Jump to content

From The Economist: Irrational Incandescence


Recommended Posts

BUSINESS AND CLIMATE CHANGE

Irrational incandescence

May 31st 2007

From The Economist print edition

People can't be bothered to make easy energy savings

SOME ways of cutting carbon are cheaper than others. So, at different carbon prices, different sorts of methods of abatement become worthwhile. Vattenfall, a Swedish power utility, has tried to quantify which ones would be worth undertaking at what price (see chart 3).

CSU971.gif

The result is a testament to economic irrationality. The measures below the horizontal line have a negative abatement cost—in other words, by carrying them out, people and companies could both cut emissions and save money. At a macroeconomic level they would boost, rather than reduce, economic growth.

Lighting, for instance, accounts for some 19% of the world's electricity use. A standard incandescent light bulb costs around €1, says Theo van Deursen, chief executive of Philips Lighting, and uses €15-worth of electricity a year. A low-energy one costs €5-6 and uses €3-worth. The payback on investing in a compact fluorescent bulb, therefore, is less than a year. Yet low-energy lighting makes up only 30% of Philips's sales. Mr van Deursen admits to being disappointed. Sales are rising faster in the developing world: there, people pay more attention to electricity bills than they do in the rich world.

Economists trying to explain this apparent irrationality suggest that the savings are too small and the effort involved in change too large. People find their electricity bills too boring to think about; within companies, those responsible for keeping bills down may not have the authority to spend the necessary capital. Another explanation is the agency problem: that the developer who would have to pay higher capital costs up front will not be forking out for the electricity bills. Besides, people buy houses not because they have good insulation but because they have pretty views.

Compared with pursuing greater energy efficiency, the abatement measures into which so much money is now being poured look rather expensive. Carbon capture and storage and wind and solar power, for instance, all have positive, and relatively high, abatement costs.

But the cheapest sources of abatement are difficult for policymakers to get at. Billions of different actors are involved. They cannot be targeted in the way that a few hundred factories can. What is more, a moderate carbon price is not likely to be effective, since people clearly do not care enough about cost.

One policy option is to decouple the utilities' revenues from the amount of electricity they sell. That gives them an incentive to increase the efficiency of power usage rather than to produce and sell extra power. California is already doing this, which is presumably why electricity prices there are among the highest in America, while consumption is relatively low.

Energy-efficiency standards, such as building regulations, are another option. Economists generally prefer to avoid rules that specify what companies can produce and how, because they require governments, rather than markets, to allocate resources, and markets tend to do a better job. But if, as in this case, a public as well as a private good is involved, and the market does not seem to be doing its job properly, there is an argument for governments giving it a nudge.

There are lots of energy-efficiency regulations in place already, and they are being tightened. Incandescent light bulbs are the top target at the moment. Both the European Union and Australia said earlier this year that they are planning to ban them. But the man in the vanguard of this green revolution is Fidel Castro, who started phasing them out two years ago.

Link to comment
Share on other sites

I'm in the process of changing all my light bulbs over to the new high efficiency ones, as the old ones burn out. I like them a lot. The equivalent of a 60W bulb only draws 15W of power. That's incredible! Well worth the extra money they cost, imo. And they are guaranteed to last 5 years (some 7 years).

Link to comment
Share on other sites

Building regulations here require all new houses to be fitted with at least 3 low energy bulbs, so people can compare them with the normal type. As Guy mentioned, they're not good to read by, so, as our bulbs burn out, we're replacing them with the old type in rooms where we do read. Our house is only two years old and one has gone already.

So much for progress!

MG

Link to comment
Share on other sites

While there is obviously SOME price at which energy demand will be reduced - at a million pounds a kilowat/hour, no one would buy energy - energy demand seems to be very price-inelastic. So much so, that no one really has any idea of what prices energy (in its different forms) have to be in order to change our patterns of living.

So that graphs like the one produced in the Economist are completely meaningless.

All the economists I know agree that economics is a very poor means of handling cultural matters.

MG

Link to comment
Share on other sites

While there is obviously SOME price at which energy demand will be reduced - at a million pounds a kilowat/hour, no one would buy energy - energy demand seems to be very price-inelastic. So much so, that no one really has any idea of what prices energy (in its different forms) have to be in order to change our patterns of living.

So that graphs like the one produced in the Economist are completely meaningless.

All the economists I know agree that economics is a very poor means of handling cultural matters.

MG

I don't think that is the point of the graph at all. The point of the graph is "if I (as a society) am going to try to reduce carbon emissions, where do I get the biggest bang for my buck?"

Link to comment
Share on other sites

I'm amazed at how bright these new bulbs are.

Too bright in some situations. I found that my eyes

would twitch and sometimes burn while reading in the front room.

But, I have to say, they have lasted many years now.

I especially like the lasting quality of the ones that go in

hard-to-get places or areas that can be a pain to get at -

those were the places to change the bulbs first.

There was a time when the new blueish bulbs were tried,

but those were pretty weak on lumens.

Link to comment
Share on other sites

I'm amazed at how bright these new bulbs are.

Too bright in some situations. I found that my eyes

would twitch and sometimes burn while reading in the front room.

Did you choose the right ones? IIRC, a 7W energy-saving bulb corresponds to a regular 40W bulb. If you get a 12W bulb, it will be too bright (like a regular 60W bulb).

I like those new bulbs, although it does not make sense to use them everywhere. They take some time to reach normal brightness, so they are no good for lights that are only used occasionally and for a short time, like in a corridor.

But all these savings are nothing compared to the electricity consumption due to air conditioning.

Edited by Claude
Link to comment
Share on other sites

I like those new bulbs, although it does not make sense to use them everywhere. They take some time to reach normal brightness, so they are no good for lights that are only used occasionally and for a short time, like in a corridor.

Exactly. That, and you can't use them in dimmers. Still, we've replaced whatever bulbs we can with flourescents. They're much improved from only a few years ago. Haven'y had them in place long enough to comment on their longeviy.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...