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Saturday, June 21, 2008

The cost of going "Green"?

The story that Al Gore's recent "Green" renovations to his Tennessee mansion was followed by a 10% increase in energy use brings on a number of questions. First, are Green technologies less efficient than other technologies? Do the green technologies substitute away from, say, natural gas into electricity? Do green technologies encourage more use, perhaps because people think the technology is so efficient that they can leave the lights on? Was the increased consumption simply an income effect?

From the story:

After the Tennessee Center for Policy Research exposed Gore’s massive home energy use, the former Vice President scurried to make his home more energy-efficient. Despite adding solar panels, installing a geothermal system, replacing existing light bulbs with more efficient models, and overhauling the home’s windows and ductwork, Gore now consumes more electricity than before the “green” overhaul.

Since taking steps to make his home more environmentally-friendly last June, Gore devours an average of 17,768 kWh per month –1,638 kWh more energy per month than before the renovations – at a cost of $16,533. By comparison, the average American household consumes 11,040 kWh in an entire year, according to the Energy Information Administration.
Sen. Gore supposedly has increased his personal wealth by approximately $100 million (around the same amount Bill and Hillary Clinton admit to having amassed since leaving the White House). This dramatic increase in wealth could lead to an increase in energy consumption, notwithstanding the individual's rhetoric concerning conservation.

There is an unrecognized problem with "green" technologies. If they make each minute of energy consumption cheaper, this can cause people to slide down their demand curve for energy, leading to an increase in consumption. On the other hand, if green technologies are intended to reduce energy consumption, an easy way to make this happen is for green technologies to actually increase the cost of energy consumption to the end user.

If energy consumption imposes significant third-party costs on others, then green technology that increases the cost of energy consumption might be justified, however it is unlikely that any government would have sufficient information to select the correct (higher) price.

If green technology increases the cost to the end user, then energy consumption will become ever more reserved for those who can afford the higher price. I call this "soft elitism" in the sense that there will be no law that against any individual, say, driving a car, or taking an airplane for vacation travel, but it will be so expensive that only the wealthy will be able to afford to do so. Congress is busy mandating the type of light bulbs we will have to use, notwithstanding any number of potential problems. Why Congress feels it this is part of its mission statement, I am sure I don't know. However, if mini flourescent bulbs cost four or five times as much as an incandescent bulb, any mandate for MFBs will lead to a) a black market for incandescent bulbs, and b) a reduction in the number of light bulbs those with less means will have in their house, which could lead to eye strain, and perhaps more hosue fires if people use candles for light. Either way, those in Congress and the wealthy probably have little sympathy for those who will bear the arbitrary costs of the policies.

Is there a sense of hypocricy when the loudest proponent of energy conservation consumes more in a month than a typical household in a year? I am sure many feel that way.

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Well, as long as we're drawing conclusions from a single point of data...
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