Thanks Cameron - a succinct and clear discussion. This is a very important dynamic for us to understand, especially when the efficiency dividend that is needed to bring CO2 emissions down to save levels is probably closer to Factor 10 then Factor 4.

If we take the policy measure of a "cap", which you made the case for based on economic theory, and we translate it into the language and concepts of everyday values and decisions, then we find ourselves in the territory of restraint - a place where people choose to consume less, even though they have the means to consume more. While I'm not an economist, my superficial understanding of the economists' paradigm is that this is considered an absurdity - Homo economicus will always seek to maximise the utility they extract from the world, which is equated with consumption of goods and services valued in the money economy.

I'm interested in what a public policy conversation would look like in which restraint (personal, corporate, collective) was considered as a plausible policy goal. If efficiency won't deliver sustainability then restraint (and I hear the entire global machinery of perpetual growth tensing at the mere mention of the word) is the heresy that dares speak its name

Yes, a nice discussion of an abstract world inhabited by homo economicus, who eats a mythical substance called utility. There is a serious question here, but these little theoretical exercises don't get to its essence (and it doesn't take a genius, named Tao or otherwise, to come up with cute examples like these).

On the one hand as, for example, houses have become marginally more energy efficient, they have got bigger, but that has more to do with a mismanaged banking system and manipulative marketing than with inevitable economic laws. But yes, there is a problem.

On the other hand, 25% of adult Australians chose voluntarily to "downsize" over the course of a decade, according to the Australia Institute's survey - meaning they chose a reduction in income to improve their quality of life. Unlike homo ec., real people *are* capable of stepping off the consumerist treadmill.

But consider carpet manufacturer Interface Corporation, which reduced its raw material intake by a factor of 30 by converting to manufacturing carpet squares and converting to a recyclable artificial fabric. It also reduced its energy use, eliminated toxic dyes and increased its profit. Homo economicus didn't get a look in, because CEO Ray Anderson made it happen without consulting economic theorists.

There is the potential for a second industrial revolution, based on 100% recycling of materials and far greater efficiency of energy use. It's there to be done, and many first steps have been taken. Did you know Germany requires old cars to be accepted back by manufacturers, who have redesigned them to facilitate recycling and remanufacturing?

This kind of simple nay-saying is not helpful.

Thanks for bringing in the Downshifting example Geoff - its a very important piece of the case disputing the supremacy of Homo ec. But we need to be careful not to miss the killer insight at the centre of Cameron's argument - that in a broader socio-politico-economic system engineered for growth, resources freed up by efficiency will drive consumption somewhere else in the system. So we need outstanding individuals like the Interface carpet man to show what's possible technologically, but we also need specific policy measures to drive an overall and on-going contraction in resource use. The German auto-industry example is a good one. Two possibilities: (1) the regulation made it more expensive to make cars, in which case the prices went up. This is a good outcome as it means the price more accurately represents the full life-cycle cost of the product. (2) the regulation opened manufacturers' eyes to actual savings in the cost of production through greater efficiency in the use of resources - in which case either lower prices for consumers or higher profits for manufacturers feed into increased spending somewhere else in the economy.

I don't think this is nay-saying. I think it is important unpacking of the dynamics of the monster we have created. To slay the beast we must know it!

A thought provoking input.

The Jevons paradox can be seen in energy use statistics (US Energy Information Agency World Energy Outlook 2008), where the average energy intensity (AEI) for the US (and for other OECD countries) has declined from about 16MJ/$ to 10MJ/$ from 1980 to 2004- about 1%/year. However, the total energy consumption per capita has remained constant and the total energy consumption has increased due to increased population.

As I have expressed a number of times on OLO, there is a nexus between energy embodiment and money- whether it is an exact equivalence is not important. The important thing is that you can't spend money on goods or services without ultimately consuming energy.

Although Geof Davies has a point that we can- and some people do- opt for voluntary simplicity, most of the evidence points to most people spending their (energy/money) efficiency dividends in greater consumption of goods and services.

The main focus has been on energy cap and trade, but as Cameron points out, there are ways of defecting that negates individual or country efforts. Another way would be to cap the money supply. Given that productivity averages about 2%/year (about 1% from energy/technology efficiency and 1% from "learning"), then by capping the increase in (real) money to 1%/year, the energy dividend could be saved. This would also mean capping credit as "defection" can occur (and has) through greater credit card use and borrowing beyond the capacity to repay (read sub-prime fiasco).

