The role of energy-service demand reduction in global climate change mitigation: Combining energy modelling and decomposition analysis

In order to reduce energy-related CO2 emissions different options have been considered: energy efficiency improvements, structural changes to low carbon or zero carbon fuel/technologies, carbon sequestration, and reduction in energy-service demands (useful energy). While efficiency and technology options have been extensively studied within the context of climate change mitigation, this paper addresses the possible role of price-related energy-service demand reduction. For this analysis, the elastic demand version of the TIAM-UCL global energy system model is used in combination with decomposition analysis. The results of the CO2 emission decomposition indicate that a reduction in energy-service demand can play a limited role, contributing around 5% to global emission reduction in the 21st century. A look at the sectoral level reveals that the demand reduction can play a greater role in selected sectors like transport contributing around 16% at a global level. The societal welfare loss is found to be high when the price elasticity of demand is low. (C) 2011 Elsevier Ltd. All rights reserved.