Something strange is happening in Times Square, something even stranger than Disney moving into an area once famous for peep shows and hardcore Triple-X movies. In a district where an explosion of neon lights and honking horns symbolizes the American attitude that energy will never run out, one of the nation’s most energy-efficient office buildings is rising like a green beacon over the Great White Way.
The future of conservation technology presents a curious double image. At the same time that a corner of Times Square goes green, governments are cutting back energy funding, and consumers are backsliding into their pre-energy crisis gas guzzling. Is energy efficiency merely yet another retro fashion from the 70s, like disco dancing, platform heels and polyester? Or is it cutting-edge technology for the 21st century?
At one time, conservation seemed like a brute necessity. After all, we were running out of energy. But the near-collapse of the OPEC oil cartel in the early 1980s and reductions in oil prices that followed seemed to put an end to these concerns. Ronald Reagan, former pitchman for General Electric’s all-electric kitchen, rose to the presidency arguing that America did not conserve its way to greatness. His administration ended up slashing every alternative energy program in sight except nuclear power.
How surprising, then, to see that, in spite of dwindling federal support and soft energy prices, conservation gains have continued until very recently. “Over the last 20 to 25 years, the economy has grown more than 60 percent with virtually flat energy use,” says Bill Prindle of the Alliance to Save Energy. “The energy productivity of the economy has become somewhat better, due to the wakeup call of the energy price shocks and shortages of the ‘70s, which caused people to think about energy in their purchasing practices and design efficiencies.” Since then, more efficient building methods and industrial operations have become consolidated into standard engineering practice. Under the influence of consumer groups, state utility commissions mandated Integrated Resource Planning (IRP), forcing electric companies to consider all alternatives to meet demand, including cost-effective energy conservation measures.
In the last few years, though, the conservation drive has faltered. Cost-cutting pressure from Congress has eroded the support for federal energy programs. Looming deregulation is causing electric utilities to throw their conservation programs overboard. Low gasoline prices have robbed much of the motive for conserving fuel, with an explosion in demand for larger cars and, in particular, sport-utility vehicles (SUVs). Highway speed limits of 55 miles per hour, once the most visible symbol of a conservation-conscious America, have again been raised to 65 or 75 mph across the nation. Is energy efficiency or conservation simply irrelevant in this age of low oil prices?
Not if you consider the environment. The United States faces international pressure to cap the emissions of greenhouse gases to address this looming climate problem. So far, the United Kingdom, Germany, Switzerland and the Netherlands have held up their end of the 1992 Climate Change Convention Agreement. But U.S. carbon emissions in 1996 rose for the fifth straight year, to 3.3 percent, well above the level targeted by President Clinton. Now the European Union wants to up the ante-cutting emissions 15 percent from the 1990 level by the year 2010. National security is another concern, as rising oil imports leave us vulnerable once more to price shocks and turbulent Mideast politics. Should there be another threat to the nation’s oil supply like the Gulf War, we are woefully unprepared to come up with substitutes for imported oil. The U.S. military already spends more than $50 billion a year to police the Persian Gulf.
Sport-utility vehicles represent a giant leap backwards in fuel economy, averaging only 16 miles per gallon.
What often gets lost in the energy debate is a simple fact: Conservation is usually the cheapest way to meet new energy demand. According to Amory Lovins, founder of the Rocky Mountain Institute, energy waste costs the U.S. economy around $300 billion per year-more than the federal budget deficit, more even than the entire military budget (which was recently running around $10,000 per second). On the other hand, conservation measures adopted since the 70s have already saved $1 trillion in energy costs.
Yet studies show that there’s still a largely untapped well of energy-efficiency opportunities available throughout the U.S. economy-in industry, transportation and buildings. There are many cost-effective measures available, even under the current regime of low energy prices.
