Understanding the energy-GDP elasticity: a sectoral approach

This paper uses per capita data for 132 countries over 1960–2010 to estimate elasticities of sectoral energy use with respect to national gross domestic product (GDP). We estimate models in both levels and growth rates and use our estimates to sectorally decompose the aggregate energy-GDP elasticity. Our estimates show that residential energy use is very inelastic to GDP if primary solid biofuels are counted in energy use tallies, especially at low income levels. Residential use of electricity is more tightly linked to GDP, as is energy use by the transportation, industrial, and services sectors. Agriculture typically accounts for a small share of energy use and has a modest energy-GDP elasticity. The aggregate energy-GDP elasticity tends to be higher for countries at higher income levels, in large part because traditional use of primary solid biofuels is less important. Gasoline prices, winter temperature, population, and land area are among other factors influencing sectoral energy use

Energy and economic growth: the stylized facts

We summarize what we know about energy and economic growth in a set of stylized facts. We combine analysis of a panel data set of 99 countries from 1971 to 2010 with analysis of some longer run historical data. Our key result is that over the last 40 years there has been a stable cross-sectional relationship between per capita energy use and income per capita with an elasticity of energy use with respect to income of less than unity. This implies that energy intensity has tended to decrease in countries that have become richer but not in others. We also find that over the last two centuries there has been convergence in energy intensity towards the current distribution, per capita energy use has tended to rise and energy quality to increase, and, though evidence is limited, the cost share of energy has declined.M.d.Mar Rubio thanks Spanish Ministry of Science and Technology and the European Union for funding through FEDER research project grant ECO2010-15882

Reducing energy demand: a review of issues, challenges and approaches

Most commentators expect improved energy efficiency and reduced energy demand to provide the dominant contribution to tackling global climate change. But at the global level, the correlation between increased wealth and increased energy consumption is very strong and the impact of policies to reduce energy demand is both limited and contested. Different academic disciplines approach energy demand reduction in different ways: emphasising some mechanisms and neglecting others, being more or less optimistic about the potential for reducing energy demand and providing insights that are more or less useful for policymakers. This article provides an overview of the main issues and challenges associated with energy demand reduction, summarises how this challenge is ‘framed’ by key academic disciplines, indicates how these can provide complementary insights for policymakers and argues that a ‘sociotechnical’ perspective can provide a deeper understanding of the nature of this challenge and the processes through which it can be achieved. The article integrates ideas from the natural sciences, economics, psychology, innovation studies and sociology but does not give equal weight to each. It argues that reducing energy demand will prove more difficult than is commonly assumed and current approaches will be insufficient to deliver the transformation required

Untangling the drivers of energy reduction in the UK productive sectors: Efficiency or offshoring?

The UK has been one of the few countries that has successfully decoupled final energy consumption from economic growth over the past 15 years. This study investigates the drivers of final energy consumption in the UK productive sectors between 1997 and 2013 using a decomposition analysis that incorporates two novel features. Firstly, it investigates to what extent changes in thermodynamic efficiency have contributed to overall changes in sectoral energy intensities. Secondly, it analyses how much of the structural change in the UK economy is driven by the offshoring of energy-intensive production overseas. The results show that energy intensity reductions are the strongest factor reducing energy consumption. However, only a third of the energy savings from energy intensity reductions can be attributed to reductions in thermodynamic efficiency with re- ductions in the exergy intensity of production making up the reminder. In addition the majority of energy savings from structural change are a result of offshoring, which constitutes the second biggest factor reducing energy consumption. In recent years the contributions of all decomposition factors have been declining with very little change in energy consumption after 2009. This suggests that a return to the strong reductions in energy consumption observed between 2001 and 2009 in the UK productive sectors should not be taken for granted. Given that further reductions in UK final energy consumption are needed to achieve global targets for climate change mitigation, additional policy interventions are needed. Such policies should adopt a holistic approach, taking into account all sectors in the UK economy as well as the relationship between the structural change in the UK and in the global supply chains delivering the goods and service for consumption and investment in the UK

Path dependence in energy systems and economic development

Energy systems are subject to strong and long-lived path dependence, owing to technological, infrastructural, institutional and behavioural lock-ins. Yet, with the prospect of providing accessible cheap energy to stimulate economic development and reduce poverty, governments often invest in large engineering projects and subsidy policies. Here, I argue that while these may achieve their objectives, they risk locking their economies onto energy-intensive pathways. Thus, particularly when economies are industrializing, and their energy systems are being transformed and are not yet fully locked-in, policymakers should take care before directing their economies onto energy-intensive pathways that are likely to be detrimental to their long-run prosperity

Fossil energy in economic growth: A study of the energy direction of technical change, 1950-2012

Climate change mitigation challenges national economies to increase productivity while reducing fossil energy consumption. Fossil energy-saving technical change has been assumed to accomplish this, yet empirical evidence is scarce. This paper investigates the long-run relationship between the rate and direction of technical change with respect to fossil energy and labor in the world economy. Growth rates of labor productivity and the fossil energy-labor ratio are examined for more than 95 of world output between 1950 and 2012. The average elasticity of the energy-labor ratio with respect to labor productivity is close to one, implying highly energy-using technical change, but no trade-o between factor productivity growth rates. This stylized fact suggests the importance of a cheap, abundant energy supply for robust global growth, and a more important role for renewable energy. Integrated assessment models do not incorporate this restriction which may result in poorly speci ed baseline scenarios