Jevons Paradox

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.

​William Stanley Jevons lived during the mid 19^th century, at a time when Great Britain was rapidly industrializing. The energy resource of his time was coal (see The 300 Year Party). Improvements in the design of steam engines meant that the factories were using coal more efficiently, consequently the price of coal fell. Paradoxically, this improved efficiency led to an increase in overall coal consumption because the reduced costs encouraged industrialists to increase the number and size of their factories. Here is how he put it,

Whatever, therefore, conduces to increase the efficiency of coal, and to diminish the cost of its use, directly tends to augment the value of the steam-engine, and to enlarge the field of its operations.

Translated into modern English, he is saying,

• Coal is being burned with greater efficiency due to technological innovation and economies of scale.
• Hence more factories and power plants use coal since it is now more economical to do so.
• Hence the overall consumption of coal increases.

This phenomenon of increasing efficiency leading to higher demand is often referred to as Jevons’ Paradox. The paradox can be defined as follows.

Technological progress increases the efficiency with which a resource is used, hence the rate of consumption of that resource increases due to increased demand caused by lower prices.​

Alternatively,

​New technologies that can produce more goods from a given amount of resources allow the economy as a whole to produce more. The overall consumption of those resources goes up.

This paradox, also known as the ‘Rebound Effect’, applies to today's response to climate change. For example, someone may decide to purchase an electric vehicle (EV) in order to reduce greenhouse gas emissions. However, the gasoline or diesel that they did not purchase is has not disappeared — it is still available for someone else to purchase, so there is no overall reduction in emissions. Indeed, if the second person decides to purchase a new conventionally powered vehicle in order to take advantage of the freed-up fuel supply, overall consumption of the gasoline or diesel will actually increase.

The paradox applies to those who decide to purchase a more economical, conventionally-powered vehicle.

• A person buys a fuel-efficient car.
• Because the car is more efficient, he or she drives more miles.
• Hence the overall consumption of fuel increases.

Although Jevons applied his analysis to coal, the same way of thinking can be used with regard to any other resource — including oil. Indeed, his insight applies very broadly. For example, a road may be congested. Therefore, extra lanes are added. However, now that commuting on that road has become easier, real estate developers build more homes in that area. Hence the amount of traffic goes up and the final result is more congestion than there was in the first place.

The paradox even shows up in human behavior. Someone who is efficient at responding emails, for example, finds that they receive even more emails in response to the ones that they have written so efficiently, hence their inbox does not shrink, it grows.

The Alternative Energy Conundrum

There is an increasing level of academic debate as to whether the Paradox/Rebound Effect actually takes place in real-world situations. Experience with the use of alternative energy supplies in recent years suggest that it does.

The use of alternative energy sources lies at the heart of most Net Zero programs. As supplies of fossil fuels become increasingly limited and as the consequences of climate change become ever more severe, the normal response is a call to switch to alternatives such as wind, solar or nuclear. However, these initiatives will only work if they are matched with a corresponding demand reduction.

In practice, as the post The Renewable Energy Paradox shows,

• Renewables are growing faster than other sources of energy.
• The fraction of energy provided by renewals is declining.

In other words, in spite of all the publicity to do with how wind and solar are growing quickly, the reality is that overall energy demand continues to increase. Solar and wind are merely providing a good proportion of the extra energy that we are using. Renewables are not replacing fossil fuels, they are merely adding to the overall growth in energy consumption.

John Michael Greer puts it this way,

What makes Jevons’ Paradox so deadly in the present situation is that adding new sources of supply to the energy mix has the same effect as making demand more efficient. That’s why it’s inaccurate to claim, as so many badly written histories do, that oil replaced coal. More coal gets burnt each year now than was burnt each year at the peak of the coal era; petroleum, by taking some of the demand that would otherwise drive up the price of coal, kept coal cheap and made it economical to use coal even more freely than before.

Greenhouse Scopes

Variations on Jevons’s Paradox can crop up in unexpected places. For example, the boundaries to do with who is which responsible for specific emissions can be unclear (see the post Greenhouse Gas Emission Scopes). One potential problem is to do with the “penalty” that a company may pay for being more efficient.

