Issue link: https://cp.revolio.com/i/488587
16 | THE DATA CENTER JOURNAL www.datacenterjournal.com california Dreaming As California goes, so goes the na- tion—at least according to a popular say- ing. But don't forget that California is also flat-out broke when one considers its debt on a GAAP (generally accepted account- ing principles) basis: some $770 billion, according to non-partisan State Budget Solutions. Of course, the U.S. federal government is hardly a paragon of fiscal virtue, but increasing regulation means increasing costs for both businesses and governments, and boosting the burden on businesses when the economy remains so delicate is a dubious endeavor. According to California's official website, "e [state] Energy Commis- sion's energy efficiency standards have saved Californians more than $74 billion in reduced electricity bills since 1977." But like so many government statistics, this number is rather malleable. In a publica- tion entitled "California Energy Commis- sion 2012 Accomplishments," the claim was a bit tamer: "Since 1976, the Energy Commission's building energy efficiency standards (Title 24) have saved Califor- nia consumers over $30 billion." And the new 2013 standard are projected to save a rather meager $1.6 billion over the subse- quent 30 years. So, the actual amount of savings is up in the air. Furthermore, the Energy Commis- sion claims that "[t]he success of standards and other energy efficiency efforts is a significant factor in California's per capita electricity use remaining flat over the last 40 years while the rest of the country's use continues to rise." e critical phrase here, however, is "per capita." Perhaps uninten- tionally—or perhaps not—the commission said "the rest of the country's use contin- ues to rise," which seems to refer to overall consumption, since it doesn't use the same per-capita qualifier. Of course, such a comparison would be unfair, because the population is increasing. According to the U.S. Energy Information Administration (EIA), total per-capita primary energy consumption (which includes "petroleum, dry natural gas, coal, and net nuclear, hydroelectric, and non-hydroelectric renewable electrici- ty") actually fell significantly between 1978 and 2011 following growth between 1949 (the earliest data) and the 1970s. In 1978, the per capita consumption was about 359 million BTUs; aer fluctuating (but never exceeding 350 million BTUs) since then, it bottomed at about 308 million BTUs in 2009 before recovering slightly to 313 million in 2011. Additional data suggests that this metric has wavered or decreased since 2011, meaning the California Energy Commission's claim is at best misleading. Granted, however, California is near the top of the 2012 state rankings in lowest per-capita energy consumption accord- ing to EIA data, but a clear analysis of this list is difficult. Low-population states like Wyoming and Alaska have the highest consumption, but disparate states like Vermont, Hawaii and Arizona are virtually tied with California. So, the role of Cali- fornia's energy-efficiency regulations in its status relative to other states is unclear. JeVon's ParaDox Even assuming Title 24 has improved the state's energy efficiency, its role in maintaining steady consumption is dubi- ous. Note again that national per-capita energy consumption has fallen since peak- ing in the 1970s, so if California has only managed to remain steady (on the basis of the Energy Commission's claim), it is fall- ing well short of the nation at large. One concern surrounding efficiency improve- ments is the so-called Jevons paradox, which says that greater efficiency tends to increase the use of a given resource. Psychologically, the Jevons paradox makes some sense: if I know that my brand-new ultra-efficient lighting system saves me large amounts of money on my energy bill, I'll probably be less diligent in turning off lights in unused rooms, for instance. On a broader scale, greater effi- ciency of energy use means that energy- based processes become cheaper, and, following the basic rules of economics, that means demand should increase, other things being equal. e decrease in per-capita energy consumption probably does owe in part to efficiency improvements. But the EIA data also shows some correlation with the mac- roeconomy: the dips in per-capita usage roughly coincide with major downturns, specifically in the early 1980s, early 1990s and early 2000s, as well as the recent Great Recession. (at this metric has failed to rise significantly since 2009 raises serious doubts about the ostensible recovery.) e overall downward trend since the 1970s seems to be attributable to factors other than efficiency gains, however. e other possible interpretation is that the Jevons paradox simply doesn't apply, but the sup- posed increasingly energy-based economy would seem to preclude such a conclusion, since energy-efficiency improvements would presumably expand growth. e question, then, is whether ener- gy-efficiency regulation in the style of Title 24 is even desirable. California's results compared with the nation at large are less rosy than the state's Energy Commission suggests, judging from EIA-supplied data. Of course, these considerations don't ad- dress whether Title 24 could be expanded to other states, but merely whether it should be expanded. the cost of regulation Another important aspect of the situ- ation—and one that the California Energy Commission conveniently overlooks—is the cost of regulatory compliance. For instance, the money spent complying with regulator demands could potentially go instead to research of new energy sources, new efficiency strategies and so on, any of which could yield far greater gains that what compliance today affords. is "opportunity cost" is certainly difficult to quantify in many cases, but it does pose a counterargument to the notion that more regulation necessarily means greater ben- efits—whether through monetary savings or lower energy consumption. Additionally, the rationale for regula- tions oen naively applies the argument that everyone benefits. For instance, by regulating energy efficiency—so the argu- ment goes—we can decrease use, save