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Energy: Production, Consumption, and Consequences (1990)

Chapter: 1. Supply, Demand, and Reappraisal

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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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Suggested Citation:"1. Supply, Demand, and Reappraisal." National Academy of Engineering. 1990. Energy: Production, Consumption, and Consequences. Washington, DC: The National Academies Press. doi: 10.17226/1442.
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1 Supply Demand, and ~appralsa1

Energy: Production, Consumption, and Consequences. 1990. Pp. 21-34. Washington, D.C: National Academy Press. Energy in Retrospect: Is the Past Prologue? ALVIN M. WEINBERG Before the discovery of fission, energy policy was not a central issue in the United States. After all, this country was blessed with enormous reserves of fossil fuel, and one could hardly conceive of a day when the United States would be importing 30 percent of its oil. 1b be sure, the lS59 discovery of oil in Titusville, Pennsylvania, came just in time to replace whale oil, which was becoming scarce; and before the discovery of the East Texas fields, alternatives such as shale oil were being pursued. By and large, however, the problem of energy in its broadest aspect had not become part of the federal government's agenda. The discovery of fission, which was widely regarded as the ultimate answer to the problem of energy, focused attention on energy. It was as though, with the solution in hand, we became aware of the problem. Thus, in a 1953 report sponsored by the Atomic Energy Commission (Putnam, 1953), Palmer Putnam argued that a prudent custodian of the world's energy future should assume energy demand would grow exponentially and that energy supply would turn out to be lower than the expansive estimates of supply then current. Although Putnam's maximum plausible world population by 2050 was only 6 billion people, his per capita growth rate for energy of approximately 3 percent per year was very high; this led to his "maximum plausible" annual demand for energy of 436 quads (1 quad = 1 quadrillion, or 10~5, Btu) by 2000 ~D. and 2,650 quads by 2050! No wonder Putnam concluded that the world must get on with the development of all energy sources, especially nuclear power and solar energy (which he regarded as too expensive), as well as improving the efficiency of energy 21

22 ALVIN M. WEINBERG use. Incidentally, Putnam was the first energy futurologist to call attention to the implication of the greenhouse effect for energy policy. Putnam's report echoed in apocalyptic tone the Paley Commission Report of 1952 (President's Material Policy Commission, 1952~. This too warned that serious shortages in energy supplies could develop, but by and large Paley went unheeded. The 1950s and 1960s were periods of energy euphoria, although a few voices, notably King Hubbert of "Hubbert oil bubble" fame, warned that the United States would become an oil importer by the 1970s (Hubbert, 1969~. The euphoria reached its zenith with the 1962 Atomic Energy Com- mission (AEC) Report to the President on Civilian Nuclear Power, (U.S. AEC, 1962) projecting some 734 gigawatts of electricity from nuclear power by 2000 (this represented about 30 percent of a total projected energy de- mand of 135 quads), and the 1964 interagency study of energy research and development (R&D) which placed fission into a broader context of energy sources. This report found "no ground for serious concern that the nation is using up any of its stocks of fossil fuel too rapidly; rather there is the suspicion that we are using them up too slowly . . . we are concerned for the day when the value of untapped fossil-fuel resources might have tumbled . . . and the nation will regret that it did not make greater use of these stocks when they were still precious" (Camber, 1964~. Despite this rosy estimate of the U.S. energy future, the interagency committee urged that the government expand research on long-range energy sources, both nuclear and nonnuclear. These studies belong to what could be called the "pre-Cambrian" period of energy policy. During this period an overall energy policy hardly seemed very relevant; and as for government-sponsored energy R&D, this was almost entirely preempted by the all-powerful AEC and the Joint Committee on Atomic Energy. Although an Office of Coal Research had been set up in 1971, nuclear energy strongly dominated the government's thinking about the future of energy. President Nixon's price freeze in 1971, followed by the Arab oil em- bargo in 1973, marked the beginning of the modern era of energy policy. The United States was then importing 6 million barrels of oil per day, and independence soon became the aim of U.S. energy policy. Thus, Dixy Lee Ray (1973), chairman of the AEC, reported to the President in 1973 that the nation could achieve energy independence by 198~but only if it con- served the equivalent of 14 quads (an oil equivalent of 7 million barrels per day) out of a total annual demand of 100 quads; and Project Independence (1974) claimed the United States could achieve energy self-sufficiency by 1985 at an annual energy consumption of 96.3 quads if oil prices rose by 20 percent and the nation conserved approximately 8 quads.

ENERGY IN RETROSPECT: IS THE PAST PROLOGUE? 23 These estimates of future demand were on the low side. Most fore- casters at the time were predicting a 1985 energy demand of around 115 quads. Even Amory Lovins (1977), an arch-exponent of limited growth, was predicting 90 quads a number close to the Ford Foundation's "Zero Growth" scenario (Energy Policy Project, 1974~. Only the National Re- search Council's Committee on Nuclear and Alternative Energy Systems (CONAES; Brooks and Hollander, 1979), in its heavy conservation sce- narios, spoke about the demand for energy remaining constant—or even falling but CONAES characterized its extreme conservation scenario as "very aggressive, deliberately arrived at reduced demand requiring some life-style changes" (see scenario A* in Gibbons and Blair, Figure 5, in this volume). I do not think that CONAES took this scenario very seriously. In those days, several energy analysts used as a rule of thumb that the number of quads equaled the last two digits of the calendar year- 78 quads in 1978, 79 in 1979, and so on. However, the reality turned out very differently. Who, in 1973, would have predicted that the total amount of energy used in 1986 would be only 74 quads, the same as in 1973? Let energy forecasters practice their precarious art with humility! THE RATIO OF ENERGY TO GROSS NATIONAL PRODUCT In the early 1970s many of us were convinced that the ratio of energy (E) to gross national product (GNP) or to gross domestic product (GDP) was a constant- as indeed it was from 1945 to 1975. We seem to have forgotten that the E/GNP ratio had been falling from 1920 to 1940. The constancy of this ratio from 1940 to 1970 concealed the secular trend to- ward higher efficiency (Figure 1~. This improvement in energy efficiency was evident throughout the Organization for Economic Cooperation and Development (OECD): between 1966 and 1970, the elasticity of energy to gross domestic product, ~ ~ ~l~nlGEp ~ 1.4; between 1980 and 1984, ~ ~ —0.2 (see Table 1~. Although the energy demand in the less developed and newly industrialized countries continued to expand, the entire non- communist world became considerably more energy efficient: ~ ~ 1.3 in 1966 1970; ~ ~ -0.5 in 198~1983. The other characteristic trend has been the continued electrification of the United States and of the world. In 1968, some 18 percent of primary energy in the United States was converted to electricity; by 1987 this fraction had doubled. The figures for the noncommunist world are similar. Moreover, the elasticity ratio of electricity to GNP seems to have been fairly constant, at least for the past 40 years (Figure 2~. Thus, the great realities of energy in the postembargo world have been (1) the extraordinary flattening in the demand for energy in the developed world, which implies an unexpected decoupling of energy and GNP, and (2)

24 ALVIN M. WEINBERG O 1 50 _ ° 125 ~ /~~~` . . x as, 1 00 - O ~ 75 / A/ 50 1 1 1 1 1 1 1 880 1900 1920 1940 1960 1980 2000 FIGURE 1 Energy (E; mineral fuels and hydropower) consumed per dollar of real gross national product (GNP) in the United States, 1880-1985. SOURCE: Schulz (1984:410~. the continuing electrification of the world in conduction with the remarkable correlation between electricity and GNP. How can this extraordinary diminution in the growth of energy de- mand be explained a diminution so extreme as to call into question the usefulness of forecasting energy demand? Four schools of thought have arisen to explain away this discrepancy. First are the energy economists. For them, the reduction in energy demand simply reflects both the lowered rate of economic growth and the increase in the price of energy. Even today, the average price of all energy is some two times (in real terms) the price of energy 15 years ago—little TABLE 1 Growth Rams of the Demand for Energy and the Gross National Product (GNP) of the Noncommunist World 1966-1970 1970-1975 1975-1980 1980-1985 Organization for Economic Cooperation and Development Energy (%) 5.8 1.3 1.7 - 0.2 Gross domestic product ('ho) 4.2 3.0 3.5 2.1 (to 1984) Elasticity 1.4 0.4 0.5 -0.2 (to 1984) Nonconununist world Energy (%) 6.0 1.9 2.6 0.7 Gross domestic product (Jo) 4.5 3.6 3.9 1.4 (to 1983) Elasticity 1.3 0.5 0.7 -0.5 (to 1983) SOURCE: BP statistics International Monetary Fund-lnternational Financial Statistics as quoted in Ministry of Intemational Trade and Industry (no date), p. 59.

ENERGY IN RETROSPECT: IS THE PAST PROLOGUE? 2.8 2.6 2.4 2.2 L N O 2.0 - IIJ m 1.8 1.6 1.4 ?- 1.2 1.0 0.8 0.6 0.4 1 985 1975 ~ · / 1970- — /. _ 1 / / — —1 960 / / ~ 1955 / /: .~ 1 9 I_ 1 947 0.2 1 1 1 1 ·/ —a/ ·? 0 1 2 3 4 GNP (trillions 1982 $) 25 FIGURE 2 Electncity production in the United States versus gross national product (GNP). The approximately linear relationship suggests that the elasticity ratio of electnaty to GNP has been constant since 1947. SOURCE: Energy Study Center, Electnc Power Research Institute. wonder that demand has abated! Moreover, since all this has resulted from the operation of the market, energy economists by and large support nonintervention as our basic energy policy. The market has worked; let it continue to work. A second group of analysts is the stn~ctural~sts. For them an important, if not dominant, reason for energy being uncoupled from GNP is a change in the structure of our economic activity the shift from manufacturing, mining, and agriculture to services, coupled with a saturation in some end uses (e.g., television sets and refrigerators). Because services are by and large less energy intensive than manufacturing, energy demand has flattened. Thus, the structuralists' policy implication would be: encourage further shift to services; energy will then take care of itself. Third are the conservationists. These include the doctrinal conser- vationists who regard conservation of energy as a transcendent human

26 ALVIN M. WEINBERG purpose; and the technical conservationists who simply insist that the tech- nology of efficiency, both in end use and in energy production, has improved greatly and can be improved further. Moreover, these improvements often result in lower overall cost. For them much of the reduced E/GNP ratio reflects the adoption of more efficient technologies prompted in part by the rise in energy prices, and in part by the widespread acceptance of a conservation ethic. Energy policy must, therefore, stress increased techni- cal efficiency; but at least for doctrinal conservationists the government must mandate efficiency standards such as corporate average fuel economy (CAFE) and building efficiency performance standards (BEPS), as well as promote broad acceptance of the principle that conservation per se is ethically superior to any alternative. Finally, there are the "electro-niks." For them the increase in electri- fication and the reduction in E/GNP are not coincidental. Rather, electri- fication of industry is per se a powerful catalyst of increased productivity. As industry electrifies, whether or not the electrification is itself energy efficient, industry becomes more productive. Electrification increases the denominator of the E/GNP ratio rather than diminishing the numerator, but the result is a decoupling of energy growth and economic growth. Energy policy for the electro-niks is: encourage electrification because an electrified society is an energy-efficient society. There is truth in the views of all four groups of analysts. Nevertheless, although analysis of energy supply and demand is much more sophisticated now than it was at the time of Project Independence, all of us must retain a basic skepticism about the ability to predict, much less mold, energy futures even to the year 2000. An intrinsic dilemma confronts us: Energy policy, insofar as it requires decisions today that affect the world 10, 20, even 50 years hence, must rely on visualization of that future world; yet as the inglorious history of past energy projections has demonstrated, that world cannot be known. The main lesson from this experience is that, insofar as possible, we must try to formulate energy policies that finesse these uncertainties, that are resilient to surprises. Is this a realistic possibility? INCREASING SUPPLY AND REDUCING DEMAND Balancing supply and demand is of course automatic. The issue is how to achieve this balance without causing unacceptable economic and social dislocations. Most old-time energy people assumed almost automatically that demand was hardly subject to any control. Their emphasis, both as policymakers and as engineers, was on increasing supply. Develop nuclear fission and fusion, oil shale, synfuels, geothermal sources—even solar and wind was their response to the oil embargo.

