Energy Efficiency Fallacy

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= The problem with efficiency gains is that we inevitably reinvest them in additional consumption. [1]


Bill St. Arnaud:

"There has been a spate of good articles on the falsehood of energy efficiency in terms of reducing energy consumption and GHG emissions.

I particularly recommend the recent New Yorker article –“The Efficiency Dilemma” and one published by The Break Though Institute – “The Efficiency Illusion”

The bottom line is that while energy efficiency may help an individual organization reduce its energy consumption and GHG emissions and hence save money, on an macro scale it encourages further consumption and greater GHG emissions. This is a result of two phenomena: the rebound effect and Jevons paradox (which are often confused as being the same thing). With the rebound effect, the increased efficiency and reduced cost encourages greater consumption of that same product or service. The rebound effect , however is relatively minor. What is of greater concern is the Jevons Paradox (aka Khazzoom-Brookes postulate) which states that energy efficiency on the micro scale results in greater energy consumption on the macro scale. As we reduce the energy cost of a product or service we make that product accessible to a greater population. Refrigeration is a good example, as documented in the New Yorker article. But the same principle applies to all sorts of diverse products or services such as cloud computing, network equipment, electric vehicles, etc. As we make these products or services more energy efficient we will reduce their cost and drive up demand.

As I have long argued the problem facing this planet is not energy consumption, but GHG emissions. Eliminating energy that produces CO2 directly will have much greater impact on reducing overall GHG than any energy efficiency program. But we have a classic example of the tragedy of the commons with GHG emissions – and this is where governments need to play a role. Funding of energy efficient research makes no sense to my mind. Energy efficiency has such a clear and obvious benefit in reducing costs – that the private sector is well positioned to develop the appropriate solutions. Developing GHG free energy solutions is a much bigger challenge.

Up to now governments have focused on the production side of GHG free energy such as grants for the capital costs of windmills, subsiding solar panels and providing generous feed in tariffs (FIT) that help make these technologies competitive with traditional fossil fuel alternatives. But very little effort has been spent on the consumption side of GHG free energy." (

More Information

  1. Why Energy Efficiency Does not Decrease Energy Consumption