The economy-wide rebound effect from improved energy efficiency in Swedish industries–A general equilibrium analysis

The objective of this paper is to analyse the rebound effect from increased efficiency in industrial energy use in Sweden. Energy efficiency improvements can have significant micro- and macroeconomic effects that hamper the positive effect on real energy savings. To assess the size of the overall rebound effect in the Swedish economy, we apply a computable general equilibrium model. The results show that the economy-wide rebound effect depends on a number of factors, e.g. the extent of the energy efficiency improvement, how the labour market is modelled as well as whether the increase in energy efficiency is combined with a cost or not. We find that the rebound effect following a five per cent increase in energy efficiency in the Swedish industry lies in the 40–70 per cent range. When energy efficiency is only improved in energy-intensive production, the rebound effect becomes even higher. These findings are in line with the results in the literature.     

The demand for energy in the UK: A general equilibrium analysis

Previous research into the demand for energy has treated economic activity as an explanatory variable. However, economic theory suggests that economic activity is not independent of energy prices and energy demand. We explore the two-way causality between energy demand and economic activity in the context of a macroeconometric model of the UK economy. Inter alia this study suggests that the demand for energy is more price elastic in general equilibrium than it is under the more conventional assumptions of partial equilibrium.     

Rebound effect in Chinese household energy efficiency and solution for mitigating it

The current efforts and technologies on energy efficiency seem unable to hold back the increasing momentum of the household energy consumption per unit of China, which has been on the increase since 2000. Usually, this phenomenon is simply attributed to the demand for more comfortable household lifestyle due to the current rapid economic development of China. However, the latent cause—rebound effect has long been ignored in the household energy efficiency of China, while it has been analyzed deeply and recognized widely all over the world. This article studies the rebound effect in the household energy efficiency of China and its related negative influence on the energy demand. A high rebound effect of at least 30% in the household energy efficiency of China is presumed by reference to the rebound effects of other countries. Finally, five feasible ways are summarized to mitigate the rebound effect and their values are analyzed respectively: (1) develop renewable energy resources, (2) increase energy prices, (3) improve energy efficiency, (4) build rational energy prices system, and (5) improve consumer behavior.     

The impact of a stimulus to energy efficiency on the economy and the environment: A regional computable general equilibrium analysis

Sustainable development is a key objective of UK national and regional policies. Improvements in resource productivity have been suggested as both a measure of progress towards sustainable development and as a means of achieving sustainability. Making ‘more with less’ intuitively seems to be good for the environment, and this is the presumption of current UK policy. However, in a system-wide context, improvements in energy efficiency lower the cost of energy in efficiency units and may even stimulate the consumption and production of energy measured in physical units, and increase pollution. Simulations of a computable general equilibrium model of Scotland suggest that an across the board stimulus to energy efficiency there would actually stimulate energy production and consumption and lead to a deterioration in environmental indicators. The implication is that policies directed at stimulating energy efficiency are not, in themselves, sufficient to secure environmental improvements: this may require the use of complementary energy policies designed to moderate incentives to increased energy consumption.     

Targeting for energy efficiency and improved energy collaboration between different companies using total site analysis (TSA)

