Declining real prices stimulated demand for energy in all countries, including the United States. The abrupt oil price rise after the embargo and the accompanying rise in the prices of other fuels have brought about declines in the energy-to-output ratios of all the industrial nations. However, the full effects on energy consumption have not yet been seen. This is because energy, as an intermediate good, depends on durable goods such as furnaces, automo biles, refrigerators, or buildings to provide its ultimate service.
The response of energy consumption to changes in price is usually specified by a number called the price elasticity of demand, defined as the ratio of a percentage change in consumption to the percentage change in the price of energy that evokes it. Because it takes time for consumption to adjust fully to a new price level, economists refer to short-term and long-term elasticities, with implied lags for adjustment. The values of price elasticities are usually deduced from historical data, from international or interregional comparisons, and from microeconomic estimates and engineering.
These estimates are subject to large uncertainties, and their values have been much debated. The response of U. It is equally consistent with a small long-term elasticity and a short adjustment time or a large long-term elasticity and a long adjustment time.
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Yet the energy consumption for extrapolated using these two models could vary by almost a factor of 2. It is enough to say here that the elasticity value one chooses makes the difference between negligible and profound reduction in GNP growth as a result of large reductions in the energy intensity of the economy. The larger the price elasticity in absolute value, the more it is possible to moderate energy demand without depressing economic growth. Two obvious questions arise from the foregoing discussion: What is the likely future course of energy prices, and to what extent are they subject to control by policy?
In addressing these questions it is important to realize that the historical decline in the price of energy, due to technical refinements, economies of scale, and neglect of social costs, was reinforced by a variety of direct and indirect subsidies to energy producers and consumers. Examples are the oil depletion allowance, income tax treatment of foreign royalties, and special tax treatment of drilling expenses. This is a complex and controversial question, however. Some policies—notably the oil import quotas of the late s and the oil production controls imposed by the Texas Railroad Commission applied until the late s —acted as countervailing factors, tending to raise prices.
Whatever the magnitude of the effect, it is clear that the low price of energy has encouraged consumption and discouraged production and exploration for new supplies. Even after the OPEC price rise, the entitlement policies of the federal government which spread the costs of imported oil relatively evenly over the domestic market , along with the continuation of price controls on domestic oil and gas, provided effective subsidies to imported oil.
The trend begun in the late s toward incorporating more of the environmental and other social costs of energy into its price is likely to continue pushing prices up. The need to search for and produce energy resources in increasingly inaccessible areas, often in hostile environments,. Energy in most forms is likely to rise in price faster than the rate of general inflation, and consumption will therefore tend to grow more slowly relative to GNP than in the past.
Tax, tariff, and price control policies, as we have seem, are important influences on the demand for energy. But energy consumption can also be molded directly—for example, by the imposition of mandatory standards for the efficiency of energy-using equipment miles-per-gallon standards for automobiles, thermal performance requirements for new buildings, and so on. There are reasons to believe that such standards will be necessary in some cases to encourage economically rational demand responses to higher energy prices.
This is because most energy-consuming equipment embodies trade-offs between initial costs and lifetime energy consumption; in general one must use extra insulation, larger heat exchangers, or the like to reduce the amount of energy consumed in performing the given task. This increases the initial cost, in exchange for future savings in energy costs. Consumers tend to be more influenced by first cost than by prospective operating costs. Where this is true, they have less economic incentive to purchase equipment on the basis of its energy consumption, even if that would be economically advantageous over its lifetime.
The Demand and Conservation Panel of this study developed a range of energy demand projections for the period — The prices assumed are those experienced by the consumer at the point of consumption and include the effects of any taxes or subsidies. These prices could also be. See statement 2—3 , by H. See statement 2—4 , by E. Scenarios of this kind, it should be noted, are not predictions.
Energy efficiency to reduce residential electricity and natural gas use under climate change
They are rather the results of calculations based on simplified models of the economy and on more or less plausible and self-consistent assumptions about the future. A variant explored the implications of a 3 percent growth rate, corresponding to a GNP 2. The appendix to this chapter discusses them briefly and offers an approach to a more accurate measure.
Table 2—2 gives the central features of the scenarios, including price assumptions and energy consumption values resulting from them. For a more detailed account of these assumptions see chapter 11 and the report of the Demand and Conservation Panel. In general the movement of primary energy prices tends to be greater than that of prices to the consumer. For example, the percent rise in average primary energy prices between and corresponds to only a 30 percent average increase in final energy prices.
