RFF on TV: FOCUS on energy conservation

A new RFF study, to be published in late 1977, is concerned with how industrial societies use energy. Material from this study was used as a jumping-off point for a discussion of energy conservation in a recent television program produced by RFF. The participants in the discussion were Roger Sant, a consultant who was formerly with the Federal Energy Administration in charge of energy conservation and the environment; Jack Carlson, vice president and chief economist with the U.S. Chamber of Commerce, former undersecretary of the Interior in charge of energy and minerals; and Joel Darmstadter of RFF, who is a coauthor, with Joy Dunkerley and Jack Alterman, of the study on which the program was based. The moderator was Bonnie Angelo of Time Magazine. Below is an edited excerpt of the transcribed discussion.

ANGELO: President Carter has said that in energy, ours is the most wasteful nation on earth. We use twice as much energy per person as other industrial countries, such as Germany, Japan, and Sweden. There's no argument about his figures, but there is some argument about the basis for comparison, the suggestion that all industrial countries function in exactly the same conditions.

Joel, since it's your study that we're using as our jumping-off point, how does the United States compare to the other industrial countries?

DARMSTADTER: Well, Bonnie, President Carter is statistically unimpeachable when he observes that, per capita, the United States does consume considerably more energy than a number of other highly advanced capitalist industrial economies. With due respect, where I would probably differ with the president is the implication that these differences in energy use are necessarily indicative of energy waste in our society.

CARLSON: I agree with Joel. One of the things that we did in this country as an act of public policy was to keep energy prices very low. For example, we kept natural gas prices well below market, and because we did that, we consumed a heck of a lot more because we treated it as a very cheap resource, and thereby overconsumed. Also, we made it impossible to mine as much coal as we would have otherwise mined out of Appalachia; and thereby, because we didn't increase the supply of other energies within the United States, and also because we're consuming more, we became more dependent upon foreign oil. And that exacerbated the problem we have today, where we're worried about foreign countries cutting us off or keeping the price going up.

Clearly, we've got to change this and move toward policies that encourage each consumer to conserve, and also to increase production of energy sources that are plentiful.

ANGELO: Roger, you've worked both with energy conservation and with the environment. As Jack mentions, we've got to turn to other sources. What kind of tradeoff does this mean in terms of the environment?

SANT: Conservation really is now being viewed as a source of energy. This is not a value judgment or a life-style change, but rather an investment in efficiency. And I think when you look at conservation in that sense, it's probably the most exciting new source of energy we have, and certainly has no negative environmental conse-quences, mostly positive.

We're really saying there is an opportunity within this country to develop a whole new source of energy which will come from more efficient industrial processes, more efficient automobile engines, more efficient appliances, none of which have anything to do with a value judgment about whether I waste or you waste or whether we consume more than the other guy. It's just an opportunity for us to turn our technological forces in the direction of achieving some of the things that have already been achieved in Europe and other countries.

ANGELO: Let's go kind of sector by sector of the study, the definitive work on the comparison between how our country and Europe handle the same problems. First, let's go to transportation.
Joel, you give us what the findings are in the field of transportation.

DARMSTADTER: Well, the United States consumes about 25 percent of its national energy budget on transportation. In Western Europe the figure, typically, is between 10 and 15 percent. A lot less energy goes to transportation.

Now, part of the reason for that difference is the fact that, as a result of these differences in prices to which we've both referred a moment ago, Europeans are driven toward more efficient vehicles. Their cars, typically, are about 50 percent more fuel efficient than our cars.

But there are a couple of other factors that we need to take into consideration, and one is that the United States is a much larger country. It is less densely populated than many foreign countries; as a result, we rely on cars to provide a necessary service in our society to a much greater extent than do the Netherlands or Britain or Germany.

But there are other aspects of transportation that are more deeply rooted in the nature of our country and our society and our geography which are going to be more difficult to overcome, and these are the kinds of things that I don't think ought to be ascribed to waste.

SANT: But, Joel, you know, ever since 1974, we've increased the miles-per-gallon of our cars by 50 percent. That's not a change toward smaller cars, that's the same kind of car that we've always been driving.

But talking about pricing, the price of gasoline has gone up quite considerably in recent months. It hasn't seemed to slow down consumption one whit. So how do you feel that pricing's going to have an effect?

CARLSON: You have to see what would have happened if you had not had these price adjustments, and especially the price adjustments that the President and the Congress are talking about, and the impact upon the cars you choose.

Now, it has turned out the mix of cars has changed. There are more compacts and subcompacts, as a proportion, being purchased than four years ago.

ANGELO: Ours have been, on an average, almost twice as heavy as European cars. Isn't that what it's been in the past?

CARLSON: They're considerably heavier, on the average. But there is some life-style change that will occur. For example, I think we see it already with our cities. There's more interest in rejuvenating the central part of the city, or living closer in. Because it costs you more to commute, not only in time, but, in this case, in energy costs. Consequently, I think cities will spread less rapidly than before—before we had this marked increase in energy prices.

But the key thing is, I think, freedom of choice. Given the increased scarcity of energy, you must go the price route, as opposed to having government dictate our life-style, of what we will or will not do. That's very important.

