Energy Productivity and Economic Growth: Experiences of the Japanese Industries, 1955–2019

Description

Energy costs in the economy amount to only a few percent of gross domestic product, but their importance to economic growth is much greater than their apparent number. Energy is used in almost all production and consumption activities, and energy price changes induce significant spillover effects throughout the economic system. More importantly, stable and affordable access to energy is a critical factor in determining the rate of capital accumulation in a domestic economy and, hence, labor productivity growth. The expansion of production per hour worked is achieved by using more and higher quality capital, which requires more energy to operate. This book aims to provide robust observational facts on energy productivity improvement (EPI) and to analyze the mechanisms of EPI achieved in Japan’s economic growth from 1955 to 2019. Linking the productivity account with energy statistics enables us to attempt not only to develop a better indicator of energy productivity but also to evaluate the EPI with other significant changes in the production process, such as capital productivity, labor productivity, and even the overall efficiency measured in terms of total factor productivity. This book is a valuable resource for researchers and policymakers seeking to understand the role of energy throughout the economy and for economic planners seeking to ensure the efficient use of energy now and into the future. Preface Contents About the Author Abbreviations List of Figures List of Tables 1 Energy and Economic Growth 1.1 Energy Productivity as a Policy Goal 1.2 Economic Growth and Capital, Labor, and Energy 1.3 U-Shaped Energy Productivity 1.3.1 Pre-WWII Deterioration: 1885–1944 1.3.2 Post-WWII Improvement: 1955–2019 1.4 Data and Analyses 1.4.1 Productivity Account for Analyzing Energy 1.4.2 Structure of This Book Appendix: Historical Data in Japan References 2 Industry Origins of Energy Productivity Improvement 2.1 Prediction Gaps 2.2 Framework 2.2.1 Energy Quality 2.2.2 Industry Aggregation 2.3 Energy Quality Changes 2.4 Industry Origins of EPI 2.4.1 Decreasing Trend in True EPI 2.4.2 Period-I: 1955–1973 2.4.3 Period-II: 1973–1990 2.4.4 Period-III: 1990–2008 2.4.5 Period-IV: 2008–2019 2.4.6 Forecast 2.5 Conclusion Appendix 1: Energy Account Appendix 2: Supplementary Tables References 3 Real Energy Cost 3.1 Two Issues in Energy Security 3.2 Framework 3.2.1 Real Unit Energy Cost 3.2.2 Real Energy Prices 3.3 Japan-U.S. Comparison 3.3.1 Price Differentials 3.3.2 RUEC Gap 3.4 RUEC in Japan 3.4.1 Sources of RUEC Change 3.4.2 Real Energy Prices 3.4.3 Increasing Capital-Energy Ratio 3.4.4 Decreasing Labor-Energy Ratio 3.5 Industry-Level RUEC 3.6 Conclusion Appendix 1: Recent Trends in Monthly RUEC Appendix 2: Supplementary Tables References 4 Energy Productivity and Overall Efficiency 4.1 Fair is Foul 4.2 Framework 4.2.1 EPI-TFP Relationship 4.2.2 Industry Aggregation 4.2.3 Technological Changes Affecting EPI 4.3 EPI and TFP 4.3.1 Whole Economy 4.3.2 Period-I: 1955–1973 4.3.3 Period-II: 1973–1990 4.3.4 Period-III: 1990–2008 4.3.5 Period-IV: 2008–2019 4.4 Conclusion Appendix: Supplementary Tables References 5 Indirect Import of Electricity 5.1 Role of Intermediate Goods 5.2 Framework 5.2.1 EID and UDS 5.2.2 EID and UDS for Hypothetical Demand 5.3 Electricity EID and UDS 5.3.1 Economy-Wide EID 5.3.2 UDS by Demand 5.3.3 EID by Demand 5.3.4 Product-Level EID and UDS 5.4 Conclusion Appendix: Input-Output Tables in Japan References 6 Toward the Energy Transition of Japan 6.1 Optimistic Views 6.1.1 Projection a Decade Ago 6.1.2 Repeated Optimism 6.2 Experiences of Japan’s Economic Growth 6.2.1 EPI with Production Expansion 6.2.2 EPI Induced by Price Increases 6.2.3 Zero EPI Under Tighter Regulations 6.2.4 EPI Through Import Substitution 6.3 Price Conditions Facing Japan 6.3.1 Price Differentials in Renewables 6.3.2 Price Differentials in Electricity 6.4 Role of Carbon Pricing 6.4.1 Two Global Commons 6.4.2 Required Conditions 6.5 Conclusion Appendix: Economic Consequences of FIT References