energy efficiency

A refresher course on economic principles for the right

The other day, President Bush, in response to a question as to why he has not pushed more for energy conservation, responded that the American people are smart enough to figure it out on their own. This prompted conservatives at the National Review to call for a "Dubya-Love Moment" in honor of what they perceived as the straight-talking truth!

It is truly amazing that a philosophical movement once filled with some of the smartest minds in economics now wears economic ignorance as a badge of honor.

So here's how to respond to those on the right who still don't get it that energy policy requires government intervention, and not just blind faith in markets:

Energy efficiency is cornerstone of ambitious plan

Everyone's favorite McKinsey study suggests that America can shed a huge chunk of its emissions through costless measures, primarily in the realm of energy efficiency. The fly in this delicious low-carbon ointment is that the freebie cuts haven't so far happened by themselves, and it's never entirely clear how well an analyst's report is going to translate into reality. How nice, then, that New York City is gearing up to provide the proof point we've all been waiting for.

Mayor Bloomberg's office recently released a plan to drop the carbon emissions of the municipal government 30 percent from 2006 levels by 2017. The plan will cost about $2.3 billion, but the city expects to recoup these costs by 2015 -- an average payback of less than eight years across a large portfolio of projects.

A brief primer on variable vs. fixed costs

For those of us in the power industry, media discussions of the economics of power generation reveal an almost complete misunderstanding of how power is priced. Depending on our vested interests, we may find this either frustrating or beneficial -- but in all cases, it's false.

Herewith I attempt to explain from whence the confusion arises -- and why it is so critical for the clean energy community to understand this math and its consequences ... and to more accurately articulate the economics of those options we prefer.

Taking a three-day weekend for the planet

From the Beehive State, a gratifying way to reduce energy use (and carbon emissions): Taking Fridays off. And it's mandatory. In part to deal with rising gas prices, Utah's republican governor John Huntsman introduced the measure for state employees. The move, of course, instantly reduces commutes by 20 percent.

The remaining four work days get longer -- state offices will now stay open from 7 a.m. until 6 p.m. -- so that the total number of hours worked remains the same.

I'll bet there's a civic benefit too: The change may actually makes government offices more accessible by extending open hours beyond the tight 9-to-5 window that most citizens still work.

From the USA Today article:

The human-scale, renewable, domestic power systems reviving rural Austrian economies

Listen Play “Lonely Goatherd,” from The Sound of Music On a sunny Saturday afternoon in Salzburg, we took a field trip to a few examples of biomass in rural Austria. The country is over 40 percent forested, and over half of the forest is owned by small farmers with less than 40 hectares (just under […]

Renewables and efficiency would provide more GDP than fossil fuels

The attached Excel spreadsheet takes specific technologies, the known cost of implementing them, and various scenarios for responses to such implementation and technical improvements (including no technical improvement!) and calculates costs and benefits. This is intended to be an open source model. The comment section will be used to revise the spreadsheet with links to the old versions added to the bottom of this post as revisions are made (for the sake of transparency.) There is also a Word document with a narration of assumptions.

The conclusion in this 1.0 version: Unsurprisingly, the key to eliminating emissions profitably is large efficiency increases. With maximum efficiency improvements even a scenario with (completely unrealistic) zero technical progress in efficiency or renewables would make our economy as a whole richer than if we stuck to fossil fuels. If we combine aggressive efficiency improvements with aggressive (but reasonable) improvements in technology we would end up richer by more than a trillion dollars a year. Aggressive efficiency spending which yields small reductions, unsurprisingly has poor financial payback.

Warning: There is an easy misinterpretation the data does not support -- that we can do nothing. The fact that eliminating most fossil fuel use is more profitable than continuing to use fossil fuels to society as a whole does not mean that elimination will happen without policy changes. Nor does it mean that is currently profitable to those who could make the technical changes. For example, transforming commercial office space into a green building raises worker productivity by a minimum of 4 percent. If a landlord makes that transformation, and somehow gets hold of the confidential data needed to document that productivity gain, how much can she increase rents based on those productivity improvements? If you guessed zero, you are right and win the no-prize. Incidentally, even if the building is 100 percent owner occupied, what do you think the odds are they will invest in improved lighting and ventilation for the sake of productivity improvements?

The unglamorous work of change at the local level

Listen Play "I Have Confidence," from The Sound of Music I arrived here too late to catch the whole day today, but I did see some people presenting work from Eastern Europe, Sweden, Connecticut, Harvard, and Cambridge, Mass. It was a bit of a random grab bag, but these are all people working close to […]

Forbes on utility objections to combined heat and power

Forbes has a nice story about the historic barriers that electric utilities have thrown up to block efficient power generation. This is nothing new to those of us "in the trenches," but it is nice to see this topic aired from more visible podiums. It's worth the time to read for anyone who thinks that the only barrier to low-carbon generation is technological development.

Mine’s lighter than yours

When society embraces vehicle fuel efficiency as a goal, hordes of smart people converge on it and try to outdo each other. The same thing will happen when we seriously go after electrical efficiency — a wave of precocious, egotistical young people that haven’t been told what can’t be done will chase after it trying […]