35 years of global energy efficiency gains reflected in the world's GDP [View all]

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Now and again I hear some talk about how GDP is coming uncoupled from the underlying energy supply that enables and drives all human activity, or even that GDP isn't fundamentally connected to energy at all.

To look at what's been happening in that arena over the last 35 years, I did a bit of arithmetic on world GDP and energy consumption numbers from the World Bank. Since 1975, world GDP has grown by an average of 3% per year. The world's primary energy consumption has grown by an average of 2% per year. The economy's energy efficiency (the amount of GDP that can be produced by a given unit of energy) has grown by an average of 1% per year.

The graph below shows those three growth rates, calculated as four-year moving averages to get rid of some of the short-period noise.



The fourth line in the graph, the black horizontal line right on 0.0% labeled "Residual", shows that all of the world's GDP growth is explained by increases in energy use and efficiency (GDP growth - the growth of energy consumption - the growth in energy efficiency) = 0.

We are becoming more efficient at using energy to make money - the energy efficiency of the world economy has improved by 40% since 1975. But there is no evidence that a recognizable economy can exist in the absence of energy inputs. And any decline in energy consumption will automatically generate a drop in global GDP.