Energy Use and Carbon Emissions: Some International Comparisons
April 1, 1994
Introduction
This report examines international energy use patterns, trends, and energy-related carbon emissions since 1970. The main focus of this study is on the developed countries, represented by the members of the Organization for Economic Cooperation and Development, or OECD2 . The study is organized as follows: 1) the OECD is placed in a world context; 2) aggregate-level information is then presented for an important part of the OECD, namely the Group of Seven (G-7) major industrialized countries (the United States, Canada, Japan, the United Kingdom, France, Italy, and Germany - defined in this report as western Germany only, except where indicated); and 3) individual economic sectors within the G-7 countries are broken out for detailed review.
Background: Economic Growth, Energy Consumption and the Environment
Since the industrial revolution, consumption of fossil fuels (oil, gas, and coal) has been critical to economic growth. Early on, however, it was apparent that fossil fuel consumption had unwanted adverse environmental effects - namely, pollution of the air, water, and land. In recent years, concern over these effects has been heightened by the possibility that the release of greenhouse gases--the most important of which are carbon dioxide, methane, and nitrous oxide--contribute to global warming. Human activities promote emissions of each of these gases, adding to existing natural background levels contained in the atmosphere. Quantitatively, the most important man-made greenhouse gas emission is carbon dioxide, which is released with the burning of coal, oil, and natural gas.
Background: The June 1992 "Earth Summit"
To address these (and other) environmental concerns, representatives from more than 140 countries met in June 1992 at the United Nations Conference on Environment and Development (also known as the "Earth Summit") in Rio de Janeiro. At the Earth Summit, participating countries agreed to "protect the climate system" by taking "precautionary measures to anticipate, prevent or minimize the causes of climate change and mitigate its adverse effects." Earth Summit participants also agreed: 1) that all Parties should adopt national programs to address greenhouse gas emissions and to periodically report on them; 2) that developed countries "should take the lead in combating climate change," through such measures as technology cooperation with developing countries; 3) that developing countries had "specific needs and special circumstances"; and 4) that industrial nations should aim to reduce greenhouse gas emissions to 1990 levels by the year 2000 (although there is no requirement to do so). On October 7, 1992, the U.S. Senate ratified the global climate change treaty
The Future: Options for Reducing Greenhouse Gas Emissions
Since fossil fuel consumption is responsible for a large share of anthropogenic greenhouse gas emissions, it follows that reducing fossil fuel consumption will help significantly in cutting such emissions. Lowering fossil fuel consumption can be accomplished by 1) shifting away from fossil fuels towards "cleaner" sources of energy (such as solar and wind) or 2) by reducing the amount of fossil energy needed to produce a given unit of economic output (either by structural shifts away from energy-intensive industries, or by increased efficiency of energy use at various levels of the economy).
Fuel Mix and Carbon Emissions
Between 1970 and 1991, world carbon emissions rose 50 percent, while energy use rose 64 percent. Emissions rose more slowly than energy use, in part because reliance on noncarbon-emitting energy sources increased. In the OECD, the energy share of noncarbon fuels rose from 7 percent to 17 percent between 1970 and 1991, reflecting mainly the increased use of nuclear power. During the same period, OECD reliance on natural gas and coal changed little. However, oil’s share of the OECD’s overall energy consumption fell from 54 percent to 43 percent.
Noncarbon-emitting energy sources have played a relatively smaller role in the fuel mix of developing countries. In 1970, the noncarbon fuel share of developing countries’ energy consumption was 4 percent, increasing to 9 percent by 1991. Again, much of the change resulted from increasing reliance on nuclear power. The largest overall change in developing countries’ fuel mix, however, involved diminished reliance on coal and increased reliance on natural gas.
For the world as a whole, were the fuel mix of 1970 to be projected to 1991, carbon emissions would have been 11 percent (or 624 million metric tons) higher than actual levels. For the developed countries, emissions would have been 11 percent (or about 306 million metric tons) higher given the OECD fuel mix of 1970. For the developing countries, energy consumption at 1970 fuel mix rates would have increased carbon emissions by 13 percent (or 408 million metric tons).
Factors Affecting Energy Use Trends
The energy crises and oil price spikes of the 1970’s sparked extensive debate and research on the determinants of energy demand and the relation of energy demand to economic growth. This research revealed that a variety of energy consumption patterns and growth paths are consistent with any given standard of living or economic growth rate. This helps account for the wide degree of variation in international energy use patterns revealed in this report.
In the 1970’s and early 1980’s, for instance, the rate of growth in OECD energy use fell markedly relative to the rate of OECD economic expansion. Substantial aggregate reductions in energy use per unit of economic output were achieved throughout the OECD during this period, particularly in response to the oil price shocks of 1973 and 1979. As a group, the G-7 countries achieved a 54-percent increase in per capita income between 1970 and 1991, while energy consumption per unit of output declined 27 percent. In contrast, the ratio of energy use to economic output actually rose slightly in the developing countries over that time period.
A variety of factors helps explain this observed divergence in energy use patterns over different country groupings. Of central importance are levels of economic development and the rates of economic change over time. Expanded levels of economic activity, for instance, are highly correlated with increased levels of energy consumption and carbon emissions. Economic growth, which is often accompanied by industrialization, electrification, and improved living standards, helps foster demand for energy in the form of industrial feedstocks, heat, light, and motive power. Not surprisingly, therefore, average per capita consumption in countries with developed economies is six times greater than in the developing countries. As developing countries evolve into newly industrialized economies based on modern systems of transportation, distribution and power generation, rapid rates of growth in energy demand are likely to occur.
