Guest Post by Thomas Fuller
A lot of energy efficiency innovations save money on utility bills for businesses, homeowners and even governments that adopt them. So why aren’t they all the rage, taking the planet by storm and reducing utility bills and CO2 emissions overnight?
Partly because you have to spend money to make money. Most energy efficient technology has a price tag attached. If you have a refrigerator that’s good for another 10 years, are you going to buy another one just to save $5 a month in utility bills? Thought not.
It’s also partly because the person who spends the money is not always the same person who makes the money. If my landlord puts solar panels on the roof, he’s making an investment. But I’m paying my own utility bills. I would benefit from his generosity. Well, if he were so generous as to do so, I would be so lucky.
An organisation you’ve probably never heard of spent $6 billion last year on energy efficiency in the U.S. and Canada. They’re called the Consortium for Energy Efficiency, funded in large part by the EPA and DOE, and they’ve come up with a variety of energy savings initiatives, ranging from lighting and water heaters to utility load balancing programs.
But that $6 billion came from rate payers. and although it lowered utility bills by $9.7 billion (and also saved 104,900 GWh of electricity and more than 367 million therms of gas) last year, the sad fact is that the rate payers who got the $9.7 billion in lower bills may not be the same rate payers who paid out the $6 billion. Only 23% of the electric efficiency initiatives target residential ratepayers…
There’s another way to do it, and I think Barack Obama is almost there. Zero or low interest loans to finance the installation of energy efficient devices and things like small-scale solar panels or even residential wind power installations. There are already a variety of incentives for these types of purchases by both consumers and businesses. But we still feel like we’re in the middle of a recession, and that slows down major purchases.
People are generally pretty good about paying back these kinds of loans. The kind of equipment financed usually increases the value of the home or business that puts it in. And the money saved on utility bills is vast.
Combined heat and power plants are as old as electricity–the first power plant ever built was combined heat and power, built by Thomas Edison in 1887. And the US was a leader in this technology, which is just common sense–instead of letting the heat escape as waste when you burn coal or natural gas, use it to heat something, like a building. Or 100,000 buildings, as Con Ed does in New York City.
But we produce less energy today from combined heat and power than we did 10 years ago. Because we don’t have the incentives balanced correctly to stimulate its use.
Instead of paying for inefficient wind farms that keep… getting… more… expensive, let’s get back to financing technologies that we know work well, like CHP and waste to energy plants.
I have no problems with the massive loans George Bush made to banks–it was the right thing to do. I have no problems with Barack Obama’s MBO of General Motors–again it was the right thing to do. We’ll turn a profit on the bank loans, and maybe on GM as well.
So let’s do the same to businesses and homeowners across the country–the rate of return on many energy efficiency innovations is near 40% and the payback for some can be realized in just a few short years. We just need easy credit terms.
Instead of the conversation being about burning fossil fuels, we should be talking about burning money instead.
Thomas Fuller href=”http://www.redbubble.com/people/hfuller
Being green does not include costs.
So what the battery costs as much as a car, it’s green right? So how about the manufacturing of the battery, and what is this rare earth stuff all about.
One problem with solar power – you need sunlight.
Some character from California said in a meeting the other day that the Ohio Valley should go solar and suggested that the valley was remiss in not doing so. However, a quick look at the solar energy available (i.e., the weather) in the hi Valley shows that solar output from there would not be a useful source.
Many people do not understand that solar power is only adequate in certain regions where the energy is readily available (lots of sun).
“Zero or low interest loans to finance the installation of energy efficient devices and things like small-scale solar panels or even residential wind power installations.”
So who pays for these loans? Oh, that’s right – the American Taxpayer! Sorry, Tom – everything you talk about sounds nice, but we are BROKE to the tune of a $1.3 trillion dollars just this year. Of course, we could defund dubious climate research projects (there are plenty of those), and the inane “National Climate Service” initiative, to help fund energy efficiency – I’d be in favor of that.
Borrowed money at low interest rates isn’t free money. Eventually it has to be paid back. If the Government guarantees it, and interest rates rise so the interest exceeds the savings, then taxpayers will cop the bill for all the defaults. If the timing is right, then an energy efficiency loans bubble could hit just when the US gets over the mortgage bubble. The worst outcome would be if interest rates go up because people start to lose faith in the US government paying back the tens of trillions in government debt. The US$ could collapse, while interest rates cause a depression, and you could end up looking at lovely solar panels on your roof while the economy collapses. My advice is: get to a sustainable economy with sustainable debt levels while you can. An impoverished country has no easy options for a clean environment.
The scary thing about your post is what it shows about how people see borrowing and debt. Government debt is so out of control that people don’t even think about the inevitable consequences. Once it was ingrained that you only spend money if you’ve saved it or you know it will generate a return to repay the debt. Know there’s no need for cost benefit studies. If it sounds good, just borrow and spend. Eventually the US, if it keeps on its present path, has to collapse into a morass of unpayable debts, in the same way that Greece is heading. Germany can bail out Greece for a while, but who will bail out the US?
Please don’t be offended by an Australian lecturing you. My own country is following right behind you. Our present Government plans to borrow about US$40 billion to build a broadband network, replacing one that already covers most of the country, with no cost benefit study at all. Translating to the size of the US economy, that would be a $600 billion project with no cost benefit study.
Writes Thomas Fuller,
This is basically asking, “Why doesn’t the Federal government pursue sensible, market-based investment strategies?” Because the government is not a marketplace, but a collection of overstuffed bureaucracies pursuing political agendas determined by Congresses fumbling in the dark and administrations inspired by ideology and not practicality.
The Federal government shouldn’t be investing in anything, other than roads and defense and its own infrastructure. It shouldn’t be trying to make decisions that are better left to the states, the people (viz. the Tenth Amendment) and most important, the free marketplace.
I’ll bet Con Edison began supplying 100,000 buildings with steam heat from its power plants without any help from the government, because it could make more money doing so. If the government were not subsidizing wind farms, do you suppose anyone would build them?
/Mr Lynn
I’m a landlord. As you said I have little incentive to buy energy efficient appliances but at the same time I can’t tell you how many potential or new tenants complain about CFLs that a previous tenant had left. I have a box full of them. Living in Georgia they are more important then in many places. Light bulbs help heat your home. When you run your air conditioner allot that is a bad thing.
I dislike promoting the concept of a ‘carbon footprint, but cars that are hybrids and utilise a large rare-earth battery have an enormous carbon footprint (due to mining the rare earths such as nickel-cadmium then manufacturing the battery) and the cost of a replacement battery is often more than buying a second-hand conventional car in good condition. Most hybrids don’t compare well on a straight MPG comparison with mid-sized (around 2 litre) conventional car.
Solar water heating does not need sunlight, just light. Generating electricity, though, requires a higher order of thermal eficiency and therefore needs sunlight.
Tom,
You forget that utilities must make a certain amount of profit for their investors, in Florida its 18% by law. Using less electricity by the end user may lower that bill but it does not reduce the utilities overhead for infrastructure & maintenance and other non fuel expenses. The utilities will simply increase the rates to maintain cash flow and the end user will pay the same for less.
I always thought the way to go was to invest in efficiency and not in solar or wind. In an ideal world, we could afford LED lights that are as bright as a standard 60W to 100W incandescent that produce the same light as incandescents, not that bright white light. I know incandescents are being banned and phased out because of CFL’s. However, my mom’s eyes have a hard time in florescent lights, and according to her optometrist, she is not alone. (My biggest complaint against the greens is they don’t think about people at all.) She bought a pack of LED’s lights, but there were too dim and expensive. If LED lights were bright and affordable, think of all the money that could be saved in more ways than one. My mom had to buy special glasses to protect her eyes from florescents. If LED’s produced bright natural light, that expense could have been saved. Then think of all the money that could be saved if we increased fuel efficiency without sacrificing quality.
There’s much more to it than that. Here’s a snapshot. http://www.reuters.com/article/idUSTRE68G3NT20100917
Partial Excerpt:
(Reuters) – U.S. household wealth fell by $1.5 trillion in the second quarter, according to Federal Reserve data on Friday that showed the strain a slow-paced recovery and high unemployment are putting on Americans.
Household net worth fell to $53.5 trillion, well below the $64.2 trillion it had reached at the end of 2007 when the recession officially began, according to the central bank’s quarterly flow of funds report.
Declines in the value of financial assets — especially in stocks and mutual funds — accounted for much of the decline in second-quarter net worth. Stocks alone were down $1.9 trillion to $14.9 trillion, more than offsetting small gains in other areas like state and local government retirement funds.
Consumers pared debt at a seasonally adjusted annual rate of 2.3 percent, the ninth consecutive quarter in which they did so. Home mortgage debt fell at an annual rate of 2-1/4 percent after a 4-1/4 percent drop in the first three months this year.
During the financial crisis that wracked the country from 2007 to 2009, trillions of dollars in housing and financial market wealth was wiped out and heavy household and financial sector indebtedness was exposed.
I am highly skeptical of the veracity of CEE’s figures. They are a government-funded organization, and their interests lie in continued government funding.
Other than adding insulation (to a point), most energy-efficiency “savings” are a mirage. They do not account for ALL costs. Sorry, Tom, but I’m not falling for it.
