Sunday, April 12, 2009

Depends on What You Mean by Japanese, Economy, and Energy-Efficient

Policy statements, op-eds, you name it, they keep saying this so often, you can almost believe it. And it goes like this…
1) The Japanese economy is twice/ten times as energy-efficient as the U.S./Chinese economy.
2) Therefore, Japan should help the United States/China/the developing world become more energy-efficient. These statements are usually accompanied by nice words about leadership and global responsibility.
The first statement is not really about energy efficiency, since all we are doing there is dividing energy consumption by GDP and comparing the quotients. Actually, few if any industrial products match those figures. To take one example that seems to be coming up recently with regard to the United States, a Toyota SUV manufactured in Japan is not noticeably more energy-efficient than a Toyota SUV manufactured in the United States. A Toyota SUV is not noticeably more energy-efficient than a GM SUV manufactured in the United States. And other things being the same, an SUV in Japan gets more or less the same mileage as an SUV in the United States. There may be more of a difference in energy consumption per SUV between the manufacturing processes, but I’m pretty sure that production facilities of similar vintage consume energy at similar rates. Take the fluorescent lamp, or any other industrial product for that matter, and we should come up with a similar story.

The key phrases are “other things being the same” and, on a more specific point, “similar vintage”. Of course, other things are not the same. History and geography have dictated different social and political choices that have, among other things, created different economies. Now history cannot be undone, nor geography altered, but the U.S. public can make the kind of social and political choices to change energy consumption patterns. However, there is not much that Japan can do to influence those choices; they are very much the product of a domestic debate. Private firms will follow those choices, and some of those firms will belong to industrial groups headquartered in Japan. But it is not the role of governments to force their business decisions.

Things are really no different with China, although modern history and the wide gulf in per capita income tend to obscure the realities. Baoshan steel, built with technical assistance from Nippon Steel, is one of the most energy-efficient integrated steel mills of its generation. Now it is likely that Nippon Steel went over and beyond purely commercial interests there—Nippon Steel is/was Nippon Steel—but it certainly did not lose money, and in any case is unlikely in today’s environment that it will look beyond the bottom line to help Chinese or any other steel mills anywhere. There are plenty of inefficient steel mills in China, and some of them may profit from upgrading (while others will simply be replaced as environmental charges and energy prices rise). But that’s a business decision to be made by the owners and operators of those mills.

These examples highlight two points. First, the relevant technology is mostly in the hands of the private sector. Governments can talk all they want about partnerships and G-to-G cooperation, but they must understand that their role is mostly limited to making the political and administrative decisions—say, subsidize public transportation—that create the conditions that push social and economic activities in a more energy-efficient direction—say, drive less—and that those decisions are in principle domestic. The ultimate choice is a business decision.

Second, there are few if any significant discrete “energy-efficiency enhancement” technologies—there is no silver bullet, an energy-efficiency Viagra. Instead, energy efficiency in any specific instant is a relative concept involving multiple technologies that have a purpose independent of energy efficiency and whose choice will usually entail consequences beyond energy-efficiency considerations. Note that even a simple fluorescent lamp requires replacing one technology—incandescent light bulbs—with another, both of which share a common objective—illumination—for which energy-efficiency is only one of several practical considerations. Moreover, these technologies in turn function within more complex systems, some of which are business decisions left to the individual users while others are made within broader social and political and social domains. Either way, there is little room for the kind of G-to-G involvement that we see on national, regional, and global security issues.

There is no end to talk about sho-ene taikoku (energy-conservation great power) Japan taking the lead in promoting energy-efficiency. A noble cause, I’m sure, but it is no replacement for the fulfillment of a sovereign state’s international obligations—maintaining the peace and order that is the backdrop drop for all international exchange, commercial or otherwise—particularly since the role of government is severely limited beyond national borders.

No comments: