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4 Implications for Strategy

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Energy: Production, Consumption, and Consequences. 1990. Pp. 205-212. Washington, D.C: National Academy Press. Energy' Environment' and Development WILLIAM D. RUCKELSHAUS We are concerned with the effect of energy production on the envi- ronment, an effect that has heretofore been seen as a sort of collision. A good deal has been said about many of these collisions: global warming, acid rain, the varied impacts of nuclear energy, and so on. It may seem as though the energy necessary for the sustenance of humanity cannot be produced without wrecking the environment necessary for human survival, but this is an illusion based on shortsightedness and on the failure of some of our political and economic institutions to respond to the wrongheaded. In fact, responsible environmental policy is the only policy that makes sense economical) in the long run. Two kinds of experience have led me to this belief. The first, and more recent, was my tenure as U.S. representative on the World Commission on Environment and Development, a panel chartered by the United Nations; the second was my experience as administrator of the U.S. Environmental Protection Agency, both in its founding period and again between 1983 and 1985. Although past experience is not always an unerring guide to the future, it is the only one we have. Whereas the simple extrapolation of current trends is unwise, it seems clear that if some changes are not made in both the way energy is produced and the way the environment is protected, the future will range from unpleasant to awful for most of the people in the world. This was, in fact, a major conclusion of the World Commission on Environment and Development, which met from 1984 to 1987, and whose - 205

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206 W7~LIM D. RUCRELSHAUS deliberations have strongly influenced my own views on environmental pro- tection. The World Commission's charter was both simple and enormous: to formulate a global agenda for change and to propose long-term en- vironmental strategies for achieving sustainable development by the year 2000 and beyond. It proceeded to do this using a remarkable and unique method, that of holding a series of public hearings in major cities in all regions of the world, and receiving ideas and testimony from thousands of peoplescientists, scholars, politicians, and large numbers of concerned citizens. The report of the World Commission, entitled Our Common Future (1987), deals with various aspects of development population growth, food security, resources, energy, industry, urban problems as part of a single interrelated problem. Its central finding is that the continued prosperity of the developed world depends on the rapid extension of prosperity to the less developed nations in an environmentally responsible manner and that, therefore, economic development and environmental protection are complementary rather than opposing goals, two sides of the same coin. The World Commission has proposed the concept of sustainable development as the new model for economic growth, a model that requires efforts to increase prosperity without the destruction of the environment on which all prosperity ultimately depends. This finding, of course, contrasts sharply with earlier studies recommending limitations on growth as the answer to global environmental deterioration. Naturally, energy development must play a critical, and perhaps the most difficult, role in the realization of this new model. As a matter of fact, the most contentious of all the commission's deliberations were those concerned with energy, and the panel almost failed to reach consensus because of energy-related issues. Perhaps the timing was unfortunate: When the commission began oil was $25 per barrel; when it ended the price had dropped to $10. Also, somewhere in the middle, the Chernobyl accident occurred. On the other hand, the world may be running out of "good" periods. It is well known that the quarter of the world's population living in the industrialized world now uses about three-quarters of the world's output of energy. This is obviously going to change as dozens of less developed nations push toward large-scale industrialization. Energy demand is going to grow accordingly, and the critical question for the environment is, by how much? Although the answer is essentially unknowable, some reasoned guesses can be made. The logic used by the World Commission can be described as follows. In 1980 the world consumed about 10 billion kilowatts of energy. If per capita use remained at the same levels as today, the projected world population by the year 2025~.2 billion people would use 14 billion

