Paul Komor

Points of Interest:
Individuals pursue several goals when making energy-related investment decisions—for example, minimizing the time to make a decision, spending the least amount upfront, or minimizing risk by obtaining the same item that worked before. Very few pursue the goal of minimizing life-cycle costs (the sum of capital and operating costs over the life of the equipment), which energy efficient technologies achieve.

Arguments against changes in Federal policy include: attempts to increase energy efficiency through regulation or other similar methods may have unanticipated administrative or other costs; past Federal efforts to implement energy efficiency have had mixed success; current levels of energy efficiency reflect consumer preferences given existing economic incentives and levels of information; and there is often little consensus on the best methods to promote efficiency.

The Office of Technology Assessment (OTA) identifies a number of policy options to promote greater use of cost-effective energy efficient technologies. These options make use of several strategies, including:
1) Changing the incentives for efficiency. Individuals often have few or mixed financial incentives for energy efficiency. Federal policies can address this issue by enhancing these incentives, for example, through pricing changes and tax policy.
2) Federal leadership through procurement, public recognition, and demonstration. The Federal Government has considerable purchasing power due to its size, and this power can be used to increase the sales and distribution of energy efficient technologies.
3) Research, development, and demonstration (RD&D) for efficiency. The Federal Government conducts RD&D on buildings technologies, and changes in RD&D planning and execution could help ensure the applicability and usefulness of the results.
4) Encouraging utilities to invest in efficiency.
Utilities are well-equipped to implement efficiency, and Federal actions such as technical support for least-cost planning can aid their efforts.
5) Mandating efficiency through codes and standards. In some cases regulation may be needed to set minimum efficiency levels, and such regulation may be most appropriate at the Federal level.
6) Improving information and awareness of efficiency opportunities. The Federal Government can provide information to enhance and support other efficiency programs such as rebates and incentives.

The role of energy in economic production is also changing as the structure of the U.S. economy changes. For many years, the conventional wisdom held that energy use and gross domestic product (GDP) were immutably linked, moving in lock step. We learned from the energy shocks of the 1970s, however, that ingenuity and innovation can substitute for energy supply when the price is right. When energy prices rise, people respond over time by shifting their market basket of purchases and by developing more efficient ways to provide energy services.

Understanding these trends is essential to grasp the complex interdependence of energy with broader national issues of economic vitality, national security, and environmental quality. Indeed, a critical lesson of the 1970s and 1980s is that energy policy must integrate with these three issues.

However, the buildings sector presents some distinct policy challenges for capturing these savings. For example, buildings in the United States are technically complex; the building industry is decentralized and fragmented; and buildings are subject to a mix of Federal, State, and local requirements that can frustrate or even discourage improvements in energy efficiency. The nature of buildings, with occupants that are often not owners, creates market imperfections that can be difficult to overcome. Finally, past Federal efforts to improve building energy efficiency have a mixed record, and tools for measurement and evaluation of energy savings are imperfect.

International comparisons of energy efficiency should be viewed with caution and, where possible, the variables and assumptions underlying such comparisons should be understood. Differences may indeed stem from differing energy efficiencies but may also be related to temperature settings, appliance saturation, and other, nontechnical factors that influence energy use.

This OTA assessment focuses on technical means to improve the efficiency of energy use in buildings. Technology, however, is not the only determinant of building energy use. Human behavior-how people operate equipment, how many children they bear, where they reside, and so on-can strongly influence building energy use as well.

Human behavior can be studied on two significantly different levels: the observable behavior of people and the underlying values and attitudes that drive those behaviors.… (more)