Postgraduate research opportunities How does an ageing population impact the Energy transition?

This project will investigate the relationship between population ageing and the energy transition. It aims to quantify the impact of ageing on energy uses and emissions at the macro level.

The ramifications of population ageing are profound and extend to crucial macroeconomic aspects such as employment, consumption patterns, savings behaviour, and overall economic growth. The current literature demonstrates that the links between energy use and an ageing society occur mainly through two channels. The first is the consumption composition channel. Changes in the age structure of a population lead to changes in consumption patterns and often (but not always) towards more energy-intensive consumption profiles. The second is a macroeconomic channel. A reduction in labour participation may lead to increased labour costs, which, in turn may lower gross output and associated energy use in the whole economy.

The literature is currently scattered. Firstly, the evidence on consumption composition channel affects is based on single-country studies and thus relies on the characteristics of such countries. Secondly, the evidence on the macroeconomic impact is either based on single countries studies or on global models based on simplifying assumptions about the population structure, trade and labour market dynamics. Importantly, none of the studies combine the consumption composition with the macroeconomic effect. However, this is a crucial point especially given that the two channels tend to pull energy use in opposite directions.

The aim of this project is to investigate the impact that an ageing population has on energy demand and associated emissions as we transition towards a low-emission society by looking at both the consumption composition channel and the macroeconomic channel. The first objective is to develop an economic model that can capture macroeconomic effects (employment participation) of an ageing population on energy use and emissions though labour participation and demand composition. An important improvement from previous literature is that the model developed in this project will explicitly consider the life cycle of economic agents using a so-called overlapping generation structure. The second objective is to apply such model to quantify the direction and the extent of changes in energy use associated with ageing. The third objective is to assess the impact of policies aimed at mitigating energy use and emissions in the context of an ageing population using the newly developed model.

The developed economic framework will be applied to quantify the economic and environmental impact of policies that reduce energy use or mitigate climate change such as investment in energy efficiency and carbon pricing. Similarly, it can be used to assess the environmental implications of policies that alter the population structure or labour participation, such as pension reforms, migration, and fertility policies. As such, the outcomes can inform important policy decisions for governments around the world and thus guide policymakers in better designing energy transition policies under an ageing society.

Further information

This project will be conducted in collaboration with Dr Patrizio Lecca, Comillas Pontifical University, Madrid.