Margaret Walls, from Resources for the Future, discusses in a blog on the Wall Street Journal website about the “energy efficiency gap” and argues that governments should support more experiments “in the field” that bring to light what works and what doesn’t and at what cost. I would assume that Task 24, relating to behaviour, from the IEA’s Demand Side Management Energy Efficiency implementing agreement is also working in this area.
Why Won’t People Invest in Energy Efficiency—Even When It Saves Them Money?
Energy analysts have long noted that people fail to invest in energy-efficiency improvements that seem to more than pay for themselves in operating cost savings. Whether compact fluorescent and LED light bulbs or Energy Star-rated furnaces or fiberglass insulation, it has been hard to get folks to pay a premium up front for savings over a product’s lifetime. Economists call this the “energy paradox” or the “energy efficiency gap.”
Nowhere is the gap more prevalent than in homes, which account for about 20% of U.S. energy consumption. In a recent study, my colleague, Karen Palmer, and I found that 22% of homeowners who had home-energy audits didn’t follow up at all on the cheapest of the recommendations, air sealing and weatherstripping, and 36% didn’t follow up on insulation recommendations. And these are people who spent time and money on an audit, which only about 3-4% of homeowners have done.
A recent study of a federal government audit and retrofit program has led to a heated discussion over its findings that the program is generating smaller than expected energy savings at relatively high cost. But largely ignored in the debate has been how hard it was to get homeowners to sign up for the program in the first place, even though the audits and about $5,000 worth of improvements were completely free.
These observations are disappointing, because improvements in energy efficiency will be necessary to make progress on climate change. States are already making plans for how energy-efficiency policies and programs will help reach the targets in the Environmental Protection Agency’s new Clean Power Plan, which will regulate CO2 emissions from power plants. But the success of those efficiency programs depends on consumers making lots of choices, big and small, that lead to reductions in energy use. If those choices aren’t made, state governments and electric utilities may end up spending money with little to show for it.
Before ingraining new policies and programs, governments should support more experiments “in the field” that bring to light what works and what doesn’t and at what cost. Utilities have done engineering studies but those studies don’t tell us how to get people to change their behavior and adopt energy-saving technologies. The changing behavior nut is hard to crack—we need to know what works to get consumers’ attention (maybe the hardest part of the problem), give them the information they need to make smart choices, and provide incentives that don’t break the bank.