John Foster

• PhD University of Manchester
• Professor Emeritus at The University of Queensland

In this paper, drawing upon previous contributions to modern Schumpeterian economics , we argue that coevolution in economic systems operates when considering several evolving populations within a socioeconomic system, these populations mutually shape their respective selection, learning, and/or novelty generation mechanisms. The properties that ar...

In the United States, the ratio of consumption to GDP has risen steadily over the past half century. In trying to understand why this ratio has increased so much, it is argued that standard models of the consumption function, built up from the neoclassical theory of constrained optimization, cannot offer a satisfactory answer. An alternative perspe...

In the United States, the ratio of consumption to GDP has risen steadily over the past half century. In trying to understand why this ratio has increased so much, it is argued that standard models of the consumption function, built up from the neoclassical theory of constrained optimization, cannot offer a satisfactory answer. An alternative perspe...

The behaviour of aggregate consumption is conventionally understood from the perspective of the permanent income and life cycle hypotheses. Both of these hypotheses are deduced from the theory of constrained optimization as applied to a 'representative agent' that consumes and saves. An alternative way of understanding aggregate consumption expendi...

This paper investigates the effect of increasing the number of wind turbine generators on wholesale spot prices in the Australian National Electricity Market's (NEM), given the existing transmission grid, from 2014 to 2025. We use a sensitivity analysis to evaluate the effect of five different levels of wind power penetration on prices, ranging fro...

Conventional ‘neoclassical’ economics is very useful in understanding how prices are determined but less so as a general basis for understanding the economic behaviour we observe. What is not taken into account is that economic systems are dissipative structures that are complex, but incompletely connected, networks of rules. It is explained why a...

The aim of this paper is to analyses residential solar PV feed-in tariffs (FiT) policy history to inform the development of a sustainable flexible pricing regime to enhance the diffusion of energy storage, electric vehicles, solar PV installations and other distributed resources focusing on the case of ‘solar rich’ Australia. Solar PV has reached p...

This report summarises the work carried out by the Project 3 team and a separate report details the work of Future Grid Cluster and its interconnections and progress by other projects. The work carried out by this team is also summarized by several working papers available on the Energy Economics and Management Group website . Details of how this a...

There remains a debate about 'oil and the macroeconomy' despite James Hamilton's claims. Manufacturing in 1970s US was, however, reliant on natural gas and electricity generated from coal, not oil. Whilst coal and electricity prices also rose in the 1970s their descent to pre-1974 levels was slower than the decline in oil prices. This research cons...

Carbon constraints will act as a significant fuel shock for electricity generation. This paper seeks to use previous fuel shocks (the 1970s oil price crises and the global surge in energy demand that started in 2003) as the context for analysing the adaptive capacity of electricity generation to large fuel shocks. Resilience is the framework for an...

Governments and network utilities are grappling with how to manage increasing costs of electricity supply, the prospect of distributed generation while still meeting social objectives of access and affordability in remote areas. Due to geographical isolation and dispersed populations, remote Australian communities are generally electrified by distr...

Economic stability is dependent on the effective functioning and resilience of energy systems. Resilience is a term used across all research disciplines and in everyday discourse. As a concept it purports to serve as a useful indicator of sustainability and robustness, but it has proved difficult to measure. Ecological resilience, psychological res...

The state of Bihar in India has approximately 75 million people with no access to electricity. The government of India has pursued a policy of rural electrification through the provision of centralised coal-fired power which has been unable to resolve the low levels of electrification. Coal supply woes in India have led Indian companies to pursue n...

The United Nations Conference on Climate Change (Paris 2015) reached an international agreement to keep the rise in global average temperature 'well below 2°C' and to 'aim to limit the increase to 1.5°C'. These reductions will have to be made in the face of rising global energy demand. Here a thoroughly validated dynamic econometric model (Eq 1) is...

PLOS_supps_v3.docx. General Statistical Tests for the Energy Growth Model. (Table A). Multi-Variable Linear Model Represented as a Difference Equation of the Change in Levels, with Residuals (Figure A). Breusch-Godfrey Serial Correlation LM Test (Table B). Heteroskedasticity Test: Breusch-Pagan-Godfrey (Table C). Ramsey RESET Test (Table D). Augmen...

This report compares the effect of increasing the number of wind turbine generators on transmission line congestion in the Australian National Electricity Market’s (NEM) under the existing transmission grid and an augmented version of the transmission grid called NEMLink (AEMO 2010a, 2010b, 2011a, 2011b). The comparison is made from 2014 to 2025. W...

This report investigates the effect of increasing the number of wind turbine generators on energy generation in the Australian National Electricity Market’s (NEM) existing transmission grid from 2014 to 2025. This report answers urgent questions concerning the capability of the existing transmission grid to cope with significant increases in wind p...