ENERGY IN RETROSPECT: IS THE PAST PROLOGUE? 27 What a shock to discover that demand could also be altered and, in- deed, that the technologies required to reduce demand might challenge the engineering community no less than the technologies of expanding supply. Today, there are many opportunities for research in demand management as well as in supply enhancement. Why did most engineers gravitate toward supply enhancement rather than demand management? I can give at least two reasons. First, designing nuclear reactors seemed to be more glamorous than improving car efficien- cies. Second, demand management usually requires millions of people to change their way of doing something. In some cases, such as lowering the thermostat, the change might affect life-style; in other cases, such as replacing an energy-inefficient refrigerator with a more efficient one, the change requires an additional outlay of money. In a broad sense, demand management, even when based on clever new technologies, is a social fix: many individual decisions are needed to achieve lower demand. By con- trast, increasing supply was regarded, perhaps naively, as a purely technical fix: only a few people have to be convinced to build a nuclear reactor or a synfuel plant. The technical fix seemed to be simpler than the social fix. At least, this is the way many engineers viewed the matter. Somehow, predicting the increased supply seemed much more robust than predicting reduced demand. But we were wrong again. We neglected the public an- tagonism to all sorts of large centralized energy systems—whether nuclear reactors, coal-fired power stations, or synfuel plants. We also underesti- mated the public's acceptance of conservation whether price induced or resulting from a widespread belief in a conservation ethic reinforced by government-mandated efficiency standards. In a way, the relative effectiveness of supply enhancement and demand management reflects the underlying U.S. political structure. Ours is a Jeffersonian democracy: decentralized, open, some would say chaotic. Large-scale interventions that are perceived as threatening by a determined group can be, and often are, blocked. Under the circumstances, we have much incentive to avoid big, threatening, energy supply projects in favor of demand management and much smaller, decentralized, supply options. By contrast, where the political structure is elitist, particularly in France with its Jacobin political tradition, large, centralized supply options- especially nuclear energy remain viable. France has managed to reduce oil imports (and, incidentally, reduce the carbon dioxide thrown into the at- mosphere) largely by its steadfast commitment to nuclear electrification a path that is unavailable to the United States, at least for the present.

28 ALIGN M. YVEINBERG INCREMENTALISM AND ITS CONSEQUENCES In trying to follllulate energy strategy for the next decade, we must therefore accept three realities: 1. The future is much less knowable than it was thought to be 15 years ago. 2. Ours is a participatory polity, one with growing environmental concern. 3. Although certain segments of the U.S. energy supply system, no- tably oil, are dominated by a few large corporations, other segments, particularly electricity, are fragmented. The United States has approxi- mately one generating company per million people, whereas Japan has one per 10 million and France, one per 50 million! The U.S. energy system seems to be responding to these realities with a grand strategy that I would describe as incrementalism. Because our energy demand in 10 years cannot be predicted, we should not build anything very large. Thousand-megawatt power plants or 100,000-barrel-per-day synfuel plants are much too risky. If more electricity is needed, build a 50- or 100- megawatt gas turbine; buy electricity from small independent producers (who have enjoyed the protection of the Public Utilities Regulatory Policy Act of 1978) or, if possible, from Canada, and do not shut down old plants; or reduce demand by offering incentives to customers to use more efficient devices. Such incrementalism finesses the uncertain future and does not expose a generating company to the risk of bankruptcy, which has engulfed unlucly utilities saddled with ridiculously overpriced nuclear reactors. Incrementalism also evokes little antagonism from politically sensitive, and often powerful, conservationists. Thus, the 1950s vision of a gradually nuclear electrified nation has in the 1980s and 1990s given way to a nation in which conservation is primary and in which energy is increasingly supplied by small, decentralized units or by older units that have been coaxed into a few more years of operation. The energy dream of 1950 is coming to pass, but not in the United States. It is happening in France, in Japan, in several communist countries, and in other newly industrialized countries whose political tradition is more authoritarian than ours and whose energy systems are more centralized. Let us concede that incrementalism is inevitable during the next decade or so, at least if conservation is insufficient to keep our energy demand from growing. Are there dangers in the long run for an energy system that will eventually be dominated by a large number of small producers? I see several such dangers. Perhaps most important, many of the new electrical supply increments use gas- or oil-fired turbines. Although the Gas Research Institute (GRI, 1987) has recently estimated that there will be enough gas through 2010 (see Able 2), one Is naturally concerned

ENERGY IN RETROSPECT: IS THE PAST PROLOGUE? 29 TABLE 2 Gas Research Institute Baseline Projection of Gas Supplies (quads), 1987 Production Basis 1986 1990 2000 2010 Current practice Domestic production 16.6 16.3 14.3 9.3 Canadian unpons 0.8 0.9 1.4 1.1 Iiquefiedna~lgasunpons o.Oa 0.1 0.3 0.8 Supplemental sources o.ob 0.2 0.3 0.3 Total 17.4 17.5 16.3 11.5 N. . . . ew ~ anves Lower48 advanced technologies 0.0 0.3 Z6 5.4 Alaskan pipeline 0.0 0.0 0.0 1.2 Canadian frontier 0.0 0.0 0.5 0.7 Other Capons 0.0 0.0 0.0 1.0 Synthetics 0.0 0.0 0.0 O. 1 Total 0.0 0.3 3.1 8.4 Total supply 17.4 17.8 19.4 19.9 aLess than 0.05 quad. bldcludes net injections to storage of 0.1 quad. SOURCE: Gas Research Institute (1987). that to achieve its 19.9 quads of gas projected for 2010, some 8.4 quads must come from "new initiatives" such as advanced extraction technologies, the Alaskan pipeline, the Canadian frontier, imports, and synthetics; and the total imports (including Canadian imports) amount to 3.6 quads. Also, insofar as oil is used in these small generators, U.S. dependence on imported energy will be increasing, not decreasing. Second is the economy of scale. During the era of energy euphoria, particularly nuclear euphoria, bigger was assumed to be cheaper. The catastrophic escalation of capital costs for nuclear plants has dissuaded us from this belief: we seem now to believe that the economic scaling laws have been repealed or at least can be circumvented if the devices are manufactured serially. However, even if the capital costs of small units are favorable, most would claim that operating costs will be higher for small plants than for large plants. One must therefore ask, does the trend toward incrementalism imply that energy particularly electrical energy—will always be more expensive in the United States than it is in countries where large plants continue to dominate?

30 ALVIN M. WEINBERG Although I am not optimistic on this score for the next decade, I see some hope for diminution in the price of energy in the trend toward ex- tending the life of power plants and other large supply devices. The 30-year licensing lifetime of nuclear power plants was a relic of fossil-fueled tradi- tion; fuel efficiency increased at a rate that made power from 30-year-old plants more expensive than from newly built plants. However, with effi- ciencies plateauing, or being rather irrelevant in the case of nuclear power plants, the incentive to shut down old plants has weakened. Extending the life of an old plant, whether nuclear or fossil, is often cheaper than building a new one. In addition, if our energy system is dominated by plants that have already been paid off and have low operating and fuel costs, the price of energy may once more begin to fall. This phenomenon may not be confined to electric generators (Wein- berg, 1985) but may be applicable to synfuel plants or even solar electric systems, provided that operating costs are low. Thus, a syofuel plant, which might cost $100,000 per daily barrel ($330 per annual barrel) and uses coal at $40 per ton, will produce synfuel at about $92 per barrel; of this, $66 per barrel is capital cost (at 20 percent). However, if the plant lasts a century, rather than the 30 years over which it is amortized, and if its maintenance costs can be kept low, the cost of the synfuel falls to around $25 per barrel once the plant has been amortized. Thus, the first South African Coal, Oil, and Gas Corporation (SASOL) plant, which was placed in operation almost 30 years ago and is now presumably amortized, probably produces synfuel at costs close to the world spot price of oil. In constructing and modifying the energy system, we must recognize that the energy system is one of society's most basic infrastructures, and- like most infrastructures it affects not only this generation but future generations as well. Perhaps the moral to be drawn is that future precepts of engineering design ought to stress longevity of the energy-producing device, more so than in the past. Although we may not succeed in giving our own generation the gift of cheap energy, perhaps we will be providing this gift to our children's children. INTERNATIONAL PERSPECTIVES My viewpoint has been primarily American and possibly nuclear, elec- trical, and supply oriented. Yet it seems fair to say that U.S. energy policy during the coming decade will be demand dominated that the emphasis will be on trying to reduce demand. In this the United States is joined, for example, by Japan; the recent Ministry of International Made and Industry (MITI, undated) report begins with an analysis of how well demand can be managed. Yet even MITI's minimum-demand scenario projects total en- ergy in Japan expanding at 1.6 percent per year until 2000, and 0.8 percent

ENERGY IN RETROSPECT: IS THE PAST PROLOGUE? TABLE 3 Forecasts of Energy Demand (in million barrels of oil equivalent per day [mboe/d])a 31 1980 Study Results Actual Results IIASAb WECC Goldemberg et al. Estimated year 2030 2020 2020 Population (billion) 4.43 7.98 7.72 6.95 High Low High Low Growth rate per capita of GDPa(%per year) 2.1 1.1 2.0 1.1 Primary energy requirements World (mboe/d) 144.4 497.0 3()9.2 348.8 271.1 158.2 Industrial nations 98.8 283.8 190.6 209.0 176.5 55.1 Developing countries 45.6 213.2 118.6 139.8 94.6 103.1 aOriginal values expressed in terawatts (TOO) were converted into million barrels of oil equivalent Her day (mboe/d); 1 TW = 14.12 mboe/d. Analyses from the international Institute for applied Systems Analysis (1981). CWorld Energy Conference (1983). dGross danestic product. SOURCE: Goldemberg et al. (1985:622). per year from 2000 to 2030, compared with a growth rate of 1.3 percent per year from 1975 to 1985. Thus, MITI expects the total energy demand in Japan to be at least 62 percent higher in 2030 than it is today and in its maximum-demand scenario 211 percent higher. Nor is Japan attracted to U.S. incrementalism. It expects to continue to build 1,200-megawatt reactors, even as it diversifies supply. Looking at the entire world, one must be struck by the developing countries' economic growth and increasing use of energy. But the diversity of estimates for the future remains Noble 3~: from the World Energy Conference's high scenario of 735 quads in 2020 (World Energy Conference, 1983) to the Goldemberg et al. (1985) estimate of 320 quads in 202 about the same as today's 300 quads. Everyone seems to agree that the developing countries will use a larger fraction of the world's energy than they now do, but there is little agreement as to how much the total is going to be. Whether this presages a big spurt in oil prices perhaps even a 1973- or 1979-type energy crisis during the next 20 years—or a much more gradual increase, no one can say.

