Five ways to look at energy efficiency

Essayists debate whether it helps decrease pollution

Phil Carson | Mar 25, 2012

Share/Save  

Just to step outside the power industry discussion for a moment, yet stay on a relevant topic, I found a very interesting discussion on energy efficiency on The New York Times last week. The paper's "Room for Debate" section brought together five brief essays by a diverse lot who discussed the concepts behind the conventional wisdom that energy efficiency is a good thing. Its title is "The Siren Song of Energy Efficiency."

I can recommend reading the five essays, three of which are briefly excerpted here. As noted below, I'd appreciate readers thoughts on the topic. The thesis, in truncated form: "Does the quest for efficiency distract from more effective approaches to cutting carbon output? What can consumers do that would be more effective?"

(Hint: If you don't "believe" in global warming or fossil fuel emissions' contribution to air quality degradation—two major drivers for  the smart grid—you can skip this exercise.)

"Amory Lovins, Sec. of Energy Steven Chu and other efficiency enthusiasts are undoubtedly correct when they argue that we Americans could live regally on little more than we currently waste," wrote New Yorker writer David Owen. "But turning efficiency improvements into environmental gains isn't as easy as they make it sound.

"Nearly every device we use today is more efficient than whatever its equivalent was in 1970," Owen continued. "Yet energy consumption has soared. Increasing the efficiency of energy-using machines has the practical effect of making energy cheaper, and when we make useful things cheaper we use more of them."

Matthew Kotchen, professor of environmental economics and policy at Yale University, took a similar tack, with a twist.

"Basic economics tells us that lower prices increase demand, meaning that people tend to drive more when it costs less to go each mile," Kotchen wrote. "People are also more likely to purchase and use things like air-conditioners when they cost less to operate. These so-called rebound effects eat into the initial energy savings of efficiency—because when things become more efficient, we tend to use them more.

"While studies have shown that rebound effects are real and potentially important, they are not an argument for dismissing the importance of energy efficiency," Kotchen continued. "Most of the evidence suggests that rebound effects offset only a fraction the environmental benefits. Perhaps the most important question when it comes to energy efficiency is why consumers do not focus on it more.

"This is the energy paradox. While there are many explanations for why it exists, a simple one is that most of us are unaware of efficiency when shopping for goods that we buy. One way to address this problem is improved product labeling that reports efficiency in terms that people care about—money saved and pollution avoided. Recent changes to the E.P.A.'s efficiency labels for new vehicles and appliances are a step in the right direction and should help consumers make more informed decisions. And for those individuals looking to have an impact beyond their own consumption choices, it would be useful to encourage political support for energy efficiency as part of a national energy policy."

The take by Peter van Doren, a senior fellow at the Cato Institute, a libertarian think tank founded by the Koch brothers, who run Koch Industries, which runs fossil fuel interests, is interesting.

"The one concept that all students, even those sleeping in the back of the lecture hall, learn from an introductory economics class is that prices matter," van Doren wrote. "And more particularly, students learn that as prices increase, the quantity consumed goes down. So if fossil fuel combustion produces byproducts that cause negative health effects on third parties as well as changes in the temperature of the atmosphere, the obvious lesson from economics is to increase fossil fuel prices enough through taxation to account for these effects.

"Though firms and consumers will react to these prices in thousands of different ways, the net result is less aggregate fossil fuel combustion," van Doren continued. "Voters and their elected officials resist this simple insight and instead prefer to impose only energy efficiency standards on manufacturers of consumer appliances and automobiles.

"A singular emphasis on energy efficiency rather than prices has two important drawbacks," van Doren concluded. "First, more efficient appliances and automobiles cost much more to achieve equivalent energy savings than a tax on fossil fuel consumption. This occurs because higher prices encourage all possible avenues of reducing energy consumption, which efficiency standards do not. Second, more efficient appliances and automobiles reduce operating costs, which leads consumers to use more energy than they would if prices had increased."

