Endogenous Energy Efficiency Improvement of Large-Scale Refurbishment in the Swiss Residential Building Stock

In Switzerland, according to Swiss Federal Office of Energy around 50% of primary energy consumption is attributable to buildings: 30% for heating, air-conditioning and hot water, 14% for electricity and around 6% for construction and maintenance. However, Streicher et al. [2017] show that large-scale energy retrofit of the Swiss residential building stock could result in theoretical energy savings of up 84% of current energy consumption. Of vital importance for energy consumption is the evolution of energy efficiency. In past and current analyses in the field of Swiss energy and climate policies, the speed and extent of energy efficiency improvement is usually set exogenously, i.e., it is assumed to be unaffected even by climate or energy policies designed to foster innovation and the development and adoption of more efficient production and consumption options (Shiell and Lyssenko [2014]). Computable general equilibrium (CGE) models and bottom-up models (e.g. Markal) rely mainly on autonomous energy efficiency improvement (AEEI, see Azar et Dowlatabadi, [1999]) despite clear evidence that technological change is influenced by economic activity and responsive to policies. These effects may be captured in CGEs (Computable General Equilibrium) using the concept of endogenous technical change.