The economic impacts of UK trade-enhancing industrial policies and their spillover effects on the energy system
Grant Allan (),
Gioele Figus (),
Peter G McGregor (),
J Kim Swales () and
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Gioele Figus: Department of Economics, University of Strathclyde
Peter G McGregor: Department of Economics, University of Strathclyde
J Kim Swales: Department of Economics, University of Strathclyde
Karen Turner: Centre for Energy Policy, University of Strathclyde
No 18-10, Working Papers from University of Strathclyde Business School, Department of Economics
The wider impacts of energy policy on the macro-economy are increasingly recognised in the academic and policy-oriented literatures. Additionally, the interdependence of energy and economy implies that a (policy) change in the non-energy system impacts on the energy system. However, such spillovers on the energy system have not been extensively researched. We begin by analysing the impacts of export promotion policies - a key element of the UKâ€™s Industrial Strategy - on the energy system and energy policy goals. As the impacts of such policies are, in large part, transmitted via their effects on the economy, we adopt a computable general equilibrium model - UK-ENVI - that fully captures such interdependence. Our results suggest that an across-the-board stimulus to exports increases total energy use significantly. This does not come directly through energy exports, but indirectly through the energy sectorsâ€™ linkages to other sectors. Export led growth therefore impacts on energy use - and significantly so. This in turn is likely to have an adverse impact on emission targets. Policy makers should be aware of the fact that a successful implementation of the Industrial Strategy may create significant tensions with the UKâ€™s Clean Growth Strategy, for example, and with the goals of energy policy more generally. The importance of this effect will in practice depend upon: the mix of goods and services that are exported (an issue that we shall address once the export strategy is published); the success of low-carbon policies. Ultimately, a knowledge of the nature and scale of these spillover effects of economic policies on the energy system creates the potential for more effective and efficient policy making.
Keywords: energy policy; industrial strategy; trade policy (search for similar items in EconPapers)
JEL-codes: C68 D58 Q43 Q48 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ene and nep-int
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Working Paper: The economic impacts of UK trade-enhancing industrial policies and their spillover effects on the energy system (2018)
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