An input-output analysis of Australian energy planning issues

The belief that the price mechanism can be used exclusively to combat problems arising from growing energy shortages has led to the neglect of the repercussions of energy conservation on the macroeconomic problems of growth and development. Moreover, many studies consider only the direct effects of energy use and concentrate on petroleum shortages, so underestimating the total repercussion and structural dependence associated with changes in energy demand in Australia. This study attempts to overcome these gaps by modifying input-output modelling to estimate all primary energy demand for fossil fuels in Australia. The complex interactions between energy conservation and macroeconomic goals are investigated at sectoral levels. The optimal sectors that meet macroeconomic goals and energy constraints simultaneously have been identified using simple, but powerful, analytical tools. The tradeoffs between energy use and macroeconomic objectives are quantified using energy as a numeraire. The conflicts that emerge between macro-planning criteria and energy use efficiency are exemplified and the need to reconcile them using the value judgements of political decisionmakers is clarified. The limitations and the scope for refinement of the methodology are also discussed