How Much Energy Do We Actually Need?

This posting is rather philosophical than technical. Whenever we talk about energy, we tend to think in terms of oil, gas, nuclear, electricity, and the like. But throughout the longest part of its history mankind has been living without any of these “modern” energy types. And yet, throughout its entire history humanity has been dependent on energy, even without knowing it to the degree we are aware of it.

Why is that so? Every living being needs energy, just to stay alive. From a very basic point of view, what you essentially need to keep yourself alive is food, the nutritional value of which is measured in kcal which, in turn, is a measure for energy.  So we have to supply our body with energy if we want to stay on this planet.

The basic energy need of a human being is about 2000 kcal per day. This is an average value which may vary according to age, sex, physical activity etc. Our basic value is meant to be valid for no or little physical activity. Thus, for people who are physically active it may be significantly higher (30 – 50 % or more). Since in the energy business it is rather uncommon to use kcal as a unit we may remark here that the above-mentioned 2000 kcal are equivalent to 2.33 kWh. From this we may calculate that the annual energy needs of a human being are about 1 MWh, taking into account a slight level of physical activity.

However, even for a society where technology has not yet developed to the level we are used to, the energy requirement per capita may well exceed 1 MWh per year. For the sake of simplicity let us consider a human being living in the Middle Ages. This means that the technological standard of that society is still much lower than nowadays, whereas at the same time its living standard is much more sophisticated than the one of, say, a society of Stone Age people.

In the Middle Ages, the vast majority of people were living an agricultural life. Thus, their energy needs reflected their living conditions. The technology of that time made extensive use of animals which was essential in order to produce a sufficient amount of food. Needless to say that the animals themselves had to be fed, too, and were thus energy consumers. The most important labour animals in such a society are horses and cows (oxen). Since they are, in general, bigger and doing much more labour than the humans, they also require more energy. Let us assume that, on average, we have one cow or horse per human being. A horse requires about 12000 kcal (14 kWh) per day, and the same is true for a cow (ox). This corresponds to about six times the energy requirements of a human. A largely inactive horse will need some 5 MWh per year. In case the animal is used for labour purposes this value will increase dramatically.

In our simple model, the minimum energy needs of a human being (plus his/her labour animal) may be estimated to about 6 MWh per year. In practice, this value might be considerably higher (30 % or more). Life was not easy then and certainly more physically demanding than in our times.

What we have considered so far was a very basic life mostly devoted to producing food and satisfying the elementary needs only. In some parts of the world, however, an additional factor comes into play: heating. Especially during the winter and the colder seasons, people need to keep a certain temperature for survival. In order to get an idea how much energy we need for heating purposes we may take the corresponding value from Switzerland which is about 6.5 MWh per person and year. This is a modern value. Linking it to a society several centuries back we have to take into consideration that on the one hand people living centuries ago might have been happy at a lower average temperature than today. On the other hand, however, we may also consider that then heating was not as efficient as it is in our times. Thus, taking the present day values may be a justified approach as the correcting factors go into opposite directions and may cancel each other.

Putting everything together leaves us with an energy need of about 13 MWh per person and year in an environment with present day climatic conditions in central Europe. One should not forget that all those basic energy needs (with the notable exception of heating) may be coverd by solar energy. In our model society it´s the sun which makes the crops grow which, in turn, serve as essential food for both humans and animals.

It goes without saying that the average energy requirements per person will increase with technological progress. Not only do we produce a number of goods nowadays which simply were not existing in the distant past, but we also enjoy a higher level of mobility. Thus both the production of goods other than the ones needed for satisfying elementary surviving conditions and mobility lead to additional energy requirements.

