Re‐estimating the energy intensity of growth with implications for sustainable development. The myth of the decoupling effect

Kostas Bithas (), Panos Kalimeris and Eleni Koilakou

Sustainable Development, 2021, vol. 29, issue 2, 441-452

Abstract: The link between energy and economic growth is re‐evaluated by estimating the energy requirements for creating one unit of “GDP per capita.” GDP per capita is widely used as the proxy monetary index for evaluating the economic utility enjoyed by individuals, at least at the macroeconomic level. Hence, the energy/[GDP per capita] ratio measures overall energy intensity across the economic system, comparing actual inputs (energy flows) with the final outcome (utility for human beings). Contrary to the prevailing energy intensity framework which evaluates the energy flows for creating one unit of GDP, we take into account population size which is an indispensable factor in determining the outcome of the economy. We re‐estimate EI for representative developed and developing countries by applying the energy/[GDP per capita] index. Our estimates suggest a coupling link for the global economy overall, as decoupling in the advanced economies in recent years has been outweighed by the coupling trend prevailing in the developing world. The findings question prevailing opinion based on the trajectories of energy/GDP and suggest a decoupling between energy and growth over the last 100 years for the majority of national economies and the global economy. Our estimates cast doubts on the prospects of sustainable development unless novel, innovative, and efficient energy policies are designed.

Date: 2021
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https://doi.org/10.1002/sd.2158

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Persistent link: https://EconPapers.repec.org/RePEc:wly:sustdv:v:29:y:2021:i:2:p:441-452

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