Digitalization, Efficiency and the Rebound Effect

February 22, 2017

Since the very beginning of modern growth-critique, starting with the publication of the report “Limits to Growth” in 1972, the mainstream response to this critique has always been: “Well, we can grow the limits by making things ever more efficient”. Now, with the shiny user interface of the ongoing digital revolution, the holy grail of the efficiency revolution gets yet another new finish: By digitalizing almost every aspect of production and consumption we can increase our efficiency even more!

For instance, we are now able to substitute material products by virtual services, e.g., by using e-readers instead of paperbacks, which some consider full-fledged dematerialization. We are also able to avoid transportation, not only by downloading e-books or skyping with faraway people, but also by buying literally everything online; and, of course, by using delivery services that serve hundreds of custumers with one truck (or, sooner or later, a drone). This is much more resource and energy efficient than before when every single person had to drive to the market him- or herself. Moreover, we can optimize entire sectors, like transport, industry, and agriculture. According to a report by the Global e-Sustainability Initiative, ICT-enabled solutions offer the potential to reduce global greenhouse gas emissions by 16.5% until 2020. This, for sure, would be a much bigger success than any climate policy law has achieved so far. So can’t we just digitalize to the rescue – and relax?

Relaxing, indeed, would be a brilliant idea for hyper active homo sapiens. It might be, however, that digitalization leads to the exact opposite. Humanity’s ecological footprint keeps growing although we have already digitalized significant parts of our economy and society over the past years. It seems that digitalization is not relaxing but rather reshaping societal metabolism in a way that tends to rebound on global energy and resource demand: Gains in efficiency are more than outweighed by the increase in consumption due to new digital services or falling prices caused by more efficient production processes.

Debates about the so-called rebound effect go back to William Stanley Jevons’ work in the 19th century, although they had been forgotten for too long. Rebound effects occur if a reduction of inputs per unit of output (efficiency) generates an absolute increase in output (growth). Since the 1980s, research on the phenomenon has continued in the niche of energy economics, but rarely made it into other disciplines. Until now it only sporadically pops up in public debates. With two books on the rebound effect (Santarius, 2015; Santarius et al., 2016), I tried to broaden the perspectives on this phenomenon by systematizing when and why rebound effects can occur. But what does the rebound effect mean in the light of digitalization? Why did the promising ICT-driven efficiency improvements so far not lead to a significantly reduced overall resource demand? Might they even lead to an increased demand by way of rebound effects?

Material rebound effects

First of all, there are material rebound effects. These include all the energy and resources needed to produce efficient technologies, in our case: ICTs. While computers and smartphones tend to become smaller and lighter, this does not necessarily entail less material throughput in the production process. Manufacturing smaller technologies is sometimes even more resource intensive. Besides, the absolute number of ICT devices steadily increases. Today, smartphones and tablets alone demand more than 40 million tons (Mt) of aluminium, 30 Mt of copper, 11 Mt of Cobalt, etc. Correspondingly, e-waste is steadily on the rise too, from 42 Mt worldwide in 2014 to prospectively more than 50 Mt in 2018. With the emerging internet of things (IoT), billions and billions of gadgets will be made internet-ready in the coming years, or even contain miniature smartphones, all of which will further increase resource demand. Besides the resource demand for producing ICTs, material rebound effects include the electricity used for applying them. The more things we make efficient through ICTs, the more we rely on running a growing ICT infrastructure. Hence, the share of ICT in total global electricity consumption is skyrocketing, from 11% today to potentially 21% or even 51% in 2030. Yes indeed, end use devices are becoming more energy efficient. But at the same time we use them more often in the day while surfing on higher bandwidths in an expanding net –when streaming movies for example.

Economic rebound effects

Secondly, there are economic rebound effects. The more efficient production and consumption become, the more we save time, money, and resources we can use for additional consumption. Consider online shopping: Thanks to the Internet it is most easy to find the cheapest item in the national or even global market, to order it per double click and get it delivered. Not to mention that going out shopping demands extra time and effort – now saved thanks to ICT. For many digital services we do not even pay per unit anymore, but for unlimited access. Take the case of music: It’s not the question how much money, time or resources you save when downloading a few mp3s compared to driving to a store and buying a physical CD – which is usually much more expensive. You would rather pay about ten bucks per month to Deezer, iTunes, Spotify or other streaming portals and then copy millions of songs to your virtual library at no extra cost and in almost no time. Digitalization is not only improving efficiencies but is also increasing the number of options at our disposition – and many of us are eager to use those, particularly when they come at ‘zero marginal costs’.

