Navigating the Jevons Paradox: Sustainability in a Resource-Efficient World - a reflection from Das Tegernsee

I'm just back from Das Tegernsee.

Das Tegernsee is an invite-only, no-phone event in the German Alps hosted by Reilly Brennan and Robert Coneybeer. It brings together industry leaders for 48 hours where the prime focus is to share ideas, drinks and food in a casual environment covered by Chatham House Rules. Participants tend to call it the best industry event of the year.

Here are a reflection I'd like to share.

The Jenovinan trap

Jevons Paradox suggests that improving resource efficiency can paradoxically result in increased overall resource consumption. William Stanley Jevons (1835-1882) coined the paradox as England's coal consumption soared, not decreased, when more efficient steam engines were introduced.

Its implications are profound; data efficiency increases overall data use, vehicle efficiency increases overall vehicle use, energy efficiency increases overall energy use, and so on. Let's call it the Jevonian Trap.

So how do we prevent our environmental efforts from falling into the Jevonian Trap? From my perspective it is quite simple. We need business models and policies that align increased resource efficiency with decreased overall resource use. Call me biased, but this is spelled c-i-r-c-u-l-a-r-i-t-y.

Goodyear got it right

More than the Roman Empire (huh? it's apparently a tiktok trend...), I think about how Goodyear used to make their tires too good. The longer they made their tires last, the fewer tires they sold. In essence, they were commercially penalised from improving their product. Goodyear solved this problem by redefining their business model to be paid per mile instead of per tire. As a result, the more efficient they made their tires, the fewer resources they used, while increasing revenues

I think about this daily. For example, what if 苹果 would charge per use instead of per phone? Apple would be incentivized to make their phones be used way longer than the average 2.5 years today (Statista). Chatting about this concept with Goodyear's CEO and Chairman Rich Kramer was a climate-nerdy dream come true.

By extrapolating this idea, everything becomes an XaaS. And why not? Efficiency should always be commercially rewarding.

Back to Das Tegernsee

A sobering market overview by McKinsey's Senior Partner Ruth Heuss and Morgan Stanley's Managing Director Regina Lawrence Savage set the scene.

As the ridiculous venture capital market of 2021 has come to an end, I sense that we all finally have time to reflect on what value and growth actually mean from a holistic perspective. Same-day deliveries, online food shopping, etc., are obviously amazing for the users. These business concepts, however, thrive in a low-interest rate economy and have yet to factor in scope 3 emissions and subsequent costs into their business models.

To some degree, the high-ambitious market also favoured audacious and sexy business concepts with potentially large impact (such as autonomous driving and carbon offsetting). Not to say those aren't necessary in the long term, but safe to safe, they are not significantly reducing carbon emissions anytime soon.

Fortunately, the ongoing economical downturn seems to have brought interest back to innovations with more immediate impact. This year's Das Tegernsee shed light on innovations such as:

• Electrifying existing truck trailers (thanks Ali Javidan at Range Energy),
• Bringing trucking principles into aviation making air freight 4x more efficient (thanks Gur Kimchi at Aerolane),
• Optimising the use of batteries (thanks Shyam Srinivasan at Zitara),
• Improving EV charging station up-time (thanks Kameale C. Terry at ChargerHelp!), and
• Making existing rail infrastructure more efficient to replace trucking (thanks Matt Soule at Parallel Systems).

Furthermore, presentations from Shiro Nakamura (legendary designer behind icons like Nissan Leaf and Nissan GTR), Diego Rodriguez (ex Intuit), Danny Shapiro (Nvidia), Alex Roy (Johnson & Roy), Byron Boots (Overland), Boris Sofman (Waymo) illustrated how close we actually are to full blown autonomy in beautifully designed electric vehicles powered by generative AI, and that is pretty cool.

The reflection

As climate innovation shifts to making the use of existing resources, assets, and infrastructure more efficient, there is a risk they ultimately increase overall resource consumption and have net-negative effects. Jevons Paradox is not to take lightly. It would be a shame to look back in 2050 and see that our efforts were in vain.

Therefore, if you currently lead or aspire to lead businesses dedicated to saving the world, please consider what you can, should, and must do to avoid the Jevonian Trap. Goodyear showed that it is can be done.

Btw, what Cling Systems does:

Cling Systems powers battery circularity. Batteries are the key enablers of renewable energy and emission-free transportation. With efficient circular solutions, that ultimately eliminate the need for mining, batteries hold the potential to power a human civilisation for millions of years.

• Read more: Cling Systems solutions
• Read more: Subscribe to Cling's quarterly newsletter
• Listen more: "Closing the Electric Vehicle Battery Loop", podcast with Jenny Gladman.
• Talk more: contact me or [email protected]

If you made it all the way here, thank you for reading! I'd love to hear your thoughts in the comments.

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