The ineffectiveness of efficiency: The paradoxical effects of state policy on energy consumption in the United States

This study examines the relationship between energy efficiency policies and state-level energy consumption in the United States. In doing this, we assess tenets of ecological modernization theory, which suggests developed societies can and will leverage technology, including efficiency innovations and policies, to limit human demands and impacts on nature without needing to curb economic growth. We use panel data spanning 2009 through 2016 for all 50 U.S. states. The results from fixed effects regression analysis contradict the ecological modernization proposition regarding the utility of energy efficiency improvement. We show, overall, that state governments' energy efficiency policies are either positively related to energy consumption or their effects fail to reach statistical significance. Our findings suggest that savings from efficiency improvement are often channeled to expanding production and consumption, which has significant implications for energy use. Thus, while efficiency improvement, in principle, can reduce energy demand and contribute to sustainability, the challenge is how to deploy it without unintentionally incentivizing more consumption.