Working Paper: NBER ID: w12272
Authors: Gilbert E. Metcalf
Abstract: Efforts to reduce carbon emissions significantly will require considerable improvements in energy intensity, the ratio of energy consumption to economic activity. Improvements in energy intensity over the past thirty years suggest great possibilities for energy conservation: current annual energy consumption avoided due to declines in energy intensity since 1970 substantially exceed current annual domestic energy supply. While historic improvements in energy intensity suggest great scope for energy conservation in the future, I argue that optimistic estimates of avoided energy costs due to energy conservation are likely biased downward. I then analyze a data set on energy intensity in the United States at the state level between 1970 and 2001 to disentangle the key elements of energy efficiency and economic activity that drive changes in energy intensity.
Keywords: energy conservation; climate policy; energy efficiency; carbon emissions
JEL Codes: Q4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Improvements in energy efficiency (Q41) | Decline in energy intensity (Q43) |
| Rising per capita income (F62) | Improvements in energy efficiency (Q41) |
| Rising per capita income (F62) | Decline in energy intensity (Q43) |
| Price (D41) | Energy intensity (L94) |
| Price (D41) | Improvements in energy efficiency (Q41) |