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The Khazzoom-Brookes postulate – or why energy efficiency might not be the answer to a low carbon economy

by Mel Starrs on October 24, 2006

in Psychology & Marketing

A fascinating summary over at EurActiv.com on why energy efficiency may not be the panacea some of us believed it to be. I’ve argued in the past that the way to reduce carbon is to start with the beginning and reduce the energy you use. However, some studies have looked at this in macroeconomic terms (i.e. a big scale):

Building on the work of nineteenth century economist Stanley Jevons, they have looked at the “rebound” or “take-back” effects of energy efficiency policies. This effect takes place when the energy savings produced by the measure are taken back by consumers in the form of higher consumption. An example: a household, which has made big energy savings over the year might, at the end of the year, decide to buy a new car with the money they saved. It is questionable therefore whether, on a macro-economic level, they contributed to less energy consumption.

Interesting. It even has a great name – the Khazzoom-Brookes postulate – and I’m always a sucker for a theory with a great name. The good news is that the magnitude of this ‘rebound effect’ has not yet been agreed upon. General concensus is that it is small enough that the overall effect is still positive (i.e. net carbon is reduced). Always good to know what theories the nay-sayers may throw your way and what the counter-argument could be.

Digging a little deeper, I have found that Khazzoom-Brookes was first put forward by an American economist, Harry Saunders, in 1992. The argument centres around the ‘top-down’ (taxing fuel, etc) versus a ‘bottom-up’ (energy conservation) approach, with Khazzoom-Brookes being in favour of ‘top-down’.

I still stand by the ‘bottom-up’ approach, but I see no reason why ‘top-down’ cannot be employed concurrently? But my grasp of economics* is shaky at best, and I need to do more reading. Can anyone recommend a site or book which will enlighten me?

*BTW, my knowledge of ecomonics, politics and history (the liberal arts?) has multiplied tenfold since starting this blog. Coming from a mostly mathematical, engineering background this has been a bit of a wake-up call. Unlike many engineering problems, sustainability does not have a black and white, clear-cut solution. Which makes life interesting…