Unfortunately, Moscovitch mischar- acterized the methodology of that

study. While we used a static input-out-

put model for the analysis, we simu-

lated changes in energy prices and productivity. And we incorporated a

number of reasonable assumptions about oil imports and spending pat- terns. Our results are consistent with what one would intuitively expect

when significant energy savings oc- cur - - consumers and businesses would have more money to spend on

things besides electricity bills. It is that re-spending effect, away from non-labor intensive energy purchases

to more labor-intensive personal con- sumption, that drives most of the em- ployment benefits.

T~n at we used a static model does t necessarily imply an over-

statement of impacts. To the contrary, the Department of Energy has recently evaluated the Administration's Cli- mate Change Action Plan for its em-

ployment impacts. Both a static and a dynamic model were used in the analy-

sis. The results indicate a higher level of employment when using the dy- namic model. Indeed, I have always

felt that the ACEEE study tended to un-

derstate the net employment and in- come benefits.

The difference, I suspect, lies in the perception of how employment is

viewed as part of the overall eco-

nomic process. Conventional theory . tends to treat it as more of a cost to be minimized than a benefit to be en-

hanced. Our approach was, in effect, to test the hypothesis that a different recipe of economic activity could sus-

tain both an energy bill savings and a

higher employment impact, and that is what we found.

--Skip Laitner, American Council for an Energy-Efficient Economy,

Washington, D.C.

Climate Cash, Climate Change

" have a natural affinity with Daniel .Lashof's perspective in favor of

concern about climate change, as

compared to Henry Linden's position that it doesn't matter. But no discus- sion is complete without a considera-

tion of what is an appropriate re- sponse, which was lacking from both articles.

Assuming that Dr. Lashof's per- spective is correct, is there a societal premium for taking the right steps to respond? Given that the DOE thinks currently cost-effective energy effi- ciency technology can displace over

35 percent of the present electric con- sumption in the U.S., and that new wind generators are competitive with natural gas turbines, that question de- serves close examination.

Greenhouse gases have an enor-

mous range of sources, but the major- ity are'fossil fuel-related, either in the use or extraction of fuel. A compre-

hensive response to greenhouse gases

cannot adequately be considered in the letters column of this journal, but

some general thoughts may. The growth assumed for these

gases, arrived at through complex

analysis repeated in a number of stud- ies, is very similar to a crude examina-

tion of what would happen if the U.S. froze its emissions at today's levels, while the rest of the world froze population but increased energy use to match the U.S. per capita rate of

emissions. But if the U.S. were to undertake a

serious, comprehensive program to capture every energy efficiency tech- nology that is also economically justi- fied, it would: (a) keep us very busy

for a couple of decades (at which time we might presume that more re- newables were cost effective), and (b) most likely improve such technolo- gies and reduce their cost as a result of substantial investments in them.

S o often we lose sight of the tar- get when we concentrate on the

details. Professor Linden's perspec-

tive seems to acknowledge the possi- bility that there are strategies which are economically justified and appro- priate hedges to "living in the test- tube." But he stops short of my own belief, which is that a non-response to

the challenge to capture every single cost-effective efficiency action that is economically justified is a prescrip-

tion for economic disaster. The adjective "sustainable" is gain-

ing popularity. Often used as a syno-

nym for non-renewable, it is a much more important concept that acknow-

ledges, for example, the impact oil prices have on the concrete and steel

costs as part of a nuclear plant. Sus- tainable technologies also recognize

the value of a photovoltaic cell to a third world villager, who needs not

only the kilowatt-hour, but also the power plant, the transmission sys- tem, the local grid, the wiring and

wall plug, and the administrative in- frastructure if he is to become electri- fied as we are in Ohio.

See Letters, page 84

September 1994 3

From Letters, puge 3

We have been vocally supportive

of a strong DSM program in Ohio,

during the acid rain compliance era,

among other reasons because the size of Ohio’s acid rain problem is great

enough that if we incorporate sub-

stantial efficiency resources we will

create a leadership position for our- selves in manufacturing and technol-

ogy development related to efficiency.

