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Category — Energy Efficiency

Energy Efficiency: Two Narratives (market sense versus regulation and political correctness)

“Tell me, JJ, what’s this capital request all about?”

“Boss, this is for a heat exchanger that will use our cooling-tower water for meeting our air conditioning needs when it’s cold outside. I figure it will save 5% of the power we now use for operating our chiller. The project should come in at around $10,000 and have a payback of less than a year.”

“Saves energy, does it?  We can use this project to get greenie points towards obtaining Polar Bear level on our Politically Correct Building certification.”

“Maybe, but getting that certification takes a lot of paperwork and costs about $50,000.”

“Include a bicycle rack in this project, which gets points also.  And does this thing use electricity?”

“A little bit, for controls and automatic valves.”

“Good. Include a solar panel to power it and put it over the entrance to the building so it can be seen.  It’ll make a great picture.” [Read more →]

August 6, 2014   4 Comments

Rebound Redux: IEA Gets Energy Efficiency Wrong

“The notion that energy efficiency measures might bring deep emissions reductions along with greater economic growth has long promised an attractive ‘win-win’ for policy makers and business leaders. The extensive literature on rebound presents an uncomfortable challenge to this view, undermining the idea that efficiency leads to decreased energy use on anything approaching a one-to-one basis.”

The International Energy Agency’s World Energy Outlook 2013 grossly overestimates how much energy efficiency can reduce greenhouse gas emissions, according to scholars cited in this very study. As such, IEA’s claim that demand-side measures can account for almost three-quarters of emission reductions by 2020 could result in global-warming mitigation efforts that overinvest in efficiency and underinvest in low- and zero-carbon energy technologies.

The Paris-based agency’s projections of emissions reductions from energy conservation and efficiency are based on questionable assumptions, experts said, pointing out that rebound effects frequently take back much or all of the energy savings that efficiency policies attempt to capture.

Though the “rebound effect” is little known to policy makers, researchers around the world have published well over 100 peer-reviewed articles documenting empirically that energy savings from increased efficiency of factories, cars, and houses can result in rebounding energy consumption. Depending on the sector in question and the efficiency policies that are implemented, estimates of rebound range from just 5 percent to well over 100 percent. [Read more →]

April 29, 2013   3 Comments

Gas Furnace Rule: Beware of “Scorched Gas” Policy

“Hurrah” to the American Public Gas Association (APGA), a small trade group that was willing to step-up to U.S. Department of Energy (DOE) and other special-interest organizations that want energy efficiency at any cost to the American consumer. The APGA/DOE Furnace Rule Settlement prevented the unintended consequences of regulatory overreach by allowing consumers choices between regulated and unregulated (and less regulated) products.

This post, following APGA’s piece at MasterResource last week, provides historical background on the subject of energy efficiency regulations in order to better understand the significance of this settlement.

From EPCA (1975) to EISA (2007)

In 1975, the Energy Policy and Conservation Act (EPCA) was enacted largely as a Federal response to the Arab oil embargoes. EPCA was amended by the National Appliance Energy Conservation Act of 1987 and the Energy Policy Act of 1992 etc., etc.

The 1975 EPCA establishes nationwide energy efficiency minimum standards for certain consumer and commercial products including heating, ventilation and air conditioning (HVAC) equipment; appliances such as washers and dryers, ranges, and refrigerators; and plumbing fixtures such as faucets and showerheads. Ever since, such minimum standards have been based upon metered energy (e.g., 3,412 Btu/kWh); a factor that gives a major head start for electric appliances.

With every revision, more and more appliances were added to the list and more and more authority was given to the Department of Energy (DOE) for carrying out its ever expanding mission. The Energy Independence and Security Act of 2007 (EISA) was especially expansive of such authority. [Read more →]

January 28, 2013   6 Comments

PURPA: Another Subsidy for Intermittent Energies

“PURPA has been the most effective single measure in promoting renewable energy.”

-Union of Concerned Scientists

What if Congress passed a law that forced you to buy intermittent energy for the same price as reliable energy? What if, in an attempt to promote “alternative” energy sources such as wind power, Congress passed a law that enabled wind to crowd out reliable resources? Congress actually passed that law in 1978, the Public Utility Regulatory Policies Act (PURPA). Its role has changed and its scope has narrowed, but “PURPA is still alive and kicking.


President Jimmy Carter, working from the viewpoint that the federal government had to intervene in markets to reduce demand and increase supply, formulated PURPA as part of a five-part National Energy Plan.

Oil and gas were seen as wasting resources relative to plentiful coal, so public policy needed to transfer demand from the former to the latter. (This was before the global warming issue took hold.) Advised by peak-oil (and peak-gas) proponent  James Schlesinger, the first secretary of the Department of Energy, Carter introduced a new energy plan for America. In a cozy fireside chat on national TV, Carter emphasized sacrifice, energy efficiency, and 55-degree thermostats as demand-side strategies to construct a new energy balance.

Other parts of the National Energy Plan included the Energy Tax Act (which introduced the gas-guzzler levy for vehicles), the National Energy Conservation Policy Act, the Power Plant and Industrial Fuel Use Act (repealed in 1987), and the Natural Gas Policy Act. These laws were aimed at reducing consumption of both natural gas and Arab oil.

