Traffic jams are back like never before. There is plenty of time to look around in rush hour traffic these days. What strikes me then is that the compound of traffic jams has changed: a lot more electric, but especially a lot more big cars. This totally fits the SUV trend. Almost half of all electric cars sold globally last year fall into that class.

This situation exemplifies a classic rebound effect, where an economy reacts differently than expected to increased efficiency or technological advancements. Despite the growing efficiency of cars, including petrol engines consuming less fuel, emissions from these vehicles are not proportionately reduced. Instead, some of the efficiency gains are redirected towards producing larger and heavier cars. This holds true even for electric SUVs, which are bigger, require larger batteries, and consume more raw materials. Surprisingly, a small petrol car has a lower carbon footprint than a large electric SUV when assessed over its entire lifespan.

Rebound effects are not a new phenomenon. Often referenced in this context is the Jevons paradox, named after Stanley Jevons, who observed in 1865 that the increased efficiency of steam engines did not lead to reduced coal consumption but rather to an increase. As the cost of coal decreased, it became economically more viable to increase production using steam power.

We still see these rebound effects in energy. But, and increasingly important, there are also more and more new sustainability-oriented innovations that suffer from this shortcoming. How about the electric bike, for instance? Once conceived partly to reduce car mileage (which it certainly does for a few people), it has now become primarily a replacement for the regular bike or just a nice gadget alongside a regular bike. This has only increased material consumption, rather than bringing sustainability gains.

In the pursuit of sustainability, every endeavour to make commodity chains more environmentally friendly seems to run into a daunting obstacle: the rebound problem. This issue stands as a significant roadblock on our path towards a circular economy, as emphasized by Circle Economy in their annual assessment of global circularity. The crux of the matter is straightforward: when a product, let's say a refrigerator, is introduced with a twice as long lifespan for the same price, consumers tend to spend the money thus saved on additional goods. Similarly, companies that adopt circular product lines often do so with the primary objective of expanding their market and boosting sales, prioritising profit over environmental concerns. Sadly, these efforts often result in greater resource consumption, rather than less.

The underlying causes of these rebound effects are not difficult to discern: it's the market. As a product becomes more efficient and consequently cheaper, it logically becomes more appealing to consumers. Innovations that captivate consumers' imagination, like electric bikes, witness a meteoric rise in sales. Additionally, producers are often driven by the allure of augmented profits through increased sales when investing in innovation.

Contemplating these matters while trapped in traffic, I am struck by a realisation: innovation alone cannot serve as a panacea for our sustainability problem. Markets, driven by the pursuit of profit, will invariably deliver efficiency at the cost of increased resource consumption. Even if we manage to produce goods more efficiently, the insatiable demand for novelty and economic growth will lead to a net escalation in resource usage.

Therefore, if we genuinely aim to reduce resource consumption, we must urgently establish firm limits and boundaries. We must challenge the prevailing narrative that endless growth and profit-driven markets hold the solution. Radical change is necessary to break free from the relentless cycle of rebound effects and redirect our collective efforts towards a truly sustainable future. Only then can we hope to create a world where our economic systems are in harmony with the finite resources of our planet.

This is a translation of Hans Stegeman's column in Het Financieele Dagblad, published 28 April 2023.