One weapon in the arsenal to reduce emissions from burning fossil fuels is a drive to increased efficiency. Make everything more efficient and we will use less energy. It seems obvious, a KWH saved is some oil that we don’t have to dig out of the ground and burn. Just like mom used to say – a penny saved is a penny earned.
But that’s not what actually happens. With more efficient light bulbs people will leave the lights on longer. Make cars more efficient and people will use up some of the efficiency to buy a bigger car and they’ll drive it faster and farther. Make homes more energy efficient and people will build bigger ones and turn up the heat in winter. Make refrigerators more efficient and people will keep the old one in the garage full of beer and install refrigerators in their windows in their bigger houses to keep the room cool.
It’s only if the price increases at the same time that people will actually use less.
In case you think it’s just me making this up you’re wrong. It’s called the rebound effect or the Jevons paradox after Stanley Jevons who published “The Coal Question” in 1865. His argument is that as efficiency increases we use more because the cost does not increase.
You can also listen to a fascinating discussion in a podcast from the Freakonomics team or read the transcript. The podcast consists of an interview with Arik Levinson, an environmental economist at Georgetown University. Mr. Levinson studied the impact of energy standards introduced in California in the 1970’s and reported his findings in the working paper “How Much Energy Do Building Energy Codes Really Save? Evidence From California”. He quotes from the last sentence of the abstract:
“There is no evidence that homes constructed since California instituted its building energy codes use less electricity today than homes built before the codes came into effect.”
He speculates that we waste some of the efficiency gains with bigger engines, heavier cars, longer commutes, and the total of all that waste across society results in an increase in energy use. To put it another way we tend to invest efficiency gains in additional consumption. We need more efficient stuff, but more important, we need less stuff. We need more efficient homes, but we need to combine that with smaller homes and we need to keep them cooler in winter and warmer in summer. We need electric vehicles powered by renewable electricity sources, but more important we need to drive less. As expected from an economist he recommends a price increase as the appropriate mechanism to encourage this change.
So, we can’t count on energy efficiency by itself to lead to reduced consumption; we need to take other steps to ensure that it does. The best way to accomplish this is to simultaneously make energy more expensive, especially the fossil fuel energy that is boiling the planet. Then, since everything is made up of energy to some extent, people will tend to choose the stuff with less fossil fuel energy content because it costs less.
But as long as fossil fuel energy stays cheap people will continue to buy and use too much stuff, and then even if it can be made more efficient we won’t realize the emissions savings we need to prevent catastrophic climate change. Carbon Tax?