Fundamental aspects of energy conservation policy

Our major choice in energy conservation is between producing the present mix of materials, commodities, and services more efficiently or decreasing demand for them. The first option is referred to as the ''technological fix,'' the second one as ''change of lifestyle.'' If the first option fails, changes in lifestyle might become mandatory. This paper deals with the technical fix approach. Higher capital investment can lead to a decrease in direct use of energy. Both the cost and the energy involved in these investments are analyzed along a conservation path, and a limited number of constants are used to describe the changes along this path. These constants can also be used to feed technological information into macroeconomic analysis. The time scales involved pose the major problem to achieving conservation by means of a technical fix. An increase in the price of energy will lead to higher capital investments in accordance with the economic lifecycles in the different sectors. For applications with a short lifetime, such as in the transport sector, energy conservation will mainly take place through the construction of new equipment. In sectors with long-lifetime investments (e.g., buildings), retrofitting will be important. The major task of governmental policy is to induce conservation before it is economically acceptable or possible.