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Consumer Lifestyle Approach to US Energy Use and

the Related CO2 Emissions

Article in Energy Policy · January 2005

DOI: 10.1016/S0301-4215(03)00210-6

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 ARTICLE IN PRESS

Energy Policy 33 (2005) 197–208

Consumer lifestyle approach to US energy use and

the related CO2 emissions
Shui Bina,*, Hadi Dowlatabadib
a
Center for Integrated Study of the Human Dimensions of Global Change, Department of Engineering and Public Policy, Carnegie Mellon University,
Pittsburgh, PA 15213, USA
b
Sustainable Development Research Institute, University of British Columbia, 1924 West Mall, Vancouver, Canada BC V6T 1Z2

Abstract

Historically, a sectoral approach (based on the industrial, transportation, commercial, and residential sectors) has shaped the way
we frame and analyze issues of energy conservation and CO2 mitigation. This sectoral categorization, however, is limited in its
capacity to reveal the total impacts of consumer activities on energy use and its related environmental impacts. In this paper, we
propose an alternative paradigm, called the Consumer Lifestyle Approach (CLA), to explore the relationship between consumer
activities and environmental impacts in the US. Estimates based on our methodology reveal that more than 80% of the energy used
and the CO2 emitted in the US are a consequence of consumer demands and the economic activities to support these demands.
Direct influences due to consumer activities (home energy use and personal travel) are 4% of the US GDP, but account for 28% and
41% of US energy use and CO2 emissions, respectively. Indirect influences (such as housing operations, transportation operations,
food, and apparel) involve more than twice the direct energy use and CO2 emissions. Characterization of both direct and indirect
energy use and emissions is critical to the design of more effective energy and CO2 emission policies. It may also help erode the false
dichotomy of ‘‘them versus us’’ (industrial polluters versus consumers) references to the locus of responsibility for control of energy
use and CO2 emissions.
r 2003 Elsevier Ltd. All rights reserved.

Keywords: Household; Consumption; Embodied energy

1. Introduction to mirror the total impacts of consumer activities on

energy use, and the related environmental impacts.
Historically, a sector-based approach (i.e., industrial, Furthermore, it may help propagate a false dichotomy
transportation, commercial and residential) has shaped among consumers of ‘‘them versus us’’ (industrial
the way we frame and analyze issues of energy use and polluters versus consumers) references of responsibility
CO2 emissions. For example, in the US for 1997, the about energy use and the related CO2 emissions.
industrial sector was the most energy-intensive (38% of In the past two decades, the role of consumers and
US total) and CO2-intensive (33%), while the residential their consumption patterns have attracted increasing
sector ranked only fourth (11%) and third (19%), in attention of and discussions among researchers. In the
energy use and CO2 emissions respectively (EIA, late 1980s, some researchers brought the concept of
2000b, c). In the sector-based approach, the residential lifestyle into the study of personal energy consumption.
sector is the only sector to directly reflect consumer As a consequence of this innovation, Lee Schipper et al.
activities which merely refer to end-uses of home energy, concluded that: ‘‘about 45–55% of total energy use is
such as space heating, water heating, and appliance use. influenced by consumers’ activities for personal trans-
Therefore, the sectoral approach is limited in its ability portation, personal services, and homes.’’ They argued
that significant changes in energy demand will be
driven by: ‘‘the mix of personal activities and their
*Corresponding author. National Center for Atmospheric Research,
locations ybesides energy prices and incomes’’ (Schip-
Advanced Study Program, P.O. Box 3000, Boulder, CO 80307, USA.
Tel.: +1-303-497-2889; fax: +1-303-497-2889. per and Bartlett et al., 1989). In order to understand
E-mail addresses: [email protected] (S. Bin), [email protected] household energy consumption patterns, Vringer and
(H. Dowlatabadi). Blok estimated energy requirement of households in the

0301-4215/$ - see front matter r 2003 Elsevier Ltd. All rights reserved.
doi:10.1016/S0301-4215(03)00210-6
 ARTICLE IN PRESS
198 S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208