The same principle holds for the

U.S. Either we will aggressively pro-

mote the use of efficiency and sell it

to the rest of the world - or we will

sit back and slide, and buy the tech-

nology from other nations. There is a

comprehensive strategy for response

to climate change contained in this

idea, and you don’t even have to be-

lieve in the greenhouse effect to bene

fit from it.

-Ned Ford, Sierra Club, Cincinnati, Ohio

Resources me Finite

I read the guest editorial by Robert

M. Solow, and fear that he shares

the blindness of other mainstream

economists. The fact that he has ex-

celled in his profession, winning the

Nobel Prize in economics in 1987,

only exacerbates the situation. He

claims that what we do with our

money doesn’t really affect overall

employment, that it only causes in-

dustrial restructuring of one form or

another. He notes that monetary and

budgetary policy at the federal level

really are the deciding factors for to-

tal employment. If we lived in a world with infinite

resources this would certainly be

true. In fact, it has been true histori-

cally, because until relatively recently

we have lived in an essentially infi-

nite world - that is, our resources

were vast in comparison to our popu-

lation and our needs. Likewise, if we

lived in a world which had infinite ca-

pacity to absorb the waste by-prod-

ucts of fossil fuel or nuclear fuel use,

our fuel choices really wouldn’t mat-

ter.

B ut we don’t live in that world

any more. Although we are still

fortunate, even wealthy, we do not

have an infinite amount of resources.

We are increasingly becoming the pro

verbial “small world.” One of the most

remarkable things about economists,

who should understand abstract ideas

such as compound interest as well as

anyone in my neighborhood, is that

they can be so ignorant of the impact of

our exponential demand growth on the

resources that remain. If we continue

to have exponential population

growth, resources per capita drop at an

even faster rate than the total resource

supply. The point is simply this: While we

can affect the amount of money in cir-

culation by macro-economic policy

decisions, if the amount of resources

available decline while the money

supply stays the same, all we do is

create inflation. If we shrink the

money supply in proportion to the

availability of goods, we prevent in-

flation but have a “tightening econ-

omy.” The fact is that jobs are de-

pendent upon the natural resource

base. The growing interest in “trade

issues” is Iargely based upon our

growing dependence on the rest of

the world to make up the deficit in re-

sources as our own base declines. If

we carelessly consume our energy re-

sources, and over-tax our environ-

mental resources, total employment

will go down.

Money - and economists - ulti-

mately don’t have anything to do

with it. Money just facilitates the

flow of real goods, and no amount of

ma~o-economic manipulations can

cover up the decline of the resource

base. Yet nothing in formal econom-

ics studies, apparently, allows the

profession to take the finite limits of

our resources into account. If there

are to be jobs in the future, we had

better get very conservative with the

way we use energy and the way we

reduce the capacity of our environ-

ment to support us, and we had bet-

ter do it soon. Put differently, our

productivity per unit of energy had

better improve dramatically.

T here is a second item implicit

in the whole issue of jobs crea-

tion that deserves mention. We have all been mesmerized by the econo-

mists’ perspective of indefinitely con-

tinuing growth of the economy and

therefore of jobs. In this paradigm, to-

tal job creation is linked only with the

expansion of economy by macro-eco-

nomic machinations controlled by the

economist-priesthood. Job creation is

like a mantra for politicians in the

199Os, making economists even more

defensive about the limitations of

their art. But no one talks much

about population growth, or popula-

tion controls. Population control is

perhaps the single most effective

move we could make toward main-

taining both our environmental qual-

ity and high rates of employment.

And, while The Electricity Journal may

not seem like the forum for this dis-

cussion, perhaps we should not con-

tinue simply to assume that it is a rea-

sonable goal to plan to produce

enough electric power for a popula-

tion growing exponentially without

discussion of population policy as

well.

-Robert J. King, P.E., Kenetech Corp., Austin, Texas

84 The Electricity Journal