Energy Efficiency Robert U. Ayres, Prof. Emeritus, INSEAD
Energy Efficiency – Why? • Economic importance • Where do we stand? • What can be done?
Labor and active capital cannot function without energy • Useful energy (exergy) can do work and is productive. Waste energy is unproductive and may be harmful. • Useful work = total exergy input X conversion efficiency. • Economic activity is strongly correlated with efficiency. • Higher efficiency => lower prices => increased demand => economic growth. • Possible problems “rebound” and “backfire”. Example: energy use by ICT. Counter example: housing, automobiles, where energy cost is small compared to other costs. Economic Importance
The economic system can be divided into four major sectors. They exhibit very different efficiencies: Current US efficiencies are estimated as follows: Where do we stand?
Education; increase understanding • Supply side: encourage CHP (compare Denmark vs. ROW), subsidize renewables for a while (Germany) • Demand side: stop energy consumption subsidies; discourage private cars, encourage ESC, car-sharing, public transport, bicycles, etc. • Standards for products (e.g.California vs. ROUS); • Level economic playing field: taxes to reflect cost of externalities; active anti-trust policy What Can be done?