32 ALVIN M. WEINBERG CONCLUSIONS Commonplace, even tiresome, is my observation that forecasts were all wrong, that demand has ameliorated, and that we do not know what is going to happen in the next decade or two. I have argued here that under such a veil of uncertainty we can only try to choose policies, technological options, and R&D strategies that are as resilient as possible to surprises. This suggests that the coming energy decade will be the decade of creeping incrementalism: Initiatives, whether enhancement of supply or diminution of demand, will be small and, in the short run, low risk. At least, we have discovered what has not worked, in particular that the magical talisman of nuclear energy simply was neither magical nor a talisman. It faltered because nuclear optimists ignored social, political, and economic realities. Perhaps what we have learned most of all is that the market is more powerful than government intervention. This was most strikingly demon- strated by the experience of the Synfuels Corporation. If the energy crisis was the moral equivalent of war, than why did the technique that worked so well in World War II, in the case of synthetic rubber, not work for synfuels? Alas, markets can be circumvented by government ukase in wartime, but not in peacetime. Synthetic oil was just too expensive. So the U.S. experience with energy since 1973 seems to bear out the views of Frederick Hayek more than those of Maynard Keynes, let alone Karl Marx. During the 1930s, Hayek insisted that government intervention in the economy inevitably would fail because the detailed information, on which the market operates, could never be available to the government interveners. (His debates with Keynes were high points in the history of economic thought.) The past 15 years suggest that, on the whole, governmental interventions have not been very effective. Our fragmented, participatory political structure dooms government energy policies such as those of France or Japan to failure in the United States. Does this mean that the best policy with respect to energy is to have no policy; that we would do best to dismantle the Department of Energy, stop all tax and direct subsidies, and get the government out of enerPv policy and energy R&D? A, I cannot accept such a conclusion. After all, some government in- terventions, such as the CAFE standards and home appliance efficiency labeling, probably have helped. Also, although markets are efficient, they are as Mans Lonuroth points out myopic; and they lack compassion. A1- though incrementalism (largely market driven) seems inevitable at present, in the long run it may saddle us with unnecessarily expensive energy. Although nuclear energy is now too expensive and unpalatable to a large minority, if not a majority, of Americans, the incentive to develop inherently

ENERGY IN RETROSPECT: IS THE PAST PROLOGUE? 33 safe reactors that will be both economic and acceptable remains strong. In addition, although doctrinal conservationists claim that demand man- agement alone can defeat carbon dioxide, most engineers seem inclined toward an eventual shift, worldwide, to nonfossil energy systems most probably fission, but perhaps solar and fusion. Thus, a long-term role for government in providing the technical base for those elements of an energy system that are not mediated by the market seems proper. Engineers are instinctively technical fixers; we are suspicious of social fixes, perhaps because we do not understand them, perhaps because we regard them as more difficult than technical fixes. Looking toward an unknowable future, we recognize that despite its social components, our energy future will depend ultimately on ingenuity: on cheap variable-speed motors, practical energy storage devices, more efficient cars, economical photovoltaic systems, inherently safe reactors, and perhaps even successful fusion. The menu of technical challenges is large, much larger than was realized when the Joint Committee on Atomic Energy dominated U.S. government energy R&D policy. A challenge so large and so diverse is what engineers thrive on. The engineering community perhaps a more sober and more realistic community- must dedicate itself to providing the technical basis for a more rational and resilient energy future. REFERENCES Brooks, H., and J. M. Hollander. 1979. United States energy alternatives to 2010 and beyond: The CONAES study. Annual Review of Energy 4:1-70. Cambel, A. 1964. Energy R&D and National Progress. Interdepartmental Energy Study Group. Washington, D.C.: U.S. Government Printing Office. Energy Policy Project. 1974. A Time to Choose America's Energy Future. Cambridge, Mass.: Ballinger Press. Gas Research Institute (GRI). 1987. Gas Research Institute Baseline Projection. Washington, D.C.: GRI. Goldemberg, J., T. B. Johansson, A. K N. Reddy, and R. H. Williams. 1985. An end-use oriented global energy strategy. Annual Review of Energy 10:613 688. Hubbert, M. K. 1969. Energy resources. Pp. 157-242 in Resources and Man. San Francisco: W. H. Freeman. International Institute for Applied Systems Analysis. 1981. Energy in a Finite World A Global Systems Analysis. Cambridge, Mass.: Ballinger. Lovins, A. 1977. Energy strategy, the road not taken? Future Strategies for Energy Development, A Question of Scale. Oak Ridge, Penn.: Oak Ridge Associated Universities. Ministry of International Made and Industry (MITI). Undated. The Twenty-F~rst Century Energy Vision—Entering the Multiple Energy Era. MITI, Japan. President's Material Policy Commission. 1952. Resources for Freedom, A Report to the President. Washington, D.C.: U.S. Government Printing Office. Federal Energy Administration. 1974. Project Independence, A Summary. Washington, D.C.: U.S. Government Printing Office. Putnam, P. 1953. Energy in the Future. New York: Van Nostrand. Ray, D. L. 1973. The Nation's Energy Future, A Report to Richard M. Nixon, President of the United States. Washington, D.C.: U.S. Government Printing Office.

34 ALVIN M. WEINBERG Schurr, S. H. 1984. Energy use, technological change and productive efficiency An economic-historical interpretation. Annual Review of Energy 9:410. U.S. Atomic Energy Commission. 1962. Civilian Nuclear Power A Report to the President 1962. Washington, D.C.: U.S. Government Printing Office. (Also 1967 Supplement, issued February 1967.) Weinberg, A. M. 1985. Immortal energy systems and intergenerational justice. Energy Policy 13~1~:51-59. World Energy Conference. 1983. Energy 2000 2020: World Prospects and Regional Stresses, J. R. Frisch, ed. London: Graham and Footman.

Energy: Production, Consumption, and Consequences. 1990. Pp. 3~51. Washington, D.C.: National Academy Press. Energy Efficiency: Its Potential and Limits to the Year 2000 JOHN H. GIBBONS AND PETER D. BLAIR In the late 1960s and early 1970s, researchers observed that energy production as well as the efficiency of energy use was increasing steadily, even in the face of falling energy prices. As a result, many concluded that it might be timely to investigate the nature of demand—where energy goes, how efficiency is limited, and what effect price has on that efficiency. In 1973, one of the authors (JHG) was asked to set up the first energy conservation efforts in the federal government, including public education, federal agency actions, and research support. At the Federal Energy Office, a wide range of energy conservation efforts were initiated hurriedly, including what turned out to be long-term successes such as building and appliance standards, efforts to increase public awareness, research and development initiatives, and some policy initiatives. During that period, many misconceptions and vivid images about the nature of energy conservation emerged. For example, the image of Presi- dent Carter wearing a cardigan sweater and seated near a fireplace as he addressed the nation may have stimulated President Reagan's definition of conservation as "being cold in the winter and hot in the summer" and sup- ported the popular view that "the United States didn't conserve its way to greatness, it produced its way to greatness." Since that time, however, con- servation has been viewed increasingly as an economically rational if not imperative global strategy. Decision makers are now cognizant that both market and nonmarket signals affect the rate of adoption of conservation opportunities. Also, the enormous potential for technological innovation in energy conservation has become more widely appreciated. Because of 35

36 JOHN H. GIBBONS AND PETER D. BLAIR widespread negative connotations, the term that is used in preference to energy conservation is energy efficiency, which more readily conjures up the positive images of competitiveness and productivity rather than the nega- tive images of self-denial, retreat, and sacrifice that have been attributed so persistently to conservation. Over the past decade, the motivation for adopting energy efficiency improvements has changed considerably. The sense of urgency about the security of energy supply is currently not the driving force behind such improvements. Instead, the desire to improve the competitiveness of U.S. products in world markets and the concern over both short- and long-term environmental impacts of burning fossil fuels seem to dominate. The short- term effects of fossil fuels on air quality (e.g., acid rain, ozone), as well as the long-term effects on global warming, are now of increasing concern. This changed decision-making environment will have important impacts on the appropriate policy tools for capitalizing on the benefits of energy efficiency. In particular, beyond the more frequently cited concerns such as economic vulnerability and national security, there is growing evidence that gases emitted during the burning of carbon-rich fossil fuels are substantial contributors to global greenhouse warming. This concern provides a new incentive to reduce the nation's dependence on these fuels. HISTORICAL PERSPECTIVE After the oil price shocks of the early 1970s, coincident with the reversal of the marginal cost of electricity (from decreasing to increasing), came several years of intense analysis as well as action. The efficiency of energy use rose rapidly because of improved "housekeeping," retrofits, and a variety of reversible options such as lowering thermostats and speed limits. However, products that use energy more efficiently began to emerge too. The effort of the National Research Council's Committee on Nuclear and Alternative Energy Systems (CONAES) in the mid-1970s was a key activity in the national attempt to understand energy demand. The study (National Research Council, 1979) was important not only in its analysis, but also in drawing together the divergent views of engineers and economists about the dynamics of energy supply and demand. In the early 1970s many features of energy consumption were explained in detail and many opportunities were developed for markedly increasing energy efficiency. There were also many surprises. For example, Figure 1 shows efficiency as a function of cooling capacity for unit air conditioners in 1973. Note that at the time the price of energy seemed to have little to do with efficiency. Efficiency improvements had been undertaken by manufacturers primarily to allow higher capacity units to be used in standard household electrical circuits. Another perhaps less surprising example was

ENERGY EFFICIENCY: ITS POTENTIAL AND LIMITS 12 _ 10 3 m ~ 8 at ILI 6 i i. _ ~ .ro; A. o o° 888 ~ ~Oc80~8Oo8oo8° 2 ° o 8 ° o 8 ° ° /S °. ~ o ~ g o ° ~ .,/ °°~ °° 88q ~ /1 15 VOLTS 7.5 AMPS / ;,. Ash 1- /° ~ A Is ~ ~ , A 4~ / · 11 revolt Unit 12 AMPS/ 0 230 volt Unit ) .,;/1 15 VOLTS ~- · ~ O o o o ° Q o C} o ooQ o o To on o o O ~ o o o o o Q o oo o o o o o o o o .. ~ o o 8 8 8 ~ o o oo o UP o o 3 o ooo o o o O 0 ~ 8 0 o8 0 Q 8 ° o ~ o o o ~ o o ° ° o o o o o o o o o o o Q oo Q ~ o o o JO ~ v o o o o 8 o o 4 8 12 16 20 24 COOLING CAPACITY (103 Btu/hr) 37 FIGURE 1 Efficiency of room air conditioners. SOURCE: National Research Council (1979~. refrigerators. Figure 2 shows the daily energy use for refrigerators as a function of their retail price. Various design features are shown as they were incorporated, which illustrates the dramatic trade-off between initial capital cost and energy savings as a function of those features. At the time of the CONAES study, the potential for energy savings in heating and cooling systems was just beginning to emerge. For example, Figure 3 shows the energy balance of an average residential heating system in 1975. Note that the net (heat capture) efficiency for new units in 1975 was 55 to 65 percent. New units today are in the 95 percent range. A particularly important lesson of CONAES was in transportation. The CONAES scenarios of future energy paths (Figure 4) showed that after initial gains in fuel economy (e.g., up to approximately 20 miles per gallon), the role of fuel became less important in minimizing the total cost of driving. In fact, in all scenarios the marginal gains from additional fuel economy improvements had little effect on the total cost per mile of operation over the lifetime of the car. This may indeed explain why automakers are not investing in new energy efficiency improvements: car buyers are indifferent, partly because other features such as performance are more important to them and partly because further efficiency gains would contribute relatively little to the reduction in total operating costs. This does not mean that

38 15 14 ED 1 3 - o ._ (a ° 12 LL Oh 11 Or LLJ At IL 10 9 8 _ 7 1 1 320 340 360 JOHN H. GIBBONS AND PETER D. BLAIR 17 3, 1] 4 ll 380 400 · 5 Design Changes 8 . ~ 7 ·7,8 '3,4 .6 ~ 4,7,8 INITIAL COST (1975 $) 1. Increase insulation thicknesss 2. Improve insulation thermal conductivity 3. Remove fan from cooled area 4. Add antisweat heater switch 5. Eliminate frost-free and forced air systems 6. Improve compressor efficiency 7. Increase condenser surface area 8. Increase evaporator surface area ·6,7,8 .2 · 1,2 · 1 ,2,7,8 - · 1,2,6 1,2,3,4,> 420 400 460 FIGURE 2 Energy use versus retail price for reEngerator design changes. SOURCE: National Research Council (1979~. in the aggregate such savings would not be significant, especially for the nation. On the contrary, they would, but to stimulate adoption, policy intervention is likely to be required to complement the market. Policy intervention will most likely continue to be very difficult to accomplish, however. For example, the 1988 rollback of the corporate average fuel economy standards set by the Environmental Protection Agency (EPA) for new vehicles suggests that some pressures against such policy intervention are increasing.

