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Energy efficiency flawed due to rebound effects
Posted by Gail the Actuary on September 14, 2010 - 10:35am
This is a guest post by Cameron Murray, an Australian economist who currently works for a regulatory authority. Cameron has a blog that he calls Observations of an Economist Environmentalist.
The word efficiency carries a meaning immersed in all things positive – you never hear that being more efficient could possibly be detrimental. In fact, if you can bear the evangelical fervour, you may have read about achieving ‘Factor Four’ or ‘Factor Five’ gains in energy efficiency, as part of a ‘Natural Capital’ revolution comprising a ‘decoupling’ economic growth from a growth in the consumption of exhaustible resources – also known as ‘sustainability’. You may even have heard about the equation I=PAT or I = P x A x T, where environmental impact (I) is a function of population (P), affluence (A) and technology (T), and that becoming more efficient will enable a desired level of affluence with far less environmental cost.
Historical experience shows that these claims are untrue, and indeed the facts suggest greater energy efficiency is counterproductive to the stated aims of curbing resource use and decreasing negative environmental externalities.
When it comes to natural resource use, and the externalities associated with resource extraction and production, efficiency alone is the enabler of greater consumption. William Stanley Jevons first noted that technological improvement, in terms of greater efficiency and therefore productivity, was the enabler of greater coal consumption in Britain back in 1865 in his book, The Coal Question: an Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of our Coal-mines. His observation was coined Jevons Paradox, even though the argument that technological improvements in resource efficiency (modes of economy) leads to greater resource use was already widely accepted in the labour market:
“As a rule, new modes of economy will lead to an increase in consumption according to a principle recognised in many parallel instances. The economy of labor effected by the introduction of new machinery throws labourers out of employment for the moment. But such is the increased demand for the cheapened products, that eventually the sphere of employment is greatly widened.”
One hundred and fifty years later, the modern debate is fuelled by economic ignorance, with many of the most influential economists and environmentalists remaining confused - failing to acknowledge the parallel effects of technology on the resource called ‘labour’ and other resource inputs to the economy.
More rigorous economists have reopened the debate, under the new term rebound effect, breaking down the transition mechanisms between greater efficiency and greater resource consumption.
- Direct rebound effect: Increased fuel efficiency lowers the cost of consumption, and hence increases the consumption of that good because of the substitution effect.
- Indirect rebound effect: Through the income effect, decreased cost of the good enables increased household consumption of other goods and services, increasing the consumption of the resource embodied in those goods and services.
- Economy wide effects: New technology creates new production possibilities and increases economic growth.
UCLA mathematics professor Terence Tao explains the direct effect as follows:
Suppose one has to decide whether to use one light bulb or two light bulbs to light a room. Ignoring energy costs (and the initial cost of purchasing the bulbs), let's say that lighting a room with one light bulb will provide $10/month of utility to the room owner, whereas lighting with two light bulbs will provide $15/month of utility. (Like most goods, the utility from lighting tends to obey a law of diminishing returns.)
Let us first suppose that the energy cost of a light bulb is $6/month. Then the net utility per month becomes $4 for one light bulb and $3 for two light bulbs, so the rational choice would be to use one light bulb, for a net energy cost of $6/month.
Now suppose that, thanks to advances in energy efficiency, the energy cost of a light bulb drops to $4/month. Then the net utility becomes $6/month for one light bulb and $7/month for two light bulbs; so it is now rational to switch to two light bulbs. But by doing so, the net energy cost jumps up to $8/month.
So is a gain in energy efficiency good for the environment in this case? It depends on how one measures it. In the first scenario, there was less energy used (the equivalent of $6/month), but also there was less net utility obtained ($4/month in this case). In the second scenario, more energy was used ($8/month). But more net utility was obtained as a consequence ($7/month). As a consequence of energy efficiency gains, the energy cost per capita increased (from $6/month to $8/month); but the energy cost per unit of utility decreased (from 6/4 = 1.5 to 8/7 ~ 1.14).
The indirect effect is more subtle and it is the environmental cost of consumption of other goods due to costs saved on, for example, lighting. If, in the above example, lighting costs were reduced to $2 per bulb for the room, it would be rational to spend $4 on lighting (using two bulbs) and spend the $2 saved on lighting to consume other goods which themselves have energy use embodied in their production.
Finally, the economy wide effect occurs due to stimulated demand for other goods and efficiency gains being shared across other sectors (due to the principle of the indivisibility of economic productivity – the linked article is highly recommended).
These economy wide effects have gained recent attention in The Economist where it is estimated that energy efficient lighting will contribute to greater energy use in the long run. You will note from the comments, the cognitive dissonance of economists when referring to labour and other resource inputs remains.
Conservation, using less at a given level of technology by giving up some utility, is equally ineffective (also highly recommended). We still face the indirect effects from conservation as we spend elsewhere in the economy, and if you believe all consumption has equal environmental cost per dollar (due to indivisibility once more and conceptual boundary problems to traditional input-output analysis of embodied resources), then you are back to where you started.
Further, conservation, like waste, is a relative concept, and by definition we can’t all do it. And we wouldn’t do it either due to the tragedy of the commons problem, where it is in each person’s best interest to defect from a cooperative conservation strategy. Terence Tao once again explains:
However, if there are enough private citizens sharing the same resource, then the "tragedy of the commons" effect kicks in. Suppose for instance that there are 100 citizens sharing the same energy resource, which is worth $1200 x 100 = $120,000 units of energy. If all the citizens conserve, then the resource lasts for $120,000/$400 = 300 months and everyone obtains $1800 long-term utility. But then if one of the citizens "defects" by using two light bulbs, driving up the net monthly energy cost from $400 to $404, then the resource now only lasts for $120,000/$404 ~ 297 months; the defecting citizen now gains ~ $7 x 297 = $2079 utility, while the remaining conserving citizens' utility drops from $1800 to $6 x 297 = $1782. Thus we see that it is in each citizen's long-term interest (and not merely short-term interest) to defect; and indeed if one continues this process one can see that one ends up in the situation in which all citizens defect. Thus we see that the tragedy of the commons effectively replaces long-term incentives with short-term ones, and the effects of voluntary conservation are not equivalent to the compulsory effects caused by government policy. (Emphasis added)
If energy efficiency is a counterproductive action for our environment, and personal conservation is useless, what should be done? As renowned ecological economist Blake Alcott points out:
If Jevons is right, efficiency policies are counter-productive, and business-as-usual efficiency gains must be compensated for with physical caps like quotas or rationing.
It really is that easy. If you are concerned about greenhouse gases, a cap on greenhouse gases is what is required. If you are worried about deforestation, you create a cap by ‘fencing off’ areas that are not be touched. If you are worried about over-fishing, you create a cap. Whether these caps/quotas are tradeable is a secondary concern, but making the caps tradeable does enable the cap to be met most efficiently.
What about a tax instead?
Many commentators argue that taxing negative externalities (such as a carbon tax) would not only reduce greenhouse gas emissions, but would also provide a ‘double dividend’ of improved economic efficiency because taxes which create other economic distortions could be reduced. However, the very nature of reducing other taxes to ensure revenue neutrality would mean that other sectors of the economy with a reduced tax burden now have greater purchasing power to pay for those goods subject to the new tax. Thus the double dividend comes at a cost to the primary dividend of reducing externalities.
Politics and ideology probably explain why the most basic economics is tossed out the window when it comes to the environmental protection. Then again, maybe we just can’t acknowledge that such a thing of beauty – efficiency - could possibly have a downside.
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Thanks, Cameron, for an interesting post!
As I think about energy efficiency, several things come to mind. One is the mechanism by which efficiency expands energy use works is by making products cheaper.
When I think about something like electric cars (which is one of the links for huge gains in efficiency), the issue would seem to be that efficiency gains (as reflected in cost savings) only exist for one part of the process--actually driving the cars.
In order to get the savings while driving the cars, you have to buy the more expensive cars. People may also be want to own more cars if one car they drive is all-electric, since electric cars are not as multi-purpose. There is also the need for upgraded grid--an expensive and time-consuming project. When you put the whole thing together, it is not clear that the efficiency savings on one part of the overall system are sufficient to offset the efficiency losses on others--especially during the early years of a change. So the efficiency savings would seem to be a good deal more complicated than simply looking at efficiency of oil use during driving would suggest.
When you overlay Jevons Paradox on top of this, the results get even more complicated.
In order to get the savings while driving the cars, you have to buy the more expensive cars.
As the average sales price of a car in the US is over $28,000, there are a myriad of choices of fuel efficient cars that are far less expensive. Even a Prius these days cost less.
There is also the need for upgraded grid--an expensive and time-consuming project.
The national grid already is long overdue for an upgrade, so that would be needed regardless.
Jevons Paradox would be appropriate with a stable or expanding commodity base, but with a decline in production expected with peak oil, prices are not going to be dropping based on reduced consumption (though they might because of recessions/depressions).
Ban all cars and give one of these to everyone, then put a cap on how many miles a year you can ride them. Granted one cross country trip per year should probably be ok... Oh, and no drive throughs at MickyDees allowed.
http://ireport.cnn.com/docs/DOC-491972?hpt=C2
But the tax would encourage substitution in goods and services that include less of the item being taxed. In the energy sector they would also compensate for currently uncosted externalities. So for example if someone was taxed $100 less in income taxes, but his carbon energy costs went up by $100 he then has the choice to use lower carbon energy sources, reduce the size of his car, switch to different heating sources, install insulation etc etc. On a net basis he even has the choice of reducing his overall costs. Carbon taxes are also highly progressive. Wealthy people would pay the most, because their lifestyles are very carbon intensive; and they would not easily avoid carbon taxes.
"if someone was taxed $100 less in income taxes, but his carbon energy costs went up by $100 he then has the choice to use lower carbon energy sources"
This is not revenue neutral to the government if the carbon tax revenue is expected to make up for lost compensatory income tax reductions. The GST is essentially a tax on all emodied energy in goods and services at the point of consumption which hasn't been reduced. A carbon tax would need to be differentiated and targeted at specific sectors, without compensation, in order to effect behviour change.
But the political need to sell 'revenue neutral' taxes, emasculates their claimed benefit. Consumers simply shrug, and carry on as before...
Note that 'revenue neutral' always is merely an average, there will be some who are impacted, and some who get a bonus.
- but if they cannot avoid them, then they have none of the claimed effects ?!
The wealthy care very little about taxes anyway, so they simply shrug, and consume more - or holiday overseas, where the lack of Carbon taxes, makes it cheaper....
There are many examples of why a reflex 'whack on a tax' fails any efficiency test.
(savings made / costs ) - they are more about Political posturing, than real action.
To the extent that consumers are rational optimizers it will change their calculus. Of course few consumers are, but most businesses at least strive to be. Note lets say I am a typical consumer and I get a shifting of my taxes -$100 from income, but $100 more on my utility bill. Now I think, "if I add those CFLs in the dining room, perhaps I can cut my taxes to only $90?". I think a lot of people so dislike giving money to the government, they'd happily spend $2 to save $1 in taxes.
Wealthy people would pay the most, because their lifestyles are very carbon intensive; and they would not easily avoid carbon taxes.
I've seen that elsewhere, but I don't remember a good source. Would you happen to have a link?
Every time I read these sorts of things about Jevon's Paradox, I still wonder if the paradox will still occur if efficiency increases are actually being driven by scarcity. In that scenario, scarcity would be like a cap and efficiency would be used as a means to attempt to maintain the status quo in the face of scarcity.
