Jevons Paradox

I had never head of Jevons paradox until I heard an Odd Lots podcast (through Bloomberg) on the energy transition. Jevons paradox is a cause and effect theory that generally states that increases in efficiency are offset by increased adoption or use He famously applied it to coal (in 1865), noting that the marvelously efficient steam engine used for a variety of industrial purposes needed less coal, but more of these engines coming into use erased the benefit of the efficiency. Therein lies the paradox. Or the “efficiency dilemma.” Wider roads get filled with more cars. Lower mpg vehicles encourage more driving. Lower food prices cause people to eat more.

Jevons paradox has been used deflate enthusiasm about innovations in the energy sector. The thinking is we’ll just use more energy if it is cheaper. It’s an alarm bell rung intending to keep us producing energy the same way as always. But the clean energy revolution is here already proving its worth and value when paired with policies to electrify our buildings and transportation. Efficiency and improved deployment leads to widespread adoption. That is a positive for electricity prices. Is cheap energy even an invitation to use more? There are some factors that don’t make this an inevitability. There is consumer behavior/education, managing demand, and even government policy choices that could capture value from the efficiency gains. But even if the quantity and price of renewables creates more electricity use a result… this increase is driven by renewable, clean sources.

Wind and solar do admittedly have their own environmental cost on the outset, but when these technologies are adopted at large scale it is still emphatically not the same as us having to mine and burn coal like we did in the late 1800’s (or continue to do in many places). Certainly there are rare earth mining and recycling concerns with this inevitable increase. But the sun shines and the wind blows. The storage of this electricity is a work in progress, our user to grid EV facilitation needs to be implemented…. I could go on, but these problems are exciting to try to solve. We’re gaining traction and finding solutions that can ultimately undercut Jevons Paradox.