Energy technology and energy economics: Analyses of energy efficiency policy in two different model traditions

Abstract:

Ambitious energy efficiency goals are among the key responses to Europe’s energy and climate challenges. To gain knowledge about the impacts of policies, two main families of models are widely used: energy system models – with emphasis on modelling technologies, and economic general equilibrium models – with emphasis on modelling markets and behaviour of economic agents. We study the same policy – an energy saving target – in two different models that are representative for the two modelling traditions in order to identify their similarities and differences. We implement the energy policy as a cap on energy purchased by residential sector. Our study illustrates that it is necessary to consider the effects of energy policy from several perspectives and use different scientific approaches before taking important political decisions. While the economic general equilibrium model allows for both energy efficiency investments and reduced demand for energy services as behavioural responses, the latter option is omitted by assumption in the energy system model. The response in the energy system model is wholly due to substitution between different technologies and energy carriers. The most striking consequence is that household demand for electricity remains virtually unaltered in the energy system model, held up by large investments in heat pumps. In the general equilibrium model, in contrast, the cap is almost entirely met by cutting household demand for electricity, with considerable impacts in the rest of the economy.  


Abstract in Norwegian:

Energiteknologi og energiøkonomi: Analyser av energipolitikk i to ulike modelltradisjoner

Sammendrag:

For studier av energi- og klimapolitikk er modeller nyttige og utbredte verktøy både i teknologi- og økonomifaget. Denne artikkelen tar utgangspunkt i et samarbeid mellom teknologer og økonomer som har hver sin modelltradisjon, selv om de over tid har tatt innover seg mange trekk fra hverandres fag. Ved bruk av en modell fra hver tradisjon får vi fram ulike historier om hva som skjer som følge av et krav om redusert energibruk i husholdningene. Analysen viser behovet for å belyse effekter av energipolitikken fra flere vinkler når viktige politiske beslutninger skal tas.

Published Feb. 5, 2018 1:28 PM - Last modified Feb. 5, 2018 1:28 PM