National Decarbonization, 1971 - 2006
An Original Breakthrough Institute Investigation

Introduction

Driving down global emissions of climate destabilizing carbon dioxide by at least 50 percent by 2050 may be necessary to avoid the most dangerous impacts of global climate change (IEA 2010). To achieve these deep emissions declines while supporting continued economic growth and expanded energy access, particularly in the world's emerging economies, the world's economies must rapidly decarbonize, reducing the amount of CO2 produced for each unit of economic activity at greater than 4 percent per year (IEA 2010).

That may not sound like much, but such rates are more than three times greater than the 1.3 percent per year global average rate sustained since the 1860s (Nakicenovic 1997).

Even at a national scale, achieving a 4 percent per year or greater rate of decarbonization is unprecedented in recent history, according to new analysis from the Breakthrough Institute, which examines historic decarbonization rates among developed nations in the Organization for Economic Cooperation and Development (the OECD).

Nonetheless, by examining the rates of decarbonization among these OECD nations, this analysis provides historic evidence regarding the fastest sustained rates of decarbonization achieved by developed economies to date, while shedding light on key drivers of decarbonization. Insights from the nations that have achieved the fastest reductions in carbon intensity will be critical to formulate effective policies to accelerate global decarbonization and climate mitigation.

Continue reading "Which Nations Have Reduced Carbon Intensity the Fastest?" »

Quick quiz: If you improve the productivity of energy use at a steel plant in China, will that plant save energy, or produce and sell more of its now-cheaper steel? If ultra-efficient lightbulbs spread across rural India, will we see energy consumption there decline or rise?

With about two-thirds of global energy consumed in the refinement and transport of energy and the production of goods and services and over 90 percent of growth in energy demand spurred by the so-called "Rise of the Rest" in the emerging economies, these two examples should be at the front of our minds as debate spreads across the blogosphere about rebound effects -- the economic dynamics by which energy efficiency improvements lead to a rebound in demand for now-more-efficient energy services (see an FAQ on rebound here).

Author and reporter David Owen's new book, The Conundrum has sparked this latest round of rebound debate (see e.g. Bryan Walsh, Matt Yglesias, and David Roberts). Much of this debate has (understandably) centered around some of the most readily understandable examples of rebound drawn from our personal experiences -- efficient cars, appliances, home electronics, etc.

Unfortunately, these examples of personal energy use in wealthy countries are also precisely the cases where rebound effects are the smallest, leading some observers of this debate to conclude rebound is a smaller deal that it truly is.

Witness the focus on the so-called "Prius Fallacy" which Time's Bryan Walsh describes as this:

[A]s we become more efficient at using energy, we can save money -- which then allows us to use more of that energy than we did before. Picture it this way: you trade in your gas-guzzling SUV for a new efficient hybrid, end up paying less per mile for gasoline, and use some of the savings to drive more than you did with the SUV. The efficiency has rebounded.

Its a good clear explanation of how rebound effects work, but unfortunately, it focuses on one of the sectors where rebound effects are smallest: consumer demand for end-use energy services in rich countries.

Continue reading "Energy Efficiency, 'Rebound,' and the Rise of the Rest" »

By Dr. Harry Saunders, Breakthrough Institute Senior Fellow

Recent posts by the CO2 Scorecard group claim to have discredited the analysis on rebound effects in industrial sectors of the US economy presented in one of my recent papers--let me here call it "Saunders." The authors offer an analysis of their own said to "devastate" the results I have reported there. Herewith is my response.

The Stakes

It is worth reminding readers of the stakes here. The energy consumption forecasts relied on by the IPCC, the IEA and McKinsey ignore rebound effects, or--to be maximally generous--treat them very inadequately. To the extent ignoring rebound effects results in underestimates of future energy use, it means we have less time than is generally believed to devise climate change solutions. This is surely problematic, but no serious individual would dispute the contention that uncomfortable reality must always trump wishful thinking. I believe rebound effects are significant and quite large, and I believe the peer-reviewed literature, including my own extensive contributions to that literature, supports this view. Unfortunately.

And to be absolutely clear: energy efficiency is a good thing (for one thing increasing economic welfare) and must be aggressively pursued; this has always been my position. It's just that it may not deliver the large reductions in energy use many (including myself) would hope for.

Editors note: for more background and reading on rebound effects see...

• An introductory FAQ on rebound effects, (Breakthrough Institute).
  
• "Does energy efficiency lead to increased energy consumption?," by Jesse Jenkins and Harry Saunders, Making It (UN Industrial Development Organization).
  
• "Energy Emergence: Rebound and Backfire as Emergent Phenomena," a comprehensive literature review on rebound effects (Breakthrough Institute)

Problems with the CO2 Scorecard Analysis

In light of the above, the CO2 Scorecard posts on this subject (1 and 2) are disappointing and disheartening. But they require a response, even if only to defend the honor of my fellow scholars in this field. A complete dissection of the CO2 Scorecard analysis would make this post too long. Rebound analysis, done properly, is a highly technical undertaking. The approach here is to show a handful of the serious problems with the authors' analysis by way of listing five points, with links to an appendix containing the technical foundation for these points. Those interested in further evaluating this foundation can link to the technical discussion; those interested only in the claims made here can skip the full technicalities. Either way, as you will see, it is difficult to escape the conclusion that the authors of the CO2 Scorecard analysis are guessing at what they hope are problems with the Saunders analysis but then have not bothered to check if their guesses are actually right...

Continue reading "CO2 Scorecard Misrepresents and Misunderstands Efficiency Rebound Research" »

Updated 1/6/12

Automotive engines steadily improved in efficiency by roughly 60 percent from 1980 to 2006, according to a new study by MIT economist Christopher Knittel. That means we could already be driving cars that get an average of 37 miles per gallon (MPG), well above today's average of 27 MPG. The catch, points out Reason's Ronald Bailey: we'd have to be driving cars with the same average weight and power as the average car on the road in 1980.

Instead, consumers took the majority of the improvements in engine efficiency over the last three decades to enjoy larger and more powerful cars (e.g. increasing their use of energy services) rather than reduce energy use, according Knittel's paper, published in American Economic Review.

