Unintended Consequences in action

House democrats have reached a deal on a bill that will enforce a 40% increase in fuel efficiency by 2020:

Automakers would be required to meet an industrywide average of 35 miles per gallon for cars and light trucks, including SUVs, by 2020, the first increase by Congress in car fuel efficiency in 32 years.

.....

"It is a major milestone and the first concrete legislation to address global warming," declared Sen. Dianne Feinstein, D-Calif., who was involved in the discussion with House Democrats as the agreement with Dingell was worked out.

Sigh. I have some bad news for the politicians.  Fuel efficiency gains do not decrease consumption.  This is something that lawmakers have been confused about for decades.  Just make stuff more efficient, and we'll use less energy, right?

Wrong.  In fact, the opposite is true.  Yes, that's right, fuel efficiency gains lead to increased consumption.  this concept is illustrated quite beautifully in the book "The Bottomless Well" by physicists Peter Huber and Mark Wills.

If you think about it, it should be obvious why.  Say you own a car that gives you 20 mpg today.  What happens if I give you a car that gets 40mpg and take your gas guzzler away?  That's right, you drive more.  This is essentially the law of demand in action.

Notice that if you make "Price" be the cost of driving one mile, and you make "Quantity Demanded" the miles driven, what happens to the miles you drive as the fuel efficiency of your car rises?

The same is true of electricity and other fuels.  If things become more efficient, we simply find more things to use that consume energy.  LCD Screens are far more energy-efficient than CRT Displays.  So we scrap the 23" Magnavox and buy a 50" Sony flat screen.  We throw away the giant 19" CRT monitor and buy two 20" LCD Monitors.  We're using less energy per device but aren't consuming less energy in aggregate.

Energy efficiency is NOT going to solve global warming.  It's not even going to help in the battle.