ENERGY EFFICIENCY: ITS POTENTIAL AND LIMITS 39 At the completion of the CONAES effort (National Research Council, 1979), the most prominent conclusions of the study were Energy demand elasticity is large, but only in the long term, corre- sponding to turnover rates of capital stock Hence, large price changes lead to an inevitable lessening of the traditionally strong linkage between the growth rates of economic activity and energy consumption, for example, as measured by the ratio of energy to gross national product (GNP). In other words, as the relative cost of various raw materials changes, our industrial and social system adjusts by substituting among these inputs to minimize cost. When cost changes occur slowly enough, energy substitution becomes viable. Future growth in energy demand depends on both prices and policy, but the most likely scenarios imply that growth rates for energy consumption will be lower than in the past. Even if energy prices remain level, advancing technology will favor more efficient use of energy. Pilot Loss (1 o%) Cyclic Loss (0-1 0%) Jacket Loss (0-0.2%) Operating Stack Loss (25%) FIGURE 3 Energy flow for a gas furnace system. SOURCE: National Research Council (1979~.

40 32 30 28 26 a) ._ a) Hi: 22 Q 20 24 a) c' 18 Cal - cn oh o z a: LL] Q o 16 14 12 10 6 4 JOHN H. GIBBONS AND PETER D. BLAIR _ I - 1'' I ~ \ - ~ ~ \ 1 ~ \ \ Total Cost- Scenario B Total Cost- Scenario C __ _ Non-Fuel Cost- Scenario B / / //~ , Aft/ (10% increase over non-fuel cost' scenario B) \ \ Fuel Cost - Scenario B \~$1.37/gal. 35 mpg vehicle' \ - - - Fuel Cost - Scenario C 2 ($0.66/gal, 14 mpg vehicle) O ~ - - 0 10 20 , FUEL ECONOMY (mpg) - _ _ _ 1 1 1 1 1 1 30 40 50 FIGURE 4 Fuel and nonfuel costs for automobiles. Marginal improvements in efficiency contribute less to total operating costs as fuel economy increases. SOURCE: National Research Council (1979).

ENERGY EFFICIENCY: ITS POTENCY AD LIMES TABLE 1 Energy Price Scenarios of the Committee on Nuclear and Alternative Energy Systems 41 Average Annual GNP Growth RateC Scenario 2010 Energy Pricea 2010 GNPb fit) A 4x 19 75pnce 2x 1975 GNP 2 B 2 x 1975 price 2 x 1975 GNP 2 C 1 x 1975 price 2 x 1975 GNP 2 D 2/3 x 1975 price 2 x 1975 GNP 2 B' 2 x 1975 price 2~8 x 1975 GNP 3 A. 4 x 1975 price 2 x 1975 GNP 2 and progressive curtailment aAverage for all the fames of Allergy combined. bGross national produce CAverage growth rates for the 1975~2010 penod. SOURCE: National Research Council (1979). . problem. mind: Liquid fuels constitute by far the most important fuel resource If one looks back over the past 10 years, several reflections come to · The favorite scenario of the CONAES study (2 percent average GNP growth since 1975 and about 2 percent average increase in real energy prices) has turned out to be pretty accurate (see Bible 1~. Whereas the projected consumption of energy in 1986 was 76 quads (quadrillion Btu) (scenario B. Figure 5), 74 quads was actually consumed. · The CONAES study was much too conservative with regard to the technological limits obtainable for auto efficiency (37 miles per gallon); see Figure 6. Industrial demand growth was greatly overestimated, perhaps be- cause the profound changes in the structure of the economy that occurred over the 1980s were not anticipated (see Figure 7~. · Some important health and environmental issues, as they related to the efficiency of energy use, were underappreciated: for example, indoor air quality, urban and regional air quality, and the ejects of chlorofluoro- carbons, ozone, and other greenhouse gases. .

42 JOHN H. GIBBONS AND PETER D. BLAIR 190 180 170 160 150 0 2010 projections 0 1990 projections ... Historic growth in energy use Projection based on continution of 1950-1973 growth rate (3.5% per year) 140 130 oh ts 1 20 _' In G llJ z IL 110 100 90 60 50 - CL to 70 _ 40 _ . .. .. 30 20 10 · Scenario D pi / / / · / / / / / ~ · / / i// go/' ~ //° / // / /' , , /// /// . . . . / . . . . _o~ .~___ - / / C // / B' / / // // / _ ~ 1986 Actual Use A* . 0 O 1 1 1 1 1 1 1950 1960 1970 1980 1990 2000 2010 FIGURE 5 Total primary energy use projections for SLY scenarios. As of 1986, scenario B has proved the most accurate. SOURCE: After National Research Council (1979~.

ENERGY EFFICIENCY: ITS POTENTIAL AND LIMITS 100 80 - ~ 60 LLJ 4o 5 20 o Cummins/NASA Lewis Car Design Volvo LCP 2000 Prototype 1986 Chevy Sprint 1986 Honda CRX O New Car Average (1988) ~ Fleet Average ,............. ::::::: .:::::: O . ., ; - ·'c :o.'~. ; D.' .. o: '. , .. . · ,. a, _ ~~N ~ 1973 1980 1983 1985 FIGURE 6 U.S. automobile mileage (miles per gallon). SOURCE: Bleviss (1988~. FUTURE IMPLICATIONS 43 In retrospect, investments in energy efficiency since the early 1970s have played an important role in the reduction of U.S. dependence on for- eign sources of oil. Throughout the 1970s, actions taken to improve energy efficiency were often dramatic successes but occurred primarily in industry, transportation, commercial buildings, and residences when fuel was a very significant operating cost and, therefore, when the payback for such an investment could be realized very quickly. Actions were often accelerated even further by public policy incentives. Some of the actions involved changes in patterns of energy use, such as lowering thermostats, but most involved investments in technology, either retrofits of existing technology (e.g., insulating existing homes) or new investments in technology (e.g., energy-efflcient new construction or automobiles with improved mileage). In many cases, more than a decade later, the returns from those invest- ments can still be seen. Although there was usually sufficient incentive to replace capital with more energy-efficient technology on a life-cycle cost basis, the initial capital cost was often enough of a disincentive to defer the investment until the existing capital approached the end of its useful life.

44 JOHN H. GIBBONS AND PETER D. BLAIR 50 an 40 Cal - z O 30 be O 20 10 o 31.5 2~.5 . A! 1 ,(. . A , ~ ~ a.. .;.. j 1960 1973 1980 46.2 Savings due to Efficiency 36.0 Savings due to Structural Change 31.6 Services Manufacturing Natural Resources FIGURE 7 The role of energy efficiency in U.S. industrial energy consumption. In 1980, 31.6 quads was consumed, rather than 46.2, because of unanticipated savings due to efficiency gains and structural changes. SOURCE: U.S. Department of Energy (1987~. By contrast, energy efficiency gains in the 1980s, although often just as significant as those in the 1970s, have frequently been realized as incidental benefits to other investments aimed at improving the competitiveness of U.S. products in world markets. Energy efficiency investments in both the 1970s and the 1980s were, and generally continue to be, easier and more cost effective than finding new sources. Although many more opportunities for improvements in energy efficiency still exist in virtually all sectors of the economy. capitalizing on many of these opportunities may require policy intervention. ,, ~ ~ , Much has changed since the 1970s. The traditional points of reference for U.S. energy security have been the two oil embargoes of the Organiza- tion of Petroleum Exporting Countries (OPEC). Those events symbolized the slyrocketing oil and gas price trends of the period. Since that time the U.S. economy has experienced a fundamental evolution of its energy char- acteristics. As noted, some of the changes of this period were behavioral changes in the use of energy, such as lowered thermostats, but many were more permanent structural changes, such as increases in both the efficiency

46 JOHN H. GIBBONS AND PETER D. BLAIR 4 3 Cat oo CD ~ ,, O ~ . _ ._ S CL Hi CD 1 o I, ~...~. .. ~~ a:" ·::::: :.:.:.:.:,:, ::: 2 20% ··· ,~12% 10% ILL 1960 1 973 1979 1 986 Services ~ Agriculture, Mining, and Construction [I Non-Energy-lntensive Manufacturing Energy-lntensive Manufacturing FIGURE 9 Attends in U.S. GNP (trillions of 1982 dollars), 1960 1986. Percentages of GNP indicate trends toward less energy-intensive activities. SOURCE: U.S. Bureau of the Census (19g7~. women in the work force grew from 36 to 56 percent between 1976 and 1986. Changes in the residential sector have contributed significantly to improved energy efficiency (see Figures 11 and l2). This is also true of the commercial sector. These improvements have come largely in the form of more efficient lighting and appliances, increased insulation to improve

ENERGY EFFICIENCY: ITS POTENTIAL AND LIMITS 47 the efficiency of heating and cooling, and more intelligent management of energy use in buildings. As noted earlier, competitive pressures on industry are encouraging investments in energy efficiency indirectly, as a consequence of efforts fo- cused on other factors that affect overall productive efficiency. Decisions to modernize industrial plants, primarily focused on reducing labor costs, for example, are likely to trigger improvements in energy efficiency that otherwise, on their own, might not be considered cost-effective. For exam- ple, the U.S. steel industry today is very different from that. of a decade ago. It has changed from high-volume production of generic steel to lower- volume production of specialized, high-value products. Hence, although the U.S. steel industry's total value of production of steel products has not declined substantially over the past decade, the composition of its output has changed considerably. On the one hand, the investment in transforming the industry has resulted in dramatically improved energy efficiency. On the other hand, the United States now imports much of its generic steel. Transportation is the sector most vulnerable to the behavior of oil imports. Gains in the energy efficiency of transportation over the past decade have been considerable and constitute perhaps the greatest policy success in energy efflciengy. Efficiency legislation passed in the 1970s 8 6 Q z CD IL o ~ 4 Z lL CL 2 _ Lo G _ ~ ~ ~ ~ , Transportation EauiDment ~_~~ a..: . . i ~.~:~r~.;i.~.2"~. O ~ /A 1970 1972 1974 1976 1978 1980 1982 1984 - - m ce o o - LU at LL FIGURE 10 Imports of energy-intensive products (non-energy imports only; imported energy such as oil and natural gas is excluded). SOURCE: U.S. Department of Energy (1987).

