Abstract:In recent years, an overly narrow focus on rebound effects has limited the extent of researcher and policy attention afforded to the wider multiple benefits of increased energy efficiency. The objective of this paper is to focus policy attention on the sustained added value to the economy that is created as result of improving energy efficiency in the residential sector. Governments around the world are committed to increasing energy efficiency more generally, but often focus public support in low income households where energy poverty is a particular concern. However, governments operate in a context of multiple objectives where energy efficiency is expected to deliver significant reductions in carbon emissions alongside sustainable economic development. We use a UK CGE model to consider the general effects of supporting increases in energy efficiency in residential energy use. Our results demonstrate that the increase in GDP, and economic activity more generally, triggered by increased energy efficiency delivers more in terms of increased household incomes than the efficiency improvement itself. We find that the more wide ranging the boost to energy efficiency, the greater the economic expansion and associated returns are likely to be, and the less the means of financing through public budgets will erode the benefits over time.

This paper offers a cautionary tale about the economic cost of European disintegration. Scotland provides an interesting twist on that story as somewhere that voted to remain part of the EU, but is now likely to be negatively affected, even though it is less directly exposed to EU trade than the UK. This occurs even if it were to achieve the softer Brexit with continued single market membership to which it aspires. The analysis includes potentially important lessons for the many nations and regions in which there exists pressures to move away from trade liberalization and towards protectionism.

This paper analyses the system-wide impact of increased household energy efficiency in a regional context, using Scotland as an example. It shows that household energy efficiency improvements typically deliver a 'double dividend' of a regional economic stimulus and reduction in energy use. However, the trade-off between the two is sensitive to the degree of regional fiscal autonomy, and so is likely to vary across regions. The use of taxation to support the implementation of energy-efficiency improvement programmes negatively impacts competitiveness, unless workers are willing to accept lower after-tax wages to fund public spending on improving household energy efficiency.KEYWORDS energy efficiency; regional development policy; energy rebound; regional fiscal autonomy; general equilibrium JEL C68, D58, Q43, Q48 HISTORY

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