Economic growth and energy consumption revisited — Evidence from linear and nonlinear Granger causality

The relationship between energy consumption and economic growth is considered as an imperative issue in energy economics. Previous studies have ignored the nonlinear behavior which could be caused by structural breaks. In this study, both linear and nonlinear Granger causality tests are applied to examine the causal relationship between energy consumption and economic growth for a sample of Asian newly industrialized countries as well as the U.S. This study finds evidence supporting a neutrality hypothesis for the United States, Thailand, and South Korea. However, empirical evidence on Philippines and Singapore reveals a unidirectional causality running from economic growth to energy consumption while energy consumption may have affected economic growth for Taiwan, Hong Kong, Malaysia and Indonesia. Policy implications are also discussed.     

Energy consumption and economic growth: Evidence from the Commonwealth of Independent States

This study examines the relationship between energy consumption and economic growth for eleven countries of the Commonwealth of Independent States over the period 1991–2005 within a multivariate panel data framework. Based on (Pedroni, 1999) and (Pedroni, 2004) heterogeneous panel cointegration test and corresponding error correction model, cointegration is present between real GDP, energy consumption, real gross fixed capital formation, and labor force with the respective coefficients positive and statistically significant. The results of the error correction model reveal the presence of unidirectional causality from energy consumption to economic growth in the short-run while bidirectional causality between energy consumption and economic growth in the long-run. Thus, the results lend support for the feedback hypothesis associated with the relationship between energy consumption and economic growth.     

Substitution between energy and classical factor inputs in the Chinese steel sector

China’s steel sector is the largest in the world and has been a major driving force behind China’s high rate of economic growth. This sector, however, is also a major consumer of energy and, in particular, coal. As a result, the iron and steel sector in China is a major contributor to greenhouse gas emissions and other pollutants. In this article we examine the potential for inter-factor substitution between capital, energy and labor in the Chinese steel sector and find that capital and energy and energy and labor are substitutes. This result suggests that removal of price ceilings on energy would tend to reduce energy use and increase capital intensiveness. While the potential for substitution between energy and labor is less than that between energy and capital, the elasticity of substitution between energy and labor is high compared with previous findings for other countries. This fact suggests that there may be potential for substituting labor for energy, given China’s abundance of labor.     

The causality relationship between energy consumption and GDP in G-11 countries revisited

This paper explores whether energy conservation policies can be implemented in countries with the same level of development. That is, is restraining energy consumption without compromising economic growth feasible in all industrialized countries? A new Granger non-causality testing procedure developed by Toda and Yamamoto [1995, Journal of Econometrics 66, 225–250] is applied to re-investigate the relationship, if any, between energy consumption and income in 11 major industrialized countries. The results clearly do not support the view that energy consumption and income are neutral with respect to each other, except in the case of the United Kingdom, Germany and Sweden where a neutral relationship is found. Bi-directional causality in the United States and uni-directional running from energy consumption to GDP in Canada, Belgium, the Netherlands and Switzerland are found. This indicates that energy conservation may hinder economic growth in the latter five countries. Further, the causality relationship appears to be uni-directional but reversed for France, Italy and Japan which implies that, in these three countries, energy conservation may be viable without being detrimental to economic growth.     

Residential energy consumption across different population groups: comparative analysis for Latino and non-Latino households in USA

Residential energy cost is an important part of the household budget and could vary significantly across different population groups in many countries. In the United States, many studies have analyzed household fuel consumption by fuel type, including electricity, natural gas, fuel oil, and liquefied petroleum gas (LPG), and by geographic areas. Past research has also demonstrated significant variation in residential energy use across various population groups, including white, black, and Latino. However, our research shows that residential energy demand by fuel type for Latinos, the fastest growing population group, has not been explained by economic and non-economic factors in any statistical model in public domain. The purpose of this paper was to discuss energy demand and expenditure patterns for Latino and non-Latino households in hhe United States as a case example of analyzing residential energy consumption across different population groups in a country. The linear expenditure system model developed by Stone and Geary is the basis of the statistical model developed to explain fuel consumption and expenditures for Latino households. For comparison, the models are also developed for non-Latino, black, and non-black households. These models estimate energy consumption of and expenditures for electricity, natural gas, fuel oil, and LPG by various households at the national level. Significant variations in the patterns of these fuels consumption for Latinos and non-Latinos are highlighted. The model methodology and results of this research should be useful to energy policymakers in government and industry, researches, and academicians who are concerned with economic and energy issues related to various population groups in their country.     