For example, if there were half the electricity available for lights then we could replace all lights with fluorescents and LEDs and maintain the same amount of lighting. But we might not be able to increase the use of lighting.
Efficiency driven by scarcity might be something we haven't seen in a long time, so economists might not really think this way. You might call it a form of demand destruction: demand destruction through efficiency improvement. This might almost be a new economic phenomenon in the age of resource constraints.
That's my take on it also. I think the author of the post is hinting the same. That is, this is all a waste of time unless absolute consumption is capped. Which to me is as fundamental a truth as 2 + 2 = 4. Which I can't prove either.
the article prompted me to go off and find this again, from http://www.columbia.edu/~jeh1/mailings/2009/20090424_Australia.pdf (page 4).
But political ideologies and endemic corruption will see to it that such an elegant solution will never come to pass. Although in the case of Australia I was amused to see the 30% tax levied on BHP Billington despite their attempts to thwart it by bringing down the Australian PM.
The whole point of peak oil and related resource constraint issues is that consumption is already capped. No laws are necessary except those of physics. It is capped by nature. We don't have to cap it, unless we want to soften the blow. The latter may be a smart self-interested thing to do... but if we don't then nature will reveal the absolute cap to us eventually.
I have been thinking about this. Say some car manufacturer come up with an engine that turns 95% of gas energy into movement with only 5% waste. With todays cars having 30% efficience for gasoline and 50% for dizel (ruffly) this new engine would tripple or double distance per volume ratio. Or slash costs just as much. Should this happen (provided this type of engine is not to expensive) we would see more cars on the roads; more people could afford to ride them. Espesially in developing countries. Oil use would not rise, since there are still not more oil to use. But there would be more resource demanding cars on more mantanance demanding roads. We would not consume more oil 'cus there ain't any, but more copper, steel and other resources. The enviornment would still have to pay up.
95% efficiency? Do they sell bridges also at low, low prices?
Jedi Welder and all,
In addition to the fact of a total resource cap, constraint,limit, etc., I would offer that there is an effective total demand or consumption limit per person.
Since every person can only be in one place at any given time, and only effectively do one thing at a time (or attempt to do a handful of things 'at one time'), and since there are only 24 hours in one day, there exists some effective/practical linit on one person's consumption per day.
If gasoline went to 10 cents per gallon, then I still couldn't drive more than 24 hours in one day...also, due to road width, parking lot space sizes, etc, constraints, there is a practical size limit to the size of my personal vehicle.
Of course, the absolute limits are far larger than the practical,effective limtes (for example, people can't drive 24 hours per day, they need time to sleep, for personal hygiene, etc.)
Given a fixed population size, there also would be population-wide (global) effective limits to consumption. Some families already have one car for each of their members of driving age. Having more cars would be pointless, and would run into parking constraints around the house/apartment etc. Same with the idea of having a TV in every room...there are effective limits even to frivolous 'wants'.
Now I am the first to admit that these 'inherent consumption limits per person' are quite huge...but, I think to be complete in this discussion we will admit that there are absolute resource supply constraints, and there also exist absolute per-person demand constraints.
More importantly, there will exist effective demand constraints which will be considerably lower than absolute demand constraints.
Circling back 'round, I think that effective supply constraints will be reached far before effective demand constraints per person are reached.
On a theoretical level, if there were 100M people on Earth and we could maintain our current level of technological development, the possibility exists (at least in terms of resource constraints) that all 100M folks could live/consume at the level of our most ostentatious current tycoons.
I agree with what you say, and statistics show that per capita energy growth in the industrialized world don't grow much.
However, I failed to mention that I was not worried about the western world, but about the undeveloped countries. Think what would happen if cars got so cheap and low fuel that Africa would have a car revolution.
My ideal world setup is still 500 milion people living with 1940 life standard supported by technology from Star Trek. We would probably be able to maintain that long time.
I was told in my Natural History class, 'The only thing that remains the same is change'
I appreciate the desires you describe, but I don't think it's possible to separate the Industrialized world from the Developing world, as if each is standing alone and their tendencies aren't strongly influenced by each other.
But Artie Shaw and Laptops is a good mix for me, as well!
But, at the very least net human utility from the oil consumption has increased. The whole reason for worrying about peak oil is the effect it has had on human utility, and the shock that will arise when the utility that can be extracted contracts.
The author's reasoning is fine, but in such a short piece he cannot explore the ramifications of theory as opposed to actual day to day life or practice.
We all tend to forget that economic theories are mostly based on the premise "everything else staying the same, things would work out this way".
The iron heel of necessity will shortly force us to cut our energy use, if not for physical reasons such as depletion, then for economic ones such as loss of the income necesary to purchase energy or the goods manufactured with it.
I think that efficiency and conservation will serve to cut consumption considerably as time passes, due to rationing either direct or indirect, as through energy taxes, and due to loss of consumer purchasing power.
It seems likely that the effects of scarcity will reduce energy consumption to a far greater degree than the effects of Jevon's paradox will increase it.The Jevons effect will likely be reduced noise in terms of the big picture, if the time frame under consideration is taken to be the next few decades.
It is altogether possible after that prosperous people will begin to to increase thier consumption of even very expensive renewable energy, bringing Jevons back into play on a local or perhaps even a country level.
It appears that world wide energy use is necessarily going to decline for a very long while, perhaps a century or more; and the climb back up the consumption curve is apt to be slow and even, and may never approach the levels seen today.
But in the considering long term, never is a foolish word to use in relation to technology.
Some little kid playing with tinker toys today may discover a new way to build solar cells that makes solar electricity "too cheap to meter". ;)
I think the article is missing the big elephant that goes along with Jevons Paradox.
Concentration of Wealth.
As a economic system evolves wealth becomes increasing concentrated at the top it takes money to make money. If the overall wealth is expanding or debt is expanding or both this concentration effect can be hidden if you will. However once expansion stops its nature becomes clear fairly rapidly. Bankers getting huge bonus's while millions lose their jobs. All that happens in the end with technological solutions like alternative energy is that energy usage is itself concentrated like wealth. Indeed even with cheap oil this has obviously happened with 25% of the worlds oil used by the US. Energy concentration if you will follows the money.
Jevons Paradox is framed in a sort of communistic society where concentration of wealth is much lower than in the real world. In the real world financial advantages multiply rapidly overtime swamping out players who did not aggressively play the game. And of course the initial distribution of wealth is already heavily skewed from previous rounds of the great game of making bigger piles of gold.
What you will see in countries like the US and in Europe that where able to support large very wealthy middle class groups based on cheap oil is that these classes will diminish in time. Some will leverage the new expensive energy regime to move up the ladder most will fall to lower class status.
And its worse than this. In industrial societies the next elephant in the room is over capacity. As the middle class shrinks and concentration of wealth continues your left with massive overcapacity across all parts of the economy too many factories, retail outlets, insurance agents etc etc.
This overcapacity of course effects the nominal value of the wealth at the top and is treated as the number one problem that must be solved small wonder the US is focused on consumption to the exclusion of everything else.
The wealthy simply are not sufficient to replace the consumption of goods and services by the hoards of debt slaves.
This is important because in the end this expanding overcapacity is the big economic driver as a country changes to one having a small middle class and large poor population. The underlying resource constraints and concentration of wealth effects that are driving the situation are drowned out if you will by the persistent overcapacity problem. Given that a lot of the overcapacity is in durable middle class goods financed with debt that fewer can obtain it becomes even more focused in housing and automobiles.
Thus initially your economic crisis is even more focused in housing and autos for a middle class that is disappearing !
Hopefully it should be obvious that to solve the problem you need some fairly draconian action and not just on the resource front. You have to reverse the engines of commerce that lead to wealth concentration and dissipate the wealth aggressively back to the lower classes to keep their consumption up. And you have to of course aggresively expand renewable energy usage at the same time with onerous taxes on conspicuous consumption working to again transfer wealth back into the general public. If you don't fight the concentration of wealth problem while working to handle the resource issue you fail and the problem of concentration of wealth and energy usage goes unsolved.
This communistic equalization is required to keep consumption from collapsing and keep economic output from collapsing. Its a bit interesting that you have to resort to it when capitalism reaches one of its many failure modes but not surprising since reseting the concentration of wealth clock if you will is the key problem.
Given its and underlying resource crisis the only addition is that obviously you want to reinvest this wealth as much as possible into renewable energy however you still need to watch utilization of existing capacity as you do it. Many have noticed that its similar to moving to a wartime economy where you re-purpose your industrial capacity.
However few seem to notice that this alone does not solve the problem as its critical to strip the wealth from the wealthiest and break their means of wealth concentration in the process. They literally have to be forced to either be capped in their wealth or take the only opportunity for concentration which is expanding renewable energy. Ones that are unable to make the shift eventually end up poor.
But they would be anyway as overcapacity destroys wealth across all levels of society in the first place.
Sorry for the long post but your comment is one of the few I've seen where someone actually recognized the real issues. I've tried a bunch to raise the alarm if you will that Jevons Paradox in a industrial society with a large middle class and robust structure for concentration of wealth is extremely dangerous if not fatal for the economy and perhaps the civilization itself. Left unchecked the continued concentration of wealth through a resource induced depression is certain to destroy the very fabric of the society.
What I find interesting is how absurd the concentration of wealth now is...almost to the point of meaninglessness.
Suppose person A's net worth is 2 billion dollars, and person B's net worth is 4 billion dollars. Now, you might think - person B is twice as rich as person A!. But the numbers are so large that you are not really saying much. It's just difficult to think of anything that person B would be able to do that person A cannot - except, of course, use that money to make even more money, as you said.
On the one hand these people are putting the plutocrats of old to shame...but what is equally absurd is the fact that this is fiat currency in a digital age, untied to anything in the physical universe, even hard cash. There is no limit to its expansion - which ultimately makes it worthless!
My fear is that the damage has already been done, and that as we proceed through this great deflation the rich will first, cash out, and second, use the cash to acquire hard resources, such as oil, other commodities, and productive agricultural land. This essentially reduces us to feudalism.
You are basically right in the course of action that needs to happen to prevent this - but it will never happen.
Now that you mention it 2 and 4 billion dollars 40 bill 100 billion etc are interesting quantities.
They exist in my opinion because a substantial amount of our money is based on the promise of future payment aka debt. Wealth itself has reached the point its defined as debt service.
You rightly note that this wealth is for all intents and purposes notational and after a point impossible to invest in a way that increases production. Collective investments of a few billion in cash in real operating companies are large moves.
This is important because wealth today does not represent todays tangible assets or labor but a commons that has been leverages securitized bundled and pleged for the next 100 years. Its a classic case of over subscription.
This is then translated into notational "wealth".
Its important because it means as long as this situation exists its impossible to reduce pressure on the commons as to many people have options if you will against it.
Or to put it simply we have divided way more pie then we have or will have already.
But, I think the potential power yielded by B is much greater than by A. Sometimes its simply a matter of ego. Why Is Meg Whitman spending something like $100M to become governor of Califonia, a job which is quaranteed to destroy her reputation?
Yes, meaningless for consumption - and they don't consume much of the wealth, and so doesn't take away much production from others. They work with capital as a tool just like you might work with a shovel. And the values has to exist, the ownership and the investments need to exist, and someone's got to do the work the capitalists do. When these values are organised in a capitalist society, the successful managers of industrial capital continually get more influence than the less successful managers. This benefits us all, compared to a bureaucratic or "shared" ownership with very mixed goals and lots of corruption and waste. This is especially visible in energy politics - do you know Germany waste a billion euros per month on high tech roof-tops (PV) which don't do any production of significance?