As Reason's Bailey notes, "This seems an example of the energy rebound effect in which increased energy efficiency encourages people to use even more energy; in this case to fuel bigger and peppier cars."

Indeed it does. (Click here for an introductory FAQ to rebound effects)

If vehicle weight and average power had held constant from 1980 to 2006, Knittel estimates that vehicles today would be roughly 60 percent more efficient than they were in the '80s. Instead, average fuel economy of new vehicles sold in the United States improved just 15 percent over this period.

The reason is clear: consumers chose to take these improvements in engine efficiency as a major increase in average vehicle weight, which rose 26 percent, and a doubling of average horsepower, which rose 106 percent from 1980 to 2006.

"Most of that technological progress has gone into [compensating for increased] weight and horsepower," notes Knittel.

Continue reading "MIT Study: Rebound Effects Erode Auto Efficiency Gains" »

Writing for Conservation Magazine, reporter John Carey spotlights an ongoing debate over "rebound effects" simmering amongst academic and energy policy making communities. "The Efficiency Catch-22" notes that as economies and consumers become more efficient, demand for the services we derive from energy rebounds, eroding some or even all of the initially expected energy reductions.

As Carey writes:

Now, new studies .. are again suggesting that modern efforts to improve energy efficiency could lead to big rebound effects; they're touching a nerve and prompting debate in energy and climate circles. Governments and think tanks have launched studies of the paradox, and stories in the New Yorker and New York Times have even suggested that energy efficiency, far from being a savior, could actually be bad for the environment. "The stakes are actually pretty high," says Roland Geyer, professor of industrial ecology at the University of California, Santa Barbara, and coauthor of a recent review of the rebound literature.

Dr. Geyer is right: the stakes are quite high.

As Breakthrough Institute documents in our comprehensive review of the academic literature on energy efficiency and rebound effects, "Energy Emergence" (February 2011), most climate mitigation strategies and national energy policies assume that significant gains can be made in reducing greenhouse gas emissions and national energy imports at little to no cost or even positive economic gain, chiefly by pursuing "below-cost" energy efficiency measures -- improvements that more than pay for themselves through energy savings over time. The International Energy Agency, for example, counsels global policy makers that energy efficiency can accomplish more than half (58 percent) of all global greenhouse gas emissions reductions needed by 2050 in order to put the world on track to a stable climate (see image at right).

Yet rebound effects mean that for every two steps forward we take towards climate mitigation via below-cost efficiency measures, we take one or more steps backwards through rebound effects. And conventional climate mitigation scenarios, including the IEA's and IPCC's, ignore or incompletely and improperly consider rebound effects in their analysis.

If we follow such a course, and ignore rebound effects, the globe will be dangerously over-reliant on energy efficiency to reduce greenhouse gas emissions. Even if rebound effects erode just one-third to one-half of the initially expected savings, the globe could fall 20 to 30 percent short of needed emissions cuts, if the IEA's mitigation plan is followed. Further, such a shortfall means the time available to devise additional remedies is reduced, increasing the urgency of the clean energy supply-side challenge.

Continue reading "Does Efficiency Present a Catch-22?" »

In an all-to-predictable swipe at new fuel economy standards currently being negotiated by the White House and the auto industry, the arch-conservative Heritage Foundation invokes rebound effects as the latest reason to oppose increased auto efficiency:

When it comes to greenhouse gas emissions, The Atlantic's Megan McArdle notes that fuel efficiency standards will reduce carbon dioxide emissions, "but not by as much as advertised, because more fuel efficient cars make driving cheaper, so people will do more of it. This 'rebound' effect robs about 25% of gains, and also means more congestion, and more wear-and-tear on roads." The rebound effect also takes away some of the estimated cost savings and oil reduction.

Let's ignore for a moment the rich irony inherent in the Heritage Foundation expressing any concern about the efficacy of auto efficiency standards in cutting carbon emissions...

Rather, let's focus on the economic implications of rebound effects, which Heritage gets exactly backwards here. If improved vehicle efficiency triggers a rebound in demand for the energy services derived from personal transportation, that rebound represents an unequivocal improvement in economic welfare at the individual level and a sign of improved productivity and growth at the economy-wide level. Last we checked, Heritage was all for economic growth and improved individual welfare.

Continue reading "Heritage Foundation Gets Rebound Effect Backwards in Fuel Economy Attack" »

In the pages of United Nations Industrial Development Organization (UNIDO)'s Making It quarterly magazine, Breakthrough Institute Energy and Climate Policy Director Jesse Jenkins and Senior Fellow Harry Saunders published an article explaining the impact and implications of the energy demand "rebound effect" spurred on by energy efficiency.

The article builds upon the Breakthrough Institute's "Energy Emergence: Rebound and Backfire as Emergent Phenomena", a comprehensive literature review pointing to the expert consensus and evidence that below-cost energy efficiency measures drive a rebound in energy consumption that erodes much of expected energy savings.

Read the full article: "Hot topic: Does energy efficiency lead to increased energy consumption?," Making It June, 2011

In the article, Jenkins and Saunders argue:

Truly cost-effective energy efficiency measures lower the effective price of the services derived from fuel consumption - heating, cooling, transportation, industrial processes, etc. - leading consumers and industry alike to demand more of these services. There are other indirect and economy-wide effects as well, as consumers re-spend money saved through efficiency on other energy-consuming goods and services, industrial sectors adjust to changes in the relative prices of final and intermediate goods, and greater energy productivity causes the economy as a whole to grow. Collectively, these economic mechanisms drive a rebound in demand for energy services that can erode much - and in some cases all - of the expected reductions in total energy use, along with much-hoped-for reductions in greenhouse gas emissions.

Furthermore, rebound effects are often most pronounced in the productive sectors of the economy, including industry and agriculture, as well as throughout the world's emerging economies.

...

Conventional climate mitigation strategies count on energy efficiency to do a great deal of work. For example, the IEA in a global climate stabilization scenario published by the agency in December 2009, estimates that efficiency measures could account for roughly half of the emissions reductions needed. Yet, from a climate or global resource conservation perspective, rebound effects mean that for every two steps forward taken through greater efficiency, rebounds take us one (or more) steps backwards. This is particularly true throughout the developing world, and in the productive sectors of the global economy.

