Bridging the energy efficiency gap: using bottom-up information in a top-down energy demand model

Bottom-up modelers typically predict a lower energy demand and a higher energy efficiency than top-down modelers do, leading to the notion of the energy efficiency gap. This difference is often ‘explained’ by combining bottom-up information with unrealistically high discount rates. In this paper we...

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Bibliographic Details
Published in:Energy economics 2001, Vol.23 (1), p.57-75
Main Authors: Koopmans, Carl C., te Velde, Dirk Willem
Format: Article
Language:English
Subjects:
Applied sciences
Bottom-up information
Demand models
Discount rates
Economic data
Energy
Energy demand
Energy economics
Energy efficiency
Energy efficiency gap
Energy policy
Environmental economics
Estimation
Exact sciences and technology
General, economic and professional studies
International
Methodology. Modelling
Policy analysis
Power demand
Studies
Supply & demand
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Summary:Bottom-up modelers typically predict a lower energy demand and a higher energy efficiency than top-down modelers do, leading to the notion of the energy efficiency gap. This difference is often ‘explained’ by combining bottom-up information with unrealistically high discount rates. In this paper we combine the bottom-up and top-down approaches in an energy demand model. The model has a top-down structure, but we employ bottom-up information to estimate most of its parameters, using the discount rate that firms say they use. This new approach provides a partial reconciliation of top-down and bottom-up methods, which proves to be very useful for policy analysis.
ISSN:0140-9883
1873-6181
DOI:10.1016/S0140-9883(00)00054-2