48 \ JOHN H. GIBBONS AND PETER D. BLAIR 25 IL >` co a) 20 a) a) ._ ct a) , 15 N m 10 5 o 1976 1980 1985 New Home Average (10) California Standards (6) Most Efficient Prototype (1) FIGURE 11 U.S. residential energy consumption (average energy to heat a single-family residence). SOURCES: Blackburn (1987) and Meier et al. (1983~. mandating corporate average fuel economy standards for automobiles has led to dramatic gains in transportation energy performance. The fuel economy of new cars today is nearly double that of the past decade. Although the replacement rate of cars has slowed, considerable future efficiency gains are also possible and perhaps essential if we wish to further reduce oil imports. For example, the fleet fuel consumption average of U.S. autos has improved steadily over the past decade to about 18 miles per gallon. With existing technology, improvements to 40 or more miles per gallon are possible, and if consumers are willing to accept smaller cars, improvements to nearly 80 miles per gallon can be achieved. Clearly there is a long way to go and much time will be required.

ENERGY EFFICIENCY: ITS POTENTIAL AND LIMITS 49 Finally, changes on the supply side will, of course, affect the future of demand and, hence, the prospects of future gains in energy efficiency. In particular, the traditional equation of vulnerability to a short-term disrup- tion related to the level of oil imports has become less emphasized in policy discussions. The events of the 1970s prompted the creation of a strategic petroleum reserve (SPR) as well as industry actions to stress flexibility in energy use. For example, even industries that replaced oil use in the 1970s with the use of natural gas or other alternatives such as cogeneration often retained the capability to burn oil. Although it is difficult to quantify this fuel flexibility in U.S. industry, such a capability, along with the existence of the SPR and improved energy efficiency, all serge to lessen vulnerability to short-term oil disruption, even as increased dependence on foreign oil returns. In the longer term, however, most trends in the economy, resource availability, and energy demand point toward dangerously increased vul- nerabili~,r in the coming years. The domestic oil and gas resource base continues to decline. Moreover, the increasing concentration of world oil Average ~ New Model (1988) 5; By ~ 4 CO o 3 o Q ~ 2 CD A o Or LU A 111 o Electric Appliances _ I' 1 _ ~ ~ i , ..~ :-:-. ·-:-:-:-:-:-:-:-: 7 ·:~:~:~:~:~:~:. :. . .:.:.:.: :. e== ............... ................. _ :~ 2.-' ~ '.2 ~ ~ oo LL As lL ~0 ~: a' Ace' a_ Best Commercial Model Em:] Potential (lower bound) Potential (upper bound) >. m $ O 600 lo to Cl) ~ 400 t 200 o _ : _ Gas Appliances A.,—%' ,,_` 1 ,,,,,, 1 I ., `,~ I F.-.~ ~ Ace' FIGURE 12 Energy efficiency potential of U.S. residential appliances. SOURCE: Goldem- berg et al. (1987~.

so JOHN H. GIBBONS AND PETER D. BLAIR reserves in the Middle East exacerbates the problem of declining domestic reserves. Currently depressed world oil prices, as well as increased concern over nuclear power and the environmental impact of burning coal, are currently pushing industry toward a return to oil and gas. The development of new "clean-coal" technologies, smaller scale "advanced-design" nuclear power plants, and synthetic fuels has slowed considerably. Finally, lower oil and gas prices have also prompted economic and regulatory changes that could increase the use of oil and gas beyond what might have resulted from the price effect alone, for example, natural gas deregulation or repeal of the Power Plant and Industrial Fuel Use Act of 1978. In addition, lower oil and gas prices have reduced industry incentives to explore for new domestic resources, thus accelerating dependence on imports. Ironically, because the immediate sense of urgency about energy issues has diminished considerably, some of the forces that dramatically moder- ated our dependence on foreign sources of fuel in the 1970s (and helped drive oil prices down) may precipitate new dependence. For example, since the easiest investments in energy efficiency have already been made, future investments may be more difficult to stimulate and perhaps require stronger policy incentives. The difficulty in capturing energy efficiency gains exacer- bates long-term economic vulnerability. Nonetheless, considerable energy efficiency gains in all sectors of the economy are possible in the future and constitute the cornerstone of a comprehensive strategy for slowing the increase in oil imports in the 1990s (see Chandler et al., 1988, and Gibbons and Chandler, 1981~. CONCLUSIONS Dependence of the U.S. economy on foreign energy sources remains the nation's most critical long-term energy problem. The economic vulnera- bility resulting from this dependence is partly due to poor, albeit improving, energy efficiency and a lack of flexibility in responding quickly to changing energy supply and prices. Currently the United States is in a period of relative stability for energy supplies and prices, and energy efficiency gains from new technology and new capital stock are steadily rolling in. This is a result of the economy's strong reaction to higher prices and structural shifts that led to reduced demand as well as more diversified supplies and, in turn, to surplus world production capacity for major energy supplies. Sur- plus energy capacity stabilized energy prices, and this stability is certainly welcome after the tumultuous economic upheaval of the 1970s. The ability to deal with short-term disruptions made possible by the SPR, by increased oil production from non-OPEC sources, and by dual fuel capabilities in industry developed over the past decade will not affect the long-term trend toward a dramatic increase in U.S. imports of oil. Hence,

ENERGY EFFICIENCY: ITS POTENTIAL AND LIMITS 51 the current period of stability is only a reprieve, not a justification for complacency. However, energy efficiency improvements, along with greater development of domestic oil sources, will affect this long-term trend of dependence. In sum, the potential for improvements in energy efficiency remain dramatic, as typified by the illustrations cited earlier in heating, cooling, and lighting of residential and commercial buildings and in improved automobile efficiency. This potential will continue to expand with improvements in information technology and new materials, but significant constraints limit the rate of realizing that potential. These constraints include continued low energy prices relative to the rest of the world, long time lags in the turnover of capital to incorporate energy efficiency improvements, and falling levels of research and development initiatives in the area of energy efficiency. It could well be a time to redouble our efforts to mine the considerable resources of energy efficiency still available in virtually all sectors of the economy. A comprehensive energy policy centered on increasing energy efficiency, however, is likely to require substantial policy intervention. REFERENCES Blackburn, J. 1987. The Renewable Energy Alternative. Durham, N.C.: Duke University Press. Bleviss, D. 1988. Energy El~cienc~r. The Key to Reducing the Vulnerability of the Nation's Transportation Sector. Washington, D.C.: International Institute for Energy Conservation. Chandler, W., H. Geller, and M. Ledbetter. 1988. Energy Efficiency: A New Agenda. Washington, D.C.: American Council for an Energy-Efficient Economy. Gibbons, J., and W. Chandler. 1981. Energy: The Conservation Revolution. New York: Plenum Press. Goldemberg, J., T. Johansson, A. Reddy, and R. Williams. 1987. Energy for a Sustainable World. Washington, D.C.: World Resources Institute. Meter, A., J. Wright, and A. H. Rosenfeld. 1983. Supplying Energy Through Greater Efficiency. Berkeley, Calif.: University of California Press. National Research Council. 1979. Alternative Energy Demand Futures to 2010. Committee on Nuclear and Alternative Energy Systems. Washington, D.C.: National Academy of Sciences. U.S. Bureau of the Census. 1987. Statistical Abstract of the United States: 1988, 108th ed. Washington, D.C.: U.S. Government Printing Office. U.S. Department of Energy. l9g7. Patterns of Energy Demand. Washington, D.C.: U.S. Government Printing Office. U.S. Department of Energy, Energy Information Administration. 1988. Months Energy Review p)OE/EIA-0035~88/01~] (April).

Energy: Production, Consumption, and Consequences. 1990. Pp. 5~71. Washington, D.C: National Academy Press. . Implications of Continuing Electrification CHAUNCEY STARR National energy strategies for the 1990s should be based on an un- derstanding of the critical role played by electricity in meeting many social objectives. This chapter describes the relationship of electrification and related technologies to some current national themes: economic growth and productive efficiency, quality of life and social change, environmental improvements, international competitiveness, and the international energy resource base. Each of these topics involves a vast complex of factors; the key role of electrification in influencing their future course and outcome will be illustrated, along with some of the implications for the biosphere, technology, societal structure, and national energy policy. Decisions during the l990s on national energy alternatives should be made in the context of the time scale that is characteristic of the energy field and its substructure. In the United States, the decision process to initiate the use of a new energy alternative requires about a decade, prototype construction and start-up another decade, and commercial expansion about two decades; finally, the new energy alternative may function for three decades or more. Thus, a period of roughly 50 to 70 years is characteristic of the consequences of national decisions in the energy field. Of course, less time is required for small-scale technical fixes or changes, and the time our process now takes to approve the expansion of conventional technologies (e.g., coal and hydrosystems) lies somewhere in between. The point is that a national energy strategy planned and implemented in the l990s will only begin to have an effect a decade or more later, and will have consequences to 2050 or beyond. It is, therefore, important to project the scope of 52

IMPLICATIONS OF CONTINUING ELECTRIFICATION 53 such consequences into the next century, despite the uncertainties involved. Some of the foreseeable long-range outcomes and their implications will be indicated in this chapter. HISTORICAL PERSPECTIVE Electricity is a unique intermediary between a variety of primary energy sources and a broad spectrum of end-use devices, many of which exist only because electricity has become widely available. The importance of electricity in the modern world is indicated by the fact that global and U.S. sales of electricity are roughly the same magnitude as the sales of oil products for end uses (globally, about $500 billion; United States, about $150 billion), even though electricity is made from primary sources of energy and therefore can be more costly than oil on an energy basis. Electricity is used in four ways: 1. ~ substitute directly for primary fuel use (i.e., a Btu or joule alternative) as in space heating or electrothermal metallurgical processes; 2. ~ permit the use of more flexible mechanical work devices (e.g., the electric motor as a substitute for the steam engine or human labor); 3. To provide the energy necessary for dissociating molecules or ex- citing atoms (e.g., batteries, lasers, plasmas, electrochemical cells); and 4. 1b provide the key input of electrotechnical systems for communi- cation (e.g., telephone, wireless, television), computation, and information storage and retrieval. In a recent survey, researchers were asked to select the most significant technical advances of all time (Research and Development, 1987~. Harness- ing electricity received 37 percent of the first-place votes; antibiotics, 14 percent; and vaccines, 11 percent. Even though such perceptions are sub- jective, this confirms the intuitive belief of most technologists that the process of electrification during the past century has been a major factor in the sociologic and economic development of modern industrial societies. How major a factor and the implications for the future are the concerns of this chapter. First, the basis for the connection between electrification and economic growth should be reviewed. This topic was recently studied by the Energy Engineering Board of the National Research Council (1986) through its Committee on Electricity in Economic Growth. The study confirmed that electricity is not merely an alternative energy form (i.e., a Btu option), but rather a unique and major input to productivity. Although electricity was first used for lighting, the electrification of industry started in the early 1900s when the electric motor became a com- mercial product. The energy demand effect is shown in Figure 1. The

