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Energy Efficiency Lives! Devastating Debunking of Rebound Effect and Breakthrough Institute

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"Energy Efficiency Lives! Devastating Debunking of Rebound Effect and Breakthrough Institute"

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Our fact-checking revealed that empirical estimates of energy rebound cited by the Breakthrough Institute are over-estimated or wrong, and they contradict the technological reality of energy efficiency gains observed in many industrial sectors.  For journalists, the Rebound Effect is a trap—it is a man-bites-dog story that never happened.

Energy efficiency policies work, a new study finds, especially when they are broad and deep and sustained, as in the case of California.

by Shakeb Afsah and Kendyl Salcito and Chris Wielga, in a report for CO2 Scorecard

Summary

Energy efficiency is an over-rated policy tool when it comes to cutting energy use and CO2 emissions—that’s the basic message promoted by the US think tank the Breakthrough Institute (BTI), and amplified in major news outlets like the New Yorker and the New York Times. Their logic is that every action to conserve energy through efficient use leads to an opposite reaction to consume more energy—a “rebound” mechanism, which, according to the BTI, can negate as much as 60-100% of saved energy, and in some cases can backfire to increase net energy consumption.

In this research note we refute this policy message and show that the BTI, as well as its champions in the media, have overplayed their hand, supporting their case with anecdotes and analysis that don’t measure up against theory and data….

We provide new statistical evidence to show that energy efficiency policies and programs can reliably cut energy use—a finding that is consistent with the policy stance of leading experts and organizations like the US Energy Information Agency (EIA) and the World Bank. Additionally, we take our policy message one step further—by using new insights from the emerging multi-disciplinary literature on “energy efficiency gap,” we recommend that the world needs more energy efficiency policies and programs to cut greenhouse gases—not less as implied by the BTI and its cohorts in the media.

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Is energy efficiency a curse in disguise? This policy instrument, long held in high esteem and considered to be the single most pragmatic choice currently available for cutting energy use and CO2 emissions, has recently come under question.

The past year has been particularly hard on energy efficiency, handing it a major thrashing in the press. Much of the literature behind these news reports flow from a young US think tank called The Breakthrough Institute (BTI). The BTI has applied the concept of a “Rebound Effect” to characterize energy efficiency policies as a medicine whose side-effects outweigh the benefits. Energy efficiency, they say, is self-defeating because it creates incentives for more energy use.

Propagated last year in a number of reports, the Rebound Effect has become another policy dispute on the climate turf. It calls into question the calculations of reputable organizations like the International Energy Agency (IEA), McKinsey & Company, British Petroleum, and PricewaterhouseCoopers (PwC) who estimate that energy efficiency alone can cut greenhouse gases by 25-40%.

The Rebound Effect deserves to be taken seriously, not just because there is an undeniable trend in global energy use to show that humanity has never successfully decreased energy use, but also because the idea is extremely powerful for those seeking reasons to disregard efficiency – whether in support of an alternate climate initiatives or in opposition to climate change in general. If the Rebound Effect can take back as much as 60-100% of energy savings, as implied by the narrative sketched by the BTI, there is no way that the world can achieve the projected reductions in GHG emissions from energy efficient approaches. In essence, the Rebound Effect has the power to derail climate policy as a whole, simply by calling into question energy efficiency.

Recognizing this seriousness, we began a detailed investigation of the economics and the science behind the Rebound Effect. We examined the sources of energy Rebound resurgence, finding that the current polemic against energy efficiency is largely fuelled by a study that is neither published nor peer-reviewed. We review the literature on energy Rebound at household and production-sector levels and identify weaknesses in both the source data and the methodology employed by Rebound’s proponents. We not only disprove the claims of Reboundistas but through our original statistical analysis we reaffirm that energy efficiency policies indeed reduce per capita energy use.

Resurgence of Rebound—Nostalgia for Mr. Jevons

The Rebound Effect has few proponents among economists and energy efficiency scientists, but it resurfaces periodically. In the past year, it has gained significant ground, scoring recognition in The New Yorker, The New York Times, Conservation Magazine, Nature and the blogosphere. First put forth by British economist William Jevons in 1865, the Rebound Effect proposes that energy efficiency is counterproductive, because energy conserved in one sector is automatically put to use in another sector. Jevons’ theory was based on an energy economy that had only coal as a source material and industrial production was the main economic sector. But his argument has been repackaged and repurposed to cover micro as well as macro level impacts. Now it has been extended to question energy efficiency (and carbon emissions reduction) efforts in general.

In its 21st century incarnation, the Rebound Effect looks a bit different than it did in 19th century England, encompassing the increasingly diversified energy environment. As the New Yorker presents it, the incentives for conservation – often cost-savings – cancel themselves out by putting money in people’s pockets that they will inevitably spend on some other energy-intensive purchase.

But the New Yorker’s accounting is off. The reporter refers to a friend’s newly remodeled kitchen with enormous side-by-side refrigerators as an example of Rebound, suggesting that this is representative of the greater public. It is unlikely that this friend can afford double Sub Zero’s because he scrimped for many years prior on a super-efficient refrigerator and light bulbs. That wealthier people may refrigerate more food is interesting, but there is no evidence that it correlates to efficient technologies and conservation strategies.

We wondered about the energy consumed by America’s ballooning refrigeration demands and researched using data from the US Energy Information Agency (EIA). The share of US households with two or more refrigerators increased by 5.2% between 2001-05. However, during the same period the total electricity feeding the growing refrigerator use declined by 3.3%, and on per capita and per household basis the decrease was nearly 7% (Table-1). In effect energy efficiency gains, which averaged 3.6% per year since 1990, was sufficient to cut total electricity consumed by refrigerators in US households. The same trend is true for Canada also where the total energy needed for household refrigerators declined by 42% since 1990. Unfortunately, the New Yorker chose to cite populist style anecdote on refrigerators rather than digging into hard data.

Refrigeration removed from the equation, we wondered whether households in general might increase energy intensity over time. Again, we found that energy intensity decreased fairly steadily, regardless of the price of energy, on a per-square-foot basis between 1980 and 2005. This is pictured in Exhibit-2A. We suspect that efficiency standards and technological advancements that cut energy use in residential heating, cooling, and appliance use is a major factor.

