Energy models, like the EIA's, give us a comprehensive view of how energy supply and demand, economic activity, and technology all interact. This model comes to some interesting conclusions, because it can forecast the effects of various policies and predict impacts to GDP. This is important because when our president actually admits that global warming is occurring, he still justifies his lack of action as “protecting the economy”. This, even though our economy is threatened by our dependence on foreign oil, even though our economic competitors (Europe, Japan, and China) are already moving forward on this issue, and even though new industries and technologies are likely to be developed with or without U.S. participation.
If we were to do something, however, EIA's forecast shows that the impacts of selected energy efficiency policies are relatively moderate, both to the economy and the atmosphere:
- Macroeconomic impacts: The economic impacts of energy efficiency policies are relatively low. Based on case 1 and case 2 -- see the policies included on page 5 -- the losses in productivity are either $445 billion (0.14 percent of potential GDP) or $864 billion (0.27 percent of potential GDP) between 2006 to 2025. However, this doesn't take into account reduced energy prices because of reduced demands for energy, which could offset or mitigate these costs in productivity.
- Carbon emissions: Reductions in carbon dioxide emissions are moderate. The various policies analyzed by the EIA taken together only reduce our overall emissions by 3.5% in case 1, to 8.3% in case 2 from 2006 to 2025. In comparison, the original target for the United States in the Kyoto protocols -- unfortunately never approved by the U.S. Senate and eventually abolished in Bush's first term -- calls for a 7% decrease over 1990 emissions levels. In comparison, we are already 13.4% above 1990 levels in 2003, based on EIA figures here, so even the many policies included in this EIA analysis will not get us to the original targets of the Kyoto protocol. (Good thing we never agreed to it! -- just kidding)
Cars: Reforming car fuel economy test procedures, or the CAFE standards, to eliminate the difference between stated fuel economy values and the lower mileages realized in actual driving conditions, reduces our consumption by about 20.6 quadrillion BTUs, or just 0.87% decrease (though this is 9.68 million barrels of oil).The study also finds that tax incentives for various technologies such as combined heat and power (CHP) and new buildings and shells are relatively ineffective.
Buildings: Revising commercial building codes to improve energy efficiency only reduces our demand by 5.1 quad BTUs, or just a 0.21% decrease! Revising residential building codes similarly only reduces our demand by 0.09%!
Ceiling fans: I have no idea why, but new efficiency standards for ceiling fans generate the most savings among all building appliances evaluated -- minus 2.7 quad BTUs or 0.11% of our total energy consumption -- more than including air conditioners, refrigerators, furnace fans, or hot-burning torchiere lamps. I suspect that this includes HVAC systems, and new standards lead to proper sizing and therefore more efficient heating and cooling systems.
Though the results of energy models have to be taken with a grain of salt -- and many barrels of oil -- my take-home conclusion is that we need more (and more effective) energy efficiency policies!
Technorati Tags: economics, energy, environment
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