Memorandum by Sonia Boehmer-Christiansen
I would like to make six related points:
1. LOBBIES
There is a very large, technology-based lobby
out there (in universities, R&D labs, some industries and
among green ideological groups) that perceives, wrongly in my
view, that energy efficiency (generation, delivery, housing and
use by appliances) is directly linked to emission reduction. According
to the current "story-line" or rhetoric, emission reduction
is a major step on the path to planetary salvation.
These groups will need testing for the validity
of their beliefs as well as for their immediate demands on government.
They all have "vested interests". The energy efficiency
lobby is "grounded" in physics and will choose its figures
carefully, promising much. However these figures often lack hard
economic analysis and testing in the real world of human behaviour,
they tend to ignore "transaction" costs and the costs
involved in removing so-called "barriers" to the adoption
of what experts believe is rational.
Institutional issues and social issues tend
to be ignored and ideology (or rather fear of environmental change—a
cultural predisposition in our risk averse society) will urge
the fixing of mandatory targets. Policy flexibility might in fact
be a safer option, making adaptation to change easier.
2. EMISSION REDUCTIONS
The reality of a strong link between energy
efficiency improvements (undoubtedly worthwhile if they reduce
costs of production etc) and emission reduction is still debated
in the academic literature. The most important variable here is
total energy consumption, and this is likely to rise as incomes
increase. If this increase is brought about by lower energy costs
thanks to improved efficiency, much depends on how this saving
is spent, how much extra energy might be consumed, and of course
its emission characteristics. Improving energy efficiency in the
real world as distinct from the physics textbooks can be very
costly, and I hope that you can find experts on this field to
provide you with details. I have published a whole issue of Energy
and Environment on this subject in 2000 (11.5), and another
one, also edited by Horace Herring of the Open University on the
same subject, is in the pipeline (E&E, 15.6 due towards the
end of this year). There the argument is that energy efficiency
is not a "green" option at all, but a commercial one.
In my view, it should be the latter, and hence it should be used
only when it makes economic sense, not when, on paper, it supports
sometimes dubious emission targets.
3. ENERGY CONSUMPTION
AND PERSONAL
INVESTMENTS
Historically at least, energy efficiency improvements
have not led to a reduction in energy demand, but have been outstripped
by growth in energy consumption.
Apparently the "energy" behaviour
of people, once they make savings due to improved efficiency,
is not well understood. I personally have not invested in a condensing
boiler on the advice of several experts who tell me that what
you save in energy costs, you spend easily (and more) on the costs
of repair, a calculation the advocates of efficiency ignore. Investing
in future energy savings may reduce the money available for, say,
an annual holiday abroad. Energy investments are usually not a
priority, however desirable in theory. Most people are not likely
to organise their spending around the long-term energy savings
they might make by investing in efficiency improvements.
One might also mention here that energy efficient
houses in Sweden should not become the example for the UK with
its very different climate and seasons, and that many "Brits"
much prefer an old drafty house (and will spend much to keep such
a house habitable) to a new well insulated one. Legal attempts
to force old houses into compliance with modern energy efficiency
standards, is surely foolish or rather, in the current jargon,
"unacceptable" to many British people.
4. ECONOMIC SENSE
I have my doubts that government can be a good
judge of which efficiency improvements are worthwhile in the whole
economy. This is surely an area that might better be left to "business"
decisions and so-called market forces. These are more likely to
pick out those investments that make "economic" sense.
I strongly feel that our Government, in spite
of past promises and bad experience, is becoming too interventionist
in the energy demand sector. The regulation of emissions (the
impacts of which remain contested, if not in the UK then certainly
in several other countries) is no substitute for energy policy.
All this does not mean that improving energy
efficiency along the energy generation and consumption chains
is unimportant, but it must make economic and commercial sense
in the short and medium term. We surely no longer plan (top down)
for the long term? Or is "global warming" the myth that
enables our bureaucrats to return to bad habits, pick winners,
direct research agendas, subsidise powerful ideological lobbies?
5. GLOBAL WARMING—A
CULTURAL CONSTRUCT?
I fear that because of the global warming scare
(especially in Western Europe) energy decisions are being based
on too narrow a range of considerations. Emission reduction aspirations
alone should not dictate energy efficiency measures, just as they
should not dictate our energy mix, though this appears to be the
way our bureaucracy is currently being "driven" to regulate
industry. I hope that you can come to the rescue.
18 August 2004
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