Download Reflections from energy analysis

International Exergy Economics
Workshop
Introduction: Context and Objectives
Steve Sorrell
SPRU, University of Sussex
Context: Energy consumption remains
strongly correlated with GDP
Source: Csereklyei et al (2016)
1% growth in per capita
income associated with
~0.7% growth in per capita
primary energy demand
Y ( E )  0.7
http://tinyurl.com/jxpn3ev
Relative decoupling of energy
consumption from GDP
Source: Csereklyei et al (2016)
Global energy intensity has fallen because
countries have got richer, not because they use
less energy to produce a given level of income
Y ( E / Y )  0.3
Absolute decoupling in the UK
The UK is a rare exception to the global trend
(others include Denmark, Romania and Cameroon)
Growing population and incomes
associated with growing energy use
Global primary energy use has
grown by ~2.4%/year since
1850 (Jarvis, 2012)
But the rate of growth must slow if we
are to meet global climate targets….
Source: IPCC, 2014
…and must ultimately decline to zero
if we are to achieve sustainability
Stock resources are
finite and flow
resources are ratelimited
Multiple factors influence the energyGDP relationship…
Physical:
• Demand for different energy services
• Efficiency of conversion devices and
passive systems
Economic:
• Composition of economic output
• Composition of energy inputs
• Mix of energy, capital and labour
inputs
• Level of technology
..and multiple techniques are used
to study this relationship...
• Index and structural
decomposition of historical
trends
• EKC-type econometric analysis
• Tests for Granger causality
between energy and output
• Growth accounting and
estimation of aggregate
production functions
• Energy-economic modelling
…but there is little agreement
• “..IF it is very easy to substitute other•
factors of production for natural
resources…..the world can, in effect,
get along without natural resources…
what little evidence there is suggests
that there is quite a lot of
substitutability….” Robert Solow
“…economic growth is not driven
primarily by ‘technological
progress’ in some general sense but
specifically by the availability of
cheaper energy, and the useful
work from that energy……energy is
the ultimate resource. It is
essential, it is needed that every
economic sector and activity and
there is no substitute…”
Most economic growth attributed
to technical change
Complexity of energy-GDP relationship
Limitations of data and methodologies
Differences in core assumptions
Most economic
growth attributed
to increased
inputs of useful
work
Could exergy economics offer new
insights?
• Account for energy quality
• Focus upon how energy is
used productively in the
economy
• Apply established methods to
new data
• Develop new methods
• Bridge physical and economic
perspectives
• Extend to all natural resources
Some questions for the workshop
• What is exergy economics?
• What is the state-of-the-art in exergy economics?
• What are the strengths and weaknesses of current
exergy economics research?
• What synergies and conflicts exist between exergy
economics and orthodox energy economics?
• What can exergy economics contribute to climate
change and sustainability analysis?
• What future research directions and funding sources
appear most promising?
• What are the potential policy implications of this
work?
Can we bring exergy economics into
the mainstream…?
Energy economics
Exergy economics
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