The Demand and Conservation Panel scenario with the highest annual rate of secondary energy real-price increase uses a value of 4 percent. This is slightly less than the rate experienced between and and substantially less than that experienced between and including the — price rises. However, it is hard to make a plausible case that rates of increase significantly greater than this could be sustained out to The scenario analysis was made under the assumption that most characteristics of the national economy will behave in the coming decades much as they have in the past.
The kinds of goods and services purchased by a consumer with a given income, for example, were assumed to change little, as were general attitudes and ways of life, although shifts in purchasing habits associated with increased affluence were accounted for. Statement 2—5, by R.
Over the yr period to present, GNP follows a 3. Using 2 percent here predestined dangerously low energy demand projections. Statement 2—6, by R. Table 2—1 simply displays short-term variations. See my previous note. GNP billions of dollars a. Government Printing Office ———9 , Fuel price elasticities used in certain analyses of the transportation and buildings sectors are extrapolations consistent with historical data and with engineering projections for each price.
No major technical breakthroughs are assumed. The panel used engineering and microeconomic methods in each of the three key sectors of energy use buildings and appliances, industry, and transportation to determine likely changes in energy intensities and overall sectoral energy consumption as responses to changes in price. Each of the sectors was analyzed separately, and the results were integrated into a total demand projection using input-output techniques to ensure internal consistency.
Over the first decade of its projections, the panel used in addition conventional econometric analysis, which relies heavily on empirical evidence from the recent past and from international comparisons. Consumption, price, income, and other data were used in calculations that reflect the characteristics of existing capital stock, population, and economic activity.
The panel found this entire range to be consistent with a level of GNP substantially greater than the present one. Very aggressive, deliberately arrived at reduced demand requiring some life-style changes. Active solar systems provide additional energy to the buildings and industrial sectors in each scenario. Outside this range, the Demand and Conservation Panel hesitated to offer statements based on its analyses.
But at some point not far below the lowest energy scenarios examined, appreciable reductions in GNP should be expected. That this will be so is not certain; there is no available research to indicate the possible effect of energy intensity on labor productivity. Capital requirements for the entire economy were shown to be relatively constant for all scenarios; investment simply shifts between energy production and energy conservation. In practice, if there are large shifts in the required allocation of capital, there may be temporary bottlenecks of capital availability to particular sectors for institutional reasons.
Actually, the panel found that at present it takes considerably less capital to save a Btu than to produce one. As the more productive opportunities for saving energy are exploited, this will become less generally true. Energy savings in transportation can be achieved through modest investments in existing technology and improved management. The greatest such savings can be realized in automobiles, aircraft, and freight trucks. Because of the typically dispersed U. In total, it may be possible to halve the energy requirement per passenger- or ton-mile in the United States over the next 25—35 years.
Under the scenario A assumptions that real energy prices quadruple and GNP growth averages 2 percent, total energy consumption for transportation in could be as low as 14 quads, below the present total of 17 quads. The automobile offers the greatest single opportunity to improve the energy efficiency of the U. The fuel economy of the automobile fleet could be raised to 30—37 miles per gallon by for less than a 10 percent increase in manufacturing costs in constant dollars. Energy savings much beyond this, however, would involve major advances in technology, compromises in performance, or higher costs.
The fuel savings themselves should be considered in context; steady improvements in fleet fuel economy over the next few years must be achieved, but at the same time efforts must be made to meet increasingly stringent standards for engine emissions. Gains toward one make gains toward the other more difficult. The total cost of owning and operating an automobile, however, is not very sensitive to fuel economy, and even a well-informed buyer may find little to prefer in a fuel-efficient car.
Thus, fuel economy standards must augment the incentives of the marketplace if the potential energy savings are to be realized. Electric vehicles offer some opportunity to moderate the demand for petroleum in the transportation sector, if the electricity is generated from sources other than oil. They may offer other advantages too—for example, shifting pollution from the vehicle to the power plant and raising the off-peak demand for electricity. Available electric vehicles have important limitations such as range , but may with improvement find an appropriate market, such as driving within metropolitan areas.
The energy-conserving potential of electric vehicles depends on the availability and costs of liquid fuels, on institutional and environmental issues, and on the development of high-energy-density batteries. Their attractiveness for a growing number of. Statement 2—7, by E. My statement 2—4 , Appendix A , also applies here. This advantage is not fully reflected in the scenario projections presented here, which assume that the price of electricity rises almost as rapidly as the price of liquid fuel. The efficiency of the passenger aircraft fleet could be improved 40 percent by Some of these developments are already occurring as a result of recent airline deregulation and the consequent fleet expansion and rise in load factors.
