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On Are Rebound Effects a Problem for Energy Efficiency?

David,

Your example only holds if you assume the only form of rebound is a specific indirect rebound mechanism, which is knonwn as the "re-spending effect," wherein energy savings are spent on a general bundle of consumer goods, which then have the average energy intensity of the economy as a whole. (For a taxonomy of rebound effects, see here). Indeed, no one predicts indirect rebound effects to add much more than another 5-15% on average to the overall rebound effect, as I wrote in my extensive 2011 review of the rebound literature.

What you are of course ignoring is the direct rebound effect (as well as several other indirect mechanisms), wherein an improvement in the efficiency of an energy service reduces the apaprent cost of that service, triggering an increase in demand for that service. Now where energy services are concerned, of course they are much more energy intensive than the economy as a whole. So if we make lighting (about 70-80% energy cost to total cost of lighting ratio BTW) or a blast furnace at a Chinese steel mill, or freight trucking, or an industrial motor at a factory more efficient, direct rebounds in energy demand can be far more significant than the overall energy intensity of the economy indicates. That's why the literature on each of these cases shows much larger rebounds than you want to acknowledge.

 

And again, the fact that energy is a relatively small share of total US GDP does not at all imply that rebound effects are small. If energy expenditures are 8 percent of US GDP, and we make all energy services twice as efficient over the next 20 years, as in your example, then that implies we just made 8 percent of the US economy twice as productive over 20 years. That would grow the U.S. economy by 4% over that 20 years, or 0.19 percent per year increase in U.S. economic growth rate over those 20 years, if we assume these gains scale smoothly. Now that would be a nice welcome boost to U.S. GDP, but two orders of magnitude less than your "simple" (and flawed) example above.

Now what does that mean for the scale of rebound? Well let's assume for sake of argument that we are in a rich nation like the U.S., so direct rebounds are in the 20-70 percent range we see across empirical studies for the U.S. (see links in my original article). Let's use 50 percent as an easy middle of the range figure for the average rebound. In that case, instead of shrinking to 4 percent of U.S. GDP, energy expenditures would only shrink to 6 percent, as half of our energy savings are eroded by direct rebound. Then if the economy as a whole grows by 4 percent and we spend 6 percent of GDP on energy-related expenditures now on average, we would spend an additional 0.24 percent of our original, pre-efficiency GDP level on energy. That would erode another 6 percent of the expected total energy savings (0.24 percent of GDP / 4 percent of GDP original energy savings = 6 percent of original energy savings). Our total rebound in this case would be 56 percent. 

That's a lot of multiplying percents, so go ahead and check my math, but the logic there is sound, and corrects the clear errors in your simple attempt to disprove the possibility of very large rebounds.

Now transplant this case to the developing world, which is less efficient, and where energy use is more like 12 percent of GDP. Say we get 50 percent more efficient there as well over 20 years, leading to a 6 percent increase in GDP over 20 years, or 0.29 percent boost in the growth rate.

Now let's assume direct rebound effects in the developing world are closer to 75 percent on average (again see evidence discussed in the original post). Then instead of cutting energy expenditures in half to 6 percent of GDP, we lose 4.5 percentage points of that savings to direct rebound (6 percent * 0.75), and we wind up still spending 10.5 percent of GDP on energy. With GDP now also 6 percent higher, the indirect rebound from this macroeconomic growth and respending is 0.63% of our original GDP or an indirect rebound of 10.5 percent of our original energy savings (0.63 percent / 6 percent = 10.5 percent). Total rebound in this case is north of 85 percent. 

These are all hypothetical, rebounds for very large, economy-wide efficiency improvements. Of course the sector and country-specific cases will differ. But I hope you see why the small share of the economy spent on energy in no way implies that rebound effects are small. 

Your continued insistance that they must be small, despite mounting evidence to the contrary, as well as the admonishions of the IPCC, is unfortunate. As I noted above, the evidence does not support the idea that backfires are the norm. Nor are they impossible or even particularly rare. My 2011 review of the literature made that quite clear.

However, the evidence also pointedly does not support the idea that rebounds "where they are found, are quite small," as you claim. As my original article notes, rebounds in the 35-80 percent range are still a very big deal for energy planning and climate mitigation. Please stop trying to imply otherwise.

Finally, your claim that the evidence for rebound effects is not empirically grounded or is based on non-testabable hypotheses is belied by the massive amount of literature on the topic. Just search Google Scholar for "rebound effect, energy, empirical" and have fun reading the reams of papers on this, which you seem to have completely missed...

I suggest you start with these three recent examples:

 

October 21, 2014    View Comment    

On Are Rebound Effects a Problem for Energy Efficiency?

Hi David,

First off, you should probably recheck your "quick calculation" that "were 100% rebounds [sic], then efficiency policy alone could double economic growth in the U.S. over the next 20 years." Last I checked, energy expenditures were a small fraction of U.S. GDP, on the order of 7-8 percent. So if we doubled the efficiency (i.e. productivity) of all energy consumption in the U.S., and 100% of the resulting gain in welfare was taken as an increase in GDP while energy consumption was held constant, then U.S. GDP would grow by about 3-4 percent as a result. But 3 percent, 100 percent, what's the difference?

