Thursday, 14 January 2016

Lesson 12, part III: Economics, the dark side of Energy efficiency

"Like the 2006 changes, it was predicted that the introduction of these limits would result in a 20% reduction in energy use for heating. A survey by Liverpool John Moores University predicted that the actual figure would be 6%"
UK energy policy, laws and regulations handbook: strategic information and basic laws.

Why did a predicted 20% reduction in energy use turn out to be 6%? The 1974 Warren Alquist act in California was predicted to lead to 80% saving in energy efficiency. Research into actual energy use has suggested they made no difference.

Remember that the oil shock inspired low-energy buildings in Europe and energy efficient products in Japan?

Today, country A uses four times more heating than country B, while country B uses fifty percent more to twice as much energy for hot water, lighting and appliances. It seems like country A would be Japan and country B somewhere in Europe. In fact country A is Germany and country B is Japan. In spite of low energy building standards, Germany uses four times more energy for heating, and in spite of all those energy efficient products, Japan uses up to twice as much energy for hot water, lighting and appliances. Or perhaps it is because of the efficiency.

Jevons paradox, inspired by 19th century economist, suggests that more efficiency will lead to more consumption. He was looking at coal, for example Watt's steam engine that was 75% more efficient than its predecessor, but ended up using much more coal.

A good way to think about this is with vending machines. There are plenty around Japan, serving hot and cold drinks to thirsty customers with a couple of coins rattling in their pockets. Considering the economics, we have the cost of the drinks, the maintenance and the heating and cooling on one side, and the income from the money going in on the other. The cost of the drinks will be balanced per drink sold, but the heating and cooling costs are going to depend on the time and the temperature outside, so there is some kind of break-even point of the number of drinks that must be sold per month.

What would happen if the vending machines became twice as efficient? They wouldn't need to sell as many drinks per month to break even. This means there are a lot more places where vending machines could be installed, and the result would be more vending machines. More efficiency would not lead to less energy use, but to more energy use.

These low-energy building standards and highly efficient products may not be helping the energy problem at all. They may be leading to more energy use. Or at best, we may just be using the energy we saved elsewhere.

Engineering estimates don't take into account consumer behaviour.

They can try, as we can see in the next part.

Freakonomics: How efficient is energy efficiency?