So, just to ignite our readers, I'm going to favor higher taxes on fossil fuels and greater energy efficiency and a national campaign akin to the 1960s' campaign against littering to educate Americans on wasted energy and wise use. We've had innumerable opportunities to do these things and, so far, we've succeeded generally in the energy efficiency area. The global market will send gas prices up and down in our time, so a few cents more in tax is not the economic death knell that anti-government demagogues would have us believe.

Devices that use energy more efficiently are better. Being aware of the tendency to use more due to those efficiencies can be overcome with education and discipline, two qualities that have fallen into disuse in the public discourse. Wise use is particularly important in an era when finite fossil fuel supplies must eventually give way to infinite, renewable supplies.
And now, dear reader, let us hear your thoughts.

Phil Carson
Editor-in-chief
Intelligent Utility Daily
pcarson@energycentral.com
303-228-4757

Related Topics

Comments

economics and price signals

It may be baked into Cato's intro to econ but we need to remember that buy decision IS NOT DIRECTLY CORELATED TO LOWER PRICES.  Buy decisions are always a trade off of alternative choices.  We don't need to get caught in a paradigm that price is everything, rather -need and desire first (psychological) then price (logical).  We call it "price elasticity" of course -what price level on which good causes yes or no purcahse decision... a much more informative metric.  I dwell on this issue simply becasue in energy we get lost, like with smart meters, and can't understand why everyone doesn't clammer to save $15 a month.  No, the answer isn't 'education', its awareness, and awareness is driven by pain or concern.  We are not rational beings, regardless of economic retoric, there is a complex algorithm at work tuned to beliefs driven by need and congnazent of price.  Of course pricing in externalities takes a long way to the end goal (we should have a war tax on oil derived fuels), and too high a price changes our behavior or spawns new innovation / too low a price results in mass consumption.  Free market theory will set the right price, if the the full costs are associted to the end product.

economics and price signals

It may be baked into Cato's intro to econ but we need to remember that buy decision IS NOT DIRECTLY CORELATED TO LOWER PRICES.  Buy decisions are always a trade off of alternative choices.  We don't need to get caught in a paradigm that price is everything, rather -need and desire first (psychological) then price (logical).  We call it "price elasticity" of course -what price level on which good causes yes or no purcahse decision... a much more informative metric.  I dwell on this issue simply becasue in energy we get lost, like with smart meters, and can't understand why everyone doesn't clammer to save $15 a month.  No, the answer isn't 'education', its awareness, and awareness is driven by pain or concern.  We are not rational beings, regardless of economic retoric, there is a complex algorithm at work tuned to beliefs driven by need and congnazent of price.  Of course pricing in externalities takes a long way to the end goal (we should have a war tax on oil derived fuels), and too high a price changes our behavior or spawns new innovation / too low a price results in mass consumption.  Free market theory will set the right price, if the the full costs are associted to the end product.

Energy Efficiency versus Carbon Foot Print

Let us not confuse or use interchangeably two different subjects, Energy Efficiency versus Carbon Foot Print. While energy efficiency is meant to measure consumption of energy for every task that is performed, be it use of Computer, Lap Top, Microwave, refrigerator, Air Conditioner or driving a mile in the car, the Carbon Foot Print is the life style, whether you use an energy start designated lap top that uses less energy for same function that you perform on energy hog laptop built in 1999 and same goes whether you use hybrid prius that may drive 40 miles to a gallon or 4x4 Ford Crew Cab pick up for same mile alone that gives about 12 miles to a gallon or something in between?. Again same is true, how many refrigerators you have at your home, one large one in kitchen that is energy star or from 1980's when your kids were born and one in each bed room suite so that you do not have to walk to kitchen in the middle of night for sip of cold water in your mcmansion of 5500 square feet versus an idle 900 square feet home in Holland with every inch used as multipurpose room of the suite type house.

