Bedazzled by Energy Efficiency (2018)

Thus, fuel prices have to be affordable enough for poor people, but a moderately wealthy person can tolerate to pay double that to drive the same distance. Those a little further up the hyperbola can drive four times as far. And after a few years of exponential growth, we all can.

I've been wanting for taxes and other duties to be exponential shaped. Scale property tax exponential with the energy use of a house. Scale vehicle tax exponential to the car's fuel consumption. (You could require airlines to charge a sort of negative-percentage frequent flyer's discount as a tax, but that would be communism.)

My guess is with the right parameters for base and exponent, this system could be very just, ensuring that everyone can fly across the country to visit family, but weekly business flights become prohibitively expensive. And my hunch is that this would be a more effective way to reduce total energy usage without creating disastrous living conditions for anybody.

I do think that a low carbon future demands more imagination from us, a re-envisioning of prosperity, which is already underway. Working from home is one example, as is gaming and electronic social networking.

If your energy production is cheap enough in terms of variable cost, the producer might decide it's worth producing about the same amount at a lower price. If there are other energy users with enough price elasticity, the economy finds a new price where they pick up the slack.

So that idea isn't that the individual consumer drives more because they get better MPG, it's that individuals' demand for gas overall decreases, so industry, guided by price signals, uses more gas for cheaper air tickets or faster package delivery or something.

You've made the producer a bit less profitable, truly cut consumption in one sector, and provided some non-enviro benefits, but you haven't reduced overall consumption or environmental impact.

There are a few things that keep this from leading to total hopelessness:

- Elasticity isn't infinite and it doesn't have to always fully eat your efficiencies. People wouldn't take infinite trips if gas were free, and I suspect a huge change like a big country moving to electric cars really does have a net-beneficial effect on carbon emissions. You're just not guaranteed 1-for-1 efficiency-to-carbon-reduction.

- Lower demand could reduce production in the long term, as capital allocations get made, more than it does the short term. That is, even if utilities decide to keep existing coal plants going full blast when prices are down because variable costs are low, maybe they'll have reduced appetite to build new ones where they have to factor in fixed+variable costs.

- Not everything we're doing is energy efficiency. Gradually replacing our higher-carbon energy generation with lower-carbon methods reduces impact a different way from reducing consumption.

But it does make me think a carbon tax, ideally slowly phased in starting a long time ago, was maybe a better approach than it might look like: directly put economic decision-makers to work finding ways to cut the thing you don't want, instead of poking a complex system and hoping for the desired effect. Besides, charging for negative externalities is a better way to raise funds than charging for working or value added anyhow. It's just so hard politically.

There is also a place for non-economic policy here, e.g. if you want more everyday travel to use efficient mass transport rather than individuals' vehicles, governments just have to make the first move and put money into making the alternative systems complete, functional, and desirable to use.