Contents lists available at ScienceDirect Technological Forecasting & Social Change journal homepage: www.elsevier.com/locate/techfore Predicting Sustainable Economic Welfare – Analysis and perspectives for Luxembourg based on energy policy scenarios Benedetto Rugani a, ⁎ , Antonino Marvuglia a , Federico Maria Pulselli b a RDI Unit on Environmental Sustainability Assessment and Circularity, Environmental Research & Innovation (ERIN) Department, Luxembourg Institute of Science and Technology (LIST), 41 Rue du Brill, L-4422 Belvaux, Luxembourg b Ecodynamics Group, Department of Earth, Environmental and Physical Sciences, University of Siena, Pian dei Mantellini, 44, I-53100 Siena, Italy ARTICLE INFO Keywords: Energy policy Index of Sustainable Economic Welfare (ISEW) Luxembourg Nonlinear black-box models Sustainability Time series forecast ABSTRACT Ambitious energy policies have been established in Luxembourg, which has one of the highest Gross Domestic Products (GDP) per capita in the world but still much depends on imported fuels and electricity. Born as an alternative to GDP, the Index of Sustainable Economic Welfare (ISEW) is applied in this study as a framework to predict socio-economic and environmental performances of Luxembourg in relation to energy policy scenarios. The ISEW for the 1960–2010 timeframe is firstly calculated and compared with GDP in order to disclose the impact of factors differently considered by the two indices, e.g. consumption trends, equity, air pollution, carbon emissions, consumer durables expenditures, investments, etc. A forecasting model to predict the ISEW trend until 2030 is then proposed to assess the relevance of national energy policies. The analysis of historical time-series shows that the ISEW grows over time at much slower pace than GDP, mostly due to increases in defensive expenditures. This gap may decline in the future by implementing those energy policies, providing a slight but tangible recovery of the economic welfare over the next 10–15 years. Several insights are ultimately given on the benefits and drawbacks of using the ISEW framework to assess long-term sustainability issues. 1. Introduction Energy supply is essential for human life, its welfare and the sus- tainability for present and future generations. In this regard, Sustainable Development Goal #7 calls for ensuring “access to afford- able, reliable, sustainable and modern energy for all” (UN, 2015). Se- curing the access to profitable energy carriers, improving the efficiency of the energy supply chain or allowing the introduction of a growing share of renewable resources in the energy mixes entail the im- plementation of complex regulations, international agreements, and technological infrastructure that most often do not meet the require- ments for a long-term and sustainable energy provision and use (Andriosopoulos et al., 2016; Araújo, 2014; EEA, 2016a; Fri and Savitz, 2014; Jonsson et al., 2015). To face these challenges, the European Union has established a roadmap with several short- to long-term targets that shall guarantee a secure, competitive, and sustainable energy life cycle for the next decades (EEA, 2016b; European Commission, 2016b). Hence, each Member State is asked to implement a number of tangible measures and effective policies to reach those ambitious “energy strategy” goals, which require for example a 40% cut in greenhouse gas emissions, compared to 1990 levels, or at least a 27% share of renewable energy consumption and of energy savings compared with the business-as- usual scenario, all by 2030 (European Commission, 2016a). Achieving these targets is particularly challenging for those coun- tries that highly depend on the import of electricity and raw materials for energy production, in particular with regard to non-renewable re- sources. Moreover, the macroeconomic and social characteristics of every country structurally influence the sustainability and resilience of the energy supply-chain, as the majority of energy is typically generated by large power plants and/or distributed through centralized systems (Adil and Ko, 2016; Alanne and Saari, 2006; Ellabban et al., 2014; Oseni and Pollitt, 2016). The Grand-Duchy of Luxembourg represents a unique example in Europe to showcase these issues. In terms of economic structure, the Luxembourgish industrial sector, dominated by steel production until the 1960s, has diversified to include chemicals, rubber and other pro- ducts (Statec, 1990, 2016). However, nowadays high technology and services largely contribute to the economic output, especially banking and other financial exports. As a result, Luxembourg is one of the lar- gest investment fund hub in Europe, and has one of the highest Gross Domestic Products (GDP) per capita in the world (Rugani et al., 2014a; https://doi.org/10.1016/j.techfore.2018.08.005 Received 16 June 2017; Received in revised form 25 May 2018; Accepted 4 August 2018 ⁎ Corresponding author. E-mail address: benedetto.rugani@list.lu (B. Rugani). Technological Forecasting & Social Change xxx (xxxx) xxx–xxx 0040-1625/ © 2018 Published by Elsevier Inc. Please cite this article as: Rugani, B., Technological Forecasting & Social Change (2018), https://doi.org/10.1016/j.techfore.2018.08.005