The Burst Pipe-Dream Of Energy Saving

  • Date: 30/08/12

Policy-makers are calling for oil and electricity to be used ever more efficiently. But scientists say that measures like banning light bulbs and home insulation are as good as useless to help reduce energy consumption.

The family of Karl-Günther Lohas is the dream of Germany’s energy policy: The teacher from Stuttgart has replaced all light bulbs, from the cellar to the attic, with LED lights long before the ban against light bulbs goes into effect in September. He has rendered harmless the energy-consuming stand-by mode of the TV with a timer and invested in a new refrigerator with an efficiency rating of A Triple Plus.

Insulation? Of course! Heat pump? That’s a matter of honour! The Lohas’ washing machines only runs at 30 degrees Celsius: the laundry is almost as clean as in energy-guzzling 40 degrees. Compared to before, the Lohas family now saves 300 Euros per year in energy costs.

According to the federal government, soon all Germans should live like the fictional energy-saving champion from Stuttgart. After all, the government’s scenarios regarding the nuclear phase-out and the targets for green electricity are based on the assumption that Germany’s electricity consumption can be reduced by a total of ten percent by 2020.

By 2030 a reduction of 25 percent should be achieved, although by then the majority of car traffic is supposed to be electrified. And of course, Germany is Europe’s model pupil who wants to meet the regulation targets of the European Commission, i.e. the reduction of the total primary energy consumption, including oil, gas and coal, by 20 percent by then.

Threat to economic growth?

The politicians try to disperse fears among the population that such ambitious goals could lead to restrictions on the quality of life and endanger economic growth: “Increasing energy efficiency” is the magic formula on which environmental and energy politicians over all party borders have agreed upon.

They allegedly promised to solve all environmental problems through technology, promised welfare through “green growth” and consumption without feeling guilty. With the reference to the coming efficiency era, politicians can distract from the cost of the energy revolution without squabbling. ‘We will save so much energy that the costs will hardly matter,’ is the message

Wishful thinking

Federal Environment Minister Peter Altmaier (CDU) announced a “great offensive in energy efficiency”. The EU Commission attacked the spendthrift with an “Energy Efficiency directive” and the United Nations recommended energy efficiency even as an effective means to combat climate change. Opposition parties believe they can attack the government most fiercely by accusing it of laxity in enforcing efficiency programs.

Environmental groups demonstrate no understanding of consumers, who mourn after the old light bulb and therefore buy industrial light bulb which are is still permitted: “Energy transition and climate protection are bound to fail if any measures to increase the energy efficiency is subverted by trade and industry” complains the German Environmental Aid and threatens: “When legitimate consumer protection organization, we will legally pursue all known cases of illegal resale of bulbs.”

So great is the confidence in the potential of efficiency gains that scientists have ignored this issue for a long time. But members of the Bundestag inquiry commission on “Growth, prosperity & quality of life” have begun to ask themselves recently why energy consumption in Germany, after 20 years of efficiency policy, is still more or less the same as in 1990?

Should not environmental taxes, introduced in the late 1990s by the Social Democrat-Green Federal Government, actually incentivised electricity saving? Why, then, has electricity consumption in Germany continued to grow continuously?

The simple equation is not working

The German MPs asked an international group of researchers for answers. Their findings are now available as an interim report to the Parliamentary Commission. It should be an unpleasant surprise for environmental politicians and efficiency apostles. More energy efficiency will not lead to less energy consumption – that’s the paradoxical judgement by the energy experts. On the contrary, efficiency measures could lead to an increased consumption of energy and resources.

“Savings from efficiency is widespread wishful thinking”, the economist Reinhard Madlener of the Rhine-Westphalia University (RWTH) summarises the report for disbelieving MPs: “Saving energy through efficiency gains in a growing system is simply an illusion.”

