Breaking the Link Between Energy Consumption and Economic Growth

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"There are skeptics of energy efficiency who claim that, paradoxically, all the energy and money we have been saving due to energy efficiency, across all sectors of the economy, has actually caused us to increase our energy consumption. This “economy-wide rebound” theory is a startling, but ultimately unsupportable, theory that is plainly contradicted by the evidence. In a new article published today in the online journal, www.ElectricityPolicy.com (Article), my colleagues and I put this economy-wide rebound theory to the test: we measure it against the data. As my colleague David Goldstein shows in his blog, no scientifically testable version of the theory, including the economy-wide version, is supported by the evidence. Indeed, what emerges is the exact opposite: energy efficiency results typically are understated by conventional accounting. In this blog, I will focus exclusively on the economy-wide rebound theory, looking at how economies can, and do, reduce energy consumption as a portion of GDP.

Rebound theory claims that efficiency causes an economy to consume more energy. But more than what? In order to be scientifically testable, the theory must provide a baseline against which it can be tested. After searching for a testable version of the hypothesis, the only one we could identify was: “more than what the economy presently consumes.” That is, rebound theory claims that efficiency causes energy consumption to increase to a higher level compared to the status quo before the efficiency measures were adopted. This version of rebound theory can be tested. Let’s check it against the facts—starting with what our energy consumption looked like before strong energy efficiency policies in America, and then looking at what happened next. If the economy-wide rebound theory were right, we would expect energy consumption to grow more rapidly than the economy. Here are the plain numbers over the last 60 years from the Department of Energy, in real dollars of GDP, along with units of energy consumption, in trillions of Btus (TBtu)."

http://www.democraticunderground.com/discuss/duboard.php?az=mydu

The ratio of energy consumption to GDP began decreasing in the US due to economic incentives (the oil embargo of the 1970s). Worldwide, energy use projections from the DOE show a fairly linear increase through 2030, and energy usage is predicted to double from 2007-2040.