Poverty and Energy

By Andy May

Poverty and access to energy are closely related. Although it probably isn’t possible to show that access to energy is the key reason so many have been lifted out of poverty in recent decades, the data and logic suggests that this so.  In the United States, the average person uses about 300 million BTUs of energy per year according to the EIA.  This is equivalent to the manual labor of 69 healthy people working hard for 6 hours per day.  Worldwide, the average person uses 73 million BTUs, the equivalent of 16 hardworking people.

Prior to the industrial age, which began with the first practical coal- and wood-fired steam engines between 1712 and 1776, slavery, bonded servants and serfs were common, this group made up over 90% of the world’s population in 1800.  For a few people to live well they needed lots of servants and domestic animals to do the manual labor for them.  Now, in the age of electricity, petroleum and nuclear powerplants, most manual labor can be done by machines.  No longer do a few wealthy people live from the labor of others, everyone who has access to energy can live well.  Before the industrial age, nearly everyone was extremely poor as seen in Figure 1, today fewer than 10% are extremely poor.

         Figure 1.  The percent of the population in extreme poverty (income of less than $1.90 per person per day or about $2,774 per year) in 2011 PPP (purchase power parity) dollars is shown in orange with the scale on the right. Total fossil fuel consumed, in Terawatt-hours (one terawatt is 1×1012 Watts) is shown in blue with a scale on the left.  The data on extreme poverty and fossil fuel consumption was downloaded from ourworldindata.org by Hannah Ritchie and Max Roser. The early data is from (Bourguignon and Morrisson 2002) and the later data from the World Bank.

While over 90% of people lived in extreme poverty for most of 19th century, extreme poverty has since been completely eradicated in the western world and is disappearing at a rapid and accelerating rate in the third world. Figure 2 shows the number of people living in extreme poverty for several selected areas and the whole world.  The United States, the European Union and Canada are not plotted because no one in those countries is living in extreme poverty.

Figure 2. The number of people in extreme poverty in selected areas and for the whole world. Downloaded from ourworldindata.org, data collected by the World Bank.

 

The only significant increase in the number of extremely poor in Figure 2 is in sub-Saharan Africa and this increase has flatten considerably since 2010.  Most of the remaining very poor live in China, India and Africa.  The very poor typically have no indoor, improved, running water or sanitary facilities, no electricity, what shelter they do have is in poor shape, they have no access to transportation and often no schools.  Their energy is from burning wood, coal, or dung, indoors and without proper ventilation. This is the primary reason over four million people die of indoor air pollution each year according to the World Health
Organization.

In this post, we use the World Bank Organization’s definition of extremely poor, which is an income of less than 2011 PPP$1.90 per day per person.  PPP$ are purchase-parity US dollars, they are corrected for the differences in the price of essential goods from country to country.  This amount seems different than the classical definition of $1/day previously used, but since that was in 1996 dollars and the new definition is in 2011 dollars they are nearly the same.  In 2011 dollars, any family of four is extremely poor if their total income (technically their total consumption, which includes charity) is less than $2,774 per year.
Homi Kharas in a Brookings Institution 2017
white paper entitled “The unprecedented expansion of the global middle class” has estimated that 140 million people are joining the world middle class annually and the number appears to be growing each year.  At the end of 2016, there were 3.2 billion people in the middle class, an astonishing number, this is over 42% of the Earth’s population.  Kharas defines the world middle class as a family of four earning more than $16,060 per year and less than $160,600 per year in 2011 PPP$.

The World Bank calls the group between extremely poor and the middle class (those who live on $1.90/day to $10 per day) “low income.”  This group is growing rapidly also. By way of contrast, the poverty definition in the United States for a family of four is an income below $24,339 per year, not including the value of free food, free medical care and housing assistance.  Taxes in the United States rise rapidly with income, yet the higher taxes are not taken into account when comparing the income of the U.S. defined “poor” to the income of higher earners, this radically distorts the measurement of inequality (see this report by John Early for more details). By world standards, a family with this much income is solidly upper-middle class. But, “poor” people in the United States have cell phones, cars, apartments, running water, sanitation, access to
schools, and disposable income nearly equal to the U.S. low income and middle-class groups.  These are items only the middle class and more affluent have in less developed countries.

The correlation between the reduction of extreme poverty and total fossil fuel consumption is very enticing in Figure 1.  Figure 3 shows the relationship using data from 1820 through 2015.  The data was downloaded from ourworldindata.org.  The early energy data shown in Figure 3 is from Vaclav Smil’s book Energy Transitions: Global and National Perspectives (2nd edition) (Smil 2017) and the later data is from the BP Statistical Review of World Energy here. The poverty data is from (Bourguignon and Morrisson 2002) and the World Bank.

 

Figure 3. Total fossil fuel use is on the X axis and the percent extreme poverty of total world population is on the Y axis.  The relationship is strong with an R2 of 0.99.  Other sources of energy, such as hydroelectric or nuclear were ignored since they were invented late in this period, which covers 1820 to 2015.  The relationship suggested by the regression is that extreme poverty is reduced by 1% for every 1,628 TWh increase in global fossil fuel use.  The regression is significant at an F of regression of 3.7×10-21, that is much higher than 99.999. There are 23 values plotted and used in the regression. The data on extreme poverty and fossil fuel consumption were downloaded from ourworldindata.org by Hannah Ritchie and Max Roser.

Figure 3 does not prove that the level of extreme poverty was reduced due to the increased use of fossil fuels, but it shows they are strongly related and that the use of fossil fuels might have been the main reason for the reduction in poverty.  Energy use and poverty are unevenly distributed in the world today.  Figure 4 shows the global distribution of total energy use.

Figure 4. Energy use in the world, data and plot from ourworldindata.org by Hannah Ritchie and Max Roser.

 

As we would expect, Figure 4 shows that the wealthier countries use much more energy than the poorer countries.  When total energy used is plotted against GDP in 2011 constant international dollars, we get the plot in Figure 5.  This is a plot of data from 211 countries and regions.  The data was downloaded from
ourworldindata.org and gathered by the United Nations, IEA and the World Bank.

