The impact on the Scottish economy of reducing greenhouse gas emissions in Scotland

DescriptionThe impact on the Scottish economy of reducing greenhouse gas emissions in Scotland: Illustrative findings from an experimental computable general equilibrium model for Scotland
ISBN978 0 7559 1858
Official Print Publication DateNovember 2008
Website Publication DateNovember 24, 2008

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Grant Allan a, Janine De Fence a, Igor Eromenko a, Amanda Lim*, Michelle Gilmartin a, Peter McGregor ab, Kim Swales ab and Karen Turner a
ISBN 978 0 7559 1858 4 (Web only publication)
This document is also available in pdf format (1.2mb)

Contents

PREFACE
ACKNOWLEDGEMENTS
EXECUTIVE SUMMARY
1. INTRODUCTION TO THE CGE MODELLING APPROACH
2. IMPACTS OF INCREASED ENERGY EFFICIENCY
3. IMPACTS OF DEMOGRAPHIC CHANGE
4. IMPACTS OF IMPOSING COSTLY REQUIREMENTS ON HOUSEHOLDS TO REDUCE ENERGY USE
5. IMPACTS OF INCREASING RENEWABLE ENERGY SUPPLY 1 - INPUT OUTPUT ANALYSIS
6. IMPACTS OF INCREASING RENEWABLE ENERGY SUPPLY 2 - CGE ANALYSIS
7. CONCLUSIONS AND RECOMMENDATIONS
REFERENCES
TECHNICAL APPENDICES
A1. Review of literature on applying the CGE modelling approach to the problem of climate change mitigation and other environmental issues.
A2. Simulation results: Energy Efficiency
A3. Simulation results: Demographic change
A4. Simulation results: Costly Requirements on Households to Reduce Energy Use
A5. Simulation results: Renewable Energy Supply 1 - Input-Output Analysis
A6. Simulation results: Renewable Energy Supply 2 - CGE Analysis

a Fraser of Allander Institute and Department of Economics, University of Strathclyde, b Centre for Public Policy for Regions, Universities of Glasgow and Strathclyde, *Formerly of the Fraser of Allander Institute

List of tables from main text
Table 1.1
Sectoral breakdown of the 1999 SCOTENVI model
Table 2.1 Short and Long Run Impacts on GDP and CO2 from a 5% Increase in Energy Efficiency in Each Sector of the Scottish Economy
Table 2.2 Short and Long Run Rebound Effects from a 5% Energy Efficiency Improvement Targeted at Each Sector of the Economy
Table 2.3 Short and Long Run Impacts on GDP and CO2 from a 5% Increase in Labour Efficiency in Each Sector of the Scottish Economy
Table 3.1 Percentage change of aggregate economic and demographic variables under the central projection, bargaining labour market closure
Table 4.1 Short- and long-run impacts on aggregate economic, energy and environmental indicators under a 1% decrease in household income, bargaining labour market, % changes from base year
Table 4.2 Percentage changes in long-run for aggregate economic, energy and environmental indicators under 1% decrease in household income with and without migration, bargaining labour market, % change from base
Table 5.1 Current (2000) shares of electricity generation by technology a and four scenarios considered, %
Table 5.2 Aggregate results on GDP, employment and CO 2 emissions
Table 6.1 Long-run aggregate economic, energy and environmental impact from "central" increase in renewable electricity generation in Scotland, bargaining labour market, % changes from base expect where indicated

