Warr 4th Iiasa Titech Technical Meeting

4th IIASA-TITECH Technical Meeting2nd –3rd May 2004, Vienna

An Elucidation of the Role of Institutional Systems in Characterizing Technology Development Trajectories

Robert Ayres and Benjamin WarrCenter for the Management of Environmental Resources (CMER)

INSEADBoulevard de Constance

Fontainebleau77300

http://benjamin.warr.free.fr

Exergy Efficiency and Economic Productivity: Historic Trends and Future Policy Guidelines -

A Tale of Four Countries.

Objectives

1. Historical trends in exergy use to provide useful work

2. Efficiency gains have driven growth, and must be maintained

3. Institutional activities4. Economic implications5. Environmental implications6. Future policy guidelines

Overview• Trends in fuel and work mix• Declining energy intensity of output• Increasing efficiency of conversion to

useful work• Future targets (efficiency and intensity)• Future economic growth• Future welfare (energy poverty)

– Role of useful work?– Role of new services?

Electricity• Increasing importance of electricity

as fraction of total work supply– See breakdown of exergy flows to

work– See breakdown of useful work

supplied• A wealth effect Japan is following

closely the US, however• Stagnating efficiency of conversion

of exergy to work

Electricity generation, exergy as % of total exergy consumptionUS 1960-1998

15%

25%

35%

45%

1960 1970 1980 1990

year

per

cen

tag

e (%

)France US Japan UK

Shift to non-fuel and industrial uses

Index of Electricity Output (1960=1)

0

1

2

3

4

5

6

7

8

9

10

1960 1970 1980 1990

year

ind

ex o

f el

ectr

icit

y o

utp

ut

(196

0=1)

JapanFranceUKUS

Electricity Output (PetaJoules)

0

2000

4000

6000

8000

10000

12000

14000

16000

1960 1970 1980 1990

year

exer

gy

(pJ)

US

Japan

France

UK

A wealth effect: see total exergy for electricity vs. GDP per capita

Total Fossil Fuels for Electricity production (pJ)vs GDP per capita

10000

100000

1000000

100 1000 10000

GDP per capita (1990 US$ PCP)

Exer

gy

(pJ)

FranceJapanUKUS

US

FRANCE

UK

JAPAN

Hydroelectic electricity supply as a fraction of all renewable energy supplies,1960-1998

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1960 1965 1970 1975 1980 1985 1990 1995

year

sect

or

fra

ctio

n (

%)

FranceJapanUKUSA

Nuclear electricity supply as a fraction of all renewable energy supplies, 1960-1998.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1960 1965 1970 1975 1980 1985 1990 1995

year

sect

or

fra

ctio

n (

%)

FranceJapanUKUSA

Electricity, exergy as % of total exergy vs GDP per capita

15%

20%

25%

30%

35%

40%

45%

50%

100 1000 10000

GDP per capita (1990 US$ PCP)

%

FranceJapanUKUS

US

FRANCE

UK

JAPAN

Average efficiency of electricity generation for all commercial energy sources

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

1960 1970 1980 1990

year

effi

cien

cy

Japan

France

UK

US

Red lines = 5yr moving averageSource: IEA , efficiency = output/input

Transport• Common trends in fuel mix trends

to supply transport work: • Overall efficiency trends:• Wealth trends:• Policy recommendations:

Transport, exergy as % of total exergy consumptionUS 1960-1998

10%

15%

20%

25%

30%

1960 1970 1980 1990

year

per

cen

tag

e (%

)France US Japan UK

Transport, exergy as % of total exergy vs GDP per capita

10%

15%

20%

25%

30%

100 1000 10000

GDP per capita (1990 US$ PCP)

%FranceJapanUKUS

US

FRANCE

UK

JAPAN

Total Fossil Fuels for Transport (pJ) vs GDP per capita

10000

100000

1000000

100 1000 10000

GDP per capita (1990 US$ PCP)

Exer

gy

(pJ)

FranceJapanUKUS

US

FRANCE

UK

JAPAN

Transport Fuel Efficiencies, 1960-2000

0%

5%

10%

15%

20%

25%

30%

35%

40%

1960 1965 1970 1975 1980 1985 1990 1995 2000

year

effi

cien

cy

Water (Inland)

