Thursday, September 17, 2009

The Rebound Effect and the Backfire Hypothesis

Energy writers who are in the green camp continue to tout their belief in energy efficiency as a major tool in the effort to mitigate global warming. Nuclear critics like Amory Lovins have argued that efficiency produced "negawatts" make nuclear-generated megawatts unneeded. Critics of the negawatts approach have noted that economists believe that energy efficiency actually increases energy use, and have done so since 1865. The classic formulation of this belief is found in William Stanley Jevons book on Coal, and is called Jevons paradox. In more recent research literature, observations of energy use increases following an improvement in energy efficiency is called the "rebound effect." Usually the observed "rebound effect" is less than the decrease in energy use caused by energy efficiency gains, but it appears to be quite a significant phenomena. UK Energy Research Centre has been researching this issue for some time, and two tears ago published a comprehensive report on the topic that reviewed over 500 studies of the rebound effect. The UK Energy Research Centre offered the following press release in connection with the publication of "The Rebound Effect".
Press Release: 01.11.07: 'Rebound Effects' Threaten Success of UK Climate Policy

A major new report from the UK Energy Research Centre uncovers the truth behind energy efficiency and carbon reductions

The UK Energy Research Centre (UKERC) today unveils a major new report on how 'Rebound Effects' can result in energy savings falling short of expectations, thereby threatening the success of UK climate policy.

An example of a rebound effect would be the driver who replaces a car with a fuel-efficient model, only to take advantage of its cheaper running costs to drive further and more often. Or a family that insulates their loft and puts the money saved on their heating bill towards an overseas holiday.

According to the report's chief author, Steve Sorrell, Senior Fellow at UKERC, "Rebound effects have been neglected by both experts and policymakers - for example, they do not feature in the recent Stern and IPCC reports or in the Government's Energy White Paper. This is a mistake. If we do not make sufficient allowance for rebound effects, we will overestimate the contribution that energy efficiency can make to reducing carbon emissions. This is especially important given that the Climate Change Bill proposes legally binding commitments to meet carbon emissions reduction targets. We need to get the sums right."

The difficulty of developing policy to take rebound effects into account is exacerbated by disagreement over the significance of rebound effects. Some believe that they are insignificant, while others argue that energy efficiency measures lead to increased energy consumption - an outcome that has been termed 'backfire'.

The report argues that rebound effects vary widely between different technologies, sectors and income groups so that general statements about the size of such effects can be misleading.

Steve Sorrell: "Rebound effects are notoriously complex. Generally speaking we expect rebounds will be large in energy intensive sectors and smaller for households or small businesses. This is important, since energy efficiency policy usually targets these smaller users."

Rebound effects can be both direct (e.g. driving further in a fuel-efficient car) and indirect (e.g. spending the money saved on heating on an overseas holiday). The evidence is that direct rebound effects are usually fairly small - less than 30% for households for example. Much less is known about indirect effects. However the study suggests that in some cases, particularly where energy efficiency significantly decreases the cost of production of energy intensive goods, rebounds may be larger.

To avoid energy efficiency gains from undermining the benefits to climate policy, the report's authors recommend building 'headroom' into policy targets to allow for rebound effects, raising energy prices in line with energy efficiency improvements or imposing absolute caps on emissions.

Main Report (5MB)

Launch Presentation

More information (technical papers, etc)

Notes to Editors

The report from UKERC is the most thorough and in-depth review of rebound effects ever undertaken, reviewing over 500 papers and reports. It analyses the nature, operation and importance of rebound effects and provides a comprehensive review of the available evidence on this topic, together with closely related issues, such as the link between energy consumption and economic growth.

The UKERC research was led by the Sussex Energy Group (University of Sussex), with contributions from the Surrey Energy Economics Centre (University of Surrey), the Department of Economics at the University of Strathclyde, and the Centre for Energy Policy and Technology at Imperial College.

About the UK Energy Research Centre

The UK Energy Research Centre's mission is to be the UK's pre-eminent centre of research, and source of authoritative information and leadership, on sustainable energy systems. The Centre takes a whole systems approach to energy research, incorporating economics, engineering and the physical, environmental and social sciences while developing and maintaining the means to enable cohesive research in energy. UKERC is funded by the UK Research Councils.

