Can Efficiency Improvements Reduce Resource Consumption

This work explores the historical effectiveness of efficiency improvements in reducing humankind’s consumption of energy resources. Ten activities are analyzed, including pig iron production, aluminum production, nitrogen fertilizer production, electricity generation from coal, electricity generation from oil, electricity generation from natural gas, freight rail travel, passenger air travel, motor vehicle travel, and residential refrigeration. The data and analyses presented here demonstrate the dynamic interplay between technological innovation, market forces, and government policy. They also show that, historically, over long time periods, incremental improvements in efficiency have not succeeded in outpacing increases in the quantity of goods and services provided. Thus, the end result over these time periods has been, not surprisingly, a sizeable increase in the consumption of energy resources across all ten activities. However, there do exist a few examples of shorter, decade-long time periods in which improvements in efficiency were able to match or outpace increases in quantity. In these cases, efficiency mandates, price pressures, and industry upheaval led to periods of reduced resource consumption. These cases suggest that with appropriate incentives, including, for example, efficiency mandates and price mechanisms, future resource consumption, and its associated environmental impacts, could be stabilized and even reduced.