April 22, 2010
Energy Efficiency Offers Profitable Returns

Bigger investments in energy efficiency in the southern US would pay back more than twice the amount invested.

DURHAM, N.C. Energy-efficiency measures in the southern U.S. could save consumers $41 billion on their energy bills, open 380,000 new jobs, and save 8.6 billion gallons of water by 2020, according to a new study from the Nicholas Institute for Environmental Policy Solutions at Duke University and the Georgia Institute of Technology. The study concludes that investing $200 billion in energy efficiency programs by 2030 could return $448 billion in savings.

The researchers modeled how implementation of nine policies across the residential, commercial and industrial sectors might play out over 20 years in the District of Columbia and 16 southern states.

"We looked at how these policies might interact, not just single programs," said Etan Gumerman of the Nicholas Institute and co-lead researcher of the study. "The interplay between policies compounds the savings. And it's all cost-effective. On average, each dollar invested in energy efficiency over the next 20 years will reap $2.25 in benefits."

It says something about the inefficiency of the market that the potential for such large savings exists.

The South uses a disproportionate fraction of total US energy consumption. This is curious because the South has much less need for heating. How much of this energy is going to air conditioning?

The South is rich terrain for efficiency improvements. Without them, the region might expect 15 percent growth in energy demand by 2030. Thirty-six percent of Americans live in the study region. The region consumes an outsized portion of American energy, 44 percent, but it also supplies 48 percent of the nation's power.

Greater energy efficiency will reduce the demand for coal and therefore also reduce the number of deaths and injuries due to slack attitudes toward coal mine safety where top management puts production first.

Share |      Randall Parker, 2010 April 22 11:00 PM  Energy Conservation


Comments
Daran said at April 22, 2010 11:57 PM:

Sounds like the report was produced by a bunch of bored Global Warmists, which makes their ability to set up a proper model somewhat suspect.

LarryD said at April 23, 2010 6:09 AM:

If the return potential is really there, and if the regulatory environment doesn't keep investors away, then the investment will be pursued. The second "if" is particularly problematic, right now.

But experience has shown that improving efficiency doesn't drop energy demand, it just slows demand growth.

bruce said at April 23, 2010 8:26 AM:

>the south uses a disproportionate amount of energy.

The old rustbelt industrial base hase moved south. To dodge unions, but also to avoid high tax/crap services. For every big factory you see, there are a bunch of home shops for contractors.

JoeKing said at April 23, 2010 2:05 PM:

" reduce the number of deaths & injuries due to slack attitudes toward coal mine safety........."


While off topic this statement is totally NOT born out by statistics.

http://usgovinfo.about.com/library/weekly/nfatalitytables.htm#table 2

The death of any worker is obviously a tragedy, but being a coal miner is perhaps one of the SAFEEST jobs one could have in that the number of miners killed each year is less than almost every other occupation from office worker, to taxi driver, to agricultural worker, to fast-food worker to even being a CEO. West Virginia has one of the lowest number of work related deaths of any state, especially where there is so much logging (very dangerous).

Mine disasters are like airplane crashes in that they are horrific in loss of life, but do not reflect a larger trend.

Placebo said at April 23, 2010 3:12 PM:

"The South uses a disproportionate fraction of total US energy consumption."

"Thirty-six percent of Americans live in the study region. The region consumes an outsized portion of American energy, 44 percent, but it also supplies 48 percent of the nation's power."

The South may use a disproportionate fraction of total US energy based on population but not based one energy production. Additionally, is population the best correlate for energy use? It would seem that heavy industry (such as auto manufacturing, mining, oil production, energy production, etc) may be a better correlate.


Kralizec said at April 23, 2010 7:06 PM:
It says something about the inefficiency of the market that the potential for such large savings exists.
In the vernacular, I think this "inefficiency of the market" is called "lying" and "distrust." Men would be more willing to spend large sums at the advice of others, if they had no experience or report of men giving lying advice for the sake of their own gain. But not only salesmen, but also governmental officials and even researchers have acquired a reputation as liars. To the inefficiency of the market, you can add the inefficiency of government and the inefficiency of science.

