Energy economics is a broad

scientific Science is a systematic discipline that builds and organises knowledge in the form of testable hypotheses and predictions about the universe. Modern science is typically divided into twoor threemajor branches: the natural sciences, which stu ...

subject area which includes topics related to supply and use of

energy Energy () is the physical quantity, quantitative physical property, property that is transferred to a physical body, body or to a physical system, recognizable in the performance of Work (thermodynamics), work and in the form of heat and l ...

societies A society () is a group of individuals involved in persistent social interaction or a large social group sharing the same spatial or social territory, typically subject to the same political authority and dominant cultural expectations. ...

. Considering the cost of energy services and associated value gives economic meaning to the

efficiency Efficiency is the often measurable ability to avoid making mistakes or wasting materials, energy, efforts, money, and time while performing a task. In a more general sense, it is the ability to do things well, successfully, and without waste. ...

at which

can be produced. Energy services can be defined as functions that generate and provide energy to the “desired end services or states”. The efficiency of energy services is dependent on the engineered technology used to produce and supply energy. The goal is to minimise energy input required (e.g. kWh, mJ, see Units of Energy) to produce the energy service, such as

lighting Lighting or illumination is the deliberate use of light to achieve practical or aesthetic effects. Lighting includes the use of both artificial light sources like lamps and light fixtures, as well as natural illumination by capturing daylight. ...

( lumens), heating (

temperature Temperature is a physical quantity that quantitatively expresses the attribute of hotness or coldness. Temperature is measurement, measured with a thermometer. It reflects the average kinetic energy of the vibrating and colliding atoms making ...

) and

fuel A fuel is any material that can be made to react with other substances so that it releases energy as thermal energy or to be used for work (physics), work. The concept was originally applied solely to those materials capable of releasing chem ...

(

natural gas Natural gas (also fossil gas, methane gas, and gas) is a naturally occurring compound of gaseous hydrocarbons, primarily methane (95%), small amounts of higher alkanes, and traces of carbon dioxide and nitrogen, hydrogen sulfide and helium ...

). The main sectors considered in energy economics are

transport Transport (in British English) or transportation (in American English) is the intentional Motion, movement of humans, animals, and cargo, goods from one location to another. Mode of transport, Modes of transport include aviation, air, land tr ...

ation and

building A building or edifice is an enclosed Structure#Load-bearing, structure with a roof, walls and window, windows, usually standing permanently in one place, such as a house or factory. Buildings come in a variety of sizes, shapes, and functions, a ...

, although it is relevant to a broad scale of human activities, including

household A household consists of one or more persons who live in the same dwelling. It may be of a single family or another type of person group. The household is the basic unit of analysis in many social, microeconomic and government models, and is im ...

s and

business Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for ...

es at a microeconomic level and resource management and environmental impacts at a

macroeconomic Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output/ GDP ...

level. Interdisciplinary scientist Vaclav Smil has asserted that "every economic activity is fundamentally nothing but a conversion of one kind of energy to another, and monies are just a convenient (and often rather unrepresentative) proxy for valuing the energy flows."

History

Energy related issues have been actively present in economic literature since the

1973 oil crisis In October 1973, the Organization of Arab Petroleum Exporting Countries (OAPEC) announced that it was implementing a total oil embargo against countries that had supported Israel at any point during the 1973 Yom Kippur War, which began after Eg ...

, but have their roots much further back in the history. As early as 1865, W.S. Jevons expressed his concern about the eventual depletion of coal resources in his book ''The Coal Question''. One of the best known early attempts to work on the economics of exhaustible resources (incl. fossil fuel) was made by H. Hotelling, who derived a price path for

non-renewable resources A non-renewable resource (also called a finite resource) is a natural resource that cannot be readily replaced by natural means at a pace quick enough to keep up with consumption. An example is carbon-based fossil fuels. The original organic mat ...

