From: Reuters
Published November 27, 2007 05:08 PM

Energy efficiency fails to cut consumption: study

TORONTO (Reuters) - American consumers are driving bigger gas-guzzling cars and buying more air conditioners and refrigerators as the overall energy efficiency of such products improves, a report released on Tuesday found.

In what the study calls "the efficiency paradox," consumers have taken money saved from greater energy efficiency and spent it on more and bigger appliances and vehicles, consuming even more energy in the process.

This irony isn't just restricted to the United States, though. "The paradox is true for every developed country," said Benjamin Tal, senior economist at CIBC World Markets, which conducted the study.

The study concludes that stricter energy efficiency regulations aren't the answer to concerns over climate change and the depletion of oil supplies because consumers treat greater energy efficiencies as a tax cut. "Because you get a 'tax cut,' you drive more," Tal said.

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The study found that energy use increased by 40 percent from 1975 to 2005 while energy efficiency improved in the same period. The sectors with the greatest increases in energy use -- transportation and residential -- are also the areas where the U.S. government is promoting energy efficiency the most.

The average mileage per gallon of gasoline has increased since 1980, but Americans have responded by driving larger vehicles and putting more mileage on their vehicles. The average American drove 9,500 miles annually in 1970. These days drivers do more than 12,000 miles a year.

The energy used to heat and cool homes is also rising as homes become larger. The study says the area of the average home has increased from 1,000 square feet in the 1950s to the current 2,500 square feet. More households are also buying air conditioners.

Tal believes one solution is to attach a price to emissions through a carbon-trading system.

(Reporting by Sharon Ho; editing by Frank McGurty)

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