Energy, Environment and Sustainability

Energy and Economic Growth? Tiago Domingos* with André Cabrera Serrenho João Santos Tânia Sousa Benjamin Warr Robert U. Ayres * [email protected] Instituto Superior Técnico, University of Lisbon Portugal

“Empty World”

Costanza, R., J. Cumberland, H. Daly, R. Goodland, R. Norgaard (1997). An Introduction to Ecological Economics. St. Lucie Press, Boca Raton, FL, USA.

“Full World”

Costanza, R., J. Cumberland, H. Daly, R. Goodland, R. Norgaard (1997). An Introduction to Ecological Economics. St. Lucie Press, Boca Raton, FL, USA.

A brief history of Humankind …

Economy

Smart growth BAU

De-growth

Environment

Have we crossed the limits?

Economy

Sustainability Threshold

Environment

… or not?

Economy

Sustainability Threshold

Environment

What is Sustainable Development? • Brundtland report (1987) – “Development that meets the needs of the present without compromising the ability of future generations to meet their own need.” – Intra- and inter-generational equity – Anthropocentric

• Sustainability of what? – – – –

non-declining aggregate output or consumption, non-declining utility, non-declining aggregate resources (productive base), non-increasing pollution, …

• Weak vs. Strong Sustainability • We choose non-declining utility as the criterion for sustainable development – some call this Weak Sustainability, but we don’t agree  – this still misses the intra-generational component

• What is green net national income (GNNI) and what does it measure? • What is genuine saving and what does it measure?

8

The Standard Economic Growth Model

Economy

𝛿𝐾

Capital (K)

GDP= 𝑓 𝐾 = 𝐼 + 𝐶

𝐶

𝐼

𝑑𝐾 = 𝐼 − 𝛿𝐾 = 𝑓 𝐾 − 𝐶 − 𝛿𝐾 𝑑𝑡 = 𝑠𝑓 𝐾 − 𝛿𝐾

Labour

Market 1 𝒑𝟏 > 𝒑𝟐

𝒒 𝒑𝟏 𝒒

𝒑𝟐 𝒒

Market 2 𝒑𝟐

(𝒑𝟏 −𝒑𝟐 )𝒒 𝑷𝒓𝒐𝒇𝒊𝒕 = 𝒑𝟏 − 𝒑𝟐 𝒒

𝑷𝒓𝒐𝒇𝒊𝒕 𝒑𝟏 − 𝒑𝟐 𝒒 𝒑𝟐 𝑴𝒂𝒓𝒈𝒊𝒏 = = = 𝟏− (𝒆𝒇𝒇𝒊𝒄𝒊𝒆𝒏𝒄𝒚) 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 𝒑𝟏 𝒒 𝒑𝟏 9

∆𝑧 = 0 𝑚

∆𝑧 = 120 𝑚

𝑃𝑜𝑤𝑒𝑟 = 150 𝑘𝑊

𝑃𝑜𝑤𝑒𝑟 = 0 𝑊 𝑺

Reservoir 1 𝒛𝟏 > 𝒛𝟐

𝑬𝒇𝒇𝒊𝒄𝒊𝒆𝒏𝒄𝒚 =

𝑾 𝒛𝟏 𝑺 − 𝒛𝟐 𝑺 𝒛𝟐 = = 𝟏− 𝑸𝟏 𝒛𝟏 𝑺 𝒛𝟏

𝑸𝟏 = 𝒛𝟏 𝑺

𝑸𝟐 = 𝒛𝟐 𝑺

Reservoir 2 𝒛𝟐

𝑾 = 𝒛𝟏 𝑺 − 𝒛𝟐 𝑺 10

Reservoir 1 𝑻𝟏 > 𝑻𝟐

𝑺 𝑸𝟏 = 𝑻 𝟏 𝑺

𝑸𝟐 = 𝑻 𝟐 𝑺

Reservoir 2 𝑻𝟐

𝑾 = 𝑻𝟏 𝑺 − 𝑻𝟐 𝑺

𝑾 𝑻𝟏 𝑺 − 𝑻𝟐 𝑺 𝑻𝟐 𝑬𝒇𝒇𝒊𝒄𝒊𝒆𝒏𝒄𝒚 = = = 𝟏− 𝑸𝟏 𝑻𝟏 𝑺 𝑻𝟏

11

Primary → Final → Useful energy/exergy

12

Exergy carriers & end-uses Exergy sources

End-uses

Oil

Oil products (gasoline)

Electricity (hydro)

Electricity / CHP Heat

Coal

Coal

Natural Gas

Natural Gas

Biomass

Biomass

Food / feed

Food / feed

Mech. Drive Light Other Elec. Uses Heat

Muscle work UsefulExergy Exergy Useful

Final Exergy

Waste Heat

Primary Exergy Waste Heat

13

Final and Useful exergy consumption – Portugal 1856-2009

9-fold increase in Final exergy consumption. 26-fold increase in Useful exergy consumption.

Final exergy

Useful exergy

14

Final exergy inputs by carrier – Portugal 1856-2009

15

Aggregate Final-to-Useful efficiency – Portugal 1856-2009

Electrification: stationary power Increase in heating efficiencies; Increasing use of heat. Motorization: increase in mechanical drive uses from oil products

16

Composition of Useful exergy – Portugal 1856-2009

Agriculture-industry-services transition.

17

Final and useful exergy intensities – Portugal 1856-2009

Final exergy / GDP (MJ/2010€)

Useful exergy / GDP (MJ/2010€)

Useful exergy / GDP

Despite shifts in composition, useful exergy intensity is stable.

Final exergy / GDP

18

Final and useful exergy intensities – Portugal 1960-2009

Final Exergy / GDP

Useful exergy / GDP (MJ/2010€)

Final exergy / GDP (MJ/2010€)

Useful Exergy / GDP

Using a GDP-deflator instead of a Consumer Price Index, stability of UE intensity is clearer.

19

Final exergy intensity (MJ/€ 2005)

Final exergy Intensity – EU15 countries 1960-2009

20

Serrenho, A. C., Sousa, T., Warr, B., Ayres, R. U., & Domingos, T. (2014). Decomposition of useful work intensity: The EU (European Union)-15 countries from 1960 to 2009. Energy, 76, 704-715.

Useful exergy intensity (MJ/€ 2005)

Useful exergy Intensity – EU15 countries 1960-2009

21

Serrenho, A. C., Sousa, T., Warr, B., Ayres, R. U., & Domingos, T. (2014). Decomposition of useful work intensity: The EU (European Union)-15 countries from 1960 to 2009. Energy, 76, 704-715.

A model for the Useful exergy intensity

• First-differences OLS with panel-corrected std. errors.  BU       GDP  i ,t



#1

Xj Intensity of high temperature heat exergy consumption

0.4054***

Intensity of residential exergy consumption

0.1317***

Intercept R2

 Xj    ui ,t  j   GDP   i ,t j 1 n

#2

#3

0.4067***

#4 0.4028***

0.1367***

0.00335

0.00105

-0.0074

0.7875

0.7288

0.0633

0.1294***

0.7888

*P(t