Across the world there is a concerted effort to reduce the use of energy via efficiency. This has grown into a political ideology dedicated to saving the planet by reducing each of our carbon footprints. For example, governments mandate CAFÉ standards to increase fuel efficiency. But what have been the actual results of these efforts?
Today we build engines that propel our aircraft, ships, trains and cars using much less fuel. However, to the chagrin of many who want to save the planet, as efficiency has increased so has the demand for more energy, particularly fossil fuels.
For example in Florida the state legislature has gone so far as to create a pilot program to create two Energy Economic Zones, one in the City of Miami and the other in Sarasota County, Florida. But to what avail? History tells us as we create greater efficiencies we then consume even more. But why does this happen?
In 2003 the Norwegian Institute for Consumer Research did a study titled The Fallacies of Energy Efficiency: The Rebound Effect? The study reports, “It has been observed that energy efficiency measures result in less than expected energy savings. This is usually ascribed to the so-called rebound effect . . . If you buy an appliance that is twice as efficient as your old one, the effective price of fuel is reduced to a half. As long as the elasticity of energy demand with respect to energy price is not zero, as would be quite unreasonable, there will be a pressure on energy demand.”
Remember: The elasticity of energy demand will never be zero.
In his Wall Street Journal column It’s Too Easy Being Green, David Owen laments, “A favorite trick of people who consider themselves friends of the environment is reframing luxury consumption preferences as gifts to humanity . . . Our capacity for self-deception can be breathtaking.”
Owen, as an environmentalist, notes, “Even when we act with what we believe to be the best intentions, our efforts are often at cross-purposes with our goals. Increasing the efficiency of lighting encourages us to illuminate more.” David is describing the Rebound Effect.
Efficiency is good. Efficiency makes available more goods and services to more people. As more people can afford an automobile because of manufacturing efficiencies the better for us all. That is what David realizes as he concludes his column. David states, “Relieving traffic congestion reduces the appeal of public transportation and fuels the growth of suburban sprawl. A robust market for ethanol exacerbates global hunger by diverting cropland from the production of food.”
Energy efficiencies lead to greater energy demand. Concepts like Economic Energy Zones, locavorism (only eating food that is produced locally), sustainable communities, electric cars, high speed rail, public transportation, green buildings, CAFÉ standards and alternative fuels are “breathtaking self-deceptions”.
As mankind finds better and cheaper ways to make things and provide services the broader will be the market as consumers like saving a buck. That is what drives us all. Getting more for less and as we can do we do more for less.
Man works in his own self-interests. That is called individualism. That will never change.
As Ronald Reagan once said, “Only when the human spirit is allowed to invent and create, only when individuals are given a personal stake in deciding economic policies and benefiting from their success — only then can societies remain economically alive, dynamic, prosperous, progressive and free.”