Abstract
On the European aggregate level there is an inverted-U curve for long-term energy intensity. In the 19th century aggregate European energy intensity rose, followed by a declining trend during the 20th century. This article discusses the possible explanations for the declining trend during the 20th century and explores the role of energy quality as expressed in energy prices. For the first time a complete set of national energy retail prices covering two centuries has been constructed and used for Britain, while the energy price data previously available for Sweden until 2000 has been updated to 2009. This allows us to explore the role of energy quality in shaping long-term energy intensity. We find no relation between energy quality and energy intensity in the 19th century, while energy quality may have stimulated the declining energy intensity in Europe over the 20th century, but is not the sole or even main reason for the decline. Rather, increased economic efficiency in the use of energy services seems to have been the main driver for the decline after 1970, presumably driven by the information and communication technology.
Highlights
Understanding the relationship between energy consumption and economic growth is essential for dealing with the major challenges faced today in the field of energy, such as global warming, energy security and the possibility of peak oil
Higher energy quality may have stimulated the declining energy intensity in Britain and Sweden over the 20th century, but is not the sole or even main reason for the decline. This is proven by the strongly declining trend in energy intensity after 1970, despite energy quality not improving in Sweden or Britain
We hypothesise that the major influence on growth in this later period was Information and Communication Technology (ICT), which needs information services and electricity but did not substantially increase demand for the latter energy carrier
Summary
Understanding the relationship between energy consumption and economic growth is essential for dealing with the major challenges faced today in the field of energy, such as global warming, energy security and the possibility of peak oil. Energy intensity is a key indicator for the relationship between energy and economic activity, and in this article we deal with its long-run trajectory in Europe. The most familiar stylized proposition on energy intensity, put forward by Reddy and Goldemberg, is that its pattern looks like an inverted U, but with peaks at different levels and years depending on local patterns of development and uptake of technology [1]. Research has demonstrated that for several countries in Western Europe energy intensity is rather stable or else declining over the last two hundred years when traditional energy carriers like wood and muscle power are included in the calculations [2].
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