There is no doubt that price creates or curbs demand depending on buying power of the consumer and economy of the country, should the Company presidents fly in private planes when Congressman on tax payers are being watched closely? And where past generals and Administration people can go and run the construction companies, the automakers have not allowed jobs to likes of DICK CHENEY, so they did not have anyone to protect them, when questioned about private planes? Do not the heads of all three large construction companies in USA not fly in private planes? How about Mr. Jack Welch, the retired so called CEO of Americas from GE, does he and his new editor spouse use private plane? What is there and construction company president's carbon foot print?

So, to save the planet it is not only important that we save energy by efficiency, but we also restrain use of energy. An effort in water supply is being made in some towns where basic minimum consumption that is essential for living for each consumer is being provided at lower rates and higher users are being slapped with higher prices. Should 10 gallon of gas a month be given at cost to every driver with valid driver license in USA and anything above that should be sold at 10 dollar per gallon, with market price for commercial use except say construction executives HUMMER or FORD Crew Cab used by single person should be charged even $20.00 per Gallon for disregard to common sense approach? If this is done, you will soon see that market forces and driving habits will change very fast.

Again, same can be done for each house hold, first 1000 kwh of each domicile can be charged at 6 cents per kwh for 60 dollar a month, then next 1000 kwh at 8 cents, next at 10 cents and next at 15 cents, you will soon see that macmansions will become four plexes with four kitchens and four families living in them instead of a couple with refrigerator in each of four suites.

We in America have good and bad habits, we are congenial and debate, we invent, we find Energy efficiency measures, we invest in Energy Conservation Measures, but we also have an appetite to consume and splurge and we consider this a symbol status instead of greed and or nuisence, we take annual vacations, we fly, take a cruise and we eat out for which we want to go to that ambiance, all that is good, but why drive half a house on highway beats me. Almost every average house in North America has 3.0 average residents, has about 1500 square feet conditioned space two televisions, more than two cars and have a desk top computer and lap top computer or similar device. We are getting used to checking our e-mails on iPad or iphone or smart phone and we leave our patio lights on all night. Do not we? Is this energy saving life style compared to other progressive countries and is this not the dream of everyone in China or India? Can mother earth afford it for 6 billion people that is growing each day? So why not start with proper planning? Why was the triangle rail road projects in TEXAS linking San Antonio, Dallas and Houston cancelled by George H. W. Bush while promoted by Reagan and not revived by Clinton or Obama? One project that would have saved more energy than Keystone Pipe line can supply over 100 years? Instead of making 7 lane highways in California, why the least congested part of the state is getting rail road first? This proves, Americans lobbyists system is working, it is not free market. It is the market of those who have and not of those who do not have. Those who have in the society and their lobbyists are selfish, greedy and beyond approach or reasoning, read what Koch's think tank is publishing, you will understand it, every self interest takes precedence over the project of masses and money speaks and buys political votes. You can see how an academic professor writes, a think tank writer writes and a generalist writes in the New York Times and no one looks at or reads the facts and difference in energy saving versus Carbon Foot Print, sometimes seems like they want to not only create but extend the confusion. So please do not confuse energy efficiency with Carbon Foot Print, while both are essentials, we need to tax heavily those who have higher Carbon Foot Print then those who live in TEEPEE's and get by while driving bicycles in heat of Texas or Santa Fe, NM. We need to see how much energy pent house in Manhattan uses versus Garden suite in same building that also produces tomatoes and reduces the carbon foot print. Should not roof load of Pent House that requires extra energy use be taxed for energy cost and that great view with all wondow glazing all around it while garden suite is given break in water rates to produce that tomato and keeping the tree and garden alive, that reduces carbon foot print?

So let us keep both going, energy efficiency to reduce waste and good planning and hold on greed and demands on the planet by changing our life style to the extent that it does not cause hardship to humanity and planet. Can we do it?