We found the same pattern in Canada, where residential energy efficiency programs have been in use since 1982. As shown in Exhibit-2B, residential energy intensity (GJ/m2) declined at an average annual rate of 1.36% in Canada even when the average household size increased over time. There is no doubt that bigger and modern washing machines, refrigerators, and sub-zero freezers are making their way into increasingly large houses in Canada, but on net energy efficiency programs and standards have still led to energy savings. A quick calculation demonstrates the result—if residential energy efficiency had remained stagnant at the 1990 level, Canadians would need an additional 400 million GJ or 111 million MWh of energy in 2008. That is equivalent to eliminating four of the largest power plants in the US.

Yet the gains in energy efficiency failed to stem the increase in the total residential energy consumption in Canada, which grew at an average annual rate of 0.7% during 1990-2008. Could this be Rebound?

On the contrary the culprits for energy use increases are GDP (which increased by 1%) and population (which grew by 2%). If not for efficiency measures (including Canada’s nationwide residential energy efficiency program, R-2000 Standard, which has helped reduce per capita energy use at an average rate of 0.4% per year) total residential energy consumption in Canada would be much higher than 0.7% per year.

Ironically, the point is reinforced in the United States by similar data used in a Washington Post report to prove the limits of energy efficiency. National data shows that per capita average energy consumption in US homes has barely budged since 1970. But the average American home isn’t representative of energy efficiency measures, as comparative long term per capita residential energy trends of California and Texas show. California, which has aggressively followed efficiency programs to cut residential energy use, successfully reduced its residential energy use per capita an average of 0.9% per year. In comparison, Texas did not adopt energy efficiency programs and has seen an average increase of 0.4% per year (Exhibit-3). That the US per capita average for residential energy has remained stagnant suggests that US as a nation has failed to adopt energy efficiency programs uniformly across all states—a sign of policy weakness not energy Rebound.

Our analysis contradicts the Washington Post, the New York Times and New Yorker storylines, and shows that the case for energy efficiency is rather straightforward and clear. Rebound is there but is in the range of 10-30% for households as reported in published literature (Greening et. al. 2000). And for transport, the Rebound effect from fuel efficiency improvements in the US is estimated to be around 10.7% based on the data covering the period 1997-2001 (Small and Dender 2007). This still leaves a net savings of 70-90% that can buck the trend of energy use per capita.

Energy efficiency works. But the real story is that it works best when governments proactively and whole-heartedly embrace energy saving policies and programs over and above the ongoing, often market driven, improvements in home appliances and other technologies.

The Rebound illusion—math doesn’t match the matter

As discussed above, at a residential consumption level the evidence of an energy efficiency dilemma is weak; on the production side the empirics of Rebound are even weaker, though the claims are much greater. In fact, the BTI’s real beef with energy efficiency is on the production side, which they incorrectly claim accounts for “two thirds” of the global energy use (Exhibit-4).

Citing over-estimated production sector energy use, the BTI has forcefully asserted that the production sector and economy-wide Rebound effects can not only wipe out the entire savings from energy efficiency but in some cases can actually increase energy use—a phenomenon called backfire. The primary reference for this conclusion comes from an unpublished paper in 2010 by Dr. Harry Saunders, a Senior Fellow at the BTI. According to Saunders, extreme Rebounds happen due to two simultaneous effects—first efficiency reduces the relative price of energy creating incentives for producers to use more energy, termed the substitution effect. And second, it reduces the price of the final product which causes the demand to increase, which in turn leads to more energy use—the demand effect (Supplemental Exhibit-S1).

Previous efforts to link efficient energy use with firms’ inclination to pursue high-energy activities were estimated at around 0-20% (Greening, et al 2000), retaining 80-100% of the energy efficiency gains. But Saunders (2010) claims that energy efficiency gains in one sector has a chain effect on the entire economy, translating into Rebound of 60-100% or even more. These claims have been refuted by climatologists, journalists, policy advocates, and others, but we sought an additional layer of verification.

Accordingly, we decided to examine Saunders’ paper equation-by-equation, number-by-number. We found several shortcomings, two of which are discussed below. Additional shortcomings will be discussed in a forthcoming working paper by the CO2 Scorecard group. Our findings were so startling that it led us to conclude that Saunders’ estimate on Rebound are not just severely over-estimated but are downright wrong in many cases.

(1) Inconsistencies with real data: Perhaps most problematically, Saunders calculates Rebound in a number of economic sectors without including any specific discussion of the underlying technological change and engineering improvements that actually increased efficiency and triggered Rebound. He essentially regards the increase in energy use as a result of a (stated) increase in efficiency without providing a causal explanation or justification for his Rebound estimates.

In this regard, the Rebound estimates of two sectors caught our attention—metal mining and electric utilities. According to Saunders, metal mining has energy specific Rebound of 51% for the period 1991-2000. During the same period the Rebound for electric utilities is 120%—representing a situation of backfire. Such high energy-specific Rebound implies that energy efficiency gains have been quite pronounced in these sectors – a major reaction can only follow a major action.

In metal mining, estimates by Saunders show that Rebound is driven by energy efficiency improvements estimated to be 2.36% per year. This is contrary to the current reality and expected trend for metal mining; energy intensity is expected to worsen or remain stagnant over time as each mine extracts its metal from a lower grade ore at the margin (ore bodies have steadily declined in grade for decades, as high-grade ore-bodies have been depleted by mining). This fact is reaffirmed by the data on the energy intensity trend of the metal mining sector of Canada (Exhibit-5A), which as expected has remained more or less steady since 1990.

Canada’s data apply well to the US mining sector’s situation, where the benchmark energy intensity is almost identical to Canada’s at 0.36 TJ/kilo-tonne (DoE 2007) compared to Canada’s average of 0.35 TJ/kilo-tonne. Given the convergence of markets and technology, US metal mining is expected to have a similar trend, which begs the question: If metal mining typically suffers from falling or stagnant energy efficiency then where is the Rebound coming from in Saunders’s paper? In a careful examination of the paper we could find no evidence-based support for Saunders’ efficiency estimate.