54 O 150 on O 1 30 or Cal x 110 a) 25 90 70 CHAUNCEY 5134RR E/GNP Ratio ~ _ Z ~ (5 50 Lu 1 880 \ Electricity Fraction 1900 1920 1940 1960 1980 50 4o LL.l 30 ~ 20 ~, LL 10 1 1 1 1 1 o 2000 FIGURE 1 The decline in the ratio of U.S. energy consumption to gross national product (E/GNP) after 1920 is due to gains in the overall energy efflcien~y of the U.S. economy. At the same time, the fraction of the total U.S. energy consumption as electricity rose. electrical fraction of the total U.S. energy consumption increased rapidly after the 1920 period. The fact that while electrification was increasing, the overall energy efficiency of the U.S. economy was also improving (as shown in Figure 1) is not often appreciated. This phenomenon seems counterintu- itive at first. Electricity generation is often perceived as a wasteful process, since about two-thirds of the primary energy input is rejected as waste heat at the power plant. However, electricity-based technologies generally are highly efficient and have served to raise the net productivity from all factor inputs, including energy. The whole manufacturing system was provided the flexibility to redesign processes for optimizing production. The technolog- ical manufacturing improvements spawned by the availability of electricity helped reduce the intensity of total energy use through such productivity improvements. Therefore, the "form value" of electricity compensates for the rejected heat loss, which of course can also be used for other purposes. If the sources of long-term growth are partitioned into two categories- (1) growth in the primary productive inputs (i.e., labor, capital plant, and equipment) and (2) growth in productive efficiency (i.e., multifactor productivity) the latter category has accounted for more than half of the overall growth in manufacturing output since the early l900s. What accounts for productivity growth? Technological progress has obviously been of major importance. More specifically, the main point is that in this century technological progress has been heavily dependent on the use of electricity and electrified techniques of production. This can be illustrated with a few statistics drawn from a major study

IMPLI=TIONS OF CONTINUING ELECT~FI=TION 55 now nearing completion at the Electric Power Research Institute (EPRI; Schurr, 1988~. During the long period 1899-1985 (almost the entire twen- tieth century to date) when capital inputs grew at an annual average rate of 3.1 percent, electricity use grew at 8.5 percent while nonelectrical energy's growth proceeded at a comparatively slow 1.5 percent. This says that tech- nological progress, as embodied in new plant and equipment and in overall systems of production based on such additions to capital stocks, has shown a strong affinity for energy use in the form of electricity. This preference was particularly strong during 192~1929 when electricity grew at 10.4 percent while nonelectrical energy actually declined at a rate of 0.2 percent per year. (This was the period in which the electrification of mechanical power in manufacturing became almost total; the comparative rates reflect the fact that such electrification applied not just to new equipment, but also to the replacement of old equipment based on steam.) The detailed evidence, whether economic-statistical for all manufacturing or anecdotal for specific technologies, is quite strong that through its critical role in technological advance, electrification has been an important engine for economic growth throughout the twentieth century. The relationship between electrification and economic growth not only is plausible from industrial case studies, but also is supported by the close correlation of electricity use with economic output measures such as the gross national product (GNP). The recent study by the National Research Council's Committee on Electricity in Economic Growth (National Re- search Council, 1986) has explored this subject in some depth for the United States. However, we will show that these relationships apply glob- ally. As a guide, consider the U.S. electricity-GNP relationship summarized in Figure 2. As electrification of the U.S. economy increased over time, the slope of the electricity-GNP line became steeper. A more detailed plot of the recent period 1947-1987 is shown in Figure 3. Obviously, it is the end use in industry that contributes to the economic output rather than electricity supply. Thus, one would expect that an increase in the efficiency of converting electricity to end uses would reduce the slope of electricity consumption versus GNP. A hypothesis to this effect, proposed in 1976, is shown with U.S. data in Figure 4. A detailed study shows that the 1973 oil embargo, which initiated fuel cost increases and thus electricity price increases, resulted in an economic drive for more efficient use of electricity, primarily in industry. The shaded trapezoid in Figure 4 shows the domain that might be achieved by improving the efficiency of electricity use. A detailed EPRI study of the technological potential for improved efficiency indicates that as much as 34 percent of U.S. use in the 1970s could be saved if all known technical means were applied (Smith, 1978~. For cost reasons, roughly half of this, 17 percent, might reasonably be achieved. This 1976 chart is a convenient way to follow yearly trends.

54 O 150 o 1 30 o o x 110 a' ~5 ~ 90 E/GNP Ratio ~ an, 70 I/ ~ o ILL (9 So- LlJ 1 880 Electrici Fraction 1900 1 920 1940 1 960 FIGURE 1 The decline in the ratio of U.S. energy consume (E/GNP) after 1920 is due to gains in the overall energy ef At the same time, the fraction of the total U.S. energy cons electrical fraction of the total U.S. energy consu' after the 1920 period. The fact that while electrific overall energy efficiency of the U.S. economy was ~ in Figure 1) is not often appreciated. This phenom itive at first. Electricity generation is often perceiv since about two-thirds of the primary energy input at the power plant. However, electricity-based te highly efficient and have served to raise the net pr' inputs, including energy. The whole manufacturing flexibility to redesign processes for optimizing pro ical manufacturing improvements spawned by the helped reduce the intensity of total energy use t} improvements. Therefore, the "form value" of elt the rejected heat loss, which of course can also be If the sources of long-term growth are partition (1) growth in the primary productive inputs (i. and equipment) and (2) growth in productive efl productivity)—the latter category has accounted fit overall growth in manufacturing output since the ~ What accounts for productivity growth? ~` obviously been of major importance. More specie that in this century technological progress has bet the use of electricity and electrified techniques of This can be illustrated with a few statistics dr 56 450 400 350 300 o ._ = ._ Q - - - 250 L' 200 LIJ o 150 _ 100 50 o o FIGURE 2 U.S. e 1~4). Clearly, the factors, such as patterns. Nevert of the technology electricity-GNP I

IMPLICATIONS OF CONTINUING ELECTRIFICATION 2700 2600 2500 2400 2300 2200 2100 2000 1900 1800 1 700 ~ 1 600 MUG) 1 500 1 400 ~ 1 300 LU 1 200 1100 1 000 900 800 700 600 500 400 300 200 100 o / ~ 1985 no/ / 1984 7~986 1 980 Ad/ 1982 ~~ l ~ l a\ · /1981J \~ / 1983 is ~ 1973 1 968 ~ 6 i~ 1~ /~19~ 1947 ~ 0 200 400 600 800 1000 1200 1400 1600 1800 GNP (billions 1972 $) FIGURE 3 U.S. electricity generation versus GNP (1947-1987). 57 of this gross relationship has yet to be fully explored, there seems little doubt that electricity use and GNP are intimately related. This provides a historical basis for speculating about future trends and their significance. A plausible future scenario requires that electrification be viewed globally, rather than limited to the United States or other industrialized

58 CHAUNCEY STARR 6000 5000 4000 3000 to LU LL 2000 1 000 o 1947-197 1976-1 986 Trend ~ Trend / / 1987 ~ / / :'.? \ /.? 1979 ~ \/ i:.- \k, ~ ,........ few 1973 =17; Efficiency of Electricilv lee 1 1 500 1000 1500 2000 2500 3000 3500 GNP (billions 1972 $) 1 1 1 1 1 FIGURE 4 Effect of conservation on the electricity-GNP relationship in the United States. The shaded area shows the range of potential for more efficient use of electricity. 2.5 2.0 t~ 1.0 LL ~ 0.5 At: o ~ 0.0 1986 19w ~ 1 970 ~ 1 965 1 960 ~ for / MU '95:' - 1 975 / /0 1 , 1 1 1 1 1 1 1 1 1 1 1 ~ I 1.0 1.4 1.8 2.2 2.6 3.0 3.4 3.8 GNP (trillions 1986 $) FIGURE 5 Electricity generation versus GNP in the USSR and Eastern Europe (196 1986~.

IMPLICATIONS OF CONTINUING ELECTRIFICATION 10 9 8 7 6 4 1 986? i 1 980? 1:g/ / 1 965 1 960/ °/ 1 1 1 1 / 5 7 9 11 GNP (trillions 1985 $) 13 15 FIGURE 6 World electricity generation versus GNP (196~1986~. 59 countries. This global view is the important one because of the fungible nature of primary fuel resources. Further, regional aspects of electrification arise from global biospheric effects and global depletion of energy resources. Long-term energy issues should, therefore, be addressed globally. A study by the Conservation Commission of the 1986 World Energy Conference (WEC-CC) projected the range of total energy demand to the year 2060 and the resulting fuel resource implications (Frisch, 1986~. This long-term projection serves to reveal some of the basic issues associated with the characteristically slow changes in energy systems, which generally have a SO-year time constant for significant change. The WEC-CC con- sisted of many international expert panels in all aspects of energy systems from a variety of countries (none from the United States), supported by regional specialists. This multiyear comprehensive study focused on total energy equivalents, not electricity, but it included all the sources primary to electricity and, therefore, provided the basis for this evaluation of the implications of continuing electrification. In particular, estimates from other sources of world economic growth and population growth have been combined with the WEC-CC resource projections to describe a probable future. It is necessary to be both skeptical and appreciative of any global pro- jections extending about 75 years hence. Many now unforeseen geopolitical, technical, and resource changes may arise to alter radically any forecasts. Alternatively, some energy trends have had long-term stability (e.g., auto- mobile use). Projections to 2060 may, therefore, help disclose those issues

60 CHAUNCEY 5134RR 3 2 o 5 _ 4 I Cr 1 \ - - ~ Gross National Population ~ _ Product 1960 1980 2000 2020 2040 2060 FIGURE 7 Past and projected world average annual percentage growth rates (growth rates centered in penod; projections from 1985~. that justitr near-term attention. Linear extrapolations of the past can also oversimplify future relationships, but in the absence of more valid models, they provide an initial framework for contemplating the future. With these caveats, the global electrification picture will now be projected. The historical base for the projection in this chapter is the 25-year period 196~1985. Earlier than this, world data are too uncertain. This period was used to explore three linear relationships: (1) electrical kilowatt- hours per unit of global GNP; (2) electrical kilowatt-hours per capita of global population; and (3) global GNP per calendar year. An additional projection of the world's population growth was taken from the WEC-CC study (Frisch, 1986), and it in turn was assembled from the World Bank and United Nations population forecasts. The annual growth rates of the global GNP and population provide two independent parameters for projecting global electricity. It is interesting that both of these show very modest growth rates, as illustrated in Figure 7. It is obvious that the projection of long-term global economic growth is basic to projecting electricity consumption in the twenty-first century and thus its role in global sociologic change. fib provide a general perception of the importance of economic growth, it is illuminating to consider the distribution of regional electricity use in 1985. About 31 percent of global primary energy was converted to electricity, with 33 percent efficiency in the industrial world (the Soviet Union and member nations in the Organization for Economic Cooperation and Development) and 25 percent efficiency in the developing countries. The industrial nations, with about 25 percent of the world's population, generate approximately 75 percent of the world's electricity. On a per capita basis, this means that on the average, people in the industrial world use 9 times as much electricity as residents of the developing world. The significance of these simple ratios is that future

