Resource and energy substitution

Abstract

Natural resource conservation through economic substitution mechanisms is an important response to constraints on the supplies of energy goods and materials that permits continued economic growth. “Conservation” is distinguished from “preservation” and connotes the rational adaptations of producers and consumers to a change in the social costs and benefits associated with the use of a unit of resources or to better information regarding these benefits and costs. Here, the possibilities of energy-material, energy-labor and energy-capital substitutions are explored using quantitative examples, and the concept, new to economics, of an energy-time tradeoff is introduced. The necessity of evaluating a product's total life-cycle consumption of energy and materials is stressed, encompassing the production technique, the consumer technology and the eventual discard and recycling options as well. Finally, we note that major substitutions require long times—twenty-five to thirty years—for invention, innovation, information diffusion, commercialization and market penetration. Governmental initiatives can play a positive role in reducing such lag times.