, known as Hotelling's rule. Development of energy economics theory over the last two centuries can be attributed to three main economic subjects – the rebound effect, the energy efficiency gap and more recently, 'green nudges'. The Rebound Effect (1860s to 1930s) Energy Economics - Instrumental Theories

Energy Economics - Instrumental Theories

While energy efficiency is improved with new technology, expected energy savings are less-than proportional to the efficiency gains due to behavioural responses. There are three behavioural sub-theories to be considered: the ''direct rebound effect'', which anticipates increased use of the energy service that was improved; the ''indirect rebound effect'', which considers an increased income effect created by savings then allowing for increased energy consumption, and; the ''economy-wide effect'', which results from an increase in energy prices due to the newly developed technology improvements. The Energy Efficiency Gap (1980s to 1990s) Suboptimal investment in improvement of energy efficiency resulting from market failures/barriers prevents the optimal use of energy. From an economical standpoint, a rational decision-maker with

perfect information Perfect information is a concept in game theory and economics that describes a situation where all players in a game or all participants in a market have knowledge of all relevant information in the system. This is different than complete informat ...

will optimally choose between the trade-off of initial investment and energy costs. However, due to uncertainties such as environmental externalities, the optimal potential energy efficiency is not always able to be achieved, thus creating an energy efficiency gap. Green Nudges (1990s to Current) While the energy efficiency gap considers economical investments, it does not consider behavioural anomalies in energy consumers. Growing concerns surrounding

climate change Present-day climate change includes both global warming—the ongoing increase in Global surface temperature, global average temperature—and its wider effects on Earth's climate system. Climate variability and change, Climate change in ...

and other environmental impacts have led to what economists would describe as irrational behaviours being exhibited by energy consumers. A contribution to this has been government interventions, coined "green nudges’ by Thaler and Sustein (2008), such as feedback on energy bills. Now that it is realised people do not behave rationally, research into energy economics is more focused on behaviours and impacting decision-making to close the energy efficiency gap.

Economic factors

Due to diversity of issues and methods applied and shared with a number of

academic discipline An academic discipline or academic field is a subdivision of knowledge that is taught and researched at the college or university level. Disciplines are defined (in part) and recognized by the academic journals in which research is published, a ...

s, energy economics does not present itself as a self-contained academic discipline, but it is an applied subdiscipline of

economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...

. From the list of main topics of economics, some relate strongly to energy economics: * Computable general equilibrium *

Econometrics Econometrics is an application of statistical methods to economic data in order to give empirical content to economic relationships. M. Hashem Pesaran (1987). "Econometrics", '' The New Palgrave: A Dictionary of Economics'', v. 2, p. 8 p. 8 ...

* Environmental economics *

Finance Finance refers to monetary resources and to the study and Academic discipline, discipline of money, currency, assets and Liability (financial accounting), liabilities. As a subject of study, is a field of Business administration, Business Admin ...

Industrial organization In economics, industrial organization is a field that builds on the theory of the firm by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization adds real-world complications to the per ...

* Input–output model *

Microeconomics Microeconomics is a branch of economics that studies the behavior of individuals and Theory of the firm, firms in making decisions regarding the allocation of scarcity, scarce resources and the interactions among these individuals and firms. M ...

Macroeconomics Macroeconomics is a branch of economics that deals with the performance, structure, behavior, and decision-making of an economy as a whole. This includes regional, national, and global economies. Macroeconomists study topics such as output (econ ...

Operations research Operations research () (U.S. Air Force Specialty Code: Operations Analysis), often shortened to the initialism OR, is a branch of applied mathematics that deals with the development and application of analytical methods to improve management and ...

Resource economics Natural resource economics deals with the Supply (economics), supply, Demand (economics), demand, and Resource allocation, allocation of the Earth's natural resources. One main objective of natural resource economics is to better understand th ...

