Category — Conservationism

[Editor note: Part I on energy conservationism examined Richard Nixon's price control order of August 1971 as the birth of peacetime conservationism , with shortages leading to mandatory allocation law.]

A tract for the energy-shortage times was a 1976 essay in Foreign Affairs by Amory Lovins, the 29-year-old energy representative of the U.K. environmental group, Friends of the Earth. In “Energy Strategy: The Road Not Taken?” Lovins coined the term soft energy paths to differentiate energy conservation and decentralized renewable technology from the “hard” path of central-station power plants fueled by oil, gas, coal, or uranium.

Neo-Malthusians such as Paul Ehrlich and John Holdren sang his praises, and the article became the most reprinted piece in the history of Foreign Affairs. Lovins was soon testifying before the U.S. Congress and advising President Carter on the proposition that the least-cost energy option was not to produce energy, but to save it.

Unlike S. David Freeman of the Ford Foundation Energy Project (see post yesterday), Lovins, an Oxford don, specialized in the technical minutiae of energy and wrote, footnoted, and argued his opponents into despair, never mind how hypothesized and obscure his engineering-grounded pontifications were from demonstrated market preferences. Lovins became the most talked about energy guru in the world during the crisis period, with a deceptively simple message that less was more. To critics, however, Lovins was “selling a dream without presenting the bill.”

Lovins held a deep-rooted suspicion—even phobia—about the energy market. “It is hard to think of any current energy technology in extensive use that does not hold the potential for serious long-term environmental risks—risks which may today be wholly unsuspected,” he warned. From this premise came his worldview, later dubbed whole systems thinking, that saw current energy usage—thus production—as a massive market failure. “We must devise a science and a technology of energy impact analysis so that we can make energy a critical variable in all policy decisions, rather than leaving it to emerge de facto from decisions taken on other grounds,” he wrote in 1975. “Boundary conditions on the energy inputs are now needed.” This message was new to the United States energy debate, although the “small is beautiful” theme of E.F. Schumacher was already popular in Europe.

Lovins’s first order of business was to push for a short-term phase-out of nuclear power—a signature issue for Friends of the Earth. Lovins feared that the rapid depletion of oil and gas would segue to super-abundant coal and nuclear—a bad transition and worse long-run lock-in to him. Lovins wanted “transitional technologies that use fossil fuels briefly and sparingly to build a bridge to the energy-income [energy-renewable] economy of 2025.” However wrong this would turn out to be, Lovins would fare better with his second aim: full-scale deployment of conservation technologies to reach a “realistic long-term goal” of “modest, zero, or negative [energy] growth” per unit of output. [Read more →]

Richard Nixon (1913–94) got on the wrong side of economic law three years before his Watergate-related resignation from the U.S. presidency. In August 1971, in a surprise decision, Nixon imposed the first peacetime wage-and-price controls in American history.

Businessmen reined in their surprise to pragmatically offer support. John Kenneth Galbraith and Paul Samuelson offered quick congratulations. There was public approval of the ‘temporary’ action that was intended to just quell inflationary expectations (as if the problem was psychological and not the inherent consequence of expansionary money). The inflation rate was then running at about 4 percent per year.

Free-market economist Milton Friedman, knowing that shortages lay ahead, lambasted the move. So did Ayn Rand in the Ayn Rand Letter. Murray Rothbard was fiercely critical (“on August 15, 1971, fascism came to America,” he wrote); he had seen price controls and shortages before.

Nixon’s edict disabled the market process responsible for coordinating supply with demand and allocating resources to their most profitable use. Predictably, oil shortages developed, which resurrected long dormant depletionist thinking and pointed policymakers toward conservationism. After all, if price controls did not allow prices to rise and “regulate” demand to available supply, then government had to—at least according to the majority of policymakers and neo-Malthusians whose worldview dovetailed nicely with public sentiment against the energy industry.

