Friday, July 6, 2012

Economic Efficiency not Energy Efficiency

Master Resource highlights a point that should be repeated early and often:

Energy efficiency and energy savings are considered to be intrinsically good. Politicians of all stripes sing the praises of less-is-more. Only one problem: this view is simplistic and wrong from the economic point of view.
 [I]f using less energy, or more accurately, spending less money on energy, meant that the person had to invest in other equipment whose cost more than offset the savings, then even though energy efficiency might be enhanced, economic efficiency would be reduced. If the opposite were the case, mandates and special incentives programs would not have to be put in place to promote energy efficiency.
But the government uses all kinds of mandates and tax incentives because it believes that people are too stupid to make the "right" choices.  

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