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Mar 20, 2012

Jevons Paradox: The Debate That Just Won't Die

This is a followup to the Spring 2011 Solutions Journal article, "The Rebound Effect: A Perennial Controversy Rises Again" by Michael Potts and Cameron Burns.

 

"Using energy more efficiently offers an economic bonanza - not because of the benefits of stopping global warming but because saving fossil fuel is a lot cheaper than buying it." - Amory Lovins

The Soft Path Graph 1976

In RMI Chief Scientist Amory Lovins' landmark piece, "Energy Strategy: the Road Not Taken," published in Foreign Affairs in 1976, he outlined his vision of a "soft energy path" which combines a prompt and serious committment to efficient use of energy (the 1976 graph featured on the right got the 2000 US energy demand right within a few percent). Since 1982, Rocky Mountain Institute has been committed to driving the efficient and restorative use of resources, working with for-profit businesses to lead the transition from coal and oil to efficiency and renewables.

The Importance of Efficiency 

Efficient use of energy is the most important, economical, prompt, underused, overlooked, and misunderstood way to provide future energy services. According to peer reviewed research and analysis in Reinventing Fire, the U.S. can deliver the same energy services and run the same economy with 40 percent less primary energy required in 2050 as compared to the business as usual case.

However, the issue is more complicated than it seems—see the debate sparked by David Owen in "The Efficiency Dilemma," published in The New Yorker in late December 2010 (Online subscribers can read the article here.), and perpetuated in his recent book, The Conundrum.

On the Web Recently

The Siren Song of Energy Efficiency (New York Times, March 19, 2012)

Whatever happened to “Use it up, wear it out, make it do or do without”? Now many civic-minded Americans ask themselves not how to avoid buying stuff, but rather what to buy: that shiny new hybrid in the driveway, the energy-efficient appliances in the kitchen, the right light bulb. Does this pay off for the planet, or does the quest for efficiency distract from more effective approaches to cutting carbon output? What can consumers do that would be more effective.

Lovins' Response

 As far as I know, David Owen and I have never met or spoken, although he has published two New Yorker articles, a book, and now this New York Times article directly attacking my work, with which he seems rather unfamiliar. This seems an odd way to do journalism, though it's not his style to let pesky facts get in the way of a good story. Even odder is that the Times now republishes his conclusions (plus an incomprehensible analogy about a village called Lovinsland) without seeming to realize they're thoroughly discredited and merit at least an opposing view.

Owen's counterfactual 2010 New Yorker article on energy "rebound" was demolished at the time by, among others, Dr. James Barrett of the Clean Economy Development CenterDr. Michael Levi of the Council on Foreign RelationsDr. David Goldstein of Natural Resources Defense Council, and myself
. Cameron Burns and Michael Potts nicely summarized the key arguments here—the #1 Google hit for searches like "AmoryLovins+Jevons"—and RMI pursues the diverse "Jevons paradox" conversation at on our blog.  A Times editor constructing a conversation on this theme could have easily found such references, leaving readers better-informed.

There is a very large professional literature on energy rebound, refreshed about every decade as someone rediscovers and popularizes this old canard. That literature supports neither Owen's view nor Prof. Matthew Kotchen's partial support that "rebound effects are potentially important." Real, yes; important, no. The price-elasticity and responding effects Owen cites, where measurable, are consistently minor—a theoretical nicety of little practical consequence.

James Watt's more-efficient steam engine did spark an industrial revolution that (as Stanley Jevons observed) created great wealth and burned more coal. But this is no proof that energy efficiency generally triggers economic growth that devours its savings (or more)—a "backfire" effect never yet observed. Rather, it shows that many disruptive technologies stimulate economic growth and wealth, sometimes sharply. Some disruptive technologies, like microchips and the Internet, incidentally save net energy even though they are not meant to be energy technologies; some disruptive energy technologies, like automobiles and jet airplanes, increase energy use, while others, like electric motors, probably decrease it, and still others, like electric lights, could do either depending on technology and metrics (which Owen's cited lighting analysis muddles); still other disruptive technologies that Owen doesn't criticize, like key advances in public health, mass education, and innovation, enormously increase wealth and have complex and indeterminate energy effects. Blaming wealth effects on energy efficiency has no basis in fact or logic.

