Amory Lovins: Efficiency Burns Brightest

By Charles Shereda

How would you prefer to die? (choose one)
1) Climate Change
2) Oil Wars
3) Nuclear Holocaust

Amory Lovins posed this question to introduce his talk entitled, ‘Reinventing Fire: The Business-Led Transition from Oil and Coal to Efficiency and Renewables’ in the second day of the Clean Tech Investor Summit in a rain-drenched Palm Springs. Lovins, the Chairman and Chief Scientist at the Rocky Mountain Institute, was alluding to what he sees as a fallacy in typical conversations about addressing climate change. By casting it as a no-win situation, said Lovins, we ignore the tremendous economic opportunity available–a chance to reduce costs, spur job growth, and create competitive advantage.

Cutting costs on the cheap

The financial good news is that we’re swimming in potential savings. Free and incredibly inexpensive efficiency gains, said Lovins, are everywhere we look, from vehicles to buildings to industry. He described the transition to a more efficient economy as costing the oil equivalent of $15 a barrel, or a fifth of current light crude prices of $75 a barrel. Companies like DuPont, Dow, and BP have realized this and capitalized on it. By Lovins’ calculation, Dow’s investment in efficiency has netted it 9 billion. DuPont reduced GHG emissions by 72% from 1990 levels and saved $3 billion in energy costs. By using integrative design techniques such as reducing furnace size because a house is properly insulated, we can save upfront as well–and ‘break through the marginal cost barrier,’ as Lovins puts it. In this prior article we discovered that there’s even a business case for improving building efficiency when you’re a real estate magnate who doesn’t pay for the energy usage of your properties–property values and occupancy rates go up.

The energy good news is that small changes at the point of use mean big fuel savings upstream. For instance, the amount of energy saved by shutting down idle PCs in a data center at night isn’t just the electricity that the PCs didn’t use; it’s the energy that was saved in every step of the process. It’s the waste heat that wasn’t generated by the turbines at the power plant; it’s the the losses in transmission lines that didn’t occur; and it’s the cooling that wasn’t needed in the server room. All of these add up to as much as a 100-fold multiplier effect on fuel saved, according to Lovins.

Large-scale storage unnecessary?

Near the end of his presentation, Lovins turned the conventional electricity pyramid upside down. He put efficiency, cogeneration, and distributed generation at the base, demand response and plug-in vehicles in the middle, and coal and nuclear plants at the smallest point. I asked about the absence of electricity storage in a pyramid that was so dependent on intermittent sources. Conventional wisdom has it that coal-fired (or natural gas or large hydro) plants are necessary to maintain a consistent baseload. Wind and solar, as intermittent electricity sources, can’t provide that same level of consistent power production and are widely believed to require electricity storage solutions or battery backup.

Lovins responded by saying that in his research, he has modeled a grid with up to 80 percent renewables without an increased need for storage. Keeping the lights on with a high number of intermittent power sources is a statistical matter, he said–at any one time, some will be producing while others are idle. It’s the same old challenge of balancing demand and supply, just more complicated than the current picture. In fact, he believes that there is no evidence yet that additional storage and backup are required than what the utilities have already paid for.

Oh, and Lovins’ answer to the opening question? None of the above, of course.


Charles Shereda is a computer scientist turned clean tech entrepreneur. He is passionate about empowering people with the means to lower energy costs and improve their lives in the process. He is working with The Amada Group to launch a clean energy bond fund and with ClearPath Sustainability Advisors to help companies reduce costs in their IT departments. He holds an MBA in Sustainable Management from the Presidio Graduate School.

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