Energy Conservation is a Waste

Abstract

As usual, sweltering summer heat which will be coming up soon
will have utilities calling on customers to conserve electricity. Mean-
while, President Clinton's budget calls for a 20% increase in spending on
energy conservation, for a total of $708 million. Mr. Clinton's budget
writers say this investment will save consumers and businesses over $10
billion annually by 2005.
But a little perspective is in order. In describing its budget two
years ago, the federal government said that its efficiency programs
would save the nation $30 billion annually by 2005. Somehow $17 billion
of those "savings" have already disappeared . The government is unable
to supply any evidence for its latest claims.
The truth is that energy conservation is virtually always a bust.
Consider the experience of England in the 19th century, when the coal
mines seemed to be emptying. Then the father of quantitative economics,
Stanley [evens, observed that greater efficiency produces more energy
use, not less. Jevons pointed out that Watt's steam engine was much
more efficient than its predecessor, the Newcomen engine. Because
Watt's engine was so efficient, demand soared. The engine ushered in
the Age of Steam, and world coal use skyrocketed.
The lesson resonates today. Governments around the world con-
tinually trot out new schemes to reduce energy use and promote effi-
ciency. Yet, as the Swedish economist Lennart Hjalmarsson notes, "I
have not managed to find one single evaluation of energy conservation
programs published in a scientific journal that shows the program has
managed to reduce growth in electricity demand at a national or regional
level and the program has been cost-effective."