Energy to Make a Dollar

There is one metric by which the U.S. compares favorably to the rest of the world: the amount of energy and greenhouse gases emitted per dollar of GDP (Table 1). In some sense, the U.S. economy is much more efficient than most other world economies, particularly when compared to China.

Table 1: Energy Consumption per Dollar for the Five Largest Economies (2005)

Country	Energy Use	Greenhouse Gases
	(kWh per dollar)	(kg per dollar)
United States	2.37	0.56
Japan	1.47	0.30
Germany	1.52	0.35
China	8.73	3.22
United Kingdom	1.32	0.29
World Average	3.07	0.83

Is this a good thing? Economists have mixed views. Most of the discrepancy in the energy intensity of the U.S. and Chinese economies is caused by the the fact that China's economy is much more reliant on manufacturing, which demands lots of energy. Once those products are made, most of them are bought by developed nations, such as the U.S. In some sense, the U.S. and other developed nations have exported their energy-intensive industries to China. Therefore, it can be argued that China's greenhouse gas emissions should be attributed to those who buy the final products.

However, this argument isn't particularly useful. The Chinese government has recently wanted things both ways. They would prefer not to have to reduce the greenhouse gas footprint of their exports, claiming that the goods are for other people, and that the buyers should bear the cost. However, if China decides it isn't responsible for the emissions, then the developed nations would have to reduce their share by buying fewer Chinese goods. They could do this by taxing imports based on their carbon footprint, for instance. Of course, this solution is equally unpalatable to Chinese industry.

Instead, the above analysis highlights the need for developing nations to make their industries more energy-efficient, and to switch to less carbon-rich energy sources. If China were to grow its economy by a factor of about 24 to match the per capita GDP of the U.S., and yet keep its greenhouse gas footprint per dollar the same, it would use 470 billion MWh of energy per year, and would put out a whopping 172 billion tons equivalent of carbon dioxide every year. This would be 3.5 times the current worldwide energy use, and 4.7 times the current greenhouse gas emissions of the entire world.

Granted, as the Chinese economy evolves, it is likely to develop a less energy-intensive, and a more profitable, economic profile. However, there would still be reason for concern. If future Chinese consumers demand the cheap, energy intensive goods that the American consumer now buys from current Chinese workers, then without new technology, greenhouse gas emissions may well shift to other developing countries. The increased demand would put a further burden on energy supplies, and on the climate