Energy Efficiency & Climate Change Law

Amory B. Lovins contributed this Guest Article to EfficiencyLaw.com, which is especially relevant today, considering this weekend’s announcement that U.S. climate legislation has suffered yet another setback in Congress.

Physicist Amory Lovins is Chairman and Chief Scientist of Rocky Mountain Institute and Chairman Emeritus of Fiberforge Corporation. Published in 29 books and hundreds of papers, his wide-ranging innovations in energy, security, environment, and development have been recognized by the Blue Planet, Volvo, Onassis, Nissan, Shingo, and Mitchell Prizes, MacArthur and Ashoka Fellowships, the Benjamin Franklin and Happold Medals, 11 honorary doctorates, honorary membership of the American Institute of Architects, Fellowship of the Royal Society of Arts, Foreign Membership of the Royal Swedish Academy of Engineering Sciences, and the Heinz, Lindbergh, Right Livelihood, National Design, and World Technology Awards. He advises governments and major firms worldwide on advanced energy and resource efficiency, has briefed 20 heads of state, and has led the technical redesign of more than $30 billion worth of industrial facilities in 29 sectors to achieve very large energy savings at typically lower capital cost. His latest academic chair was as a 2007 visiting professor in Stanford University’s School of Engineering. In 2009, Time named him one of the 100 most influential people in the world, and Foreign Policy, one of the 100 top global thinkers. He currently leads RMI’s strategic synthesis Reinventing Fire—mapping and driving the business-led transition from oil and coal to efficiency and renewables.

What Can We Do to Fix the Climate Problem?

Climate protection, like the Hubble Space Telescope’s mirror, got spoiled by a sign error: in fact, climate solutions are not costly but profitable, because saving fuel costs less than buying fuel. Many leading companies are making billions of dollars’ profit by cutting their carbon intensity or emissions at rates of 5–8% per year —in the best cases, 6–16% per year. When politicians who lament climate protection’s supposed costs, burdens, and sacrifices join the parallel universe of practitioners who routinely achieve profits, jobs, and competitive advantage by wasting less fuel, the political obstacles will melt faster than the glaciers.

Stabilizing carbon emissions requires only increasing energy productivity (measured in $ GDP per GJ) by 2% per year, rather than the canonically assumed 1% per year; stabilizing climate (to the extent irreversible changes aren’t already underway) needs only approximately 3–4% per year. The U.S. has long achieved 2–4% per year, compared with China’s 5%. Raising global adoption to 3–4% per year will be profitable and not so difficult—especially since most of the growth is in countries like China and India that can more easily build their infrastructure right than fix it later. The main missing ingredient is careful attention to “barrier-busting”—turning the 60–80 known market failures in buying energy efficiency into business opportunities. A least-cost climate-protection strategy can also have surprisingly broad trans-ideological appeal.

Energy efficiency is not the only, but certainly the main, tool for profitable climate protection, and indeed could suffice if pursued to its full modern potential, typically with expanding rather than diminishing returns (i.e., radical savings at lower capital cost, now demonstrated in a couple of dozen sectors but awaiting a revolution in design pedagogy and practice).

Detailed assessments show how to save half of U.S. oil and gas at respective average costs of $12/bbl and $0.9/GJ (2000 $), and three-fourths of U.S. electricity at  approimately $0.01/kWh —all below short-run marginal cost. For example, tripled-efficiency but safer and uncompromised cars , trucks, and planes using current technology would respectively repay their extra capital cost in 2, 1, and 4–5 years at current U.S. fuel prices.

Now add alternative supplies. Global fossil-fuel carbon emissions come about 2/5 from burning oil and 2/5 from making electricity (the remaining gas and coal are analogous). Redoubled U.S. oil efficiency at $12/bbl plus substituting saved natural gas and advanced biofuels (together averaging $18/bbl) can eliminate U.S. oil use by the 2040s. Since the average cost of getting completely off oil is roughly $15/bbl—one-fifth the recent price—this transition will be led by business for profit. Innovative public policies can support, not distort, the business logic without needing new fuel taxes, subsidies, mandates, or national laws. Early implementation is encouraging, and by 2009 had pulled ahead of schedule.

As for electricity, “micropower”—low-carbon combined-heat-and-power plus carbon-free decentralized renewables—provided 1/6 of the world’s electricity and 1/3 of its new electricity in 2005, meeting from 1/6 to over 1/2 of all electrical needs in 13 industrial countries. By 2008, the latest data available, micropower was providing 17% of the world’s electricity (vs. nuclear power’s 13%) and about 91% of the world’s new electricity (vs. nuclear’s less than 0%); renewables other than big hydro got $100 billion of private investment and added 40 billion watts of capacity while new nuclear build got no private investment and lost net capacity; the renewables including big hydro got more total investment than all fossil-fueled generation. Micropower and “negawatts” are widening their dominance of the world’s new electrical services, and their 207 “distributed benefits,” when counted, will widen their already decisive economic advantage by about another tenfold. Some notable vendors of big thermal power plants, seeing their markets dwindling, now understand this and believe their future is in distributed and renewable power, while others deny the reality of these trends. Evidence is also emerging that the supposed need for bulk electrical storage in a largely or wholly renewable supply system is a myth: reliability can instead be ensured by proper diversification, forecasting, and integration with existing assets.

The new climate-safe technologies for both supply and efficiency, being cheaper and faster (hence doubly lower in financial risk) than traditional competitors, will continue to wallop them in the marketplace—and to buy more climate solution per dollar and per year. Conversely, when central planners continue to buy costlier and slower options, they reduce and retard climate protection—by approximately 2–10-fold per dollar and 20–40-fold per year, for example, when new nuclear power is bought instead of micropower and efficiency.

In short, the climate problem is neither necessary nor economic, but is an artifact of not using energy in a way that saves money. Climate change can be prevented by taking markets seriously —letting all ways to save or supply energy compete fairly, at honest prices, no matter which kind they are, what technology they use, where they are, how big they are, or who owns them. Internalizing carbon and other environmental costs will be correct and helpful but not essential.

Fair competition can simultaneously solve many other problems. For example, saving electricity needs about 1,000 times less capital, and repays it about 10 times faster, than supplying more electricity. This 10,000-fold capital leverage can turn the power sector (now gobbling about a fourth of global development capital) into a net funder of other development needs. Profitably eliminating oil use would certainly make the world better and safer. A more efficient, diverse, dispersed, renewable energy system can make major supply failures, whether caused by accident or malice, impossible by design rather than (as now) inevitable by design.

The inevitable demise of nuclear power—already stricken by a fatal attack of market forces— can belatedly stem nuclear proliferation too, by removing from ordinary commerce a vast flow of ingredients of do-it-yourself bomb kits and their innocent-looking civilian disguise. That would make those ingredients harder to get, more conspicuous to try to get, and politically far costlier to be caught trying to get, because for the first time, the motive for wanting them would be unmasked as unambiguously military. Focusing intelligence resources on needles, not haystacks, would also improve the odds of timely warning. All this wouldn’t make proliferation impossible, but would certainly make it far more difficult for both recipients and suppliers.

Had my analyses of these opportunities been adopted when first published [in 1979-1980 in the Bulletin of Atomic Scientists], we would not now all be worrying about climate change, oil dependence, or Iran and North Korea. But it’s not quite too late. As the late Donella Meadows said, “We have exactly enough time—starting now.”

So what are we waiting for? We are the people we have been waiting for. And as Raymond Williams wrote, “To be truly radical is to make hope possible, not despair convincing.”