Why don't you all who whine about wealth concentration take a look at real consumption concentration instead? You'll find the differences are much smaller. If the rich spend their money, they often spend it on goods and services which are very expensive in relation to the amount of work and energy invested in creating them. For instance, they buy expensive brands. That money isn't wasted - the resources they represent doesn't disappear. It is just shifted around and to a great extent ends up in poorer peoples consumption.
Land.
They buy land and drive up the prices. The bottom line for the poor is subsistence farming with the ability to sell some excess production. The wealthy cut the poor off from the land. Certainly this is hidden in the wealthier countries but its clear in poorer countries like Pakistan for example. Indeed in Germany your access to land has been taken for so long you don't even realize you lost it.
So the Germans have been deprived for much longer than the Pakistanis? Poor, poor Germans. Please wake up to the real world!
Any chance you could back that up with actual number of KW hours produced and consumed in relation to the cost of the installations and the percentage of that cost that is wasted?
My family in Germany and quite a few Germans I've talked to recently might disagree with your assessment. BTW, Have you read the Bundeswher's Peak Oil report? page 31
Basically they are looking at a multi pronged approach of as many different forms of alternative energy as possible depending on geographic locations. Wind and solar are definitely part of their vision and plan. Do you really believe the Germany Military is planing on wasting a billion euros per month long term?
The feed-in-tariff ranges from 23 to 39 euro cents per kWh for solar PV in Germany. The 23 cents is when you produce for you own consumption.
The feed-in-tariff for onshore wind is 9 cents per kWh for the first five years, and 5 cents after that. On average, therefore, solar PV wastes at least 20 euro cents per kWh in comparison to onshore wind.
However, the PV production according to this wikipedia article is 6.2 TWh per year, and in the same article the claim is that the cost is 1 billion euros per month. I don't get those numbers to add up with a FIT of around 30 cents. 6.2*0.3 = 1.86 billion euros per year. So I'm not at sure about the billion now - however the 20 cents waste seems certain.
May I qoute from the Bible? I know much people here are not concerned about the book, but I am adressing the thought process of man that lived 2700 years ago.
1 See, the LORD is going to lay waste the earth
and devastate it;
he will ruin its face
and scatter its inhabitants-
2 it will be the same
for priest as for people,
for master as for servant,
for mistress as for maid,
for seller as for buyer,
for borrower as for lender,
for debtor as for creditor.
3 The earth will be completely laid waste
and totally plundered.
The LORD has spoken this word.
This is from Isaiah 24 and the text speaks about how humans missuse the planet, wich leads to resource depletion, ecological and economical collapse, depopulation and ghost towns, surviviors drinking not to party but to forget. And all this on a global level.
None of what we discuss on these pages are in any way new. But let me point you to verse two: No one gets away.
Hands up anyone who belive this prophecy will NOT come true.
It already has, multiple times.
Welcome to the post-apocalypse.
If you seek the LORD,
Look hard into the mirror.
Stare deep and behind the eyes that stare back at you.
The LORD is there and nowhere else.
He alone listens to you when you pray in solitude.
Believe in HIM as you believe in yourself.
_____________________________
And p.s., don't let any sound logic get into the space betwixt your ears.
It may unnerve you.
Americans have been sold a bill of goods that this is an inevitable law of nature. But in fact the other advanced economies are not experiencing the runaway concentration of wealth that is happening in the US. I've just started reading Winner Take All Politics by Jacob Hacker and Paul Pierson, which purports to show that the real reason is our broken political system which has been captured by the super-rich.
Note that the Tea Party candidates, despite primary wins, have been rebuffed by the GOP party machine. The party publicly states they will not support such candidates as "they have no chance to win", which is a self-fulfilling prophecy.
Obviously if such candidates win the primary it represents a severe dissatisfaction with the party platform, yet the party chooses to hold the line and attempt to lose the election to a Dem (and therefore destroy the nascent movement) rather than adapt the party position to incorporate concerns and thereby accept shifting party power structures. Apparently the power structures don't want to shift.
I wonder how long it will be until independents actually have some opportunity, as both parties increasingly show displeasure with the party platforms?
FYI: The first edition of Principia Mathematica manages to rigorously prove 1+1=2 on page page 379.
Anyone who has any familiarity with Principia Mathematica should make sure to read Logicomix.
This is so OT. but I find it interesting nonetheless.
1+1=2? OK, so I exaggerated :)That article also says
I am somewhat familiar (in the lay sense) with Goedel's Theorems of completeness and incompleteness as applied to the
1+1=2result (see the "Consistency and criticisms" section), which led me to my original statement.That is, this is all a waste of time unless absolute consumption is capped.
The best sentence that sums it all.
I'd just add one more thing - "That is, this is all a waste of time unless absolute consumption is capped or substituted with something else."
If we replace a gasoline powered car with electrical car we have permanently removed our gasoline consumption from the gasoline demand pool. There still may be rebound from that, but if all started switching to electrical cars (or more generally to carbon neutral devices), the rebound would be directed to these, not to the now obsolate technology (ICE car). Therefore conservation can be meaningful but only if it's accompanied with substitution. Conservation alone won't make it.
Two plus two is five
http://www.ahajokes.com/m017.html
Read the rest at the link provided for a good laugh.
"2+2=5" holds only for large values of 2.
(... when speaking in base 3)
I think we need to realize what Jevon's really is. It is merely an explanation of what will happen if a good is used more efficiently, and that good has a price elasticity of demand that is greater than one, i.e. a steep demand/price-curve, where demand increase more than X% when price decrease by X%. This is since a more efficient use works like a price decrease.
What you are talking about, "scarcity driven efficiency", is actually "price driven efficiency", i.e. we are moving up on the price axis, and then demand almost always is lower. However, the elasticity of demand (the steepness of the demand/price-curve) will depend in part on the possibility of more efficient use.
For instance, nuclear breeder technology will make the price elasticity of uranium extremely low. The price of this good won't matter anymore, and a further increase in efficiency will be irrelevant, and thus uranium, in this example, will then definitely not exhibit Jevon's paradox.
If more of a good would be demanded at a lower price, then Jevons applies. That would cover almost every good I can think of. Price elasticity of demand is simply the slope of the demand curve at a given point of interest. Quantity demanded almost universally increases as price decreases. ( Maybe not for status symbols that basically serve the purpose of displaying wealth )
It is always a bit strange to me when I explain something over the net, and somebody says I'm wrong without checking it up. Please do.
I did read the above ( not being an expert ) before replying.
Did I misunderstand?
Ah, good, you looked it up. Yes, I think you haven't got Jevons quite right. Jevons applies when increasing efficiency leads to higher (total) consumption of a good. Not just any rebound effect, for instance when an efficiency increase (and so consumption decrease) of 5% leads to a rebound effect of 2%, i.e. a net 3% saving.
I.e., Jevons applies when PED is greater than 1, not when it is greater than 0.
Suppose I have a constantly on incandescent light bulb in my basement next to the fuse box. The incandescent bulb uses 4 dollars worth of power per time period it provides light. Because it burns out often, it only really runs about half the time, so it provides 50% reliable light for 2 dollars per time period.
Now suppose I replace it with a CFL bulb that uses 1 dollar worth of power per time period it provides light. And to be generous, let's suppose that because it doesn't burn out very often, it provides approx 100% reliable light.
I've got twice the light for half the price. I get no benefit from lighting my fusebox twice as brightly. There's now 1 dollar worth of energy still unused, but there's 1 dollar left in my pocket. I'll either buy something else ( that embodies energy ) and consume it or I'll save or invest the money. That save/invest option ultimately involves using energy - likely more than 1 dollar worth.
Energy is a very versatile resource. Because it is so widely useful, there are a wide variety of uses to which it can be put if only cheap enough. Not purchasing (saved) energy tends to drive down the price which makes it practical to use in even more diverse applications.
Energy saved from one use goes into more marginal uses. Energy wasted displaces the most marginal uses for energy. Just because my demand for light levels off doesn't reduce my demand for energy since my saving the difference increases the demand for energy embodying ( and possibly energy demanding ) capital.
Yes, but the Price Elasticity of the demand curve is not infinite, not even close.
Given a certain population level, there are practical limits for demand for any good, both on an individual basis and collectively.
The same applies to the sum total of all goods and services, given a certain specified population level.
How much milk/coca cola/beer/mineral water/insert your favorite beverage here would you buy and drink per day if its price per bottle were 1 cent?
Jevon's has definite limits.
Your stomach is only so big, your digestion is only so fast, and there are only 24 hours per day, and you can only be in one place at once, and you can only (really) do one thing at a time.
What matters is the shape and slope of the demand/price curve, and how much cost is affected by the change in energy cost. Few things are 100% energy cost. Even driving a Hummer, fuel costs are not the biggest driver of cost per mile, so a more efficient engine wouldn't have a gigantic effect of the user cost per mile. If demand rises less than efficiency decreases per unit energy cost, then Jevons doesn't mean a net increase in energy demand, it applies in a weaker form, where you don't get as much savings as a naive calculation would predict.
Even turning up my furnace to 80F in winter the cost isn't solely driven by energy cost. The furnace will wear out sooner because of the extra usage. So even if the fuel was free, I wouldn't want to just burn as much as possible.
Suppose we simplify to make thinking easier, and postulate a currency backed by and redeemable in hydrocarbon BTUs kept in tanks somewhere for the purpose ( like an Oil Fort Knox ). Moreover, let's POSTULATE for simplicity that this currency is sound in that fractional reserve banking does not exist. If you buy that the economy with such a currency would function basically as it does now, which I do, then all cost, would then be denominated in energy. There is no need to worry about how much of the cost represents energy - it all does. Is there any reason to suppose that devaluation of this currency ( by efficiency gains which are equivalent to new discoveries ) would not result in the money being spent FASTER? Who would want to hold it if it were being devalued? Would not the increased demand for these goods require additional energy to fulfill?
You do want to burn as much oil as you can. I run the heater in my car with the windows open to get fresh air in the fall without being cold. If oil were free as a car's heat probably is ( as long s you are driving it anyway ), then it would make sense to do that in a house with an oil burner. You do want to drive your hummer as much as you can. You want to maximize benefit subject to cost constraints.
If you had free time on your hands, you might look for ways to use it industriously. If you had free oil on your hands, you would look for ways to use as much as possible of it industriously.
If something has low energy input, it's probably cheap and heavily used already. If something has high energy input it's probably expensive and would be used much more if it were cheaper.
The reverse of jevons is that if things suddenly become less efficient ( or energy supply drops ) then demand for everything ( including energy ) decreases. I don't think that demand for the most energy intensive products need be the first to be destroyed, as the wealthy can afford to pay more for what they buy more than the poor who buy cheaper less energy intensive things can afford to pay more for what they buy. Hummers will be on the road long after the poor have stopped using diesel tractors to plow their fields.
The assumption here seems to be that for the purpose of policy goals scarcity does not kick in and act as a "natural cap" any time soon.
I tend to agree - here we may be speculating that PO will kick in relatively soon (say 5-10 years), but in the context of the climate change problems we have other FFs to worry about; namely coal resources alone seem to be enough to fry the planet. It is also very likely that other FF sources like tar sands and oil shale will be developed over time to compensate and that may become even bigger issue in the long run.
