Evaluating Industrial Conservation Programs: An Interdisciplinary Approach

Abstract

Proponents have touted utility conservation programs in homes, businesses, and factories as powerful strategies for conserving our nation’s energy resources and reducing our long-term dependence on foreign oil. When installed in a factory, for example, a conservation program can improve the operating efficiency of a manufacturing plant and its technical process. While many of these conservation strategies may be commendable, one must not be too optimistic in estimating how much energy can be saved by using them. By improving the efficiency of a particular industrial process, we reduce implicitly the cost of using energy to produce effective work. Once the cost of using energy is reduced, a producer may become more energy-intensive, much like a producer who hires more workers once wages decline. The increase in energy usage tends to offset the earlier reduction which many have resulted when operating efficiencies were lowered through conservation programs. This paper recommends techniques to estimate program offsets.