To be sure, energy efficiency does modestly increase wealth, just as Owen's more efficient desk-lamp makes him slightly richer. I doubt this saving makes him use the lamp at least four times more (as would be needed to offset its energy savings), or that if it did, sitting longer at his desk would not displace other substantial energy-using activities. More likely his total energy use rose simply because he got richer: his writings and lectures have sold well to people who like his message, so he now has more stuff, uses it more, travels more, and probably doesn't reinvest much of his increased wealth in buying still more energy efficiency, which he thinks would frustrate his stated goal of environmental improvement.

That U.S. energy productivity has grown faster than GDP in only nine of the past 35 years doesn't prove it can't, nor make it less valuable; the U.S. now uses half the total energy it would have used at its 1975 energy intensity. (I'm one of two analysts who called this correctly back then.) Energy efficiency's speed and depth of adoption depend on many things—frugal technologies' price and easy availability, delivery channels' maturity and trustworthiness, citizens' attitudes and behaviors, and (most of all) barrier-busting so people can make smarter choices. Some places do this well. California, for example, has held per-capita electricity use flat for 30 years while per-capita real income rose by four-fifths.
 

Nor does continuing, though slackening, energy growth mean energy productivity can't accelerate to outpace economic growth consistently, as U.S. oil productivity did during 1977–85, when GDP grew 27 percent while oil use fell 17 percent Indeed, Rocky Mountain Institute's new synthesis Reinventing Fire (which properly counts rebound effects to the minor extent they've been established in the professional literature) explores what would happen if the United States achieved over decades the rates of efficiency improvement that some states have already sustained. The result: a 158 percent-bigger 2050 U.S. economy could use 24 percent less energy, need no oil or coal or nuclear energy, emit 82–86 percent less fossil carbon, and cost $5 trillion less (in net present value, ignoring all externalities)—the transition needing no new inventions nor Acts of Congress, and led by business for profit.

Owen's call to reject such practical and profitable transformation reminds me of the economic theorist who lay awake all night wondering whether what works in practice can possibly work in theory. Fortunately, his sophistry will not deter readers who understand energy and economics.

Join the Conversation

Is there indeed an "efficiency dilemma"? Or, will efficiency help us jump-start the journey toward a fossil-fuel-free economy?

We want to hear from you.

Other Articles

In response published on January 17, 2011 in The New Yorker, Lovins responded to Owen's claim that energy efficiency can lead to greater energy use. 

"David Owen argues that energy efficiency can lead to greater energy use, but actual “take-backs” of energy savings are usually between zero and a few per cent, rarely ten to thirty per cent, and never more than a hundred per cent..." 

Read Amory's Full Response

In addition, an article published on February 28, 2012 in WIRED, Amory argues that there's evidence that efficiency standards work. For example, After California imposed them in 1974, per capita electricity consumption stopped growing, even as it rose throughout the rest of the nation.

Read  the full article

Other Voices in the Discussion

Numerous responses, both in print and online, have perpetuated a lively conversation about Jevons paradox, a proposition that technological progress that increases the efficiency with which a resource is used tends to increase, rather than decrease, the rate of consumption of that resource. Most recently, David Roberts featured a four-part series in Grist, and a March 19, 2012 debate featured byNew York Times posed the question, "does this pay off for the planet, or does the quest for efficiency distract from more effective approaches to cutting carbon output?"

Below is a sample of articles stating Jevons paradox has a negligible effect.

Rebounds Gone Wild
realclimateeconomics.org, January 10, 2011

Do Green Cars Just Make People Drive More?
Motherjones.com, March 7, 2011

Rebounds and Jevons: Nobody Goes There Anymore. It's Too Crowded.
realclimateeconomics.org, January 18, 2011

Some Dilemma: Efficient Appliances Use Less Energy, Produce the Same Level of Service with Less Pollution and Provide Consumers with Greater Savings. What's Not to Like?
switchboard.nrdc.org, December 17, 2010

Mangling Energy Efficiency Economics
blogs.cfr.org, December 14, 2010

Rebounds Gone Wild
greatenergychallengeblog.com, December 20, 2010

Energy Efficiency: Paid Lunch or False Shortcut?
Huffingtonpost.com, December 31, 2010

Does Improving Efficiency Do Any Good?
theenergycollective.com, January 3, 2011

Energy Efficiency on the Rebound
Huffingtonpost.com, March 3, 2011

A fascinating encounter with advocates of large rebound effects
Koomey.com, Feb 13, 2011

These articles claim that Jevons paradox has a large impact.

