Get Energy Smart! NOW!

With the quite stark contrast between the Department of Interior’s go-ahead to offshore wind turbines (Cape Wind) and the worsening disaster of ever more oil coming over the Horizon from the Deepwater (e.g, Deepwater Horizon’s explosion and resulting dumping of untold amounts of oil into the Gulf of Mexico), people are turning to the question: how can we foster more of Twirl, Baby, Twirl and less of Drill, Baby, Spill (or, well, Drilling, Disaster, Denial).

One idea that came across the electrons: set a goal of cutting oil and coal use 2 percent per year, indefinitely, which would leave us at about a 50% reduction in both by 2047.

My reaction: 2% forever might sound’ great but falls incredibly short of what is required and very far short of what is possible without revolutionary stretch goals.

Simply put, I do not think that the best path forward is to set weak goals and then declare victory as inadequate measures succeed. Especially because anything realists in energy and climate policy propose, if it ever gets a hearing, will get watered down in the process.

Personally, there is value to setting objective and threshold standards. Objective is what we’d like and threshold is the minimal acceptable.

Let’s take two arenas, in turn: coal electricity and oil usage.

COAL:

• OBJECTIVE:  Elimination of coal-fired electricity in US within a decade and globally in 20.  “Gore” standard / plan re the US.   Basically, this looks ‘doable’ in technological terms (Energy (now wind) financier Jerome a Paris has, for example, looked at just how much wind can do) but this “doable” would be difficult, not just for political reasons.
• THRESHOLD:  Elimination of coal-fired electricity in 20 years in US, 30 years globally.  Google / Get Energy Smart! NOW! standard. This looks to be very doable, with spare capacity if one of the parts of the elimination path doesn’t work.

In short, we can eliminate coal from our electricity system (without the chimera of CCS) by 2030 with a serious net economic benefit for the nation due to, for example, reduced health care impacts.  This is far more than “2%” per year and, again, it is quite achievable via the combination of energy efficiency and low GHG-electricity increases (nuclear, renewable, and, potentially, natural gas).

In all seriousness, when it comes to electricity, the US can cost-effectively cut demand by 25% over the next decade via direct efficiency while boosting production efficiency by, easily, an equivalent amount. (Simply the potential for CHP producing electricity from industrial facilities is, to put it bluntly, rather scary of what we’re wasting. ACEEE estimates that 95 gigawatts (roughly 10 percent of US demand) of CHP could be added between 2010-2020. (That is electricity with, in essence, zero additional energy use since this is capturing waste heat to make electricity.) How about geothermal with the hot water coming out of oil and natural gas wells? How about …???)

There are paths for rapidly sparking moves in this arena, such as profit decoupling. One of my ‘favorite’, that doesn’t seem to get discussed too much, is how our tax policy is often counter to Energy Smart practices. For example, energy use is deductible as an expense while capital investments most typically end up on depreciation schedules which can be as long as 42.5 years (meaning that net present value of that depreciation is less than, in fact, half the actual cost).  Why not put (above some threshold level of, perhaps, $10k/year of energy costs) polluting energy use on a 3-year depreciation schedule while making ‘Energy Star+’ (perhaps 30% above constantly tightening standards) investments a then-year deduction, ‘Energy Star’-like costs a 3-year depreciation, and non-Energy Star 5+ year investments.  Without question, that sort of shift would get financial officers at all major businesses paying close attention as to how to cut energy costs and more willing to invest in ways to cut that usage.

Turning to oil …

Again, that ‘2% per year’ sells the opportunity short.  There are clear paths to cutting, with positive economic impact (from reduced traffic accidents, reduced health impacts, reduced oil cost imports, reduced costs of oil as reduced demand limits price increases, etc …), U.S. oil demand by 25 percent within five years and in the range of 50 percent within a decade.

For an investment of roughly $7o billion over five years, the United States could cut demand by the end of 2015 by over 4 million barrels per day.  The “ROI” on that investment of about $14 billion per year?  At $86 per barrel (today’s price), that would reduce US oil import costs by over $140 billion.  Without considering all the other benefits (being able to invest the money in other productivity, reduced health care costs, etc …), that is a 10 to 1 ROI in terms of the annual costs against improvement in the US balance of payments.

And, that would just be the beginning as the ‘longer-term’ investments would begin to kick in toward the end of the decade. One of the great opportunities to seize?  Electrification of rail could cut US demand by over 10 percent, by in the range of 2.5 million barrels / day, while easing connecting wind resources into the grid and making our highways safer and less expensive to maintain by greatly reducing the number of trucks moving around the country. This would have many other economic benefits: imagine being able to move tomatoes from California to New York in 30 hours, reliably, with virtually no petroleum and 100% clean electricity used in the transport process?

And, for cutting into the US oil demand, there is the other side of the equation — efficiency will only take us so far (even though it can go quite far). There are quite a few promising developments in the world of alternative liquid fuels — whether from waste, algae, or otherwise.  Targeting 10% of US liquid fuel demand to come from such sources (not corn ethanol or palm oil or …, please) by 2020 seems a clear “Objective” target with 2025 as threshold. Achieving that, combined with increasing electrification of transport and other efficiency measures, would set the United States on a clear path toward eliminating oil from the transportation system by 2035, if not earlier.

And, there are all of our non-transportation, non-energy fossil foolish addictions, like plastics. Eliminating plastic bags would cut 2 days off our oil demand.  That is an example of something that is achievable virtually overnight (with, let’s say, a 25 cent charge for disposable plastic bags).  Perhaps someone should ask Americans to consider this question: Is the destruction of the Gulf Coast really worth the convenience of a plastic bag? Disposable plastic forks?  Disposable plastic water bottles? Etc …

In summary …

Targeting ‘2% per year’ sells the economic opportunity short while remaining simply inadequate against the scientific reality that humanity must drive done its emissions as rapidly as possible to reduce the likelihood of catastrophic climate chaos.