Tag Archives: rebound effect

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.

Talk of the Jevons paradox is getting tired. Energy efficiency, no matter how you slice it, is a good thing.

Eric Wesoff of GTM Research has a guest blog post on GE’s Ecomagination site titled “Will efficiency lead to more power consumption?” It touches on the idea, first proposed by economist William Stanley Jevons in 1885, that technologies designed to make our use of energy more efficient work to increase, not decrease, overall power consumption. This Jevons paradox, or energy rebound effect,  is often used by folks who want to undermine policy efforts aimed at promoting energy efficiency. Wesoff, it should be pointed out, is simply posing the question to encourage discussion.

 Does the introduction of new energy-efficient technologies make us use more of something we might not otherwise use, thereby negating efficiency gains? There certainly is evidence that, for example, people drive more when they’re in more fuel-efficient vehicles. But beyond The Breakthrough Institute, it’s generally believed the rebound effect is in the area of 10 per cent and that there is still a healthy net benefit to introducing more efficiency into vehicles. Certainly, there are specific examples we can find that show the rebound effect is higher, but there are far more examples — in my view — where it’s likely to be far lower. I don’t buy, for example, that introducing more efficient lighting technologies will lead us to leave the lights on more. Yes, communities and cities will grow and that will increase electricity demand for lighting, but on a per-capita basis will we use more? Maybe, for some, if the price of power stays the same or falls, but that’s not the case. The fact is, the widespread introduction of LED lighting will lead to a dramatic overall reduction in energy use on a per capita basis, and we can’t blame energy efficiency on growth that is likely to happen anyway.

If I insulate my home am I going to use more electricity or natural gas to heat it? No. If a company automates lighting and other functions in a building to reduce energy costs why would it revert back to using more energy in that building? Am I going to wash more laundry because my laundry machine is more efficient? No.

Some point to efficiency as making products cheaper for people in developing countries, such as India and China. So what’s the solution — make products as inefficient as possible to keep these products out of these markets? Besides, consumption in India and China is largely driven by increases in personal wealth, not advancements in energy efficiency.

Anyway, there’s no shortage of articles and blog posts debunking the impact of the Jevons paradox, yet it continues to get raised as some sort of achilles heal to energy efficiency programs. It’s all getting a bit tiring. The fact is, where the rebound effect is seen as a potential problem, there are many policy options available to keep it in check. Carbon taxes. Program that encourage a culture of conservation. Time-of-use pricing. Electricity pricing threshold.

This is a non-problem.