Economics, Energy and the Environment

Energy Fact of the Week: Energy intensity and GDP growth

This week, a guest post of sorts. Over on the Oil Drum or OurFiniteWorld.com, Gail Tverberg, an actual actuary, has compiled a terrific overview of the question of energy use and GDP growth, all in service of debunking the idea popular with some environmentalists that economic growth can be decoupled from energy use, or at least from cheap energy (which means fossil fuel energy). Gail writes:

In recent years, we have heard statements indicating that it is possible to decouple GDP growth from energy growth. I have been looking at the relationship between world GDP and world energy use and am becoming increasingly skeptical that such a decoupling is really possible.

She offers several charts of the energy-GDP trends in different countries and regions, but I include here only her global chart:

Her conclusion tracks closely with mine:

If GDP growth and energy use are closely tied, it will be even more difficult to meet CO2 emission goals than most have expected. Without huge efficiency savings, a reduction in emissions (say, 80 percent by 2050) is likely to require a similar percentage reduction in world GDP. Because of the huge disparity in real GDP between the developed nations and the developing nations, the majority of this GDP reduction would likely need to come from developed nations. It is difficult to see this happening without economic collapse.

Only an actuary could make the droll understatement of the last sentence here. Her entire post on this is well worth reading.

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