Economics, Energy and the Environment

On the Bright Side: Energy Efficiency

The chart above shows the increasing energy efficiency of the U.S. economy from 1949 to 2008, using data from the Energy Information Administration.  As recently as 1970, it required 18,000 BTUs of energy for each real dollar of GDP produced, and by 2008 the energy required per dollar of real GDP had been reduced by more than 50 percent, to only 8,520 BTUs per real dollar of GDP. In other words, the U.S. economy has more than doubled its overall energy efficiency in only 38 years.

Another way to appreciate the significant improvements in energy efficiency over time is presented in the graph below, which shows the dramatic increases in energy efficiency for standard household appliances between 1980 and 2008 using data from the Association of Home Appliance Manufacturers (AHAM). Take a home refrigerator for example. In 1980, its energy factor (EF, a standard measure of overall energy efficiency for appliances) was 5.59, and by 2008 the EF increased almost three-fold to 15.50, for a 177.3 percent improvement in energy efficiency. The other standard home appliances in the chart also had significant improvements in energy efficiency, from a 41.5 percent increase for the room air-conditioner, to a 91.4 percent increase for the dishwasher.


The AHAM also has data (available here) on the annual operating costs of home appliances in 2005, and those data are displayed in the graph below. It seems pretty amazing that you can have a refrigerator or freezer running 24 hours a day, 365 days per year at annual cost of only $40 to $44 (or only 11 to 12 cents per day), but that is part of the energy efficiency story—increasing energy efficiency translates directly into increasing energy affordability for the average American.


Bottom Line: The U.S. economy has never been more energy efficient than it is today and it just keeps getting more efficient every year as we find ways to produce more output with less energy. Home appliances keep getting both cheaper to purchase and cheaper to operate over time, which translates into a rising standard of living for the average American. Amid all of the gloom and doom we hear about the state of the economy, the increase in energy efficiency is something to celebrate.

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