A clear understanding of rebound effects therefore demands a fundamental re-assessment of energy efficiency's role in global climate mitigation efforts.

A continued failure to accurately and rigorously account for rebound effects risks an over-reliance on the ability of efficiency to deliver lasting reductions in energy use and greenhouse gas emissions. Without a greater emphasis on the other key climate mitigation lever at our disposal - the de-carbonization of global energy supplies through the deployment and improvement of low-carbon energy sources - the global community will fall dangerously short of climate mitigation goals.

At the same time, however, we can re-affirm the role of energy efficiency efforts in expanding human welfare and fueling global economic development. Unlocking the full potential of efficiency may very well mean the difference between a richer, more efficient world, and a poorer, less efficient world. The former is clearly the desirable case - even if the world uses more or less the same amount of energy in either scenario.

The pursuit of any and all cost-effective efficiency opportunities should thus continue as a key component of an efficient course for global development, even as we reconsider the degree to which these measures can contribute to climate mitigation efforts.

You can also find an introductory FAQ on the rebound effect here.

By Harry Saunders and Jesse Jenkins

Update - 9/2/2011 - Please see corrigendum appended to this post

A recent article in Electricity Policy by Natural Resource Defense Council (NRDC) analysts (David Goldstein et al.) purports to offer a fresh look at the question of energy consumption rebound resulting from cost-effective efficiency improvements. But rather than advancing the ongoing discussion about rebound among serious energy analysts, NRDC attempts to turn back the clock, relying on outdated and recycled citations dating from as far back as the early 1990s and asserting that conclusions about rebound effects must be testable against "rigorously framed hypotheses" while failing to apply that standard to their own claims regarding the historic success of efficiency policies in reducing energy use.

In reviewing their article, it is difficult to escape the feeling that Goldstein and his colleagues simply ignore any recent work that is inconvenient to their premise, including a rich trove of literature and inquiry into rebound effects published in recent years. It is particularly revealing that the authors restrict their analysis to those sectors of the global energy economy where rebound effects appear to be least significant--end-use consumption in rich, developed economies. In so doing they ignore both the productive sectors of the economy responsible for two-thirds of the global energy use and the emerging economies driving the vast bulk of global energy demand growth--in short those sectors of the global energy economy in which the vast majority of current and future energy demand is concentrated and in which the rebound literature suggests rebound effects are likely to be greatest.

In fact, NRDC's contention that "rebounds at the economy-wide level are trivially small" is controverted by virtually every review of the evidence for energy efficiency rebound conducted in recent years. So while NRDC attempts to re-litigate a decades-old debate, for serious analysts and policymakers, particularly in Europe, this debate, about whether rebound exists and is non-trivial, is effectively over. The focus now is on developing a richer understanding of when and where such effects operate, at what scale, and, increasingly, a focus on what, if anything, can be done to mitigate such phenomena. The UK government, for example, now explicitly considers at least one rebound mechanism when planning efficiency policies. And the European Commission funded a large study in 2011 that begins from the consensus that rebound effects are real and significant, and explores what can done about it.

In the United States, the tone seems to be shifting and signs are appearing that energy researchers are beginning to realize they need to deal forthrightly with this issue. Many who before quite adamantly denied the rebound phenomenon now treat it more cautiously as the academic substantiveness of multiple recent studies becomes apparent. Small working groups of scholars are forming to address the gaps in our knowledge. The Center for Climate and Energy Decision Making at Carnegie Mellon University will soon host a gathering of scholars to define the research questions that call out for serious inquiry. And the latest Stanford Energy Modeling Forum study on energy efficiency (EMF, 2011), while it still overlooks much of the recent literature (perhaps because it was framed a few years ago) nonetheless acknowledges key rebound mechanisms.

The critical question really isn't whether or not rebound effects exist -- as basic economic theory dictates, they most certainly do -- but rather how large they may be in various contexts.

Truly cost-effective energy efficiency measures lower the effective price of the services derived from fuel consumption - heating, cooling, transportation, industrial processes, etc. We know that economic actors react in complex ways to changes in the relative and absolute prices of various goods and services, and in particular, that when prices fall, consumers and industry alike demand more of these services, all else being equal. Other indirect and economy-wide effects can result from efficiency improvements as well, as consumers re-spend money saved through efficiency on other energy-consuming goods and services, industrial sectors adjust to changes in the relative prices of final and intermediate goods, and greater energy productivity causes the economy as a whole to grow. Collectively, these various mechanisms are known as "rebound effects" as they drive a rebound in demand for energy services that significantly erodes reductions in total energy use otherwise expected from efficiency improvements, along with much-hoped-for reductions in greenhouse gas emissions. In rough terms, for every two steps forward we may take through efficiency, rebound effects take us one (or more) steps backwards.

(Read an introductory FAQ on rebound here)

Unfortunately, conventional forecasts of energy use and the reductions possible through efficiency measures routinely ignore many (if not all) of the various rebound mechanisms. To the extent rebound phenomena are non-trivial, the implication is that the traditional forecasts of global energy use on which so much of climate change policy is reliant may seriously understate the scale of the challenge by ignoring or improperly treating rebound, meaning we have less time than we think to devise climate solutions.

NRDC's entry into this high-stakes debate disappoints on the methodology side, as we discuss in detail below. But the article also reads like an effort to turn back the clock to a time five to ten years ago when many still dismissed the rebound phenomenon as irrelevant, the province of a few fringe theorists, perhaps. This finds its reflection in the outdated citations the analysts rely on, with the most frequently cited report dating from 2005 (IEA/Geller) and reliant in turn upon Greene (1992), itself a survey of even older literature.

The field has progressed substantially since then--especially in Europe.

Perhaps triggered by the exhaustive UK Energy Research Center study of rebound led by Steve Sorrell (2007, 2009), inquiry into rebound effects has since seen noteworthy advances overseas. Significant funding in Europe is now going to researchers examining the problem through multiple analytic methods, and the fruits of these labors are appearing monthly in the literature.

