December 18, 2015
Efficiency Gains Have Driven Cost Declines and Increases in Energy Consumption – Will the Trend Continue or Peak?
Dramatic increases in energy efficiency historically have allowed for cheaper energy services, and rather than reducing the amount of energy people used, these improvements increased energy consumption. As such, consumers play an important role in energy transitions: energy services transform the way we live and that transforms the way we produce energy. The transition to a low-carbon economy may be accelerated by an innovation system that helps consumers get cheap, unobtrusive, and cleaner energy services. Standardized, mass produced technologies may hold the key to achieving this goal.
When most people think of energy efficiency, they think of modern amenities, like their squiggly compact fluorescent light bulbs. But according to one of the world’s experts on the history of energy, lighting has become more efficient for 700 years — and much cheaper as a result.
“Over the last 700 years, there has been a 10,000-fold decline in the cost of lighting,” explained London School of Economics professor Roger Fouquet at Breakthrough Dialogue. “Efficiency has dramatically improved and that’s why we are benefitting from cheap lighting,” explained Fouquet.
Over hundreds of years, greater efficiency has meant we have been able to derive more “energy services” — heat, light, or power — from the same amount of energy.
Rising Efficiency Allows for Cheaper Energy Services
But rather than reducing the amount of energy used, all of this energy efficiency dramatically increased consumption. Total lighting consumption soared from less than 20 billion lumen-hours in 1800 to 10,000 billion lumen-hours in 1900 to nearly 800,000 billion lumen-hours in 2000 – a 40,000-fold rise in 200 years.
“The cost between 1300 and 1900 [before electric lighting] to burn a million lumen-hours — which is the equivalent of a 100-watt bulb running for 100 hours, or 4 days —is $30,000 in 2000 year dollars,” explained Fouquet. “That’s an incredibly large amount of money. And that was for using animal fat candles to get poor quality light.”
While there was a 14-fold efficiency improvement in lighting between1800 to 1900, that’s almost nothing compared to the 1,000-fold increase in efficiency between 1900 and 2000 — the age of electricity.
Implications for the Developing World
Today, rising energy consumption applies more to poor rapidly developing countries than to Europe and the United States, where there is much unmet demand for lighting, power, and heat.
“Up until 1950, in the United Kingdom, if you increased incomes by 10 percent you would increase the consumption of lighting by more than 40 percent, and increase passenger transport by 30 percent,” Fouquet explained. “Those are phenomenal numbers. If we translate these to China and India today, these would be huge increases.”
With every energy transition, whether from wood and dung to coal and oil to natural gas, or from animal fats to kerosene, humans have used much larger, not smaller, quantities of energy.
“With each energy transition, energy consumption globally does not drop,” said Fouquet. “It wouldn’t follow historical patterns to see a drop in global energy consumption in a future low-carbon energy transition.”
Later in his talk, Fouquet said he thought energy consumption would eventually peak and decline.
“I want to emphasize that there is a peak and there is a decline; and at some point, we move toward substantially lower income elasticities,” he said. “This feeds in a lot with what Jesse Ausubel says, that there are peaks in increases of consumption and there are declines.”
However, higher levels of energy consumption should be expected from developing countries, just as there were greater increases in energy consumption in the past in the United States and Europe.
“The peaks of income and price elasticities are around $3,000 to $6,000,” Fouquet explained. “Hopefully afterward, things will drop down and there will be element of decoupling of energy services from energy and GDP.”
Consumers Drive Energy Transitions
Yale School of Forestry & Environmental Studies’ Arnulf Grubler emphasized the importance of paying attention to how consumers use energy services — “mobility, comfort, transportation, and creating our material environment.”
Grubler addressed Breakthrough’s interest in reducing carbon emissions through “decarbonization” — which is used to describe both fewer emissions per unit of GDP and per unit of energy.
“In terms of decarbonization, the US has been in stasis since the 1970s,” explained Grubler. “China is a different story. Its energy intensity is higher. We see an acceleration of rates of decarbonization as we move from primary energy to final energy to useful energy. The energy consumer is doing pretty well decarbonizing, but the effects on the system are jeopardized by the energy conversion sector, our utilities and refineries, which are actually carbonizing more. Consumers are greener than utilities.”
“In terms of primary energy, China looks just like the United States in 1923, when the United States was at the peak of its industrialization,” said Grubler. “But China is leading the transition to electrified mobility.”
“They love their iPhones, air conditioners, and novel ways to use electricity that the United States can learn from. Hi-speed rail, electric scooters and vehicles. There are more electric vehicles in China than all the electric vehicles in the United States.”
Mass Production Key to Cheap Energy
Grubler had harsh words for nuclear energy and some renewables.
“Nuclear is a special technology, the more we build, the more expensive they become. The market spends very little money on certain technologies like nuclear – and yet the government sinks a lot of money into nuclear R&D. It’s the only technology which after 50 years since market introduction we still spends more on R&D than the market actually spends. How good is that technology? Should we not have moved past the R&D stage into an enthusiastic embrace of market as we do for all other tech?”
“Some renewables like offshore wind are close to moving toward similar regime,” Grubler said. “We oversubsidize these technologies. The cost reductions don’t come about.”
“Two technologies have had persistent price declines: solar PV and heat pumps,” Grubler said. “What they have in common is that they are standardized, serialized, mass-produced commodities, as opposed to individualized, built in small batches like nuclear plants.”
When asked how nuclear might get cheaper, Grubler replied, “Look at the lesson of France for current generation nuclear. You have only modest cost escalations as long as the French build well-tested, standardized, modular reactors. If you can replicate this model, fine. If you follow model of always upscaling, you are always doomed.”
Grubler said that innovation policy focuses too much on primary energy supply technologies and should focus on more end-use innovation (efficient consumer products).
“Because the energy technology innovation system is so biased, we see a discontinuity in historic decarbonization trends,” explained Grubler. “There’s been a slowdown ever since 1975. We have seen the breakdown of our technology innovation simply because we have inconsistent, contradictory messages. Overcoming a deficient system gives hope for accelerating decarbonization.”
The Economist’s Oliver Morton asked Grubler how what a good innovation system would look like.
“[A good] innovation system would help consumers get convenient, clean, unobtrusive, and cheap energy services,” Grubler replied. “Any innovation system that doesn’t do that should of course not be subsidized and then secondly not endorsed.”
“Should we just forget about the energy supplier?” asked Morton. “Just focus on energy services. Is that what you’re saying?”
“It would be tempting to say so but obviously you can’t,” responded Grubler. “Obviously in our innovation portfolio, the supply-side is overrepresented. There are exceptions, including shale gas and high-efficiency microgas turbines. There are opportunities on the supply side. But we need to rebalance priorities of R&D investment into end-use.”
“We shouldn’t exclude nuclear from the end-use scenario,” said Jesse Ausubel, who received the Breakthrough Paradigm Prize the night before. “Richard Lester and I were at a meeting last November where engineers from the University of Berkeley presented new ideas for nuclear batteries. Others at University of Missouri are making nuclear batteries that can last 1,000 times as long. The amount of nuclear materials in these batteries is so small you don’t have health worries. The battery may operate for a year rather than an hour.”
“Jesse’s proposal is very interesting,” said Grubler. “It’s thinking about a completely different application of nuclear. Forget about the steam cycle. Forget about the economies of scale from steam plants. Go microelectronics."
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IN THE NEWS
David Biello, "Does Increased Energy Efficiency Just Spark Us to Use More?" January 24, 2013
John Tierney, "When Energy Efficiency Sullies the Environment," March 7, 2011
John Carey, "The Energy Efficiency Catch-22," September 1, 2011
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