Editor Note: The post below, published at MasterResource in June 2009, has profound challenges for the notion that self-interested business underinvests in energy efficiency, giving a “market failure” rationale for government investments in and mandates for energy efficiency. This post introduced the term conservationism to differentiate government conservation from market conservation. It also documents the market failure of Joe Romm’s shuttered nonprofit, the Center for Energy and Climate Solutions.

“Enter the energy outsourcing model of energy service companies (ESCOs) in the 1990s, widely heralded as a ‘new economy’ breakthrough and a new feature of ‘natural capitalism’. Enron Energy Services (EES), in particular, the energy outsourcing division of the late Enron, was the next great thing…. ‘ESCOs are DEFINITELY the future,’ exclaimed Joe Romm. ‘I intend to work with the big ones to transform the market, which I think will take about two or three years.’

“Projects pursuing LEED certification earn points across several areas that address sustainability issues. Based on the number of points achieved, a project then receives one of four LEED rating levels: Certified, Silver, Gold and Platinum.”

– LEED Website

“LEED advocates say the added cost of building to their standards is small. That may be true for the actual recommended energy measures; it is the certification process that is so costly.”

“Proponents of LEED say there are short paybacks and many benefits for the extra costs. But the environmental benefits are subjective…. Plus, many of the projected savings for LEED buildings are proving very difficult to verify.”

“LEED with its one-size-fits-all standard … may not hold up in competition with voluntary energy efficiency programs.”

– Jim Clarkson (below)

It’s a shame to see money wasted in the name of energy conservation.…

[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.…

[Editor note: Part II on energy conservationism tomorrow examines the energy conservation faddism of Amory Lovins.]

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.…