Does Higher Energy Consumption Cause Greater Economic Output?

An old energy debate gets a new solar shine.

An old energy debate gets a new solar shine.

Let's start with a basic correlation: Rich countries use a lot more energy than poor countries on a per capita basis. Is this an accident? What kind of causal relationship exists between wealth and energy, if any? Does a strong economy require massive amounts of per-capita energy consumption? Many green tech advocates have taken the view that this is not the case. They think that energy use and economic output can be decoupled.

All kinds of studies have been done trying to prove that this is (im)possible. Take this one from Korea, for example, which showed no causal relationship at short time scales and the arrow of that causation running from higher GDP to more energy consumption at longer ones. Other studies have looked at the G-7 and China and found a very complex relationship between a country's economy and energy consumption. In some countries or time periods, there appears to be a causal relationship running one way, the other way, or in both directions. And sometimes that is not the case. The list of studies and counterstudies could go on and on. It's complicated.

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But most energy people I've met tend to have a hunch one way or the other. CEO Siva Sivaram of Twin Creeks Technologies is on the team that has the arrow running from energy to GDP. "Don't make power to meet the need," Sivaram tells me in the video above. "Make power available and then the needs will come."

In many ways, this is an older notion of the relationship between power and "progress" (I use the term carefully). Proponents of large power plants -- nuclear and coal alike -- used a similar set of arguments to enshrine their priorities on the American energy agenda throughout the 20th century. What makes Sivaram fascinating is that he's a solar guy with the same fundamental premise. He's saying, "Don't make [solar] power to meet the need. Make [solar] power available and then the needs will come." That's an uncommon combination. For some historical (and analytical) reasons, solar-power promoters tend to want to curb overall power usage. In the past, that was in part because solar-power production was such a tiny slice of the country's energy picture that any conceivable world running on solar would have to use a teensy fraction of the power Americans did in 1980.

Now, though, you've got 3.5 gigawatts of solar PV on the grid, according to new Energy Information Administration numbers. You've got the global south, where solar makes a ton of sense, growing quickly. You've got a whole industry that wants to grow.

It's not hard to see why the old-school solar evangelists now share their industry with people whose worldviews have more in common with 1950s utility executives than 1970s back-to-landers.