Energy: Will Efficiency Lead to More Consumption?

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In the polarized realm of climate and energy politics, energy efficiency has always been the common ground. The concept is so attractive—we clearly waste far too much of our energy, whether that means driving a car with that gets low gas-mileage or living in a poorly insulated house. If you’re worried about climate change and are looking for a way to cut carbon emissions, improving energy efficiency is a no brainer. And even if you think climate fears are overstated, there’s a logical business case for upping your energy efficiency: energy wasted is money wasted. (See this report from the UN Foundation to set a sense of the hopes being placed in scaled-up energy efficiency.)

But what if the environmental faith that increasing energy efficiency means decreasing carbon emissions isn’t perfect? What if by improving the efficiency of our lightbulbs (or our cars or our thermostats), we actually pave the way for increased energy consumption—and as long as most of our energy is provided by fossil fuels, increased carbon emissions as well? What if energy efficiency rebounds on us?

That’s the argument being made by Harry Saunders, one of the authors of a recent paper in the Journal of Physics on the energy-economics of solid-state lighting—in plain language, how the introduction of ultra-efficient LCD lighting will impact energy consumption and energy prices. (Get a PDF of the paper here.) The study itself looked at data from  300 years of lighting use in Britain, and found that people have spent about the same amount of money on lighting—roughly 0.72% of GDP—no matter where in the world or when in history they live. The difference is the efficiency of the lighting source—in the rich world, as fireplaces gave way to whale lamps, and incandescent lightbulbs gave way to compact flourescent bulbs, we’ve been able to get more and more light for the same amount of money.

From an economic perspective—and a quality of life one—that’s a good thing. (Just ask the 1.4 billion people around the world who live without access to regular electricity.) But the history of lighting shows that improving energy efficiency doesn’t reduce overall energy consumption. Rather, it can actually increase energy consumption, as efficiency improvements allow us to burn more light without paying more.

As Saunders wrote in a recent post, this is an example of the “rebound effect”—energy efficiency lowers the cost of energy, and we then tend to use those cost savings on activities or items that either use energy or have energy embedded in them. The savings end up rebounding on the economy as a whole, as Saunders points out:

The good news is that increased light consumption has historically been tied to higher productivity and quality of life. The bad news is that energy-efficient lighting should not be relied upon as means of reducing aggregate energy consumption, and therefore emissions.

The rebound effect is a hotly debated one among energy experts, as I found in reporting a fairly brief article on the subject last year. (It’s also called the Snackwell effect, after the diet cookies—snackers eat more because each cookie is lower in calories, and end up packing on the pounds.) Skeptics of the rebound effect believe it’s naturally limiting, arguing that just because light gets cheaper thanks to greater efficiency doesn’t mean we’ll suddenly be driven to keep the Christmas lights on year-round. There’s a limit in how many lightbulbs we’d want burning at one time, no matter how cheap their energy costs are, just as trading in an SUV for a Prius doesn’t mean we’ll drive three times as much. Here’s what Evan Mills, a scientist at Lawrence Berkeley National Laboratory, said about the Journal paper:

More is not always better. For rich and poor alike, the sky (i.e., a burning sun in every living room) is not the limit for lighting demand.  Illuminating engineering societies around the world have actually been reducing their lighting-level recommendations for many years running, as overzealous guidelines have been seen to create excessive glare and other problems.  Even granting some pent-up demand for more lumens, LEDs can save energy because their light can be more precisely directed to end-use needs and more easily controlled.

But Saunders argues that the most significant rebound effects can be indirect. After you buy that Prius, you may end up driving a little more than you did before, but you’ll still burn less gasoline. That’s not all though:

These “direct-use” rebounds are small in comparison to “indirect-use” rebounds in energy consumption. Globally, some two-thirds of all energy is consumed indirectly– in the energy used to produce goods and services. A residential washing machine may be energy efficient in terms of function, but in terms of production, the metal body alone requires energy to mine, smelt, stamp, coat, assemble and transport it to a dealer showroom and eventually a residential home. The energy embedded in your washing machine, or just about any product or service you consume, is very large. And remember that any money you save on your energy bills through efficient appliances or the like is re-spent on other goods and services, which each take energy to produce, all while more productive use of our money (e.g. in spending, savings and production) spurs a more robust economy, demanding even more energy.

This makes sense intuitively. Increases in productivity—another word for efficiency—is what drives economic growth, and always has. You might take some of your energy savings and conserve it—perhaps by working less—but in the U.S. at least that’s rarely been the case. We save through efficiency and then we buy more—and we end up with more stuff, and responsible for more carbon emissions.

That doesn’t mean energy efficiency has no role in reducing carbon emissions—far from it. As the authors point out in the Journal piece, improving energy efficiency and cutting waste and give economic breathing room to policymakers who want to cut energy use by raising the price of energy, perhaps through policies like a carbon cap:

Changes in the efficiency of lighting affect both the cost of light and the amount of light that can be consumed per unit energy; while changes in the cost of energy associated with lighting affect only the cost of light. Thus, an increase in the cost of energy associated with lighting, which would normally reduce both human productivity and energy consumption, can be mitigated by an increase in the efficiency of lighting: energy consumption can be held constant while maintaining some human productivity increase or energy consumption can be reduced without a decrease in human productivity.

But make no mistake about it—in this case it’s the artificial increase in the price of energy that reduces energy consumption, not the increase in energy efficiency. Efficiency just becomes a way to pay for rising energy prices. It’s be a waste to forego chances to cut energy waste, but don’t forget—there’s no such thing as a free lunch in carbon policy, even when it comes to the green policy everyone loves.