Psychological rebound effects

What’s more, because it all seems so clean and sound and feels so comfortable and appropriate, even consumers that somewhat care about sustainability might generate some psychological rebound effects on the way. These take place when efficiency improvements are used as an implicit or explicit excuse to further consumption. No matter if we actually save money or resources or not: we feel less cognitive dissonance when consuming ‘smartly’.

Tablets are getting ever more energy efficient just as their batteries – you don’t have to charge them so often any more. This is why many people wouldn’t consider the electricity consumption of their smartphone a significant share in their overall electricity demand. Flat screens come with an energy star label; so that should be fine. Each single networked “thing” in the emerging Internet of Things might run at almost no energy. But in fact the electricity use moves from end users to data centres, cloud services, search engines, etc. You think it’s clean, but it’s all contained in the underlying ICT infrastructures. Welcome to the world of digital glass and design handhelds that seem so far away from dirty coal power plants and toxic e-waste. Alas, the latter have not disappeared though.

The same holds true for our daily actions that we try to make more efficient with the help of ICTs: they often provide more comfort and flexibility, but only seem to reduce resources along the way. For instance, the number of cars in private driveways might stabilize or slowly decrease (in some cities), but at the same time there’s unrestrained use of Car2Go systems. Is that eco-friendly? Smart home technologies might reduce heating costs, that’s great. But what if apartments are increasingly filled with gadgets like networked window shutters, outdoor security cams, indoor voice control hubs, and ceiling mounted video projectors? That’s not ‘smart consumption’, but smart self-betrayal: You feel less guilty, but consume even more.

 Structural rebound effects

Finally, digitalization brings about structural rebound effects, because its innovations and efficiency improvements change the social and economic structures we are living in. Smart cities will make public services more efficient, and will hence entail rather more and better than less services. This is why we might want it after all, but it’s not necessarily more eco-friendly.

Applications such as bar-coding, big data analyses of consumer choices and just-in-time-marketing can most efficiently match product cycles with social trends and fashions – with the likely effect of shortening product life spans and fashion cycles instead of extending them. So-called ‘algorithmic trading’ operates the exchange of shares, bonds, and other financial products at the stock market in mere nanoseconds – producing more stock exchange than less. Not to mention that communication through email and social media keeps us productive day and night. You have an unanswered message in your inbox for two hours? Probably there are already three reminders plus a worried inquiry whether you are still alive. Digitalization is yet another ‘great accelerator’ of the social and economic pace of life and will squeeze more output out of our lifetimes. As Marx has put it, all economics boils down to time economics. Digitalization closes the circle in the endeavour to accelerate capital turnover to the speed of light.

Little wonder that the few econometric studies on rebound effects from ICT technologies suggest very high rebound effects. Yet note that these studies take a very narrow view on rebound effects from static demand elasticities only. Fully understanding the impacts of digitalization on efficiencies in production, consumption, communication and everyday life is yet an endeavour that remains to be undertaken.

In the meantime, let’s relax – and stop digitalizing to the rescue. For it’s not only giant technologies like nuclear power plants or wide-bucket excavators that affect our environment and our fellow beings, but also the sum of all oursmall-scale technologies. It does not matter whether we try growing the limits by big or by small technologies. Nor whether the tools we apply are smart or pretty ‘dumb’. In both cases, they can rebound alike. The only unambiguous way we can use digital technologies for sustainability reasons is not by pursuing greater efficiency, but by enabling greater sufficiency in human action and degrowth in material consumption. How can the digital revolution be reconceptualised to serve a sufficiency revolution?


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Teaser photo credit: By Jason Sanfield/Flickr.

Tags: degrowth, digital technologies, energy efficiency, Jevons paradox