This report investigates the effect of increasing the number of wind turbine generators on carbon dioxide emission in the Australian National Electricity Market’s (NEM) existing transmission grid from 2014 to 2025. This report answers urgent questions concerning the capability of the existing transmission grid to cope with significant increases in...

This report investigates the effect of increasing the number of wind turbine generators on carbon dioxide emission in the Australian National Electricity Market’s (NEM) existing transmission grid from 2014 to 2025. This report answers urgent questions concerning the capability of the existing transmission grid to cope with significant increases in...

This report investigates the effect of increasing the number of wind turbine generators on wholesale spot prices in the Australian National Electricity Market’s (NEM) existing transmission grid from 2014 to 2025. This reports answers urgent questions concerning the capability of the existing transmission grid to cope with significant increases in w...

This report investigates the effect of increasing the number of wind turbine generators on transmission line congestion in the Australian National Electricity Market’s (NEM) existing transmission grid from 2014 to 2025. This reports answers urgent questions concerning the capability of the existing transmission grid to cope with significant increas...

What effect does the firm structure have on the quality of service delivered by networks and infrastructure industries? We answer this question by empirically assessing the impacts of complete vertical separation, such as ownership unbundling, on the quality of service delivered by a liberalized network industry. Electricity distribution utilities...

The debate on electricity networks privatization in the Australian National Electricity Market is an important public policy concern but remains unsettled. This article reviews and compares the economic performance between the privately and state-owned electricity networks in Australia across three dimensions encompassing prices, quality and invest...

This paper analyses wind speed and electricity demand correlation to determine the ability of wind turbine generators to meet electricity demand in the Australian National Electricity Market (NEM) without the aid of energy storage. With the proposed increases in the number of windfarms to meet the Large-scale Renewable Energy Target (LRET), this co...

This paper investigates the effect of a carbon price on wholesale electricity prices and carbon-pass-through rates in the states comprising the Australian National Electricity Market (NEM). The methodology utilize an agent-based model, which contains many features salient to the NEM including intra-state and inter-state transmission branches, regio...

An evolutionary macroeconomic approach is applied to explain economic growth in Australia from 1901 to 2008. Support is found for the hypothesis that there were two distinct developmental phases: before and after World War II. The evidence suggests that, in each phase, growth followed an innovation diffusion trajectory made possible by a growing ca...

Highlights  Compares centralised coal generation and decentralised renewable energy  Rural renewable energy investment is equivalent to centralised imported coal option  Pollution costs of coal emissions makes renewable generation more attractive  Employment benefits from rural electrification will drive rural development  Centralised generati...

Measuring energy security or resilience in energy is, in the main, confined to indicators which are used for comparative purposes or to show trends rather than provide empirical evidence of resilience to unpredicted crises. In this paper, the electricity systems of the individual states within the United States of America are analysed for their res...

Over the past decade, Australian multi-factor productivity growth has been predominantly negative, often leading to the view that there is a ‘productivity problem’. It is shown that it is not a useful measure and is thus misleading. Exploratory econometric investigations suggest that economies of scale are the primary drivers of productivity growth...

The theme of the 14th International Joseph A. Schumpeter Conference 2012 held in Brisbane, was “the evolution of economic systems, through innovation, entrepreneurship and competitive processes.” This was intended to be broad enough to encompass a wide range of submitted papers in evolutionary economics and related areas. This book is the outcome o...

Governments and utilities are struggling to respond to the increasing costs of energy supply in remote networks while still meeting social objectives of access and availability. Due to vast distances and sparse population, remote Australian communities are generally electrified by distributed networks using diesel generation. This is expensive, env...

Economic stability is dependent on the effective functioning and resilience of energy systems. Resilience is a term used across all research disciplines and in everyday discourse. As a concept it purports to serve as a useful indicator of sustainability and robustness, but it has proved difficult to measure. Ecological resilience, psychological res...

Economic stability is dependent on the effective functioning and resilience of energy systems. Resilience is a term used across all research disciplines and in everyday discourse. As a concept it purports to serve as a useful indicator of sustainability and robustness, but it has proved difficult to measure. Ecological resilience, psychological res...

1 Introduction This report’s primary aim is to provide yield projections for the proposed Linear Fresnel Reflector (LFR) technology plant at Collinsville, Queensland, Australia. However, the techniques developed in this report to overcome inadequate datasets at Collinsville to produce the yield projections are of interest to a wider audience becau...

1 Introduction This report primarily aims to provide both dispatch and wholesale spot price forecasts for the lifetime of the proposed hybrid gas-solar thermal plant at Collinsville, Queensland, Australia . This report is the second of two reports and uses the findings of Bell, Wild and Foster (2014b) in the first report. 2 Literature review The...

