Energy is acknowledged as an essentialelement in the process of production by capital and labor. Energy use has risensignificantlyacross the globe, particularlyfrom the period of the Industrial Revolution and the oil catastrophe that occurred in 1973. Energy plays a significant role in the growth of the economy. Effectual utilization of energy results in energy savings, which promotes national competitiveness and improves Gross Domestic Products (GDPs) and household revenue. Some of the main sources of energy include coal, biomass, hydropower, wind power, as well as nuclear power. There have been increased investments in renewable sources of energy because of their inexhaustibility and environmental friendliness, which guarantee faster growth and positive forecasts concerning the projections of the green energy field. Technological development and structural reforms have played a great role in promoting energy efficiency. Future energy systems will need energy sources that are able to generate a lot of electricity without releasing greenhouse gasses. Natural gas will likely be a great source of energy in the future because of its ecologicalbenefits over coal and oil as well as its capability of functioning as abalancing power.
Introduction and Background
Energy plays an important function in the economy of a country. Determinations at socioeconomic and technological growth cannot be productive without a consistent energy supply. Energy is necessary for producing goods and services and therefore significant for the industrial growth of a country. Energyalso contributes to the growth of the economy on both demand and supply sides. Regarding the demand aspect, consumers purchase energy in the form of electricity to maximize their utility. In terms of supply, energy is a major element of production as well as capital, labor, and materials. As a major factor, energy contributes to the development of a nation and living standards of people through industrial and economic growth. This denotes that there is a causal relation, which runs from energy consumption to national income or GDP and vice versa (Mathur 230). Nevertheless, the use of energy as well as growth per capita influences carbon emissions and probably the cause of increased carbon emissions and climate change. The present paper examines the association between energy consumption and economic growth.
Discussion of the Issue
Several researches have analyzed the link between energy consumption and economic growth. The findings indicate that energy presevation can damage economic growth in the short-run and long-run. Some studies reveal that when efficient use of energy is effected only at an individual state level, it does not have a stronger impact compared to when effected across the nation. It is because effective utilization of energy results in energy savings, which enhance national competitiveness and improves GDPs as well as real household revenue. High expenditure on efficacy measures and reduced expenditure on energy compliment each other. They indicate that energy savings result in reduced energy costs, making the economy more competitive and increasing per capita GDP growth rate(Mathur 231).
Information from the Climate Institute on Energy efficiency and economic development regards energy as a factor of production and indicates that with increased real energy prices, effectiveness in the utilization of energy leads to economic growth. They indicate that energy productivity has risen overtime (GDP per unit of energy used) and effective utilization of energy results in higher economic growth through the reduction of energy demand per unit of output (Mathur 231).
There is a non-linear sigmoid relation between energy consumption and GDP. Energy consumptions rise at acumulative rate with increase in GDP and after sometime, it rises at a reducing rate with further increase in GDP. Utilization of alternative or renewable sources of energy rather than conventional sources is the cause of thevariation in relation.Energy is an essential resource for producing mechanical power in the process of economic growth from the time of Industrial Revolution in the 18th century. The industrial revolution enhanced technological advancements and mass production methods and led to a higher demand for labor, capital, and energy resources. Despite that fact that Industrial Revolution increased energy demand in the production process, a major debate over the role of energy in economic growth still exists. During the second part of the 18th century, energy was viewed as a source of power in agriculture by the physiocrats, affirming that all energy originated from land, rain, and sun (Pata 1). After the oil crises in the 1970s, certain economic theories regarded energy as a factor in the production of economic resources, which played a role in producing goods and services. Concerning the possible link between energy and growth, several perceptions have been raised. Nevertheless, currently, the widely acknowledged perception is that energy is a vital resource in the production process. This is because it has an important function in changing inputs into outputs in the production process. Ecological economists maintain that technological advancements and innovations have little impact on determinations of increasing productivity; however, energy and resources associated with energy contribute to the growth and production process (Pata and Terzi2).
Recently, there has been a substantial rise in investment in renewable energy globally. The structure of investments varies from one region to another and impacts the efficiency of the utilization of renewable sources of energy. The levels of carbon emissions have been minimal in the previous years. The amount of CO2 emissions from the utilization of renewable energy depend on the size of GDP and reduces with a rise in GDP. The limitation of renewable energy growth in the present energy infrastructure is the lack of needed flexibility of the current power system to include new renewable energy sources, especially the wind and solar (Kapitonov167).
