Exergy Efficiency and Economic Productivity: Historic Trends and Future Policy Guidelines - A Tale of Four Countries (US, UK, Austria and Japan)

1. 4th IIASA-TITECH Technical Meeting
2nd –3rd May 2004, Vienna
An Elucidation of the Role of Institutional Systems in Characterizing Technology
Development Trajectories
Robert Ayres and Benjamin Warr
Center for the Management of Environmental Resources (CMER)
INSEAD
Boulevard de Constance
Fontainebleau
77300
http://benjamin.warr.free.fr
Exergy Efficiency and Economic Productivity:
Historic Trends and Future Policy Guidelines -
A Tale of Four Countries.

2. Objectives
1. Historical trends in exergy use
to provide useful work
2. Efficiency gains have driven
growth, and must be
maintained
3. Institutional activities
4. Economic implications
5. Environmental implications
6. Future policy guidelines

3. 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?

4. 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

5. Electricity generation, exergy as % of total exergy consumption
US 1960-1998
France US Japan UK
45% Shift to non-fuel and industrial
uses
percentage (%)
35%
25%
15%
1960 1970 1980 1990
year

6. Index of Electricity Output (1960=1)
10
Japan
9
France
8 UK
index of electricity output (1960=1)
US
7
6
5
4
3
2
1
0
1960 1970 1980 1990
year

7. Electricity Output (PetaJoules)
16000
US
14000
Japan
12000 France
UK
10000
exergy (pJ)
8000
A wealth effect: see total exergy
6000 for electricity vs. GDP per capita
4000
2000
0
1960 1970 1980 1990
year

8. Total Fossil Fuels for Electricity production (pJ)
vs GDP per capita
1000000
France
Japan US
UK
US
JAPAN
Exergy (pJ)
100000
UK
FRANCE
10000
100 1000 10000
GDP per capita (1990 US$ PCP)

9. Hydroelectic electricity supply as a fraction of all
renewable energy supplies,1960-1998
100%
France
90%
Japan
80% UK
USA
70%
sector fraction (%)
60%
50%
40%
30%
20%
10%
0%
1960 1965 1970 1975 1980 1985 1990 1995
year

10. Nuclear electricity supply as a fraction of all
renewable energy supplies, 1960-1998.
100%
90%
80%
70%
sector fraction (%)
60%
50%
40%
30%
France
20% Japan
UK
10%
USA
0%
1960 1965 1970 1975 1980 1985 1990 1995
year

11. Electricity, exergy as % of total exergy
vs GDP per capita
50%
France
Japan
45%
UK
JAPAN
US
40% US
UK
35%
%
30%
25%
FRANCE
20%
15%
100 1000 10000
GDP per capita (1990 US$ PCP)

12. Average efficiency of electricity generation for all
commercial energy sources
0.50
0.45
Japan
0.40
0.35 France
0.30
efficiency
0.25 UK
0.20
0.15 US
0.10
0.05 Red lines = 5yr moving average
Source: IEA , efficiency = output/input
0.00
1960 1970 1980 1990
year

13. Transport
• Common trends in fuel mix trends
to supply transport work:
• Overall efficiency trends:
• Wealth trends:
• Policy recommendations:

14. Transport, exergy as % of total exergy consumption
US 1960-1998
30%
France US Japan UK
25%
percentage (%)
20%
15%
10%
1960 1970 1980 1990
year

15. Transport, exergy as % of total exergy
vs GDP per capita
30%
France
Japan
UK
25% US
US
20%
%
FRANCE
JAPAN
15%
UK
10%
100 1000 10000
GDP per capita (1990 US$ PCP)

16. Total Fossil Fuels for Transport
(pJ) vs GDP per capita
1000000
France
Japan
UK
US
US
Exergy (pJ)
100000
UK
FRANCE
JAPAN
10000
100 1000 10000
GDP per capita (1990 US$ PCP)

