One Response to Energy Efficiency Redux
Over the weekend, an excellent editorial on energy efficiency appeared in the Washington Post. And while Climate Progress has previously blogged on the Mckinsey report the piece discusses, any time the major media publishes one of their rare articles on energy efficiency, it deserves attention and praise.
The article’s full text is posted below:
What kind of lightbults do you use?
Ever since President Bush lamented the nation’s addiction to oil in his State of the Union address, energy policy has been on the rhetorical agenda. But neither the administration nor Congress has shown much appetite for action beyond subsidies for research on alternative fuels. A new analysis of the energy market from the McKinsey Global Institute offers a reminder that inventing technologies can matter less than ensuring they are used. If the world were to adopt existing technologies that pay for themselves within 10 years, the growth of energy consumption could be cut by about three-quarters, according to McKinsey. But such technologies aren’t going to be adopted unless governments embrace regulatory and tax incentives. Market forces aren’t powerful enough to do the job alone.
Consider electricity generation: Switching from old-fashioned generators to new ones can almost halve the amount of energy needed for a given level of output. Oil refineries and steel producers could implement similar changes, and there are even greater savings to be had from construction techniques. Better insulation, wider use of low-energy compact fluorescent lighting and more efficient water heating would slow the growth of residential energy demand worldwide from 1.4 percent to 0.5 percent a year.
The reality, however, is that optimizing energy efficiency is not the first thing that consumers think about when they get out of bed. Some may not realize that an energy-saving investment can pay for itself in 10 years or less. Some may lack capital to finance the investment. Most just have other stuff to worry about: They want comfort, hence larger houses; they want convenience, hence more appliances; they want sex appeal, hence fast cars. Because the savings from energy conservation are marginal to the budgets of most households, they don’t carry much weight.
This is not a reason to give up on price signals, but it is an argument for strengthening them with taxes and regulations that drive conservation. Japan, which has both high energy prices and strict efficiency standards, consumes less energy per unit of output than any other country; its gas and coal power plants are more than 70 percent more efficient than Russian ones, and its standards for air conditioners are nearly 50 percent stricter than China’s. Europe’s experiment with gasoline taxes also shows that policy can make a difference. Its vehicles are 15 percent more efficient than U.S. cars in the same class.
The McKinsey report drives home one further point: No strategy can control the growth in energy consumption unless it includes developing countries. An estimated 13 percent of the growth in global energy demand between now and 2020 will come from new Chinese power plants, with Chinese vehicles and buildings adding to the load. Meanwhile fuel subsidies in many oil-exporting countries encourage careless consumption, while the lack of metering of Russian residential gas usage creates an all-you-can-eat attitude. Energy policy is hard enough when it’s confined to Washington, but there’s no escaping the imperative to pursue it internationally, too.