Jevons' Paradox and the Myth of Resource Efficiency Improvements
by John M. Polimeni, Kozo Mayumi, Mario Giampietro, and Blake Alcott
ISBN: 9781844074624
A man by the name of William Stanley Jevons, in a book he wrote called The Coal Question back in 1865, stated “increasing the efficiency of a resource leads to the increased use of that resource”. This simple statement was made concerning the introduction of the coal-fired steam engine and has had many test applications over the years across numerous industries. The Jevons Paradox, as it has come to be known, is widely used in the field of economics and can help us understand the realistic availability of our natural resource supplies. One of the central concepts of the book recommended here is the increase in agricultural production efficiencies over the past fifty years and how those efficiencies in yield resulted in larger human populations, which then required more feedstocks to sustain them than in the system with pre-efficiency modifications. Jevons Paradox stipulates that increases in efficiency alone will not lead toward sustainability. Today, the theory is as valuable as it was one-hundred fifty years ago. Many people who argue that renewable energy is the way to future technological innovations that will ultimately reduce our consumption of natural resources to sustainable levels might change their opinion after familiarizing themselves with Javons Paradox. By pulling on lessons from the past, this book leaves the reader asking if sustainability is an unattainable dream.
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Whether we are talking about the food we eat or the cars we drive or the electricity that powers our homes, the same five-step process applies. Natural resources are harvested and then manufactured into products that are transported to a marketplace so that consumers can use them and then ultimately dispose of them; harvest, manufacture, transport, consume, and dispose. This simple five-step process applied millions of times over the course of several successive centuries, collectively, is having a catastrophically detrimental effect on virtually every ecosystem and species on earth, including the human species.
Contrary to what renewable energy advocates often claim, simply retrofitting our existing consumerist structure will not solve all of our problems. If we simply change the resources that we are consuming rather than changing the underlying assumptions about our consumerist society, we will remain locked on the trajectory of depletion, simply depleting alternative sources.
We need to change more than the list of resources that we consume; we need to adopt a new business structure that allows for our environment to be cleaned up. Our entire economic system needs to begin to enact regulations that will allow for it to evolve into a one that is based more upon the natural systems from which it draws all of it feedstocks. If our society is to thrive, it will have to learn how to sustain itself into the future where our planet will house an ever-increasing human population.
Jevons Paradox warns us that increasing efficiency is not enough to solve our depleting natural resource stock on earth. The conditions in the decades after the advent of the coal-fired steam engine showed us that, even though the energy efficiency levels of a resource (coal) were increased, overall use of that resource increased. The reason this happens is because, as the efficiency of a resource increases, price decreases, making the resource more affordable to a wider array of consumers. If we do not change the consumerist culture that has been created by capitalism, we will continue to consume more and more resources as the population grows. Even after efficiency levels are increased, the same five-step process exists: Harvest, manufacture, transport, consume, dispose. This process is what is unsustainable; by simply putting a different resource through the equation, we are not addressing the root cause of the problem.
Harvesting resources will always be damaging to the environment; we cannot get around this, but we need to start looking at the amount of waste that is being created collectively by a consumerist economy. If we begin to look more closely at the amount of waste created through the manufacturing process and analyze ways to incorporate waste back into the production loop, we might be able to lower our levels of resource extraction to sustainable levels.
Businesses can streamline their manufacturing processes in many ways that ultimately benefit their bottom-line and the environment. Capturing waste heat to produce energy to be used on site, or capturing emissions to be processed into industrial chemicals that can be sold as feedstocks to other industries, or reuse and recycling program costs that are figured into the production process are but three ways to streamline consumerist culture and can lower long term manufacturing costs and benefit the overall environment.
Once the products are made, they are often moved across the world by airplanes, trains, trucks, and cargo ships. This process of sending goods across the planet is extremely costly in terms of its use of fuel. For now, petroleum is the central source of power for the transportation industry, but not only are we running out of this fuel, we also have come to understand that burning petroleum on the scale that we are is having detrimental effects on human health and on the health of several key ecosystems across the planet. To continue shipping goods around the planet using petroleum as the base fuel is insane. We need to start creating local economies that do not depend so heavily upon economies of scale in order to reach their economic equilibrium. We need to start figuring the costs associated with environmental degradation into the equations relating to sending goods around the globe.
Depending on the product, the consumer usually uses a particular good and then disposes of it in the trash. Most goods that are made today are not built to last very long; computers are obsolete in 3-5 years, cars are inefficient after 10 years, televisions, refrigerators, and other household appliances are simply not built to last. Instead, it is in a company’s best interest to design a product that needs to be replaced in a cyclical fashion in order to keep revenues coming in over time. This kind of degenerative systems-thinking is what is causing us to realize that our current economic structure is unsustainable. We are running out of places to discard our waste; we are running out of energy to manufacture our goods; and we are running out of resources to harvest.
