Tuesday, February 02, 2010

Energy Efficiency and GDP

Opponents of reducing energy consumption tell us that conservation and efficiency measures will hurt the economy. But a look at historical energy usage clearly demonstrates that energy efficiency does not require a sacrifice in our quality of life.
Matt Yglesias pointed me to this chart from the U.S. Department of Energy that shows energy intensity – the amount of energy compared to economic output – has declined consistently over decades:
The DOE describes how the chart was generated:
Taking a long-term perspective, and using the simple Energy/Gross Domestic Product (E/GDP) ratio, the amount of energy needed to produce a dollar's worth of goods and services in the U.S. economy fell by more than half between 1949 and 2004.
Think about how our standard of living has changed since 1949: American households have more cars, more appliances, and certainly more computers today than when Harry Truman was president.
Energy efficiency is not about reducing our standard of living. To the contrary, if GDP has grown twice as fast as energy consumption, then we can conclude that our current standard of living would not be possible without the gains in energy efficiency since 1949.


Anonymous Edmund Dohnert said...

Tom -

I've just recently gotten into a discussion on this very subject elsewhere. To summarize:

I wonder how much of this apparent increase in the ratio of GDP to energy consumption is the result of improved energy efficiency and how much is due to the fact that the US GDP has an increasingly large 'non-physical' component that has virtually nothing to do with expending energy (e.g., real estate commissions, legal fees, medical services, etc.)

Also, with regard to energy consumption in the US industrial sector, one main reason for reduced US energy consumption is the simple fact that much of our heavy industry has been off-shored, and much of the energy content of our imported goods shows up on some other country's energy consumption numbers, such as China's.

And lastly, GDP has become an increasingly dodgy indicator, subject to all sorts of mischief by a government constantly trying to portray things as better than they really are. GDP is not to be taken too seriously.

11:02 AM, February 04, 2010  

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