List of figures from main text
Figure 2.1
Impact of a 5% increase in energy efficiency in the Non- Renewable Electricity Sector on Environmental Indicators
Figure 2.2 Impact of a 5% increase in energy efficiency in the Non-Renewable Electricity Sector on Environmental Indicators
Figure 2.3 Impact of a 5% increase in energy efficiency in the Renewbale Electricity Sector on Key Indicators
Figure 2.4 Impact of a 5% increase in energy efficiency in the Renewable Electricity Sector on Environmental Indicators
Figure 3.1 Percentage changes from base year for working age and total population under "Central" projection
Figure 3.2 Impact on sectoral output and employment, % changes from base year values by 2050
Figure 3.3 Energy indicators, % changes from base year under the central population projection, bargaining labour market closure
Figure 3.4 CO 2 emissions and CO 2 intensity of production indicator, % changes from base year under the central population projection, bargaining labour market closure
Figure 3.5 Trends in CO 2 intensity of production indicator under "Central", "Medium-High", "High" and "Low" population scenarios
Figure 3.6 Trends of Gross Domestic Product for "Central", "Medium-High", "High" and "Low" population scenarios
Figure 3.7 Trends in CO 2 generation under "Central", "Medium-High", "High" and "Low" population scenarios
Figure 4.1: Long-run impact on sectoral output and employment, % changes from base year
Figure 4.2:GDP, CO 2 emissions and CO 2 intensity of production following a 1% decrease in household income, bargaining labour market, % changes from base
Figure 4.3: GDP, electrical energy and non-electrical energy demands following a 1% decrease in household income, bargaining labour market, % changes from base
Figure 5.1 Absolute sectoral changes in GDP, £million, in Scenario A (high marine)
Figure 5.2 Absolute sectoral changes in GDP, £million, in Scenario B (low marine)
Figure 5.3 Absolute sectoral changes in employment, FTEs, in Scenario A (higher marine, lower wind)
Figure 5.4 Absolute sectoral changes in employment, FTEs, in Scenario B (lower marine, higher wind)
Figure 5.5 Absolute sectoral changes in GDP, £million, in Scenario C
Figure 5.6 Absolute sectoral changes in GDP, £million, in Scenario D
Figure 5.7 Absolute sectoral changes in employment, FTEs, in Scenario C
Figure 5.8 Absolute sectoral changes in employment, FTEs, in Scenario D
Figure 6.1 Long-run impact on sectoral output and employment, % changes from base year

List of tables from technical appendices
Table A2.1 Short and Long Run Impacts on GDP and CO2 from a 5% Increase in Energy Efficiency in Each Sector of the Scottish Economy
Table A 2.2 Short and Long Run Impacts on GDP and CO2 from a 5% Increase in Energy Efficiency in Selected Groups of Sectors in the Scottish Economy
Table A 2.3 Short and Long Run Rebound Effects from a 5% Energy Efficiency Improvement Targeted at Each Sector of the Economy
Table A 2.4 Short and Long Run Rebound Effects from a 5% Energy Efficiency Improvement Targeted at Selected Groups of Sectors
Table A2.5 Short and Long Run Impacts on GDP and CO2 from a 5% Increase in Labour Efficiency in Each Sector of the Scottish Economy
Table A2.6 Short Run and Long Run Impacts on GDP and CO2 from a 5% Increase in Labour Productivity in Selected Groups of the Scottish Economy
Table A3.1 Percentage change of aggregate economic and demographic variables under the central projection, bargaining labour market closure
TableA3.2 Percentage changes of aggregate economic and demographic variables under the "Central" population projection, for Exogenous Labour Supply and Fixed Real Wage labour market specifications
Table A3.3 2050 results for sensitivity analysis for elasticity of substitution between labour and capital, bargaining labour market specification under "Central" population scenario
Table A3.4 2050 results for elasticity of substitution between value added and inter-mediate inputs sensitivity analysis, bargaining labour market specification under "Central" population scenario
Table A4.1 Short- and long-run impacts on aggregate economic, energy and environmental indicators under a 1% decrease in household income, bargaining labour market, % changes from base year
Table A4.2 Percentage changes in long-run for aggregate economic, energy and environmental indicators under variations in the decrease in household income, bargaining labour market
Table A4.3 Percentage changes in long-run for aggregate economic, energy and environmental indicators under 1% decrease in household income with and without migration, bargaining labour market, % change from base
Table A4.4 Percentage changes in long-run for aggregate economic, energy and environmental indicators under 1% decrease in household income with and without migration possibilities for bargaining, exogenous labour supply case and fixed real wage specification of the regional labour market, % changes from base year
Table A5.1 Current (2000) shares of electricity generation by technology and four scenarios considered, %
Table A5.2 Aggregate results on GDP, employment and CO 2 emissions
Table A5.3 Sectoral breakdown of 31 sector IO table and CO2-output coefficients for 2000
Table A5.4 Current (2000) shares of electricity generation by technology and four scenarios considered, %
Table A5.5 Aggregate results on GDP, employment and CO 2 emissions
Table A5.6 Change in CO 2 emissions, % from base year, under for scenarios with original emissions coefficients and 90% reduction in Coal generation emissions coefficients
Table A6.1 Long-run aggregate economic, energy and environmental impact from "central" increase in renewable electricity generation in Scotland, bargaining labour market, % changes from base expect where indicated