Companies have a responsibility to design products in a way in which they can be discarded in a responsible manner, a manner in which the components of the original product go back into the manufacturing process instead of heading to a landfill. Old computers need to be reengineered, old refrigerators need to be rebuilt, old car parts need to be reused and recycled. Not only is the marketplace currently adopting measures that will allow society the ability to easily adapt to these measures, but political momentum is building behind the idea of evolving capitalism so as to make it more sustainable.
So, how much efficiency will be enough to overcome Jevons Paradox? Is there one innovation in manufacturing, transportation, or in consumption that promises a substantial return on an investment? The answer is that we need legislation to be enacted that helps create a new system of ground-rules that will govern the business world. There is no one innovation that is the answer. Sustainability will be met through the use of a variety of practices; efficiency is just one of these practices. Much like the patchwork of renewable energy sources that will power the future, sustainability is made up of a consortium of different practices across every sector of our society.
Finding an alternate fuel to oil, one that comes from a renewable source, is just the beginning. How about wires that transfer energy almost instantaneously with 100% efficiency, or filters made from algae blooms that capture CO2 from industrial smokestacks? The point being made here is that innovation is coming in many forms spread out across every industry. This is an evolution of the human imagination, and it is all set to come to a reality near you over the course of the next century. We can either choose to innovate, or we can continue to operate from behind the eight-ball in a perpetual state of disaster recovery for the foreseeable future.
The patchwork of innovation that is forming presently will not be allowed to enter the arena of entrenched industry moguls without legislative help. If the past few decades are an indication of the stakes, there is destined to be a fight in order to change our capitalistic society. American capitalism was built upon monopolies and connections between insiders, but the evolution of economics over the course of the next one-hundred years does not have room for monopolies or for old-world cronyism.
The world, and hence, political participation, is evolving toward an open, information-based arena similar to the one that is developing on the internet; one where every individual is afforded the opportunity of a fair playing field. Customers and citizens alike can learn so much about a company or country and its products or actions before they decide to buy an item or support a candidate. The availability of information makes it so that companies and leaders who abuse people or the environment in bringing their product or vision to life are being held responsible for their actions; in some cases, companies or leaders are even held liable for the unintended social and environmental consequences hidden in their manufacturing processes or caused as a result of their legislation.
In other words, sustainability requires information, and information leads to rules being put in place to protect stakeholders. Regulations, generally speaking, have been seen in the past by the established ruling class to be intrusive, but without regulation, we can not achieve sustainability. Regulation is the key to creating a foundation for the global economy upon which certain principles will be honored. Regulation is good for people and the planet and bad for those who seek to take advantage of the system at the cost of others. We have learned countless times in our past that without regulation, people and businesses will take advantage of others and pollute the environment.
Let us look at an example here to highlight the evolution of an industry so as to maybe shed some light on where we are headed. We will look more closely here at how the application of Jevons Paradox is spurring the advancement of the field of biofuels. Perpetually applied, this idea of economic evolution fueled by innovation will ultimately lead to the development of a sustainable system that can then be implemented to legislative policy.
Once the world agreed that our use of oil was unsustainable, we set out to design a system for producing fuel that was able to sustain itself in spite of the planet’s global population projections. Corn ethanol production came online as the first solution to the energy matrix we set up for ourselves. It was touted as a sustainable solution to some of the concerns regarding petroleum, mainly price spikes and atmospheric pollutants. In terms of harvesting, it could be grown and produced domestically, cutting down on transportation costs; but in terms of manufacturing, we found that the increased demand for corn caused price spikes in the food sector. It was also speculated that consumption would increase because no system was put in place to lower these rates. In terms of disposal (in this case, burning it), analysts have suggested that instead of reducing atmospheric pollutants, we will simply be emitting similar levels of different, equally harmful contaminants. Innovators set out to design a process of making our transportation industry sustainable by only addressing one of the five steps of production. Through research and financial simulations, the market’s first choice, corn-based ethanol, was shown to be a complete failure at addressing most of the concerns that initiated the project because it did not address the root of the problem.
Their second choice, cellulosic ethanol, while addressing more of the concerns, has proved itself to also be unsustainable in the long-run. In terms of harvesting, the feedstock is grown domestically or taken directly from local landfills. In terms of manufacturing, since we are not using food crops, we detach ourselves from food price spikes (although some analysts have suggested that marginal cropland will have to be used for switchgrass and woody vegetation growth). In terms of consumption and disposal, the rates remain the same as with corn ethanol. The fundamental production cycle remains in place with cellulosic ethanol, and we are still locked on an unsustainable growth track in terms of atmospheric pollutants and consumption levels based upon population projections and feedstock availability.
The idea of an ethanol-powered economy, though, did not die because it failed twice. That is because the fundamental concerns with a petroleum economy are real and ethanol relieves some of them in terms of CO2 emissions, future extraction costs, foreign policy issues, and environmental degradation. Sure, we can go electric with all of our automobiles, but where will all of the power to charge the vehicles come from? Most likely, it will come from burning more coal at power plants, which will be more damaging than driving on petroleum. Creating a sustainable substitute for oil will allow us to begin the shift from a fossil fuel economy toward a renewable one.
