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10 Buildings and Industry B eyond transportation, tremendous amounts of energy can be saved in homes, businesses, and industry through more efficient technologies and through changes in behaviors. “The world’s energy needs and our envi- ronmental responsibilities converge toward a common solution,” said Reuben Jeffery. “Conservation must remain an important part of that solution.” Samuel Bodman made a similar point, “We all must actively promote enhanced energy efficiency wherever we can—in our homes, our vehicles, our offices, and across all industries. Because the truth is, the largest source of immediately available, ‘new’ energy is the energy we waste every day.” The needed steps are straightforward, said Bodman: insulating homes and other buildings, choosing energy-efficient appliances and compact fluorescent bulbs, considering a fuel-efficient vehicle or taking public transportation, and par- ticipating in an energy assessment program. “Collectively, these actions have an impact in precisely the right direction, taking some immediate pressure off demand.” The changes going on in U.S. society today are more than a reaction to higher gas or home-heating costs, Bodman said. “I believe we are seeing a grow- ing commitment to not just affordable energy but clean energy as well.” Speakers at the summit discussed just a few of the many efficiency improve- ments possible through technological change. But these examples demonstrate a point that extends much more broadly—efficiency improvements often pay for themselves over time, making reduction of greenhouse gas emissions through energy efficiency a win-win proposition. 77

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78 THE NATIONAL ACADEMIES SUMMIT ON AMERICA’S ENERGY FUTURE CONSERVATION IN CALIFORNIA California has been leading the way in conserving electricity, Steven Chu pointed out. In 1973, electricity use in the United States was about 8,000 kilowatt-hours per person for the country as a whole and about 6,500 kilowatt- hours for California. By 2006, electricity use per person in the United States averaged 12,000 kilowatt-hours, while in California electricity use was about 7,000 kilowatt-hours. Meanwhile, the real gross domestic product of California grew by a factor of two. It’s a “myth that if you flatten the use of energy you will kill your economy,” Chu said. One of the most important advances in California was the introduction of energy efficiency standards. For example, the efficiency of refrigerators improved by more than a factor of four from 1975 to 2005 even as the size of refrigerators grew from 18 cubic feet to 22 cubic feet. Meanwhile, the infla- tion-adjusted cost of refrigerators went down by a factor of two. The amount of energy saved just from refrigerators is equivalent to more than two-thirds of all the hydroelectric power generated in the United States (Figure 10.1). Major efficiency gains also are possible with air conditioners and gas furnaces. “This should be done throughout the whole sector,” Chu said. Large amounts of energy also can be saved through building codes. Cali- fornia has a temperate climate, which makes heating and cooling buildings less expensive. Yet California codes call for extensive building insulation, which 800 nuclear energy 700 600 500 Billion kWh/yr 400 conventional hydro 300 Energy Saved w/ Refrigerator Stds 100 million 1 kW 200 = 80 power plants PV systems of 500 MW each renewables 100 0 Figure 10-1.eps FIGURE 10.1  The amount of energy saved by efficiency standards for refrigerators compared to several other sources of supply in the United States. PV, photovoltaic. SOURCE: Courtesy of Arthur H. Rosenfeld, California Energy Commission.

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BUILDINGS AND INDUSTRY 79 has helped to conserve energy in the state. “There are so many opportunities to capture energy efficiency in buildings,” Chu said. “We’re talking factors of three or more in new buildings that would pay for themselves in 5 years.” An important policy innovation that has spurred conservation in the state has been to separate profits from energy sales. Traditionally, utility companies have made more money by selling more energy, creating an incentive to spur energy consumption. State policy in California consciously decoupled that con- nection. Instead, if utilities introduced more efficiency into the use of energy, they were able to charge higher rates. “There were inducements for the utility companies to actually make investments and save more energy,” Chu said. This has had a profound effect by making utilities outspoken advocates for energy efficiency in the state. For many years, California was the only state to have taken such an action, but it now is being implemented by states elsewhere. Enlightened policies also can affect individual perceptions of discount periods. Most people are not impressed by an investment that will pay for itself in 20 years. They tend to like to see a repayment within a year and a half. But if they can be repaid in 5 to 6 years, inducements and policies that promote awareness of such payoffs can create “a big change,” said Chu. For example, a recent report by McKinsey & Company (2007) estimated that $1,000 worth of additional insulation and labor could pay for itself within 1½ to 2 years. Yet the American Home Builders Association is lobbying very strongly against efficiency targets, said Chu, contending that “American homeowners . . . don’t want to pay for [improvements].” The solution, according to Chu, is “to write your Congress people.” Finally, Chu lauded the Top Runner program in Japan, which he called “an Energy Star labeling program on steroids.” The program identifies the most efficient product in a variety of categories and then uses the performance of this “top runner” model to set a target for all manufacturers to achieve within the next 4 to 8 years. “You don’t really need an elaborate appliance standard bureaucracy,” Chu said. You let “industry bootstrap itself. It’s a target, not a mandatory regulation, yet it seems to be very effective.” Chu asked why programs like California’s utility company decoupling or Japan’s Top Runner have not been widely replicated around the world. Partly it is because people have not heard about the programs. In a 2007 report entitled Lighting the Way: Toward a Sustainable Energy Future (IAC, 2007), a commit- tee cochaired by Chu and José Goldemberg recommended that a small inter- national committee of experts be used to identify policies that have worked. Such policies are like the rudder of a ship that governments can use to produce enormous course changes over time. SAVING MONEY BY SAVING ENERGY The Rocky Mountain Institute also has examined a large number of ways to improve efficiency in homes and businesses. According to Lovins, institut-

