Green Deal: a waste of precious resources
Jun 24, 2015
Bishop Hill in Climate: Parliament, Climate: WG3

I've always had my suspicions about the way that energy efficiency is presented as an easy way of reducing carbon emissions. For a start there's the Jevons paradox: the observation that efficiency gains tend to lead consumers towards enhanced performance. In other words, as houses become more efficient we tend to keep them much warmer. Being someone who lives in a cool (or even cold house) and wears jumpers all the time, I find modern houses stiflingly hot, but most people are much happier to wear shorts and t-shirts indoors.

But even leaving this kind of thing aside, whenever I have done the sums on my own house I've always come to the conclusion that investment in energy efficiency is not going to provide a good return. It's therefore interesting to see that my back-of-a-fag-packet calculations seem valid across the board. A new, and by the looks of it carefully controlled study of homes in the USA has found that the much touted gains from energy efficiency measures are actually relatively small and certainly less than the cost of installation.

The researchers found that the upfront cost of efficiency upgrades in the Michigan program came to about $5,000 per house, on average. But their central estimate of the benefits only amounted to about $2,400 per household, on average, over the lifetime of the upgrades.

The program did help households save energy: after the upgrades, homes used 10 to 20 percent less energy for electricity and heating. But, notably, that was less than half of the savings that had been predicted beforehand.

In the UK, enormous sums of money have been ploughed into energy efficiency, most notably through the LibDems "Green Deal". Indeed most people's phones have been ringing off the hook with people touting subsidised home insulation schemes. But assuming that the results of the US study apply here too then one would have to conclude that the Green Deal has been a complete waste of precious resources. It's another epic fail by big government.

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