[Reproduced from SCIENTIFIC AMERICAN]
Does Increased Energy Efficiency Just Spark Us to Use More?
January 24, 2013 | 
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Last year, the U.S. raised its fuel economy standards for cars and trucks for the first time in decades. By 2025, the fuel efficiency of vehicles will be required to double. As a result, oil consumption is predicted to fall and—given that the U.S. remains the world’s largest consumer of oil—global crude prices might fall as well. That makes using oil cheap again, encouraging yet more consumption that ends up reducing the energy saving impact of the initial policy.
That is the story of the so-called “rebound effect,” more properly called Jevons paradox, after W. Stanley Jevons, the British economist who first proposed it in his 1865 book “The Coal Question.” Jevons paradox is undoubtedly real and has to be considered in any energy efficiency policy. After all, the last time the U.S. raised its fuel economy standards significantly in the late 1970s, global oil prices cratered not too long thereafter in the early 1980s. Or consider the refrigeration paradox: freezers have become better and better at using less energy to keep food cold. As a result, many Americans now have two: a modern, efficient one in the kitchen for comestibles and the old fridge in the garage or basement to keep the beer cold and freeze extra supplies.
But, although the rebound effect may be real, it is “too small to derail energy-efficiency policies,” argues a team of four economists in a comment published in Nature on January 24. (Scientific American is part of Nature Publishing Group.) Using data from the Energy Information Administration’s annual forecast, the researchers estimate that the rebound effect will reduce energy savings from the new fuel efficiency standards to 5 percent from 7 percent.
The economists take care to note the distinction between direct and indirect effects. So, for example, savings on fuel leads to an increase in driving, eliminating nearly a third of the efficiency savings. At the same time, money not spent on fuel is then often spent on other items that in turn require energy to produce—causing an indirect drop of five to 15 percent. Finally, at the scale of the national and global economy, oil not used in cars in the U.S. will be used in cars in China, along with other displacement effects.
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