Economics Graduate Program - Master Degree

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http://hdl.handle.net/11527/17505

Gözat

Yazar "Hannum, Christopher Micheal" ile Economics Graduate Program - Master Degree'a göz atma
  • Öge
    Can Energy Efficiency Save Energy? An economy-wide rebound effect simulation for Turkey
    (Institute of Social Sciences, 2016) Somuncu,Tuğba ; Hannum, Christopher Micheal ; 436982 ; Economics ; İktisat
    Energy efficiency is often considered as one of the most important tools for reducing use of energy resources. However in the literature there is an ongoing debate about certain offsetting impacts. These offsetting impacts are called take-back effects or rebound effects. According to economic theory, an increase in energy efficiency will ensure a reduction in per unit price of energy services. A price reduction will stimulate energy demand from consumers and firms and eventually will lead to a higher energy consumption level. While the first effect is called a direct rebound second one is called an indirect rebound effect. In this study economy-wide rebound effects for Turkey which consist of the sum of direct and indirect effects has been examined. In the case of Turkey energy efficiency stands out as a crucial issue; because Turkey, as an energy importing country, wants to reduce energy consumption while maintaining economic growth. There are several policies, plans and strategies that aim to promote energy efficiency. However the big question remains whether obtaining higher levels of energy efficiency will result in a lower energy consumption level or not. In order to estimate economy-wide rebound effects, constructed an energy-economy computable general equilibrium (CGE) model for Turkey by creating a social accounting matrix (SAM) based on the 2002 Turkey Input-Output table from the Turkish Statistical Institute (TUIK). In addition to these official records to provide a more realistic view of Turkish economy shadow economy is included into SAM. Because both theoretical and empirical studies reveal that size of rebound effect is sensitive to price elasticity of demand; when demand is more elastic rebound is likely to be seen. In a situation like consumers don't pay for energy their demand becomes independent of price and doesn't response to any price reduction in energy. In particular Turkey face a serious leakage energy consumption where consumers benefit from costless energy. It would be a legitimate assumption that these consumers' demand over energy is price inelastic. Consequently a price reduction in energy services could lead no change in demand. Nested constant elasticity of substitution (CES) structure for production and household utility in which energy and capital are perfect complements and the energy-capital composite (e.g. building services) substitutes for labor and other intermediate goods with a Cobb-Douglas form has been applied. Household utility is generated using a Cobb-Douglas functional form from food, services, savings and a durable goods composite created by combining an industrial good and energy. The industrial good and energy are treated as perfect complements. Rebound effect is defined as percentage increase in total energy consumption over the expected (reduced) energy consumption level. Two energy efficiency policies which are being implemented in Turkey has been introduced into model. The first is energy certification for buildings and the second is mandatory energy labeling for household appliances. The first is energy certification for buildings which demonstrates their energy consumption level and groups them into 7 categories as A,B,C,D,E,F, or G. In accordance with this law newly constructed buildings must meet at least C level in order to qualify for building permit. As an energy efficiency increment it is assumed that all existing buildings will be improved to C level from G while all new buildings will be in the C category. The second policy is mandatory energy labeling for household appliances, which is functionally similar to energy certification for buildings. A durable good bundle of energy and industrial goods is composed, representing the usage of appliances. Energy efficiency in this bundle is assumed that increases due to the policy with the same percentage increase as has been observed over the 10 years since the initial formulation of the policy. Simulations for the both scenarios show rebound effect which ranges between 18-%19. These results indicate that approximately 20 percent of energy savings due to improvements in the energy efficiency are lost due to the rebound effect. Since size the of the rebound is great enough to be non-negligible, any policy, forecast or action which does not take it into consideration will be inadequate.