Sounds draconion? Not really. A 1%/year increase in productivity means a "stanadard of living" doubling in 70 years. Not as good as the 2% we have enjoyed for more than 100 years, but a small price to pay for saving the planet.

Take home message: The "market" of pure selfishness cannot optimise, it can only maximise. Society needs a plan (apart from "grow"), and regulations to help us get there.
If we rely only on animal spirits then we will mimic nature: exponential growth then crash...taking a large part of the ecosystem with us.

I don't agree that the article was clear or succinct but I do agree with the basic message.. improved efficiency will not lead to reduced demand on resources, but the reverse.
However, that should please green activists as their policies are aimed at reducing efficiency - wind energy is the prime example. Then there is the mainstream preference for green-star buildings. the green star system may do something to increase energy efficiency but whether, on a straight cost-benefit trade off, it is worth the trouble is doubtful indeed.

A strange article, with no perceivable practical basis or result.

“If you a concerned about greenhouse gases, a cap on greenhouse gases is what is required”, or a visit to a counsellor, to ascertain why you are unable to accept the science which shows that natural cycles account for all global warming. Human emissions have not been demonstrated to have any effect, on climate, despite the spending of billions of dollars which could have been devoted to useful ends.

“If you are worried deforestation (sic), you create a cap by “fencing off” areas that are not be touched”, or accepting the fact that forests are continually renewed, because, despite what the greenies say, trees are continually growing, and replacing those harvested. Reverse the facilitation of bushfires, brought about by regulations promoted by the greens, if you wish to reduce destruction of forests.

“If you are worried about over fishing, you create a cap”, or if you wish to be constructive, and sensible, consider solutions such as reducing the number of natural predators attacking the fish populations.

Curmudgeon -

One of the reasons discussions on OLO are frequently unedifying is that too many participants can't resist indulging in gratuitous distortions and insults.

"... that should please green activists as their policies are aimed at reducing efficiency". That's not the intention of "green activists", of course. You might think that will be the result of their policies, but you didn't say that and argue your case, you just slagged off "green activists" - all of them, without distinction, whoever they might be.

It was a reasonably constructive discussion until you had to throw that in.

Well said, Geoff. Some OLO-ers treat the Forum as though it were their personal cyber-graffiti wall. Their comments are neither witty or edifying and are very repetitious. Surely the idea of opinion sites is to exercise opinions- exploratory ideas with a bit of supporting evidence, with the view to others providing rational support or negation. Insults are not opinions.

Back on the subject- efficiency is necessary, but not sufficient, to improve the sustainability of our "civilisation" paradigm. Efficiency improvements mean doing more with the same, or the same with less.What we do with this opprtunity determines whether the effort of achieving greater efficiency is worthwhile.

What a revelation this article has been for me. It enables a clear and very substantial distinction to be made between cap-and-trade and a carbon tax. I formerly thought of cap-and-trade as an inefficient alternative to a simpler tax, with no understanding of the different outcomes.

Many thanks. The elegant simplicity of the argument speaks for itself, tax will be nowhere near as effective as a cap. Our efforts must go towards establishing the design of a cap, not merely adopting any cap that the Government might choose. This is a huge subject, the study of which now has, for me at least, much greater merit and immediacy.

Geoff Davies - no it was a 'mutual admiration club' style debate until I pointed out the obvious, and even then not in a particularly confrontational manner. If you don't like people pointing to brutal realities then don't come on the site.
If you want more brutal reality then, although the article is correct, it is pointless. Various regimes have tried to subvert or stop efficiency growth. Australia's now largely abandonded system of tariffs and government control in certain sectors (dairy and egg boards, to name a few) had that effect, as did various command (socialist) economies. The command economies, in particular, have all been abandonded for the very good reasons that they didn't work very well at all and the citizens did not want them.
If the author has a problem with increasing efficiency as such, and wants to go in the opposite direction, how does he intend to do it?

Curmudgeon - from my reading the author had no issue with efficiency in general. His point was that increasing the efficiency with which the economy converts resources into goods and services will not lead to an overall reduction in the consumption of resources.

Some people see no reason why we would want to reduce our consumption of resources. I think that view is dangerous, but they're entitled to it. I can't see why anyone who holds that view would have any interest in this discussion (beyond using the initial opportunity to reassert their position that there is no need to think about reducing resource use by means of improving efficiency or any other means).