For more information, please contact
Lex Waspe
UKERC Communications Manager
T: +44 (0)20 7594 1573
M: 07974 779 004
Within the last few weeks, the UK Energy Research Centre has offered some revision to "The Rebound Effect " and its supporting documents. The most important conclusion of this research has been that there is strong evidence for the existence of a rebound effect that is less than 100% of the energy savings from efficiency. Indeed researchers found that
There are very few quantitative estimates of economy-wide [rebound] effects, but several studies suggest that these may exceed 50% in some cases.
A 50% + rebound would be very worrisome, and would suggest that energy efficiency has only limited value as a global warming mitigation tool. In addition researchers looked at evidence that there was an "energy backfire", that is an absolute growth of energy demand as a consequence of energy efficiency. They concluded, based on existing studies:
* Empirical evidence is indirect, suggestive and in some cases flawed.
* Hence, the backfire ‘hypothesis’ is not verified
* Arguments and evidence should nevertheless be taken seriously
* Underlying theme is the disproportionate contribution of energy to economic growth
Thus the datum supporting the backfire hypothesis:
Are insufficient to demonstrate its validity, but nevertheless pose an important challenge to conventional wisdom.
Thus the notion that energy efficiency programs can backfire should be taken seriously, even if not proven, Clearly then the value of energy efficiency as a tool to fight global warming is open to rational questioning, and the case for moving forward with energy efficiency programs should be evaluated in light of the potential levels of low cost energy than might be derived from Generation IV nuclear technologies like the LFTR.

My major concern is that while anti-nuclear advocates like Amory Lovins have offered energy efficiency as a tool that renders advanced nuclear power as unneeded in mitigating global warming, yet scientific research raises serious doubt about the effectiveness of energy efficiency. In light of the fact that Lovins appears to withdrawn from the "energy efficiency" debate, energy efficiency advocates ought not use energy efficiency as an established substitute for advanced nuclear technology.


donb said...

The UK Energy Research Centre report states:
To avoid energy efficiency gains from undermining the benefits to climate policy, the report's authors recommend building 'headroom' into policy targets to allow for rebound effects, raising energy prices in line with energy efficiency improvements or imposing absolute caps on emissions.

Well, at least they have the courage to state what many others of the same ilk have left unsaid, i.e., the consumption of energy (and consumption in general) is evil, so we will find a way to make you poorer so you consume less.

I recognize that at times the price of energy will go up. While I may not like it, if I know that the ultimate result is that more energy becomes available, I can accept the increased price.

If the price increase drives me to increase my efficiency so that I better my standard of living, I would like to decide how to use that benefit, thank you very much! This is what a truly free, growing and bountiful society is all about.

Duncan said...

You did a post a while back about upgrading the lighting in your hourse, and how doing so made you realize many areas weren't well lit so you added more lights, then your wife decided that since you were paying less for lighting you could afford an electric clothes dryer instead of using the washline.

Even if the anecdotes were apocryphal, that was the best illustration of Jevon's paradox I've seen.

It seems to me that when people talk about efficiency in the context of negawatts, they are not talking about economic efficiency. I get that feeling whenever I read Secretary Chu's comments, for instance.

A distribution system that cuts electricity losses in half, but costs so much that electricity prices don't come down... isn't providing any economic value.

David Walters said...

Actually we upgraded about 24 of our 30 bulbs to CF and we did save tons of money. In fact, my electric bill was halved. This kind of thing I actually like because there is a direct, immediate, 'visceral' savings when you get your utility bill.

So...figured, looking over the meter reading, that our usage was essentially halved. We don't have air conditioning as no one dies in Pacifica, CA, we have the natural Pacific Ocean "AC" every morning and afternoon in the form of temperature cooling fog.

But...even if everyone does this with the same results, and the residential load is halved, it's still only about 20% of the grid's total load, and, it doesn't take into account *growth*, which is what in large part sunk the state back in 2000 during the energy crisis: not enough power plants.

So now they building *thousands* of MWs of fossil plants, NG run CCGTs, increasing our per-capital CO2. Idiots.

Anonymous said...

For those of you who may not know, Dave Walters operates power plants for a living. When he talks about grid effects and power demands--listen. He knows exactly what he is talking about.

Bill said...

David Walters: "... as no one dies in Pacifica, CA, ...".

No, they die next door in Colma. :-)


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