Mind the Electric Gap

Thirty percent of U.S. electricity consumption could be erased through gains in energy productivity, according to the Rocky Mountain Institute. (Related: see R.M.I. chairman Amory Lovins‘s recent guest post.) The institute’s analysis arrived at electricity productivity stats for all 50 states by dividing each state’s G.D.P. by the kilowatt hours of electricity it consumed.

New York state topped its list. For each kilowatt hour of electricity (the equivalent of burning one 100-watt light bulb for 10 hours) the Empire State consumes, it generates $7.18 in G.D.P. Mississippi, squarely on the bottom of the electric productivity list, generates just over $3 per kilowatt hour. The R.M.I. claims significant cutbacks in carbon emissions could be made (pdf) if all 50 states could increase their productivity to match the top 10 most productive states (in descending order: New York, Alaska, Connecticut, Delaware, California, New Jersey, Massachusetts, Rhode Island, New Hampshire, and Colorado). They call it “closing the efficiency gap.”

See for yourself. To visualize its data, R.M.I. has launched a cool interactive map, where you can see how your state stacks up in energy productivity, and the potential carbon savings it could make through productivity enhancements alone.

The institute is currently at work on a follow-up paper that will offer some solutions for closing that gap. What kinds of strategies should they use?

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  1. IAS says:

    This fundamental message that I took away from the RMI report is that there are significant opportunities for efficiency gains, without any breakthrough technologies, simply by being as efficient as some states already are. While I agree that a large potential exists, I am not convinced that it is fair or accurate to use differences in electric productivity as an analog for differences in electric efficiency. In order for that to be a fair assumption then GDP would have to be an indicator of electrical service provided, which is not necessarily the case.

    Many economic activities can contribute to GDP, but have no relation to electrical services. Even after normalizing for industrial intensity and climate differences, some states likely receive more electrical services per dollar of GDP than others do–just as some people demand more electrical services than others.

    Consumers in some states may spend a smaller percentage of their income on electrical services (either because of climate, energy prices, or energy efficiency) and therefore have more money to spend in other sectors which are likely more labor intensive than electricity. Doing so creates more jobs, more economic activity, and more GDP. So, there is probably a bit of compounding: more efficient states use less energy, leading to even higher GDP, which further reduces energy intensity. Assuming that the relationship between electric productivity and efficiency is linear, as was done in this report, is incorrect. Assuming that the productivity gap can be filled in with efficiency is also incorrect since GDP may not be a robust indicator of electrical services.

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  2. Duncan says:

    #36 Energy Guy your spelling is as bad as your analogy. It took me a while to find the Jevons Effect from googling your “Jeavon’s Paradox”. This blog post is about ready for the dustbin of non-history anyway, so this is almost pointless…

    There’s nothing paradoxical about the Jevons Effect. It’s very straightforward economics. That’s why the snake oil being sold as “negawatts” can’t possibly be true.

    Under any circumstances.

    Even Anecdotally.

    Whatever anecdotal evidence RMI can provide of reduced consumption due to increased efficiency is a mirage. Increased efficiency can’t help but increase consumption; to argue otherwise is like saying that gravity is an upwards acceleration.

    If I replace my old lightbulb with one that uses 25% the electricity, does the new lightbulb cost the same as the old one? If it does, I’ll buy 2 or 3 lightbulbs and not bother turning them off except when I want to go to sleep. I may hook one of them up to a motion sensor by my back door to scare away burglars and stray cats. I’ll definitely hook one up to the electric garage door opener I’ll install with the savings from all my lightbulbs.

    Even if *I* stop buying new gadgets before I get back to my previous energy consumption, my lowered consumption will force Con Ed to lower rates and my neighbors will start using more electricity until as a group we’re using more than we started with.

    You think I’m being facetious? Look at all the office buildings in our city that leave the lights on all the time because the cost is so low there’s no benefit to going around and turning them off. If a company’s Director of Green gets the company to install systems to turn off those lights, the company eats the added cost to gain positive PR, not because it saves money.

