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The Mechanisms for Autonomous Energy Efficiency Increases: A Cointegration Analysis of the US Energy/GDP Ratio

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  • Robert K. Kaufmann

Abstract

Many forecasts for energy use and carbon emissions assume that energy intensity will decline over time for reasons unrelated to energy prices, which are termed autonomous energy efficiency increases (AEEI). A cointegration analysis of a vector error correction model indicates that the types of fuels consumed, personal consumption expenditures spent on energy, and energy prices account for changes in the ratio of energy use to economic activity in the US between 1929 and 1999. Cointegration indicates that AEEI is associated with technical and/or structural changes which allow consumers to substitute oil, natural gas, and/or primary electricity for coal, and that shift energy use from final demand to intermediate sectors. Identifying the factors responsible for AEEI allows me to: (1) show that econometric efforts to measure technical change using a deterministic trend are inconsistent with economic theory and cannot be interpreted reliably; (2) show that modeling technical change with a deterministic trend may generate forecasts that overstate reductions in energy use and carbon emissions; and (3) test the observational record for the presence of price-induced technical change and its effect on economic growth. Together, the results indicate that current estimates for AEEI may overstate future reductions in energy use and that the economic impacts of policies to reduce energy use and slow emissions may have a greater effect on economic growth than anticipated currently.

Suggested Citation

  • Robert K. Kaufmann, 2004. "The Mechanisms for Autonomous Energy Efficiency Increases: A Cointegration Analysis of the US Energy/GDP Ratio," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 63-86.
  • Handle: RePEc:aen:journl:2004v25-01-a04
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    Cited by:

    1. Sen, Souvik & Ganguly, Sourav, 2017. "Opportunities, barriers and issues with renewable energy development – A discussion," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 1170-1181.
    2. Raymond J.G.M. Florax & Henri L.F. de Groot & Peter Mulder, 2011. "Energy Efficiency and Technological Change," Chapters,in: Improving Energy Efficiency through Technology, chapter 1 Edward Elgar Publishing.
    3. Peter Mulder & Henri Groot, 2007. "Sectoral Energy- and Labour-Productivity Convergence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 36(1), pages 85-112, January.
    4. Stern, David I., 2010. "The Role of Energy in Economic Growth," Working Papers 249380, Australian National University, Centre for Climate Economics & Policy.
    5. David I. Stern & Cutler J. Cleveland, 2004. "Energy and Economic Growth," Rensselaer Working Papers in Economics 0410, Rensselaer Polytechnic Institute, Department of Economics.
    6. Miketa, Asami & Mulder, Peter, 2005. "Energy productivity across developed and developing countries in 10 manufacturing sectors: Patterns of growth and convergence," Energy Economics, Elsevier, vol. 27(3), pages 429-453, May.
    7. Jakob, Michael & Haller, Markus & Marschinski, Robert, 2012. "Will history repeat itself? Economic convergence and convergence in energy use patterns," Energy Economics, Elsevier, vol. 34(1), pages 95-104.
    8. Wan, Jun & Baylis, Kathy & Mulder, Peter, 2015. "Trade-facilitated technology spillovers in energy productivity convergence processes across EU countries," Energy Economics, Elsevier, vol. 48(C), pages 253-264.
    9. Chang, Yoosoon & Choi, Yongok & Kim, Chang Sik & Miller, J. Isaac & Park, Joon Y., 2016. "Disentangling temporal patterns in elasticities: A functional coefficient panel analysis of electricity demand," Energy Economics, Elsevier, vol. 60(C), pages 232-243.
    10. Ockwell, David G., 2008. "Energy and economic growth: Grounding our understanding in physical reality," Energy Policy, Elsevier, vol. 36(12), pages 4600-4604, December.
    11. Robert K. Kaufmann, 2014. "The End of Cheap Oil: Economic, Social, and Political Change in the US and Former Soviet Union," Energies, MDPI, Open Access Journal, vol. 7(10), pages 1-17, September.
    12. Coccia, Mario, 2010. "Energy metrics for driving competitiveness of countries: Energy weakness magnitude, GDP per barrel and barrels per capita," Energy Policy, Elsevier, vol. 38(3), pages 1330-1339, March.
    13. Jean-Francois Mercure, 2012. "On the changeover timescales of technology transitions and induced efficiency changes: an overarching theory," Papers 1209.0424, arXiv.org.
    14. Peter Mulder & Raymond J.G.M. Florax & Henri L.F. de Groot, 2011. "A Spatial Perspective on Global Energy Productivity Trends," Chapters,in: Improving Energy Efficiency through Technology, chapter 2 Edward Elgar Publishing.
    15. Lambert, Jessica G. & Hall, Charles A.S. & Balogh, Stephen & Gupta, Ajay & Arnold, Michelle, 2014. "Energy, EROI and quality of life," Energy Policy, Elsevier, vol. 64(C), pages 153-167.
    16. Sorrell, Steve, 2009. "Jevons' Paradox revisited: The evidence for backfire from improved energy efficiency," Energy Policy, Elsevier, vol. 37(4), pages 1456-1469, April.
    17. Richmond, Amy K. & Kaufmann, Robert K., 2006. "Is there a turning point in the relationship between income and energy use and/or carbon emissions?," Ecological Economics, Elsevier, vol. 56(2), pages 176-189, February.
    18. Peter Mulder & Henri L.F. de Groot, 2011. "Energy-Productivity Performance Across 14 OECD Countries: The Role of Energy-Extensive Sectors," Chapters,in: Improving Energy Efficiency through Technology, chapter 3 Edward Elgar Publishing.
    19. Timilsina, Govinda R. & Csordás, Stefan & Mevel, Simon, 2011. "When does a carbon tax on fossil fuels stimulate biofuels?," Ecological Economics, Elsevier, vol. 70(12), pages 2400-2415.

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    JEL classification:

    • F0 - International Economics - - General

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