Investigating the city-level correlation between energy consumption and economic growth: A review and way forward

This paper reviews the nexus between energy consumption and economic growth, and identifies causal relationships. In contrast to most of the literature in the field, this review focuses primarily on the city-level relationship... [ view full abstract ]

This paper reviews the nexus between energy consumption and economic growth, and identifies causal relationships. In contrast to most of the literature in the field, this review focuses primarily on the city-level relationship between energy and economy. A country-level understanding of the relationship was reviewed in order to find context for the city-level investigation. Despite the fact that there is a widely recognised positive correlation of energy consumption with economic growth, there is no established consensus on the correlation coefficient or magnitude of relationship between energy consumption and economic growth, and there is limited understanding of the causal mechanisms responsible. This review identifies energy intensity, energy cost share and energy return on investment as useful metrics for understanding the relationship between energy consumption and economic growth. Furthermore, it provides an increased understanding of economic development and its influence on the growth of cities in the context of sustainable development. While increasing energy consumption will further economic development and city growth, there is an increasing need to decouple resource consumption and environmental impacts from increased energy consumption. This paper identifies and discusses various key focus areas (energy efficiency, decoupling, and the unrecorded economy) and their impacts on the energy-economy nexus and discusses their relevance for the sustainable development of cities.