Is increasing energy efficiency driving global climate change?

Improving energy efficiency is our best hope to slow global energy consumption and limit carbon dioxide emissions. 

Makes perfect sense, right? Better technology for more jobs and a healthier planet! Yay capitalism. 

But let's look a little closer. People may choose to drive more often if a vehicle is fuel efficient: driving is useful or pleasurable and now it is more affordable. Or, less money spent on fueling energy efficient vehicles could enable more money to be spent on fuel for home air conditioning.

Economists do acknowledge such offsets to some degree referring to a phenomenon called "rebound". A very few studies even argue for “backfire”: gains in energy efficiency ultimately lead to greater energy consumption.  The idea was first introduced by William Stanley Jevons in 1865. Jevons was emphatic that energy efficient steam engines had accelerated Britain’s consumption of coal. The cost of steam-powered coal extraction became cheaper and, because coal was very useful, more attractive.

Calculating the total magnitude of rebound or backfire has proved contentious and elusive. The problem for academics has been that any given efficiency improvement has knock-on effects that can eventually propagate through the entire global economy. Estimating the ultimate impact is daunting if not impossible. 

Imagine you buy a nice new fuel efficient car. An unequivocal good for the environment, right? Sure feels good to do one's part to save the planet. And you have a fatter wallet too since you spend less on gas. Life's good! You can spend that saved money now (for argument’s sake) on better household heating and cooling so that you sleep better at nights. Being more rested you become more productive at work, giving you a raise and your employer higher profits. The business grows to consume more while you take that much deserved flight for a vacation in Cancun. 

In this fashion, the ramifications of any given efficiency action might multiply indefinitely, spreading at a variety of rates throughout the global economy. Barring global analysis over long time scales, conclusions about the magnitude of rebound or backfire may be quantitative but highly uncertain since they are always dependent on the time and spatial scales considered. 

Analyzing the global economy like a growing child

There’s a way around this complexity - to ignore it, by treating the economy only as a whole. 

Stepping back like this is a standard part of the physics toolbox. Imagine describing the growth of a child without being an expert in physiology. It shouldn't take a doctor to comprehend that the child uses the material nutrients and potential energy in food not only to produce waste but also to grow the child's body mass. As the child grows, it needs to eat more food, accelerating its growth until it reaches adulthood and its growth stabilizes (hopefully!). 

Now, an inefficient, diseased child who cannot successfully turn food to body mass may become sickly, lose weight, and even die. But a healthy, energy efficient child will continue to grow and some day become a robust adult who consumes food energy at a much higher rate than as an infant. 

What could be treated as a tremendously complicated problem can also be approached in a fairly straight-forward manner, provided we look at the child as a complete person and not just a complex machine of component body parts. 

Efficient civilization growth

We can take the same perspective with civilization.  Without a doubt, consuming energy is what allows for all of civilization’s activities and circulations to continue -- without potential energy dissipation nothing in the economy can happen; even our thoughts and choices require energy consumption for electrical signals to cross neural synapses. Just like a child, when civilization is efficient it is able to use a fraction of this energy in order to incorporate new raw materials into its structure. It was by being efficient that civilization was able to increase its size. 

When civilization expands, it increases its ability to access reserves of primary energy and raw materials, provided they remain or are there to be discovered. Increased access to energy reserves allows civilization to sustain its newly added circulations. If this efficiency is sustained, civilization can continue to grow. In a positive feedback loop, expansion work leads to greater energy inputs, more work, and more rapid expansion. 

This is the feedback that is the recipe for emergent growth, not just of civilization, or a child, but of any system. The more efficiently energy is consumed, the faster the system grows, and the more rapidly the system grows its energy consumption needs. 

Ultimately there are constraints on efficiency and growth from reserve depletion and internal decay. But in the growth phase, efficient conversion of energy to work allows civilization to become both more prosperous and more consumptive.

Implications for climate change

It is easy to find economists willing to express disdain for the concept of backfire, or even rebound, by pointing to counter-examples in economic sectors or nations where energy efficiency gains have led to less energy consumption. For example, the USA has become more efficient and thereby stabilized its rate of energy consumption. 

While these counter-examples may be true, they are also very misleading, especially if the subject is climate change. Nations do not exist in economic isolation. Through international trade the world shares and competes for collective resources. Quite plausibly, the only reason the USA appears to consume less energy is that it has outsourced the more energy intensive aspects of its economy to countries like China. Should an economist argue that “There is nothing particularly magical about the macroeconomy, it is merely the sum of all the micro parts” we can be just as dismayed as we would upon hearing a medical practitioner state that “there is nothing particularly magical about the human body, it is merely the sum of all its internal organs”. Connections matter!

Fundamentally, through trade, civilization can be treated as being “well-mixed” over timescales relevant to economic growth. In other words, trade happens quickly compared to global economic growth rates of a couple of percent per year. Similarly, excess atmospheric concentrations of CO2 grow globally at a couple of percent per year. They too are well-mixed over timescales relevant to global warming forecasts because atmospheric circulations quickly connect one part of the atmosphere every other. For the purpose of relating the economy to atmospheric CO2 concentrations, the only thing that matters is global scale emissions by civilization as a whole.

Taking this global perspective with respect to the economy, efficiency gains will do the exact opposite of what efficiency policy advocates claim it will do. If technological changes allow global energy productivity or energy efficiency to increase, then civilization will grow faster into the resources that sustain it. This grows the economy, but it also means that energy consumption and CO2 emissions accelerate. 

CO2 emissions can be stabilized despite efficiency gains. But this is possible only if decarbonization occurs as quickly as energy consumption grows. At today’s consumption growth rates, this would require roughly one new nuclear power plant, or equivalent in renewables, to be deployed each day. 

