Energy economics

Energy economics

Energy economics is a broad scientific subject area which includes topics related to supply and use of energy in societies. [Sickles, Robin (2008). "energy economics." "The New Palgrave Dictionary of Economics", 2nd Edition. [ Abstract.] ] Due to diversity of issues and methods applied and shared with a number of academic disciplines, energy economics does not present itself as a self contained academic discipline. On the other hand the importance of energy in the economy and politics provides some cohesion to professional and scientific endeavors in energy economics. From the list of main topics of economics, some relate strongly to energy economics:
* Econometrics
* Microeconomics
* Macroeconomics
* Resource economicsEnergy economics draws heavily also on results of energy engineering, political sciences, geology, ecology etc. Recent focus of energy economics includes the following issues:
* Climate change and climate policy
* Risk analysis and security of supply
* Sustainability
* Energy markets and electricity markets - liberalisation, (de- or re-) regulation
* Demand response
* Energy and economic growth
* Economics of energy infrastructure
* Environmental policy
* Energy policy
* Energy derivatives
* Forecasting energy demand
* Elasticity of supply and demand in energy market
* Energy elasticity measuring energy required to achieve GDP

Some institutions of higher education (universities) recognise energy economics as a viable career opportunity, offering this as a curriculum. There are numerous research departments, companies and professionals offering energy economics studies and consultations.


Energy related issues have been actively present in economic literature since the 1973 oil crisis. But when extended to include the ecological point of view the economics of energy resources have their roots much further back in the history. As early as 1865 W.S. Jevons expressed his concern about the eventual depletion of coal resources in his book "The Coal Question" [ [ Online Library of Liberty - Titles ] ] [ [ Jevons, "The Coal Question": Library of Economics and Liberty ] ] . One of the best known early attempts to work on the economics of exhaustible resources was made by H. Hotelling. As a result, he derived a price path to non-renewable resources, known as Hotelling's rule.

Thermoeconomics is based on the proposition that the role of energy in biological evolution should be defined and understood through the second law of thermodynamics but in terms of such economic criteria as productivity, efficiency, and especially the costs and benefits (or profitability) of the various mechanisms for capturing and utilizing available energy to build biomass and do work. [Peter A. Corning 1 *, Stephen J. Kline. (2000). [ Thermodynamics, information and life revisited, Part II: Thermoeconomics and Control information ] Systems Research and Behavioral Science, Apr. 07, Volume 15, Issue 6 , Pages 453 – 482] [ Corning, P. (2002). “ [ Thermoeconomics – Beyond the Second Law] ” – source:] As a result, thermoeconomics are often discussed in the field of ecological economics, which itself is related to the fields of sustainability and sustainable development.

Modern application

In Japan

Japan, which is already one of the most environmentally conscious countries in the industrialised world, has for centuries -and lately even more- been trying to become even more environmentally friendly and become an example for other industrialised countries to follow. [ [,28804,1819678_1819686,00.html "Time": The Green Connection (July 2008)] ] It is doing so trough (semi-) environmental companies as Toyota, Sharp, extremely high energy efficiency (up to 10x more efficient than its neighbour China; principally through the use of a market based approach namely high energy prices), a high carbon-reduction target under the Kyoto-protocol (6%), the hosting of the 2008 G-8 summit focusing on environmentalism and the previous hosting of numerous environmental country meetings (Kyoto-protocol, ...), by sponsoring emission-reducing projects in China (18 as of July 2008), environmental government advisory firms as JICA (trough its Sino-Japan Friendship Center for Environmental Protection-program), Nippon Keidanren, high input in environmental technology (eg Zero emission technology as nuclear power plants). In Japan, there are even far-fetched environmental solutions as discouraging wasting water by installing toilet-flushing noise generators (to cover the sound of their commonly used "multiple flush" toilet system) and cleaning with mere water and elbow grease (to avoid the need of using soap or detergents). [ [,28804,1730759_1734222_1734215,00.html "Time" magazine: The Japanese Way (28 April 2008)] ]

