1. Energy and Economic Growth: Why we need a new pathway to prosperity
Prof. Tim Foxon
Professor of Sustainability Transitions
SPRU – Science Policy Research Unit
University of Sussex, UK
Presentation to Exergy Economics Workshop,
University of Sussex, July, 2016

2. Outline Sustainability transition challenge
Different approaches to understanding long-term systems change
Green as a direction for innovation policy
Coevolutionary approach
Future research plans

3. Sustainability Transition
A transition to an economy and society that delivers enhanced human wellbeing and social equity whilst remaining within planetary boundaries
Need for systems change from current unsustainable systems of production and consumption
Questions:
What can we learn from long-term view of past systems change?
What theories and approaches have been used to conceptualise systems change?
What is the role of energy provision in past waves of economic growth?

4. Understanding transitions
Socio-technical transitions approach:
Coevolutionary dynamics
Focus on socio-technical regime change and radical innovation
Multiple actors involved in bringing about systemic change
Social movements can play an important role
Long-term view
Coevolutionary approach:
Coevolution of ecosystems, technologies, institutions, business strategies and user practices (Foxon, 2011)
Draw on insights on systems change, path dependency and lock-in from evolutionary economics
Draw on insights on energy and material dependence of economies from ecological economics

5. Ecological economics model of the economy

6. Techno-economic paradigm change
Carlota Perez (2002):
Long waves/surges of economic growth
5 surges, starting with industrial revolution
Each driven by a new technological/organisational innovation, which becomes cheap and creates spillovers to new uses and new technologies
Initial financial investments lead to a bubble, then a turning point, after which productive investment leads to growth era
Full benefits are realised when institutions co-evolve to enable benefits of new technologies to be realised
‘Green’ as the new direction for implementing ICT surge (Mazzucato and Perez, 2014)

7. Source: Schot, Foxon and Langer (2016), SPRU Working Paper

8. Green as new direction for innovation
“Reverse the energy- and materials intensive model inherited from mass production” (Mazzucato and Perez, 2014)
Prescriptions for a reorientation of production:
a mission-oriented approach to shaping and creating markets to address societal challenges;
a reorientation of investment and finance towards value-creating projects in the real economy rather than financial speculation;
taxation that rewards long-run investment rather than value extraction
Role of consumption:
circular economy/sharing economy ideas

9. Great Transformation Karl Polyani (1944):
Origins and collapse of late 19th/early 20th century ‘free market’ economy
Argues that ‘self-regulating free market’ was created by state action, based on classical economic theories
Markets for labour, land and money create impacts, e.g. unemployment, overexploitation of resources and financial bubbles
Further state action is needed to mitigate the negative social consequences of these impacts
Clear parallels to recent financial crisis
Economy is embedded in social relations

10. Collapse of complex societies
Joseph Tainter (1988):
As societies get more complex, they face higher energy and organisational costs and diminishing returns
This typically leads to social unrest and collapse of society to a much lower level of complexity and energy use, e.g. Roman Empire
Jared Diamond (2006):
Emphasised societies overrunning ecological constraints, leading to reduction in food supply and collapse, e.g. Easter Island
Links to declining ERoEI (Hall et al.):
As energy resources are exploited, net energy delivered declines
Renewable sources may have lower ERoEI (still debated)
Role of consumption:
Expectations raised of high levels of consumption that can’t be met

11. Coevolutionary approach
Examine systems change in terms of mutually coevolving systems:
Ecosystems, technologies, institutions, business strategies and user practices
Through causal interactions between these systems, examine:
Dependence of systems on natural ecosystems, through flows of energy and materials
How techno-economic systems become locked-in, and how this lock-in was overcome
How patterns and expectations of consumption were created
Sustainability perspective:
Need to conceptualise benefits in terms of human wellbeing and quality of life, rather than purely economic growth

12. Coevolutionary interactions
Source: Foxon(2011), Ecological Economics

13. Energy and Economic Growth: Why we need a new pathway to prosperity
Book proposal accepted by Routledge (Earthscan)
Examine past long waves of energy-industrial change, from Industrial Revolution to ICT
Implications for economic development:
Role of cheap fossil fuel energy in enabling these long waves
Implications for a sustainable low carbon transition
What this tell us about what current society needs to do to achieve a peaceful transition to a system based on renewable sources, but lower levels, of energy use and lower, but more equitable, levels of consumption