Saunders’ estimates for electric utilities were equally unsupportable, given the industry’s stagnant (and sometimes negative) energy efficiency trends over time. Because electricity generation technology has a long life span, once installed a production system remains locked-in for 40-50 years. These technologies come with fairly advanced control and automation systems that leave little room for year-to-year technological improvement. Furthermore, with the advent of environmental regulations and tighter air emissions standards auxiliary energy consumption (to power scrubbers, fans, pumps and other control gear) increases in existing, aging power generation facilities, making them less, not more, energy efficient, even as they become “cleaner”. At best, energy intensity will remain stagnant. Canadian power generation and energy efficiency data demonstrate this stagnation (Exhibit-5B).

If energy efficiency improvements are near zero in the metal mining and electric utilities, their energy specific Rebound should also be near zero. Saunders’ estimates, of 51% and 121% respectively, contradict the technological reality and defy logic.

Even in cases where there are genuine improvements in energy efficiency, Saunders’ estimates appear to be exaggerated. In the case of primary metal covering steel production, Saunders estimates energy efficiency gains of 2.9% driven by the electric arc furnace technology (which was introduced in the US in the 70s). However, a US Department of Energy report (Stubbles 2000) shows that the steel sector’s energy intensity fell from 20 to 18 MBtu per ton amounting to only 1.3% per year change during 1990-98, considerably less than the rate of improvement estimated by Saunders. This is indicative of overestimation, which automatically translates into high energy-specific Rebound like the 66% estimated by Saunders.

Saunders’ empirical errors and discrepancies raise fundamental questions about the empirical methodology his paper uses to quantify “vintage effects”—the technological improvements that affect energy efficiency in a production sector.  His results are not just over-estimated but are likely to be out of sync with the reality of technology trends, raising questions about the validity and accuracy of the entire paper.

(2) Deficiencies in the model:  Even if Saunders efficiency estimates aligned with real-world efficiency gains, there would still be major concerns with the theoretical model he employed, which does not capture the real world economics of production decisions of industrial organizations. Many factors that affect the model parameters and prices like labor unions, corporate vision, social norms, strategic behavior, incomplete information, unexpected technological breakthroughs and others are excluded. Instead, Saunders’ model is a generic and simplistic one with a mathematical architecture that by design is only capable of producing results that show increasing demand for factors of production whenever there is an improvement in its productivity or efficiency. So if capital becomes more productive, there will be more investment; if energy efficiency improves there will be more energy use—this is pre-determined by the interplay of equations and assumptions in the model.

The present unemployment rate in the US economy puts his theory in doubt. According to Saunders’ model, improvement in labor productivity will lead to more demand for labor through the same rebound mechanism put forth for energy efficiency. If this were true, governments worldwide would be grateful – unemployment would be at all-time lows, given the latest worker productivity data. But observed economics works differently—for the past few years improvements in labor productivity in the US have barely dented the unemployment rate.

The fact is that Saunders’ and other such multi-sectoral and economy-wide models of rebound (Hanley 2009,  Turner 2009 and Turner & Hanley 2011) are too simplistic and stylized for the task at hand. Blind faith in the results of such mathematical models is risky, and as emerging evaluations show there are important lessons to be learnt for policy analysis (IMF-Independent Evaluations Office 2011, Chapter-4/para-46). We don’t want to imply that Saunders’ statistical technique or other economy-wide models should be discarded, but their results need deeper validation and fact-checking before pitching it for policy decisions.

Three cheers for energy efficiency

Disproving the anti-energy efficiency literature is not enough to do away with Rebound. We must positively prove that energy efficiency policies are quite capable of cutting energy use per capita, and should remain an instrument of choice for governments.

To validate energy efficiency as a desirable policy measure, we must begin with the most credible policy data. The best evidence of this is provided by the energy efficiency policy scorecard of the American Council for Energy Efficient Economy (ACEEE), which we statistically analyze for energy use per capita.

The ACEEE energy efficiency scorecard uses a comprehensive evaluation framework covering public utility programs, transportation policies, energy-efficient building codes, combined heat and power, appliance efficiency standards and state government initiatives (financial incentives, government greening, and eco R&D). It is designed to measure the quality of energy efficiency policies at the state level in the US.

Controlling for factors like electricity and gas prices, per capita income, variations in weather patterns, population density and economic structure, we used a multiple regression model (described in Appendix-1) to statistically verify if the quality of energy efficiency policies as measured by the ACEEE is associated with lower energy use per capita.

Using ACEEE’s 2009 data, we found that a 1% improvement in ACEEE’s energy efficiency score leads to an estimated 0.18% decrease in energy use per capita at the state-level in the US. This is visualized in Exhibit-6 as a downward sloping line depicting the long run average correlation between energy efficiency policy score and energy use per capita. As discussed in Appendix 1, a similar relationship between ACEEE’s energy efficiency score and energy per capita exists for the years 2007 and 2008. This finding confirms that the causal relationship between energy efficient policies and energy use per capita is not a one-year phenomenon but is consistent and statistically significant over time.

These new findings verify what the US Energy Information Administration has been putting forth for over a decade: energy efficiency policies are central to cutting emissions. Just last year the EIA published estimates on building efficiency improvements using best available technologies, but the agency noted that even with the best technology, policies would still need to be in place to promote efficiency. Data further confirm these findings—as shown in the Exhibit-7, California, which is among the most energy efficient states and has pursued efficiency policies since 1974, was able to put a lid on the average per capita electricity consumption for over three decades—in comparison electricity use per capita increased at an annual rate of 1.4% for the rest of the US. If Rebound effects were as rampant as claimed by the Breakthrough Institute, we would not find a robust relationship between energy efficiency policies and lower electricity use per capita trend.

None of this is to say that Rebound is not happening; given that energy use is so pervasive in our economy both energy Rebound and energy conservation occur simultaneously and constantly. But, as our data analysis indicates, on net the policies that encourage energy efficiency create incentives for energy conservation that ultimately outweigh the effect of energy Rebound, leading to comparatively lower  energy use per capita. Total energy use may still increase due to population growth and economic expansion, but without energy efficiency these increases will be much larger.

Journalists and researchers—a note of caution!

