Efficiency Is Our Best Untapped Energy Source

The world's biggest untapped energy source, according to energy expert Amory Lovins, is efficiency. But don't call it "conservation."

In an interview conducted by science writer Carole Bass for Yale Environment 360, Lovins, the co-founder and chairman of Rocky Mountain Institute, says that word connotes "privation, discomfort and curtailment." By contrast, "efficiency" means "doing more and better with less energy and money, but with more brains and technology," he says.

The longtime renewable energy advocate and author says retooling for energy efficiency will require "barrier-busting" at many levels. And government, Lovins says, "should steer, not row."

Carole Bass: You have called energy efficiency "the largest, cheapest, safest, cleanest, fastest way to provide energy services." How do you quantify that claim? For example, how large, how cheap, how fast?

Amory Lovins: Oh, for example, in the United States we could save at least half the oil and gas and three-quarters of the electricity we use, and that efficiency investment would cost only about an eighth [of] what we’re now paying for those forms of energy. …

CB: How fast could we do that?

AL: To get completely off oil -- half from the supply side and half by redoubling the efficiency of using oil -- would take ’til the 2040s, if we did it about a third slower than we saved oil from 1977 to ’85, when we were last paying attention. Saving half the gas could be a good deal faster, probably about 20 years. And saving three-quarters of the electricity would take several decades, because we would need both to build new things in a much smarter way and to retrofit existing buildings and factories -- bearing in mind that about 70 percent of our electricity goes to buildings and 30 percent to factories.

Now, there are ways to speed this up, like mass retrofits. The most important way to speed it up would be to reward utilities for cutting our bills, not selling us more energy. That reform is adopted in a handful of states but pending in about another two dozen. And there’s a lot of barrier-busting needed at all levels of government as well as firms and households.

By barrier-busting, I mean enabling people to respond to the price signals they see, and use energy in a way that saves money, by turning into a business opportunity each of the 60 or 80 well-known obstacles or market failures in buying efficiency. [You’ll find the taxonomy of those on pages 11 to 20 of our 1997 paper Climate: Making Sense and Making Money, which is in the climate publications library of rmi.org.] And another important way to make retrofits much cheaper is to coordinate them with retrofits and renovations you’re doing anyway for other reasons. We published an example where that coordination would enable you to save three-quarters of the electricity used by a typical 20-odd-year-old glass office tower at a slightly lower cost than the regular 20-year renovation you have to do anyway, that saves nothing.

CB: Now, you mentioned that barrier-busting is needed at all levels of government. It seems as though your work focuses very much on the private sector.

AL: Well, barrier-busting is needed in the public and private sectors, and in fact many of the biggest obstacles are at the level of the firm. For example, a company or an individual hiring an architect or an engineer would do well to pay that designer for -- or, pay those designers for what they saved, not for what they spend, which is the traditional method of compensation. Or, there’s the well-known split incentive. Why should I fix up the building if the landlord owns it, and why should the landlord fix it if I pay the bills? You need to drop in a lease rider to share equitably the costs and benefits of the retrofit.

CB:You do focus mainly on the business side, is that right?

AL: Yeah. We work in all sectors, but most of our work is with the private sector, because we actually want to get things done.

CB: How far can the private sector take us, and at what point do we need to bring the general public along as well?

AL: I think government should steer, not row. The rowing, the heavy work, will and should be done by the private sector in its co-evolution with civil society. The government should get the rules right. And I think the broad framework that makes the most sense for energy policy would be to let all ways to save or produce energy compete fairly, at honest prices, no matter which kind they are, what technology they use, how big they are, where they are, or who owns them. And let’s see who’s not in favor of that. I would predict that those not in favor will include all the incumbents, who are quite happy with the present arrangements they paid a lot of money for.