Energy Efficiency as a Government-dependent Industry (Remember Enron’s ESCO model?)

Conservation and economic efficiency versus conservationism and physical efficiency. See here.

IEA’s new report, titled Recommendations of the Global Commission for Urgent Action on Energy Efficiency, lists 10 recommendations.

1. Prioritise cross-cutting energy efficiency action for its economic, social and environmental benefits

2. Act to unlock efficiency’s job creation potential

3. Create greater demand for energy efficiency solutions

4. Focus on finance in the wider context of scaling up action

5. Leverage digital innovation to enhance system-wide efficiency

6. The public sector should lead by example

7. Engage all parts of society

8. Leverage behavioural insights for more effective policy

9. Strengthen international collaboration

10. Raise global energy efficiency ambition

Conservationism, a multi-decade push by government mandates and special favor, needs to be redoubled or … (fill in the blanks). “Governments should be significantly more ambitious in both the short- and long-term when setting their efficiency targets, policies and actions,” the report states.

Of course the Keynesian economists come out of the woodwork for this. States Sam Fankhauser, executive director of the Grantham Research Institute on Climate Change, London School of Economics:

Building efficiency ticks all the recovery boxes – shovel-ready, employment intensive, a high economic multiplier, and is absolutely key for zero carbon [as it is] a hard-to-treat sector, and has big social benefits, in the form of lower fuel bills.

But economics is about consumer value as determined by demonstrated preference. It is not about the physicality of less energy usage for its own sake. Saving energy requires up-front capital costs, short of quality sacrifices. As I have written:

Profit-seeking conservation is nothing new, as economists have noted. So why must we assume that self-interested conservation is a ‘market failure’ requiring government subsidies and mandates? Why is market decision-making with energy necessarily sub-optimal?

And if “market failure” is posited, what must be said about “government failure”? Political processes are human too, and worse, bureaucrats do not have their own hard-earned cash on the line. The case for government (non-market) conservation is not self-evident.

And the good news is that the history of energy is the history of improving efficiency in productionnd consumption.

Technological improvements and greater capital investment have often reduced resource requirements. History is replete with statistics showing how resource efficiencies have been a natural byproduct of profit-driven activity in a free and prosperous commonwealth as shown, for example, by economist Pierre Desrochers (here and here).

Energy-efficiency industry group presses for tax credits

Benjamin Hulac (Roll Call: Jun 4, 2020)

Existing tax credits aren’t big enough to motivate consumers to install clean and efficient energy systems, the industry says

Congress should expand tax credits for energy efficiency projects to “help speed the recovery” in the industry, which the coronavirus pandemic and looming recession have hit hard, hundreds of heating, cooling, insulation and energy companies said Thursday.

In a letter to Republican and Democratic leaders, nearly 800 companies called for Congress to expand a credit people can use to make energy-efficient improvements to their homes by raising it for the next two years to $2,400 from $500 and doubling the percentage of expenses that the credit would cover.

Authors of the letter, which the nonpartisan advocacy group Alliance to Save Energy organized, said the so-called 25C credit is insufficient to prompt homeowners to make upgrades. 

They also said boosting the credit could help bring back jobs lost in the pandemic.

“Our experience working with customers shows that the current 25C credit of $500 is not enough to spur homeowner investment at a level that would put hundreds of thousands of Americans who have lost their jobs back to work,” the letter says.

Lost jobs

The pandemic and stay-at-home orders that followed decimated the U.S. clean energy industry, pushing roughly 600,000 people into unemployment since March, according to a tally from E2, an industry trade group. 

More than 413,000 of those layoffs were among energy-efficiency workers, who, as technicians and mechanical experts, need to enter buildings and install new doors, windows, insulation, and heating and cooling systems. Social distancing requirements have made that task often impossible.

“We know that there is a real need to improve the efficiency of homes throughout America, and expanding this incentive pays all sorts of returns — lower utility bills, benefits to the environment, and now putting people back to work,” Dale Benander, Safety Manager of ABS Southeast in Worcester, Mass., said in a statement.

The request from Benander and his colleagues is more ambitious than the House and Senate bills Reps. Jimmy Gomez, D-Calif., and Mike Kelly, R-Pa., and Sens. Susan Collins, R-Maine, and Maggie Hassan, D-N.H., introduced in October.

Their legislation would raise the credit to $1,200 for homeowners.

The energy-efficiency industry, a large portion of the broader clean energy industry, is on track to lose 600,000 jobs by the end of June, with 80 percent of those losses coming from companies with 20 employees or fewer, according to ASE. Some of those losses include clean energy-related jobs.

“Many of these contractors have just seen their demand plummet,” Ben Evans, a spokesman for the group, said.

Separately, the IRS last week extended the deadline for renewable energy companies to meet the requirements for federal tax credits, due to the pandemic. 

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