For journalists, the Rebound Effect is a trap—it is a man-bites-dog story that never happened. Counter-current climate change reporting is enticing but requires careful analysis. The journalists caught up in the allure of Rebound made two key mistakes—first they used anecdotes to anchor their core message, and second they ignored the voices of leading energy efficiency experts. One man’s refrigerator is not another man’s climate crisis, but it does create a narrative that leaves readers, the energy consumers, wondering about the usefulness of energy efficiency. Reporters should heed experts who are widely recognized for their understanding of energy efficiency, like Dr. Amory Lovins of the Rocky Mountain Institute and Mr. Skip Laitner of the American Council for an Energy-Efficient Economy. Unfortunately Dr. Lee Schipper of Stanford passed away in August 2011, a leading energy efficiency expert whose insights were ignored by a spate of reporters.

Particularly for energy efficiency, journalists have a special responsibility. New emerging research by Harvard and MIT/NYU economists confirm that non-price approaches like information provision and social norms can successfully influence consumer choices towards a more energy efficient lifestyle (Allcott and Mullainathan 2010 and Dietz 2010). Empirical analysis built on this thesis confirmed that informational awareness cut residential electricity use by as much as 2%, an impact that is equivalent to increasing the price of electricity by 11-20% (Allcott 2011). Such results underscore the importance of disseminating reliable and accurate information on energy efficiency, and journalists are well positioned to promote this effort—but it will require responsible and well researched reporting.

Consultants, too, have contributed to mis-communication—the case in point is a European Commission report. This report not only failed to conduct a thorough review of Saunders 2010, but it took its findings at face value and treated it at par with published papers and government reports—a case of false equivalence in literature review that ended up over-stating the incidence of energy Rebound.  As shown in Exhibit 8, this was quickly seized by the BTI to declare that “Rebound debate is over”.

The policy implications of such mistakes are serious—effective instruments like energy efficiency will be underused even more and, and worsen the problem of energy-efficiency gap, a situation characterized by under-valuation of energy costs and less than optimal use of energy efficient products and services. Recently this phenomenon was empirically affirmed by economists (Allcott and Wozny 2011) as well as engineers, sociologists and psychologists (Attari et al. 2010).

Policy messages

Rebound, we agree, occurs constantly. As established in 2000, and noted above, Rebound is estimated to be in the range of 10-30% for residential and transportation sectors, 0-20% for industries, and indirect economy-wide effects remain small—these estimates still hold in 2012. There is no need to revise these estimates upwards, because the new research promoted by the BTI lacks the necessary empirical credence. The bottom-line is clear—if energy efficiency can retain 70-100% of the savings on net, that’s not a bad deal. Given that energy efficiency programs are below-cost or low-cost, and can take us up to 25-40% GHG abatement, there are good reasons to retain energy efficiency as an essential component of the overall climate policy mix.

Our own findings show that ACEEE’s energy efficiency scorecard is a very useful methodology for capturing the quality of energy efficiency efforts of governments. Such approaches should be strengthened and disseminated in developing countries where energy efficiency potential can be tapped early on in the income growth cycle. Further, it is worth emphasizing that to get a full picture of energy efficiency, ACEEE’s approach shows that analysis of policies and programs should be comprehensive covering utilities, buildings, transport, appliances and other aspects—and it is misleading to reduce or compartmentalize such an analysis to a single appliance or just the building codes.

Finally, the world needs more energy efficiency—not less (Luoma 2011). This is the salient finding of new and emerging multi-disciplinary research on energy-efficiency gap. If energy efficiency is not leading to anticipated reductions in energy use, it is due to inadequate adoption of energy efficient products and services, not the Rebound Effect. Governments, therefore, need to apply both non-price and price-based strategies broadly across supply-side and end-use sectors to promote energy efficiency.

Implications for the Breakthrough Institute (BTI)

Thrusting Energy Rebound into climate policy discussions in a way that it pits one policy against the other is a distraction. We believe that the BTI-led anti-energy efficiency campaign hurts our collective effort to develop a comprehensive climate policy framework. By promoting insufficiently reviewed literature that undermines policy solutions to climate change, the BTI is putting tried-and-true ideas into silos.

The BTI’s position on energy efficiency aligns with its overall intellectual approach reflected in from the group’s 2004 “The Death of Environmentalism”, and its more recent 2010 “Post-Partisan Power” and 2011 “Climate Pragmatism.” BTI seeks to be a voice apart from the environmental movement, but its commitment to unique approaches seems to have overridden its commitment to fact. The myopia of Rebound is a microcosm of the narrow perspective taken by proponents of “climate pragmatism” in general. To be pragmatic about climate change, we must tackle it head on; bickering about what policy would be best diverts attention from the essential. The best method for mitigating climate change is a mix of all policies. Rebound tried to remove energy efficiency from the mix; climate pragmatism removes more. Our forthcoming research note will offer a detailed critique of Breakthrough’s climate pragmatism.

Conclusion

Rebound or no rebound, energy efficiency works!

Shakeb Afsah is the President and CEO of the CO2 Scorecard Group; Kendyl Salcito serves as the Policy Communications Specialist for the CO2 Scorecard; Chris Wielga was a summer intern at the CO2 Scorecard.

Q.E.D.

This report was originally published at the CO2 Scorecard. For a list of references and supplemental graphs, you can find the report here.

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40 Responses to Energy Efficiency Lives! Devastating Debunking of Rebound Effect and Breakthrough Institute

  1. Mike Roddy says:

    Ted Nordhaus of BTI writes a lot of their “research”. Ted was a History major, and his go-to source is Roger Pielke Jr., a Political Science professor.

    Nordhaus knows nothing about data, and it is a mystery that anyone pays attention to them. The fudging here is something that a Statistics undergrad would pick up on immediately. What Ted does understand are polemics and sleight of hand. Nordhaus and Shellenberger do far more damage than, say, Watts and Morano, since a person who doesn’t know the facts would conclude that BTI is reasonable and intelligent.

    It’s time someone put together a media kit to explain the details, as this piece does so well on the energy efficiency front. While we’re at it, let’s address the other frauds, too, such as Roger Pielke Jr.

    • Mulga Mumblebrain says:

      The ‘Breakthrough (canny psychological marketing) Institute’ has a saleable product. It is, no doubt, ‘supported’ by utterly disinterested corporations dedicated to ‘informing the public’.Same old, same old. I first saw the so-called ‘Jevons Paradox’ brought up by ‘Economist’. Say no more. Still it was a wheeze to think that they were so confident of the propaganda utility of their colleagues in the MSM that they could expect to get away with comparing 19th century England to the whole planet in the 21st century. Of course, they are not interested in intellectual honesty, rigour or consistency, despite their laughable claims to be so. They are determined simply to win, and keep those lovely profits flowing into those Cayman Island accounts, and their arguments are all contorted to fit results determined a priori by ideological and financial ambitions. The whole system is rotten to the very core, morally, psychologically and intellectually, and even a calamity as great as climate destabilisation is merely a symptom of the underlying pathology.