The Economist misinterpreted the economic analysis their article was based on. This was made clear in the subsequent issue in a letter from the authors of the original analysis. I can't get past the Economist's paywall, but here is a link to the underlying analysis:
IOP PUBLISHINGJOURNAL OF PHYSICS D: APPLIED PHYSICS
J. Phys. D: Appl. Phys. 43 (2010) 354001 (17pp)doi:10.1088/0022-3727/43/35/354001
Solid-state lighting: an energy-economics perspective
J Y Tsao1, H D Saunders2, J R Creighton1, M E Coltrin1 and J A Simmons1
1 Physical, Chemical and Nano Sciences Center, Sandia National Laboratories, PO Box 5800, Albuquerque, NM 87185-0601, USA 2 Decision Processes Incorporated, 2308 Saddleback Drive, Danville, CA 94506, USA
Received 12 March 2010, in final form 10 June 2010 Published 19 August 2010 Online at stacks.iop.org/JPhysD/43/354001
Abstract
Artificial light has long been a significant factor contributing to the quality and productivity of human life. As a consequence, we are willing to use huge amounts of energy to produce it. Solid-state lighting (SSL) is an emerging technology that promises performance features and efficiencies well beyond those of traditional artificial lighting, accompanied by potentially massive shifts in (a) the consumption of light, (b) the human productivity and energy use associated with that consumption and (c) the semiconductor chip area inventory and turnover required to support that consumption. In this paper, we provide estimates of the baseline magnitudes of these shifts using simple extrapolations of past behaviour into the future. For past behaviour, we use recent studies of historical and contemporary consumption patterns analysed within a simple energy-economics framework (a Cobb–Douglas production function and profit maximization). For extrapolations into the future, we use recent reviews of believed-achievable long-term performance targets for SSL. We also discuss ways in which the actual magnitudes could differ from the baseline magnitudes of these shifts. These include: changes in human societal demand for light; possible demand for features beyond lumens; and guidelines and regulations aimed at economizing on consumption of light and associated energy.
http://iopscience.iop.org/0022-3727/43/35/354001/pdf/0022-3727_43_35_354...
I think the impact of Jevons paradox depends on where one is on the income scale. Poor folks won´t be able to afford the new technology at least initially and will forced to consume less or not at all. Middle class folks might take the savings and pay off some of their enormous debt. Such action would remove money from the economy and worsen the current depression. Rich folks seem like they would be first in line for any new technology if it had the right panache. Saving a few dollars on lights would hardly be seen in their expenses or effect their other buying decisions.
So I wonder who these economists are actually talking about?
This was being taken apart in yesterdays Climate Progress, specifically relating to improvements in lighting efficiency in advanced economies. Average lumen levels in advanced countries have already leveled off, we just don't need to increase them several fold. In the case where energy cost is the dominate cost of an activity, then efficiency may reduce cost enough for that usage to gain its share of the economic pie. For instance in Jevon's day, more efficient locomotives could outcompete horses and rapidly gain market share, increasing coal demand. A lot depends upon the details of the economic situation, and such things as whether the activity is competing with another tecnology which isn't benefiting from the efficiency gains.
As another area, think about home heating. If I double my insulation, am I then going to turn the thermostat up to 85F, to keep my consumption up?
Efficiency increases mean we can afford the energy price increases that are coming.
Jevon wil face a though future.
Through legislation and taxation the Danish energy consumption for heating buildings since 1980 ( actually since 1970 is unchanged or falling ( 40 years) even if the floor area has grown by 30 %.
http://www.ens.dk/documents/netboghandel%20-%20publikationer/energi%C3%B... - link and in Danish /I'm sorry.
It seems that incentives are not enough- you have to combine several tools legislation / taxes or you will get BAU.
Regards /And
Yeah! .. For cryin' out loud..
I read this keypost and just shook my head. More cautionary missives against the 'misguided belief in our ability to root out waste in our systems..'
"Don't do it! What if something goes wrong? What if it gets WORSE?" Wow. If it gets worse, I don't know.. I'm such a believer in conserving and efficiency, maybe I'll just keep believing it's just karmically better and not pay attention to my actual oil, gas or electric bills.
Sure, there are usage compensations in SOME cases.. but the Energy Star fridge I just put in one of our apartments just isn't going to use more power than it's predecessor. All the incandescent lights I just changed to CFL's aren't going to be turned on gratuitously just because I know they're cheaper. I'm not an idiot, I did it to lower my electric bill, and I can actually add! I didn't rob Peter just to pay Central Maine Power.
Nothing wrong with you reducing your personal expenditures simply that it in general won't result in a collective reduction thats all.
What your doing is making yourself more flexible if you had not reduced your energy consumption then you would have had to pay the energy bill no choice. Having increased your efficiency offers you choices.
Now hypothetically you might have saved enough to say fly to Europe twice a year and thats the choice you make. Your total energy consumption would then say be flat or higher right.
If your decision results in energy prices remaining "low" below some threshold where someone else would have also increased efficiency then perhaps you by choosing to invest in efficiency early might have made the overall system less efficient at the same time.
Outside of the obvious that it frees up cash to spend elsewhere including other energy uses efficiency gains don't have to result in any sort of overall gain. I think in the end it really depends on how the latent wealth created by efficiency gains is reinvested.
Personally I wonder about the infrastructure more than efficiency gains given our current infrastructure.
Why do you have a fridge in the first place for example ?
It far more efficient to have say a communal fridge/freezer than and individual one.
Perhaps a small one for some needs. But if your in a community then a corner store seems to be the biggest gain.
My point is low energy infrastructure in the end seems to be the right answer not efficient extension of the current infrastructure. Plenty of people all over the world live everyday using very little fossil fuel and electricity. Somewhere between their lifestyle and ours should lie a low energy lifestyle suitable for renewable energy yet significantly more comfortable than a mud hut.
I do get your point, and of course, I'm using very small personal examples. Of course, with your description of a communal fridge, there's a combination of an efficiency increase AND a lifestyle change, which it seems the author might be in agreement is some kind of an improvement.. but of course, a big part of that improvement is an Efficiency Increase. It doesn't work in a vacuum.. you change your bulbs when you have started to notice your consumption. Maybe you are looking in one part of your life and not another one, yet. But this browbeating that any of these efforts is meaningless is simply obnoxious.
The part that always gets tossed in with the Jeavons line is the causal relationship that 'using less here predicts that you will use more over there'. ie, your Vacation to Europe line.. which I know, is just a quick example..
Putting a girl to bed.. can't think.
But thanks for the comments,
Bob
No, it would still be less. The cost of that flight is mostly made up of other things besides energy. There is the capital cost of the airplane, and supporting infrastructure. Then there are the salaries of the crew, and ground maintence and administrative personell etc. I think the fuel is only on the order of 20% of the cost. So I save $100 on my electric bill, and buy $20 worth of airplane fuel with the $100 spent on air travel. Of course to be fair, half of my electric bill was the cost of generation and transmission network, so my net energy consmuption savings is lower than $80. But, it is still positive and substantial.
But don't forget to ask about this balancing act, where the supposition is that once you've saved energy doing this, you (via 'the Paradox') are expected to simply spend just as much energy someplace else.
As with the familiar problems in the Title "ENERGY EFFICIENCY FLAWED..." , not unlike the 'False Fire Brigade' .. it is setting up a proposition that it doesn't prove, and yes I'm one of those people who'll be irked by this because I don't want to see misleading statements that get people thinking that everything they've heard about reducing consumption in that way is just more bunk.
Efficiency CAN backfire, and it's not a Silver Bullet, like anything else.. but with titles like these, you'll never get that argument, unless you have the time and patience to unravel the buried details and the noncommittal asides attesting to value 'good efficiency'.
It plays like those nutrition announcements, RED MEAT IS GOOD FOR YOU AGAIN! It plays at sliding the bar all the way to one end or the other, a tennis match for an overstimulated audience.
Look thats just and example however once you spend your money on something else. Then you have to account for the energy usage. Part that you paid in salaries for others they will spend on energy themselves. Part of the cost of the planes is the energy input. Your original electric bill is not just for the energy you consumed but for the power plant costs and operational costs. I suspect what you will find is you in general simply chose to pay airline workers vs electric company workers and investors. If you going to do this sort of analysis fine do it on both sides of the equation.
Heck where I live hydro provides a substantial amount of the electricity saving money on electricity and using it to fly using hydrocarbon fuel is "bad" for the environment.
In the end the energy consumption of a society is dependent on its infrastructure design and its financial system.
It backed into the pie if you will. For mature societies the pie is sliced up and then some or oversubscribed.
Next the financial aspect comes into play because its not energy your saving but money. Saving money just happens to translate often into lower energy usage. In your case your excited about a fairly direct connection however something as simple as not going out to eat as often or not going to the mall has a similar effect without a capitol investment.
As far as saving money with your energy star fridge or home improvements your simply patching and infrastructure that was built with little regard to energy savings. Patching is fine at a personal level because as I said it gives you elasticity but thats financial elasticity constraining your expenditures in a number of activities provides similar benefits and often similar gains in reducing energy usage.
To really change how things work requires the society as a whole to adopt a lifestyle and financial model that leaves a substantial amount of resources in the commons. The best measure for this in my opinion is large tracts of undeveloped land for which there is no demand i.e free. Its pretty easy to know when you have a commons thats not fully exploited. This obviously requires the population density to be so low that you simply cannot exploit the commons. And whats surprising is individual energy usage could be quite high under such circumstances efficiency gains against a back drop of massive common wealth don't matter so much. But in general they probably won't be since to create such a society in the first place requires deep infrastructure efficiency and control of population.
Thus the solution to the problem is to create a bastion of untouched wealth thats free for all to use yet social constrains ensures it remains generation after generation.
This beats the concentration of wealth problem because its really and accounting issue my solution is that wealth is concentrated in the commons not in individuals. The problem is not really vast estates owned by the wealthy its that once stuff is owned then the public is denied access.
I suspect that to actually execute such a concept whats required is that inheritance laws are changed to cap how much wealth and assets can be inherited. The rest is returned to the state or more correctly the people.
A few generations of this and the drive to concentrate wealth beyond what can be inherited drops sharply.
If its a fixed number regardless of the number of children or inheritors then this alone will help drive towards smaller family sizes. Larger families dilute the inheritance. Indeed in general if you decided to have a large family the cap itself would cross generations. Thus if you had four kids they and their children are only allocated one inheritance package.
Sorry to go off on what looks like a tangent but defining a commons free for all crosses generations. The pie or commons was itself divided up over many generations. Considering actions in one generation or at the individual level simply is not how you solve the problem of the commons it took generations to divide the pie and it takes generations to undivide it. Thus inheritance laws lie at the heart of the problem. Solve that and I argue real efficiency gains become natural.
Modeling the economy as a knee jerk feedback system accomplishes nothing. I don't need an economist to tell me my car will slow down if I take my foot off the gas.
This post reminds me of wingnuts like Limbaugh who deliberately waste energy on Earth Day to 'balance' environmentally conscious people who want to symbolically save it.
Yes, individual choice based on greed will destroy the planet---I don't need an economist to explain that.
“You must be the change you wish to see in the world.” ~ Gandhi
Step outside your black box.
- deleted - replied to the wrong post
You're dismissing the article without reading or understanding it.