Figure 5. Plot and regression of GDP per capita in constant international 2011 dollars versus energy use in kg of oil equivalent. There are 212 countries and regions plotted, the points are the average for the period 1990 to 2014. Data downloaded from ourworldindata.org by Hannah Ritchie and Max Roser.  Original data sources are the IEA and the World Bank.

 

Figure 5 plots primary energy used per capita versus GDP per capita.  The points are the average annual totals for both values from 1990 to 2014. The correlation isn’t great, but acceptable, the F of regression is significant at the 1.4×10-67 level. This suggests the two values plotted are strongly related and that for
every kg of oil equivalent consumed per person we can expect GDP to grow an average of 53 cents per person over the period from 1990 to 2014 in 2011 PPP$.  There are 140 kg of oil in a barrel, which costs about $68 today (roughly $63.50 in 2011$) or 45 cents/kg.  The same values can be viewed in the time
dimension as shown in Figure 6.

Figure 6.  Over the years with data, energy use and GDP show the same trend in some detail. Original data sources are the IEA and the World Bank.

 

The correlation seen in Figure 5 is also visible in the data plotted in Figure 6.  In Figure 7 we compare worldwide energy used per capita to GDP per capita, but each observation is a year, rather than a country or region like in Figure 5. Remember that in Figure 5 we simply averaged the data from 1990 to 2014, in
Figure 7 the years are plotted separately.

Figure 7.  Worldwide energy used in kg of oil equivalent versus GDP in constant international 2011 dollars.  Each observation is one year (1990-2014). Original data sources are the IEA and the World Bank.

The R2 has improved over Figure 5 with this yearly view. Even though we have 25 observations in this regression versus 212 in Figure 5, the F statistic of the regression is significant at 1.2×10-12.  As people move from poverty to the lower and middle classes they use more energy, which is why the energy growth is
concentrated in Asia and the Pacific as seen in Figure 8.


Figure 8.  Energy consumption in the world by region. From ourworldindata.org by Hannah Ritchie and Max Roser. Original data sources are the IEA and the World Bank.

In Figure 9 we see the fossil fuel data for selected countries and regions.  Clearly, while fossil fuel use is declining in the EU, OECD and in the U.S., it is increasing much more rapidly in Africa, China and India.  This is partly because many more people live in Africa, India and China; but also because of the rapid decline in extreme poverty in the third world.  As people come out of poverty they use more energy, they use it for essential things like clean water, sanitation and healthy food; but also, for luxuries like cars, air conditioning,
heating and cell phones.

Figure 9. Fossil fuel use for selected countries and regions. Data downloaded from ourworldindata.org, collected by the IEA.

Per dollar of GDP, low-income people use more energy.  But, when their income rises, they use energy
more efficiently, this can be seen in Figure 10. The figure shows the GDP per energy used ratio for low-income and high-income countries.  This may be because high-income countries have their energy distribution infrastructure in place and low-income countries are still building theirs.  Until the
infrastructure is in place energy delivery is expensive and less reliable.

Figure 10.  Energy efficiency expressed as GDP/energy used for both high-income and low-income countries. Data downloaded from ourworldindata.org, collected by the IEA.

China is well along in their energy infrastructure build-out and as can be seen in Figure 9 the rapid growth in their fossil fuel use has leveled off after a very rapid increase from 2002 to 2013.  Coal is the most popular fuel for generating reliable electricity by far.  Coal, regardless of what you may hear from the blathering news media, still produces 40% of the worlds electricity, see Figure 11.


Figure 11.  Coal is the largest primary fuel for making electricity in the world today and for the foreseeable future.

While worldwide coal use dropped from 2013 to 2016, it increased in 2017. It is expected to remain the dominant primary energy source for electricity through 2030 by ExxonMobil and the IEA.

Figure 12 shows that during the build-out of the Chinese energy infrastructure coal use skyrocketed in the country.

Figure 12. Coal consumption in selected countries. Data downloaded from ourworldindata.org.

 

Africa, a continent with limited energy infrastructure, but over a billion mostly poor people, shows very little change from year-to-year.  India’s coal use is beginning to pick up and looks like China 25 years ago.  India has huge coal reserves, the fifth largest in the world and over a billion people, mostly very poor.  The country is advancing economically very fast and since access to reliable electricity is vital to a robust economy, it
may follow the path of China.  India’s commitment to reduce CO2 emissions and coal use in the Paris agreement is as a percent of GDP (energy efficiency) so if they follow the normal course of infrastructure development, like China did, they meet their commitment, but their CO2 emissions increase.

Electricity is somewhat wasteful because only 28% of the primary energy used to generate it is delivered in a useable form to the consumer (EIA 2012), but electricity is none-the-less essential for water and sanitation facilities, hospitals and communications.  For these reasons and many more, access to electricity is vital for economic growth and reducing poverty as seen in Figures 13 and 14.

 

Figure 13.  Plots of per capita GDP and percent of the population with access to electricity by year for the world. Data downloaded from ourworldindata.org.

 

Figure 14. The correlation between the percent of the population with access to electricity and per capita GDP for the period 1990 to 2014. Data downloaded from ourworldindata.org.

Like fossil fuel use and total energy use, use and access to electricity is very closely correlated with prosperity. Due to the importance of electricity for creating and delivering clean water, proper sanitation and
health care, it is also vital for a population’s health.

 

Conclusions and Discussion

The correlation between access to energy, especially electricity, and economic prosperity is very strong.  This strong correlation suggests, but does not prove, that available, affordable energy is essential for reducing
poverty.  It also suggests the opposite, that withholding energy from a population will lead to more poverty.  Other factors can cause poverty, government corruption, runaway crime, and war are examples; but surely access to affordable energy is a critical component of economic prosperity.