  2. Wayne Kernochan says:

    I wish to point out what appears to be a corollary to this article’s point.

    In order to reduce energy consumption in absolute terms, rather than per capita, it is sufficient to counteract the average rise in population given an average GNP increase. The figures from Canada strike me as representative. Therefore, more or less, to achieve energy consumption reduction in absolute terms, one would need to less than double the strength of California’s energy use policies. It seems clear that up to now, increasing the stringency of these policies has had little detectable effect on population growth or Gross State Product/GNP growth, and may have had a positive effect. It therefore seems likely that using California as an example and doubling the “policy strength” of California’s policies would achieve absolute energy consumption reductions in absolute terms on an ongoing basis, and approximately tripling those policies would lead to 40% energy consumption reductions in absolute terms by 2045, with small negative or positive effects on the economy.

    • Wayne Kernochan says:

      Additional note in case this wasn’t clear: as Joe has noted, energy consumption reduction in absolute terms by itself under any realistic scenario is nowhere near adequate to avoid all but the very worst effects of global warming. However, if we combine a focus on sharply lower fossil-fuels use with designed-in energy-consumption reduction as we move to much alternative energy sources, the result of the combination is faster movement to a 10-15%-of-today fossil-fuel-caused carbon-emissions “steady state”, i.e., a much greater likelihood that we will by reducing controllable total carbon emissions by 70% in absolute terms over the next 20 years hold the global warming to a disastrous rather than a catastrophic level for our great-grandchildren.

    • Wayne Kernochan says:

      And yet another thought. When climate change is rapid, in the US in particular houses and buildings built for one mix of heat and cold are less and less appropriate for a greater percentage of heat and smaller percentage of cold. This will naturally tend to drive up energy use, because of the increasing inefficiency of the building, unless it is repeatedly modified in a costly way, or the owner repeatedly builds a new one to the north.

      The most cost-effective counter to this is alternative energy sources that do not require movement and are not vulnerable to a change in the water supply. On this count, nuclear reactors fail because they require a steady supply of water coolant at temperatures below a certain level. Likewise, hydro-energy is iffy, while geothermal energy is fine but is probably not available in enough places cost-effectively. Wind is the second-best, but will still require movement as wind patterns change, and when in-/near-ocean sites are submerged — and it may require costlier technology to prevent damage from stronger peak winds likely in the future. Of the above, solar is best in the US because the prospects for most of the country are for an increase in drought and desertification in most areas, in effect increasing sunlight per year per array and increasing the number of areas where solar can be put with least disruption to the ecosystem. In fact, the same may be true of most areas of the Earth south of Siberia and upper Canada.

  3. Andrew says:

    Hmm, i don’t dispute the data but i still think that a culture that pursues permanent economic and material growth is going to increase overall energy use and resource depletion regardless of efficiency. Efficiency may buy time, but not very much.

    In the end the the chain saw is more efficient than the hand saw – and in a culture that rewards consumption of forests the efficiency of a chain saw is always going to increase the rate of deforestation.

    Industry and government are hard at work trying to increase the efficiency of tar sands extraction. This inevitably means more rapid expansion of tar sands.

    Efficiency could only effective when combined with real policy attempts to reduce overall consumption. All nations on this planet are actively pursuing policies that would increase material consumption.

    • Then you have a problem with wealth, as opposed to efficiency. That’s fine, and I encourage you to pursue ways to get people to consume fewer material goods, but efficiency isn’t what is driving the trends you mention (it is only a minor contributor). The New Yorker article perpetuates this confusion, as do many others. People getting wealthier and building bigger houses isn’t the rebound effect–only effects that are directly and solely related to efficiency improvements can be attributed to rebound, and unless you can specify a causal relationship between efficiency improvements and the effects you are interested in, you can’t call it rebound.

      • Andrew says:

        I wasn’t calling it rebound. I was only making the point that efficiency is rather meaningless in terms of conservation in the context of a culture that pursues limitless material growth. Efficiency as a concept is not exclusive to the power needs of a product, efficiency also exists in how we go about resource extraction – and in the case of resource extraction more efficiency has always meant more rapid resource consumption because of the nature of what we value in this culture, i.e., material economic growth.

        If we want efficiency to be meaningful in terms of dealing with global warming or resource depletion a radically different culture is a necessity. Otherwise you just end up with a more efficient consumer culture, but an ecocidal culture nonetheless.

        • Mulga Mumblebrain says:

          I’m with you Andrew. Efficiency without reduction in consumption is pointless. We need to make sufficiency the highest good, not greed or ambition or aspiration (the last, popular with the Right in Australia, always puts me in mind of a patient suffocating on their inhaled vomitus). Development must be as it is in Nature where an organism is born, grows to maturity then slowly descends into non-being again. The only entities that ruthlessly seek unlimited growth are capitalism and cancer. Both end up killing their hosts.

    • fj says:

      Intense integration with natural capital where human capital is the most important component

      This is one design strategy that may greatly limit the most important consumption issue you mention with maximum benefit.

      There seems to be a bias in framing strategies addressing climate change strictly in terms of energy which may be misguided; although, it does seem that the fossil fuel industries are the biggest group obstructing very necessary and rapid change.

    • fj says:

      Andrew,

      In addition to intense integration with natural capital, “Poor People First” may be another strategy for achieving considerable benefit with minimal cost and consumption.

  4. Doug Bostrom says:

    This, the ethics series, other solidly grounded material gathered together here as a one-stop climate-related policy information shop is terrific. Keep up the great work!

  5. fj says:

    This seems to be an excellent report by Afsah, Salcito, and Wielga and it is absolutely bizarre how much time and “energy” has been spent on the idea that increased energy efficiency causes increased use since it’s not a terribly sophisticated myth.

    What patience!

    Comprehensive case studies — like the ones posted above — that include all inputs and outputs should easily prove that the rebound myth is absurd; and it seems that proponents of this myth are ultimately unable to provide them.