Energy Efficiency versus Carbon Foot Print

Let us not confuse or use interchangeably two different subjects, Energy Efficiency versus Carbon Foot Print. While energy efficiency is meant to measure consumption of energy for every task that is performed, be it use of Computer, Lap Top, Microwave, refrigerator, Air Conditioner or driving a mile in the car, the Carbon Foot Print is the life style, weather you use an energy start designated lap top that uses less energy for same function that you perform on energy hog laptop built in 1999 and same goes weather you use hybrid prius that may drive 40 miles to a gallon or 4x4 Ford Crew Cab pick up for same mile alone that gives about 12 miles to a gallon or something in between?. Again same is true, how many refrigerators you have at your home, one large one in kitchen that is energy star or from 1980's when your kids were born and one in each bed room suite so that you do not have to walk to kitchen in the middle of night for sip of cold water in your macmansion of 5500 square feet versus an idle 900 square feet home in Holland with every inch used as multipurpose room of the suite type house.

There is no doubt that price creates or curbs demand depending on buying power of the consumer and economy of he country, should the Company presidents fly in private planes when Congressman on tax payers are being watched closely and when past generals and Administration people can go and run the construction companies, the automakers have not allowed jobs to likes of DICK CHENEY, so they did not have anyone to protect them. Do not the heads of all three large construction company not fly in private planes? How about Mr. Jack Welch, the retired so called CEO of Americas from GE, does he and his new editor spouse? What is there carbon foot print?

So, to save the planet it is not only important that we save energy by efficiency, but we also restrain use of energy. An effort in water supply is being made where basic minimum consumption that is essential for living for each consumer is being provided at lower rates and higher users are being slapped with higher prices. Should 10 gallon of gas a month be given at cost to every driver with valid driver license and anything above that should be sold at 10 dollar per gallon, with market price for commercial use except say construction executives HUMMER or FORD Crew Cab? If this is done, you will soon see that market forces and driving habits will change very fast.

Again, same can be done for each house hold, first 1000 kwh of each domicile can be charged at 6 cents per kwh for 60 dollar a month, then next 1000 kwh at 8 cents, next at 10 cents and next at 15 cents, you will soon see that macmansions will become four plexes with four kitchens and four families living in them instead of a couple with refrigerator in each of four suites.

We in America have good and bad habits, we are congenial and debate, we invent, we find Energy efficiency measures, we invest in Energy Conservation Measures, but we also have an appetite to consume as symbol status, we take annual vacations, we fly, take a cruise and we eat out for which we want to go to that ambiance, Almost every average house in North America has 3.0 average residents, has about 1250 to 1500 square feet conditioned space two televisions, more than two cars and have a desk top computer and lap top computer or similar device. We are getting used to checking our e-mails on iPad or iphone or smart phone and we leave our patio lights on all night. Do not we? Is this energy saving life style compared to other progressive countries and is this not the dream of everyone in China or India. Can planet earth afford it? So why not start with proper planning? Why were the triangle rail road projects in TEXAS linking San Antonio, Dallas and Houston cancelled by George H. W. Bush while promoted by Reagan and not revived by Clinton or Obama? One project that would have saved more energy than Keystone Pipe line can supply over 100 years? Instead of making 7 lane highways in California, why the least congested part of the state is getting rail road first? This proves, Americans lobbyists system is working, the society is selfish and greedy, every self interest takes precedence over the project of masses and money speaks and buys political votes. You can see how an academic professor writes, a think tank writer writes and a generalist writes in the New York Times and no one looks at or reads the facts. So please do not confuse energy efficiency with Carbon Foot Print, while both are essentials, we need to tax heavily those who have higher Carbon Foot Print then those who live in TEEPEE's and get by while driving bicycles in heat of Texas or Santa Fe. we need to see how much energy pent house in Manhattan uses versus Garden suite in same building that also produces tomatoes and reduced the carbon foot print. Should not roof load of Pent House that requires extra energy use be taxed while garden suite is given break in water rates to produce that tomato and keeping the tree and garden alive?