The rate of population growth is another key factor affecting economic development and the demand for energy. In the developed countries, relatively slow population growth over the past several decades relative to rates of economic expansion have been reflected in sharply higher per capita incomes. In contrast, many developing countries have experienced rapid population growth, meaning that economic expansion in these areas has served largely to maintain rather than improve per capita living standards. In this context, energy demand growth may serve not so much to improve living standards but to sustain those so far achieved.
Still another factor conditioning national energy consumption and carbon emissions patterns is the relative mix of energy-intensive industries in particular countries. Some countries, for instance, contain a higher proportion of relatively energy-intensive raw materials and chemical processing industries. Such differences in industrial mix can result in considerable variation in energy demand even among countries with similar levels of per capita income. Differential factor endowments explain much of this variation. Countries with relatively cheap, abundant energy resources (like Canada and the United States), therefore, will commonly specialize in energyintensive activities.
Differences in energy use technologies to produce comparable products can also give rise to variations in overall energy demand. Technological advance in a particular production process may permit savings in the energy needed to yield a unit of product. Technology practices often differ widely across nations. Identifying best-available practices and promoting widespread adoption of such practices can help foster energy conservation. The degree to which variation in energy demand among countries with similar economic circumstances is due to differences in the penetration of energy efficient technologies is uncertain. However, in particular industries at particular points in time, significant differences have been identified.
Energy prices and social policy also significantly condition national energy demand and carbon emission characteristics. Countries with centrally-planned economies, for instance, generally have pursued economic development policies which foster growth in energy-intensive industries and set energy prices at artificially low levels. As a result, these countries have been commonly characterized by large energy requirements and carbon emissions per unit of economic output compared to more market-oriented economies.
The relative importance of these six factors (economics, population, industrial mix, technology, prices and social policy) on energy demand has fluctuated across countries and over time. The search for and implementation of efficiency improvements, for instance, accelerated mainly after the oil price shocks of 1973 and 1979 and were focused primarily in the developed countries. Although these oil price shocks prompted similar reductions in housing, transportation, and industrial energy intensities throughout the developed countries, national differences in energy use were not eliminated. Countries with heavy reliance on energy-intensive industries at the beginning of the 1970’s, for example, were still reliant on them in 1990. A similar finding is true for personal transportation. Since 1970, however, countries with the highest taxes on gasoline also had the highest rate of growth in vehicle registrations. Thus, factors other than price must also have played a strong role in the demand for personal transportation.
A review of historic trends and cross-national comparisons indicates substantial flexibility in the relationship between energy consumption and economic activity. Changes in energy prices, for instance, appear to accelerate efforts to conserve on energy use in developed market economies. Despite the historical experience, uncertainty remains regarding the extent to which energy conservation can achieve stabilization or reduction in energy demand without reducing living standards and/or raising costs of production. Two potential paths to increased conservation exist. One involves identifying best available practices with regard to energy use and encouraging widespread implementation of such practices. The other involves improving technology so that underlying production possibilities can be sustained while overall energy use is reduced or carbon-based energy is replaced by noncarbon or renewable energy sources.
Report Outline
This report presents an array of national- and sectorallevel energy use indicators across countries and across time. The level of detail presented here is highly aggregated, and as such does not focus on specific energy end-use practices in any one country or at a detailed level within a particular economic sector. However, these summary measures are helpful tools in identifying the effects of differing energy end-use practices. The identification of broad differences in energy-use trends across areas and economic sectors will help to focus further analyses regarding national and international energy and environmental policies. For example, evidence showing a growing share for electricity in worldwide energy consumption underscores the importance of minimizing carbon emissions from the electricity generation sector. This conclusion in turn suggests a potential course of action: namely, the widespread adoption of best-available electricity generation technologies. Thus, the broad review of international energy use patterns presented here should be viewed as a necessary and important starting point for identifying potential opportunities for energy conservation and carbon emission control.
Data Sources
Energy data used in this report were gathered primarily from three main sources: 1) the Energy Information Administration’s International Energy Annual 1992; 2) the OECD’s Energy Balances of OECD Countries 1990-1991 (and prior editions); and 3) the OECD’s Energy Statistics and Balances of Non-OECD Countries. Economic and price information is taken mainly from the OECD’s National Accounts, Volume 1: 1960-1991 and Volume 2: 1978-1990; The WEFA Group’s World Economic Service: Historical Data, July 1993; and the International Energy Agency’s Energy Prices and Taxes, First Quarter 1993. Other data sources for this report include: 1) the American Automobile Manufacturer’s Association (World Motor Vehicle Data, 1993 Edition) for world motor vehicle registration trends; and 2) the Lawrence Berkeley Laboratory for information on residential space heating, automobile utilization, and gasoline fuel efficiency. More detailed sources for all graphs are included in the appendix of this report.3 Data are available upon request. All gross domestic product4 statistics for the G-7 countries are expressed in 1985 U.S. dollars, calculated on a purchasing power parity5 basis. For world comparisons, GDP’s are expressed in 1985 U.S. dollars, calculated on a standard exchange-rate basis