University of California Energy Institute
When to Pollute, When to Abate?
Intertemporal Permit Use in the Los Angles NOx Market
Stephen P. Holland and Michael R. Moore
We argue that today’s primary focus on energy efficiency may not be sufficient to slow (and ultimately reverse) the growth in total energy consumption and carbon emissions. Instead, policy makers need to return to an earlier emphasis on “conservation,” with energy efficiency seen as a means rather than an end in itself. We briefly review the concept of “intensive” versus “extensive” variables (i.e., energy efficiency versus energy consumption), and why attention to both consumption and efficiency is essential for effective policy in a carbon- and oil-constrained world with increasingly brittle energy markets. To start, energy indicators and policy evaluation metrics need to reflect energy consumption as well as efficiency.
We introduce the concept of “progressive efficiency,” with the expected or required level of efficiency varying as a function of house size, appliance capacity, or more generally, the scale of energy services. We propose introducing progressive efficiency criteria first in consumer information programs (including appliance labeling categories) and then in voluntary rating and recognition programs such as ENERGY STAR. As acceptance grows, the concept could be extended to utility rebates, tax incentives, and ultimately to mandatory codes and standards.
For these and other programs, incorporating criteria for consumption as well as efficiency offers a path for energy experts, policy-makers, and the public to begin building consensus on energy policies that recognize the limits of resources and global carrying-capacity. Ultimately, it is both necessary and, we believe, possible to manage energy consumption, not just efficiency in order to achieve a sustainable energy balance. Along the way, we may find it possible to shift expectations away from perpetual growth and toward satisfaction with sufficiency.