If the design and load factor improvements described were introduced, new aircraft in might consume Btu per passenger-mile, as against Btu in If a passenger load factor 44 percent above the values is included, 8 then even at quadrupled energy prices scenario A , the per capita air travel demand would increase 58 percent.
The total energy consumed in scenario A would be 1. Freight-hauling trucks built in the future can be made 30 percent more fuel-efficient by using turbocharged diesel engines, improved axles, radial tires, and declutching fans. Lighter tractors designed for aerodynamic efficiency would represent an additional 10 percent gain. The fuel economy of the truck fleet can be improved by installing diesel engines in medium- and. The 7—14 percent savings in fuel that can be realized in trucks by conservative driving may not be achieved even at much higher fuel prices, since the costs of labor and capital substantially outweigh that of fuel in the truck freight business, where both wages and depreciation of equipment are time dependent and revenue is distance dependent.
Any fuel-conserving measure that increases the time per trip incurs costs in wages and capital that fuel savings would be hard pressed to match. Railroads, which account for about 1 percent of national energy consumption, are highly energy efficient for long-haul freight. A shift of long-distance freight transportation from truck to rail could be accomplished by major changes in regulatory policies, to allow, for example, the formation of integrated transportation companies free to seek optimum combinations of truck and rail freight through competition.
Improvements in energy intensity assumed under the conditions of each scenario are included for ready comparison. In scenario C, the real price of energy remains constant, but even so the energy intensities of all forms of transportation drop, consistent with historical patterns under falling real prices for energy. Prevailing standards for improvement in automobile fuel economy are assumed to be met, and as automobile travel begins to reach saturation in cars per owner, minutes spent in automobiles daily, etc.
In scenario B, prices for energy have climbed steadily to twice the levels by , and in response the fuel efficiency of automobiles has doubled. Rail freight has expanded by 30 percent, truck freight has grown by 40 percent, and air freight has tripled. In scenario A energy prices quadruple by , and public policies accelerate the response to this energy conservation incentive. As a result, present federally mandated standards for automobile fuel efficiency are met and superseded by new standards. By the year , advanced fuel-conserving technology perhaps Brayton and Stirling engines would begin to be used in new automobiles.
Air travel would increase by about 60 percent, and under this intensified demand as well as public policies. Very aggressive, deliberately arrived at reduced demand requiring some lifestyle changes. Airplane load factors would reach 70 percent considered the maximum achievable. Truck freight would improve substantially in fuel efficiency and load factors. Despite significantly higher per capita use, the transportation sector would consume 18 percent less energy in than in This scenario includes assumed changes in tastes and preferences that produce reductions in energy consumption beyond those available from technological efficiencies.
One change of this sort would be a shift to a more service-oriented economy, emphasizing lasting, repairable goods over disposable ones. Another would be a strong trend toward living and working in the same area, reducing by 10 min the time the average person spends in cars each day and yielding energy savings of 1 quad.
Under the assumptions of this scenario, freight transportation would also be significantly reduced. Although the energy consumption of our principal means of transportation can be moderated by technology and management for improved efficiency, another opportunity to achieve long-term conservation in transportation presents itself in new patterns of living, working, and recreation. These patterns will change regardless of energy prices and policy over the next 35 years, but comprehensive land-use policies combined with incentives and penalties could promote energy-conserving patterns.
However, the concentration of metropolitan populations in the United States has been thinning since World War II, along with the concentration of jobs. These patterns have contributed to a general decline in the use of public transit as well as to increased automobile ownership and longer average trips. This trend would have to be reversed if significant energy savings were to be realized from new living patterns. It is difficult for a dispersed population to achieve significant energy savings through public transit. Direct shift of travel demand from the private auto to public transit has relatively little benefit in terms of energy conservation.
Only when public transit, by altering settlement and industrial location patterns, reduces total travel demand e. See statement 2—8 , by H. Today, for example, 98 percent of the urban passenger-miles covered in this country are by private automobile, and urban travel accounts for half the fuel consumed by automobiles. Even if the use of public transit were 15 times greater and consumed no fuel at all, the overall savings in fuel would amount to only 15 percent if total travel demand remained the same.
The savings in energy consumption that might be achieved by fixed-rail mass transit depend directly on patterns of settlement and land use that run counter to the recent locational trends described above. Such changes could probably be realized only over a period of time well beyond that addressed in this study. Today buses, van pools, and car pools, because they can make flexible use of an already existing network of roads and highways, are the most effective means of reducing energy consumption in commuter travel.
