Conservation: Moving to Action

The previous entry described some of the technologies available to achieve dramatic reductions in electricity use. So the technologies exist. But how do we get them used, so we can see actual reductions in consumption?

Economists always assume that markets are perfect. And they assume that consumers are always rational. But perfect markets depend on perfect information. Most consumers don’t know the technologies available, much less their economic impact.  Information is not perfect. And consumers aren’t always rational. A rational consumer would always turn off the light when leaving the room.  And they would know that the amount of electricity consumed for each appliance and light.  But consumers are pressed by time and have conflicting priorities. They may not have access to capital, which many conservation initiatives require. So they won’t always make the “rational” decision which will reduce their cost.

And our electricity “market” is not rational either. We price our power based on the average cost. But new power costs much more than existing power. By pricing based on average cost instead of marginal cost, we provide an consumers with a lower price than it costs us to get an extra kWh, thus providing an incentive to the consumer to waste electricity, and ensuring that we need to increase supply, at a high cost.  This makes the economic decisions regarding investing in conservation technologies wrong. Conservation saves the system more money than it saves the consumer.  The price signals are wrong, even if we assume efficient markets, and rational consumers.

And then there are external effects. The coal plant doesn’t provide compensation to citizens who suffer from asthma, or to all of us who will pay for the effect of climate change. And we don’t know what the cost of safe storage of nuclear material for thousands of years will be – we have passed the cost of our consumption onto future generations – another external effect.

Many people today have have a blind faith in free markets to solve all problems. And we have a mis trust of government intervention in markets.  But free “markets” in electricity do not exist, and they are not efficient markets.  If ever there is a place for government intervention in markets, it is electricity conservation.

So what can governments do?

First, getting the price signals closer to right would help.  Instead of pricing electricity on average cost, we should price it based on marginal cost, or close to it.  Our tiered pricing, where the consumer pays more per kWh the more they use is a good first step.  But the spread between low and high prices could be expanded to encourage conservation behaviour.

Our Provincial sales taxes need reform.  Today, there is no tax on electricity.  But if you buy a compact fluorescent bulb to reduce consumption, you pay tax on that.  Better to tax electricity, and cut taxes elsewhere, to make the price signal on conservation more accurate.

Regulation of products can make a big difference.  Inefficient T12 ballasts and bulbs should be banned over time.  Refrigerator, washing machine, coffee maker, air conditioner, Christmas light, computer and other appliance efficiency standards should be set.  We should even consider phasing out incandescent bulbs.

The Federal government had the Energuide home energy audit, with an assessment of your home’s heating efficiency.  This program has been cancelled, but hopefully will re-emerge stronger than before.  The program could be improved to include electric appliances and hot water (it has done home heating only in the past), and the evaluators should be encouraged to make it simple for the homeowner.  The home energy auditor in the past has not been allowed to provide recommendations about insulation, heating system, or air sealing suppliers, in order to maintain an appearance of being unbiased.  But in the process, we make it hard for homeowners – they have find their own suppliers, which is sometimes hard.  The result is that they often don’t implement the recommendations, even though implementing them may be the rational thing to do.  Why can’t the evaluator have a selection of compact fluorescents with them, or low flow shower heads, or hot water pipe insulation, or lists of local contractors available when they talk to the homeowner?  We need to make it easy – this is the key to getting action.

I hate to say it, but there may be a role for door – to – door salespeople, or telemarketers, to offer home energy audits, and provide education.  Can we rely on direct mail, where a 1% uptake is considered a good response?  Service groups, churches, and other community groups may offer a good entry with a higher uptake than conventional mass marketing methods can achieve.  How many Canadians took the one tonne challenge?  How many didn’t?  We need a much stronger consumer uptake.

Financing can be a challenge for some.  Low cost loans for installation of energy efficient air conditioners, solar thermal hot water, and ground source heat pumps would overcome a significant barrier.

About 5 years ago, as I became enlightened on energy, I learned about the lower energy consumption of T8 flourescent tubes compared to T12’s.  So I initiated a retrofit at EMJ, the firm I worked for in Guelph.  The next step of course was to move this retrofit out to the branches.  I called the Vancouver branch, and asked what they used.  They had made the switch to T8’s 2 years earlier.  A representative from BC Hydro’s Power Smart program had done a sales call, and had recommended the switch.  The cost was paid over time on the power bill.  Contractors to do the work were all arranged.  They made it simple.  They made it “free”, as the cost of the change in bulbs was less than savings in electricity.  And so it was done.

Special initiatives for low income housing, or convenience or grocery stores, or restaurants, where there are unique circumstances can also be helpful.
It will not be cheap.  It needs budget.  But it is far cheaper than the alternative.  It will save us all money.  Doing nothing ensures that we will need to “invest” in more nuclear or fossil plants, with their financial and environmental risks.  And with the conservation approach, the benefits of lower consumption, and lower costs, will stay in the province.

The Conservation Bureau was formed by the Provincial government a couple of years ago.  They have laid some good groundwork, by studying electricity use by sector, by end use, by customer grouping etc.  They have a good base of information on which to target conservation initiatives.

It is time to move to action.

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