Energy and Economic Growth, Is There a Connection? Energy Supply Threats Revisited

Paul Ojeaga,Deborah Odejimi,Dominic Azuh,Emmanuel George

doi:10.4236/ojee.2014.33007

Abstract

The increased cost of accessing energy and the effects on economic growth (GDP) across regions is one of grave concern [1]. The Cost implication of energy supply often shapes regional energy policies across the globe. This paper presents an empirical investigation into the relationship between energy generation and economic growth, while also investigating probable threats to sustainable energy supply across regions. Energy generation was found to have some implications for economic growth across regions. It was found that hydro electric, renewable energy and nuclear generation sources were significantly driving growth across regions while coal and gas sources were not. This was particularly true since the cost of fossils was having strong cost implications, for overall energy generation cost in countries in regions due to overdependence on fossils. Generating sources were also found to have strong implications for sustained energy supply (energy security), renewable energy and gas generating sources that had the strongest effects on sustainable energy supply across regions. This was probably true since regions were focusing on new technologies in energy generation process, which are cheaper, cleaner and more sustaining, while still depending on gas plants due to the relative cost implications of maintaining gas plants compared to hydro and nuclear generating plants. The method of estimation used in the study is the seemingly unrelated regression estimation method.

Highlights

Lots of studies have already argued that energy generation has strong cost implication for private-sector driven growth
The dependent variables include energy security (ENSEC) which we measure using score values assigned to regions, based on the level of diversification and infrastructure in renewable energy sources in regions with North America the United States having stronger capabilities towards averting energy interruptions, and economic growth which is the aggregate regional gross domestic product in constant US dollars (USD)
Λ0 λ1LABOUR i,t + λ2 CAPITALi,t + λ3TECHi,t + λ4 X i,t + u2i,t through their interaction in a simultaneous regression model. In this case we study the dynamics between energy supply potential threats to such supply such as number of generation sources, environmental factors that affect such supply, availability of technology, consumption rate across regions etc. and the possible effects of energy generation on economic growth through the investigation of what generation sources were promoting growth across regions using the same set of exogenous variables

Summary

Introduction

Lots of studies have already argued that energy generation has strong cost implication for private-sector driven growth. There is an ongoing debate as to what exactly are the threats to sustainable energy supply [2], since the cost of generation can have strong implications for energy stakeholders and policy makers. Issues of sustainability are ones of paramount importance, and overdependence on fossils means that susceptibility to failure in energy generation and supply risks is increasing since issues of cost and political disputes e.g. the Russo-Ukrainian gas dispute of 2005/2006, can affect gas supplies across regions. While the use of fossils continues to have strong consequences for energy security, it is likely to have little or no effect on growth due to the cost implication of acquiring fossils for the energy generation process. Global demands for energy are on the increase in United Nations energy report 2012, making World energy consumption to have doubled by the year 2050

Objectives

Results

Conclusion