GET SMART

Where were you when the corn ethanol revolution happened? Actually, that revolution didn’t turn out so well. Revolutions are supposed to be by the people, for the people kinds of things. But this one was by the US government, for the special interests. Not surprisingly, it ended up harming the people – in this case by contributing to a worldwide food crisis that exacerbated hunger in the developing world, social unrest and global recession.

Observing today’s hype about smart meters, I can’t help thinking about corn ethanol. Why? Because the benefits of corn ethanol, such as they were, didn't amount to sustainable, widespread energy or economic benefits. The numbers didn't add up – and I don’t yet see them adding up for smart meters.

Advocates of smart meters primarily tout them as devices that will benefit consumers. They emphasize the savings the meters will encourage by allowing consumers to ‘see’ what energy they are using; the idea being that more informed consumers will make better choices about their energy use.

This argument is only true up to a point. The deeper substance is often missed, which is that information by itself has not been shown to be a sufficient motivator for energy conservation (or for that matter, other outcomes that require behavioral change, such as weight loss or quitting smoking). In which case, the potential impact of this fundamental selling point is debatable. (I’ve written in some detail about the behavioral stuff here).

Another proposed benefit is that, where utilities have variable rates (electricity prices that vary during the day based on supply, demand, generation type and/or time of day), their customers can save money by adjusting their heavy electricity usage to occur during times of lower prices. This of course may not always be practical for the consumer, and in any case doesn’t apply to most of the Caribbean.

For now, it seems that the biggest beneficiaries of smart meters are likely to be the utilities themselves – the main benefit being that the electricity company can read the installed smart meters remotely from a central place, thereby eliminating the cost of sending out meter readers.

Billions of dollars are being spent by utilities and governments worldwide on smart metering programmes. Just this month, the British government unveiled an ambitious plan to install smart meters in all of the country’s 26 million homes by 2020, at a price tag of £8.5 billion. Their estimate is that the plan will allow the power industry and consumers to save £14.5 billion. Caribbean utilities are following suit with their own, much-smaller-scale smart metering programmes (but no word on what they’re spending yet).

But what about the energy and carbon balance of all this?

A smart meter is a complex thing. After it is designed it must be manufactured, using energy, materials and components (glass, plastic, metals, integrated circuits and so on). Then it must be packaged in a box (which itself must be manufactured), then shipped in a truck, train, ship or plane. Then it is taken to the customer’s home (more driving) and installed. At that point, after being responsible for a long chain of energy use and carbon emissions, the meter is meant to help reduce the customer’s energy use and carbon emissions.

In some cases, the smart meters will be designed to be linked up to in-home displays and also to other monitoring devices and systems connected to (or built into) electrical outlets or appliances. All this is so that a consumer can get a complete, detailed array of information about his or her energy use, at any given minute. In other words: more information – but also more devices, which means more materials, manufacturing, packaging, shipping, energy used and carbon emitted.

All of this raises a few questions.

What impact will all of these devices have when they finally get into the home and are plugged in or equipped with batteries (yet another device)? Will the energy savings and carbon reductions encouraged by the meter over its lifetime be sufficient to offset its own direct and indirect energy and carbon footprint?

Remember the paperless office? The widespread use of computers and digital imaging technology was supposed to eliminate paper documents by allowing us to digitize written communications. We would, the argument went, use far less paper because, thanks to technology, we wouldn’t need to. Well, that didn’t happen. On the contrary, according to The Myth of the Paperless Office, a book by Sellen and Harper published by MIT, the use of email in an organization causes an average 40% increase in paper consumption.

Smart meters will probably work out for the utilities that deploy them. But on the consumer side, this looks to be another example of trying to attack a problem of behaviour (how we consume energy) by throwing yet another device at it. And we already know how other examples of applying technology to behavioral problems have been working out.

