[MonteQuest]

Monte you are the one conflating. Debt and energy and not interchangeable. GDP does not measure asset prices or financial speculation, it measures goods and services.

GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.

[kublikhan]

GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.

Yes and you cannot create goods and services out of thin air with just debt or financial speculation. It takes takes labor, material, and energy.

[MonteQuest]

GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.

Yes and you cannot create goods and services out of thin air with just debt or financial speculation. It takes takes labor, material, and energy.

But you can create income out of thin air to spend on goods and services via debt and speculation transactions. Without it, US GDP would be negative. Sales of real assets inflated by debt and speculation are counted as GDP. It takes no energy to inflate assets. It's still the case that energy use is flat due to declining GDP growth. And even the growth that is positive is the result of debt. Adjusted for inflation, it is negative.

[Outcast_Searcher]

Monte you are the one conflating. Debt and energy and not interchangeable. GDP does not measure asset prices or financial speculation, it measures goods and services.

GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy's output of goods and services.

With respect, I don't see how the CALCULATION of GDP has anything to do with income. It is the total measure of goods and services produced, adjusted for imports and exports.

For example, if everyone's salary were doubled OR cut in half, that doesn't change the amount of goods and services produced. If all the work were done by robots for example, then clearly GDP doesn't need salaries as an input (assuming non-sentient robots who aren't paid salaries).

Now, you could argue that GDP strongly correlates with total income for an economy. And that seems true, but for one example, savings is DEFERRAL of purchase of goods and services, so they're not equivalent. Debt would be another obvious example that can make them unequal.

...

I looked up the definition of GDP a few times to ensure I'm not missing/forgetting something obvious.

https://courses.lumenlearning.com/bound ... minal-gdp/

[MonteQuest]

With respect, I don't see how the CALCULATION of GDP has anything to do with income. It is the total measure of goods and services produced, adjusted for imports and exports.

In an economy, they are basically equal, which is why I said they measure the two things at once.

[MonteQuest]

Let's just get it simple. Kub said, "Total energy demand has been more or less flat for over the last decade. Coal plants have been retired. Oil consumption has fallen. Renewables and rising efficiency has taken their place. Total fossil fuel consumption in this country has fallen this past decade."

Renewables have not taken their place. They only met 25% of new energy demand. And I say declining GDP growth is responsible for the flat demand in energy, not efficiency gains. NG has largely replaced coal. The data I see bears this out.

Renewables and efficiency/conservations gains are not viable solutions to our climate issue, nor our energy needs. They are marginal supplements. Anyone want to make any bets on what the REN21 Global Renewables Status Report will be in June? Wind, solar, and geothermal are 2% in 2019, having grown just .3% last year. What will REN21 2020 show? I'm done with the above debate. We are going nowhere, guys.

[kublikhan]

But you can create income out of thin air to spend on goods and services via debt and speculation transactions. Without it, US GDP would be negative. Sales of real assets inflated by debt and speculation are counted as GDP. It takes no energy to inflate assets.

But it does take energy to actually do anything with those inflated assets. Even if no energy was expended to inflate the assets the energy consumption gets captured on the consumption side of the equation. In the end, you still cannot use debt to substitute for energy.

It's still the case that energy use is flat due to declining GDP growth. And even the growth that is positive is the result of debt.

I agree the financial crisis lowered the GDP growth rate and that GDP growth rate is goosed by higher debt levels. It seems that the current rate of productivity/efficiency increases can just about match this low GDP growth rate and keep energy consumption flat. However if GDP growth goes higher or productivity/efficiency increases fall, we will see energy consumption increase again. This is what the EIA is projecting will happen going forward:

In the AEO2020 Reference case, total U.S. energy consumption increases at an average annual rate of 0.3% between 2019 and 2050, and GDP grows at an annual rate of 1.9%, which indicates a 1.5% average annual decline in energy intensity during the projection period.

EIA projects U.S. energy intensity to continue declining, but at a slower rate

Renewables have not taken their place, and I say declining GDP growth is responsible for the flat demand in energy, not efficiency gains. NG has largely replaced coal. The data bears this out.