Bright Lights, Big Savings
Energy efficiency results so far have been outstanding, but experts say far more can be done. One of the greatest energy efficiency success stories has been in the area of electricity demand-side management (DSM). Several states require utilities to consider energy-efficiency measures on an equal basis with electric generation options, mandating them to pick the least expensive methods to meet new electricity demand. Studies show that helping consumers improve the efficiency with which their electricity is used often costs utility companies less than building and operating new power plants. At their peak in 1993, utilities spent nearly $3 billion on these DSM programs. Their efforts saved the equivalent of 44 large nuclear power plants (44,000 megawatts of peak demand).
As a symbol of what’s possible, Sacramento Municipal Utility District (SMUD) is the national poster child of green utilities, plowing eight percent of its gross revenues back into energy efficiency. SMUD has initiated very aggressive DSM programs, helping customers to purchase 42,000 super-efficient refrigerators, planting 500,000 shade trees to save air conditioning, and buying power from four cogeneration plants. However, looming electric deregulation threatens to cause a crash in these programs every bit as precipitous as their rise. In California, for example, funds for DSM fell almost 40 percent between 1994 and 1995 due to the threat of restructuring and retail competition. At risk are the rebates for fuel-efficient equipment, educational and training programs that were at the heart of California’s highly successful energy conservation efforts-programs that enabled it to hold per-capita electric use in 1993 to the 1979 level while consumption rose 29 percent elsewhere in the country.
Ironically, competition and deregulation could mean more expensive power for consumers. An Electric Power Research Institute (EPRI) study shows that the DSM programs nationwide were highly effective in the short time they have been on the scene. It says utility conservation programs saved electricity at a cost of 2.1 cents per kilowatt-hour, competitive with the very cheapest electric generation options (natural gas and hydroelectric). And saving electricity through efficiency is clearly a bargain compared to nuclear power, which can exceed a cost of 10 cents per kilowatt-hour, or dirty high-sulfur coal electric power, which typically costs four to six cents per kilowatt hour.
Energy conservation grew rapidly in the 1970s, the result of a persistent gas crisis and a president, Jimmy Carter, who campaigned for conservation from the White House.Photo: H. Armstrong Roberts
Industrial energy conservation remains at an embryonic stage in the U.S. For the near future, industry will likely continue to be an underachiever without incentives or mandates from government. For most industries, energy is a small part of operating costs-less than two
percent of the value of manufacturing shipments, according to some estimates-so there is little incentive to save.
Photo: Jimmy Carter Library
Independent power generation, or cogeneration, is one area where industry could save enormous amounts of energy and money. Wherever industrial boilers generate process steam, there exists a possibility to make the steam do double duty-first for the industrial process, and then to turn a turbine and generate electricity. Cogeneration allows up to 90 percent of the energy in fuel to be used productively-far more than the typical 33 percent efficiency for central power plants owned by U.S. utilities. Combining heat and power in a cogeneration plant knocks 15 to 30 percent off the cost of the power generated.
Appliances are another huge success story for energy efficiency, driven largely by mandatory federal standards. Laws passed in 1987 and 1992 have saved over $15 billion in energy costs. According to Energy Innovations, a study sponsored by the Alliance to Save Energy, American Council for an Energy-Efficient Economy, Natural Resources Defense Council, Tellus Institute and the Union of Concerned Scientists, standards adopted to date are expected to save consumers $130 billion over the long run. Economic benefits to consumers of the new standards exceed their costs by three times on average. Developing standards has only cost the government $50 million, yielding a benefit-to-cost ratio for the governments investment of 2,500 to one.
There are also impressive environmental benefits. According to Energy Innovations, appliance standards are cleaning up the air by avoiding more than 53 million tons of CO2, 11,000 tons of sulfur dioxide and 108,000 tons of nitrogen oxides per year. A new standard for refrigerator/freezers was adopted in early 1997 and will take effect in 2001. This one change will reduce energy use by 30 percent over standard refrigerators, for a $40 billion energy cost savings.
Residential and commercial buildings represent more than a third of U.S. energy demand. Here too, there have been significant successes. American energy use per household fell 19 percent between 1973 and 1991. In commercial buildings, energy consumption per square foot also fell substantially. Yet these sectors achieve far below their maximum potential. According to Energy Innovations, residential and commercial energy use can be cut an additional 25 to 50 percent using technology available today.
