The cheapest energy is energy you don’t use
With signs of progress in public thinking about climate change, it might be useful to collect some thoughts on alternative energy. I hope to look over the prospects for a number of different sources of energy, and the extent to which they can contribute to reducing emissions of CO2 and other greenhouse gases. Comments will be most valued. I’ll probably edit these posts over time, occasionally moving a new version to the top of the page, so this will be a bit different from a standard blog.
Before looking at the usual suspects (solar, wind, biofuels, nuclear) and so on, I want to restate a central point. The most important, and at the margin cheapest, “source” of alternative energy is not to use so much in the first place. In economic terms, we need to move towards less energy-intensive goods and services adopt more energy-efficient ways of producing the goods and services we use. A big example in the first category is substituting communications for physical travel. As business travel gets more expensive (and in my experience more painful) the alternative of doing business over the phone, via computer, or using a videolink gets steadily more attractive. As regards energy efficiency, it’s already more cost-effective in many cases to buy an energy efficient appliance with a higher upfront cost. Higher energy prices will make this more obvious, but there’s also a need for policy interventions to encourage households and firms to pay attention to this point.
There are good reasons for thinking that, over a span of a decade or more, the elasticity of demand for energy will be 1 or above, that is a 10 per cent increase in energy costs will produce at least a 10 per cent reduction in demand. If so, and assuming that large-scale alternatives to fossil fuels are likely to be at least twice as expensive, we can expect reductions in energy consumption to be the dominant response to the problem of climate change. Under these assumptions, at a price sufficient to induce large-scale substitution of alternative fuels, energy consumption will be less than half as great as in the ‘business as usual’ baseline.
Sunday 09 Sep 2007 | John | Climate change, Natural Resources
I work in a highly distributed organization, and I can tell you - there’s no substitute for presence. We hold face to face meetings multiple times a year, largely in order to iron out issues that crop up due to miscommunication - you simply cannot underestimate the importance of body language.
Second, on the cost of travel. Contrary to what you say, it’s not getting more expensive. It’s getting less expensive. It’s far cheaper for me to fly to my company’s HQ (in Ohio) now than it was in 2000, and flights to California are dramatically cheaper. Going to Europe used to be well over a $1000; now it’s almost never that expensive.
gF5UvbYoWcFDd
Thanks for web pages..