ENERGY EFFICIENCY AND ECONOMIC FALLACIES

The sharpening energy efficiency debate has revived claims that the apparent savings from using more efficient technologies would be largely offset by the macroeconomic response - the tendency to use more energy services because they are made cheaper. When energy price or availability constrains demand this is correct. In more normal circumstances, it may be true for efficiency changes which occur as part of general economic trends, but not for policy-driven measures aimed at bringing more efficient technologies into imperfect markets. In such cases there will usually be real net energy savings only slightly smaller than those suggested by a simple engineering analysis, and clear economic benefits. © 1990.