1. The macroeconomic impacts of reducing energy use
What lies beyond orthodox growth models?
Lukas Bunse, University of Leeds
International Exergy Economics Workshop, 14/07/2016

2. Outline Background of my PhD Results of my literature review
Ideas and questions to take forward

3. Background In 30 years we will use less energy than now
How to get there without making a mess of it?
Two stories: decoupling vs. economic decline

4. Literature review question
Why do different researchers reach so different conclusions on the possibility of decoupling energy use from economic growth?

5. My answer … Orthodox growth theory
… and the distinction between the short-term and the long-term

6. Example of peak oil Orthodox paradigm Oil shock GDP Time
Equilibrium Growth Trend =
Production function + factor inputs + technical progress
Time

7. Example of peak oil Alternative Paradigm High oil prices
Higher oil demand
Recession
Dynamic limits to growth
Economic growth
Lower oil demand
Low oil prices
Adapted from Murphy & Hall 2011

8. Transmission belt model
Tug of war model
(orthodox)
Transmission belt model
(alternative)
Economic growth
Economic growth
Energy
Energy

9. Problems with orthodox theory
Possibility of decoupling often built in by assumption
Growth trend is often exogenous
Abstracts from complex dynamics

10. Moving forward
How to conduct research under alternative, non-equilibrium paradigm ?
How to go beyond aggregate production functions?
What are alternative paradigms?

11. Looking for inspiration …
Heterodox schools of economic thought
Post-Keynesian economics
Evolutionary economics
Ecological Macroeconomics

12. Specific questions? Case studies of decoupling. Are they sustainable?
How do effects of energy price shocks vary over different time scales?
What is the relationship between energy and labour productivity growth?

13. Thanks for listening! Questions or ideas?

14. Reference(s)
Murphy, D. J., & Hall, C. A. S. (2011). Energy return on investment, peak oil, and the end of economic growth. Annals of the New York Academy of Sciences, 1219, 52–72