The next section – "Why Econometrics" – opens with a graph of the relationship between economic growth and CO2 emissions, which I put together from World Bank, International Energy Agency, and BP data sources.
The following section – "Do GHG Emissions Cause Climate Change?" starts with original research using the temperature and CO2 time series in the previous graphs. The CO2 concentration acts as a proxy variable for all radiative forcing in this analysis. It then goes on to present results from my 2014 paper with Robert Kaufmann published in Climatic Change. Details of the data are given in that paper.
The video of my fourth Francqui lecture on the energy and the industrial revolution is now on Youtube:
The opening graph of population and GDP per capita in the United Kingdom since 0CE combines data from the Maddison Project at the University of Groningen and data produced by Steven Broadberry. The energy data in the next graph was compiled in a 2007 publication by Paul Warde. The graph of energy use in Europe since 1500 and the graph of the composition of energy use are from "Power to the People" by Astrid Kander, Paolo Malanima, and Paul Warde.
Opening the section on Sweden is a photo of the Aitik copper mine. We used data from the Historical National Accounts of Sweden and Astrid's PhD research. If you are wondering how the value of energy could be as large as the GDP in 1800 in Sweden this is because energy is an intermediate good. GDP is value added by labor and capital with land included in capital usually. Gross output of the economy is much larger than the GDP. A huge amount of economic activity was dedicated to producing food, fuel, and fodder.
The solar panels that open the concluding section are in Japan. I've forgotten where.
The video of my third Francqui lecture on the rebound effect is now on Youtube:
The first part of the presentation – "What is the Rebound Effect" – mostly comes from my teaching material on the rebound effect. The graph of the macroeconomic price effect comes from Gillingham et al. (2016). In the following two slides, I modified it to show infinitely elastic (assumed by Lemoine (2020) for example) and totally inelastic energy supply, which results in 100% rebound.
The next section – "The Economy-wide Rebound Effect: Evidence" – starts with a graph from my 2017 paper in Climatic Change: "How Accurate are Energy Intensity Projections?". The graph compares the historical rate of growth of energy intensity to the two "business as usual projections" in the 2016 World Energy Outlook. "Current policies" only includes implemented policies while "New policies" includes announced but not yet implemented policies. The latter is at the extreme of historical decline in energy intensity. This doesn't mean that it can't happen, but we should be sceptical given the performance of IEA projections described in my paper. The following slide shows the first page of another Gillingham et al. article, this time their 2013 paper in Nature. The rest of this section is based on my 2020 Energy Policy article: "How Large is the Economy-wide Rebound Effect?". A sad aspect of this article was that it was invited by Stephen Brown who died while I was writing it.
Saunders (1992) was one of the early papers in the modern revival in interest in the rebound effect. Lemoine (2019) is just a working paper version of Lemoine (2020), mentioned above. Lemoine does for general equilibrium what Saunders did for partial equilibrium. I kind of mangled my explanation of "Intensity vs. growth effects". The proper explanation is in my 2020 Energy Policy article.* Both elasticities on the RHS of the equation will be small if rebound is large and the energy cost share is small. Using Saunders' (1992) model as an example, the first elasticity is equal to sigma-1, where sigma is the elasticity of substitution between capital and energy. But the rebound holding GDP constant is sigma. If the elasticity of substitution is one – which is the case for the Cobb-Douglas function – then rebound is 100% holding GDP constant. The contribution of the second term to rebound is small if the energy cost share is small.
There are two graphs of "historical evidence". The monochrome one is from Arthur van Benthem's 2015 JAERE paper. The color one is based on one in my 2016 Energy Journal paper coauthored with Mar Rubio and Zsuzsanna Csereklyei, which I discussed in the previous lecture. The remaining references in this section are: Saunders (2008), Turner (2009), Rausch and Schwerin (2018), and Adetutu et al. (2016). They're all discussed in my Energy Policy paper.
The final section on "Using SVARs to Estimate the Economy-wide Rebound Effect" is mostly based on Bruns et al. (2020) (working paper). At the end, I added unpulished results on several European countries and Iran. This work was carried out in collaboration with Anne Berner and Mahboubeh Jafari. We haven't posted working papers for this research yet.
The video of my second Francqui lecture on energy and economic growth is now on Youtube:
The first part of the presentation comes from my teaching material on the biophysical foundations of economics. There are a couple of slides of energy units and energy flows from the Global Energy Assessment. The slide of the Earth and economic system is from Perman et al.
The next section of the lecture on the "stylized facts" is based on my 2016 paper with Zsuzsanna Csereklyei and Mar Rubio published in the Energy Journal. I updated the data from 2010 to 2018 using the Penn World Table and International Energy Agency data. The third section on the meta-analysis of the energy and economic growth literature is based on my 2014 paper with Stephan Bruns and Christian Gross also published in the Energy Journal. Finally, I talked about my work with Akshay Shanker in our 2018 working paper: "Energy Intensity, Growth and Technical Change". This material was the most technical and "inside baseball" of the lecture (though a lot less technical than the paper). I think I got a bit lost towards the end when I was talking about the effect of the price of energy on energy intensity and other speculations... But the key message is that there is a lot to research still in this area.