When Energy Efficiency Sullies the Environment
nytimes.com, March 7, 2011

If you think efficiency reduces our energy use, think again
thenational.ae, January 4, 2011

If efficiency hasn't cut energy use, then what?
grist.org, December 16, 2010

Brother, can you spare a fridge?
grist.org, December 23, 2010

"Energy Emergence: Rebound and Backfire as Emergent Phenomena" - Report Overview
thebreakthrough.org, February 17, 2011

Efficiency Promise: Too Good to Be True
New York Times, March 19, 2012

 

 

 

Join the Discussion


Showing 1-10 of 26 comments

January 25, 2011

This is discussed quite a lot in the UK too. The most annoying feature is that the paradox has sometimes been used by renewable energy enthusiasts as a reason for not undertaking energy efficiency measures, creating unnecessary tension between EE and RE experts. In truth, if we are to move to a sustainable energy future we have to do BOTH, although in practice it is often the efficiency measures that should be tackled first as (a) they typically have a quicker financial return and (b) only by capping total demand can we realistically expect to meet a majority of demand through renewables. Yes, there will always be some leakage back from savings into additional energy demand, but on average it tends to be quite low.


January 25, 2011

Obviously efficiency is necessary and essential, but not sufficient. A list of some other reports on the rebound issue worth reading, can be found here - /Content/Files/jp_totten.docx


January 26, 2011

I have a ton of respect for Amory Lovins. He is doing a lot of good but I fear that Jevon is probably correct. Rebound may be insignificant in the short term but common sense tells me that rebound will be absolute in the long term. I strongly believe that this is not an either/or situation. We need efficiency improvements and a carbon tax that is equal to the environmental costs of excess CO2. A carbon tax will only lend support to the kinds of efforts led by Mr. Lovins. High fuel prices in Japan motivated Honda and Toyota to create hybrid vehicles. US domestic automakers had the technology to create hybrid cars but they knew American consumers would not buy them when gasoline prices were low. Honda was the first automaker to sell a hybrid car in the US but they discontinued the first generation Honda Insight in 2006 due to slow sales. Toyota's Prius was also a slow seller when gas prices were low. The Prius sales only accelerated AFTER gasoline prices began to skyrocket in 2005. And let me repeat that the Prius and Insight would never have been developed had gasoline prices not been very high in Japan. Gasoline prices in Japan are currently about $6 per gallon. The best selling car in Japan is the Honda Insight. Amory Lovin's: Please keep up the good work. We need people like you but we will never achieve the deep CO2 cuts that are necessary without a carbon tax IMHO.


January 27, 2011

I'm perhaps too naive, but I looked at the Empire State Building retrofit and saw: $106million invested for energy related products, producing annual energy cost savings of $4.4million. That's a simple payback of 24 years. In energy terms I missed the total before and after uses expressed in, say, kWh/m2a. But savings at the consumer end, say in the order of 10%, typically result in only 0.03% savings in raw input energy. What should I be impressed about?


January 27, 2011

Thank you all for your comments on Jevons. This one has been around a long time of course, making periodic appearances. Some folks think it through on a highly conceptual level, others based on an example or two - often vehicle or electricity or appliance use, either historic, current or future. Much of the time three key pieces are missing - the role of wealth, logic, and the facts.

Wealth first - the refrigerator example discussed in the New Yorker article is a classic example of wealth driving more consumption. Its not efficiency that drives someone to get a drinks fridge for the downstairs den or a chest freezer for the garage - its wealth or maybe in some cases a lifestyle choice. Efficiency has no causality in these situations. Sometimes we wish efficiency were more of a direct driver of behavior - even consumptive behavior - too often its invisible or nearly so. But we'l save that thought for another day.

Logic next. For Jevons to be a real deal - it must actually hold true quite broadly, maybe close to universally, in the relevant space. And it does not. Everywhere you look you see individuals, groups, and the economy creating counterexamples in their everyday lives. For instance individuals and populations regularly buy more efficient cars without changing their driving patterns at all (where would they get the time - or the stamina to cope with even more traffic?) Obviously this technology is at a relatively late life cycle stage, where there are almost as many vehicles in the US as people, and as our reader points out, this really does affect things. So there are many fields where Jevons does not apply. There are probably also a few where it does. The early steam engines of Jevons' era- where efficiency was a huge issue, as thermal efficiency was just a few percent - probably counts. Increasing efficiency WHEN it is the fundamental issue affecting usage will lead to more use. A big when, which we seldom find nowadays. People are confusing wealth with Jevons.

