Decoupling fails — rebound

Improving resource efficiency is probably the most common argument put forward in defence of decoupling. However, every action that responds to savings in resources is prone to rebound effects, that is a difference between the projected and the realised environmental savings from an efficiency improvement. Such a phenomenon was hinted at already in the 18th century by Stanley Jevons in The Coal Question (1865, pp. 140–142): “It is wholly a confusion of ideas to suppose that the economical use of fuel is equivalent to a diminished consumption. […] Whatever, therefore, conduces to increase the efficiency of coal, and to diminish the cost of its use, directly tends to augment the value of the steamengine, and to enlarge the field of its operations” – hence the rebound effect often qualified as “Jevons Paradox” (Giampietro and Mayumi, 1998; Jevons, 1865). This idea that efficiency changes would rebound into more consumption gained ground in the field of energy economics in the context of the oil crises of the 1970s, most notably with the work of Khazzoom (1980) and Brookes (1990) – later referred to as the “Khazzoom-Brookes postulate” (Saunders, 1992). After more than 40 years of research, the literature has expanded to encompass a variety of causes and effects.28 In order to account for overall decoupling, the concept we find most relevant is the “environmental rebound effect” (originally used by Goedkoop et al., 1999, and then by others such as Murray, 2013; Spielmann et al., 2008; and Takahashi et al., 2004), which goes beyond energy issues to encompass a wider range of environmental concerns.29 Several types of rebound effects Rebound effects come in many shades depending on whether efficiency leads to an increase of consumption of the same product or service (direct rebound effect), whether freed resources are allocated elsewhere (indirect rebound effect), or whether consumption is induced by structural changes in the economy as a whole (structural rebound effect). These effects, alone or together, are then either partial or total depending on the magnitude of their impact on resource use. First-order: direct rebound effects Direct or first-order rebound effects refer to cases where the efficiency gain is reinvested as additional consumption of the same product or service. This is especially true for normal goods for which a decrease in the cost of use perceived by users translates into higher consumption. For instance, driving a more fuel-efficient car more often, faster, or over longer distances; the petrol that was saved in efficiency by the car rebounded into more usage of the car. Direct rebound effects can also occur in production, for example when the acquisition of a more energy-efficient machine motivates additional production (output effect). 28 Here are a few examples that show the wide span of the concept: time rebound effects (Jalas, 2002), socio-psychological or mental rebound effect (de Haan et al., 2006; Girod and de Haan, 2009; Santarius and Soland, 2018), international rebound effects (Bergh, 2017). 29 For a general framework for the study of environmental rebound, see Font Vivanco et al. (2016). IS DECOUPLING LIKELY TO HAPPEN? 37 Second-order: indirect rebound effects Indirect or second-order rebound effects refer to cases where resources freed by an efficiency or sufficiency improvement are re-allocated to another type of consumption (re-spending effect). For example, driving a more fuel-efficient vehicle (efficiency) or deciding to use it less often (sobriety) could save money (income effect), which can then be spent on impactful products or services (e.g. a faraway holiday trip by plane) or invested on problematic financial products (e.g. related to fossil fuel extraction). For producers, profits resulting from productivity gains can be reinvested into expanding production capacity (re-investment effect). What Wallenborn (2018) calls “structural rebound effect” is a good example of such indirect rebound.30 It is structural because it has to do with economic structures such as markets, ownership, and money. In a globalised economy where money can be used to buy almost anything (one then speaks of generalpurpose money), all purchasing power is a potential polluting power. Even if euros are spent on green products, and even if the sellers of these products spend these euros in a sustainable way, at some point down the chain, these euros are likely to be used in a polluting manner. Even euros not spent will cause resource consumption and pollution when re-lent by the bank to finance new investments. The only way to avoid this effect would be to change the structure of the economic system itself (decommodification, localisation, special-purpose monies like complementary currencies, etc.). Third-order: economy-wide rebound effects Efficiency in resource use can also rebound at the macro-level (economy-wide or macroeconomic rebound effect). For instance, efficiency gains in internal combustion engines have helped made private car transportation effective and affordable and resulted in a wide diffusion of this technology. This generalisation of private car transport has in turn driven the spatial configuration of cities and territories, resulting in extensive spatial configurations which now rely on, and even require, the use of private cars. This wide-scale modification of the system of needs now results in a dramatically higher energy consumption from the transport sector. In other words, more fuel-efficient cars reinforce the hegemony of cars at the expense of more sustainable modes of transportation like trains and bikes. Resource efficiency can also lead to a restructuring of the economy around nature-intensive activities (composition effect). For example, abandoned mining activities can be resumed after the development of new efficient techniques makes it economically profitable again, as it is currently the case for gold mining where lower grade ores (including the former overburden) are now reprocessed. 