How Big Is the Energy Efficiency Resource?
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Environmental Research Letters EDITORIAL • OPEN ACCESS How big is the energy efficiency resource? To cite this article: Amory B Lovins 2018 Environ. Res. Lett. 13 090401 View the article online for updates and enhancements. This content was downloaded from IP address 147.202.68.137 on 06/05/2019 at 16:06 Environ. Res. Lett. 13 (2018) 090401 https://doi.org/10.1088/1748-9326/aad965 EDITORIAL How big is the energy efficiency resource? OPEN ACCESS Amory B Lovins PUBLISHED Rocky Mountain Institute, 22830 Two Rivers Road, Basalt CO 81621, United States of America 18 September 2018 E-mail: ablovins@rmi.org Original content from this Keywords: increasing returns, efficiency, climate, integrative design, whole systems, expanding returns work may be used under the terms of the Creative Commons Attribution 3.0 licence. Abstract Any further distribution of Most economic theorists assume that energy efficiency—the biggest global provider of energy services—is a this work must maintain attribution to the limited and dwindling resource whose price- and policy-driven adoption will inevitably deplete its potential author(s) and the title of and raise its cost. Influenced by that theoretical construct, most traditional analysts and deployers of energy the work, journal citation and DOI. efficiency see and exploit only a modest fraction of the worthwhile efficiency resource, saving less and paying more than they should. Yet empirically, modern energy efficiency is, and shows every sign of durably remaining, an expanding-quantity, declining-cost resource. Its adoption is constrained by major but correctable market failures and increasingly motivated by positive externalities. Most importantly, in both newbuild and retrofit applications, its quantity is severalfold larger and its cost lower than most in the energy and climate communities realize. The efficiency resource far exceeds the sum of savings by individual technologies because artfully choosing, combining, sequencing, and timing fewer and simpler technologies can save more energy at lower cost than deploying more and fancier but dis-integrated and randomly timed technologies. Such ‘integrative design’is not yet widely known or applied, and can seem difficult because it is simple, but is well proven, rapidly evolving, and gradually spreading. Yet the same economic models that could not predict the renewable energy revolution also ignore integrative design and hence cannot recognize most of the efficiency resource or reserves. This analytic gap makes climate-change mitigation look harder and costlier than it really is, diverting attention and investment to inferior options. With energy efficiency as its cornerstone and needing its pace redoubled, climate protection depends critically on seeing and deploying the entire efficiency resource. This requires focusing less on individual technologies than on whole systems (buildings, factories, vehicles, and the larger systems embedding them), and replacing theoretical assump- tions about efficiency’s diminishing returns with practitioners’ empirical evidence of expanding returns. 1. Introduction energy efficiency as a limited and dwindling Ricardian resource (like fuels) whose adoption, driven by policy and In theory, theory and practice are the same, but in practice price, will deplete its potential and raise its cost. Yet as a they are not. Most climate modelers explicitly or tacitly four-decade global field practitioner of advanced energy use economic theory as the dominant framework for efficiency in all sectors, I consistently observe the assessing potential technological gains in energy end-use opposite. Energy efficiency is empirically an expanding- fi ( )1 ef ciency Lovins 2018a . Economic theory tends to treat quantity, declining-cost resource. Its adoption is increas- ingly motivated by positive externalities but constrained 1 This Essay uses ‘efficiency’ in the engineering sense (ratio of energy bystrong,diverse,complex,andchallengingmarket output to energy input, or of effect to effort), not in the economic sense. There are seven kinds. ‘End-use efficiency’ measures how much of the failures requiring both policy intervention and business energy delivered to a customer is converted to end-use services (comfort, innovation (Hirst and Brown 1990,Koomey1990, illumination, mobility, torque, etc).Furtherupstream,‘extraction fi ’ ‘ Sutherland 1991,Lovins1992,Koomeyet al 1996,Bres- ef ciency is from fuels in the ground to raw primary fuels; conversion – efficiency’ is thence to secondary energy (gasoline, electricity, etc); sand et al 2007,Metzet al 2007 pp 418 430, Gillingham ‘primary efficiency’ is from primary fuels or renewable flows to customer et al 2009,Granadeet al 2009, National Academies 2009b