While commercial buildings have become more efficient in the last 20 years, that progress has been somewhat offset by huge increases in the use of personal computers, copiers and fax machines. But the technology is getting better. The EPA’s Energy Star Office Equipment Program has registered 2,000 computer, printer and monitor models as energy-efficient, and it estimates the program will save 17,000 gigawatt-hours per year by 2010. In 1993, computer manufacturers slashed the energy use of desktop computers by putting low-power microchips used in notebook models into the desktops.
The Environmental Protection Agency (EPA) has achieved notable results with several voluntary programs to encourage greater energy efficiency in buildings. Under its Green Lights Program, corporations signing an agreement with the EPA to adopt cost-effective lighting retrofits are entitled to technical assistance. By the end of 1996, Green Lights had over 2,500 participants, including nearly 200 Fortune 500 companies. The companies conserve over 3,000 gigawatt-hours per year, saving $250 million as of 1996.
Ever since Jimmy Carter appeared on television in a cardigan sweater telling people to turn off their lights, conservation has sometimes suffered an image problem. Many homeowners probably concluded that conservation means freezing in the dark. But in the form of efficiency, it actually means doing more with less. For example, superinsulated houses in the bitterly cold winter climate of Saskatchewan have been adequately heated with only the body heat of their occupants. More than 100,000 superinsulated homes now exist in Canada, Scandinavia, and the northern U.S. Good insulation has proved a simple but powerful energy-saving measure: Model conservation standards developed in the Pacific Northwest have reduced electric use for space heat by 40 to 50 percent.
A change to more efficient lighting saves on air conditioning as well as the electric bill, because inefficient lights add to a building’s heat load. New compact fluorescent light bulbs (CFLs) use only one-fourth as much energy as standard bulbs to achieve the same illumination. While CFLs are expensive, they can pay their cost back in two to four years, and they last much longer than a standard bulb. But currently, only nine percent of U.S. homes have them.
Most homeowners still aren’t taking full advantage of efficient technology, either. A 1994 study examining surveys of participants in the Massachusetts Electric Company’s DSM program found that 90 percent of building owners were unwilling to install lighting retrofits with short paybacks and large efficiency gains until their local utilities gave them substantial incentive payments. After they installed retrofits with rebates and utility help, two-thirds said they would invest in lighting retrofits in the future without special incentives. The results seem to indicate that utility building efficiency programs acted like a foot in the door, which got the building owners more interested.
Lack of information is one of the biggest reasons why consumers aren’t able to fully exploit their potential energy savings. Government, utility and industries acting together can help lower the cost of getting information to consumers, much like labeling food products makes it easier to select the cheapest, most nutritional ones. New technologies on the horizon will greatly lower the cost of informing electric utility customers, demystifying the relationships between consumption and your bill.
In a subdivision near Little Rock, Arkansas, Entergy Corporation, a large utility, installed household-based computer chips linked to television cables. With this digital display system, customers get real-time electricity pricing, which discounts the power used in off-peak hours. The customer can program their home air conditioners and other appliances to turn on only during off-peak hours, when electricity is available at lower rates. The utility hopes to avoid having to build new electric power plants to meet the peak demand.
Landlord-tenant relationships are another institutional barrier to unlocking the full energy efficiency potential in buildings. Tenants usually will not invest in improving a building they don’t own. Building owners have some incentive to save tenants money if they can gain a competitive advantage in leasing by doing so. However, since electricity is just a small part of office costs-payroll costs are 160 times larger on average-demand for greater efficiency is likely to remain limited.
Why Don’t We Do It in the Road?
Transportation is another sector where former conservation gains are now imperiled by new trends. Says Prindle of the Alliance to Save Energy, “There have been regulations such as CAFE [Corporate Average Fuel Economy] standards for automobiles that have doubled the average fuel economy of the vehicle fleet in the U.S. However, in the last decade there’s been virtual gridlock on CAFE.