SANT: But that's a judgment, Jack, that you and I know is not going to be that easy to make. I mean we have suddenly found ourselves with prices 50 percent hisher than what we had experienced, and just to say, "Oh, well, the right way to go is the price way," ignores the sense of you and me as consumers out there saying, "Wait a minute. I don't want to do that."

ANGELO: You would be in favor of more regulatory standards?

SANT: Well, I think both need to happen.

ANGELO: Well, I'd like to know from Joel how this whole dilemma is addressed in Europe.

DARMSTADTER: In the automotive area, in the transportation area, we've already alluded to the fact that there are enormously higher taxes on gasoline . . .

ANGELO: And not put on for conservation purposes, as I understand it.

DARMSTADTER: Yes. It's very interesting that the genesis of these policies in Europe was neither for energy conservation nor for environmental protection. These policies were primarily triggered by a need for government revenues. They had, fortuitously, but unwittingly, the result that the pattern of energy usage in those countries appears to be considerably more conserving. But it's nice to be able to remember that these things have not happened as a result of a sort of enlightenment and foresight, which doesn't make the lesson any less applicable to the United States, but it's a good thing to keep in mind.

ANGELO: So, what do you do about bringing down the use of home heating, of space heating?

SANT: Well, it turns out that we're now building homes that are much more efficient than we were building five—ten years ago. We now have federal standards that will be imposed, probably in the next two years. Our present estimate is that they'll be running 40 to 50 percent more efficient than the homes built just a couple of years ago.

ANGELO: What's accounted for this?

SANT: Well, it's just—it's greater use of insulation, better use of overhang, better siting of the home to take advantage of solar—you know, passive solar kinds of things, better efficiency overall in the construction of the house. And they're not very elaborate, exotic things.
Savings in commercial buildings are even more pronounced. The new federal building up in New Hampshire is about 60 percent more efficient than any building we've ever built in the federal—the commercial building market.

DARMSTADTER: There's an interesting aspect, going back to the relative reliance on the free market or on government regulations, in the insulation area. There are very encouraging figures on the degree to which Americans have in the last couple of years, on their own devices and at their own initiative, chosen to beef up the insulation in their homes. It's something like 15 percent of owner-occupied houses have apparently added attic insulation and storm windows and things of that sort. But nevertheless, that doesn't mean that there is no role for government, because there are a number of persons in the country who are not going to be affected by these trends. People who rent apartments for instance. There's nothing in it for them unless there's some device that induces the landlord to upgrade the insulation in those dwellings.

ANGELO: They put the price on their rent. Isn't that what we normally find?

CARLSON: Well, that's the difficulty that we were talking about before. Increasing price has an income effect, and we have to adjust to it.

But I'd like to follow up on the insulation side. The biggest thing the government can do is bring to the attention of the householder who really hasn't scrutinized his bill that closely and hasn't considered the advantages of insulating, to show him those advantages, and he'll respond to the market prices as he sees them. I don't think this heavy-handed regulation need necessarily be imposed upon consumers, but to let them know what's in their self-interest, and then I think you'll get the improvements.

CARLSON: I wouldn't mind if the person were required to specify what the insulation conditions were in the house. But to have the federal government reach all the way through our financial structures, right down to the person selling his home, to set up a heavy regulatory structure to mandate certain standards that would have to be checked, yes, I'm opposed to that.

ANGELO: But there are regulations controlling such things as wiring and plumbing. Is this that different from that?

CARLSON: Not nationally, except a little bit in the VA area. But generally. . . .

ANGELO: So you're saying that, what gets done—that could be done on a local zoning, if it's done.

CARLSON: Surely. And educational. I think there's a very big payoff for the educational side, to let people know what their self-interest is. And change will come about from that far more than any of these other approaches we're talking about, where the government would mandate certain things to be done.

SANT: You know, I don't think we any longer have the privilege of saying, "Well, it's one versus the other." I think we're going to need all those tools, and if we ignore any one of them, I don't think we'll get the job done.

ANGELO: Joel, I'd like to know just a little bit more about the study that you've done. You've made the point that the United States has different factors involved in its use of energy.

DARMSTADTER: I think it is a fact, and it's brought out in our study, that per unit of industrial output, energy in European countries—energy consumption is a lot less than it is in United States. But let's keep in mind that business firms look at the bottom line, which is a dollars-and-cents line, not merely an energy line. And there's substitutability at times between energy resources and other resources, such as labor and capital. So that in the French aluminum industry, for example, they do use less energy per ingot of aluminum produced than we do, but they also use more man-power, person-power, labor, than we do. So, there's a tradeoff, apparently, in the aluminum industry.

And I have no reason to think that, pervasively, the United States is, dollars-and-cents terms, vastly less efficient or vastly less competitive than our foreign counterparts. Now, there are exceptions to that, of course.

So, I think, in the industrial use of energy, you've got to look at economic efficiency along with energy intensity.

The Program from which this discussion was excerpted was one of a series entitled FOCUS, produced cooperatively by RFF, the Carnegie Endowment for International Peace, and the Brookings Institution, and distributed Public Issues Network to 125 cable TV stations. A radio version was distributed by the Longhorn network to 95 educational stations across the country. Videotape cassettes of the FOCUS programs are available from Public Issues Network, 1755 Massachusetts Ave., N.W., Washington, D.C. 20036.