Other people may think that there is a need to think about our quantum of resource use. To these people the question of whether improving resource use efficiency is likely to get us there is relevant and important. You are entitled to your view that we are deluded and that our conversation is pointless.

I think there has been some mangling of the concepts of production efficiency & consumption efficiency in this article... in a conceptual sense.

Also, most of the examples presented use basic economic models, the assumptions of which are a bit simplistic. These assumptions lead enivitably to the outcome: i.e that production efficency will always drop prices and increae resource use/increase consumption of substites.

The problem is not efficiency - the problem is the assumptions. (and the simplistic, one dimensional concept of what is 'good' & 'bad' for the environment)

The world ain't that simple.... and there are plenty of ways to argue that efficiency can be positive for the environment.

Curmudgeon -

My concern was whether the discussion is *edifying*, not whether we agree or disagree.

It is not edifying to make claims about other peoples' motives. It is simply a statement of unverifiable prejudice - you can't read their minds, so you can't actually know. So it's a pointless comment. It wasn't the reality that was brutal, it was your delivery, which you seem to take some pride in.

The underlying reason discussions on OLO are often not edifying is that too many people, apparently including you, seem to be oblivious to such distinctions. All you seem to want is a slanging match.

Geoff Davies - no, you've misunderstood what was said.. I was not imputing personal motives to anyone. Greens are pushing inefficient technologies because they are greens, not because they have grand plans to make industry inefficient. However, it would be helpful if they recognised that brutal reality.
Almost all green technology will reduce efficiency and destroy jobs - an obvious point to make on first principles. To claim that this statement, in a post on an article on efficiency, is not "edifying" is to completely miss the point.

Curmudgeon -

Then you need to define what is "inefficient". My view (as distinct from some mythical monolithic body of "the green activists") is that we can use energy much more efficiently than we do now. My view is also that there is a good chance renewable energy sources will then suffice. If that can all be done cost-effectively when costs of alternatives are properly accounted for (also my view), then the problem is taken care of.

If you mean, for example, that the generation of energy is somehow less efficient for wind, solar, etc., relative to the amount of energy potentially available, that is not really relevant. What is relevant is the cost of making energy available. Beyond that I don't know what you might mean. So either your "inefficiency" is irrelevant or I think you are wrong on the numbers.

Also I think your claim that renewable energy will involve fewer jobs is wrong.

When people use phrases like "brutal reality" or "ferocious opposition" or "the facts of the matter are", then I immediately suspect logical weaknesses in their argument. There is no "brutal reality"- in these matters there isn't even a reality, because we are conjecting about possible future events. Even if we were talking about the present, then perceptions vary and realities are personal. Shared perceptions might be called facts.

Meanwhile, in my view, there is a lot of loose talk about job creation, one way or the other. Many analyses have been done on job-multipliers, with the result that, if the inputs are a fairly ordinary mix of materials and labour and the import fraction is not unusual, then one can expect a job multiplier of about 3 times the direct employment. Again, if the situation is not unusual, jobs are created at about 1 per $100-150,000 of investment. Seeing that a wind generator and a carbon-powered generator or a nuclear plant are mainly a mix of steel, cement and labour of various skills, then one can anticipate that the job creation and multipliers will be fairly similar.

I do have a concern about photovoltaics in Australia, as most of the panels are imported and the labour value-added will reduce as we go from roof-top to large scale systems.

Which leaves us with the energy return efficiecy -EROEI. Again, all of these systems are trending to much the same value- about 25 year payback.

These are measurements, numbers and inferences- more refined data may exist- but not brutal realities that can be ferociously opposed.

Perhaps the real point is that greater efficiency by itself will lead to greater consumption but when the price of energy begins reflecting the long term, accumulating external costs that are part of high emissions energy and/or the costs of shifting to low emissions - we will be very glad of having the means to make energy go further. Those external costs - such as the expected impacts of climate change on SE Australian agriculture -cannot be just disbelieved into non-existence although plenty of people including Curmudgeon continue to try.

Cap emissions and we will discover that greater energy efficiency is very worthwhile.

We have a lot of concern on this thread about edification, words used, styles adopted, and capping emissions.

The point blithely ignored is that there is no reason to cap emissions.

That would only be necessary if human emissions had any effect on global warming, or if CO2 were not a beneficial gas.

Perhaps for our edification someone could produce some evidence that there is any scientific basis for any assertion that emissions should be capped.

