Saturday, July 10, 2010

The true cost

It has been argued that the current downturn in the economy, one that came close to becoming another depression, was caused by higher (fossil fuel) energy prices and the drive for short-term profits by corporations. There is likely a great deal of truth to both.

The solutions, of course, are in switching government subsidies from fossil fuels to renewables, adding carbon taxes to energy sources that are not renewable, and in restructuring the investment community so that it takes a longer view.

I note that these two destructive factors are strongly at work in the general population, not only amongst investors and corporate heads. When it comes to energy conservation/efficiency and renewable energy the question is always asked "what is the pay-back period?" This question is never asked when deciding to update one's kitchen, buying a car, and the like. People want to know how affordable it is to them, not what the energy savings are going to be, nor how much more energy secure they are going to be.

A very innovative funding program in the U.S. has recently been closed down because the mortgage companies were not convinced that homeowners paying less for energy are less likely to foreclose on their mortgages. The long-term viability of operating a home has been sacrificed for the short-term.

Homeowners here are usually far more concerned about borrowing more money, even when it can be shown that the reduced energy costs would pay for those borrowing costs. And once the loan is paid off then they would have more disposable income.

Unless we learn from lessons provided to us from "the great recession" we are far more likely going to repeat it. If we do learn then we can have improved financial security, a better environment, and a future for our children/grandchildren.