Energy Hogs Roam the Whole Economy
Some want to punish household electricity consumption, but that’s a small slice of our energy use.
There is a good deal of ink spilled on how much energy people use in their homes, and plenty of judgment of those who use a lot, as I discussed last week. It’s not uncommon for me to get frowny faces when I mention our hot tub, even when those same faces were just telling me about their recent vacation in an exotic location or multiple trips to conferences on the East Coast.
The focus on home energy consumption is understandable in some ways, because it’s the thing that society can observe most directly and completely through a single entity, the distribution utility. And, it’s the usage for which price is most under the control of government regulators.
Don’t get me wrong, we should try to make homes as energy efficient as can be done cost-effectively. But the reality is that the vast majority of the energy use we are responsible for takes place outside the home, whether we are driving our car, flying across the globe, dining in restaurants, consuming goods that take energy to create, having those goods delivered to our house, or pretty much any other activity we engage in.
Home Energy’s Role in the Economy
While writing the paper about this that I put out last week, I found the 2021 EIA US energy flows graphic above to be a real eye-opener. It shows that about 15% of US primary energy use – which includes the losses in electricity generation and transport – is attributable to residential electricity consumption (Multiplying the share of energy that goes into electricity generation – 36.7 quads divided by 97.3 quads – by the share of electricity that is used by households – 39%). Adding in residential natural gas, raises it to 20%.
Virtually all US energy use eventually benefits some US households (after a small adjustment for the net impact of imports and exports), yet nearly all of the moral judgment – and use of the term “energy hog” – is reserved for energy consumption in the home. There is discussion and policy about how to make the 80% used outside the home more efficient, but you don’t see the sort of shaming or financial penalties that we see for residential usage, and that in many parts of the country is official policy.
Prices for gasoline, air travel, energy-intensive production goods, housing, food, and all of the other goods and services that constitute the 80% are set by market forces.The prudence of households that consume low or high quantities plays essentially no role in the price they pay. In fact, many such goods are sold with quantity discounts or with additional rewards to customers who consume high quantities, such as through customer loyalty programs employed by airlines and other industries.
Residential energy consumption seems to sit alone as an area of consumption for which some believe payment should be based on the ethics of high usage levels. As a result, households whose consumption preferences tilt more towards staying at home take a disproportionate hit relative to those who choose to spend a higher share of their income on travel, dining out, and consuming other goods and services. It is hard to come up with an equity-grounded argument for such asymmetric treatment.
(Source)
It’s the Environment, Stupid
But talking about energy use is so last century. The concern of most policymakers is really environmental impact. Through that lens, singling out home electricity usage is especially problematic. If we apply the residential share of electricity to the EPA’s emissions accounting, electricity use in the home accounts for only 10% of US GHG emissions.
It likely accounts for an even smaller share of the damages from local pollutants, because coal is in decline as a fuel for electricity and power plants generally are located farther from where people live than polluting freeways and industrial facilities. Not to mention the indoor air quality issues created by combusting natural gas or wood at home. If we really care about GHGs and local pollution emissions, a focus on residential electricity consumption is particularly misplaced.
Hogs, Angels and Air Travel – Some Further Context
While working on this topic and writing the paper, I did a comparison of home electricity consumption to air travel that blew my mind, so perhaps this will also blow yours.
I showed last week that controlling for the number of household occupants and the local climate, and counting total electricity consumption regardless of whether the juice is from the roof or the grid, greatly reduces the usage difference between households that appear to be “energy hogs” and those that appear to be more energy-efficient “angels”. In fact, after adjusting for household occupants, climate and total consumption, I report in the paper that the difference between the 25th and 75th percentile consumption per capita among the customers of California IOUs is 2058 kilowatt-hours per year. The difference between 10th percentile and 90th percentile is 4372 kWh/year.
The marginal emissions rate from electricity generation in California is approximately 0.4 metric tons per MWh, so a 75th percentile household generates about 0.82 metric tons more GHG emissions per year than a household at the 25th percentile. The difference between the 10th and 90th percentiles is about 1.75 tons.
