Bashmakov, Igor;
Grubb, Michael;
Drummond, Paul;
Lowe, Robert;
Myshak, Anna;
Hinder, Ben;
(2024)
“Minus 1” and energy costs constants: Empirical evidence, theory and policy implications.
Structural Change and Economic Dynamics
, 71
pp. 95-115.
10.1016/j.strueco.2024.06.010.
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Abstract
This paper demonstrates an apparent long-term constancy of economy-wide energy expenditures relative to income – an inter-decadally-constrained sustainable (“Bashmakov-Newbery”) range of 4.2 ± 0.8 % relative to Gross Output, and 7.2 ± 1.5 % relative to GDP, based on data from industrialised countries. Initial evidence suggests the range to be narrower when external trade effects are accounted for. Statistically equivalent to a very-long-term price-to-energy-intensity elasticity of -1 (“Minus 1”), this indicates long-period economic dynamics including induced innovation and structural change, and we probe theories and policy implications. Either higher energy prices are fully offset by reduced energy intensity, or they later decline to match energy intensity improvements. Complementary theoretical approaches help to explain the observations but challenge the conventional economic logic that high environmental pricing should be the principal instrument to drive transformation. Rather, energy efficiency, innovation, deployment, structural change and pricing co-evolve, suggesting need for a diversity of complementary policy strategies implemented over extended periods of time.
| Type: | Article |
|---|---|
| Title: | “Minus 1” and energy costs constants: Empirical evidence, theory and policy implications |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1016/j.strueco.2024.06.010 |
| Publisher version: | https://doi.org/10.1016/j.strueco.2024.06.010 |
| Language: | English |
| Additional information: | © 2024 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). |
| Keywords: | Social Sciences, Economics, Business & Economics, Economic cycles, Energy prices, Energy cost share, Energy intensity, Price elasticity, Affordability thresholds, Carbon pricing, Energy transitions, OIL PRICE SHOCKS, ECONOMIC-GROWTH, DEMAND, INVESTMENT, EROI, SUBSTITUTION, ELASTICITY, RETURN |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL BEAMS UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment UCL > Provost and Vice Provost Offices > UCL BEAMS > Faculty of the Built Environment > Bartlett School Env, Energy and Resources |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/10202800 |
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