Energy efficiency is energy gain

April 17th, 2013, Published in Articles: Energize

Like many other perennial debates, the one about the rebound effect simply refuses to go away. The basic argument is that if you replace an inefficient car, or light bulb, or refrigerator with a more efficient one – everything else being equal – the typical consumer will drive farther, use more light and buy bigger fridges virtually cancelling any energy efficiency gains. Those who subscribe to this theory claim that making appliances and electricity consuming devices more efficient is mostly counter-productive because consumers will simply use more.

This argument was promoted by Robert Michaels, in the August 2012 issue of The Wall Street Journal, in an opinion article titled “The hidden flaw of energy efficiency”. Some of his points include:

  • Technology that improves energy efficiency and reduces its cost means people can consume more goods and services that use energy – home electronics, appliances and the like. And of course, businesses will use additional energy making them.
  • Mexico’s recent cash-for coolers program, subsidised the swap-out of inefficient refrigerators and air conditioners for more efficient ones. A World Bank engineering study claimed that the new refrigerators would consume nearly 30% less energy. But the actual savings estimated by researchers at the University of California Energy Institute was only 7%, because buyers chose larger capacities and options like ice makers in the doors. Newer air conditioners actually consumed more electricity because they cut the cost of attaining previously unaffordable comfort levels in summer months.
  • Rebound greatly complicates the politics of energy efficiency. Some organisations, including the Natural Resources Defense Council and the American Council for an Energy Efficient Economy, have attempted to refute it, but their studies have thus far examined only a minority of rebound findings and have yet to account for long-term and world-wide effects of greater efficiency.
  • These direct and indirect effects are substantial, as found in the recent Energy Institute Research survey, “The Rebound Dilemma”, but they are small relative to the long-term consequences for the nation and the world.

Such arguments are not new. The counter-intuitive idea that making things more efficient could increase, rather than decrease consumption, is usually credited to William Jevons, who published a book in 1865 titled, “The Coal Question”. Referring to energy efficiency – which he called “economical use of fuel”, he claimed, “It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth.” In 1865, England was at the peak of its industrial revolution, and coal was the fuel used to power the industry to make steel and everything else. Consequently, Jevons was mostly concerned about the impact of new technological advancements, such as the blast furnace, which allowed more steel to be produced from the same amount of coal. His theory was that using less coal to make more steel would not result in lower coal consumption, as one might expect. His argument was that because steel can now be produced more economically, its price will fall, resulting in increased demand which results in more coal being used. “The greater number of furnaces will more than make up for the diminished consumption of each,” he concluded. Over the years, Jevons’ ideas were forgotten and rediscovered periodically.

More recently, a number of energy efficiency scholars have found new nuances in his theory, and references to Jevons paradox have multiplied. David Owen wrote an interesting piece on the subject titled, “The efficiency dilemma”, which appeared in The New Yorker in Dec 2010. The late Lee Schipper, an expert in energy efficiency, who was interviewed for the article, stated that Jevons’ paradox has limited applicability today. Few scholars deny the existence of the rebound effect, but question how big the rebound may be. The context in which the rebound takes place is equally important. If a consumer economises in the use of lighting, heating, cooling or refrigeration due to severe fuel poverty, and is presented with a far more efficient technology, few would argue that net consumption will fall. In this case, consumer is enjoying more lighting, heating or cooling with the same limited energy budget.

There is nothing wrong with that. The case involving swapping inefficient refrigerators in Mexico with more efficient ones, mentioned by Michaels would clearly fall in this category. But consider a typical commuter getting a more fuel-efficient car. Would the commuter take longer drives or select to move further away from office just because the cost of his daily commuting has dropped? Owen refers to studies that suggest “… when you increase the fuel efficiency of cars you lose no more than 10% of the fuel savings to increased use,” and even this limited rebound can be disputed. Or consider the typical office, retail store, or hospital, which is already cooled (or heated) beyond what is necessary – or in some cases comfortable. Would the office, shopping mall or hospital be cooled to an even more frigid temperature if the air conditioner were vastly more efficient? In this case, the rebound effect may be little to none. Or consider an area which uses plenty of lighting as is. Would electricity consumption increase if the lights were replaced with more efficient versions? The empirical evidence does not support an overwhelming rebound effect.

The arguments, of course, become circular. Michaels, for example, points out – correctly – that, “A family that once had only a single air-conditioned bedroom may now choose to install a central unit, and one that suffered in the heat may purchase its first one,” which explains why Jevons’ paradox, and the rebound effect, are such fun topics to discuss. The bottom line at least in the context of rich, mature economies, where most consumers already use, and can afford, relatively high levels of energy consumption, is that making appliances more efficient or homes better insulated will result in lower energy consumption, even after accounting for some rebound effect. To claim otherwise, using Jevons’ colourful words, would be very contrary to the truth. The phenomenon of demand saturation is real and spreading beyond the energy domain. Consumers in many mature economies have more things than they know what to do with.

Making existing gadgets more efficient is unlikely to result in increased energy consumption. Americans already watch plenty of TV as is; making TVs more efficient is unlikely to result in more TV watching. And the average American house already has 2,5 TVs – how many more will they want or need? Moreover, 31-million Americans live alone, up from 5-million in 1950, a trend repeated in many other mature economies. Even if a single-occupied house had multiple TVs, it is unlikely that more than one would be on at any given time. Just as with phones, there are more TVs than viewers. Demand saturation is something to reckon with, not just in electricity business but also in oil, automobile, food, or the housing sector, to name a few. There are roughly 50-million more cars in the US than there are licensed drivers. With a new 54,5 miles per gallon standard taking effect in 2025, gasoline consumption will be falling, no matter what Professor Michaels says. An aging population drives less often and shorter distances. And rising gasoline prices are not likely to help. For companies in gasoline refining or retailing in the US, the future is getting by with a shrinking demand – a different story for developing economies.

Demand saturation is, of course, not limited to energy. In the food business, whether restaurants or supermarkets, for the affluent segment of the market, the emphasis is no longer on quantity but increasingly on quality. It is not about getting more calories cheaply, but migrating towards fresh, healthy, organic, and locally-grown products.


This article was published in the October 2012 issue of EEnergy Informer and is reprinted here with permission.

Contact Dr. Fereidoon Sioshansi, EEnergy Informer,