Air (International)

Air (Domestic)

Road (EU)

Road (US)

Rail (Steam)

5% difference betweenshort and long-range

flights (Lee et al. 2001,Annual Rev. Energy

Env. )

or

longhaul consumes 1.6 times and shorthaul

2.7 times the fuelconsumed while

cruising (Babikian, 2001)

Rail (Diesel Electric)

Transport efficiency (all modes) (useful work / exergy), 1960-2000

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1970 1975 1980 1985 1990 1995

year

effi

cien

cy

United Kingdom

Japan

European Union

France

United States

Industry• Japan is has a materials and fuel

intensive industrial sector (similar to US)

• Japan has fastest historical rate of dematerialisation

• This is concentrated in 4 major industries: textiles, minerals, metals and petrochemicals

• Reducing resource dependence of energy and materials intensive industries.

Non-fuel, exergy as % of total exergy consumptionUS 1960-1998

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

1960 1970 1980 1990

year

per

cen

tag

e (%

)France US Japan UK

Non-fuel, exergy as % of total exergy vs GDP per capita

2%

3%

4%

5%

6%

7%

8%

9%

10%

100.00 1000.00 10000.00

GDP per capita (1990 US$ PCP)

%

FranceJapanUKUS

USFRANCE

UK

JAPAN

Total Fossil Fuels for Non-Fuel uses (pJ) vs GDP per capita

1000

10000

100000

100 1000 10000

GDP per capita (1990 US$ PCP)

Exer

gy

(pJ)

FranceJapanUKUS

US

JAPAN

FRANCE

UK

Industrial (heat), exergy as % of total exergy consumptionUS 1960-1998

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

1960 1970 1980 1990

year

per

cen

tag

e (%

)France US Japan UK

Japan - Change in industry sector exergy mix, 1960-2000

-1.57%

0.05%

0.10%

0.07%

-0.06%

-0.13%

0.00%

-0.30%

-0.83%

-0.04%

-0.04%

-0.21%

-2.00% -1.50% -1.00% -0.50% 0.00% 0.50%

Iron and Steel

Chemical and Petrochemical

Non-Ferrous Metals

Non-Metallic Minerals

Transport Equipment

Machinery

Mining and Quarrying

Food and Tobacco

Paper, Pulp and Printing

Wood and Wood Products

Construction

Textile and Leather

annual change

US - Change in industry sector exergy mix, 1960-2000

0.25%

0.12%

0.00%

0.02%

0.10%

0.12%

0.08%

-0.02%

-0.10%

0.00%

-0.04%

-0.21%

-2.00% -1.50% -1.00% -0.50% 0.00% 0.50%

Iron and Steel

Chemical and Petrochemical

Non-Ferrous Metals

Non-Metallic Minerals

Transport Equipment

Machinery

Mining and Quarrying

Food and Tobacco

Paper, Pulp and Printing

Wood and Wood Products

Construction

Textile and Leather

annual change

Japan - Breakdown of total industry sector commercial fuel exergy consumption, 1960-2000

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

frac

tion

of

tota

l

1960 26% 92% 8% 20% 0% 2% 3% 6% 4% 5% 33%

1970 26% 33% 3% 7% 1% 2% 1% 2% 3% 3% 6%

1980 25% 28% 3% 9% 1% 3% 0% 3% 4% 3% 3%

1990 19% 30% 3% 9% 2% 5% 0% 4% 8% 4% 3%

1998 17% 32% 3% 9% 2% 6% 0% 4% 7% 3% 2%

Iron and SteelChemical and Petrochemical

Non-Ferrous Metals

Non-Metallic Minerals

Transport Equipment

Machinery Mining and Quarrying

Food and Tobacco

Paper, Pulp and Printing

Wood and Wood Products

ConstructionTextile and

Leather

US - Breakdown of total industry sector commercial fuel exergy consumption, 1960-2000

