Might Energy Efficiency Lead to Higher CO2 Emissions?

[GliderGuider]

This is a twist on the Jevons Paradox that I hadn't run into before. To me it makes intuitive sense.

Energy Efficiency Leads to Higher CO2 Emissions?

A simple definition of peak oil:

Peak oil occurs when efficiency improvements fail to support the price increase needed for marginal production increase.

To unpack that: on the efficiency side, if the efficiency of a process doubles, then the energy needed to deliver the energy service halves allowing twice the price to be paid for the energy without impact. If America doubled the nation's vehicle fleet efficiency, $6 gas wouldn't seem so bad. On the production side, higher prices allow resources previously too expensive to be produced to be mobilised into reserves and produced. $100 oil opens the doors for Canadian tar sands and ultra deep water oil.

Hmmm..... Greater energy efficiency (especially for oil) leads to continued consumption at higher prices, the higher prices make more money available for production, resulting in continued production, which in turn results in higher CO2 emissions. If we had lower efficiency, usage would fall off faster as the price rose.

Lets all pray for a limit to energy efficiency??? It seems a rather paradoxical position for energy oriented environmentalists. Anyone care to poke a hole in it?

[txlibdem]

1. This just in: fasting causes obesity. More at 11:00

Shooting pandas causes them to mate more, thus increasing the Panda population.

Never washing my car... keeps it spotlessly clean.

Regular exposure to HIV/AIDS, Hepatitis C, and Herpes keeps you healthy. It's proven. I have a chart somewhere...

[GliderGuider]

2. It wouldn't be the first time the world has behaved counter-intuitively. /nt

[txlibdem]

3. I was just being a smart aleck ;-)

I definitely agree that rising gasoline prices will make even more nasty and polluting sources of oil suddenly seem economically viable. As long as they don't have to pay anything for their damage to the environment that is.

The only criticism I can see with the linked info is that the price of oil has doubled during a time when our demand for it has been decreasing or stagnant. Increased efficiency should effectively decrease demand and, unless I misread the link, will force them to raise prices. But demand was down and prices went up anyway. Cause, not effect. Or is that effect without cause???

Thanks for posting the info, however; it's always good to take an honest look at others' opinions.

[joshcryer]

4. Fasting does cause your body to enter a starvation mode.

And once it does that it will start storing fat.

[txlibdem]

5. That's yo-yo dieting.

But other than that you've got it right.

There are several religions who practice fasting as a way of cleansing the body and spirit. I don't see an obesity problem with all those people. Must be a statistical anomaly?

[joshcryer]

6. I do think that once the global standard of living is lifted, this will not be the case.

It would grow with population as opposed to standard of living increases.

However, it is still sobering, and only underscores why we need clean (as possible) energy.

[Fledermaus]

7. pseudoscience

But you would have us believe that if you were to get a new car that improved your efficiency 100%, you would now dive over 30,000 miles a year instead of 15,000 miles.

[muriel_volestrangler]

8. I don't think that logic works

Let's analyse what is suggested:

The main use for oil (ie transport) becomes twice as efficient.

Therefore, this claims, the price could be doubled by the producers, and people would still pay it, because they were able to afford that much for fuel before. This is debatable, but it might happen.

Then, this suggests, the higher price allows the profitable production of forms of oil such as shale or tar sands that, in the complete production and use process, produce more CO2.

However, what is the market for this new production? The existing demand for transport is already met (producing, it has to be noted, half the CO2 that it was before); any increase in transport will be twice as efficient as before in use, so the doubled price will mean the marginal cost of fuel for transport will be just the same as before. So there's no reason to think that this will mean any new transport use will occur than at present. Meanwhile, non-transport uses of oil, which have not become more efficient, will have their oil cost doubled, so their demand will decrease.

However, there's a lot of oil that could be produced using the old methods (and had been, up until the increase in efficiency), that the halving of demand has left unused. The producers of this oil will be able to undercut those producing from tar sands etc., and thus prevent the oil price from actually doubling.

While it's quite likely that an increase in efficiency would mean more transport miles, because some uses would become affordable (eg in developing countries), it's never going to get to the point where it will mean more CO2 overall - just that a doubling in efficiency won't mean a halving in CO2.

All in all, I think the scenario that theoildrum presented just doesn't make it through basic considerations of supply and demand.

[GliderGuider]

10. It depends on whether demand for travel is saturated, and whether we're actually at Peak Oil.

The demand we're talking about isn't for oil per se, it's actually for VMT.

I think the flaw in your analysis is that the effect of efficiency would not be to increase the amount we're currently driving in a year, but that we would be able to keep more people driving longer in a high price/high efficiency regime than in a high price/low efficiency regime. Increased fuel efficiency lowers the cost per VMT, and keeps people at the lower margin from being elasticized out of the system as quickly - i.e. they keep on driving when otherwise they might have stopped. The upper end of the consumer range might not be affected at all (i.e. their demand for travel is saturated), but there may be more people at the bottom end of the spectrum whose unsaturated demand can now be met because of a lower effective price. .

However, it's a complex problem, because it depends on widely varying regional price elasticities of demand (the degree to which people reduce their VMT consumption with increasing cost per mile), the effect of fuel efficiency increases as a cost-per-mile divisor, the degree to which oil price influences extraction rates, and the actual effect of Peak Oil on global extraction rates.

I assume that Peak Oil has essentially capped any further increases in production, so I think that oil prices will be driven by those regions with low short-run elasticity of demand, and those with high elasticity will be marginalized out of the market as usual. Increases in fleet fuel efficiency will serve to move the price curve down, and this will factor into regional demand when filtered through the local price elasticity.

There's are no surprises here at all. To me the big question is oil's price elasticity of supply due to Peak Oil. If the elasticity out to be essentially 0 (i.e. no amount of price increase results in an increase in the oil supply) then all bets are off, and there will be no increase in CO2 generation from oil no matter how high the price goes.

Coal is probably another story. The market for electricity is definitely not saturated, there is lots of supply available at higher marginal prices. Are there still significant efficiencies to be gained in thermal generation of electricity from coal? If so, we could see a fatter CO2 tail as marginal countries are able to afford more coal generation capacity. As a side note, such efficiencies will serve to further slow the entry of renewables into the market, absent policies that raise the cost of carbon.

So overall, I think that the Oil Drum article is probably barking up the wrong tree. They took their eye off their raison d'etre - Peak Oil - and as a result the analysis is significantly flawed.

[jpak]

9. "Numbers purely illustrative - not predictive"

:rofl:

:rofl:

:rofl:

What next? A seminar on the Laffer Curve and Trickle Down Economics?

Lets all pray for intelligent posts - assuming that prayer can do such things (which it cannot).

yup