Efficiency Gains Don't Improve the Economy by Themselves

INSIGHTS BY DAVID M. DELANEY

Why Efficiency Gains Won't Reduce Consumption

Jeavons' paradox says energy efficiency improvements tend to
increase energy consumption, so without other consumption
controls, efficiency improvements cannot decrease consumption.

When there are "other consumption controls", for example
irremediable depletion or punishing taxes, efficiency
improvements mitigate the economic effect of having to make
do with less energy, but are limited in the three ways
described below. In the case of irremediable depletion,
these limitations must be understood in the context of the
relationship of energy to economic growth. The economy
grows only when more things, or bigger things, or more
services, are delivered. At constant energy efficiency,
economic growth in any sector requires growing energy use..

Limitation 1) Rate of response. Efficiency gains are made
by designing and making new products, buildings,
transportation systems, and infrastructure. The design and
implementation takes time -- years. The expected
oil production decline is between 2 and 3% per year,
indefinitely. Actually, it's worse-- the decline of maximum
possible production is expected to be linear, a constant
number of barrels per year at about 2% of the 2010 expected
production rate for about 40 years. (See the ASPO
graph.) This is an enormous rate of decline of the energy
input to society. The rate of introduction of efficiency
improvements will have great difficulty keeping up with the
decline. If growth is to be maintained, the yearly
introduction of efficiency improvements must be greater than
the rate of decline of energy sources. Less energy will be used
year after year, certainly, but at least some of the
decrease seems likely to be due to stopping economically
productive activity.

Limitation 2) A high rate of introduction of energy efficiency
improvements requires a high rate of economic activity and
a correspondingly high rate of energy usage. In times of
relentlessly decreasing energy availability, there will be severe
competition between alternative uses of limited energy -- to feed people
and heat houses, to provide consumer goods, or to invest
in efficiency improvements.

Limitation 3) In any field, there will be limits to the
energy efficiencies that can be made. Even if growth has
been maintained by improvements in energy efficiency, when
improvements to energy efficiency stop, as they must, or
otherwise become insufficient to offset the effects of
declining energy input, economic growth must stop.