Patrick Kent
“Unleashing American Energy” is an executive order from President Trump encouraging more energy production as well as promoting consumer choice when it comes to goods and appliances. One provision is a pause on disbursement of certain funds appropriated through the Infrastructure Investment and Jobs Act (IIJA) of 2021 and the Inflation Reduction Act (IRA) of 2022 related to clean energy, electric vehicles and energy efficiency. On the campaign trail, the administration promised to eliminate energy efficiency standards for appliances, claiming that they result in inferior product choices for consumers.
While the merits and drawbacks of “clean” energy and electric vehicles can be debated, efficiency measures have on balance boosted economic growth. After the oil shocks of 1973 and 1979, energy efficiency efforts became a focus for government policy for the first time. President Gerald Ford signed the first energy efficiency law in 1975, the Energy Policy and Conservation Act (EPCA). The act established the first fuel economy standards, introduced energy efficiency ratings on appliances and created the Strategic Petroleum Reserve amongst other initiatives. Since that time, efficiency has been a continued theme in energy policy. By EIA estimates the energy consumption per capita in the US has decreased by 14% from 1970 to 2022 while the economy, as measured by GDP per capita, has increased by 144% during the same period.
In Biophysical Economics we break productivity gains down into the increase in energy available to the economy and the efficiency with which the energy is converted to useful work. That useful work is the production of goods and services that describe all of economic activity. Some of the energy produced and saved is invested into capturing more energy for the system. The energy available to the economy is therefore a function of the energy returns, either the energy produced relative to the energy used in its production (EROI) or the energy saved (ESOI) relative to the energy it took to capture the savings.