It doesn't just say that the greedy will destroy the planet: it says that environmental "good citizens" achieve very little but providing charity to the greedy. Thus, to make effective change, we must set limits for *everyone*: being virtuous on our own is nearly useless.
This is not a popular sentiment on either end of the political spectrum, who believe, on the left, in "acting locally"; on the right, in "personal choice". Which is why the article goes into so much economic detail.
I do think I understand it.
The author, an economist says energy efficiency and conservation don't work because of his alleged 'rebound effects', which are part and parcel of his economic black box. He immediately dives in with a money analysis of light bulbs, then says targeted taxes are 'unfair' and concludes that rationing and caps(preferably tradeable) are the only effective methods for controlling consumption knowing that these are the least paliable choices.
He poisons the debate with his 'examples'.
Energy efficiency, conservation and caps are all effective tools for reducing consumption when applied in a concerted, coordinated manner; to fight depletion requires a complex approach instead of simplistic analogies .
But the poster's apparent goal is to discredit them and all attempts to change. To him they are more 'false firemen'.
'The Greedy?' Who is that?
So, I should stop insulating my basement and getting better seals and Shutters on the Skylights, and instead just keep sending those checks in to the OilCo's, since making my house really energy efficient is only encouraging those Snake-oil Insulation and Weatherstripping Moguls? (See, I was confused, cause I only have to pay them ONCE for a warm house)
The deforestation example is a bad one.
Not touching or managing forests doesn't result in less deforestation it can result in more because forest density, underbrush, and fuel wood accumulation leads to wildfires and bug infestations. This is a growing, massive problem in the Western U.S. and British Columbia and it is spreading.
Even without counting the fires and their smoke (and the myths that they are "unavoidable" and all fires are "natural") the accumulation of dead biomass converting into methane should give the most ardent conservationists pause.
Should we allow timberlands to become the feedstock for wildfires that spew GHG and particulate matter and/or decay into methane? Doesn't it make sense to manage our forests better by turning thinnings into biopower and biofuels to finance reforestation and to provide non-fossil energy alternatives?
Your understanding of forest ecology appears to be seriously out of date.
Not really that far off OFM. I'm living among the very state of forests he describes with dead pine beetle and increased forest fires. Should have spent a few weeks around here mid-August with the forest fire smoke making the whole area look like dense fog.
Maybe that is momentary as the dead wood burns off and more resistant generations or other species grow in. But, the primary cause of the pine beetle infestation spread was warmer winters and forestry management not wanting to destroy infested trees in a Provincial park. Conservation and environmental dogma gone to far I'm afraid, and the law of unintended consequences. The problem may be farther compounded by increased global warming as we are experiencing a two-fold or three-fold increase in lightning in the Province too.
(I've been tracking it for consideration of protection on transmission lines - yes TPTB 40 years ago felt overhead shield wires weren't necessary in BC like they are in other parts of N. America. Oops!)
Yes, plenty of fuel standing around just waiting for a match or lightning strike in the BC interior. Unless we take down and burn the dead trees on our terms, Nature will do it for us, and we may not be able to stop it.
BC, I tried to email you the other day and it bounced back at me. Want to talk to you about those renewable electrical projects at Sun Peaks, etc.
Email is in my profile,
Cheers,
Paul
How did the forests manage before humankind?
Ents looked after the forests I believe.
There may be some excess that can be removed. But, it is not necessarily true that all that dead wood should be removed, some should be allowed to decay into new soil/nutrients. And it isn't easy to collect. The big problem with forest thinning, is that in order to attract commercial bidders for the job, authorities have to make the conditions too generous. The commercial cutter would rather remove the big old growth trees, and leave the smaller -and dead ones either standing, or as slash. So the parameters get bent to sweeten the economics. Often, if the managers are not careful, the end result can be worse (and more fireprone) than if he had left it alone.
BC EE,
With more info from you to add some context to your previous comment , I find myself agreeing with you.;)
Sorry about questioning your understanding of forestry-but sometimes comments are easily misinterpreted.
Here's my problem - the underlying assumption is that people will spend any "saved" money on more stuff. I recognize that this appears to be the case yet I know that I personally don't do this to any extent. This may be because I'm old and have acquired so much stuff that I don't need more. However, my wife and I have always pretty much lived this way...we have what we have and are satisfied.
Ultimately, it seems to me that it comes down to being, how can I say it, secure within yourself with no need to keep up with the Jones'.
Todd
I saw that too. I wondered "what if the spare utility" or whatever were used to pay down debt instead?
If you don't spend the money, you deposit the money in the bank instead, and the bank lends the money out.
So if you don't spend it, it seems like someone else does.
Of course, at the moment, if you deposit money in the bank, they use it to build their reserves against loan losses, and don't loan it out. And at the moment, many people are using any extra to pay down debt. While normally that would be like putting money in the bank, again right now that money isn't being loaned out either.
Finally, if you either buy gold (someone is, it hit another high yesterday), or take it out as cash, it's not getting loaned out either.
Which brings up another problem with Jevons paradox - what if you're in deflation, and having made the efficiency improvement, you don't have the money to use two lightbulbs instead of one? It isn't just an issue of not having enough money because of scarcity of the resource, it could also be a matter of not having the money because you have less money, even given the same resource.
I agree with everything you say, but I would like to add that if you take it out in cash, the government will spend it through a process known as QE. It may take a few years though.
Almost right there is no shortage of money its fiat after all. If demand for money was high then interest rates would be skyrocketing. They are not and will continue to fall until its simply not profitable to loan money I'm guessing 2% for 30 year is the bottom. Carry trades amongst convertible currencies aka the Japanese Yen have hidden real low interest rates for some time. Japan has taken the loss for quite a while. Certainly it adds risk if exchange rates change sharply but cheap money for the wealthy has been available for years.
What your viewing as lack of money is really not a lack of money but a lack of creditworthiness. Its important because if you have cash your consumption stays the same. Indeed consumption of all goods and services that can be paid for at the time of use simply require cashflow not credit. Certainly as cash flow falls overall consumption declines but as you pay down debt or default your cash flow situation improves.
Its important to distinguish between cash and credit as you enter and economic contraction. Higher savings rates via default and the paying down of debt will not be converted into new loans. Instead they will be used to maintain the standard of living of goods and services that can be purchased with cash.
And of course the big boys are cars and homes. These are not easily purchased out of savings and will continue to bear the brunt of the deflationary impact. I suspect that the recent reasonably decent new car sales are and artifact of people planning strategic default on their homes. Before their credit is ruined by default many are going out to purchase one last new car to take them through the years of bad credit. Also of course since their revolving credit is not cut immediately yet because they default on their home they are leveraging that while they can.
This is important because it means as you enter deflation the "cash" economy remains fairly robust even as the credit economy collapses. In particular in the case of oil, oil demand becomes increasingly inelastic as credit default is leveraged to allow cash flow to buy oil.
Once your obviously in a deflationary cycle and its clear to many that they have no hope of seeing the assets they bought using credit retain their value then its a new paradigm and default and redirection of cash flow to purchasable goods drives the economy.
Expect housing to continue to tank. Expect auto purchases to start heading downwards as strategic defaulters have purchased one last car if they need too. If oil again becomes in short supply vs demand expect to be surprised at how high the price can go. So many people allocated so much to debt service that as they default cash flow for cash purchases increases substantially thus oil demand become effectively inelastic. This keeps the rest of the economy outside of housing and auto's from collapsing.
For us expect imports from China to remain surprisingly robust.
The key point is you absolutely must distinguish between cash and credit during a depression the two are not the same and never where they act the same during economic expansion but the differences between cash and credit become stark as the economy contracts. Also don't mistake the initial coupling between demand and contraction of the credit economy with a long term trend. The initial contraction of the credit economy is only coupled to the consumption of other goods and services purchased with cash right at the peak as people attempt to conserve to service debt. After that they decouple rapidly with debt default fueling if you will cash consumption.
Only after all of this plays out do you finally get down to people competing with limited amounts of cash for resources and it takes a long time before you reach that point in and economy based on debt.
Not if you are truly into footprint reduction and conservation -- in that case, you use as few resources as possible AND you reduce your income to match your needs. So you don't put that money in the bank, instead you just don't earn it in the first place! Now whether someone else earns it "instead", I couldn't say...
Pretty far outside the box, I know, but a true conservationist will head in this direction.
I also think it's an illusion that 'utility' (to return to the 1 lightbulb vs 2 example) is considered fixed. It's not -- people have a very large amount of control over how much utility they get from their use of resources. In other words, instead of it being a given that 2 lightbulbs give 1.5 times the utility of one light bulb, I would ask HOW does the second bulb provide increased utility? What activities or experiences does it foster? And I would be willing to bet that with just the tiniest bit of imagination and determination, a person could find a way to get all that same value using just the one bulb.
Well yes your right that is the real answer as you make your lifestyle more renewable not necessarily more efficient you simply expand your free time.
I might as well add that this is exactly the approach I'm trying to take. I've moved to consulting to give me flexibility timewise and location wise. Now I'm working to reduce my cash flow for staying alive. And at the moment saving for something one day at least a trailer and a patch of land. But yes the idea is to steadily reduce my cost of living and my requirement for money to live a comfortable life. Efficiency plays are role but also of course moving towards renewable energy sources. Coppiced trees for example. I'm not against partaking of the modern life the question is how much of it do I really need ?
My conclusion is that on a daily basis modern communications aka computers and networks are good stuff.
Reasonable medical care for curable diseases and attempts to cure diseases for the young are good stuff.
Extreme care for someone in their 80's is not good and I don't want it.
Refrigeration and freezing I'm working on :)
Airplanes and trains are ok :)
So for me at least I've set a list of things I like from the modern world everything not on the list I'd like to replace with a zero impact renewable lifestyle which includes the ability to make everything I use.
Outside of refrigeration you can see that what I want from "modern" society is its network informational and part of its transportation network and its medical services.
Thus my approach is to determine what I want from society that costs money in the sense of a currency accepted widely then try and fill in the rest of staying alive myself if I can and perhaps in time as a member of a community thus allowing obvious specialization.
Despite the distortions that have happened this is what the Amish did. I think its the right answer you define explicitly what you expect the community to provide and accept responsibility for everything else on your own shoulders. A local web aka village makes it much easier but it should not be required.
At the next level as far as staying alive goes nothing is considered ruled out. If I can figure out how to make it and it makes sense to make it I do. I just happen to be a chemist so ...
But my point is this does not mean plastics are verboten simply it means are the required if so where and then can one easily manufactured be used ?
I suspect the actual number of places where plastics are good stuff is small glues are likely to be important however. And to be honest I don't really know I've just gotten started on this path. Food is obvious and not something I'm really focusing on right now outside of learning how to garden in the region I live in. Its a different climate from where I grew up so different issues.
I'm looking at two basic issues refrigeration and toosl materials. On the tools side I'm exploring how far you can go with good old fashioned stone. Yep thats right stone tools gasp .. Can you simply use flint knives in the kitchen why the heck not ? Cutting a cucumber does not require stainless steel.
In the old days, and then some! With fractional reserve banking, the bank only needs to hold as cash a small fraction of deposits, say 10%. So that thousand dollars you gave it means it can lend out $10,000 (the money comes from the Federal reserve).
This is incorrect and misleading, especially for people who have little knowledge of finance. If the bank holds 10% of your deposit of one thousand dollars it can lend out $900.
The multiplier effect comes from the fact that the lent money can then be redeposited by another client.
Well, that's one theory of how it works.