The above considerations are far from being simply of an academic nature. We may compare our estimates with present day statistical data. Let us look at some countries with different economic development. Taking the UN figures for energy per capita from 2008 reveals the following (GDI = gross domestic income per person):

Zambia    6.9 MWh   (GDI: 950 USD)

Zimbabwe 8.9 MWh   (360 USD)

Paraguay   8.1 MWh   (2110 USD)

Mongolia   13.7 MWh  (1670  USD)

Romania   21.3 MWh   (8280 USD)

Uzbekistan   21.5 MWh   (910 USD)

UK     39.5  MWh  (46040 USD)

US   87.3 MWh   (47930  USD)

There is a clear correlation between the level of industrialization and energy consumption. In addition, there is a climatic factor which must not be neglected. As we climb up the economic ladder we require more and more extra energy.

However, by using energy in a smart and efficient way we may limit the extra requirements. The average energy consumption per capita in the UK corresponds roughly to the EU value (40.8 MWh). Whereas the GDI of a US citizen is only slightly higher than the one of a UK citizen, his/her energy consumption exceeds the one of a person living in UK more than twofold. Thus, energy efficiency in the US is only half as good as it is in the UK.

Where are the limits? On the one hand we have to live with the fact that getting wealthier comes at a price in terms of energy consumption, on the other hand we want to squeeze as much wealth as we can from every MWh. As I have discussed in some of my previous posts (here, here and here) there is a clear tendency to become more energy efficient. Extrapolating those tendencies may give us a clue where we are heading to.

Household Energy Use – The Case of Switzerland

Modern societies need a considerable amount of energy, which is almost entirely used the three sectors industry (including services), mobility and household, at roughly equal parts. Thus, the energy consumed at home forms a substantial part of the entire final energy use.

In this posting we study the situation in Switzerland which is one of the most competitive and industrialized countries of Europe, though not being a member of the EU. All raw data for the subsequent investigation stem from Swiss Statistics which provides excellent information on all areas of consumption. In particular, we will focus on the period 2000-2010. The above-mentioned sectors had the following shares in the total final energy consumption in 2010: industry and services 35 %, mobility 34 % and household 30 %.

Total household energy use went up by 14.1% during the first decade of this century. However, this obvious increase does not take into account that the number of people living in Switzerland has also risen during that period. Thus, the relevant figure to look at is the consumption per capita, and here the situation looks quite different as can be seen in Fig. 1.

The trend line makes clear that the specific energy use per person has gone down over the years. The steep increase since 2007 is well in line with the number of heating degree days (HDD) following a similar pattern as can be seen in Fig. 2. Apparently, it has become colder between 2007 and 2010.

Fig. 2 Heating degree days (HDD) and heating effort in Swiss households.

The similarity between the red curves in Figs. 1 and 2 is not accidental, as more than 72 % of total household energy are used for heating purposes (in 2010). Thus, changes in the number of heating degree days should be reflected in the heating effort. Warm water makes up for another 12 % of household use while the remaining 16 % are shared among various sectors such as lighting, cooking, washing, drying, etc.

A closer look at the figures for warm water reveals that consumption has remained relatively stable (Fig. 3).  Taking into account the growing number of households (+ 11 %) during the period in question naturally leads to the conclusion that each household uses less and less warm water.

Fig. 3 Total energy used for warm water and consumption per household (/HH).

Fig. 4 shows the contribution of other sources of household energy use. Their aggregated consumption volume is relatively moderate as stated above. Nevertheless, as a whole they are not to be neglected although their individual shares are not as important as the ones for heating and warm water.

Fig. 4 Household energy use (except heating and warm water).

Whereas lighting, cooking and refrigerating (including freezing) have remained virtually unchanged over the years, washing (including drying) and miscellaneous have increased dramatically by 52 % and 32 %, respectively. This is well in line with a growing population as more people require more clothing to be washed. So there are some areas of energy consumption being more sensitive to the number of persons involved while others like lighting tend to be rather independent of population figures.

Thus, as stated in my previous posting, growing energy consumption figures (in absolute terms) should not be obscured by ignoring the simultaneous changes in the number of consumers. On an individual basis, we gradually tend to use less energy. This is the good news. But, of course, the crucial question is how much further we can get in becoming more energy efficient. Or, to put it differently, is there a limit and, if yes, where is it?