Netherlands (Vringer and Blok, 1995), Lenzen assessed estimation methodologies and the corresponding results
the energy use and greenhouse gases attributable to are documented in Sections 3 and 4, respectively. The
consumer activities in Australia (Lenzen, 1998), Weber derived policy implications are discussed in Section 5.
and Perrels quantified the impact of lifestyle factors on Conclusions are provided in the final section.
the 1990s and 2010s energy demand and related
emissions in West Germany, France and the Nether-
lands (Weber and Perrels, 2000), Pachauri and Spreng
2. The concept
studied energy requirement of households in India
(Pachauri and Spreng, 2002), and Reinders et al.
2.1. Consumer lifestyle approach
(2003) conducted a study to estimate direct and indirect
energy requirement of households in 11 European
The term Consumer in CLA refers to the entity that
countries.
purchases and uses products and services for the
Building on these past studies on energy use and
purpose of individual or household consumption. Life-
consumer activities, we propose a consumer-oriented
style is a way of living that influences and is reflected by
integrated assessment framework for analysis of energy
one’s consumption behavior. The basic premise under-
use and CO2 emissions, viz. the Consumer Lifestyle
lying consumer lifestyle research is that by under-
Approach (CLA). We also offer a transparent metho-
standing consumers we can design better public policies.
dology linking various consumer activities to economic
Understanding consumers is made complicated by many
activity, energy use and CO2 emissions. Our efforts
interacting factors, many of which evolve over time in
intend to shed light on the following questions: (1) How
response to circumstances. The proposed CLA attempts to
do we study consumer-related energy use and the related
offer an interdisciplinary framework which explicitly
environmental impacts? (2) What is the role of consumer
acknowledges the multitude of interacting factors and
lifestyle choices in the US economy, energy use and CO2
groups these under five major headings (see Fig. 1):
emissions? (3) How much of the total US energy
consumption and CO2 emissions is a product of (1) External environmental variables, such as cultural
consumer activities? (4) What are the most energy/ influences and technology development, which form
CO2-intensive consumer activities? external context to a consumer’s decision process.
In Section 2, we introduce the design and various (2) Individual determinants, such as attitudes and
components of the Consumer Lifestyle Approach, as well beliefs, which are psychological variables influencing
as the concept of direct and indirect influences of an individual consumer’s decision making.
consumer activities. Then, a CLA study, re-estimating (3) Household characteristics, such as household size,
US energy use and CO2 emissions, is presented. Its housing type and size, income and location, which

Fig. 1. A framework for the proposed consumer lifestyle approach. Note that: (1) The ‘‘1. External Environment’’ is partly from Fig. 1-1. A
simplified decision process framework for studying Consumer Behavior (Loudon and Bitta, 1993, p. 22). The ‘‘2. Individual Determinants’’ is partly
from Fig. 1 Rationality for Economists (McFadden, 1999). The dashed line indicates feedback from ‘‘Consequences’’ to other CLA components.
 ARTICLE IN PRESS
S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208 199

Fig. 2. Direct and indirect influences. Notice that: (1) The subjects of ‘‘Purchase’’ component may be a product or a service; the subjects of ‘‘Use’’
component may involve direct energy inputs, services or products that do not require energy inputs; the subjects of ‘‘Disposal’’ component may be
recycled, buried or incinerated. (2) About 28% of US energy is directly consumed by household activities (direct influences), 57% of the total for
household-related economy activities (indirect influences), and about 15% is for non-household related consumption activities, such as national
defense. The details of methodology and results can be referred to Sections 3 and 4. (3) Government and non-profit related activities are labeled as
‘‘non-household’’ here. Detailed information on their energy use and emissions is not part of this study, while its contribution is marked using double
lines.

form household context for a individual consumer’s Fig. 2 demonstrates the scopes of direct and indirect
decision making. influences as defined and estimated in this study.1 Notice
(4) Consumer choices, such as purchases and use of that energy and emissions related to end-of-life pro-
services and equipment. cesses are included if associated with economic activity
(5) Consequences, such as resource use and related (e.g., as input costs to recycled material). However,
environmental impacts, which are the results of informal economy and government related direct and
consumer activities. indirect impacts, i.e., composting, landfill emissions, and
government services are not yet characterized.
The consumer choices studied here refer to consumer In CLA, the terms of ‘‘direct’’ and ‘‘indirect’’ are
purchase and use behaviors, and the consequences defined from a consumer’s perspective. To distinguish a
studied here refer to the energy use and the related consumer activity causing to direct or indirect influences
carbon dioxide emissions caused by consumer activities. is to see if the energy is being used and the related CO2 is
In this paper, we employ various data sources and emitted at the same time of using or before (or after) a
models to quantify the relationship between consumer consumer uses a product or service. For example,
choices and consequences at a macro-level. driving a car leads to direct influences as gasoline is
used and CO2 is emitted while a consumer operates the
car. However, for this to happen, there are indirect
2.2. Direct and indirect influences impacts related to the manufacturing of cars, their
maintenance and insurance, provision of a road infra-
Within the component of consumer choices, house- structure, and discovery, production, transport and sale
hold and individual activities (purchase and use) have of gasoline to consumers taking a ride in their car.
direct or indirect impacts on energy use and related CO2 In CLA, consumer activities are categorized into three
emissions. If a consumer’s activity leads to energy levels. At the highest level, all consumer activities are
consumption and CO2 emissions while the product or categorized into two groups: direct influences and
service is in use, these are called direct (on-site) indirect influences. Direct influences include home
influences, where energy consumption and CO2 emis- energy use and personal travel, while indirect influences
sions occur in the preparation (production and delivery)
of a product or service and before its use are called 1
For detailed methodologies and results, please refer to Sections 3
indirect (embodied) influences. and 4.
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200 S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208

