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Energy Efficiency Dynamics and Climate Policy

Author

Listed:
  • Gregory Casey
  • Yang Gao
  • Gregory P. Casey
Abstract
We study the effectiveness of climate change mitigation policies in reducing carbon emissions, focusing on the channel of economy-wide energy efficiency. Using U.S. data, we estimate impulse response functions (IRFs) that characterize how energy efficiency responds to energy price shocks. Standard climate-economy models cannot replicate the slow transition dynamics observed in the data. We build a tractable model that nests the existing literature and can closely replicate the empirical IRFs. The slow dynamics in our model imply that carbon taxes reduce cumulative emissions less than predicted by standard models and that clean energy subsidies reduce cumulative emissions more than predicted by standard models.

Suggested Citation

  • Gregory Casey & Yang Gao & Gregory P. Casey, 2024. "Energy Efficiency Dynamics and Climate Policy," CESifo Working Paper Series 11303, CESifo.
    • Handle: RePEc:ces:ceswps:_11303
    as

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    File URL: https://www.cesifo.org/DocDL/cesifo1_wp11303.pdf
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    References listed on IDEAS

    as
    1. Griffin, James M & Gregory, Paul R, 1976. "An Intercountry Translog Model of Energy Substitution Responses," American Economic Review, American Economic Association, vol. 66(5), pages 845-857, December.
    2. Gregory Casey & Woongchan Jeon & Christian Traeger & Gregory P. Casey & Christian P. Traeger, 2023. "The Macroeconomics of Clean Energy Subsidies," CESifo Working Paper Series 10828, CESifo.
    3. Glen P. Peters & Robbie M. Andrew & Josep G. Canadell & Sabine Fuss & Robert B. Jackson & Jan Ivar Korsbakken & Corinne Le Quéré & Nebojsa Nakicenovic, 2017. "Key indicators to track current progress and future ambition of the Paris Agreement," Nature Climate Change, Nature, vol. 7(2), pages 118-122, February.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    climate change; climate policy; energy efficiency;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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