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The modest environmental relief resulting from the transition to the service economy

Henriques, Sofia LU and Kander, Astrid LU (2010) In Ecological Economics 70(2). p.271-282
Abstract
A service transition is supposed to lead to the decline of energy intensity (energy/GDP). We argue that this interpretation is overly optimistic because the shift to a service economy is somewhat of an illusion in terms of real production. Several recent studies of structural effects on energy intensity have made the error of using sector shares in current prices, combined with GDP in constant prices, which is inconsistent and ignores the different behaviour of prices across sectors. We use the more correct method of sector shares in constant prices, and make an attempt to single out the effect from the real service transition by using two complementary methods: shift share analyses in current and constant prices, and Logarithmic Mean... (More)
A service transition is supposed to lead to the decline of energy intensity (energy/GDP). We argue that this interpretation is overly optimistic because the shift to a service economy is somewhat of an illusion in terms of real production. Several recent studies of structural effects on energy intensity have made the error of using sector shares in current prices, combined with GDP in constant prices, which is inconsistent and ignores the different behaviour of prices across sectors. We use the more correct method of sector shares in constant prices, and make an attempt to single out the effect from the real service transition by using two complementary methods: shift share analyses in current and constant prices, and Logarithmic Mean Divisia Index (LMDI) for 10 developed and 3 emerging economies. A service transition is rather modest in real terms. The major driver of the decline in energy intensity rests within the manufacturing sector. Meanwhile, the transition to a service sector had a small downward impact on energy intensity in 7 of the developed countries (and no impact in the others). For emerging economies like Brazil, Mexico and India, it is the residential sector that drives energy intensity down because of the declining share of this sector as the formal economy grows, and as a consequence of switching to more efficient fuels. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
energy intensity, service economy, environmental kuznets curve
in
Ecological Economics
volume
70
issue
2
pages
271 - 282
publisher
Elsevier
external identifiers
  • wos:000285128300016
  • scopus:78449254301
ISSN
0921-8009
DOI
10.1016/j.ecolecon.2010.08.010
language
English
LU publication?
yes
id
998ee0f7-202d-4da7-91d5-08d627c733df (old id 1729088)
date added to LUP
2010-12-06 12:17:37
date last changed
2018-05-29 11:56:13
@article{998ee0f7-202d-4da7-91d5-08d627c733df,
  abstract     = {A service transition is supposed to lead to the decline of energy intensity (energy/GDP). We argue that this interpretation is overly optimistic because the shift to a service economy is somewhat of an illusion in terms of real production. Several recent studies of structural effects on energy intensity have made the error of using sector shares in current prices, combined with GDP in constant prices, which is inconsistent and ignores the different behaviour of prices across sectors. We use the more correct method of sector shares in constant prices, and make an attempt to single out the effect from the real service transition by using two complementary methods: shift share analyses in current and constant prices, and Logarithmic Mean Divisia Index (LMDI) for 10 developed and 3 emerging economies. A service transition is rather modest in real terms. The major driver of the decline in energy intensity rests within the manufacturing sector. Meanwhile, the transition to a service sector had a small downward impact on energy intensity in 7 of the developed countries (and no impact in the others). For emerging economies like Brazil, Mexico and India, it is the residential sector that drives energy intensity down because of the declining share of this sector as the formal economy grows, and as a consequence of switching to more efficient fuels.},
  author       = {Henriques, Sofia and Kander, Astrid},
  issn         = {0921-8009},
  keyword      = {energy intensity,service economy,environmental kuznets curve},
  language     = {eng},
  number       = {2},
  pages        = {271--282},
  publisher    = {Elsevier},
  series       = {Ecological Economics},
  title        = {The modest environmental relief resulting from the transition to the service economy},
  url          = {http://dx.doi.org/10.1016/j.ecolecon.2010.08.010},
  volume       = {70},
  year         = {2010},
}