Table 1
Consumer consumption activities categorization

Consumer activities categorization Sources

Direct influences Home energy Space heating Residential Energy Consumption Survey
Air conditioning (Department of Energy, 1999), or RECS
Water heating
Refrigeration
Other appliances and lighting

Personal travel Long distance by automobiles and trucks American Travel Survey (Department of
Long distance by air Transportation, 1995), or ATS;
Long distance by others Transportation Energy Data Book (Oak
Short distance by automobiles and Ridge National Laboratory, 1999), or
trucks TEDB
Short distance by others

Indirect Housing operations Shelter, utilities, etc. Consumer Expenditure Survey (Department
influences Transportation Vehicle purchase (net), gasoline and of Commerce, 1999), or CES
operation motor oil, other vehicle expenses, etc.
Food and beverage Food at home, food away from home
Apparel and services Men and boys, women and girls, etc.
Health care Health insurance, drug, etc.
Entertainment Fees and admissions, magazines, etc.
Personal Insurance Personal insurance and pensions
Others Education, tobacco, etc.

include housing operation, transportation operation, food consumer expenditures on housing operation, transpor-
consumption, etc. Within these broad categories two tation operation, food, clothing, and recreation.
nested levels of activity are defined with increasingly
detailed information for each activity (data permitting). 3.1. Energy–CO2 approach for direct influences
A complete list of consumer activities characterized
using available data for the US is presented in Table 1. 3.1.1. Home energy
Fuel consumption information at home is well
documented in the Energy Information Administration
(EIA)’s RECS database. For example, RECS provides
3. Methodology residential energy consumption data on five end-uses
(space heating, water heating, air conditioning, refrig-
The existing US data sources (listed in Table 1) do not eration, other appliances and lighting) by four fuel types
provide ready information regarding CO2 emissions (electricity, natural gas, fuel oil, and liquid petroleum
from consumer activities: (1) the Residential Energy gas) (EIA, 1999). The CO2 coefficients for each fuel type
Consumption Survey (RECS) provides information are also estimated and published by the EIA (EIA,
about home energy consumption; (2a) the American 2000a).
Travel Survey (ATS) reports on household travel The formula used to estimate the total CO2 emissions
patterns, while (2b) the Transportation Energy Data from five residential end-uses is presented below:
Book (TEDB) provides energy consumption in the
transportation sector; and (3) the Consumer Expendi- T HOME CO2
ture Survey (CES) collects expenditure data characteriz- XX
¼ ðFuelm  CO2 Coefficientm Þn  HH;
ing buying habits. n m
Two approaches are used here to estimate the total
energy use and CO2 emissions from consumer activities. where T HOME CO2 (in tons of CO2 equivalent) is the
One uses actual and estimated fuel use and carbon annual CO2 emissions of home energy in US; n refers to
content of these, the other uses economic data on the type of end-use at home, such as space heating and
consumer expenditures and an economic input–output water heating; m refers to the fuel type used in each end
matrix of energy use (and CO2 emissions) associated use, such as electricity and natural gas; Fuelm (GJ) is the
with the economic activity supporting that expenditure. annual energy consumption by fuel per household;
The energy–CO2 accounting framework is used for CO2 Coefficientm (metric ton/GJ) is the CO2 coefficient
direct influences while the expenditure based I–O by fuel type; and HH is the number of households.
analysis is used to fill in the indirect influences of HH ¼ 101:5 million households in 1997.
 ARTICLE IN PRESS
S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208 201

