Monthly Archives: February 2019

Energy Price Tag

An idea for a new law: next to every normal price tag must be an “Energy Price Tag” that tells you how much energy was spent to get that item/service to where it is – in other words its cost in terms of energy.

First, a brief digression into what I mean by energy. In this post when I refer to energy I will mean in the physical sense, i.e. as defined by science/physics. Energy is the ability to do work. There are a large number of units that all measure energy. The SI unit for energy is the joule. Energy is also given in terms of: BTUs, kWh, calories, and other units.

Why would we want to do this?

Because it would raise awareness around energy consumption. Most people have no idea how much energy it takes for our economy to function as it currently does, and this would make it far more transparent. It would make it much easier for people to factor in environmental costs to their purchasing decisions.

For example, pre-industrial agriculture was an energetically positive endeavor. What I mean by this is that more energy was gained by eating the food than was spent to grow it. This is not the case for modern industrial agriculture, which is completely reliant on fossil fuels. Now on average 12-15 Calories of energy from fossil fuels are spent to create one Calorie of food. This results in a huge net energy loss.

How would this work in practice?

Businesses at each step of the supply chain would be responsible for monitoring and reporting the energy that goes into their process/product. It would be the energetic equivalent of a value added tax – without the tax.

There would of necessity be some sort of compliance enforcement. Perhaps the IRS could be expanded to include energy monitoring, or there could be independent firms that do the same thing, like accounting firms today.

Once the system was in place, it would be simple for the last step in the supply chain to add up the energy cost of the previous steps, add their energy cost to it, and then display it for their customers.

What would the difficulties of implementing this system be?

Most of the difficulty in implementing this new law would be in getting the necessary systems to do so up and running. A standard would have to be created and agreed upon, and then some kind of monitoring agency would have to be created. Businesses would have to implement new processes to determine and then monitor their energy usage.

Because monitoring and reporting energy use would be an added burden on corporations, they will be opposed to doing so. Corporations will almost certainly lobby against this, should this idea ever make it into potential law.

The biggest difficulty would be that this would have to happen world-wide. Because supply chains are so globalized, instituting this law in just one country wouldn’t work. However, it would really only take a handful of the largest economies to insist on this rule for it to be implemented.

What might the consequences of implementing this system be?

Hopefully, and especially if this effort is accompanied by an educational campaign, consumers would display some amount of preference for lower energy cost goods and services. For a (made up) example, if a bottle of Coke and Pepsi cost the same amount of money, but it takes twice as much energy to create that bottle of Coke than that of Pepsi, some amount of people might decide to purchase the Pepsi on the basis of its lower Energy Price Tag (EPT). All other things being equal, I imagine that most people would chose the energetically cheaper option. I can even see people being willing to pay more money for a product with a significantly lower EPT.

If the above bears out, this could have all kinds of eco-friendly effects. Companies might start advertising that their product is energetically cheaper than their competitors’. Companies would be incentivized to be more energy efficient. Local goods would almost always be energetically cheaper than foreign goods, and thus there would be some amount of incentive to shop local which is good both ecologically and socially. New machinery would almost always be more energy expensive than repairing old machinery, and thus EPT might help combat planned obsolescence.

Other considerations

I glossed over it earlier, but coming up with standards to properly measure energy usage and then allocate it appropriately among goods and services will not always be easy and in some cases could be incredibly difficult. For example, how would one allocate the energy spent researching a new pharmaceutical over the pills it leads to? This might require two separate EPTs, one covering the manufacture and transport of those individual pills and another noting the net research energy cost. However, I think the time and energy it takes to do so will be well worth it.

In my initial conception of this idea, I think it would be best to only measure and account for non-biological sources of energy (fossils fuels not being considered biological). Thus fossil fuels, wind, solar, geothermal, etc. would all factor into EPT, while human and animal physical labor would not. An exception to this would be biofuels such as ethanol. The EPT of biofuels would only measure the energy that went into growing them, not the energy that they captured from the sun.

Determining the EPT of energy itself would be another interesting case. Perhaps noting that energy source’s EROI (energy return on energy invested) would be sufficient. Dividing the amount of energy you use from a given source by its EROI would give the EPT of that amount of energy.

It is also worth keeping in mind what EPT would leave out. EPT would not measure ecosystem degradation or destruction. EPT would not account for socially disruptive practices. EPT would not measure humans rights abuses such as sweatshops, and perversely would actually incentivize them. Perhaps this could be addressed by requiring sweatshop use disclosure in products.

I’m sure there of many considerations I haven’t thought of, and would love to hear from you if you think of one.