    With complete deference to the posted and extremely comprehensive analysis by Afsah, Salcito, and Wielga, there seems that there may be an indication that the rebound effect tends to rear its almost “hysteresis-like” ugly head when the sample size is not large enough and “The Law of Small Numbers” may skew accurate analysis where the report indicates that:

    “Rebound is estimated to be in the range of 10-30% for residential and transportation sectors, 0-20% for industries, and indirect economy-wide effects remain small.”

    Large samples are more precise than small samples.

    Nobel Laureate (Economics) psychologist Daniel Kahneman devotes an entire chapter to “The Law of Small Numbers” in his recent “Thinking, Fast and Slow” discussing how many people are deceived by this strictly statistical effect, including scientists and psychologists.

    One simple thought problem might be:

    Bicycles can be as much as 3 to 4 times more efficient than simple walking and electric bikes — using say 320 watt electric motors — are somewhat in the same ballpark as well.

    Since there are over one-half billion (500 million) Chinese cyclists and an additional 1.5 million people in China using electric bikes, maybe proponents of Jevons Paradox or Rebound Effect could explain a better way to save energy at the same level of mobility?

    • Raul M. says:

      fj thank you,
      Yes it is now more understandable that bicycles are more efficient than walking and electric bicycles are more efficient that peddling a bicycle.
      Now that the truth may be brought more into the open…
      Thank you again for assurance to an question that occurred to me.
      Bicycle riders of the older crowd may once again enjoy the thrill of chasing squirrels and the like.
      Please be advised that most squirrels are quick and don’t much care for such huge things just moving around so.
      They may chatter and scold.

  6. Geoff Beacon says:

    You say

    Rebound or no rebound, energy efficiency works!

    What if my Professor Kim Swales is right in saying

    We have undertaken econometric work on the elasticity of demand for household energy in the UK. We get values of around 0.4 for the short run and over 1 for the long-run. This means that you get backfire in the long run for energy efficiency but that tax would be effective in reducing household energy use. These are provisional results at the moment.

    I think it would mean that the effective way to curb carbon emissions is to tax them.

    I think the words “carbon tax” disturbs people in the USA so much that you have to pretend something else would work.

    Would it be better to use the term “carbon pollution fines”?

    • Mulga Mumblebrain says:

      ‘Econometric work’ very often, in my experience, depends crucially on various presumptions, open, hidden and unconscious, brought to the study by the protagonists. In fact, it is, in practice, infinitely malleable, determined, often enough, by the outcomes sought. The effort to reject energy efficiency has been audacious, cynical, calculated and, thanks to the reliable Rightwing MSM, amazingly successful so far. They leave no stone unturned.

      • Geoff Beacon says:

        If it’s rightwing to point out that the affluent pollute the world more that the less affluent then perhaps I’m rightwing.

        If it’s rightwing to suggest that those that pollute the most should compensate those that pollute the least then I’m rightwing.

        If it’s rightwing to suggest that a bit of energy efficiency can save us enough cash to spend on other forms of pollution then I’m rightwing.

        Energy efficiency is OK in its place but if we insulate our houses and use the savings to fly round the world, we haven’t done much for the climate.

        Efficiency by itself may not be enough.

  7. Reuben Deumling says:

    Efficiency as practiced does however suggest that the problem is chiefly technical, that we don’t need to worry much about reducing our consumption, think about conservation, or adjust our habits and attitudes. In that sense efficiency is a party to the proceedings that in sum is failing to yield reduced GHG emissions on the scale we know we need. Efficiency as practiced directs our attention to relative savings not to absolute reductions. They are not the same thing, and one does not automatically lead to the other.

    In this country, the rebound effect is a very polarizing term, so perhaps it is more useful to think about this from a slightly different angle: As long as energy efficiency is widely recognized as the most visible strategy for combating rising energy consumption or rising greenhouse gas emissions, and as long as both trends continue to increase (or fail to decrease) some folks out there are going to notice and try to grapple with this conundrum. In the process they occasionally stumble on the rebound effect which seems to help explain this. It isn’t always clear to me whose fault that is.

    Perhaps it is time for energy efficiency advocates to take an offensive position and identify in absolute terms what contribution EE is going–or can be relied on–to make toward short, medium, or long term GHG emission reduction goals rather than burying the rebound effect, again.

    The issue that prompts journalists and others to dig up the rebound effect is real and deserves an explanation.

    • Mulga Mumblebrain says:

      Energy efficiency must act in tandem with demand and consumption reduction. That means radically reduced energy use and radically reduced (to zero as soon as possible) fossil fuel consumption. This means trillions in profits foregone by Big Business. Good luck!

  8. fj says:

    Just came from a panel talk today (Jan 12, 2012) at the New York Academy of Sciences

    “Energy for the Next 20 Years: Protecting the Environment and Meeting Our Demands”

    That included Jesse Jenkings from the Breakthrough Institute who somehow got another speaker to promote the Rebound Effect.

    With a representative from the Breakthrough Institute, the New York Academy of Sciences should have also invited one of those goofy Republican denier candidates to be on the panel for a good laugh; anyway, there were some not so subtle hints how far from reality at least some on the panel were.

    Panelist Arne Juniohann (Heinrich Boell Institute) described the impressive clean energy achievements of Germany in the last decade as reported on Climate Progress which was pretty embarrassing for the rest of the fidgeting American panelists that could not offer anything close, just vague excuses and incoherent ramblings about how clean tech stuff couldn’t be done and of course Jevons Paradox! NYAS even made a video documenting the event.


    http://www.nyas.org/Events/Detail.aspx?cid=d7a7b899-0bf2-4a9b-81cc-5bd74ac86216

    Had to laugh recalling Amory Lovins statement:

    “Something is not impossible if it already exists.”

    And, Germany as the world’s 4th largest economy is seriously addressing climate change as reported by Climate Progress.

    Most encouraging (for Germany at least).

  9. David B. Benson says:

    Some industries require considerable energy for processing. For example, some aluminum production is moving back to Washington state as a response to various forms of price increases, including inflation, in China. Washington state will soon have its third (or is it fourth) carbon fiber plant, again due to the relatively low cost of electricity here.

    Some of California’s touted energy efficiency comes simply because heavy industry had to move out in response to the overly high costs of producing in California. I’m no economist but I opine that sensible accounting has to be done for the entire globe, not just country by country and certainly not state by state.