3.1.2. Personal travel effluents from each industry and economic activity
Although many people believe that energy consump- associated with dollar value of output (Green Design
tion due to personal travel is a significant fraction of the Initiative, 2000; Henderickson and Horvath, et al.,
total US picture, few studies have estimated its 1998).
magnitude. In this paper, the estimation of energy use In this study, an average annual household’s con-
from personal travel is reported. TEDB provides each sumer expenditure is used as inputs to the EIO-LCA
vehicle’s (automobiles, motorcycles, trucks, buses, air, model. The Bureau of Labor Statistics provides detailed
rail-passenger, and water-recreational) energy consump- information on the consumer expenditure survey re-
tion by fuel type (gasoline, diesel fuel, LPG, jet fuel, and counting expenditures under 70 different categories
electricity) (Oak Ridge National Laboratory, 1999), (Bureau of Labor Statistics, 1999). Since these categories
while ATS offers information on the percentage of are not a one-to-one match to the 485 commodity
personal travel use with each vehicle type (Bureau of categories in the EIO-LCA, we examined each of the
Transportation Statistics, 1997a, b). The integration consumer expenditure categories and developed a
of the two information sources produces estimations mapping from these to appropriate commodity cate-
of energy consumption from personal travel. gories defined by the Department of Commerce. This
The formula for estimating energy use of personal mapping function translated the 70 consumption
travel by a transport mode for long and short distance categories into 62 commodity outputs, allowing us to
travel is use the EIO-LCA to estimate indirect energy use from
T PT ENERGYk consumer expenditures.2 The full list of indirect
XX influences of consumer activities is presented in
¼ ðFuelij  DRatioi  VRatioij Þ; Appendix A.
i j
The formula for estimation of energy consumption
where T PT ENERGYk (EJ) is the annual energy use by and CO2 emissions for indirect influences is
all transport modes for long or short distance travel in X CPI1992j
US; k refers to the fraction of long or short distance Xi ¼ CES1997j  Tji ;
j
CPI1997j
travel; j refers to the fuel type, such as gasoline and X
diesel; i refers to the transport mode, such as automobile T IND Energy ¼ ðEIi  Xi Þ  HH;
and bus; Fuel j (EJ) is the energy use of a vehicle mode i X
i
for personal travel using fuel j; VRatioij is the ratio of T IND CO2 ¼ ðCIi  Xi Þ  HH;
personal use for a vehicle mode i using fuel j; DRatioi is i
the fraction of long and short distance traveled by where i refers to an industrial product or a service
transport mode. For example, about 87% of energy use category in EIO-LCA model; j refers to an expenditure
by automobile and truck is for short distance travel (less category in the Consumer Expenditure Survey; Xi ($) is
than 100 miles), and close to 100% of energy use by air a household’s expenditure on products or services i in
is for long distance travel (large than 100 miles). the EIO-LCA; CES1997j ($) is the consumer expendi-
CO2 emissions from personal travel are calculated as ture on product j in 1997; CPI1992j and CPI1997j are
the product of the fuel consumed and its corresponding the consumer price indices in 1992 and 1997 for a
CO2 coefficient. product or service j; Tji is the transformation matrix of
consumer expenditure category j to an industrial
3.2. Using the EIO-LCA to estimate indirect influences product or a service category i; T IND Energy (EJ) is
annual energy consumption caused by indirect influ-
Input–output analysis has been widely recognized as a ences; EIi (thousand J/$) is the energy intensity of
popular tool to estimate energy use, greenhouse gas industrial output i; T IND CO2 (million metric ton of
emissions, pollutants embodied in consumer goods and CO2 equivalent) is annual CO2 emissions caused by
services on a macro-scale. Similar analyses have been indirect influences; and CIi (metric ton/$) is CO2
conducted in assessing the indirect energy requirements intensity of industrial output i:
of households in Netherlands (Vringer and Blok, 1995), An example of the estimation of annual indirect
Australia (Lenzen, 1998), West Germany and France influences from food consumption per household is
(Weber and Perrels, 2000), and India (Pachauri et al., illustrated in Table 2. We dissect each recorded element
2002). of food expenditures in the CES and find an equivalent
The Environmental Input–Output Life Cycle Analysis class of economic activities in the EIO-LCA. Then by
(EIO-LCA) model developed at Carnegie Mellon Uni- correcting for the base-year of expenditure measures
versity is a suitable and convenient tool to estimate we can estimate indirect energy use and CO2 emissions
energy use and related greenhouse gas emissions
embodied in US domestic goods and services. It has 2
The base year for the EIO-LCA when our study was conducted is
adjunct tables that represent various environmental 1992.
 202
Table 2
Estimation of indirect influences of food consumption for a US household in 1997
Consumer expenditures in 1997 Consumer price indexes EIO-LCA model Estimation results

Items 1997 price 1992 CPI 1997 CPI CPI items 1992 EIOLCA sector Energy CO2 coefficient Energy CO2
price name coefficient (kg/$) consumption emissions
(chained) (GJ/$) (GJ) (kg)

