The energy efficiency rebound: major fire or blowing smoke?

A lot of ink has been spilled over what some people believe is an inherent flaw in energy efficiency technology. But does the so-called energy efficiency rebound effect, also called Jevons Paradox, present a major fire or is it just blowing smoke?

Put simply, here’s how one version of the argument goes: Forecasts of savings from energy efficiency measures are overblown, because when prices go down and people start buying more efficient appliances — like air conditioners or refrigerators — they will choose devices with larger capacities and other options that will drive total consumption up. It’s a fairly simple problem to define, but notoriously complex to grasp, and could have nontrivial conclusions.

If powerful enough, the energy rebound effect could hamper an important trend in industrial, consumer and commercial energy efficiency. Between increased government mandates for energy efficiency measures and the promise of significant energy savings from energy suppliers, the developed world is becoming increasingly more efficient with its energy use.

But not everyone agrees that Jevons Paradox has any bite. The Rocky Mountain Institutes’ Chief Scientist, Amory Lovins agrees that the rebound effect exists, but says it is quite small — perhaps absurdly small. Lovins has fought arguments about the rebound effect for years, stating back in 1988:

“It is, I believe, now widely accepted to be a fallacy whose tedious repetion ill serves rational discourse and sound public policy.”

Nevertheless, the issue continues to reassert itself. David Owens, staff writer for The New Yorker describes the following scenario:

“Imagine a primitive village in which the only energy input is food and the only way to transport anything is to carry it or drag it over the ground.  Now invent the wheel. If the village were Lovinsland, [adhered to Lovin’s argument] this increase in efficiency would cause food consumption and production to fall.  In the real world, though, we know that the villagers will reinvest their sudden energy surplus, leading to a cascade of mutually reinforcing increases in consumption of all kinds.”

On the surface it seems to make sense – for the consumer, an energy efficiency improvement can function much like a decrease in price; it’s cheaper, so use more. Voila, the rebound effect.

But the limitations to this effect also seem to be common sense. Even if I have the most efficient air conditioner, I’m simply not going to keep lowering the temperature until my family is shivering. The mountains of laundry won’t get bigger necessitating more wash cycles, I’m not going to go around turning on lights in unoccupied rooms, or buy lights that are so bright that they scorch my eyes. And if I am motivated to promote environmental stewardship, then my savings could be even greater. (Let’s acknowledge the flaw in this argument; I’ll just take that extra money and go on a Hawaiian vacation, consuming even more energy!)

Robert J. Michaels recently wrote about rebounding in his Wall Street Journal article, “The Hidden Flaw of ‘Energy Efficiency.” Michaels states that:

“Rebound greatly complicates the politics of energy efficiency,” and says “[studies] have yet to account for long-term and world-wide effects of greater efficiency.”

Okay, I’ll bite. Rebounding needs to be better understood to create rational forecast scenarios that reflect true energy savings from efficiency measures. This is especially critical as demand grows as electrification becomes more widespread in the developing world.

Rational debate over energy policy is necessary, but the discussion seems to quickly devolve into acrimony rather than collaborative efforts to develop useful approaches to grapple with this issue. Why? Because the rebound paradox is contrarian to the approach of current energy efficiency policy, yet easily informed with ideological bias.

The solution is quite simple: Aggressively study the impacts of rebound effects and incorporate those understandings into climate economic models.  It’s time to move beyond theory and embrace action.