Energy economics also draws heavily on results of energy

engineering Engineering is the practice of using natural science, mathematics, and the engineering design process to Problem solving#Engineering, solve problems within technology, increase efficiency and productivity, and improve Systems engineering, s ...

geology Geology (). is a branch of natural science concerned with the Earth and other astronomical objects, the rocks of which they are composed, and the processes by which they change over time. Modern geology significantly overlaps all other Earth ...

political sciences Political science is the scientific study of politics. It is a social science dealing with systems of governance and power, and the analysis of political activities, political thought, political behavior, and associated constitutions and ...

ecology Ecology () is the natural science of the relationships among living organisms and their Natural environment, environment. Ecology considers organisms at the individual, population, community (ecology), community, ecosystem, and biosphere lev ...

etc. Recent focus of energy economics includes the following issues: *

Climate change Present-day climate change includes both global warming—the ongoing increase in Global surface temperature, global average temperature—and its wider effects on Earth's climate system. Climate variability and change, Climate change in ...

and climate policy *

Demand response Demand response is a change in the power consumption of an electric utility customer to better match the demand for power with the supply. Until the 21st century decrease in the cost of pumped storage and batteries, electric energy could not b ...

* Elasticity of

supply and demand In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris_paribus#Applications, holding all else equal, the unit price for a particular Good (economics), good ...

in energy market * Energy and

economic growth In economics, economic growth is an increase in the quantity and quality of the economic goods and Service (economics), services that a society Production (economics), produces. It can be measured as the increase in the inflation-adjusted Outp ...

Energy derivative An energy derivative is a derivative contract based on (derived from) an underlying energy asset, such as natural gas, crude oil, or electricity. Energy derivatives are exotic derivatives and include exchange-traded contracts such as futures ...

s * Energy elasticity * Energy forecasting * Energy markets and

electricity market An electricity market is a system that enables the exchange of electrical energy, through an electrical grid. Historically, electricity has been primarily sold by companies that operate electric generators, and purchased by consumers or electr ...

s - liberalisation, (de- or re-)

regulation Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. Fo ...

* energy infrastructure * Environmental policy *

Sustainability Sustainability is a social goal for people to co-exist on Earth over a long period of time. Definitions of this term are disputed and have varied with literature, context, and time. Sustainability usually has three dimensions (or pillars): env ...

Some institutions of higher education (

universities A university () is an educational institution, institution of tertiary education and research which awards academic degrees in several Discipline (academia), academic disciplines. ''University'' is derived from the Latin phrase , which roughly ...

) recognise energy economics as a viable career opportunity, offering this as a

curriculum In education, a curriculum (; : curriculums or curricula ) is the totality of student experiences that occur in an educational process. The term often refers specifically to a planned sequence of instruction, or to a view of the student's experi ...

. The

University of Cambridge The University of Cambridge is a Public university, public collegiate university, collegiate research university in Cambridge, England. Founded in 1209, the University of Cambridge is the List of oldest universities in continuous operation, wo ...

Massachusetts Institute of Technology The Massachusetts Institute of Technology (MIT) is a Private university, private research university in Cambridge, Massachusetts, United States. Established in 1861, MIT has played a significant role in the development of many areas of moder ...

and the Vrije Universiteit Amsterdam are the top three research universities, and

Resources for the Future Resources for the Future (RFF) is an American nonprofit organization, founded in 1952, that conducts independent research into environmental, energy, and natural resource issues, primarily via economics and other social sciences. Headquartered in ...

the top research institute. There are numerous other research departments, companies, and professionals offering energy economics studies and consultations.

International Association for Energy Economics

International Association for Energy Economics (IAEE) is an international

non-profit A nonprofit organization (NPO), also known as a nonbusiness entity, nonprofit institution, not-for-profit organization, or simply a nonprofit, is a non-governmental (private) legal entity organized and operated for a collective, public, or so ...

society of professionals interested in energy economics. IAEE was founded in 1977, during the period of the energy crisis. IAEE is incorporated under United States laws and has headquarters in

Cleveland Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County. Located along the southern shore of Lake Erie, it is situated across the Canada–U.S. maritime border and approximately west of the Ohio-Pennsylvania st ...

. The IAEE operates through a 17-member Council of elected and appointed members. Council and officer members serve in a voluntary position. IAEE has over 4,500 members worldwide (in over 100 countries). There are more than 25 national chapters, in countries where membership exceeds 25 individual members. Some of the regularly active national chapters of the IAEE are; USAEE - United States; GEE - Germany; BIEE - Great Britain; AEE - France; AIEE - Italy.

