One of President Obama's goals in his State of the Union address was to make American homes twice as energy-efficient by 2030. But would that actually curtail overall energy use and reduce U.S. carbon emissions? That's a trickier question.
So here's one way to look at it. A new report from the Energy Information Administration finds that U.S. homes have become far more energy-efficient over the past decade. But newer homes actually use slightly more energy than older ones. That's because they're also about 30 percent bigger and contain more electronic gadgets:
Let's unpack this. Newer homes (in brown) are about 30 percent bigger, yet only use 2 percent more energy than older ones (in blue). Why? For one, newer homes take a lot less energy to heat. That's partly because more of them are located in the warmer South and partly because they have better insulation.
So efficiency is improving. Yet the bottom line is that newer homes still use more overall energy than older homes do. As Americans get richer, they buy bigger houses and outfit them with more appliances and electronics. A second chart makes that point:
Now, there are a couple of ways to interpret these graphs. One is that this is an example of the "rebound effect" in action. As televisions and refrigerators become more energy-efficient — thanks in part to government standards — they become cheaper to operate, and Americans use more of them. If it doesn't cost much to run an air conditioner, why not install two of them? Or three?
A second way to look at this is that as Americans get richer, we're inevitably going to want bigger homes and purchase more gadgets, no matter what. Improvements in energy efficiency can ensure that our energy needs don't explode as we get wealthier. That seems to be happening in the United States. Americans today have larger homes and more appliances while using roughly the same amount of energy as they used to.
Economists have long bickered over this topic, and the answer likely lies somewhere in between. Improved efficiency does help conserve energy. But there's also likely to be a decent-sized rebound effect, as energy gets cheaper and Americans consume more of it. Studies have found that the rebound ranges from 10 percent to 80 percent, depending on the situation.
Long story short: Higher energy efficiency is a boon for consumer welfare. And there's an argument to be made that certain government policies — like appliance standards — can correct some market failures and improve efficiency. What's more, boosting energy productivity will almost certainly be necessary for the United States to cut its carbon emissions and tackle climate change. But efficiency by itself likely won't be sufficient.