I’ve said it in earlier articles, but perhaps not clearly enough: There’s no simple connection between energy use and economic growth.
Perhaps this chart will help:
I’ve plotted U.S. GDP per capita (adjusted for inflation) alongside primary energy use per capita, from 1800 through 2022. As always with a dual-axis chart, the relative scales are arbitrary (though I haven’t introduced further arbitrariness by starting the vertical axes at nonzero values).
How should we describe the relation between these two data sets?
Obviously there are correlations, especially in the short-term fluctuations. For instance, the economic shocks of 1929, 2008, and 2020 all triggered dips in energy use. When you lose your job, you travel less and buy less manufactured stuff and try to use less heating fuel. But these fluctuations have little to do with the long-term trends.
Equally obvious is the observation that both GDP/capita and energy/capita have increased over the long term.
But the similarities pretty much end there. Most importantly, the overall shapes of the curves are completely different. The rise in GDP/capita has progressed pretty steadily over the full 222 years, with only brief interruptions, resulting in a factor-of-23 cumulative increase. Meanwhile the rise in per-capita energy consumption was confined to the 80-year period between the 1890s and the 1970s, and this increase was by a mere factor of 3.
During most of the 19th century, Americans grew wealthier without increasing their per-capita energy use. That was possible because most energy use in the early 1800s was fuelwood burned in fireplaces for home heating. The fireplaces were inefficient, sending most of the heat up the chimney. By late in the century, more efficient stoves and furnaces were providing most of our heat, and this efficiency gain canceled out our increasing energy use for manufacturing and transportation.
The 20th century brought a multitude of new and expanded energy technologies. The added energy uses outran the efficiency improvements until the 1970s, causing per-capita energy use to increase. Since the 1970s, a wide variety of efficiency improvements have approximately compensated for further added energy services.
I think it’s also fair to say that we’ve been adding energy services more slowly since the 1970s (though it’s hard to quantify “energy services”). By the 1980s, the market penetration of cars and large home appliances was saturating, and Americans shifted more of their spending toward entertainment and other services that aren’t energy-intensive.
Another factor in recent decades has been offshoring of some of America’s most energy-intensive industries (such as metals production) to other countries. The energy data I’ve plotted above doesn’t include energy used in other countries to manufacture goods we import—and to be fair it really should. I don’t know of a comprehensive data set that applies this correction, but Our World in Data has published an analysis by Viktoras Kulionis for a shorter time period, from 1995 through 2020:
The big picture is that the correction is significant, but not nearly as large in percentage terms as GDP growth over the same time period. An accompanying article by Hannah Ritchie points out that the “decoupling” of GDP growth from energy use—even after correcting for offshored production—has occurred in many other rich countries besides the U.S. [I should note that the Kulionis data set does not appear to have been published elsewhere, let alone peer reviewed. But there’s no reason to disbelieve the broader conclusion, which is consistent with what we know about industry’s share of total energy use.]
In trying to draw a close connection between GDP and energy use, some authors point not to historical data but to comparisons between countries:
The overall correlation is quite strong, though I would add a couple of caveats:
- The spread in energy use at any given GDP value is pretty big. Even if we ignore the more extreme outliers, it’s easy to find pairs of countries, like Canada and the U.K., with about the same per-capita GDP yet whose per-capita energy use differs by more than a factor of 3. These variations are often associated with differing climates, population densities, or other characteristics that wouldn’t vary so greatly within a single country over time.
- Although the plotted energy per capita values span a breathtaking factor of 1000, this is badly misleading. At the low end, all the values are much too low because these data exclude energy from traditional biomass fuels. And at the high end, there are a handful of small countries whose energy use is connected less to local lifestyles than to trade-dependent industries (oil, aluminum).
When interpreted in light of these caveats, the data basically tell us that any low-income country can expect to increase its energy use several-fold as it industrializes.
What many people really want to know, of course, is whether further economic growth in the U.S. (and other rich countries) will entail increased per-capita energy use. The answer is that nobody knows. But the pattern of the last several decades suggests that “no” should be our default answer. Those who wish to argue that the pattern will soon change bear the burden of proof.