The relationship among natural gas energy consumption,capital and economic growth: Bootstrap-corrected causality tests from G-7 countries

This paper examines the relationship between natural gas consumption, economic growth and capital by using G-7 countries data and a bootstrap-corrected causality test for the period 1970–2008. It was found eight significant Granger causality relationships. For Italy, the Granger causality is from natural gas consumption to growth and United Kingdom adverse. For pattern of France, Germany and United States there is two sided Granger causality between natural gas and growth.     

An overview of energy consumption of the globalized world economy

For the globalized world economy with intensive international trade, an overview of energy consumption is presented by an embodied energy analysis to track both direct and indirect energy uses based on a systems input–output simulation. In 2004, the total amounts of energy embodied in household consumption, government consumption, and investment are 7749, 874, and 2009 Mtoe (million tons of oil equivalent), respectively. The United States is shown as the world’s biggest embodied energy importer (683 Mtoe) and embodied energy surplus receiver (290 Mtoe), in contrast to China as the biggest exporter (662 Mtoe) and deficit receiver (274 Mtoe). Energy embodied in consumption per capita varies from 0.05 (Uganda) to 19.54 toe (Rest of North America). Based on a forecast for 2005–2035, China is to replace the United States as the world’s leading embodied energy consumer in 2027, when its per capita energy consumption will be one quarter of that of the United States.     

Fundamental aspects of energy conservation policy

The formulation of a governmental energy conservation policy requires that the issues involved be fundamentally analyzed. Information transfer, more intensive use of data, and good housekeeping can all contribute to reduced energy use. Our major choice, however, is between producing the present mix of materials, commodities, and services more efficiently or decreasing demand for them. The first option is referred to as the “technical fix”, the second one as “change of lifestyle”. If the first option fails, changes in life-style might become mandatory.This paper deals with the technical fix approach. Higher capital investment can lead to a decrease in direct use of energy. Both the cost and the energy involved in these investments are analyzed along a conservation path, and a limited number of constants is used to describe the changes along this path. These constants can also be used to feed technological information into macroeconomic analysis.The time scales involved pose the major problem to achieving conservation by means of a technological fix. An increase in the price of energy will lead to higher capital investments in accordance with the economic lifecycles in the different sectors. For applications with a short life-time, such as in the transport sector, energy conservation will mainly take place through the construction of new equipment. In sectors with long lifetime investments (e.g. buildings), retrofitting will be important.Including the indirect energy requirements in the conservation study leads to some important conclusions. It can be demonstrated that the thermodynamic limit is not the ultimate limit for conservation. An energy minimum is obtained, which corresponds to a use of energy higher than the thermodynamic limit. It is also impossible to reduce or eliminate some components of the present energy supply system and at the same time to introduce a new decentralized supply system.A crucial aspect of the technological fix approach is that within the present rules, capital investments for saving direct energy can only be made after the increase in energy price has taken place or when it can be firmly anticipated on a short term. At this point, however, the time needed for making these capital investments is lacking and adverse economic consequences can be expected.It is therefore the major task of governmental policy to induce conservation before it is economically acceptable or possible. This requires some form of government interaction. The theory developed in this paper provides a method by which to rank the options according to the energy saved per dollar of public funds invested. This measures the difference between the objectives of the private sector and those of society.The longer this policy is postponed, the larger is the risk that conservation will have to be achieved in an emergency program. In that situation the indirect energy necessary for the capital construction might jeopardize the short-term goals.     

Energy consumption and economic growth in China: A multivariate causality test

This study takes a fresh look at the direction of causality between energy consumption and economic growth in China during the period from 1972 to 2006, using a multivariate cointegration approach. Given the weakness associated with the bivariate causality framework, the current study performs a multivariate causality framework by incorporating capital and labor variables into the model between energy consumption and economic growth based on neo-classical aggregate production theory. Using the recently developed autoregressive distributed lag (ARDL) bounds testing approach, a long-run equilibrium cointegration relationship has been found to exist between economic growth and the explanatory variables: energy consumption, capital and employment. Empirical results reveal that the long-run parameter of energy consumption on economic growth in China is approximately 0.15, through a long-run static solution of the estimated ARDL model, and that for the short-run is approximately 0.12 by the error correction model. The study also indicates the existence of short-run and long-run causality running from energy consumption, capital and employment to economic growth. The estimation results imply that energy serves as an important source of economic growth, thus more vigorous energy use and economic development strategies should be adopted for China.     

