On a global scale, no decoupling is to be expected between GDP and energy consumption

To assess a country's carbon footprint, we take into account not only the emissions generated locally, but also those included in imported products. Otherwise, relocating part of a country's industrial activities outside its borders would give the illusion that it had reduced its carbon footprint. France's carbon footprint, for example, is 11 tCO2/capita, whereas emissions from domestic production alone are just 5 tCO₂/capita.

Jacques Treiner, University of Paris and Jacques Percebois, University of Montpellier

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Similar reasoning applies to calculating the energy footprint of GDP, i.e. the quantity of primary energy required to produce the goods and services consumed, while also accounting for that spent on manufacturing imported goods and services. Here again, the reduction in a country's energy content will be illusory if, at the same time, it relocates its industrial activities, and then repatriates the products it no longer makes.

While it seems logical that a rise in GDP should be accompanied by an increase in energy use, the correlation can become more complex over the long term, taking into account several factors: energy savings linked to improvements in energy-using equipment, substitution between forms of energy (some are more efficient than others), changes in the structure of GDP (the tertiarization of GDP tends to reduce energy content, all other things being equal).

Let's try to get a clearer picture by starting from the concrete reality we want to measure through these calculations.

GDP, energy and material transformation

All goods and services are obtained through various transformations of matter, the physical approach to which enables energy balances to be drawn up, and the monetary accounting of which contributes to GDP.

Energy consumption and GDP therefore represent two ways of accounting for the same transformations of matter. The transition from one accounting system to the other is thus analogous to a simple change of unit, which should result in a linear relationship between GDP and energy consumption - considering here that non-market activities represent only a small part of the production of goods and services. Do empirical data confirm this reasoning?

First, let's take a look at the national figures, which seem to contradict this assertion. Since the 1970s, Germany and the UK have shown a rise in GDP with virtually constant energy consumption, followed by an increase in GDP associated with a reduction in energy consumption.

On the y-axis, GDP in billions of dollars; on the x-axis, primary energy consumption in billions of tonnes of oil equivalent. Points correspond to the years 1960-1965-... -2015.
Our World in Data

Striking contrasts between Europe and Asia

When these five representative European countries are aggregated, three regimes can be identified, each characterized by a different slope in the GDP/energy relationship: the first before the oil shocks of the 1970s; the second, marked by an abrupt break in the slope, no doubt associated with a marked improvement in energy efficiency; and in recent years, a third regime marked by a rise in GDP associated with a fall in primary energy consumption.

Part of this evolution can be explained by a change in the structure of GDP, but also by progress in energy efficiency. The explanatory variable is, of course, the price of energy: oil shocks have made energy more expensive, leading to greater efficiency and substitutions between forms of energy.

More recently, the introduction of a carbon price in industrialized countries may explain the efforts made to reduce the unit consumption of products. But this measure also has the effect of encouraging carbon "leakage", which is tantamount to relocating polluting industries.

These three patterns are confirmed if we add the data for North America. The first change in slope came in 1975, as a result of the first oil shock, and the beginning of a "strong decoupling" in the rich countries in the early 2000s: growing GDP with less energy.

On the x-axis, primary energy consumption in billion tonnes of oil equivalent; on the y-axis, GDP in billions of dollars. Points correspond to the years 1960-1965... 2015 on the left and 1970-1975... 2015 on the right (lack of data before).
Our World in Data

This is in stark contrast to East Asia, where the trend seems to confirm the initial suggestion of a linear relationship between GDP and energy consumption.

As for the regions of the world not represented here - South Asia, Latin America and Africa - they are following the same trend as East Asia, albeit a few decades later.

Yet these countries are characterized by a growing weighting of industrial activities - this is particularly the case in China.

Decoupling more apparent than real

Let's now aggregate all global data. We then identify two regimes, with a slight improvement in energy efficiency starting in the late 1990s, but no "strong decoupling".

Insofar as this development is taking place at a time when China is entering the global market on a massive scale, the following interpretation can be proposed: to analyze the relationship between GDP and energy, we need to consider economically autonomous entities, or take international trade into account. It is only under these conditions that the same transformations of matter are taken into account, both in the calculation of their energy consumption and in their contributions to GDP.

Since the 2000s, many energy-intensive activities essential to the functioning of society have been relocated, notably to China. The "decoupling" in wealthy countries is more apparent than real, and is mainly due to the effects of their "partial deindustrialization".

A linear relationship between GDP and energy consumption seems to be well confirmed by aggregated global data, with a slightly increasing slope, corresponding to a long-term improvement in energy efficiency.

Analysis by major world regions. World (1970-2015), East Asia (1970-2015), North America + France + Germany + UK + Italy + Spain (1960-2015). The thin broken blue line traces the two trends.
World Bank

On a global scale, economic growth will therefore continue to be accompanied by an increase in energy consumption, albeit at varying rates depending on the period.

On a regional scale, and even more so on a national scale, the situation will be different. Economic growth will mean lower energy consumption, thanks to technical improvements and structural changes in GDP.

But the energy saved in some countries will be used in others for the benefit of the former. The sharp drop in final energy consumption expected in France between now and 2030, according to the PPE, and which should be accompanied by a sharp reduction inCO2 emissions, thus runs the risk of masking delocalized consumption and emissions.

To refine our knowledge of the energy impact linked to a country's GDP, it therefore seems essential to also take into account the energy content of its imports, in a context of globalized national economies.The Conversation

Jacques Treiner, Theoretical physicist, research associate at the LIED-PIERI laboratory, University of Paris and Jacques Percebois, Professor Emeritus at the University of Montpellier, researcher at UMR CNRS Art-Dev, University of Montpellier

This article is republished from The Conversation under a Creative Commons license. Read theoriginal article.