For example, if a company makes a product that uses electric power more efficiently than its competitors then sales of that product will increase. This means that the greenhouse gas emissions to do with that product will also increase, thereby penalizing the manufacturer for doing a good job.

Carbon Capture and Sequestration

If we are to have any chance of meeting goals such as ‘Net Zero by 2050’ it is becoming increasingly clear that we will need to remove CO₂ that has already been added to the atmosphere. In other words, we will need to implement Carbon Capture and Sequestration (CC&S) technology. This is a discouraging insight. If we, as a society, are not able to control the rate at which we add greenhouse gases to the atmosphere, what makes us think that we can responsibly manage the removal of those gases once added?  

What is also discouraging is that CC&S opens up an apparent “We can have our cake and eat it too” line of thinking related to Jevons’ Paradox. If we sequester one ton of CO₂ then it will be tempting for another nation or company to use that newly created “parking space” to burn fossil fuels that create at least one ton of new CO₂ emissions.

The Original Paradox

The ideas that lie behind paradox were originally formulated by Jevons in his book The Coal Question; An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal Mines (they went in for long book titles in those days) in the year 1865. In it he said, 

​Coal in truth stands not beside but entirely above all other commodities. It is the material energy of the country — the universal aid — the factor in everything we do. With coal almost any feat is possible or easy; without it we are thrown back into the laborious poverty of early times. With such facts familiarly before us, it can be no matter of surprise that year by year we make larger draughts upon a material of such myriad qualities — of such miraculous powers.

. . . new applications of coal are of an unlimited character. In the command of force, molecular and mechanical, we have the key to all the infinite varieties of change in place or kind of which nature is capable. No chemical or mechanical operation, perhaps, is quite impossible to us, and invention consists in discovering those which are useful and commercially practicable . . .

I must point out the painful fact that such a rate of growth will before long render our consumption of coal comparable with the total supply. In the increasing depth and difficulty of coal mining we shall meet that vague, but inevitable boundary that will stop our progress.

Let us unpack the above three paragraphs.

The first paragraph states that coal was the über-commodity of the 19^th century because it was the principle source of energy. Jevons understood that it was coal that put the ‘Great’ in ‘Great Britain’. Substitute the word ‘oil’ for ‘coal’ and his words apply equally well to our times. Without fossil fuels we are “thrown back into the laborious poverty of early times”.

The second paragraph shows that coal not only provided energy; it was also the basis of “molecular power” — the ability to create new products from new chemicals. In our time, we use oil not just as a fuel, but also to make an enormous range of products such as fertilizers, medications, pesticides and plastics.

But, and there’s always a ‘but’, in the third paragraph Jevons points out that the supply of coal is not infinite. Moreover, it will become ever more expensive to extract future supplies. He is actually describing, a hundred years ahead of his time, the problem of declining Energy Returned on Energy Invested (ERoEI), as described in Alice and the Red Queen. He has a premonition of what we now know as the Hubbert Curve.

His wonderful phrase, "that vague, but inevitable boundary that will stop our progress" became real for Great Britain around the year 1918 when coal production peaked. It was also about that time that the British Empire started to decline. And now, with regard to oil, we are bumping into our own “vague but inevitable boundary”.​

A final observation is to do with the quality of his writing. How did we let our own standards decline so precipitately?

Compassion

Although Jevons' observations may seem harsh and unforgiving, he himself was far from being a cold-hearted economist who had no concern for the needs of those in trouble. Here is what he said (once more, using a quality of English that one can only envy).​

Reflection will show that we ought not to think of interfering with the free use of the material wealth which Providence has placed at our disposal, but that our duties wholly consist in the earnest and wise application of it. We may spend it on the one hand in increased luxury and ostentation and corruption, and we shall be blamed. We may spend it on the other hand in raising the social and moral condition of the people, and in reducing the burdens of future generations. Even if our successors be less happily placed than ourselves they will not then blame us.​

Had we acted on his advice 150 years ago we would not be in our current physical and moral quagmire.​