 So let us keep both going, energy efficiency to reduce waste and good planning and hold on greed and demands on the planet by changing our life style to the extent that it does not cause hardship to humnity and planet. Can we do it?

Electric cars are they conserving energy? Rev4

Electric cars are they conserving energy? Rev4

 

Ask yourselves what is the real cost of “Electric Car”?

 

Note: Electricity is a secondary form of energy derived by utilizing one form of energy to produce electric current.

 

Let us look at the facts:

 

In order to produce electricity, we need some form of energy to generate electricity, whereby you lose a substantial amount of your original source of energy in the generation process.

In the process we are losing the efficiency of the initial energy source, since it is not a direct use of the energy.

 

Let us take it a step further. To generate electricity we utilize; coal, oil, natural gas, nuclear, hydro electric - water, photovoltaic-solar, wind, geothermal, etc. Many electricity generating plants utilize fossil fuel, which creates pollution.

 

Do you realize how much of the initial source of energy you lose to get the electricity you need for your electric automobile; you also lose electricity in the transmission lines.

 

Why are we jumping to a new technology, without analyzing the economic cost, the effective return and efficiency of such technology; while computing and measuring its affect on the environment?

 

Natural gas vehicles are a direct source of energy, where you get the most for your energy source – in efficiency and monetary value. Cost of natural gas to a comparable gallon of gas ranges around $1, it has higher octane and extends the life of your engine, it is also safer than gas.

 

In these hard economic times – I would think, you would want to get the most for your dollar – and not waste resources.

 

Another economic impact would be the loss of road tax on fuel, these funds are used to build and maintain the highway infrastructure.

 

“It is Cheaper to Save Energy than Make Energy”

 

YJ Draiman, Director of Utilities & Sustainability

 

 

 

http://www.energysavers2.com

 

Will High Electricity Rates Drive Innovation?

Escalating costs of OIL will produce innovation!

 

 

YJ Draiman's vision is to make Los Angeles as the World Capital of Renewable energy and conservation.

http://www.yjdraimanformayor.com

 

 

Electric cars are they conserving energy? No!

 

I worked with UPS in Chicago in the early 90's, researching the conversion of UPS vehicles to Natural Gas as a primary fuel with overnight slow fill stations on UPS compound.

If we are to survive the Energy crisis and become energy independent, we must utilize every effort not to waste our energy resources. Innovation and technology will eventually save the day.

Electric cars are a fiction of energy conservation, (Look at all the costs associated with such technology); it is not a viable option.

We must look into other forms of fuel, and invest heavily into R&D.

 

YJ Draiman, Director of Utilities & Sustainability

http://www.yjdraiman.org

In response to Tom Casten

There are a couple of things in your post that are not quite accurate. 

One is that the production of energy is not a competitive market--that depends on where you live.  In the ERCOT market, generation is all competitive.

Another is that the efficiency of electricity production has been stuck at 33%.  The statement is only partially correct in that construction of newer plants is presently in limbo--older plants are being kept on line because the market forces in competitive markets are skewed by federal intervention and regulatory uncertainty.  Combined cycle gas turbines operate at efficiencies of 50% with advanced ones pushing 60%.  Ultra supercritical steam plants are approaching 45% efficiency. 

The off-peak market in ERCOT is less than $30/MWh presently.  Wind generators get a federal tax credit of $22/MWh, which considering it is a tax credit rather than a tax deduction equates to earnings of $62.86/MWh.  The round-the-clock market in ERCOT is roughly $43.50 presently and wind is unpredictable.  When fronts come in, windfarms generate significantly 24 hours a day for one or two days while a stationary cell may take them off-line for days.  What private developer will build a new fossil power plant when he cannot predict his revenue stream?

