International Industrial Ecology Day 2021

The ultimate goal of green investment is to transform the stock of capital assets in an economy to achieve deep decarbonization, reduce biodiversity loss and address further pressing environmental issues. While a variety of methods from industrial ecology may be used to support green investment, the focus of this paper is the mutualistic relationship between capital and energy through which greenhouse gas (GHG) emissions are linked to the economy. All mitigation strategies require a transformation of the capital stock, including: i) decarbonization of the energy-producing capital assets; ii) constructing and using capital with higher energy efficiency; and iii) changing the nature and variety of asset types that make up the capital stock. This paper provides results from a study of the US economy from 2004-2019.

The paper is influenced by a literature that views the functioning of economies through a biophysical or socio-metabolic lens. Previous studies of the US have established the role of energy, or useful work, in economic growth, determined embodied energy, energy-return on energy investment and historical material flows.

We start with a high-level mapping of energy use and GHG emissions to four broad categories of capital, before describing detailed results for: i) capital investments for providing energy; ii) energy for capital formation; and iii) energy for using capital. Energy supply assets in the US increased by almost $1 trillion between 2004 and 2019; these included growth in wind and solar assets, but were still dominated by investments in fossil fuel assets that perpetuate the climate change challenge. The energy intensity of using the manufacturing and residential capital stocks declined between 1990 and 2018. Intellectual property products, with an energy intensity of 2.9 TJ/$million of investment, grew as a proportion of the capital stock relative to structures (7.0 TJ/$million) and equipment (6.9 TJ/$million).