(Source: Author’s calculations as describe in text)
For comparison, the US domestic airline industry gets about 62.6 passenger miles per gallon (details in the paper) and each of those gallons puts out about 0.01 metric tons of GHGs. That means one person’s 5400 mile round-trip between San Francisco and Boston burns about 86 gallons and releases about 0.86 tons of GHGs. In other words, one round-trip coast-to-coast flight cancels out the annual GHG difference between a person living in an “efficient” 25th percentile electricity use home and a person living in a “pretty hoggy” 75th percentile electricity use home. Two roundtrips in a year nearly wipes out the emissions difference between an “energy angel” in the 10th percentile and a “hog” in the 90th percentile. That certainly wasn’t something I knew before, and I suspect it is not something known by other halo wearers who buy high-efficiency appliances, install triple-pane windows, set their A/C to 77 degrees, drive EVs, and generally walk the walk…that is, until we fly the flight, to another conference or well-deserved holiday.
(Source)
My point is not that we should stop flying entirely or that we should stop producing and transporting goods that we buy in stores or have delivered to our homes. It’s that it is easy to judge people by one kind of behavior and ignore all the other things people do that contribute to pollution and the climate crisis. It is human nature to focus on the metrics by which we appear most socially responsible and downplay the ones that aren’t as flattering.
Unfortunately, when it comes to electricity rate design, some advocates and policymakers seem to think this natural bias should drive policy. What I take away from this research is that residential electricity use is a small, though still important, component of our climate crisis and pollution problems. There is clear evidence, however, that net household electricity consumption is not a good guide to determining which people are imposing more or less damage on the planet and its occupants.
Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas
Suggested citation: Borenstein, Severin, “Energy Hogs Roam the Whole Economy”, Energy Institute Blog, UC Berkeley, August 28, 2023, https://energyathaas.wordpress.com/2023/08/28/hogs-take-flight/
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Severin Borenstein View All
Severin Borenstein is Professor of the Graduate School in the Economic Analysis and Policy Group at the Haas School of Business and Faculty Director of the Energy Institute at Haas. He received his A.B. from U.C. Berkeley and Ph.D. in Economics from M.I.T. His research focuses on the economics of renewable energy, economic policies for reducing greenhouse gases, and alternative models of retail electricity pricing. Borenstein is also a research associate of the National Bureau of Economic Research in Cambridge, MA. He served on the Board of Governors of the California Power Exchange from 1997 to 2003. During 1999-2000, he was a member of the California Attorney General's Gasoline Price Task Force. In 2012-13, he served on the Emissions Market Assessment Committee, which advised the California Air Resources Board on the operation of California’s Cap and Trade market for greenhouse gases. In 2014, he was appointed to the California Energy Commission’s Petroleum Market Advisory Committee, which he chaired from 2015 until the Committee was dissolved in 2017. From 2015-2020, he served on the Advisory Council of the Bay Area Air Quality Management District. Since 2019, he has been a member of the Governing Board of the California Independent System Operator.
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Great article, thanks. Now, given this info (I actually already knew about flights), I still don’t know what is the main cause of the duck-curve peaks.
What I hear a lot is that it is “when people get back home from work”, but when residential is 11% consumption of the overall use, the whole argument is hard to believe ? I’d guess that’s important to know since if we could shift all our energy use to when the sun is up, the problem would be easy(er) to solve.
The duck curve is based on March 31 so there’s almost no residential A/C in it at all.
There’s apparently about 30GW of temperature related load (A/C, refrigeration, …) based on past heat driven peak events on CAISO (5 days each August or September). I think about 8-10 GW of the 30GW is residential A/C so the remaining 20GW is probably almost all commercial (A/C) and industrial (A/C and refrigeration of food, food processing, other temperature sensitive operations). I don’t even have A/C. All newer homes have A/C and more and more people routinely use A/C even though many live in a fairly mild climate where it is almost never needed (there’s been studies that have shown that increased efficiency A/C has resulted in increased use of A/C and increased net energy consumption).
I’d love to see a study on where the 30GW of temperature based heat event peak gets allocated and where the 15GW of temperature based load on a normal summer day goes. How much to residential, and to what (A/C, refrigeration, other appliances, lighting, …), industrial, and to commercial and to what. Surely there have been studies on this to show the Demand Response DR potential of different segments and energy use.
Well noted, at the end it’s all up to us. Never allow statistic to control your life. Every day everybody is invited to share energy…..
