2023/20 | LEM Working Paper Series | ||||||||||||||||
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Energy efficiency policies in an agent-based macroeconomic model |
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Marco Amendola, Francesco Lamperti, Andrea Roventini and Alessandro Sapio |
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Keywords | |||||||||||||||||
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Energy efficiency policies; Sustainability; Rebound effect; Agent-based modelling.
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JEL Classifications | |||||||||||||||||
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C63, O33, O38, Q41, Q48
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Abstract | |||||||||||||||||
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Improvements in energy efficiency can help facing the on-going climate and energy
crises, yet the energy intensity of economic activities at the global level in recent years
has decreased more slowly than it is required to achieve climate goals. Based on this
premise, the paper builds a macroeconomic agent-based K+S model to study the effects
of different policies on energy efficiency. In the model, energy efficiency of capital goods
improves as the outcome of endogenous, bottom-up technical change. Public policies
analysed range from indirect policies based on taxes, incentives, and subsidies, rooted in
the traditional role of the State as fixing market failures, to direct technological policies,
akin to the entrepreneurial state approach, in which a public research laboratory invests
in R&D with the aim to establish a new technological paradigm on energy efficiency.
Simulation results show that while most policies tested are effective in reducing energy
intensity, the public research lab is extremely effective in promoting energy efficiency
without deteriorating macroeconomic and public finance conditions. The superiority of
the national lab policy, however, emerges on a relatively long time-horizon, highlighting
the importance of governments that are patient enough to wait for the returns of that
policy and the necessity to complement this strategy with more ''ready to use'' indirect
measures. Additionally, results indicate that the macroeconomic rebound effect induced
by most of the policies is rather small. Concerns about macroeconomic rebound effects
are, therefore, most likely often overstated.
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