Benjamin Warr

Exergy, power and work in the US economy, 1900–1998

Conventional economic growth theory assumes that technological progress is exogenous and that resource consumption is a consequence, not a cause, of growth. The reality is different and more complex. A ‘growth engine’ is a positive feedback loop involving declining costs of inputs and increasing demand for lower priced outputs, which then drives costs down further, thanks to economies of scale and learning effects. In a competitive environment prices follow. The most important ‘growth engine’ of the first industrial revolution was dependent on coal and steam power. The feedback operated through rapidly declining fossil fuel and mechanical power costs. The advent of electric power, in growing quantities and declining cost, has triggered the development of a whole range of new products and industries, including electric light, radio and television, moving pictures, and the whole modern information sector. The purpose of this paper is to reformulate the idea of the ‘growth engine’ in terms of the service provided by energy inputs, namely ‘useful work’, defined as the product of energy (exergy) inputs multiplied by a conversion efficiency. We attempt here to reconstruct the useful work performed in the US economy during the twentieth century. Some economic implications are indicated very briefly.

The Economic Growth Engine

The historic link between output (GDP) growth and employment has weakened. Since there is no quantitively verifiable economic theory to explain past growth, this unique book explores the fundamental relationship between thermodynamics (physical work) and economics.

Economic growth models and the role of physical resources

In summary, I argue three theses. The first is that exergy is a major factor of production comparable in importance to labour and capital. The second is that the empirical work/exergy ratio f is an important measure of technical progress in the long run. Similarly, and third, the output/work ratio g can be regarded as a useful indicator of the extent to which the economy is “dematerialising” (if it is) or “informatising”66 in some sense. Third, it is possible that technical progress as traditionally defined can be approximated reasonably well by mathematical expressions involving ratios of capital, labour and exergy inputs.

Energy Efficiency and Economic Growth: the ‘Rebound Effect’ as a Driver

In this chapter we argue for two linked theses. The first thesis is that increasing energy efficiency has been a major — perhaps the major — driver of economic growth since the industrial revolution. In fact, ‘technological progress’ as normally construed by economists appears to be primarily due to increasing energy-conversion efficiency, notwithstanding contributions from information technology in recent decades. The second, related thesis is that, while reduced carbon dioxide emissions are essential for long-term global sustainability, the usual policy recommendation of most economists and many ‘greens’, namely to increase the cost of energy by introducing a carbon tax, would be ill-advised. Such a policy might have the beneficial effect of reducing government budgetary deficits. But it would have an adverse impact on economic growth, at least in the industrial world.

Trends in Austrian Resource Efficiency: An Exergy and Useful Work Analysis in Comparison to Material Use, CO2 Emissions, and Land Use

Summary In the past few years, resource use and resource efficiency have been implemented in the European Union (EU) environmental policy programs as well as international sustainable development programs. In their programs, the EU focuses on four resource types that should be addressed: materials, energy (or carbon dioxide [CO2] emissions), water, and land. In this article, we first discuss different perspectives on energy use and present the results of a long‐term exergy and useful work analysis of the Austrian economy for the period 1900–2012, using the methodology developed by Ayres and Warr. Second, we discuss Austrian resource efficiency by comparing the presented exergy and useful work data with material use, CO2 emissions, and land‐use data taken from statistical sources. This comparison provides, for the first time, a long‐term analysis of Austrian resource efficiency based on a broad understanding thereof and evaluates Austrian development in relation to EU and Austrian policy targets.

Useful Work Transitions in Portugal, 1856–2009

The use of heat, as a consequence of industrialization, is a recent evolution to the service economy. In contrast to the conventional approach, we perform a useful work accounting, focusing our analysis on the final uses of energy instead of their sources. This enables the assessment of energy-driven activities and capturing of the structure of energy mixes. In addition, we include important energy flows, such as food for humans and feed for working animals, which are usually absent from energy statistics. We consider five different categories of energy uses: heat, mechanical drive, light, other electric uses, and muscle work. We apply this methodology to account for useful work in Portugal from 1856 to 2009. Different transitions in final energy use are identified in this long-term analysis such as the shifts from firewood to coal and from coal to oil and electricity. Useful work shifts from muscle work to mechanical drive uses, and from low to high temperature.