"Energy Efficiency is at the heart of energy affordability." Tony Earley, Chairman, CEO and President of PG&E Corporation


Energy Efficiency-A Worthy Goal, But Not Enough

By Jonathan Marshall

It’s not as sexy as landing a man on the moon, but the national energy challenge posed by President Obama in his State of the Union address may have more lasting impact on this country and the world’s well-being.

Setting “a new goal for America,” the president said, “let’s cut in half the energy wasted by our homes and businesses over the next 20 years. The states with the best ideas to create jobs and lower energy bills by constructing more efficient buildings will receive federal support to help make it happen.”


Obama did not pluck this goal out of thin air. Last week, the bi-partisan Alliance Commission on National Energy Efficiency Policy issued a major white paper stating that “doubling energy productivity by 2030 is an aggressive, yet achievable goal” that will help “supercharge our economic prosperity for the 21st century.”

Learn more about the California model for energy efficiency

Besides the usual environmental suspects, the commissioners include leaders of industry (Lowe’s, Panasonic, United Technologies), utilities (National Grid US, Southern Company), finance (Citigroup), and politics (Sen. Mark Warner of Virginia).

(Although not represented on the commission, PG&E has long been a champion of energy efficiency as well. A recent study by E Source reports that PG&E’s programs saved customers almost 1.6 billion kilowatt-hours of electricity in 2011, the most of any utility surveyed.)

There are many good reasons to support more efficient use of energy. But other recent reports provide sobering reminders that energy efficiency by itself won’t vanquish the looming threat of climate disruption from greenhouse-gas pollution.

By helping us accomplish more with less energy, efficient technology effectively lowers the cost of energy. The lower cost may in turn cause us to use more energy — a response called the rebound effect or Jevons’ paradox.

A case in point: the Department of Energy’s latest Residential Electric Consumption Survey shows that homes built in the last decade use much less energy per square foot — one good measure of efficiency — than older homes. But because they are 30 percent larger, and come equipped with more computers, TVs, refrigerators and other appliances, they actually consume 2 percent more energy than older homes.

A similar story holds for the commercial sector, according to the Sustainable Energy in America 2013 Factbook produced by Bloomberg New Energy Finance. Owing to an explosion of computers and other electricity-consuming appliances, commercial buildings today consume about as much electricity per square foot as they did in 1980, despite much tougher building standards.

All those computers have contributed enormously to America’s productivity, without requiring a proportionate increase in energy consumption, reason enough to keep pursuing cost-effective energy efficiency measures. But the net result hasn’t been a long-term decrease in greenhouse gas emissions.

Short of some miraculous technological breakthrough, most economists say the lowest-cost way to achieve that goal — which is fast becoming as important to our economic well-being as it is to our environment — is to make sure consumers pay the full social cost of energy at the outlet or the pump. That can be accomplished by cap-and-trade schemes, such as the one recently introduced in California, or by carbon taxes, like the one California Sen. Barbara Boxer has just proposed.

President Obama hinted as much when he called on Congress to enact a “market-based solution to climate change,” but he knows that will be an uphill battle. A recent national survey conducted by Duke University researchers found nearly two-thirds of Americans support regulation of greenhouse gas emissions to curb climate change — but only 29 percent of those surveyed support a carbon tax.

Email Jonathan Marshall at jonathan.marshall@pge.com.

This story originally appeared on pgecurrents.com.