A sectorial analysis of policies to reduce energy demand and CO2 emissions in the UK

This thesis contributes to the energy economics field by expanding existing estimation methods to be applied to panel and cross section datasets and by providing new empirical evidence about the effects of different policies aimed at reducing energy consumption and CO2 emissions in the industrial, transport and residential sectors. I differentiate three basic contributions. First, in chap- ter two I estimate Cross Price Elasticities (CPEs) between energy and two types of capital, for the most energy intense industries in the UK. I investigate the effect of increasing taxes via energy prices to reduce energy consumption by us- ing a Translog Cost Function (TCF) and a Generalised Leontief Cost Function (GLCF). The CPEs estimated for the long run using the TCF and the GLCF show that capital and energy are complementary. Therefore, this policy may seriously affect investment. Second, in chapter three I show evidence that the amount of energy consumption and CO2 emissi?ns will not be reduced by increas- ing the number of diesel cars alone. These cars are more efficient than petrol ones, however, the increase in efficiency reduces energy cost, inducing households to drive more. The model also shows that a combination of improvements in public transportation and taxes on fuel prices is the most effective dieselisation policy. Finally, in chapter four I provide empirical evidence that households with low adoption of cavity and loft insulation and upgrades to the boiler can be iden- tified by their socioeconomic and behavioural characteristics. Therefore, these drivers need to be considered when designing policies to induce households to improve their energy efficiency levels. Additionally, I measure for the first time the average adoption benefits of the analysed measures per diffeseat household types showing a gap in energy efficiency in English dwellings. vEThOS - Electronic Theses Online ServiceGBUnited Kingdo