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Increasing Energy Efficiency in Scottish Households : Trading-off Economic Benefits and Energy Rebound Effects?

Figus, Gioele and Turner, Karen and Lecca, Patrizio and McGregor, Peter and Swales, Kim (2016) Increasing Energy Efficiency in Scottish Households : Trading-off Economic Benefits and Energy Rebound Effects? [Report]

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Abstract

This paper investigates the economy-wide impacts of a 5% improvement in Scottish household energy efficiency, focussing specifically on general equilibrium energy rebound effects, both in household energy use and in total energy use across the Scottish economy. The impacts are measured through simulations using an intertemporal single region computable general equilibrium (CGE) model. Previous studies based on a national case show that improving efficiency in household energy can stimulate the economy through an increase and change in the pattern of the aggregate demand. However, this may put upward pressure on domestic prices, thereby crowding out exports. 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 to their baseline values and restoring the lost competitiveness. By considering different simulation scenarios we show that there is a friction between the economic stimulus from increasing household energy efficiency and the rebound effects.