Food 4801 60 3953

Food at home 2880 41 2675
Cereals and bakery products 453 5 303

S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208

Cereals and cereal products 161 153.3 169.5 146 Cereals breakfast 0.0140 0.884 2 129
foods
Bakery products 292 150.4 181.1 243 Bread, cake, and 0.0110 0.718 3 174
related products
Meats, poultry, fish, and eggs 743 12 773

ARTICLE IN PRESS
Beef 224 132.3 136.8 217 Meat animal 0.0170 1.065 4 231
Pork 157 127.8 155.9 129 Meat animal 0.0170 1.065 2 137
Other meats 96 130.7 144.4 ‘‘Meats’’ 87 Miscellaneous 0.0190 1.244 2 108
livestock
Poultry 145 131.4 156.6 122 Poultry and eggs 0.0229 1.466 3 178
Fish and seafood 89 151.7 177.1 76 Prepared fresh or 0.0170 1.069 1 81
frozen fish and
seafoods
Eggs 33 108.3 140 26 Poultry and eggs 0.0229 1.466 1 37
Dairy products 314 128.5 145.5 277 Dairy farm products 0.0219 1.412 6 392
Fruits and vegetables 476 7 429
Fresh fruits 150 184.2 236.3 117 Fruits 0.0249 1.563 3 183
Fresh vegetables 143 157.9 194.6 116 Vegetables 0.0100 0.634 1 74
Processed fruits 102 137.7 148.8 94 Dehydrated fruits, 0.0160 1.05 2 99
vegetables, and
soups
Processed vegetables 80 128.8 147.2 70 Dehydrated fruits, 0.0160 1.05 1 74
vegetables, and
soups
Other food at home 895 136.8 158.1 ‘‘Food at 774 Bottled and canned 0.0150 1.005 12 778
home’’ soft drinks
Food away from home 1921 138.9 154.7 ‘‘Dinner’’ 1725 Eating and drinking 0.0110 0.741 19 1278
places
Alcoholic beverages 309 147.3 162.8 280 Wines, brandy and 0.0110 0.741 3 207
brandy, spirits
Total 5110 63 4160
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S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208 203

associated with each element of food expenditures. Table 3

Since the use of input–output model, the energy US Energy consumption and CO2 emissions by consumer activities,
1997
use and CO2 emissions resulting from manufacture,
transportation, and marketing have been allocated Consumer activities Energy CO2 emissions
into the estimated indirect influences of food use (EJ) (Mt CO2)
consumption. Direct influences 28.3 2230
Home energy 10.9 1046
Space heating 5.5 338
Other appliances and lighting 2.4 381
4. Results and discussions
Water heating 2.0 157
Refrigeration 0.5 89
4.1. The national picture Air conditioning 0.4 81

A summary of results from our analyses of US energy Personal travel 17.4 1184
Short distance by automobiles 12.7 855
use and CO2 emissions is presented in Table 3. Direct and trucks
energy use (28.3 EJ) is only half as large as indirect Long distance by air planes 2.2 149
influences of consumer expenditures (56.4 EJ), and the Long distance by automobiles 1.9 130
related CO2 emissions due to direct influences (2230 Mt and trucks
CO2-e) are only 70% of indirect influences (3289 Mt Long distance by others 0.3 25
Short distance by others 0.3 25
CO2-e).
The rank of energy- and CO2-intensive consumer Indirect influences 56.4 3289
activities is depicted in Figs. 3 and 4, respectively. Housing operation 25.6 1411
Housing operation (indirect influences) is the most Transportation operation 17.4 954
energy- and CO2-intensive among all consumer activities Food and beverages 6.4 426
Apparel and services 2.6 167
(including direct and indirect influences), which is
Others 1.6 117
mainly contributed by the consumption of utilities Personal insurance and pensions 1.1 81
(about 60% of housing operation). For direct influences, Entertainment 1.1 76
personal travel is the most energy- and CO2-intensive Health care 0.5 56
(17.4 EJ and 1184 Mt CO2-e), much of which is caused
Total direct and indirect 84.6 5519
by short distance travel by automobiles and trucks (about
72%).
Comparing Figs. 3 and 4, a reader may find that the
direct energy use of personal travel is about 50% higher GDP, and ratio of energy use and CO2 emissions by
than home energy, while the related direct CO2 emissions consumers to the US total.
of personal travel are only 13% higher than home energy. The first row of Table 4 shows the US GDP, and
The percentage differences results from the large portion shares of that GDP directly represented by expenditures
of electricity consumed in homes. About two-third on home energy and personal travel in the first three
of fossil energy used to produce electricity is lost columns. In the fourth column the indirect influence of
in production, transmission and distribution. This other consumer expenditures on GDP is represented.
leads to electricity being about three times as carbon We observe that while the share of direct energy
intensive as the primary energy source used in its expenditures by households is only 4% of the GDP,
production. the shares due to all other consumer expenditures
Since US has 101.5 million households and there are (related to indirect influences) is 10 times higher at 42%.
2.64 individuals in average household in 1997, a reader When we look at energy use we see that approxi-
can get calculation results about annual energy use and mately 11% is accounted for by consumption for home
CO2 emissions per capita and a household from the energy and 18% for personal travel. The indirect impact
information provided in Table 3. of consumer choices accounts for a further 57% share of
the energy used in the US. Thus, consumer lifestyle
4.2. Consumer activities, the economy, trade, energy use, decisions account for 85% of all energy use in the US
and CO2 emissions when direct and indirect usages for home energy,
personal travel and other expenditures are combined.
What are the roles of consumer activities in US We should add at this point that while the Input–Output
economy, energy use and CO2 emissions? This section is models are based on balanced national accounts, the
devoted to mapping the findings from the CLA re- augmented matrices used to estimate energy use and
estimation study onto nationally aggregated measures emissions from such activities are not corrected for
of economic activity, energy use, and CO2 emissions. embodied energy or pollution in exported and imported
Table 4 documents share of consumer expenditures in goods and services. Therefore, the values reproduced in
 ARTICLE IN PRESS
204 S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208