30 In the words of Jevons’s himself writing in the The Coal Question (1865): “[…] In fact, there is hardly a single use of fuel in which a little care, ingenuity, or expenditure of capital may not make a considerable saving. But no one must suppose that coal thus saved is spared – it is only saved from one use to be employed in others, and the profits gained soon lead to extended employment in many new forms. The several branches of industry are closely interdependent, and the progress of any one leads to the progress of nearly all” (Jevons, 1865: 136 cited in Missemer, 2012, p. 99). IS DECOUPLING LIKELY TO HAPPEN? 38 Partial and total rebound Depending on its magnitude, a rebound effect can result in either an overall decrease (partial rebound) or increase in resource use (total rebound, also known as overshoot or back-fire). In the first case, the savings are larger than the extra rebounded consumption (e.g. a heater consumes 50% less and rebounds in being used 1.5 times more, which means there are still 25% net savings). In the case of total rebound, however, the rebounded consumption is larger than the savings and savings are totally offset (e.g. if the money saved by using a car consuming 30% less energy per km is used to pay for a holiday trip by plane where it pays for much more energy than in the case of gasoline which unlike kerosene is heavily taxed).31 In relation to decoupling, this means that a rebound effect can either slow down the expected rate of decoupling (partial rebound) or reverse it altogether (total rebound). Empirical evidence of rebound Indirect and structural rebound being highly complex, most empirical research focuses on direct rebound effects, which are easier to measure. In their review of energy use rebounds, Ackerman and Stanton (2013, pp. 120–121) conclude that evidence for total direct rebound effects is rare: “estimates of 10 to 30 percent seem common […] actual evidence of rebound effects of 100 percent or more appears to be non-existent.” Same conclusions for surveys conducted by Greening et al. (2000) and Sorrell (2007) who find a diverse range of rebounds, sometime low like in the case of lighting (up to 15%), moderate like in the case for aviation (19%), or very high like in the case for motorised transport (up to 96%).32 Galvin (2014) reports a rebound for household energy conservation in the range of 0-50% for older EU member states between 2000 and 2011 – certain countries, notably Eastern European countries, as well as Finland and Denmark, show situations of total rebound. Grafton et al. (2018) show that higher use of efficient technology rarely reduces water consumption. Kyba et al. (2017) report a situation of backfire in the case of LED technology for outdoor lighting. Antal and van den Bergh (2014) estimate the re-spending rebound for saving energy from gasoline to range between 45 and 60% for large economies such as Russia, China, and India. Magee and Devezas (2017) examine numerous statistical sources to estimate the use of 69 different materials from 1960 to 2010, arguing that the Jevons paradox applies to just about every substance. Out of their sample, they find only 6 cases of absolute decline. Four of these materials – asbestos, beryllium, mercury, and thallium – have been phased out deliberately by legal restrictions because of toxicity issues. The other two are wool, which has declined without decreasing the global populations of domestic sheep or other wool-producing animals, and tellurium, a byproduct of refining copper whose use in solar panel manufacturing means its overall consumption is likely rising again. 31 In the literature, and following Ehrhardt-Martinez and Laitner (2010), what we call partial and total rebound are often referred to as “typical rebound” and “back-fire.” The authors (ibid. 7-77) also add a third category: a “negative rebound” for situations where actual energy savings are higher than expected (e.g. “a family that installs a new energy-efficient water heater may be motivated to find other ways to save energy by taking shorter showers, washing clothes in cold water, or by limiting dishwasher use to full loads”; negative rebound, better example, direct causality: isolating walls reduces heating demand, making existing heating installations oversized. This, in turn, requires installing new and smaller boilers, which are more efficient, so energy demand sinks again. or on the producer side if the price of a new machine is greater than the saving in operating cost it allows). To avoid confusion, others prefer to speak of a “super-conservation” effect (Saunders, 2005) or “amplifying” and “leverage” effects (Spielmann et al., 2008).IS DECOUPLING LIKELY TO HAPPEN? Empirical studies of macroeconomic rebound effects are scarcer than their micro counterparts. In his review of the literature, van den Bergh (2017, p. 4) concludes that “the majority of economy-wide studies suggest overall rebound is above 50% and possibly much higher.” In a survey of computable general equilibrium studies, Dimitropolous (2007) finds three cases of total rebound, three others above 50%, one in the range of 30-50%, and one around 15%. Even though rebound effects of the 2ndor 3rdorder are the most determining ones, these remain the most difficult to study empirically. The rebound effect argument minimises the plausibility of the decoupling hypothesis. Thus rebound effects must be taken into account while considering decoupling scenarios as they might make rates of resource use more or less sensitive to the introduction of resource-saving technologies and sufficiency-driven behavioural changes. The point is not to argue against those, which may still have positive overall impacts, as long as rebound effects remains limited, especially if anticipated by decision makers and counterbalanced with proactive policies. But it remains very risky to rely exclusively on sectoral and technical improvements. Rather, what is necessary is an in-depth and systemic consideration and anticipation of potential rebound effects in the design of sustainability policies.