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New Zealand Association of Economists conference 2006
Decoupling economic growth and energy use in New Zealand

Authors

Martin Brown-Santirso and Abby Thornley

Abstract

Worldwide, modern economies are highly dependent on a reliable and adequate supply of energy. Small disruptions in supply or price spikes can potentially lead to marked changes in economic growth. Importantly, all sectors of the economy place large demands on a country’s energy supply. In return, this energy supply affects jobs, productivity and both social and economic development.

Currently, there are no international conventions or agreements that specifically refer to the regulation and/or limitation of energy use per unit of Gross Domestic Product (GDP). However, international agreements and conventions, such as Agenda 21 and the 2002 World Summit on Sustainable Development, call for consideration on how economies can grow and prosper while reducing their use of energy and materials. These agreements also encourage the reduction of the amount of energy and materials used per unit of goods or services produced.

Since economic growth and social development are intricately linked to energy demand, questions for New Zealand (and other economies) include: are we using our critical energy supplies efficiently, and which sectors are, or are not, making improvements in energy efficiency?

This paper discusses the relationship between New Zealand’s consumer energy demand and economic growth (as measured by GDP), investigating whether economic growth is decoupling from energy demand. To further understand this relationship, demand for individual energy products such as coal and diesel is measured against economic growth, to examine New Zealand’s national energy profile.

At a more detailed level, this paper presents information on the volume and type of energy products consumed by New Zealand’s government, industry and households, with the aim of identifying the largest energy consumers. Finally, this paper compares consumer energy demand and value-added at an industry level, assessing which industries are improving in terms of energy efficiency.

pdf icon. Decoupling economic growth and energy use (PDF, 232KB)

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