Mark Wooldridge

 

Perhaps it's time

Mark,

While I enjoy your persistence in promoting the fossil fuel industry, perhaps it's time to identify the company you work for.

Regards, Phil Carson

Five Ways to Look at Energy Efficiency

Phil: David Owen wrote, "Nearly every device we use today is more efficient than whatever its equivalent was in 1970".  True for appliances that use electricityy,  but misses the elephant in the room, the efficiency of producing electricity, which remains as dismal as it was in 1960 -- about 33% of fuel energy delivered to users as power. 

The economists like to explain consumer behavior, impact of price, etc., but do not even ask, much less answer the question of why the production and delivery of electricity has not improved in  50 years.

Some suggested answers:

  • Price signals do not work when all costs pass through, as is the case with electric utilities.
  • Taxing externalities will not change utility behavior, if the taxes simply flow through to users
  • Most utilitiy regulation provides zero rewards for improving efficiency, which might explain continued inefficiency.
  • Regulators treat all megawatt-hours as equal, even though one distributed generation MWh can offset 1.2 to 1.45 remotely generated MWh.
  • Although the power system must provide multiple ancillary services including regulation, reliability, balancing active and reactive power, spinning reserves, system inertia, etc.,  economists have claimed that a real time price for megawatt-hours  will lead to  competitive provision of all these services.  Where is the evidence?

Competition works in other markets, but in electricity, not so much.  Real prices for power are up 15% since 2000, efficiency is stagnant, and the reguulatory architecture remains rooted in 1920 realities, technology and fuels.

In short, use of electricity is a competitive market, production and delivery of electricity is not.

Tom Casten

Chair, Recycled Energy Development LLC

Thanks Tom

The combined heat and power option indeed looks attractive for many reasons. And recapturing former waste heat is really the big picture for efficiency, as you point out.

Let's be in touch on examples in the U.S.

Regards, Phil Carson

Energy Efficiency

Seems to me the real bang for the buck on energy efficiency lies with heating and cooling. Simple measures like: more insulation in the attic; a more efficient air conditioner/furnace when the old one needs to be replaced. However, on a relative scale, such investments are a bit more than the average consumer's budget can handle. That is where help from the government (e.g. tax breaks) would be helpful. Too bad that legislation has expired.

However, the average consumer does not have the time to lobby congress, as they are too busy trying to earn a living. Instead, the politicians are bought and sold by the green energy mafia, with literally billions of dollars completely wasted on completely ineffectual solutions (renewable energy) to a largely trumped-up problem (global warming).

The same page, at first...

We were on the same page, at first. Indeed, passive EE in the form of building envelope insulation and good windows have the best pay-off; certainly insulation tops the list, windows are further down the list. Tax breaks to do that seem logical and I applaud your flexibility of thinking that some basic government policies have beneficial effects at relatively low cost.

I cannot, however, endorse your second paragraph because renewable energy is not "ineffectual" and will rise in prominence in the mix as costs fall and integration gets easier and cheaper, particularly at the end-user level. That's true now and will become more so over time. As for global warming being "trumped up," I think many confuse their political leanings with scientific findings. It's a fact that the world is warming. It's a fact that anthropogenic carbon and other gases are directly implicated. What's far more important is to have the discussion of what if any measures we could take that would not negatively impact our linked economies, while producing cleaner energy at reasonable cost. Are there unanswered questions about this vast and complex issue? Of course, just as evolution has the preponderance of evidence on its side, but still has deep gaps in understanding.

Regards, Phil Carson

Speculation on consumer behavior

OK, so let's assume that we want to use less energy (at all costs). There is no doubt that making energy more expensive will set off a chain reaction of consumers seeking ways to conserve (reduction in quality of life as a result) and purchase more efficient products.

This drive will probably lead to manufacturers developing products to meet those needs. It might even lead to more educated consumers, which we certainly need. One other outcome that I for see, will be that the "rich" will be taxed or will have to pay more to help subsidize the "poor."

