vehicles feature regenerative braking and advanced power electronics to increase efficiency. Moreover, to achieve a very easy-to-use technology, a very simple interface between driver and the system is under development, including fault-recovery strategies and GPS positioning for car-rental fleets. Also marine applications have been included, with tests on PEFC applied on passenger ships and luxury yacht as power system for on-board loads. In marine application, it is under study also an electrolysis hydrogen generator system using seawater as hydrogen carrier. For stationary and automotive applications, the project includes a hydrogen refuelling station powered by renewable energy (wind or/and solar) and test on fuel processors fed with methane, in order to make the power generation self-sufficient, as well as to test the technology and increase public awareness toward clean energy sources.     

An estimation of energy and GHG emission intensity caused by energy consumption in Korea: An energy IO approach

In Korea, 97% of the energy resources are imported. The growth rate of greenhouse gas (GHG) emission per capita in the country was the highest in the world during 1990 and 2004. Moreover, 83% of the domestic GHG emissions stemmed from energy use in the year 2004. Therefore, there is an urgent need to develop an econometric model for energy intensity and GHG emission intensity in view of the poor energy endowment and environmental situation in Korea.