The Worst Way to Measure Energy Efficiency
By Chris Nelder
It is widely assumed that over the coming decades, increased energy efficiency will help the world meet its energy needs and reduce carbon emissions. That may be true, but recent research suggests that energy intensity—a widely used way of measuring efficiency—isn’t the right metric.
Energy intensity is a simple ratio: energy use per dollar of GDP. According to the U.S. Energy Information Administration, the energy intensity of the U.S. economy declined by 1.6 percent per year from 1985 to 2004, suggesting that we’re doing more with less energy.
Energy companies have embraced this idea: “Energy per unit of income as measured by GDP continues to fall, and at an accelerating rate,” asserts BP. “This is true in our outlook to 2030 not only for the global average, but for almost all of the key countries and regions. The combination of energy efficiency gains and a long-term structural shift towards less energy intensive activities as economies develop underpins this trend.” Similarly, ExxonMobil’s Outlook for Energy: A View to 2040 projects that economic output will increase by 80 percent while OECD energy demand remains flat, because “[g]lobal energy demand does not rise as dramatically as economic growth as a result of declining energy intensity.”
That sounds pretty good, and to a certain extent it’s true. Numerous changes in the U.S. economy have gradually made it more energy efficient since the 1970s, and it is widely observed that the world’s most developed economies are more energy efficient than developing economies. However, it’s far from certain that developing economies will achieve enough wealth to attain First World levels of energy efficiency, as agencies like the Intergovernmental Panel on Climate Change assert, or that the historical trend of improving energy efficiency will persist into the future, as many other observers, like Credit Suisse, assume. If these assumptions don’t pan out, we could encounter a climate and energy supply catastrophe much sooner than imagined in official scenarios.
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