Crawford School of Public Policy Centre for Climate Economics & Policy Global energy use: Decoupling or convergence? CCEP Working Paper 1419 December 2014 Zsuzsanna Csereklyei Geschwister Scholl Institute of Political Science, Ludwig-Maximilians-Universität Munich David I. Stern Crawford School of Public Policy, The Australian National University Abstract We examine the key factors driving change in energy use globally over the past four decades. Our econometric approach is robust to the presence of unit roots, unobserved time effects, and spatial effects. We test for both strong decoupling where economic growth has less effect on energy use as income increases, and weak decoupling where energy use declines over time in richer countries, ceteris paribus. Our key findings are that the growth of per capita energy use has been primarily driven by economic growth, convergence in energy intensity and weak decoupling. There is no sign of strong decoupling. THE AUSTRALIAN NATIONAL UNIVERSITY
Keywords Energy consumption, convergence, decoupling JEL Classification Q43, O13 Suggested Citation: Csereklyei, Z. and Stern, D. I. (2014), Global energy use: Decoupling or convergence?, CCEP Working Paper 1419, December 2014. Crawford School of Public Policy, The Australian National University. Address for correspondence: Zsuzsanna Csereklyei Geschwister Scholl Institute of Political Science Ludwig-Maximilians-Universität Munich, Oettingenstr. 67, D-80538 München, Germany Email: Zsuzsanna.Csereklyei@gsi.uni-muenchen.de The Crawford School of Public Policy is the Australian National University s public policy school, serving and influencing Australia, Asia and the Pacific through advanced policy research, graduate and executive education, and policy impact. The Centre for Climate Economics & Policy is an organized research unit at the Crawford School of Public Policy, The Australian National University. The working paper series is intended to facilitate academic and policy discussion, and the views expressed in working papers are those of the authors. Contact for the Centre: Dr Frank Jotzo, frank.jotzo@anu.edu.au THE AUSTRALIAN NATIONAL UNIVERSITY
g(e/p ) i = α +(β 1 + β 2 (Y /P ) i ) g(y /P ) i + ɛ i g(e/p ) g(y /P ) (Y /P ) i β 2 (Y /P ) i β 1 α ɛ g(e/p ) i = α +(β 1 + β 2 (Y /P ) i ) g(y /P ) i + β 3 (Y /P ) i + ɛ i β 3 g(e/p ) i = α +(β 1 + β 2 (Y /P ) i ) g(y /P ) i + β 3 (Y /P ) i + β 4 (E/Y ) i,0 + ɛ i (E/Y ) i,0 i
β 4 g(e/p ) i = α +(β 1 + β 2 (Y /P ) i ) g(y /P ) i + β 3 (Y /P ) i + β 4 (E/Y ) i,0 + j η j X j,i + ɛ i X H 2 O CO 2
g(e/p ) i = β 1 + β 2 g(y /P ) i + ɛ Ei g(y /P ) i = α 1 + α 2 g(e/p ) i + γ T X i + ɛ Yi β 2 plimβ OLS 2 = β 2 + cov(ɛ E,g(E/P ) var(g(y /P )) cov(ɛ E,g(E/P )) = α 2var(ɛ E ) 1 α 2 β 2 var(g(y /P )) var(ɛ E ) α 2 (1 α 2 β 2 ) α 2
( lny lne = 1 σ 1 ) lng σ lne σ G β 2 β 2 (Y /P ) g(y /P ) g(y /P ) (Y /P ) (Y /P ) (Y /P ) (Y /P ) g(y /P ) (Y /P ) g(y /P ) (Y /P ) (Y /P ) i (Y /P )
W M 1 1 2 (W + W T )M 1 M 1 = I i(i T i) 1 i T i m e 1,..., e n M 1 1 2 (W + W T )M 1 g(e/p ) i = m γ i e i + χ T Z i + u Ei i=1 Z u Ei
z[i(û E )] < δ, δ =1 z[i(û E )] û E δ =1 z
Mean Annual Growth Rate of Energy Use per Capita 1971-2010 10% 8% 6% 4% 2% 0% -2% -4% -4% -2% 0% 2% 4% 6% 8% Mean Annual Growth Rate of GDP per Capita 1971-2010
E/Y 1971 H 2 0 Note 1 < < < Note 2 E/Y 1971 H 2 O Note 3
E/Y 1971 E/Y 1971 E/Y 1971 E/Y 1971 H2 0 Note 1 < < < Note 2 E/Y 1971 H 2O Note 3
Mean Growth Rate of Energy Use per Capita 1971-2010 4% 3% 2% 1% 0% -1% -2% -3% Low Income Residual Growth effect Weak decoupling effect Convergence effect Other time effects Dependent variable Lower Middle Income Upper Middle Income High Income
1.0 0.9 0.8 Parameter Value 0.7 0.6 0.5 0.4 0.3 g(y/p) Y/P mean*g(y/p) 0.2 0.1 0.0 1971-2010 1981-2010 1991-2010 2001-2010 Sample Period
E/Y 1971 E/Y 1971 H 2 0 H 2 0 E/Y 1971 E/Y 1971 H 2 0 H 2 0 Note 1 < < < Note 2 E/Y 1971 H 2 O Note 3
g(e/p )= lne/p 2010 lne/p 1971 39 H 2 O