Economy-wide efficiency gains raise total energy use, the macroeconomic form of Jevons's paradox.
Khazzoom and Brookes's macroeconomic version of Jevons. The policy consequence is uncomfortable: efficiency standards alone do not reduce total consumption, which is the case for pricing carbon rather than mandating efficiency.
In practice
- A country that doubles its vehicle fleet efficiency finds total fuel use higher a decade later, because driving became cheaper.
- An efficiency standard for appliances lowers running costs and raises ownership, and the aggregate demand rises.
- Further reading
- Wikipedia
- Subject
- Economics & Incentives
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- The theories behind every argument about money