In a statement that NRDC's analysts clearly did not take to heart, Sorrell concluded his rigorous assessment of the literature in 2007 with this statement:

"It would be wrong to assume that, in the absence of evidence, rebound effects are so small that they can be disregarded. Under some circumstances ... economy-wide rebound effects may exceed 50% and could potentially increase energy consumption in the long-term. In other circumstances ... economy-wide rebound effects are likely to be smaller. But in no circumstances are they likely to be zero."

In 2011, one of your authors led another comprehensive survey of the field (Jenkins et al.), which concludes:

"Rebound effects are real and significant and combine to drive a total, economy-wide rebound in energy demand with the potential to erode much (and in some cases all) of the reductions in energy consumption expected to arise from below-cost efficiency improvements."

While both literature reviews put the state-of-the-art in the field at NRDC's fingertips, their analysts unfortunately opt to merely cite selectively from both works, while ignoring the broad consensus that has developed in the academic literature.

We suggest the NRDC would be better advised to instead climb on board and move without delay up this learning curve. The bright and committed staff and analysts at NRDC have much to contribute to the understanding - and management - of rebound effects.

But as it stands, there are several methodological difficulties with the current NRDC analysis. Two are central:

• First, the NRDC paper hangs on an effort to construct and examine "rigorously-testable hypotheses" of rebound, a method they fail to appropriately utilize, while eventually falling afoul of their own requirement for testability of hypotheses in their effort to prove the historic success of efficiency policies in reducing energy use.


• Second, the authors make the common error of focusing their arguments on the smallest part of the energy economy--end-use consumption in rich, developed economies. This means they ignore both the productive sector of the economy responsible for two-thirds of the global energy use and the emerging economies driving the vast bulk of global energy demand growth--and the different-in-kind rebound mechanics in play in both places. In such sectors, the shadow of Jevons still lurks (see Jenkins et al. 2011 for survey of key literature).

Continue reading "Rebound and Rigor: NRDC's Entry into Rebound Effect Debate Stuck in the Past " »

I've said it before and I'll say it again: when it comes to the global climate challenge, as goes China, so goes the world.

Driving that aphorism home, co2scorecard.org, a not-for-profit project that closely tracks global greenhouse gas emissions, now reports that China's CO2 emissions increased by 906 million tons in 2009 -- the second largest annual increase for any country in recorded history. China's soaring emissions were enough to completely offset the drop in emissions wrought by the economic havoc plaguing much of the Western world (see graphic below).

China's unprecedented surge in CO2

As Goes China, So Goes the World: Soaring CO2 emissions from energy use in China drive global greenhouse gas trends (click image to enlarge; source: co2scorecard.org)

To put this unprecedented 5 billion ton increase in annual CO2 emissions in context, Mr Afsah and colleague Kendyl Salcito note that during the 14-year long post-war boom period of 1959-1973, during which U.S. CO2 emissions rose each year, America's annual output of CO2 jumped by only 2 billion tons.

Continue reading "Climate Challenge Hinges on Fueling China with Clean and Cheap Energy" »

On February 17th, Breakthrough Institute released a new, comprehensive survey of the literature and evidence concerning the rebound effects triggered by many energy efficiency improvements.

"Energy Emergence: Rebound and Backfire as Emergent Phenomena" explains why energy efficiency measures that truly 'pay for themselves' will lower the cost of energy services -- heating, transportation, industrial processes, etc. -- driving a rebound in energy demand that can erode a significant portion of the expected energy savings and climate benefits of these measures.

This new set of Frequently Asked Questions explains rebound effects, how they operate, what kinds of energy efficiency improvements trigger bigger or smaller rebounds, and why coming to terms with the full scale of rebound challenges the heart of many contemporary climate mitigation strategies.

You can download the full "Energy Emergence" report here, or download and view a Power Point briefing on the report here.

Click any question below to view the answer...

Q: What is a "rebound effect?"

Q: So do rebound effects wipe out all of the energy savings from efficiency improvements?

Q: So what's the big deal? We still make progress right? Why do rebound effects matter?

Q: But I've always heard that rebound effects are really small. Amory Lovins has written that "we are observing only very small rebound effects (if any at all) in the United States," for example. He says that we don't drive our cars twice as much just because they are twice as efficient, for example. How big a deal is this?

Q: So how large would rebound be if we improve end-use consumer energy services like personal transportation or home heating or appliances?

Q: Should we expect rebounds to be the same in rich and poor nations?

Q: What about industrial efficiency improvements? Does making a business or a factory more efficient trigger energy demand rebound?

Q: What happens if we pursue efficiency improvements across an entire sector or economy? If we make the entire U.S. economy more efficient, for example, should we still expect rebound effects?

Q: When is backfire likely to occur? Are there times when rebound wipes out ALL of the savings from energy efficiency?

Q: Are you saying energy efficiency is a waste of time then? Are you arguing against pursuing efficiency?

Q: Are you saying that rebound effects are the reason energy use has continued to rise? Isn't energy use just growing because the economy is growing and richer people are using more energy?

Q: But we aren't capturing all the efficiency opportunities out there. If we work harder at efficiency, can't we out pace the rate of economic growth and finally decouple the economy from consuming ever more energy?

Q: Are rebound effects peculiar to energy? Does the same thing happen for labor or other materials

Q: Are "Rebound Effects" the same as the "Jevon's Paradox"?

Q: Do all energy efficiency improvements trigger rebound effects?

Q: I read a blog post by staff from the Natural Resources Defense Council who said that your report "blames a host of evils on efficiency, but fails to back up their accusations with facts." Is that true?

Do you have your own questions that aren't answered here? Please leave your question in the comments and we'll do our best to answer.

Breakthrough Institute founders Ted Nordhaus and Michael Shellenberger issued the following statement along with the release of a new Breakthrough report, "Energy Emergence: Rebound and Backfire as Emergent Phenomena."

Today Breakthrough Institute releases a new report finding extensive evidence that a large amount of the energy savings from below-cost energy efficiency are eroded by demand rebound, and that in some cases the rebound exceeds the savings, resulting in increased energy consumption from efficiency, known as backfire.

