Menu
Because I roam the desert a lot, the UV Index is something I pay attention to. It is an international standard that measures the strength of ultraviolet radiation from the sun at a given time and place. Canada was the first to adopt such an index in 1992. The U.S. followed in 1994, as have any subsequent number of countries since that time. Today the World Health Organization (WHO), as shown below, has standardized the UV Index by replacing the many different regional methods which otherwise provided an inconsistent set of results.
A UV index of zero is essentially a nighttime reading. On the other hand, an index of 10 (highlighted by the color red) roughly corresponds to the midday sun beating down on the earth through a clear sky. Here in the Sonoran Desert, it is not really all that uncommon. I was out on the desert floor at roughly the time when the UV index hit the color purple as I reflected on the thought experiment I am about to describe. For those interested in the current regional UV Index forecast, click here.
You might balk at my suggested estimate of a $4.3 trillion loss to the U.S. economy and worry that my exposure to ultraviolet light has had a deleterious effect on my neuropathways. But I was properly protected, and I was not outside for all that long. If we step back to think about it, this very big number may prove a useful metric to help us understand the huge economic opportunities that await us – should we begin to think big about energy productivity as we now accept the idea of ultraviolet intensity. I discuss all of this in the context of the 1992 Earth Summit organized in Rio de Janeiro.
It was thirty years ago this week — June 3 to June 14, 1992 — when the United Nations convened what was called the Conference on Environment and Development in Rio de Janeiro. It was also known variously as the Rio Summit, the Rio Conference, and the Earth Summit. While there was advancement on several environmental fronts, a number of critics suggested that significant progress, both during and following the 1992 Earth Summit, was derailed by what has been called the North-South Divide: in effect, the serious social and economic differences between the rich industrial nations and the many developing countries.
I might suggest, in fact, that progress was held up as much by failure to read and understand the idea of energy productivity. We can think of this as a connection between environmental quality and the huge inefficiencies with which we use energy, water and other natural resources. In the case of greenhouse gas emissions, for example, and drawing on Our World in Data, the United States has discharged a total of 426 billion tonnes of carbon dioxide emissions. Almost 42 percent of those emissions have been produced since the Rio summit in 1992 (see More by Waste than Ingenuity for a different look at the scale of our many diverse waste products).
More to the point, if we pay attention to increased energy productivity, with clear returns on those energy investments, we may be able to better see that we can actually afford the investments which will enable our productivity upgrades; and we will find we are better off if we make those large-scale improvements over the next several decades. The question becomes one of how we might introduce the productivity perspective as a solid business model. Hence, the introduction of a thought experiment to help understand the scale of potential impact or benefit.
Yes, it absolutely does require energy to drive our economy. But we can power economic activity so much more efficiently and cost-effectively, if we’ll step back and ask better questions – ones that lead to more productive investment patterns. We can get a sense of the scale and missed opportunity these past 30 years by examining the change in our energy productivity over the last bunch of years, especially since 1950 to provide a historical context, and also since 1992 when the Earth Summit was first convened. And we can then compare the year 2022 with: (a) how we now expect it to look under a business-as-usual or more likely outcome, with (b) what a greater energy productivity improvement might have otherwise generated. Key data are provided in the table that follows.
Before we examine the table above, we first need to understand what we might think of as the energy equivalent of a UV Index, or what we call an “Energy Productivity Index.” In this case, we measure productivity as total dollars of economic activity supported for each one million Btus, or British thermal units, as they drive our Gross Domestic Product (GDP). Here we compare constant dollars of GDP (to remove the effects of inflation) for each unit of primary energy consumed. It is not an entirely satisfying indicator, but we can use the increased $GDP per million Btu (MBtu) as a proxy for improvements in energy productivity.
In 1950, for example, each MBtu of energy that was consumed in that year supported $66 of real GDP. That might be akin to the color purple in the UV Index. Our total energy needs in that year were about 34.6 Quadrillion Btus, or Quads. By 1992 a variety of efficiency improvements increased that index to $113/MBtu; unfortunately, still in the red zone. While there was something of a roller coaster effect in the actual year-to-year changes, the data above show an average 1.3 percent rate of improvement over that 42-year period.
The good news is that we showed some improvement with a productivity increase that accelerated to 2.0 percent annually over the period 1992 to 2022. Hence, our nation’s energy productivity will have climbed to somewhere close to $205/MBtu later this year. While this is, indeed, a decent rate of improvement, we are still in the orange or high zone. We could have done much better.
If we had followed the kinds of cost-effective improvements that were documented and laid out in the January 2012 study I did with my colleagues and published by the American Council for an Energy-Efficient Economy (ACEEE), the Long Term Energy Efficiency Potential, or if we had pursued the investment strategy as my colleague and materials engineer Dr. Saul Griffith suggests would be possible in his new book, Electrify: An Optimist’s Playbook for Our Clean Energy Future, then we might have encouraged an even better 3 percent annual rate of improvement in our nation’s energy productivity. That would have bumped us up to $274/MBtu – what we might think of as now in the yellow or moderate zone. By way of comparison, the ACEEE Long Term Energy Efficiency Potential study suggests that, with smart policies and improved investment patterns, we could nudge well past $500/MBtu over the next three to four decades. That would certainly put us in the green zone, and that would have saved the U.S. economy an enormous amount of money.
The table above doesn’t show all the individual annual values but as it turns out, we actually did achieve a 3 percent rate of improvement nine different times out of the 30 total years since the 1992 Rio summit. But if we had actually sustained a 3 percent rate of improvement over the full 30 years, we would be using 25% less energy than we actually do today, or 74.0 quads instead of the 98.8 quads now projected for the end of this year (as shown in the table above). And. . .
At an average energy price of $10.60/MBtu suggested by the Energy Information Administration? The aggregate energy savings means that our nation’s economy would have saved something very close to a cumulative $4.3 trillion in avoided energy costs over the period 1992 through 2022. Again, referencing the ACEEE study, that magnitude of energy bill savings would have been more than sufficient to pay for the program and investment costs – and still have left a healthy amount of money for households and businesses to pay for goods and services other than energy. Perhaps equally compelling, the physical energy savings would have saved us four years of greenhouse gas emissions. In effect, a smart pattern of energy productivity investments would have produced a net savings of money, and it would have greatly reduced the impact on the global climate and environment.
I’m the first to admit the usual caveats apply. These are rough values which I offer more in the way of gedankenexperimenten, or a thought experiment that is very much in the tradition of Hans Christian Ørsted, Albert Einstein, and Enrico Fermi – rather than as a counterfactual or the basis for specific actions that we might undertake following Rio+30. To be sure, there are a good many questions that we would need to answer. For example, would the economy have expanded with a higher level of energy productivity? As suggested in the table above, the early analytics suggest yes – something larger than the currently projected $20,303 billion by end of this year. And would we have used up some of the energy savings with a slightly larger economy? Would energy costs have dropped as a smaller demand would create downward pressure on those energy prices? And with smaller levels of demand, might we have eliminated a proportionately larger share of fossil fuels which are the single biggest driver of greenhouse gas emissions and other pollutants? Yes, this thought experiment would benefit from further validation, but I think it’s still a potentially powerful story; and one that might allow us to follow Rio+30 with a much smarter pattern of behaviors and productive investments.
There is neither a law of physics nor economics that prevents us from quadrupling the productive use of energy and other resources. Rather, it is much more an issue of imagination and our political will to get it done.
– John A. “Skip” Laitner