The automakers have succeeded in opposing any attempt to increase it from its last level.”
While cars increased their miles per gallon (mpg) performance 60 percent between 1973 and 1988, big gas-guzzling autos and SUVs are now reversing this progress. SUVs, minivans, and pickup trucks are subject to much less stringent requirements than cars, so the net effect has been an erosion of fuel efficiency.
That’s a disturbing trend. According to The New York Times, 1996 was the first year in which the cars going into junkyards got better mileage than the ones rolling off the dealer’s lots. Yet a hybrid car like the Toyota Prius, on the market in Japan today, can easily achieve 66 mpg and fuel cell cars promise to do even better than that (see “Beyond Batteries” in the November/December issue).
The American trucker may be immortalized in country music as a freeway cowboy, a symbol of independence on the open road, but the trucking industry has actually hurt U.S. energy independence. Trucking constitutes two-thirds of freight energy use, yet it is a far more polluting and less fuel-efficient way to move freight than pipelines, barges or railroads. From 1960 to 1990 trucking has tripled.
Rail is the most fuel-efficient alternative for moving both goods and people. There has been lots of energy-efficiency progress in rail, with a 2.8 percent per year average decline in energy usage for several decades. The fastest-growing segment of rail freight is intermodal, which puts containers on rails that can then be switched to trucks or ships.
High-speed passenger bullet trains, like those in use in Europe and Japan, are both cost- and time-effective with airplanes for trips under 600 miles. Unfortunately, a small relative drop in prices at the gas pump can translate into large increases in travel. Economists say that transportation energy demand varies much more with income than price. Energy Innovations claims that fuel pricing changes would have to be enormous to induce significant long-run reductions in energy use and emissions.
European mass transit is safe, clean, fast, reliable and relatively inexpensive. Yet, as in the far more auto-dependent U.S., transit continues to lose market share to the passenger auto. It seems that more government mandates and subsidies are needed to encourage more fuel-efficient autos, as well as to encourage consumer change to more efficient modes of travel-like rail. Also, people have to be encouraged not to ride alone in their cars. Half of the savings in fuel efficiency in cars between 1972 and 1992 were canceled out by decreases in vehicle occupancy.
Re-energizing Efficiency Efforts
What accounts for our dwindling national interest in conservation, despite its bright potential to save Americans energy, money and the environment? Energy analysts and economists suggest the real problem is that there are not enough economic incentives to take conservation seriously, even when it saves consumers money.
Market economies can only imperfectly account for the risks of irreversible, large-scale, long-term, and intergenerational impacts like global warming or risks of a new Persian Gulf War. Climate and other ecological emergencies suggest that we need to put sustainable goals ahead of market demand, and long-run survival ahead of short-run economics. Future generations are not represented in the market, and our choices as citizens may be different than as consumers. The Office of Technology Assessment (OTA) found that energy market prices fail to reflect 33 to 50 percent of total social costs. The OTA notes that past achievements of policy-driven energy-efficiency improvements at low cost refute the notion of a well-functioning market for vehicle efficiency.
Standard economic models usually will fail to take any account of changing technology. Yet, technological innovations, such as CFC recycling and alternative cleaning methods for semiconductors helped build an experience base which allowed industry to meet the phase-out goals at a modest cost.
There is a powerful lesson here. The global move towards sustainability represents a shift away from growth-and toward development. Growth-defined as the ever-increasing use of non-renewable resources-is unsustainable as the appalling costs of resource depletion and pollution grow ever more apparent. On the other hand, development, if it is defined as an increase in human potential, is a boundless pursuit. When it came to replacing Chlorofluorocarbons (CFCs), creativity was our greatest natural resource, allowing novel solutions to emerge where they did not formerly exist. A concerted national effort towards more energy efficiency would yield not only a full measure of what current technology can achieve, but it will likely also enlarge the boundaries of the possible.
ELAINE ROBBINS is a freelance writer based in Austin, TX.