17. Transport Fuel Efficiencies, 1960-2000
40%
Water (Inland)
35%
30% 5% difference between
Rail (Diesel Electric)
short and long-range
flights (Lee et al. 2001,
25% Air (International) Annual Rev. Energy
efficiency
Air (Domestic) Env. )
20%
or
15%
Road (EU) longhaul consumes
10% 1.6 times and shorthaul
Rail (Steam)
2.7 times the fuel
5% Road (US) consumed while
cruising (Babikian, 2001)
0%
1960 1965 1970 1975 1980 1985 1990 1995 2000
year

18. Transport efficiency (all modes)
(useful work / exergy), 1960-2000
20%
18%
16%
14%
12%
efficiency
10% United Kingdom
8% Japan
6% European Union
4%
France
2%
United States
0%
1970 1975 1980 1985 1990 1995
year

19. 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.

20. Non-fuel, exergy as % of total exergy consumption
US 1960-1998
10%
France US Japan UK
9%
8%
7%
percentage (%)
6%
5%
4%
3%
2%
1%
0%
1960 1970 1980 1990
year

21. Non-fuel, exergy as % of total exergy
vs GDP per capita
10%
France
JAPAN
9% Japan
UK
8% US
7%
6%
%
FRANCE
5% US
4%
3% UK
2%
100.00 1000.00 10000.00
GDP per capita (1990 US$ PCP)

22. Total Fossil Fuels for Non-Fuel uses (pJ)
vs GDP per capita
100000
France
Japan
US
UK
US
JAPAN
Exergy (pJ)
10000
FRANCE
UK
1000
100 1000 10000
GDP per capita (1990 US$ PCP)

23. Industrial (heat), exergy as % of total exergy consumption
US 1960-1998
60%
France US Japan UK
55%
50%
45%
percentage (%)
40%
35%
30%
25%
20%
15%
10%
1960 1970 1980 1990
year

24. Japan - Change in industry sector exergy mix, 1960-2000
-0.83% Textile and Leather
-0.04% Construction
Wood and Wood Products 0.00%
Paper, Pulp and Printing 0.07%
-0.04% Food and Tobacco
-0.06% Mining and Quarrying
Machinery 0.10%
Transport Equipment 0.05%
-0.30% Non-Metallic Minerals
-0.13% Non-Ferrous Metals
-1.57% Chemical and Petrochemical
-0.21% Iron and Steel
-2.00% -1.50% -1.00% -0.50% 0.00% 0.50%
annual change

25. US - Change in industry sector exergy mix, 1960-2000
-0.02% Textile and Leather
Construction 0.00%
Wood and Wood Products 0.12%
-0.10% Paper, Pulp and Printing
0.00% Food and Tobacco
Mining and Quarrying 0.02%
Machinery 0.12%
Transport Equipment
-0.04%
Non-Metallic Minerals 0.08%
Non-Ferrous Metals 0.10%
Chemical and Petrochemical 0.25%
-0.21% Iron and Steel
-2.00% -1.50% -1.00% -0.50% 0.00% 0.50%
annual change

26. Japan - Breakdown of total industry sector commercial fuel exergy consumption, 1960-2000
45%
40%
35%
30%
fraction of total
25%
20%
15%
10%
5%
0%
Chemical and Non-Ferrous Non-Metallic Transport Mining and Food and Paper, Pulp and Wood and Wood Textile and
Iron and Steel Machinery Construction
Petrochemical Metals Minerals Equipment Quarrying Tobacco Printing Products Leather
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%

27. US - Breakdown of total industry sector commercial fuel exergy consumption, 1960-2000
45%
40%
35%
30%
fraction of total
25%
20%
15%
10%
5%
0%
Chemical and Non-Ferrous Non-Metallic Transport Mining and Food and Paper, Pulp and Wood and Wood Textile and
Iron and Steel Machinery Construction
Petrochemical Metals Minerals Equipment Quarrying Tobacco Printing Products Leather
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%

