McKinsey and others continue to produce reports that suggest that Efficiency, that rather plain sister to the much more desirable Innovation, should be invited to the ball. Their latest, states that using only measures that are net present value positive at a 7% discount rate, the US could reduce consumer demand by 23% by 2020 and save nearly US$700 billion in the process. Other reports have also suggested that savings of 25% or more have commercial payback periods. Steven Chu (US Energy Secretary) has had his department review the studies on home energy efficiency and discusses the results at Climate Progress. He states
“There are other reasons why energy savings aren’t fully captured. Market failures include inertia, inconvenience, ignorance, lack of financing and “principal agent” problems (e.g., landlords don’t install energy efficient refrigerators because tenants pay the energy bills).”
Economists do not like to hear that their sacred market is not perfect, and tend to be vocal in dismissing this sort of talk, despite the fact that successful retrofits are now very common. Our own example saved an extra 20% of electricity in a new house which had been designed to be efficient (more details here). Steven Chu is too polite to mention another uglier reason that the market doesn’t work, which runs the gamut from laziness to fraud, with two recent examples below:-
The first, which left me completely gobsmacked, is the case of the LG fridges which were designed to detect conditions similar to the testing laboratory and to use less energy, despite that fact that food might not be kept within temperature limits. The story was reported in the Sydney Morning Herald. This manufacturer obviously considers it more important to get a good star rating than to produce a fridge that is safe to store food in. Choice found the device during testing (though the governments testing lab didn’t seem to despite charging $10,000 to test a unit). Nick Stace who is Choice’s CEO politely calls this an extreme form of greenwashing; I’m afraid I consider it simply fraudulent. More amazingly the company, which has made misleading environmental claims twice before, has not agreed to recall the fridges but is trying to get away with refunding the extra electricity costs.
The second was discovered early this year. California changed the law to require a 5% reduction in the electricity use of incandescent light bulbs, and a study by Ecos showed that rather than re-engineering the bulbs, many companies just made them dimmer than the ones they replaced, sometimes by more than 10%! Again the companies involved do not seem to think this sort of behaviour is a problem, with one product manager stating “To make a brighter lamp, we would have had to decrease the bulb’s life or increase the cost of the product.” It was estimated that the extra cost would be 8 cents per bulb.
The more optimistic may hope that the market ignores minor efficiency improvements until they become significant, but I suspect that the short term profit motive and our own lack of interest in boring energy specifications drive companies to spend more on marketing rather than reengineering. If we want this to change we have to push for more regulation, or start paying attention when we buy appliances.
The CSIRO and the Australian Bureau of Meteorology have released a 6 page State of the Climate snapshot which is well worth a read. It is very understandable and shows that as an average Australia has warmed by 0.7 °C since 1960 with some areas warming 1.5°C to 2°C over that fifty year period. All other metrics from the number of record hot and cold days, sea temperature and carbon dioxide and methane concentrations are accelerating in the expected direction.
As to the future they state “Australian average temperatures are projected to rise by 0.6 to 1.5 ºC by 2030. If global greenhouse gas emissions continue at current levels, warming is projected to be in the range of 2.2 to 5.0 ºC by 2070.” Note that some areas can be expected to warm by 2 to 3 times that amount based on the last 50 years.
The rainfall patterns are also polarising as expected with less rain in the south and east and more in the north west and inland. The map below make clear that the populated area and much of the agricultural land are drying, and yes this trend is expected to continue.
