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Macroeconomic Effects of Efficiency Policies for Energy-intensive Industries: the Case of the UK Climate Change Agreement, 2000-2010.


Citation Barker, T.S, Ekins, P. and Foxon, T,J. Macroeconomic Effects of Efficiency Policies for Energy-intensive Industries: the Case of the UK Climate Change Agreement, 2000-2010.. 2007. https://doi.org/10.1016/j.eneco.2006.12.008.
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Author(s) Barker, T.S, Ekins, P. and Foxon, T,J.
Opus Title Energy Economics
Pages 760-778
Volume 29
DOI https://doi.org/10.1016/j.eneco.2006.12.008
Abstract

This paper reports a study modeling the UK Climate Change Agreements (CCAs) and related energy-efficiency policies for energy-intensive industrial sectors. Bottomup estimates of the effects of these policies are introduced into the energy-demand equations of a topdown dynamic econometric model of the UK economy with fifty industrial sectors, MDM-E3. This allowed estimation of the effects of the reduced energy use for the outputs from the sectors, i.e. the reductions in unit costs of the energy-intensive industries, on the demand for their outputs (both in the UK and in the export markets). The model is solved as a counterfactual 20002005 and as a projection 20052010 in a series of scenarios to allow estimation of the effects of the policies on inflation and growth, as well as on overall energy demand and CO2emissions. The system-wide finalenergy reductions isestimated to be 4.2mtoe, or 2.6%, of total final demand for energy by 2010, including a rebound effect of 19%, with negligible effects on inflation and a slight increase in economic growth through improved international competitiveness.