Accounting for the population increases and the growing global middle class of the future is a difficult task, but ethanol innovators must account for future demand when figuring the sustainability of a given feedstock. While first and second generation biofuels, as some analysts suggest through their use of computer models, are unsustainable, researchers have found their answer to the source of the next generation of biofuels in the most unlikely of sources. What they have found is algae. Yes, algae. This fledgling industry may be the solution we have been waiting for; it is poised to provide energy in a multitude of forms for an unlimited number of people.
Algae grows quickly, cutting down on costs associated with production while increasing the availability of feedstocks; some strands are nearly 50% oil by mass, making the refining process extremely efficient; it absorbs CO2 from the atmosphere, so it can act as a filter for pollutants while it creates fuel; and innovators and scientists are working to bring the costs of commercial production in line with those of petroleum refining.
The technology exists, or will shortly, to be able to produce algae-based ethanol in a cost-competitive manner. Algae can be grown on filters at industrial sites inside smokestacks to consume valuable CO2, or it can be grown in giant algae ponds located next to power plants where smokestacks are bent around to pump their CO2 back into the water, or it can be grown in laboratory conditions where it can be genetically engineered to grow faster and produce more oil. Scientists are also working to genetically engineer algae so as to emit more hydrogen through the growing process. The hydrogen gas can then be used as an additional fuel source. In terms of consumption, since algae sequesters CO2 from the air, the more we grow, the cleaner our atmosphere becomes. As the population grows and more power plants are built, more algae farms are installed in order to keep pace with increases in emissions. Algae requires less acreage than cellulosic ethanol’s feedstocks, and therefore environmental concerns regarding sustainability are addressed. We are left with a different set of atmospheric pollutants than petroleum, but we have addressed four of the five steps in the production process. Only time will tell what next generation biofuels will bring.
From corn to biomass to algae, the innovation keeps evolving because of the need to clean up the entire production process; it is important to consider all of the five steps in the production process, harvesting, manufacturing, transportation, consumption, and disposal. If we don’t, we are simply re-disguising the original condition and are, in no way, solving problem we are facing collectively.
Will ethanol help in cleaning up the five-step process? Some people say that it does. Others say that it might in the future, and still others claim that it makes the situation worse. Depending upon which generation technology these people are referring to, they are all correct.
Once the questions regarding its primary feedstock are resolved, ethanol will contribute to a sustainable world in three major ways. First, it will burn considerably cleaner than fossil fuels, lowering air pollution and the trickle-down environmental poisoning that ensues from dirty air. Second, feedstocks that are grown for production will sequester CO2 from the air; and third, environmental degradation that occurs around extraction sites for oil, coal, and natural gas, not to mention the number of oil spills on the world’s oceans or the wars currently being waged to secure access to oil, all will be a thing of the past.
Obviously, though, algae ethanol is not at your local gas station available for purchase right now. This is because the evolution of economics is only in its infancy. It is still much cheaper to poison the air and degrade the environment than it is to enact environmental regulations around the fossil fuel industry. The sustainability movement is still trying to break in to mainstream economics and politics. It is still in its initial phase where it is trying to define itself, fleshing out different scenarios before innovations are mass-produced and regulations legally enforced.
While consumer items created from renewable or sustainable sources are mostly scattered about and hard to find here at the beginning of the twenty-first century, over the course of the next one-hundred years, those items will be the standard, and our way of life that we are living now will seem as archaic as that of those who lived in the nineteenth century do to us.
For now, though, we have to deal with what we have, and for us that means investing in the initial sustainable economy infrastructure and pressuring politicians to enact legislation that puts a realistic value on a functioning ecosystem. We can no longer continue living lives filled with creature comforts at the cost of future generations. It is time to start building the bandwagon that will drive the evolution of capitalism toward sustainability.
Big innovations in sustainability are not readily offered to the public yet. They will all be here soon. You, however, are being offered an opportunity to help create the sustainable economy of the future by investing in innovative companies on the forefront of the renewable economy. Only through conscious investing can we create a sustainable domestic energy policy. We can no longer just sit idly in the status quo and hope that change will come. Through bold investments, the individual investor can be a part of creating the momentum that will enable legislation to be passed that will allow for the creation of a sustainable economy. The markets respond to shifts in monetary investment and politicians listen to markets.
The exciting part about living in a polluted world where many life forms are going extinct is that the human imagination is in overdrive trying to come up with a solution to our environmental end-game that we have created for ourselves with our economy. Over the next one-hundred years, we will witness an age of human discovery equal to other great periods in human history, or we will become part of one of the greatest mass-extinction events in the history of this planet. The smart investor will help build the vehicle that will help us travel into the future.
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International Energy Agency
www.iea.org
The International Energy Agency (IEA) is “an intergovernmental organization which acts as energy policy advisor to 28 member countries in their effort to ensure reliable, affordable and clean energy for their citizens”. It was created during the global oil crisis in 1973-74. It is primarily concerned with energy security, economic development, and environmental protection. Some of their current work is focused on climate change policies, market reform, energy technology collaboration, and outreach. This website is important to review in order to analyze some of the global trends developing concerning energy development in the twenty-first century.
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