Hi M....Here's an interesting thought: Conservation Wastes Energy
Bush is right to resist the "rebound effect."
opinionjournal.com
BY KIMBERLEY A. STRASSEL
Thursday, May 17, 2001 12:01 a.m. EDT
The Bush administration today unveils its energy policy, one that will rightfully put energy supply, and better ways of delivering that supply, at the center of our nation's energy efforts. The howls have already begun, with environmental groups, Democrats and a few misguided Republican "moderates" furious that conservation policies haven't been given a leading role.
For the past decade, U.S. energy policy has followed the conservationist agenda like a bible. Bill Clinton came to office promising to put policies that stifled demand for energy ahead of those that actually produced the stuff. Federal and state governments have spent hundreds of millions on tax rebates and programs that "encouraged" people to use less; consumers have shelled out as much complying with regulations that mandated greater efficiency in everything from cars to air conditioners.
Today, we see the results. Energy consumption hasn't gone down; rather, it has stubbornly risen by an average of about 1.7% a year since the early 1980s, despite the increasing weight of conservation policies. And now, after years of neglect, the supply side is a wreck. Environmental regulations have stifled exploration, as well as power-plant and refinery construction; electrical lines and gas pipes are bottlenecked. The entire West, as well as states like New York, faces energy crises and blackouts.
Clearly, demand management is not the answer. That's because it serves mainly to distort supply and demand--like all government policies that meddle in markets. In fact, economists show that government-led demand reduction often produces an effect that is the exact opposite of the one intended: to wit, that enforced conservation actually causes people to use more energy, not less.
The idea is simple: Making a product more efficient makes it cheaper to use. This, in turn, causes people to use a product more. Also known as the "rebound effect," it's an idea that has been around a long time.
Way back in the 19th century, English economist Stanley Jevons embarked on a study of coal and its consumption. He was intrigued by the introduction of James Watt's new, efficient steam engine, which began replacing older, more energy-hungry engines.
Jevons found that in Scotland (Watt's native land), coal consumption was initially reduced by one-third. But in the ensuing years of 1830 to 1863, there was a tenfold increase in consumption. Why? The engines were so much cheaper to run that people used them far more than they ever would have before. Greater efficiency had produced more energy use, not less.
The same arguments apply to government-mandated energy efficiencies today. Since 1970, the U.S. has made cars almost 50% more efficient; in that period of time, the average number of miles a person drives has doubled. Studies show that when consumers buy more energy-efficient air conditioners, they run them longer because it still costs the same amount.
Consumers, in short, spend to the size of their billfolds. And that is the failing of government-led demand reduction. There is only one thing that convinces Americans that they should conserve--market prices. Only when electricity bills get too high will people start hanging their clothes out to dry. Only when gas prices start to pinch will Americans drive less or hunt for smaller cars.
The U.S. has experienced only a few downturns in energy consumption over the past 30 years. One was in 1974-75, when oil prices increased; the second was in the early 1980s, after a second oil price rise.
Such consumer-led decisions to save energy aren't bad. Indeed, efficiency, when brought about by the market--and by the market alone--enhances productivity and frees up resources for other uses.
Conservationists are aware of these economic arguments, and of the fact that they have little or nothing to show after decades of enforced demand reduction. They also know that from a pure supply standpoint, they face a losing battle to convince people to conserve. After all, the world continues to experience an increase, rather than a decrease, in proved energy reserves. Today's proved oil reserves around the world are twice what they were in 1970. In this country alone, we have 300 years' worth of known coal reserves.
So the standard-issue conservationists have changed their tune and taken up with a more aggressive lobby: extreme environmentalists. Conservation, at least in today's politics, isn't so much about having enough to go around as it is about putting a freeze on any and all development, for the sake of "nature." Although their arguments invariably lack merit--who can deny that seismic drilling makes oil extraction enviro-friendly, that clean coal has dramatically cut back on pollutants, and that there is no proof that fossil fuels contribute to "global warming"?--the environmental lobby has a loud voice and a lot of money. It has proved itself the one group capable of cowing Mr. Bush into concessions.
But with the U.S. standing on the brink of a serious energy crisis, Mr. Bush can't afford to give way to pretty-sounding ideas. We are currently witnessing proof positive that conservation is not the answer. None other than California is a bastion of conservation; according to the Energy Information Administration, part of the Department of Energy, it ranks 47th in per capita energy consumption among U.S. states. Yet, as the state makes only too clear, all the conservation in the world doesn't make up for a lack of supply. Remember, too, that it was an environmental crowd, shouting conservation messages, that helped make it impossible to build new power plants there.
Mr. Bush's plan, which focuses on allowing companies to get on with the business of producing energy and getting it to people, is the most a government should, or can, do in the sphere of energy policy. Conservation must be seen for what it is--a personal virtue, a market-led way of allocating resources, and even a healthy awareness of man's place in this world. But not by any stretch should it constitute an energy policy.
Ms. Strassel is an assistant features editor of The Wall Street Journal's editorial page. Her column appears on alternate Thursdays. |
