The answer is yes according to this recent article in The Economist.
SOLID-STATE lighting, the latest idea to brighten up the world while saving the planet, promises illumination for a fraction of the energy used by incandescent or fluorescent bulbs. A win all round, then: lower electricity bills and (since lighting consumes 6.5% of the world’s energy supply) less climate-changing carbon dioxide belching from power stations.
Well, no. Not if history is any guide. Solid-state lamps, which use souped-up versions of the light-emitting diodes that shine from the faces of digital clocks and flash irritatingly on the front panels of audio and video equipment, will indeed make lighting better. But precedent suggests that this will serve merely to increase the demand for light. The consequence may not be just more light for the same amount of energy, but an actual increase in energy consumption, rather than the decrease hoped for by those promoting new forms of lighting.
The idea is that the cheaper lighting might so increase lighting purchases and energy consumption that energy use might rise.
Now this possibility interested mathematician Terence Tao and he wrote up a little example on Buzz. He then elaborated and that is when I chimed in (see this Buzz thread). My point was that solid-state lamps were hardly going to be a competitively priced good. Instead, they would likely, initially at least, be sold a patent holder at a monopoly price. Consequently, in Tao’s example, no dire increases in energy costs would arise. Nonetheless, as you can see from the exchange, there were some cases that could produce that and also some interesting differences in our language.
Anyhow, I have written up a short note that demonstrates the interesting things that might arise. In particular, a tax can be used to mitigate the problem but also that the tax has another cost — it reduces monopoly profits and hence, the incentives to innovate for these things. That said, I think it requires some more work to see if that result would stick. As Suzanne Scotchmer has shown, these models are subtle. Anyhow, if anyone wants to work through this, please feel free to link to any results in the comments.
Nonetheless, one thing is for sure. This conclusion in The Economist:
So, for those who truly wish to reduce the amount of energy expended on lighting the answer may not be to ban old-fashioned incandescent bulbs, as is the current trend, but to make them compulsory.
is deplorably wrong!