Facts last. The efficient cars cancel out their benefits with the "more driving problem". It's not a problem. People do drive a bit more, but far less than the efficiency gain. There is a net benefit. It would not be the case if it was one of the first cars, probably, but, it's not. One of our readers commented about how a services perspective helped see through the Jevons issue, and that there were natural limits in many cases to needs. We'd agree.

Happy to get your thoughts in return - and happy debating!

-Robert Hutchinson, RMI Managing Director


January 28, 2011

Keeping the discussion within scope of a blog it seems that two key ideas come into play regarding Jevons Paradox, the critical path toward mitigating the climate change crisis, and the salient characteristics describing how we must now advance civilization: 1. Profound integration with natural capital where human capital is the most important component 2. Reinvention of the equivalent of what might be described as the "eden concept" where residents have a very low cost-of-living and a very high quality-of-life Most likely the goals and methods will include highly disruptive deployment of energies and efficiencies greater than 90% with minimal material throughputs making the Jevons' discussion of little or no consequence except that perhaps the incremental approach at this late time is definitely not the way to go, which must include massive restoration of natural services. And, having written the book on natural capital, Lovins definitely gets it.


January 29, 2011

Greetings LMH, I would like to address your two concerns about the Empire State Building (ESB). Of course there are many reasons to be impressed with this building in addition to the recent deep retrofit. If you look at http://www.retrofitdepot.org/Financial you will see more financial and other detail on the ESB project. In short, the $106M was a total of "energy related" projects, of which $93M were in the original capital budget before optimizing energy was considered. Originally chiller upgrades and air handler replacements were in the budget, but with marginal operating energy savings. The energy design team reviewed this investment and by increasing it $13M provided the ~$4.4M anual operating cost savings. It is this incremental cost difference (between the original capital budget and the optimized investment), that should be used as the true additional investment resulting in operating cost savings, and hence the ~ 3 year simple payback. This really works. We reduced capital expenses in some areas (chiller saved $17M ) invested in others (windows, added $4M, VAV added $2.4M) and the reallocated capital results in a much better return. The EUI was reduced from 88kBtu/sf to roughly 55kBtu/sf. The ESB story has two big points: 1) including energy retrofits at the right time, when investments are already scheduled will dramatically increase their financial benefit, and 2, big transformative efficiency improvements happen when multiple items are considered in an integrated way. At ESB the reduction in chiller loads was only possible because of including improved windows, which allowed for the reduced chiller capital costs. The windows would not have been cost effective on operating cost alone. In this building, I expect the energy savings will remain, so perhaps Jevon does not apply here either :) Hope this elucidation helps the ESB story seem more impressive! -Victor Olgyay, AIA


January 30, 2011

With energy and efficiency dominating the conversation the lack of discussion of the importance of material throughputs is a serious issue much like promoting "free-market" policies while omitting natural services and greatly reducing any relevance.


February 1, 2011

David Owens New Yorker article "The Efficiency Dilemma," asks "If our machines use less energy, will we just use them more?" http://www.newyorker.com/reporting/2010/12/20/101220fa_fact_owen The quick simple answer is: When throughput accounting and design scaling is correct, chances are that we will make optimum use of our machines in the most practical, convenient, cost-effective, and environmentally responsible manner; and if we use them more it will not matter since the impact on the environment will be minimal. An SUV obviously is not scaled correctly to move an individual, as well as a 35-ton subway car to move two hundred 175-pound people since both move more than one-half ton of wasteful dead weight per person wherein a simple bicycle might add between 15 to 35 pounds to the weight of each person it moves. The 430 million cyclists and 120 million electric bike users in China have minimal impact on the environment since cycling is about 3 to 4 times more efficient than even walking. And, it should be obvious that cycling provides a very primitive but effective solution to net-zero mobility.


February 4, 2011

I wrote about this on my company blog: http://www.pikeresearch.com/blog/articles/the-jevons-paradox-is-energy-efficiency-futile My main point is: While there may be certain instances in which the Jevons Paradox would be apparent, it only applies in cases where prohibitive energy costs are a constraint to increased consumption. But for the majority of today's energy uses (heating, cooling, illuminating buildings), energy consumption is a function of keeping a home at 72 degrees or providing enough light, not of getting as much heat or light as possible. If the Jevons paradox were really the case for general residential/commercial consumption, don't you think it would be a lot easier to convince utilities to implement efficiency programs? According to the Jevons paradox, encouraging consumers to buy more efficient appliances/equipment would lead to even more consumption. But we know all too well that this isn't the case, and utility efficiency programs are the result of regulations/incentives, not recognition of the Jevons paradox.

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