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The demand for energy by residential and commercial buildings is expected to grow more slowly from to than in the past few decades, as population growth slows and some demands become saturated. Rising energy prices, aided by mandatory building and appliance standards, could foster wider use of such well-known measures as heat pumps, better insulation for buildings, larger heat-exchange surfaces for air conditioners and refrigerators, and passive solar building design.
Existing technology could be incorporated in new buildings and appliances to reduce energy consumption substantially. For example, gas and oil heating systems have been built to use 30 percent less gas or oil than conventional designs, through improved combustion and heat transfer. Electric heat pumps for space heating deliver about 3 times more heat than electric resistance heaters per unit of electricity consumption, and can also be reversed for cooling. The energy consumption of refrigerators can be economically reduced even at present electricity prices by 50 percent through better design and construction.
Well-insulated new single-family houses need 40 percent less heating than the average house built before Concentrated efforts to remove or reduce these institutional barriers could result in substantial additional energy savings in the buildings sector. Economic considerations are likely to weigh more heavily than others in the decision to improve thermal integrity 21 in buildings.
But because many homeowners move frequently, and because the consumer who pays the bills for operating and maintaining a building does not usually make the design and construction decisions, any decision to improve efficiency must be encouraged by building code standards, financial incentives, and information campaigns. Builders have inadequate incentives to minimize life cycle costs; in fact, they tend to favor low initial costs instead. Of the 1,, single-family homes built in , , were erected by developers for sale on the open market.
Retrofitting an existing structure for greater efficiency in energy use will not appear wise to many consumers, even as energy prices rise. Existing buildings offer less scope for energy conservation than do new ones, but some retrofit measures are generally economical. Caulking, increasing attic insulation to 6 in. Together, they can reduce heating requirements by as much as 50 percent; savings on air conditioning would be somewhat less.
Figure 2—1 illustrates the energy savings possible in new and retrofitted single-family residences as a function of incremental capital costs. More stringent standards, based on performance, are being prepared and discussed. High on the list of priorities in any program to accelerate improvements in existing buildings is accurate information for lending institutions, homeowners, and homebuyers on the advantages of retrofitting. Readily available loans, subsidies, and tax incentives can also stimulate retrofitting.
A justification for such measures is that the whole society benefits from. An effective means of reducing energy consumption by existing buildings would be to require that they meet thermal efficiency standards at the time of resale. Such a measure has been introduced in Congress but not adopted. In scenario C, real energy prices remain constant, with the exception of natural gas prices, which double to compensate for past underpricing.
The lagged response to public policies now in force brings about improved efficiency in new buildings and appliances through , and to some extent thereafter as older stocks are replaced. Small improvements are introduced in gas appliances, but electric resistance units rather than heat pumps continue to dominate electric space heating. Under the conditions of scenario B, prices for energy double by , with substantial effect in the buildings sector. Energy consumption in this sector decreases at an average annual rate of 0. Because of differences in assumed energy prices, the relative market share of electricity increases from 21 to 51 percent, while the natural gas share declines from 53 to 21 percent Electric heat pumps become cheaper and more efficient because of large-scale production and find widespread use.
Solar energy finds a market toward the end of the period for water heating, space heating, and air conditioning. The energy efficiency of new air conditioners in is close to 10 Btu per watt-hour compared to 6 Btu in Higher energy prices translate into increased expenditures for energy in buildings.
However, the percentage of personal income spent for household fuel increases only moderately—from 3. The technologies to produce the higher efficiencies in this scenario are either on the market or achievable by well-known means. Under scenario A, as energy prices quadruple by , energy consumption in the buildings sector declines to 11 quads, from 16 quads in New energy-efficient appliances find ready markets, and solar energy begins to make a significant contribution near the end of the period: Statement 2—9, by E.
Improved retrofit measures and construction practices contribute to the energy savings use in this scenario. Increasing income over the period helps ease the pinch of higher expenditures for fuel, but residential fuel expenditures rise from 3. These changes reduce heating and cooling requirements by about a third.
Additional savings are achieved by the use of integrated utility systems in residential complexes to cogenerate electricity and heat. Industrial energy consumption per unit of output in the United States fell at an annual rate of about 1. Overall, the energy required per unit output in U. Where no change in a basic industrial process is possible, somewhat smaller savings can be realized by building more efficient facilities.
Furthermore, some of the industries that consume the most energy per unit output—such as petrochemicals—also show the greatest increases in demand a trend that is likely to continue. In part this increased demand will be the result of substituting materials for one another to improve energy efficiency in -other products. For example, increasing the use of aluminum and plastics in automobiles will result in lifetime fuel savings considerably greater than the additional energy required to produce the materials, but this will, of course, be reflected in increased output of such materials.