Incorrect. Total US fossil fuel consumption fell the last decade:

US fossil fuel energy consumption
2007: 86 quads
2019: 80 quads

Renewables & increased efficiency have replaced their loss:

Renewable energy consumption
2007: 6.8 quads
2019: 11.5 quads
Net US reduction in energy consumption 2007-2019: 1.3 quads
Total renewable energy & efficiency increase: 6 quads

The increase in renewable energy & efficiency in the US exactly matches the decrease in fossil fuel use.

[MonteQuest]

I agree the financial crisis lowered the GDP growth rate and that GDP growth rate is goosed by higher debt levels. The increase in renewable energy & efficiency in the US exactly matches the decrease in fossil fuel use.

Both of those statements can't be true. The decline in the GDP growth rate meant less energy was used. Same with efficiency gain at the micro-level. I say the first dominated, you say the second was totally responsible. That can't be the case. Let's just agree that efficiency gains and a decline in GDP growth produced a flat demand in energy growth over the last decade.

Renewables didn't even meet but 25% of new energy demand (IEA), much less help reduce world fossil fuel use. In power generation, fossil fuel use actually increased from 2018 to 2019.

[MonteQuest]

Renewables have not taken their place, and I say declining GDP growth is responsible for the flat demand in energy, not efficiency gains. NG has largely replaced coal. The data bears this out.

Incorrect. Total US fossil fuel consumption fell the last decade:

I have never claimed now or in the past that FF use didn't decline. FF use fell largely due to a decline in GDP growth. You already have acknowledged that. We are going in circles.

[kublikhan]

Renewables didn't even meet but 25% of new energy demand (IEA), much less help reduce world fossil fuel use. In power generation, fossil fuel use actually increased from 2018 to 2019.

My comment was talking about the US, now you are talking about the world:

"Total energy demand has been more or less flat for over the last decade. Coal plants have been retired. Oil consumption has fallen. Renewables and rising efficiency has taken their place. Total fossil fuel consumption in this country has fallen this past decade."

I have never claimed now or in the past that FF use didn't decline. FF use fell largely due to a decline in GDP growth. You already have acknowledged that. We are going in circles.

That doesn't make any sense. GDP grew 22% over the past decade. Fossil fuel consumption shrank by 7%. Should we not have seen fossil fuels grow by 22% then instead of shrink by 7%?

[MonteQuest]

My comment was talking about the US, now you are talking about the world:

You did it with efficiency gains when I was talking about the US. I think that 25% would also closely apply to the US. I don't have the exact figure. Renewables have only captured a small portion of US primary energy over the last decade. The earlier charts showed that.

I have never claimed now or in the past that FF use didn't decline. FF use fell largely due to a decline in GDP growth. You already have acknowledged that. We are going in circles.

That doesn't make any sense. GDP grew 22% over the past decade. Fossil fuel consumption shrank by 7%. Should we not have seen fossil fuels grow by 22% then instead of shrink by 7%?

Not if GDP grew less than the 3.19% in did in the decade before. GDP growth declined from 3.19% avg to about 2% or less. Thus FF use declined. You even agreed. "I agree the financial crisis lowered the GDP growth rate." It declined all across the OECD countries, while it increased in the non-OECD developing countries.

[kublikhan]

Not if GDP grew less than the 3.19% in did in the decade before. GDP growth declined from 3.19% avg to about 2% or less. Thus FF use declined. You even agreed. "I agree the financial crisis lowered the GDP growth rate." It declined all across the OECD countries, while it increased in the non-OECD developing countries.

You are conflating a decline in growth rate(GDP), with a decline in total usage(fossil fuels). Even if the GDP growth rate declined, overall the economy still grew. IE, if the economy grew 2.2% per year, then over a decade it grew 22%. Absent any productivity increases, this will require a corresponding increase in energy usage as well. So if a decade ago we require X resources to run the economy, today we require X * 1.22. Thus even with the lower rate of GDP growth, we would still need more fossil fuels overall to run the economy at it's higher level. Unless of course we replaced some of our fossil fuel usage with renewables and productivity increases.

[MonteQuest]

Unless of course we replaced some of our fossil fuel usage with renewables and productivity increases.