    • Mulga Mumblebrain says:

      David, you old Carmnist. How dare you advocate for an end to one of the Bosses’ favourite tactics- ‘Divide and Rule’.

  10. Yvan Dutil says:

    One has to be careful, with those analysis. In many case industry migration can explain a lot of the energy efficiency gain.

    As for building, they do get more efficient over time, but also as they get bigger they get more efficient by a simple geometric effect.

    Nevertheless, Jeavon paradox do exist but it is weak. The main problem is the Kharzoom-Brooke postulat, in which energy efficiency translate in an increase of the general consumption to to increase economic growth. The only way to avoid this is the tax even more the energy.

    • Mulga Mumblebrain says:

      Make energy use more efficient plus tax excessive energy use. It’s not exactly rocket surgery, is it? But it contradicts one of capitalisms Ten Commandments- ‘Thou shalt maximise profits’.

  11. Jack Enright says:

    BTI must be another Republican think tank that is short sighted and thinking only of profits from stocks etc. Republicans including Ron Paul are strongly in favor of deregulation of the government. They see that as their best ploy to persuade the public that the government not unregulated corporations are their enemy. Vote for a Republican and go back to the times of not Lincoln but McKinley when John Rockefeller owned company towns where the laborers were slaves. Who wants to go back a hundred years to what they call family values? The other problem lies with democrats who push the Gore policy as environmentalism,it is actually a plan to depopulate the masses. The Carbon Tax is a mandate to tax the public, rob the people of freedom and spread lies about who is responsible. Those people who push depopulation should start with themselves. We do not need them. Carbon dioxide is not a toxin or cause of global warming. Nuclear radiation, deforestation, capitalism, factory farming, pollution, totalitarian war, thermonuclear blasts, oil spills, all these and more cause widespread climate disruption. Hardworking people who build solar projects,fast railway lines, fishermen organic farmers, nurses, doctors, chefs, inspectors, pilots, waitresses, we all work together for a better world. Efficiency is the motto in every business. Saving energy by installing solar panels on roofs makes money for workers and investors and uses far less resources. So it is a great idea. It is not a great idea to invest billions of dollars into a Nuke plant that will not save resources but poison the environment from the mining operation, neighborhoods and toxic waste disposal for thousands of years. Burning coal in old plants and giving credits to keep it going is a stupid policy. Only the corrupt politicians want to keep the greenhouse gas theory going to make more money. Plants make the climate going, they use carbon dioxide. So grow more trees, keep the Ocean clean and stop ruining the wilderness!

  12. Bill Goedecke says:

    The Jevon’s Paradox came about because of the underlying drive for economic expansion and continued accumulation during the 19th century. Jevons did not question the economic system but took it to be a natural phenomina. “Economy” Jevons stated “multiplies the value and efficiency of our chief material; it indefinitely increases our wealth and means of subsistence, and leads to an extension of our population, works and commerce, which is gratifying to the present , but must lead to an earlier end” (from ‘The Coal Question’). Although Jevons did not see anything unnatural about such a system, he did note the underlying intention of expansion. The imperative of accumulation and expansion inherent in our economic system will always trump conservation, even to the point of “an earlier end”. We are destroying the basis of our biological life because of this imperative. So I question the framing of the “energy efficiency” question in terms of a political question. Our system is relentless. We have to question our economic system.

  13. P.F. Henshaw says:

    There’s only one thing missing here, the connection between these micro-economic examples and the macro-economic principle that is being tested by them.

    The discussion does not start from the clear quantitative global data for the “backfire effect”. That data definitively proves that the world’s economies have generated 2.5 new energy uses for every 1.0 uses eliminated by economic efficiency. http://synapse9.com/pub/EffMultiplies.htm

    Once you accept the reality of how the real world economy clearly does behave as a whole, THEN you have a framework for asking how local behaviors might influence it.

    The really deep problem, of course, is humans have pride in their theories. It makes us loath to search out and investigate the information nature might be hiding from us. For energy demands caused by our economic choices that’s been measured. The energy use demand for our economic choices, that nature keeps untraceably hidden from our view, is ~80% of the total on average! The facts are inescapable, that we we’ve been doing our economic energy analysis with much less than “half a deck”. http://synapse9.com/SEA

    • Bill Goedecke says:

      How can a fundamental change in our economic system come about? If our thinking is based on an underlying philosophy in which progress is achieved with ever-greater accumulation (quantity equals quality) then how can we ‘think’ of a different system? Isn’t the basis of the discussion about the ontological question of what a human being actually is? I would think that we need to adapt an underlying philosophy that incorporates states of equilibrium and disequilibrium, and the notion of function between points of equilibrium (where equilibrium is an active state of balanced flows). Instead of ‘a place of achievement’ (such as acquiring a car, house, etc.), the focus would be on ‘being in (an active state of) equilibrium’ (meaning being in the present moment). Material needs of human life could be distributed evenly, as it would not be the raison d’être for human society. Efficiency implies reaching ‘states of achievement’ which are then subsumed by a dialectical synthesis in which a ‘greater’ state of achievement is reached, such as when computers offered efficiency in paper use, but also provided access to wider information which increased paper use. I agree with you that we need to make different choices, but suggest that choices made are based on our underlying ontological notions of what a human being is (so can we really make different choices unless we challenge those notions?).

      • P.F. Henshaw says:

        Bill,
        Yes, that’s a good point! Other’s have noticed that dilemma, that we’d need a “whole new way of thinking” is how I think Einstein said it. Keynes was one who actually spelled out the new rules of economics that would be needed, though. He described how finance would have to change as it became unprofitable for the economy to continue expanding. His discussion of it was so far beyond what other economists could imagine he was essentially ridiculed and ignored because of it, though. As far as I know only the leading systems economist Kenneth Boulding, who I learned about it from, recognized the brilliance of it.

        I like most of your description of the features a new way of thinking would need to have. Once you look at the operational necessities you’d confront added moral quandaries to resolve, I think. For example, equity is not a natural principle, and balance is often a process of change. Thinking of human bodies as examples of natural systems, our brain cells consume far more energy than most other parts, and that seems to be part of how our energy balance is maintained.