BEHAVE

When we were children and our mothers, grandmothers or assorted aunts wanted us to stop acting like children, their command was “Behave!” When you heard that and got the look that went along with it, you generally shaped up. Or else. These days, the problem with behaviour is that no one pays attention to it any more (no, this isn’t a discussion about parenting; it’s about energy efficiency and conservation in the Caribbean).

The energy problem in a nutshell is that we need to find ways to supply more green energy – and to reduce our demand for it at the same time. So energy conservation and energy efficiency are vital aspects of the solution.

The thing is: our policymakers (and here I’m also referring to the consultants who write the policies and plans that the politicians approve) have quite often misunderstood the demand side of the problem – and have traditionally framed it as being comprised of two separate things, one having to do with people and the other with technology.

For example, according to a national energy policy document published this year by a large CARICOM country, energy conservation is defined as “practices and actions that reduce the amount of energy that is used”, whereas energy efficiency is “changing technology so that less energy is used to accomplish the same task.”

In other words:

Conservation = Behaviour
and
Energy Efficiency = Technology

So, according to the above formulation, if I walk to the bar instead of driving there, I would be reducing my energy use by conservation. But if, on the other hand, I bought a new, more fuel-efficient vehicle that gets far better gas mileage than my current vehicle, I could still drive to the bar – but I would also use less energy, so I achieve the same result, thanks to technology!

New technology is so much sexier than better behaviour.

Except that: a British economist named William Stanley Jevons explained, some 144 years ago, why this would not actually be the case. “It is wholly a confusion of ideas”, Jevons wrote then, “to suppose that the economical use of fuel is equivalent to a diminished consumption. The very contrary is the truth.” In his book The Coal Question, published in 1865, Jevons pointed out how James Watt’s steam engine, by improving on the previous design, provided much better fuel efficiency – thereby causing England’s consumption of coal to soar. His observation came to be known as the Jevons Paradox.

The Jevons Paradox is explained by what is called the rebound effect; an economic theory which says that if the cost of a resource is reduced due to increased efficiency, people will consume more of the resource (or the services dependent on the resource) than previously, thereby offsetting (partially or entirely) the effect of the efficiency improvement.

For example: a colleague recently told me the story of his neighbour, who never used his outdoor lights at night – until he got energy efficient compact fluorescent lamps. Since then, he has been leaving the lights on outside, because he knows he now has “energy-saving bulbs” inside. Well, guess what the overall effect on his electricity bill is likely to be? (This is an example of a direct rebound effect).

Or, take television. I want a new TV. I have a 32” Sony cathode-ray tube model, and I’m interested in a sleek flat-panel set. Flat-panel plasma or LCD TVs are more energy efficient than their bulky CRT counterparts; they use less electricity per inch of screen. But what are the chances that I will replace my 32” CRT with a 32” flat-panel? More than likely I (and many other buyers of new TVs) will upgrade screen size as well, which then causes the better energy efficiency per screen inch of the new TV to be offset by the larger number of screen inches. And, you know what? Flat panel TVs look really sexy when they’re on, so maybe I’ll inadvertently leave my new TV on more often than I did the old one. This all adds up to using more electricity, not less.

The important point here is that these are not isolated examples. A growing body of research indicates that the rebound effect is a universal behavioural response, one that gives rise to energy consumption outcomes that are quite different to the predicted ones.

So how is this relevant to Caribbean energy policy?

To date, I have seen no energy policy published in the Caribbean that makes any reference to the rebound effect or to behavioural factors in relation to energy efficiency outcomes. This omission causes us to get our sums wrong.

We can calculate, based on the technical efficiency differences, the energy-saving effect of new technology (importing fuel-efficient vehicles; replacing incandescent bulbs with CFLs and so on), but without taking behavioural factors into account, our estimate of the amount of energy to be saved will be incorrect. We need new equations, which are:

Conservation = Behaviour
and
Energy Efficiency = Technology + Behaviour

Who’s sexy now?

I’m writing some more on this soon, but here’s some reading on the rebound effect. http://en.wikipedia.org/wiki/Rebound_effect_(conservation)