The video of my inaugural Francqui lecture on economic growth and the environment is now on Youtube:
The first part of the presentation comes from my teaching material on the environmental Kuznets curve. The slide of turning points in the literature is based on my 2001 paper with Mick Common in JEEM: "Is there an environmental Kuznets curve for sulfur?". The cross-sectional graphs on sulfur and carbon emissions are from my 2017 paper in the Journal of Bioeconomics: "The environmental Kuznets curve after 25 years". The longitudinal EKC for five countries uses data from the latest release of CEDS. The idea behind "explaining the paradox" – that there is a monotonic frontier that shifts down over time – is, I think, first expressed in the JEEM paper and then developed in my following papers in Ecological Economics (2002), World Development (2004), Journal of Environment and Development (2005), and then more recently in EDE(2017). Reyer Gerlagh created the original growth rates figure for greenhouse gas emissions, which was in the part I wrote of Chapter 5 of the WG3 volume of the 5th IPCC Assessment Report. A paper on carbon and sulfur emissions was eventually published with Reyer and Paul Burke as the EDE (2017) paper. The research on total greenhouse gas emissions was carried out with my masters student Luis Sanchez and published in Ecological Economics in 2016. This was before the first paper in this series – the EDE one – was eventually published because of the long review process that one went through. The research on PM 2.5 was carried out with my masters student Jeremy Van Dijk and published in Climatic Change in 2017.
Almost seven years ago, I posted an animation of a series of Excel graphs showing the relationship between energy use and GDP per capita over time in a sample of 99 countries. In preparation for my Francqui Lectures, I've updated the animation to 2018 using the new PWT 10 GDP data (and still using IEA energy data). I also replaced Cuba with Botswana, but not changed any of the other countries:
The outlier that starts getting poorer but maintains its energy use near the end of the sequence is Venezuela. The curve does look like it twists a bit clockwise over time but it is still pretty consistent. So, I ran 48 annual cross section regressions and plotted the values of the coefficients over time with a 95% confidence interval:
The drop off in the slope coefficient in the last 2 years seems to be due to the behavior of the Venezuela outlier. Otherwise, both coefficients drift without a clear trend.
I have now made a plan for my series of Francqui Lectures at Hasselt University. Unfortunately, given Australian government pronouncements, we have decided to make this an online only series. I had hoped to travel to Belgium mid-year, but that is now not going to be possible.
The inaugural lecture will take place in March and following that there will another 4 lectures over the next couple of months. They will focus on key areas of my research in recent years with introductions based on my ANU course material in environmental and energy economics. I have now written abstracts and made plans for each one:
Inaugural Lecture: Economic Growth and the Environment What is the relationship between economic growth and environmental quality? The environmental Kuznets curve (EKC) hypothesis proposes that growth initially damages the environment but at higher income levels eventually improves the quality of the environment. The EKC has been a very popular idea over the last three decades despite being criticized almost from the start. The lecture will first review the history of the EKC and alternative approaches. Then applying an approach that synthesizes the EKC and alternative convergence approaches, it will show that convergence and non-growth time-related effects are important for explaining both pollution emissions and concentrations. Future research should focus on developing and testing alternative theoretical models and investigating the non-growth drivers of pollution reduction.
Lecture 2: Energy and Economic Growth and Development All economic activity requires energy, but what is the relationship between energy use and economic growth and development? Richer countries tend to use more energy per person than poorer countries, but energy used per dollar of GDP tends to be lower in richer countries and decline over time globally. Countries are also becoming more similar – converging – in their energy use. This lecture will present evidence on these patterns and investigate the drivers of change.
Lecture 3: The Rebound Effect Energy efficiency improvements that reduce the cost of providing energy services result in more use of those services reducing the energy saved. This is the direct rebound effect. There are also follow-on effects across the economy – such as the energy required to produce the other goods and services that consumers buy instead of energy – that can potentially make the economy-wide rebound much larger. Could the rebound be large enough for energy efficiency improvements to “backfire” by actually increasing rather than reducing energy use? The lecture will show how we can use a structural vector autoregression model to estimate the effect of energy efficiency shocks on energy use. The model is applied to the US, several European countries, and Iran demonstrating that economy-wide rebound is large, and backfire may be possible.
Lecture 4: Energy and the Industrial Revolution Ecological and mainstream economists disagree on how important energy is for economic growth, and economic historians are divided on the importance of coal in fueling the increase in the rate of economic growth known as the Industrial Revolution. The lecture will argue that energy is much more important for growth when it is scarce than when it is abundant. Increasing energy services has much less effect on growth in developed economies than in pre-industrial or developing economies. The lecture will present models of the role of energy, and coal specifically, in economic growth and apply them to understanding the Industrial Revolution in Britain and Sweden, two countries with extensive historical data.
Lecture 5: Econometric Modelling of Global Climate Change Economic growth has increased anthropogenic emissions of greenhouse gases and their concentration in the atmosphere leading to climate change. This means that greenhouse gases follow similar stochastic processes to macroeconomic variables, allowing us to apply the toolkit of time series econometrics to analyzing global climate change. However, though economic activity has immediate impacts on the climate, there is also a “tail” of much slower effects due the role of the ocean in storing heat and the slow processes of the carbon cycle and changing land-cover. The lecture will show how time series econometrics can be applied to understanding global climate change and estimating the impact of economic activity on the climate.
I am one of the two recipients (one is Belgian and one international) of a Francqui Chair at Hasselt University. This sounds like an academic position but actually is a one year appointment during which the chair is supposed to give 10 hours of lectures in their field. I'm not sure yet what they are exactly looking for. But here are Siem Jan Koopman's planned lectures at the University of Antwerpen.
So, I'm thinking if I weave my research into a more pedagogical narrative I would be on the right track. I am hoping the lectures will be recorded and I will be able to post them here on Stochastic Trend. My coathors Stephan Bruns and Robert Malina nominated me for this award.
I am hoping I will actually be able to visit Belgium next year assuming that I will be able to access a COVID-19 vaccine.