List of figures from technical appendices
Figure A2.1
Impact of a 5% increase in energy efficiency in the Non- Renewable Electricity Sector on Environmental Indicators
Figure A2.2 Impact of a 5% increase in energy efficiency in the Non-Renewable Electricity Sector on Environmental Indicators
Figure A2.3 Impact of a 5% increase in energy efficiency in the Renewbale Electricity Sector on Key Indicators
Figure A2.4 Impact of a 5% increase in energy efficiency in the Renewable Electricity Sector on Environmental Indicators
Figure A2.5 Type 1 and Type II 'electricity to electricity' multipliers
Figure A2.6 Type 1 and Type II 'non-electricity to non electricity' multipliers
Figure A2.7
Percentage Change in Capital Rental due to a 5% improvement in the sea fishing sector
Figure A2.8 Electricity Intensities
Figure A2.9 Impact of a 5% increase in energy efficiency in the Public and Other Services Figure A 2.10 Impact of a 5% increase in energy efficiency in the Public and Other Services on Environmental Indicator Variables Sector on Key Energy Indicators
Figure A2.11 Percentage Change in Capital Stocks in the Energy Sectors due to a 5% improvement in the Public and Other Services
Figure A2.12 Impact of a 5% increase in energy efficiency in the Aggregate Manufacturing Sector on Key Energy Indicator Variables
Figure A2.13 Impact of a 5% increase in energy efficiency in the aggregate Manufacturing sector on environmental indicator variables.
Figure A2.14 Percentage Change in Capital Stocks in the Energy Sectors due to a 5% Improvement in the Aggregate Manufacturing Sector
Figure A3.1 The Scottish labour market in 2000 and 2050 under alternative population projections
Figure A3.2 Percentage changes from base year for working age and total population under "Central" projection
Figure A3.3 Impact on sectoral output and employment, % changes from base year values by 2050
Figure A3.4 Energy indicators, % changes from base year under the central population projection, bargaining labour market closure
Figure A3.5 CO 2 emissions and CO 2 intensity of production indicator, % changes from base year under the central population projection, bargaining labour market closure
Figure A3.6 Percentage changes from base year values for working age and total Scottish population under four population scenarios
Figure A3.7 Trends of Gross Domestic Product for "Central", "Medium High", "High" and "Low" population scenarios
Figure A3.8 Trends of employment for "Central", "Medium-High", "High" and "Low" population scenarios
Figure A3.9 Trends of real wages for "Central", "Medium-High", "High" and "Low" population scenarios
Figure A3.10 Trends in (private) consumption under "Central", "Medium-High", "High" and "Low" population scenarios
Figure A3.11 Trends in CO 2 generation under "Central", "Medium-High", "High" and "Low" population scenarios
Figure A3.12 Trends in CO 2 intensity of production indicator under "Central", "Medium-High", "High" and "Low" population scenarios
Figure A3.13 Trends in electrical energy demand under "Central", "Medium-High", "High" and "Low" population scenarios
Figure A3.14 Trends in non-electrical energy (tonnes oil equivalent) demand under "Central", "Medium-High", "High" and "Low" population scenarios
Figure A4.1 Long-run impact on sectoral output and employment, % changes from base year
Figure A4.2GDP, CO 2 emissions and CO 2 intensity of production following a 1% decrease in household income, bargaining labour market, % changes from base
Figure A4.3GDP, electrical energy and non-electrical energy demands following a 1% decrease in household income, bargaining labour market, % changes from base
Figure A4.4GDP changes over time under bargaining, exogenous labour market and fixed real wage labour market specifications, with migration on and off, % changes from base
Figure A5.1 Sectoral output multipliers, Type 1 and Type 2, from thirty-one sector IO table for Scotland in 2000
Figure A5.2 Sectoral GDP-output multipliers, Type 1 and Type 2, from thirty-one sector IO table for Scotland in 2000
Figure A5.3 Sectoral employment-output multipliers, Type 1 and Type 2, from thirty-one sector IO table for Scotland in 2000
Figure A5.4 Direct CO 2-output coefficients and sectoral CO 2-output multipliers, Type 1 and Type 2, from thirty-one sector IO table for Scotland in 2000
Figure A5.5 Absolute sectoral changes in GDP, £million, in Scenario A (high marine)
Figure A5.6 Absolute sectoral changes in GDP, £million, in Scenario B (low marine)
Figure A5.7 Absolute sectoral changes in employment, FTEs, in Scenario A (higher marine, lower wind)
Figure A5.8 Absolute sectoral changes in employment, FTEs, in Scenario B (lower marine, higher wind)
Figure A5.9 Absolute sectoral changes in GDP, £million, in Scenario C
Figure A5.10 Absolute sectoral changes in GDP, £million, in Scenario D
Figure A5.11 Absolute sectoral changes in employment, FTEs, in Scenario C
Figure A5.12 Absolute sectoral changes in employment, FTEs, in Scenario D
Figure A6.1 Long-run impact on sectoral output and employment, % changes from base year