Birth of Peacetime Conservationism

The oil crisis, contrary to popular remembrance, did not begin with the Arab Embargo of October 1973. It began with petroleum product shortages that arose in late 1972 when price controls became constraining. In February 1973, Senate hearings on fuel shortages demonstrated, in the opinion of committee chair Henry Jackson (D-Wash),

One, there has been an unprecedented breakdown in our energy supply and distribution system;

Two, the fuel shortages now being experienced are far more extensive than anticipated;

Three, more severe shortages of fuels, particularly gasoline, are in the offing. [Read more →]

Although smart phones and computers make it easier to remember, last month Americans endured the semi-annual hassle of changing their clocks an hour. “Daylight Saving Time” (DST) was originally started during World War I to allegedly save energy. Jimmy Carter gave it to us in peacetime as part of his National Energy Plan. In practice, DST causes needless headaches—and even heart attacks!—and arguably doesn’t even save energy.

Chalk it up to yet another failed government intervention.

 The Hubris of DST

Joe Romm is not afraid to recommend society-changing government intervention in order to achieve a conservation goal, and he proposes drastic carbon legislation to prevent what he sees as “hell and high water.” Yet even this central planner hit the nail on the head when he complained: “You can’t save daylight by moving around the hands on your clock, of course. So daylight saving time remains as absurdly named as it ever was.”

For those who are skeptical of the current suite of climate models, Romm’s complaint is ironic. The same mindset that led government wartime planners to alter time, leads today’s planners to project what the global temperature will be in the year 2080.

The Harm of DST

There are many harms to DST. Most obvious, there is the hassle every household endures in actually changing the numerous clocks (microwaves, nightstand, watch, car, etc.). Although this doesn’t seem like a big deal, imagine if the federal government mandated that every U.S. citizen sit in a timeout corner for 15 minutes twice a year. Multiplied over hundreds of millions of people, that would add up to a significant waste of time, unless there were some corresponding benefit to the practice. [Read more →]

One of the most curious facts about energy is that economies continue to use more of it even as they use it more efficiently. This strikes us as strange because it has become an article of faith that making cars, buildings, and factories more energy efficient is the key to cheaply and quickly reducing energy consumption, and thus pollution.

But energy experts have never seen this as particularly mysterious. As energy historian Vaclav Smil notes, “Historical evidence shows unequivocally that secular advances in energy efficiency have not led to any declines of aggregate energy consumption.” A group of economists beginning in the 1980s went further, suggesting that increasing the productivity of energy would increase economic growth and energy consumption.

Efficiency advocates dismiss the evidence of rebound of energy use pointing to direct behavioral changes at the household or business level that are easiest to measure. But the most significant energy rebounds are indirect — in the production of energy, raw materials, and consumer goods — not in the “end use” consumer products.

Below, a leading energy economist, Harry Saunders, explains why energy efficiency does not decrease energy consumption in the way we conventionally understand it. In the process, Saunders clarifies the controversy over his recent co-authored study for the Journal of Physics, which reviews 300 years of lighting history to predict the impact of new solid-state lighting technologies (e.g. LEDs).

Against the widespread belief that new lighting technology will reduce energy consumption, Saunders and his colleagues found that they will likely increase it — greatly expanding the global use of lighting in the process, especially in developing countries. Saunders clarifies some important questions, and explains the basics of “the rebound effect.”

With the new study, rebound has firmly moved from the theoretical to the empirical, and the implications of it must now be dealt with by all of us who were counting on efficiency to be an easy way to reduce greenhouse gas emissions.

Here is Saunders’s latest thinking: [Read more →]

Editor Note: Demand-Side Management (DSM) is an electric-utility program where all ratepayers subsidize the energy conservation investments of those ratepayers who participate in the program. Dan Simmons, director of state affairs for the American Energy Alliance and for the Institute for Energy Research in Washington, D.C., submitted the following testimony in opposition to Georgia Power Company’s request to implement a DSM program.