If the costs of improving old plants and the increasing demand for energy-intensive industries are taken into account, the overall energy savings that industry can achieve by will probably be no more than 30 percent, even for scenario A. Greater savings would require public policy measures to compel increased durability of equipment, so that a given amount of consumer service would be provided by a lower output of manufactured goods than at present.
Energy efficiency : towards the end of demand growth
Opportunities for industry to conserve energy can be grouped into four categories. Improved housekeeping—operating and maintaining equipment at peak performance, turning out unneeded lights, and reducing heat losses—can quickly reduce energy use per unit of industrial output by 5—15 percent in a non-energy-intensive industry.
Waste-heat recovery and insulation—modest plant improvements to reduce heat loss and recover the higher-temperature waste-heat streams for use—typically can improve thermal efficiency by 5—10 percent in an. Introducing new processes would improve the efficiency of energy use anywhere from 10 to 90 percent in aluminum smelting, uranium enrichment, refining operations, steel making, and other industries; because they generally require new production facilities and equipment, these measures will be introduced only gradually over several decades.
Recycling saves energy in factories for example, by burning wood and scraps in paper mills. Materials such as aluminum, paper, glass, and steel can be recovered for reprocessing, and this becomes economically more attractive as energy costs rise. A number of tax and regulatory policies, however, still favor the use of materials from virgin sources rather than recycled materials; a systematic effort to identify and eliminate such economic distortions would result in additional energy savings that are difficult to estimate at present.
Many industries can reduce their requirements for purchased electricity by the use of cogeneration. This involves the use of the high temperatures available from fuel combustion to generate electricity, with the lower temperature exhaust heat from the generator used for industrial process heat. This can be done, for example, by producing high-pressure steam to operate a steam turbine generator and then using the lower pressure exhaust steam as process steam, or by using combustion gases to operate a gas turbine or diesel generator and then using the exhaust gases to produce low-pressure steam in a waste-heat boiler.
If the high-temperature heat can be generated from coal rather than oil or natural gas—for example by on-site medium-Btu coal gasifiers chapter 4 —then not only is fuel used more efficiently, but scarce natural fluid fuels are conserved. Cogenerating electricity and steam presents an attractive opportunity to conserve energy, because about 40 percent of industrial energy is used to produce low-pressure process steam.
The additional fuel required for cogeneration is about half that required by the most efficient single-purpose utility plant.
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Cogeneration also produces fewer air pollutants and lower thermal discharges than conventional single-purpose systems, which consume and reject more energy for equivalent service. A number of existing cogeneration systems can be applied in a variety of plants and modified to accept any of a number of fuels. Economic and regulatory factors, together with industry reluctance, have discouraged cogeneration over the last 50 years.
If all large-scale industrial demands for low-pressure steam were provided through cogeneration in , around 10 quads of by-product electricity could be. The technological, economic, and institutional barriers to the replacement of existing systems with cogeneration, or even to the construction of new cogeneration systems, are formidable.
In spite of its advantages, industrial cogeneration has declined in the United States from supplying 30 percent of industrial electricity in the s to about 8 percent today. User-contributed reviews Add a review and share your thoughts with other readers. Add a review and share your thoughts with other readers. Similar Items Related Subjects: Linked Data More info about Linked Data. End of demand growth is within reach. Will energy efficiency make a difference? Sioshansi with contributions from Ahmad Faruqui and Gregory Wikler -- Utility energy efficiency programs: Haffner and Fatih Cemil Ozbugday -- Carpe diem: The frustratingly slow evolution of energy efficiency.
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Remember me on this computer. Cancel Forgot your password? Upcoming events Jan 4 Statistics: Media contacts press iea. Today Tracking Clean Energy Progress Are the sectors and technologies critical to the clean energy transition on track? Browse all IEA publications Energy Efficiency Analysis and outlooks to GDP Energy use Energy use without energy efficiency Global primary energy demand Global primary energy demand 1.
Missed opportunities The world is missing opportunities to improve energy efficiency and today's policies are not delivering the full potential gains that are cost-effective and use current technology. With stronger policies in place, last year the world could have saved more than …. Significant energy productivity Under the EWS, the amount of global GDP produced for each unit of energy could double between now and , for only a marginal increase in global energy demand. Primary energy demand GDP Energy intensity What will it take?
Transport energy demand could stay flat to , despite a doubling of activity Making this happen will require stronger and broader fuel economy standards for both cars and trucks, as well as policies for non-road transport. Industry could produce nearly twice as much value per unit of energy in The majority of energy savings could come from less energy-intensive sectors like food, beverage and textile manufacturing.