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The paradox in energy conservation

To conserve or not to conserve: as easy as a roll of the dice?

I have been desperately trying to catch up on current affairs and news that I missed while I was away without access to the outside world in India for almost half of March. Skimming through The Straits Times, I try to look out for interesting articles on issues that interest me, as well as issues that I could write about here. I found an article, written on 15 March (just one day after I flew off to India), with regard to a paradox that one often encounters when championing environmentalism: why is it that despite knowing that green technology can save money and energy, so little investment goes into it?

Tilak K Doshi of the Energy Studies Institute of National University of Singapore suggests several reasons, examining it from the viewpoint of an economist. Usually, economists deduce that when acting rationally, this paradox occurs if there is market failure (in terms of imperfect / lack of information about such technologies) or if "objective cost-benefit calculations" have already been done to indicate that such technologies do not really lower costs and energy consumption. However, it is also rational to suggest that because the cost of adopting these technologies "are likely to fall as the technologies become more commonplace in the future", it is better to "wait and see".

In addition, if investments in green technology cannot be recouped or if benefits cannot be reaped in the short term or tangibly, there might not be incentives to invest. The article uses the example of a house owner selling his home: if investing in energy-saving appliances would not allow him to charge more when he sells his home, why bother spending that extra money? If considering this vis-a-vis energy savings leading to lower bills, both forms of thinking make perfect sense... so how does the home owner reconcile the differences? The writer proposes "develop(ing) an audited home energy rating system to give house buyers and renters reliable information about their likely savings on energy bills", which would bridge the differences nicely.

So economics can still be applicable in solving some of these nitty-gritty problems, even though some have suggested that it is the economist's way of thinking (for instance, profit-maximisation hence resulting in the concealing of hidden costs on the environment) throughout the past century that has created the environmental problems we face today.