The impact of increased efficiency in the use of energy: A computable general equilibrium analysis for Spain

The need to reduce emissions of greenhouse gases has been placed in recent years. The improvement in the efficiency of use is one of the pillars of the energy policies in most countries. Particularly, in Spain, rates of energy intensity are among the highest in the European Union. With an increasing level of CO2 emissions, the need to reduce energy consumption has come to occupy a central role in the political agenda to address both challenges. Rarely, however, are generally taken into account the considerations arising from the rebound effect. That is, the possibility of improving energy efficiency could lead to reductions in energy consumption lower than expected, or even increases in consumption. Less common is still being analyzed and quantified in which sectors and/or what types of energy is more likely to produce the desired effect, or what consequences might arise from an improvement in energy efficiency over other variables such as employment, prices or GDP. This paper analyzes the Spanish economy through a CGE model using the Input-Output Framework of the Spanish economy for the year 2005. The model we use is a static MEGA, which describes an open economy, disaggregated into 27 production sectors. Unlike similar models, it has the particular feature of including unemployment in labour markets, given the high level of unemployment in the Spanish economy. The simulations consist in improving the productivity of energy-related inputs. Specifically, it is simulated a reduction of the use of 5 energy intermediate inputs (all together and individually) by unity of output produced. This leaves as result: a decrease in the total consumption of electricity, gas and coal (positive rebound effect in the case of electricity and negative for the gas and coal), an increase in the consumption of petroleum products and the resulting increase in crude oil imports (backfire effect), a significant increase in the amount of energy as end use, an increase in the GDP and welfare of the economy of about 0.5% and a reduction in the unemployment rate of around 5%.