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Can vehicle efficiency beat fuel efficiency in cutting fuel use

Gioele Figus and J Kim Swales ()
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J Kim Swales: Department of Economics, University of Strathclyde

No 1802, Working Papers from University of Strathclyde Business School, Department of Economics

Abstract: This paper demonstrates the importance of considering both energy and non-energy efficiency improvements in the provision of energy intensive household services. Using the example of private transport, we analyse whether vehicle efficiency can beat fuel efficiency in cutting fuel use. We find that this ultimately depend on the elasticity of demand for transport, the substitutability between vehicles and fuels and the initial share of fuel use in private transport. The framework also allows to identify ‘multiple benefits’ of technical progress in private transport by considering both the ability of such policy to reduce fuel demand and to increase the consumer’s surplus. We extend the partial equilibrium framework by using computable general equilibrium (CGE) simulations to identify the system-wide impacts on total fuel use of the two alternative efficiency changes. Simulation results suggest that the substitution effects identified in the partial equilibrium analysis are an important element in determining the change in total fuel use resulting from these consumption efficiency changes. However, the identification of associated changes in intermediate fuel demand, plus the potential expansionary effects of the improvements in household efficiency transmitted through the labour market can generate general equilibrium effects that vary substantially from those derived using partial equilibrium analysis.

Keywords: energy services; technical progres; energy efficiency; partial equilbrium; general equilibrium (search for similar items in EconPapers)
JEL-codes: C68 D58 Q43 Q48 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2018-02
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:str:wpaper:1802

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