Impacts of new energy technology using generalized input-output analysis

Abstract

Traditional input-output analysis was modified to include air pollution emissions, employment, and other accessory variables. Engineering studies of high and low DTU coal gasification and the gas turbine topping cycle were then utilized to incorporate these new technologies into the 1980 input-output table that was projected by the Bureau of Labor Statistics. These two techniques are shown to be able to correct many previous objections to input-output analysis and to have applicability to a wide variety of practical problems. A series of 1985 projections featuring high, medium and low growth of energy consumption (both with and without the new technologies) were also made. Economic and environmental impacts were then calculated for these alternative futures. The major conclusions are: 1. Total investment in general and capital good industries in particular (primarily turbogenerator manufacturers, boiler makers, and construction equipment manufacturers) are quite sensitive to energy use growth rates (especially electricity). 2. Introduction of high tu coal gasification will aggravate the demand for investment funds and introduction of the second generation gas turbine topping cycle (with or without low Btu coal qasification) will decrease the demand. These technologies will have their major impacts on the industries listed above. 3. Sliaht changes in the overall growth rates of total personal consumption expenditures and government spending result in large fluctuations in total investment. 4. If high energy qrowth continues and if investment is to remain within its historical limits as a per centage of GNP, energy investment will become a laraer and larqer part of total investment. 5. While interest rates are assumed to be the balancino mechanism between supply of and demand for investment funds, the very act of saving more money (which is induced by hiqher interest rates) means that less can be spend on consumption goods. This in turn lessens the demand for investment funds because the qrowth rates of consumption sectors are lovwer. This indirect effect of interest rates on investment has been little studied but may be quite important. The policy implications of these results are also discussed.