You claim you aren't actively trying to dismiss the consensus that rebound effects are typically significant. Yet you claim in your October 9th article at NRDC's blog that "rebound effects are very small where they exist at all."

That would be news to the IPCC Working Group III, which surveyed the peer-reviewed literature and concluded that "rebound effects cannot be ignored." Here's how they summarize the reams of literature on this, which you are so quick to shrug off:

"A comprehensive review of 500 studies suggests that direct rebounds are likely to be over 10% and could be considerably higher (i.e., 10% less savings than the projected saving from engineering principles). Other reviews have shown larger ranges with (Thomas and Azevedo, 2013) suggesting between 0 and 60%. For household‐efficiency measures, the majority of studies  show rebounds in developed countries in the region of 20-45% (the sum of direct and indirect rebound effects). ... . For private transport, there are some studies that support higher rebounds, with Frondel et al.(Frondel et al., 2012) findings rebounds of between 57 and 62%. 

There is evidence to support the claim that rebound effects can be higher in developing countries (Wang et al., 2012b; Fouquet, 2012; Chakravarty et al., 2013). Roy (2000) argues that rebound effects in the residential sector in India and other developing countries can be expected to be larger than in developed economies because high‐quality energy use is still small in households in India and demand is very elastic (van den Bergh, 2010; Stern, 2010; Thomas and Azevedo, 2013)." 

As I noted, the studies they are summarizing here exclude any macroeconomic rebound effects. Those are of course difficult to observe empirically, so you'd be happy we just pretend they don't exist. But when it comes to studying complex real-world phenomona for which we can't run controlled experiments (say, the global climate, or the economy), we tend to rely on models to form intuitions, develop hypotheses, and come up with our best guesses for what the world looks like. When those findings are inconvenient for you, you'd better come up with a better argument than "BUT: MODELS," or we might start thinking you really are trying to ignore rebound effects. You sound an awful lot like a skeptic of anthropogenic climate change when you make remarks like that...

Jesse

October 15, 2014    View Comment    

On The Future of Energy: Will 'Cheap as Dirt' Batteries Transform the Grid?

We would need batteries to go to an ultra-low carbon nuclear-heavy system as well (i.e. 80-100% reductions in CO2 leave little-to-no room fo gas-fired peakers). See my previous post on this here. In the near-term, batteries could simply be a viable alternative to gas (and sometimes oil or coal-fired) peaking power plants that operate today with very low capacity factors and very high marginal costs. Once online, batteries could do more than peak-shave though, and could also provide additional ancillary services, including frequency regulation, reserves, renewables integration and load shifting in some combination.

October 13, 2014    View Comment    

On The Future of Energy: Will 'Cheap as Dirt' Batteries Transform the Grid?

Thanks for clarifying. Cheers

October 13, 2014    View Comment    

On The Future of Energy: Will 'Cheap as Dirt' Batteries Transform the Grid?

At 7 cents/kWh cycle, how do you get "doubling the current cost of electricity"? We wouldn't be using the batteries for 100% of our electricity. The most lucrative use would be to flatten load peaks and fill in valleys (which would benefit baseload nuclear plants just as much if not more than solar or wind, btw). There, you'd be trying to ensure the spread between peak and off-peak prices is <7 cents/kWh or $70/MWh. Currently, that wouldn't happen every day, but many days in the year you would see that kind of peak/off-peak spread. And that's at current expected costs. Drop the cost 30-50 percent further, which doesn't seem impossible, and you're at a ~$35-50/MWh spread. That would be quite competitive with current peaking power plants, and probably drive most of them out of business, while increasing the load-factors for baseload plants and allowing mid-day solar production to be shifted to the afternoon peak, for example. I could see that being economical. How about you?

October 13, 2014    View Comment    

On The Future of Energy: Will 'Cheap as Dirt' Batteries Transform the Grid?

"Roger," I'm not sure what you mean by 2/3rds of the energy stays on the high and mid-system. Do you mean 2/3 of energy is consumed by industrial and commercial customers connected to high and medium voltage levels of the distribution system? 

Losses are indeed higher in the distribution grid than the transmission grid, but that's largely due to the difference in voltage -- lower voltage means higher resistive losses -- not the quantity of energy flowing on the wires. 

Distributed generation tends to reduce total power flow across lines at lower penetration levels, and then increases it across low/medium voltage at higher penetration levels. So the impact of DG on losses is parabolic: starts with a decline, bottoms out, then starts to increase. 

October 13, 2014    View Comment    

On The Future of Energy: Will 'Cheap as Dirt' Batteries Transform the Grid?

