Energy and the US Economy
Energy and the US EconomyShort Version: Energy is 10% of the US economy—over \$1 trillion per year, or \$4000 per year for each person, with roughly \$1000 of that leaving the country, to supply the average US resident with more than 100 times more energy than they use internally. About 85% of the energy used is from fossil fuels, which are being burned much faster than nature makes more.
Friendlier but Longer Version: During the course, we’ll take a look at the big sources of energy, the big issues in energy use, the “why you might care” and “what it means to you” questions. For now, a few more-or-less connected numbers and graphs may be useful. This course is not about having you memorize numbers, but you should be aware of magnitudes—which things are really big and matter a lot, versus those that are small and can be safely ignored (unless you’re the wonk on this topic and need to know everything!).
As you just saw, the food you burn inside powers you at the same rate, on average, as a bright old-style light bulb (100 watts) that is turned on. But, the food may have been cooked, after it was shipped to you in a refrigerated truck after it was harvested by a corn-picker or combine from a field that first was plowed by a tractor. The plowing and harvesting and trucking and refrigerating and cooking all required energy. You probably are reading this on an electric-powered computer, in a room that is heated in winter and cooled in summer using energy. If there is glass on the computer screen, it started out as sand, which was melted using energy. Aluminum or iron or other metals were smelted from ores, using energy.
Video: Energy Use (1:09)
Energy use increases as economies grow. The plots show energy intensity (how much energy is used per dollar of economic activity) and economic activity (dollars per person per year), plotted against total energy use, for the different continents. Bigger economies use more energy. There is no strong relation between how big an economy is and how efficiently it uses energy, but a slight suggestion that bigger economies are more efficient.
DR. RICHARD ALLEY: These are a couple of plots showing some information about human use of energy and economy. Use of energy per person per year is on the bottom-- zero, not using any over to using a huge amount. And this amount is about 100 times more energy used outside the person than inside. And what you'll notice is this is economic activity-- how big the economy is, how many dollars per person per year. And poor people don't use much energy, and rich people use a lot of energy. Now, you might first think that that means that rich people are just wasteful. But what you see above is how much energy is needed to generate \$1 of economic activity, and there just isn't much relationship there. So, it's not that rich people are wasting more energy. They get as much activity out of a barrel of oil as poor people do. They just generate way more economy. And so, you use more energy when you're rich, basically.
Source: Data from US Energy Information Agency, for 2006; plot prepared by Richard Alley.
You get the idea. And, if you add up all that energy, there is a lot of it. The total energy use in the US economy, divided by the number of people, comes to a bit over 10,000 watts per person—all together, everything that is going on around you to take care of you involves more than 100 times the energy use inside of you. You don’t really have more than 100 incandescent bulbs burning all the time to take care of you, but all the plowing and harvesting and trucking and refrigerating and cooling and smelting and melting and heating and cooling and … that do take care of you are using energy at the same rate as more than 100 old light bulbs, or 100 of you.
You might imagine that you have 100 energy “serfs” doing your bidding… but if you actually had 100 serfs to do your bidding, they would spend most of their effort taking care of themselves and staying alive rather than doing for you. Plus, there is no way that those serfs could actually pick up your car and run down the highway at 65 miles per hour (100 km per hour)!
This much energy doesn’t come cheaply, though. Energy costs are roughly one-tenth of the entire US economy. That comes to about $1 trillion per year recently, or about $4000 per person per year, with roughly $1000 of that spent outside the US to pay for energy imports. (These numbers bounce around some from year to year; you can get updates at the US Energy Information Administration. So, each year, a US resident is sending ~$1000 to people outside the US, primarily to pay for gasoline. Those people overseas may use those dollars to buy US-made products, or to visit the US, or to buy US companies, or to buy camels or classic paintings, or to buy bullets, or in other ways—once the money is sent over the border, it is theirs….
US Energy Use
US Energy UseEnergy use in the US is dominated by fossil fuels—oil (or more formally, petroleum), gas (or more formally, natural gas), and coal (which is generally just called coal). Recently, fossil fuels have been totaling about 85% of energy sales in the US (and more-or-less 85% worldwide), with the rest of US use split more-or-less equally between nuclear and renewables. (In 2010, the US Energy Information Administration gave US energy supply as Oil 37%; Gas 26%; Coal 21%; Nuclear 8%; Renewables 8%. This was used to move us around (transportation 28%), to build things (industrial use 20%), to heat and cool houses (residential 11%) and to power our plugged-in gizmos (electricity 40%).
Video: U.S. Energy Supply (0:52)
U.S. Energy Supply
DR. RICHARD ALLEY: These are a couple of plots showing some information about human use of energy and economy. Use of energy per person per year is on the bottom-- zero, not using any over to using a huge amount. And this amount is about 100 times more energy used outside the person than inside.
And what you'll notice is this is economic activity-- how big the economy is, how many dollars per person per year. And poor people don't use much energy, and rich people use a lot of energy.
