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An offshore wind farm near the Danish island of Samso. (BOB STRONG/BOB STRONG/REUTERS)
An offshore wind farm near the Danish island of Samso. (BOB STRONG/BOB STRONG/REUTERS)

Book Excerpt

The economics of energy conservation Add to ...

I’m sure a good number of Danes would take issue with me. They’ll point to their coal plants, which are among the most carbon efficient in the world. They’ll rightly note that those same power stations do double duty, generating heat as well as electricity. While all of that is true, it misses the fundamental point. Prices are what have made the difference. Prices are what matter.

As much as Denmark is a living, breathing example of environmental success, it’s only fair to note that the battle against carbon emissions is easier there than it is elsewhere. Denmark has no significant hydrocarbon reserves of its own, which means its politicians don’t need to worry about appeasing a carbon-intensive energy industry. In the same spirit, the country also doesn’t have an auto sector to speak of. In Denmark, no one needs to worry about currying favor with autoworkers to get re-elected.

Contrast Denmark’s situation with the pressures faced by my home province of Ontario. When the global recession sent automakers reeling toward bankruptcy, Ontario, along with Canada’s federal government, spent billions of taxpayer dollars to help keep General Motors and Chrysler solvent. Across the border, politicians in Washington doled out even more money to those same companies in order to safeguard high-paying manufacturing jobs.

Likewise, the oil industry also gets billions in subsidies from governments in the United States and Canada. In the United States, government tax breaks for Big Oil are wrapped in the rhetoric of promoting energy self-sufficiency and reducing the country’s dependence on imported oil from faraway lands that could become unfriendly at any moment. In Canada, subsidies are granted under the guise of protecting one of the country’s leading exports.

Danish politicians don’t have to contend with the powerful lobbying efforts of Big Auto or Big Oil. The country is politically free to impose what are, in effect, huge carbon taxes that encourage energy conservation. While admirable from an environmental standpoint, for a country that’s forced to buy oil and coal from foreign producers, slashing energy consumption also makes a tremendous amount of economic sense.

Half a world away, the Japanese are coming to the same conclusion.

Like Denmark, Japan is largely devoid of domestic hydrocarbon reserves. That forces the country to import nearly every last drop of the 4.5 million barrels of oil its economy burns every day. In an effort to reduce its oil imports, Japan turned to nuclear energy, which before the Fukushima meltdown accounted for nearly a third of the country’s power generation.

Japan has no obvious substitute for its lost nuclear power. Practically and economically, that makes for a country highly motivated to adopt Danish-style energy conservation.

The new catchword in Japan is setsuden, or electricity conservation. These days, the concept is evident almost everywhere. Office dwellers are going without air-conditioning, while factory workers are switching off lights and machinery when they’re not needed. In stores, escalators are becoming staircases. And households across the country are being encouraged to scale back power usage by as much as 20 per cent. Even Japanese businessmen, renowned for their conservative attire, are being asked to wear casual clothes to work rather than dark suits, the idea being that dressing in breathable material will reduce the strain on office air-conditioning.

Setsuden is defining the new contours of an energy-constrained Japanese economy. Similar changes may soon decide the shape of your economy as well.

A magical new power source isn’t waiting in the wings to solve Japan’s energy problems. Instead, the country is figuring out that the alternative to building more nuclear reactors is using less electricity and closing the energy gap in other ways. Here, the cost of fuel will actually turn out to be one of Japan’s best friends. High prices enforce an economic discipline that will naturally curtail energy use.

Certainly other steps will help along the way. More electric vehicles are bound to be on roads in Japan, and around the world, before too long. Wind and solar power will continue to become more affordable and more efficient, which will add to the role they’re able to play in supplying tomorrow’s power needs. And more inventive measures are being found all the time. In Paris, an ambitious car-sharing service using electric vehicles has been launched. Other cities are bound to follow suit.

But the really big changes that will come in an energy-constrained future won’t have to do with the type of vehicles we drive or how we generate electricity. Instead, what will matter most is the energy that’s not used. The real energy savings, as Denmark knows, happen when fewer cars are on the road and less power is used at home.

Excerpted from The End of Growth . Copyright © 2012 Jeffrey Rubin Enterprises Inc. Published by Random House Canada, an imprint of the Knopf Random Canada Publishing Group, a division of Random House of Canada Limited. Reproduced by arrangement with the Publisher. All rights reserved.

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