Friday, April 6, 2018

Why is climate change hard to solve? - VI

(Sixth part of a series)

Part IV in this line of posts looked at time paths of individual countries in terms of GDP per capita and energy efficiency, measured in terms of tonnes of oil equivalent (toe) per million $ of GDP.

Rich countries have been improving in this regard for decades. Poorer countries came closer to the present with increasing energy use per GDP, but even they have shifted to decreasing energy use (i.e., increasing efficiency).

That’s the good news.

But while the increasing efficiency is real, it seemed perhaps to be slowing as it approached 50 toe per million $ GDP, as if that were some sort of limit that would be hard to break through.

Part V looked at country time paths of a different sort, comparing GDP per capita with energy use per capita. The application there was to look at the phenomenon of “decoupling,” in which a country manages to keep its GDP growing even as its energy use is stable or even slightly decreasing.
Figure 1 (from the end of Part V)

With those same GDP-and-energy paths, you can make an argument that 50 toe per million $ is not an unbreachable boundary, but that there is nonetheless a serious problem in terms of total use.

The key to the visual representation is to take the path diagrams from Part V, that show energy use per capita, and find a way to represent efficiency on them as well.

And there’s actually a clean way to do this.

Efficiency is represented as energy per GDP. If your energy use doubles and your GDP also doubles, then your efficiency hasn’t changed at all (2 divided by 5 is the same as 4 divided by 10).

But if you move along a set of points where you keep increasing energy and GDP by the same multiple, then you’re moving along a ray from the origin: a straight line that starts in the bottom-left corner of the chart and moves out from there.

Figure 2 shows the ray that defines an efficiency level of 200 toe per million $ of GDP. Any points above and to the left of that ray have worse efficiency (more toe per GDP), while point below and to the right have better efficiency.
Figure 2

In Figure 3 you see a collection of different efficiency rays, for levels of 25, 50, 100 and 200 toe per million $ of GDP. The 50-toe line that interests us is the heavy, black one.
Figure 3

As shown in Figure 4 with an imaginary country, if your energy-use path is moving perfectly horizontally to the right, your efficiency will be improving over time, as you cross one efficiency ray after another. There’s intuition behind this. A horizontal path means that you’re increasing your GDP without increasing your energy use. If GDP goes up while energy use stays the same, then it must be true that energy per GDP is declining.
Figure 4

In Figure 5, the 50-toe line is added to a chart of energy paths of a broad range of countries.
Figure 5. Data from BP Statistical Review and Penn World Tables. See here

At the top, you can see three rich countries using a lot of energy: Canada, Norway, and the U.S. They have been moving pretty much horizontally for several years—decades, in the case of the U.S. Nonetheless, they are still a lo-o-o-o-o-ong way from reaching the 50-toe line—decades more at their current pace.

At the bottom left there are poor countries using a lot less energy, and Figure 6 provides a closer view of six poor to middle-income countries.
Figure 6. Data from BP Statistical Review and Penn World Tables. See here

Bangladesh (black path) has stayed close to the 50-toe line.

India (blue) and Indonesia (gold) have moved roughly parallel to the 50-toe line in the space above.

Turkey, Mexico, and especially China seem to be moving away from it.

As discussed in Part V, these are poor countries with, even now, very low energy use compared to Europe or North America. It is not surprising that they continue to have a large appetite for more energy.

For the “stars” of this exercise, see Figure 7, with a somewhat rich country (Lithuania) and two rich countries (Ireland and Switzerland).
Figure 7. Data from BP Statistical Review and Penn World Tables. See here

All three are on paths to breach 50 toe per million $ GDP within about a decade. Ireland and Lithuania seem to have been brought much closer to that line by the recession of 2007-09. While the recession slowed their rightward progress through GDP growth, it more than made up for that by reducing their energy use, and since the economic recovery they have continued on their new, lower paths.

So here’s the good news: it doesn’t look like 50 toe per million $ GDP is some impossible level of efficiency. There are countries close to crossing that line.

But there are big caveats.

First, the “star” countries, while prosperous, are small. They represent a tiny fraction of the world’s economies. The bigger European players like Germany are further from the line. The even bigger U.S. is further still. And the giants of China and India are not yet on horizontal paths heading toward the line.

Second, efficiency is just an aid toward combining prosperity with low energy use. What we ultimately care about is energy use itself. The most efficient countries are continuing to improve efficiency, but because they’re rich, even their commendable levels of energy per GDP still mean a lot of energy use. It’s not nearly as much as the U.S., Canada, or Norway, but it’s generally more than the poor countries (Lithuania uses about the same per capita as China, but more than the other poor countries, and Ireland and Switzerland are higher).

As a related point, a horizontal path is a sure-fire way to improve your efficiency, but it doesn’t bring down your actual use. And the general trend of the wealthy countries is more horizontal than downward, while the poorer countries are still in a phase of increasing energy use.

The next post—which I expect to be the last—will explore some further aspects of that.

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