MACROECONOMIC/SOCIOECONOMIC COMPARISONS OF SPS AND ALTERNATIVE ENERGY TECHNOLOGIES R. U. Ayres Carnegie-Mellon University Macroeconomic impacts are measured by changes in GNP and its major components, unemployment rates, and inflation rates, attributable to alternative technologies, indirect system dollar costs include infrastructure, residual pollution, resource, and monetary welfare costs that could affect the economy. Certain economic effects (e.g., employment) are likely to be more pronounced at the regional than at the aggregate national level. The principal macroeconomic issue is: What effects will deployment of SPS or its alternatives have on the national economy of the 21st century? The impact of SPS clearly depends on the prevailing economic environment in which it is superimposed. In particular, the key questions are: What is the overall demand for energy? What is the pattern of demand (i.e., central electricity vs. other forms)? What will electricity cost if produced by conventional technologies? What impact would SPS have on the projected cost of electricity? Overall, demand for energy at any given time is acknowledged to be related to the level of economic activity (GNP). Of course, the changing "mix" of services and heavy industry in the economy has altered this relationship over time. Moreover, rising energy prices can be expected to alter the relationship further in the direction of encouraging conservation by substituting capital or labor for energy as a factor of production. A related issue is the likely effect of rising energy prices on productivity and GNP growth. Qualitatively it is clear that higher energy prices must have some drag effect on productivity, because capital that would otherwise go to increase output per unit of labor (i.e., to increase labor productivity) will be diverted to reducing energy inputs or developing substitutes to replace high- cost imports. The consensus of most economists today is that the historical, 3.3% p.a. U.S. growth rate of the 1950-1975 period will drop to less than 3% for the next several decades. Economic projections assuming a 2.8% p.a. growth rate between 1989 and 2000 and 2.3% p.a. after the year 2000 imply rates of capital formation and savings significantly higher than the U.S. has experienced in the past 20 years. If these higher implied rates of capital formation are not achievable, a growth rate even slower than that postulated above will be the result. Thus, the suggested 2.8%-2.3% GNP growth pattern for the period 1980-2030 is, in all probability, an upper limit of what can be achieved. Unfortunately, international petroleum supplies are politically determined and the prevailing climate suggests that the level of imports cannot be expected to rise much, if at all, over present levels. Thus new or replacement sources of energy for the U.S. must be found domestically. The four scenarios discussed hereafter are predictaed on variations of this basic theme. The four scenarios are as follows: UI Unconstrained, Intermediate energy intensity CI Constrained, Intermediate energy intensity
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