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Energy expenditure,economicgrowth,andtheminimumEROI of society

Author

Listed:
  • Florian Fizaine Fizaine

    (Université Paris-Saclay)

  • Victor Court

    (IFPEN - IFP Energies nouvelles)

Abstract

We estimate energy expenditure for the US and world economies from 1850 to 2012. Periods of high energy expenditure relative to GDP (from 1850 to 1945), or spikes (1973–74 and 1978–79) are associated with low economic growth rates, and periods of low or falling energy expenditure are associated with high and rising economic growth rates (e.g. 1945–1973). Over the period 1960–2010 for which we have continuous year-to-year data for control variables (capital formation, population, and unemployment rate) we estimate that, statistically, in order to enjoy positive growth, the US economy cannot afford to spend more than 11% of its GDP on energy. Given the current energy intensity of the US economy, this translates in a minimum societal EROI of approximately 11:1 (or a maximum tolerable average price of energy of twice the current level). Granger tests consistently reveal a one way causality running from the level of energy expenditure (as a fraction of GDP) to economic growth in the US between 1960 and 2010. A coherent economic policy should be founded on improving net energy efficiency. This would yield a "double dividend": increased societal EROI (through decreased energy intensity of capital investment), and decreased sensitivity to energy price volatility.

Suggested Citation

  • Florian Fizaine Fizaine & Victor Court, 2016. "Energy expenditure,economicgrowth,andtheminimumEROI of society," Post-Print hal-01410625, HAL.
    • Handle: RePEc:hal:journl:hal-01410625
    DOI: 10.1016/j.enpol.2016.04.039
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    Citations

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    Cited by:

    1. Rafael Ninno Muniz & Stéfano Frizzo Stefenon & William Gouvêa Buratto & Ademir Nied & Luiz Henrique Meyer & Erlon Cristian Finardi & Ricardo Marino Kühl & José Alberto Silva de Sá & Brigida Ramati Per, 2020. "Tools for Measuring Energy Sustainability: A Comparative Review," Energies, MDPI, vol. 13(9), pages 1-27, May.
    2. Emmanuel Bovari & Victor Court, 2019. "Energy, knowledge, and demo-economic development in the long run: a unified growth model," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01698755, HAL.
    3. Leiva, Benjamin & Ramirez, Octavio A. & Schramski, John R., 2019. "A framework to consider energy transfers within growth theory," Energy, Elsevier, vol. 178(C), pages 624-630.
    4. Melgar-Melgar, Rigo E. & Hall, Charles A.S., 2020. "Why ecological economics needs to return to its roots: The biophysical foundation of socio-economic systems," Ecological Economics, Elsevier, vol. 169(C).
    5. Joseph R. Burger & James H. Brown & John W. Day & Tatiana P. Flanagan & Eric D. Roy, 2019. "The Central Role of Energy in the Urban Transition: Global Challenges for Sustainability," Biophysical Economics and Resource Quality, Springer, vol. 4(1), pages 1-13, March.
    6. Yong Jiang & Chao-Qun Ma & Xiao-Guang Yang & Yi-Shuai Ren, 2018. "Time-Varying Volatility Feedback of Energy Prices: Evidence from Crude Oil, Petroleum Products, and Natural Gas Using a TVP-SVM Model," Sustainability, MDPI, vol. 10(12), pages 1-17, December.
    7. Carlos E. Gómez-Camacho & Bernardo Ruggeri, 2019. "Energy Sustainability Analysis (ESA) of Energy-Producing Processes: A Case Study on Distributed H 2 Production," Sustainability, MDPI, vol. 11(18), pages 1-23, September.
    8. Patrick Moriarty & Damon Honnery, 2019. "Energy Accounting for a Renewable Energy Future," Energies, MDPI, vol. 12(22), pages 1-16, November.
    9. Heun, Matthew Kuperus & Owen, Anne & Brockway, Paul E., 2018. "A physical supply-use table framework for energy analysis on the energy conversion chain," Applied Energy, Elsevier, vol. 226(C), pages 1134-1162.
    10. Luciano Celi & Claudio Della Volpe & Luca Pardi & Stefano Siboni, 2018. "A New Approach to Calculating the “Corporate” EROI," Biophysical Economics and Resource Quality, Springer, vol. 3(4), pages 1-28, December.
    11. Joel D. Gunn & John W. Day & William J. Folan & Matthew Moerschbaecher, 2019. "Geo-cultural Time: Advancing Human Societal Complexity Within Worldwide Constraint Bottlenecks—A Chronological/Helical Approach to Understanding Human–Planetary Interactions," Biophysical Economics and Resource Quality, Springer, vol. 4(3), pages 1-19, September.
    12. Adrien Fabre, 2018. "Evolution of EROIs of Electricity Until 2050: Estimation Using the Input-Output Model THEMIS," Policy Papers 2018.09, FAERE - French Association of Environmental and Resource Economists.
    13. Graham Palmer, 2018. "A Biophysical Perspective of IPCC Integrated Energy Modelling," Energies, MDPI, vol. 11(4), pages 1-17, April.
    14. Ryan Roberts & Josephine Kaviti Musango & Alan Colin Brent & Matthew Kuperus Heun, 2018. "The Correlation between Energy Cost Share, Human, and Economic Development: Using Time Series Data from Australasia, Europe, North America, and the BRICS Nations," Energies, MDPI, vol. 11(9), pages 1-15, September.
    15. Svartzman, Romain & Dron, Dominique & Espagne, Etienne, 2019. "From ecological macroeconomics to a theory of endogenous money for a finite planet," Ecological Economics, Elsevier, vol. 162(C), pages 108-120.
    16. Kis, Zoltán & Pandya, Nikul & Koppelaar, Rembrandt H.E.M., 2018. "Electricity generation technologies: Comparison of materials use, energy return on investment, jobs creation and CO2 emissions reduction," Energy Policy, Elsevier, vol. 120(C), pages 144-157.
    17. Victor Court, 2019. "An Estimation of Different Minimum Exergy Return Ratios Required for Society," Biophysical Economics and Resource Quality, Springer, vol. 4(3), pages 1-13, September.

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