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Are we in the era of 'demand destruction'?

Are we in the era of 'demand destruction'?

Michael Graham Richard (@Michael_GR)
Energy / Energy Efficiency
August 6, 2014

As we often point out - in fact we did just yesterday - energy efficiency is a low-hanging fruit that we need to grab with both hands. The amount of energy that we're wasting is simply too big to ignore, and by cutting down on waste we'll cut down pollution and have a much easier time transitioning to clean sources of power. But if rather than simply making what we have now more efficient, we switch to something else that simply doesn't require energy from polluting sources, or requires a lot less, we get into another very important concept: Demand destruction.

Daniel A. Gross has a great piece about it at City Lab. Here's a choice cut that says it all:

Demand destruction occurs when you eliminate or substantially reduce the need for the resource on a near-permanent basis. Somebody trading in a Chevrolet Malibu for a Nissan Leaf won’t be buying any gasoline for the next 10 years.

And I'd say 10 years is conservative; chances are, the people who are buying electric cars today won't even go back to internal combustion engines ("once you go electric, you don't go back!" should be the industry's tagline). In a decade, electric cars should be a lot better and a lot less expensive, and oil prices should keep rising too...

This is what happens when people put solar panels on their roofs; they don't just use a bit less electricity from the grid than before. In many case, they cut their grid use massively, or even entirely, and on a pretty permanent basis. Ok, maybe they are still grid-tied and use the grid at night, but they might also produce a surplus during the day that they sell back to the grid, right during peak usage, when utilities make the most money (unlike at night).

The difference between plain old energy efficiency and demand destruction is a bit fuzzy; more qualitative than quantitative, except when you go from something to zero (that's clearly demand destruction).

For example, if everybody swaps their old inefficient incandescent light bulbs for much more efficient LEDs (trivia: Did you know that 70% of lightbulbs in the U.S. are still inefficient models?), this could be said to be just a boost in energy efficiency. After all, you still have lights using electricity. But the amount of electricity demand that would go away would be large enough that it would be arguable that this is demand destruction. LEDs aren't just a little bit more efficient than incandescents; they use 4-5x less energy!

All of this adds up - solar panels, efficient lights, electric cars, wind farms, etc - and with a few more years of exponential growth in all these green technologies, we'll start to really see them take out a big chunk of demand for electricity and fossil fuels.

So your homework is to think about ways that you can permanently reduce your demand for dirty sources of power. Can you swap your car for a bike? For an electric car? Can you go solar? Replace old, wasteful appliances and fixtures to permanently reduce your electric and water use?