Tag Archives: ACEEE

Sorry Mr. Jevons, your energy efficiency paradox really isn’t

We hear all the time about the virtues of buying more energy-efficient light bulbs, appliances, homes, and vehicles. By using less energy, such things save us money, take stress off the power grid, and help us reduce our consumption of fossil fuels.

But there are some who question whether energy efficiency is everything it’s touted to be. Specifically, they point to the idea that there is a large rebound effect to increased energy efficiency. The concept here is that when we use products that consume less energy, we end up using more of the product or using more products – or both.

When we buy a more energy-efficient car, we drive more. When we install more efficient light bulbs, we’re more inclined to leave the lights on longer. If the end result is that gains in energy efficiency are offset by increased energy use, then what’s the point?

This dilemma was first explored in 1885 by British economist William Stanley Jevons, which is why the rebound effect is often referred to as the Jevons paradox. These days, critics with mostly libertarian leanings cite it as a reason to discontinue “ineffective” government-funded energy efficiency programs.

The Washington-based Institute for Energy Research, which has reportedly received funding from the likes of Koch Industries and ExxonMobil, made that argument last month in a 43-page report.

“The pervasiveness of energy efficiency rebounds illustrates that attempts to plan or direct energy policy toward desired goals will likely fall short of expectations,” it asserted. “Instead of imposing energy efficiency mandates, energy policy should embrace market prices and disruptive innovations to guide energy to its most valuable uses.”

In other words, policies attempting to phase out inefficient lighting products? Bad. Mandating fuel-efficiency standards for vehicles? Ineffective government meddling. Make power plants cleaner and more efficient? Let the market decide.

The research institute’s study rightly ruffled the feathers of the American Council for an Energy-Efficient Economy, which this week tried to set the record straight: Claims of 100 per cent rebound, it said, “do not stand up to scrutiny.”

The council released its own detailed report – a kind of study of available studies – that looked at both direct and indirect rebound effects.

Direct rebounds include the example of driving a more efficient car more often, ultimately using up any potential fuel savings. An indirect rebound occurs when money pocketed through energy-efficiency savings is spent on something else, such as a big-screen TV, which ends up consuming more energy – both through its production and everyday operation.

The council didn’t dispute that such rebounds exist, and that they vary depending on the product or action. But it concluded that critics of energy-efficiency programs were grossly exaggerating the size of the rebounds. It found that direct rebounds were generally 10 per cent or less, and indirect rebounds – while “less well understood” – were estimated at 11 per cent.

“Even if total rebound is about 20 per cent, then 80 per cent of the savings from energy efficiency programs and policies register in terms of reduced energy use,” it said. “And the 20 per cent rebound contributes to increased consumer amenities and a larger economy. These savings are not ‘lost’ but are put to other generally beneficial uses.”

On top of this, it would stand to reason that the rebound effect would be smaller in an environment of rising energy prices. Indeed, higher gasoline prices are driving many people to purchase more energy-efficient vehicles.

In this sense, efficiency is being embraced as a way to cope with energy inflation; a way to maintain current levels of consumption, not drive more of it. If gas prices never changed, it might be a different story, but most people just want to be able to drive back and forth to work and keep their gas bill manageable.

Former CIBC chief economist Jeff Rubin has argued that the genesis of the economic crisis we’re currently in has to do with high oil prices, and that reality of rising energy costs will make it difficult for countries – such as the economic basket cases in the eurozone – to achieve the kind of growth they need to recover.

Along this line of thinking, it would seem that greater energy efficiency – with one measure being energy consumption per unit of GDP, or “energy productivity”—represents one way for countries to cope with rising oil prices and achieve the kind of growth that can help whittle down debt and balance budgets.

Greater energy efficiency, in this respect, could play a large role in lifting us out of our global economic doldrums.

I’m sure even Mr. Jevons would agree.

Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies.