Or less energy-intensive activities like the service sector, while energy-intensive manufacturing jobs disappeared.

“Many OECD countries have transitioned from relying on energy-intensive manufacturing to using more services-based economic activities that are less energy intensive. Based on 2015 estimates, OECD countries used on average 12% less energy per dollar of GDP than non-OECD countries.”--EIA.

Health care and hospitality are where most of the new jobs are created. I've already said that renewables met some of the new demands for energy. Efficiency gains met some new demand in microeconomic instances. Let's agree it was a mixed bag of responses. But the same thing that is cratering energy use during this crisis, is the same thing that cratered it in the OECD countries following the GFC--"demand destruction" by consumers. We have yet to recover from the GFC or the Tech bubble crash in 2001. We have used cheap debt to drive GDP as opposed to cheap energy. Debt doesn't replace energy, it just makes it more accessible. Now, we have reached debt saturation and more debt fails to grow GDP after factoring inflation.

As to renewables, in 2008, wind. solar, and geothermal comprised 1% of our primary energy. 12 years later, it’s just 3.5% as of April 2019. (EIA) A 2.5% increase is nearly a meaningless contribution.

As to productivity, productivity growth has been in severe decline going back to the financial crisis for most developed countries. The U.S. manufacturing sector productivity increased by just 0.7% over the five years from 2012 to 2017. The 0.7-percent labor productivity growth rate during these years is less than one-third the long-term rate of productivity growth of 2.3 percent posted from 1947 to 2007.--(BLS)

Below trend: the U.S. productivity slowdown since the Great Recession--BLS

[MonteQuest]

Even if the GDP growth rate declined, overall the economy still grew. IE, if the economy grew 2.2% per year, then over a decade it grew 22%. Absent any productivity increases, this will require a corresponding increase in energy usage as well.

Not if you outsource that energy demand to other countries, but reap the profits here. Or, as I said above, shift to less energy-intensive service jobs--which is what we did in a big way.

[kublikhan]

As to renewables, in 2008, wind. solar, and geothermal comprised 1% of our primary energy. 12 years later, it’s just 3.5% as of April 2019. (EIA) A 2.5% increase is nearly a meaningless contribution.

In 12 years we have supplanted 6 quadrillion BTUs of annual fossil fuel use with new renewables and energy saving measures. I'd call that a meaningful contribution.

As to productivity, productivity growth has been in severe decline going back to the financial crisis for most developed countries. The U.S. manufacturing sector productivity increased by just 0.7% over the five years from 2012 to 2017. The 0.7-percent labor productivity growth rate during these years is less than one-third the long-term rate of productivity growth of 2.3 percent posted from 1947 to 2007.--(BLS)

Below trend: the U.S. productivity slowdown since the Great Recession--BLS

Energy productivity rose greatly:

Between 1990 and 2015, China experienced the largest increase in energy productivity (133%) as a large increase in economic output was more than double the increase in energy consumption. During the same time period, U.S. energy productivity rose by 58%, with improvements in every sector

Global energy intensity continues to decline

The 2019 data continue a trend of essentially flat electricity use since 2007, even while the economy and population have grown significantly. This stretch is in marked contrast to the 1980–2006 period, when electricity use grew substantially, first paralleling economic growth before falling below it.

The change between these periods is because of many factors, but previous ACEEE analysis finds that increasing energy efficiency is a major contributor, allowing more work to be done with less energy. The rapid shift to more-efficient lighting in homes and commercial buildings has been a key factor, and more-efficient air conditioners and electronics have helped as well. Policies, including updated appliance and equipment standards, utility energy efficiency programs, and strengthened building energy codes, all played a role.

2019 electricity sales continue decade-long flat trend

Not if you outsource that energy demand to other countries, but reap the profits here. Or, as I said above, shift to less energy-intensive service jobs--which is what we did in a big way.

According to those who dug into the numbers, the majority of the decline in energy intensity was not from outsourcing. It was from increases in efficiency:

2017 - In the past two years, US energy use has declined 1%, while gross domestic product (GDP) has increased 4.25%. As a result, our energy intensity (energy use per dollar of GDP) has improved by 2.5% per year, a little better than the 2.0% per year compound rate we averaged over the 1980–2014 period. As noted in our 2015 blog post, based on a variety of studies, we estimate that about 60% of the improvement is due to energy efficiency improvements and 40% to structural changes in our economy (e.g., our growing service economy).