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ENERGY E~RONME~ ID DEVELOPMENT 207 kilowatts. However, if energy consumption became uniform worldwide at the current level of industrial nations, the same population would require 55 billion kilowatts. Neither of these figures is realistic; they merely establish the approximate bounds of the range within which energy futures are likely to fall. The World Commission examined the environmental effects of energy futures at the high and low ends of this range, 35 billion and 11.2 billion kilowatts. The high-end scenario would involve producing more than one and a half times as much oil, more than three times as much natural gas, and nearly five times as much coal as in 1980. This increase in fossil fuel use implies bringing the equivalent of a new Alaska pipeline into production every two years. Nuclear capacity would have to be increased 30 times over 1980 levels. The high-energy future would continue to aggravate some disturbing environmental trends, directly via physical effects and indirectly through the economies of developing nations. Direct effects include global warming associated with the carbon dioxide produced by burning fossil fuels, as well as urban industrial air pollution and acidification of the environment from the same cause. They also include the various risks accidents, waste disposal, and proliferationattendant on the expansion of nuclear energy. Indirect effects arise from the continuing dependence of less developed nations on steadily increasing amounts of imported energy and their need to borrow vast sums to keep up with demand. For example, the high- energy use scenario just mentioned would require investments of $130 billion per year in the developing counties alone. This dependence creates a desperate need for foreign exchange, which in developing nations often translates into overuse and destruction of natural resources. For example, over 38,000 square miles of tropical forest are destroyed each year, and a like amount is grossly disrupted. It is impossible to tell how much of this loss is attributable to the need to procure energy directly or to pay for it, but that is probably a substantial part and it will continue to grow. If energy cannot be purchased abroad, it must come from immediately available sources, and in the undeveloped world this most often means firewood. If present trends continue, by the year 2000 nearly 2.5 billion people will be living in areas that are extremely short of fuel wood. In some cities of the developing world, families may pay one-third to one-half of their income for firewood. The pressure on remaining forests from this sort of economics is easy to imagine. Of course, as forests are depleted, we see not only the familiar damage to habitat and species extinctions, but also a diminution in the very ability of the planet to handle the carbon dioxide produced by burning fossil fuelsa vicious cycle indeed. A future that includes this kind of damage is by no means foreordained, provided we have the political will and the institutional structure to create

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208 W7~L4M D. RUCKELSHAUS sustainable development throughout the world. Foremost among the will and structures will be the public environmental demands of the developed world and the agencies created in response to these demands. I would like to offer my own view of U.S. environmental protection both past and presentbecause we must understand its capabilities and deficiencies as a tool for solving the problems being addressed. Here I am both hopeful and dismayed hopeful because I know, first hand, how far we have come in changing the national consensus on environmental protection. The Environmental Protection Agency has been in existence for less than 20 years. Virtually all our environmental legislation is a product of that brief t~me-span. Before that, there was a widespread belief among business and political leadership that environmentalism was a fad and that it would, if taken seriously, wreck U.S. industry. That agreement has been entirely reversed. Most all corporate leadership now accepts some form of environmental protection as a legitimate cost of doing business. Thus, we nearly all have environmental consciousness now, whereas nearly all of us grew up without it. That is a monumental change and a hopeful sign, because if we could achieve such change, then the even greater changes required to establish sustainable development, in energy and elsewhere, may not be beyond our grasp. The dismaying part results from the current orientation of our en- vironmental protection efforts. In fairness, this orientation arises out of the history of these efforts, a history that might be called "pollute and cure." That is, environmentalism began in this country, as it did in all the industrially developed nations, as a response to widespread pollution. A structure of command and control regulation was established, first for the most egregious pollution and later for the less obvious types. The theory was that by establishing very high standards and gradually cracking down on allowable emissions and effluents, a point would eventually be reached where virtually no pollution would enter the environment. Where it was appropriate, this approach worked reasonably well, albeit at colossal cost. It was appropriate, for example, in controlling a relatively small number of mass pollutants from easily identifiable fixed and mobile sources. It was appropriate for repairing badly polluted localities through targeted investment in items such as tall smokestacks and sewage treatment plants. As time went on, new environmental problems emerged, for which this approach was much less appropriate. Thousands of products were found in daily use which, even at very low levels of exposure, had some probability of causing damage to human health or the environment. It was learned that many of the pollution control systems mandated simply transferred