Canada near bottom of heap when it comes to energy efficiency: report

My colleague David Olive at the Toronto Star has an excellent column today about how Canada, despite boastful talk out of the Harper government, has eight reasons to curb its enthusiasm when it comes to how well it’s doing relative to the rest of the world. Business spending on R&D and venture capital investment as a percentage of GDP are ridiculously low. We have a pathetic labour productivity growth rate. The income inequality gap is growing while it shrinks in Europe. Our infrastructure deficit is widening. That’s just a taste of what Olive highlights.

Now today, the American Council for an Energy Efficient Economy is reporting a new detailed study that ranks Canada 11th out of 12 of the world’s largest economies. Seems when it comes to energy efficiency, the only country Canada is capable of beating is Russia.  (You need to register to access details of the full report).

The council analyzed more than 25 different energy efficiency indicators or “metrics” to determine a total country score out of a possible 100. In addition to an overall ranking, it also ranked countries under specific categories: buildings, transportation, industry and “national effort.” Our best ranking came with national effort, but even then, all we could do is achieve 8th place. On industry we ranked 10th, and with both buildings and transportation we ranked 11th.

When you dig into the report there are some interesting statistics. Canada ranks dead last when it comes to oil consumption per person, and we come third last when oil consumption is measured as a percentage of GDP. We also rank second last for our energy-efficiency policies. The report makes for some very insightful reading, but what it shows overall is that the Great North Strong and Free is a big laggard when it comes to energy efficiency, and that is ultimately going to affect our productivity and competitiveness on the world stage. It also reinforces our growing reputation as a major roadblock to serious action on climate change.

Corporate Knights is currently working on a G20 Clean Capitalism Country ranking that will appear in our summer (September) issue. It will be interesting to learn how we rank when all environmental, social and governance criteria are lumped together. Stay tuned…

Efficiency debate: The pros and cons of consumer electronics

The American Council for an Energy-Efficient Economy issued a report yesterday touting the role that semiconductor-based technologies have played in making the U.S. economy more efficient. At the same time, the International Energy Agency issued its own report calling on governments around the world to be more aggressive with efficiency standards for ICT and consumer electronics, which are expected to demand twice as much power by 2022 and three times as much by 2030 — creating a need for another 280 gigawatts of power generation (i.e. like adding another Japan to the world, or more than 230 nuclear reactors). “This will jeopardize efforts to increase energy security and reduce the emission of greenhouse gases,” according to an IEA news brief.

I’ve got a story on it here in the Toronto Star.

It appears the American efficiency council was aware that the IEA report was coming and intent on countering its conclusions, or at least defending the role that semiconductor-based technologies have played in improving efficiency throughout the larger economy. The council claims that such technologies have *avoided* the need for 184 power plants since 1976 and, using 2006 as a reference point, saved consumers and businesses $69-billion on their electricity bills. More than that, the technologies have prevented 479 million megatons of CO2-equivalent emissions — that is, they’re responsible for a “20 per cent cut in electric utility industry emissions linked to climate change.” Going forward, it estimates a further $1.3 trillion (yes, trillion) in savings between now and 2030. “Despite the immediate growth in electricity demands to power the growing number of devices and technologies, semiconductors have enabled a surprisingly larger energy productivity benefit in that same period,” argues John Laitner, the council’s director of economic and social analysis.

So who’s right? Well, both.

Certainly computers and networking gear have contributed substantially to economic efficiency, but can the same argument be said for iPods and cellphones with digital cameras and other unnecessary features built into them? Do we really need four televisions, three computers, two DVD players and digital picture frames that use remote controls in every home? Fact is many of the consumer electronics, if not most, contribute nothing to productivity but exist merely to entertain and make life more convenient, and in most cases slightly so. This is what the IEA is talking about, and while it implicitly recognizes such a market is important and not going away, it makes a good argument: If we’re going to become more gadget-obsessed we have an obligation to make these devices as energy-efficient as possible.