In 2011, specialists from Eurostat, EU’s statistical office, categorized renewable power generation as a segment that was experiencing an adoptive phase and had a medium competitive capacity. Additionally, the global demand for renewable energy sources had indicated a steady development. The renewable energy source share in the global power generation balance is anticipated to hit 35% by 2050. Plans for optional energy production are being established and adopted in several developed nations. The major benefits of renewable energy sources are their inexhaustibility and environmental friendliness, which provide the probable faster growth and positive forecasts concerning the projections of the green energy field (Kapitonov167). The distribution of renewable energy sources has enabled a revolution inthe green energy markets in EU nations, the entire Asia and China. Additionally, although the U.S. is still in the first phase of the lifecycle of the growth of renewable energy sources, countries such as Russia are progressing towards the green industrial processing of renewable energy sources (Kapitonov168).
Biomass is a renewable source of energy that plays an important function in the reduction of CO2 emissions from coal power plants and can be utilized in producing heat and electricity. Bioenergy is a form of stored solar energy gathered by plants through photosynthesis. Wood as well as other parts of plants have been utilized for many years in preparation food and provision of heat. Biomass continues to be the major form of fuel for approximately 1.4 billion individuals globally with no electricity.
Coal is the basis of the world’s energy system because of its economic attractiveness and features that enable constant and safe large-scale electricity generation. Regardless of its poor environmental identifications, coal greatly contributes to energy supply in several nations. It is the most prevalent fossil fuel globally, and over 75 nations contain coal deposits. The present share of coal in global power generation is more than 40%, but it is anticipated to reduce in the near future, whereas the real coal consumption will increase (Six Sources of Energy–One Energy System20).
Hydropower is a source of renewable energy, which is economically attractive, offers security of supply, and contains reduced levels of CO2 emissions. Hydropower is highly attractive, particularly because the French market has opened up to competition. Hydropower entails utilizing the energy available in the movement of water to produce electricity.Nuclear power produces large volumes of electricity with reduced CO2 emissions. It is also economically attractive and secure. Natural gas is an expanding energy source in Europe, which is economically attractive, flexible and its supply is secure. Additionally, natural gas has reduced specific CO2 emissions compared to other fossil fuels. On the other hand, nuclear power is significant in several European nations since it is secure, cost effective, and has reduced CO2 emissions. Nuclear power also produces large volumes of electricity. Wind power is the rapidly growing energy source in Europe and highly contributes to the attainment of the European Union’s climate goals.Wind power does not entail fuel costs and does not emit CO2. Its total cost per generated kilowatt hour is comparatively high because of considerable investment costs (Six Sources of Energy–One Energy System21).
Energy is an essential input to economic activity and thus to human wellbeing and development. In the past, low costs of energy have assisted in stimulating economic growth, and currently, several industries manage their energy costs to enable to them compete on a global platform. Energy costs may be reduced by enhancing the efficiency of energy end-use, or by reducing the costs of power generation. The cost of producing energy carriers, for example, electricity, heat, as well as fuels differsamong different sources of energy and technologies. Power production costs include capital costs and operating costs, while capital cost entails essential funding power plant construction.Additionally, operating costs incorporate fuel inputs and power plant maintenance. Societies look forward to an energy mix that ensures reduced and steady general cost of delivered energy for homes and businesses. The management of capital costs is often a subject of scale and time; power plants that generate a lot of energy for a long period can spread out the costs of capital investment. The management of operating costs if often conducted by obtaining cost effective and reliable fuels and preserving technically efficient systems. Electricity costs have been reduced by establishing a durable capital-intensive energy infrastructure (Six Sources of Energy–One Energy System8).
Power plants that can consistently generate large amounts of electricity are required to meet the electricity demands. Extensive nuclear, fossil-built, as well as hydropower stations can generate such kind of power. Several renewable energy sources like wind and solar power are sporadic. They produce electricity only under favorable conditions; thereforethey cannot operate as baseload power. Solar cells and wind turbines provide energy once the sun starts shining or the wind blows (Six Sources of Energy–One Energy System9).
The European Union’s electricity generation energy mix incorporates fossil energy sources. Oil, coal and natural gas constitute 54% of EU electricity generation. Coal and nuclear are the two most important sources of energy, and each amount to 28% of electricity generation. Hydropower equals 11%, biomass and waste 3%, and wind power 4%. Globally, fossil fuels are more significant, constituting approximately two-thirds of total electricity generation (Six Sources of Energy–One Energy System13).