Summary from Testimony: Market vs. Non-Market Conservation

Advocates of demand side management frequently overlook the human dimension. People make conservation decisions every day. Families are constantly striving to maximize the benefits they receive from using energy with the cost of using that energy.

Some economic analyses try to argue that ratepayers systematically misestimate the proper discount rate and therefore DSM is required to fix this error. But those analyses fall victim to assuming they know what’s best for ratepayers. The people who know best are ratepayers themselves. Only the individual ratepayer can decide how he or she best allocates their scare resources.

DSM leads to inefficient outcomes. It increases rates for all ratepayers, but only benefits a few of the ratepayers. Because history shows that DSM programs do not typically lead to the demand reductions claimed, they do not lead to lower electricity rates overall.

DSM is not new. It has been tried and studied for years. DSM is subject to the well known problems of the rebound effect, free riders, moral hazard, to name a few. Georgia Power’s 2010 Integrated Resource Plan and Application for Certification of Demand Side Management Programs analysis does not explain how this program will overcome these well-known economic problems nore does it explain how it will overcome the problems with Georgia Power’s DSM program from the 1990s. Without an analysis, it is difficult to believe Georgia Power’s DSM programs will achieve the benefits Georgia Power projects.

TESTIMONY

Q. PLEASE STATE YOUR NAME, TITLE AND BUSINESS ADDRESS.

A. My name is Daniel R. Simmons. I am the Director of State Affairs for the American Energy Alliance and the Institute for Energy Research, non-profit organizations that educate the public on energy policy. Our offices are located at 1100 H Street, Suite 400, Washington, DC 20005.

Q. PLEASE SUMMARIZE YOUR EDUCATION AND PROFESSIONAL EXPERIENCE.

A. I received a Bachelor of Science in Economics from Utah State University in 1998 and a Juris Doctorate from George Mason University School of Law in 2003. In 1998, I moved to Washington, D.C. and worked for the Competitive Enterprise Institute as an environmental policy analyst. In 2000, I went to work for the Committee on Resources of the United States House of Representative as a professional staff member. From 2002 to 2005, I was the Emmett McCoy Research Fellow at the Mercatus Center and from 2005 to 2008, I was the Director of the Natural Resources Task Director at the American Legislative Exchange Council. From 2008 and presently, I am the Director of State Affairs at the American Energy Alliance and the Institute for Energy Research. [Read more →]

Editor note: Part I examined Dr. Ehrlich’s views on Julian Simon, growing energy usage, and depletion. Part II examined his errant energy forecasts. (Previous posts on the worldview and statements of Obama science advisor John Holdren are here.)

Energy conservation(ism) was the Ehrlichs’ silver bullet for fossil-fuel depletion. Current usage levels were decried as enormously wasteful. Depletion and climate change called for “a reorganization of the American way of life” to cut energy usage in half or else “the nation would go bankrupt.” [1] The bankruptcy would come after “frequent unpredictable blackouts and brownouts, the continual need to devise more ‘emergency’ measures, and the return of closed gasoline stations.” [2]

Transportation Usage

On the transportation side, smaller cars, alternative vehicles (even with “miserable pickup”), “slower coast-to-coast transportation,” and an end to two-car families were recommended as, potentially, “the cost of survival.” [3] Paul Ehrlich took on automobiles as status symbols with sarcasm:

“Cars are for transportation, and proper use of the media could once again persuade American men to get their sexual kicks out of sex (not reproduction) instead of a series of automotive sexual surrogates. Restriction of families to ownership of single small cars also would put some pressure against over-reproducers.” [4]

