Decoupling Economic Growth and Energy Consumption

economic growth
Gita Subramony for Zondits, April 14, 2015. Image credit: Ylebru

The world’s economic growth continues to decouple from energy consumption. In the USA, energy demand has remained relatively flat since 2007 despite economic growth. One of the factors leading to this trend is more advanced and cheaper energy efficient technologies. LEDs are a great example – as the technology has developed, these lights can be used in a variety of applications and achieve similar light quality as their less efficient counterparts. Additionally, as the technology has developed their price has dropped, allowing more consumers to purchase and install them.

While this trend is promising, a recent article in The Economist points out that if we are in the game of reducing or minimizing the impacts of global warming, we are going to have to massively increase our spending on efficiency, especially in the world’s existing building stock. More stringent codes and standards will help create efficient new buildings, but retrofits will be the key to dramatically reducing energy consumption across the board. Other technologies such as solar panels, battery storage, and ice storage will also be instrumental in reducing our energy consumption from greenhouse gas-emitting sources.

The role of the utility will also have to change. Traditionally, a utility’s business model was dependent on selling more energy, not incentivizing people to use less. Given the dire worldwide consequences of climate change, this business model will no longer be sustainable. Utilities seeking to maintain profits in the new era of energy efficiency and clean energy will have to refocus their strategy on distributed generation, energy storage, and energy efficiency as a resource.

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Green around the edges

The Economist, April 11, 2015

POWER consumption used to march in lockstep with economic growth. As the world recovers from financial crisis, that link is weakening. Though the average conceals wide variations, in 2014 advanced industrialised countries used 0.9% less electricity than in 2013, and slightly less even than in 2007, since when their combined economies have grown by 6.3%.

A new study for the UN Environment Programme concludes that two factors are at work. One is thrift. Faced with rising prices, consumers use less. British electricity prices increased by 44% over the period; consumption fell by 12%. The other is greater use of energy-saving technology. This includes better insulation, advanced heating and cooling systems, and energy-efficient device s, notably light-emitting diodes (LEDs), which, unlike incandescent bulbs, turn most of the power they use into light rather than wasting much of it as heat.

But if global warming is to be held to no more than 2ºC by 2050—the level above which most scientists think that climate change risks being dangerous and irreversible—energy use and economic growth need to part ways once and for all. The best hope, experts agree, is a huge increase in energy efficiency. This ought to be straightforward. The technology is getting cheaper and better all the time. Many energy-efficiency measures quickly pay for themselves. Yet progress is frustratingly slow.

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