Quotulatiousness

August 3, 2013

Energy efficiency does not equate to lower energy usage

Filed under: Britain, Economics, History — Tags: , — Nicholas @ 10:48

Tim Harford talks about an obscure 19th century prognosticator and the implications of one of his predictions:

Despite Keynes’s admiration, Jevons might now be forgotten, save for one famous prediction and one intriguing argument. The famous prediction — that the UK’s economic prosperity was at risk because the country would run out of viable reserves of coal — was contained in The Coal Question (1865), a book that made Jevons a celebrated pundit at the age of 29. The coal industry did fall into decline. Production peaked exactly a century ago, when there were 1.1 million coal miners — four times as many as when Margaret Thatcher was elected in 1979. Whether this had much to do with the fall of the Empire is a fascinating question.

Jevons remains notable in some circles for an argument he made in The Coal Question, rebutting critics who claimed that a coal shortage was no problem because steam engines would become dramatically more efficient. Jevons replied: “It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth.” This idea became known as the Jevons paradox: that energy efficiency does not reduce energy consumption. When light was hugely expensive, a person might read by the fickle flame of a single candle; now it’s so cheap we flood our cities with it. Double glazing could mean lower heating bills but in practice it means warmer houses.

So was Jevons right? That’s a hotly contested topic. On a microeconomic level, he was not: a 50 per cent increase in the energy efficiency of a device will lead to increased use, but rarely to the doubling in usage that would be necessary for Jevons to be correct. Aha, reply Jevons’s defenders: even if a fuel-sipping car does not induce me to drive much further, I may still spend my cash savings on some other energy-guzzling device. True. But energy is a small enough part of the economy — about 6 to 10 per cent — that the actual cash savings available to spend elsewhere will usually be modest.

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