The rebound effect: the ACEEE strikes back

Michael Giberson

The significance of the “rebound effect”  remains a matter of some debate. (The rebound effect is the frequently observed tendency for energy efficiency improvements to increase consumer use of the now more efficient good or service).

Recently the Institute for Energy Research published Robert Michaels’s survey of rebound effects. In the study, Michaels concluded:

Properly accounting for the impact of rebounds is essential to obtaining an accurate picture of how the efficiency policy in question may impact consumption levels, and will also better inform the cost-savings estimates associated with decreasing consumption.  Improving the accuracy of cost-savings estimates will allow policymakers to better evaluate whether the benefits of energy efficiency programs outweigh the problems associated with limiting the choices available to consumers.

This would be a matter of mere technical interest among energy policy economists but for conservation advocates who have seized onto engineering efficiency regulation as a key public policy tool to promote resource conservation. One such group of conservation advocates, the American Council for an Energy Efficient Economy, has produced its own survey of the efficiency and rebound literature. In announcing the study, ACEEE said:

… we found that there are both direct and indirect rebound effects, but these tend to be modest. Direct rebound effects are generally 10% or less. Indirect rebound effects are less well understood but the best available estimate is somewhere around 11%. These two types of rebound can be combined to estimate total rebound of about 20%. We examined claims of “backfire” (100% rebound), but they do not stand up to scrutiny. Furthermore, direct rebound effects can potentially be reduced through improved approaches to inform consumers about their energy use in ways that might influence their behavior. And indirect rebound effects, which appear to be linked to the share of our economy that goes to energy, may decline as the energy intensity of our economy decreases.

Efficiency policy often gets treated as a “win win win” type of policy, which accounts for some of its popularity as a conservation tool. The public gets a reduction in any externalities associated with the production and consumption of the resource, more resources are left in the ground for future generations, and the consumers get more bang for their resource buck. Rebound effects cut into the first two effects, and whether consumers actually get more bang for their buck depends on the cost of the efficiency improvements and the degree to which consumers prefer to save some money now over more money later. The reason efficiency policy advocates want to push back against rebound is that recognizing even modest rebound effects can substantially tilt cost-benefit analysis against energy efficiency policies.

As mentioned in prior posts on rebound effects, the Breakthrough Institute and the Rocky Mountain Institute have dueled on the issue as well.

Saying goodbye to Edison’s hot little light bulb?

Michael Giberson

Andrew Rice has a great little story in the New York Times Magazine on the upcoming phaseout of the incandescent light bulb. No, the incandescent bulb has not been “banned,” not exactly. It is just that, a few years ago, Congress agreed to raise energy efficiency standards for light bulbs effective January 1, 2012, to a level high enough that incandescent bulbs would not qualify.

The story wraps together a little history, technology, politics, aesthetics, and economics, and adds just a few hints of political philosophy. Nice. A couple of good parts:

Lumileds, a subsidiary of the Dutch conglomerate Royal Philips Electronics, specializes in the manufacture of light-emitting diodes (L.E.D.’s), tiny semiconductor chips similar to the ones you’d find within your computer, except that they turn electricity into photons instead of information….

Philips created its L.E.D. bulb to compete for the L Prize, a government-sponsored award meant to encourage the development of a replacement for the 60-watt incandescent before the new standards begin to go into effect in January. Traditional incandescents are extremely inefficient, giving off 90 percent of their energy as heat, not light, and over the years, the government and the lighting industry tried to move consumers on to products like halogens and compact fluorescents. But no amount of subsidy or “green” branding has managed to woo consumers away from Edison’s bulb. “Not only is it in alignment with the type of light that consumers like,” says David DiLaura, author of “A History of Light and Lighting.” “It’s commoditized and it’s cheap.”

So some years ago, Philips formed a coalition with environmental groups including the Natural Resources Defense Council to push for higher standards. “We felt that we needed to make a call, and show that the best-known lighting technology, the incandescent light bulb, is at the end of its lifetime,” says Harry Verhaar, the company’s head of strategic sustainability initiatives. Philips told its environmental allies it was well positioned to capitalize on the transition to new technologies and wanted to get ahead of an efficiency movement that was gaining momentum abroad and in states like California. Other manufacturers were more wary, but they also understood the downside to selling a ubiquitous commodity: the profit margin on a bulb that sells for a quarter is negligible. After much negotiation, the industry and environmental groups agreed to endorse tightening efficiency by 25 to 30 percent.

And:

The notion of light as a thoughtless commodity would have seemed fanciful to our distant ancestors. Before electricity, light was expensive, a product of exhaustible sources like whale oil. It was Edison who finally took it to the masses in limitless quantities. On Dec. 31, 1879, the inventor invited a crowd of thousands to his laboratory in Menlo Park, N.J., to witness a demonstration of his fantastic innovation, described in a patent as an “electric lamp for giving light by incandescence.”

Technically speaking, whale oil is a renewable resource, right?

Much of the crucial basic research behind the [Philips L Prize] bulb was done by a specialized group of about 40 Lumileds scientists. They continually work to improve the L.E.D. performance by experimenting with the closely guarded “recipe” used to cook up the diodes by combining molecules of indium, gallium and nitrogen. “The material system is not very well understood,” says Ted Mihopoulos, who heads the department. Minuscule changes in temperature inside a reactor can yield significant variations in color and brightness. People sometimes say that L.E.D.’s are like diamonds; no two are exactly alike. When the time came to build an L Prize prototype, Mihopoulos said he culled the 24 brightest diodes from his lab’s private stash.

Doesn’t exactly seem like a technology ready to jump from the lab to the manufacturing line, but there are still over six months to go before the phaseout (unless Congress intervenes on behalf of consumers wanting to stick with incandescents) so I guess consumers should keep their fingers crossed.

In March, [Sen. Jeff] Bingaman convened a Senate committee hearing on the new standards. Two Republicans, Rand Paul of Kentucky and Jim Risch of Idaho, used the occasion to denounce free-market infringement. Paul pressed Kathleen Hogan, a D.O.E. official, to say whether she was pro-choice before going off into a long disquisition on liberty. “I find it really appalling and hypocritical . . . that you favor a woman’s right to an abortion but you don’t favor a woman or a man’s right to choose what kind of light bulb,” Paul said. “I really find it troubling, this busybody nature.”

Okay, I’ll admit that – in the summer at least, when I’m paying to cool my house – I’m troubled by all the heat given off by incandescent bulbs. See Energy Circle for an illustration. But count me among the consumers who have tried compact fluorescents (actually have some in my family room right now) and have been usually disappointed by shorter-than-promised lifespans for poorer quality light and at a much higher cost.

L.E.D.s seem like a great solution, maybe someday, but they still need work to outperform the cheap, hot little bulb devised by Thomas Edison so many years ago.