86025_4 Energy Systems Determinants 1: Demand 86025 Energy

86025_4 Energy Systems Determinants 1: Demand 86025 Energy

86025_4 Energy Systems Determinants 1: Demand 86025 Energy Systems Analysis Arnulf Grubler Energy (services) are one of the fundamental requirements for social and economic development and not just their consequence Former US DOE chair 86025 Energy Systems Analysis Arnulf Grubler Energy Services for: Survival and security (basic needs) Building and maintaining material environment Comfort (in using material env.) Social interactions (communication,

self-actualization) 86025 Energy Systems Analysis Arnulf Grubler Energy Services Demand quantities: income, price, lifestyles, infrastructure,.. Demand qualities: availability, income, price, comfort, (in-)convenience, Quantities and qualities interact! Modernization indicator: quantity/quality of energy, e.g. noncommercial, traditional biomass use (cow-dung, residues, wood) 86025 Energy Systems Analysis Arnulf Grubler Traditional Fuel Use and Demographic Indicators 140 7

120 6 100 5 80 4 60 3 40 2 20 1

0 0 <20 20-40 40-60 60-80 >80 percent non-commercial in total energy use 86025 Energy Systems Analysis infant mortality, deaths per 1000 life births female life-expectancy, years male-female life expectancy gap, years total fertility rate, children/woman

Source: WEA, 2000, p. 53 Source: WEA 2001 Arnulf Grubler (Primary) Energy Use per Capita Europe 10,000 BC food household production transport services China 100 BC Europe 1300 England 1880 Japan 1990 USA 2000 Europe 2050 IIASA-WEC C1 Scenario

0 50 100 150 200 GJ per capita per year 250 Source: Modified from V. Smil, 1991. 300 Mapping Energy Access Final Energy per Capita vs Population Density AD 2000 Source: Chirkov&Grubler, IIASA, 2007. 86025 Energy Systems Analysis

Arnulf Grubler Energy Use Distribution of Indian Households 1998-99 Source: S. Pachauri, IIASA, 2006. India Per Capita HH (Direct) Energy Use vs. Income: Useful, Final and Hypothetical (with non-commercial fuel efficiencies) : Efficiency is biggest contributor to human welfare gains 25000 Hypothetical final if used with non-commercial fuel efficiencies MJ per capita 20000 15000 Final energy

10000 Useful energy 5000 0 <500 500-1000 1000-1500 1500-3000 3000-4500 HH income Rupees per year 86025 Energy Systems Analysis 4500-6000

>6000 Data: TERI, 1995. Arnulf Grubler India - Primary Direct and Indirect Household Energy Use Per Capita (1) Average - All India 45% 19% 7% Indirect food Indirect non-food Direct non-commercial Direct commercial Energy in GJ per capita 29%

Average - Rural & Urban 20 16 12 8 4 0 RURAL URBAN Direct commercial Direct non-commercial Indirect non-food Indirect food Source: S. Pachauri, IIASA, 2006. Energy in GJ per capita India - Primary Direct and Indirect Household Energy Use Per Capita (2) 39 36

33 30 27 24 21 18 15 12 9 6 3 0 Bottom Rural Middle Rural Top Rural Indirect food Direct non-commercial

Bottom Urban Middle Urban Indirect non-food Direct commercial Source: S. Pachauri, IIASA, 2006. Top Urban India Fuel Use Structure of Urban and Rural Households vs. Income Dung Wastes Wood

Charcoal Soft coke Kerosene LPG Electricity Data Source: TERI, 1995. Rural Urban 100 Percent 80 60 40 20 0 <3000

3000 - 6000 6000 - 12000 12000 - 18000 Household income (rupees per year) 86025 Energy Systems Analysis >18000 Arnulf Grubler Per Capita Energy & Services Western Europe (average) 13,000 $ PPP income ~ 2.5 toe final energy Floorspace: 40 m2 Residential energy: .8 toe Industry energy: 1 toe Transport energy: .7 toe Passenger-km (cars #): 10,700 (.74) Ton-km (trucks #):