Fig. 3. Rank of energy use by US consumer activities, 1997.

Fig. 4. Rank of CO2 emissions by US consumer activities, 1997.

Table 4 reflect the fraction of energy used assuming is not part of the US domestic emissions accounts
imported goods and services similarly classified in the and hence the finding of household consumption
Consumer Expenditure Survey have the same energy accounting for 45% of GDP, 85% of energy use, and
and CO2 intensity as their domestically produced 102% of CO2 emissions. These figures not only highlight
alternatives. the true magnitude of energy use and emissions by US
In the final section of Table 4, we present estimates of consumers, but also reveal a large leakage of CO2
the share of consumer activities in total US CO2 through imports of goods serving the needs of US
emissions. These figures show the relatively high carbon consumers.
intensity of electricity—used in homes—leading to a
relatively higher share for home energy in CO2 emissions
than in energy use. In the final column we also find 5. Policy implications
the paradox of total emissions from consumer expendi-
tures accounting for 102% of US CO2 emissions. 5.1. Direct and indirect influences
This is explained by the high emissions intensity of the
products imported into the US (using US emissions The findings from our re-estimation study demon-
characteristics). The calculated embodied carbon strate that the indirect influences of consumer choices
in these imports (as if they had been made in the US) represent a larger share of US energy use and CO2
 ARTICLE IN PRESS
S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208 205

Table 4
The role of household consumption activities in the US picture

Consumer Consumption Activities (CLA Approach)

Conventional Indicators for U.S. Economy, Direct Influences
Indirect Total (direct
Energy Consumption, and CO2 Emissions Home Personal
Subtotal Influences + indirect)
Energy Travel
U.S. GDP - 8111 billion U.S. current dollar
2% 2% 4% 42% 45%
(Total - 100%)
personal consumption (68% of GDP) 3% 3% 5% 62% 67%
gross private domestic investment (15%) <100%
net exports of goods and services (-1%) <100%
N.A. N.A. N.A. N.A.
government consumption expenditures and
gross investment (18%) < 74%
U.S. Energy Consumption - 99 EJ (Total -
11% 18% 28% 57% 85%
100%)
residential (11% of Total) 100% N.A.
N.A.
transportation (26%) 66%
N.A. <34% N.A
commerical (25%) N.A. <100%
N.A.
industrial (38%) <100%
U.S. CO2 Emissions - 5426 MMTG
19% 22% 41% 60% 102%
(Total - 100%)
residential (19%) 100% N.A. N.A.
transportation (32%) 68%
N.A. <32% N.A
commerical (25%) N.A. <100%
N.A.
industrial (33%) <100%

Note that: (1) ‘‘Personal consumption’’ is conceptually different to ‘‘household consumption’’ mentioned in this study. Personal consumption
expenditure is collected by the Bureau of Economic Analysis at the US Department of Commerce from US manufacturers. It covers not only
household consumption, but also non-household consumption such as consumption from non-governmental organizations. (2) The darkest shaded
areas with ‘‘N.A.’’ indicate an absence of information from which to make calculations, the lightly shaded areas specify a low degree of uncertainty in
the presented estimates, and the italic figures show the upper bound of our best estimates. (3) The dark area with white italic figures (in the rows of
US energy consumption and US CO2 emissions) indicate the listed ratio should be interpreted as a reference point because actual comparisons are
inappropriate for conceptual reasons. These conceptual challenges arise from the fact that US total energy use and emissions data do not account for
imports of manufactured goods and services. The consumer expenditure data however includes imported products and energy used to produce these
is calibrated to manufacturing patterns in the US, rather than the location of origin.

