Where Have All the BTUs Gone?

I have been away for a few weeks at conferences and have chatted to all sorts of different experts about energy issues. However, during my time away I have been nagged by an important open question. In my last post, I stated that I don't consider the 25% renewables by 2025 goal to be an achievable one, and I presented data that showed that whatever progress we have made over the past few years has been as a result of energy usage reductions rather than increased amounts of renewable energy. Regardless of my viewpoint on the achievability of the goal, these energy savings are great as I believe we can accomplish more through energy savings than we can from new renewable energy sources. Nevertheless it is critical to understand what we are doing to save energy so we can do more of the same. So to paraphrase the words of the old Pete Seeger song "Where Have all the Flowers Gone," I want to know "Where Have All the BTU's Gone?" 

In-state energy use in NH has decreased by 9% since 2005 - see my last post. Some possible reasons include: 

 

• The Great Recession of 2008/2009 resulted in lower economic output and therefore less energy consumption.
• Increased fuel costs have caused us to moderate our energy-consuming habits.
• Through various State, Federal and privately funded energy savings programs, we are becoming more energy efficient, and we are able to accomplish more with less energy input.
• We have a smaller population and therefore fewer of us in NH are using energy.

Let's dispense with the last point first. From 2000 to 2010, the NH population grew from 1.24 million to 1.32 million – a 6% increase. So not only are we using less energy – we are using less energy while the State population is growing. Because census data are only collected on a per decade basis, it is useful to look at energy usage on a similar basis, so let's take a look at energy consumption since 2000, shown in the chart below.

The blue bars show that in the first half of the decade (except for the post 9-11 economic downturn in 2001), there was a continuation of our decades' long run up of energy consumption. In fact, from 1990 to 2000 our energy consumption increased 16%. We reached a peak of in-state consumption of 331 trillion BTU in 2004. Since then energy consumption has turned around and had dropped off 11% by 2010. I have overlaid data for the NH Gross Domestic Product (GDP) as the red line, and, except for the post 9-11 slow down in 2001 and a dip for the 2008/2009 Great Recession, the decade saw a 14% increase in GDP. So our decrease in energy consumption preceded the Great Recession by a number of years. There is no doubt the recession did encourage further energy savings as we, like Jimmy Carter, turned down the thermostats, took to wearing more sweaters and sat closer to the fire.

Dividing energy consumption by GDP dollars yields a number called GDP energy intensity, which is a measure of the amount of energy, in BTUs, it takes to produce a dollar of GDP output. In the table below you can see our energy intensity for some key years and how it has changed since 1990.

Our decrease in energy intensity is clear and this mirrors a long-term decrease for the whole US. In fact, in NH our energy intensity is typically 30% lower than the USA average. Generally speaking, our energy intensity has decreased and we are able to produce more GDP output with smaller energy outlays. This comes from an increasing awareness of the energy components of our industrial output as well as our move away from energy-intensive industries such as mining, steelmaking and general heavy manufacturing.

Another energy intensity measure that is often calculated is energy use per person. These numbers for NH and the USA are shown below.

 

Here we see an increase in per capita consumption to 2004 and then a 12.5% drop off from 2004 to 2010. Again our per capita consumption is, on average, about 30% lower than that of the US total. In fact, on a state basis, NH is way down the list in per capita energy use – we are at position 44. Rhode Island and New York, which have the lowest use of energy per person, have per capita values 15% lower than ours. On the other hand, states like Alaska and Wyoming have usages three times greater than ours.

So our energy usage has declined and is lower than the US average, but it still begs the question – "Why?". To get a better view of the decrease, I have looked at the four main components of our in-state energy consumption, viz., transportation, commercial, residential and industrial use and how they have changed since 2004. I have plotted the data for 2004 and 2010 for each of the sectors in the chart below.

 

 

 

In 2004 our energy usage was 331 trillion BTU and in 2010 it was 296 trillion BTU – a 35 trillion BTU decrease. This is an 11% decrease in our in-state energy consumption. Transportation usage only decreased by 2%, commercial use declined by 12%, residential usage decreased 10%, and industrial usage dropped by 27%.

The pie chart below shows which sectors contributed the most to the 35 trillion BTUs savings. Most of the decrease came from the industrial sector which contributed 40% of the savings, next was the commercial sector which provided 33% of the savings, followed by residences with 20% and a small portion by reduced transportation usage. I note that another blogger on NH issues, Brian Gottlob at Trendlines, has done a similar analysis. (In fact, I subscribe to the Trendlines Blog and I always find his data-based take on NH economic issues interesting. I encourage you to do the same.)
 

So where does the impressive decrease in industrial energy consumption come from? Contrary to what many folks think, this is not due to erosion of our manufacturing base. In fact, NH's manufacturing base has held up well over the past decade. On average, we get 15% of our state GDP from manufacturing, compared to 12% for a US average and based on some recent data we are even seeing an increase. What is different is that our manufacturing is changing – it is no longer the heavy manufacturing of years gone by, and, based on discussions with manufacturers, I know that energy is now a top-five expense in most manufacturing companies. Companies have invested in many projects to reduce energy costs and, as a result, manufacturing is now more energy efficient than ever before.

 

To get a better sense of the industrial energy usage in the state, I have extracted the energy used in industrial activities as well as the industrial GDP component to calculate the industrial energy intensity. This data are shown in the table below and I have included the data for the US as a whole as well. 

The key point to note is that industrial energy intensity has decreased over the past decade for both NH and the US, however there was an impressive decrease in NH industrial intensity from 2004 to 2010. This was an almost 50% significant decline in the State's industrial intensity since 2004. I don't have a ready explanation for this decrease but it is surprising and warrants further review and continued tracking.

As usual, I have flooded you with data, charts and information and there is a lot more I could ply you with. At this time I have to leave you with only a partial understanding of why we have been able to reduce energy usage in New Hampshire. There is more to this picture and I too need to better understand why we have been able to decrease energy usage in New Hampshire since 2004 even though economic output, measured by GDP, has increased. I plan to do some more research and I will share my findings with you over the course of the next few months. Nevertheless, this is what we know so far:

• Our energy intensity on a per capita and a per GDP dollar basis has decreased steadily and our numbers are amongst the lowest in the USA.
• Most of our energy savings have come from reductions in industry energy usage and from commercial applications.
• The industrial energy intensity has been reduced by almost 50% since 2004.

What do you know and what can you contribute to this discussion? Feel free to leave a comment or send me an email.

Until next time, remember to turn off those lights when you leave the room.

Mike Mooiman
Franklin Pierce University
mooimanm@franklinpierce.edu
3/5/2013

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