Economic Activity and CO₂ Emissions: Social Benefits of Renewable Energy Consumption by Households

Abstract

This chapter tests theoretically and empirically the existence of a stable relationship between energy consumption and CO2 emissions. Based on microeconomics and physics, a model has been specified and applied to annual data for twenty countries, which representing 61 percent of the world’s population in 2018, over the period 1995–2015. The data are from the International Energy Agency (2019) and econometric techniques including panel data and causality tests have been used. The results indicate that there is a causal relationship between energy consumption and CO2 emissions. In general, consumers cannot directly change emissions caused by production processes, but they can act on emissions caused by their own domestic energy consumption. Approximately three quarters of domestic energy consumption is due to heating and domestic hot water consumption. Taking into account the lower emissions and the lower economic cost of the initial investment, four potential energy systems have been selected for use in heating and domestic hot water. Their social returns have been assessed across nine of the twenty countries in the sample over a lifecycle of 25 years from 2018: France, Portugal, Ireland, Spain, Iceland, Germany, United Kingdom, Morocco and the United States. Cost-benefit analysis techniques have been used for this purpose and the results indicate that the use of thermal water, where applicable, is the most socially profitable system among the proposed systems, followed by natural gas. The least socially profitable systems are those using electricity.

Citation

Barreiro-Pereira, F. and Abdelkader-Benmesaud-Conde, T. (2023), "Economic Activity and CO₂ Emissions: Social Benefits of Renewable Energy Consumption by Households", Chatterji, M., Luterbacher, U., Fert, V. and Chen, B. (Ed.) International Migration, COVID-19, and Environmental Sustainability (Contributions to Conflict Management, Peace Economics and Development, Vol. 32), Emerald Publishing Limited, Leeds, pp. 47-70. https://doi.org/10.1108/S1572-832320230000032004