Nov 21, 2017

The great decoupling of power use and economic growth

Ben Geman

A short Energy Information Administration analysis looks at how the link between power use and economic growth has been severed in some big countries, as the chart below shows.

Why it matters: Stagnant overall electricity growth in the U.S. has helped to shake up power markets as growing use of natural gas and renewables puts the squeeze on coal.

Expand chart

Reproduced from EIA Today in Energy, Nov. 20, 2017; Chart: Axios Visuals

  • One cause of the decoupling: The economies of major OECD nations like the U.S., U.K. and Japan have shifted away from manufacturing over time toward service-oriented output. "Service-based economies tend to use less electricity than economies with high levels of industrial activity, as commercial services are generally less energy-intensive compared with manufacturing," EIA notes.
  • Another cause: The manufacturing sectors have also become more technologically advanced and energy efficient.

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Despite Trump, Congress boosts clean energy funding

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Big Tech data centers probably aren't a climate change time bomb

Data: Reproduced from an International Energy Agency report; Chart: Axios Visuals

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Why U.S. manufacturing and services are moving further apart

Data: Institute for Supply Management; Chart: Axios Visuals

While U.S. manufacturing has fallen into its deepest hole in a decade, the all-important services sector keeps chugging along.

What's happening: The Institute for Supply Management's gauge of the U.S. services sector yesterday produced a reading solidly in expansionary territory and above expectations. That was a far cry from the company's manufacturing index, which last week hit its weakest level since June 2009.

Go deeperArrowJan 8, 2020