The Importance of Energy to the Economy, the Environment, and the World

The Importance of Energy to the Economy, the Environment, and the World jls164 Tue, 12/06/2011 - 11:21

The Economy

As we walk through our daily lives, it becomes very easy to take for granted the almost complete dependence we have, as humans in a post-industrial economy, on the incredible supply of inexpensive and convertible energy. If we live in anything other than a tropical climate, we require heating so that we don’t freeze. We use energy to till our fields and harvest our food. We also use energy to provide light during non-daylight hours as well as power machines that allow for inexpensive manufactures such as clothing and other household items. We move about, except when walking or bicycling, through the conversion of some sort of potential energy into the kinetic energy of the plane, train, automobile, or boat. And finally, we use energy to communicate and store and manipulate data. This vast network of comfort, nourishment, nutrition, transportation and information would be utterly impossible without inexpensive and readily dispatchable energy. It is literally the life’s blood of the entire economic system.

The resemblance between the human circulatory system and the natural gas grid (or the electric transmission and distribution grid) is similar, and the energy delivery system is almost as crucial to the economy as the circulatory system is to the human.

Schematic of the human circulatory system

Figure 1.1: The human circulatory system

Credit: Circulatory System by Mariana Ruiz Villarreal via Wikimedia Commons is licensed under public domain.

Natural gas pipelines map in the US, separated by interstate pipelines in blue, and intrastate pipelines in red.

Figure 1.2: Map of U.S. interstate and intrastate natural gas pipelines

Credit: Map of U.S. interstate and intrastate natural gas pipelines. U.S. Energy Information Administration, Natural Gas Explained (Public Domain). For an accessible version contact EIA.

This chart shows the dependence on energy of various economies around the world. This is directly showing Tons of Oil equivalent to make $1,000 of GDP. A tonne of oil is equivalent to 7.44 barrels or 11,630 kWh. The implications are massive. Every 1,000 dollars of GDP in the US has at least 1 MWh or almost a barrel of oil embedded in it. More importantly, this offers no quantification of the risk to the economy should this energy supply be disrupted. Then the energy intensity would increase massively and whole supply chains and communication networks would be disrupted.

See image caption and text below image. See link in caption for text description.

Figure 1.3: Total energy supply per unit of GDP for selected countries and regions, 2000-2020

Click for a text description of Figure 1.3.

Total energy supply per unit of GDP for selected countries and regions, 2000-2020
Year	USA	India	World	China	EU
2000	0.165	0.153	0.152	0.244	0.106
2001	0.161	0.148	0.149	0.233	0.106
2002	0.16	0.147	0.149	0.228	0.105
2003	0.156	0.14	0.148	0.237	0.106
2004	0.153	0.137	0.147	0.244	0.105
2005	0.149	0.132	0.145	0.242	0.103
2006	0.143	0.129	0.142	0.235	0.1
2007	0.143	0.127	0.138	0.222	0.095
2008	0.139	0.13	0.136	0.209	0.094
2009	0.136	0.131	0.136	0.204	0.093
2010	0.136	0.128	0.136	0.204	0.095
2011	0.132	0.126	0.133	0.2	0.09
2012	0.127	0.126	0.131	0.192	0.09
2013	0.127	0.122	0.128	0.184	0.089
2014	0.125	0.121	0.126	0.176	0.084
2015	0.12	0.115	0.122	0.165	0.083
2016	0.117	0.108	0.119	0.154	0.082
2017	0.114	0.106	0.117	0.15	0.081
2018	0.113	0.105	0.116	0.147	0.078
2019	0.111	0.101	0.114	0.145	0.076
2020	0.106	--	--	--	--

Credit: U.S. Energy Information Administration (EIA). Licensed under CC BY 4.0

The Environment

The Environment mrs110 Thu, 04/13/2023 - 15:38

The constituents of global greenhouse gas emissions (those gasses which contribute to global warming) can be seen below:

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Figure 1.4: Global Greenhouse Gas Emissions by Gas

Click for a text description of Figure 1.4

Global Greenhouse Gas Emissions by Gas
Source	2010 Data
Carbon Dioxide (fossil fuels and industrial processes)	65%
Carbon Dioxide (forestry and other land use)	11%
Methane	16%
Nitrous Oxide	6%
Flourinated Gasses	2%

Credit: 2010 EPA Global Greenhouse Gas Emissions Data. Based on IPCC (2014). Details about the sources included in these estimates can be found in the Contribution of Working Group III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change.