The rebound effect

What drives scientists to such a judgment becomes clear when we look at the realities of the family of the energy-saving master Karl-Günther Lohas. When the Stuttgart native installed energy saving light bulbs in his house, he also took the opportunity to lighten out the entire footpath to the garage. The Lohas now do not always switch off the lights when they leave a room.

With the calm conscience of active environmentalists, they now also use a higher air temperature in winter from the eco-heating. For fear of mould in the perfectly insulated house, they tear open the triple-glazed windows more frequently, which require frequent reheating.

As the fuel-efficient car purrs so easily on the road, their next holiday destination is not as usual the Bavarian Forest but the south of France. And the new flat screen TV with top energy saving values per square centimetre screen surface is with a 1.50 meters screen size twice as large as the old tube model. The bottom line is that the model family consumes now nearly as much energy as before.

If the energy-saving success is immediately eaten up by increased consumption elsewhere, scientists talk about the “rebound effect”. Sometimes, even more energy and resources are used after the efficiency measures than before. In that case, the scientists speak of the “backfire effect”.

According to studies, the rebound effect from the car use in German households reaches up to 67 percent. U.S. studies give even higher values: 87 percent of potential savings would thus be destroyed again by behavioural and demand changes in the household. In a few cases the “backfire” goes even up to 300 percent: The efficiency measure has triggered so a threefold higher consumption elsewhere.

Some institutions believe that on average only about 25 percent of all efficiency measures are destroyed again. The renowned Rhine-Westphalia Institute for Economic Research (RWI) in Essen on other hand holds 60 percent more likely to be realistic.

The Advisory Council on the Environment of the Federal Government believes in similar dimensions. It writes that “the long-term macro-economic rebound effect is regularly above 50 percent and reached values of over 100 percent.” The gains of each efficiency measure would therefore cut in half or sometimes even completely.

Also, the Inquiry Commission of the Bundestag concluded in its interim report, published in May, that “the rebound effect in a vast majority of cases is a significant size between 50 and 100 percent”, with a serious risk of backfire. “Estimates with an improved methodology in recent years tended to be corrected upwards”.

The Jevons Paradox

Given these studies, scientists like RWTH professor Madlener wonder how “the rebound mechanism is still consciously or unconsciously ignored, suppressed or not well understood by many non-economists, journalists and government officials.” The rebound effect would “in most model calculations either taken into account completely inadequately or not all.”

This is also criticised by Manuel Frondel, Head of Environment and Resource at RWI: “To date, the existence of the rebound effects as a result of increasing energy efficiency in the German energy policy gets paid hardly any attention.” Some institutions, which make long-term forecasts and targets for saving electricity or carbon dioxide, normally do not include the rebound effect in their models.

The same goes for the energy scenarios of the federal government until 2020. Even the expert committee of the United Nations climate change, the “Intergovernmental Panel on Climate Change” (IPCC) has stated the rebound effect while the glossary of the latest, fourth assessment report. But according to Frondel considered the IPCC “no rebound effects in their scenarios on the future emissions of CO2 and other greenhouse gases.”

The ignorance of the planners

To achieve the energy savings targets set by the federal government could therefore be much harder than thought. The ignorance of the planner is all the more surprising because the rebound mechanism was observed and described 150 years ago.

In 1865, the British economist and philosopher William Stanley Jevons wrote that “the economic use of fuel does not lead to a reduction in consumption. Just the opposite is the case.” That the fuel efficiency can lead to more consumption is since known as the “Jevons Paradox”.

Jevons was inspired among others by James Watt, the inventor of the modern steam engine. The Scottish engineer was awarded a contract to improve a poorly functioning steam engine at the University of Glasgow in 1764. He succeeded so well that his engine required 60 percent less carbon than its predecessor producing the same amount of power.

This tremendous increase in efficiency did not lower coal consumption: Watt’s steam engine was one of the triggers of the industrial revolution, which increased the coal consumption of mankind immeasurably and has been responsible for a major part of the global environmental problems. Watts’ efficiency invention had a “backfire” effect of an unimaginable scale.

