chapter 5 in search of solutions ii: efficiency improvements
TRANSCRIPT
Chapter 5
In Search of Solutions II: Efficiency Improvements
Definition of Efficiency
RΒ
e
Technological efficiency (e) is defined as the ratio of “amount of benefit (B) per unit limited resource (R)”, i.e.,
Examples of benefits (B):
Examples of limited resources (R):• non-renewable or renewable fuels and minerals• arable land• waste-absorption capacity of the environment• time (labor) and money
• work done by machines• food produced by industrialized agriculture• years of life extended by high-tech medicine• material affluence, expressed as per capita GDP
Reducing the Use of Limited Resources by Increasing Efficiency
eB
R
The use of a limited resource (R) can be reduced by increasingefficiency (rearrange the e=B/R equation):
Resource use (R) declines with time ONLY IF
efficiency (e) improvements outpace the growth in the demand for benefits (B),
i.e., e increases FASTER than B.
Rising Material Affluence
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
1800 1850 1900 1950 2000
Year
Per
Cap
ita
GD
P (
1985
US
$)
USA
UK
Germany
France
Japan
Source: Huesemann and Huesemann (2008)
Causes of Economic Growth
There are at least three important aspects worth consideringto understand why continuous progress in science and technology has played a key role in rising living standards (per capita GDP) in industrialized nations:
• The nature and drivers of technological innovation
• The rebound effect in response to efficiency improvements
• Factor analysis from neoclassical growth theory
The Nature and Drivers of Technological Innovation
Modern technologies are nothing more than highly efficientprocesses designed to convert large quantities of energy and mineral resources into a wide variety of products and serviceswhile minimizing the input of human labor.
Science and technology have increased affluence by:
• substituting capital and energy for labor, thereby increasing labor productivity which translates into rising per capita production and consumption. • creating a large number of new products and services, thereby opening up new avenues for consumption.
• continuously increasing efficiencies, thereby decreasing the costs of goods & services, thus stimulating their consumption.
Rebound Effect orJevons’ Paradox
Efficiency gains do not necessarily decrease the use of limited resources but rather stimulate their consumption as a result of efficiency-induced price reductions.
This phenomenon is called “rebound effect” or Jevons’Paradox, since it was first observed by British economistStanley Jevons in 1985. (Note: He found more efficient steamengines will increase rather than decrease demand for coal).
Example: Increases in automobile fuel efficiency will resultin more driving due to lower fuel consumption cost, thereby reducing originally predicted fuel savings.
The rebound effect is directly or indirectly responsible fora large increase in per-capita consumption/affluence.
The Contribution of Technological Change to Economic Growth
Source: Huesemann and Huesemann (2008)
This growth accounting equation has been used by neoclassicaleconomists to determine how much technological change (TC orTFP), relative to increases in capital (K) and labor (L), is responsible for the total growth in economic output (Q):
% Q growth = % L growth + % K growth + TC
Efficiency Improvements and Limited Resources
Science and technology has caused growth in material affluence (B) as well as continuous improvement in efficiencies (e).
According to the equation R=B/e, the use of limited resources (R) will only decline with time if technological efficiency improvements (e) occur faster than the technology-induced growth in (material) benefits (B).
To determine whether efficiency improvements have reduced the use of limited resources, historical data are analyzed toevaluate whether efficiency improvements have occurredfaster than the respective demands for benefits.
Energy Efficiency & Total Energy Use
60
80
100
120
140
160
180
200
220
1970 1975 1980 1985 1990 1995 2000 2005
Year
TP
EU
, ee
, an
d G
DP
(19
73=
100%
)TPEU
ee
GDP
Source: Huesemann and Huesemann (2008)
Automobile Fuel Efficiency & Total Automobile Fuel Use
80
90
100
110
120
130
140
150
160
170
180
1970 1975 1980 1985 1990 1995 2000
Year
TF
E, e
f, a
nd
TP
Km
(19
74=
100%
)TFE
ef
TPKm
Source: Huesemann and Huesemann (2008)
Lighting Efficiency &Total Energy Use for Public Lighting
1
10
100
1000
1900 1920 1940 1960 1980 2000
Year
TE
UL
, el,
and
LS
(19
23=
100%
)TEUL
el
LS
Source: Huesemann and Huesemann (2008)
Efficiency of Materials Use & Total Material Requirements
80
90
100
110
120
130
140
150
160
170
1970 1975 1980 1985 1990 1995
Year
TM
R,
em,
and
GD
P (
1975
=10
0%)
TMR
em
GDP
Source: Huesemann and Huesemann (2008)
Efficiency of Carbon Use& Total Atmospheric CO2 Emissions
80
100
120
140
160
180
200
220
1975 1980 1985 1990 1995 2000 2005
Year
CA
RB
ON
, ec
, an
d G
DP
(19
80 =
100
%)
CARBON
ec
GDP
Source: Huesemann and Huesemann (2008)
Labor-Saving Technology & Number of Hours Worked
0
200
400
600
800
1000
1200
1400
1850 1900 1950 2000
Year
AH
W, L
P, &
PC
-GD
P (
1870 =
100%
)
Annual Hours Worked
Labor Productivity
GDP per Person
Source: Huesemann and Huesemann (2008)
Medical Progress & Health Care Costs
• Health care spending in the United State is expected to reach 20% of GDP by 2015.
• High-tech medicine is believed to be responsible for 50% to 85% of the growth in health care costs.
Medical technology increases health care costs because of:
• greater availability and accessibility of tests and treatments due to efficiency-induced cost reductions (rebound effect).
• hope for new cures which, if successful, become permanent needs.
• prolonging life as long as possible, no matter what the costs.
As long as demand is unlimited, cost will continue to escalatedespite efficiency improvements in health care delivery.
Inherent Limits to Efficiency Improvements
There are inherent thermodynamic limits to energy conversion efficiencies (2nd law of thermodynamics).
The supply-side energy efficiency, currently at 37%, can be increased by at most two-fold.
The end-use energy efficiency can probably be increased by two to three-fold.
Total energy efficiency can be increased by five-fold.
There are limits to improving the efficiency of materials use since one cannot indefinitely “angelize” the economy.
There are limits to improving labor productivities since service sector and professional jobs cannot be mechanized.
Unintended Consequences of Efficiency Solutions
Increased vulnerability to resource shortages.
The problem of reverse adaptation: Efficiencies (means) become ends in themselves.
Optimization of technical efficiencies strengthens materialistic values and leads to neglect of non-material values.
Excessive focus on efficiency improvements may destroy the quality of life.
• Greater exploitation of workers and the environment (e.g., assembly line).
• Positive bias towards the quantifiable, leading to neglect of cultural or personal values such as fairness, equity, freedom, creativity, faith and aesthetics.
• Strong focus on rational problem solving while ignoring subjective viewpoints, potentially creating a world devoid of love and empathy.
Conclusions
Historical data demonstrate that many efficiency improvements have not been able to reverse the growth in the use of limited resources.
There are inherent thermodynamic and practical limits to allefficiency improvements. Therefore, it is impossible to have continued economic growth without increased use of limitednatural resources and associated pollution. The are numerous unintended side-effects to efficiency solutions. Society must avoid the “reverse adapation” problem by first defining societal values and goals BEFORE using technology with better efficiency to achieve them.
Resource use (R) declines with time only if efficiency (e) improvements outpace the growth in the demand for benefits (B), i.e., e increases FASTER than B.