On your own principles, Randall, the more profound reason we find men often to be suspicious and obstinate is that their remote ancestors' more trusting and agreeable kinsmen died without offspring. If most of us were very much more easily led, I suspect the more easily led would be led even to their destruction, for other men's gain, and the ordinately suspicious, obstinate survivors and their ordinately suspicious, obstinate children would inherit the earth once more.

Mike Anderson said at April 23, 2010 8:20 PM:

The South uses a disproportionate fraction of total US energy consumption. This is curious because the South has much less need for heating. How much of this energy is going to air conditioning?

Does a cat have an ass? Of course we use the energy for air conditioning! (and dehumidifying)

The problem with all these grandiose efficiency schemes is that no one has come up with incremental ways to economically retrofit hundreds of thousands of 20-year-old houses for energy efficiency. The best deal lately is CF bulbs, which dump a lot less waste heat into a room than the old incandescents.

Brett Bellmore said at April 24, 2010 12:45 AM:

I personally think that it would be helpful if they built refrigerators so that you could plug them into the air conditioner, and share the external condenser. Should be a lot of energy savings there, compared to dumping the heat into an air-conditioned space. (Naturally, you would want the refrigerator to run normally during the heating season.) Wouldn't require much more than a couple of small copper lines and a valve, and the retrofit wouldn't be any harder than supplying water to an ice maker.

With peak pricing, retrofitting a buried, insulated water tank to allow air conditioners to run when the power is cheap, not when the sun is shining, would probably be cost effective. I was actually working on a system like that for my home in Michigan, when I lost my job and had to move to SC. Propane had gotten so expensive that off peak resistance heating would have been cheaper...

gcochran said at April 24, 2010 12:16 PM:

When faced with some kind of efficiency-promoting modernization that has high payoff, say 10% a year (but with higher initial cost), most consumers will not go for it. Probably for the same reason that the average consumer keeps money on his credit card: time preference. Either that or they know something about 2012 that I don't.


Brett Bellmore said at April 24, 2010 12:39 PM:

Well, dipping into my 401-k to upgrade the energy efficiency of my house back in Michigan *would* have been a smart investment, the payback was less than 5 years. If I hadn't been laid off two weeks later, with the loan converted into a disbursement subject to a hefty tax penalty, and the house located nowhere near the job I later managed to find. IOW, in uncertain times, people rationally refrain from investments, even with fairly short payoffs, in favor of liquidity.

But the system I came up with would have saved me a lot of money, if I could have continued to live in the house, and had been able to keep my job.

Randall Parker said at April 24, 2010 4:14 PM:

Greg, The average American household has over $7k on their credit cards. I agree with you about time preference.

What I fear: Is the time preference becoming shorter?

The market isn't more efficient because it is made up of humans with human cognitive deficiencies.

Brett Bellmore, Ouch on the Michigan house.

Regards the refrigerator and air conditioner: Houses really need to be designed to maximize appliance efficiency. Dryers shouldn't dump heat outside during the cooler months. Hot water itself should have its heat extracted before going down the pipe when it is cold out. Refrigerators should be able to dump heat outside in the summer but inside in the winter. It mike make sense to run them off of a heat pump that manages the whole house.

ken said at April 26, 2010 2:04 PM:

44% electrical usage with 36% population doesn't seem that bad when you consider the extra demand from air conditioning.

That's not to say that homes couldn't be designed for better energy efficiency. One thing I notice is that most homes in the South, even the recently constructed ones, are designed with steep, dark shingled roofs. From an energy efficiency standpoint this design is ill suited to typical Southern hot sunny days. The steep roofs allow extra surface area for heat transfer and the dark shingles guarantee extra solar loading. Ideally the roofs should be flat and white.

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