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World Energy Intensity has Stopped Improving

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World Energy Intensity has Stopped Improving

Unread postby kublikhan » Fri 30 Mar 2012, 15:38:46

In recent years, we have heard statements indicating that it is possible to decouple GDP growth from energy growth. I have been looking at the relationship between world GDP and world energy use and am becoming increasingly skeptical that such a decoupling is really possible.

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Prior to 2000, world real GDP was indeed growing faster than energy use, as measured by BP Statistical Data. Between 1980 and 2000, world real GDP growth averaged a little under 3% per year, and world energy growth averaged a little under 2% per year, so GDP growth increased about 1% more per year than energy use. Since 2000, energy use has grown approximately as fast as world real GDP–increases for both have averaged about 2.5% per year growth. This is not what we have been told to expect.

Why should this “efficiency gain” go away after 2000? It seems to me that at least part of the issue is declining energy return on energy invested (EROI)–we are using an increasing share of energy consumption just to extract and process the energy we use–for example, in “fracking” and in deep water drilling. This higher energy cost is acting to offset efficiency gains. But there are other issues as well, which I will discuss in this post.

Figure 11 shows that energy intensity on a world basis has been flat since 2000.

Why does world energy intensity remain flat, while energy intensity for many individual countries has been decreasing?
The big issue would seem to be outsourcing of heavy manufacturing. This makes the energy intensity of the country losing the manufacturing look better. Outsourcing transfers manufacturing to a country with a much higher energy intensity, so even with the new manufacturing, its ratio can still look better (lower). It is hard to measure the overall impact of outsourcing, except by looking at world total energy intensities rather than individual country amounts.

Another issue is that the energy use of interest is per dollar of real GDP, and a savings in energy that results in a cost savings may not be very helpful in lowering energy intensity of GDP. For example, suppose that a manufacturer creates a new, smaller car, that is 20% cheaper and uses 20% less gasoline on an ongoing basis. More workers will be able to afford this car. Furthermore, a well-off worker who can afford this new cheaper car (and who could also have afforded a more expensive car) will have left-over money. With this left-over money, the well-off worker can purchase something else, such as an airline trip, food flown in from overseas, or a new iPod. All of these extra purchases take energy as well. So when the overall picture is viewed, the fact that more energy-efficient cars are being manufactured does not necessarily translate to lower energy intensity of GDP.

One issue mentioned in the introduction to this post is the fact that EROI for fossil fuels is declining because the easy-to-extract fossil fuels have mostly been extracted. As a result, we are now extracting the more difficult to extract fossil fuels, requiring more energy.

A similar situation occurs in many other endeavors, because we live in a finite world, and we are reaching limits. In mining, the quality of ores is getting poorer, meaning than more energy needs to be used in extraction. In farming, we are stretching our resources tighter, requiring more fertilizer, pesticides, and more irrigation, all requiring energy. We are running short of fresh water in some places, so water is pumped from greater distances or desalination is used, adding to energy usage. Pollution is an issue, so we require utilities to add scrubbers to old coal plants. All of these efforts require energy, and likely contribute to an upward trend in energy usage, offsetting efficiency savings elsewhere.

Another issue that tends to raise energy intensity of GDP is the long-term trend toward using machines and additional energy to do jobs, rather than simple human labor. For example, if a person chops down a few trees and builds his own house, most calculations would say that there is neither GDP nor (outside) energy used. If a person hires a builder to build a house, and the builder uses hand tools to chop down trees and human labor to build the house, the result is an increase in GDP, but little fossil fuel energy use. If the builder becomes more “modern” and uses earth movers and concrete to build homes, then energy use rises relative to GDP created.

If the plan is to reduce fossil fuel consumption, then we may very well be expecting real GDP to also decrease, perhaps by a similar percentage. In fact, looking at the experience of FSU in Figure 9, the GDP decline may even be greater than the energy decline.
Is it really possible to decouple GDP Growth from Energy Growth?