Energy Efficiency – How Europe Can Achieve Its 2020 Targets

Becoming more energy efficient is perhaps the most straightforward and least expensive way of tackling the energy problem. Recently, the EU has addressed this issue within the framework of the so-called Europe 2020 targets which aim at reducing gross energy consumption by 20 %, producing at least 20 % of all energy from renewable sources and reducing greenhouse gas emissions by 20 % (with respect to 1990 levels). All that is supposed to be attained by 2020 at the latest.

Leaving aside the two latter issues, we will focus in this posting on the question of energy efficiency. Lowering energy consumption by 20% (when compared to projected levels) means in particular that by 2020 Europe will use some 1474 Mtoe (mega-tonnes of oil equivalent) of primary energy.

Fig. 1 shows the development of EU gross inland consumption from 1990 onwards with EU-27 representing the entire union whereas EU-15 refers to the “old” Member States, i.e. excluding those countries which joined the union in 2004 or later.  One striking observation is that during the past two decades consumption figures have always been substantially higher than the 2020 target line. Thus we are facing a real challenge.

Fig.1 EU gross inland consumption of energy. Source: Eurostat.

But looking at absolute consumption levels only does not reveal the whole story since, at the same time, we are also expecting economic growth. And a growing economy means higher energy consumption, at least to some extent. Putting consumption and economic performance together yields another interesting observable, namely the so-called energy intensity which is shown in Fig. 2. This parameter indicates how much energy is needed in order to produce one unit of economic output. Energy intensity is thus measured in kgoe/kEUR (kg of oil equivalent per 1000 EUR). Apparently, this indicator has fallen drastically since 1991.  In 2010 it was at 168 kgoe/kEUR for EU-27.

Fig. 2 EU energy intensity. Source: Eurostat.

One apparent feature of this figure is that the gap in the intensity levels between EU-27 and EU-15 is getting smaller over the years, thus indicating that the countries which joined the EU in 2004 or later are outperforming the older Member States (EU-15) when it comes to becoming more energy efficient. Nevertheless, the energy intensity of the younger EU members is still considerably above average.

Reducing absolute energy consumption means that intensity figures will drop accordingly. But by how much? In order to obtain an answer to this question, we analysed two scenarios, one with a stagnant economy, i.e. no (real) GDP growth up till 2020, and another one with an average GDP increase of 2 % annually.

Taking the zero-increase economy as a reference we find that energy intensity must drop from its 2010 level to some 141 kgoe/kEUR in 2020. This is not too far from the current EU-15 level (151 kgoe/kEUR). However, at EU-27 level this means that the intensity has to go down by some -1.75 % on average per year.

Going over to a more dynamic scenario with an average economic growth rate of 2 % we find the respective energy intensity in 2020 at 115.5 kgoe/kEUR. Obviously, the effort is much stronger in this case, requiring an annual decrease of almost -3.7 %.

To put things into perspective we may mention that the average intensity gain during the period 1991-2010 was 1.94 % per year. Thus, the prospect of performing equally well in a no-growth economy does indeed look quite promising. However, once the economy is supposed to grow even at a moderate pace, our effort may easily double.  In that case, more drastic measures are required in order to attain the ambitious goal.

Heating Demand and HDD

Heating degree days (HDDs) are supposed to serve as an indicator for heating demand. At first glance, everything seems obvious. HDDs are a smart combination of the temperature difference between the interior of a dwelling and the outside temperature and the number of days where the difference is valid. (See one of our previous articles for technical details).

In an earlier posting we investigated the link between HDD and gross energy consumption. Then the findings were not as convincing as one might expect. An increase in HDD does not necessarily mean that consumption is rising in the same way. On the contrary, in some cases the two parameters might even go in opposite directions.

