Why we are asking this now
The rebound effect is a much discussed theory. According to the rebound effect, energy efficient technology cheapens energy and in turn encourages the maximum use of energy. The end result would be more energy consumption. There are two aspects of this scenario. Some argue that the energy efficiency saves energy, while the others claim that the rebound effect cancels out the effects of energy efficiency. In a study done by the Breakthrough Institute, it was found that the rebound effect happens in certain cases, while in other cases, energy efficient technology was found to be much effective. The rebound effect was the strongest in the most productive sectors of the economy. The counter intuitive, outlandish nature of the theory gives it much appeal, but we should always look into the evidence before making any conclusions. The energy consumption in the world has risen partly due to the fact that the economies are rising from the woes of the economic crisis and partly because of the rising economic activity in emerging economies which use less efficient energy resources. The rising energy consumption is a good sign as it indicates economic growth.
Is it really that serious?
We have to use our energy resources carefully, if we do not want to run out of resources. This is especially true for the nonrenewable sources of energy, especially fossil fuels. Moreover, carbon emissions from the fossil fuels often pollute the environment and contribute to global warming.
What others are saying:
1) William Stanley Jevons:
Jevons states – “It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth.”
2) Economist Harry Saunders:
Saunders states – ” In the absence of efficiency gains, energy use will grow in lock step with economic growth (energy intensity will stay fixed) when energy prices are fixed. Energy efficiency gains can increase energy consumption by two means: by making energy appear effectively cheaper than other inputs; and by increasing economic growth, which pulls up energy use.These results, while by no means proving the Khazzoom-Brookes postulate, call for prudent energy analysts and policy makers to pause a long moment before dismissing it.”
3) The New Yprker Magazine:
The Newyorker Magazine has expressed its doubts on the effectiveness of energy efficient technology because of the rebound effect, which is also known as the Jevons Paradox, after the 19th Century economist William Stanley Jevons. One important drawback of energy efficiency is that it focuses on the small battles and ignores the larger ones.
The main hurdles:
The International Energy Agency claims that energy efficient technology can bring down the energy requirements of the world by one third and have a significant reduction in the emission of greenhouse gases like CO2. Energy efficiency is also said to have a significant benefit on national security as it reduces imports from abroad. It also prevents the depletion of energy resources. One of the main hurdles is the nature of the appliance. An energy efficient dish washer, may have little effect on peak demand as more energy is used when people wash dishes in the night. It would require extreme commitment to stick to energy efficiency and such commitment would be hard to find. The most important threat is that cheaper energy will lead to more energy use. People might often find it difficult to stick to energy efficiency as certain energy inefficient devices are quite cheap. We would need emission caps and carbon taxes to save energy, which find a lot of opposition from the free market camp.
What can be done?
An improved energy efficiency system is the requirement of the day for a wide variety of reasons. In many cases, an analysis of cost and benefits would suffice. If buying an energy efficient appliance would save energy which offsets the higher price of the device, it would be a motivating factor for most people who are aware of their rightful interests. Many of us would love the comfort provided by energy efficient technology. It could even be possible to save money by adopting the energy efficiency technique. Energy efficient technology also helps to reduce the carbon footprint. The Government can do a lot to encourage people to take the necessary steps to save the natural resources and in turn our planet and ourselves, but besides that individual co-operation is also required.