Written by Lorian Eades   

Once again we are confronted with evidence that saving the world is a complicated business fraught with pit falls, subject to magical thinking and full of delusional advise.

Since 1976, the US Department of Energy has helped over 7 million households (mostly lower income families) upgrade their homes with weatherization improvements and energy efficiency changes. The idea is that these programs save both money and energy usage and therefore are valuable for our nation. Homes have had their windows upgraded, insulation installed or improved, weather tightness improved, appliances and HVAC units replaced in attempt to curb energy usage and lower carbon emissions. Of course these are great ideas. Of course they are worth every penny. Of course they will help us address global warming. Of course this is the moral high ground for such a rich country. Every rational person should support this type of progressive policy.

Of course, we should probably actually try to accurately determine the impact of these these programs.

Michael Greenstone is the head of the Energy Policy Institute at the University of Chicago and he was interested in evaluating these energy efficiency measures installed in residential homes. He sampled 30,000 low income Michigan households who participated in the Department of Energy programs and found some disturbing results. Energy bills didn’t decline nearly enough to eventually pay for the cost of the upgrades. In fact, the projected savings were 2.5 times higher that the actual amount saved. “The problem is the real world is screwy,” said Greenstone. No shit Mike!

Perhaps low income Michigan folks were not representative of the national norm. Greenstone conducted a similar study of middle income homes in Wisconsin. Unfortunately, the results were the same. For every $5,000 a home owner spent, they would recoup $2,400 in savings. Even my 401k performs better than that.

Of course these days every metric must be about carbon costs so Greenstone calculated the cost of every ton of CO2 saved by home energy efficiencies to be $329. Since the US Department of Energy considers a ton of CO2 to cost society about $38, this is a pretty damning metric. The home energy improvement policies geared toward reducing energy consumption are as much as 9 times more costly that simply not using so much energy in the first place. Worse, since 1980 average home energy consumption hasn’t changed. Of course, the US Department of Energy refused to comment on this research. The great irony is that almost every household in the US could actually reduce their carbon footprint and not spend a penny - simply stop making so many trips in their cars. The overly zealous could even consider staying home for vacations or (heaven help us) allowing their children to walk to soccer practice and ride the bus to school.

It may make us feel good as a country to believe that some insulation, a few new appliances and some light bulbs can save the world, but like most things the truth is a bit more sobering.