Regional policy and energy efficiency: a computable general equilibrium approach

The Computable General Equilibrium (CGE) modelling frameworks used in this thesis are single-Country dynamic models with myopic or forward looking expectation. The latter can be seen as an applied and more extensive version of the skeletal model presented in Abel and Blanchard (1983). Investment decisions follow a Tobin’s q adjustment process, and are separated from savings decisions. The former reflect the intertemporal optimization of firms and the latter are the outcome of intertemporal optimization by households. First essay. After European Structural Funds reform in 1988, the European Union (EU) stressed the importance to evaluate the effectiveness of the Cohesion Policy that aims to promote the development and structural adjustment of lagging regions. For regions under Objective 1, structural funds represent the most important EU tool to generate an increase in productivity and competitiveness over the long term of less developed regions by financing investments on tangible, intangible and human capital. Thus, in our analysis, we focus on the regional Research and Development (R&D) policy implemented to increase the stock of knowledge capital (intangible capital). In particular, we analyze two Operational Programs financed by SF that the Sardinia Regional Government made operational from 1994 to 2006: Programma Operativo Plurifondo (POP) 1994-1999 and Programma Operativo Regionale (POR) 2000-2006. Second Essay. We investigate a particular issue related with energy efficiency improvements. The International Energy Agency (IEA, 2009) suggests the importance of efficiency improvement to reduce energy use and, within the European Union, one of the targets for member states is to reduce energy consumption by 20% through increased energy efficiency (European Commission, 2009). Energy efficiency improvement has the unquestionable benefits to reduce the price of energy services. However, it is still debatable the extent to which, improvement in the productivity of energy, is effective in terms of reducing the consumption of energy and thus the associated negative externalities (e.g., carbon dioxide emissions, CO2). Thus policy makers are particularly interested to determine the size of the energy rebound effect. We attempt to quantify the magnitude of the system-wide rebound effects from an increase in energy efficiency in the industrial use of energy in Italy. To this end, we use a large scale numerical dynamic general equilibrium model calibrated using the Italian Social Accounting Matrix for the year 2006. A number of authors have examined the impacts of increased energy efficiency within the demand and the production side of the economy using CGE models (Semboja, 1994; Grepperud and Rasmussen, 2004; Glomsrød and Taojuan, 2005; Hanley et al, 2006 and 2009; Allan et al, 2007; Turner, 2009). For instance, the works of Allan et al, (2007) and Turner (2009) for the UK, and Anson and Turner (2009) and Hanley et al, (2006; 2009) for Scotland evaluate the impact of an increase in energy efficiency in the industrial use of energy. From this literature, rebound effects are the more common finding. While there is an increasing interest in US and UK to identify and quantify the rebound effects, it seems there is still a little interest in the rest of Europe and especially in Italy. To the best of our knowledge, do not exist in the energy economic literature estimations of energy rebound related to Italy. We then propose to fill the gap and take Italy as a case study. We believe it would be useful to compare rebound estimates with those of the existing literature, furthermore the estimation of the rebound would eventually provide a useful indicator to policymakers that are compelled to reduce carbon emission and transform the Country in a highly energy-efficient, low-carbon economy through policy aimed to increase energy efficiency (European Commission, 2009