Steve Keen explains how the evidence shows it really works quite differently in his Roving Cavaliers of Credit piece:
http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/
There are some assumed utility vs. cost curves that support this thesis that are uncommon in the real world (they probably exist, but are hardly dominate).
The tragedy of the commons example illustrated is useful to explain the long term market reaction to limited, cheap hydroelectric power with a step function up in cost to other sources of electricity. But beyond that point, I struggle to find application.
Another unrealistic assumption is that all economic activity is highly energy intensive. Diverting economic activity from, say consuming electricity, will inevitably result in more economic activity in another areas that consumes as much energy.
However, there are vast sectors of the economy that consume relatively little energy per $ of GDP, and these sectors have been growing disproportionally in recent years. Services such as medical care come to mind. Shifting $ from the monthly gas & electric bill to downloading a song by Lady Gaga {gag} or walking down the street for a blueberry gelato or beer & cover for a local band certainly reduces the energy/GDP.
Basically, I see a flawed construct with little application in the real world.
Best Hopes for MORE Energy Efficiency,
Alan
PS: And if we are "trapped" in shrinking economy because of ever smaller energy resources, shrinking our energy consumption via efficiency seems the best way to NOT severely affect the balance of our economy. If we increase efficiency faster than energy supply shrinks, we can have quite a good economy.
So much of economics is not rooted in the real world, but in abstractions that are very poor approximations to it.
Part of me feels that to be true, and another part wonders what the energy content of the production/shipping/storage of the beer or gelato would be. Would it be comparable to your personal saving?
Yet another reason why I wouldn't want to be an economist.
The beer is Abita Amber, brewed about 40 miles away (the local brewery never re-opened after Katrina :-(
The gelato is made locally, from local milk products. Louisiana is a major sugar producer with local sugar refineries. The blueberries come from Mississippi.
Some % of the price I pay for beer & gelato goes for energy, but a small % (say 1% or 2%). About half of my electric bill is for energy, the rest capital equipment & billing.
So $10 less electricity and $10 more in multiple beers & gelato results in less energy being consumed.
Alan
That's good to know then. Things really will be apocolyptic if we haven't got enough energy for beer.
I seem to be cursed with seeing an argument from many sides. I can appreciate Jevons Paradox in general terms but fear that it's too blunt an instrument when applied to real world scenarios. There's always some spanner in the works. Jevon would probably have made a good computer programmer. His idea is perfectly fine within some tightly confined bounds, but becomes less and less of a fit as more externalities come into play.
John.
Fascinating post! Thanks for the work done.
Earlier this year the European Council for an Energy Efficient Economy (eceee) produced a report that brought up the notion of "sufficiency." I wish they had gone a bit more into the behavioral/psychological aspects. From their executive summary:
"Finally, I argue for a range of changes in the way voluntary and mandatory efficiency policies and programs are implemented to systematically implement sufficiency and progressive efficiency concepts, keep specifications up to date, and discourage excessive consumption through price and information signals. Long term, such profound changes are our only hope for reversing the extraordinary global risks of climate change."
Full report:
http://www.eceee.org/sufficiency/
http://www.eceee.org/sufficiency/eceee_Progressive_Efficiency.pdf
Some people call this Jevon's Paradox, while others call it Jevon's Law, as if it was a law of nature. I think of it as Jevon's handy all purpose excuse for doing nothing, in the face of a serious problem.
Using the articles own simplistic examples there are many cases where the direct rebound effect will only apply very weakly or not at all, since the demand for the good or service delivered more efficiently is not infinite, but has a steeply decreasing utility curve.
If I have LEDs that consume 1/5 the watts/lumen as incandescents will I choose to light my living room 5 times more brightly? Not likely.
If I insulate my house, upgrade my windows, and purchase more efficient heating and cooling equipment I may choose to cool or heat my house more, but if I reduce BTUs/degree day by 90% I will certainly not increase my heating thermostat setting 9X.
If I purchase a more fuel-efficient hybrid instead of an SUV (gas mileage 50 mpg versus 11 mpg) it is very unlikely that I will increase my vehicle miles per year by 4X plus (not enough time for all that driving of course).
Experience does show that trusting to individual virtue to reduce energy consumption is hopeless. But experience does also show that developing more efficient technology can indeed reduce energy and material consumption, despite Jevon's purported paradoz.
Of course, regulatory approaches are also necessary, and in general will not suffer from direct rebound effects, and if regulatory/tax/incentives are broad enough across the economy then redirecting expenditures towards goods and services with lower energy consumption seems eminently possible. As another poster notes, several European nations have already accomplished this redirection to a significant degree, based on their much lower carbon intensity per unit of GDP compared to the US.
I have reached to the same conclusions myself. Actually after more thinking this all led me to the (seemingly pervasive) logic that in the case of FFs an environmentally conscious person should consume more! In fact as much as possible.
The logic goes as follows: in a system of unconstrained consumption a limited resource is being used and will be used as long as it is economical to do so. Conserving it or using it more efficiently may just prolong the time the resource will be used, but on the other hand it will reduce the price it is available to other. The price will be rising in the long run because the resource will eventually start depleting, but because we were more efficient in using it the price will rise much more slowly with much more boom and bust cycles in between, until it is realized we need to move to alternatives. On the other hand if we didn't conserve, demand would have risen much faster than supply that it may cause a sustained price rise which may lead us to developing alternatives. I believe this was the phenomenon we observed prior to 2008.
Of course all of this is not what we need and the real solution as the author pointed out would be to limit the use of the resource (put a cap on it). But since we don't do that and there is no reasonable expectation that we will do that effectively, we are left out with this somewhat inverted option if we want to do something about it individually.
Not only do "commentators argue" but the simple facts are that countries with higher gas taxes (such as in Europe) do indeed consume less gas than countries with lower gas tazes (I would not think that such an obvious point would elude a trained economist). But the salient fact is that Europeans DO NOT use their increased purchasing power from reduced taxes in other sectors of the economy and consequent increased purchasing power to consume more fossil fuels, but simply emit much less carbon per capita than countries with lower gas taxes. This real world experience shows that falsity of the theoretical claims about "cost to the primary dividend". And of course, an economy-wide carbon tax would incentivize consumers to find the lowest carbon way to deliver the goods and services that they desire. Thus a French citizen achieves the mobility that both US and French people desire by either driving a very fuel-efficient car, walking, or taking a train.
Blind adherence to Jevon's purported paradox would tell us that the positive environmental consequences resulting from Europe's high gas taxes are not possible, despite the abundant real world evidence to the contrary.
Or maybe Europe's high gas taxes have amounted to a form of subsidizing higher levels of gas consumption in the U.S.
As someone that pays the equilivent of $6.50 a gallon, I can assure you that although the price does sting a bit, it doesn't restrict the amount of miles driven by a noticeable amount. The fact that Europeans drive smaller and more effecient cars has a far bigger bearing on the national fuel usage. The UK motorist has averaged about 10-12,000 miles a year for as long as I can remember. I agree though that whatever fuel we manage to save is freed up to be shipped over to the US.
This article (http://www.youthxchange.net/main/b273_using_cars-c.asp) says that Europe has far fewer cars per capita than the US, 460 per thousand vs. 800 or 900 per thousand when light trucks are included. So it's not just the efficiency of European cars- it may be because you have a public transit infrastructure that allows people to choose not to have a car.
Apparently, it stings some people so much they don't buy a car.
Infrastructure does play a big part, but in a different way. With narrower roads and smaller housing it's difficult to find somewhere to park extra cars. Most cities are a complete nightmare to drive through let alone park in. Unlike most US cities, ours have had to try and accomodate cars in an already tightly packed area. Public transport is favoured purely because it easier than finding a parking space. It certainly isn't seen as being the cheaper option.
I was in Minneapolis a few weeks ago and drove through St. Paul at roughly 15mph... There are WAY TOO many cars (at times)... On the way out i managed 75mph through most of the same area.
In my town in southwest Wisconsin, we have an issue of parking (too many cars) and that is being "fixed" by at least 2 new parking ramps. Its tough climate to walk/bike year round (too hot/too cold). We do have a brand spanking new bus depot that just opened. High speed rail is also in the cards (we already have Amtrak depot).
The future of biking in 90F humid weather makes me cringe, as does walking in -20F snow covered winter wonderland. Although the land is fertilize, rainfall is very high (this year) and during summer you can grow about anything.
Plenty of bicyclists in 95F VERY humid weather in New Orleans.
Alan
'Efficiency policies' can not ever increase efficiency. If they actually increased efficiency, then no 'policy' would be needed.
Therefore, by decreasing efficiency, 'efficiency policies' do have the desired effect of shrinking the economy and therefore it's environmental impact.
Caps are no better than other forms of introducing inefficiency. Other goods are substituted if there is a cap. You end up playing a game of whack-a-mole that you can never win.
Random carpet-bombing of towns and cities would be equally effective at reducing the size of the economy and probably produce equivalent misery.
Jevons' paradox is true for goods with elastic demands, and untrue for the others.
Taxing externalities is smart. Caps are stupid.
The logic here seems to be "if we contrive an example in which the elasticity of demand is extraordinarily high, then we get a result consistent with our contrivance, namely demand that goes up with efficiency." IOW a tautology.
Fair enough, but it seems to follow from this logic that if we want to reduce energy consumption, we could simply ban CFL and LED bulbs, or better yet, mandate a return to kerosene or gas. Unless, of course, we assume that right now we happen to be, by an amazing coincidence, in the best of all possible worlds, or anyway the one with the minimum possible consumption, such that any change in efficiency, up or down, would induce more consumption. Perhaps we can call this a state of Peak Nonconsumption.
Or perhaps we're on an ideological kick here. Like anyone else, regulators tend to want job security, which for them is: ever more ways to arbitrarily boss ever more people around.
I have talked to Dr. von Weizsäcker recently who authored Factor Four and Factor Five. He said all energy efficiency measures inevitably lead to rebound effects if the energy prices dont rise by the same percentage as the the efficiency gains do. His recommendation: To get a political agreement that outlines a fixed percentage of rises in energy costs equivalent to the gains in efficiency. It´s his main message, above all technological recommendations.
This seems to be very logical.
Why wouldn't this idea work? (Other than the very idea of any new taxes are DOA in the U.S., even if they would serve to maintain energy expenses at a fixed level)
I think the article misses the whole point of efficiency in today's world, which is that it will slow the decline of the economy for a given decline in available energy. Energy efficiency may give us another 10 years before we have to face societal collapse. If that is good for the environment is another question.
It is a difficult thing, to get people to conserve when we have oil companies who still have product and want to sell it and we have people who are not as rich as they wish to be and want to play the BAU game a little longer. At what point in peak oil do the oil companies throw their weight into alternative solutions (as opposed to talking about it?)
We have central planners who have good ideas that don’t work in practice:
An example is recycling: people save their glass and the dump takes it and buries it with the other trash. The glass companies can make new glass out of sand as cheaply as they can use the recycled glass. Sand is simply not a scarce resource and making new bottles takes about the same amount of energy in either process. But we have communities who still tax their citizens to pick up recycling and sorted glass bottles.
And we have freedom loving individualists who will burn oil in their cars until civilization falls into decline and then it is too late to do the massive alternative change over from a fossil fuel society to an electrical society. Putting a tax on gas that lets the central planners buy more votes will not solve things, returning the tax money to society is noble but will never be done.
