In Monday's New York Times, columnist John Tierney adds a thoughtful piece to the many articles and blog posts written about the paradox of efficiency as energy policy panacea. Mr. Tierney discusses several aspects of energy efficiency, including the "rebound effect" (also known as the Jevons Paradox, about which my colleague David Bradish has written several blog posts).
For us, the bottom line of the article is a recognition that efficiency improvements are unlikely to reduce carbon emissions and may, in fact, increase them as consumer savings on energy are spent on more carbon-intensive products and services elsewhere in the economy. We believe Mr. Tierney gets it right when he says:
"But if your immediate goal is to reduce greenhouse emissions, then it seems risky to count on reaching it by improving energy efficiency. To economists worried about rebound effects, it makes more sense to look for new carbon-free sources of energy, or to impose a direct penalty for emissions, like a tax on energy generated from fossil fuels.[emphasis added]"The Times article is a quick, insightful read and we commend it to you.