Rising fuel prices, increasing costs associated with emissions of green house gases and the threat of global warming make efficient use of energy more and more important. Industrial clusters have the potential to significantly increase energy efficiency by energy collaboration. In this paper Sweden’s largest chemical cluster is analysed using the total site analysis (TSA) method. TSA delivers targets for the amount of utility consumed and generated through excess energy recovery by the different processes. The method enables investigation of opportunities to deliver waste heat from one process to another using a common utility system.The cluster consists of 5 chemical companies producing a variety of products, including polyethylene (PE), polyvinyl chloride (PVC), amines, ethylene, oxygen/nitrogen and plasticisers. The companies already work together by exchanging material streams. In this study the potential for energy collaboration is analysed in order to reach an industrial symbiosis. The overall heating and cooling demands of the site are around 442 MW and 953 MW, respectively. 122 MW of heat is produced in boilers and delivered to the processes.TSA is used to stepwise design a site-wide utility system which improves energy efficiency. It is shown that heat recovery in the cluster can be increased by 129 MW, i.e. the current utility demand could be completely eliminated and further 7 MW excess steam can be made available. The proposed retrofitted utility system involves the introduction of a site-wide hot water circuit, increased recovery of low pressure steam and shifting of heating steam pressure to lower levels in a number heat exchangers when possible. Qualitative evaluation of the suggested measures shows that 60 MW of the savings potential could to be achieved with moderate changes to the process utility system corresponding to 50% of the heat produced from purchased fuel in the boilers of the cluster.Further analysis showed that after implementation of the suggested energy efficiency measures there is still a large excess of heat at temperatures of up to 137 °C.     

The prospects for coal-to-liquid conversion: A general equilibrium analysis

We investigate the economics of coal-to-liquid (CTL) conversion, a polygeneration technology that produces liquid fuels, chemicals, and electricity by coal gasification and Fischer–Tropsch process. CTL is more expensive than extant technologies when producing the same bundle of output. In addition, the significant carbon footprint of CTL may raise environmental concerns. However, as petroleum prices rise, this technology becomes more attractive especially in coal-abundant countries such as the U.S. and China. Furthermore, including a carbon capture and storage (CCS) option could greatly reduce its CO₂ emissions at an added cost. To assess the prospects for CTL, we incorporate the engineering data for CTL from the U.S. Department of Energy (DOE) into the MIT Emissions Prediction and Policy Analysis (EPPA) model, a computable general equilibrium model of the global economy. Based on DOE’s plant design that focuses mainly on liquid fuels production, we find that without climate policy, CTL has the potential to account for up to a third of the global liquid fuels supply by 2050 and at that level would supply about 4.6% of global electricity demand. A tight global climate policy, on the other hand, severely limits the potential role of the CTL even with the CCS option, especially if low-carbon biofuels are available. Under such a policy, world demand for petroleum products is greatly reduced, depletion of conventional petroleum is slowed, and so the price increase in crude oil is less, making CTL much less competitive.     

An improved approach to estimate direct rebound effect by incorporating energy efficiency: A revisit of China's industrial energy demand

The rebound effect, or the response to energy efficiency improvement, has drawn considerable attention from economists and policymakers. However, the magnitude remains quite controversial because of the differences in the definitions and methods being used. Originating from the definition of direct rebound effect, we develop an improved approach incorporating energy efficiency. The main advantages of the proposed approach are twofold. First, it enables us to estimate the demand elasticity of useful energy service with respect to energy service price. The estimates are more consistent with the definition of rebound effect and are more effective. Second, it decomposes direct rebound effect into substitution and output channels, enabling us to further understand the microeconomic mechanisms. Applying this method, we assess the direct energy rebound effect in China's industrial sectors. We find that the direct rebound effect for the industry is 37.0%, and the substitution and output channels contribute to 13.1% and 23.9%, respectively. Substantial variations in the magnitudes and mechanisms occur by sector. For heavy industry, most energy rebound is induced by output expansion because of its sizeable cost decrease from efficiency improvements. Unlike heavy industry, most energy rebound in light industry comes from substituting energy service for other inputs because firms in light industry are more flexible in adjusting production inputs. Our results provide evidences for the importance of energy efficiency measures, and highlight the necessity of differentiated measures according to the sectoral characteristics.     

基于CGE模型的东北亚能源互联网经济效益量化分析

东北亚地区的能源基础设施合作引起了很多学者的关注.大多数研究专注于该地区电网互联、可再生能源开发的技术可行性,而忽略了能源基础设施合作带来的社会和经济效益的定量分析.本研究使用可计算一般均衡模型来评估构建东北亚能源互联网的经济社会效益.主要模型工作包括 1)构建新的嵌套结构,2)通过计量模型估计化石和非化石能源发电替代...     

