NCPA - National Center for Policy Analysis

The Paradox of Energy Efficiency

November 7, 2012

For decades, automobile manufacturers and energy companies have emphasized their development of energy efficient products. The push for more efficiency stems from the desire to cut fuel and energy costs and help the environment by reducing emissions. Even though there have been technological breakthroughs in fuel and energy efficiency, energy consumption has remained about the same, says Ronald Bailey, a science correspondent at Reason Magazine.

Some researchers claim that there are seven "stabilization wedges" that could curb carbon dioxide emissions from rising. Energy efficiency and conservation has the greatest potential.

However, the auto industry, for example, has done much to cancel out any gains made from making its automobiles more fuel efficient.

  • Since 1980, the average fuel economy of American vehicles has increased only from 23 miles per gallon (mpg) to 27 mpg.
  • This is because the amount of power an engine produces has increased by 60 percent during that time.
  • Furthermore, the average weight of vehicles has increased 26 percent while horsepower has risen by 107 percent.

The reason for this is that there has been an increase in the demand for energy, which has offset any gains in efficiency. As lighting has become cheaper -- thanks in large part to LEDs -- there have been new ways to use it. For example, some offices have illuminated their ceilings with LED virtual skies.

One phenomenon that has been witnessed in efforts to become efficient is called the "rebound dilemma." Essentially, when energy and fuel become more efficient and prices go down, the demand goes up.

For example, the extra money saved from energy costs goes into buying larger houses, which require more energy. Or, drivers may drive longer distances or for longer periods of time because efficiency has made it cheaper to do so. As a result, there may be a higher demand for products like tires, which require more energy to make.

Proponents of conservation argue that the rebound effect does not cancel out the benefits achieved through fuel and energy efficiency. However, the studies used by proponents fail to consider the increased energy use and higher consumption of fuel and energy.

Source: Ronald Bailey, "The Paradox of Energy Efficiency," Reason Magazine, November 2012.


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