Energy Productivity Remains Our First Resource

As defined here, Energy Productivity is scale of Gross Domestic Product (GDP) supported by primary or total energy consumption. Data made available by the US Energy Information Administration (EIA) shows that the American economy grew from $2,290 billion in 1950 to $18,409 billion by 2020 (that is, GDP as measured in constant 2012 dollars). In effect, the US economy was 8.04 times bigger by 2020 compared to 1950. Converting these values to an index in which 1950 is 100, the 2020 index is then 804.

In 1950, total primary energy consumption in the US was 34.6 quadrillion Btus, or quads. As of 2020, the use of energy grew to only 92.7 quads.¹ Thus, while the economy expanded by a factor of just over 8, total energy demand grew only 2.7 times. In 1950, the consumption of one million Btus (MBtu) of total energy supported only $66 of economic activity (or GDP expressed in constant 2012 dollars). That scale of energy productivity enabled an average personal income of about $10,700 in 1950 (also expressed in 2012 dollars). By 2020 one million Btus of energy supported both $199 of GDP with an average income of nearly $47,800 per year.² If an economy requires less energy to support more economic output, energy productivity has improved. Three key categories are responsible for the improvement in US energy productivity since the 1950s: 

The first is energy efficiency improvements at the end-use level. This includes more efficient lighting, heating and air-conditioning, appliances, and other equipment within homes and businesses. It also includes the use of more efficient vehicles and industrial processes. 

The second category is improving efficiency of electricity generation. Combustion generation technologies now require about 2.9 kilowatt-hour of heat equivalent to produce one kilowatt-hour of electricity delivered to the home or business. Clean and renewable energy systems require far less primary energy per kWh. The shift underway to wind and photovoltaic (solar) systems could eliminate as much as 23.4 quadrillion Btus of energy (or Quads) while continuing to meet the nation’s electricity requirements. On average, that might reduce total energy demand by about 23 percent of current and future energy requirements through the year 2050 while still delivering the same amount of electricity that might be otherwise needed. 

The third category is the more productive use of capital, materials, chemicals and water. By reducing the aggregate waste in all of those categories, less energy is necessary to transform such resources into the desired goods and services and distribute them in ways that support our social and economic well-being. 

Adding up all of these three elements—(i) higher end-use energy efficiency, (ii) greater deployment of renewables; and (iii) reduced waste in the use of all other resources—can significantly lower total energy needs even as the nation’s economy can become a more robust and more. And as we have seen, Energy Productivity has already been the single biggest contributor to our nation’s economic well-being, providing three times the benefit of all new energy resources. And especially as we confront the growing burden of climate change, as well as a less robust economy, it is both greater energy productivity and renewable energy options that must lead the way.

For those who might want to explore some of this perspective a bit further, see my brief working paper on Energy as Work: Estimating Exergy Efficiency for the U.S. and the Global Economy.