Energy is the
intricately related to social and economic development of a country. Most of
the infrastructures of development including transport, communication,
industries all require energy and the availability of energy plays an
fundamental role in determining the level of access general population have to
these amenities. Advanced countries use much as 5 to 6 times the average per
capita energy than in the developing nations. Many poorer nations suffer from
‘Energy Poverty’ where they lack access to energy required to sustain a proper
quality of human life. Providing higher amount of energy in the poorer nations
has a huge potential to raise their living standards. Building on this proven
correlation between energy use and development, we seek to answer if there is
an optimum level of energy use that is enough to sustain a high level of
quality of life and economic growth.
Human Development
Index (HDI) provides a comprehensive measure of quality of human life in a
particular country. It is a composite measure of health, education, income and
other components that provides an index for standard of living. HDI for each
country is plotted for its energy use (per kg of oil equivalent per capita)[1].
This metric gives an estimate of the amount of energy consumed per person. The
relationship is potted in the figure 1 below for each country for the year
2011.
.png)
Figure 1: HDI vs.
Energy Use (kg of oe per capita)[2]
for the year 2011
Figure 1 shows an
‘S’ shaped relationship between the HDI and the per capita energy use of a
country. It starts with group of countries that use less than 1500 kg oe per
capita with HDI less than 0.75. The group mainly includes developing countries
and emerging economies such as Algeria, China, Brazil, Panama, Ecuador. As the
energy use increase from 1500 to 2500 there is a linear growth in the HDI up to
0.90 which can be seen with countries such as Chile, Greece, Hungary. However
after around 2500-3000 kg of oe per capita energy use the HDI index starts to
flat off. The countries that use more than 3000 kg of oe are the more developed
and industrialized economies such as Germany, Denmark and others. All of these
countries have HDI greater than 0.9 however, their energy use ranges from 3000
to 8000. This shows that there isn’t much correlation between energy use and
HDI after 3000 kg oe per capita of energy use.
This has a great
significance to both the developing and the developed world. As the developing
countries increase their energy use, it is helpful to consider that there is an
optimum level of energy resource required to achieve growth. Policy makers can
plan for per capita energy use around from 2500 to 3000 kg oe which is enough
to sustain growth as shown in the figure. For energy intensive economies,
especially that are far right to the chart with countries such as Canada, Luxemburg
and US, it is important to realize that their economies might be using more
energy than required, and that there is big potential for energy efficiency and
energy reduction where the policy makers could focus on.
In addition to HDI
and energy use relationship, we could also consider the relationship between
energy use per capita and per capita Gross Domestic Product (GDP) based on
purchasing power parity (PPP). GDP PPP is more informative than GDP while
comparing different economies as it considers the purchasing power parity in
each country.
.png)
Figure 2: GPD PPP per capita vs. Energy use (kg of oil equivalent per
capita)[3]
for the year 2011
Figure 2 shows the
relationship between GDP PPP per capita and per capita energy use. Similar to
figure 1, it appears as a moderately ‘S’ shaped curve. There are significant
numbers of low income and developing nations clustered together who use less
than 2500 kg oe and have less than 15,000 GDP PPP. These countries include same
countries that appeared in figure 1. As the energy use increases from 2000 to
3500, we see an increasing linear relationship between energy use and increase
in GDP PPP. Within this particular range, the GDP increases from 20,000 for
Hungary to 40,000 for Switzerland. However the GDP PPP stays flat for any
amount of increase in energy use after 3500 of energy use per capita.
This follows on the
conclusion that we derived from figure 1, that higher energy use after 3000 per
capita has very little relation on the human development or economic growth. According
to the figure 2, per capita energy use of US stands around 7000 per capita,
which enables it to achieve GDP PPP of $45,000, but there is ample evidence
from other countries like Switzerland, Germany, Austria that US could get the
same level of GDP with energy use around 3500 per capita.
To better
understand the relationship between GDP PPP and energy use, one could take the ratio
of the two quantities. This ‘new’ metric tells you the amount of GDP PPP the
country achieved for each unit of energy spend. It is closely related to the
concept of energy efficiency, where the maximum benefit is achieved per unit of
energy. The comparisons between the countries are shown in Figure 3.
Figure 3: Ratio of GDP PPP per capita and Energy use per capita
Figure 3 differs in
that it shows how much capable the country is to turn each amount of energy
into GDP. According to the figure, Columbia ranks the top with the ratio of
13.23 which means that for each unit of energy use, Columbia was able to make
$13.23 on its GDP PPP. Other high ranking countries include Peru, Ireland,
Switzerland, Botswana, Panama with their ratio around 12. US ranks pretty low
with its ratio of 6.03 which is close to Czech Republic, New Zealand and
Malaysia. China scores pretty low at 3.65 along with South Africa and Iraq.
Turkmenistan is the lowest with the ratio of 1.7.
The figures above shows
any country that has energy access around 2500-3000 kg oe per capita increases
its chances of achieving high HDI and GDP PPP. That task however is monumental,
especially when 19% of the population does not have access to electricity and
38% depend on traditional biomass for energy[4].
Finding the right balance between energy use and growth is a challenge set for
both developing and developed economies and this data provides a valuable tool
for both to work with.
[1]
1 kg of oil equivalent (oe) = 11.63 kWh
[2]
Data visualization created through raw data available through UNDP and World
Bank data.worldbank.org
[3]
Data visualization created through data available through World Bank
data.worldbank.org
[4]
International Energy Agency http://www.worldenergyoutlook.org/resources/energydevelopment/globalstatusofmodernenergyaccess/
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