Energy efficiency, which denotes getting the most from the energy consumed to meet different needs can assist in alleviating the economic and social impacts of alarmingly increasing costs and limited supply, while concurrently minimizinggreenhouse gas emissions that lead to climate change. Energy consumption can be minimized through the enhancement of energy efficiency. Businesses can minimize the use of energyby maintaining and upgrading their equipment effectively, using advancedconstruction systems and resources and employing energy-efficient technology. This process is often attained by utilizing experimented and verified technologies that are prevalent (Rutland and Alex 634).
Minimizing the use of energy enables businesses to compete globally and reduces the living cost and reliance on fossil fuels. Portland has developed plans and capital to assist the community to minimize energy consumption and release of greenhouse gas. The nation has also established energy reviewsand cash enticement programs (Rutland and Alex 635).Studies have identified various factors that impact energy efficiency in numerous industries. The energy strength effectively determines the energy efficiency. This is oftenestimated as units of energy use per unit of product within a country or business. Increased energy intensity implies a higher cost of changing energy into a product. Energy intensity has reduced in Chinese industries because of structural reforms in the economy and technological progress. Regarding structural changes, studies concentrate on reforms in the sector of the economy. For instance, economic shift, which entails market freedom and removal of imposed energy prices, resulted in the enhanced industrial energy efficiency in China in 2007. Technological advancementcontributed more to the reduction of China’s energy intensity compared to structural reform. For example, regarding China’s cement industry, the demand for energy is largely determined by the technical nature of the kilns. Therefore, technological progress plays a major role in reducing energy intensity(Hu1407).
I believe that innovation and information technology will enhance effective supply and utilization of energy in the future. Additionally, thecurrent electricity networks are mainly adapted to electricity from a small number of large power plants. The grids are one-way, deliveringelectricity to supply networks. However, future energy systems will put new demands on the electricity system. Numerous intermittent energy sources like wind power and electric automobiles will rise the demand for a quick, accommodating and dependable electricity grid. Additionally,the development of the offshore wind power has increased the demand for a fresh, high-capacity gridandsuperior networks designed forgathering wind energy. A delay in the construction of grids may slow the extension of offshore wind power.
Future energy systems will need energy sources that are able toprovide a lot of electricity without releasing greenhouse gasses. I also believe nuclear power is a source of energy that is capable of meetingsuch requirements. Europeanstudies have contributed a lot of knowledge to the sector of nuclear technology and concentrate on factors like improved waste management and fuel preservation. The structure for future nuclear power has been effected through many global organizations and systemsassociated with research and development (Six Sources of Energy–One Energy System80).
Natural gas will be an essentialsource of energy source in the future, mainly becauseof its comparativeecologicalbenefitscompared coal and oil and the capability ofoperating as balancing power. Presently, natural gas still representsmore thanone-fifth of global energy supply. The demand for natural gas is greatlyassociated witha higher rate of global economic growth and is stimulated by the power industry.Developed world economies will lead to increased demand for natural gas. The need for natural gas is also influenced policies and gas pricesin relation to oil and coal. Several nations view natural gas as a substitute for coal and oil, mainly because of environmental benefits. This is similar to nationsplanning to stop using nuclear power for political motives. (Six Sources of Energy–One Energy System636).
Hydropower will be essential to the attainment of a sustainable energy system in the coming days. The subject of climate change has altered the perception of the face of power generation, and the determination to shift to a carbon neutral energy mix are in place at all levels of the entire world. For example, The EU has developed several climate targets to act asa foundation for its climate change determinations through the year 2020. Achieving such targets needs a higher consumption of renewable energy sources like hydropower (Six Sources of Energy–One Energy System54).
Enhanced energy efficiency in every sector is evident, but still inadequate for the EU to effect its determined energy efficiency targets. Additionally, efficiency enhancement measures needmore investments, which in addition to investment plans of the energy independence will raise the final price of all forms of energy to end-users; it will limit the energy available to them and the majorhindrance will be created in attaining the nation’s energy sustainability. To guaranteemore sustainability and consistency of three elements of the energy segment: energy autonomy, energy segment efficiency and competitiveness, as well as the sustainable growth of energy segment, multifactorial examination and scientific research are required.
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