I keep hearing about all these great energy saving ideas that I and businesses are apparently not smart enough to understand and take advantage of. Truth is, most are not worth it. That is why they are not “all the rage.” Cost is basically the economic statistic that helps people evaluate the true cost of resources associated with various alternatives. Businesses are very good at this as a great deal of effort is made to reduce costs. If returns were that large, they would cash in, and so would I.
Money is not a thing all to its own. It represents the value of human and natural resources required to produce something, as well as the associated opportunity cost. These energy efficient technology ideas are not worth implementing at this point because they cost too much, and require MORE resources than the alternative. You need to consider all of the costs when comparing alternatives.
Money is a proxy for energy. It takes energy (money) to build that new refridgerator, it takes more energy (money) to junk (or recycle) the old refridgerator and interest to finance the purchase. Added together over time and and thne compared with the $5 (or whatever) monthly utility bill savings the purchase may NEVER pay for it self in dollars (or BTUs) Same same for light bulbs, houses, cars. haven’t run an energy (monetary) budget on replacing my 96 Mercury Grand Marquis with 239,000 on the odometer with a Prius but I don’t think there would be a reasonable payback period for the investment.
Now if the government offers a special incentive, say a tax rebate the monetary calculation might work out for me but the energy calculation stays the same, i.e. no gain and is simply shifted to the tax payer. Again with no net monitary or energy savings to society.
The taxpayer subsidization of interest rates that Fuller is advocating probably do not net us an energy savings.
The best way to close the energy gap (and save energy in the long run) is to stop transactions, but that pretty much kills our economy/civilization. So what to do? By their nature no growth economic policies concentrate power and privilege (on both ends of the spectrum). In the future do our children’s children eat monkey chow processed to taste like chicken or become the gardeners/laborers/slaves on a depopulated earth administered by enlightened elites (strongmen).
Only government can hurt everyone.
=================
I reject the premise that the GM bailout was the right thing to do.
Reducing investment costs for some will result in higher taxes for others to recover the subsidy costs. Money isn’t free.
So, the high energy use, low profit companies get subsidized at the expense of low energy use, high profit companies. Reward the weak, tax the strong.
Moreover, subsidized loans will distort the efficient use of capital as companies invest in projects they otherwise would not, based on payback analysis. Capital deployed somewhere is capital not deployed someplace else.
Government intervention almost always results in less efficient use of resources as opposed to the free market which rewards the opposite.
http://www.mckinsey.com/clientservice/sustainability/pdf/A_Compelling_Global_Resource.pdf
“This anthology of articles looks at the energy-efficiency opportunity and how to capture it in nations and companies over the next few years. The opportunity to lower energy costs substantially is compelling. The United States, for instance, could realize more than a trillion dollars annually in energy savings if comprehensive efforts are put in place to overcome barriers and improve energy efficiency across the economy.”
There is low hanging fruit that nobody could rationally object to picking.
The NJ State Assembly passed a law that allows small alternative energy generators to form “generation co-ops” and sell energy back to the grid at wholesale prices, via net metering.
However, they specifically exempted combined heat and power from the program. At current gas prices, you can generate power for under $0.15 per kWh using a small single engine generator burning natural gas. Electrical rates are about $0.18 per kWh for residential. My commercial bill is over $0.30 per kWh during the summer when you add in demand charges.
The State is hell bent on killing CHP systems, but keeps re-funding a solar program (with millions more proposed for off shore wind farms) that is a huge waste of rate payer money. I have to conclude there must be some private interest out there funneling a lot of money to legislatures in order to keep the cash flow going.
The concept of each home having it’s own source of energy makes sense. Each home reduces its consumption from the grid, so the renewables portions are increased and as a percentage of overall consumption from the grid they also increase.
If the governments of the USA and UK invested their funding into individual home schemes instead of the inefficient wind turbines, then there wouldn’t be a worry about where the “loans” need to come from because they are already sanctioned via another route. Also bill payers would actually get and see a real benefit from the ridiculous Renewables Obligation that we pay on our energy bills.
The UK and a lot of Europe has got fed in tariffs which should help. As for solar, as far as I know the technology only needs light energy so bright sunlight helps but any sunlight will make a contribution – so it’s woth having. Also the latest verical wind turbines which look like chimney cowlings seem to be a decent option to help boost your renewables for a minimal outlay.
Let’s see the data on this before we endorse it. And on the massive loans to the banks and GM, too. Tom, your pro-government sentiment is too easily swayed by thinking that it’s ability to manipulate the currency and take from it’s citizens what they possess will remedy all mistakes that it makes and solve all challenges we face. You are just making assertions here and they’re not convincing.
Back when men were wearing, like, you know, wigs and stuff some of them wrote a thing called a Constitution which said that the business of the government is to print the money, deliver the mail, regulate interstate commerce and defend the shores. Is that thing still around anywhere?
More government, more waste.
We’ve been doing ‘energy efficiency’ since Jimmy Carter was president.
Tom, best article, so far. I disagree with the assertion the bailouts were the right thing to do, but I consider that ancillary to your main point. As far as saving energy, I’m heavily involved in adoption and implementation of “smart grid” technologies. I work for a very small rural electric coop(about 3500 meters). Thus far, we’ve spent millions in an effort to get there. From the changing of all meters, to new hardware and software, training, ect. the amount is staggering. In the end, who pays for it? Well, the rate payers do. They’ve actually been charged money to save energy. For those who are in an investor owned utility or a municipality, you should be thankful most haven’t adopted it concept….yet. If things don’t change soon, though, they will be forced to move there. I recently asked a board member of a neighboring coop, when they expected the payback on the investment.(they’ve adopted the same concepts and equipment) He looked at me a bit puzzled and then stated that some of the advantages weren’t expressed in terms of money.
Moving towards more efficiency has always been a natural progression using the traditional market systems. One can’t mandate innovation. This is why the cost of saving is so high. Everyone is for moving to more energy efficient methods and materials, but not when the costs exceed the savings.
Before anyone gets too excited about energy conservation, perhaps they should read the post at the link below. An excerpt:
“. . . energy conservation is a one-time problem. We evaluated the various processes, including homes, apartments, skyscrapers, industrial buildings, shopping malls, and of course industry, and made the appropriate energy-conserving investments. By doing so, over approximately five years, the refining and chemical industries reduced energy consumption per unit of production by more than 30 percent. That was a laudable achievement, and I am proud to have been a part of that.
But what we also found was that, even if more money were spent, there would not be another 30 percent reduction over the next five year period, then another 30 percent in the following five years, and so on. Energy consumption, and energy efficiency, does not work that way. It seems obvious to me, as an engineer, but this seems to escape the notice of the many misguided folks who see sustainability and conservation as a jobs-creating industry that we should have been doing all along.”
http://sowellslawblog.blogspot.com/2010/02/energy-conservation-is-not-sustainable.html
But we produce less energy today from combined heat and power than we did 10 years ago. Because we donāt have the incentives balanced correctly to stimulate its use.
Remember the real estate agents’ mantra, “Location, location, location!”
People are scared to live near the high-voltage transmission lines coming from a power plant. They don’t want to be around any smelly old power plants at all. Think of the children!
Co-generation does happen, but on an industry-to-industry basis, where a company that can use the heat for processing locates next to a power plant. Locally there’s a small electricity provider that burns wood waste that located next to a cannery, sells them the steam from across the street. The arrangements can work well.
But convincing regular people these days that living close enough to a plant to use steam for heating is a good thing? High pressure steam being pumped into a house? Tearing up the streets to lay in steam lines, which the TV has shown us are prone to leaks with manhole covers getting blown into the air and all sorts of nastiness? Not happening. NYC was a lucky example that happened at just the right time in history, in a densely-populated area. You won’t see that again unless you’re building a city from scratch, no matter the government incentives.
No more borrowing!
What I get from this is nothing is practical until the guy who is paying for it thinks its practical and forcing a government subsidized source on the payer that is intended to replace a practical source is going to be not wanted by the guy who is paying with his own money and again through the tax.
And if the whole reason for the change is viewed as a fraud then it should be no surprise that the payer views it as purchasing snake oil.
“We just need easy credit terms.” Not!
Fail – slow learner
Go back and try again
From: DonS on September 21, 2010 at 6:33 am
I believe these days there are small print copies available from various dispensers in the White House and the Congressional buildings. Sheryl Crow says to use only one sheet.
š
Okay, let’s see here:
1. Provide a product and sell it as something everyone should get
2. Throw out an incentive, a carrot on a stick, for purchasing this product
3. Make it even easier to get this product by providing government sponsored and backed loans that are zero interest or low interest.
Sound familiar? Subprime housing market anyone? Student loans??
You provide “free” money and the lending system will eventually collapse on itself after the “product” becomes grossly overpriced and people start realizing they’re being ripped off. Higher education’s day is coming, too.
@Don S:
More government, more waste.
These days, with all the wigs and lace long gone, there are a few upleasant truths we must accept:
-More wealth, more waste.
-More private enterprise, more waste.
-More people, more waste.
And the people who pay for the waste, are not necessarily the ones who make it, especially in the libertarian world commenters like Don S imagine.
The world is complex, accept that. Unless you want to go back to a pre-industrial village economy. Your nostalgia for an idealized ‘democratic’ past is on a par with the green fantatics’ longing for Eden.
