Jevons Paradox

Why green energy won’t work – without degrowth.

In economics, Jevons paradox occurs when technological progress increases the efficiency with which a resource is used (reducing the amount necessary for any one use), but the falling cost of the use of that resource increases demand enough so that resource use is increased, rather than reduced.

English economist William Jevons laid out what became known as Jevons paradox in his 1865 book The Coal Question. Jevons saw that England’s use of coal increased after the introduction of the Watt steam engine. The Watt engine made coal-fired steam a more efficient power source, which led to an explosion in the use of coal.

Jevons paradox leads to the “rebound effect” in energy use, where the efficiency of a system first makes the demand for a resource less, due to efficiency, but that energy use “rebounds” as more of the new efficient process (the steam engine, gas-powered cars, solar panels) is used.

This is the opposite of what we need if we are to use less fossil fuel energy. Remember, over 80 percent of the world's energy is still fossil fuel-based, so even improvements in clean or “green” energy that leads to cheaper solar and cheaper wind, causes a rebound effect, which results in more energy use, with still 80 percent of that fossil fuel-based. That 80 percent is going down, but only by a percentage point or two per year.

We need to use less energy.

If someone tells you that green energy can solve climate change or other environmental problems, ask them what they plan to do about Jevons paradox and the rebound effect.

They likely won’t have a good answer.

So, what do we do?

We use less energy, that is what we do.

But how do you do that?

Well, you have to fight the rebound effect. Because the rebound effect isn’t going to go away just because you ask nicely.

Combating the rebound effect takes action. As energy efficiency gains come, and they always come, policy needs to keep up – which has never been the case. Limits on the use of energy that keep the costs steady or higher could be used. Some free marketers won’t be happy with that, but the alternative – ever-increasing energy use and ever-increasing environmental damage - isn’t a good option.

A change in mindset and a culture change is required. A change in how we see and use energy is required. We need to change our mindsets, and the functioning of our markets so that the ecosystem comes first.

This can involve the removal of subsidies that result in an overuse of energy, or overconsumption of energy. This can mean higher taxes on energy use past a certain threshold for businesses and consumers. This can mean a cap on energy use to ensure that energy prices don’t continue to drop with efficiency gains.

Remember, if we put the biosphere first – which is what we should do, because we live there – we need to price the externalities of energy use.

That won’t be easy. Cheap energy is one of the main ways politicians get elected and stay elected.

The story we tell ourselves is that abundant and cheap energy makes our lives plentiful, which makes us happy.

Not so. Abundant and cheap energy keeps GDP rising. That is not happiness.

Cap energy use.

For the most part, Western societies have never operated with a cap on energy use. Maybe that time has come.

A policy that caps energy use would be unpopular today, which is why we need to start talking about it. People need to understand the purpose behind such policies and laws, with sufficient lead time to digest the changes, and a gradual dialing down of energy consumption.

As I’ve stated before, we need to include the cost of energy inputs and their externalities in our economics.

In addition to capping energy use, or appropriately taxing energy use, we could increase our focus on circular economies, promote more sharing of resources, and change the cycle of conspicuous consumption that is part of many Western economies.

Degrowth is the answer … to addressing Jevons paradox.

So degrowth is the answer – or part of the answer.

Most of what I’ve written about in this space has been about using and consuming less.

-         A four-day workweek

-         Eliminating bullshit jobs

-         Universal basic income

-         Universal basic services

-         A jobs guarantee

-         Eliminating planned obsolescence

-         Leaning into population decline

These and many other issues I’ve written about are about using less. Not out of any need for austerity, but because using more doesn’t make you happy. Using more makes shareholders happy. Using less makes you happy. Using less makes shareholders sad.

I’m not trying to make shareholders sad. I’m a shareholder myself. But I’m a human being looking to survive first. That takes precedence.

It should anyway.

An economic system that sees Jevons paradox as the problem it is and actively plans to combat it is a step in the right direction.

It’s a step we need to take.