My Productivity Guy chimes in:

Jonah – I know it was probably a throw away line, but in your “Drug War and Other Problems” post you said that “energy efficiency always makes sense to me.” Not always. Any energy efficiency program necessarily involves some cost, and whether it makes sense from the consumer’s point of view depends on whether the lifetime, present value of energy cost savings that result from the program exceed those costs. The answer will vary by program and customer circumstances, but in some cases the answer is no.
The issue is basically the same from society’s point of view, except now costs are compared to the sum of energy cost savings and “environmental externalities” that are mitigated when energy use declines. The big environmental externalities are pollution and climate change, but how these are valued is a subject of great debate, to say the least. Environmentalists can come up with outlandish valuations of these externalities to justify almost any energy efficiency measure, but that obviously doesn’t mean they’re right.
The good news is that lots of energy efficiency programs do make sense. For example, many utilities have incentive mechanisms in place to get customers to adopt energy efficiency (also called “demand side management” or DSM) measures i.e. utilities have the opportunity to make more money by getting their customers to become more energy efficient. I don’t believe any utilities currently try to justify the worth of any these programs to their regulatory commissions by including estimates of environmental benefits – the programs are approved for incentive treatment only if they make sense from a consumer’s point of view. More and more utilities are also trying to make a business out of encouraging market-driven DSM, which is a good idea.
Other than that, I agree with the gist of your post. I was also wondering whether you’ve seen this on the issue of drug use.
It’s by Lee Harris, so it’s thoughtful but long

Me: I don’t want to debate energy efficiency with Productivity Guy because he does this stuff for a living and I’m crashing on a deadline. And, yes, it was a bit of a throwaway line. But for the sake of argument, isn’t there some question begging here? I mean if energy efficiency isn’t, you know, efficient it isn’t really efficient? No doubt I’m missing something.

This does raise a peeve of mine I’ve never seen sufficiently explained. I often hear environmentalists say they’re “open” to nuclear power, but they think it’s often too expensive (this was Gore’s response when he testified on the hill). That sounds reasonable enough. But when such objections are raised to wind or ethanol the response is often eye-rolling about how such critics don’t understand the real costs of climate change etc. I haven’t followed the nuclear debate that closely since I went out to Yucca mountain a few years ago, but am I wrong for seeing something of a double standard here?

As for the Lee Harris piece. Lots of folks have suggested I take a look. I haven’t had a chance, but I will.