Surely, primary energy demand is certainly too crude a measure to be strongly correlated to simple variations in temperature. Too many other factors like energy demand for transport purposes and manufacturing come into play. At the end of the day, domestic needs and especially heating constitute just a fraction of the total energy cocktail. Thus it is tempting to go one step further and look into a potential, and hopefully more clearcut relationship between HDD on the one hand and consumption figures for heating purposes on the other.

We performed such an analysis for the case of Austria, covering the years from 2003 till 2010. The source data have been taken from Eurostat and Statistik Austria. The consumption figures refer to three different sources, namely heating, warm water and cooling.

Fig. 1 HDD and energy consumption for heating purposes in Austria, HDD* = HDD/30.

The correlation between the two sets of data is obviously better than in our earlier analysis which was based on gross consumption figures. Nevertheless, there are notable deviations from an ideal scenario which require some interpretation.

Before the economic crisis of 2008 the amount of TWh that went into heating was fairly stable. Up to 2008 and again in 2010 HDDs show much larger deviations from the mean value than the consumption figures. In some years, 2004 and 2008 to be precise, the deviations have a different sign, thus going in opposite directions as can be seen in Fig. 2.

Fig.2 Energy demand for heating and HDD, deviation from mean value.

Both, in 2006 and 2009, consumption figures differ more significantly from their mean value than their respective counterparts in HDD.  However, we may consider this as an exception. In general, energy consumption for heating, cooling and warm water seems to be more inert than the fluctuations caused by weather conditions.

This is good news because it shows that our heating systems are much less sensitive to outside conditions than what we might expect in the first place. On the other hand, it may also indicate that dwellings having a high degree of thermal insulation of which there are many in Austria are less exposed to temperature fluctuations.

Energy Consumption and Productivity

In a recent study we analyzed the relationship between two basic parameters which are crucial for every economy: its final energy consumption (FEC) and its productivity level. Conventional wisdom has it that, in order to stay competitive, a modern economy has to become more productive over the years. There are clear differences between various countries as far as their productivity growth is concerned. The overall picture is such that between 1995 and the beginning of the financial crisis in 2008 economic output per working hour increased significantly in most EU Member States. Then, with very few exceptions, a general downturn set in yielding lower output figures than before the crisis. One  notable exception was Spain where productivity rose even during that difficult period.

If, on the one hand, economies are supposed to increase their production per working hour they are, on the other hand, also keen on using as little energy as possible. The aim is to produce more with the same amount of energy or, in other words, to improve energy intensity.

In order to make the two things comparable, we have indexed them, setting 2005=100, and followed them during the period 1995 – 2009. All the raw data of our investigation have been taken from Eurostat.

Let us look at the EU-27 data first (Fig. 1).

Fig. 1 Productivity and final energy consumption (FEC) in the EU. 2005=100.

We see that productivity has increased siginificantly stronger than final energy consumption (21.8% vs. 4.0%). Remarkably, just before the economic crisis, the EU managed to go up in productivity while at the same time consumption figures climbed only moderately. The crisis of 2008 led to a slight downturn in output per hour and and to a substantial lowering of energy needs.

The overall EU picture is nicely reflected by Germany showing a similar pattern (Fig. 2).

Fig. 2 Productivity and final energy consumption in Germany, 2005=100

Germany´s final energy consumption index has been fairly stable over the years, mostly oscillating between 95 and 100 and reaching its lowest value in 2009  (-3.5%). Her economic performance, on the other hand, was outstanding (+20.1%). Similar conclusions may be drawn for France and the Netherlands which are not shown here.

The situation is strikingly different in the case of Spain (Fig. 3).

Fig. 3 Productivity and final enrgy consumption in Spain, 2005=100.

First we note that Spain´s productivity gain has not at all been outstanding over the 14-year period. Compared to other countries like Germany, the increase was rather moderate (9.6%). Second, energy consumption has gone up at a much higher pace than output per hour (39.6%). As a consequence of economic crisis the consumption index went down for the first time in more than 10 years. A rather similar conclusion can be drawn for Italy (not shown), whereh a moderate rise in productivity was met by a soaring energy consumption. After 2005 consumption figures came down here, too, and the productivity index followed shortly after.

