Energy efficiency remains the most cost-effective climate strategy
Of the rigorously-framed hypotheses claiming that large negative rebounds exist, we measure them against the data, which refute the hypotheses. Rebounds at the end-use level are small and decrease over time. Rebounds at the economy-wide level are trivially small, and might well be a net positive.
The false narrative industrial complex has been working overtime to attack the myriad benefits of energy efficiency (see links below). Now a new report provides a definitive rebuttal to the “rebound effect.” Here is a summary by lead author Dr. Goldstein, who co-directs NRDC’s Energy Program.
Every few years, a new report emerges that tries to resurrect an old hypothesis: that energy efficiency policy somehow results in consumers using more energy instead of less.
This hypothesis was introduced in the 19th Century by economist William Stanley Jevons, who argued that increases in the energy efficiency throughout a nation would lead to increases in coal consumption, rather than decreases.
Recent articles have attempted to revive these claims, also known as “rebound effect” “”restating that energy efficiency tends to encourage more energy use, not less, and that if a consumer’s immediate goal is to tackle climate change, then it seems risky to count on reaching it by improving efficiency. Assuming rebound effects eat up most of the energy savings, such claims then argue that efficiency cannot be a good policy to reduce energy consumption or combat climate change.
However, in a new report published today in the online journal, www.ElectricityPolicy.com, my colleagues at the Natural Resources Defense Council dispel these claims, finding that:
1) Rebound effects are small, at high end, and at the low end, very well might have the opposite effect – efficiency might cause people to save more than was already expected.
2) Rebound effects do not jeopardize our ability to reduce greenhouse gas emissions or to lower our energy consumption because they do not change energy efficiency savings significantly. Indeed, to the extent they do, the effects appear to be positive.
3) There are two different types of rebound theory, both of which have been discredited. The first, known as the end-use rebound theory, hypothesizes that people who own efficient appliances would use them more and thereby consume more energy. This is contradicted by comprehensive studies showing end-use rebounds to be small and decreasing over time, as well as the aggregate consumption metrics. For example, when environmentally conscious consumers switch to energy efficient light bulbs, they don’t necessarily leave the lights on longer. The second, the economy-wide theory, hypothesizes that any energy savings from efficiency would be offset by money savings respent on activities that demand additional energy consumption. This is refuted by the fact that only a small portion (maximum of 6-8%) of those expenditures ever goes to energy. For instance, consumers who save money on their electric bill, may use those savings for any number of things – food, movie tickets, or a child’s college fund.
Our analysis – “Are There Rebound Effects from Energy Efficiency? – An Analysis of Empirical Data, Internal Consistency, and Solutions” - takes a detailed look at what rebound theory really says, how or whether this theory has been tested in the real world, or even how it could be tested, and what policy recommendations and results would flow from it if it were correct.
The first thing we found in our research is that rebound enthusiasts rarely define what they actually are predicting. This is an important failing, because the science of economics demands that theories be tested in such a way that the evidence either disproves or supports the hypothesis. Most rebound effect hypotheses are so casual that proponents of rebound can use any real world situation they choose to use and claim that it validates their ideas. Our study was able to find only two ways of stating rebound theory that are rigorous and capable of being tested. Both are firmly refuted by the evidence. The first version of a rebound theory that is scientific enough to be tested asserts that energy use grows in fixed proportion to the economy (to GDP). As my colleague Sierra Martinez elaborates in his blog, the history of the last 40 years in the United States and virtually all other developed economies, shows this to be false. After implementing energy efficiency policies, many economies have indeed broken the lockstep increase in energy consumption with production of wealth.
The second version asserts that the savings to a state through efficiency policies will be much less than the sum of the expected savings from the policies and technologies one by one. However, California showed actual reductions in electricity use per capita over the last 40 years (compared to the rest of the nation) that not only equal the sum of the predicted savings but are actually four times as big. Other states showed similar, if smaller, results. Nowhere were there serious predictions of savings accompanied by disappointing results.