Technology transfer issues and challenges for improved energy efficiency and environmental performance in China

The need to ensure sustainable energy related technology transfer from OECD countries to industrializing nations and nations in transition is considered. Particular reference is made to the issues and challenges associated with China. This is an industrializing nation with a strong need to achieve significant improvements in overall energy efficiency and the associated environmental impact. This together with an overwhelming dependence on coal in all market sectors highlights the challenges that need to be surmounted. Copyright © 2000 John Wiley & Sons, Ltd.     

Scenario-based energy efficiency and productivity in China: A non-radial directional distance function analysis

Improving energy efficiency and productivity is one of the most cost-effective ways for achieving the sustainable development target in China. This paper employs non-radial directional distance function approach to empirically investigate energy efficiency and energy productivity by including CO₂ emissions as an undesirable output. Three production scenarios, namely energy conservation (EC), energy conservation and emission reduction (ECER), and energy conservation, emission reduction and economic growth (ECEREG), are specified to assess China's energy efficiency and productivity growth during the period of Eleventh Five-Year Plan. Our empirical results show that there exist substantial differences in China's total-factor energy efficiency and productivity under different scenarios. Under the ECEREG scenario, the national average total-factor energy efficiency score was 0.6306 in 2005–2010, while the national average total-factor energy productivity increased by 0.27% annually during the period. The main driving force for energy productivity growth in China was energy technological change rather than energy efficiency change.     

The effectiveness of energy efficiency improvement in a developing country: Rebound effect of residential electricity use in South Korea

The government of South Korea considers an energy efficiency improvement policy an effective economic measure for climate change like many other governments. But it is unaware of any ‘rebound effect’, the unexpected result of energy efficiency improvement. So the rebound effect of residential electricity use in South Korea was estimated using two different scales in this paper. At the macro level, the rebound effect was estimated indirectly by using price elasticity, and at the micro level, the rebound effect of individual home appliances was estimated directly by using a non-linear relationship between energy efficiency and energy use. At the macro level, the long- and short-term results of rebound effect were estimated at 30% and 38%, respectively. Also at the micro level, the rebound effect of air conditioners was 57–70%; while refrigerators showed only a composite of rebound and income effects. Finally, there was no backfire effect, and efficiency improvement brought energy reduction. In conclusion, these suggest that rebound effect is an important factor that the government of South Korea must consider when planning its energy efficiency improvement policy.     

Transition towards a low carbon economy: A computable general equilibrium analysis for Poland

In the transition to sustainable economic structures the European Union assumes a leading role with its climate and energy package which sets ambitious greenhouse gas emission reduction targets by 2020. Among EU Member States, Poland with its heavy energy system reliance on coal is particularly worried on the pending trade-offs between emission regulation and economic growth. In our computable general equilibrium analysis of the EU climate and energy package we show that economic adjustment cost for Poland hinge crucially on restrictions to where-flexibility of emission abatement, revenue recycling, and technological options in the power system. We conclude that more comprehensive flexibility provisions at the EU level and a diligent policy implementation at the national level could achieve the transition towards a low carbon economy at little cost thereby broadening societal support.     

The effect of energy end-use efficiency improvement on China’s energy use and CO2 emissions: a CGE model-based analysis