Leading government and international agencies, including the International Energy Agency, the United Nations Intergovernmental Panel on Climate, and private consultancies such as McKinsey, have ignored or dismissed the strong evidence for rebound and even backfire in the peer-reviewed academic literature, resulting in climate mitigation scenarios that conclude that large emissions reductions can be achieved through greater efficiency. These agencies must, in future studies, take the evidence into account when constructing mitigation scenarios or risk a dangerous over-reliance on energy efficiency in climate mitigation strategies.

Below-cost energy efficiency is critical for economic growth and should thus be aggressively pursued by governments and firms. However, it should no longer be considered a simple and direct way to reduce energy consumption or greenhouse gas emissions.

Rebound and backfire could be mitigated through raising the price of energy. However, given the tight relationship between energy consumption and economic growth, climate mitigation must focus on cutting the relationship between energy consumption and emissions, which means moving to low-cost, zero-carbon energy sources.

There is a large expert consensus and strong evidence that below-cost energy efficiency measures drive a rebound in energy consumption that erodes much and in some cases all of the expected energy savings, concludes a new report by the Breakthrough Institute. "Energy Emergence: Rebound and Backfire as Emergent Phenomena" covers over 96 published journal articles and is one of the largest reviews of the peer-reviewed journal literature to date.

Readers in a hurry can download Breakthrough's PowerPoint demonstration here or download the full paper here. An introductory FAQ can be found here, and is a good starting point for readers interested in rebound effects.

In a statement accompanying the report, Breakthrough Institute founders Ted Nordhaus and Michael Shellenberger wrote, "Below-cost energy efficiency is critical for economic growth and should thus be aggressively pursued by governments and firms. However, it should no longer be considered a direct and easy way to reduce energy consumption or greenhouse gas emissions." The lead author of the new report is Jesse Jenkins, Breakthrough's Director of Energy and Climate Policy; Nordhaus and Shellenberger are co-authors.

The findings of the new report are significant because governments have in recent years relied heavily on energy efficiency measures as a means to cut greenhouse gases. "I think we have to have a strong push toward energy efficiency," said President Obama recently. "We know that's the low-hanging fruit, we can save as much as 30 percent of our current energy usage without changing our quality of life." While there is robust evidence for rebound in academic peer-reviewed journals, it has largely been ignored by major analyses, including the widely cited 2009 McKinsey and Co. study on the cost of reducing greenhouse gases.

Continue reading ""Energy Emergence: Rebound and Backfire as Emergent Phenomena" - Report Overview" »

By Michael Shellenberger, Ted Nordhaus, and Jesse Jenkins

If there's one thing everyone knows for certain, it's that energy efficiency reduces energy consumption. President Obama, Steven Chu, Fortune 500 chieftains, Silicon Valley VCs, the U.N. and McKinsey all say it.

Why, then, does ever-greater efficiency go hand-in-hand with ever-greater energy consumption? In this week's New Yorker, journalist David Owen explains this apparent paradox. The essay (excerpted below) is as fascinating as anything written by Malcolm Gladwell. And the implications for energy and climate policy are of great significance.

Continue reading "The Efficiency Illusion" »

By Michael Shellenberger and Ted Nordhaus

Cover for the Oct. 28, 2010 issue

An abridged version of this article appears in the October 28, 2010 print edition of The New Republic (and online here, subscription required)

In August 2008, then-candidate Barack Obama traveled to Lansing, Michigan, to lay out an ambitious ten-year plan for revitalizing, and fundamentally altering, the American economy. His administration, he vowed, would midwife new clean-energy industries, reduce dependence on foreign oil, and create five million green jobs. "Will America watch as the clean-energy jobs and industries of the future flourish in countries like Spain, Japan, or Germany?" Obama asked. "Or will we create them here, in the greatest country on earth, with the most talented, productive workers in the world?"

Two years later, the answer to that second question appears to be no. Obama's environmental agenda is in tatters. His green jobs plan has done little to make a dent in unemployment, which persists at close to 10 percent. Obama's signature environmental initiative, cap-and-trade, died in the Senate in July. And, during the first year of Obama's tenure, China massively outspent the United States on clean-energy technology.

The story of how Obama's green agenda came up empty is more complicated than the one conventionally told by Democrats and greens, who imagine that cap-and-trade would have been transformational had Republicans and global-warming deniers not gotten in the way. In truth, the president's strategy was flawed from the start. Cap-and-trade would not have birthed a domestic clean-energy economy -- indeed, it wasn't designed to. Meanwhile, the administration's green stimulus spending was split between short-term, if worthy, investments in green technology, to which far too little money was allocated, and over-hyped public-works projects that would never have delivered the new industrial economy Obama promised as a candidate.

Continue reading "Green Jobs for Janitors: How Neoliberals and Green Keynesians Wrecked Obama's Promise of a Clean Energy Economy" »

Turns out that decades of energy efficient lightbulbs and Energy Star appliances haven't led to reductions in energy consumption in the average household, but they have given the average American relatively more disposable income to devote to new (energy-guzzling) gadgetry.

As David Fahrenthold reports in the Washington Post:

The amount of energy that the average American requires at home has changed little since the early 1970s -- despite advances in technology that have made many home appliances far more energy efficient...

But on a per-capita basis, Americans still require about 70 million British thermal units a year to heat, cool and power their homes, just as they did in 1971...

A key reason, experts say, is that American homes are getting bigger, which means more space to heat and cool. And consumers are buying more and more power-sucking gadgets -- meaning that kilowatts saved by dishwashers and refrigerators are often used up by flat-screen televisions, computers and digital video recorders.

These trends "have balanced each other out. It's been a wash, basically," said Lowell Ungar of the nonprofit Alliance to Save Energy.

Continue reading "In 40 Years of Energy Efficiency Improvements, No Change in Household Energy Consumption" »

One of the most curious facts about energy is that economies continue to use more of it even as they use it more efficiently. This strikes us as strange because it has become an article of faith that making cars, buildings, and factories more energy efficient is the key to cheaply and quickly reducing energy consumption, and thus pollution.

