Bill Gates, energy efficiency and the “Jevons paradox”

Bill Gates, energy efficiency and the “Jevons paradox”

When it comes to economic reasoning, common sense is bad advice. Take the latest initiative from Bill Gates: the multi-billionaire and philanthropist has just decided, via his anti-CO2 Breakthrough Energy Ventures, to invest 20 million dollars in a revolutionary start-up, Blue Frontier, which develops an air conditioning system clean, i.e. 50% to 90% more energy efficient. Who would blame him? Isn’t the founder of Microsoft in this role of savior of the planet that he has given himself? Isn’t it legitimate to give back more “efficient” all fossil fuel-consuming machines? The 2 billion air conditioners in service in the world are a real nuisance, they are responsible for nearly 4% of greenhouse gas emissions. Their number should increase by half in the next ten years. Bill Gates is convinced he can change the situation.

A certain sobriety is essential in the use of the word “sobriety”

This logic comes up against a bone: the paradox of Jevons. William Stanley Jevons (1835-1882) was an English neoclassical economist. In a book published in 1865, “The Coal Question”, he was the first to show that, contrary to common sense, an innovation that saves energy does not lead to a reduction in production. global energy, but… its increase. Efficiency leads to lower costs, which translates into a rebound in demand.

The sequel after the ad

The rebound effect

In Jevons’ day, coal producers were concerned about the increasing efficiency of blast furnaces and other steam engines. The demand for coal, they feared, would fall. Jevons reassured them: it will increase! “The idea that more efficient use of fuel means less consumption is totally confusing. The exact opposite is true.” he writes. The rebound in demand, he developed then, would largely compensate for the drop in consumption of each machine. The risk he perceived then was rather an accelerated exhaustion of the English mines.

Ecology and economy, enemy sisters

Although Keynes ranked him among the “great minds” of the XIXe century, Jevons fell into oblivion. Its paradox has however been verified on numerous occasions. Thus in commercial aviation, the drop in kerosene consumption was welcomed as good news for the environment: the emission of CO2 per aircraft fell by 60% between 1960 and 2000. But the resulting fall in costs also favored the low-cost boom and, with it, that of air traffic. Similarly, the appearance of low-energy LEDs has led to an explosion in the number of screens in public spaces – and the advertising pollution they peddle – which can hardly be considered progress.

Changing economic approach

Should we conclude that Bill Gates would do better to invest his money in start-ups working not on air conditioning, but on the insulation of buildings? Alas, in this area too, the paradox of Jevons lurks in the shadows. It has been found that individuals whose energy bills are falling tend to increase the temperature of their heating… And when they don’t, they can also take advantage of the savings made to afford (for example) an additional air trip .

15, 19 or 21°C: “Thermal comfort is a social construction”

We haven’t left the inn… unless we change our economic approach. It’s not about denying “energy efficiency”, but to think it, instead of devoting a simple cult to it. The objective, for investments in energy savings to make sense, must be to cancel “rebound effect” described by Jevons. States have tools to achieve this: taxes, caps, quotas, regulations, and other big words that scratch too many ears. Is it normal that kerosene, despite advances in the efficiency of air transport, is still exempt from taxes? Or that we come across LED screens displaying advertising in restaurant toilets? Not to mention the air-conditioned stores that keep their doors wide open. Blue Frontier-type innovations will not be “breakthroughs” if they facilitate such craziness.

Pascal Riché will now provide the column devoted to the economy every two weeks, alternating with Daniel Cohen.