This paper contributes to the debate on the trend towards “tertiarization” of the economy, i.e. the historical change in the sectoral composition of the economy shifting employment and value added towards an ever more dominating service sector. We develop an aggregate production function model in which a declining ratio between energy prices and wages creates incentives for technical changes aiming at a substitution of energy inputs for labor. However, the sectors’ differing technological opportunities for such a substitution set limits to such an endeavor. The theoretical predictions of the model are tested with data for the EU and the US for the period 1980-2000. The results show that there indeed are significant differences between the sectors in the changes of the energy-labor ratio and the corresponding effects on the sectors’ value added and employment. Since these effects play a significant role for the observed tertiarization, it may be conjectured that, with a likely rise of energy prices in the future, the trend towards tertiarization is neither sustainable nor irreversible.