Energy Intensity Indicators: Economy-Wide Total Energy Consumption
New Economy-wide Energy Intensity Index
The national system of energy intensity indicators presented on this Web site captures the changes in intensity due to efficiency improvements relative to the influence of other explanatory factors unrelated to efficiency improvement. One example of such an 'other explanatory factor' is the shift of economic activity out of the industrial sector and manufacturing, that use large amounts of energy per unit of output, into service industries that use only very small amounts of energy. A shift from steel to electronics influences the simple E/GDP ratio, but is not indicative of improvements in energy efficiency.
The new system of energy intensity indicators (henceforth referred to as "energy intensity indices") provides a truer measure of changes in energy intensity that are associated with improvements in the efficient use of energy. While this new indicator of energy intensity for the economy as a whole is not a perfect measure of how energy efficiency has improved, it comes much closer to capturing the influence of efficiency changes than does a measure based only upon a simple ratio of energy to overall GDP.
This page discusses economy-wide total energy consumption for energy intensity indicators.
Simple Energy/GDP Ratio
Taking a long-term perspective, and using the simple Energy/Gross Domestic Product (E/GDP) ratio, the amount of energy needed to produce a dollar's worth of goods and services in the U.S. economy fell by more than half between 1949 and 2004. The nation's output of goods and services, as measured by inflation-adjusted Gross Domestic Product (GDP), increased more than six-fold, from $1.63 trillion to $10.75 trillion over the period. Total energy consumption increased three-fold, from 32 Quadrillion British thermal units (QBtu) to slightly less than 100 QBtu. As a broad measure of energy intensity, the ratio of energy to GDP (E/GDP ratio) declined by 47% over this 55-year period. These long-term trends are illustrated by indexes, relative to 1985, in Figure 1 below.
This entire period, however, can be better understood by considering three sub-periods. In the period up to the Organization of Petroleum Exporting Countries (OPEC) oil embargo (1949 through 1973), total energy consumption generally grew slightly slower than GDP. Corresponding to this trend, energy intensity (measured by the E/GDP ratio), declined by 11%. The 1973-1974 oil embargo and subsequent price shocks of the late 1970s and early 1980s encouraged energy conservation and efficiency improvements in all sectors of the economy. Between 1973 and 1985, the E/GDP ratio decreased by 28%. Oil prices fell sharply in 1986, accelerating price declines in all fuels whose prices had peaked in the early 1980s. In spite of this development, after 1985 the E/GDP ratio has continued to decline, dropping another 26% by 2004. Translating these declines into annual average rates indicates that up to 1973, the E/GDP ratio declined at about 0.5% per year; between 1973 and 1985, it declined about 2.7% per year; and between 1985 and 2004, it declined 1.6% per year.
While this is an impressive record of achievement, the simple E/GDP ratio measure of energy intensity overstates the extent to which energy efficiency improvements have occurred in the economy, because factors that affect intensity that are unrelated to the efficiency of energy use are included in the ratio.
Economy-wide Energy Intensity Index - Total Energy
As indicated in Figure 1, between 1985 and 2004, energy intensity, based on total energy and as measured by our newly developed index fell by 10%, considerably less than the simple E/GDP ratio would indicate. This 10% change over this 19-year period corresponds to an average annual percentage reduction in energy intensity of 0.56% per year. Other explanatory factors unrelated to efficiency improvements contributed to a decline in energy use of 17% between 1985 and 2004.
Sector Energy Intensity Indices - Total Energy
Changes in energy intensity for each of the four end-use sectors (transportation, industrial, residential buildings, and commercial buildings) are shown in Figure 2 below. Note that the electricity-producing sector is not shown in the graphic, because the generation and transmission losses associated with the production of electricity by the utility sector have been allocated to the end-use sectors; in other words, these graphics use total energy, rather than delivered energy (see Terminology and Definitions). In this case, the commercial buildings sector has increased its energy intensity by 12%, and the energy intensity in the residential sector has declined by about 9%. The decline in energy intensity was greatest in the industrial sector, falling by 19% over the 19-year period. During the same period, the energy intensity of the transportation sector declined by 14%.
|Simple E/GDP Ratio||Economy-wide Energy
|Sector Energy Intensity Indices for Total Energy|
|Transportation||Industrial||Residential Buildings||Commercial Buildings|
Note: This information applies to the four end-use sectors shown above, and includes electricity losses attributed to each of these sectors. The Highlights of Energy Intensity Trends - Delivered Energy section covers five sectors (electricity is added) and only includes purchased electricity in each of the sectors. The single sector unaffected by this distinction is the transportation sector, which uses so little electricity that losses are too small to notice.