Coal consumption and economic growth revisited

This paper revisits the causal relationship between coal consumption and real GDP for six major coal consuming countries for the period 1965–2005 within a vector autoregressive (VAR) framework by including capital and labour as additional variables. Applying a modified version of the Granger causality test due to Toda and Yamamoto [Toda HY, Yamamoto T. Statistical inference in vector autoregressions with possibly integrated process. J Econom 1995;66:225–50], we found a unidirectional causality running from coal consumption to economic growth in India and Japan while the opposite causality running from economic growth to coal consumption was found in China and South Korea. In contrast there was a bi-directional causality running between economic growth and coal consumption in South Africa and the United States. Variance decomposition analysis seems to confirm our Granger causality results. The policy implication is that measures adopted to mitigate the adverse effects of coal consumption may be taken without harming economic growth in China and South Korea. In contrast, for the remaining four countries conservation measures can harm economic growth.     

The peculiar economics of federal energy management

US federal agency energy managers face different constraints than do comparable private sector managers. They are faced with energy consumption goals mandated via legislation or directed via Presidential Executive Order that encourage if not compel them to invest more in energy efficiency or renewables than would be cost effective from a private sector perspective. To make such investments, they also are provided access to private capital that is additional to their agency budgets. The encouragement to invest beyond what is cost effective may be a source of waste in some instances, and the financing mechanisms appear more expensive than necessary. A rough estimate of the magnitude of the waste is offered, as well as a mechanism to reduce the costs of agency access to capital.     

经济和能源地缘格局变化及中美战略对策

本世纪头10年世界经济发展和能源消费增长重心东移,转向东亚—南亚弧形地带,其中中国和印度成为领跑者,这一趋势将至少持续到本世纪30年代。中国和印度占世界GDP的份额分别从2000年的3.72%和1.49%上升到2010年的9.34%和2.44%。2000～2010年间世界能源消费总量年均增长率为2.67%,而中国和印度则分别为11.54%和5.18%。2001～2010年间,北美、日本的石油进口量呈下降趋势,欧洲呈微弱增长态势;而同期中国石油进口量年均增长率达16.29%,印度2000～2009年间石油进口量年均增长率为6.32%。2000～2010年间世界煤炭消费量年均增长率为4.84%,2010年煤炭占基础能源的30%;而中国10年间煤炭消费量的年均增长率为13.21%,2010年煤炭占基础能源的70.3%。中国能源消费总量增长过快、能源构成不合理的问题相当突出,必须加大对能源消费总量的控制,大力调整能源结构,坚决扭转煤炭占能源构成比例持续升高的局面。与经济发展和能源消费增长重心东移相应的是中美两国战略思维的变化。美国战略重点东移、"重返亚洲"的目的是遏制中国,这不过是冷战时期围堵的老思维;但美国同时又必须与中国合作,双方的相互渗透、相互依存已经达到相当的程度。而中国必须看到国内外经济形势的变化,形成新的战略思维,改变发展方式,坚定不移地以改革促稳定,以结构调整保发展。     

Energy expenditure in sectors of manufacturing

Factory data for the mid-1960s, collected in six countries, are used to compute the energy intensiveness in 24 different industries. It is shown that the energy intensity is correlated with the capital intensity of production. A second empirical aspect considers the impact of both capital stock and its level of utilization on energy expenditure. For many sectors of manufacturing there is evidence of scale economies in energy use; that is, a given increase in plant size requires a less than proportionate increase in the energy input.     

Evaluation of federal and state subsidies for ground-source heat pumps

Energy efficiency can be a powerful way to lower energy bills, as well as the external (social) costs associated with energy consumption. Previous experience and research, however, has demonstrated that consumers are often unwilling to make investments in energy efficiency, even when such investments have relatively short payback periods. Because energy efficiency can contribute to correcting negative externalities associated with energy use, subsidies and other programs have been proposed as a way to increase efficiency investments. Thus, under the right circumstances, such subsidies can improve economic efficiency. In this paper, we analyze the economics of energy-efficient space conditioning using data from an actual household in rural Pennsylvania to evaluate ground-source heat pumps (GHP). GHP technology has been advocated as a potentially appealing energy efficiency measure for rural communities. We find that with current subsidies GHP is economically viable for a wide range of electricity prices. We also find, however, that current subsidies are actually greater than those that can be economically justified. Using the efficient level of subsidies reduces, but does not eliminate, the economic case for GHP technology. We also evaluate the economics of efficiency subsidies using an ambitious program in Pennsylvania as a case study. The program, known as the Alternative Energy Investment Act (AEIA), provides subsidies for GHP among other technologies. We find that the substantial federal subsidies for GHP undercut the economic efficiency arguments for the AEIA with respect to GHP.     