Of course, efficiency is in itself a good thing: Stefan Thomas, Senior Research Fellow at the Wuppertal Institute, stresses in the journal “Energiewirtschaftliche Tagesfragen” the many benefits of a more efficient use of energy and resources: money, which is saved due to saved energy costs, is available, for example, for increased comfort.

An efficient industry enjoys an advantage in international competition. That is all right; the increase in overall energy efficiency is therefore rightly one of the main policy objectives of the Federal Government.

The horsepower boom

Only: efficiency targets are always sold politically with the environmental statement that they would reduce the consumption of electricity, coal, oil and gas in absolute terms. A misconception, say economists. Also, the rapid growth of the world population in recent decades and the resulting dramatic increase in the use of resources is due, not least, to a more efficient use of resources, says RWTH expert Madlener.

Because it permits “the use of more productive assets, including for the production of food, which in turn is a pre-condition for a larger population and higher levels of consumption.”

That the federal government will barely be able to reduce Germany’s energy consumption with efficiency targets shows a look at the automotive industry. There, politically demanding efficiency targets are typically implemented idiosyncratically by the carmakers: cars that absorb less fuel are rarely produced.

Rather, vehicles which are advertised with the advantage “with the same consumption” as the previous model to have “more power”, are developed. No wonder that the German gasoline and diesel consumption has hardly been falling for decades. The engines are getting more efficient, but at the same time also bigger and stronger. New cars had an average of 118 hp in 2009; in the first half of 2012, it is already 138 hp.

Even though the last traditional bulbs will be banned from the retail sector from next Saturday onwards by decree of the European Commission, there should be, in the opinion of RWI energy expert Frondel, some rebound effects which will devour the expected energy savings to a certain part again. For it is possible that households will leave their new energy-saving lamps switched on significantly longer in the knowledge of the much lower consumption costs or even switch on more lamps at the same time as before.

The alternative

That cheap light sources will be used longer is also shown by British studies. Thus the demand for lighting in the UK has increased by 80 times between 1800 and 1900 because the light sources – from tallow candles to wax candles to gas fires – have become cheaper and cheaper and therefore more affordable.

Until 2000, the light use per capita, measured in lumens hours, increased even by 6,500-times compared to the level of 1800, while at the same time, gross domestic product increased by only the factor of 15. The reason: the invention of the light bulb increased the efficiency of light generation by several thousand percentage points in comparison to candles and gas lights, which made light into a mass product. Despite these enormous improvements in efficiency, there was in the end not less, but more consumption.

Even in the face of this immense increase efficiency in light sources it was “very surprising that the European Commission now wants to force further improvements in efficiency by regulation,” says RWI expert Frondel. If artificial light becomes even cheaper thanks to the energy-saving lamps, further increases in the demand for lighting are to be expected.

It was in any case “difficult to imagine that we will get in the foreseeable future to a saturation point: There are many dark corners that could be illuminated at night in all cities and towns.” The politicians should not hope that by forcing people to use LED lamps to reduce energy consumption in absolute terms.

Scepticism about the efficiency targets

If Germany and Europe are to use less coal, gas and petroleum, government efficiency targets will help little. An EU regulation, which requires a limit of CO2 emissions from passenger cars and prescribes technical standards, therefore must also be approached with scepticism, says Frondel.

As an alternative that can actually lead to an absolute reduction of energy and resource consumption, scientists see only direct consumption taxes. “Unlike efficiency standards, taxes confront the drivers directly with the cost of individual mobility and driving,” says RWI expert Frondel. Reinhard Madlener of the RWTH Aachen University agrees: “To keep the rebound effect small, one cannot avoid the introduction of taxes.”

For a long time, economists have advised policy-makers to redesign the tax system; to move away from direct taxation and towards more consumption taxes. If an increase in the fuel tax is accompanied by a corresponding reduction in income taxes, the citizens’ tax burden does not increase.

Translation Philipp Mueller

Die Welt, 25 August 2012