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| Fig. 1: U.S. GDP and CO2 emissions are decoupling. Emissions data for 1973-2019 and GDP data from the Sep. 2020 EIA Monthly Energy Review, with emissions data for 1949-2011 overlaid from the 2011 EIA Annual Energy Review. [5,6] (Source: G. Alvarez) |
It has been prominently argued that it is impossible to reduce energy use without stalling or reversing economic growth. [1-3] Yet, the impending climate crisis demands that we dramatically cut emissions of greenhouse gases, byproducts of the fossil fuels which make up about 80% of percent of the American energy budget, in order to curb global warming. [4,5] The shift from carbon-based fuels to renewable sources of energy will not happen overnight. Are our only remaining options then to suffer now or later?
A commonly cited economic theory suggests that when energy efficiency rises, firms and individuals use more energy because it costs less to produce the same output. The effect - dubbed "rebound" or, if the rebound is larger in size than the original efficiency gain, "backfire" - was first identified in 1865 by British economist William Stanley Jevons when he observed that the increased efficiency of coal-burning steam engines spurred the Industrial Revolution and led to an explosion in energy consumption. [7]
Some modern authors suggest that Jevons' theory could apply to the present world on a huge scale, perhaps so much as to erase entirely our ability to reduce energy use through improved efficiency. [8-10] However, much of the literature that builds on the so-called Jevons paradox is theoretical in nature, and while the theoretical mechanism of rebound is perfectly sound, empirical studies have found no substantial macro-rebounds within a sector or of an economy-wide macro-effect, and the only observable micro-rebound effects are limited to about 5-15%. [11,12] Furthermore, evidence suggests that energy efficiency is a resource of expanding quantity and declining cost. [13] Nonetheless, the idea that growing energy use is necessary and beneficial despite innovations in efficiency has been promoted by the energy industry as a public relations tool since the 1970s. [14]
There is a broader issue at hand. In order to make robust projections for the future, it is necessary for forecasters to assume some sort of structural constancy across both time and variable conditions; that is, that a system will function similarly in the future as it has in the past, and that its mechanics will be unchanged by influences on parameters not considered by its model. [15] While this constancy is generally exhibited by physical systems, it is often absent in economic and social systems, where dynamic market forces are highly uncertain and dependent on non-linear changes in behavior and technology. [16,17] Thus, although systems of all kinds must obey the basic principles of thermodynamics, it is a risky and rarely successful proposition to subject non-physical systems to simple physical laws. For this reason, it is suggested that forecasts be used principally to illustrate the general effect of policy decisions on "business as usual" trends, rather than narrowly bounding future scenarios absolutely. [18] Otherwise, overly pessimistic judgements on the permanence of the status quo may contribute to inaction and limit choices for future decision-makers.
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| Fig. 2: American primary energy intensity continues to fall. Data from the Sep. 2020 EIA Monthly Energy Review. [5] (Source: G. Alvarez) |
The futility of projecting old trends into the future is well-documented in the case of energy use and GDP. Despite remaining largely constant for many decades before the 1970s, the ratio of primary energy consumption to economic output has defied the expectations of simplified physical models, steadily declining globally over the last 40 years and falling 35% in the U.S. between 1973 and 1999. [19,20] Fig. 2 depicts this precipitous descent of American energy intensity. Fig. 1 illustrates that over the same period of time, the U.S. has continued to grow its economy while stabilizing its carbon emissions. [5,6] Comprehensive historical analyses of the U.S. conclude that GDP does not cause energy use, and to sustain growth, increased energy supplies may be substituted with increased efficiency; moreover, international comparisons with nations like Sweden, which as early as the 1970s used only 60% as much energy as did the U.S. to produce a unit of GDP, suggest that there is much room for further substitution. [21,22]
Modern data are fundamentally inconsistent with the fear that economic growth is not possible without increased energy consumption. Efficient innovation has shown that climate mitigation can occur without financial disaster. Therefore, to confront the wicked energy challenges of our time, we should resolve not to let the inefficiencies of the past discourage us from achieving the efficiency which is necessary for our future.
© Gabe Alvarez. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
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