The rebound effect: An evolutionary perspective

Abstract

The rebound effect presents a major flaw in to energy conservation policies that aim to reduce energy consumption through energy efficiency development. Economics and energy related disciplines have thus far developed tools to measure such a phenomenon. This paper attempts to explain this seeming paradox using a thermodynamic-evolutionary theoretical framework in addition to the traditional economic approach. We here propose that evolutionary systems, such as biological or even economic systems, may rearrange themselves in a more complex fashion under the pressure of an increasing flux of energy, driven by the higher conversion rate of greater efficiency. Higher complexity, due to a greater energy density rate, counteracts the positive effects of energy efficiency. We investigated this hypothesis in the context of the road freight transport system and the productive structure. The qualitative analysis in this paper, further substantiated by figures, provides a link between the dynamics of production patterns and the effect of efficiency in the light of the macro-economic effects of increased energy demand. The analysis departs from a rigorous investigation of the actual energy efficiency evolution in the road freight transport system to develop through a survey of the subsequent worldwide economic revolution in the production system. It is then shown how outsourcing, the key feature of globalization, can be identified as the main source of traffic density growth. Finally, four paradigms are used to stress how the shift in the production system must be considered a leap in structural complexity that consequently serves to increase the frequency of components’ interactions.

Introduction

The rebound effect is portrayed by economic literature as a price-adjusting phenomenon that counterbalances, partially or thoroughly, the conservation effects expected by the adoption of a more efficient technology (Khazzoom,, 1980, Brookes, 1990, Saunders, 1992). It involves an upswing of new costs brought about by the introduction of new energy conversion technology. Economic theory, however, seems to focus solely on the problem of estimating the size of the effect, i.e. the percentage of savings offset by the increased demand (Geening, et al., 2000, Berkhout et al., 2000, Dimitropoulos, 2007). In the present analysis, we address the rebound effect from evolutionary and thermodynamic perspectives using an approach first envisioned by Alfred Lotka in the field of life sciences (Lotka, 1956). The aim of this analysis is therefore to provide unique insight on the issue in order to achieve a novel explanatory framework of the phenomenon. We seek this new framework due to our conviction that phenomena exhibiting significant analogies, albeit belonging to different fields, can be approached using a broader theory that is general in terms.

There are indeed similarities between economical and biological systems. One important analogy, particularly relevant to the present research, is the relationship between higher efficiency and higher energy level: systems with a better energy conversion rate also display a higher energy density rate. If the positive relationship between energy efficiency and energy density is a constant of thermodynamic evolutionary systems then the analogy can be broadened to a third feature: complexity (Odum, 1996). It is considered fundamental knowledge of evolutionary biology that greater complexity is linked to greater efficiency. Evolution thus awards the highest efficiency achieved to the highest structural complexity throughout the system (Alberts et al., 1994). Furthermore, it is well known that greater complexity entails higher energy costs and thus, the greater the complexity, the higher the energy density rate. It is therefore possible that the formation of a more complex structure may offset the conservation effect brought about by a more efficient technology. The explanation of the rebound effect would rest in the complexity leap of the system following the advent of new technology.

More specifically, the rebound effect addressed here is the macro rebound effect or wide-economy rebound effect, a specific type of rebound effect that is considered most crucial in determining energy consumptions (Sorrell and Dimitropoulos, 2007). The macro rebound effect underlies a long-term adjusting mechanism affecting factors markets. As stated by Sorrell and Dimitropoulos: “a fall in the real price of energy services [that] will reduce the price of intermediate and final goods throughout the economy, leading to a series of price and quantity adjustments, with energy-intensive goods and sectors gaining at the expense of less energy-intensive ones" (Sorrell and Dimitropoulos, 2006). This effect is considered by some authors to be the main cause of the constant growing trend in energy consumptions (Ayres and van den Bergh, 2005, Sorrell and Dimitropoulos, 2007). Nevertheless, the methodology and the extent of the impact on the economy energy path remain unanswered questions (Dimitropoulos, 2007). Here, the macro rebound effect is analyzed in the context of the productive structure's shape, as a result of the energy efficiency in the freight transport sector. This work will not tackle the question of the rebound size, nor the dispute over the proper econometric/theoretical approach. It will propose instead a novel view on the issue in order to create a bridge between different disciplines and deal with the broader question of the relationship between energy level, energy efficiency, and complexity.¹ Although the analysis is qualitative, it provides a link between the dynamics of production patterns and the effect of efficiency increases, in the light of the macro-economic effects of increased energy demand.