Publications

The International Association for Energy Economics publishes three publications throughout the year: * '' The Energy Journal'', a quarterly academic publication * the ''Economics of Energy & Environmental Policy,'' a semi-annual publication * the ''Energy Forum''

Conferences

The IAEE conferences address critical issues of vital concern and importance to governments and industries and provide a forum where policy issues are presented, considered and discussed at both formal sessions and informal social functions. IAEE typically holds five Conferences each year. The main annual conference for IAEE is the ''IAEE International Conference'' which is organized at diverse locations around the world. From the year 1996 on these conferences have taken place (or will take place) in the following cities: * 2021 - Online Conference * 2020 - No Conference * 2019 - Montreal, Canada * 2018 - Groningen, The Netherlands. * 2017 - Singapore. * 2016 - Bergen, Norway. * 2015 - Antalya, Turkey. * 2014 - New York City, United States. * 2013 - Daegu, South Korea. * 2012 -

Perth Perth () is the list of Australian capital cities, capital city of Western Australia. It is the list of cities in Australia by population, fourth-most-populous city in Australia, with a population of over 2.3 million within Greater Perth . The ...

, Australia (35th). * 2011 -

Stockholm Stockholm (; ) is the Capital city, capital and List of urban areas in Sweden by population, most populous city of Sweden, as well as the List of urban areas in the Nordic countries, largest urban area in the Nordic countries. Approximately ...

, Sweden. * 2010 - Rio,

Brazil Brazil, officially the Federative Republic of Brazil, is the largest country in South America. It is the world's List of countries and dependencies by area, fifth-largest country by area and the List of countries and dependencies by population ...

. * 2009 -

San Francisco San Francisco, officially the City and County of San Francisco, is a commercial, Financial District, San Francisco, financial, and Culture of San Francisco, cultural center of Northern California. With a population of 827,526 residents as of ...

, United States. * 2008 -

Istanbul Istanbul is the List of largest cities and towns in Turkey, largest city in Turkey, constituting the country's economic, cultural, and historical heart. With Demographics of Istanbul, a population over , it is home to 18% of the Demographics ...

Turkey Turkey, officially the Republic of Türkiye, is a country mainly located in Anatolia in West Asia, with a relatively small part called East Thrace in Southeast Europe. It borders the Black Sea to the north; Georgia (country), Georgia, Armen ...

. * 2007 -

Wellington Wellington is the capital city of New Zealand. It is located at the south-western tip of the North Island, between Cook Strait and the Remutaka Range. Wellington is the third-largest city in New Zealand (second largest in the North Island ...

, New Zealand. * 2006 - Potsdam, Germany. * 2005 -

Taipei , nickname = The City of Azaleas , image_map = , map_caption = , pushpin_map = Taiwan#Asia#Pacific Ocean#Earth , coordinates = , subdivision_type = Country ...

, China (Taipei). * 2003 -

Prague Prague ( ; ) is the capital and List of cities and towns in the Czech Republic, largest city of the Czech Republic and the historical capital of Bohemia. Prague, located on the Vltava River, has a population of about 1.4 million, while its P ...

Czech Republic The Czech Republic, also known as Czechia, and historically known as Bohemia, is a landlocked country in Central Europe. The country is bordered by Austria to the south, Germany to the west, Poland to the northeast, and Slovakia to the south ...

. * 2002 -

Aberdeen Aberdeen ( ; ; ) is a port city in North East Scotland, and is the List of towns and cities in Scotland by population, third most populous Cities of Scotland, Scottish city. Historically, Aberdeen was within the historic county of Aberdeensh ...

, Scotland. * 2001 -

Houston Houston ( ) is the List of cities in Texas by population, most populous city in the U.S. state of Texas and in the Southern United States. Located in Southeast Texas near Galveston Bay and the Gulf of Mexico, it is the county seat, seat of ...