Japan's environmental consciousness can be traced back trough its history, having always been an island nation with few natural resources and little flat terrain, suitable for erecting buildings (most of the country consists of valleys and hills). Also, because of the Second World War, allot of big cities were destroyed and needed to be rebuild. This rebuilding was done efficiently and by using the latest techniques (eg high-rise construction to make the best use of the available land) and construction materials (concrete and steel) and at the most efficient manner (efficient urban planning/road and transport design). The having of only little resources has (described earlier) later inspired the concept of "Mottainai", literally meaning "what a waste", which manifests itself into a reflexive desire to conserve and reuse [ [,28804,1730759_1734222_1734215,00.html Time Magazine:The Japanese Way (28 April 2008)] ] . However, as Japan currently emits 7% more than it did in 1990 (and is still partially relying on fossil fuels such as coal and gas), it faces a challenge in attaining the stated goal of a 50% reduction in emissions by 2050. [ [ Japanese putting all their energy into saving fuel] ]

Key concepts

Analysis of a nation's or a world energy economy can be started from the corresponding energy balance, allowing one to visualise the flows of energy resources and their utilisation on a periodical (usually annual) basis.

However, one shall be aware that this level of analysis inherently misses the economic aspect of the energy problem, since all sources and uses of energy are expressed in physical units (usually quadrillion BTU's). The costs and the efficiency of various energy sources has to be accounted for separately.

Since energy policy planning and analysis is a long-term business, some kind of insight into the sustainability of different policy options is preferable. This implies forecasting of main energy and economic variables along several scenarios and establishing a consistent criterion for comparison among them.

Energy Accounting is a hypothetical system of distribution, proposed by Technocracy Incorporated in the "Technocracy Study Course", which would record the energy used to produce and distribute goods and services consumed by citizens in a Technate. [ Economy and Thermodynamics]

Scientists have speculated on different aspects of energy accounting for some time as to how it might relate to an alternative social system. [Stabile, Donald R. "Veblen and the Political Economy of the Engineer: the radical thinker and engineering leaders came to technocratic ideas at the same time", "American Journal of Economics and Sociology" (45:1) 1986, 43-44.] Many variations of energy accounting are in use now, as this issue relates to current (price system) economics directly, as well as projected models in possible Non-market economics systems. [Cutler J. Cleveland, [ "Biophysical economics"] , "Encyclopedia of Earth", Last updated: September 14, 2006.]

ee also

*Energy Accounting
*Energy and Environment

ources, links and portals

There are three journals of energy economics:
* " Energy Economics"
* [ "Energy Journal"]
* [ "Resource and Energy Economics"]

There are several other journals that regularly publish papers in energy economics:
* [ "Energy" -- The International Journal]
* [ "Energy Policy"]
* [ "International Journal of Global Energy Issues"]
* [ "Utilities Policy"]

There is also a [ handbook] in three volumes.

Much progress in energy economics has been made through the model comparison exercises of the (Stanford) Energy Modeling Forum and the meetings of the [ International Energy Workshop] .

IDEAS/RePEc has a [ list of energy economists] and a [ ranking of the same] .

External links

* [ M. King Hubbert on the Nature of Growth. 1974]
*Yuri Yegorov, article Econo-physics: A Perspective of Matching Two Sciences, Evol. Inst. Econ. Rev. 4(1): 143–170 (2007) [ _pdf (application/pdf Object)]
*Borisas Cimbleris (1998): [ Economy and Thermodynamics]
*Schwartzman, David. (2007). " [ The Limits to Entropy: the Continuing Misuse of Thermodynamics in Environmental and Marxist theory] ", In Press, Science & Society.
*Saslow, Wayne M. (1999). " [ An Economic Analogy to Thermodynamics] " "American Association of Physics Teachers".
* [,_Frederick Soddy, Frederick - Encyclopedia of Earth]
* [ Biophysical economics - Encyclopedia of Earth]
* The International Society for Ecological Economics (ISEE) -
* The International Journal of Green Economics,
* The Green Economics Institute
* Eco-Economy Indicators:
* Ecological Economics Encyclopedia -
* The academic journal, "Ecological Economics" -


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