In 1990 there were about 2 billion people living in extreme poverty, this has now been reduced to less than 700 million.  Currently over 200,000 people move out of poverty and into the lower or middle class every day.  Income inequality in the world is lower today than at any time in the history of humankind.  Even in the United States, inequality has been lowered substantially; regardless of what is seen in the news media.  Phil Gramm and Robert Ekelund have even speculated that it was the rising equality between working people and welfare recipients in the U.S. that led, in part, to the election of Donald Trump as President, from their June 24, 2018 op-ed in the Wall Street Journal:

 

“The new analysis [(Early 2018)] was published in April by the Cato Institute’s John F. Early, a former assistant commissioner of the Bureau of Labor Statistics, and it provides the most comprehensive accounting to date of how taxes and government payments affect income distribution in the U.S. His study includes the roughly $1 trillion of annual government spending not currently counted in the U.S. Census Bureau’s income-distribution tables. That includes Medicaid, food stamps, the earned-income tax credit, and 85 other federal payments and services, along with similar state and local income supplements. The study also subtracts federal, state and local taxes from individuals’ measured income, an adjustment not contained in the census data.

The most surprising finding is the astonishing degree of equality among the bottom 60% of American earners, generated in part by the explosion of social-welfare spending and the economic and wage stagnation during the Obama era. Hardworking middle-income and lower-middle-income families must have recognized that their efforts left them little better off than the growing number of recipients of government transfers. The perceived injustice of this equality helped drive the political shift among blue-collar workers, many of whom supported the pro-growth candidacy of Donald Trump in 2016 despite having voted for Mr. Obama in the two previous presidential elections.”

Due to the steep increase in the tax rate with rising income and the large size of government payments to the bottom quintile of the U.S. population, the study by John Early found that while the bottom quintile earned only 2.5% of all earned income, they have virtually the same share of spendable income as the second quintile.  Middle income workers earned almost six times what the bottom quintile earned, but only had 20% more spendable income.  They conclude this basic unfairness to the working class was noticed by the public and played a large role in electing the President.

Judge William Alsup, a United States District Judge in California, recently dismissed a lawsuit by several California communities against a number of oil and gas companies.  The California communities were seeking damages against a potential future rise in sea level that they claim is due to carbon dioxide emissions from burning oil and gas.  In that judge’s opinion (text here) he states the thesis of this post reasonably well:

“With respect to balancing the social utility against the gravity of the anticipated harm, it is true that carbon dioxide released from fossil fuels has caused (and will continue to cause) global warming.  But against that negative, we must weigh this positive: our industrial revolution and the development of our modern world has literally been fueled by oil and coal.  Without those fuels, virtually all of our monumental progress would have been impossible.  All of us have benefited. Having reaped the benefit of that historic progress, would it really be fair to now ignore our own responsibility in the use of fossil fuels and place the blame for global warming on those who supplied what we demanded?  Is it really fair, in light of those benefits, to say that the sale of fossil fuels was unreasonable?”

The judge makes the point that we cannot condemn fossil fuels, especially coal, or outlaw their use, without also considering the consequences of the actions.  Restricting or eliminating fossil fuels, or even increasing their cost, will almost certainly slow the reduction of poverty in the world or even increase the level of poverty.  Is this fair?

 

Works Cited


Bourguignon, François, and Christian Morrisson. 2002. “Inequality among World Citizens: 1820-1992.” The American Economic Review 92 (4). http://piketty.pse.ens.fr/files/BourguignonMorrisson2002.pdf.


Early, John. 2018. Reassessing the Facts about Inequality, Poverty, and Redistribution. CATO Institute, CATO Institute. https://object.cato.org/sites/cato.org/files/pubs/pdf/pa-839-updated.pdf?mod=article_inline.


EIA. 2012. “Electricity’s share of U.S. delivered energy has risen significantly since 1950.” Today in Energy,
March 2. https://www.eia.gov/todayinenergy/detail.php?id=5230.


EIA. 2017. “What is U.S. electricity generation by energy source?” https://www.eia.gov/tools/faqs/faq.php?id=427&t=3.


Smil, Vaclav. 2017. Energy Transitions, Global and National Perspectives. Santa Barbara: Praeger.
https://books.google.com/books? l=en&lr=&id=X2doDQAAQBAJ&oi=fnd&pg=PP1&dq=Energy+Transitions:+Global+and+National+Perspectives+(2nd+edition)+&ots=sdzvQtrjOU&sig=CleGMY22BPMcJrOAbgbJJ1Wp-Vo#v=onepage&q=Energy%20Transitions%3A%20Global%20and%20National%20Pe.

 

 

 

 

 

 

 

 

 

 

 

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71 thoughts on “Poverty and Energy

  1. Good article. The misanthropy of the greens is one reason they oppose development and energy.

    • The “greens” are willing to do absolutely anything to the natural world if it hurts people.

    • Yep. Right. Greens hate people. Every one of those who care about the environment want to keep poor people poor and don’t want development. And conversely, those who don’t care about the environment are humanitarians, lining up to help the people in Burudi and Ghana and Djibouti get out of poverty, and getting their Congressmen to support billions in aid to build schools and infrastructure and power plants and transmission lines in the third world. Because they love people, and greens hate them.

      Environmental degradation and sustainable use of natural resources play no role in poverty, of course. And climate change?! Get serious! People will have endless bounty due to CO2 fertilization. Heck, it’s greening the planet, so they must have lots more nutritious food already (apart from areas of floods and droughts, anyway).

      /sarc

      • Your idea of sarcasm makes me sad for you, Kristi.

        You really should embrace the truth of many misanthropic intentions within the CAGW coalition. Then you’d be a much more wary consumer of news and information, and also a much more wary promoter of certain so-called “solutions.”

        • Oh, but I am wary! I know I have to be wary of what WUWT feeds me.

          Embrace the truth of misanthropic intentions within the CAGW “coalition”? Who are they? What makes them misanthropic? Did they force nearly every country in the world into the Paris Accord?

          One could just as easily make the argument that skeptics are misanthropic because they don’t want to help supply villages with solar panels so at least they have some electricity, but instead want to make them wait until they have access to and can afford electricity from fossil fuels. “Cheap” energy is relative. Nor do skeptics want to make any sacrifices to help impoverished people adapt to climate change or mitigate its hazards. Oh, I know the arguments: AGW is a fantasy, with no evidence to back it up. CO2 is good for everyone. Science is corrupt. Models are useless. Warming is good. On and on it goes, any and every excuse to disbelieve whatever science doesn’t fit the dogma and believe whatever supports it. Any excuse to blame, ridicule and vilify those who are concerned about climate change.

          No need to be sad for me.

