Capitalism and the Curse of Energy Efficiency
The curse of energy efficiency, better known as the Jevons Paradox—the idea that increased energy (and material-resource) efficiency leads not to conservation but increased use—was first raised by William Stanley Jevons in the nineteenth century. Although forgotten for most of the twentieth century, the Jevons Paradox has been rediscovered in recent decades and stands squarely at the center of today’s environmental dispute.
The nineteenth century was the century of coal. It was coal above all else that powered British industry, and thus the British Empire. But in 1863 the question was raised by industrialist Sir William George Armstrong, in his presidential address to the British Association for the Advancement of Science, as to whether Britain’s world supremacy in industrial production could be threatened in the long run by the exhaustion of readily available coal reserves.1 At that time, no extensive economic study had been conducted on coal consumption and its impact on industrial growth.
In response, William Stanley Jevons, who would become one of the founders of neoclassical economics, wrote, in only three months, a book entitled The Coal Question: An Inquiry Concerning the Progress of the Nation, and the Probable Exhaustion of Our Coal-Mines (1865). Jevons argued that British industrial growth relied on cheap coal, and that the increasing cost of coal, as deeper seams were mined, would lead to the loss of “commercial and manufacturing supremacy,” possibly “within a lifetime,” and a check to economic growth, generating a “stationary condition” of industry “within a century.”2 Neither technology nor substitution of other energy sources for coal, he argued, could alter this.
Jevons’s book had an enormous impact. John Herschel, one of the great figures in British science, wrote in support of Jevons’s thesis that “we are using up our resources and expending our national life at an enormous and increasing rate and thus a very ugly day of reckoning is impending sooner or later.”3 In April 1866, John Stuart Mill praised The Coal Question in the House of Commons, arguing in support of Jevons’s proposal of compensating for the depletion of this critical natural resource by cutting the national debt. This cause was taken up by William Gladstone, Chancellor of the Exchequer, who urged Parliament to act on debt reduction, based on the uncertain prospects for national development in the future, due to the anticipated rapid exhaustion of coal reserves. As a result, Jevons’s book quickly became a bestseller.4
Yet Jevons was stunningly wrong in his calculations. It is true that British coal production, in response to increasing demand, more than doubled in the thirty years following the publication of his book. During the same period in the United States, coal production, starting from a much lower level, increased ten times, though still remaining below the British level.5 Yet no enduring “coal panic,” due to exhaustion of available coal supplies, ensued in the late nineteenth and early twentieth centuries. Jevons’s chief mistake had been to equate the energy for industry with coal itself, failing to foresee the later development of energy substitutes for coal, such as petroleum and hydroelectric power.6 In 1936, seventy years after the parliamentary furor generated by Jevons’s book, John Maynard Keynes commented on Jevons’s projection of a decline in the availability of coal, observing that it was “overstrained and exaggerated.” One might add that it was quite narrow in scope.7...
See full article for the rest. Thanks to Keith Addison's biofuels list for the link.