The paradox of energy efficiency is a good thing, actually
A Wall Street Journal article recently made an excellent point about energy efficiency. It’s quoted at length below:
The idea that more efficiency can spur more consumption rather than less is known as the Jevons Paradox. Named after the British economist William Stanley Jevons, who first described it in his 1865 book “The Coal Question,” the paradox challenges the intuitive belief that efficiency gains automatically lead to energy savings.
Critics who dismiss Jevons’s idea often focus on consumer behavior. For example, it is hard to imagine that a driver would drive 50% more miles if purchasing a car that uses 50% less fuel per mile. They might drive a little more, but it wouldn’t be enough to make a difference.
When you zoom out further to the global economy, however, you see that industry reacts much differently to increasing efficiency. More efficient firms generate greater profits, which leads to more investment, more production and, crucially, more energy consumption to support more food production and population. Efficiency makes it economically viable to extract and consume harder-to-reach energy resources, such as oil from hydraulic fracturing or wind from less windy areas, which then fuels the production of more machines, vehicles and industrial processes.
Consider these two questions:
First, have we continually developed machines and processes that are more energy-efficient? The answer is yes.
Second, has global energy consumption continued to rise alongside this increase in efficiency? Again, the answer is yes, unequivocally so for the past two centuries.
My feeling on this is: great! It’s a good thing that more people can use more stuff for cheaper. That increases living standards. Consumers should have more home lighting, more appliances, and more driving as technology becomes more efficient and cheaper (and there may be consumers who would drive 50% more miles if their vehicle became 50% less efficient, by the way). Businesses reinvest and innovate with more energy. The problem becomes when energy efficiency standards are mandated by governments rather than consumer choice. Innovation and technological advances do much better than whatever an energy efficiency certification does to a household appliance (and as far as I can tell from my spotty dishes, it doesn’t help with speed, cost, or efficacy).
The author goes on and loses me (emphasis added). It’s unusual to see a frank acknowledgement that a goal of carbon capture is to reduce efficiency!
If growth is the goal and you want to spur more of it, then keep promoting investment in energy efficiency with no other policies to restrict profits and investment. But if the goal is to balance growth with lower greenhouse-gas emissions, you have to direct investments toward low-greenhouse-gas technologies and away from high-greenhouse-gas technologies by penalizing emissions. After all, one reason for governments to encourage carbon capture and storage on fossil-fuel power plants is that the chemical process of capturing CO2 diverts some of the energy away from generating electricity, thus reducing efficiency.
Energy efficiency is a valuable tactic for improving well-being by expanding access to energy services. However, we must confront its unintended consequences. By failing to account for the rebound effect, we risk being “surprised” that efficiency ends up driving more emissions. Jevons’s insights from over 150 years ago still hold today. It’s time we incorporate them into climate strategies that genuinely reduce emissions—before another 150 years pass us by.
Modern living standards depend on more energy for cheaper, which energy efficiency contributes to. That’s not just a “valuable tactic” to promote “well-being” and “energy services.” Correcting such a paradox by driving up the costs of energy is asinine.