1. Steve Sorrell SPRU, University of Sussex
International Exergy Economics Workshop Introduction: Context and Objectives
Steve Sorrell
SPRU, University of Sussex

2. 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

3. 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

4. Absolute decoupling in the UK
The UK is a rare exception to the global trend
(others include Denmark, Romania and Cameroon)

5. Growing population and incomes associated with growing energy use
Global primary energy use has grown by ~2.4%/year since 1850 (Jarvis, 2012)

6. But the rate of growth must slow if we are to meet global climate targets….
Source: IPCC, 2014

7. Stock resources are finite and flow resources are rate-limited
…and must ultimately decline to zero if we are to achieve sustainability
Stock resources are finite and flow resources are rate-limited

8. Multiple factors influence the energy-GDP 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

9. ..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

10. …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 increased inputs of useful work
Most economic growth attributed to technical change
Complexity of energy-GDP relationship
Limitations of data and methodologies
Differences in core assumptions

11. 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

12. 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?

13. Can we bring exergy economics into the mainstream…?
Energy economics
Exergy economics