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Jimmy Jia

Degree:

MBA

Location:

USA

Industry:

Energy, Environment & Resources

Year:

2009

By Jimmy Jia

20 years later

How did a single comment become the guiding principle behind my work?

“Well, that is a nice trick to improve the efficiency of solar panels. Sadly, it won’t be of any use unless we stop increasing the overall energy consumption of society.”

This caught my attention as I was sitting in my research lab’s weekly group meeting. I was a graduate student in Material Science and Engineering and a lab mate just presented on some unexpected and interesting results. For most of the meeting, my professor and the student discussed the implication of this technology – how to validate it, how to replicate it, and how to scale it. As we were about to adjourn, my professor made this offhand remark to lighten the mood, that we should not be so serious in our work because factors outside our control will outweigh our proposed efficiency gains. Yet this comment has stuck with me for nearly two decades and is the guiding principle behind my work. Reducing energy consumption is a different goal than being more efficient at consuming it.

Why does consumption always increase as society progresses?

Since asking this question, I started to notice examples everywhere. Year over year, society consumes more fuel, regardless of the success (or lack thereof) of the energy efficiency sector. Formally, this concept is known as the Jevons paradox. First observed by the UK economist William Stanley Jevons in 1865, he noted that although coal extraction efficiency increased over time, the overall consumption of coal in the UK also increased. Recently we have seen this with LED street lamps becoming a major contributor to light pollution. Cities used the freed-up money from LEDs to install additional streetlights in more sparsely populated areas of their communities. The net effect is a minimal change in city budgets for streetlights and many more lit roads.

The reason for these paradoxes is because we have stopped asking why we are consuming energy. People make buying decisions based on the service level we receive, not on the technology being sold. When someone selects two-day shipping, it is because they want a better service. Saving energy, on the other hand, implies a worse service at a higher cost. It is very hard for a company to sell a worse service, even at a discount, just because the energy footprint is lower. For any business to succeed, the value proposition needs to solve a customer problem. We have forgotten how to ask what problem our energy consumption is solving.

Energy resources are critical to our society, economy, and quality of life. Consuming it gives us the ability to pump water to Los Angeles, run iron refineries in Australia, transport our waste to landfills, and keep our economy humming along. It is also a major source of uncertainty and risk to the environment. Politicians lose their jobs when resources are not managed properly (Carter, OPEC) and shareholders lose their value when resources are wasted (BP, Deepwater Horizon Oil Spill). This represents a strategic opportunity for many organisations and businesses – how can an executive improve their competitive advantage by reducing their carbon footprint?

I am optimistic that the issues we face are manageable and the solutions are practical. I am hopeful that executives and policymakers want to mitigate both short-term and long-term risks faced by their stakeholders and constituents. I believe that, armed with the right tools, decision makers can optimise for highest value and lowest cost with minimal carbon. If we accomplish this, then we will move one step closer to reducing society’s overall resource consumption.

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