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
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
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 @ur momisugly September 21, 2010 at 6:43 am
Djoser @ur momisugly 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. 🙂
What Wiglaf said bears repeating (since I was beaten to it).
Wiglaf says:
September 21, 2010 at 7:00 am
“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.”
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:
“. . . 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.”
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.
@ur momisugly 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 $3.2 billion that Congress voted in February as part of an economic stimulus package to provide energy and conservation block grants to states and cities has been spent by the beginning of August according to an audit (PDF) by the Energy Department’s inspector general, reports The New York Times. It also has only created or saved about 2,300 jobs as of the second quarter of this year.”
http://www.environmentalleader.com/2010/08/17/audit-finds-only-8-of-u-s-stimulus-funds-for-energy-efficiency-spent/
A realtor friend of mine once told me regarding the energy bills of residences for sale…no on asks, no one cares, it doesn’t make any difference to a potential sale what the monthly bills are.
I’m sure this was a slight exaggeration, but the point was made… Few buyers look at the cost of energy to run their house as a significant piece of information when deliberating a purchase in the Raleigh/Durham/Chapel Hill area of NC. (Rates are ~$ 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” 🙂