But articles like this do point out that we must be mindful of the unwanted consequences as we strive to solve the problem
Is incorrect; It is more correct to say :
greater energy efficiency can sometimes be counterproductive.
eg If I retool a turbine, and raise the efficiency 3%, there certainly IS a positive effect.
Where it can sometimes go wrong, is if the consumer is lazy, or the product badly designed.
Consumers often intend to have a positive impact, and there are plenty of examples of them spending capital in order to try to do so.
Terence Tao's example of a lighting is chosen for simplicity, but very few consumers actually install more lights when doing a bulb change.
{ More efficient Lighting is actually pretty much a no-brainer. }
Where his example does have bite, is areas like Heat pumps.
Consumers intend to be more efficient, and in fact, they strictly are.
but because there is no direct cost information, they can easily outrun that efficiency gain, with more consumption.
That is where direct consumer feedback in important, and Heat Pumps should have smarter control systems, and deliver more information.
The incremental cost of adding features like the following, is VERY low.
** Show the Consumer the Area under the curve, of their billable cost.
** Add control modes, that work on COST, or comfort, not a 'fixed temperature'
longer term, a demand side request to adapt the control shape, could be added.
If a power supplier can nudge down energy usage, important peaks can be managed.
Fixed temperature controls really are a dinosaur.
Of course, vested interests drive against this:
a) Most Power companies do not really want to sell less power.
b) Heat Pump vendors want to pitch 'lazy comfort', and sell more pumps.
(More control options could simple confuse a sales target, and showing REAL usage information, could well contradict the smooth sales talk, where 'up to' gets whispered )
The issue is thus more with consumers (& regulators), especially the 'feel good', 'tick box' kind, allowing weak 'solutions'.
We may have doubts about the efficiency of energy efficiency measures, but they are necessary both for the society, in spite of Jevons paradox, and for the individuals, in spite of the "tragedy of the commons".
Jevons paradox will not happen after energy efficiency measures are applied if we are close to the limits of growth in a world with finite resources; the price of energy will go up and the economic resources to spend on energy will be more and more limited. As a society then, saving energy will help to reduce the expenditure in expensive energy leaving free these economic resources for more productive use. Technology will give us opportunities to spend more energy, is true, but in this framework of expensive energy the technology developed to save energy will have additional incentives for development.
Individuals will also benefit economically from taking the decission to use energy more efficiently because the common resources, in this case energy, are not free.
However, saving energy as a society or as individuals will not help much to reduce the global warming problem because of the "tragedy of the commons" problem: the energy we don't use, others will use it. The total amount of fossil energy available is limited, and that's what we altogether will burn in worldwide fossil fuel markets. Developing countries will burn all the oil saved by the developed ones.
Murray points out very clearly why CAFE standards don't reduce the total amount of fuel used since increases in the total number of cars swamps improvements in mileage. If the goal is less total fuel used then rationing is the only proven way to do it. Imposing a cap without a well thought out rationing plan could make fuel for important uses too expensive. If not enough fuel is allocated to agriculture there might not be enough food to go around. Services like the fire department may not be able to buy enough fuel and whole cities could burn to the ground near the end of the fiscal year. Local governments are already broke and such things like snow plowing may not be done next winter. Rationing reduces demand from other sectors of the economy and allows essential services to still be affordable.
That's only true because CAFE standards are weak. If CAFE standards were raised high enough they would outweigh the increase in the number of cars, or possibly even (additionally) cause a decrease in the number of cars by causing their prices to rise.
Also, with CAFE standards as they are, at least more people have benefited from using the same amount of total fuel. If we didn't have CAFE standards, we would probably have the same amount of fuel used, the same amount of people, and fewer people with cars.
However, both trading or taxes can be worse than useless, if applied alone.
Trading opens very serious fraud risks, and creates the illusion of action. A piece of paper can say you are ok, even if your usage, or emissions, increase.
Trading systems can also collapse, or be gamed.
Taxes alone, merely pass-on-the-price, and the recent Fuel price spike proves just how lousy a usage control mechanism, price really is!.
Worse, Greensmoke Taxes allow politicians to 'tick the box', and do nothing else.
They think they have already 'taken action', and as Taxes tend to be electoral poison, they prefer not to talk about them, once imposed.
So the 'do nothing' is quickly entrenched. Money is wasted.
Much smarter is an Excise Charge, that is used to drive changes.
Yes, you can argue Excise charges and Taxes are the same, but whilst a Tax (usually) goes into the 'general accounts' and promptly vanishes (or churns), Excise charges (usually) have their own accounting, and so can be directly applied to focused spending.
That difference is very important.
Sometimes Jevon's paradox applies and sometimes it does not. With the efficiency of coal at the time, the more efficient use of coal allowed poorer people to enjoy heat.
But if you consider something like lighting in a modern industrialized countries, the effect will largely not be there. If I can install LED bulbs which use electricity such that my utility bill goes down, I'm not going to suddenly say "Hey, lighting is cheaper . . . gimme more light! Woo-hoo!" I already have all the light I need. And so does pretty much everyone in the country. So a drop in lighting prices is just not going to lead to more usage. I'm sure it will in few areas . . . more people will probably start using LED billboards & signs. But mostly, we have all the light we want.
But with gasoline, this definitely does occur. We have made efficiency gains over the last 20 years in internal combustion engines (ICE). And instead of getting better mileage, we just opted for bigger cars & SUVs with more power.
So the effect is very real, but it doesn't always apply.
And in some cases, there may be benefits even if just as much energy is used. For example, if EVs became cheap and everyone bought them then we might end up using just as much energy if not more. However, at least that energy would be largely domestic instead of imported, so there would still be a gain.
Correct, but the driver of this was not consumers, but more the Car companies.
They added the kilograms, and moved resources into higher profit vehicles.
SUV's also had DIFFERENT rules, further encouraging this morphing.
Car companies have to be dragged kicking and screaming, to better fuel AND weight numbers. Some are responding.
This is where a Smart Excise system can help: Use a small excise charge, to drive lower registration, or Road User charge holidays (just two examples) for the buyers of the most efficient vehicles.
This accelerates movement down the Fleet Economy curve.
What are you talking about? Car companies always try to produce what is demanded by consumers. Of course the consumers were the drivers.
If that were true, you would not need any marketing departments, or advertising budgets, as all the 'consumer demanded' cars you claim, would be nicely matched to everyone who walks onto a car-lot.
Meanwhile, back in the real world, Car Companies spend hundreds of MILLIONS trying to move customers to more expensive, higher profit models.
They have a serious incentive to do so, and history shows they do so, rather well.
And sponsor stuff like motorsports that are meant to drive a demand for more (and specialized) product. They aren't just using advertising as a zero sum game (stealing customers from the competition), but are actively trying to drive consumer wants towards whatever they can sell at high markup. Often that is high horsepower and size.
NASCAR = Not A Sport Car Advertising (to) Rednecks
No, they are primarily trying to move customers to THEIR models, and they are offering a range of cars to capture different market segments. They spend advertising money in all segments, and remember that advertising as well is something that also is produced in relation to customer demand. If advertisers press for high performance rather than frugality, then they do that because customers care more for performance. Nowadays, customers care more for frugality than they used to, so advertising money is spent a bit more in that area than before.
I profoundly disagree.
See the SUV craze/fad that was created from nothing. BTW, an extra 1 million b/day consumed by SUVs over large cars.
Also see the 4WD cars that have ZERO need for 4WD.
Alan
No, the craze wasn't created from nothing. Why wasn't the craze about something else, like frugality or pedestrian safety? Human nature! It wasn't car manufacturers who conspired to support OPEC, they simply followed the human attraction to power and size. Culture isn't arbitrary. Of course fashion can make Priuses cool, but there will always be a bias to power, size, aggressive beauty, domination and rider comfort and safety. And that's because of human nature, not because advertisers create the bias. Advertisers follow bias more than they create it.
Why wasn't the craze about something else
Frugality and pedestrian safety did not have the advertising budget of GM, Ford and Daimler-Chrysler.
Alan
+10
Anyone who does not understand that advertising creates artificial needs for consumption and not the other way around is profoundly naive!
Advertising IS propaganda
http://www.youtube.com/watch?v=KH3SxZz3yoA
http://www.youtube.com/watch?v=t47hAn_X9WQ&feature=related
SUVs are sold as a magical vehicle of personal freedom...
My "favorite" had a mother dropping her son off at a new school, first day of class. He was worried about being liked and fitting in.
But when the other boys saw him being dropped off in a HUMMER there was a chorus of "How cool !"
Almost as good was a 9 passenger SUV being justified to haul two small kids because they could be separated when one of them had the sniffles.
Yes, the "problems" in our lives that are solved by 8 mpg vehicles.
Just consumer demand, of course.
Alan
*sigh* Why didn't those companies advertise about that then?
Because they didn't see a way to profit from it.
Precisely, which is my point, and which proves Alan and FMagyar wrong.
No, it doesn't and you know it!
BTW 'Frugality and Pedestrian Safety, Inc.' as far as I know, is incorporated as a not for profit organization for the protection of the commons and they don't have much of an advertising budget to speak of...
Yes it does, and you don't know it!
the human attraction to power and size. ...a bias to power, size, aggressive beauty, domination and rider comfort and safety. And that's because of human nature
Humans beings have vulnerabilities. Their better judgement can be overridden, by pushing such buttons. As a society, we can choose whether to allow sellers to prey on consumers in this fashion.
Does this seem to violate the desire for free markets? Think of it as preventing fraud, by not allowing advertisers to communicate to buyers that products will do things they can't. For instance, I'm pretty sure that driving a Hummer won't induce super-models to lounge about my vehicle.
It is more basic than that. You label some features of human nature as flawed, and then you try to suppress that feature by laws. This is done by socialists and conservatives alike. Often when this happens, people are seen as helpless victims who aren't free to make decision as soon as there is money involved. So you can't sell kidneys, for instance, and you can't pay surrogate mothers, and you shouldn't advertise and so on. So, sure, superficially, this may be about the free market. But it's really about freedom, period. Who are you to label these sides of human nature as flawed, and the catering to them as fraud?
Studies have shown that men judging women's attractiveness are unaffected by what car the women drives. However, women consistently rate men's attractiveness higher in pictures that shows the man with a nice car.
Who are you to label these sides of human nature as flawed, and the catering to them as fraud?
Is there really any question that human beings sometimes make decisions with their pre-frontal cortexes, and sometimes with their lizard brains, and that they (and the rest of us) would be better off if the pre-frontal cortex was more in the driver seat? Alcoholism, substance abuse, obesity, etc, don't exist?
How is an homeless alcoholic free?
I see nothing wrong with free markets in areas which "socialists" and conservatives now like to make illegal, such as drugs and prostitution. OTOH, I view the customers in these markets as mostly people who are ill, and who need treatment more than they need either punishment, or access to their drug of choice. Finally, I draw the line at sellers in these markets attempting to draw new customers into the market by appealing to their addictions. I'd make these things legal, but require that they be advertised in black & white text in small neutral fonts and non-emotional language.
Studies also show that owners of status symbols consistently over rate the effectiveness of their purchases in raising their status in the eyes of other people. And, what percentage of Hummer owners are single and unattached, consciously buy the vehicle in the hope that the Hummer will get them a date, and knew nothing about cars & women and therefore needed to be informed by GM that some women like nice* cars?
*nice means expensive? I wonder if a Hummer is really the best way to convey that. I suspect most women are more attracted to something not designed for duty in Iraq.
