The Jevons Paradox

 
 

It seems a paradox: efficient energy consumption has been the driving force behind growing global energy consumption and carbon dioxide emissions. Our first guess would probably be the opposite: technological advances increase energy efficiency and decrease energy consumption and CO2 emissions. With less energy required to accomplish the same economic task, we don’t need to consume as much oil, gas, and coal to maintain the same lifestyle.


The issue is generally acknowledged to be a little more subtle, however. Many economists argue for a weak “rebound effect”, whereby increasing energy productivity spurs fractionally greater emissions further down the road. One form is the “direct” rebound effect. People may choose to drive more often if a vehicle is fuel efficient, because driving is useful or pleasurable and now more affordable. There are also “indirect rebound effects”, which extend the response to differing economic sectors. Less money spent on fuel for efficient vehicles might enable more money to be spent on fuel for home air conditioning.


A few studies even point to an extreme form of rebound termed “backfire”: gains in energy efficiency lead ultimately to more rather than less energy consumption. First discussion of the principle came from William Stanley Jevons in 1865. Jevons was emphatic that energy efficient steam engines had accelerated Britain’s consumption of coal. The cost of steam-powered coal extraction became cheaper and, because coal was very useful, more attractive.


The problem has been that calculation of the total magnitude of rebound or backfire has proved both contentious and elusive. A major reason is that any given efficiency improvement has knock-on effects that eventually propagate through the entire global economy. Calculating the ultimate impact is daunting if not impossible.


For example, suppose that efficient vehicles enable a savings in transportation costs that allows for more money to be then spent on household heating and cooling. By raising home comfort, workers sleep better. They become more productive where they are employed. With higher profits, their employers reward the workers with raises. In turn, the workers spend the money on goods produced overseas with coal-generated electricity.


So, in this fashion, the ramifications of any given efficiency action might multiply indefinitely, spreading at a variety of rates throughout the global economy. Barring global analysis of rebound effects over long time scales, conclusions may be quantitative but uncertain, and dependent on the time and spatial scales considered.


Analyzing the global economy as a whole


How should the problem be solved? An easy way to address the complexity of the global economy is simply to ignore it.  Rather than resolving the myriad economic flows within the global economy, a more general approach can be taken by treating the economy only as a whole.


The analogy here might be to a growing child, who uses the material nutrients and potential energy in food not only to produce waste but also to grow its body mass. As the child grows, it needs to eat more food, accelerating its growth until it reaches adulthood and growth stabilizes (hopefully!). An inefficient diseased child may become sickly, lose weight, and die. But a healthy, energy efficient child will continue to grow to some day become a robust adult who consumes energy at a much higher rate. The problem is fairly straight-forward, provided we look at the child as a whole.


If we look at civilization as a whole, then consuming energy is what allows for all of civilization’s activities and circulations to continue -- without potential energy dissipation nothing can happen. The twist is that, like a child, when civilization is efficient it is able to use a fraction of this energy in order to incorporate new raw materials into its structure. Efficiency allows civilization’s total size to expand.


But expansion of civilization increases its access to reserves of primary energy and raw materials, provided of course that they remain or are there to be discovered. Increased access to energy reserves allows civilization to sustain more of its circulations and also to expand further. Expansion is into new reserves. So, in a positive feedback loop, expansion work enables greater energy inputs and therefore even more work and more rapid expansion.


Now, if efficiency increases then expansion is faster for any given amount of energy consumption. Civilization is able to accelerate even more rapidly into the reserves of energy and raw materials that it requires leading to even further and faster consumption. As with the child, this is the feedback that is the recipe for emergent growth, not just of civilization but of any system. Doing expansion work efficiently ultimately allows for greater rather than lower energy consumption.


Ultimately there are constraints on efficiency and growth, from reserve depletion and internal decay. But in the growth phase, efficient conversion of energy to work allows civilization to become both more prosperous and more consumptive.

Implications for climate change


It is easy to find economists willing to express disdain for Jevons’ Paradox by pointing to counter-examples in economic sectors or nations where energy efficiency gains have led to less energy consumption. For example, the USA has become more efficient and thereby stabilized its rate of energy consumption.


While these counter-examples may be true, they are also very misleading, especially if the subject is climate change. Nations do not exist in economic isolation. Through international trade the world shares and competes for collective resources. Quite plausibly, the only reason the USA appears to consume less energy is that it has outsourced the more energy intensive aspects of its economy to countries like China. The argument that “There is nothing particularly magical about the macroeconomy, it is merely the sum of all the micro parts” is wrong for the same reason that it is wrong to say that “there is nothing particularly magical about the human body, it is merely the sum of all its parts”. Connections matter!


Fundamentally, through trade, civilization can be treated as being “well-mixed” over timescales relevant to economic growth. In other words, trade happens quickly compared to global economic growth rates of a couple of percent per year. Similarly, excess atmospheric concentrations of CO2 grow globally at a couple of percent per year. They too are well-mixed over timescales relevant to global warming forecasts because atmospheric circulations quickly connect one part of the atmosphere every other. For the purpose of relating the economy to atmospheric CO2 concentrations, the only thing that matters is global scale emissions by civilization as a whole.


Taking this global perspective with respect to the economy, efficiency gains will do the exact opposite of what most claim it will do. If technological changes allow global energy productivity or energy efficiency to increase, then civilization will grow faster into the resources that sustain it. This grows the economy, but it also means that energy consumption and CO2 emissions accelerate.


CO2 emissions can be stabilized despite efficiency gains. But this is possible only if decarbonization occurs as quickly as energy consumption grows. At today’s consumption growth rates, this would require roughly one new nuclear power plant, or equivalent, to be deployed each day. Barring this, since wealth and energy consumption rates are linked, it can only be through an economic collapse that CO2 emissions rates will decline. If the size of civilization enters a long and profound decline then wealth, energy consumption and CO2 emissions will all decrease at roughly the same rate. Only if the collapse is sufficiently rapid will it be possible to maintain atmospheric CO2 concentrations below levels that are normally considered dangerous.


Perhaps there is a way out of this admittedly grim sounding double-bind. But Jevons’ Paradox tells us that it will not be by way of increasing energy efficiency. Quite the opposite.


For more details, see


Garrett, T. J., 2012: No way out? The double-bind in seeking global prosperity alongside mitigated climate change, Earth System Dynamics 3, 1-17, doi:10.5194/esd-3-1-2012

 

Why efficiency gains accelerate

global energy consumption and CO2 emission rates