Hi Prof. Borennstein, Thanks for this interesting article. Whenever people talk about the emissions of airplanes, it is worth pointing out that a person flying on a private plane emits 10 to 20 times as much carbon pollution as a commercial airline passenger and only 1% of people are responsible for 50% of the world’s aviation emissions, or half a billion tons of CO2.3. It would be interesting to hear your thoughts on this exploring how these insights could shape our climate policy initiatives.
It’s time to retire the pervasive perception that energy consumption is causing climate change:
• All energy consumed by humans is a combined 179 PWh (2022).
• All energy absorbed by the sun each year is 1,068,720 PWh = 5,970 times as much as is being used by humans.
• All but .074% from both sources is radiated back out to space as infrared (blackbody) radiation.
The amount of heat absorbed by the Earth from consumption of energy is vanishingly small, compared to what is retained by Earth’s the atmosphere from excess CO2. It’s carbon emissions, not energy consumption, that is causing climate change.
• Though solar and wind have decreased emissions from coal, natural gas has taken its place for providing reliable, baseload electricity. Solar and wind have increased, not replaced, consumption of natural gas.
• Emissions from natural gas have eclipsed emissions from coal plants, and are now the second largest source of U.S. CO2 emissions (after gasoline).
I think it’s time to talk about the ethics of increasing reliance on natural gas, and the ethics of adopting wind and solar as a solution to climate change. It’s time to talk about the ethics of opposing nuclear energy.
Most energy consumption emits CO2 as a byproduct. So one for one. Unless it is battery, wind powered, or solar it will. So I think your claim is irrelevant. Noone seriously thinks consumption of energy directly causes warming.
If I am wrong please explain in detail. Include discussion of lapse rate.
Nuclear energy emits no CO2 as a byproduct. Moreover, unlike battery, wind, or solar, it doesn’t require backup power at night, or when it isn’t windy or cloudy.
Nuclear is truly zero-carbon energy – no asterisks. No qualifiers.
Will, yes there are asterisks and qualifiers to be accurate.
The life cycle costs of nuclear are low, about 50 gCO2 emissions per kWh, similar to solar around 50gCO2, worse than wind 20gCO2, much better than natural gas 500gCO2, much, much better than coal 1000gCO2.
Nuclear requires storage to achieve the scale needed to get costs down and storage or additional flexible generation like natural gas CCTs to manage shifting demand that nukes can’t easily adjust to.
Nuclear generates no GHG emissions in the power production. But GHG calculations have to include the entire life cycle, which includes mining impacts of extracting and transporting and manufacturing fuel rods. Include the GHG impacts of processing and transport of spent fuel and operation of storage facilities. This rigor is equally applied to solar, wind, and batteries which also must be mined, transported, manufactured and managed at end of life. Batteries can in fact operate without backup power at night.
See nice summary here: https://www.nrel.gov/analysis/life-cycle-assessment.html
Everything is an engineering tradeoff. Wind/Solar require energy storage backup, just like in order to enable the scale needed to get costs down, nukes needed storage (storing excess energy at night, instead of solar storing excess energy during the day). Nukes take forever to build and require siting and transmission for huge incremental capacity adds, but can supply huge amounts of baseline power, but at now 4X the LCOE of solar, maybe 2X the LCOE of solar firmed with storage. Solar and storage can be added incrementally as needed right where load is being added so enhances grid reliability with lower transmission costs. And so forth, more asterisks and qualifiers needed for an accurate and thorough discussion.
Except for the cement and steel, extensive, used to build the facilities and haul in fissionable and waste byproducts.
“Nuclear is truly zero-carbon energy – no asterisks”
Not true. Just like variable output renewables, baseloaded nuclear requires load following fossil to meet load variations. Nuclear just has the problem in reverse of wind and solar.
Yep. Didn’t know about the need for load following to smooth out variations. Sure it’s true but can you recommend a book or report or paper that explains more? Thanks!
“Not true.”
Yes Richard, it is true, but we’ve been through this before.
Modern nuclear plants in France, South Korea, and China follow load all. day. long. Following the gentle curves of consumer demand hasn’t been a problem for nuclear for decades, and though anti-nuclear crusaders in the U.S. have successfully slowed development of U.S. nuclear to a crawl, other governments aren’t as tolerant of these antics. They’re working with developers to build flexible nuclear plants at one-third of the cost, in one-half the time.