With its rapid economic growth, China is now confronted with soaring pressure from both its energy supply and the environment. To deal with this conflict, energy end-use efficiency improvement is now promoted by the government as an emphasis for future energy saving. This study explores the general equilibrium effect of energy end-use efficiency improvement on China’s economy, energy use, and CO₂ emissions. This paper develops a static, multisector computable general equilibrium model (CGE) for China, with specific detail in energy use and with the embodiment of energy efficiency. In order to explore the ability of subsidizing non-fossil-generated electricity on moderating potential rebound effects, in this model, the electricity sector was deconstructed into five specific generation activities using bottom–up data from the Chinese electricity industry. The model is calibrated into a 16-sector Chinese Social Accounting Matrix for the year 2002. In the analysis, seven scenarios were established: business as usual, solely efficiency improvement, and five policy scenarios (taxing carbon, subsidized hydropower, subsidized nuclear power, combination of taxing carbon and subsidized hydropower, combination of taxing carbon and subsidized nuclear power). Results show that a sectoral-uniform improvement of energy end-use efficiency will increase rather than decrease the total energy consumption and CO₂ emissions. The sensitivity analysis of sectoral efficiency improvement shows that efficiency improvements happened in different sectors may have obvious different extents of rebound. The three sectors, whose efficient improvements do not drive-up total national energy use and CO₂ emissions, include Iron and Steel, Building Materials, and Construction. Thus, the improvement of energy end-use efficiency should be sectoral specific. When differentiating the sectoral energy-saving goal, not only the saving potential of each sector but also its potential to ease the total rebound should be taken into account. Moreover, since the potential efficiency improvement for a sector over a certain period will be limited, technology measures should work along with a specific policy to neutralize the rebound effect. Results of policy analysis show that one relatively enhanced way is to combine carbon taxing with subsidized hydropower.     

Jevons’ Paradox revisited: The evidence for backfire from improved energy efficiency

Beginning with William Stanley Jevons in 1865, a number of authors have claimed that economically justified energy-efficiency improvements will increase rather than reduce energy consumption. ‘Jevons Paradox’ is extremely difficult to test empirically, but could have profound implications for energy and climate policy. This paper summarises and critiques the arguments and evidence that have been cited in support of Jevons’ Paradox, focusing in particular on the work of Len Brookes and Harry Saunders. It identifies some empirical and theoretical weaknesses in these arguments, highlights the questions they raise for economic orthodoxy and points to some interesting parallels between these arguments and those used by the ‘biophysical’ school of ecological economics. While the evidence in favour of ‘Jevons Paradox’ is far from conclusive, it does suggest that economy-wide rebound effects are larger than is conventionally assumed and that energy plays a more important role in driving productivity improvements and economic growth than is conventionally assumed.     

Metafroniter energy efficiency with CO2 emissions and its convergence analysis for China

This paper measures the energy efficiency performance with carbon dioxide (CO₂) emissions in 30 provinces in China during the period of 1997–2011 using a meta-frontier framework with the improved directional distance function (DDF). We construct a new environmental production possibility set by combining the super-efficiency and sequential data envelopment analysis (DEA) models to avoid “discriminating power problem” and “technical regress” when evaluating efficiency by DDF. Then, it is used in a meta-frontier framework to reflect the technology heterogeneities across east, central and west China. The results indicate that eastern China achieved the highest progress inefficiency relative to the metafrontier, followed by western and the central China. By focusing on technology gaps, we offer some suggestions for the different groups based on group-frontier and meta-frontier analyses. The inefficiency can be attributed to managerial failure for eastern and western China, and technological differences for central China. The convergence analysis shows that energy and CO₂ emission governance will produce negative effects on economic growth, and it is suitable and acceptable to introduce rigorous environmental measures in eastern China.     

Carbon taxation in Russia: Prospects for a double dividend and improved energy efficiency

This study analyses the sectoral and macroeconomic impact of carbon taxes on the Russian economy, one of the world's most energy- and carbon-intensive economies, while assessing the hypothesis of a double dividend. Substituting carbon taxes for labour taxes can reduce GHG emissions and enhance welfare by improving the efficiency of the tax system — a strong double dividend. The analyses confirm, when capital is not internationally mobile, that a double dividend is likely to occur under (i) a high elasticity of labour supply, (ii) high elasticities of substitution between labour and the capital-energy aggregate, (iii) low elasticities of substitution between capital and energy. It is the tax-shifting effect between capital and labour that is crucial. In contrast, welfare losses resulting from the environmental tax reform may be substantial if capital is internationally mobile.     