Another part of his “auto-control program” was a ban on motorized camping on public land so “people could be encouraged to regain an appreciation of their place in nature.” An exception was made “for those physically unable to back-pack.” [5] The use of off-road vehicles (dirt bikes, dune buggies, all-terrain vehicles, etc.) was censured as devastating the environment. [6] Government agencies could lease “special purpose vehicles . . . to provide whatever level of usage is determined to be ecologically acceptable” on public lands.[7] In the longer term, “America’s transportation system could be redesigned to minimize the need for automobiles and trucks and maximize the use of feet and bicycles for local transport.” [8] Trains and planes as public transportation (“mass transportation”) were to be utilized for long distances. [9] This makeover of the transportation system “means our settlement patterns must also change” toward urbanization and away from “leapfrogging suburbs.” [10]

So long as cars existed, their number, size, mechanics, and fuel consumption had to be regulated to minimize oil usage.[11] “The large automobile should disappear entirely, except for some taxis, and these could be designed to run economically.” [12] Lower speed limits were suggested. [13] Cars should be designed to be recyclable. [14] Consumers were invited to boycott “one or more” of the automobile manufacturers’ products. [15] Consumers were also urged to buy used cars rather than new ones. [16] Automobile vacations were discouraged, as were three-day weekends responsible for “enormous jams on highways.” [17] A monthly step-up in motor fuel taxes was recommended “until gasoline costs $2.50-$3.00 per gallon, comparable to [1990] prices in Europe and Japan.” [18] In the long run, Paul Ehrlich believed, cars would have to be powered by an energy source other than gasoline. [19]

“Many other restrictions,” such as banning power lawnmowers in the suburbs, were part of Paul Ehrlich’s ideal world. [20] A side benefit (he liked to tie-in his policy objectives) was offered:

“People in those areas might learn to plant attractive displays of native plants rather than struggling with pesticides, fertilizers, and mowers to keep a monoculture of grass under control. And as a result their lives, and those of their neighbors, will become quieter, more relaxed, and less polluted.” [21]

Electricity Usage

Ehrlich and Harriman considered “the generation and use of electric power . . . [as] one of the prime activities that results in environmental deterioration.” [22] They worried that at the usage growth rates encouraged by electric utilities, “every square inch of the United States would be covered with conventional power plants in two hundred years or so.” [23] Consequently, [Read more →]

[Editor note: Texas has been a hotbed for energy mandates and environmental pressure groups ever since Enron successfully lobbied for the state to enact a strong renewable energy mandate in 1999. This mandate was expanded in 2005, and the a second expansion (with a solar carve-out) almost passed in the last session. Currently, environmental pressure groups are working to toughen an energy efficiency mandate enacted in the same 1999 law and extended in 2007.]

The Texas Public Utility Commission (TPUC) is in the midst of a rulemaking that would expand Texas’s energy efficiency program. Questions of administrative overreach aside (the state legislature rejected the program last session), a sober look at costs versus benefits indicates it is a very questionable deal for ratepayers.

Some will argue that more government-directed conservation (or conservationism) is a good thing. After all, it is frequently claimed that the existing efficiency program is cost-effective based on 2001–2009 data.

In reality, however, the record provides no such justification. Actual expenses for the program in 2008 were at least $57.9 million, and projected expenses for 2010 are $105 million. These costs are paid for by residential and commercial electricity consumers. The PUC says the benefits of this program outweighs its cost. But the commission currently uses a cost-benefit method that does not accurately measure the program.

PACT Problem

Texas is almost alone among the states in using a Program Administrator Cost Test (PACT) to evaluate its efficiency programs. Yet the California Standard Practice Manual, used as a reference in many other jurisdictions, explicitly warns against PACT: “By defining device costs exclusively in terms of costs incurred by the administrator, the results reflect only a portion of the full costs of the resource.” [Read more →]

“[LEDs are] not the same. They’re weird-looking. They’re sized different and have these unusual ripples. If you have those interspersed with your traditional lights, they’re going to look dumb.”

- Interviewed consumer, AP Piece, December 21, 2009

An AP piece yesterday by by Sean Murphy, Many Take Dim View of New-Fangled Christmas Lights, is another example of some of the problems that occur when an (inferior) product is forced on consumers in the name of ”energy sustainability” (aka, the futile climate crusade).