Re: the comment about each house having its own energy source. We need to decide if a house that has its own energy source should be allowed to hook into the electric grid with no extra cost. If so, then those of us without our own energy source will have to pay for the availability of the extra generating capacity so that when the private energy source (usually solar or wind) is not available, the extra generating capacity is. If the house with its own energy source feeds back into the grid by running the meter backwards, they will not pay much if anything for the availability of the extra capacity when they need it.
I have not seen this problem mentioned in any discussion of alternative energy supply. It becomes especially significant if the electric company must install new higher cost capacity that can be available very quickly, or operate baseload capacity at lower, less efficient levels so as to be able to ramp up quickly when needed.
Bottom line–there is always a cost, even if it is camouflaged.
Tom, I can’t believe you say things like “low interest loans” (etc.) and act like that’s somehow “free.” It’s not. The way you speak about economics make me wonder if you ever really learned about how economic systems work, because everything you suggest is “good” is unlikely to be so. For government to pick an choose what to subsidize (including fossil fuel production) only wastes money and delays finding the right answers to any real problems we have.
If you really want to reduce CO2 production then you ought to be pushing for nuclear. It’s cheaper than fossil fuels and produces no direct CO2. Anyone who argues the waste problem or the catastrophe problem simply does not understand the technology or the economics. This is one area where France does have it right. Yes, there’s a political problem to overcome about where to put waste because no one wants it in their backyard, but if even a small portion of the money being wasted on “alternative” energy were put to brib…, er, subsidizing some state to put it in their salt dome/ mountain base, etc., the political problem just *might* be overcome. And then there’s Thorium fusion… where’s the Manhattan-like government-backed project to make that possible in the next 10 years?
Your posts make no sense to me at all: not based on your assessment of climate science, nor on your understanding of energy-production technology; not based on your interpretation of the implications of these sciences/ technologies, and certainly not on what you think are good economic/ policy ideas.
The problem is: I don’t know where to start to have a sensible discussion because you seem to have a belief system that I find so flawed in so many ways as to make such a discussion uninteresting.
Anthony, I’m not sure Tom adds value to this blog. If his thinking were cogent, even if believing CO2 might be a problem, then an occasional post could be worthwhile, but this steady diet of his posts is simply innervating. Bring back more serious science to this blog, PLEASE! It’s really gone down hill in the last 3-6 months in that regard. I’m tempted to spend more time at Science of Doom, at least they’re trying to make sense of what’s most important: do we have AGW or not?
If I buy a fridge, there’s a cost associated with putting a fridge in my home; the cost of making it, transporting it, maybe putting it in a showroom and so on. You can express this cost in a number of ways, the price tag, the amount of energy used to make it, indirect costs, and others.
There’s a cost of running it over its life, which will probably be about 15 years.
Then there’s the cost of disposing of it afterwards, transport, the apparatus set up by the government to dispose of it, all of which has to be paid for and all of which take energy. You can view these costs as being spread over the 15 years or so.
Cutting short the cycle because of undue concentration on marginal savings on electricity to run the fridge, almost certainly makes no sense, either to me personally or to the world at large, whether in terms of money, energy, or any other measure.
I’d say that was true of a lot of these other energy saving, carbon footprint reducing schemes, they are shortsighted and probably don’t actually do what they promise, when you look in a bit more detail.
I am very distrustful of big schemes got up by governments altogether, because it often appears that they really don’t understand the problem, or there’s some motive which they don’t want to admit to.
Beware Greeks Bearing Gifts
I was surprised I hadn’t heard of the Consortium for Energy Efficiency if it was saving USD 9.7 billion so I looked at their State of the Efficiency Program Industry 2009 report at http://www.cee1.org/files/StateofEEIndustry2009.pdf
The report is a mine of information and small print from which I have learnt that the estimated savings in 2008 were
āŗ Electricity: 104,900 GWh
āŗ Gas: 367 million therms
āŗCO2: 61 million metric tons
BUT these savings are estimated based upon new installations in 2008
PLUS installations from 1992 that are still generating savings.
So we don’t know what was actually saved in 2008… but we do know the US per capita cost in 2009 was $12.45 for some of the electrical work… while those lucky enough to live in Vermont actually paid $49.38.
I don’t view Tom’s favorable opinion of the bailouts as ancillary to the point of this article at all. In fact, I think it is the real point. The main goal of pushing AGW is to take from the many and give to the individual, how are the bailouts any different?
Tom, what’s your source for the claim that CEE spending of $6 billion translates into savings of $9 billion?
CEE’s 2009 annual report says they took in $6.1 billion and spent $5.4 billion.
I found no estimates of savings – I’m looking specifically for whether the claimed savings are recurring, the NPV of estimated future savings, or the undepreciated future savings estimates.
As I’m certain you know, my assumption is the claimed savings are the latter and I don’t believe they are real anyway.
I want to look into whether they are realistic, and depreciate future cash flows to present to see whether they made any economic sense.
Roger Sowell,
I agree about the energy reductions. As a mechanical engineer working primarily HVAC systems, I am constantly struggling to meet energy guidelines pushed by non-engineers. While lighting systems are important, air conditioning, heating and refrigeration make up the bulk of most residential and office energy bills. In data centers and telecom, air conditioning is second only to the process power requirements. A 100 watt light bulb uses 876 kWH is left on 24 hours per day, 365 days per year. A 5 ton airconditioner with an EER of 12 (relatively high efficiency) uses 3,600 kWH if operated 8 hours per day for 3 months.
ASHRAE keeps publishing tight energy guidelines, and then other organizations like USGBC push certification for LEED where they push for even tighter energy boundaries. But like Roger says, there’s only some far you go with energy reduction and must look at the consumption.
These improvements in efficiency are not actually met 1/3 of the time even though the design receives certification. In addition, the life cycle costs of the improvements rearely take into account additional maintenance,durablility or actual operation of the equipment. People decide that the 75 – 78 F prescribed in the design is too warm and they adjust the temperature back down to 72 F. They decide that using outside air economizers are to difficult to operate or it is too warm or too cold.
Actually, one of the easiest ways to reduce air conditioning and heating energy is to reduce the size of the dwelling. In Texas and over much of the United States, people keep buying larger and larger houses. In the 1970’s, 1500 square feet was a fairly decent size house. Now single family dwellings are moving to 3000 – 4000 square feet, along with the increased energy bill.
Finally, one of my biggest complaints is the how the governing entities treat data centers and telecom switches. It used to be that they considered these facilities as process loads (as in manufacturing) and this relived many of the restrictions. Now they are looking at the raw energy usage of the facilities and are in shock; many of the data faciilities operate at 100 w per square foot of process load which is nearly all converted to heat that has to be cooled. While I agree we should look to improve efficiency, I don’t see any give or take on what these electronic facilities actually provide to society. They have enabled people to work from home, eliminating transportation and office costs. The have reduced snail mail to advertising and reduced billing process to on-line affairs. They have greatly enhanced communication, and if properly managed will reduce paper consumption. I see these facilities as being “green as a frog”, and the professional engineers should be the ones balancing the trade-offs of energy consumption, reliability and total life cycle costs.
By the way.
CHP as common sense?
Yeah, exploding streets in crowded cities make a lot of sense.
Con Ed can’t pay building owners fast enough to replace that old CHP crap with on-site generators. They never made any money selling that steam, all they did was cost people their lives. Those old 1920’s steam pipes are worth far more as fiber optic conduits than as dangerous inefficient heating conduits.
And if you don’t have the population density of Manhattan, CHP isn’t even vaguely feasible for residential. Other than providing process heat for industrial use, I fail to see the logic.
Tom,
I don’t think it is so simple as low interest rates. The Federal Government does not normally make loans to individuals, they make loans to banks (currently at near-zero interest)… and banks make loans to individuals, assuming the risk on non-payment. If banks judge someone (or company) not likely to pay back a loan, then they are just not going to accept the risk of the loan, or at a minimum, charge high enough interest to compensate loan risk. Banks exist to evaluate and minimize loan risk (not that they always do a good job!), but Government at any level is completely ill-suit to do this.
Now it might be possible to work through local utilities and have loans for energy-saving home improvements automatically included in utility bills, and tie the utility rate for the building to the loaned value of the energy efficiency improvements, but there is currently no mechanism (that I know of) for this to be done. No matter what, there would be significant costs associated with any system to do this kind of thing. There is no free lunch available with energy savings; that is why it is not happening.
Thank you for a very thought-provoking post, Tom! As a consulting scientist who has worked in the field of industrial energy efficiency & pollution control for >25 years, I’d like to give a bit of perspective from that side of the balance sheet….
If there is anything that industry dislikes above all else, it is uncertainty. My clients must make plans for factory siting & construction, technology selection, manpower requirements etc. years & even decades in advance. They go nuts with all this back & forth over energy policy, climate change regulations etc. and just want some way to budget for eventual costs so they can adapt to a new manufacturing environment. They presently face two certainties: costs for energy will continue to increase, and carbon emissions will be regulated.
