Jevons' Paradox and the Perils of Efficient Energy Use

Renewable Oil

It's a given among Peak Oilers and New Urbanists alike that the imminent and permanent return of high oil prices will send convulsions through the suburban American landscape. But it's one thing when professional Jeremiahs like James Howard Kunstler preach this to the converted week after week, and something else when the Urban Land Institute and PricewaterhouseCoopers advise commercial real estate investors to "shy away from fringe places in the exurbs and places with long car commutes or where getting a quart of milk takes a 15-minute drive." Oil shocks will do what urban planners can't seem to and the government won't (through sharply higher gas taxes or putting a price on carbon): force people to live at greater densities.

In books like $20 Per Gallon and Why Your World Is About To Get A Whole Lot Smaller—both published last year, in the wake of 2008's real estate bubble-burst—the end of cheap oil is presented as a good thing, a chance to press the reset button on civilization and live more locally and sustainably. Kunstler goes further in 2005's The Long Emergency and in subsequent blog posts and novels, painting peak oil as a cleansing fire that will burn away exurban places like Pasco County, Florida. Last Wednesday, I drove for hours through the ground zero of Florida's foreclosure crisis, a scrolling landscape of strip malls, auto dealerships and billboards promising motorists that their stock market losses had been someone else's fault (and that you should sue them). The apocalypse would be a small price to pay for no more of this.

How else to explain the hostility directed at Amory Lovins by Kunstler and others? Lovins identified the hard and soft paths of fossil fuels versus conservation and renewables thirty-four years ago, and has since written books like Winning the Oil Endgame and Small is Beautiful, in which he called for a massively distributed, solar-powered "microgrid." But Lovins earned ridicule for his still-unrealized vision of a "hypercar" made of composites and electric drive trains three-to-five times more efficient than existing models. The hypercar, Kunstler wrote, "Would have only promoted the unhelpful idea that Americans can continue to lead urban lives in the rural setting." (To add insult to injury, Lovins' Rocky Mountain Institute is accessible only by car.)

Why unhelpful? In a phrase: Jevons' Paradox. Nearly a century before the geologist M. King Hubbert began calculating peak oil, the economist William Stanley Jevons discovered, to his horror, peak coal. In The Coal Question, published in 1865, Jevons raised the questions which haunt sustainability advocates to this day: "Are we wise in allowing the commerce of this country to rise beyond the point at which we can long maintain it?" He estimated Britain's coal production would reach a peak in less than a hundred years, with calamitous economic and Malthusian consequences. The engine of coal's demise would be the same invention that was created to conserve it: the steam engine. But it made burning coal so efficient, that instead of conserving coal, it drove the price down until everyone was burning it. This is Jevons' Paradox: the more efficiently you use a resource, the more of it you will use. Put another way: the better the machine—or fuel—the broader its adoption.

A corollary is the Piggy Principle: instead of saving the energy conserved through efficiency, we find new ways to spend it, leading to greater consumption than before. No wonder Kunstler is alarmed that a hyper-efficient hypercar would lead to hyper-sprawl—it's only been the pattern throughout all of human history. Maybe the worst thing that could happen to new urbanism would be an incredibly efficient new car (or fuel) that allows Americans (and, increasingly, the Chinese) to carry on as before, as an oil glut allowed us to do between 1979 and 2001. Crisis is on their side.

Jevons' peak coal reckoning was postponed by a new fuel source discovered a few years earlier in the Pennsylvania hills: oil. Today, there is another liquid fuel source on the horizon, provided it can scale: next-generation biofuels. Peak Oilers take it as an article of faith that biofuels won't work (and for now they have both physics and economics in their corner). But reading books like the ones mentioned above (or watching films like The End of Suburbia and Collapse) one gets the feeling they're actively rooting against them as well. "A crisis is a terrible thing to waste," Paul Romer once said. Especially if you waste one by solving it and forgetting it ever happened.

Energy, transportation and urbanism are inextricably entwined, but as far as I can tell, no one has asked the founders of biofuel startups what kind of world they envision if they succeed. The assumption is more of the same. Only more of it. Last Thursday, I was in Washington D.C. for a briefing sponsored by the Biotech Industry Organization (a lobbying group) to update lawmakers on their progress. Executives from Solazyme, Algenol, HP Biopetroleum, Gevo, and Coskata took turns explaining how sunlight/sugars/miscanthus/waste products would be converted by algae/microorganisms/yeast into oil/ethanol/isobutanol. Each laid out plans to leave the lab behind and begin scaling up production to millions of gallons per year.

The urban consequences of a potentially endless, cheap(er), greener source of liquid fuel weren't on the agenda that morning, but I did bring it up at breakfast with Jonathan Wolfson, the CEO and co-founder of Solazyme. His company hopes to produce oil using algae (albeit by brewing it in fermenters instead of growing it in ponds). Solazyme touts resulting biodiesel is the only one of its kind that can be poured into a diesel gas tank unblended.

