Study: Energy efficiency leads to greater consumption
A new report released last month by CIBC World Markets, "The Efficiency Paradox," outlines how energy efficiency initiatives and regulations often end up increasing consumption. CIBC World Markets Chief Economist and Chief Strategist Jeff Rubin, author of the report, found an "efficiency paradox" in which consumers have been able to use the cost savings generated by more efficient products to invest in additional energy consuming products.
Rubin notes, "While seemingly perverse, improvements in energy efficiency result in more of the good being consumed - not less."
As energy efficiency regulations have increased in the wake of concerns over the depleting conventional oil supply and greenhouse gas emissions, so has energy usage. The report finds that while energy usage per U.S. gross domestic product unit has fallen by nearly 50 percent since 1975, total U.S. energy usage has risen by over 40 percent in the same time frame.
"The problem is that energy efficiency is not the final objective - reducing energy consumption must be the final objective to both the challenges of conventional oil depletion and to greenhouse gas emissions," adds Rubin. "Despite the huge gains in energy efficiency, that is simply not happening. Instead, energy consumption is growing by ever increasing amounts."
According to the report, most government efficiency regulations have been aimed at the transportation industry and residential sectors, which combined account for half of the total U.S. energy consumption.
Rubin says, "While these initiatives have largely been successful at promoting large increases in energy efficiency - almost double the pace in the rest of the economy - overall energy usage in the transportation and residential sectors has risen faster than in the rest of the economy. In short, energy usage has risen fastest where energy efficiency gains have been the greatest."
Rubin does believe the world has a need for energy efficiency, however, he also believes the scope of current initiatives will not see this achieved. "In order for efficiency to actually curb energy usage, as opposed to energy intensity, consumers must be kept from reaping the benefits of those initiatives in ever-greater energy consumption. Otherwise, energy usage will be the beneficiary of our best efforts towards greater energy efficiency."