Jevons Paradox - or a gentle cough concerning energy efficiency

There is a common thread to almost all recommendations that deal with the problems associated with our dependence on fossil fuels, whether that concern arises because of Energy Security issues, or because of concerns over Climate Change. That thread dictates that the obvious first step is to engage in a program of conservation and improving energy efficiency. This is the “low hanging fruit” referred to by Secretary of Energy Steven Chu, and over the past weeks it was repeated in speech after speech, at both the EIA Energy Meeting and the Missouri Energy Summit I have just described.

Improving energy efficiency is not a new mantra, it has been proposed, and programs implemented to encourage it over many years. There is, however, one often unrecognized problem. Over the years that problem has become known as Jevons Paradox, after the English economist who propounded it in 1866. Writing about concerns over the availability of coal for the British economy he said

“A further class of opponents feel the growing power of coal, but repose upon the notion that economy in its use will rescue us. If coal becomes twice as dear as it is, but our engines are made to produce twice as much result with the same coal, the cost of steam power will remain as before. These opponents, however, overlook two prime points on the subject. They forget that economy of fuel leads to a great increase in consumption, as shown in the chapter on the subject; and secondly, they forget that other nations can use improved engines as well as ourselves, so that our comparative position will not be much improved.”

It is the first of these points that has become known as Jevons Paradox. More simply put – It is wrong to assume that the more efficient use of fuel will lower its usage. In fact the very opposite happens.

Jevons was writing at a time when the benefits of coal, in moving the world into the Industrial Revolution, were evident. Developing markets for coal had led to the creation of canals, the invention of the railway and the steam locomotive and, at the time he wrote, the increased popularity of marriage. In his book “The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coalmines,” he devotes Chapter Seven to the consideration of the paradox cited above. Although he separates domestic considerations from his argument , subsequently they have been found to be equally vulnerable to the paradox.

Jevons began his case by noting that seamstresses who master the use of a sewing machine find increased demand for their services, and then commenting that the improved efficiency achieved, first by Smeaton and then by Watt, on Newcomen’s original atmospheric engine, dramatically increased their range of application.

Consider that the duty (number of pounds of water raised one foot by burning a bushel (84 lb) of coal went from 5.59 million lb in 1769 with the original engine, through 9.45 million lb with Smeaton’s enhancement in 1772, to 26.6 million lb with Watt’s improved engine in 1788, reaching 43.3 million pounds in 1830 with the Cornish engine. With each step in the progression more engines were sold, and the market grew. And as the market grew the machines became cheaper, and then more widely adopted. It transformed society.

The reduction of the consumption of coal, per ton of iron, to less than one-third of the former amount, has been followed, in Scotland, by a tenfold (increase in ) total consumption.

And he adds this caution

But no one must suppose that coal thus saved is spared – it is only saved from one use to be employed in others, and the profits gained soon lead to extended employment in many new forms.

Later economists have modified this statement into what is now referred to as the rebound effect “some efficiency gains are wiped out by a greater demand for the product.”

There appears to be considerable support for the proposition that the Paradox still holds true. Jeff Dardozzi reviews some of the history

In the 1980s, Jevons' observation was revisited by the economists Daniel Khazzoom and Leonard Brookes. In their analysis, they looked beyond the relationship between energy resources and the machines that convert them to useful work to consider the overall effect of technological improvements in resource efficiencies on the energy use of a society as a whole. They argued that increased efficiency paradoxically leads to increased overall energy consumption. In 1992, the economist Harry Saunders dubbed this hypothesis the Khazzoom-Brookes Postulate and showed that it was true under neo-classical growth theory over a wide range of assumptions. Since the appearance of the Khazzoom-Brookes Postulate, numerous studies have weighed in on the debate arguing a range of impacts of the rebound effect.

In January 2008, Earthscan released Jevons Paradox: The Myth of Resource Efficiency Improvements as the latest and most comprehensive review of the paradox in economics literature. Prefaced by anthropologist Joseph Tainter (The Collapse of Complex Societies, 1988), the book reviews the history of the debate, current findings and includes the latest multi-disciplinary studies regarding the existence of the rebound effect. The book clearly supports the proposition that the rebound effect is present in the US, Europe and most other economies and that strategies to increase energy efficiency in themselves will do little to improve the energy or the ecological situation. In fact, they may well worsen it as the historical impact of resource efficiency improvements shows that increasing the efficiency in the use of a resource in turn increases the consumption of that resource.

There is an excellent video available on the subject (though it lasts 18 minutes) ( courtesy of San Francisco Bike Blog)

Treehugger illustrates the Paradox using the example of the Tata Nano car – that gets 47 mpg but, at $2,500, expands the car market to vast numbers of Indians.

Jevons work has been confirmed by economists such as Mark Mills and Vaclav Smil, “energy efficiency increases energy consumption.” It is becoming the topic of new books which support the concept,

As Huber and Mills make clear in The Bottomless Well: "Over the long term, societies that expand and improve their energy supplies overwhelm those that don't." Given the harsh realities of the Jevons Paradox, the U.S. (and the rest of the world) need to get busy expanding and improving those energy supplies.

It might make a topic for an interesting session at a future Energy Conference.