Hi Keith,

I think the problem with lead acid batteries is their very short lifespans. Only a few hundred cycles and they are already starting to degrade quite quickly. And thats only if you manage them well. I've personally had experience using a deep cycle lead acid paired with a solar panel, and since we didn't have very good charge control system, we ruined the battery pretty quickly -- in less than 100 cycles!. 

Sadoway's team and Ambri, the company working to commercialize liquid metal batteries, are targeting more like 10,000 cycles in the battery's lifetime. They've already reached 1,600 cycles in lab tests with an  0.0002%/cycle degradation of usable capacity rate. That compares to 0.1% per cycle for well managed lead-acid batteries.

So the materials costs are one part of the equation. The longevity of the battery is another. The latter is where liquid metal may really win, with a 500-fold improvement in degradation rate! Not so bad...

Cheers,

Jesse 

October 13, 2014    View Comment    

On Energy Quote of the Day: A Disturbing Climate March Observation

Thanks for raising this point Jared. Really unfortunate to see such poorly calibrated priorities...

September 24, 2014    View Comment    

On Are Carbon Capture and Storage and Biomass Indispensable in the Fight Against Climate Change?

You've got the next fluxes wrong. While the total annual CO2 absorption (by oceans, weathering of rocks, biomass etc) is larger than the annual anthropogenic emissions by quite a bit, you've also forgot about the other part of the natural cycle: non-anthropogenic sources of CO2, which are nearly enough to use up all of the sinks on their own. So yes, if we stop emitting all anthropogenic CO2, atmospheric CO2 concentrations will fall. But they won't fall particularly fast. By about 1 ppm per year, if I recall correctly. So it will take quite a bit of time to draw things back down, and that's assuming ZERO anthropogenic emissions worldwide. That's not likely any time soon (i.e. this century). The scenarios modeled here, by contrast, assuming continued emissions in the non-electricity sectors (like aviation, land use changes, shipping, industry) and rely on net-negative emissions in the electricity sector to compensate, starting around 2050. In other words, they count on electricity emissions going net negative well before total anthropogenic emissions falls to zero. 

September 11, 2014    View Comment    

On Are Carbon Capture and Storage and Biomass Indispensable in the Fight Against Climate Change?

Hi Joris,

I'm afraid you've missed the point (see my comment above). The EMF inter-model comparison clearly points to the conclusion that no single power generation technology is "indespensible." If any one is limited in availability, the others can compensate, albeit at higher cost. So if you presume, as you do, that nuclear is available at low-cost and scale, great. Then we need less renwables and CCS in power generation. The converse is also true: if nuclear is not as cheap as you pose, then we lean more heavily on CCS and renewables. (If any two of those are unavailable, then things get more problematic!). 

The point of the study, however, is that CCS and biomass are flexible technologies. They are not only applicable in power generation (as nuclear or wind or solar are). They can be used to decarbonize industrial emissions (i.e. in cement or chemicals) and transportation modes that are hard to electrify (biofuels for aviation or shipping) and heating needs that are similarly hard to electrify. In addition, when coupled, they offer an option to go carbon negative. It is much more difficult to envision nuclear playing a role in carbon removal (unless we have such a sufficient oversupply of nuclear to provide heat intput to run artifical air capture and removal technologies -- i.e. "artificial trees"). 

In other words: this isn't about electricity. Or, this isn't about nuclear (for a change!). Not every discussion at TEC has to revolve around nuclear... ;)

Cheers,

Jesse

September 9, 2014    View Comment    

On Are Carbon Capture and Storage and Biomass Indispensable in the Fight Against Climate Change?

Hi Keith,

Thanks for the comment. Actually, the relatively low shares of nuclear (which are a result of the model's optimization process and underlying technology cost assumptions, not a normative constraint on the part of the scenario authors) are not the reason why EMF-27 sees CCS and biomass as so essential. The study concludes that with a variety of technologies for decarbonizing the electricity sector -- nuclear, renewables, CCS -- that if any one technology is unavailable at scale or constrained, then the others can pick up for it (albeit at a higher cost). In contrast, with very few options for decarbonizing industry, transportation, and heat (electrification is key but can only go so far in these sectors), CCS and biomass are indespensible here. Finally, biomass + CCS together is important, the study finds, to meeting aggressive 450 ppm CO2 stabilization targets, because together, they can help go carbon negative. That allows for overshoot of the 450 ppm threshold in the mid-century range and a net carbon negative contribution by the end of the century to compensate. Without biomass+CCS, going carbon negative is infeasible, and the scenarios reviwed have a very hard time meeting the 450 ppm goal without the ability to overshoot 450ppm then draw down CO2 later by going carbon negative. 

In short, we can argue with the modeler's assumptions about nuclear costs vs other electricity decarb. options, but that's not really what's leading to these findings about CCS and biomass. 

Cheers,

Jesse

September 9, 2014    View Comment    

On New EPA Carbon Standard Compliance Strategies (Part 1): Which Technologies Have Reduced U.S. Power Carbon Emissions Since 2005?

Thanks for the great analysis John. I look forward to part 2...

September 3, 2014    View Comment