Elisa Wood had an interesting post on efficiency at the cleantechies blog:
http://blog.cleantechies.com/2010/07/30/what-en…

For my part, just a couple quick comments:

1) To a degree we can talk about 'conspicuous production' as a 'consumer' goal: people like solar panels (and businesses like big windmills) because they make a statement. I tend to think there's some truth to this. We are more closely related to chimps and bonobos than we are to homo economicus, so reputation and standing likely means more to us than 'getting and spending.'

(It's interesting, btw, to note that, as environmentalists, we now see reason to lament people's stubborn unwillingness to act like good rational maximizers — this is a major change from the granola era.)

2) That said, it is still worth thinking about the economics of efficiency. One of the big problems that came up (and, I think, one of the common themes to the 'kingpins' success) was how to build efficiencies of scale.

Chris Williams has argued persuasively that we need to think about returns on investment and rates of return (instead, of, e.g. 'payback time'). The problem is that these financial calculations are a little bit 'squishy' because they need to account for effort as well as payback. As an example, I live in a fairly drafty 4 br New England house built in the 1920s. Give me $5k to cut my energy bills, one of my big decisions would be between investing in a portfolio of weatherizations — caulking, repainting, insulating, etc — and slapping a nice big solar system on the roof. The latter might not be optimal, but it would provide a satisfactory return, for far less effort and management time on my part.

It's a similar issue for service providers, as one commenter mentioned — it's somewhat easier to specialize retail-scale solar or wind installation than to build a business that does 'home energy makeovers.' Even though a 'holistic' portfolio of home energy improvements might achieve a better return on investment, it demands a wider range of competencies, faces competition from DIY punters, and suffers from dispersion.

Of course I am disappointed by our inability to enact a national cap and trade regime — it's a significant defeat for the Obama Administration and a harbinger of rifts within the Progressive coalition. Still, RGGI and the Western Climate Initiative do impose a price on carbon within their respective regions. Nationally, the avenue of attack on the Oil-congressional complex is probably not raising revenues but stripping subsidies (to research and development, to drilling/mining on federal land, to insurance against liability for environmental damage). The larger political climate aside, wind and solar remain excellent investments in the context of a parlous economy and increasingly volatile markets for oil.

I agree – efficiency isn't sexy. People are much more interested in renewable energy technologies because they make a direct statement, but also, because I don't think that people understand how efficiency influences the effectiveness of renewables. I myself did not take much time to think about this as a student while advocating for climate legislation until a friend pointed it out to me.

The national government has repeatedly failed us in passing energy/climate legislation that will actually make any sort of impact (I, by the way, am a proponent of the cap-and-dividend approach to carbon taxing that returns a portion of the money earned through taxing to the people). This doesn't mean that local communities and state governments cannot take action, though. I think that municipalities and states can make efficiency sexy and chat her up, or at least slip her into the conversation under the radar, by coupling renewable energy tax credits and other renewable incentives with efficiency incentives. For example, if you weatherize your home, you receive a larger tax credit or a rebate on a solar hot water system or panel installation.

On the commercial scale, business is business. Efficiency projects most often have a far greater rate of return on investment than renewables. They should be marketed as such. Efficiency = making money. This language is universal, and in most industrialized countries, especially the US, and especially for businesses, money = sexy.