Abstract
The recent trend in New Economics is the establishment of measures of sustainable wealth and welfare which take into account all the parameters of economic, environmental, and social life and progress, juxtaposed to the conventional and myopic GDP. This review summarizes results from a series of recent papers in the energy-growth nexus field, which have perused a proxy for the sustainable GDP instead of the conventional GDP and discusses the difference in results and policy implications. The energy-growth nexus field itself has generated a bulk of work since the seminal study of Kraft and Kraft (1978), but still the field needs new perspectives in order to generate results with a consensus. The bidirectional causality between energy consumption and sustainable economy provides evidence for the Feedback Hypothesis, a statement that essentially warns that it is too early for sustainability to be feasible without fossil energy consumption, and vice versa. The unidirectional causality reveals, on the one side, that an economy cannot grow without the plentiful consumption of energy (the Growth Hypothesis) and, on the other side, that the growth of the economy fuels energy consumption (the Conservation Hypothesis). Failure to corroborate causality between energy consumption and economic growth is evidence for the Neutrality Hypothesis.
Highlights
According to the International Energy Agency [1] the world energy consumption has increased by 45% since 1980 and will be 70% higher by 2030
The current paper summarizes the gist causality results from a series of six studies which have been devoted to the investigation of the energy-sustainable economic growth relationship in various groups of countries worldwide
While the idea was first applied to a set of Sub-Saharan countries, mainly because it was a region suffering from poverty and because of the role it could play in the global sustainability, the interesting results the first study reached gave the initiative for the gradual study of an additional set of countries, covering almost the whole world
Summary
According to the International Energy Agency [1] the world energy consumption has increased by 45% since 1980 and will be 70% higher by 2030. European Union energy targets for 2030 have been set as follows: 40% reduction in greenhouse gas emissions (compared to 1990 levels), at least 32% share of renewable energy consumption, and 32.5% energy savings compared with the business-as-usual scenario [2] The EU is devoting significant efforts to reduce energy consumption in the main consumption areas such as residential, tertiary, transport and industry. Both primary and final energy consumption are slightly above their 2020 targets because not all sectors have managed to decrease their consumption. They draw conclusions about the sensitivity of economic growth to various energy policy tools, which aim to make the economy rely less on energy consumption and produce less greenhouse emissions, resulting in less fossil fuel resources depletion
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