The macroeconomic benefits of ambitious energy efficiency policy – a case study for Germany

Panel: 1. Foundations of future energy policy

This is a peer-reviewed paper.

Authors:
Sibylle Braungardt, Öko-Institut (Institute for Applied Ecology), Germany
Judit Kockat, Fraunhofer ISI
Johannes Hartwig, Fraunhofer ISI
Wolfgang Schade, Fraunhofer ISI

Abstract

Energy efficiency has been recognized as one of the fastest and cheapest contributions to a sustainable, secure and affordable energy system. The multiple benefits of energy efficiency strategies are receiving increasing consideration both from policy makers and the scientific community. Among the various co-benefits of energy efficiency initiatives, the macroeconomic benefits such as direct, indirect and induced economic effects play an important role. In order to pave the way for a large-scale deployment of energy efficiency strategies, it is essential to understand, quantify and communicate the macroeconomic effects. Our study presents a detailed analysis of the long-term macroeconomic benefits of German energy efficiency policy including the industry and transport sectors as well as residential buildings. For three scenarios with different levels of ambition, we quantify the macroeconomic effects by combining bottom-up projections of energy efficiency policy implementation with an extended dynamical input-output analysis. This allows us to study sectoral shifts within the economy regarding value added and employment, compared to the baseline scenario. We provide an in-depth analysis of the effects of energy efficiency policy on consumers, individual industry sectors and the economy as a whole and account for technological change both regarding its impact on energy demand as well as its macroeconomic effects. We find differing effects on employment resulting from investment and consumption shifts for the various economic sectors and identify indications on how individual sectors might prepare for these developments. Our study finds significant positive macroeconomic effects resulting from energy efficiency initiatives and is expected to provide further impulses towards ambitious energy efficiency policy. Our methodological approach can be extended to other countries and regions and provides a comprehensive framework to the analysis of the macroeconomic benefits of energy efficiency.