The News & Observer tells us this morning that Progress Energy wants approval from the N.C. Utilities Commission to force ratepayers to subsidize up to 80 percent of the cost of installing energy-efficient equipment in “flower shops, pizzerias, and other small businesses.”
This presents a good opportunity to remind you about the problems Roy Cordato has noted about a focus on energy efficiency alone.
“Energy efficiency is rooted in the idea that some people, who have been labeled experts, believe that other people — American citizens, North Carolinians, residents of a particular town or city — are using ‘too much’ energy,” said report author Dr. Roy Cordato, JLF Vice President for Research and Resident Scholar.
“It is an empirically and even conceptually unsupportable assertion,” added Cordato, a Ph.D. economist. “The reality is that energy efficiency requirements and programs are about substituting so-called experts’ preferences for the preferences of people who actually purchase resources and do the consuming and producing.”
As a concept, “energy efficiency” has no relation to real economic efficiency, Cordato said.
“Whichever definition you use, ‘energy efficiency’ focuses strictly on saving energy even if it means sacrificing overall economic efficiency,” he explained. “Pursuing energy efficiency leads to the strong possibility that use of other inputs might increase. In other words, it might take more labor, plastic, steel, copper, glass, or other inputs to make up for the reduced energy use.”
Real economic efficiency looks at more than just the impact of one input, Cordato said. “Economic efficiency relates total costs to the value of the output that those costs generate,” he said. “Total costs include money spent, but they also include subjective factors such as sacrifices in time and convenience.”