Has energy efficiency performance improved in China?—non-energy sectors evidence from sequenced hybrid energy use tables

We conduct a comparative analysis of two energy efficiency indicators for China: heating value energy intensity (HEI) and economic value energy intensity (MEI). We formulate 1997–2002–2007–2012 hybrid energy comparable sequence use tables in an input-output accounting framework, and compare the two indicators using a randomized block ANOVA. The results show that MEIs and HEIs have significantly different variability patterns among sectors and are evolutionarily divergent over time. The directional changes in MEI and HEI are found to be inconsistent at both the sectoral and national levels. A further analysis with a LMDI index decomposition model shows that the difference between HEI LMDI and HEI LMDI is principally caused by energy prices. Based on the evidence from the two indicators and their relationship to energy prices, we are unconvinced about China's purported improvements in energy efficiency in recent years.     

Electricity demand price elasticity in China based on computable general equilibrium model analysis

Based on the CGE model, this paper simulates the impact of electricity price adjustment on demand for electricity, and the simulation results show the range of electricity elasticities of different consumers. The elasticities of the high power-consuming sectors are relatively larger. However, the absolute values of the price elasticities are less than one. Furthermore, this paper quantitatively analyses the price elasticity of different categories of users, which are classified according to the objectives of China’s electricity price reform. The elasticity absolute value of Industry & Commerce is around 0.018, that of Residents is around 0.300 and that of Agriculture is around 0.066. Finally, the price elasticities of different consumers in 2005 and 2007 are calculated through the CGE model, and it is discovered that the price elasticity absolute values in 2007 are less than that in 2005. The analytical results of this paper can provide corresponding support for the formulation of electricity pricing mechanisms for the developing countries.     

Integration of solar thermal for improved energy efficiency in low-temperature-pinch industrial processes

Solar thermal systems have the potential to provide renewable industrial process heat and are especially suited for low pinch temperature processes such as those in the food, beverage, and textile sectors. When correctly integrated within an industrial process, they can provide significant progress towards both increased energy efficiency and reduction in emissions. However, the integration of renewable solar energy into industrial processes presents a challenge for existing process integration techniques due to the non-continuous nature of the supply. A thorough pinch analysis study of the industrial process, taking in to account non-continuous operating rates, should be performed to evaluate the utility demand profile. Solar collector efficiency data under variable climatic conditions should also be collected for the specific site. A systematic method of combining this information leads to improved design and an optimal operating strategy. This approach has been applied to a New Zealand milk powder plant and benefits of several integration strategies, including mass integration, are investigated. The appropriate placement of the solar heat is analogous to the placement of a hot utility source and an energy penalty will be incurred when the solar thermal system provides heat below the pinch temperature.     

Manufacturing productivity and energy efficiency: a stochastic efficiency frontier analysis

This paper presents a mathematical model to estimate both production frontier and energy demand frontier, and evaluate the energy efficiency in the automotive manufacturing sector using plant‐level production and utility consumption data. By using the stochastic frontier analysis, two models—an output efficiency model (production frontier) and an input efficiency model (energy demand frontier)—are developed to analyze the plant's energy efficiency performance relative to the ‘best practice’ among peers. Both the structure and parameters of two stochastic frontier functions are identified to understand the relationship between production inputs (e.g., utilities and plant‐specific variables) and the overall productivity. A case study of a set of automotive engine manufacturing plants is conducted and shows that electricity has higher efficiency than other forms of utility in those production‐related activities, and the regional and climate factors have significant impacts on energy efficiency. The models provide a way to measure how far from the production frontier as well as how far from the energy demand frontier the plant is. The results also provide useful information about the inefficient energy components in manufacturing facilities. The opportunities of improving plant‐level efficiency in automotive manufacturing plants can be revealed by the results. Copyright © 2015 John Wiley & Sons, Ltd.