The situation looks entirely different in Sweden (Fig. 4).

Fig. 4 Productivity and final energy consumption in Sweden, 2005=100.

In terms of energy consumption Sweden has steadily gone down (-9.5%) whereas productivity gains were quite impressive (30.3%), the latter, not surprisingly, being shaken by the global economic situation from 2007 onward. This picture clearly reveals that Sweden not only managed to produce considerably more per working hour but also with less energy.  The situation is a bit similar in the UK (Fig. 5) with substantial improvements on the productivity side (30.5%). Consumption figures, on the other hand, show a slight downward trend though less pronounced than in the case of Sweden (-3.2%).

Fig. 5 Productivity and final energy consumption in the UK, 2005=100.

Thus, it is possible to see productivity rising and at the same time consume less energy. If, however, energy consumption is growing faster than productivity, this clearly indicates that there is a gap in energy efficiency which needs to be closed. Some countries set nice examples of how this can be achieved.

Heating Degree Days and Energy Consumption

Heating degree days (HDD) may serve as an indicator for the amount of energy used for heating purposes. The correlation seems to be pretty obvious: a larger number of HDD should inevitably lead to a corresponding increase in energy consumption. This relationship should, as a consequence, be reflected by the amount of primary energy used. Of course, heating is not the only way to consume energy. Traffic, industrial production and services equally request their share in primary energy demand.

In Germany, heating accounts for about 30 % of total final energy consumption. Thus, if the number of HDD is up by, say, 10 % then we would expect the consumption figures to increase accordingly. The question is to what extent the latter would reflect changes in HDD. Let us demonstrate this via a simple thought experiment. Imagine Germany consumed 100 units of final energy in 2009, 30 of which were used for heating. The number of HDD was x. In 2010 HDD increased by 10% compared to the previous year. Thus we would expect a total of 33 units being absorbed for thermal comfort. Everything else remaining unchanged, the total final energy consumption in 2010 would amount to 103 units. Thus, the total consumption figure would be up by 3% in 2010.

Does this argument also hold good for primary energy consumption? Let us have a look at two countries of similar size and climatic conditions, namely Germany (Fig. 1) and UK (Fig. 2). The source data have been taken from BP Statistical Review of World Energy 2011 and Eurostat. The figures show primary energy consumption per capita (CPC) in tons of oil equivalent (toe) and the number of HDD in the respective country.

Fig. 1 Primary energy consumption per capita (in toe) and HDD in Germany

Consumption figures in Germany reflect changes in HDD only partially, as expected. At the end of our observation period we even note that a significant rise in HDD is met by a slump in consumption per capita. Between 1994 and 1996 HDD went up by more than 27%. The respective rise in CPC was a mere 3.3%.

The UK data are as follows.

Fig. 2 Primary energy consumption per capita (in toe) and HDD in UK

Again, the changes in consumption per capita are much less pronounced than the respective variations in HDD. In 1995/96 HDD increased by some 11.5 %, whereas CPC went up by 4.5 % only. As in the German case, towards the end of the obervation period a clear upward trend in HDD is met by a significant drop in CPC.

Heating degree days have certainly their merits when it comes to estimating energy needs for thermal comfort. However, on a more global scale, their usefulness is relatively limited. In any case, their importance should not be overrated.

Heating degree-days

What are heating degree-days and what are the advantages and limitations of that conept? Generally speaking, heating degree-days (HDD) represent a sensible measure in order to estimate how much energy must be provided for heating purposes.

It´s cold outside, you turn on the heating. The colder it is, the more you have to heat, if you want to keep the room temperature at a convenient level. As a consequence, you need more energy, if the outside temperatures are lower. Thus the temperature difference between inside and outside to a large extent determines how much oil, gas, wood or electricty you need in order to keep your place cosy and warm.