Small, unsafe, high-insurance-premium micro cars are bad enough (do these things work on the highway?). But also troubling is the assault on quality lighting–and more lighting per se–that hinder those whose mood is elevated by brightness and the many who have trouble coping with the dark. (Of course some can go too far with holiday lighting, as with any pleasurable activity.) But many need all of the high quality lighting they can get to neuter their Seasonal Affective Disorder (SAD) syndrome.

And so this holiday season–the time of year when many turn the winter blues into a winter wonderland–consumers are finding themselves increasingly stuck with LED lighting. Some wonder how ‘green’ the ecolights are compared to what is in your attic. Others have tried and given up on solar LED as the ‘green’ way.

Reprinted below is Mr. Murphy’s essay on consumer angst with LED lighting. (And it does not sound like energy savings if buyers are racing from store to store to find the lighting they want and need, does it?) [Read more →]

[Editor note: This piece, written during the BTU tax debate by Julian Simon (1932–1998), is reproduced for its relevance for today's energy debate]

As the fight intensifies about an energy tax in the budget bill, some cool heads ought to reexamine the underlying belief that it is good for us to “conserve energy.” We see that belief in headlines such as “The High Cost of Cheaper Energy,” and Washington Post editorials like “A Totally Free Market Leads to Over-Consumption.”

Conservation Isn’t Necessary or Good

Some people simply believe that it is ipso facto a good thing to use less energy and have less economic growth. As Paul Ehrlich put it, “Giving society cheap abundant energy is . . . like giving an idiot child a machine gun.” Other backers of the bill seek not only to preserve the supply of energy but also to return to a “simpler life” (for others, of course, not for themselves) because it will make us better human beings. As Amory Lovins puts it, “If nuclear power were clean, safe, economic, assured of ample fuel . . . it would still be unattractive.”

Perhaps most common are those who somehow believe that there is an economic rationale for “saving” energy. That unstated and unanalyzed belief is seen in columnist Jim Hoagland’s statement, “A rejection of energy taxes would send a message down the national spinal cord that America can still afford to use more of and pay less for the least efficient fuels.”

The economic-saving rationale for an energy tax is not, however, widely accepted among economists whose business it supposedly is to understand such matters. I’d bet that the consensus of leading economists does not support the public belief in energy conservation. (I also repeat my public offer to wager a week’s pay that the price of any type of energy will be lower at any future date than now, which would prove that there is no impending shortage and then no basis for tax restraints on energy use.) [Read more →]

“Today the conservation movement is led by sober business men and is based on the cold calculations of the engineers. Conservation, no longer viewed as a political issue, has become a business proposition…. The old school looked on conservation as a governmental function; the new school believes in entrusting it to the hands of business men and engineers.”

- Erich Zimmermann, World Resources and Industries (New York: Harper & Brothers, 1933), pp. 784–85.

Profit-seeking conservation is nothing new, as economists have noted. So why must we assume that self-interested conservation is a ‘market failure’ requiring government subsidies and mandates? Why is market decision-making with energy necessarily sub-optimal?

And if “market failure” is posited, what must be said about “government failure”? Political processes are human too, and worse, bureaucrats do not have their own hard-earned cash on the line. The case for government (non-market) conservation is not self-evident.

Technological improvements and greater capital investment have often reduced resource requirements. History is replete with statistics showing how resource efficiencies have been a natural byproduct of profit-driven activity in a free and prosperous commonwealth as shown, for example, by economist Pierre Desrochers (here and here).

Coal Pounds/kWh Efficiencies: 1900 and Today

Consider the use of energy inputs to generate electricity. At Samuel Insull’s Commonwealth Edison Company in Chicago, for example, between 1900 and 1913 the amount of coal per kWh fell from approximately seven pounds to three pounds. (1) Insull spoke to such invisible-hand conservation–versus political shouts–in a 1916 speech: [Read more →]