Monday, March 7, 2011

Energy Efficiency and Jevons Paradox

Just read an article in the NY Times on how energy efficiency can lead to increased energy usage.  I've heard the argument before, and there's definitely some truth to it.  The article contains links to some of the evidence for this.

The perspective given in this article leads right into one of the major themes of this blog.  Things aren't simple, can't be considered as isolated effects, and attention has to be paid to their contingent nature.  In this particular case that contingency is the fact that more effective measures such as a gas tax are made cheaper by increases in energy efficiency.  It could be true that:

While there’s no doubt that fuel-efficient cars burn less gasoline per mile, the lower cost at the pump tends to encourage extra driving. There’s also an indirect rebound effect as drivers use the money they save on gasoline to buy other things that produce greenhouse emissions, like new electronic gadgets or vacation trips on fuel-burning planes.
However, it's also true that people have very real concerns about how a gas tax might impact the economy and the poor.  Increased fuel efficiency reduces these costs.  This changes people's cost calculations and can make possible political alignments that weren't possible before.*  Technological advances change the underlying systemic pressures and can impact policy outcomes in meaningful ways.  Analyzing things in isolation misses this, and while I think most well informed people realize there's more to it, this doesn't describe everyone engaged in political debate. 

I believe it's important to recognize, and be explicit about, these second order effects so that we don't have as many tiresome arguments about topics such as efficiency vs. a gas tax (not that I recall seeing this specific frame), as if these are separate strategies rather than complementary ones.  Probably too much to ask from a newspaper article with wordcount, as opposed to a blog where I can freely ramble on to my heart's content, but I see things presented so often in this basic oppositional structure that I couldn't help commenting on it.

Though I do feel that perhaps rather than ending

No matter what laws are enacted, people are going to find ways to use energy more efficiently — that’s the story of civilization. But don’t count on them using less energy, no matter how dirty their clothes get.
Perhaps something could have been added that spoke of the complementary nature of the preferred solution of a gas tax along with the inability of efficiency to achieve large economy wide energy savings on its own (though I'm agnostic about the washers mentioned in the last paragraph, gas taxes are more interesting to me).

*I will admit this doesn't seem to be happening in the US.  We seem to use the technical advances involved in making more efficient cars to simply make them bigger instead (which I think may be part of the explanation for the increased fatalities for small cars, it's not irrelevant the big ones are growing in size and number as well.  Part of this issue is timing, efficiency increases may create a window where a gas tax could be imposed without harm since people haven't adjusted their habits yet.  Given them time, and this will become more difficult.  This is purely theoretical in the case of the US auto industry where we haven't seen a move to more efficient vehicles since a good portion of the efficiency increases are wiped out by size.


  1. The increase in large vehicles is caused by the COLA requirements. COLA requirements are placed on entire fleets, rather than types of cars. Vehicle makers can meet the requirements while pleasing their consumers best by making their small cars fuel efficient while keeping their large vehicles very large and fuel inefficient. Changing the COLA requirements would increase costs a lot of the larger vehicles, which wouldn't be a big problem for most people. Most people buy a minivan or SUV when they have one or two children. But trucks are bought by small business owners frequently on private credit when they run out of credit for their business, so we would have to be careful with pricing people out of the truck market. We could increase tax credits for people with more than two children and subsidize trck buying for business owners.

  2. SirW, do you mean CAFFE standards?

    I've found a small, local exception to Jevon's paradox. I drive about 40,000 miles per year and parking my pickup and picking up a Prius hasn't inspired me to drive a single extra mile. If Ford builds a transporter, though, I'll be all over the place.

  3. I agree CAFE standards are a particularly inefficient way to institute environmental standards. I definitely think it would be plausible to create some sort of depreciation schedule specific to business vehicles that could help small businesses without encouraging too many people to find ways to abuse it.

    Doug, good example. While Jevon's paradox is real, I think people tend to exaggerate it. I believe it probably depends a lot on specific circumstances, which are only sometimes hard to take into account. On a simple level, I think a key piece is to look at general wealth effects. I know I don't turn off my lights because of my high electricity bill, so replacing them with more efficient lights won't cause me to use more lighting, for another personal instance.