Economists Don’t Pay Their Utility Bills

March 8, 2011

Industry News

The New York Times recently featured an article titled “How Energy Efficiency Sullies the Environment” and upon reading the headline in my Google Reader, I nearly scoffed aloud with disgust. I dove head first into the article, anxious to read what this cockamamie claim was all about.

Pointing out that current energy efficiency standards (I’m assuming they’re referring to EnergyStar compliance requirements) have required washing machine manufacturers to reduce the amount of hot water intake, the article’s first claim is that today’s washing machines don’t get your clothes as clean as their less-efficient counterparts of yesteryear technology. They make a good point. Hot water kills more germs therefore less hot water means more germs in your unmentionables. Personally, I’m not a germophobe so I couldn’t care less about this.

Immediately after making the point that a few more germs in the laundry is a small price to pay for environmental sustainability and a cleaner planet, the author makes the following claim:

“…a growing number of economists say that the environmental benefits of energy efficiency have been oversold. Paradoxically, there could even be more emissions as a result of some improvements in energy efficiency, these economists say. The problem is known as the energy rebound effect. While there’s no doubt that fuel-efficient cars burn less gasoline per mile, the lower cost at the pump tends to encourage extra driving. There’s also an indirect rebound effect as drivers use the money they save on gasoline to buy other things that produce greenhouse emissions, like new electronic gadgets or vacation trips on fuel-burning planes.”

Do these “economists” happen to pay their utility bills every month or pay attention to these horrendous gas prices? This “energy rebound effect” that they’re referring to apparently does not take into consideration that energy costs are rising around every corner. All of those hybrid-driving folks out there are spending just as much now on gas each week as they were 2 years ago because it costs more to fill up the tank. And those who are saving energy at home? They are not going out and buying an iPad just because they made the switch to CFLs – I promise you that.

As fuel becomes more expensive, whether it’s gasoline for the car, natural gas for the furnace, or electricity for the lights and gadgets, anything savings realized through energy efficiency eventually get washed out by the increased cost of living – utility rate hikes, energy optimization surcharges, gas pump jumps, grocery bill spikes, etc.

The author goes on to cite more so-called economists at the UK Energy Research Center: “When Britain’s UK Energy Research Center reviewed more than 500 studies on the subject, it rejected the assumption that rebound effects were small enough to be disregarded. The author of the 2007 report, Steve Sorrell, noted that these effects could, in some circumstances, “potentially increase energy consumption in the long term.”

Please note the “could” … “in some circumstances” … and “potentially” snuck in there. I could… potentially… in some cases, be considered a complete lunatic but 99 out of 100 times, people would say I’m sane. These people have apparently not seen how excited I get when I hear “Cupid Shuffle” come on the loud speakers at the local pub, but I digress. What’s important here is that the potential for this half-baked “energy rebound effect” to actually materialize depends solely on an immediate plateau of energy costs that would allow energy savings to actually hit your wallet.

The reality of the energy efficiency situation is this: reducing how much energy you use will not result in reducing how much you pay on your energy bill – and if it does, it won’t result in enough savings to actually boost the (inter)national demand for fossil-fuel based production of consumer products. It might land you an extra happy meal each month, but with the costs of energy rising on every front, energy efficiency will be a necessity to maintain energy expenses at the current level.

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