So for 20 years(1980-2000), the energy intensity of the world economy was improving(GDP has been growing faster than energy use). However since 2000, these gains have stopped. Now energy growth has equaled GDP growth. One possible explanation is that falling EROI has overwhelmed efficiency gains. That's pretty shitty news. I was hoping the lower EROI of energy would increase the cost of energy. The higher cost would push people to use the energy more efficiently. While more efficient use may indeed be happening, since 2000 it has not been enough to offset the lower EROI of the energy.
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Re: World Energy Intensity has Stopped Improving

Unread postby Pops » Fri 30 Mar 2012, 16:54:52

On the flip side, I wonder how much the apparent GDP increase reflects actual increases in work preformed and things made vs. "churn"?

Are a million gigaflops a second of equity and commodity trades that wrings out "profit" where there was none - and creates nothing, real estate commissions, insurance commissions, government borrowing and spending, etc really a "product"?
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Re: World Energy Intensity has Stopped Improving

Unread postby The Practician » Fri 30 Mar 2012, 20:50:10

Pops wrote:On the flip side, I wonder how much the apparent GDP increase reflects actual increases in work preformed and things made vs. "churn"?

Are a million gigaflops a second of equity and commodity trades that wrings out "profit" where there was none - and creates nothing, real estate commissions, insurance commissions, government borrowing and spending, etc really a "product"?



Exactly. Stop counting debt and unicorn farts as GDP and I bet it never decoupled from energy use, and we are now in the situation where GDP is increasing slower than energy use.
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Re: World Energy Intensity has Stopped Improving

Unread postby Keith_McClary » Tue 03 Apr 2012, 00:41:23

Pops wrote:On the flip side, I wonder how much the apparent GDP increase reflects actual increases in work preformed and things made vs. "churn"?
Energy is a significant part of global GDP (measured in $), so when energy prices suddenly increase with little change in energy production, global GDP increases (Saudi GDP certainly does). So energy/GDP decreases.

But "intensity" is defined as energy/"Real GDP".

"Real GDP" supposedly represents the "value" of "real" goods and services, so "intensity" should not change merely because of relative price changes.

However, over a few years, "Real GDP" gets adjusted to recognize that expensive energy is a larger proportion of GDP. I think this results in a phoney reduction in "intensity" as it is defined.
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Re: World Energy Intensity has Stopped Improving

Unread postby SeaGypsy » Tue 03 Apr 2012, 02:53:01

How many energy units are saved by how many asses sitting in one place messin' w/ digits & getting paid double what a tractor driver gets?

Energy equations are like horror movies, scary fun. Scary because there is only one answer/ We burn way more way quicker than we have any way of storing it and we don't really have a way out of that. Fun because once you get used to the fact, the hilarity of pundits beating around the bush eventually either drives you insane or makes you realize it's only you who can control your own little bubble, regardless of the outcome.
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Re: World Energy Intensity has Stopped Improving

Unread postby rquayle » Wed 13 Nov 2013, 18:38:03

I am now woking up this analysis at home (hobby thing).
If anyone wants to co-author to help complete & publish it, email me.

Global Energy Efficiency, 1960-2012: Both Increasing and Decreasing
Robert G Quayle rgquayle@gmail.com
November 13, 2013

Abstract: Since 1960, overall global energy efficiency, defined as wealth created per unit of increased carbon dioxide added to the atmosphere, has increased by nearly 40% when comparing the 1960-1990 period with the 1991-2012 period. However, perhaps because of increasing population and increasing standards of living, the annual per capita global energy efficiency is decreasing slightly, and has gone down an average of about 4% from the 1960-1990 period to the 1991-2012 period.
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Re: World Energy Intensity has Stopped Improving

Unread postby Keith_McClary » Wed 13 Nov 2013, 23:58:05

rquayle wrote:I am now woking up this analysis at home (hobby thing).
If anyone wants to co-author to help complete & publish it, email me.

Global Energy Efficiency, 1960-2012: Both Increasing and Decreasing
Robert G Quayle rgquayle@gmail.com
November 13, 2013

Abstract: Since 1960, overall global energy efficiency, defined as wealth created per unit of increased carbon dioxide added to the atmosphere, has increased by nearly 40% when comparing the 1960-1990 period with the 1991-2012 period. However, perhaps because of increasing population and increasing standards of living, the annual per capita global energy efficiency is decreasing slightly, and has gone down an average of about 4% from the 1960-1990 period to the 1991-2012 period.
I'm interested in that sort of analysis. Maybe you could post a preliminary draft somewhere.

Mainstream definitions of "wealth created" tend to be equivalent to "amount of FF burned".
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