          • Silber:
            Climate change has been all good news so far:
            (1) Greening of our planet, and
            (2) Warmer nights in the colder, drier latitudes,
            mainly in the northern half of the Northern Hemisphere,
            where warmer nights are good news.
            .
            The only bad news from climate change so far
            is in the wild imaginations of silly leftists,
            like you.
            .
            I am sad for you because you have been
            brainwashed to believe wild guess predictions
            of the future — wrong for 30 years so far —
            rather than observing reality.
            .
            You must also believe that the wild guess
            predictions of the future climate
            are real science — they are not, especially when they
            predict triple the warming that actually happened,
            and predict Antarctica warming that has not
            happened since the 1970s.
            .
            CAGW is a fantasy.
            .
            AGW is an assumption.
            .
            97% of climate models are wrong,
            therefore they ARE
            nothing more than
            useless computer games.
            .
            The only model that seems to work
            is a Russian model — that model
            must be in collusion with
            President Trump !
            .
            You are so clue-less about climate science,
            because you believe wild guesses of the
            future climate, and predictions of doom,
            are real science !
            .
            Our planet has already warmed at least
            +2 degrees. C. since the cold decades in
            the late 1600s, during the Maunder Minimum,
            possible + 3 degrees C. — and that was
            good news for the people on our planet
            — people complained bitterly about those cold decades,
            and there were several famines too.
            .
            But never mind real science, and anecdotes of
            climate in prior centuries — you have your
            government bureaucrats with science degrees,
            and every year for three decades, they have
            predicted rapid warming (with their models)
            that does not happen.
            .
            Continue to trust the government, Silber —
            because bureaucrats can predict the future,
            unlike ordinary people, and
            they would never lie to you,
            or anyone else!
            .
            My climate change blog
            for objective people:
            Over 18,000 page views so far
            http://www.elOnionBloggle.Blogspot.com

  2. Figure 1 is a ‘hockey stick’ graph with profound impact.
    More low cost energy = Less Poverty!

  3. I am still not convinced by the arguments that CO2 has produced any significant harm…or warming.

  4. Consider food production. In a nation with cheap available energy, a farmer can employ a tractor, combine, weed sprayer, fertilize spreader, hay rollers, front loaders, etc., which are made using large amounts of energy. This allows a single farmer to produce several dozen times the food a farmer in a nation with little or no energy supplies.
    Fact of life: energy is life; cheap energy is prosperity.

      • Corruption, socialism and rampant crime did them in. I live near Houston, which is where nearly all of the petroleum engineers, that used to work for PDVSA, now live. They were offered $750/month by Hugo Chavez to keep PDVSA working. They said no, moved to the U.S. where they make well in excess of $10,000/month to keep our oil and gas fields working. In the meantime, Venezuela’s oil and gas fields broke down. The oil is there, they just can’t get it out. Corruption and stupid laws, plus selling gasoline for 17 cents a gallon, ruined their economy. Making energy expensive isn’t the only way to send a country into poverty. Humans are very creative.

        • “classic example of what socialism does to an otherwise prosperous and energy rich nation”
          What about Norway, quite socialistic with abundant North Sea oil/gas and hydro power, yet high living standards?
          There are other factors — like stupidity.

          • Do you disagree that socialism has destroyed Venezuela’s economy and left her people impoverished?
            A classic example of socialist ‘like stupidity’.

            “Yabut wattaboutthisorthat?”
            It is just a matter of time until the socialist parasites cripple the wealthy and healthy host country.

          • Socialism is defined as a system where the means of production and all property are owned by the government. Thus, Venezuela and Cuba are good examples. Strong private property laws and personal freedom laws are antithetical to socialism. By that measure Norway is very free and not socialistic. See the 2017 Human Freedom index.

          • “Socialism is defined as a system where the means of production and all property are owned by the government.”

            Funny, I thought it was defined as liberalism. Where did I get that idea?

      • It may be cheap, but it can’t be had at any price.

        Like everything else in Venezuela energy is severely rationed.

        • Mark W.
          I remain unconvinced that, in Venezuela today, stupidity – even criminal stupidity – is rationed.
          There may be limited amounts [although almost – a l m o s t – unlimited amounts] of stupidity, and perhaps a little electoral chicanery.
          But rationing of stupidity?
          It flows, flood-like, across a once-lovely country.

          Auto

          Perhaps you can enlighten me on this.
          Thanks.

          Auto

  5. While I appreciate the many good charts,
    your conclusion, below, does not make sense.
    .
    “The correlation between access to energy,
    especially electricity, and economic prosperity
    is very strong. This strong correlation suggests,
    but does not prove, that available,
    affordable energy is essential for reducing
    poverty.”
    .
    My comment:
    It takes a lot more than affordable energy
    to create economic growth and prosperity.

    If you think cheap energy is the “solution”
    to poverty, then the US and other developed nations
    should ship as much coal as they possibly can
    to all the African nations — no charge —
    and in a few decades the piles of coal will be magically
    transformed into a prosperous continent !

    Or maybe not.
    .
    My climate blog:
    http://www.elOnionBloggle.Blogspot.com

    • The conclusion is worded correctly. You say: “It takes a lot more than affordable energy
      to create economic growth and prosperity.” I agree with this. Access to available and affordable energy is essential, but energy alone will not make one prosperous. I’m reminded of the old saying money cannot buy happiness. This is true, of course, but try and be happy without any.

    • Set up your straw man argument… and knock it down.
      Andy’s quote specifically states ‘..especially electricity..’ as the most important form of energy driving prosperity. Not heaps of coal. Not pools of oils. No need to invoke magic.

      Access to abundant low cost electricity drives economic prosperity, dramatically improves personal hygiene and sanitation, and reduces poverty.

      • J Mac
        If people in this world
        still do not have electricity today,
        then there is something wrong with them,
        that will not be solved, IMHO
        merely by giving them piles of coal
        and even building coal-fueled power plants for them.
        .
        What’s “wrong” with them could be just about anything,
        but I believe the lack of electricity
        is a symptom, not that main problem.
        .
        I’ll be kind, and just assume
        many people without electricity
        live in a hot / dry climate,
        with little / poor farmland
        — situations that stand in the way of
        their productivity.

