Top Energy Experts Focus on Efficiency

Sometimes when you throw a bunch of miscellaneous balls in the air just to see what happens, something interesting actually happens. Such was the case this last Friday, when the Economist magazine assembled a dozen energy specialists--four in the UK, four in Brazil, and four in the US—and invited them to ruminate and ramble for 90 minutes about what lies ahead.

What was striking about the conversation--considering that we are still digesting the impact of Fukushima on nuclear prospects, the revolution in "unconventional gas," and the business crisis in solar energy—was how much of it centered on something else entirely, namely energy efficiency.

Perhaps this should not have been so surprising. A major technology assessment produced for the White House during George W. Bush's presidency found that improvements in efficiency have by far the biggest potential to reduce greenhouse gas emissions while keeping demand and supply of energy in balance. Evidently those in the know are of much the same opinion.

Energy efficiency is the "least sexy kind of energy so it's under-appreciated and under-invested," said Gregory Kats, president of Energy E. Thus, with proper incentives, its growth potential ought to be enormous.

One problem, when it comes to leveraging the smart grid in order to persuade consumers and help consumers use electricity more sensibly, is that power accounts for a small fraction of their expenditures: In the United States only 1.7 percent of the average household budget goes for electricity, said Alex Laskey, president of Opower. So consumers are not very responsive to price signals and need more to change their behavior.

Of the Americans who have programmable thermostats, said another, 70 percent do not know how to program them.

So far, most advances in improved efficiency have been in industry, among the companies that are really big energy consumers. "The industrial sector has in fact led the charge in demand response, load management, and energy efficiency management," said John Norris of FERC. Yet supply-side efficiency still is neglected, complained Joan MacNaughton, an eminent energy policy specialist in the UK. Tougher mandated standards will be essential, she said.

Sometimes favorable policy outcomes will be the result of serendiipity, observed Brazil's José Goldemberg, a former environment minister. There has been an enormous improvement in Sao Paulo's air quality because of flex-fuel vehicles, and yet that benefit was not really the reason the government decided to promote cars that could run on different combinations of cane ethanol and gasoline.

Given the nationalities of the participants, contributions tended to reflect national preoccupations: Brazil's with biofuels, America's with underinvestment in grid improvements, Britain's with climate. Yet the general theme connecting many disparate observations was that economic growth does not have to imply environmental degradation, partly because of growing energy efficiency, partly because of cleaner energy production. Since 1990, The Economist pointed out at the outset, global energy consumption has increased 45 percent but greenhouse gas emissions just 36 percent.

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