------------------------------------
Finally, the idea that advertising is designed solely for competitive advantage is unrealistic. If that were the case, industries would not fiercely fight advertising bans that affected all players in the market equally. In fact, industries know that advertising is essential to maintaining demand for whole categories of products. For instance, diamond engagement rings were unknown in Japan until DeBeers undertook a large advertising campaign. Now, young Japanese couples consider it essential that they buy an expensive, useless, not-especially-rare speck of shiny carbon before they start their lives together.
You raise good points, Nick. You're also prepared to let go more than most, and I'll settle for that, even though you seem to overreact to advertising.
The issue about "socialists" is interesting btw - it's a bit of a culture clash for me. Socialist Americans don't like to be called socialist, for some reason, whereas socialist Europeans really take pride in the label. But we can save that discussion for another day.
Any guy who wants to impress me better be in an old Toyota pickup.
Old Farmer Mac is your man ! Coming to ASPO-DC in one.
I, OTOH, drive a Mercedes Benz (1982 240D manual transmission). Not much of a "babe magnet" despite the 3 pointed star.
Alan
This is correct, for now, but will likely change when market inertia is overcome and LEDs are more mature. We actually do have little light inside, compared to daylight, and when we can overcome the (im-)practicalities of having a limited number of point sources and instead cover the roof, walls and floor with colour-and-intensity-programmable thin film LEDs, the use of light will increase enormously. LED bulbs is a pitiful surrender to old socket tech. Also, I think the billboards/signs you envision will just be a small part of a lightning revolution. LEDs will be much, much easier to integrate into products than old lightning tech, and there will be lots and lots of new cool applications indoors and outdoors.
"LED bulbs is a pitiful surrender to old socket tech. Also, I think the billboards/signs you envision will just be a small part of a lightning revolution. LEDs will be much, much easier to integrate into products than old lightning tech, and there will be lots and lots of new cool applications indoors and outdoors."
That is actually the sort of example they were talking about. Full utilization of LED technology at maximum efficiency would require that a house be extensively remodeled. The total energy use for that exercise is more than you would ever save by the switch to super-efficient LED lights. So the best approach is to stick with the already installed sockets and install the LEDs there.
Later, if the house/room is remodeled of replaced for other reasons, then you can install the state of the art lighting, and the marginal cost of the upgrade might then be worth it.
I think this is a extreme extrapolation...there are many more factors in this scenario other than the efficiency of the LED lights...there is the capital cost to buy these thin film lights. There is the installation cost. There is the maintainance/replacement/repair cost.
There are aesthetic considerations.
I like sky lights for the natural light but I didn't install a glass roof, or even double the number of skylights in my home.
Precisely the aestetic considerations will play a big role in expanding the use of light. Light is beautiful. And yes, LED production/installation costs are important factors.
Light is blinding and ugly, especially flourescents and LEDs that make human faces look green. I turn off all lights I don't need. I wish the city would turn off all the streetlights so I can see the starts better.
Yes, preeecious. Hurts my eyes, blinds them it does! Filthy, nasty light.
Utter bull@#$%. A smart third grader can see through this.
I=PAT does not make the claim that 'A' or 'P' will be stable, or even that they have no relationship to 'T'. It suggests not merely what the authors claim, but can also show that efficiency allows is a greater level of affluence for more people at the same environmental cost. In fact, according to I=PAT, efficiency has potential benefits both regarding environmental impact and regarding societal equality, and indeed any increase in efficiency will necessarily create at least one of these benefits(!), while not necessarily creating both.
Nothing about Jevon's paradox makes conclusions logically drawn from I=PAT untrue. I=PAT makes no claims about population dynamics (i.e. the variability of 'P'). Neither, for that matter, does Jevon's paradox. It is not reasonable to conclude on the basis of Jevon's paradox that efficiency is "flawed". The only thing that it might be "flawed" for is reducing population, but I know of no one who makes such a ridiculous claim.
It may be that some 'green' advocates are ignorant of the possibility that there may be a disadvantageous relationship between 'T' and 'AxP' that (on a global scale) my prevent efficiency measures from reducing total environmental impact. However, the authors fail to even argue that Jevon's paradox shows that there is a such a relationship. Regardless, using I=PAT as a proxy for possibly mistaken attitudes about efficiency reduces the opening argument of this piece to a pathetic straw-man.
Otherwise, this pieces contains a decent explanation of Jevon's paradox for the un-initiated. One hopes, however, that idiots will not misinterpret it and parrot pieces of it around the internet as justification for why consumers should not be more energy efficient. For starters, being more energy efficient usually saves consumers money.
Jevon's Paradox only applies to inelastic markets. For vehicle commuters demanding gasoline, I think they are fairly inelastic. Just because gas goes half as cheap as before does not mean you are going to drive your car twice as much, because most commuters want to spend as little time in their car as possible after a week fighting traffic. Gas demand would go up a bit with gas at half price, but not twice. And if consumers then have extra money to spend on something else, well that situation won't be lasting much longer because the economy is about to completely implode and no one will have any money ... the consumer-centered US economy is finished, it was an experiment to be ending in failure. People will turn from consumers to savers. Furthermore, there are other technological substitutions like electric cars which use no gas at all so it doesn't matter how efficient electric cars become they will not be demanding any gasoline. And their energy efficiency has nothing to do with the power of the car (unlike gas powered cars), plus electricity is so cheap most people wouldn't even think about the costs when driving their cars. But yes, the light bulb is a good example of Jevon's Paradox, but it is only one particular example, while many other unique situations do not so clearly follow Jevon's Paradox.
Yes, but the next car you buy might be a less efficient one instead of a more efficient one, if the price of fuel is not a concern for you. Jevon's does not say the effects are immediate or linear.
Oh, Jesus. I couldn't drive my car too much in one day,for the gasoline price rose rapidly
The energy efficiency must be a great issue.Usually I go to the EERE(Office of Energy Efficiency and Renewable Energy) for information.
A couple of remarks:
1. Many of the commenters here are making microeconomic counterarguments ("if I...", "if a ...") to an essentially macroeconomic argument ("the overall result is ..."). As such, they are going astray.
Sure, each individual has a limit to their propensity to buy more of any given commodity. But as it gets cheaper, more and more people who couldn't afford it in the past can now indulge. For the system as a whole, limits to consumption only start to apply when every family in the world has its flying car and pair of jet skis, or when all those who do not are permanently prevented from doing so by political or military force -- or the end of economic growth.
2. Jevons's paradox is now somewhat debased. It applies only to commodities that are used as inputs to the production of intermediate goods, for which there is great unrealised potential demand. The original paradox applied to increased efficiency in the use of coal to produce iron, which in turn had a great many uses in final goods of all kinds. The cut in the price of iron meant that it was suddenly profitable to use it in applications where it was formerly too expensive. It is this expansion in the number of applications for iron, as well as the (normal) elasticity of demand for each application of iron as its price decreased, that combined to create the great increase in demand for coal.
Electricity is an input into all sorts of intermediate goods, but there are really only two where Jevons's paradox might apply: aluminium/aluminum (slang name: "solid electricity") and steel from scrap. The number of applications for these metals is, at present, increasing only slowly. Jevons's paradox is unlikely to show up.
Jevons's paradox does not apply to any kind of final consumption - SUVs, light bulbs, HVAC, whatever. That's normal elasticity of demand.
3. The rebound effect is real. Anecdotally, I light my apartment more brightly with CFLs than I ever did with incandescents. I keep it warmer with a heat pump than I ever did with radiant heaters. Also, the keypost's claims about the indirect effects of efficiency improvement seem very plausible. Again, you have to think macroeconomically, not microeconomically.
Do you mean to say if the price of electricity dropped that consumers, manufacturers and business owners would not increase their usage?
God save us from economists.
I think sometimes this paradox applies, but what about when I consider driving to work. Now I want to use my bike, but I need to add night lighting to the bike. Will the cost of these lights >$100 be worth it? Should they be LED, tungsten, or halogen? I would think at first glance that LED is the best option. I would spend less money on batteries. Are LED lights for bicycles not the most efficient bike lighting option?
So if I spend $10 a week driving to work, then after 15 weeks of biking to work I would offset the LED light costs.
Should I spend money on the least efficient lighting technology. A wooden torch or something to that effect. Gasp. What is my personal time worth? Do I need to go into the woods and find a nice piece of wood each day. Sounds inefficient. Should I use the halogen bulb? Then I need to go to the store and buy batteries more often. Do I have the time to do that 2-3x as often. Terribly inefficient.
I would rather be efficient when possible.
Nice example, but let me guess that you don't come from Holland or Germany. Bikes come with lights and dynamos attached so there is no need for any batteries. If you do go for batteries they will be rechargeable ones and will last you for 5-10 years.
It seems there are so many opinions on dynamos vs. battery pack power. Of course you can spend $500 on super bright LED system with lithium battery pack. There is the intangible element of safety. The German gov't sanctions the 12V dynamo over the 6V now since it produces better lighting. I am from America and my car was recently an attempted theft. The thieves failed to steal her though, but I am ready to ride my bike to work now. Been reading oil drum since 2005 (Katrina) although this is my first post ;-)
I will consider the dynamo option though and certainly rechargeable batteries. LED is most definite for the rear/tail light, but the front could be halogen. A lot to consider this weekend, but I will keep efficiency in mind!
LED also allow flashing, with a big gain in visibility, so LED now dominates bike lights.
Helmet and pedal lights, also give delineation, and the more you are seen, the safer you are. (given a bike is far riskier, you need ALL the gains you can claw )
Halogens are sunset technology for Bikes.
If you have not already done so, research electric bikes.
The Times reports that around 200,000 electric bikes were sold in the United States last year, while an estimated 120 million electric bicycles are now on the road in China.
Clearly it is time to re-instate corporal punishment. Gasoline pumps which fail to display dauntingly-high prices should be beaten. Electric meters which neglect their duty to internalize all the externalities of fossil-fuels should be horsewhipped. Coal needs a damn good spanking for not staying buried in the ground. Oil should just be....what? Stuffed deep in a hole and never allowed to come out?
Oh, and why not shaming and shunning too? It's time to scream at Escalades, holler at Hummers, let those darn Excursions know how exasperated we are.
After all, we human beings are just victims - prices, advertising, corporations, government policies, genetics; they all conspire to make us consume like the Earth is a giant going-out-of-business sale.
And for sure we don't want to preach or evangelize or criticize or condemn other human beings TO THEIR FACES. OMG! It's not just that such tactics aren't "nice", doing such things would be an abridgement of freedom!!
I have to ask, people: what kind of cowardly, spineless worms have we become?
To get the total efficiency of a system, efficiencies are multiplied. So the Et = E1 * E2 * E3 * E4 * E5 * E6
If
E1 = .3.
E2 = .9.
E3 = .8.
E4 = .7
E5 = .9
E6 = .8
Then
Et1 = .3 * .9 * .8 * .7 * .9 = .108864
Now if E1 is a prime mover and the efficiency increases to .31 then
Et2 = .112493
Et2 – Et1 = .00363
So an increase in efficiency in the hundredths place of the prime mover increases the total efficiency of the system in the thousandths place.
So it behooves us to increase the efficiency of the prime mover and hopefully the change in the system efficiency is small enough not to cause the consumer to go from 1 blub to 2 blubs. The saving of energy for the prime mover is enough to justify the cost to improve the efficiency. IMHO
Please correct if there is any bonehead mistakes.