Thursday, June 9, 2011

Global Energy Efficiency Declined in 2010

Yesterday, BP came out with their annual Statistical Review of World Energy, which gives us a bunch of helpful data about 2010 to look at.  Gregor McDonald has already noted that the ongoing shift toward coal has continued.  The first thing that struck me was that the headline growth in global primary energy consumption, 5.6%, was likely larger than the growth in global GDP, implying that the efficiency with which the global economy uses energy must have declined.

To assess this, I took the IMF data on global world product (at purchasing power parity), and then deflated it (using BEA GDP deflators) to get a series in real dollars, rather than nominal ones.  I divided that by the BP numbers for total primary energy (in millions of tonnes of oil equivalent), and that gives the graph above (not zero scaled to better show changes).  Indeed, although it has been fitfully improving for decades, it took a small step backwards in 2010.  Unfortunate. In my opinion, the world should be very focussed on improving its energy efficiency for multiple excellent reasons, and it's discouraging to see it go backward.

Total primary energy consumption is closely linked to carbon emissions, as the following graph shows:

Both are growing apace (after a short hiatus in the great recession).  Through about 2000, primary energy was growing a little faster than carbon emissions, but since then it's been worsening (due primarily to rapid growth of coal usage in developing countries).

The uncontrolled experiment with the climate system continues.


jemand said...

Could the increase in inefficiency be from economic growth occurring more in the developing world this last year than the developed? I'm not even certain that the developed world is in general more energy efficient but it seems probable.

KODE said...

Hmmm. Government spending 'G' adds directly to GDP, and according to the standard narrative this surged in the wake of the financial crisis. Would be illuminating to see a comparison of how G and energy efficiency develop over time. Don't know where to get total G-numbers for the world, though... had a quick look at your IMF link, didn't see any...

Two hypotheses:

1) Steve Keen has observed that delta-debt should be added to the GDP formula. Since G is added but delta-debt isn't, this overstates GDP post-GFC relative to pre-GFC. This in turn makes energy efficiency per GDP appear to be lower post-GFC than it actually is.

2) The Invisible Hand -- worshippers are right, and government spending causes misallocation of resources, causing energy efficiency to fall. Strong anticorrelation between delta-G and delta-energy_efficiency (possibly with a lag).