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

frac

tion

of to

tal

1960 16% 32% 0% 4% 4% 2% 0% 7% 14% 0% 0% 3%

1970 10% 25% 2% 3% 3% 2% 0% 5% 9% 0% 0% 2%

1980 7% 30% 3% 5% 2% 3% 0% 6% 10% 0% 0% 3%

1990 5% 39% 2% 7% 3% 7% 1% 8% 12% 1% 0% 3%

1998 8% 42% 4% 7% 2% 6% 1% 7% 10% 5% 0% 2%

Iron and SteelChemical and Petrochemical

Non-Ferrous Metals

Non-Metallic Minerals

Transport Equipment

Machinery Mining and Quarrying

Food and Tobacco

Paper, Pulp and Printing

Wood and Wood Products

ConstructionTextile and

Leather

Minerals and Metals exergy consumed / GDP , 1960-2000

0

200

400

600

800

1000

1200

1960 1970 1980 1990year

gJ

/ bill

ion

$ p

er c

apit

aJapan UK US France

Minerals and Metals exergy consumed / GDP per capita , 1960-2000

0

20000

40000

60000

80000

100000

120000

140000

1960 1970 1980 1990year

gJ

/ bill

ion

$ p

er c

apit

aJapan UK US France

Industry, exergy as % of total exergy vs GDP per capita

10%

20%

30%

40%

50%

60%

100 1000 10000

GDP per capita (1990 US$ PCP)

%

FranceJapanUKUS

US

FRANCE

UK

JAPAN

Total Fossil Fuels for Industry (pJ) vs GDP per capita

10000

100000

1000000

100 1000 10000

GDP per capita (1990 US$ PCP)

Exer

gy

(pJ)

FranceJapanUKUS

US

FRANCE

UK

JAPAN

Residential/Commercial• Declining as a % of total up to

1975 then increasing• Income relationship varies greatly

from country to country for various reasons

• Japan outperforms the US, having lower total consumption for equal GDP per cap.

Residential (heat), exergy as % of total exergy consumptionUS 1960-1998

0%

5%

10%

15%

20%

25%

30%

1960 1970 1980 1990

year

per

cen

tag

e (%

)France US Japan UK

Residential and Commercial, exergy as % of total exergy vs GDP per capita

0%

5%

10%

15%

20%

25%

30%

100 1000 10000

GDP per capita (1990 US$ PCP)

%FranceJapanUKUS

US

FRANCE

UK

JAPAN

Total Fossil Fuels for Residential and Commercial (pJ) vs GDP per capita

1000

10000

100000

1000000

100 1000 10000

GDP per capita (1990 US$ PCP)

Exer

gy

(pJ)

FranceJapanUKUS

US

FRANCE

UK

JAPAN

Labour OverviewAverage trends of hours worked and compensation per hour:

1960-2000 (average across 12 OECD countries)

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

1960 1965 1970 1975 1980 1985 1990 1995 2000

year

ind

ex

hours workedcompensation

Source: US Dept. Labor, Bureau of Labor Statistics 2002.

Hourly rate of compensation index (1992=100): 1960-2000

0

20

40

60

80

100

120

140

160

1960 1965 1970 1975 1980 1985 1990 1995 2000

year

ind

ex

France

Japan

UK

US

Source: Bureau of Labour Statistics (BLS) International Labor

Growth in Labour Quality

-2.50

-2.00

-1.50

-1.00

-0.50

0.00

0.50

1.00

1.50

2.00

2.50

1975 1980 1985 1990 1995

year

del

ta[l

n(q

)]

JapanUS

Labour Services (1992 US Hours): 1960-2000

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

1960 1970 1980 1990 2000

year

serv

ice

leve

l

FranceJapanUKUS

Source: Bureau of Labour Statistics (BLS) International Labor Statistics.

Aggregated Measures• The individual trends for each country

show– Increasing electricity (both)– Increasing transport (both since 1975)– Increasing residential (Japan only since

1970)– Decreasing residential heat (US only)– Decreasing industrial heat (both)– Exergy intensity declining until 1990 (Japan)– Exergy intensity decline since 1960 ongoing

(US)

Breakdown of exergy inputs into the economy by useUS 1960-1998

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

1960 1965 1970 1975 1980 1985 1990 1995

year

per

cen

tag

e (%

)ELECTRICITY (prime movers)

TRANSPORT (other prime movers)

HEAT (Industrial)

NON-FUEL

HEAT (Residential)

