Amory Lovins and His Nuclear Illusion – Part Three (Energy Efficiency and “Negawatts”)

So far I have written two detailed posts on Amory Lovins’ and the Rocky Mountain Institute’s latest nuclear critique. My third post discusses energy efficiency and Amory Lovins’ coined term “negawatts.” There is this widely held belief that becoming more energy efficient means that we will consume less energy. At first glance, that notion seems correct but digging further, I found there’s much more to it. In the case of energy efficiency, RMI overlooks a fundamental effect of efficiency on the energy marketplace.

From RMI’s condensed version:

An even cheaper competitor [to new nuclear plants] is enduse efficiency (“negawatts”)—saving electricity by using it more efficiently or at smarter times.

There are several misperceptions about what energy efficiency really contributes. Here’s what Robert Bryce has to say in the Energy Tribune:

The final – and most important – area in which Lovins has been consistently wrong is his claim that efficiency lowers energy consumption. And when it comes to arguing the merits of energy efficiency, Lovins’s prime nemesis is a dead guy – William Stanley Jevons – a British economist who in 1865 determined that increased efficiency won’t cut energy use, it will raise it. “It is wholly a confusion of ideas to suppose that the economical use of fuels is equivalent to a diminished consumption. The very contrary is the truth.” And in the 142 years since Jevons put forth that thesis, now commonly known as the Jevons Paradox, he’s yet to be proven wrong.

The Jevons Paradox is explained further in The Bottomless Well:

First, efficiency seems to come, regardless - often far more efficiency than the most well-meaning regulators and policy pundits can foresee.
…
Second, when radically more efficient technologies do emerge, they are quickly embraced by paying customers without any need for government mandates - embraces not just to displace old ways of doing things, but to do all sorts of new things that previously hadn’t been done at all (pp. 106-107).

Two centuries ago, no engine could surpass 10 percent efficiency. By raising boiler temperatures and pressures, engineers pushed performance to about 20 percent efficiency by the turn of the twentieth century. By mid-century, they were up to about 40 percent. Today, the best thermal plants routinely hit 50 percent efficiency. Efficiency gains this large ought to have had a dramatic impact on supply and demand - and they did. The price of transportation and electricity fell steadily. And the total amount of fuel consumed in those sectors rose apace. Efficiency may curtail demand in the short term, for the specific task at hand. But its long-term impact is just the opposite. When steam-powered plants, jet turbines, car engines, light bulbs, electric motors, air conditioners, and computers were much less efficient than today, they also consumed much less energy. The more efficient they grew, the more of them we built, and the more we used them - and more the energy they consumed overall. Per unit of energy used, the US produces more than twice as much GDP today as it did in 1950 - and total energy consumption in the US has also risen three-fold (p. 111).

…efficiency fails to curb demand because it lets more people do more, and do it faster - and more/more/faster invariably swamps all the efficiency gains (p. 112).

It is only when we begin to focus on efficiency in the extraction of energy that the paradox of efficiency comes to seem less paradoxical…The better our energy-extracting technology, the cheaper the energy, and when goods get cheaper, we consume more of them. There’s nothing paradoxical at all about that proposition … Small wonder, then, that efficiency increases consumption. It makes what we ultimately consume cheaper, and lower price almost always increases consumption. To curb energy consumption, you have to lower efficiency, not raise it. But nobody, it seems, is in favor of that (p. 123)

Where’s the data to back up the Paradox?

Below is a chart that shows the electric intensity vs. electricity consumption per person for the U.S. The chart shows that the U.S. became more efficient with its electricity (electric intensity) starting in the 1970s but continued to consume more electricity per person. If efficiency supposedly curbs demand, then the chart should show the red line following the blue line after the 1970s (or at least some change in that direction). It does not.
RMI’s Rebuttal

RMI and Amory Lovins are well aware of the Jevons Paradox and the Energy Tribune article. They attempt to rebut the two by citing the improvements in refrigerators, the implementation of hybrids, and the reduced energy consumption per-capita in California and Vermont. The Paradox describes macro-level behavior. Micro-level data on refrigerators and hybrids do not refute it. For example, the energy savings from refrigerators could simply have gone to plasma-screen TVs, XBoxes, computers or other electrical equipment. The energy savings from hybrids could simply have gone to a new lawn-mower, boat or car.

The most significant point in RMI’s rebuttal may be the following:

According to RMI co-founder and Chief Scientist Amory Lovins, Vermont has reduced energy use per household in recent years. And California, he adds, "has held per-capita electricity use flat for 30 years -- saving 65 peak GW and more than $100 billion of power-system investment -- while per-capita real income rose 79 percent."

Proponents of energy efficiency often cite California as an example of what the rest of the nation could do to save energy (as evidenced above). A careful look at the data tells us otherwise. Here’s Max Schulz:

California’s proud claim to have kept per-capita energy consumption flat while growing its economy is less impressive than it seems. The state has some of the highest energy prices in the country—nearly twice the national average, a 2002 Milken Institute study found—largely because of regulations and government mandates to use expensive renewable sources of power. As a result, heavy manufacturing and other energy-intensive industries have been fleeing the Golden State in droves for lower-cost locales. Twenty years ago or so, you could count eight automobile factories in California; today, there’s just one, and it’s the same story with other industries, from chemicals to aerospace. Yet Californians still enjoy the fruits of those manufacturing industries—driving cars built in the Midwest and the South, importing chemicals and resins and paints and plastics produced elsewhere, and flying on jumbo jets manufactured in places like Everett, Washington. California can pretend to have controlled energy consumption, but it has just displaced it.

Conclusion

I agree with RMI that promoting energy efficiency is important and valuable. However, I disagree with RMI on where increased efficiency leads. It does not necessarily lead to decreased consumption. The Energy Tribune sums up this perspective very well when it says:

Efficiency is a wonderful by-product of human ingenuity. It is an essential part of America’s ever-evolving economy. It is part and parcel of the free-market economy working independently of government-mandated efficiency programs. It makes sense to wring more work out of each unit of energy. Energy efficiency conserves capital. It is good for the environment. It is good for rich and poor alike. Efficiency helps reduce the impact of energy price volatility and possible oil price hikes.

But when it comes down to brass tacks, energy efficiency doesn’t necessarily mean less energy use, it usually means more energy use. And that usually means more carbon dioxide emissions. Thus, the idea of “saving the climate for fun and profit” may be just a bit more complicated than Lovins claims.