28. Minerals and Metals exergy consumed / GDP ,
1960-2000
1200
Japan UK US France
1000
gJ / billion $ per capita
800
600
400
200
0
1960 1970 1980 1990
year

29. Minerals and Metals exergy consumed / GDP per capita ,
1960-2000
140000
Japan UK US France
120000
100000
gJ / billion $ per capita
80000
60000
40000
20000
0
1960 1970 1980 1990
year

30. Industry, exergy as % of total exergy
vs GDP per capita
60% JAPAN
50%
40%
FRANCE
%
30%
France
Japan UK
20% US
UK
US
10%
100 1000 10000
GDP per capita (1990 US$ PCP)

31. Total Fossil Fuels for Industry
(pJ) vs GDP per capita
1000000
France
Japan
UK
US
US
Exergy (pJ)
100000 JAPAN
UK
FRANCE
10000
100 1000 10000
GDP per capita (1990 US$ PCP)

32. 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.

33. Residential (heat), exergy as % of total exergy consumption
US 1960-1998
30%
France US Japan UK
25%
20%
percentage (%)
15%
10%
5%
0%
1960 1970 1980 1990
year

34. Residential and Commercial, exergy as % of
total exergy vs GDP per capita
30%
France FRANCE
Japan
25% UK
US
20%
UK US
15%
%
10%
JAPAN
5%
0%
100 1000 10000
GDP per capita (1990 US$ PCP)

35. Total Fossil Fuels for Residential and
Commercial (pJ) vs GDP per capita
1000000
France
Japan
UK
US
US
100000
Exergy (pJ)
UK
FRANCE
10000
JAPAN
1000
100 1000 10000
GDP per capita (1990 US$ PCP)

36. Labour Overview
Average trends of hours worked and compensation per hour:
1960-2000 (average across 12 OECD countries)
140.00
120.00
100.00
80.00
index
60.00
40.00
20.00 hours worked
compensation
0.00
1960 1965 1970 1975 1980 1985 1990 1995 2000
year
Source: US Dept. Labor, Bureau of Labor Statistics 2002.

37. Hourly rate of compensation index (1992=100): 1960-2000
160
France
140 Japan
UK
120 US
100
index
80
60
40
20
0
1960 1965 1970 1975 1980 1985 1990 1995 2000
year
Source: Bureau of Labour Statistics (BLS) International Labor

38. Growth in Labour Quality
2.50
2.00 Japan
US
1.50
1.00
0.50
delta[ln(q)]
0.00
-0.50
-1.00
-1.50
-2.00
-2.50
1975 1980 1985 1990 1995
year

39. Labour Services (1992 US Hours): 1960-2000
200000
France
180000 Japan
UK
160000 US
140000
120000
service level
100000
80000
60000
40000
20000
0
1960 1970 1980 1990 2000
year
Source: Bureau of Labour Statistics (BLS)
International Labor Statistics.

40. 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)

41. Breakdown of exergy inputs into the economy by use
US 1960-1998
60.00%
ELECTRICITY (prime movers)
TRANSPORT (other prime movers)
50.00%
HEAT (Industrial)
NON-FUEL
40.00%
HEAT (Residential)
percentage (%)
30.00%
20.00%
10.00%
0.00%
1960 1965 1970 1975 1980 1985 1990 1995
year

42. Fuel exergy consumption by sector: US, 1960-2000
10.0
Commercial and agricultural sectors for
Japan out of range
9.0 Residential Japan
8.0
Transport Japan
7.0
Energy Japan
6.0
index
5.0
Industry Japan
4.0
Commercial US
3.0 Transport US
Residential US
2.0 Energy US
Industry US
1.0
Agriculture US
0.0
1960 1965 1970 1975 1980 1985 1990 1995
year