Peak oil's big crunch "isn't creative destruction," he said. "It's destruction destruction." Sketching two circles on his place setting, one large and one small, he explained the large represented the roughly 150 billion gallons of gasoline Americans consumed last year, and the small one 50 billion gallons of diesel. His goal wasn't to produce or replace gasoline, he said. Electric cars would do that—ideally electric-biodiesel hybrids.

He was unfamiliar with Jevons' Paradox, but grasped the dilemma immediately. "Whether it's because of that, or whether it's because the world is projected to grow to 9 billion people by 2050, one way or another you have the same end problem, which is that we need more moving forward, not less," he said. "We need more energy, and we need more food, not less of either." He hoped algal oils would offer a solution to both—Solazyme has already begun selling algae-based nutritional supplements, and announced last week that it's working with Unilever to explore replacing petrochemicals in its soaps.

"I'm very receptive to urban planning," he continued. "I live in San Francisco, and I live in a place where I can walk to the market and walk to a movie, and I don't need to drive around the city and very often I don't. What I'm not receptive to is when you take that argument to the Luddite level. There's no really important technology that's been developed that couldn't be used in a negative way. But that's not a valid argument against new technology. Biofuels can either be very good or very bad, depending on where your biomass comes from, but they're like everything else. When you say 'Okay, because of the worst case, we don't want this technology. So we don't want to look at alternatives to liquid petroleum, because we know petroleum is going to run out, and what we really believe is that everyone should be walking anyway.' Well guess what? That's just not realistic."

Two days earlier, Accenture published a survey of 9,000 individuals in 22 countries about their attitudes on energy: 90% were concerned by rising energy costs, and 76% by the prospect of shortages; 83% were concerned by climate change, and 89% thought it was important to reduce their country's reliance on fossil fuels. But barely a third thought they should do so by using less energy; the remainder believed their governments should find new sources, stat.

"We cannot address climate change or energy security unless we both create new sources of clean energy and reduce consumer demand," said the report's primary author. "But our survey shows that consumers do not think lower energy use is a priority."

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7 Comments

  • Peter Combs

    Jevons argued that technological improvements could not be relied upon to reduce fuel consumption. Energy conservation by consumers is outside the scope of his 19th century economic observation. Conservation was not even on the map in the mid-1800's, and it is only catching on as a concept and lifestyle in our culture in the last 20 years. To date, we don't even have a compelling graphic of the notion of energy conservation, which aptly enough is depicted by cartoon characters for children. You can't teach what you can't envision. The neuro-economists explanation for the difficulty of changing our behavior as the offshoot of our brain being hard-wired to value the tangible 50% more than the intangible. The smell of fresh clean towels and teh sparkle of clean dishes calls us to "push the start button now!"

  • Cameon Murray

    Agree. Jevons paradox makes pursuing energy efficiency counter-productive. And I agree with the people you mention who think Amory Lovins is a bit of a crack-pot. I have a neat little article outlining how the flow-on effects, called rebound effects, cause jevons paradox.
    http://ckmurray.blogspot.com/2...

  • Hagay Vider

    As an architect I support new urbanism, not because it saves fuel, but because it creates a better, more humane environment. When people are exposed to it, even die hard suburbanites, they immediately love it.
    Saving transportation fuel is only a minor part of the equation. Over 40% of the energy we consume is in buildings; building and then operating/occupying them. Making building construction and operation only marginally more energy efficient will save much more fuel than all the electric/bio-fuel/nat-gas/hydrogen transportation solutions tossed up, at a significantly lower cost.

  • Robin Kodner

    Nice answers to hard questions about the place of algae biofuel by Jonathan Wolfson. I like the question "Energy, transportation and urbanism are inextricably entwined, but as far as I can tell, no one has asked the founders of biofuel startups what kind of world they envision if they succeed"
    I wrote answer to that here: http://algaeenergy.blogspot.co...

  • Jym Allyn

    Greg,

    Absolutely brilliant article. Thank you.

    As we complain about competition from China and India and cheap labor coming from illegal immigrants from Mexico, we fail to remember that until about 150 years ago 90% of the people on our planet never traveled more than 20 miles from their birthplace during their entire lives.

    Globalization is not only world-wide communication and world-wide availability of goods and services. It is also world-wide transportation of goods and people. Efficient transportation is a major factor in reducing the cost of goods and increasing the value of those goods. In the long-run, everyone benefits. The immediate goal needs to be our ability to reduce the pain and costs of the short-run.

  • Ron Brown

    Biofuels are a joke. Most of them are no more "green" I can fly to the moon.

    Biofuels will remain a niche market requiring massive subsidies. And rather than using food for fuel, why not use fuel for fuel? The US and the world has massive natural gas deposits and nat gas is about 1/17th the cost of an equivalent amount of oil right now. And yet this author seriously thinks biofuels (even more expensive than oil) is the way forward? Criky. That's like suggesting instead of eating bread, we should eat cake...