emissions than the direct influences that are so often the efficient, and making the durable consumer goods more
focus of public policy discussions. This is a far cry from efficient.
the traditional sector-based presentations that attribute The potential for the latter to reduce energy use and
so much of the energy use and emissions under hea- CO2 emissions is, on average, roughly half the former.
dings that appear to be outside the control of house- Therefore, policymakers need to avoid two obvious
holds. pitfalls: (1) Mandating early capital stock turnover, in
Direct influences, accounting for 28% and 41% of the pursuit of use phase efficiency, may lead to needless
total US energy consumption and CO2 emissions energy use and CO2 emissions in the manufacturing
respectively, are caused by consumers’ use and purchase phase of a product’s lifecycle. (2) The flip side of the coin
behaviors. The estimation of direct influences sets the is mandating more robust technologies that last long
upper bound for possible changes of use behavior that after they could be replaced by better technologies
may be partly achieved by regulation, persuasion, or offering combined energy and emissions savings in both
market interventions. By combining these figures with use and manufacturing phases.
an assessment of the possibility of bringing about such One of the main purposes of this paper is to
changes, we can estimate payoff from investment in such demonstrate that polices of energy conservation and
interventions (as compared to technology-based initia- carbon mitigation should aim at the aggregate of
tives). direct and indirect energy use and CO2 emissions.
Indirect influences, twice as large as direct influences, We use the following two examples to illustrate that
are related to consumers’ purchase behavior. The missing the integration of both influences in policy
reduction of energy use and CO2 emissions for indirect design may lead to slow or even opposite direction of
influences would be mainly achieved by green design progress.
(such as employing efficient technologies and pro- Example 1, in US, the production of an average
cesses) in the supply chain. So, the related policies vehicle is associated with GHG emissions of 12.25 t of
can be aimed at making production processes more CO2 equivalent. Based on a service life of 14 yr, this
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206 S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208

indirect emission is equivalent to 0.875 t/yr. When help them be aware that their increasing travel mileage
considering a policy to reduce emissions (direct influ- (both direct and indirect influences) and quick switching
ences) from private transportation by scrapping ineffi- to a new model of car (indirect influences) because of
cient cars, a policy maker should not ignore the indirect fashion change will put them on a hot seat labeled high
emissions associated with manufacturing a car. Early carbon emitter.
retirement of a car in order to reduce in-use CO2
emissions will therefore be only advisable if the sa- 5.2. Target activities
vings from in-service emissions exceeds 0.875 t CO2/yr.
Therefore, it is easy to justify the early retirement of a Identifying target activities (the most energy-intensive
car achieving only 12 L/100 km with one that is 25% or/and the most carbon-intensive consumer activities) is
more efficient and achieves the US CAFE! Standard one of important outputs from application of CLA
(9 L/100 km). However, the next 25% change in methodology.
efficiency from 9 to 6.75 L/100 km is only just above This identification helps policy makers and research-
the pro-rated GHG emissions embodied in the vehicle.3 ers employ scarce resources in the most efficient
However, one thing we need to address here is that way. Our findings (see Table 3) suggest that finan-
building cars of greater longevity is a double-edged cial investment, technology development, capability
sword that can reduce pro-rated indirect emissions but building and research focus should be addressed to
may lead to a protracted lock-in to a less efficient services and products related to home (home energy
capital. use and housing operation) and personal transpor-
Example 2, the end-use efficiency of electric appli- tation (personal travel and transportation operation) for
ances is often higher than gas-fired appliances which energy conservation and carbon mitigation. The reduc-
perform the same functions (i.e. while electric water tion potential of energy use and carbon emissions
heaters are over 90% efficient, gas-fired units are rarely from food and clothing consumption is too limited to
better than 80%). If a policy maker focuses only on be pursued.
the direct influences, he may be in favor of pro- This identification also helps lay people become aware
moting electric units while their indirect energy use of the level of impacts associated with each of their
and CO2 emissions are more than three times higher consumption activities. Most lay people, even when
than gas-fired units. It is suggested that if policies are motivated to become more environmentally responsible,
aimed at direct impacts alone, there is a high likelihood are not equipped with such knowledge. Some think that
of significant unintended negative consequences—the turning off lights, recycling cans, and becoming vegetar-
indirect effects are twice as large and often go ians are the most significant behavioral choices they can
unassessed. make. Although these behaviors often reduce energy use
We also suggest that it is important for policy makers and CO2 emissions, their overall effect is minimal.
to recognize that the portfolio of capital stock repre- Meanwhile, unwitting persistence in other activities,
sented by the indirect influences of consumer expendi- such as frequent air-travel and using electricity as a
tures has many different lifetimes and that policies source for heat can lead to significant primary energy
aimed at changing these will have to be pursued for use and CO2 emissions.
corresponding periods if the policy is to bear fruit. For We suggest that well-designed and credible informa-
example, we could aim for more efficient housing tion dissemination programs, based on the outputs of
structures by enforcing more stringent building stan- consumer-impact studies, especially containing the
dards. But it is important to realize that the payoff to information relating to their daily life and the corre-
such measures will take many decades to be realized sponding environmental impacts, will more effectively
fully. Moreover, policy makers should be aware of the engage the public in the issues of energy conservation
dynamics of responses by consumers in their choices, and carbon mitigation.
and by the economy in how these are met, needs to be
kept in focus when designing policy. These dynamic
factors will determine the pace at which policy objectives 6. Conclusions
can be met and at what cost.
From a consumer perspective, the concepts of direct In this paper, we propose an interdisciplinary frame-
and indirect influences would further stipulate learning a work to study consumer-related issues of energy use and
consumer’s his/her own use and purchase patterns, both carbon dioxide emissions. We apply this approach in an
of them incurring direct and indirect influences. It may estimation of the relationship between US consumers’
direct and indirect energy use and CO2 emissions.
3
These calculations are based on US averages where the cost of a Based on the findings presented in this paper, we
new car in 2001 was $20,000, it was expected to be driven 12,000 miles conclude that studying the specifics of consumer choices
per year and in service for 14 yr. and activities is of critical importance to devising
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S. Bin, H. Dowlatabadi / Energy Policy 33 (2005) 197–208 207