43. Breakdown of exergy inputs into the economy by use
Japan 1960-1998
60.00%
ELECTRICITY (prime movers)
TRANSPORT (other prime movers)
50.00%
HEAT (Industrial)
NON-FUEL
40.00% HEAT (Residential)
percentage (%)
30.00%
20.00%
10.00%
0.00%
1960 1965 1970 1975 1980 1985 1990 1995
year

44. Fuel exergy consumption by sector: US, 1960-2000
30000
Transport
25000
Industry
20000 Residential
Commercial
pJ
15000
10000
Energy
5000
Agriculture
0
1960 1965 1970 1975 1980 1985 1990 1995
year

45. Fuel exergy consumption by sector: Japan, 1960-2000
9000
8000
Industry
7000
6000
5000
pJ
Transport
4000
Residential
3000
Commercial
2000
Energy
1000
Agriculture
0
1960 1965 1970 1975 1980 1985 1990 1995
year

46. Environmental Kuznets Curve -
Commercial Fuel Exergy (pJ)/ GDP per capita (million 90 US$ /millions)
550
France Japan UK US
500
450
400
exergy/GDP
350
300
250
200
150
1960 1965 1970 1975 1980 1985 1990 1995
year

47. Aggregate conversion efficiency of commercial
fuel exergy to useful work,1960-1998
30%
25%
20%
percentage (%)
15%
10%
5%
France Germany Japan UK US
0%
1960 1965 1970 1975 1980 1985 1990 1995
year

48. Non-weighted average of exergy to work
conversion efficiencies, 1960-1998
Drop in efficiency of
electricity
conversion efficiency
25%
percentage (%)
20%
France Japan UK US
15%
1960 1970 1980 1990
year

49. g = 1/f*(R/GDP), 1960-1998
France Japan UK US
0.028
g (economic output/work input)
0.023
0.018
0.013
1960 1970 1980 1990
year

50. Marginal Productivity of Labour (from LINEX estimates)
1.00
Linex parameter a*((Labour+Exergy Services)/Capital)
0.90
0.80
0.70
0.60
0.50
0.40
0.30
US
0.20 UK
France
0.10 Japan
0.00
1960 1965 1970 1975 1980 1985 1990 1995

51. Marginal Productivity of Useful Work (from LINEX estimates)
1.00
US
0.90 UK
France
0.80 Japan
0.70
0.60
1-alpha-beta
0.50
0.40
0.30
0.20
0.10
0.00
1960 1965 1970 1975 1980 1985 1990 1995

52. Estimates of GDP, Japan 1960-2000
10
Y
9 LINEX
Time Dependent CD
8
Time Average CD
7
output (1960=1)
6
5
4
3
2
1
0
1963 1968 1973 1978 1983 1988 1993

53. Estimates of GDP, US 1960-2000
3.5
Y
LINEX
3
Time Dependent CD
Time Average CD
2.5
output (1960=1)
2
1.5
1
0.5
0
1963 1968 1973 1978 1983 1988 1993

54. Estimates of GDP, UK 1960-2000
3
Y
LINEX
2.5 Time Dependent CD
Time Average CD
2
output (1960=1)
1.5
1
0.5
0
1963 1968 1973 1978 1983 1988 1993

55. Estimates of GDP, France 1960-2000
4
Y
3.5 LINEX
Time Dependent CD
Time Average CD
3
2.5
output (1960=1)
2
1.5
1
0.5
0
1963 1968 1973 1978 1983 1988 1993

56. 10
If a reduced to 0.01, b
held constant.
9
8
All estimates coincide.
7
Y
6
5
LINEX
4
3 Time
Dependent
2 CD
1
Time
Average CD
0
74
78
82
62
66
70
86
90
94
19
19
19
19
19
19
19
19
19

57. 10
If a increased to 1, b
9
held constant.
8
Estimates diverge.
7
Y
6
LINEX
5
Time Dependent
The b parameter
4
CD
Time Average CD
controls the slope, as it
3 increases so the rate of
2 predicted output
1
increases.
0
90
94
62
66
70
74
78
82
86
19
19
19
19
19
19
19
19
19