The Generalized Jevons Paradox and the Future of Energy

IMF Working Papers, July 24, 2026

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Global energy and materials are essential to the functioning of the economy and have significant implications for macroeconomics and the environment.
The world is not on track to meet Paris Agreement goals.
The paper documents two stylized facts:
- The world economy is characterized by large embedded emissions and materials: different energies and materials are deeply entwined and interdependent, which has historically led to additive – rather than substitution – dynamics in energy and materials on a global scale.
- Historically there has been a strong positive correlation between efficiency in resource use and total resource use at a global scale.
These observations are synthesized into the Generalized Jevons Paradox (GJP): the direct and indirect energy/material demand effects of long-term energy and material interdependencies—shaped by market and geoeconomic power, trade arrangements, and financial factors—can lead to cases where improvements in efficiency and changes in energy composition do not reduce, and can coincide with increases in, total fossil consumption and global emissions.

Additive (rather than substitutive) dynamics in energy and materials have characterized global-scale changes historically.
A strong positive correlation exists historically between efficiency in resource use and total resource use at the global scale.
A declining share of fossil fuels in primary energy consumption can coexist with rising total fossil consumption and rising global emissions—as observed since 2012.

The GJP calls for caution when projecting energy and material flows within energy transition frameworks.
Policies should focus on better allocation of energy and material flows across sectors and countries and on reducing supply chain vulnerabilities.
Implementing such policies raises difficult distributional and political economy questions.