Of course, there are small rebounds in a limited number of end uses. For example, if you weatherize a drafty home, the occupants may be able to afford to keep it heated more comfortably, and there are indirect effects of efficiency on energy price and thus overall usage. But these effects have been incorporated into most energy models since the 1970s, and are found to be very small and decreasing over time.
Rebound proponents often want to rely solely on supply-side solutions. But if rebound suggests that efficiency may not save much energy, similar theories on the supply side would show that new clean energy sources may not reduce the usage of older dirty ones as much as expected either.
As you’ll read in the article, our analysis found that energy efficiency policies are not only the fastest way to reduce energy use but continue to be most the effective solution to combat climate change. The objections raised by rebound enthusiasts about efficiency policy and its effectiveness are inconsistent and so vague that they cannot be proven (or disproven). The data that is available about rebound theory indeed shows that its predictions are refuted. What we know is certain: energy efficiency continues to offer us a strategy that allows people to enjoy a higher standard of living, with increased energy services, while decreasing energy consumption and combating climate change.
- David Goldstein
Related Posts:
- The Breakthrough Institute’s attack on clean energy backfires
- Efficiency lives “” the rebound effect, not so much
- Debunking the Jevons Paradox: Nobody goes there anymore, it’s too crowded
- Energy efficiency and the ‘rebound effect’
- Breakthrough Institute does the full Charlie Sheen: After months of attacking clean energy standards and efficiency, now they flip-flop to defense
Previous in TP Climate Progress
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It’s good to see a comprehensive analysis of the rebound effect, one more avoidance tactic dispelled. However, the fact remains that we need to do more than improve efficiency and selling action on this alone is not likely to solve our problems. Consumers need to understand the reasons for cutting emissions, and the urgency of this. That the US energy consumption line isn’t rising is some comfort, but even with greener energy production it needs to be dropping.
Agree with #1, but i feel as if this story misleads. We are told up front that the rebound effect is refuted, but sounds like the study actually confirms it rather than refutes it. More helpfully, they point out that the rebound effect is small and some magnitude of rebound is appropriately (and already) included in sound policy analysis. My take-away is that energy efficiency rebounds do exist but aren’t worth worrying my head over because they are so small.
[JR: The report confirms that the rebound effect is not a big deal. The false narrative industrial complex was arguing that it is a huge deal -- so much so that efficiency could actually be counterproductive. That has been refuted. So, no, this post isn't misleading -- the FNIC is.]
I agree that the rebound effect probably does not exist in modern USA because energy is essentially treated as a free resource in abundant supply, so there is litle connection between price, efficiency and consumption.
Unfortunately the same is not true of the whole world, or of the whole world over the whole period since the industrial revolution started. It was only because efficiencies increased that the payback from industrial machinery made the whole project viable and the more efficent machines became the more the pace of the project accelerated. These dynamics still apply in developing economies still in the process of becoming industrialised.
About 96% of the world’s population are not American. These economies will mop up any spare fossil fuels on the market, at prices which reflect the benefit received, which in turn increases as more efficient ways of burning them are available. At no point does this train of logic indicate global fossil fuel consumption will decrease.
If you could (hypothetically, obviously) reduce the efficiency of all machines to zero everyone would stop using them immediately and CO2 emissions would also reduce to zero.
[JR: And yet we have peak oil. Go figure!]
Thanks for not being misleading, you are saying the story doesn’t refute the theory but rather the false narrative surrounding the theory. That’s different from your headline though.
[JR: I have clarified that headline, but in the annals of headline writing, this one wasn't terribly misleading -- maybe a 3 on a scale of 1 to 10 where the average newspaper headline is a 4 or 5. Indeed, the opening quote spells out precisely what is meant, so again, not terribly confusing to readers. Also, the economy-wide rebound effect, which is the one that is principally being talked about, may not exist at all.]
