Energy Intensity Trends

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ENERGY INTENSITY TRENDS

Energy intensity is defined as the ratio of energy used to some measure of demand for energy services. There is no one measure of energy intensity. The measure depends on the universe of interest being measured. If the universe of interest is an entire country, then the measure needs to reflect the energy used and the demand for energy services for that country. A country's demand for energy services is usually measured as the dollar value of all goods or services produced during a given time period, and is referred to as Gross Domestic Product (GDP). If the universe of interest is households, energy intensity might be measured as energy used per household or size of the housing unit. If the universe of interest is the iron and steel industry, the measure for energy intensity could be energy used per ton of raw iron produced or energy per dollar value of the raw iron.

Energy-intensity measures are often used to measure energy efficiency and its change over time. However, energy-intensity measures are at best a rough substitute for energy efficiency. Energy intensity may mask structural and behavioral changes that do not represent "true" efficiency improvements. A shift away from producing products that use energy-intensive processes to products using less-intensive processes is one example of a structural change that might be masked in an energy-intensity measure. It is impossible to equate one energy-intensity measure to some "pure" energy efficiency. Therefore a set of energy-intensity measures should be developed—keeping in mind the caveats underlying the measures.

ENERGY-INTENSITY TRENDS IN THE UNITED STATES, 1972 TO 1986

Before the 1970s the United States experienced a time of falling energy prices and ample supplies of petroleum. In 1973, crude petroleum prices shot up by 400 percent. In the early 1980s, the growth of economic activity outpaced the demand for energy. Between 1972 and 1986, energy consumption per dollar of GDP declined at an average annual rate of 2.1 percent. Energy per dollar of GDP is a useful measure. It is important, however, to understand the factors that lie behind any changes in the measure.

At first, short-term behavioral changes, such as lowered thermostats and reduced driving, were common in reducing energy demand, but their overall effects on demand were small. While these transient changes were taking place, other, more fundamental changes were working their way into energy-using processes. Examples were the introduction of automobile fuel economy standards, appliance efficiency standards, and the movement away from energy-intensive processes in the manufacturing sector.

In 1975, Congress responded to the oil crisis of 1973 by passing the Energy Policy and Conservation Act. This legislation established Corporate Average Fuel Economy (CAFE) standards. By 1985, CAFE standards required that all new passenger cars had to have an average gas mileage of 27.5 miles per gallon (mpg) of gas, nearly double the mileage of typical cars made in the mid 1970s. Light trucks had to average 20.6 mpg.

Additionally, as a response to rising energy prices and uncertainty of supply, several states adopted appliance efficiency standards. At the federal level, the National Appliance Energy Conservation Act of 1987 established the first national standards for refrigerators and freezers, furnaces, air conditioners, and other appliances. The Energy Policy Act of 1992 added national standards for incandescent and fluorescent lights, small electric motors, office equipment, and plumbing products.

The movement away from energy-intensive processes in the manufacturing sector was an important force in the reductions in energy intensity during these years. One of the most noticeable shifts was in the primary metal industry. In 1976, 128 million tons of raw iron were produced by 1986 production had fallen to 81.6 million tons. Domestic primary production of aluminum was 3.7 million metric tons in 1972, but fell to 3 million metric tons in 1986.

ENERGY-INTENSITY TRENDS IN THE UNITED STATES, 1986 TO 1997

After 1986, the CAFE and appliance standards in place resulted in stock turnovers to more efficient automobiles and appliances. However, the decline in energy consumption per dollar of GDP slowed appreciably and, between 1986 and 1997, the energy intensity trend remained rather flat. Other forces in the U.S. economy were pushing energy consumption higher, resulting in increases in the energy-intensity measure.

Between 1987 and 1997, twelve million households were added to the country's housing stock, representing a 13 percent increase. Since most of this increase took place in the West and the South, the demand for electricity for central air conditioning increased as well. In 1987, 52 percent of all households in the South had central air conditioning. In 1997, this percentage was 70 percent—a 35 percent increase. Additionally, new households have been getting larger, resulting in an increased demand for heating, air conditioning, lighting, and appliances. New energy-consuming devices such as VCRs, microwaves ovens, and home computers were also purchased on a wide scale.

The energy intensity measure, miles per gallon, for the stock of passenger cars increased from 17.4 in 1986 to 21.3 in 1996. However, average miles driven per car per year increased from 9,464 to 11,314. There has also been a change in the mix of new vehicles purchased. In 1980, 38 percent of all new vehicles were subcompacts, falling to 18 percent in 1997. The market share for small vans was less than 1 percent in 1980, but grew to 19 percent in 1997. Small utility vehicles had a market share of 3.4 percent in 1980, growing to 26 percent in 1997. Although the larger vehicles became more efficient, more were being purchased and were being driven more.

Although the manufacturing sector continued its decline in the production of energy-intensive products, between 1986 and 1997 the service sector continued to grow. Not only did the commercial building stock increase, but the use of office equipment—from computers to copy machines—has grown rapidly. In just three years, between 1992 and 1995, the number of personal computers and computer terminals in commercial buildings increased from 29.8 million to 43 million (45%).

Clearly the United States is doing more with less energy. Although total energy has grown as demand for goods and services has climbed, energy use per person has hardly changed, 348 million Btu per person in 1972 and 352 million Btu in 1997. During this same time period, energy per GDP has declined 32 percent. State and federal energy-efficiency standards, consumer behavior, and structural shifts, have fueled this decline.

Stephanie J. Battles

See also: Appliances.

BIBLIOGRAPHY

The Aluminum Association. (1997). Aluminum Statistical Review for 1996. Washington, DC: Department of Economics and Statistics.

American Iron and Steel Institute (1998). Annual Statistical Report 1988. Washington, DC: Office of Energy Markets and End Use.

Energy Information Administration. (1995). Measuring Energy Efficiency in the United States' Economy: A Beginning, DOE/EIA-0555 (95)/2. Washington, DC: Office of Energy Markets and End Use.

Energy Information Administration. (1998). Annual Energy Review 1997, DOE/EIA-0384 (97). Washington, DC: Office of Energy Markets and End Use.

Heal G., and Chichilnisky, G. (1991). Oil and the International Economy. Oxford, England: Clarendon Press.

International Energy Agency. (1997). Indicators of Energy Use and Efficiency. Paris, France: Organization for Economic Cooperation and Development.

U.S. Bureau of the Census. (1997). Statistical Abstract of the United States, 117th ed. Washington, DC: U.S. Government Printing Office.

U.S. Department of Energy. (1998). Transportation Energy Data Book: Edition 18. ORNL-6941. Oak Ridge, TN. Oak Ridge National Laboratory