My clients now simply accept that the EPA will institute carbon emission regulation in 2011, and that they will have to comply. Cap & trade was a way to make it a bit more palatable, but in all honesty, they are in the business of producing manufactured goods & not credits, so they really didn’t give a wit what happened to cap & trade. If they can budget for change, they can figure it into the costs of the goods they sell to John Q public.
Congress will try to play games with holding up EPA’s Clean Air Act funding, lawsuits will be filed etc. but my clients believe that carbon regulation will eventually occur, regardless of what happens in November 2010 and beyond. Despite what many think, the strategy that the EPA is presently taking is bullet-proof. Please see:
http://www.bloomberg.com/news/2010-09-14/epa-issuing-u-s-carbon-limits-guidance-soon-agency-administrator-says.html
Even with a wholesale change of parties in the White House and Congress, I don’t see how this juggernaut can be stopped. Thus far, all the court battles have gone to the EPA. Sad but true.
@Wade The LED lights you (or your mother) purchased are basically a scam. They do not produce really usable white light and not very much light output.
If you see LED lights for sale, and you look closely and see LOTS of LEDs in the “bulb”, just walk on by, these are not a bargain, they are mostly useless.
However, there are some LED “bulbs” which use one (or a small number) of much higher power LEDs. These do give a lot of light, and the spectrum is much more balanced. The problem is, that for reasons that escape me, they are VERY expensive. They should be selling for around $20 each, they actually sell for more like $100. Once the price comes down I (and a lot of other people) will buy them.
JP Miller: I agree with you that Thomas Fuller, author of many recent guest posts on WUWT, makes little sense most of the time. Still, he has a point of view and an agenda,
and it is worth reading if only so we can point out the flaws.
His views are fairly typical of many who have zero understanding of physics, chemistry, engineering, and economics. Thank goodness his type do not build bridges, buildings, or oil refineries. As the old saying goes, if they did, the first woodpecker that came along would collapse civilization.
stick to climate science sir … your economic ignorance is stunning …
“the rate of return on many energy efficiency innovations is near 40% and the payback for some can be realized in just a few short years. We just need easy credit terms.”
If they really did return 40% then someone would easily find a way to finance them. Are you really that daft about econimics ?
I know a landlord who who put in a geothermal loop, heatpump and solar panels. he was getting a bit over 150$/mopnth in higher rent, because it was saving a couple of hundred dollars for the tenants.
as for 23% targeted for energy saving initiatives, it is probably right. residential energy use cannot be more than 23% of the total energy cost on immovable systems ( like houses, stores and factories )
Sorry, but bailing out banks and GM wasn’t the right way to go.
The problem was people not able to pay off high-interest mortgages, not able to buy cars, etc. So, any bailout money should have gone directly to the consumers, not the producers. Giving the banks more money doesn’t help the people who still cannot pay that high-interest loan. And giving GM money doesn’t mean people will be able to buy their cars.
The money should have gone directly to the consumer, so they could, ya know, consume. Giving each household say $50,000 earning below a certain threshold would allow them to pay their mortgages for several months, buy a new car, buy clothes for the kids, buy some furniture, invest, etc. Even if they didn’t spend the money wisely, they’re still spending the money, and businesses would benefit. Any who chose not to spend the money wisely would then deserve wherever they end up.
To me that would have been the smart thing, apart from doing nothing.
Djozar says:
September 21, 2010 at 7:18 am
I see these facilities as being āgreen as a frogā
So do I… but then I might draw the line at the servers hosting Real Climate āŗ
Yea, Tom’s going to buy me a new frig and give me a low/no interest loan out of his own pocket…
….so the rest of you tax payers won’t have to
Isn’t that sweet……
Tarpon says: JP miller says:
Completely agree with both comments. Where on earth have you been or where have you come from Mr. Fuller? The US government is out of control and we don’t need them in anymore things at present. We are broke now because of them. Sorry if I sound rude, but I cannot agree with anything you wrote.
People are generally pretty good about paying back these kinds of loans. The kind of equipment financed usually increases the value of the home or business that puts it in.
That kind of equipment tends to be part of the home, and people are defaulting on mortgages right and left. People are also realizing what I read about a decade ago, home ownership no longer makes sense. With rising property taxes, maintenance costs, new homes being so expensive, and the now-demonstrated fact that homes may not hold their value, renting makes more sense. Try convincing landlords to get such energy-efficient changes, they are well aware of the payback period of any such “improvements.”
(Side rant, feel free to snip: Home ownership is now a myth. When you own something, it is yours to keep. Where there are property taxes there is no ownership, as the state can take your home if you don’t pay what they demand. That’s not ownership, that’s leasing.)
It must be a “California” thing to think those changes increase the value of a home. Nearly all solar panel systems look ugly on a home. Used home buyers also see the maintenance issue, something else that’ll need to be paid for. With panels on a roof, a simple shingle re-roofing becomes a major panel tear-off and re-install, at a point where you’ll likely be putting up new panels anyway, actually more likely a complete whole new system. Who needs the hassle?
Go stand somewhere you can see the financial district of a major city at night. See all those lights? Why does every block have every light on at 3am? This isn’t rocket science, it’s basic common sense: turn the bloody lights off when you’re not in the room.
Hi Duncan
It’s in their annual report for 2009.
As following his advice?
“A massive campaign must be launched to de-develop the United States.
De-evelopment means bringing our economic system into line with the realities of
ecology and the world resource situation.”
– Paul Ehrlich,
Professor of Population Studies
http://www.green-agenda.com/
Roger Sowell @ September 21, 2010 at 6:43 am
Djoser @ September 21, 2010 at 7:18 am
Energy conservation (doing with less & doing without) is not durable, as the fact that we are no longer wearing Jimmy Carter cardigans clearly attests.
Energy efficiency improvements are relatively durable, though the are subject to Jevons’ Paradox, through which reductions in conservation offset increases in efficiency.
Frequently our ability to accomplish is greater than our willingness to do so. š
What Wiglaf said bears repeating (since I was beaten to it).
Wiglaf says:
September 21, 2010 at 7:00 am
“Okay, letās see here:
1. Provide a product and sell it as something everyone should get
2. Throw out an incentive, a carrot on a stick, for purchasing this product
3. Make it even easier to get this product by providing government sponsored and backed loans that are zero interest or low interest.
Sound familiar? Subprime housing market anyone? Student loans??
You provide āfreeā money and the lending system will eventually collapse on itself after the āproductā becomes grossly overpriced and people start realizing theyāre being ripped off. Higher educationās day is coming, too.”
A-a-a-a-a-nd let’s not forget the fraud and administrative costs and also the subsequent program(s) to fix the problems with the initial program.
We’ll have been using cold fusion for 50 years before such a loan program would get axed.
There are some warm white LED lightbulbs around, so the harsh blue of some of them is not as big a problem as it used to be: http://www.ledwholesalers.com/store/index.php?act=viewProd&productId=555 (I have no relation to these people). As far as residential wind-turbines, just try to permit one and if you are able to permit one, get ready for some bricks through your window from neighbors. In so many words, they are a source of annoying noise. I have a solar panel setup, but the time to break even is close to never even if the panels were able to last that long. Of course, there is the nasty problem of months when the sun does not shine. I think a year ago june we say the sun all of 3 times in the day for the whole month. I have nothing against renewable energy if you are willing to pay up, and LEDs will reduce your light bill. But they are not the panacea that they are held to be.
Are we?
“Current lifestyles and consumption patterns of the affluent middle class – involving high meat intake, use of fossil fuels, appliances, air-conditioning, and suburban housing – are not sustainable.”
– Maurice Strong,
Rio Earth Summit
http://www.green-agenda.com/
Re: Charles Higley: The difference in solar insolation between California and much of the rest of the country may not be as big as you think. See: http://www.solarcraft.net/sun-hours-map.htm
A bigger difference in CA vs most locations is that your neighbors in CA are forced (through tax credits) to pay half of the cost. Your neighbors could put this money to better use.
I am all for reducing the cost of energy. However, the suicidal attempts to control CO2, which isn’t a driver of increased temperature, will make reducing energy costs impossible. What don’t you understand about that?
I’d rather not ask the broke government to dole out money because we aren’t patient enough to wait for working appliances to wear out before replacing them with new ones.
If a solar panels really saved that much money, “all bills paid” facilities would invest in them. Landlords would attract tenants with them. Competitors would invest in them to keep up with the former.
Roger Sowell says:
September 21, 2010 at 6:43 am
Before anyone gets too excited about energy conservation, perhaps they should read the post at the link below. An excerpt:
ā. . . energy conservation is a one-time problem. We evaluated the various processes, including homes, apartments, skyscrapers, industrial buildings, shopping malls, and of course industry, and made the appropriate energy-conserving investments. By doing so, over approximately five years, the refining and chemical industries reduced energy consumption per unit of production by more than 30 percent. That was a laudable achievement, and I am proud to have been a part of that.
But what we also found was that, even if more money were spent, there would not be another 30 percent reduction over the next five year period, then another 30 percent in the following five years, and so on. Energy consumption, and energy efficiency, does not work that way. It seems obvious to me, as an engineer, but this seems to escape the notice of the many misguided folks who see sustainability and conservation as a jobs-creating industry that we should have been doing all along.ā
Roger, well stated and factually accurate. As an engineer everything you say makes sense and is totally consistent with my experience. It is a well known concept that there may be a lot of low hanging fruit when one initiates an ENCON study that can save energy consumption, but there is a law of diminishing returns where the investment are too small.
