The Energy-Growth Nexus: History, Development, and New Challenges

This chapter provides a summary of the energy-growth nexus (EGN) historical development and its factual context. Moreover, besides providing the connections with its close relative—the environmental Kuznets curve (EKC) studies, it also and most importantly, provides insights into new challenges having appeared in the EGN and will start being handled by researchers very soon. The latter concern mostly the water-energy-food (WEF) nexus and the need for meta-analysis.
The chapter first presents a brief description of the EGN research and explains the historical aspects related to its emergence and the environmental aspect and climate change policy links to the EGN topic. Following is a standard definition of four basic causal relationships, including the explanation for each of the possible energy conservation outcomes and pointing out the deficiencies stemming from the use of the Granger causality for policy recommendations.
The chapter covers major methodological points emerging in the literature, divided in two strands—tools and methods [notably the cointegration (pre-)testing and panel data methods]. Special attention is given to potential deficiencies of the methods and the importance of data and variable selection. The paper hosts the first comprehensive critique of the WEF nexus and prepares the road for the necessary changes.