    Better yet, buy an old house and upgrade the wiring. No one has ever brought an old building up to code by reducing electric capacity – every generation uses more electricity as marginal costs go down. If the costs weren’t going down, we’d still use as much electricity per capita as our grandparents.

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  3. Energy Guy says:

    Your own examples show your ignorance. Many people have bought CFL bulbs and their electric usage does indeed decrease. I know because I evaluate energy efficiency programs for a living — doing statistical analysis of the energy bills of many thousands of households in many different programs around the nation.

    You are quite clueless about this topic and also about economics (but it doesn’t stop the arrogance…).
    Do you even know what elasticity means and understand price and income elasticity effects? Do you think these elasticities are greater than 1? Think about it — who would add more bulbs and turn them on more often to the point of using 4x as much lighting just because their bulbs use less power? In the developed world, — people already have all the lighting they want and so elasticity effects are generally quite small — certainly far less than 1. I guess you would just drive all the time if you got a high mileage car?

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  4. Ike says:

    @#24 Steve…

    Actually, those of us in the South were really considering selling off Michigan. If we do so before all those automotive bailouts are paid, we can really get out from under a bad debt. You guys are costing me boatloads of cash.

    Granted, with your surplus of $7,000 homes on the market, now would not be the ideal time to sell, but I’m not sure that you haven’t bottomed out already.

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  5. endependence says:

    I found it interesting that three of the four states whose Republican governors are considering “refusing” stimulus funds from the federal government (at least as of February 20, 2009) are ranked as follows:

    Louisiana = Governor Bobby Jindal Ranks #34
    South Carolina = Governor Mark Sanford Ranks #47
    Mississippi = Governor Haley Barbour Ranks #50

    A large part of the American Recovery and Reinvestment Act is for “energy” expenditures ($65 billion in tax incentives and expenditures).

    Maybe these governors dislike saving energy as much as they dislike taking money that will help their citizens.


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  6. Fourcultures says:

    Mike @10 – I agree there’s a problem with energy efficiency in itself. People just spend the gains on more of the same, unless there is some other reason not to. The Jevons Paradox spelt this out in the Nineteenth Century. See also Energy efficiency – running to stand still?

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  7. brad bradshaw says:

    Although the premise is a good one, that the United States needs to improve electric energy intensity (GDP/kWh), which is certainly the case as we waste extraordinary amounts of energy relative to output, the comparison between states as a broad measure is too coarse and high level a measure to guide policy. The author’s would have us believe that New York is sitting pretty from an energy efficiency perspective compared to Mississippi, which is just not true. The real measure should be the potential ROI associated with energy efficiency improvements by state.

    It is important to make special note of the total mix of economic activities within a geographic area from which GDP is derived – i.e., although New York indeed has high energy intensity industries, it also has an uniquely high proportion of financial, service and other low electricity intensive economic activities which skews the results. We see this when making comparisons between countries over time, as the United States has been outsourcing GHG intensive activities, which makes us look better, but basically makes the global emissions problem worse.

    It may also be more instructive, in addition to relative efficiency ROI potential, to look at the causal factors that explain the identified variances between the states. The empirical evidence will point to the mix of economic activities as being the dominant factor that explains differences between the states. Fortunately, the second major source of variance will be the relative investment in electric energy efficiency over the years and the relative electricity prices. There has been overwhelming evidence, for example, that California has improved their relative electric energy intensity of the past twenty years, compared to other states, because of their significant investments in electric energy efficiency.

    Finally, it is absolutely critical that we adopt the principles associated with a sustainable economy as the basis for setting economic and resource policies in United States and the world. The sustainable economy paradigm is unique in that it embraces the policy of sustainable value creation, integrating from the outset human activities with the natural world. Only on this basis will we begin to see how our path forward is clear with respect to enriching the human experience around the world in a manner responsible to ensuring our well being and hat of the planet, upon which we depend, for generations to come.

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