To see just how much the energy sector contributes to these emissions, please see below.
Note: The pie chart below is interactive. You can click on sectors of the chart to see the proportions within a sector or category.

Figure 1.5: Global Greenhouse Gas Emissions by Sector (%)

Click for a text description of Global Greenhouse Gas Emissions by Sector

Table 1: Energy Sector Emissions
Sector	Category	Industry Sub-sector	Emissions %
Energy (73.2%)	Used in Industry (24.2%)	Other	10.6
Energy (73.2%)	Used in Industry (24.2%)	Iron and Steel	7.2
Energy (73.2%)	Used in Industry (24.2%)	Chemical and Petrochemical	3.6
Energy (73.2%)	Used in Industry (24.2%)	Food and Tobacco	1.0
Energy (73.2%)	Used in Industry (24.2%)	Non Ferrous	0.7
Energy (73.2%)	Used in Industry (24.2%)	Paper Pulp	0.6
Energy (73.2%)	Used in Industry (24.2%)	Machinery	0.5
Energy (73.2%)	Used in Buildings (17.5%)	Residential	10.9
Energy (73.2%)	Used in Buildings (17.5%)	Commercial	6.6
Energy (73.2%)	Transportation (16.2%)	Road	11.9
Energy (73.2%)	Transportation (16.2%)	Aviation	1.9
Energy (73.2%)	Transportation (16.2%)	Shipping	1.7
Energy (73.2%)	Transportation (16.2%)	Rail	0.4
Energy (73.2%)	Transportation (16.2%)	Pipeline	0.3
Energy (73.2%)	Unallocated Fuel Combustion	--	7.8
Energy (73.2%)	Fugitive Emissions	--	5.8
Energy (73.2%)	Agriculture & Fishing	--	1.7
Agriculture (18.4%)	Livestock and Manure	--	5.8
Agriculture (18.4%)	Agricultural Soils	--	4.1
Agriculture (18.4%)	Crop Burning	--	3.5
Agriculture (18.4%)	Deforestation	--	2.2
Agriculture (18.4%)	Cropland	--	1.4
Agriculture (18.4%)	Rice Cultivation	--	1.3
Agriculture (18.4%)	Grassland	--	0.1
Industry (5.2%)	Cement	--	3.0
Industry (5.2%)	Chemicals	--	2.2
Waste (3.2%)	Landfills	--	1.9
Waste (3.2%)	Wastewater	--	1.3

Credit: OurWorldinData.org, Climate Watch, The World Resources Institute (2020), Licensed under CC-BY(2.0)

Hopefully, it becomes apparent that to address the threat of global warming, addressing the greenhouse gas intensity of the energy sector is paramount. In order to address this intensity, we must understand how the markets for energy work. This understanding helps us to make better decisions as we are confronted with choices to make in our professions.

The World

The World mrs110 Thu, 04/13/2023 - 15:39

Energy dependence drives geopolitics significantly. Many (if not most) of the world conflicts since the early 1980s either have been directly caused by a scramble for energy or had significant energy undertones. The flashpoints for global conflict include Iraq, Iran, Libya, Syria, Ukraine, Russia, Nigeria, and Venezuela. Each of these nations has significant energy wealth. The recent and deadly conflict in Ukraine has significant energy implications. The Donbas region is a part of Ukraine with large oil and gas reserves. This potential supply, when interwoven with greater integration of Ukraine’s economy, represents a threat to Russia’s position as the EU’s energy supplier. Please read the article "6 Ways Russia's Invasion of Ukraine Has Reshaped the Energy World" for a view into the conflict and the effect on energy throughout the world.

There are many other examples of how energy and its uninterrupted supply influence geopolitics and national security strategy. These include a huge and continuous US Navy presence in the Persian Gulf and the Mediterranean Sea, as well as the long-term contracting of China for Petroleum products. Please read the article called "BP Signs Long-Term LNG Contract with China's Shenzhen Energy."