Save Energy, Make Piles of Money
By Amory B. Lovins
The Washington Post
 The idea that reducing global warming will harm the U.S. economy is
flatly contradicted by business experience.
Arguing about how to share the alleged pain of the energy savings required
to abate global warming is irrelevant. Climate protection is actually a
lucrative business opportunity disguised as an environmental problem. The
same energy efficiencies that reduce global warming are hugely profitable
in strictly business terms, without even ascribing any value to the environmental
benefits of squeezing more work out of fossil fuels.
Energy efficiency is a competitive advantage, not a burden, because
it's cheaper to save fuel than to buy and waste it, even at today's low
prices. Modern energy-efficient technologies in all sectors often yield
after-tax returns of upwards of 100 percent a year while providing superior
service quality.
Much energy is wasted because
bad choices are made by people who don't foot the bill.
True, not every last shred of this waste can be eliminated at a net
profit, but there are more than enough profit opportunities in energy savings
to reach ambitious targets for greenhouse-gas reductions while satisfying
the most demanding investors.
The U.S. economy as a whole is only about 2 percent energy efficient
compared with what physics permits. Cars use only one percent of their fuel
energy to move the driver. As a nation, we waste about $300 billion in energy
every year-more than the defense budget and federal deficit combined.
Consider the production of electricity, the costliest and most carbon-intensive
form of energy. America's power plants turn fuel into one-third electricity
and two-thirds waste heat. This waste heat alone is the equivalent of Japan's
total national energy use. Yet cogeneration processes to use the heat-already
common in Europe-could harness up to 91 percent of a fuel's energy content,
providing more electricity per unit cost and doing so profitably, perhaps
cutting carbon emissions threefold and costs twofold.
Or consider Dow Chemical, an industry leader in energy savings. Dow
increased profits $110 million a year in its Louisiana division alone by
implementing some 900 energy-saving ideas suggested by workers. Dow, Mitsubishi,
Interface, Xerox, Southwire, Carrier, and other forward-looking corporations
are discovering thousands of ways to rethink, redesign, and re-engineer
their products and industrial processes to save money by cutting energy
waste. Substituting economically rational design criteria would save much
of the energy now being used by industry, while reducing capital costs at
the same time.
So if energy efficiency is so profitable, why aren't more businesses
cashing in_ Markets are imperfect mechanisms, and complex organizations
run by real people don't make perfectly rational choices. Just because something
makes economic sense doesn't mean it's going to get done.
Amory B. Lovins and
his dog.
[TOP] |
Lighten your load:
dark-roof colors absorb heat, while light ones refect it away, reducing
the demand for electric fans and air-conditioning.
Detailed scrutiny of business experience reveals more than 30 specific
kinds of barriers that interfere with what should be common-sense savings:
everything from inattentive business practices to obsolete government regulations
and perverse economic incentives.
For example, nearly all electric utilities are rewarded for selling
more energy and penalized for cutting customers' bills. But a few states
have decoupled utilities' profits from sales volumes, letting companies
keep a portion of what they save their customers. The nation's largest investor-owned
utility, Pacific Gas and Electric, thus added more than $40 million to its
1992 bottom line while saving its customers nine times that much simply
by removing this one perverse economic incentive. Similarly, architects
and engineers design much more efficient buildings if they are rewarded
with a share of the savings-rather than, as is now the case, getting fees
that are based on the cost of what they design.
Compact Flourescent
lamps such as these use less energy and last longer than traditional bulbs.
Much energy is wasted because bad choices are made by people who don't
foot the bill. For example, most buildings are wired with skinny electrical
wire, which costs a little less but wastes far more in electricity because
of its increased resistance. Using larger-diameter wire would yield an average
after-tax return of 169 percent per year. But an electrician who specifies
thicker wire isn't likely to be the low bidder who gets the job. It is ironic
that many supposed proponents of free-enterprise capitalism have so little
faith in the ingenuity and vitality of the marketplace when it's used to
reduce global warming profitably. We already have shown that this can work.
It is a little-known fact that U.S. energy savings since 1973 have cut our
national energy bill by some $150 billion to $200 billion a year-quietly
and profitably-without disrupting economic growth or compromising our quality
of life. From 1979 to 1986 the U.S. economy grew by 19 percent, while energy
use shrank 6 percent.
While that stunning success was spurred by high energy prices, doing
it again needn't be. For example, although electric rates are only half
as high in Seattle as in Chicago, Seattle has, in the 1990s, been saving
electric load 12 times as fast as Chicago and electric energy 3,640 times
as fast. Why_ Because Seattle City Light has helped create an informed,
efficient and effective market for savings. Chicago's utility hasn't.
It's time to stop thinking of energy efficiency as bitter economic medicine.
As Edwin Land, inventor of the Polaroid camera, used to say, the future
may require "not so much having a new idea as stopping having an old
idea."
The writer, a specialist in energy efficiency, is founder
of the Rocky Mountain Institute in Colorado.
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Let's Turn Down the Heat
Practical Steps Consumers Can
Take to Slow Global Warming
By Howard Geller and John Morrill,
ACEEE
There's good news and there's bad news. First the bad news. The scientific
community has reached a consensus that global warming is underway due primarily
to our burning of fossil fuels and the resulting build-up of carbon dioxide
and other "greenhouse gases" in the atmosphere.
The good news is that there are a lot of things that we as individuals can
do in our homes and workplaces to reduce our contribution to global warming
and other environmental problems like urban smog and acid rain. Better yet
many of these steps can save money as well as protect the environment.
Here are some practical, cost-effective steps that individuals can take
and what they could mean for the environment. |
Look for the "'Energy
Star" label for products that use less energy and can cut your utility
bill by 30 percent.
Lighting
Lighting accounts for 20 percent of all electricity use in the country and
about 15 percent of electricity use in our homes. However, normal incandescent
bulbs are actually heaters in disguise. The typical household spends $110
per year on electricity for lighting, but only 10 percent of this energy
turns into visible light. The rest just heats the air around the bulb.
Fortunately, there is a practical alternative. Compact flourescent lamps
(CFLs) use just one-quarter to one-third as much electricity as incandescent
bulbs and last ten times as long. If every household replaced its most-used
incandescent light bulbs with CFLs, electricity use for lighting could be
cut in half. That would cut our nation's emissions of CO2 by about 125 billion
pounds, enough to completely halt the growth of emissions given our recent
growth rates.
continued
on page 23 |
