What we should be doing is overturning the whole energy wasting system of autosprawl which could be accomplished by eliminating the carbon-auto subsidies, starting with taking the tariff off of our public investment in transit, i.e. making public transit free.
Here, from the Economist, is the simple, intuitive, economic argument that is missing from 98% of the talk about "going green."
Because fuel costs are a significant part of the total price of running a car, lowering them means cheaper motoring. And cheaper motoring, all other things being equal, means more motoring. The same applies to flying, home insulation or industrial processes: any reduction in energy use means a reduction in cost which, in turn, leads to an increase in demand, eating into the savings from more frugal engineering. In energy economics this is known as the “rebound effect.” It was first described in 1865 by William Stanley Jevons, an economist investigating steam engines.
Since then, says Steve Sorrel, an economist who produced a report about the rebound effect for Britain’s Energy Research Centre, there has been little research into just how big the rebound effect is. Estimates of the “direct” effect range from almost zero to over 100% (ie, greater efficiency encourages so much more consumption that net energy use actually goes up).
The precise size of the effect depends on both the good in question and the wealth of those consuming it. “The potential for a big rebound is higher when you’re looking at low-income groups,” says Mr Sorrel. “Lots of poor people can’t afford to make their homes as warm as they’d like. So they’ll take any efficiency improvement in the form of more heating, whereas the rich—who are already comfortable—will probably spend the savings on something else.”