Energy analysis of electricity supply and energy conservation options

A methodology is developed to compute the total energy requirements for electricity-generating systems using an input-output model that explicitly accounts for the physical flow of energy. The capital and operating requirements of 16 separate energy supply facilities are used to evaluate the total energy required by 9 alternative means of producing and delivering electricity. Evaluated electricity-generating systems rely on either fossil or nuclear energy as their fuel source. Energy payback periods are computed based on an equivalent electricity basis. These results are compared to a number of alternative capital investments to reduce energy demand. In general, the conservation options return their energy requirements sooner than the supply alternatives.     

Energy consumption and economic growth in New Zealand: Results of trivariate and multivariate models

This study examines the energy consumption–growth nexus in New Zealand. Causal linkages between energy and macroeconomic variables are investigated using trivariate demand-side and multivariate production models. Long run and short run relationships are estimated for the period 1960–2004. The estimated results of demand model reveal a long run relationship between energy consumption, real GDP and energy prices. The short run results indicate that real GDP Granger-causes energy consumption without feedback, consistent with the proposition that energy demand is a derived demand. Energy prices are found to be significant for energy consumption outcomes. Production model results indicate a long run relationship between real GDP, energy consumption and employment. The Granger-causality is found from real GDP to energy consumption, providing additional evidence to support the neoclassical proposition that energy consumption in New Zealand is fundamentally driven by economic activities. Inclusion of capital in the multivariate production model shows short run causality from capital to energy consumption. Also, changes in real GDP and employment have significant predictive power for changes in real capital.     

Energy consumption and economic growth: The experience of African countries revisited

The aim of this paper is to re-examine the causal relationship between energy consumption and economic growth for seventeen African countries in a multivariate framework by including labor and capital as additional variables. We apply the variance decomposition analysis due to Pesaran and Shin [Pesaran M.H. and Shin, Y. Generalised impulse response analysis in linear multivariate models, Economics Letters, 1998; 58; 17–29.] to evaluate how important is the causal impact of energy consumption on economic growth relative to labor and capital. The results of our multivariate modified Granger causality analysis due to Toda and Yamamoto [Toda, H.Y. and Yamamoto, T. Statistical inference in vector autoregressions with possibly integrated process, Journal of Econometrics, 1995; 66; 225–250.] tend to reject the neutrality hypothesis for the energy–income relationship in fifteen out of the seventeen countries. In contrast, results of our variance decomposition analyses show that in eleven out of the seventeen countries, energy is no more than a contributing factor to output growth and not an important one when compared to capital and labor. Labor and capital are the most important factors in output growth in fifteen out of the seventeen countries. However, these results should be interpreted with care as they may not be sufficiently robust enough to support the inference that energy consumption plays a minor role in the economic growth of African countries.     

Energy consumption,energy R&D and real GDP in OECD countries with and without oil reserves

The objective of the study is to shed light on the contributions of energy consumption and energy R&D on economic growth. We examine two sets of causal relationship between (1) capital stock, energy consumption and real GDP and (2) capital stock, energy R&D and real GDP using panel-based fully-modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) for 20 OECD countries over the period of 1980–2010. Since different countries may respond differently to energy consumption and energy R&D, the sample is further divided into two groups: OECD countries with oil reserves and without oil reserves. Similarly, energy consumption and energy R&D are also further divided into fossil fuel energy and renewable energy. The results show that the role of energy R&D should not be overlooked and fossil fuel R&D is found to drive economic growth more than fossil fuel consumption. The findings also show that while capital stock and fossil fuels are the key factors driving economic growth, renewable energy promotes real output, specifically in the countries without oil reserves.     

A design for hydrogen production and dispensing for northeastern United States,along with its infrastructural development timeline

Countries are trying to reduce their energy consumption, fossil fuel usage, and greenhouse gas emissions. Recent guidelines generated by various government agencies indicate an increase in the fuel economy, with a reduction in green house gases. The use of both alternative fuel vehicles and renewable energy sources is thus necessary toward achieving this goal. This paper proposes a hydrogen fueling infrastructure design for the Northeastern United States. The design provides an implementation plan for a period of 13 years (from 2013 to 2025). This design gives priority to customer convenience with minimum additional investments for its implementation. Extensive research has been conducted on generating a hydrogen supply from factories and other potential sources that can satisfy demand in the region. Markers (e.g. population density, traffic density, legislation, and growth pattern) have driven the process of demand estimation.