successful policies for energy conservation and CO2 Food away from home
mitigation. We elaborated the importance of add- Alcoholic beverages
ressing the aggregate of direct and indirect energy
use and carbon emissions in the policy design, and Housing operation
further note that the relevant policies should aim to Shelter
reduce both direct and indirect energy uses and Utilities, fuels, and public services (electricity/natural
emissions. gas/fuel oil and other fuels/telephone, and water and
We also highlighted the issue of leakage due to trade. other public services)
The US is perhaps an extreme example of this Household operations
phenomenon, but our calculations show how consumer Housekeeping supplies
expenditures while only 45% of GDP and 85% of Household furnishings and equipment (household tex-
the energy use account for more than 100% of the tiles/furniture/floor coverings/major appliances/small
CO2 emissions reported in the US emissions inventory. appliances, misc. houseware,/miscellaneous household
Clearly, there is a need to develop CO2 inventories equipment)
using a concept similar to GNP and GDP to
differentiate between ‘‘within border production’’ Apparel and services (men and boys/women and girls/
and ‘‘within border consumption’’. children under 2 years old/footwear/other apparel
Moreover, we suggested the output of consumer products and services)
impact studies could be a good resource for information
dissemination programs. Transportation operation
We hope that CLA may be a useful addition to Vehicle purchases (net outlay) (cars and trucks, new/cars
traditional methods employed in the study of energy- and trucks, used)
environment problems and policy design. Whether this Gasoline and motor oil
tool, through being designed around specific and Other vehicle expense (vehicle finance charges/main-
familiar household activities, is more useful to con- tenance and repair/vehicle insurance/rent, lease, licenses,
sumers remains to be studied. Our hope is that CLA other/public transportation)
approaches will not only help policy makers design more
effective policies but enhance public awareness and Health care (health insurance/medical services/drugs
engagement in these issues. and medical supplies)

Entertainment (fees and admissions/television, radios,

Acknowledgements and sound equipment/other equipment and services
(pets, toys, playground equipment, sports, exercise,
We are very grateful to Baruch Fischhoff for his etc.)/reading)
valuable comments and inputs. In addition, we thank the
following people whose questions, comments and informa- Personal insurance and pensions
tion helped shape our research: Mike Decay, Lester Lave,
Granger Morgan (at Carnegie Mellon University), Bill Others (miscellaneous/tobacco/education/personal care
Keil (Bureau of Labor Statistics), Robert Lotta (Energy products and services/cash contribution).
Information Administration). This research was made
possible through support from the Center for Integrated References
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