Energy and the New Reality, Volume 1: Energy Efficiency and the Demand for Energy Services Chapter 11: Policies to Reduce the Demand for Energy L. D. Danny Harvey This material is intended for use in lectures, presentations and as handouts to students, and is provided in Powerpoint format so as to allow customization for the individual needs of course instructors. Permission of the author and publisher is required for any other usage. Please see for contact details. Publisher: Earthscan, UK Homepage:

The demand for energy depends on the demand for energy services x the energy intensity of providing the services. The demand for energy services in turn depends on population, GDP/P, the cost of energy and lifestyle (which is affected by the cost of energy)

Limiting Future Population The only acceptable way to do this is to reduce fertility rates Fertility rates can be reduced by - reducing the demand for large families - increasing the educational level of and economic opportunities for women, so as to delay marriage - providing contraceptive and family planning services Large declines in fertility rates have been achieved in such diverse countries as China, Mexico, Iran and Tunisia during the past 2-3 decades

Figure 11.1: Fertility rates (children per women)

Reducing the Rate of Growth of GDP/P GDP is used as a proxy for human happiness However, once basic human needs are satisfied, increasing income increases our happiness largely by making as wealthier compared to other people As it is impossible to simultaneously make everyone wealthier relative to everyone else, trying to promote human happiness by promoting economic growth (once basic human needs are met) is doomed to failure while increasing environmental destruction that will ultimately cause great misery

3 key strategies for reducing the growth of GDP/P while increasing human well- being and happiness Promoting alternatives to GDP as an indicator of “progress” Forming alliances between governments and counter-consumption groups (such as voluntary “Simplicity Circles”) in engaging the public in a dialogue about alternative ways of thinking Promoting a shift to shorter working hours Promoting greater product longevity

Figure 11.2 Hours worked per employee per year

Figure 11.3 Decrease in hours worked per year

Figure 11.4 Decrease in hours worked per year

Strategies for making it easier for people to choose to work fewer hours and for companies to hire part-time employees Greater investment in public transit (so that fewer people need to own cars) and in affordable housing, thereby reducing the expenses that need to be supported by working long hours Reduction in the inequality of income (through more progressive taxation) Public financing of health care and disability insurance so that companies are indifferent as to whether they have, for example, 10 people working full time vs 20 people working half time

See: it is brilliant!

Increasing the price of energy

Figure 11.5 Correlation between electricity price and electricity intensity Source: Verbruggen (2006, Energy Policy 34, 1310–1317,

Promoting Energy Efficiency Standards and regulations Training programs for architects and building design engineers Development of comprehensive building retrofit programs (spanning years) Removing regulatory barriers Voluntary agreements with large industrial enterprises Technical assistance for small industrial enterprises

Promoting diets with less meat Remove all subsidies for livestock and fishery operations Impose stricter environmental and labour standards on livestock operations (thereby increasing private costs while reducing public costs) Educate the public about the health risks of high- meat diets

Research and Development The technologies needed to achieve dramatic reductions in energy use already exist However, there is still room for research and development to improve existing technologies, and especially to reduce costs

Key areas where R&D could be quite helpful are Vacuum insulation panels (expensive at present) Phase change materials Solar air conditioning Batteries and super-capacitors for PHEVs Development of light-weight yet strong materials Fundamental research pertaining to chemical processes and nanotechnology Research on how to maintain current yields in low-energy organic farming systems

Figure 11.6a: Energy R&D by IEA countries

Figure 11.6b: Energy R&D by IEA countries

Fig 11.7: Energy R&D by IEA Countries in 2006

Rebound Effect This is the tendency for initial energy savings due to improved efficiency to be reduced for the following reasons - a direct rebound effect due to the cost of energy services decreasing because less energy is needed (so that we demand more) - an indirect rebound effect due to spending the money saved from energy efficiency on other activities or services (which always require some energy) - a reduction in the real cost of energy due to reduced demand - transformational effects – changes in consumer preferences, alterations of social institutions and changes in the organization of production

Depending on economic circumstances, the energy use under consideration, and who is doing the estimating and how, the estimated rebound effect ranges from 1% to 25% (that is, the initial energy savings is reduced by 1% to 25%)

Reducing the rebound effect Push energy efficiency measures to the point where there is no net cost savings (i.e., where energy cost savings just offsets the cost of financing the efficiency measures) Promote efficiency measures that cost rather than save money, but that yield non-monetary benefits (i.e., high performance windows because they look nice and are easier to clean because the can be inverted) Increase the tax on energy as overall energy efficiency improves

The dilemma of economic growth The current world economy is structurally dependent on growth for stability, yet endless growth threatens climate catastrophe (and, to the extent that it is dependent on cheap energy and easy-to-extract mineral resources, is not sustainable) Tim Jackson, in Prosperity Without Growth: “Virtually no attempt has been made to develop an economic model that doesn’t rely on long term growth...we have no model of how common macro-economic ‘aggregates’ (production, consumption, investment, trade, capital stock, public spending...) behave when capital doesn’t accumulate... In short, there is no macro-economics of sustainability and there is an urgent need for one”

Peter Victor in Managing Without Growth: Slower by Design, Not Disaster: “Economic growth is the policy objective against which all other proposals must be judged... education policy... transportation policy... immigration policy... support for the arts....” We need instead to make reducing GHG emissions the policy objective against which all other policies are judged (at least in part)