From the journal of the Economic Research Council comes this paper by John Constable of Renewable Energy Foundation fame. It considers the question of whether energy is just another factor input into the economy or whether it has a more fundamental role. The conclusion is that energy is different, the reason being found in the realms of thermodynamics:
...wealth is created by using energy to introduce improbable order into the world, in other words a reduction of entropy in one part of the system at the expense of a greater increase in entropy in another.
This is interesting when read in conjunction with the consideration of EROI the other day. If it is correct, the implications of deliberately increasing the cost of energy are likely be serious:
The policy-induced energy cost increases are a chronic presence not an acute shock; even
assuming that no further generating plant is constructed in the UK after meeting the 2020 renewable electricity target, the subsidy entitlements created up to that time will persist for another two decades. Indeed, the cumulative subsidy burden between 2002 and 2040 will amount to about £160 billion....It is therefore to be expected that non-energy input costs should now begin to show a steady upward trend as high energy costs work their way through, entailing steady reductions in standard of living as more of the wealth of the economy circulates within the capital of the energy sector and less in other sectors outside it.
It's interesting to consider that both of the parties that have a chance of forming the next government are going to go into the election with policies that implicitly require lower standards of living for decades to come. I'm reminded of this.