Distributed generation (DG) is rapidly increasing its penetration level worldwide and is expected to play a more important role in providing power. An important benefit of DG is its ability to defer transmission investments. In this paper, a simulation model is implemented to conduct quantitative analysis on the effect of DG on transmission investm...

The National Electricity Market was established in 1998 as a response to the overall liberalization and restructuring of the Australian electricity sector. The wholesale market integration effects of this establishment, however, remain to be systematically examined. We use econometric techniques based on pairwise unit root tests, cointegration anal...

The connections between the work of Simon Kuznets and Joseph Schumpeter are discussed from a history of economic thought perspective. First, their broad perspectives on economic evolution are compared and contrasted. It is argued that Kuznets assigned a greater role for institutional change in economic evolution and he had a greater interest in the...

It is argued that the explosive growth experienced in much of the World since the middle of the 19th Century is due to the exploitation and use of fossil fuels which, in turn, was made possible by capital good innovations that enabled this source of energy to be used effectively. Economic growth is viewed as the outcome autocatalytic co-evolution o...

The theme of the 14th International Joseph A. Schumpeter Conference, held from July 2nd–5th 2012, was “the evolution of economic systems, through innovation, entrepreneurship and competitive processes.” This was intended to be broad enough to encompass a wide range of submitted papers in evolutionary economics and related areas. However, perhaps mo...

Marginal cost pass-through rates of increasing cost of carbon are established. Market behaviour shifts to infra-marginal rent seeking under increasing carbon and natural gas costs. Strategic behaviour of generators is established under these shifting conditions. a b s t r a c t We seek to evaluate the extent of the pass through of increased fuel an...

In this comment I discuss the excellent contribution of Koppl et al. (2014) to our understanding of the role of institutions in the economic system. Much that is offered by them reinforces and extends previous analysis by institutional and evolutionary economists. However, I argue that there are areas of evolutionary economics and complex economic...

This paper, the final in a three part series examining the competitiveness of Australia’s power system, seeks to identify a pragmatic strategy to transition Australia to a resilient power economy at reasonable cost and in an age of uncertainty. The resilience of a country’s power economy refers to its ability to meet power requirements while withst...

In this paper, we present three nonparametric trispectrum tests that can establish whether the spectral decomposition of kurtosis of high frequency financial asset price time series is consistent with the assumptions of Gaussianity, linearity and time reversiblility. The detection of nonlinear and time irreversible probabilistic structure has impor...

Reducing CO2 emissions is imperative to stay within the 2 degree global warming 'safe limit' but these reductions must be aligned with fuel security and economic growth. Here an advanced multifactorial model (Eq.1) is used to forecast global energy demand, based on global population (UN), current energy use (International Energy Agency and BP) and...

This document sets out the design of a scenario framework for the CSIRO Future Grid Cluster's Project 3. It sets out how the various influences, or driving forces, are grouped into four categorised. These being: Policy, States of the World, Sensitivities, and Linkages. The first two; Policy, and States of the World, are then further broken down int...

This report presents the findings and recommendations from the project called ‘Analysis of institutional adaptability to redress electricity infrastructure vulnerability due to climate change’. The objectives of the project are to examine the adaptive capacity of existing institutional arrangements in the National Electricity Market (NEM) to existi...

This non-technical summary presents the findings and recommendations from the project called ‘Analysis of institutional adaptability to redress electricity infrastructure vulnerability due to climate change’. The objectives of the project are to examine the adaptive capacity of existing institutional arrangements in the National Electricity Market...

In this chapter we make recommendations that address the four sources of maladaptations to climate change: 1. institutional fragmentation, both economically and politically; 2. distorted transmission and distribution investment deferment mechanisms; 3. lacking mechanisms to develop a diversified energy portfolio; and 4. failure to model and to tr...

We seek to evaluate the projection that a carbon price will reduce emissions at least cost by inducing a shift of generation from coal-fired to gas-fired plants. Modelling of Australias National Electricity Market in 2035 is undertaken using Australian Energy Market Operator assumptions for fuel costs, capital costs and demand forecasts and an elec...

The objectives of this project are to examine the adaptive capacity of existing institutional arrangements in the National Electricity Market (NEM) to existing and predicted climate change conditions. Specifically the project aims to: 1. identify climate change adaptation issues in the NEM; 1. analyse climate change impacts on reliability in the NE...

The standard neoclassical approach to economic theorising excludes, by definition, economic emergence and the related phenomenon of entrepreneurship. We explore how the most economic of human behaviours, entrepreneurship, came to be largely excluded from mainstream economic theory. In contrast, we report that evolutionary economists have acknowledg...

