Towards an Ecological Macroeconomics: Linking Energy and Climate in a Stock-Flow Consistent Input-Output Framework

This dissertation examines the development of a stock-flow consistent input-output (SFCIO) model in continuous time and its applications to energy analysis and climate change at the macroeconomic level. The approach used in the dissertation is to explore the SFCIO model via the development of a sequence of progressively more detailed models. The first portion of the dissertation is concerned with the analysis of several key problems: first, the integration of physical quantities (energy and power) with macroeconomic variables and the issue of dimensional analysis; second, the introduction of physically determined investment equations; third, the modelling of endogenous prices as physical market clearing mechanisms; and fourth, the presentation of an overall model calibration scheme based on a life-cycle net energy approach.

The second portion of the dissertation presents a sequence of energy transition models designed to explore the dynamics of economies attempting both a transition in how energy is generated (from fossil-fuels to renewables), and how energy is used (the electrification of end use). Using scenario and sensitivity analysis, the conditions under which economies succeed or fail at generating emissions trajectories consistent with a 1.5-degree target are explored. A three sector (renewable, fossil-fuel, and manufacturing) energy transition integrated assessment model is developed that includes endogenous depletion-based fossil-fuel EROI, an endogenous energy storage based renewable EROI, and climate interactions via coupling with the BEAM carbon cycle model and a two-component energy balance model. This is further extended to incorporate trade dynamics under assumptions of capital mobility and immobility.

A principal finding of this work is that, assuming no large-scale deployment of negative emissions technologies, the only conditions under which an SFCIO modelled economy can achieve emissions trajectories consistent with a 1.5 degree target is immense up-front investment in renewables and a rapid rate of decommissioning and replacing non-electrified capital with electrified capital and that degrowth alleviates the magnitude of these requirements.