Subject: Viridian Note 00117: Internet Energy 3
To: Viridian List <>

Key concepts: Internet energy consumption, growth rates,
carbon consumption, new economy

Attention Conservation Notice: It's a righteous sermon on the beauty and promise of the Internet from New Economy / New Energy activists. Last of three parts.

(((Highlights from an executive summary of a much more extensive article at

"The world is only beginning to come to grips with the complex consequences of the exploding growth of e- commerce and the Internet economy.

"This paper reflects an analysis of currently available but incomplete data, and begins to construct some rough scenarios. (...) Hopefully these scenarios begin the process of identifying opportunities and challenges for business leaders and policy makers and suggesting the directions of future research and initiatives.

"The nation experienced remarkable economic growth in 1997 and 1998, about 4% per year(...) The overall productivity of the economy appears to have increased substantially, driven by the IT sector. (..) During those same two years, the nation's energy consumption == the principal source of air pollution and the gases linked to global warming == hardly grew at all. In the previous 10 years, U.S. energy intensity, measured in energy consumed per dollar of gross domestic product declined (i.e., improved) by under 1% per year. In both 1997 and 1998, it improved by more than 3% == an unprecedented change during a time of low energy prices. In 1998, U.S. emissions of greenhouse gases rose only 0.2%, the smallest rise since 1991 (which was a recession year).

"The analysis suggests that mainstream forecasts may be overestimating U.S. energy and carbon dioxide emissions in the year 2010 by up to 5% == while significantly underestimating overall U.S. economic growth.

"(...) The Internet economy itself seems to be generating both structural gains and efficiency gains.

"Internet energy efficiency gains potentially cover a broad spectrum of activity. In business-to-consumer e- commerce, for instance, a warehouse can contain far more products like books per square foot than a retail store. Warehouses themselves also typically use far less energy per square foot than a retail store. So books and other products sold over the Internet would likely consume less energy per book then traditional retail-based sales.

"More important is business-to-business e- commerce, which is estimated at 5 to 10 times the size of business-to-consumer e-commerce. As traditional manufacturing and commercial companies put their supply chain on the Internet, and reduce inventories, overproduction, unnecessary capital purchases, paper transactions, mistaken orders, and the like, they achieve greater output with less energy consumption.

"Another important effect is that the Internet appears to be promoting greater use of home offices, allowingtelecommuters to spend less time at the office and also spawning many purely home-based businesses. (...) This shift will increase energy consumption in homes, but will likely save far greater energy in avoided office building construction and utility bills, as well as reduced commuting energy.

(((Better yet, as a home-based author in the digitally assisted culture industry, I'm doing all these things already without any special effort, and am beginning to feel all warmly self-righteous about it.)))

"There are aspects of the Internet that will probably entail more energy use, such as greater small- package delivery by truck. These cases may not, however, result in a net increase in energy use; efficient package delivery by truck may replace at least in part inefficient personal driving to malls, supermarkets, bookstores and the like. This will be particularly true if most of the packages are delivered by the Post Office, which already passes virtually every home in the country daily.

(((Those Viridian T-shirts will be shipped surface from the US Post Office from now on (unless you are Russian, in which case you get them airmail because your economy is so thoroughly downsized already.))))

"The Internet is growing so quickly, and data on it remain so inadequate, that it is certainly not possible to draw more than tentative conclusions at this point (particularly in areas as difficult to analyze as the possible substitution of Internet use for transportation). That is why we have labeled this analysis a scenario, and not a prediction.

(((Others might label this analysis "wishful thinking" or even "spin doctoring," but so what? If we can just get the New Economy people in our corner, we can tank those ugly coal guys overnight!)))

"We believe the Internet may already be reducing the energy intensity of the industrial sector, and that it holds the potential to have its most significant impact in this area. If so, this would be the Internet's biggest impact on the environment, since this sector is responsible for a third of the nation's air pollution and the vast majority of its hazardous waste and other pollutants.

"We believe the Internet could significantly reduce the contribution of the commercial building sector to the nation's energy intensity, and that gains in this sector will likely outweigh increases in electricity use in residential buildings. We suspect the Internet economy will be no worse than neutral in the transportation sector, but could well have a large positive impact. In general, we believe one label commonly used for e- commerce, 'frictionless,' has a useful analogy here. Friction causes energy to be lost. Frictionless commerce saves energy.

"If, indeed, the Internet is already reducing energy intensity, then it is likely to have a very big impact in the years to come. The Internet economy is projected to grow more than ten-fold-from its current level of tens of billions of dollars today to more than $1 trillion in a few years. Moreover, while the Internet economy remains a small share of the total U.S. economy, it represents a much higher fraction of the growth in the economy. That is the essential point for this paper(...)

"We believe the combination of trends described above makes it likely that the years 1997 to 2007 (and probably beyond), will not see the same low-level of energy intensity gains that the previous 10 years saw, which were under 1% per year. We expect annual improvements in energy intensity of 1.5%-and perhaps 2.0% or more. If this comes to pass, most major economic models used in the country will need to be modified."

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