For more details

Garrett, T. J., 2012: No way out? The double-bind in seeking global prosperity alongside mitigated climate change, Earth System Dynamics 3, 1-17, doi:10.5194/esd-3-1-2012

On the thermodynamic origins of economic wealth

What are the origins of wealth?

Economics textbooks describe wealth as an accumulation of all financially valuable resources. It is our collective beliefs that give this accumulated stock value.  Human labor uses this stock to produce more stuff through the GDP thereby enabling overall wealth to grow with time.

At least on the face of it, this view of the economy makes a lot of sense. Economists have mathematical equations that express these ideas providing quantitative descriptions for how and why the economy grows.

Yet something still seems unsatisfyingly magical. Why should we believe in the concept of economic value in the first place?. The existence of a financial system is hardly obvious. It hasn’t always existed through history, even during periods where people produced and consumed. And most of what we do in our lives (fortunately) doesn’t involve any exchange of currency at all. We are able to enjoy a good moment of each other’s company without having to pay a single cent.

The economy and the second law

Sure, financial wealth is a human quantity, but we are still part of the physical universe. No matter how rich we may be, we are all equal subjects of its rules.

Chief among these rules is the Second Law of Thermodynamics. The Second Law has been expressed in many ways that are either wrong, strangely mystical, or maddeningly vague. It doesn't have to be this way. The most straightforward is to view the direction of time as a flow of matter that redistributes energy to ever lower potentials. Drop something it falls. It was up, now it’s down; air flows from high to low gravitational potential or pressure to make the winds. Easy.

Take the waterwheel in a mill. A mill consumes high gravitational potential energy from a flowing stream. The flow drives the wheel circulations and finishes its journey in the stream below where the potential energy is becomes unusable. The total capacity of the mill to dissipate potential energy, its size or “stock”, is something we can estimate by looking at the size of the mill and noting how fast it circulates.

Or how about a hurricane? The pressure difference between the eye of the hurricane and its surroundings provides the potential energy with which to drive the winds while the hurricane constantly loses energy by radiating to space. Again the hurricane has a size or "stock" that defines its power.

What does this have to do with the economy? Well, everything. Our perceptions are based on neuronal activity in the form of cyclical transfers of charge from high to low potential in our brains. The cycles are sustained by by high potential calories in food that we dissipate as waste heat from our bodies. Our food is produced with high potential fossil fuels that we burn to till the land, produce fertilizer and transport from farm to market. We get to and from market using gasoline that is dissipated in our cars. The money we use to buy food comes from the fruits of our labors staring at computers that that themselves dissipate energy as they make computations with a certain cycle frequency and transfer data to and from other computers along communication networks, all of which turns high potential energy to low potential waste heat.

But can we really reduce all this to something as simple as a waterwheel or hurricane? There’s 7+ billion of us, our brains are so complicated, and the economy is so big.

All the circulations in civilization are ultimately derived from the consumption and dissipation of high energy density “primary energy resources”. As a global organism, our civilization collectively feeds on the energy in coal, oil, natural gas, uranium, hydroelectric power and renewables. Civilization continually consumes these resources to accomplish two things: the first is to propel all civilization’s internal back-and-forth “economic” circulations along its accumulated networks; the second is to incorporate raw materials into our structure in order to grow and maintain our current size against the ever present forces of dissipation and decay.

Energy, from whatever source, powers our machines, our telecommunications, modern agriculture, and the supply of the meals that give us the energy to sustain our thoughts, attention, and perceptions. Without energy, civilization would no longer be measurable. Everything would grind to a halt. Nothing would work. Lacking food, we would be dead and our attention span with it. The gradient that meaningfully distinguishes civilization from its environment would disappear. Value would vanish.

Wealth is power
Stepping back to see the world economy as a simple physical object, one where people are only part of a larger whole, would be a stretch for a traditional economist hung up on the idea that wealth must be restricted to physical capital rather than people. But, crucially, unlike traditional models, it is an idea that can be rigorously tested and potentially disproved. It is a hypothesis that is falsifiable. 

I have shown in peer-reviewed studies published in Climatic Change, Earth System Dynamics, and Earth’s Future that the observed relationship between the current rate of energy consumption or power of civilization, and its total economic wealth (not the GDP), is a fixed constant of 7.1 ± 0.1 milliwatts per inflation-adjusted 2005 dollar.

Equivalently, every 2005 dollar requires 324 kiloJoules be consumed over a year to sustain its value. In 2010, the global energy consumption rate of about 17 TW sustained about 2352 trillion 2005 dollars of global wealth. In 1970, both numbers were about half this. Both quantities have increased slowly by about 1.4% per year to 2.2% per year averaging a growth rate of 1.90% /year.  The ratio of the two quantities has stayed nearly constant over a time period when both wealth and energy consumption have more than doubled and the rates of growth have increased by about 50%. Currency is the psychological manifestation of a capacity to dissipate energy.

Can wealth continue to grow?
What this means is that we must continue to grow our capacity to consume primary energy reserves just to grow our wealth. We should never conclude that growth can’t continue over coming decades, as some claim in perennial doomsday predictions. It’s just that there is nothing stronger than inertia to guarantee that it will. The water wheel in the picture above can rot or the river can dry. Hurricane low pressures can dissolve. For us, continued consumption growth may quite plausibly become too difficult due to depletion of energy and mineral reserves or accelerating environmental disasters such as climate change. If this happens, all our efforts to produce growth can be expected to be more than offset by decay.

At some point, all systems experience decay and collapse. We’ve seen the waxing and waning of civilizations throughout history. Historical studies suggest that any long-term decline in a society’s capacity to consume forebodes hyper-inflation, war, and population decline. The question for us should not be whether collapse will happen, but when, and whether it will be slow or sudden.