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Energy and economic growth: Grounding our understanding in physical reality

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  • Ockwell, David G.

Abstract

This article attempts to summarise the complex, wide ranging and unresolved debate within the economics literature on the possibility of decoupling economic growth from energy use. It explores the difference between neo-classical and ecological economic worldviews and highlights how the ecological economic approach attempts to ground its analysis within the physical limits implied by the laws of thermodynamics. Once these laws are accounted for, the possibility of decoupling economic growth from energy use seems more limited than neo-classical economics implies. Analysis of empirical evidence also demonstrates that observed improvements in GDP/energy use ratios in the USA are better explained by shifts towards higher quality fuels than by improvements in the energy efficiency of technologies. This implies a need to focus on decarbonising energy supply. Furthermore, where energy-efficiency improvements are attempted, they must be considered within the context of a possible rebound effect, which implies that net economy-wide energy savings from energy-efficiency improvements may not be as large as the energy saved directly from the efficiency improvement itself. Both decarbonising energy supply and improving energy efficiency require the rapid development and deployment of new and existing low-carbon technologies. This review therefore concludes by briefly outlining areas of economic thought that have emerged as a result of engagement between economists and experts from other disciplines. They include ecological, evolutionary and institutional economics, all of which can make policy-relevant contributions to achieving a transition to a low-carbon economy.

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  • Ockwell, David G., 2008. "Energy and economic growth: Grounding our understanding in physical reality," Energy Policy, Elsevier, vol. 36(12), pages 4600-4604, December.
  • Handle: RePEc:eee:enepol:v:36:y:2008:i:12:p:4600-4604
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    3. Elena Ketteni & Theofanis Mamuneas & Panos Pashardes, 2013. "ICT and Energy Use: Patterns of Substitutability and Complementarity in Production," Cyprus Economic Policy Review, University of Cyprus, Economics Research Centre, vol. 7(1), pages 63-86, June.
    4. Jan Goebel & Christian Krekel & Tim Tiefenbach & Nicolas Ziebarth, 2015. "How natural disasters can affect environmental concerns, risk aversion, and even politics: evidence from Fukushima and three European countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(4), pages 1137-1180, October.
    5. Gasparatos, Alexandros & Gadda, Tatiana, 2009. "Environmental support, energy security and economic growth in Japan," Energy Policy, Elsevier, vol. 37(10), pages 4038-4048, October.
    6. Bithas, K. & Kalimeris, P., 2013. "Re-estimating the decoupling effect: Is there an actual transition towards a less energy-intensive economy?," Energy, Elsevier, vol. 51(C), pages 78-84.
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    8. Wolde-Rufael, Yemane, 2010. "Coal consumption and economic growth revisited," Applied Energy, Elsevier, pages 160-167.
    9. Kumar, Ronald Ravinesh & Stauvermann, Peter Josef & Patel, Arvind & Kumar, Radika Devi, 2014. "Exploring the effects of energy consumption on output per worker: A study of Albania, Bulgaria, Hungary and Romania," Energy Policy, Elsevier, vol. 69(C), pages 575-585.
    10. Zhao, Xiaoli & Yin, Haitao, 2011. "Industrial relocation and energy consumption: Evidence from China," Energy Policy, Elsevier, vol. 39(5), pages 2944-2956, May.
    11. Jan Goebel & Christian Krekel & Tim Tiefenbach & Nicholas R. Ziebarth, 2014. "Natural Disaster, Environmental Concerns, Well-Being and Policy Action," CINCH Working Paper Series 1405, Universitaet Duisburg-Essen, Competent in Competition and Health.
    12. Pedregal, D.J. & Dejuán, O. & Gómez, N. & Tobarra, M.A., 2009. "Modelling demand for crude oil products in Spain," Energy Policy, Elsevier, vol. 37(11), pages 4417-4427, November.
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    14. Heidari, Hassan & Katircioglu, Salih Turan & Saeidpour, Lesyan, 2013. "Natural gas consumption and economic growth: Are we ready to natural gas price liberalization in Iran?," Energy Policy, Elsevier, vol. 63(C), pages 638-645.
    15. Wen-Hsien Tsai & Hsiu-Li Lee & Chih-Hao Yang & Chung-Chen Huang, 2016. "Input-Output Analysis for Sustainability by Using DEA Method: A Comparison Study between European and Asian Countries," Sustainability, MDPI, Open Access Journal, vol. 8(12), pages 1-17, November.
    16. Zeus Guevara & Tânia Sousa & Tiago Domingos, 2016. "Insights on Energy Transitions in Mexico from the Analysis of Useful Exergy 1971–2009," Energies, MDPI, Open Access Journal, vol. 9(7), pages 1-29, June.
    17. Kumar, Ronald Ravinesh & Kumar, Radika, 2013. "Effects of energy consumption on per worker output: A study of Kenya and South Africa," Energy Policy, Elsevier, vol. 62(C), pages 1187-1193.

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