Pure Self-Interest Promotes Energy Efficiency
NY Times -- President Obama came to a suburban Washington Home Depot store Tuesday to push a program -- helpfully called “Cash for Caulkers” -- that is aimed at helping homeowners to make their homes more energy efficient. “I am calling on Congress to provide new temporary incentives for Americans to make energy efficiency retro-fit investments in their homes and we want them to do it soon,” Mr. Obama said.
Mr. Obama wants Congress to look into consumer rebates for households that make energy efficient upgrades to their homes. He said homeowners could get back their investments in energy efficiency in two to three years.
MP: Department of Energy data (here and here) show that household consumption of energy (in 1000s of BTUs per square foot) declined by almost 33% between 1980 (65) and 2005 (43.7), and household expenditures on energy per square foot (in 2009 dollars) declined by more than 40% between 1980 ($1.39) and 2005 ($0.83, see top chart above), suggesting that American homes are becoming more and more energy efficient all the time.
Likewise, there have been dramatic increases in energy efficiency for standard household appliances since 1980, according to data from the Association of Home Appliance Manufacturers (see bottom chart above). For a home refrigerator in 1980, its energy factor (EF, a standard measure of overall energy efficiency for appliances) was 5.59, and by 2008 the EF for refrigerators had increased almost three-fold to 15.50, for a 177.3% improvement in energy efficiency. The other standard home appliances in the chart above also had significant improvements in energy efficiency, from a 41.5% increase for the room air-conditioner, to a 91.4% increase for the dishwasher.
Bottom Line: These significant increases in energy efficiency for both our homes in general and also for the appliances that we have in our homes have happened gradually, but steadily, for many decades, and many of these improvements in energy efficiency probably took place without any government intervention, stimulus or rebate programs. The incentive to save money ensures that there will always be an incentive to become more energy efficient out of pure self-interest, since increased energy efficiency translates directly into monetary gain.
Listening to Obama, one might get the impression that we have become less and less energy efficient over time, and we energy gluttons now need nanny state hectoring to become energy misers. The truth is just the opposite - we have become more and more energy efficient over time, not less, and here's another example showing that today's economy is more than twice as energy efficient as the economy in 1970, measured by "Energy consumption per real dollar of GDP (data here):
We might see increased efforts to inflate a green bubble in the coming years as the Obama administration sees renewable energy as a way of driving down the unemployment rate. In a speech last week at the Brookings Institution touting proposals for job creation, President Obama urged Congress to “consider a new program to provide incentives for consumers who retrofit their homes to become more energy efficient, which we know creates jobs, saves money for families, and reduces the pollution that threatens our environment.”