3,400 (.24) Latin America (average) ~5,000 $ PPP income ~ 1 toe final energy Floorspace: 10 m2 Residential energy: .5 toe Industry energy: .3 toe Transport energy: .2 toe Passenger-km (cars #): 4,700 (.21) Ton-km (trucks #): 2,000 (.09) Data characteristic for 1990s 86025 Energy Systems Analysis Arnulf Grubler Primary Energy Use and Income: Path Dependence 10 1800 1850

1900 1925 1950 1975 1995 9 8 toe per capita 7 6 USA 1800-1998 UK 1800-1998 5 Austria

1922-1995 4 Japan 1900-1998 3 2 Data: Butschek, 1997; Fouquet & Pearson, 1998; Grubler, 1998; Martin, 1988 & JStO, 1998. 1 0 0 5000 10000 15000

20000 25000 30000 GDP (1990 US$) per capita 86025 Energy Systems Analysis Arnulf Grubler Energy Use & Wealth: OECD Past and IIASA-WEC and IPCC Scenarios for DCs 10 1800 1850 1900 1925 1950 1975 1995

9 8 toe per capita 7 6 IIASA-WEC USA 1800-1998 SRES A1 A2 B1 B2 UK 1800-1998 5

Austria 1922-1995 4 Japan 1900-1998 3 2 1 0 0 5000 10000 15000 20000

25000 30000 GDP (1990 US$) per capita 86025 Energy Systems Analysis Arnulf Grubler Energy Demand: The Economists Perspective Income growth, e.g. US real-term per capita income: +2%/ yr (AFTER inflation) since 1900 = a Factor >7! Elasticity of demand with respect to: -- income -- energy prices (incl. taxes!) -- different for different income groups, fuel types, etc. Biggest impacts: Income growth, cost reductions, quality improvements Rate of time preference: consumption impatience (discounting) Tradeoffs, e.g. transportation:

income price time (air vs. car travel) Reminder: elasticity: >0 = % change of A per % change of B, 0><1 called inelastic; >1 called elastic e.g. income elasticity: = +0.7 = 1% income growth +0.7% demand e.g. price elasticity: = -0.3 = 1% price growth 0.3% demand Household Ownership (% of HH with) 1978 to 1985 (78-85 growth = colored) TV Refrigerator Washer Vaccum cl. 86025 Energy Systems Analysis Arnulf Grubler Cost Declines in Refrigerator Costs in US Source: OTA, 1991.

On example of cost declines + quality improvements (efficiency) see Bill Nordhaus example. of Light https://classesv2.yale.edu/access/content/group/fes83026_f06/readings/nordhaus_lighting_1998.pdf Consumption Impatience: Discounting Preference to consume now rather than later Incentive to save (consumption deferral): interest rate A bet: I give you 1 $ today, or will put 2.3 Million $ in a trust fund to be paid out to your descendents in 300 years (a Yale story). What would you prefer?* Different discount rates: social < entrepreneurial (ROI) < < individual consumption * If you prefer 1$ today then your rate of time preference >5% (often too high for climate cost benefit assessments) Denmark Distribution of Discount Rates Source: Harrison, Lou& Williams AmEconRev., 2002 86025 Energy Systems Analysis

Arnulf Grubler Implict Discount Rates vs. Income: Purchase of Air Conditioners in US Source: Hausmann, 1979. HH income, US$(1994)/yr Implicit discount rate, %/yr 12,000 20,000 30,000 50,000 70,000 100,000 89.0 39.0 27.0

17.0 8.9 5.1 86025 Energy Systems Analysis Arnulf Grubler Energy Demand: The Industrial Ecologists Perspective Product/service orientation Cradle-to-grave accounting: Net energy analysis (direct+indirect energy requirements) How to deal with structural change? How to deal with multi-factor productivity? 86025 Energy Systems Analysis Arnulf Grubler US- Energy per $ Value Added

(TJ per Million $, energy embodiment, 1992 I-O data) Source: Carnegie Mellon Univ. www.eiolca.net Direct energy Product fertilizer passenger cars hotels semiconductors real estate agents computer&data services Indirect energy On-site 130.4 1.2 2.9 0.9 0.8 0.2 Energy Transport supply