Most people do not realize that major industries started ENCON activities years ago not because the government told them but because the cost of energy increased and it was good business practice to compete. I once worked for a company that had an entire division of Engineers working on ENCON projects.
It is interesting that those who know nothing about energy or business believe that the Government can provide programs to make business and homes more efficient. Just look at how well the stimulus money worked for improving energy efficiency of homes with all the government rules and catering to special interests.
This is YOUR future paradise:
…they have devised a ‘carbon rationing’ system that will include a mandatory carbon card that you must have if you want to buy anything, even food. And it will be global – everyone will be signed up to the same system.
@ JP Miller, September 21, 2010 at 7:07 am
I wanted to post much in much the same vein as you however you put it in a much more eloquent way than I would have managed.
I am a relatively new viewer to this site. I’m happy I found it as it provides much needed relief from the seemingly constant onslaught of global warming hyperbole from the mainstream media, government and their many, many ‘agencies’ here in the UK.
It’s a shame Thomas Fuller neither engages with comments below the line nor addresses your critique of his article or anyone else’s come to that.
Thanks for the most informative and educational site Anthony.
Greetings from London.
Are we burning our money or is it that someone else it is burning it?
Glad to see so many people here that understand money isn’t free!
Econ lesson for Mr Fuller:
1. High price is a signal for other producers to get into the market.
2. The innovation of additional players creates the productive capacity which eventually lowers consumer price.
3. Claiming you can cheat the price system buy redistributing money is just dishonest. Sure you can make a solar panel cheaper, but at the expense of something else which is now more expensive.
4. Money has its own “conservation of energy.” it’s called opportunity cost.
The market isn’t as poorly understood as climate!
Further to the comment above on use of stimulus money to save energy in homes:
“Only about 8.4 percent of the $3.2 billion that Congress voted in February as part of an economic stimulus package to provide energy and conservation block grants to states and cities has been spent by the beginning of August according to an audit (PDF) by the Energy Departmentās inspector general, reports The New York Times. It also has only created or saved about 2,300 jobs as of the second quarter of this year.”
http://www.environmentalleader.com/2010/08/17/audit-finds-only-8-of-u-s-stimulus-funds-for-energy-efficiency-spent/
A realtor friend of mine once told me regarding the energy bills of residences for sale…no on asks, no one cares, it doesn’t make any difference to a potential sale what the monthly bills are.
I’m sure this was a slight exaggeration, but the point was made… Few buyers look at the cost of energy to run their house as a significant piece of information when deliberating a purchase in the Raleigh/Durham/Chapel Hill area of NC. (Rates are ~$ 0.085 per KWH). Over the past 25 years I can’t think of one homeowner that has moved to a smaller house after they left the neighborhood. Apparently ~ $200 – 300/mth energy is not a significant enough energy expense to warrant looking at ways to cut you electrical bills.
One more impact on costs that is often overlooked is the additional cost of design and putting together all the required documentation. I usually see design fees as 10-20% higher in California just to cope with the energy and environmental regulations. Not only do heating and air conditioning loads have to be calculated, but a “baseline” building load to evaluate how much energy was “saved”. Then there are volumes of forms to be filled out affirming what professional engineers have always done without prompting.
I have not studied Consortium for Energy Efficiency in the last couple of years, but previously I investigated the analysis for such recommendations. I was aghast at some assumptions — such as zero cost for installation; only equipment cost was included, with implicit assumption that homeowners and businesses could install the equipment for free. Also, zero maintenance cost — implicitly assuming that the equipment doesn’t break down.
I put solar panels on my home with about 95% of cost subsidized by state & federal government. When there was a maintenance problem, it is more cost effective to remove the panels rather that to repair them. Considering installation and materials, I suspect more CO2 was emitted with my solar panels than if I had not put them on. Also, our farm installed windmills because of generous subsidies — and the subsidies are indeed generous — but repairs are not cost effective. And there was quite of bit of energy used in the concrete and steel that now lie useless.
When somebody else’s money is being used, we do not make as good of decisions as if it was our own money.
Dave in Canmore says:
September 21, 2010 at 9:16 am
3. Claiming you can cheat the price system buy redistributing money is just dishonest.
It is not dishonest, it is simply stupid. After that only goes inflation. As proved by all “revolutionary governments” all around the world. Though it is OK as it serves its final purpose, which is the substitution of local entrepeneurs by the global elite. (what, at the beginning, was the substitution of local aristocracies/kingdoms by bankers’ democracy)
About this “carbon rationing thing”.
I have never been a red-baiter. But that means all people get the same amount of carbon. And you can’t exceed it, even (or especially) if you have more money. Therefore carbon rationing is a half-replacement (on the negative side) for money.
This would be an inconceivable imposition of wealth redistribution — done direct. None of your namby-pamby incrementalism here!
Socialism, my left ass. This is communism, plain and simple.
Pearland Aggie says: “I reject the premise that the GM bailout was the right thing to do.”
The fact is, it was the unions that got bailed out. More ‘bama votes.
In a rational world, a landlord could install equipment to reduce the tenant’s utility bill and charge higher rent to cover the cost of the equipment. Renters should be attracted to places that have lower utility bills.
Evanmjones>
Or, you’ll just buy someone else’s carbon allowance – that guy in the 3rd world won’t have much use for it whilst he’s dying of hunger.
evanmjones says:
September 21, 2010 at 9:40 am
If this is demoniac, demons exaggerated this time, no one will ever accept that silly “carbon rationing” š
Tom your economic illiteracy knows no bounds. To baldly state that you do not mind all the unfunded borrowing the Government does without any, even meek, attempt to consider the cost really proves you are a watermelon
Dave says:
September 21, 2010 at 9:58 am
I guess you missed it this time: It is about YOU dying of hunger!
More illogic Tom. This is why this kind of thinking is often attributed to “The Looney Left”. You should try some real world experiments and perhaps reality would sink in.
Everyone is interested in reducing cost for themselves. But most efficiency schemes increase overall costs. Imagining that the government has magic money to give away without consequence is a basic staple of the left. Subsidies don’t change the equation, just redirect the responsibility for repayment to someone else….. Like your children. You write about our responsibility to others, yet you can’t see this?
I own my car free and clear. It gets roughly 30 mpg combined. Edmunds rates the 2010 Prius at 50 combined mpg. I paid $14,900, the Prius is $25,000 with less features, and smaller size. At $4/gallon, it would take 180,000 miles before I’d realize any fuel savings, and I’d still have to make up the interest on the extra 10k. At 200,000 miles, the Prius batteries are due for replacement. $4,000 bucks, and I’m still waiting to save money. Forget the subsidies, they’re just transferring the cost to my children.
It’s the same with nearly everything. And the economics only worsen when you owe nothing on your current car/appliance. We should focus our efforts on securing abundant energy now and into the future. Let the free market drive efficiency.
Most people are woefully ignorant of economics — and greenies seem to be oblivious to the whole thing. If the market won’t support something without a subsidy, then it is not practical. Most of these ideas are just window dressing to redirect money into someone’s pockets. In most cases, the best thing for government to do is nothing.
Here is the stark reality, as I see it. And, I might add, this view is the common view (dare I say consensus?) of people in the oil and gas industry.
OPEC has a firm grip on the price of oil, within a small range. They can, and do, agree to restrict output or increase output to maintain the price. OPEC is not dumb; they fully appreciate the break-even costs of each form of basic energy: conventional natural gas, shale gas, methane hydrates, LNG from stranded gas fields, coal-bed methane, bio-methane, coal, shale oil, tar sands, hydrogen, algae-oil, gas-to-liquids, bio-diesel, bio-ethanol, solar, wind, tidal, waves, ocean current, ocean temperature difference (OTEC), geothermal, nuclear, and any others.
There is a reason that OPEC selects the price of oil at any given time. Presently, $75 per barrel is the price, and one should ask why does OPEC not charge $750 per barrel? The answer is, of course, that all or most of the above forms of energy would be economic and the sales of oil would decline. It should be noted that OPEC did whatever it took to bring the price of oil back down from the peak of $140 per barrel of just two years ago.
Therefore, until OPEC runs out of oil, they will continue to price oil at just below the point where any competing technology makes economic sense. That is not going to happen for a very, very long time. Estimates of OPEC oil reserves and the time to consume them result in oil running out many decades, perhaps centuries from now. Oil discovery and production technologies continue to improve, which pushes the end date out even more.
Governments can try, as some presently are doing, to subsidize alternative forms of energy, but it is a hopeless and never-ending effort. Those funds would be far better deployed in other ways.
Some marginal alternative energy projects will be economic, as for example a solar rooftop PV system where the local utility charges 35 or 40 cents per kWh as their highest price on a tiered-pricing system. Similarly, small distributed generation systems will be attractive where power prices are sufficiently high. In sum, though, these projects are trifling compared to the world’s energy needs.
Just some things to think about. OPEC is no dummy. They have the control. And the oil. And, there is absolutely nothing anyone can do about it.
I write about this under the heading The Grand Game on my blog.