But energy experts have never seen this as particularly mysterious. As energy historian Vaclav Smil notes, "Historical evidence shows unequivocally that secular advances in energy efficiency have not led to any declines of aggregate energy consumption." A group of economists beginning in the 1980s went further, suggesting that increasing the productivity of energy would increase economic growth and energy consumption. Efficiency advocates dismiss the evidence of rebound in energy use pointing to direct behavioral changes at the household or business level that are easiest to measure. But the most significant energy rebounds are indirect -- in the production of energy, raw materials, and consumer goods -- not in the "end use" of consumer products.

Below, a leading energy economist, Harry Saunders, explains why energy efficiency does not decrease energy consumption in the way we conventionally understand it. In the process, Saunders clarifies the controversy over his recent co-authored study for the Journal of Physics, which reviews 300 years of lighting history to predict the impact of new solid-state lighting technologies (e.g. LEDs). Against the widespread belief that new lighting technology will reduce energy consumption, Saunders and his colleagues found that they will likely increase it -- greatly expanding the global use of lighting in the process, especially in developing countries. Saunders clarifies some important questions, and explains the basics of "the rebound effect."

With the new study, rebound has firmly moved from the theoretical to the empirical, and the implications of it must now be dealt with by all of us who were counting on efficiency to be an easy way to reduce greenhouse gas emissions.

-Michael Shellenberger, President, Breakthrough Institute

Why Energy Efficiency May Not Decrease Energy Consumption

By Harry Saunders

I recently co-authored an article for the Journal of Physics ("Solid-state lighting: an energy-economics perspective" by Jeff Tsao, Harry Saunders, Randy Creighton, Mike Coltrin, Jerry Simmon, August 19, 2010) analyzing the increase in energy consumption that will likely result from new (and more efficient) solid-state lighting (SSL) technologies. The article triggered a round of commentaries and responses that have confused the debate over energy efficiency. What follows is my attempt to clarify the issue, and does not necessarily represent the views of my co-authors.

Continue reading "Why Energy Efficiency May Not Decrease Energy Consumption" »

In a new interview with Technology Review, Bill Gates nails the global energy and climate challenge and discusses the need for dramatic increases in energy innovation funding to make clean energy cheap.

Bill Gates has been speaking out publicly over the last few months--first in a blog post on his website, then in a talk at the TED conference, and now as part of the American Energy Innovation Council--for radical energy innovation to drive carbon emissions to zero.

In a climate discourse dominated by emissions targets and carbon caps, Gates has provided a refreshing and clear-eyed look at the first-order importance of direct public investment to develop clean, affordable technologies to replace fossil fuels on a global scale.

In this new interview, Gates discusses why dismissing the difficulty of the challenge is counter-productive, and argues that carbon pricing can never drive the dramatic innovation required to transform the global energy system. Instead of raising the price of fossil fuels, Gates argues that the time has come to shift our attention to raising the revenues necessary to fuel innovation and make clean energy cheap.

Below the fold, you can find excerpts from Gates' interview, which can be read in full here.

For more, the NYTimes Andy Revkin and TIME magazine's Bryan Walsh each spotlight the interview here and here, respectively.

Continue reading "Gates: Invest in Innovation to Make Clean Energy Cheap" »

Breakthrough President Michael Shellenberger comments in an MSNBC report on why energy efficiency efforts in the economic stimulus package have not delivered jobs as promised.

As the Obama administration promotes a second home energy-savings program -- a $6 billion rebate plan -- some experts are asking whether that will pay off for homeowners or for the planet.

"A very rosy picture was painted that energy efficiency would be a great way to create jobs and save money," said Michael Shellenberger, an energy expert who heads the Breakthrough Institute, an Oakland-based think tank that is financed by nonpartisan foundations and works on energy, climate change and health care issues. "The Obama administration risks overpromising again."

Making your home more energy efficient is often described as picking low hanging fruit or money up off the ground, but it looks like efficiency may not save you quite as much on your energy bill as you'd expect. According to the New Scientist:

"SURVEYS of hundreds of UK households reveal that people who have made their houses more energy efficient are more likely to indulge in small excesses - turning up the heating, for example, or keeping it on for longer. Small excesses add up to large costs. The results of the studies - seven of them in total - suggest that such energy creep could wipe out as much as half of the anticipated savings from making homes more energy efficient (Building Research & Information, vol 38, issue 1)."

Cross-posted from Roger Pielke, JR.'s Blog

I raised this question in an earlier post, suggesting from international statistics that China's energy intensity has improved only by 7.4% since 2005, rather than larger figures more commonly referenced based on data from the Chinese government.

Now, Julian Wong from the Center for American Progress points us to an analysis that he published on his blog showing substantially similar figures using another set of data. With that data the analysis concludes that:

[China's] energy intensity drop for the three year period 2006-2008 is only 7.7%, not the 10% commonly reported.

Before pointing us to the guest post Julian tells us in the comments that:

China's goal is to reduce energy intensity (energy consumption per unit of GDP) by 20% of 2005 levels by 2010. According to its own reports, China has made steady progress in achieving that (it is now at -13.4% of 2005 levels), but because GDP has continued to grow by 8 to 10% over the last few years, absolute emissions have increased.. . the main implication of my point is that while China has done a lot, it will need to do more going forward.

I responded by encouraging Julian to share the broader context of China's "fuzzy math" with his readers over at CAP, it seems like an important part of the story that is too often left out of CAP analyses.

Robert Stavins, Director of the Harvard Environmental Economics Program and a leading proponent of cap and trade, acknowledged in an op-ed for the Huffington Post last week that capturing energy efficiency opportunities is more challenging and costly than many have predicted.

In his recent report entitled, "Too Good To Be True? An Examination of Three Economic Assessments of California Climate Change Policy," Stavins found that three separate studies of the California Global Warming Solutions Act of 2006 - all reporting that emissions reductions targets were achievable at no, or negative, cost to the economy - grossly underestimated the economic burden through errors of omission.