We have consumers with highly inefficient electric resistance heating systems who refuse to consider purchasing a more efficient product. If we can force the rich to pay higher taxes or fees in order to subsidize these folk's energy bills, why can't we force these people to change out their heating systems? It makes as much sense to me for the government to intrude and cram its agenda down the consumers throats this way.

My personal opinion is that what some see as consumers wasting energy is really people pursuing a better quality of life. I don't think they make wise energy choices, and then think, "Oh, look I saved some money. I think I'll go waste it someplace else." Some may see this as unbridled materialism; I see most of it as logical decisions based on a desire to improve your life.

Sustinability

I think the issue is more around whether consumers/citizens recognize limits to waste and by eliminating waste, which is substantial in the U.S., they can sustain what are absurdly rich energy-driven lifestyles.

One thing for sure: hard times sure cut into the consumption of everything, including energy. Perhaps we only learn the hard way, modifying behavior after big crises. That's true of spending and consumer debt, it's true that several small children get run over before a traffic light gets installed. Perhaps it'll be the same catharsis for energy.

However, "soaking the rich" just doesn't happen in the U.S., especially when the thin veneer at the top has the money to buy the influence. Nope, it's the middle class who pay for both poor and rich when it comes to infrastructure, etc. I don't see that changing. Just plugging the holes in the tax code, though, would make me feel that the democracy experiment remains viable.

Regards, Phil Carson

Higher prices for energy

One of the issues missing in this article is the impact that higher energy prices has on the working man who just goes to work and back everyday.  Raise fuel prices for his work vehicle and you are going to hurt him big time.  There are a goodly percentage of people whose main usage of their vehicles is going to work, going to the grocery store, taking the kids to school, maybe driving to the mall to get new clothes to replace those that have been worn out or the kids have out grown.

Another issue missing in this article is one of the things that made America such a dynamic economy--one that drove the economy of the entire world--mobility.  The car made it more reasonable for someone who grew up in MidWest to move to the Gulf Coast or California or South Carolina or whereever to pursue a job they really wanted to be in while still having the ability to go home and see relatives occassionally.  The mobility afforded by private vehicles made it possible for people to live away from their job location for a better quality of life.  This mobility made it possible for some to work their jobs while living some place where they have room to build a workshop or have a garage to tinker in and possibly develop a new product that spawned a new business.  Mobility made it possible for people to move to other places with ease, expand their horizons, and diversify the country.  Does anyone not wonder why America is frequently considered the land of innovation?  I venture that it is the mobility afforded by low fuel prices.

Good point

What you say has been true in America up to this point. But what worked in the past, when our nation was young and less connected, won't necessarily be the paradigm moving forward. Especially when you consider that the Middle East has been our oil patch, so to speak, until now when India and China are undergoing the growth of middle class mobility that the U.S. enjoyed in the 1940s through the 1960s.

With a half-trillion dollars spent fighting in Afghanistan and Iraq and turmoil in Iran, Syria and various African nations that produce critical commodities, the equation going forward looks very different. Thus the current push to explore all alternatives in the mix, so we don't spend lives and treasure to enable us to waste energy with impunity.

I'm familiar with the working man, having been one, full-time,  for nearly 40 years. I understand the pinch at the pump. What we face is an opportunity to solve hurdles to our way of life proactively, out of anticipation that the game has changed. Or, we can head to the edge of the cliff, looking backwards, fondly, on what brought us so far, but perhaps doesn't get us over the canyon yawning ahead.

Regards, Phil Carson

Rebound Effect

Limiting the rebound effects to the arena in which the original impact occurs -- for example driving more miles because one has bought a high efficienct vehicle -- or using more electricity because one has solar panels -- is asking for trouble. Rather the issue should be reviewed based on money. Saving a dollar means that the dollar will be spent or invested elsewhere. The benefits of efficiency only occur (saving the planet from climate change, ending fossil fuel use) if one uses the saved money in combination with investing in low climate impact renewable energy. 

