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

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  • Gregor Semieniuk

    (Science Policy Research Unit, University of Sussex)

Abstract

Climate change mitigation challenges national economies to increase productivity while reducing fossil energy consumption. Fossil energy-saving technical change has been as- sumed 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 be- tween 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.

Suggested Citation

  • Gregor Semieniuk, 2016. "Fossil energy in economic growth: A study of the energy direction of technical change, 1950-2012," SPRU Working Paper Series 2016-11, SPRU - Science Policy Research Unit, University of Sussex Business School.
    • Handle: RePEc:sru:ssewps:2016-11
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    1. Marco Sakai & Paul E. Brockway & John R. Barrett & Peter G. Taylor, 2018. "Thermodynamic Efficiency Gains and their Role as a Key ‘Engine of Economic Growth’," Energies, MDPI, vol. 12(1), pages 1-14, December.
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    3. Rezai, Armon & Taylor, Lance & Foley, Duncan, 2018. "Economic Growth, Income Distribution, and Climate Change," Ecological Economics, Elsevier, vol. 146(C), pages 164-172.
    4. Laur Kanger & Johan Schot, 2016. "User-made Immobilities: A Transitions Perspective," SPRU Working Paper Series 2016-13, SPRU - Science Policy Research Unit, University of Sussex Business School.
    5. Mazzucato, Mariana & Semieniuk, Gregor, 2018. "Financing renewable energy: Who is financing what and why it matters," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 8-22.
    6. Johan Schot & Laur Kanger, 2016. "Deep Transitions: Emergence, Acceleration, Stabilization and Directionality," SPRU Working Paper Series 2016-15, SPRU - Science Policy Research Unit, University of Sussex Business School.
    7. Miremadi, I. & Saboohi, Y. & Arasti, M., 2019. "The influence of public R&D and knowledge spillovers on the development of renewable energy sources: The case of the Nordic countries," Technological Forecasting and Social Change, Elsevier, vol. 146(C), pages 450-463.

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    More about this item

    Keywords

    labor productivity; fossil energy productivity; energy-using technical change; decoupling; long-run trends; stylized fact;
    All these keywords.

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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