An older but similar study, often referred to as the Five Labs Study (executive summary), conducted by the DOE's Interlaboratory Work Group, also reported that efficiencies to reduce emissions could be captured at no economic cost. These findings, published in the late 1990s, were used to bolster support for the Kyoto Protocol despite the fact that the authors readily acknowledged that the study had not "analyzed specific policies to achieve the cases, identified the political feasibility of policies, or described a pathway to achieve the cases." According to Stavins' critique:

"Those studies were terribly flawed, which was what led to their faulty conclusions. I had thought that such arguments about massive "free lunches" in the energy efficiency and climate domain had long since been laid to rest. The debates in California (and some of the rhetoric in Washington) prove otherwise."

Specific policies, the feasibility of policies, and the effectiveness of policies, asserts Stavins, all have cost implications that are egregious to ignore. By omitting them in the early Five Labs Study and the later California studies that Stavins analyzes in his report, only the cost of specific actions to reduce emissions are accounted for, not the often considerable costs associated with policy implementation.

Continue reading "Stavins: For Energy Efficiency, No Such Thing As a "Free Lunch"" »

By Johanna Peace, Breakthrough Fellow

Here's the current climate stalemate: While US and EU negotiators keep pushing for an international treaty based on cutting emissions, developing nations like China and India keep refusing to adopt hard emissions caps. But according to a new report by the Center for Clean Air Policy, those emission caps are too hard to measure and monitor in developing nations, anyway. Instead, the report concludes, developing countries should adopt a new approach to increase efficiency in their most energy-intensive industries by setting measurable clean energy technology targets.

Dan Klein of CCAP, a co-author of the report, explained:

"To be able to say we're going to improve our emissions intensity by 5 percent, that's a nice concept. But to be able to actually do that means ... you have the ability to measure industrywide what you're doing now and what you're doing after."

On the other hand, "It's not such a difficult thing to count the number of plants that have a certain technology," Klein said.

Continue reading "New Report Recommends Technology Deployment Targets to Decarbonize Industry" »

By Yael Borofsky, Breakthrough Fellow

The United States needs a new "sustained national commitment" to improving energy efficiency and accelerating both the development and deployment of clean energy technologies, according to a major new report from the National Academies Press (NAP).

Authored by the National Academies' Committee on America's Energy Future, the recently released paper is the first part in a longer report, titled America's Energy Future: Technology and Transformation. The result of a major study initiated in 2007, the report is designed to inform policymakers about the state of development, costs, implementation barriers, and impacts of current energy technology and potential options for the future and presents eight key findings (summarized below).

Policymakers should employ a portfolio of policies that "supports a broad range of initiatives from basic research through demonstration," the Committee recommends, adding the typical cautionary note, that policymakers should strive to avoid "select[ing] technology winners and losers,"

America's Energy Future explains that the scope and scale of the U.S. energy challenge requires that the U.S. take advantage of available energy efficiency improvements, deploy emerging clean energy technologies, and fund long-term investments in research and development of new technologies. No single component of that strategy is sufficient. According to the report:

"'Business as usual' approaches for obtaining and using energy will be inadequate for achieving the needed transformation. The efforts required will involve not only substantial new investments by the public and private sector in research, development, demonstration, and deployment--in virtually all aspects of the energy infrastructure--but also new public policies and regulations on energy production, distribution, and use."

The authors also acknowledge that the "the U.S. energy system has developed in response to an array of uncoordinated market forces and shifting public policies," the result of the fact that the United States has never before advanced a comprehensive set of national energy policies. The report calls for a concerted, coordinated and sustained suite of federal policies and investments to advance clean energy technologies and transform the U.S. energy sector, such as the Breakthrough Institute's proposal to make clean energy cheap and abundant.

Continue reading "National Academies: America's Energy Future Demands Sustained National Commitment to Clean Energy" »

By Yael Borofsky, Breakthrough Fellow

If pressed, most policymakers would concur that symbolism is not the foundation of sound and effective policy. Yet, as University of Colorado Professor and Breakthrough Institute Senior Fellow, Roger Pielke, Jr. points out in his piece featured today on Yale Environment 360, climate policies contingent on carbon emissions targets are often just that: symbolic.

The article was prompted by criticism of Japan's commitment to seemingly small reduction targets, with a significant portion of the finger-wagging coming from the U.K.

The appeal of emissions targets lies in their simplicity. By setting a (usually lofty) long-term goal for reducing carbon emissions, governments appear pro-active in their efforts to deal with climate change. But as Pielke, Jr. repeatedly emphasizes, ambitious targets unsubstantiated by strategies for achieving those goals are not only simple and symbolic, they are misleading.

In lieu of a realistic plan of action and pressured by an untenable goal, governments resort to creative accounting tricks so that their carbon "budget" is balanced. Thus, a nation can be a symbolic climate change hero without actually decarbonizing. The article quotes Stanford's David Victor:

[S]etting binding emission targets through treaties is wrongheaded because it 'forces' governments to do things they don't know how to do. And that puts them in a box, from which they escape using accounting tricks (e.g., offsets) rather than real effort.

According to Pielke, Jr. the UK's recent adoption of aggressive targets provides a definitive example of why they are a "magical solution" to climate change mitigation that unfortunately will not deliver results:

To achieve a 34 percent reduction from 1990 emissions by 2022 while maintaining modest economic growth would require that the U.K. decarbonize its economy to the level of France by about 2016. In more concrete terms, Britain would have to achieve the equivalent of deploying about 30 new nuclear power plants in the next six years, just to get part way to its target. One does not need a degree in nuclear physics to conclude that is just not going to happen.

Decarbonization of an economy, however, is not driven by target-setting or accounting. Using the Kaya Identity as a guide, a simple equation that illustrates how a nation's population, GDP, energy mix, and energy use all contribute to its total carbon emissions, the only real, feasible policy recourse for achieving decarbonization is to drive improvements in the carbon intensity of the energy supply and/or energy efficiency as rapidly as possible. Neither targets nor offsets are a factor in the equation.