The repealed Fuel Use Act essentially mandated that coal plants be built in place of natural gas-fired power plants (for nine years it was against the law to build a natural gas-fired power plant, although exemptions were granted). Given the recent surge in production of natural gas from shale formations in the U.S. and elsewhere, the idea of conserving natural gas seems absurd. It also runs contrary to PURPA’s secondary goal to promote fuel diversity.

PURPA can be seen as yet another element of conservation by decree, or conservationism, based on the view that resources are fixed in both the physical sense and the economic sense.  It was an integral part of Carter’s and Congress’ technocratic solution to the “fixity” problem as they saw it. [Read more →]

January 22, 2013   5 Comments

Energy ‘Rebounds’ and ‘Backfires’: An Introduction and Literature Overview

Much of today’s energy policy assumes that regulations mandating greater energy efficiency will reduce energy use. But that isn’t always the case, and energy efficiency improvements are seldom as large as promised by engineering calculations because of “rebounds.” Such is the most general conclusion from hundreds of studies pertaining to the effects of energy efficiency, whether market or nonmarket.

Such is the message from my literature review published by the Institute for Energy Research (pictured here):

For example, people who install lighting that is 50 percent more efficient frequently leave the lights on longer, negating some of the energy savings from greater efficiency. This is called an energy efficiency rebound. Sometimes these mechanisms even bring about net increases in energy use known as backfires.

Rebounds have a direct implication for energy efficiency mandates and incentives. If rebounds are substantial, efficiency policies will be less effective at reducing air pollutants, for example, because the “saved” energy gets consumed elsewhere. Energy consumption may even increase on net to cause backfires.

Rebounds, and certainly backfires, fall into the ‘unintended consequences’ category of government intervention into the complex market. It is reason to ‘let the market decide’ with energy usage, as in energy production. [Read more →]

July 17, 2012   5 Comments

Economic Efficiency, Not ‘Energy Efficiency’ (Economist Cordato parses a sacred cow)

Energy efficiency and energy savings are considered to be intrinsically good. Politicians of all stripes sing the praises of less-is-more. Only one problem: this view is simplistic and wrong from the economic point of view.

Energy efficiency is so central to the current energy conversation that to criticize it is to take on the unenviable role of the contrarian or, as some have called me, the curmudgeon. In a recent paperRoy Cordato of the John Locke Foundation happily takes on the role of critic as he dissects energy efficiency as a policy goal.

Dr. Cordato states in part:

It seems that no matter what governments at any level do, from building buildings to formulating and implementing legislation, “energy efficiency” has to be a consideration…. The problem is that the term, as defined by those who embrace it as a policy guide, is focused strictly on saving energy even if it means sacrificing overall economic efficiency.

Cordato draws a key distinction between energy efficiency and economic efficiency. Strictly speaking, energy efficiency is a type of technical or engineering efficiency focused on reducing one input, energy, in providing a given service or product. On the other hand, economic efficiency is a broad and all-encompassing concept that takes into account the relative costs of all inputs. Cordato explains: [Read more →]

July 6, 2012   17 Comments

When the Cap Isn't a Cap, the Trades are a Charade

Many analysts (including myself) have written about the innumerable problems with cap-and-trade, mostly focusing on the bogus nature of the trade. And most of the problems we’ve predicted have found their way into the current cap-and-trade law working its way through Congress, the American Clean Energy and Security Act of 2009 (Waxman-Markey climate bill).

As was widely predicted, Waxman-Markey has degenerated into little more than a special-interest pork-fest, where the political system is getting ready to give away at least 85% of the valuable emission permits to favored energy constituencies such as electrical utilities, university researchers, low-income households, renewable manufacturers, anti-deforestation programs, and so on. The Obama administration’s pledge to auction off 100% of the emission permits was a joke on the face of it: virtually all emission trading programs feature extensive “grandfathering” of polluters and favored constituencies.

Principled environmentalists have turned their guns on what has emerged. Michael Shellenberger of the Breakthrough Institute, in particular, has explained that it’s not only the trade elements of Waxman-Markey that are bogus, it’s the cap as well. It turns out that under Waxman-Markey’s byzantine provisions, “carbon emissions in regulated sectors of the U.S. economy [are] to rise at business as usual (BAU) rates through 2030.” [Read more →]

June 4, 2009   2 Comments

More Doubts on "Green Jobs"

As time passes, the skepticism grows about the ability of government funding for “green jobs” to simultaneously (a) pull the economy out of recession and (b) reduce the risk of climate change.  In the March 4 edition of Slate–hardly a bastion of reactionary conservatism–Senior Fellow Michael Levi of the Council on Foreign Relations took the greenwash off of “green jobs” in the essay, “Barking Up the Wrong Tree: Why green jobs may not save the economy or the environment.” Levi also directs CFR’s Program on Energy Security and Climate Change. [Read more →]

March 6, 2009   3 Comments

W. S. Jevons (1865) on Energy Efficiency (Memo to Obama, Part IV)

The insights of William Stanley Jevons, though set down long ago, make a profound contribution to the current debate over energy efficiency and energy-conservation policy, and not just to the debate over the role of renewable energy in modern society. [Read more →]

February 2, 2009   2 Comments