I am sure that there is no such science, and I suspect that the reason the pro-cappers talk about anything but a valid reason why anything should be capped, is that they wish to avoid the topic.

Everyone has their own style. Curmudgeon’s is at least direct, soundly based, and informative, which is more than I can say for some others.

Leo, the science is only in serious doubt if you avoid information that comes from institutions and scientists that actually study climate and insist on getting your information filtered through sources that start with the premise that human induced climate change has no sound basis. If you can't find evidence for it you're obviously looking only in places that are telling you what you want to hear; that it's not true.

Give me NCAR, NOAA, NASA, Hadley CRU, CSIRO, BoM and the world's leading universities and Academies of Science over mining geologists/mining company directors turned controversial book writers and preachers to the disbelievers like Plimer or Carter any day.

You want to bet the future of the world that all science knows about climate is so wrong there's not a chance they could be right? Dangerously irresponsible - and gullible - is what I think.

Ken, I carefully read your post, which purports to answer mine and did not find a reference to any scientific basis for AGW, and if there is no such basis then there is no reason to cap emissions.

The only basis anyone has put forward is the unscientific guess by the IPCC that it is "very likely". That opinion is backed by 5 unconflicted scientists.

The settled science is that natural cycles govern climate, leaving no room for guesses about likelihood with no scientific basis.

Anyone can have a guess, and it is pitiful to see the body which says it has reports from 2500 scientists, reduced to having a guess, through lack of any scientific basis for its assertion.

My guess is that there is no measureable effect of human emissions on climate, because that is the scientific status. No one has measured it, because it has no effect. We do not know if it exists, because there is no scientific evidence. Human emissions have not been shown to have any effect on climate.

Remember when the IPCC were going to find the "hot spot", which would be the "signature" for AGW?

That never happened, but there was no big announcement that AGW could not be proved, and "very likely" did not exist.

There is, however, a petition signed by more than 31,000 scientists urging that no action be taken in the absence of a scientific basis, because no such basis is available now.

OK, Ken? No need for caps.

Efficiency is doing more with less. The fact that we do more with the same amount does not invalidate the argument that efficiency is good for sustainability. In fact it is the only way we are going to get a sustainable economy.

The important thing is not to do things that are obviously bad because we think they cost us less. It is obviously bad to dig vast amounts of coal and burn it when there are other alternative more benign ways to produce energy.

It costs less to produce a kilo watt hour of electricity from the solar panel on my roof now that it is installed than it costs to deliver a kilo watt hour of electricity from a coal fired power station in the Hunter Valley.

The repayment costs on my solar panel will repay the capital cost within 40 years (well within the expected life of the panel).

So even that most "inefficient" of renewable energy a solar panel does much more with less as the energy inputs to make the solar panel are returned within two or three years.

There is a magic pudding and it is called investment in building new productive assets. Our finance industry is geared to favour the purchase of existing assets over the building of new assets. If instead of inflating house prices with new loans we invested in new renewable energy plants with low interest loans we would solve the ghg emissions problem within ten years.

The Second-Law-Of-Thermodynamics states : "the less energy you use,the greater the disorder & the closer to DEATH(thermodynamic equilibrium)you become"

Its a neat trick for high IQ, rich, Media savvy, big Energy users to get all the dumb low IQ breeders to use less Energy using a moral blackmail as a scam.

They then are FREE to use more energy, become more sexually competitive and have more Masserati & private jet fun while the rest of humanity get disordered, uncompetitive, hormonally stagnant and dies.

Reminds me of the Superman on the Empire State Building Joke:

After demonstrating how air currents on the east side of the building will bring you back onto the viewing platform if you jump, a well dressed man serially convinces 3 civvies to jump to their deaths, much to his delight.

Upon seeing this unfold the elevator driver goes up to him and says: "That's a mean trick Superman!"

It's like a jungle sometimes
It makes me wonder how I keep from goin' under

A child is born with no state of mind
Blind to the ways of mankind
God is smilin' on you but he's frownin' too
Because only God knows what you'll go through
You'll grow in the ghetto livin' second-rate
And your eyes will sing a song of deep hate
The places you play and where you stay
Looks like one great big alleyway
You'll admire all the number-book takers
Thugs, pimps and pushers and the big money-makers
Drivin' big cars, spendin' twenties and tens
And you'll wanna grow up to be just like them, huh

Don't tell me to use LESS N-ER-GEE 'cuz I'm close to the edge
Everyone competin' wid hard MegaJoules not to lose their head