Tuesday, January 4, 2011

Jevons Paradox

Can energy efficiency be bad for the environment?  How can electric cars and LED lighting result in higher rates of overall energy usage when they are meant to have the exact opposite effect?  This is the crux of the Jevons Paradox which indicates it is going to be even harder than previously thought for society to reduce the overall amount of energy usage (and therefore CO2 emissions).  

William Stanley Jevons was a British economist who argued way back in 1865 in his book The Coal Question that energy efficiencies designed to save or reduce the amount of fuel used tend to have the paradoxical effect of increasing energy consumption in the long-term. Jevons noted that the introduction of James Watt's innovative steam engine resulted in each individual engine using less coal. A good thing. But because each individual engine used less coal, they were more cost-effective to use. This resulted in steam engines being rapidly employed in a wide range of industries where they had previously not been used. In the long-run, Watt's development of the steam engine led to a dramatic increase in the overall amount of coal being burned because steam engines were now all over the place.

As he stated, "...it is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption.  The very contrary is true."  As the per-unit cost of something falls due to increased efficiency, it stimulates additional demand and therefore increases the total usage of that resource. 

Why is this relevant?

In Copenhagen last year, the U.S. Energy Secretary Steven Chu announced a new program launched by the Department of Energy called Climate REDI. One of the most elusive goals of the UN Framework Convention on Climate Change remains to generate a binding agreement on reducing greenhouse gas emissions. The Climate REDI program is an indication that the short-term strategy of the U.S. is to reduce their share of greenhouse gas emissions primarily through technological increases in energy efficiency throughout the economy rather than invest in a clean energy infrastructure to replace our dependence on cheap coal, oil and natural gas.

Energy efficiency is great. There are few people who would argue against energy efficiency.  It appeals to people on a variety of different levels. Each one of us driving a more efficient car will need to fill the tank less frequently which will save us money. I could use more money in my pocket.  From an organizational point of view, purchasing less fuel or energy costs less too. But do those increases in efficiency saving us all money on an individual basis in the short-term really do anything to discourage the long-term usage of energy or will they ultimately backfire and result in increased emissions of greenhouse gas? Jevons paradox suggests the latter.

Think about your car.

Technological advances in the auto industry in recent decades have made car engines more efficient. But these efficiencies have not resulted in increased fuel economy (which has largely remained static since the 1980's), they resulted in bigger cars and bigger engines with more power over that same period of time. Why? Except for a brief period of time in 2008 when prices spiked over $4/gallon the price of gas is cheaper than water. (Think of how much would it cost to fill your cars gas tank with bottled water!) The combination of more efficient engines and cheap gas has fundamentally changed the American landscape.  There are 50 million more registered vehicles than licensed drivers in the U.S. and a huge amount of time and energy is spent moving us huge distances on a daily basis. 

Think about your computer.

As processors have become faster and more efficient and memory has become cheaper, we now never have to worry about slow computers and running out of memory...right?  No, not right.  As processing time has sped up and we have more computing memory applications have stepped right in to fill the void.  As the cost of memory got cheap, it stimulated additional demand and we now use more than ever.  This is Jevons Paradox. 

What is worrisome is that any climate change mitigation strategy for the U.S. must involve reducing total greenhouse gas emissions. But being more energy efficient will not necessarily mean that we use less energy.  While increasing the fuel efficiency of cars and overall energy efficiency will help in the short run, Jevons knew as far back as 1865 that we are going to have to do more, much more to reduce the overall Greenhouse Gas emissions we produce from the production of energy. Increased efficiency is just not enough.

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