How the link between economic growth and rising energy use has broken and what it means

Economic growth no longer translates directly into energy use. Tom Chivers explores  in an article on the Business Green website how the link between economic growth and rising energy use has broken – and what it means fora modern, service-oriented economy.


Is a very low energy economy something to aspire to?

You might think we’re in a bit of a bind, as a society. The nature of capitalism requires that for living standards to improve, the economy has to grow, continuously. Yet for the economy to grow, it kind of feels like we need to use more stuff. Mine more rare earths, sell more iPhones, build more roads.

And that – traditionally – has meant using more energy. And using more energy has – traditionally – meant pumping more carbon into the atmosphere, and speeding up the process of warming the Earth.

That link between energy use and carbon is, sadly, still largely the case in Britain. There has been extraordinary progress: the collapse in the use of coal is the most notable one. In 1970, coal provided almost half of this country’s energy; as recently as 2012 it was still 20 per cent. In 2017, it was just five per cent. But in the main it’s been replaced by natural gas. Renewables have grown spectacularly when you look at the relative percentages – solar power production rose by 38 per cent in 2016 alone, which sounds amazing. But in absolute terms, as a share of overall energy use, they’re still marginal.

Wind, solar, and hydro together made up just three per cent of the UK’s total primary energy generation. Bioenergy is eight per cent but of questionable impact. Nuclear, bizarrely and sadly, has been slowly dropping for years. British energy is still dominated by fossil fuels. It’s just more gas for power and oil for transport, and less coal these days.

Gas is lots cleaner than coal – it emits about half the carbon dioxide per kilowatt-hour of energy generated – but, nonetheless, when you use energy in this country, when you switch on a lightbulb or boil a kettle, you will most likely be pushing more carbon dioxide into the atmosphere.

But, slowly, something remarkable and under-reported is happening. The first link, between growth and energy, is breaking. Economic growth no longer translates directly into energy use. For nearly two decades, even though the economy has grown (most of the time), our energy use has been steadily falling. In 2001, Britain used the energy equivalent of 237 million tonnes of oil per year. In 2017, that was down to 192 million, a 19 per cent drop.

What’s changed? Well, the 2007 financial crisis certainly had an impact. That led to a 4.7 per cent drop in GDP. But even taking that into account, and despite sluggish growth since 2007, the UK economy has grown more than 70 per cent this millennium. And primary energy use was dropping in the growth periods either side of the crash.

Partly this is a result of more efficient use of fuel: modern gas plants waste much less energy at the combustion stage than coal plants do.

And partly it’s efficiencies at the user end. An incandescent lightbulb is an extraordinarily wasteful thing compared to a modern LED bulb; it uses something on the order of 10 times as much energy to provide the same light. There have been similar if less dramatic efficiencies in the designs of our cars, stoves, farms, factories, and homes, among other things.

But the most interesting part, I think, is the change in the nature of the economy itself. If your economy is largely based on the production and sale of physical things, then you have a hard floor on how much energy you use. The production of steel to build a car just requires a certain amount of energy in its mining, smelting and so on, and the laws of thermodynamics won’t bend for you; you can improve things with efficiency, and we have (the German economy is heavily manufacturing-based, but has become much more efficient, allowing it to also grow and reduce energy at the same time), but it can only go so far.

The service sector of the economy, the bit where I pay you to do my taxes or cut my hair, is less obviously linked to energy use. And as countries develop, they move towards a service-based economy. China’s service sector now accounts for over half of its economy, up from 44 per cent in 2010 and just 22 per cent in 1983. In the developed West it’s even more, typically around the 70-80 per cent mark.

And, most excitingly, the things we trade now are changing. If I buy a book on my Kindle, or a film on my Apple TV, the energy involved in producing my copy is negligible compared to the energy required to make an actual physical paper book or DVD. Information can be copied at almost no cost, but has just as much value to the user as the physical forms used to. We could, in theory, grow the economy enormously at almost no energy cost.

Whether it’s happening soon enough to stop the worst effects of climate change I don’t know (although, hearteningly, Britain’s carbon emissions are apparently down to 1890 levels). But at least it’s not a depressing logical impossibility to grow the economy, and improve the lives of the world’s people, without ruining the atmosphere.

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