    • We should help them build coal fired power plants. Coal is pretty cheap these days. A cheap reliable source of energy would do a lot.

      • The Chinese are already doing that. And they will benefit from better trade relationships with these countries once they are no longer poor.

  6. Andy,
    Figure 14 is a strange graph. It implies that in 1983 (and about 1985) , there were three distinct values for World per Capita GDP. I think that this needs some explanation.

      • Interesting chart.

        I spend some of my time in Kyrgyzstan. That is a really poor country and they have 97% electrification of homes. The chart X axis doesn’t even go that far to the right so there are no dots for the Kyrgyz or Kazakh or Tajik people on the bottom right. Money isn’t everything. The truth is nowhere near an R squared of 95%. Using a ‘global’ number set is very misleading as it doesn’t not represent the relationship between GDP and electrification. Weird, huh? The chart may not lie, but it misrepresents.

      • I wish I’d paid more attention to the article when it was first posted, as few are likely to see my comment. The article has many problems, IMO.

        One qualm I have with graphs 3,5,7 and 14 is that Andy uses a regression rather than a correlation. Linear regression assumes that the variable on the y axis is “dependent on” or “predicted by” the (independent) variable on the x axis, but that is not necessarily the case here – that is what he is trying to show, which makes the argument circular. Fig. 5 also appears to violate the assumption that the residuals have a normal distribution. Perhaps a logarithmic transformation would help. Another issue with fig. 5 is that both regions and countries are plotted, which means that data are counted twice.

        Even with Andy’s “fix” to fig. 14, having each observation represent a year violates the assumption of a regression if there is autocorrelation between years, which seems likely. Fig. 7 is a good illustration of the problem of applying a trend line to the data, since the observations are more scattered. Compare that with another graph that uses years as observations:
        https://ourworldindata.org/wp-content/uploads/2017/10/Oil-prices-vs.-consumption.png It would clearly be wrong to associate any trend with such data, although it may be tempting to do so if looking only at points beginning in the mid- 1990s. This graph also illustrates that fuel prices are affected by political and social factors that are impossible to predict (as opposed to energy from the sun, although that could theoretically change, too, if climate change alters cloudiness).

        Since the idea is that there is a relationship between individual poverty/prosperity and energy use, another problem is the assumption that per capita GDP reflects individual income. Where there is a wide disparity in personal income or a large proportion of the GDP is kept and used by the government, this assumption is not met. A very high income and resource use in just part of the population could skew the data. Fig. 7 illustrates this problem: the lowest GDP per capita graphed is $12,000, which is higher than many (or most?) individuals ever see.

        In figure 14 Andy appears to compare the average percent of the population with access to electricity for the years 1990-2014 against the GDP of a single year, 2011. Where an energy transition falls within the time frame (if it does) could significantly impact the results, especially since 2011 falls near the end of the time period. There would also presumably be a lag time between providing the whole population with access to “energy” (electricity) and a rise in GDP. …And this remark suggests yet another issue: total energy use of a country could rise without any increase in percent access to electricity whatsoever. For instance, you could see an increase in energy use that only affects those living in urban areas. Their prosperity could lead to things like vehicle purchases, air conditioning, and increased manufacturing (leading to increases in energy use for transport through a rise in trade) while very little of it filtered down to the rural poor. As I understand it, China is a good example.

        Andy, referring to fig. 3: “Other sources of energy, such as hydroelectric or nuclear were ignored since they were invented late in this period, which covers 1820 to 2015.” Just because these sources of energy did not exist for the whole period is not a reason to ignore them if one is trying to get at the relationship between energy use and poverty. Hydropower is not new, and in 2016 accounted for 1/4 of all renewable energy sources, which also includes traditional biofuels, “fuelwood, forestry products, animal and agricultural wastes.” These account for 60-70% of all renewable energy sources. https://ourworldindata.org/renewables Andy evidently is not trying to look at all energy, but only at fossil fuel use. There is nothing wrong with doing that, but he should be clear about what his thesis is.

        In figure 3 what do the observations represent? There are 23 points, yet is covers the period from 1820-2015. The data are also from multiple sources, and this could be problematic, especially in the case of poverty. Is “poverty” defined the same in both sources? Andy should have discussed this. (“Data” is plural!)

        It’s a nice effort, but there are too many shortcomings in the statistical analysis and, more importantly, in the reasoning. Whether or not he’s right, he doesn’t make a convincing argument. This is far too common in skeptics’ arguments on WUWT, resulting in a weak case against the idea that AGW is a fact and a problem – not to mention the fact that energy policy is such a huge topic here, which could easily prejudice the evaluation of climate science.

        …………………………………..

        Apart from what is discussed in the article, I found interesting the estimation of how long fossil fuel reserves will last, which is plotted on the same site (though evidently not the same page, which Andy doesn’t provide) from which Andy got his numbers: both oil and natural gas reserves are expected to run out within 50-60 years, “reported as the reserves-to-product (R/P) ratio which measures the number of years of production left based on known reserves and annual production levels in 2015. Note that these values can change with time based on the discovery of new reserves, and changes in annual production.” Also highly relevant to the discussion is a graph of the price fluctuation of fossil fuels over time (“Average global prices of oil, natural gas and coal, measured as an energy index where prices in 2000=100.”) Coal, for example, has an index of about 84 in 2002 and 410 six years later. https://ourworldindata.org/fossil-fuels The volatility of fossil fuel prices could have a significant impact on how economical that energy is compared to renewables. Simply saying, “coal is cheap energy” ignores this as well as the investment necessary to provide access to the energy coal can provide. It is essential to differentiate between how much renewable energy costs in countries that already have the infrastructure in place to make use of fossil fuels vs. those that have large populations lacking (dependable) infrastructure (refrigeration doesn’t do much good if you can’t count on uninterrupted power supply!).

    • Clyde, et al., I changed the graph to make it more clear that it is GDP versus percent of the population with access to electricity. Hopefully, that removes any confusion.

      • Andy,
        Thank you for the update. The new graph is mathematically palatable. Lines connecting the dots should not be used with scatter plots. That was why I assumed the X-axis was years. A line used with time-series is perfectly reasonable, but multiple ordinate values for a given date needs explanation.

