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What drives the change in UK household energy expenditure and associated CO2 emissions? Implication and forecast to 2020

Author

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  • Mona Chitnis

    (Surrey Energy Economics Centre (SEEC) and Research Group on Lifestyles Values and Environment (RESOLVE), University of Surrey)

  • Lester C Hunt

    (Surrey Energy Economics Centre (SEEC) and Research Group on Lifestyles Values and Environment (RESOLVE), University of Surrey)

Abstract

Given the amount of direct and indirect CO2 emissions attributable to UK households, policy makers need a good understanding of the structure of household energy expenditure and the impact of both economic and non-economic factors when considering policies to reduce future emissions. To help achieve this, the Structural Time Series Model is used here to estimate UK ‘transport’ and ‘housing’ energy expenditure equations for 1964-2009. This allows for the estimation of a stochastic trend to measure the underlying energy expenditure trend and hence capture the non-trivial impact of ‘non-economic factors’ on household ‘transport’ and ‘housing’ energy expenditure; as well as the impact of the traditional ‘economic factors’ of income and price. The estimated equations are used to show that given current expectations, CO2 attributable to ‘transport’ and ‘housing’ expenditures will not fall by 29% (or 40%) in 2020 compared to 1990, and is therefore not consistent with the latest UK total CO2 reduction target. Hence, the message for policy makers is that in addition to economic incentives such as taxes, which might be needed to help restrain future energy expenditure, other policies that attempt to influence lifestyles and behaviours also need to be considered.

Suggested Citation

  • Mona Chitnis & Lester C Hunt, 2011. "What drives the change in UK household energy expenditure and associated CO2 emissions? Implication and forecast to 2020," Surrey Energy Economics Centre (SEEC), School of Economics Discussion Papers (SEEDS) 134, Surrey Energy Economics Centre (SEEC), School of Economics, University of Surrey.
    • Handle: RePEc:sur:seedps:134
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    References listed on IDEAS

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    2. Broadstock, David C. & Hunt, Lester C., 2010. "Quantifying the impact of exogenous non-economic factors on UK transport oil demand," Energy Policy, Elsevier, vol. 38(3), pages 1559-1565, March.
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    12. Chitnis, Mona & Druckman, Angela & Hunt, Lester C. & Jackson, Tim & Milne, Scott, 2012. "Forecasting scenarios for UK household expenditure and associated GHG emissions: Outlook to 2030," Ecological Economics, Elsevier, vol. 84(C), pages 129-141.
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    14. Tajudeen, Ibrahim A., 2021. "The underlying drivers of economy-wide energy efficiency and asymmetric energy price responses," Energy Economics, Elsevier, vol. 98(C).
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    Keywords

    Household energy expenditure; CO2 emissions; Structural Time Series Model;
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