This is really sick, and shows the kind of people we are dealing with. It should motivate climate activists that much more.
What’s next? Benzene is good for you?
Heraclitus – I’d agree that
“the fact remains that we need to do more than improve efficiency and selling action on this alone is not likely to solve our problems.”
Specifically, with oil at around $100/barrel and coal trading at near record prices, any displacement of supplies of these fossil fuels by efficiency measures or non-fossil energy supplies will, absolutely predictably, result in their being bought and burned elsewhere at marginally reduced prices.
This perfectly normal response is so widely ignored by the wishful thinking of proponents of decarbonization that it clearly needs a descriptive title – I’d suggest “Diverted Fossil Fuel Trading”.
It is conceivable that non-fossil energies and efficiency measures might one day become so extremely cheap that they would flood global energy markets, to the extent of suppressing prices below the production costs of 98% of coal supplies. But in practice that would a/. have made coal very cheap and hugely affordable for many decades of widespread untenable consumption, and b/. the impact of massively reduced global energy prices on resources’ extraction, usage and wastage would likely itself be catastrophic.
The basis of the wishful thinking appears to reflect ‘national’ presumptions – that if America ‘does its bit’ in advancing energy efficiency and non-fossil energy usage, then that’s good enough. Sadly it ain’t. Specifically this ‘market-led’ outlook is potentially lethal to our chances of mitigating global climate damage since it serves the false assumption that there is no need of a binding climate treaty, as Stern, Obama’s mouthpiece at UNFCCC, has recently claimed. This claim contradicts the growing international consensus recognizing that the treaty is both urgent and essential to agree annually contracting global GHG budgets and the convergence over time of nations’ tradable output-entitlements to per capita parity.
I suggest that the strategy of leaving decarbonization to the markets, with piecemeal hard-fought national subsidies but no equitable global regulation contracting fossil fuel usage, is but the latest diversionary tactic of the fossil fuelled status quo. As such, I wonder if you may agree that it seems both anti-Democratic and typically regressive ?
Regards,
Lewis
It’s astounding to see people pushing this ridiculous meme. If we need to get away from using high-emission energy sources, we have a lot of capital plant to build. Any measures that economically reduce the scale of the needed investment should be implemented as quickly as possible– and factoring in the externalities of our energy consumption shows that we can justify substantial investments to do this. It’s past time to drive efficiency up aggressively, with better insulation, new building codes, lighter vehicles and processes. (One important problem is the tendency of consumers to refuse to make front-end investments even when they pay back quickly; subsidies, delayed payment plans and increasing efficiency standards are needed to make sure we keep moving in the right direction.)
Interestingly, there is a rebound effect elsewhere, but the consequences are quite different. This relates to new or expanded roadways, etc. The improvements reduce the commuting time, but people then move further away and more move in, with the net result of little or no improvement in commuting time. Of course, the policy implications of this are the opposite of what our friends deriding energy efficiency would want.
>people who own efficient appliances would use them more and thereby consume more energy.
Sure. . . I wash and dry my clothes twice before I wear them because it is so cheap to do so. . .
Malcreado at 9. -
alongside Robert’s cogent assessment at #3. of the practical global reality of “Jevon’s Paradox” (as it’s been known for a couple of centuries) there is a further downside of dismissing its significance for our current predicament.
If reducing energy costs (by improved efficiency) has no significant effect on energy usage, then logically the converse is equally true, that raising energy costs (by carbon pricing) will also have no significant effect on usage. This news would of course be welcomed by our opponents (who’ve fought carbon pricing tooth and nail) but I doubt it would get much support from professional economists, whether they be regressive, impartial or progressive in outlook.
At a practical level the choice is surely not of whether a more efficient (lower operating cost) clothes drier will cause people to dry clothes twice, but of whether those who put time into drying clothes on a line outdoors (and bringing them in each time rain looks likely) will simply give it up and go and buy an electric clothes drier.
