Until now the story of human prosperity has been all about cheap, abundant energy. However, something big has been happening. For the first time in history, we are growing richer while using less energy. That is unalloyed good news for budgets, incomes and the planet. We have reached a technological tipping point.

From the middle ages, living standards just edged up at a snail’s pace, and we did little damage to the planet, because growing forests absorbed carbon from wood burning. The population was small. We led lives that were, in Hobbes’ phrase, “nasty, brutish and short”. Then we started burning coal on a large scale in the 18th century, and the industrial revolution made the graph look like a hockey stick: suddenly incomes were doubling in decades, following centuries of stability. After allowing for inflation, real GDP in England and Wales doubled from 1830 to 1864, again by 1898, and again by 1951, despite two world wars.

Gross domestic product is a measure of activity, not welfare. But there is plenty of evidence of real progress. If life is better than death, this surge of growth was more good news. Male life expectancy at birth in England and Wales in 1841 was just 40 years. By 1950, it was 66. On the latest figures for 2012, it is now 79 for men and 83 for women.

This unprecedented prosperity and welfare was inextricably linked to the burning of fossil fuels, and therefore to the beginning of carbon emissions and global warming. And we are paying with the steady rise in carbon and temperatures compared with pre-industrial levels.

This is why so many green thinkers have rightly been suspicious of economic growth: the curve of rising living standards has been tracked by the curve of rising energy use from coal, oil and gas. The simple answer was green puritanism: change our lifestyle. Don the hair-shirt. Stop consuming more. Stop growth – and therefore stop pollution.

The good news is that we can increasingly see a future where technology does most of the change for us. Readers of the Digest of United Kingdom energy statistics will find an extraordinary table in the new edition: the two-century link between growth and energy has broken. The UK economy has doubled in real terms since 1985, but total energy consumption is exactly the same as it was in that year. Indeed, energy consumption has fallen since 1970 while the economy has nearly trebled in size.

Of course, industry is a big user of energy, and a lot of heavy manufacturing has migrated to China and other low-labour cost parts of the world. Global energy use and carbon emissions are rising because of population and income growth, but the energy-saving trend is visible even in developing countries. Global GDP per unit of energy is 35% higher than it was in 1990.

Photograph: Rui Vieira/PA

What has been going on? Cars are far more efficient, even though larger. A good supermini now runs more than 70 miles per gallon of fuel, whereas the most efficient mini in 1965 did 43 miles per gallon. With hybrids and fully electric vehicles, there is more fuel economy coming. We are also taking the train more: electric trains run better than diesel. Nearly two-thirds of our energy bills go on home heating, and our boilers are better and homes more insulated: “Which?” estimated recently that a new condensing boiler will save 39% over an old heavy boiler. For a typical British semi-detached house, that is a saving of £460 a year. Our household items use much less electricity than before. A fridge-freezer now uses half the electricity of a similar sized model 20 years ago.

Nor is this process slowing down. The cost of lighting is collapsing. A light emitting diode (LED) will give the same amount of light as an old-fashioned Edison incandescent bulb, with a saving in electricity use of 93% (and you can now get dimmable and warm versions). One business that runs three warehouse shifts a day – and therefore uses a lot of light – told me it recently re-equipped with LEDs, and the investment paid for itself in little more than a year.

Some of this is simply a response to the marketplace. Oil in the late 60s cost $3 a barrel. It now costs $103. Not surprisingly, rising energy costs have put a premium on new energy-saving technologies and the roll-out of existing ones. Government policy has also helped. California’s vehicle emission standards have boosted the uptake of electric vehicles, creating a market for the Tesla, and the EU and the US have imposed tough standards for appliances.

Businesses are bound to be early adopters of energy-saving technologies, because retailers and distribution firms can spend a fortune on energy. They are used to assessing investment and returns, whereas householders are often put off by the higher initial cost, and poorer households simply cannot afford the switch of energy efficient products even though they pay back quickly. Poorer householders simply cannot afford the up-front cost. That is why it is so crucial for government to encourage household energy saving.

It is also why one of the most short-sighted decisions of this government was to halve the amount of support for energy saving through the Eco subsidy, and just this summer to end the cashback scheme for the energy-saving green deal because it was too successful. The £120m budget allocated until next spring was exhausted in six weeks.

Andrew Warren, of the Association for the Conservation of Energy, says there are now 7,000 fewer people employed in making our homes energy efficient than in 2012. This will inevitably slow down the roll-out of energy-saving measures, and will raise our future energy bills compared with what they would otherwise be. It will also make the task of cutting carbon emissions more difficult and more expensive: the cheapest way of saving carbon is to not use energy in the first place. Any form of energy production – renewables, nuclear or carbon-captured fossil fuel – would be more expensive.

Bad policy, and Treasury short-termism, is a crying shame (if nothing new). But the big picture is clear, and optimistic. Energy-saving is working. Green growth makes sense, and is happening. There is a future that preserves the gains of industrialisation without its polluting losses. Our living standards are rising, while our energy use is not.