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ENERGY E~RONME~ ID DE~LOPME~ 2(J9 pollution from one environmental medium to another taking toxic wastes out of the river, for example, and burying the residue on the land. The structure of environmental law and regulation had also become very complex, as the law chased pollution around wherever it seemed most apparent in any particular year. This complexity has rendered almost impossible an ordered, multimedia approach to controlling pollution, in which some finite national investment in pollution control could be aimed at targets that represented the most significant risks. Most of the environmental protection resources in this country are now directed, as our laws demand, toward reducing even further what appear to be relatively small risks to human health. Very little of that previous resource is left over for dealing with the immense transboundary and global environmental issues that concerned the World Commission, and ought to concern us now. A slow, legalistic, and extremely expensive system has been created which is at heart an adversarial system. Environmentalists and their political allies push for tighter and tighter controls. The industrial community and its political allies push for lower control costs. Yet, in principle, neither environmentalists nor industry should have any objection to efficient pollution control. We can no longer afford to stage these elaborate battles over incremental pollution, especially when a much wiser goal would be investment in waste-minimizing productive capacity. What about the rest of the world? Is there some way for nations to achieve environmental goals without eventually reproducing this wasteful and frustrating pattern? The newly industrialized nations have just started to arrive at the stage where they find pollution intolerable. Once this stage arrives, progress can be quite rapid. On Taiwan, for example, a complete reversal of public opinion with regard to pollution control has occurred over the past two years. Taiwan and South Korea will probably increase their environmental consciousness in the late 1980s, not unlike the United States and Japan did in the 1970s. However, these nations will probably not adopt the legalistic, adversarial pattern found in the United States; the national consensus model used by Japan is more likely. In any case, these nations are not the chief concern over the next 20 years. We should be much more worried about the less developed nations, which are now getting ready for their leap into industrial life. If they must go through the same "pollute and cure" cycle as both the older and the more recently industrialized nations have, three~uarters of humankind may produce pollution at the levels historically produced by the small fraction of it that was industrialized during the century now coming to an end. Given the current situation with respect to energy, the question must be asked: Will these nations be able to afford it? Highly polluting machinery is often more wasteful of energy and raw materials than its less polluting

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210 VELLUM D. RUCKELSHAUS counterpart. Given the situation with respect to the global environment, another question must be asked: Will the world be able to afford it? It seems undeniable that somehow, within the next quarter of a century, the transition must begin to a stable base of minimally polluting energy sources at levels that will allow the development and prosperity of all the societies on the planet. It is unlikely that this will be done well unless the power, prestige, and skill of U.S. environmental institutions, public and private, are shifted away from efforts to "control" progressively smaller increments of toxic pollution and toward the long-term problems of the global environment. For our purposes, these problems can be posed in the form of a single question: How can the world develop the energy it requires and sustain the health of the environment without which it cannot live? Answers must be sought at three different levels with respect to the future: the immediate, the midrange, and the ultimate. These will be addressed in turn. The immediate issue is how to continue progress toward a sustainable energy future in the current low-price environment. Conventional account- ing works against conservation measures when energy is cheap, although paradoxically it is in such periods that more resources are available to make conservation investments against the inevitable day when the price of energy goes up again. From the viewpoint of public policy, there should be no subsidies for fossil fuel use when prices are this low: that means both the familiar direct subsidies and the more subtle environmental subsidies paid via health, property, or environmental damage. Also, policies that discriminate against renewable energy sources should be eliminated. These include both the fossil fuel subsidies just mentioned and the continuing discrimination against small-scale sources of energy by large energy distrib- utors. Overall, these months of low energy costs must be used as a grace period, in which to marshal our resources and establish the basis through investment and planning for a sustainable energy future. In the midrange, ameliorative steps must be taken against the global and regional energy-related problems. This refers mainly to greenhouse warming and precipitation acidification, both of which are vast in scale and subject to considerable scientific uncertain~. In both problems there are a number of plausible scenarios from which to choose. Consider the following, however: whatever the scenario, the resources that can be devoted to any environmental problem are finite and we cannot afford to launch major programs against every "problem of the week" or to march off boldly in the wrong direction. On the other hand, windows of opportunity may be slamming shut with every year of delay. We cannot afford paralysis by analysis either. The way out of this quandary seems to be an approach patterned on the way insurance is bought. We are accustomed to sacrifice some present