Doing more with less: How the US economy grows while energy use falls

[marmico]

Good back and forth with kub and Monte. Monte seems confused about levels and rates.

We have used cheap debt to drive GDP as opposed to cheap energy.

Hardly. Energy is cheap. For instance, household direct spending on energy goods and services (gasoline, electricity, heating) at ~4% relative to total household spending over the last 5 years is the lowest ever in the GDP data set going back 60 years.

[MonteQuest]

As to renewables, in 2008, wind. solar, and geothermal comprised 1% of our primary energy. 12 years later, it’s just 3.5% as of April 2019. (EIA) A 2.5% increase is nearly a meaningless contribution.

In 12 years we have supplanted 6 quadrillion BTUs of annual fossil fuel use with new renewables and energy saving measures. I'd call that a meaningful contribution.

Renewable gains were only a small percentage of new energy demand. It retired zero existing FF use.

[MonteQuest]

After considering Kub's arguments and reviewing the facts presented, I'll concede the following: Since U.S. GDP has grown over the last decade, yet energy per unit of GDP has declined, something must be happening beyond just declining GDP growth. It’s obvious that renewables have done little to displace FF energy use with their minuscule capture of the energy pie. And even if they did, they are still part of our primary energy supply. In fact, with a lower EROEI, modern renewables are less efficient by producing less net energy. That leaves us with the conclusions that the EIA cites:

“Worldwide energy intensity, measured as energy consumption per unit of gross domestic product (GDP), decreased by nearly one-third between 1990 and 2015. Within a region over time, several factors contribute to rising energy productivity:
• Structural changes in production and consumption (from manufacturing to service economies)
• More efficient use of resources
• Outsourcing energy-intensive activities
Between 1990 and 2015, U.S. energy productivity rose by 58%, with improvements in every sector.”—Source: EIA July 2016

So, the flattening of energy demand in the US is due to a shift to less energy-intensive activities like service industries, efficiency gains, and the outsourcing of energy-intensive activities. But since “worldwide energy intensity” has declined, where have energy-intensive activities been outsourced to? While many countries have shifted to service industries, somewhere, manufacturing is still taking place. This disparity leaves a lot of questions.

Then I found this: “The AEO2020 Reference case projects domestic energy demand to grow 0.3% per year on average through 2050, slower than the average annual growth of 1.9% in U.S. gross domestic product. This projection is largely driven by continued increases in energy efficiency in the end-use sectors.”

Then the paragraph continues and refutes the first part that claims “largely driven.”

“Gains in appliance efficiency in the residential and commercial sectors, increases in efficiency of new capital equipment in the industrial sector, and increases in fuel economy partially offset the growth in the number of households, industrial activity, and vehicle-miles traveled.”—EIA January 2020.

Thus efficiency gains going forward are only enough to “partially offset” new energy demand. What accounts “largely” for most of the decline in energy demand growth? Something is missing from the equation to account for the decline in energy consumption in the face of growing GDP, now, and into the future. Is it the continuing migration of economic activity away from making tangible things and toward providing services and virtual products such as games and binge-watchable TV series driving the decline? Is GDP being measured differently or factoring in debt-driven and speculative assets like real-estate sales that are spent not on goods and services, but on more speculation? Efficiency gains can't seem to account for the decline in aggregate demand, and if they did in the last decade, they won't going forward. The Law of Diminishing Returns at play.

[MonteQuest]

Good back and forth with kub and Monte. Monte seems confused about levels and rates.

We have used cheap debt to drive GDP as opposed to cheap energy.

Hardly. Energy is cheap.

Yet, debt has driven GDP growth since 1971.



And now it doesn't.

[MonteQuest]

The REN21 Renewables Global Status Report 2020 will out in June. Modern renewables like wind, solar, and geothermal comprise 2% of the 2019 global energy pie, growing only .3% last year. In the USA, it is 3.989% of the total pie, growing .489% last year.