 

 

Exactly correct, but likely?

I think the formula you describe is right for, say, a government that collects a gas tax, which we do, driving those dollars back into infrastructure and research. Very smart to tie driving and, thus, impacts on the road, to the tax that builds/repairs the roads.

The idea of rebound effect is more in the personal realm and the individual's tendency to use more when something's cheaper. To avoid that requires discipline and a clear goal. I fear that the noise and partisan battlling at the federal level, for instance, obscures both the national will and discipline to accomplish a shift in the nation's direction. It's not just your everyday American's failings that threaten a constructive shift. It's that big money buys influence in Congress and money buy media that has contributed to an incoherent national conversation about our collective future. Energy and the utility industry is no different. Many utilities were calling for a price on carbon emissions, say, 3-4 years ago, because they understood it's inevitable and wanted market clarity for major investments. Yet they were thwarted by the fossil fuel interests that desired the status quo.

To act collectively is nearly always difficult. But money has killed the conversation that could have led to it.

Regards, Phil Carson

The Efficiency Paradox

...which what some call the phenomenon whereby energy use doesnt fall even though more efficient appliances are introduced.

The correct answer is to do both.  I agree that standards can lead to economically inefficient use of resources, but on the other hand, appliance manufacturers (and particularly auto manufacturers) sometimes need a nudge before they'll produce more energy efficient products so that consumers actually do have a choice.  However without higher prices, consumers might use more efficient vehicles to drive more miles while keeping their fuel expenditures flat.

I'm not an economist, but it seems that in the case of petroleum, natural gas and coal, prices typically reflect more than just the running costs of the marginal producer.  Especially when demand is high, prices are sufficient for the marginal producer to recover both capital and operating costs.

In electricity, the situation is almost byzantine in its complexity.  The price consumers pay may have multiple parts (capacity and energy), and it is almost always based on historical cost rather than replacement (marginal cost).  This leads to an absurd situation where a distributed generation resource that has the same capital and operating costs as a central station plant is considered "uneconomic bypass", even though it might actually be more economically beneficial once incremental transmission and distribution infrastructure costs are considered.  Moreover, the bias toward pricing based on historical cost means no one really knows what value consumers place on electricity.  I've recently seen some work by Lawrence Berkeley Laboratory in which the value of service ran into the hundreds of dollars per kWh, yet prices are four orders of magnitude lower.

Consumer advocates have their own take on this debate.  Mark Toney of The Utility Reform Network, a California consumer advocacy group, is a sociologist by training, and his organization believes persuasion and similar measures other than price are the appropriate way to change energy consuming behavior.  Once again, I'd suggest it takes both.

Sometimes policymakers also make interesting trade-offs when setting policy.  Diesel-powered light trucks and cars are about 1/3 more energy efficient than gasoline-powered models.  I drive a vehicle that's sold with a 2.4 liter diesel engine everywhere in the world but North America, where it can't be sold yet because it doesn't meet US emissions standards.  If the manufacturer started selling a diesel version tomorrow, I would buy it, but for the time being, I'm stuck.  In the meantime, I've threatened to swipe a colleagues's diesel Jetta and swap the motors.

Jack Ellis, Tahoe City, CA

Don't try this at home

Jack,

As usual, I'll have to mull over any statement that follows, "I'm not an economist, but ..."

But I think your central point is to reform the centralized power compact with end-users to allow electricity to be priced such that traditional market forces of supply-and-demand kick in and we begin to see just how electrons are valued. Am I following you?

That indeed would be a start and THEN we could tinker with policies and have a clearer view of the effect of adding distributed generation and other assets, such as storage. But I believe the corollary to your thinking is that more tinkering at the margins of an already, as you say, byzantine market, just further muddies the water.

Regards, Phil Carson