HOW CAN WE SUPPORT FUTURE ECONOMIC GROWTH? IS THERE A GLOBAL ENERGY DEMATERIALIZATION?

RECALDE, MARINA YESICA; ZILIO, MARIANA INÉS; GUZOWSKI, CARINA

Rio de Janeiro

Conferencia; ISEE Conference; 2012

International Society of Ecological Economics

During the last decades, in a context of increasing concern about climate change consequences and depletion of the most important energy sources, the discussion of how to sustain the increasing energy demand has became highly relevant. The crucial point of this discussion is w hether it w ill be possible to sustain global economic grow th, not only in developed but especially in developing and underdeveloped regions, w ith the current w orldw ide supply of energy resources and a minimum of human environmental impact. To this respect, the opinions are different. On the one hand, according to the hypothesis of dematerialization, there is a reduction in material and energy consumption along the economic grow th path, therefore the use of less energy and resources to produce the same economic output could represent a solution to the ecological compatibility of future economic grow th (Ramos-Martin, 2005). From an environmental standpoint, for some economists this idea supports the hypothesis of the Environmental Kuznets Curve (EKC), w hich states the existence of an inverted-U shaped relationship betw een economic grow th and environmental degradation, implying that environmental degradation increases w ith economic activity up to a turning point after w hich income increases associate to higher environmental quality (Grossman and Krueger, 1991; Shafik and Bandopadhyay, 1992; Panayotou, 1993). If this hypothesis w ere correct, the best and probably the only solution to natural resources depletion and environmental problems w ill be grow th and w ait (Beckerman, 1992). Nonetheless, this hypothesis has been extensively criticized both because of its theoretical underpinnings and the empirical findings (Pargal and Wheeler, 1996; Harbaugh, Levinson and Wilson, 2000; Dasgrupta et al, 2001; Stern, 2004; Ramos-Martin, 2005; Wagner, 2008). When looking at energy intensity evolution of many developed countries, it is clear to see a decreasing trend. How ever, many authors argue that this drop has been highly due to a reallocation of energy intensive industries from developed to developing countries, w ithin other policies, in the frame of Haven Pollution Hypothesis (HPH) (Jenkins, 2003􀃜Cole, 2004; Cole and Elliot, 2005; Wagner and Timmins, 2008). If this w ere the case, then developing regions, such as Latin American and Caribbean countries (LA&C), should try to reallocate their productions in order to replicate the successful cases. Nevertheless, if these countries do not have the real chance to reduce their energy intensity, both because of the role of energy in economic grow th and because they cannot use the same policies (especially reallocation strategies), then other energy economic policies w ill be required. In this frame, the core objective of this paper is to study the main determinants of energy intensity decreasing trend in developed countries, considering the changes in energy mix, the rational use of energy policies and the economic structure changes as driven forces, but taking into account that production reallocation may have played a crucial role. The paper also seeks to determine the real potential of these policies to reduce energy intensity in LA&C region. To this purpose, w e use tw o different samples, one composed by a group of OCDE countries and the other one by LA&C. We firstly analyze the aggregate and disaggregate energy intensity paths and Greenhouse Gases (GHG) emissions for each group. Secondly, w e establish a relation betw een the energy intensity reduction and the factors previously mentioned in the OCDE group. Finally, w e study the real potential of the use of these OCDE energy policies in the LA&C sample. The relevance of this study for LA&C, and other developing regions, is tw ofold. In the first place, as energy is the material base of the economy (Georgesçu-Roegen, 1971; Podololinsky, 1883; en Ramos Martin, 2005; Common, 1997; Stern, 2004; Cleveland, 2003; Beaudreau, 2005; Stern and Cleveland, 2004), sufficient energy supply w ill be required to sustain these regions economic grow th. In the second place, in a context of increasing relevance of the discussion about climate change, its costs and responsibilities, the w ay in w hich future energy requirements w ill be supply becomes crucial. According to the IPCC scenarios in 2035 and 2050, developing countries w ill be the most energy consumer countries, as they w ill grow at a highest rate than developed ones (IPCC, 2011). Therefore, these countries w ill have to make harder enforces to reduce their energy consumption. If reallocation is not a feasible option for LA&C, then reply ?the successful decoupling strategy? of developed regions w ill not be an easy task and it w ill be necessary to find other environmental and energy policies to sustain our common future.