But this is not the only parameter having an impact on your heating bill. Another factor of crucial importance is the numer of days you have to keep the heating running in the first place. Wintry weather conditions and their duration can vary considerably from one year to another. Last year, at the beginning of November, outside temperatures in northern Europe were already below 0° C. This year, however, in the same region the thermometer has hardly ever touched the freezing point, thus saving a lot of energy costs.

So we see that two crucial parameters determine the heating effort: the temperature difference between living room and outside on the one hand and the duration of the period when the heating is on.

Formally speaking, following the definition used by Eurostat, HDD may be defined as follows:

HDD = (18° C – Tm)*d,  if Tm <= 15° C  or

HDD = 0,  if Tm > 15° C

In this formula, d represents the number of days when heating is considered to be required and Tm is the mean outside temperature defined as Tm = (Tmin + Tmax)/2. Thus, Tm is an average value of minimum and maximum temperatures during a certain period. But when is the heating actually on? According to Eurostat the heating is on when Tm <= 15° C, whereas for Tm > 15° C it is off and then HDD = 0.

In this way, we have obtained an important indicator for the amount of energy which is needed in order to keep our living or working space at an agreable level.

However, HDD in itself is not sufficient to determine or even estimate the actual amount of energy necessary for heating purposes. To that end, more input is needed. In particular, we need to know how big the energy flow from our living and/or working premises to the outside world is. Clearly the heat flow is directly proportional to the difference in temperatures as indicated in the formula for HDD. Yet, the amount of heat passing from the cosy appartment to the cold and sometimes frosty environment also depends on the insulation we use in order to reduce the loss of heat. The insulation in turn is closely linked to the construction materials used.

Fig. 1 gives us an overview over HDD in the EU-27 and some selected countries. The raw data for this have been taken from Eurostat.

Fig. 1 HDD in EU-27 and selected countries, 1980-2009

Apparently, there is a clear distinction between several countries, depending on their geographical location. HDD for Germany and UK are closely following the EU average. The northern countries Sweden and Finland are placed well above that average, whereas the southern Member States Spain and Portugal find themselves well below that value. The mean deviation from the EU average amounts in the case of Sweden and Finland to 67% and 79%, respectively. Spain and Portugal, as the antipodes in HDD,  are as far as 43% and 60% below the European mean value, respectively.

HDD reflects the climatic conditions of each country. Average temperatures are considerably lower in Europe´s northern periphery and in the southern part. Therefore the difference in HDD between Finland (5800 on average) and Portugal (1300) is easily explained. Taking HDD as the only reference, Finland would need more than 4 times as much energy for heating than its couterpart. However, comparing these figures with the energy consumption per capita for both countries (Finland 5.3 ktoe and Portugal 2.2 ktoe, annual average for 1991-2010) yields a clear indication that there must be some features which tend to soften the sharp discrepancies. Among these are the standards for heat insulation (which can vary between different countries), the number of cooling degree days (having an opposite north-south tendency) and the level of industrialization.

Energy per capita

It doesn´t come as a surprise that bigger countries consume larger amounts of energy than smaller ones. In general, at least. And yet, there are exceptions to this rule. US consumption of primary energy was 2204.1 Mtoe in 2009 according to BP´s Statistical Review of World Energy 2011. In the same year Canada used some 312.5 Mtoe.  The two neighbours are roughly equivalent in terms of economic performance (with GDP per capita in the US being larger than the respective quantitiy for Canada). Thus the main reason for explaining the difference is by reference to the population numbers. Here the US with 307 millions outweighs Canada with 33 millions. However, there are also other factors coming into play, as we shall see later.

A nice example that population is not the only parameter steering energy needs is given by comparing Germany and Mexico. Although Mexico has considerably more inhabitants (107 millions vs. 82) its consumption figures are significantly lower than the German ones (167 Mtoe vs. 307 Mtoe).