“Nuclear just has the problem in reverse of wind and solar.”
Not sure what you mean by this. If you’re trying to say wind and solar are incapable of following consumer demand and nuclear isn’t, I guess “capable” can be considered the reverse of “incapable”. Is that what you meant?
It isn’t only the inability of wind and solar to follow demand that is a problem, it’s their irregular output. When a cloud front blocks the sun over Topaz Solar Farm, it’s necessary to ramp up gas “peaker” plants to maintain voltage. Similarly, if a gust of wind kicks up at Altamont Wind Farm, it’s necessary to ramp the same plants down to prevent overvoltage from causing a forced outage.
Look at the supply curves on the Today’s Outlook page at CAISO.com. You’ll find whenever wind and solar are on line, there’s always a healthy supply of natural gas generation chugging along to keep them from taking the grid down: http://www.caiso.com/TodaysOutlook/Pages/supply.html
That also happens to be why the American Petroleum Institute and the American Gas Association adore wind and solar. They know natural gas will always have a home on grids that are integrating intermittent, unreliable. renewable energy.
Why Natural Gas Will Thrive in the Age of Renewables
“The goal of generating 100 percent renewable energy may not be achievable. But in the coming decades natural gas can help meet the growing global demand for sustainable energy.”
https://www.washingtonpost.com/brand-studio/api-why-natural-gas-will-thrive-in-the-age-of-renewables/
The concern about ethical energy use extends back to the 1973 oil supply crisis. The CAFE auto vehicle fuel economy standard was motivated by the desire to end the production of “energy hog” cars. People were encouraged to turn their current car in for a much more energy efficient one, even if it didn’t make financial or economic sense. We still have that ethic underlying the campaign to expand the electric vehicle market.
And air travel is now under much more scrutiny ethically, with more calls for limiting trips. (I hadn’t realized how remarkably fuel efficient air travel is–on GHG basis, that’s equivalent to 56 mpg for a single occupancy car–maybe I should fly to LA more often.) The more important question for air travel is what are the (nonfinancial) values of greater cultural, social and familial connections that it facilitates?
Also, it’s important to note that there is a big push to electrify most, if not the entire, transportation sector. About 45% of the GHG emissions come from passenger vehicles. And green hydrogen will be a 100% electric product.
“The concern about ethical energy use extends back to the 1973 oil supply crisis.”
That’s true. I highly recommend a great history on this topic and era, Meg Jacobs’ “Panic at the Pump” (2016): https://us.macmillan.com/books/9780809075072/panicatthepump
“And green hydrogen will be a 100% electric product.”
Though embraced by some as a potential storage medium for solar and wind, green hydrogen is a chimera invented by Chevron, Shell, and BP. It doesn’t exist, and never will.
95% of industrial hydrogen is manufactured by steam-reforming methane at refineries, where copious amounts of carbon monoxide (CO) and carbon dioxide (CO2) are emitted into the air. When consumed as a fuel, hydrogen only returns the amount of energy it took to separate it from carbon in CH4 – so with losses, it’s already a net-positive carbon emitter.
In theory, it can be separated from water using electrolysis powered by renewable energy. Without a dedicated hydrogen pipeline infrastructure, however, a separate, 100%-renewable electricity grid would be required to transport clean electricity to each gas plant, where it could then be used to produce hydrogen.
Intermountain, a coal/gas plant in Utah that supplies much of California’s imported power, has announced it intends to produce hydrogen this way. Stored underground in a natural salt cavern, the hydrogen would be mixed with natural gas and ostensibly lower the plant’s carbon footprint. Hydrogen only has one-third the heating value of natural gas, however, so 33% more of the mixture would be required to generate the same amount of electricity.
While planning the future Diablo Canyon Power Plant in the 1960s, PG&E envisioned 8-10 nuclear plants up and down California’s coast. Sierra Club, which endorsed nuclear energy at the time, supported Diablo with a 9-1 vote. Had not a generous donation from Atlantic Richfield Company split the club into two rival factions, we wouldn’t be forced to consider these convoluted decarbonization schemes today.