  7. But really, we ought to toss all this out because it makes greenies feel so good about themselves by passing crippling and useless legislation.

  8. This economic argument is valid indeed. It is the essence of the book “The moral case for fossil fuels.” (recommended)

    I believe we are losing a trillion dollars a year from the fight against fossil fuels, and a lot of human life.

    But we are LOSING by relying on this argument. Humans are properly a major measure of morality–but the rest of the biosphere matters,too. If the biosphere gained and money lost, the greens would be right. But before all the screaming began in the 1990’s, paleogeology was a real science–that is, it was driven by a search for truth, whatever the result might be. In those days, the term for a warm period was “climate optimum.” We would be wise to use this term as much as possible, making it clear that we mean a warm period.

    The alarmism is, in fact devastating to the nonhuman biosphere. Carbon dioxide is the basis of ALL life. And warmer temperatures are BETTER. This is under considerable threat from decades of howling alarmism: action will be taken sooner or later to cool the Earth, with resulting loss of human and nonhuman life, and of biodiversity.

    Another reason we keep losing is by being suckered into the us v. them mentality: we are right and they are wrong. That may be so about temperatures, but people simply do NOT often admit they were wrong. We have to make them right. And (some of) the greens are RIGHT where it counts most: they are fighting for Restoration Agriculture (the book of that name is superb), Cows Save the Planet, by Judith Schwartz and Permaculture. These aim to restore the carbon content of the soil. That will increase food abundance AND biodiversity and the well-being of the biosphere.

    This site and other climate sites are heavy on data about physics, and physical phenomena such as clouds. But the real point of it all is Life.

  9. Great article! If the message from the greenies was changed from “we want to save the planet for you” to “we want you to stay poor”, the reaction from people in poor countries would be much different.

    It also seems like China and India are ignoring the greenies’ message anyway–they want to be more prosperous.

  10. Does anyone have access to data which show the correlation between energy available per caput and year and per country and the respective life expectancy? The (putative) negative correlation might disclose the real agenda of the green mafia, i.e., reduction of the world population.

    Rainer Facius

      • Thank you, Andy.
        Your graph shows the trend until the beginning of the 20th century with the expected trend. Since then life expectancy in developed countries grew by another decade or probably two. Anyway, does your book give the references to the data which you used for this graph? And, question number two, can you point to sources where corresponding data for the last 100 years are available? UNDP? Life expectancy versus GDP would be an intermediate source.
        Rainer

  11. Correction: Of cause do I expect a positive(!) correlation between available energy and life expectancy!

  12. GOALS UNITED NATIONS:
    Goal 1: End poverty in all its forms everywhere
    https://www.un.org/sustainabledevelopment/poverty/

    Goal 2: End hunger, achieve food security and improved nutrition and promote sustainable agriculture
    https://www.un.org/sustainabledevelopment/hunger/

    WR: Goals number 1 and number 2 are achieved by the use of fossil fuels. Incomes can rise much faster and because of the ‘greening’ of the planet by the increasing ‘plant food CO2’, crops are yielding tenths of percents more, halving food prices for the poor. There is no better way to reach goal 1 and 2 than by the use of fossil fuels.

    You would expect an intense discussion within the UN between pro and contra CO2 groups. So far, I only hear the environmental ‘contra CO2 groups’ of the UN’s IPCC and I don’t hear at all the groups that are defending goal 1 and goal 2. Which raises doubts about the well functioning of the United Nations, as most UN countries have profit by reaching goal 1 and goal 2. Even Western countries.

    Why isn’t there an open discussion within the United Nations about the [proved] pro’s and [eventual] contra’s of the use of fossil fuels? Why is only one organisation within the UN (the IPCC) dominating the voice of the United Nations’? What is wrong???

  13. Great article, just one complaint: you glibly incorporate the WHO claim of indoor combustion particulates affecting mortality. The stats produced by WHO have been gamed. Check out the work of Steve Malloy at Junkscience.com for additional details, and investigate the source of the claim yourself

  14. This is like “Wall is white and cow is white, and therefore cow is wall or wall is cow”. World over energy use is concentrated towards rich on one side and on the IT/computer use on the other.

    Dr. S. Jeevananda Reddy

  15. It is important to be careful when drawing causality from correlation. In this case there are many factors that correlate, and the main one that inversely correlates with poverty is economic development. Richer economies have a lower rate of poverty. Of course richer economies also consume more energy. Energy is one of many inputs to economic growth, although a very important one, together with capital, knowledge (education), and labor. Other factors are less easy to spot, like an adequate legal frame, social stability, or low level of corruption. An adequate demography is also very important.

    Just by offering cheap energy to a country doesn’t mean that it can take it and improve its economy. Asia did, but most of Latin America or Africa did not. The rest of the factors to develop the economy weren’t there, and it is the growth of the economy what drives the demand for energy, not the other way around.

    Of course cheap, abundant energy makes the economy run better, and it is by itself an stimulating factor, but only to a certain extent. Without capital, skilled abundant labor, and know-how, the economy won’t increase by much no matter how cheap and abundant is the energy.

    Besides, fast rates of growth are by themselves unsustainable on the long run. Sooner or later they decrease, like in Japan, or now most of the OECD. Exercises in extrapolation are fun but to be accurate they require knowledge on how the variables might change over time.

    https://imgs.xkcd.com/comics/extrapolating.png

    • Javier, I don’t disagree with what you wrote. I’m also not claiming that access to energy causes prosperity. What I think is that access to energy is essential to prosperity. See the difference? Money doesn’t cause happiness, but try to be happy if you don’t have any? Many other factors are important, as I wrote in the post, but all of them together will not get you there without energy.

  16. “This strong correlation suggests, but does not prove, that available, affordable energy is essential for reducing
    poverty. It also suggests the opposite, that withholding energy from a population will lead to more poverty. Other factors can cause poverty, government corruption, runaway crime, and war are examples; but surely access to affordable energy is a critical component of economic prosperity.”