A sensible quantity for measuring the energy hunger of a particular economy is the primary energy consumption per capita. In that way, size effects stemming from largely different populations are normalised. The philosophy behind this is similar to the one of energy intensity which measures consumption per unit of GDP.

In the following we consider a number of developed economies and look at their energy hunger per head. We will find out that there are considerable differences between those countries although, at first sight, they may appear to be very similar in nature. The raw data for the following investigations have been taken from BP´s Statistical Review of World Energy, from the UN Statistics Division and from the CIA World Factbook.

Fig. 1 Primary energy consumption per capita in ktoe, 1991-2010

Although each of these countries is part of the wealthier economies of our planet, their energy consumption per head reveals some striking differences. We may observe that during the past 20 years the figures have not changed dramatically. Norway´s figures, though, show some variation, however, without any clear trend to higher or lower values.

One of the intentions of our choice was to highlight consumption characteristics between northern and southern countries. And indeed, the southern branch consisting of Italy, Portugal and Spain is well separated from their northern counterparts Canada, Norway, Finland and Sweden. In fact, there is even a significant gap between Sweden and Finland on the one hand and Canada and Norway on the other.

Having the north-south distinction as a particular feature we may come forward with some explanations on the seemingly unbridgable gap between the northern and southern economies. Obviously, one of the strongest arguments is based on climatic variations. Average temperatures are lower in nordic countries than in the southern ones which explains part of the difference. In order to have a reliable measure on how energy consumption is triggered by climatic circumstances we apply the concept of heating-degree days (HDD) which is used by Eurostat. Apparently, there are two parameters governing the HDD: the temperature and the number of days when heating is necessary. Without going into details we may state that the  nordic countries (except Canada) had more than 5000 HDD in 2009, whereas the Mediterranean countries managed with well under 2000 HDD.

Although the HDD concept is able to explain much of the difference, it is still not reflecting reality in total. The other factor coming into play here is the economic performance of each country expressed in GDP per head. Here, too, we see a gap between the two blocs. In order to visualise differences we take the average of both, the GDP and the energy consumption per capita, and scrutinize the deviations of both of the blocs from the mean value. The result is given in Fig. 2.

Fig. 2 Deviation of GDP and energy consumption per head from average in %. Data from 2009.

Fig. 2 gives us an indication that the energy intensity (which is pegged to the GDP) is closely linked to the consumption per capita, thus reflecting the economic performance of a country and its inhabitants. Those countries with a higher GDP per head tend to have also a higher primary energy consumption per inhabitant than the countries with a below average GDP per capita.

Although the term “energy per capita” has some intrinsic limitations, it represents nevertheless a sensible quantity if we are to understand consumption patterns and their causes. It is particularly sensitive to take into account factors like the degree of economic development and the temperature zone of a given country. Otherwise our conclusions might be distorted, especially when comparing countries with different economic background and/or geographic distribution. It goes without saying that Canada will consume more energy per inhabitant than, say, Portugal, simply because of its relative positioning on the globe. However, geography does not account for everything. We have to make allowances for differences in industrial and economic power as well. And again Canada, having a considerably higher GDP per head, is better off  than Portugal. Putting everything together will allow us to draw the right conclusions from the rough picture the concept of “energy per capita” provides us with.

Oil Dependency of Developed Economies

Oil is one of the major energy sources for a modern economy. Both, developed and developing economies depend heavily on it. So we may ask ourselves to what exent we depend on this critical source. Intuitively, we know that renewables are constantly gaining ground. However, the simple fact that oil prices continue to be a vital indicator for economic activity shows us that oil still keeps its dominant role in the energy mix.

In order to find out how our dependency on oil and oil products has developed over the past decade, we compare the economic output in terms of nominal GDP with the respective oil consumption figures. This is done for the EU, the United States and Japan. The period in question is running from 2000 to 2010. Both, the GDP and oil consumption are normalized to be equal to 100 in 2000. The raw data for our investigation have been taken from Eurostat and the Shell Statistical Review of World Energy 2011.