Layne Blanchard says:
September 21, 2010 at 10:13 am
“There is no free lunch”, everybody pays it in the end, spiced however, because only then one realizes how big was that “lunch” where, and this is the worst part, we were not invited.
(*)from an experienced third worlder
Pragmatically, massive loans to banks was the right thing to do. First of all, commerce depends upon a healthy financial system. Second, it was not a significant risk as demonstrated by the fact that the government will make $ on these loans. Third — and most importantly — the government has guilty hands in causing the panic that led the need for these loans. Although bank greed played a role in the panic, much more fault lies at government for its CRA, Fannie Mae & Freddie Mac activities (and the list goes on). These activities occurred over multiple administrations, and congressional “bullying” played a large role.
The GM loan is somewhat different. To some extent, you can say that the economic panic caused by government hurt GM and therefore justified the loan. However, the impact was not nearly as direct. But perhaps one could argue that government “bullying” decades ago forced GM management to agree to labor contracts that had only one chance to be supported by sales — that was by selling high-margin vehicles. Nevertheless, there are several differences from the bank loans. First, the loans did not fix the labor-cost disadvantage that GM has, and therefore the loan is more risky. Second, as administered, the loan reeked of political favoritism. Rather than allocating assets to those who had a right to them via collateral contracts, the GM loan awarded assets to entities that helped elect the administration and will help in future elections.
Loans from government are tempting. The government can borrow $ cheaply, and the party in power can tilt the funds to its political allies. However, government loans distort the market for loanable funds. Money is removed from businesses and people who can produce ongoing jobs, and the destination of the money is directed by politically motivated individuals.
Layne Blanchard says:
September 21, 2010 at 10:13 am
Forget the subsidies, theyāre just transferring the cost to my children.
Wrong!. Experienced third worlder has to say the following: YOU will pay it!, and suddenly, when you less expect it. It’s just one of these days, not more than one year from now.
The question is: “To burn or not to burn”, or rather, “take them to the stake or to the lunatics’ asylum to re-educate them”
This reads like an advert for double glazing.
Loans for alternative energy sound nice, but fail to take into account the state of technology today.
Solar power plants that are already built have efficiencies in the 10% to 12% range. This represents ONLY the captured energy from whatever sunlight strikes the panels.
On top of this, the solar plant itself has between a 15% and 33% activity ratio – i.e. how often it actually is producing power. This compared to 90%+ for conventional power plants.
But the first point is the issue: present technology yields power at a 10% to 12% ratio – absolute cutting edge technology raises this to perhaps 18%.
But within less than a decade, solar power can achieve 30%+.
Throwing tons of money – loaned or otherwise – just enshrines the inefficient technology and may in fact stunt the development of the better ones. There are entire sectors of solar such as thin film and Silicon Germanium which will have NO place in the future solar spectrum, but would very likely become entrenched if a tide of money (and the economies of scale that follow it) inundate the solar industry now.
But we can just replace them, you might say.
Well, who is going to want to replace hundreds of billions of dollars of solar plants when their lifetime is in the 3 decade range?
We don’t seem to have the will to replace 2 decade old coal plants – why should the 12% solar plants be any different?
A coherent vision and a plan is something I would support; throwing money at a perceived problem I do not.
This is one of Tom Fuller’s best articles, because it is one of his shortest articles.āŗ
Fuller writes: I have no problems with Barack Obamaās MBO of General Motorsāagain it was the right thing to do.
Anyone who thinks that it was “right” for the President to personally boot out the elected CEO and half the Board of Directors from a major auto maker and replace them with his cronies, then give away a large part of the company to overpaid assembly line workers while stiffing thousands of mom ‘n’ pop bond holders, and shoveling multi-$billions to prop up private companies must be wondering why other Presidents never did the same things with American Motors, Packard, Studebaker, Fisher, etc., etc.
The answer, of course, is that it is un-American for a President to personally interfere in markets when there is a bankruptcy code in place to handle such situations. Further, every action Obama has taken with regard to GM and Chrysler has been detrimental to the employees and shareholders of GM’s competitors and to U.S. taxpayers, who must fund the difference between subsidized loans and market rates.
Tom Fuller, our unscientific post-modern marxist opinion generator preaches his big-government nonsense here because no one reads his newspaper blog. Marxist economics is based on a fool’s understanding of human nature, and on the equally foolish presumption that the government bureaucrats and politicians who got us into this mess have the answers. They don’t, and any action the government takes will make matters worse, and will cost far more than the free market alternative. It will enrich favored special interests, and create a new and never-ending federal bureaucracy to fix a non-problem.
To put things in their proper perspective:
1. Government is forceāØ
2. Good ideas do not have to be forced on othersāØ
3. Bad ideas should not be forced on othersāØ
4. Freedom is necessary for the difference between good ideas and bad ideas to be revealed
Tom Fuller is a big government believer and advocate, totally deficient in understanding human nature and economics. If his post-normal mind was not already made up, comprehending the four points above might have caused the scales to fall from his eyes; government is not the solution, it is the problem.
As being an “experienced third worlder” I have just remembered what you are going to experience, and, most importantly, when you are going to experience it:
The correction for these problems is devaluation, but then it comes the question: When?.
Well, the best time to do it, it is right after an election.
This sort of things are usually postponed or delayed to such ocassions.
However, though it will make you poorer for awhile, it does the “trick” of an inmeadiate awakening to reality, and the sooner the better. After that, with a less expensive currency, your exports and jobs will increase.
It is like pressing a reboot button: It is healthy. Just imagine the wonders it does: All those GM big salaries Smokey talks about, that magic wand turns them instantly lower than before!
Though last but not least, those who know it, wonder what are they buying?
Here in England our government has now given up trying to operate under the pretext of “Saving The Planet”; they now acknowledge that all they are doing is raising taxes to generate revenue for an otherwise UNSUSTAINABLE government.
Here’s how an imbecilic “what if …” is going to have a direct and very expensive effect on the ordinary taxpayer here in this Green-afflicted land:
http://www.telegraph.co.uk/news/newstopics/politics/liberaldemocrats/8016774/Liberal-Democrat-Conference-Oil-price-could-double-in-return-to-1970s-style-shocks.html
I didn’t notice you mentioning the GM bond holders.
Smokey says:
September 21, 2010 at 11:51 am
Bravo! Well said Sir!
What about the energy to manufacture that new energy saving appliance which in many cases is greater than the appliance consumes over it’s live expectancy.
Phasing out appliances before the expected live will increase energy consumption in the manufacturing and transportation portion of its live, actually increasing energy consumption overall.
Tom. I didn’t even bother reading the comments & almost gave up on the post.
I am from the UK & saw from mid 2008 that Obummer was anti-USA.
Sad that you still can’t
DaveE.
“Partly because you have to spend money to make money. Most energy efficient technology has a price tag attached. If you have a refrigerator thatās good for another 10 years, are you going to buy another one just to save $5 a month in utility bills? Thought not.”
Actually it’s a rather simple equation for most people.
5*12*10 = 600.
Is cost of new fridge < 600? If so, then buy.
A glib "thought not" doesn't really make any sense unless you didn't do the maths properly and thought you'd come up with something more illustrative.
Bart Verheggen says:
September 21, 2010 at 6:19 am
Probably right, there’s low hanging fruit! So in the UK the plonkers go for condensing flue boilers.
I’ve never been a fan of these ‘instant hot water’ systems, my experience has always been that they don’t bloody well work! After ‘renovation’ my experience has not been revoked, they don’t work!
Solar heating on the other hand, may have worked.
DaveE
DaveE.
Businesses are not investing in energy efficient technologies because they do not see them as a cost benefit, if the investment costs more than they save in energy usage it is not worth it. There is nothing complicated about it. It is the same reason why buying a hybrid car is a waste of money, the money save on gas does not equal the added cost of the car.
Investing in solar panels does not save you money as the cost of the installation and equipment is not offset by the energy savings, even long term.
Government energy efficient programs have been shown to be a fraud,
Energy Star Program: Covert Testing Shows the Energy Star Program Certification Process Is Vulnerable to Fraud and Abuse (U.S. GAO)
Obamaās EPA Gave Energy Star Certification to āGas-Powered Clock Radioā and 14 Other Phony Products, GAO Says (CNS News)
Energy Efficiency just increases energy usage due to the Jevons Paradox,
The Efficiency Paradox (Peter Huber, Ph.D. Mechanical Engineering, MIT)
The Virtue Of Waste (Peter Huber, Ph.D. Mechanical Engineering, MIT)
The Jevons Paradox (CounterPunch)
It was not the right thing to bailout the banks or nationalize GM,
The Great Bank Robbery of 2008 (Robert P. Murphy, Ph.D. Professor of Economics)
What Was the Point of Bailing out GM? (Daniel J. Ikenson, M.A. Economics)
Failed businesses need to go bankrupt but thanks to two economically illiterate presidents in a row we got zombie corporations.
@ CRS, Dr.P.H.
The EPA’s position is not bulletproof,
Scientific Shortcomings in the EPA’s Endangerment Finding from Greenhouse Gases (PDF)
(The Cato Journal, Volume 29 Number 3, pp. 497-521, 2009)
– Patrick J. Michaels, Paul C. Knappenberger
Layne,
I always say that people who own a Prius cannot do basic math. After explaining the fuel cost vs. car cost difference + maintenance over time to a friend who bought one the best he could come up with was it has a cool dashboard.
