Economics of Energy and Green Growth

Abstract

It is well known that energy is crucial for both human welfare and the continuous development of society. Energy sources can be categorized as either depletable or renewable and storable or non-storable, respectively. Today, global energy consumption mostly depends on fossil fuels. On the other hand, the increasing use of renewable energy sources is very promising due to the disruptive effects of climate change. Increased use and production of renewable energy will also contribute to the transition towards green growth. In this context, it is not possible to talk about the concept of decoupling; we can choose a way to grow without damaging the nature and the environment. To locate these conceptual expressions, developed countries should look at national and international production strategies in this direction. Especially societies and countries that grow with energy production need to be careful about this issue. Energy consumed in different amounts and methods is among the factors that accelerate environmental destruction. Without decoupling, ongoing and growing economic growth in developed and the increasing environmental pressures, inevitably exceeding the carrying capacity of ecosystems, and the corresponding environmental impacts and adversities on society will inevitably refer to developing countries. If the pressure on the environment caused by climate change greenhouse gas emissions cannot be successfully separated (decoupled) from economic growth, it will not be possible to reach the desired targets. Decoupling is defined as ‘relative’ (‘weak’) or ‘absolute’ (‘strong’). Relative decoupling signifies higher rates of economic growth than rates of growth in material and energy consumption and environmental impact. Consequently, relative decoupling implies a gain in efficiency rather than the removal of the link between impact and GDP. In this chapter, the economics of energy (in terms of production), green growth, and their impact on the environment will be discussed in terms of decoupling.