IMPLICATIONS OF CONTINUING ELECTRIFICATION 61 global economic growth, particularly of the developing regions, will be associated with very large increases in electricity generation. Based on three independently derived equations relating global elec- tricity consumption to estimates of global GNP and population growth, two independent but similar results are projected (as shown in Figure 8~: by 2040 2060, electricity demand will be about 3.0 times that of 1980 (a growth rate of 1.87 percent per year during this 60-year period). The equations given in Figure 8 may be a lower boundary, because new electrotechnolo- gies may increase the range of uses. If one assumes that the efficiency of conversion or primary fuel lo electricity Is not improved, this would mean that during 204(}2060, electricity generation will require as much primary energy as total world energy consumption today. Skeptical as one may be about the credibility of such long-range projections, the historical trends of the past century suggest that these may be conservative. Even if the uncertainty of long-range projections of electricity demand is acknowledged, it is nevertheless instructive to examine their implications for principal primary fuel resources. The WEC-CC study (Frisch, 1986) examined in great detail the availability of primely fuels. Three scenarios of total energy demand were considered: high, central, and zero growth. The central scenario is considered the most likely and will be used here because it is consistent with the extrapolation of 1960 1985 trends. Its energy demand growth rate averages about 1.3 percent per year for 1980-2060, and appears both modest and reasonable compared with the 1960-1980 growth rate of 3.9 percent per year. Based on this central projection, the WEC-CC estimated the changing contributions by competing primary energy sources, giving consideration to proven, probable, and speculative supplies, as well as to the economic constraints on their production. The resulting distribution is shown in Figure 9. The message is simply that the role of coal as the world's principal fossil fuel will become more prominent in the coming decades. 1b quote this study (Frisch, 1986:63~: Today, when we consider the glut of oil available and the spectacular falling price of a barrel, abundant energy might well seem to be a reality. This is true, however, only so long as we confine our perspective to the limits of this century. As soon as we pass beyond the year 2000, the appearance of reality can be seen for what it is, an illusion. The first shortages are nigh. Close at hand, the pressure on supplies grows fiercer, the struggle to find resources intensifies. The first to come under threat are the hydrocarbons and, indeed, also uranium unless breeders come to the rescue. Regionally, it is the big importers, the western countries, that face difficulties but, as time goes on, the Third World and the East will also become more and more exposed. Actually, the Third World countries may be the most sensitive to resource scarcities, because fuel imports play a very large role in their economies. When the WEC-CC results are applied to the electricity projections, the major fuel sources are distributed as shown in Figure 10. The assumed

62 CHAUNCE:Y STARR availability of natural gas for filer purposes does raise a question as to whether such a high-quality resource should be consumed in this manner, instead of being kept as a raw material for the production of petrochemicals and synthetic products. Nevertheless, the important role of fossil fuels is evident. In 2060, this projection calls for 1.64 times as much annual fossil fuel consumption for electricity generation as was used in 1980. In Figure 10 it is assumed that the world's hydroelectric energy is 5 times as much and nuclear energy 18 times as much as was available in 1980. Whether hydroelectric growth will be this great, even if feasible at 2.0 percent per year, or nuclear energy will expand this much at 3.7 percent per year, depends on many existing constraints. Even in such an authoritarian and centrally planned economy as the USSR, major hydroelectric and nuclear 32 28 24 ti~ 1 2 J 6 o _ . - 20 _ o ._ _ ._ 16 _ _ 8 4 0~ 1 960 I · Based on GNP | · Based on Population | 1 1 Pr a/ i' /Y Pi ~ p 9 Global Population Year Pop (x 106) 1980 4,453 2000 6, 123 / 2020 2040 8,979 2060 7,807 9,686 1980 2000 2020 2040 2060 FIGURE 8 World electric power consumption- actual and projected (from 1980 to 2060), based on GNP (Pg) and population (Pp). Pg = - 2,076 + 0.8202(GNP), where GNP in billions of 1985 U.S. dollars is given by GNP = - 679,252 + 349.218(calendar year). Pp = —9,466 + 3.872(Pop), where Pop is given by the inset table.

IMPLICATIONS OF CONTINUING ELECTRIFICATION 7 I 6 (D 5 o CD CL in cr: llJ A 63 p Coal 4 3 1~ ~ ~.0- _o Natural Gas _ _ ~ Uranium —O— of ?> New Sources Of ~~ ~ Hydroelectric 05=~ 1960 1980 2000 2020 2040 2060 Noncommercial FIGURE 9 Evolution of world energy supplies (projection from 1980~. SOURCE: Fnsch (1986~. power plant projects have been modified because of general concern with potential long-range environmental and ecologic effects. If this becomes a global trend, then the role of fossil fuels, and coal particularly, increases substantially—regardless of whatever greenhouse effects they may produce. Although nuclear power avoids the atmospheric environmental impacts of fossil fuels, its public acceptance depends on establishing the safety of the whole nuclear fuel cycle. Perhaps the cost of electricity will eventually be the dominant determinant, driven by the economic scarcity of fossil fuels. In any event, the history of international calamities and uncertainties in long-range strategic planning would suggest that all technical options should be kept viable and that each may have a useful niche in the future global mix of fuels for electricity generation. BIOSPHERIC IMPLICATIONS Let us now consider the broad implications of such long-range growth in global electrification. It is evident that the most certain consequence will be a significant annual increase in fossil fuel combustion products emitted to the biosphere, with a resulting greenhouse effect. Whatever climatic change the continuing growth in some atmospheric gases (e.g., carbon dioxide, methane) is projected to produce, such changes will be accelerated by the future increase in global fossil fuel use. There is at present no economically practical technology that can be used to remove carbon dioxide as an end product of fossil fuel use. Although it is technically

64 CHAUNCEY 5174RR 4 3 2 1 Coal, Oil, Natural Gas, car' Thor / - ~ Hydroelectric O l 1960 1980 2000 2020 2040 2060 FIGURE 10 Projected mix of available world primary energy sources for electricity generation (projections from 1980~. possible to strip carbon dioxide from power plant flue gas, the ultimate conversion of the carbon dioxide to storable forms requires large energy inputs and is very costly. The permanent storage of carbon dioxide is not foreseeably resolvable. Reduction in its rate of production may result from seeking an increase in the efficiency of fossil fuel conversion, and this may delay the onset of the inevitable biospheric effects by a decade. It is important to recognize that any reduction in electrification growth by using fossil fuels directly for end purposes (i.e., a low-electrified econ- omy) is apt to increase, rather than decrease, the total emission of pol- lutants. Except for the use of passive solar heating where feasible, the system efficiency of primary resources conversion to end functions is higher for electrified systems because of the relatively high efficiency of electrical devices. Also, electrification permits the use of nonfossil resources such as nuclear, hydroelectric, and solar power for electricity production. Further, centralized generating plants based on fossil fuels usually permit a much higher quality of pollution control than is feasible with small dispersed activities. The goal, then, is to minimize pollution by promoting the most efficient generation and use of electricity. On the brighter side, technology is available to reduce the output of other noxious atmospheric effluents such as the oxides of sulfur and nitrogen that produce acid rain. In the coming decades, the new-technology fossil fuel plants should reduce these effluents to minimal levels. Coal ash will still need disposal, but as new uses are found for this material, it can become a resource material. A further uncertainty in long-range electricity projections arises from

IMPLICATIONS OF CONTINUING ELECTRIFICATION 65 the effect of projected climatic change by altering present electric load patterns. A study now under way for EPRI indicates that this impact on electric utilities could be significant and that these changes could be evident within several decades. The net effect is to shift the structure of electrical demand in such uses as agricultural irrigation pumping, air conditioning with heat pumps, and other weather sensitive loads. If climatic changes also cause demographic movements of industry and populations, a corresponding shift of transmission networks will be needed as well. A major technical factor affecting large increases in regional elec- trification is the increasing scarcity of inland cooling water to accept the by-product heat from either fossil- or nuclear-fueled power plants. Regional constraints on water use and ecologically acceptable water temperature in- creases have already limited power plant expansion plans in many areas. This has created continuing engineering interest in the development of dry cooling towers (atmospheric heat rejection), and a parallel interest in raising the Carnot efficiency of the thermodynamic cycle. This would also have the salutary effect of reducing the total effluent outputs per unit of electricity. Major progress toward this objective depends on the develop- ment of very high temperature materials, such as workable ceramics, which represent one of the active frontiers of materials research. More distant is the use of high-temperature thermionic converters for additional efficiency gains. Another technical option for mitigating some of these undesirable constraints is the current development of direct conversion to electricity by the electrochemical fuel cell (U.S. Department of Energy, 1986), which avoids the Carnot cycle limits and may achieve efficiencies of approximately 60~0 percent. Materials lifetime and economics are current issues, but another decade of development may produce competitive commercial units. The fuel cell needs hydrogen, foreseeable produced from hydrocarbon fuels, and an oxidant such as the oxygen in air. Three approaches are now being developed: the low-temperature phosphoric acid, and the hi~h-temnernt~,r~ molten carbonate and solid oxide fuel cells. Gas turbines work well with carbon monoxide. This, fortunately, befits the output of a coal gasifies, which can use coal and water to produce equal amounts of hydrogen and carbon monoxide. Thus, given an economically functional phosphoric acid fuel cell, the efficient way to use coal is through gasification, with carbon monoxide fueling a thermodynamic combined cycle generator (gas turbine and steam cycle), and with hydrogen going to the fuel cell. This combination might provide a 25 percent efficiency improvement in the use of coal for electricity generation. More options become possible because of the ability of high-temperature molten carbonate and solid oxide fuel cells to use carbon monoxide (or methane) directly with the

66 CHAUNCEY 5174RR added benefit that by electrode surface reactions with water, hydrogen is produced. TECHNOLOGY IMPLICATIONS All of us are familiar with the role of electrification in a modern society. Personal productivity is generally enhanced by a variety of electrical devices. The more recent applications in industry are described in a series of EPRI reports (EPRI, 1984 1987~. Of special interest is the potential of the more recent developments such as lasers, plasma torches, superconductors, and new materials. Lasers provide a highly collimated energy beam that can be tuned over a wide range of frequencies ranging from infrared to ultraviolet. They can be used to stimulate chemical reactions and separate isotopes by selective photoexcitation, photoionization, or photodissociation of atomic or molecular vapor. When used with computerized controls, lasers are replacing conventional cutting tools with commercial success. The plasma torch can reach a temperature of almost 8000°F (4400° C), about twice the temperature of a flame. Plasma torches could dissociate the molecular structure of most compounds. A plasma-fired cupola for iron foundry melting is one of the many new and potentially large present applications. The use of the plasma torch to destroy toxic wastes has been demonstrated to be extremely effective, and this "pyroplasma" technology will eventually become a major tool for environmental waste control. The laser is scale limited at present and thus not adapted for a large throughput of material. However, the application potentials are sufficiently attractive that low-cost modular units may eventually be developed. More speculative is the possibility of future commercialization of elec- tric laboratory processes such as the synthesis of new products by using electrochemistry and organic plasma chemistry (Schurr, 1983~. An elec- trode reaction or a controlled plasma can provide the energy needed for molecular excitation and bond breaking, with subsequent stabilization of resulting species to provide new products. Electrochemical and plasma processes have the ability to produce high-energy electron level excitation, thereby creating new species and reactions. Great progress has been made in the laboratory synthesis of new products, but so far the energy eifi- ciency and rate of production are low. The development of large-scale electrochemical equipment is the challenge for the twenty-first century. A recent electrochemical development appears to have promise for removing toxic chlorinated chemicals from organic waste. By electrochem- ical stripping of the chlorine atom from chloro-organic compounds, their inherent toxicity is destroyed. A commercial prototype dechlorinating plant has been built to treat pesticides.