The 2008 banking crisis was a bit more complicated than a normal bank failure:
“AIG has been executing a clear, methodical, and orderly wind-down of AIG Financial Products Corp. (AIGFP), which is the business that wrote the credit default swaps that were the main source of AIGās liquidity issues in 2008.
AIGās strategy remains to exit the vast majority of the risk at AIGFP by the end of 2010. Any remaining positions, which will be largely de-risked and not require active management, will either be managed by AIG or third parties.
AIGFP reduced the number of positions in its portfolio by 54% in 2009 to approximately 16,000, and the notional amount of derivatives outstanding fell below $1 trillion from $2.7 trillion in 2008.”
Note the amounts JUST for AIG (2.7 trillion), then expand this by numerous other world wide banks:
http://www.reuters.com/article/idUSMAR85972720080918
Now note the estimated total value of Credit Default Swaps (not including deriviates) from wikipedia:
“Credit default swaps have existed since the early 1990s, but the market increased tremendously starting in 2003. By the end of 2007, the outstanding amount was $62.2 trillion, falling to $38.6 trillion by the end of 2008.”
Include derivatives and this number jumps to over 500 trillion @ ~ 2007:
http://en.wikipedia.org/wiki/Derivatives_market
Now realize that these are UNREGULATED entities with the power of rapid collapse, just like the stock market, that the United States GNP is about 15 trillion and the estimated world GNP (varies depending on source) is roughly 55 trillion.
Now compare the GNP’s to the investments in Default Swaps and Derivatives and one might see that there could be a problem if a slide occurred in these markets and affected the banks (possibly much like those that resulted in the depression).
Banks need income to make short/long term loans to industry and individuals. If that income dries up then the loans can’t be made. If enough banks are affected, then the serviced economy is in a world of hurt with plants shutting down and workers furloughed. The only solution would be to print money and provide it to lend (bailout) while attempting to resolve the crises.
Although there has been some attempt at regulating some of these markets for economic protection, the scale of the problem as can be seen in the numbers is immense and some reputable economists are still predicting a possible doomsday that will not be so easy to recover from : http://www.portfolio.com/views/blogs/daily-brief/2010/08/25/nouriel-roubini-tweets-growth-approaching-zero
These problems came about primarily from gradual disassembly of the Glass-Steagall Act (http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act) that was set up to regulate banking during the previous US depression in an attempt to prevent a recurrence. In addition no controls were ever established for the new forms of trading such as Default Swaps and Derivatives (business can be trusted attitude).
Truly, nations are doomed to repeat history when unlearned.
As for spending 5-20$ for products that “might”save me 10-40$ before it breaks is not too logical to me. I would prefer to take understood tech (hot water solar panels/insulation) with an understood and certified payback. Even better if it is something that I can build/install.
“Even with a wholesale change of parties in the White House and Congress, I donāt see how this juggernaut can be stopped. Thus far, all the court battles have gone to the EPA. ”
Just defund the EPA.
Energy Investment won’t improve the economy, because the economy isn’t here.
The real shovel ready energy investments & industries are overseas.
So, technically, the recession may have ended last year…for the global industries that are growing.
We are subsidizing a growing economy, just not ours.
We are being farmed.
BFL, if you want to know what happened read this book,
Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse (Thomas E. Woods Jr. Ph.D. History, 2009)
They tried interest free loans in Australia on solar and pink bats. The scheme was rorted. It was so bad a government with a massive majority was turned into a minority government after just one term.
Let’s not forget fanny mae and freddy mac in the US. Where are we now?
Sorry, but this is a stupid idea.
Or, youāll just buy someone elseās carbon allowance ā that guy in the 3rd world wonāt have much use for it whilst heās dying of hunger.
No doubt. (The worst of communism AND imperialism.)
In an era when it is fashionable for electricity suppliers to embrace the green goodness, the price of electricity to the consumer will rise. It will rise if the consumers en masse decrease their consumption, becuase the utility will lose sales and hence profit, so the price goes up. It will increase as well if people increase consumption, because the utilities have to invest in more capital works.
I’d be interested in this exercise. Write to your electricity supplier, ask under which conditions your electricity account can be made to fall; and then post the replies here if Anthony agrees.
RW
“Actually itās a rather simple equation for most people.
5*12*10 = 600.
Is cost of new fridge < 600? If so, then buy."
I agree that in this case it's pretty much that simple, but for most other cases it is not.
To get a full life cycle cost analysis, you have to look at:
– The cost of capital, including the small amount of interest earned over the 10 years.
– Inflation of electrical costs.
– Installation and disposal costs.
– Maintenance costs; saving the old one would probably cost more than the new one in maintenance.
– Reliability of the new equipment – most new equipment are not as durable as the old fashioned equipment.
– Capacity of the new vs. old equipment. If the old equipment has more space, then it's not a one-to-one trade off.
I have to do this evaluation for almost every project I do, especially government projects or LEED projects. If you interested (or jus bored) DOE has a program called BLCC5 that will model most of these parameters and allow comparisons of systems.
In all debates about “saving” energy, overlooked are Human Nature, relative prosperity and market elasticity.
Human Nature: low energy light bulbs consume less electricity so cost less to power. That means you can have more lamps and leave them on longer for the same cost. Here in France restaurants and shops are festooned with low energy lights left on all day and evening all year round.
The net result is that utility bills are about the same, power consumption the same, but more lights are left on for longer so consumers benefit from more lighting, less worry about switching them off, but hardly benefit at all from reduced cost because prices go up each year anyway.
Prosperity: it cost 35 pence (UK) per gallon to put petrol in my first car in the early 70s. I remember years later when petrol prices approached Ā£1 per gallon, commentators confidently predicting some people would drive less and less and others stop using their cars altogether. Petrol in the UK is now about Ā£1.20 per litre (more than Ā£5 per gallon, more than 14 times of the price in the early 70s – in large part due to taxation including so-called green-tax) yet car ownership increases and people use their cars more and more. Reason, the cost at Ā£5 per gallon comparative to income is now lower than 35 pence was in the early 70s, plus lean-burn engines, reduced weight cars have resulted in increased miles per gallon. Thus more miles driven, more fuel consumed at same cost.
Market elasticity: making consumables cheaper increases the rate of their consumption.
Poptech says:
September 21, 2010 at 6:13 pm
@ CRS, Dr.P.H.
The EPAās position is not bulletproof,
Scientific Shortcomings in the EPAās Endangerment Finding from Greenhouse Gases (PDF)
(The Cato Journal, Volume 29 Number 3, pp. 497-521, 2009)
– Patrick J. Michaels, Paul C. Knappenberger
======
REPLY:
EPA considered all of that & struck down numerous lawsuits by US Chamber of Commerce etc.
Here:
http://www.epa.gov/climatechange/endangerment/petitions.html
“EPA determined in December 2009 that climate change caused by emissions of greenhouse gases threatens the public’s health and the environment. Since then, EPA received ten petitions challenging this determination. On July 29, 2010, EPA denied these petitions.
The petitions to reconsider EPA’s “Endangerment Finding” claimed that climate science can’t be trusted, and asserted a conspiracy that calls into question the findings of the Intergovernmental Panel on Climate Change (IPCC) , the U.S. National Academy of Sciences , and the U.S. Global Change Research Program. After months of serious consideration of the petitions and of the state of climate change science, EPA found no evidence to support these claims.
The scientific evidence supporting EPA’s finding is robust, voluminous, and compelling. Climate change is happening now, and humans are contributing to it. Multiple lines of evidence show a global warming trend over the past 100 years. Beyond this, melting ice in the Arctic, melting glaciers around the world, increasing ocean temperatures, rising sea levels, altered precipitation patterns, and shifting patterns of ecosystems and wildlife habitats all confirm that our climate is changing.”
Re: Poptech:
“BFL, if you want to know what happened read this book,
Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse (Thomas E. Woods Jr. Ph.D. History, 2009)”
Review excerpt:
“With a foreword from Ron Paul, Meltdown is the free-market answer to the Fed-created economic crisis. As the new Obama administration inevitably calls for more regulations, Woods argues that the only way to rebuild our economy is by returning to the fundamentals of capitalism and letting the free market work.”
Observation, as pointed out, is that it was an unregulated, no oversight free market that resulted in the depression and the 2008 fiasco. For truly free markets perhaps we should step back to the 1890’s when child labor existed in all it’s glory (and still does in some “competitive” markets overseas). Business about profits and nothing else can get completely out of control much like an alcoholic gambler. This is especially true with the corporate entity which was primarily established to limit personal liability. There is rarely any personal attachment of corporate boards and CEO’s to the business that they run except for the salary’s that they make. If the structure goes under, they are rarely hurt (unless rarely of course, fraud is proven) but everyone else, worker, investor and economy, will suffer.
Logic would dictate that free markets are a lopsided process and need some oversight to the extent that commercial enterprises play fairly. An example of this are Mil-specs and government contracts of which many complain about the complexity there-in. They got that way precisely because of free market “cheaters”. Let’s say that the government issues a contract for a commercial leather coat and then the coat turns out to deteriorate rapidly because of substandard quality that was not specified in order to save money (like some Wal-Mart leather coats). A review will then cause the Mil-spec to be tightened and an extensive testing requirement added. Many cycles of this can occur until the Mil-spec becomes quite literally unwieldy. Unlike you or I which take pot luck or a best buy based on a review or a friend’s recommendation, the government spends taxpayer money for these products which should be accounted for.