delivery; and ‘distribution efficiency’ is from conversion (in a refinery, section 2.7). Those barriers can seem homeostatic: low gas processing plant, power station, etc) to customer delivery. Further downstream, ‘hedonic efficiency’ is from delivered service to economic ambitions and limited barrier-busting efforts yield mea- welfare and human well-being. ‘System efficiency’ spans the whole range ger progress that seem to justify inaction, while high from energy resources to welfare and well-being—from ultimate means ambitionsandeffortsyieldimpressiveresultsthat to ultimate ends. This discussion focuses on efficiency gains from end- usetechnology,notfrombehavior,urbanform,etc.Itusesenergy reinforce doubling down. But the lively debates about ‘savings’ as simplified, if sloppy, shorthand for reduced energy intensity. how to turn obstacles into business opportunities, and © 2018 The Author(s). Published by IOP Publishing Ltd Environ. Res. Lett. 13 (2018) 090401 A B Lovins how much the externalities are worth, miss a crucial point But energy efficiency resources are infinitely4 expand- that could raise ambition and ignite decisive action: the able assemblages of ideas that deplete nothing but efficiency resource itself, and its economically capturable stupidity—a very abundant if not expanding resource. ‘reserves,’ are severalfold larger and cheaper than the energy, This conceptual gap has serious consequences. Over- business, economics, policy, and climate communities looking most of the energy efficiency potential gravely fi commonly acknowledge. understates the scope for pro table climate solutions: it Most traditional analysts and deployers of energy makes climate protection look harder and costlier than it fl efficiency see and use only a modest fraction of the actually is, diverting and in ating attention to costlier and worthwhile efficiency resource. In the language of the riskier options. The examples below suggest that such — oilpatch—formally, of economic geology (United misallocation of scarce resources money, effort, skills, focus, time—overlooks more than half of the modern States Geological Survey 1991)—they count only energy revolution, reinforcing most climate models’ bias demonstrated and measured (proven) reserves; often toward the supply side and sketchy treatment of the omit subeconomic demonstrated resources without demand side (Lovins 2018a) and thus further suppressing symmetrically competing them against long-run mar- efficiency’sfullcapture.Thisisanalogousto,andprob- ginal supply; and usually omit indicated and inferred ably as important as, underplaying noneconomic-social- reserves and undiscovered and hypothetical resources. science factors, such as behavior and urban design, in dis- fi In energy ef ciency as in geology, total reserves exceed cussions dominated by technologists (Creutzig et al 2016, proven reserves, and the resource base, increasingly 2018,Mundeco,Ürge-VorsatzandWilson2018). exploitable as exploration and extraction techniques Few policymakers realize that saved energy is improve, far exceeds both. already the world’s largest source of energy services, This geological analogy is useful for quantity but bigger than oil (i.e., 1990–2016 reductions in global misleading for cost, because unlike orebodies, most energy intensity saved more energy in 2016 than the oil omitted energy efficiency resources cost less than those burned in 2016). The public’s impression is similarly now being exploited, so adding them would decrease lopsided. Decreased energy intensity during 1975–2016 average cost and speed adoption. That is because their saved 30× more cumulative US primary energy than extra savings come not from using more or fancier doubled renewable production supplied, yet the ratio of widgets (Regnier 2017), but from artfully choosing, headlines seems roughly the opposite, because renew- combining, sequencing, and timing fewer and simpler ables are conspicuous but unused energy is invisible. widgets to achieve bigger savings and more co-bene- Far greater savings available from integrative design are fits2 at lower cost. Reserves are the profitably exploi- almost unimaginable. — table subset of resources, so ‘discovering’ larger but Even for most engineers whose profession has fi improved efficiency for millennia—integrative design cheaper ef ciency resources disproportionally increa- 5 ses reserves. Moreover, the technical progress that was not in their textbooks or courses and remains absent from their otherwise admirable practice. No keeps making oil (Lovins 2014) and other minerals one disputes that if components are not designed to cheaper to extract applies comparably if not more to work with each other, they will work against each energy efficiency, stranding more competing assets other, making savings less than the sum of the parts, sooner.