Reasons to be cheerful, Part 3: Energy efficiency
There are plenty of reasons to be gloomy about the prospects of stabilising the global climate, but there are also some promising developments, so I’ve started a series on this topic. Part 1 on peak gasoline herePart 2 on solar PV here
This post is about energy efficiency, which is often neglected, but is likely to be the biggest single source of emissions reductions over the next few decades. I’m going to define efficiency fairly narrowly, to refer to technologies that deliver essentially the same services using less energy than those they replace: so, for example, I’m including more efficient airconditioners, but not “smart” systems that cut off when demand is high.
The shorter version is
1. With existing technologies or straightforward extensions, it’s possible to double energy efficiency (reduce energy use per unit of energy services by 50 per cent) at relatively low cost and with marginal changes in performance.
2. With rising carbon prices over time, it’s likely that further improvements can be made in many areas
3. Concerns about possible rebound effects (aka the Jevons paradox) are misplaced
The first question to ask is what improvements in energy efficiency are available, at low cost, and why these improvements have not been made already. I can’t do a comprehensive survey, so I’ll just look at a few cases to indicate what is possible
* Motor transport – the Obama administration pushed through substantial improvements in fuel-efficiency targets as the price of bailing out the car industry during the crisis and is now seeking more dramatic improvements by 2025, with a likely target of 56 mpg, a doubling relative to the 2010 level of 27.5. From this report, it seems clear that these targets are technically feasible, and, while the costs (aorund $2000/vehicle) will not be trivial, they will not make cars unaffordable either.
* Set top boxes – according to this NY TImes article, they are among the biggest single energy users in many US homes. Most householders are simply unaware of how much energy these boxes are using, and the providers have no real incentive to economise, although it would be easy to reduce energy use by 50 per cent or more
* Light bulbs – the replacement of incandescent light bulbs by low-energy alternatives is already well under way. The current alternative, compact fluorescents have some problems, but have improved greatly under the pressure of market demand. A likely superior alternative, based on light-emitting diodes, is on the horizon but not here yet.
In most cases, the obstacles reflective inadequate information organisational inertia or market failures, and the best way to overcome them will include regulatory changes as well as price incentives. This is most obvious in the set-top box example, but it is also relevant when consumers (who commonly face high borrowing costs) need to pay an upfront cost for energy savings that will be received over a long period and may be hard to measure credibly. Also, in many cases, such as that of rented houses or company car fleets, the buyer of the house may not be the one who bears the associated energy costs.
Some people have worried that an increase in energy efficiency will simply result in an increase in the demand for energy services, so that energy use will not decrease much and may perhaps increase. The general point (with reference to labour rather than energy) goes back at least as far as Jevons. But this refers to an exogenous increase in energy efficiency, meaning that energy services become cheaper. Where the increase in energy efficiency is driven by an increased (price or regulatory) cost of energy use, we are (in the jargon of Econ 101) moving along the demand curve, not shifting the supply curve. So, there will normally be no rebound effect.
A doubling of energy efficiency across the board is probably the minimum we need to have any chance of making the kinds of emissions reductions that are necessary to stabilise climate, while allowing currently poor countries to catch up to the living standards of developed countries. As these examples (and they are typical of other areas I’ve seen) show, that’s feasible with existing technology. In most cases, that will still leave plenty of room for improvements in efficiency relative to the maximum level that is theoretically possible. But it will take the power of price incentives to ensure that the research is done to make this theoretical possibility into a reality.