7.6 3.2 3.7 1.4 5.4 0.5 3.3 0.5 2.4 0.3 1.2 0.3 Other sectors 6.6 6.4 1.9 2.7 1.2 1.1 Total

147.8 12.6 10.7 7.4 4.7 3.0 Note product and value orientation: Energy embodied in car vs. total energy use over lifetime of car Energy $ per VA $: industry vs. services (energy price differences) 86025 Energy Systems Analysis Arnulf Grubler Carbon Intensity of Products/Services (2 digit SIC level) Source: Marland&Pippin, 1990. 86025 Energy Systems Analysis Arnulf Grubler US - Time and Energy Use Time

109 hrs Energy(final) 109 kgoe kgoe/hr At home 835.5* 236.6 0.28 At work 291.1 660.0 2.27 Services

183.5 152.0 0.83 Travel 107.6 279.0# 2.59 Total 1417.7 1328.4 0.94

* Excluding sleeping time #Passenger travel only, rest of transportation accounted for at work 86025 Energy Systems Analysis Arnulf Grubler US Time Energy-Diagram (cumulative percentage distribution) 86025 Energy Systems Analysis Arnulf Grubler Energy Time Information: Intensity of Products/Activities Working time = 0 Energy Real estate Communication Chemical products =0

n tio ma or Inf =0 Source: D. Spreng, 1993. Shoes Restaurants Agricultural services En erg y Plastics Paints Radio/TV Drugs

Iron & steel broadcasting Engines / turbines Paper Metal products Construction Food Textiles Entertainment Pr im ary Asphalt Economic Structural Change (based on Kuznets, 1971) 86025 Energy Systems Analysis Arnulf Grubler

Energy Demand: Social Science Perspectives on Value and Lifestyle Changes Given: Hierarchy of needs (Maslow) economists (actionrevealed preferences?) Constructed: Preferences discovered in process of establishing social relations (Mary Douglas) cultural theory (perceptionspreferencesactions?) Generational change: Succession of cohorts (e.g. Nathan Keyfitz) demographers, cross-over scientists 86025 Energy Systems Analysis Arnulf Grubler Consumer Expenditures Structure in US (based on: Lebergott, 1993) 86025 Energy Systems Analysis Arnulf Grubler

Typology of Value-ists Along 2 Dimensions of Social Relations & Associated Myths of Nature Source: M. Thompson based on M. Douglas and P. Timmerman 86025 Energy Systems Analysis Arnulf Grubler Keyfitz quote N. Keyfitz, 1992. N. Keyfitz, 1992.

Germany: Car Ownership by Gender and Age Cohorts Source: Buttner&Grubler, 1995. 86025 Energy Systems Analysis Arnulf Grubler Germany: Car Ownership of Female Age Cohorts Source: Buttner&Grubler, 1995. 86025 Energy Systems Analysis Arnulf Grubler Scenarios of Car Diffusion for a United Germany: Greens are Outnumbered by Greys!! 3 Scenarios: Constant 1990 Rates, Trend, Green Generation 1990: 79 Million Germans 35 Million Cars (26% female owners) 2030: 77 Million Germans (70 by 2050) 30 Million cars (24% female owners)

38 Million cars (36% female owners) 33 Million cars (41% female) 86025 Energy Systems Analysis Arnulf Grubler Take-back Effects 86025 Energy Systems Analysis Arnulf Grubler Percent Change since 1970 in US Automobile CO2 Emissions and Driving Forces 86025 Energy Systems Analysis Arnulf Grubler IPAT Impacts = Population x Affluence x Technology Widely used decompositional technique* Component growth rates additive:

e.g. POP 1%/yr, GDP 3%/yr, E/GDP -1%/yr = GDP/POP 2%/yr, Energy 2%/yr See previous car emissions example C (emissions) = gallons fuel use gal = gal/miles x miles/vehicle x vehicle/people (empty seats) x people x (adjustment for increasing SUV share), canceling out all elements: gal=gal = identity Assumes variables are independent! Beware of fallacy of spatial aggregation (POP growth in India, Car growth in US lumped together in global IPAT)! *See e.g. Ausubel&Waggoner, 2002; and review of Chertow, JIE, 2001. 86025 Energy Systems Analysis Arnulf Grubler

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