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Following, we review current world energy demand and its environmental impact, potential future demand, and the most promising options for production and efficiency. The rebound effect--the tendency for a portion of expected environmental gains from new clean energy production or efficiency to be taken up by new demand--calls for a policy response such as carbon pricing.
Current world primary energy demand is as follows.
With growing population and rising standards of living, especially in poorer countries, world energy demand will continue to grow.
Demand for energy, and for electricity in particular, may further grow as increased energy inputs help address environmental challenges such as fresh water and land use in agriculture.
Energy is the main human driver of climate change.
Developing clean, abundant, and affordable electricity is essential to the larger energy challenge, since non-electric energy needs can be substituted, directly or indirectly, with electricity. A combination of solar, wind, and nuclear power is most likely to meet this need.
Solar and wind power are generally less expensive, per kilowatt-hour, than nuclear power, but in large quantities they pose additional challenges in keeping the power grid balanced. This problem can be solved through a combination of long distance, high voltance transmissions, overbuilding and curtailing renewable sources, and energy storage.
Some energy end uses, such as fuel for personal cars or building heating, can be replaced directly with electricity. For those that can't, synthetic fuels generated by electrolysis may be long term solutions.
Biofuels are a more affordable alternative than electrofuels, but are limited by land use and water requirements.
For industrial heat, particularly at high temperatures, the plausible alternatives to fossil fuels are electricity and hydrogen, and neither are presently feasible at a large scale.
Replacing non-energy feedstock uses of fossil fuels with electricity-based alteratives is possible but not currently feasible at scale. Electrolyzing the world chemical industry would require almost as much electricity as is currently used today for all purposes.
Emissions from fossil fuels cannot be eliminated entirely by energy efficiency, but efficiency lessens the burden of replacing fossil fuels with low carbon alternatives. We estimate the following efficiency potential.
Some efficiency options are mostly technical in nature, while others--urban density and recycling in particular--will result from broader systemic changes.
Deployment of clean energy and energy efficiency is necessary, but not sufficient, to end the harmful impacts of the current energy system. When the efficiency of an energy usage improves, there is a tendency for a portion of the expected energy savings to be spent on increased production. Conversely, when clean energy is deployed, some of the new production goes to satisfying new demand, as opposed to displacing old production. The phenomenon is called the rebound effect.
The rebound effect is not necessarily a bad thing, as it results in greater production of goods that people want and is a driver of economic growth. However, it is important to be aware of rebound when considering how technology can solve environmental challenges. To address rebound, policymakers should adopt carbon pricing or other tools that more directly push fossil fuels out of the market.