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National Academy of Sciences: Energy Efficiency Could Eliminate Need For New Power Plants

Friday, December 11, 2009

For years now, I've been touting the fact - and it is a fact, not opinion - that energy efficiency offers by far and away the biggest "bang for the buck" of any energy resource. And yes, energy efficiency - "negawatt" energy, as Amory Lovins calls it - is an energy resource, in the sense that it is "a megawatt of power that was not required to be produced or expended" in the first place. The concept is simply that it costs a lot less to save a unit of energy than to produce that unit, and it's as obvious and simple as you can get in the world of energy. In the United States, by the way, economic output (GDP in constant dollars) over the past 30 years has shot up 134%, while energy consumption has increased only 24%, resulting in a reduction in U.S. energy use per unit of economic output of nearly 50%.

Now, a new study by the National Academy of Sciences confirms the huge additional potential offered by energy efficiency for the U.S. economy, as well as for our ability to slash carbon dioxide emissions. The study finds that:

*"Fully adopting these [energy efficiency] technologies could lower projected U.S. energy use 17 percent to 20 percent by 2020, and 25 percent to 31 percent by 2030."

*"[R]eplacing appliances such as air conditioners, refrigerators, freezers, furnaces, and hot water heaters with more efficient models could reduce energy use by 30 percent."

*"[D]eployment of industrial energy efficiency technologies could reduce energy use in manufacturing 14 percent to 22 percent by 2020, relative to expected trends."

*Perhaps most impressively, "The energy savings from attaining full deployment of cost-effective, energy-efficient technologies in buildings alone could eliminate the need to add new electricity generation capacity through 2030."

That's right, "eliminate the need to add new electricity generation capacity." To put this in perspective, the latest reference case forecast by EIA assumes that between 2007 and 2030, we will require 218 gigawatts of additional gross power generating capacity in this country. Assuming a cost of about $1,000 per kilowatt of capacity, that would mean expenditures of about $218 billion through 2030. In contrast, if we go the energy efficiency route, the National Academy of Sciences study indicates that we wouldn't need to spend any of that money.

Of course, we'd still have to spend money on retrofitting buildings, factories, etc. for energy efficiency. However, the beauty of energy efficiency is that it's the "gift that keeps on giving," in that once you make your initial investment in efficiency technology, you start earning a return on that investment in energy expenditures saved. To use a simple example, if you add a "few hundred dollars worth of insulation", you can "reduce your annual heating and cooling bill 10 to 30 percent." Depending on how much you spend and how much you save, the payoff period on your investment could be just a few years, after which it's all money in your pocket instead of in Dominion Power's.

That was just a small example, but imagine this done all through the economy - transportation, residential and commercial, industrial - and it adds up to huge numbers in terms of energy savings, economic benefits, and cuts to carbon dioxide emissions - a win, win, win situation. So how do we get there from here? According to the NAS report, there are barriers to entry we need to overcome. Some of those can be dealt with by increasing energy efficiency standards for appliances, cars, buildings, etc. That's pretty much a no-brainer, and we should do it ASAP. However, that's almost certainly not going to be enough to really kick start an energy efficiency revolution in this country. For that, we need to get the price signals right (and right now, they're totally distorted by perverse taxes and subsidies that, if anything, encourage the waste of energy). Over at Green Inc., Stanford Professor Lee Schipper - one of the world's leading experts on energy efficiency - pretty much nails it:
The tax and refund makes very good economic sense, Brian (#1). [R]aising the price of carbon bearing energy relative to other goods and services is what makes it attractive to invest away from energy/carbon intensive processes or goods and services. Smart people will both save energy AND take their refunds. Seems to me the main choice is a tax (fixed tax, uncertain quantity of CO2) or a cap and trade (fixed quantity, uncertain price). Y ou choose, but tyou can't choose "C, none of the above" as wehave for the past 35 years.

Hundreds of critically reviewed papers agree that tax or C/T with a refund has the smallest "cost" to the economy. and I'm willing to compromise and give it ALL back. We know what to do to save carbon, but until we have a carbon tax or cap and trade we don't have the incentive as individuals or companies.
So, we know what we need to do, and we know how to get there. Instead of wasting time talking about low "bang-for-the-buck" non-answers like subsidizing expensive nuclear power, or converting corn to fuel (at a huge cost in energy, water, etc.), or other suboptimal solutions, why don't we go right for the high "bang for the buck" that energy efficiency gives us? Put in place some sort of mechanism - a carbon tax, cap-and-dividend, cap-and-trade, whatever - and jump start an energy revolution - both "negawatts" as well as non-carbon-based "renewables" - in this country. Given that this is all "win-win-win," what on earth are we waiting for?