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GTAP Resource #4112

"Economic impacts of energy efficiency investments : simulation of the 2012 IEA “Efficient World Scenario” in the OECD ENV-Linkages model"
by Chateau, Jean


The 2012 “World Energy Outlook” book, publishedby the IEA, analyses in depth energy efficiency in final uses and in energy production and transformation activities. The Efficient World Scenario constructed by the IEA is characterized by additional investment of $11.8 trillion in more efficient end-use technologies that will be more than offset by a $17.5 trillion reduction in fuel expenditures and $5.9 trillion lower supply-side investment. As well as these direct impacts of energy efficiency policies on energy demands and energy-related investments, this paper assesses their broader impact on the global economy. Our analysis seeks to do this by linking the IEA’s World Energy Model (WEM), a partial equilibrium model designed to replicate how energy markets function, to the OECD ENV-Linkages general equilibrium model, an economic model that describes how economic activities are linked to each other across sectors and regions. Specifically, the ENV-Linkages model was calibrated using the outputs of the WEM for energy demand, investment in energy consuming and producing equipment and fuel savings.
Our analysis shows that the economic impact of the Efficient World Scenario would feed through a number of channels. In general, the policies included in the Efficient World Scenario would encourage firms and households to shift their spending patterns towards more energy-efficient capital goods, which, in turn, reduces their expenditure on energy consumption. This change in the balance of spending, and therefore supply and demand, has a cascade effect on the relative price of all goods and factors of
production in the economy.
Firms producing less energy-intensive goods and services are faced with increased demand and react by trying to maximise profits. By contrast, demand for more energyintensive goods and services declines. At a household level, the move towards less energy-intensive goods and services results in a reduction in energy expenditure, wh...

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Created: Chateau, J. (4/12/2013)
Updated: Chateau, J. (4/12/2013)
Visits: 2,373
- Dynamic modeling
- Climate change policy
- Not Applicable

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