Good article in The Economist last week exploring the reasons why energy efficiency is not pursued more vigorously as an avenue for investment. The bottom line reasons why it should:
- It returns 10% to 17% annually. (The S&P 500 historically gets 12%.)
- It requires reduces carbon emissions.
- Individuals tend to demand a return on investment in the neighborhood of 30%.
- When individuals have a seemingly endless supply of cheap fuels they put off efficiency measures.
- Individuals get overwhelmed with their options.
It has been increasingly pursued by corporations as an avenue for cost-cutting and social capital. Corporations are also more enthusiastic about a 10% annual ROI.
One player in the game has been surprisingly reticent. Power companies in most places profit by selling more power, not by encouraging people to conserve. This is starting to change for a number of reasons including these:
- Providing peak power is increasingly expensive.
- Some states are exploring decoupling profit from units of power sold.
- Mandates that require a portion of the power portfolio to come from renewable sources.
There's a discussion of carbon taxes and how they might shift the game farther, but I'm going to need to take a bit longer than my lunch break to read through that.