The International Energy Association has observed that nearly all countries now offer or are planning feed-in tariffs (FiTs) for solar PV but debate has shifted from ‘if or how to implement a FiT’ to ‘how to move to a self-sustaining market post FiT’. The aim of this paper is to explain how a sustainable FiT can be designed for residential solar PV...

The purpose of this article is to investigate the impact that the introduction of a carbon price signal will have on wholesale electricity prices, carbon-pass-through rates and retail electricity rates in the states making up the Australian National Electricity Market (NEM). In order to assess this, we employ an agent based model of the NEM called...

This chapter explains why it is essential to conduct all economic analysis within a complex (adaptive) systems framework and to show why this makes a very significant difference. It is explained what the original purpose of constrained optimization analysis was when it was imported into economics over a century ago and why what was a sensible and p...

The overall goal of Project 2 has been to provide a comprehensive understanding of the impacts of distributed energy (DG) on the Australian Electricity System. The research team at the UQ Energy Economics and Management Group (EEMG) has constructed a variety of sophisticated models to analyse the various impacts of significant increases in DG. Thes...

Historically Australia’s ample supply of coal has underpinned its power system. Competing countries however have used a variety of different energy sources and, as a result of this diversity, many have a more resilient power system to provide future electrical power. this report looks at Australia’s global position with respect to its resource-rich...

The restructuring of global power industries has introduced a number of challenges, such as conflicting planning objectives and increasing uncertainties, to transmission network planners. During the recent past, a number of distributed generation technologies also reached a stage allowing large-scale implementation, which will profoundly influence...

This paper examines the economic competitiveness of implementing Carbon Capture and Storage (CCS) for deployment on the Australias National Electricity Market (NEM) against conventional base load electricity generation. By examining the Lev-elised Cost of Energy (LCOE) for sent out generation as a suitable hurdle for judging the future prospects of...

This paper aims to analyze the issue of price spikes in electricity markets through the lens of noncooperative game theory. The case we consider is Australia's long established National Electricity Market (NEM). Specifically, we adapt von der Fehr and Harbord's [26] multi-unit auction model to settings that more closely reflect the structure of the...

The overall goal of Project 2 has been to provide a comprehensive understanding of the impacts of distributed energy (DG) on the Australian Electricity System. The research team at the UQ Energy Economics and Management Group (EEMG) has constructed a variety of sophisticated models to analyse the various impacts of significant increases in DG. Thes...

The overall goal of Project 2 has been to provide a comprehensive understanding of the impacts of distributed energy (DG) on the Australian Electricity System. The research team at the UQ Energy Economics and Management Group (EEMG) has constructed a variety of sophisticated models to analyse the various impacts of significant increases in DG. Thes...

A basic tenet of ecological economics is that economic growth and development are ultimately constrained by environmental carrying capacities. It is from this basis that notions of a sustainable economy and of sustainable economic development emerge to undergird the “standard model” of ecological economics. However, the belief in “hard” environment...

The purpose of this article is to present a statistical uncertainty principle that can be used when localizing a single change in the mean of a band-limited stationary random process. The statistical model investigated is a continuous time process that experiences a shift in its mean. This continuous time process is presumed to be sampled using an...

Whilst emissions trading systems are widely held to be able to deliver lowest-cost abatement, uncertainty reduces their effectiveness. We consider a new scheme, the Tender-Price Allocation Mechanism, which focuses carbon factor cost expenditure on abatement rather than just revenue transfers. It is a scheme that reduces uncertainty and the costs of...

In this article, we show how tests of nonlinear serial dependence can be applied to high-frequency time series data that exhibit high volatility, strong mean reversion, and leptokurtotis. Portmanteau correlation, bicorrelation, and tricorrelation tests are used to detect nonlinear serial dependence in the data. Trimming is used to control for the p...

In this article, the goal is to offer a new research agenda for evolutionary macroeconomics. The article commences with a broad review of the main ideas in the history of thought concerning the determinants of economic growth and an introduction to the evolutionary perspective. This is followed by a selective review of recent evolutionary approache...

In this article, we present two nonparametric trispectrum based tests for testing the hypothesis that an observed time series was generated by what we call a generalized Wiener process (GWP). Assuming the existence of a Weiner process for asset rates of return is critical to the Black-Scholes model and its extension by Merton (BSM). The Hinich tris...

Distributed generation (DG) is rapidly increasing its penetration level in Australia, and is expected to play a more important role in the power industry. An important benefit of DG is its ability to defer transmission investments. In this paper, a simulation model is implemented to conduct quantitative analysis on the effect of DG on transmission...

It is argued that the fact that economic systems are dissipative structures must be taken fully into account in economics if we are to understand the nature of the economic-ecological interface and how to deal with emergent environmental problems, such as global warming. Such problems are a product of economic growth, which is widely accepted to be...