IMPLICATIONS OF CONTINUING ELECTRIFICATION 67 Perhaps the most exciting near-term electrotechnical development is the electric automobile. Electric vehicles have been used since the ear- liest days of the automobile, but their use has been severely limited by the electricity storage capacity and lifetime of the conventional battery. In the past decade, intensive development of the lead-acid battery and the electric vehicle has made the combination marginally competitive for short-range urban uses and prototype demonstrations are now under way. Improvements in the traditional nickel-iron cell have succeeded in produc- ing a battery with 50 percent more energy storage per unit weight than the lead-acid cell. It is expected that within a few years, a demonstration of a nickel-iron powered commercial van with a possible 100-mile range will be made. It appears very likely that urban use of the electric automobile will be common by the turn of the century. Another long-range technical challenge is the fixation of nitrogen by electrical means. Low-cost fertilizer is one of the key requirements for meeting the food demands of the inevitably increasing global population. Historically, primitive arc devices were used in the United States and Sweden to fix nitrogen from the atmosphere. This was superseded by the much more economical synthetic ammonia technology. Perhaps the ongoing development of lasers and plasmas may lead to commercial nitrogen fixation which, with phosphate rock, could provide the nutrients for a future global food supply. SOCIOLOGICAL IMPLICATIONS The electrification of industrial societies has resulted in profound changes in their social structure. Most dramatic among these has been our emancipation from the solar day its effect on our living patterns is obvious. The revolutionary change in manufacturing produced by the ad- vent of the electric motor has already been described. Electrically powered small machine tools also made possible the decentralization of small-scale specialty manufacturing. Beyond manufacturing, however, the same electric motor development provided the mechanical power for vapor-compression refrigeration units for commercial and residential use. The consequent sociological restruc- turing has been massive. The effect of refrigeration on the processing and distribution of food is clearly evident; it has radically increased our available sources of nutrition as well as their economics and healthfulness. Refrigeration has also totally altered our food supply and delivery systems. Air cooling has completely changed the demography of the southern portion of the United States, as well as becoming an integral part of life-styles in hot weather (e.g., air-conditioned cars, offices, restaurants, schools, theaters, and homes). Electricity-powered cooling systems have

68 CHAUNCEY 5174RR expanded the availability of friendly living space in otherwise inhospitable climates. The continuing development of the electric reversible heat pump now provides a single device that can both cool and heat, and can do so very efficiently, so that completely electrical, space temperature conditioning is now becoming more commonplace and economical. The electrification of communications and information systems has steadily expanded the individual's span of accessible knowledge and recre- ation. Each of these areas of electrification deserves much study to assess thoroughly its sociological impacts. In this limited discussion, it is sufficient to make the general point that electrification in the twentieth century has profoundly changed our society. The interesting speculation is the degree to which the twenty-first century will see continued societal changes from this electricity-based expansion of accessible food, space, time, knowledge, and productivity. In looking forward to the twenty-first century, the most significant electrification outcome is likely to be its contribution to global economic growth and increased per capita income. This could be the strongest force for improved global health, education, and public welfare. Such broad benefits are not usually perceived as causally related to electrification, but our studies indicate the relationship is both real and powerful, given a societal environment conducive to economic and industrial growth. One can also predict substantial mitigation of many of the current envi- ronmental problems of industrial societies by the application of foreseeable electrotechnologies. The most obvious is the revival of urban electrical transportation systems as a means of reducing air pollution and traffic con- gestion. The electrical passenger train, both surface and subterranean, has again become the technically desirable transportation mode for connecting the inner city with the suburbs, and this will become more commonplace as the traffic density on surface roads increases. Further environmental benefit can be gained by using the by-product heat from electricity generation for urban district heating or other local uses. In the city, the air pollution created by the gasoline-fueled automobile has become an incipient health hazard. The electric automobile is now a developmental reality. As previously mentioned, the commercial availabil- ity of improved storage batteries (e.g., nickel-iron) could provide a major alternative to the gasoline-fueled automobile for urban use. A study of the potential role of a successful electric automobile (100-mile range) indicates that it could satisfy 92 to 96 percent of the average family's trips and could cover approximately 66 to 74 percent of the miles traveled annually (Horowitz, 1987~. Such a major transportation transition, encouraged for urban pollution reduction, could substantially raise electricity demand and

IMPLICATIONS OF CONTINUING ELECT~FI=TION 69 reduce national oil needs by as much as one-half. This is a current tech- nological development that could significantly change long-range electricity roles and the geopolitics of oil. Electrification of communications will facilitate urban decentralization. It is already evident that advanced communications techniques permit any individual to function intellectually from any location, through communica- tions links with other individuals, libraries, data banks, universities, service centers, markets, financial services, entertainment, and so on. Eventually, this could mitigate urban population density and its attendant environ- mental stresses. I~To-way television will become commonplace as the full capacity of fiber-optic networks is achieved. The terminal equipment is costly today, but rapid progress can be anticipated to lower its cost substan- tially. Thus, video conferences, shopping, education, and other activities may be conducted without personal travel. Low-cost and versatile commu- nications may also help to strengthen the family ties of members separated by a long distance. There will, of course, continue to be many activities that require the assembly of large groups in urban centers. Transportation costs for raw materials, finished goods, and services play an important role in deter- mining the need for centralized production and management. Thus, the pressures for urban decentralization will be balanced by counterpressures for the maintenance and revitalization of urban centers. Electrified `'peo- ple movers" such as trains, subways, elevators, escalators, and walkways facilitate more efficient infrastructure for high-population-density urban communities. These few examples of the possible future implications of electrification have focused on their potential for societal change. The rapidly developing information and electrification technologies have combined to produce a foreseeable spectrum of future technical opportunities for achieving global societal goals. In an unpublished paper entitled "Future Imperfect," Robert M. White (1986), president of the National Academy of Engineering, per- ceptively discusses the present era of technological change and its interac- tion with economic, political, and social change. In that paper, he suggests that we may not fully perceive that we are already in a period of techno- logical innovations so sweeping that they will "transform the institutions of society, the general welfare of people, the economies of nations, and the fate of individual industries." Electrification is by no means the chief element of such a technological revolution. However, in combination with the parallel development of other technologies, it is clearly a crucial com- ponent in the creation of future opportunities to effect changes in our global societies.

70 C~4UNCEY STARR IMPLICATIONS FOR NATIONAL ENERGY POLICY Electrification is so closely interwoven with other energy systems that its future course will be influenced by the directions taken by all other energy programs. The global issues discussed in this chapter, which are pertinent to electrification, are similar to the issues for a national energy policy. These may be summarized in terms of two strategies: 1. Societal strategy—establish long-range objectives and priorities: economic growth; environmental improvement: both regional and global; · geopolitical balance of international versus national markets; · transition methodology for government and industry; and · time scale for objectives. 2. Technological strategy—develop energy supply and demand alter- natives for adaptation to future constraints: · electrification a dominant mode, except for passive solar heating; · stimulation of nonfossil resources such as hydroelectric, nuclear, and solar energy; risk-taking incentives for research and development; and program stability in government and industry. As previously discussed, the long-time characteristics of energy systems require very long-range strategies for achieving both societal and technical objectives. The duration of such strategies must be very much greater than the short-term, two-, four-, and six-year election periods of our political processes. We need a national energy policy whose directions can be maintained and supported for decades by both government and industry. As a more general comment, it should be emphasized that although applied science and engineering can provide the technical tools, their use depends on the initiatives and support of industrial, political, and social institutions. Familiar as this thought may be, one must continually emphasize the need for institutional flexibility to achieve the benefits made possible by the opening of new frontiers through technological progress. This requires a long-term societal commitment to achieving common goals. A historical review of the relationship of energy use and social development throughout human civilization (Starr, 1971, 1979) illustrates that energy has always served as a scaffolding for economic progress. Unfortunately, during the past two decades, the historical recognition of energy as a positive good has undergone a reversal. Once again, the productive contribution of energy—used efficiently, of course must be recognized. It is in this context that electrification appears to be the most effective mode for the use of future energy resources.

IMPLICATIONS OF CONTINUING ELECTRIFICATION REFERENCES 71 Electric Power Research Institute. 1984. Microwave Power in Industry. EPRI report no. EM-3645. Palo Alto, Cali£: EPRI. Electric Power Research Institute. 1985. Electricity and Industrial Productivity A Technical and Economic Perspective. EPRI report no. EM-3640. Palo Alto, Calif.: EPRI. Electric Power Research Institute. 1985. Induction Heating of Metals: State-of-the-Art Assessment. EPRI report no. EM - 131. Palo Alto, Calif.: EPRI. Electric Power Research Institute. 1985. Resistance Heating of Metals: State-of-the-Art Assessment. EPRI report no. EM4130. Palo Alto, Calif.: EPRI. Electric Power Research Institute. 1985. Vacuum Melting of Metals: State-of-the-Art Assessment. EPRI report no. EM-4132. Palo Alto, Calif.: EPRI. Electric Power Research Institute. 1986. Electroforming of Metals: State-of-the-Art Assessment. EPRI report no. EM4568. Palo Alto, Calif.: EPRI. Electric Power Research Institute. 1986. Electron Beam Processing of Metals: State-of-the- Art Assessment. EPRI report no. EM~526. Palo Alto, Calif.: EPRI. Electric Power Research Institute. 1986. Plating, Finishing, and Coating: State-of-the-Art Assessment. EPRI report no. EM-4569. Palo Alto, Calif.: EPRI. Electric Power Research Institute. 1986. Radiation Curing: State-of-the-Art Assessment. EPRI report no. EM-4570. Palo Alto, Calif.: EPRI. Electric Power Research Institute. 1986. Resistance Heating of Nonmetals: State-of-the-Art Assessment. EPRI report no. EM4915. Palo Alto, Calif.: EPRI. Electric Power Research Institute. 1987. Radio Frequency Dielectric Heating in Industry. EPRI report no. EM-4949. Palo Alto, Calif.: EPRI. Frisch, J. R. 1986. Future Stresses for Energy Resources. World Energy Conference- Conservation Commission. London: Graham & Footman. Horowitz, A. D. 1987. Exploring potential electric vehicle utilization: A computer simulation. Transportation Research 21A(1~:17-26. National Research Council. 1986. Electricity in Economic Growth. Energy Engineer- ing Board, Commission on Engineering and Technical Systems. Washington, D.C.: National Academy Press. Research and Development. 1987. December65. Schurr, H. 1983. Application of nonequilibrium plasmas in organic chemistry. Pp. 1-51 in Plasma Chemistry and Plasma Processing, Vol. 3, No. 1. New York: Plenum. Schurr, S. 1988. Electricity in the American Economy: An Agent of Technological Progress. Palo Alto, Calif.: Electric Power Research Institute. Smith, C. B., ed. 1978. Efficient Electricity Use. Elmsford, N.Y.: Pergamon Press. Starr, C. 1971. Energy and power. Scientific American (September). Starr, C. 1979. Collected Readings in Energy. San Francisco: W. H. Freeman. U.S. Department of Energy. 1986. Fuel Cells Technology Status Report. DOE/1VIETC- 87/0257; (DE 87006525~. Washington, D.C: U.S. Department of Energy. White, R. M. 1986. Future Imperfect. Paper presented to the Electric Power Research Institute, Monterey, Calif., August 19, 1986.

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Energy provides a fresh, multidisciplinary approach to energy analysis. Leading experts from diverse fields examine the evolving structure of our energy system from several perspectives. They explore the changing patterns of supply and demand, offer insights into the forces that are driving the changes, and discuss energy planning strategies that take advantage of such insights.

The book addresses several major issues, including the growing vulnerabilities in the U.S. energy system, the influence of technological change, and the role of electricity in meeting social objectives. The strongest of the book's themes is the growing influence of environmental concerns on the global energy system.

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