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80 THE NATIONAL ACADEMIES SUMMIT ON AMERICA’S ENERGY FUTURE ing economical ways to save electricity could save about three-quarters of the electricity consumed in the United States at an average cost of about 1 cent per kilowatt-hour, which is cheaper than the cost of operating a power plant. Other studies have arrived at comparable findings, and “the efficiency potential keeps getting bigger and cheaper because the technology improves faster than we use it,” Lovins said. “It’s as if the low-hanging fruit is mushing up around our ankles and spilling in over the tops of our waders while the innovation tree pelts our head with more fruit.” Lovins used his house and Rocky Mountain Institute headquarters in Snowmass, Colorado, as an example (Figure 10.2). At an elevation of 7,100 feet in the Rockies—where frost is possible any day of the year, winters can be continually cloudy, and lows can reach minus 47 degree Fahrenheit—Lovins has harvested 28 banana crops in the central atrium. Yet the house does not have a furnace. It is extremely well insulated and efficiently designed, which together cost less than a heating system would have cost. The building saves 99 percent of space and water heating energy and 90 percent of home electricity, and when the house was built in 1983 the additional construction costs paid for themselves in 10 months. Other projects have demonstrated similar results in extremely hot climates, Lovins said. Homes in such climates can be built with no air conditioner and remain quite comfortable in temperatures up to 115 degrees Fahrenheit. Even in humid Bangkok, homes can use 90 percent less air conditioning and still offer better comfort and no extra construction costs. “These examples span the range of Earth’s climates and tell a common story,” Lovins said. “If you optimize the house as a system, . . . you get big, cheap savings.” The object is to use tech- nologies and smart design to tunnel through the cost barrier of diminishing returns and rising marginal costs. “If I add enough [insulation], I get rid of the furnace, ducts, vents, pipes, wires, controls, and fuel supply arrangements. It’s 99 percent cheaper than if I had set out to save little or nothing.” Rocky Mountain Institute has demonstrated these steps in $30 billion worth of industrial projects in 29 sectors. Sometimes the changes are as simple as designing production plants to use fat, short, and straight pipes rather than thin, long, and crooked pipes. “It works better and costs less,” Lovins said. TRANSFERRING TECHNOLOGIES TO THE DEVELOPING WORLD Much of the growth in energy consumption over the next two decades will be in the developing world. Therefore, energy-efficient technologies need to be transferred from the developed world to the developing world, said Rodney Nelson. A major recommendation from the National Petroleum Council’s study of world oil and gas supplies is that energy-efficient technologies need to be implemented outside the developed world (NPC, 2007).

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BUILDINGS AND INDUSTRY 81 FIGURE 10.2  Top: Amory Lovins’ house (and the original headquarters of the Rocky Figure 10-2.eps Mountain Institute) in chilly Snowmass, Colorado (left), uses about 1 percent the normal space- and water-heating energy and 10 percent the normal electricity, with a 10-month bitmap images low resolution payback in 1983. It has produced 28 indoor banana crops (right) with no furnace. Middle: A Davis, California, tract house, designed by Davis Energy Group to use about a tenth the normal U.S. amount of energy, is comfortable with no air conditioner at up to 115˚F (45˚C) and, if built in quantity, would cost about $1,800 less than normal to construct and $1,600 less over time to maintain. Bottom: Designed and constructed by Professor Dr. Soontorn Boonyatikarn, this 350-square-meter Bangkok house, at normal construction cost, provides superior comfort with one-tenth the normal air-condition- ing energy. SOURCE: Top: Courtesy of Rocky Mountain Institute. Bottom: Courtesy of Soontorn Boonyatikarn, Chulalongkorn University.

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82 THE NATIONAL ACADEMIES SUMMIT ON AMERICA’S ENERGY FUTURE Sometimes these technologies can be very straightforward yet have a major impact, Chu observed. At the University of California, Berkeley, and Lawrence Berkeley National Laboratory, a team led by Ashok Gadgil developed a cook- stove that is four times more efficient than the three-stone stove traditionally used in Darfur (Figure 10.3). Each stove annually avoids the emission of 2 tons of carbon dioxide per year (a typical car emits 4 tons of carbon dioxide per year). It also produces much less indoor air pollution, which is responsible for the deaths of more than a million people worldwide each year. The cost is less than $20, including a modest profit to the local manufacturer. “The energy problem can be greatly advanced by pretty low-tech stuff,” said Chu. “In the poorest part of the developing world, quite modest things can have a profound impact.” FIGURE 10.3  A cookstove designed in Berkeley, California, and manufactured in the Sudan avoids 10 tons of carbon dioxide emissions over its 5-year life. SOURCE: Roy Kaltschmidt, Lawrence Berkeley National Laboratory.