The energy transition in international economic systems: An empirical analysis of change during development

This study investigates the way energy is used in economic systems in countries and the US states to generate desirable outputs. An observed energy transition is characterized by low energy efficiency as a country first develops, followed by increasing efficiency as the transition is passed. Energy intensity, the energy required to generate a unit of output, is an inverse measure of efficiency and reaches a peak at the transition. Below the transition, countries increase energy use faster than GNP so energy intensity rises rapidly along with material use and pollution while socioeconomic indicators improve. Beyond the transition, however, environmental and economic indicators improve only as energy intensity declines. Economic systems become more diverse, in the same sense that ecosystems become more diverse, as they develop and a means of calculating economic diversity is presented. The increased diversity results from changes which enhance efficiency and decrease entropy in energy use and facilitates the allocation of more energy to beneficial outputs and less to waste. A partition coefficient is presented which expresses the relative energy allocations and which relates to energy, pollution and economic indicators. The role of energy pricing in the transition is discussed.