Energy Is GDP: Building Societies of Superabundance
“Energy is the great enabler of human progress, the lifeblood of modern civilisation, and the foundation upon which economic growth is built… Without abundant and affordable energy, human flourishing would grind to a halt.”
In this paper, Gerard Holland provides a history of energy, and analyses the relationship between energy and economic growth. The paper argues that energy is the bedrock of modern economies.
Summary of Research Paper
If we are to tackle the challenges of the twenty-first century, we must understand the vital link between energy and prosperity. History shows that without abundant energy, economic growth is negligible and living standards are low, whereas energy abundance helps lift billions of people out of poverty.
Fossil fuels have been a driving force behind economic growth—starting with coal which fuelled the Industrial Revolution, and then oil which powered the internal combustion engine, revolutionised transportation, and enabled automobiles, aeroplanes, and mechanised agriculture. The electrification of cities and industries reshaped lives, bringing light to homes, powering appliances, and transforming manufacturing.
Fossil fuels still provide 81% of global energy, and their energy density is unmatched by renewables. So, it is vital that as we pursue cleaner energy, we avoid repeating the mistakes of preindustrial societies by underestimating the importance of affordable and abundant energy.
Studies consistently show a strong link between energy use and GDP. Cheap, abundant energy fuels industrialisation, powers innovation, and creates opportunities for dignified work. Energy abundance enables societies to escape the constraints of subsistence living and facilitates human flourishing.
That is why affordable energy is vital. If energy prices go up, the economy must either become more energy efficient or GDP growth will slow. For energy costs to remain stable, any increase in energy prices needs to be matched by an improvement in energy efficiency.
When a country spends too much of its GDP on energy, economic growth slows. The US economy, for example, struggles when energy costs exceed 11% of GDP. High energy costs reduce the money businesses have for investment and the disposable income households can spend.
Energy poverty remains a significant barrier to improving health, education, and economic opportunities. Access to clean cooking fuels alone could prevent millions of premature deaths a year. Yet billions of people around the world still lack access to reliable electricity, clean cooking fuels, and basic modern conveniences. A key priority should therefore be to end energy poverty.
As nations face the dual imperatives of economic growth and environmental stewardship, it is essential to avoid the dangers of energy scarcity. This does not mean ignoring environmental challenges. It means addressing them in ways that enhance and do not undermine human progress. By developing a vision of superabundance, reducing the cost of energy and increasing its availability, we can unlock a new era of shared prosperity for generations to come.