        You could find my writings on it and references to Keynes and Boulding by searching my site [site:synapse9.com keynes]. That’ll bring up the connections between my discoveries about the natural successions displayed by self-organizing growth systems of all kinds and economics, and my physics theory for how to investigate opportunistic systems. Some of it will make easy sense and some not I expect.

        The extremely radical observation Keynes made that got him in trouble with his peers was that he thought it would be fairly easy for the economy to accumulate too much investment to be profitable. So when accumulating investment started to become less profitable, Keynes saw that investors would need to voluntarily stop adding their earnings to their savings to keep the economy from being driven to expand until it became entirely unprofitable.

        He never found a way to describe it so others would understand, nor did Ken, nor have I yet. It’s rater counter-intuitive that the tables would turn and investors would make more profit by no longer accumulating their profits but spending them. It’s a completely natural consequence of the economy shifting from a positive to negative sum game as a response to natural limits.

        • Bill Goedecke says:

          P.F.Henshaw – yes, I will look over the material on Keynes. I have some understanding of economics, took a macro-eco class at berkeley – read a lot – what I gather is that mainstream economics does not incorporate the labor theory of value – such as in Marx – so (I would assume) does not really factor in a multiplier effect of energy – something that Robert Ayres and Benjamin Warr incorporated in some way (I read that paper a while ago!). Anyway, thanks for your post and site. Bill

          • P.F. Henshaw says:

            Bill, I think there’s special commonality between the philosophy of science evident in the work of Malthus, Jevons, Keynes, Boulding and myself, that of considering economies to be self-organizing natural systems. That “systems ecology” approach means, among other things, using data to help explore the physical processes of complex environmental systems to discover how they work and are changing by themselves. The philosophy of science used by established disciplines treats data as the raw material for constructing mathematical models, to represent as being how nature works. So, the two approaches are both only subtly different and radically different at the same time.

            It wouldn’t make sense to consider systems that work by themselves to be following abstract equations or theories a scientist has made up for themselves. Self-organizing systems would be considered as exhibiting temporary regularities, the instability of which would lead you to investigate what new regularities might be emerging. Having models of how things worked before can help you identify when behaviors are starting to work differently.

            One example is how commodity price increases no longer stimulate sufficient new supply and for 10 years have kept markets vulnerable to speculative manipulation. When demand grows but doesn’t generate adequate supply, it implies the earth has broken the assumptions on which growth theory is based.

            I have a fairly developed approach, but haven’t written it up very well, I think, still searching for the approach people following the conventional philosophy of science will recognize and allow me to discuss with them.

        • Bill Goedecke says:

          P.F. Henshaw – Just want to reply briefly to your last post – I think of economics as a subset of sociology – that it tends to be doctrinal because it arises from the social context. I guess you could say that the social context arises from its philosophical constructs. From my point of view, economics can never be self-organizing if it is seen separate from its sociological and philosophical roots. I have bookmarked your site -B

  14. fj says:

    Re: Jevons Paradox, Rebound Effect, and “Gone With The Wind”

    What a unique concept:

    The more efficient something is the less efficient it is.

    Wow, multiverse may just possibly exist and the physics laws of this universe probably do not apply!

    But, let’s stay with well-established Newtonian Physics in this universe for manageable analysis.

    First, energy efficiency is a physics problem and a fairly trivial one at that and requires an accounting of the energy in and out of a closed system. Let’s stay with Newtonian Physics for the time being but, of course it would be fun to bring in Special and General Relativity, and Quantum Mechanics if case studies really required it.

    So far, fundamental conservation laws apply: Conservation of energy, linear and angular momentum derived from the fundamental homogeneity and isotropy of space and time — another discussion could be that space and time are mere cognitive tools but let’s comply with accepted practice and that this is way beyond the scope of this analysis — and, let’s still stay, as mentioned, with Newtonian Physics unless the additional complexity can be justified.

    Kind of suspect it will be quite difficult to prove that energy, linear and angular momentums are not conserved so, let’s take that as a given unless proven otherwise.

    Second, the Jevons economics issue and ultimately, the psychology issue mainly: The decision by people to use more stuff than necessary to perform a given function.

    This should not be limited to the efficiency of closed systems and energy considerations, and better described in terms of functionality, since efficiency may be construed as just one part of the systems in question.

    And rationality, though not necessarily irrationality which is another discussion beyond the scope of this epic which Daniel Kahneman details in his Conclusion of “Thinking Fast and Slow” starting at page 411.

    Since there’s an indication that current discussions of Jevons Paradox and Rebound Effect are politically driven such as faith in human rationality closely linked to ideology-advancing agenda in which it is unnecessary and even immoral to protect people against their choices like the sham beliefs of Climate Change Denial, Creationism, Trickle Down Theory, etc.; it might be best to reconsider.

    But, do give it a go and remember that it’s highly unlikely that energy is not conserved and highly efficient practices are not the best way to stop accelerating climate change at wartime speed.

  15. P.F. Henshaw says:

    It’s certainly cause for patience and extra consideration when discovering our social values have led us into some faulty thinking. Expanding the economy more efficiently won’t shrink it, unfortunately, and our policy ideas get confused by that again and again.

    It’s a matter of being misled by attention to one part of a network of connected things, as if it were disconnected. Over the years it’s been quite traumatic for me, to find just how many of my professional friends trusted their competitive urge to advance their social values over any effort to recognize the physical facts… just a horrible experience.

    It’s so important to recognize that it’s often not our values that are wrong when they mislead us. It’s often our being uneducated about how they’ll apply. I crunch a lot of these kinds of insights into my Twitter.com/shoudaknown posts, the last being: “If the social values of the cells deny being part of the body, every cell is a cancer, like we see.”

    I’d agree we need a “whole new way of thinking”. When our social values have been misleading, competing for social dominance clearly isn’t the answer. It’s closer to the problem that keeps getting in the way of our really learning what to do.

    On the effects of efficiency, people often don’t notice that different people ask the question differently. Some ask about “deterministic” and some about “systemic” effects. Asking about one distracts from considering the other, too. Still, understanding seems to require asking about both, looking for the traceable chains of effects for “A causes B” and the system effects for “A changes B”.

  16. Dr.A.Jagadeesh says:

    Energy Efficiency is the least cost approach to meet the demand.

    Dr.A.jagadeesh Nellore(AP),India
    E-mail: anumakonda.jagadeesh@gmail.com