Continue reading "Pielke, Jr: Forget "Magical Solutions" and Directly Decarbonize the Economy" »

With most DC-based environmental organizations at least grudgingly supporting the Waxman-Markey American Clean Energy and Security Act, and official government analysis of the latest version of the bill still pending, it has been largely up to independent think tanks, advocates and bloggers to take a critical look at the major provisions in the nearly 1,000-page climate and clean energy bill. Breakthrough has spent most of the past two weeks doing just that, and we have released some of the first analysis of the bill's cap and trade provision, allowance allocations, and renewable electricity standard.

Yesterday, the Southern Alliance for Clean Energy (SACE), a Knoxville, Tennessee-based non-profit organization advocating clean energy solutions throughout the southeastern United States, released their own analysis of the Waxman-Markey renewable electricity standard. SACE's independent analysis confirms Breakthrough's own earlier look at the now severely-weakened renewable electricity standard, concluding as we did, that the impact of the renewable electricity standard on U.S. renewable electricity generation will be "effectively zero."

SACE also looks at the likely impact of the efficiency requirements in the now combined efficiency and renewable electricity standard (which the Alliance refers to using yet another new acronym: "CERES") and concludes it falls far short of President Obama's campaign pledge to reduce U.S. electricity consumption 15% by 2020 (below business as usual projections).

Continue reading "Climate Bill Analysis, Part 9: Southern Alliance for Clean Energy Confirms Breakthrough's Analysis of Renewable Electricity Standard " »

Advocates of the Waxman-Markey American Clean Energy and Security Act (H.R. 2454, or "ACES" for short) argue that the bill is far more than just a climate bill. It's a comprehensive piece of clean energy, efficiency and climate legislation, and taken as a whole, they argue, it should be considered transformational -- even if the cap and trade portion of the bill may have been significantly weakened (see Breakthrough's detailed analysis of the ACES cap and trade program here).

The ACES bill does indeed include many provisions to set a new course for our nation's energy policy, including efficiency standards and regulations, authorization for new programs aimed at modernizing the nation's electricity infrastructure and paving the way for plug-in hybrid and electric vehicles, and a national renewable electricity standard. Many of these will move America in the right direction.

But the question remains: will ACES really be transformational? And will it propel American quickly away from business as usual and towards the prosperous clean energy economy and dramatic emissions reductions we need?

Breakthrough's team has taken a close look at the bill's cap and trade provision, and discovered that the combination of offset provisions and a little-known provision called the "strategic reserve pool" could allow U.S. emissions to greatly exceed the supposed emissions "cap" set by the legislation.

Here we examine one of the other major provisions of the ACES bill, the national renewable electricity standard (RES) established by Title I of the bill. Unfortunately, our analysis concludes that the RES has been severely weakened since initially proposed in the discussion draft version of the ACES bill; as it now stands, the RES may barely increase U.S. renewable electricity generation compared to business as usual projections.

Continue reading "Climate Bill Analysis, Part 7: Renewable Electricity Standard Severely Weakened; May Have Little to No Impact" »

Driven by record-high gas prices in the first half of the year and the economic crisis that hit in the later half of the year, United States greenhouse gas emissions plunged by the largest amount in decades, according to preliminary data released today by the U.S. Energy Information Administration.

U.S. greenhouse gas emissions, which drive global climate change, fell to 2.8% in 2008 to 5.8 billion metric tons of carbon dioxide equivalent (CO2-e), the lowest level of emissions in any year since 2000. Total U.S. energy consumption also fell 2.2% in 2008, the EIA reports.

(Sorry for poor image quality, blame the source: the EIA)

Continue reading "U.S. Greenhouse Gas Emissions Plunge in 2008" »

By Teryn Norris & Jesse Jenkins

The landmark Waxman-Markey 2009 American Clean Energy and Security Act was introduced in the House this afternoon (May 15, download PDF here), and the Breakthrough Institute has performed a preliminary analysis of how it would invest over $1 trillion in cap and trade revenue between 2012-2025. Our key findings for this period include (all numbers are approximate -- download spreadsheet here):

• Polluting industries: 57.3% of allowances would be freely distributed to polluting industries, including 36.7% for the electricity sector, 12.3% for energy-intensive industries, 6.5% for local natural gas distribution companies, and 1.8% for oil refiners
• Direct consumer protection: 16.5% of allowances would be used for direct consumer protection , including 15% for low and moderate-income families and 1.5% to benefit users of home heating oil and propane
• Energy efficiency and clean energy technology: 12.2% of allowances would be used to fund energy efficiency and clean energy technology development and deployment
• Adaptation and technology transfer: 4.7% of allowances would be used for domestic and global climate adaptation and technology transfer
• Workforce development: 0.6% of allowances would be used to fund worker assistance and job training
• Deficit reduction and other: 8.6% of allowances would be used to fund deficit reduction and other public purposes

How much money would these allocations translate into? That depends on the average price for each pollution allowance. The EPA's initial price estimate was $13-22 per allowance between 2015 and 2020, and has since revised that downward by at least 10% (to $12-20 per allowance) as the bill was weakened and additional offsets were permitted. We will assume here an average price of $15 per allowance. In that case, the allocation would look like this (click images to magnify):

Continue reading "Climate Bill Analysis, Part 1: Waxman-Markey Gives Nearly 5 Times More to Polluters than Clean Energy" »

Kate Galbraith at the NYTimes' Green Inc. blog dives into that question in a recent post, "Deciphering California's Energy Efficiency Success." Galbraith looks at a new study critical of the attempts frequently made by climate and energy efficiency advocates to hold up California's low per-capita electricity use as proof that cutting carbon emissions won't be all that hard.

Talk to any California utility or environmental advocate, and at some point they are bound to cite - with pride - the flattening out of the state's per-capita electricity use.

Since 1975, the amount of electricity per person has grown by almost 50 percent in the rest of the country, but California's numbers have stayed nearly level.

Advocates often credit energy-efficiency measures taken by utilities, at the behest of the state.

Unfortunately, matters aren't that simple it seems, according to a new study from Cynthia Mitchel and two colleagues at Energy Economics, which suggests that many of the drivers behind California's low per-capita electricity consumption have nothing to do with the state's battery of policies encouraging energy efficiency.

Continue reading "Is California a Model for an Energy Efficient Economy?" »