Texas Texas ( , ; or ) is the most populous U.S. state, state in the South Central United States, South Central region of the United States. It borders Louisiana to the east, Arkansas to the northeast, Oklahoma to the north, New Mexico to the we ...

. * 2000 -

Sydney Sydney is the capital city of the States and territories of Australia, state of New South Wales and the List of cities in Australia by population, most populous city in Australia. Located on Australia's east coast, the metropolis surrounds Syd ...

, Australia. * 1999 -

Rome Rome (Italian language, Italian and , ) is the capital city and most populated (municipality) of Italy. It is also the administrative centre of the Lazio Regions of Italy, region and of the Metropolitan City of Rome. A special named with 2, ...

, Italy. * 1998 -

Quebec Quebec is Canada's List of Canadian provinces and territories by area, largest province by area. Located in Central Canada, the province shares borders with the provinces of Ontario to the west, Newfoundland and Labrador to the northeast, ...

, Canada. * 1997 -

New Delhi New Delhi (; ) is the Capital city, capital of India and a part of the Delhi, National Capital Territory of Delhi (NCT). New Delhi is the seat of all three branches of the Government of India, hosting the Rashtrapati Bhavan, New Parliament ...

, India. * 1996 -

Budapest Budapest is the Capital city, capital and List of cities and towns of Hungary, most populous city of Hungary. It is the List of cities in the European Union by population within city limits, tenth-largest city in the European Union by popul ...

, Hungary. Other annual IAEE conferences are the North American Conference and the European Conference.

IAEE Awards

The Association's Immediate Past President annually chairs the Awards committee that selects the award recipients. * Outstanding Contributions to the Profession * Outstanding Contributions to the IAEE * The Energy Journal Campbell Watkins Best Paper Award * Economics of Energy & Environmental Policy Best Paper Award * Journalism Award

Sources, links and portals

Leading journals of energy economics include: * '' Energy Economics'' * '' The Energy Journal'' * '' Resource and Energy Economics'' There are several other journals that regularly publish papers in energy economics: * '' Energy – The International Journal'' * ''

Energy Policy Energy policies are the government's strategies and decisions regarding the Energy production, production, Energy distribution, distribution, and World energy supply and consumption, consumption of energy within a specific jurisdiction. Energy ...

'' * '' International Journal of Global Energy Issues'' * '' Journal of Energy Markets'' * '' Utilities Policy'' Much progress in energy economics has been made through the conferences of the International Association for Energy Economics, the model comparison exercises of the (Stanford) Energy Modeling Forum and the meetings of the International Energy Workshop. IDEAS/RePEc has a collection of recent working papers.

Leading energy economists

The top 20 leading energy economists as of December 2016 are: IDEAS/RePEc has
list of energy economists
and

* Martin L. Weitzman * Lutz Kilian * Robert S. Pindyck * David M. Newbery *

Kenneth J. Arrow Kenneth Joseph Arrow (August 23, 1921 – February 21, 2017) was an American economist, mathematician and political theorist. He received the John Bates Clark Medal in 1957, and the Nobel Memorial Prize in Economic Sciences in 1972, along with J ...

* Richard S.J. Tol * Severin Borenstein * Richard G. Newell * Frederick (Rick) van der Ploeg * Michael Greenstone *

Richard Schmalensee Richard Lee "Dick" Schmalensee (born 1944) is the Howard W. Johnson Professor of Management, emeritus at the MIT Sloan School of Management. He is also Professor of Economics, emeritus, at the Department of Economics at MIT. He served as the ...

* James Hamilton * Robert Norman Stavins * Ilhan Ozturk * Paul Joskow * Ramazan Sari * Jeffrey A. Frankel * David Ian Stern * Kenneth S. Rogoff * Rafal Weron * Michael Gerald Pollitt * Ugur Soytas

References

External links

United States Association for Energy EconomicsUIA - International Association for Energy Economics (IAEE)The Distinguished Lecturer SeriesIAEE Newsletter
{{DEFAULTSORT:Energy economics Environmental social science

Economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...

Resource economics