Thus far I’m resisting the temptation. How about you ?
Regards,
Lewis
>#10
of course I was being sarcastic. I think the one problem with your example is that the end product is a little different. Hang dried clothes are not nearly as soft as clothes from the dryer. For that reason (and convenience) you see very few clothes lines being used in the US these days. So the cost of the energy may not be a driving factor in that case.
Jeavons’ paradox really existed in the 19th century because our ability to produce energy was getting more efficient, i.e. cheaper, as our ability to do useful work with energy sources also became more efficient. The key difference between then and now is that in these times efficiency is a reaction to scarcity and rising prices. This prevents the rebound effect, but it is the high prices as much as the increased efficiency that results in energy conservation.
I first saw mention of ‘Jevon’s ‘Law” in the media a few years ago, and it struck me as irrelevant, as other posters have noted, to today’s conditions. The world of the early 19th century is not that of the early 21st century, and even if ‘Jevons’ was an immutable law, like gravity, we could still fashion policies to ameliorate its effect. So it was immediately obvious that this long dead anachronism had been resurrected for the all-too familiar ideological purposes of the denialist Right. Which returns us, as ever, to the central question that has bedeviled philosophers, mystics and religious questioners for ever-why are some people wicked? Why work so utterly feverishly to sabotage every action taken to avoid, mitigate or ameliorate the gargantuan horror of climate destabilisation? Why subvert, invade and destroy countries to control their hydrocarbon riches rather than drive more efficient cars less often? Why put money before humanity? I’m afraid that I think we are simply putting fingers in the holes of a leaking dike, if we cannot discover just why denialists exist, and why billions are spent by vested economic interests to incite them, even at the cost of the denialists’ own children. I do not believe that the denialist industry top dogs are so stupid as to believe anthropogenic climate destabilisation is a lie, or conspiracy, so what is really motivating them? Unless we come up with a coherent understanding of this even if we avert climate disaster, the same state of mind will return to threaten humanity in new and possibly even more dire ways.
@ 10 Lewis
Not necesarily. People buy what they need, unless they can’t afford it. There is a set amount of demand, and price can only affect it to the point of whether or not it is affordable. Cheaper energy won’t make you use more energy unless you had been previously been unable to afford it. More expensive energy won’t reduce usage until it starts going out of a price range of affordability.
Mulga – I’d like to agree that:
“if ‘Jevons’ was an immutable law, like gravity, we could still fashion policies to ameliorate its effect”
but, while ameliorating gravity looks somewhat problematic, ameliorating the impact of Jevons Paradox by means of effective carbon pricing is certainly feasible under rational governments.
My point is that without setting a price on carbon, the provision of better energy efficiency technologies will raise energy consumption significantly in those societies and communities where current energy costs are a significant constraint on consumption.
This can readily be demonstrated by, for example, sending high efficiency diesel pumps for use by Indian farmers, for whom the fuel cost of ordinary diesel pumps to raise irrigation water is becoming prohibitive as prices rise and the aquifers decline. So dire is the cost constraint that many suicides have resulted, as without water crops are lost, and families are left destitute.
This example also demonstrates the raised capacity for resource destruction by un-moderated energy efficiency gains.
However it does not describe the common phenomenon forming the basis of the industrial project of those with ample wealth using gains in business profitability through gains in energy efficiency to increase their outputs, and so overall energy consumption, in order to raise their surplus wealth.
Ziyu at 14. – “Cheaper energy won’t make you use more energy unless you had been previously been unable to afford it. More expensive energy won’t reduce usage until it starts going out of a price range of affordability.”
My point exactly.
Cheaper energy -will allow you to- use more energy -if- you had been previously been unable to afford it. More expensive energy -will- reduce usage -once- it starts going out of a price range of affordability.
Glad to see we agree on this.
Regards,
Lewis