Energy ladders of supply and demand

Abstract

This paper documents an energy supply ladder that nations ascend as their per capita incomes increase. Economic development results in an overall substitution from the use of biomass to fulfill energy needs to energy sourced from fossil fuels, and then toward nuclear power and certain low-carbon modern renewables such as wind power. The results imply an inverse-U shaped relationship between per capita income and the carbon intensity of energy use, which is borne out in the data. Fossil fuel-poor countries are more likely to climb to the upper rungs of the energy supply ladder and experience reductions in the carbon intensity of energy use as they develop than fossil fuel-rich countries. Leapfrogging to low-carbon energy sources at the upper rungs of the energy supply ladder is one route via which developing countries can reduce the magnitudes of their expected upswings in per capita carbon dioxide emissions. The paper also presents evidence on how the sectoral composition of demand for energy evolves according to an "energy demand ladder" as economies develop Show more