April 21, 2007

So you want to save the planet? What should you consider first?

April 22nd is Earth Day and you might be wondering what should we do? After all, the problem of global warming is huge and we have an administration that is worse than an ostrich in facing the problem. Yet, there are so many things we can do, that the question becomes where do we start?

Back in the 1970s during the oil shock that created long lines at gas stations, a man named Arthur Rosenfeld did some calculations and came to a surprising answer.

When the OPEC oil embargo hit in October 1973, Rosenfeld did a little math. He discovered that if Americans used energy as efficiently as the Europeans or Japanese, the United States could have been exporting oil in 1973, rather than sitting in rationing lines at gas stations. The solution, he realized, was not to bend the Arab oil regimes to America's will but to end America's thralldom to them by wasting less energy.

This discovery, that energy usage had a strong demand side component, put him on the road to a life long journey in looking at how we use energy and the invention of some simple, yet powerful technologies that we are still employing today.

The following summer, Rosenfeld and a few like-minded physicists organized a month long workshop, held at Princeton, that attracted top scientists and engineers from fields such as building design, transportation, the manufacturing sector, and gas and electric utilities. "We began looking at some things that were all sort of common sense," he recalls. "Change incandescent lights to fluorescents, make better use of skylights, put more insulation in buildings, that kind of thing. By the end of the first week, we realized that we had blundered into one of the world's largest oil and gas fields. The energy was buried, in effect, in the buildings of our cities, the vehicles on our roads, and the machines in our factories. A few of us began to suspect that the knowledge we gained during that month would change our lives."

Realizing that the answer to many of our energy problems was using what energy we already had more wisely, Rosenfeld help create the energy efficiency standards such as California's Title 24 which we all live by now. He did this by working on the problem like how do you build houses that need less airconditioning where its hot and less heating where its cold. And the result?

California's building efficiency standards (along with those for energy efficient appliances) have saved more than $56 billion in electricity and natural gas costs since 1978. It is estimated the standards will save an additional $23 billion by 2013.

These standards are used in 15% - 20% of all new buildings in the United States and have been adopted by countries throughout the world as they look at how to reduce their energy use.

Rosenfeld went on to help define energy efficiency standards for many of the appliances we use in our homes. As a result, our refrigerators use approximately 50 kwh per year rather than the 250 kwh per year (or more) that they ate in 1974. This focus on looking at using energy more wisely had been tremendously effective and provides us enormous savings.

California embraced energy efficiency with alacrity and while much of the rest of the country continued to increase their energy use per capita, California's energy use per person was largely flat. (See chart)

But then came the energy deregulation craze, and California utilities no longer were regulated to keep working on efficiency. After all, the mantra went, the market would do a better job than a regulatory body in figuring out what to do. Yet, energy, like a number of other things in life, doesn't fit the free market model very well, because the goal of the energy market is to maximize profit and profit comes from selling more watts. As the NRDC article says,

The utilities needed prodding to do these things, because even though saving energy was beneficial to ratepayers and society in general, it was against their own financial interests. They made money by selling kilowatt-hours. The more they sold, the more they made. They had a far greater economic incentive to hand out free hair dryers (which some actually did) than to subsidize setback thermostats and CFLs for their customers.

When the market based solely on maximizing the profits of the energy producers created a perfect racket that led to the energy crisis of 2000-2001. It was then that ole supply-side himself, VP Cheney *, opined that California hadn't been taking care of building enough power plants and that the state had relied too much on conservation.

California responded by putting together a crash course in more conservation. The state poured in $1 billion dollars into helping deploy energy efficient technology throughout California addressing the most important areas of demand for homes, cities and towns, and businesses through the Flex Your Power program.

  • Households replaced nearly 8 million incandescent lights with compact fluorescent lights
  • Cities and towns replaced millions of old wasteful traffic lights with frugal LED traffic lights
  • Factories swapped out thousands of old motors for new more efficient ones.

Courtesy of the NY Times

The result was a crash in demand and a savings of 5000 MW of power (saving approximately the output of 10 large power plants) which was enough to collapse the fraudulent market that was driving the crisis. And during that time, California was the most energy efficient society in the industrial world. Many of those savings are still benefiting California and what California is doing is to feed more resources into helping raise the bar.

California's recommitment to energy efficiency is partly a return to the past, but with a significant new wrinkle. Now, when utilities plan for long-term growth in electricity demand, efficiency is the resource of first resort, with renewable energy sources next in line. Utilities and regulators call this the "loading order." What it means, in Kennedy's words, is that "before our electric utilities spend a dollar to buy power in the market or build a new generation plant, they will first invest in ways to help us use energy more efficiently." If efficiency measures don't free up enough generating capacity to meet the growth in demand, the next resource in the loading order is renewable sources. Only then can utility companies turn to fossil-generated power (whether bought or built), and even then any new plants that are constructed must be no dirtier than a state-of-the-art natural-gas generating plant.

So what should we do first? Let's follow California's sensible lead.

  • Waste less energy.
  • Use renewable power wherever we can.
  • Become carbon neutral.

One of the complaints I've seen about California is how expensive electricity is here and how that results in companies wanting to do business elsewhere. Yet, each kwh of energy used in California goes farther than a kwh in another state (see Texas). In fact, when the Chinese who were looking at adopting some of California's standards calculated the costs, they came to the conclusion that they could invest a quarter of the money to save 1 MW as it would cost to generate that same 1 MW. California's approach to charging more to save more is cheaper in the long run. Because:

The benefits to consumers from energy efficiency investments are, if anything, likely to compound. Once you hit the payback period, energy efficiency is like a cash cow -- it just keeps saving and saving. (And saving.)

And we are on the track to doing something about those greenhouse gases.

More on this story from paradox and the SF Gate.com.

* Here's what Cheney said during the California energy crisis:

"What's happened in California, I would argue, is they've taken the route of saying, 'Well, we can conserve our way out of the problem. All we have to do is conserve; we don't have to produce any more power.'

"So they haven't built any electric power plants in the last 10 years in California, and today they've got rolling blackouts, because they don't have enough electricity; they've got rising prices; they've got a whole complex of problems that are caused by relying only on conservation and not doing anything about the supply side of the equation."

Ole supply-side can't get rich on our saving energy. No wonder he doesn't get it.

Posted by Mary at April 21, 2007 08:41 PM | Environment | Technorati links |

Good post, but fundamentally in error re the end of the 2000-2001 western Energy Crisis.

The crisis essentially evaporated the moment FERC declared its intent to impose (very mild) price regulation -- even before the regulatory regime took effect, it took the profit out of game, and the big gamers moved on. April 25 declaration, and by May 9 we were talking about the crisis in past tense. [Isolated 1 and 2-hour blackouts did occur May 7 and 8, in context of record inland temperatures.] FERC then moved to harder controls with even graeter effect.

As recounted by Public Citizen:

After the Federal Energy Regulatory Commission, under heavy political pressure, imposed round-the-clock wholesale price controls for the entire Western electricity market in June 2001, prices dropped significantly, and California has experienced not one single rolling blackout. Spot prices fell more than 80 percent immediately after the price controls took effect.


Posted by: RonK, Seattle at April 22, 2007 08:09 AM

> So you want to save the planet?
> What should you consider first?

- have two or fewer children yourself

- help to make family-planning services and safe, effective contraception available to all people.

These two actions are the highest-leverage you can take. There would be little environmental problem with all the world's peoples living at a first-world standard of consumption if the world population were still below one billion.

Posted by: joel hanes at April 22, 2007 08:07 PM