used in other models, a term coined by Manne and Richels [16]. Technological improvement and increasing energy productivity provide the possibility of reducing energy use in the long term, without increasing costs. Expressing this rate as an exogenous factor severely limits the model's ability to represent how policy or macroeconomic changes may affect technological development. Studies to measure the AEEI empirically have been relatively few and the results inconclusive (Hogan and Jorgenson [14] ).