Now, you might first think that that means that rich people are just wasteful. But what you see above is how much energy is needed to generate $1 of economic activity, and there just isn't much relationship there. So it's not that rich people are wasting more energy. They get as much activity out of a barrel of oil as poor people do. They just generate way more economy. And so you use more energy when you're rich, basically.
Source: The figure is modified by Richard Alley from Figure 1.3, US Energy Information Administration, Annual Energy Review 2010
We’ll revisit these issues later. US usage per person is a little smaller than some countries, but (much) larger than many others. Per person, the world averages roughly 1/4 of US use. Most of the world's economy is dominantly fossil-fueled with people often getting about 85% of their energy from fossil fuels as in the US, and energy is often about 10% of the economy.
Activate Your Learning
In the previous section, we learned that the average person in the US uses ~10,000 watts of energy while producing only 100 watts from the food they eat. If average world energy use is about 1/4 of that in the US, and assuming all people produce about the same amount of energy from the food they eat, do people worldwide create as much energy from eating food as they use in their daily lives?
For now, though, it should be evident that if we spend 10% of our money on energy, it impacts everything—jobs and security and environment and more. As we saw in last week's Discussion, there are great options for making money and saving money by doing things better in the energy business. But, over the last few decades, we actually have doubled the amount of economic activity squeezed out of each barrel of oil or ton of coal—bright people have been working on this, and making or saving much more money might take a lot of effort or some new inventions.
Perhaps most importantly, the current system is grossly unsustainable. As we will see in upcoming content, the store of fossil fuels in the Earth is limited, and we are removing them much more rapidly than nature makes new ones. With essentially everything we do relying on energy use and 85% of the energy system relying on unsustainable fossil fuels, a lot of things will need to change.
Earth: The Operators' Manual
Video: China: In with the New - A 4-minute clip on China's movement toward alternative energy use.
China: In with the New
NARRATOR: If the US military is the largest user of energy in America, China is now the largest consumer on the planet. At 1.3 billion, China has a population about 4 times larger than the U.S. So average per person use and CO2 emissions remain about one quarter those of Americans. But, like the U.S. military, China is moving ahead, full speed, on multiple, different sustainable energy options. And it pretty much has to-- Cities are congested. The air is polluted. Continued rapid growth using old technologies seems unsustainable.
PHOTOGRAPHER: I count to three...
NARRATOR: This meeting in Beijing brought together mayors from all over China, executives from state-owned enterprises, and international representatives. The organizer was a U.S.-Chinese NGO, headed by Peggy Liu.
PEGGY LIU, CHAIRPERSON, JOINT US-CHINA COLLABORATION ON CLEAN ENERGY: Over 20 years, we're going to have 350 million people moving into cities in China, and we're going to be building 50,000 new skyscrapers, the equivalent of ten Manhattans, 170 new mass transit systems-- I mean it's just an incredible, incredible scale.
NARRATOR: This massive, rapid growth comes with a high environmental cost.
MARTIN SCHOENBAUER, EXECUTIVE DIRECTOR, US DEPARTMENT OF ENERGY CHINA OFFICE: They're recognizing that they're spending as much as six percent of their gross domestic product on environmental issues.
NARRATOR: In 2009, China committed 35 billion dollars, almost twice as much as the U.S., to energy research and incentives for wind, solar, and other clean energy technologies. It's attracted an American company to set up the world's most advanced solar power research plant. China now makes more solar panels than any other nation. But it's also promoting low-tech, low-cost solutions. Solar water heaters are seen on modest village homes. Some cities have them on almost every roof.
PEGGY LIU: China is throwing spaghetti on the wall right now, in terms of over 27 different cities doing L.E.D. street lighting, or over 20, 30 different cities doing electric vehicles.
NARRATOR: But visit any city, and you can see that the coal used to generate more than 70% of China's electricity has serious consequences, with visible pollution and adverse health effects. China uses more coal than any other nation on Earth. But it's also trying to find ways to burn coal more cleanly.
PEGGY LIU: In three years, 2006 to 2009, while China was building one new coal-fired power plant a week, it also shut down inefficient coal plants. So, you know, it's out with the old, and in with the new. And they're really trying hard to invent new models.
NARRATOR: This pilot plant, designed for Carbon Capture and Sequestration, was rushed to completion in time for Shanghai's 2010 World Expo. It absorbs and sells carbon dioxide, and will soon scale up to capture three million tons a year that could be pumped back into the ground, keeping it out of the air.
MARTIN SCHOENBAUER: Here in China, they are bringing many plants on line in a much shorter time span than it takes us in the U.S.
PEGGY LIU: China is right now the factory of the world. What we'd like to do is turn it into the clean tech laboratory of the world.
NARRATOR: If nations choose to pay the price, burning coal with carbon capture can offer the world a temporary bridge until renewables come to scale.
PEGGY LIU: China is going to come up with clean energy solutions that are cost effective and can be deployed at large scale. In other words, solutions that everybody around the world wants.