I have a question regarding this statement – “the US domestic airline industry gets about 62.6 passenger miles per gallon (details in the paper) and each of those gallons puts out about 0.01 metric tons of GHGs.” Specifically, is that 62.6 figure the average GHG emissions per passenger or the incremental emissions? If I decide at the last minute to not board the flights to Boston and from and no one takes my place, does that mean that the plane will not burn those 86 gallons of fuel?
Phillip
Your question illustrates an important concept that is overlooked when looking at marginal emissions from electricity. The decision to consume electricity is more often created by a single large purchase or action, such as buying a refrigerator or a new electric vehicle, than by small decisions such as opening the refrigerator door or driving to the grocery store. Yet, the conventional analysis of marginal electricity costs and emissions assumes that we can arrive at a full accounting of those costs and emissions by summing up the momentary changes in electricity generation measured at the bulk power markets created by opening that door or driving to the store.
But that’s obviously misleading. The real consumption decision that created the marginal costs and emissions is when that item is purchased and connected to the grid. And on the other side, the comparative marginal decision is the addition of a new resource such as a power plant or an energy efficiency investment to serve that new increment of load.
So in that way, your flight to Boston is not whether you actually get on the plane, which is like opening the refrigerator door, but rather your purchase of the ticket which led to the incremental decision by the airline to add another scheduled flight. It’s the share of the fuel use for that added flight which is marginal, just as buying a refrigerator is responsible for the share of the energy from the generator added to serve the incremental long-term load.
If Phillip decides not to fly to Boston and is not replaced, the plane would use (slightly) less fuel. And whether to schedule a flight is a binary decision – there is no “incremental decision” between Yes and No.
Phillip’s marginal emissions would be those required to carry him on the flight, plus other emissions costs of an empty, crewed flight divided by the total number of passengers. If he doesn’t fly, his marginal emissions are nil.
Often the marginal costs do not fit the theoretical mathematical construct based on the first derivative in a calculus equation that economists point to. Often it is a very large discreet increment, and each consumer must be assigned a share of that large increment in a marginal cost analysis. The single most important fact is that for average costs to be rising, marginal costs must be above average costs. Right now in California, average costs for electricity are rising (rapidly) so marginal costs must be above those average costs. The only possible way of getting to those marginal costs is by going beyond just the hourly CAISO price to the incremental capital additions that consumption choices induce. It’s a crazy idea to claim that the first 99 consumers have a tiny marginal cost and then the 100th is assigned the responsibility for an entire new addition such as another flight scheduled or a new distribution upgrade.
I’d say if a person really wants to reduce/control energy emissions, then, yes, we “should stop flying [as much as possible and or we should stop producing and transporting goods that we buy in stores or have delivered]”. We certainly should eliminate unnecessary flying and buying, starting with the year end holidays.
A trenchant analysis. But if you look at typical (sub)urban neighborhoods, where most people locally consume most of their energy quota, you’ll probably find that the biggest local “hogs” are the large leased commercial & residential properties with big parking lots. These property owners don’t pay their tenants’ utility bills; that disconnect is a big problem. Where’s the incentive to adopt renewable energy & efficiency?
There are some indications that IRA tax incentives might spark investment by these large leased property owners in solar parking lot canopies +stationary storage batteries +Vehicle-2-Grid chargers. This would be a remarkable & rapidly transformative outcome. We’d quickly get widely distributed BEV charging infrastructure, a matrix of reliable neighborhood micro grids, and shading for massive (sub)urban asphalt heat islands. A “triple-play”! All this, without additional utility transmission spending, and easily permitted by local building officials with little or no public opposition. Much more effective, over time, than more remote solar farms. If IRA incentives don’t work, the remaining policy levers are building codes & local ordinances.
Well done.
Virtue signalling has become “woke” in all the wrong ways. Putting things in the larger context often exposes the folly. The same thing is true about the push to change out residential gas appliances for electric ones. It makes little sense as a policy, especially in California, other than virtue signalling
So we can expect to begin paying for flights based on personal income levels?
We return a substantial portion of our solar generation to our utility in Massachusetts. We get some of it back monthly. But apart from our personal desire not to contribute to collective greenhouse gas emissions with our load, it’s not clear we get enough back to seriously help pay our capital costs. We do get bunches back by not having to pay for electricity generation, but to make up for what we’ve paid over the years for poles and transformer maintenance, not clear at all.
haha! best comment here. Let’s start with private jets fuel taxes, that would win the elections.