Par Samuel Furfari, Université Libre de Bruxelles (Belgique)

A benchmark that explains why green NGOs want to promote energy sobriety

The fashion for saving energy, which assumes that human behaviour can compensate for the inelasticity of energy demand, is not new. Only the name is. In 1924, when US President Calvin Coolidge proposed saving oil because he had been told that reserves would soon be exhausted, he devised a strategy called energy conservation. Though compassionate and generous, these methods failed to reverse the continuing growth in energy demand. Energy consumption, and oil consumption in particular, continues to rise as the world’s population grows and more people need to eat and work, i.e. consume energy. It is the task of industry and engineers to make processes and products more efficient. It has always been an ongoing quest. The Romans used massive stones to build their bridges, creating amazing monuments. Today, a similar function is performed with much lighter materials. Efficiency is normal behaviour in human activities, including the production, conversion and consumption of energy.

The parameter used to assess this progress is energy intensity, which measures the energy consumed per unit of GDP produced. Its unit can be expressed in tonnes of oil equivalent per dollar or, better, in joules (or multiples of joules) per dollar. The figure below, which shows the evolution of energy intensity between 1990 and 2022, has been prepared using data from the World Bank for the GDP values, and the energy consumption statistics are those provided by the Energy Institute (2023 for 2022). The figure also shows the intensity for each of the fossil fuels.

The figure allows us to draw some deductions.

1. World energy intensity has fallen dramatically. It has dropped from 150 gigajoules per billion dollars (GJ/B$) in 1990 to 60 GJ/B$, i.e. a reduction of 60% (-1.9%/year). There are many reasons for this improvement. First, energy prices have risen, forcing industry – and to some extent the residential sector – to reduce consumption. However, energy intensity should not be confused with energy efficiency. In fact, energy demand has increased throughout the period under consideration, only energy intensity has been drastically reduced. Second, technological improvements have made industrial processes or energy-consuming equipment more efficient, including in the automotive sector. Thirdly, the world’s wealth has increased substantially, so the ratio can only fall as GDP increases in the denominator. And finally, the share of the tertiary sector, especially services, in the economy is growing at the expense of the primary (agriculture) and secondary (industry) sectors. It is clear that the tertiary sector uses less energy than the others.
   
2. Oil intensity logically followed the same trend as energy intensity. It fell from
   60 GJ/B$ to 19 GJ/B$ over the period analysed, a reduction of 68% (-2.1%/year). Even if the differences in percentage per year between the different fossil fuels are relatively small, it is worth noting that oil intensity has improved the most among the fossil fuels. It is also the most expensive of them, which partly explains the reduction in intensity. The sharp decline from 2005 to 2010 corresponds to the oil price spike when OPEC abandoned the ‘price band’. The higher oil price improved the efficiency (from 45 GJ/B$ to 23 GJ/B$ during this period). However, the oil price spike in 2020 did not induce the same behaviour as of 2005–2010 because, on the one hand, continuous improvement is very difficult and, on the other hand, emerging countries are much more active than twenty years ago.
   
3. Gas and coal intensities have also decreased. Their improvement is -1.7%/year and – 1.9%/year respectively, but in absolute terms it is not as significant as the fall in oil intensity. Coal – the cheapest fossil fuel except in the USA – has a slightly better intensity than the others.
   
4. Let’s note that the three fossil fuel intensities are tending towards a similar value, whereas they were quite different in 1990.
   
5. The second clear message is that all fuel intensities are reaching an asymptote around 20 GJ/B$. This means that the low-hanging fruit is over and that we should not expect much improvement further. Technology has delivered what it can, processes will never reduce their energy consumption to zero, and societal behaviour has also reached a limit. Accordingly, scenarios and policies that aim for higher improvements in energy intensity and thus energy reduction are utopian for all fossil fuels.

Conclusion

At COPs, including the recent COP 28, many green NGOs have insisted that the solution to reducing CO₂emissions is sobriety. This is understandable, as they have finally realised that there is no real solution to replace fossil fuels and nuclear energy, as it is now clear that renewable energy is not the solution that has been announced and proclaimed for at least 44 years. Green NGOs must therefore insist on reducing energy consumption by changing people’s behaviour, i.e. by changing the way of life in OECD countries. In a way, they make sense, because energy efficiency has reached its limit. We can no longer dream that insulating houses, for example, will deliver all the expected energy savings. 

Of course, it will be interesting and financially beneficial for the inhabitants of the house (including their comfort), but insulation is not free: you have to produce the insulating materials (often based on the hated oil) and have them installed by workers, not to mention all the services involved in the operation, such as the energy used to transport workers and materials. All this may give the illusion of efficiency, but the real parameter for assessing the relevance of the operation is its impact on energy intensity at a macro level. 

This short article shows that we are reaching an asymptote and that it is an illusion – at least in OECD countries – to believe that energy efficiency will lead to an overall reduction in fossil fuels and nuclear energy.

Unless we want to go back in time and live like our grandparents, energy consumption is only going to grow, and since renewables can only absorb part of this growth at best, demand for conventional energy will increase, as will CO₂ emissions.