Transcribed

Impact on consumption of goods and services in firms in the 4-for-2°C relative to New policies Scenario, 2020

Figure 2.16 Impact on consumption of goods and services in firms in the 4-for-2 °C relative to the New Policies Scenario, 2020 Electricity -4.7% Oil products 2.1% Natural gas -1.5% Other Services Transport Energy-intensive goods Net effect -0.2% Electricity -5.5% Oil products -2.7% Natural gas -4.2% Other Services Transport* Energy-intensive goods Net effect -0.2% -140 -120 -100 -80 -60 -40 -20 Billion dollars (2011) * Includes transport equipment and transport services. Non-OECD OECD

Impact on consumption of goods and services in firms in the 4-for-2°C relative to New policies Scenario, 2020

shared by W.E.R.I on Jul 11

164 views

0 faves

0 shares

0 comments

Energy expenses in OECD countries are between 2% and 4% lower than in the New Policies Scenario, equivalent to a net reduction of about $40 billion. The net increase in OECD household consumption is... limited to 0.1%. Similar net deviations are observed in non-OECD countries, though non-OECD economies are generally more industry-oriented and energy spending accounts generally for a larger share in consumption. Energy efficiency measures redirect consumption towards goods and services which embed less energy. Therefore, the set of policies in the 4-for-2 °C Scenario induces a more significant boost in household consumption. The services sector is further developed, as economic development proceeds in these countries. In 2020, household spending on energy goods is cut by almost 4% in the case of oil products. The electricity bill diminishes by more than 8%, incentivised by the reform of fossil-fuel subsidies. The overall increase in household consumption is, to some extent, counterbalanced by an overall reduction in consumption of goods and services by firms (Figure 2.16). Energy expenses by firms are reduced in similar proportion to those of households. But demand by firms for other goods, notably manufactured products, is maintained, though changed in detail. The resulting net impact on consumption by firms is a 0.2% decrease ($90 billion) in OECD countries, offsetting the net increase in households. Larger cuts in the energy bills of non-OECD firms also lead to a net 0.2% drop in consumption in 2020 (-$80 billion). The assumed multilateral reform of fossil-fuel consumption subsidies leads to more efficient resource allocation across the entire economy and is thus welfare-enhancing in countries implementing the reform. This measure benefits Middle Eastern countries particularly, which results, in combination with other elements of the policy package, in a slight increase in their GDP.