Let us start with the European Union. Fig. 1 gives us a nice impression about the decoupling of economic activity and oil consumption which has taken place in the past decade. A net gain in real GDP is accompanied by a significant drop in oil use.

Fig. 1 EU-27 oil dependency 2000-2010, 2000 = 100.

The underlying reasons for this significant development are twofold: on the one hand, oil is facing competition from other sources such as natural gas. On the other hand, oil using machinery, like car engines etc. are getting more efficient, i.e. using less energy per km/mile.

Fig. 2 displays the same analysis for the United States. Again, real GDP and consumption of oil are jeading in different directions. As in the case of EU-27, the decoupling becomes even more siginificant as of 2006/2007. Quite remarkably, during the economic crisis in 2008/2009 the relative drop in consumption was considerably bigger than the one in economic performance.

Fig. 2 US oil dependency 2000-2010, 2000 = 100

As a final example, let us have a look at the situation in Japan. In one of our previous post we have already observed that Japan excels particularly when it comes to energy intensity, i.e. economic output per unit of energy used. Having this in mind, we would expect quite similar findings for the case of oil consumption. Fig. 3 shows the results of our analysis.

Fig. 3 Japan´s oil dependency 2000-2010, 2000 = 100

Although Japan´s GDP has performed less favourably when compared to the US and the European Union, its oil dependency has fallen much stronger than the one of its competitors. The decoupling between economic performance and the respective oil consumption is already quite significant in the beginning of our observation period, getting larger during the years. Thus, the reduced consumption of oil and its products is one of the key factors in Japan´s successful struggle to obtain a higher economic output per unit of energy.

Energy Intensity in Europe, the US and Japan

In the previous posting we analyzed the development of energy intensity at a European scale. The findings were twofold: on the one hand, we saw a clear tendency to lowering the amount of energy per unit of GDP. This means that energy is used in a more efficient way. On the other hand, there are still remarkable differences between the EU member states. The gap between, say, Spain and Denmark which amounted to 63.72 kgoe/1000 EUR in 1995 has actually widened over the years and was at 79.44 in 2009. Thus, Denmark has clearly done better than Spain during that period. This, in turn means, that there is substantial room for improvement on the Spanish side.

Arguably one might say, that Spain and Denmark are not at the same level in terms of productivity, and that is certainly a valid point. However, from the Spanish point of view it is strongly desirable to become more competitive and thus increase its productivity.

In this post we want to have a closer look at the energy intensity of the three main economies in the world having comparable levels of productivity: the EU, the US and Japan. The raw data for the following analysis have been taken from Eurostat. As usual, the quantity in question is measured in kgoe/1000 EUR of GDP.

Fig. 1 Energy intensity in the EU, US and Japan, kgoe/1000 EUR

First, we observe a decline of energy intensity in all three economies. However, this decline is much more pronounced in the EU and the US than in Japan. During the period in question the US saw its intensity figure falling by 25.6%, while Europe faced a decline of 20.9%. Japan, on the other hand, came down by a mere 11.8%. Why is that so? It seems that Japan has already reached a saturation level when it comes to using energy in the most efficient way. The US and Europe have considerably improved their output figures, delivering a higher GDP per unit of energy used.

Nevertheless, there is still a huge gap between the two “Western” economies and Japan. Clearly, the gap is narrowing. In 1995, it was some 104.9 kgoe/1000 EUR between the EU and Japan, while the respective difference between the US and Japan was 134.6. In 2009, this has come down to 73.5 (EU-Japan) and 85.7 (US-Japan), respectively. Thus, the United States are still using almost twice as much energy per unit of GDP as Japan.

Improving productivity and introducing energy saving measures are the key parameters if we want to perform equally well as Japan. Clearly, Japanese economy has set the baseline which we should try to achieve. It is possible to bring energy intensity down to less than 100 kgoe/1000 EUR. However, this may take several decades given the current level of progress.