    You can post all the graphs you want about poverty and fossil fuel use. Correlation is not causation. Even so, in this case I think it’s far more probable that as people have more income, they have more access to energy, and use more of it. Access to energy and the energy itself are both costs. How are those in extreme poverty supposed to afford the energy that would help them out of poverty? Transmission lines and coal plants don’t just appear, and corrupt governments don’t provide energy out of the goodness of their hearts. Even good governments don’t to do so. The whole thesis here is backwards.

    “Even in the United States, inequality has been lowered substantially; regardless of what is seen in the news media.”

    I’d like to see the evidence for this! Are you talking about “the study by John Early found that while the bottom quintile earned only 2.5% of all earned income, they have virtually the same share of spendable income as the second quintile”? Does this include retirees and the disabled? That could have a dramatic impact on earned income. It still doesn’t say anything about income equality, though, unless it addresses the upper end of the scale.

    What about unearned income among the wealthy? I wonder how that compares to government handouts.

    And how about wealth as a measure of inequality, rather than income?

    “Wealth — the value of a household’s property and financial assets, minus the value of its debts — is much more highly concentrated than income. The best survey data show that the share of wealth held by the top 1 percent rose from just under 30 percent in 1989 to nearly 49 percent in 2016, while the share held by the bottom 90 percent fell from just over 33 percent to less than 23 percent over the same period. Put another way, the top 1 percent now have more than twice as large a share of the nation’s wealth as the bottom 90 percent.”

    https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality

    • Kristi Silber, Wealth, whether inherited or earned, is private property. Except in a socialist state where it can be stolen by the government, it is not part of the discussion. The thesis of the post is that access to energy is essential to prosperity, but just one component, along with a low level of crime, low corruption, peace, etc.

      Your rather unseemly focus on the wealthy is misguided. Most people are not wealthy, what Phil Gramm, Robert Ekelund and John Early discovered is that the US statistics and their classification of “poor” are deeply flawed. They do not count the government and private help to the “poor” as income. Then they do not count the taxes and fees paid by the working man as deductions from income. The welfare and the earned income tax credit have become so generous and the taxes so high, that a welfare recipient has as much left over spendable income as someone working full time. It is this “equality” that is the problem to the most people because it is viewed as unfair. How many people do you know that collect social security disability, that are not disabled? I know quite a few and everyone I know knows of someone. You seem to have a problem with the wealthy, this is not a problem if they earned the money, it’s the unearned hand-outs and the large spendable money in the hands of able-bodied people that do not work that is a problem and unfair.

      As for energy infrastructure, most of the construction of this is (and always has been) funded by private capital and done by private companies. This is and was true in the US, Canada, and Europe. Much of the Chinese build-out over the last 30 years was private, although the government in China is very intrusive, more so than in the US. If the government gives private companies permission they will build it at their own expense and then charge for the delivered energy to make a profit. That requires only rule of law, solid contracts, low crime and corruption. Getting the infrastructure built is easy, getting the necessary stability and a willing government is hard.

      • You say “The thesis of the post is that access to energy is essential to prosperity,” but it doesn’t seem like that’s the argument you’re making, which is, “Although it probably isn’t possible to show that access to energy is the key reason so many have been lifted out of poverty in recent decades, the data and logic suggests that this so.” Being “lifted out of poverty” is very different from prosperity. Even your argument that the poor and low income in America have similar disposable incomes (a highly dubious statement!) belies this statement To me your argument is about And that it is not the opposite – that increased income enables greater use of fossil fuels, since people (and countries) can afford access to energy, as well as pay for it once they have access?

        Why even bring the U.S. into the discussion? U.S. income inequality is irrelevant. But since you bring it up, I’ll address it anyway.

        Evaluating poverty according to U.S. Census figures is flawed because it only looks at income on a household basis. See
        https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality

        Among the list the Cato paper’s list of what CPS includes:
        “■ Social Security
        ■ Unemployment compensation
        ■ Workers’ compensation
        ■ Veterans’ payments other than pensions
        ■ Government retirement pensions and
        annuities
        ■ Government survivor pensions and
        annuities
        ■ Government disability pensions and
        annuities
        ■ Public assistance (includes Temporary
        Assistance to Needy Families [TANF]
        funds and other cash welfare)
        ■ Supplemental Security Income (SSI)
        ■ Veterans’ pensions”

        And yet they say that “comparisons using the CPS estimates are misleading because they exclude $1 trillion in government transfer payments to lower-income households”

        Ummm, does anyone else see a problem with this? What are “government transfer payments” if not included in the list or even in “money income not elsewhere classified? Or with Andy’s statement that “They do not count the government and private help to the “poor” as income”? Should medicaid be counted as monetary income?

        And why does the top fifth have the same average income as the 4th fifth???

        Then there’s the EITC. “The EITC is a “refundable” tax credit, meaning that if an individual owes no income taxes, money equal to the entire credit is sent to the filer. The EITC has all the characteristics of money income, but it is not counted as such by the Census Bureau.”

        How can anyone who earns income have no income taxes? And if EITC should qualify as “money income,” should the millions in tax credits given to businesses also be considered money income? Does not the EITC encourage the poor to work, and isn’t that the idea? Their income goes directly into the economy, it doesn’t sit around in Swiss banks.

        Andy differentiates those on “welfare” from those who have full-time jobs. He evidently does not realize that full-time employment does not always lift one out of poverty. When someone is working at or near minimum wage, how can they afford child care, for example? Or health insurance?

        “How many people do you know that collect social security disability, that are not disabled? I know quite a few and everyone I know knows of someone.” This is irrelevant. A straw man. (And do they tell you they are fraudulently receiving SSDI, or do you assume so? Why don’t you turn them in if they admit it?) “You seem to have a problem with the wealthy,” I said nothing to suggest this. “…this is not a problem if they earned the money,” Do you really believe that the wealthy earned all their money??? That’s naive. Ever heard of the stock market? Just taking salaries/wages into account, do you really believe that the CEO of Wells Fargo works a thousand times harder, or is a thousand time more intelligent, than someone who picks fruit for a living? “…it’s the unearned hand-outs and the large spendable money in the hands of able-bodied people that do not work that is a problem and unfair.” The poor have so much spendable money that their children go without meals. Some are on the precipice of homelessness, or already there. Public school teachers in poor neighborhoods can vouch for such examples of poverty in the children they teach, and they see the effects of poverty on communities. (Plenty of the poor cannot afford cars – how did you get the idea that they could? I don’t get the feeling you have a good understanding of poverty either in the U.S. of in the developing world.)

