Sensitivity of future regional and global energy markets and macroeconomic activity to a hypothetical global energy market disruption

James Edmonds; Xin Zhao; Pralit Patel; Di Sheng; Ellie Lochner; Christoph Bertram; Gokul Iyer; Michael Westphal; Allen Fawcett; Stephanie Waldhoff

doi:10.1016/j.isci.2024.111449

Sensitivity of future regional and global energy markets and macroeconomic activity to a hypothetical global energy market disruption

iScience. 2024 Nov 22;28(1):111449. doi: 10.1016/j.isci.2024.111449. eCollection 2025 Jan 17.

Authors

Affiliations

¹ Pacific Northwest National Laboratory, Joint Global Change Research Institute, 5825 University Research Court, Suite 3500, College Park, MD 3500, USA.
² Center for Global Sustainability (CGS), School of Public Policy, University of Maryland, Thurgood Marshall Hall, 7805 Regents Drive, College Park, MD 20742, USA.

Abstract

In this paper we contribute to a long history of research studying interactions between energy systems, international energy trade, and macroeconomic activity. We develop and employ methods to quantify transmission pathways for energy markets to affect the macroeconomy and CO₂ emissions. We track the long-term consequences of a hypothetical permanent disruption to global energy markets, cession of Russian fossil fuel exports, for energy markets, regional and global economic activity (gross domestic product [GDP]), labor and capital markets, and CO₂ emissions against two dramatically different reference scenarios. Relative to our first reference scenario, we find that fossil fuel exports contribute roughly one-half-trillion dollars/year to Russian GDP in 2050. We find that by 2050 global GDP is largely unaffected by the loss of Russian fossil fuel exports with all the benefits accruing to non-Russian energy exports, e.g., the Middle East. We track transmission mechanisms including net exports, energy services, and capital and labor market feedback.

Keywords: Energy policy; Energy systems; Engineering.