Fuel exergy consumption by sector: US, 1960-2000

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

1960 1965 1970 1975 1980 1985 1990 1995

year

ind

ex

Industry US

Transport US

Residential US

Commercial US

Agriculture US

Energy US

Energy Japan

Commercial and agricultural sectors for Japan out of range

Transport Japan

Residential Japan

Industry Japan

Breakdown of exergy inputs into the economy by useJapan 1960-1998

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

1960 1965 1970 1975 1980 1985 1990 1995

year

per

cen

tag

e (%

)ELECTRICITY (prime movers)

TRANSPORT (other prime movers)

HEAT (Industrial)

NON-FUEL

HEAT (Residential)

Fuel exergy consumption by sector: US, 1960-2000

0

5000

10000

15000

20000

25000

30000

1960 1965 1970 1975 1980 1985 1990 1995

year

pJ

Industry

Transport

Residential

Commercial

Agriculture

Energy

Fuel exergy consumption by sector: Japan, 1960-2000

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

1960 1965 1970 1975 1980 1985 1990 1995

year

pJ

Industry

Transport

Residential

Commercial

Agriculture

Energy

Environmental Kuznets Curve - Commercial Fuel Exergy (pJ)/ GDP per capita (million 90 US$ /millions)

150

200

250

300

350

400

450

500

550

1960 1965 1970 1975 1980 1985 1990 1995

year

exer

gy/

GD

PFrance Japan UK US

Aggregate conversion efficiency of commercial fuel exergy to useful work,1960-1998

0%

5%

10%

15%

20%

25%

30%

1960 1965 1970 1975 1980 1985 1990 1995

year

per

cen

tag

e (%

)

France Germany Japan UK US

Non-weighted average of exergy to work conversion efficiencies, 1960-1998

15%

20%

25%

1960 1970 1980 1990

year

per

cen

tag

e (%

)

France Japan UK US

Drop in efficiency of electricityconversion efficiency

g = 1/f*(R/GDP), 1960-1998

0.013

0.018

0.023

0.028

1960 1970 1980 1990

year

g (

econ

om

ic o

utp

ut/

work

in

pu

t)France Japan UK US

Marginal Productivity of Labour (from LINEX estimates)

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1960 1965 1970 1975 1980 1985 1990 1995

Lin

ex p

aram

eter

a*(

(Lab

ou

r+E

xerg

y S

ervi

ces)

/Cap

ital

)

USUKFranceJapan

Marginal Productivity of Useful Work (from LINEX estimates)

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1960 1965 1970 1975 1980 1985 1990 1995

1-al

ph

a-b

eta

USUKFranceJapan

Estimates of GDP, Japan 1960-2000

0

1

2

3

4

5

6

7

8

9

10

1963 1968 1973 1978 1983 1988 1993

ou

tpu

t (1

960=

1)YLINEXTime Dependent CDTime Average CD

Estimates of GDP, US 1960-2000

0

0.5

1

1.5

2

2.5

3

3.5

1963 1968 1973 1978 1983 1988 1993

ou

tpu

t (1

960=

1)YLINEXTime Dependent CDTime Average CD

Estimates of GDP, UK 1960-2000

0

0.5

1

1.5

2

2.5

3

1963 1968 1973 1978 1983 1988 1993

ou

tpu

t (1

960=

1)YLINEXTime Dependent CDTime Average CD

Estimates of GDP, France 1960-2000

0

0.5

1

1.5

2

2.5

3

3.5

4

1963 1968 1973 1978 1983 1988 1993

ou

tpu

t (1

960=

1)YLINEXTime Dependent CDTime Average CD

0

1

2

3

4

5

6

7

8

9

10

1962

1966

1970

1974

1978

1982

1986

1990

1994

Y

LINEX

TimeDependentCDTimeAverage CD

If a reduced to 0.01, bheld constant.

All estimates coincide.

0

1

2

3

4

5

6

7

8

9

10

1962

1966

1970

1974

1978

1982

1986

1990

1994

Y

LINEX

Time DependentCD

Time Average CD

If a increased to 1, bheld constant.

Estimates diverge.

The b parameter controls the slope, as it increases so the rate of

predicted output increases.