        Free market capitalism is not the answer to poverty. Someone has to do the low-skilled jobs, and there is enough supply of those people that businesses don’t have to pay them well to fill the vacancies. Equality of opportunity is a fantasy. It is very hard to get out of poverty, although some do it.

        I’m a capitalist. I believe it’s the best economic system there is. But that doesn’t mean free market capitalism is perfect, or the answer to all economic problems, and it creates some of its own, such as the accrual of a nation’s wealth (and power) in few hands and the maintenance of an underclass. We choose capitalism, and that is a good thing, but that doesn’t mean it absolves us of the responsibility to ensure all Americans have enough to eat and decent medical care. It’s a myth that people can just sit back and let the assistance role in.

        …But a for the general thesis when discussing developing nations that fossil fuel use will help the extremely poor out of poverty, that’s ridiculous. You need money to buy energy – you say yourself that access to energy is often from private investment, and that means the recipients not only pay for the energy, but for the investment in the means of creation and access – and the profit.

        “This suggests the two values plotted are strongly related and that for
        every kg of oil equivalent consumed per person we can expect GDP to grow an average of 53 cents per person over the period from 1990 to 2014 in 2011 PPP$.” Far more likely, for every increase in GDP, we can expect an increase in oil consumption.

        “As people move from poverty to the lower and middle classes they use more energy, which is why the energy growth is concentrated in Asia and the Pacific as seen in Figure 8.” You are using figures for GDP, not for individuals, and can make no assumptions about increased personal income.

        ” Even in the United States, inequality has been lowered substantially; regardless of what is seen in the news media.” But your Cato source says, “income inequality has risen only modestly, in line with trends in other nations”

        In short, you are making strong “suggestions” that are not backed up by data. You state that “the use of fossil fuels might have been the main reason for the reduction in poverty,” but “might be” is not an argument, it’s speculation. Your graphs and stats don’t support it. (You even run a regression assuming GDP is the dependent variable, a violation of the statistic.)

        P.S. Where did you get your evidence that “slavery, bonded servants and serfs were common, this group made up over 90% of the world’s population in 1800”?

        5

    • Kristi

      “You can post all the graphs you want about poverty and fossil fuel use. Correlation is not causation. ”

      I have worked in the field of SME development and bringing technology to market for decades. I assure you that when it comes to energy, access is economic causation. The proof is the correlation, both up and down. The correlation is not the source of the causation, energy is the cause and poverty reduction is the effect.

      The effect is so well known and so strong, that even tiny amounts of electricity from solar panels can bring a sewing group online making school uniforms in remote places, localising the production of essential items. Refrigeration is another good example, preserving food.

      There are only a few things one can do productively with solar PV apart from lighting. Two are: driving small business machinery and solar pumping without storage of electricity. There is in Swaziland a “solar village” where I first saw this used. Access to energy is economically transformative, the same as what happened when the first Stirling engines built into wood stoves were made available on the US market in the 1800’s.

      Energy is life. Energy is causation, and the strong correlation with eliminating poverty merely shows how direct is the impact.

      • Crispin, you are misunderstanding my point. I agree that access to electricity is a good thing, good for health, development, education, economic opportunity…on and on. What I’m arguing is that many of the poor in developing nations aren’t likely to be able to afford energy provided by fossil fuels any time soon. And that is why I argue that in some places (particularly rural villages far from the existing grid) would benefit from renewables. They would need economic help to get them installed, but once there, the energy is free. Access to energy from fossil fuels would also be a cost, but not just at the outset; it would be ongoing. Coal may be cheap in some countries, but even in the U.S. it’s much more economical if the coal-fired plant is near a mine. Many African countries would have to import coal, and that means first building the infrastructure to carry it to the plant. PV panels don’t need that kind of infrastructure investment, and could help kick start a climb out of poverty. In the tropics the day length is much less variable over the course of the year, and even without storage a village could do what they needed to during the day: run a couple (donated) computers, charge cell phones (or even a single one shared by several families), run a pump. Refrigeration is good, too, but energy-intensive, and some kind of electricity storage would be necessary; I’m less convinced that is essential when access to nutritious food is a problem to begin with. Education and access to information are key for long-term decreases in poverty. Even some health care can be provided by phone and internet, especially with drones launched from centralized facilities to deliver medications and first aid items.

        Another alternative is generators, but they need fuel and are susceptible to breaking down.

        I think we agree, don’t we? Or am I misunderstanding you?

  17. There HAS to be a strong correlation between energy use and prosperity because energy use is required for productivity. National income is equal to national productivity, and without energy to leverage labor, you can do only a little better than a subsistence lifestyle because your average productivity will be very low.

  18. Most graphics only show a correlation between energy consumption and poverty. It does not neccesarily has to be fossil energy any more. Now a day it can as well be renewable energy. A benifit of renewable energy is less airpollution wich is a major problem in almost all big cities in the world. Plus there will come an end on cheap fossil energy.

  19. I know beating this drum is almost hopeless but…

    “This is the primary reason over four million people die of indoor air pollution each year according to the World Health Organization.”

    They actually said that it shortens the lives of those people. There are no medical statistics to prove this claim, it is “by attribution”. The attribution is based on the Global Burden of Disease allocations of all deaths before the age of 86 to “some causes” being 51 in all. All years “short of 86” are divided into these contributing factors for national statistical and health policy reasons. In short, everyone died early because of a little bit of everything

    Be particularly wary of any claim that says “xx number of people died from air pollution” in a certain country or in a certain time. Those are all estimates based on estimates of estimates, 6 levels deep. Air pollution is bad for us, as far as we know, but attaching numbers has been difficult. It is made “easier” by the EPA declaring that all PM2.5 is equally toxic, even in cases where that is obviously untrue.

    What we should do is continue our decades old work of cleaning up the environment and creating better products for burning dung, wood and coal because they will still be used for a long time yet. Now that modern science and engineering is being applied to the problems of the poor, particularly with respect to space heating, dramatic improvements particularly in the small scale combustion of coal, are entering the market.

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