Energy Revolution Policies for a Sustainable Future Chapter 2: Barriers by Howard Geller Summary - Travis Lantz Critique - Nick Gasnier

Discussion of Barriers 1.) Barriers to greater energy-efficiency 2.) Barriers to renewable energy use

Table 2-1 Barriers to the Adoption of Energy Efficiency and Renewable Energy Technologies * Limited supply infrastructure * Quality Problems * Insufficient information and training * Misplaced incentives * Lack of money or financing * Purchasing Procedures * Pricing and tax barriers * Regulatory and utility barriers * Political obstacles

Barriers to Greater Energy Efficiency Limited Supply Infrastructure In some countries, especially developing and former communist nations, energy efficient technologies are: - not produced - not readily available When higher energy efficiency is not an option: - consumers ignore energy performance - manufacturers have little incentive for improving efficiency

Barriers to Greater Energy Efficiency Quality Problems Hurts the reputation of energy efficient products this leads to low consumer acceptance

Barriers to Greater Energy Efficiency Insufficient Information and Training Consumers and Businesses may not: - be aware of energy efficient options - have information on how much energy is saved - know how much money would be saved In addition, consumers may have doubts about energy saving claims, and the ability for these products to work in their homes.

Barriers to Greater Energy Efficiency Misplaced Incentives Financial interests may not be aligned - those responsible for installing energy efficient measures - those who purchase energy and would benefit from such measures Use of specifically required efficiency measures are not specified by the designer.

Barriers to Greater Energy Efficiency Purchasing Procedures Lowest-cost product with the desired features = the ‘best buy’ lack of incentive for energy efficient measures consumers pay attention to: - price - product features and performance - capacity - reliability - brand name - NOT energy-efficiency

Barriers to Greater Energy Efficiency Lack of Money or Financing Consumers/businesses may lack money needed for energy-efficient projects Long-term lending to businesses is almost nonexistent in developing and former communist nations

Barriers to Greater Energy Efficiency Pricing and Tax Barriers Many nations (rich and poor) subsidize conventional energy sources = reduced incentive for efficient energy use by consumers energy prices rarely reflect full costs to society: - production and use - social and environment = pollution from air, water, and land, or global climate change caused by power generation and supply

Barriers to Greater Energy Efficiency Regulatory and Utility Barriers Utilities: - do not have financial incentive to promote the use of energy efficient sources - may refuse to buy energy from consumers at reasonable rates

Barriers to Greater Energy Efficiency Political Obstacles Powerful industries can oppose or block action aimed at increasing energy efficiency: - fossil fuel or carbon dioxide taxes - vehicle efficiency standards - minimum efficiency standards for appliances

Barriers to Renewable Energy Use Limited Supply Infrastructure Energy-efficient systems are not readily available -- rural areas especially, where they could be most economically viable Private firms will not bring product into new regions --> a market for energy-efficient products is never established Products are much more costly in countries where they are not manufactured, relative to local sources of energy

Barriers to Renewable Energy Use Quality Problems Solar and bioenergy systems lack standardization and quality control Systems can be improperly assembled or installed Service and repair may not be readily available in some areas

Barriers to Renewable Energy Use Insufficient Information and Training Consumers may lack credible information on these aspects of renewable energy options: - performance - reliability - economic merit Businesses may lack information on potential customers for renewable energy products

Barriers to Renewable Energy Use Lack of Money or Financing Renewable energy technologies have: - a long pay back period - lack of long-term financing at low interest rates

Barriers to Renewable Energy Use Pricing and Tax Barriers Renewable energy measures are not affordable when traditional energy sources are subsidized Electricity prices in rural areas are not reflective of the cost for the electricity grid extension

Barriers to Renewable Energy Use Regulatory and Utility Barriers Utilities impede renewable energy development by: - adopting ridiculous interconnection requirements - refusing to pay reasonable rates - establishing burdensome application procedures

Barriers to Renewable Energy Use Political Obstacles Many governments favor conventional fossil fuel sources Banks have traditionally not lended to renewable energy projects Electric Utilities oppose market reserves for renewable electricity

In Summary Many barriers limit energy efficiency improvements and renewable energy adoptions worldwide for many reasons: - technical in nature (limited availability of products or quality problems) - human behavior (purchase products based on least initial cost) - flaws in the ways markets operate (energy price sunsidies, energy prices do not include full cost, or poorly informed consumers) - public policies and institutions (lack of financing, poor regulations, or disadvantageous tax policies)

Critique of Barriers Chapter Nick Gasnier

Questioning of Barriers Examination of assumptions made concerning the circumstances which exist prior to the introduction of the barrier to energy efficient measures Assumptions made about the effect of certain actions would have

Limited Supply Why do limited infrastructures exist ? Assumes such an infrastructure would be used if it did exist . Most consumers use what is most familiar to them

Lack of Money Says renewable energy technologies must be offered longer-term financing at low interest rates . Assumes renewable energy technologies would be used if the producers/consumers of them received such loans .

Quality problems Why do “energy efficient” products not live up to performance claims ? Improper use Manufacturing flaws Installation problems Dangerous to assume that quality problems result only from producer or consumer actions .

Misplaced Incentives Producers and consumers frequently have conflicting monetary interests . Assumes that they would take more energy efficient measures if they were both to receive financial benefit . Good to explain barrier with a concrete example :

Common example of Misplaced Incentives rental buildings (office or residential ) usually have separate payments for monthly rent and utility bills Owner resp for “up front” equipment purchasing costs Tenant resp for monthly bills Include monthly energy costs with monthly rent ? Need for consolidation of energy monitoring .

Pricing and Tax Barriers Should gov’t continue to subsidize conventional energy production ? Assumes that subsidizing energy production makes it more available to consumers .

Insufficient Info and/or Training Says many consumers are unaware of renewable energy options Assumes that consumers would use these renewable energy options if they were aware of them

Regulatory and Utility Barriers Assumes utility companies would promote more efficient energy use if they had financial incentive for doing so .

Political Barriers Assumes that powerful industries are able to control political policies . Example : Auto producers oppose vehicle emissions standards or taxes on “gas guzzlers” .