Completely free markets lead to chaos. Everyone thinks we have too many regulatory agencies, well let’s start with abolishing the FDA and OSHA and then see how much risk that you have for bacterial or heavy metal poisoning in that next can of food or for getting an appendage caught in an open machinery belt (hey you do TRUST the free market don’t you). Historically (not a favorite subject these days), these government agencies were set up BECAUSE of business abuses that resulted in maiming and death solely for profit margins. I agree to the extent that these kinds of agencies can become unwieldy but a large part of this is, again, because of business rule skirting at every corner (the “free market” “max profit” way).
Similarly, some business should have more oversight than others. A best example is the health insurance company deregulation that occurred in the 1980’s which caused a much larger number of companies to chase an ever smaller patient base per company until only the healthiest could afford to be covered. Why this was never obvious to anyone is beyond me.
Imagine the economic efficiency that would occur if everyone were “honest Johns”. Unfortunately free market naked profits stand in the way.
Ed Reid,
What we did in the 1980s was to reduce specific energy consumption in chemical plants and oil refineries in the USA, as mandated by President Reagan’s law on the subject.
Our 30 percent improvement (a bit more, actually) was measured on the basis of a unit of production (or raw material consumed), thus for a refinery we were looking at something like 750,000 Btu’s per barrel of crude oil refined as the base case, then approximately 500,000 Btu’s per barrel after the energy reduction measures.
CRS, Dr.P.H.
I am aware of the EPA’s position but what was decided in court was that the EPA can regulate if it can establish that CO2 is harmful. Thus what is presented in the paper has not been argued in court yet.
Stating the EPA’s position under an liberal administration is meaningless.
BFL says at 3:02 pm [ … ]
You had better be careful, with that post you’re close to depleting the world’s stock of red herrings!
So leaving Wal-Mart and your other fishies aside, no one is demanding an unfettered free market. There are appropriate places for regulation, such as contract law enforcement, uniform measurement standards, laws against fraud, etc.
The problem is that the government now wants to take over companies — and even entire industries. With no other competitor to enforce efficiency, hold down prices, or provide alternatives to the government’s company store, how do you think that will work out? Do you never wonder who pays for the ever-expanding new layer of no-value-added bureaucrats?
Ask someone who’s started his own business and has to meet a payroll what the free market means.
Better yet, start your own business. Then try to compete with the government.
Report back on how well monopsony works.
BFL, there are some excellent books on the subject,
Financial Fiasco: How America’s Infatuation with Homeownership and Easy Money Created the Economic Crisis (Johan Norberg, M.A. History)
The Housing Boom and Bust (Thomas Sowell, Ph.D. Professor Emeritus of Economics)
Poptech says:
September 22, 2010 at 4:39 pm
CRS, Dr.P.H.
I am aware of the EPAās position but what was decided in court was that the EPA can regulate if it can establish that CO2 is harmful. Thus what is presented in the paper has not been argued in court yet.
Stating the EPAās position under an liberal administration is meaningless.
=======
REPLY:
Poptech, USEPA holds all the cards. They will use the Clean Water Act to demonstrate harm to coastal waters due to acidification and its effects upon calcifying organisms such as coccolithophores.
Please see: http://earthobservatory.nasa.gov/Features/Coccolithophores/
The major coal-fired utilities have already folded to this position & are getting ready to do whatever EPA tells them to do. Industry groups such as API are filing suits, but they’ll be crushed.
Industry always screams when EPA sets regs, & then EPA wins and industry either submits or moves offshore. Coal-fired plants can’t move. Watch and see.
CRS,
There is extensive scientific literature arguing against damage from acidification and the court case are not over. If the EPA starts going after coal plants and consumers see their electric rates go up you will see Congress take action to stop the EPA. Watch and see after November. This is not over.
For those interested in what the EPA is up to in climate change, this is a good read:
http://www.nytimes.com/gwire/2010/05/13/13greenwire-epa-issues-final-tailoring-rule-for-greenhouse-32021.html
The EPA’s “tailoring rule” was an important maneuver to exempt a lot of small players & rope in the big actors (coal powered utility fleets). Note the dates and timelines.
Poptech says:
September 22, 2010 at 8:52 pm
CRS,
There is extensive scientific literature arguing against damage from acidification and the court case are not over. If the EPA starts going after coal plants and consumers see their electric rates go up you will see Congress take action to stop the EPA. Watch and see after November. This is not over.
—
REPLY:
Poptech, I understand your position! However, in this grand chess game, the USEPA moves very slowly & deliberately….they are experts at this stuff.
I admit that there is conflicting scientific information on ocean acidification; however, unlike the IPCC, the EPA actually collects & analyzes its own data in its own labs (or under contract with universities), so they are immune to the “Climategate” tag. EPA’s scientists are very, very good, and the courts will consider this.
Regarding the US Senate, it will only matter if the GOP can garner enough seats for a veto-proof majority. I don’t see that happening at this time.
It ain’t over ’til it’s over, but the EPA lawyers are top-guns (I know several), and they are not easily cowed by industry. The model that the EPA is following is tried & true, and with the Supreme Court decision, I don’t see many arrows in the quiver against them. This will be very interesting….stay tuned!
For some reason my other comment never appeared.
[Reply: Nothing in the spam folder. Can you re-post? ~dbs, mod.]
Well said. People are only interested in the short-term. They can’t see the benefits of making investments to save them big money in the long term.
Someone above made a comment about solar not being a good resource in parts of the country like Ohio, compared to California. Yes, California has more sun. Ohio probably has about 80% of the sun hours that the sunniest parts of the America, but still a lot more sun than Germany who has made the largest investments in solar.
Decreasing our energy costs has a much larger social impact. We will decrease our dependence on foreign fossil fuels.
MA Solar Installer says:
“We will decrease our dependence on foreign fossil fuels.”
The Department of Energy was formed after the first OPEC oil embargo [1973] with a mandate to ‘reduce our dependence on foreign oil.’
How’d that work out? ā¹
How exactly does using solar reduce our foreign oil consumption? Solar generates electricity not transportation fuel.
We are currently “energy independent” generating electricity as we get 48% from Coal, 21% from Natural Gas, 20% from Nuclear and 6% from Hydroelectric. We do not use oil to generate electricity,
Only 1% of the United States electrical generation comes from oil (EIA)
5 Myths About Breaking Our Foreign Oil Habit (The Washington Post)
The Idiocy of Energy Independence (ABC News)
Multi-Billion dollar energy companies do not invest long-term? Really?
For “Smokey says @ 6:31 PM:”
Sorry, I thought I was clear that I was NOT talking about owners that have a very personal interest in their company and its efficiency. I was aiming at corporate structures in which the rulers have few if any reasons to be emotionally involved in their corporations success or morality and many of which have an unethical alliance in one way or another with the government(s) and depend on a bank of lawyers to keep the righteous at bay.
Energy independence in the US should refer only to oil as used in vehicles but really refers to the green agenda of no coal/gas/atomic and except for the elite, a return to the basics:
http://www.green-agenda.com/globalrevolution.html
Some other scary elitist quotes:
“Complex technology of any sort is an assault on
human dignity. It would be little short of disastrous for us to
discover a source of clean, cheap, abundant energy,
because of what we might do with it.”
– Amory Lovins, Rocky Mountain Institute
“The prospect of cheap fusion energy is the
worst thing that could happen to the planet.”
– Jeremy Rifkin,
Greenhouse Crisis Foundation
“Giving society cheap, abundant energy would be the
equivalent of giving an idiot child a machine gun.”
– Prof Paul Ehrlich, Stanford University
The major problem is that the one political side is in strong support of corporate government and the other side just the extreme opposite (except of course where donations or grants are necessary) with few politically in the middle. Personally I am tired of voting for either because it is a poor way to try to balance two evils. So perhaps it is just a matter of time……
It is shocking how much energy we waste due to inefficiency. In fact, the average American power plant is only 33% efficient. Efficiency is the key to solving our energy woes, and CHP and other energy recycling techniques are the key to efficient power generation. Companies like Recycled Energy Development (http://www.recycled-energy.com/) are making great strides in this area, but unfortunately, our tax code and energy policy don’t do enough to encourage efficiency. This fall, Congress will consider investment tax credits for CHP and other energy recycling techniques, which if passed will spur a wave of investment in this clean, economical method of power generation. This small change to the tax code will make a big difference for our economy and our planet.
Is WUWT being targeted for green marketing? I see a company name used as “Website” thus tied to the commenter’s name which is also explicitly mentioned in the post. It was done here (http://www.windturbinestar.com/) and now above with Colleen (http://www.recycled-energy.com/) and those are just two examples I’ve noticed, there could be others.
Could just be a curious quirk, with new commenters unaware the “Website” field is normally used for linking to a personal website. And such comments just happen to appear after a thread appears dead, saying wonderful things about the linked site, thus being the “last word” on the thread that will get noticed (and remain unchallenged)…