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ENERGY E~RONME~ ID DEVELOPMENT 211 income in order to protect ourselves and our families against the possibility of disaster. No one now would deny the possibility of disaster from these global problems. The arguments are about probability and timing. Therefore, investments must be adjusted according to the likely range of probability, as with insurance, but in any case at a scale adequate to make a dent in the problem if a dent can be made. The knowledge gained by actually operating a program is invaluable and cannot be replaced by academic research. Moreover, it sends an important message, that the problem is real, and that we are concerned about it. Consider, for example, how much more would be known about how to handle acid rain and how much better off we would be scientifically (not to mention politically) if a modestly scaled sulfur control program had been launched in 1982. On the ultimate time scale, the basic thing to keep in mind is that global problems require global solutions. It is now possible for one nation to damage another nation inadvertently through environmental pollution at levels of human suffering and property damage that once were associated only with acts of war. It, therefore, seems wise to accept such problems as falling broadly within the purview of "national defense" and to start paying the kind of attention such damage would demand if inflicted by hostile troops. The recommendations of the World Commission outline what kind of attention is needed. On the global impacts of fossil fuels, including greenhouse effects and acidification, the commission recommends a four-part strategy that combines improved monitoring and assessment of the evolving phenomena, increased research to improve knowledge about the origins and effects of these phenomena, development of international agreements on the reduction of greenhouse gases, and adoption of international strategies for minimizing damage from the coming changes in climate and sea level. On the nuclear front, the World Commission recognized that at present, different nations have different views about the necessity and safety of nuclear power. Yet because of the potential for transboundary effects, it is essential that governments cooperate in the development of a com- prehensive set of international agreements covering the technical, health, and environmental aspects of nuclear power. These would include such things as international notification of nuclear accidents or transboundary movement of nuclear materials, as well as codes and standards for operator training, compensation and liability, reactor safety, radiation protection, decontamination, and waste disposal. Above all, in nearly every one of its recommendations, the World Commission urges a return to multilateral action global responses to global problems. Without an acceptance of this, if global issues are seen only as some legalistic fray between a polluter and a victim, nothing much

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212 W7~L4MD. RUCKELSHAUS will be accomplished. In the United States, for example, responsible and wise action on acid rain has been thwarted by, among other things, the insistence that ratepayers of midwestern utilities bear the entire cost of remedial action. In fact, acid rain is, at the very least, a national problem and it requires a national response. The developed world and its institutions should play a leading role in formulating the global response, but will they? Global responses are difficult things to organize in representative democracies. It is hard for elected officials to spend many chips on efforts that benefit their home constituency only indirectly, or may have some immediate adverse effects on that constituency, and relate to events farther off in time than the next election. On the other hand, as pointed out earlier, no one could have predicted in 1968 the realization of the environmental agenda 20 years later. So perhaps this scant grace period will not be wasted. Perhaps there will be time to plan for the changes attendant on creating the energy future the environment needs, a future with the necessary energy services, at a fraction of current primary energy consumption. We will, eventually, have to change, and the longer change is put off, the more desperate, painful, and expensive will the remedies be. It remains to be seen for how long narrow considerations of national sovereignty and short-term interest will keep us from doing what global environmental and . . . economic WlSC om requires. REFERENCE World Commission on Environment and Development. 1987. Our Common Future. New York: Oxford University Press.

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Energy: Production, Consumption, and Consequences. 1990. Pp. 21~237. Washington, D.~: National Academy Press. What to Do About CO2 JOHN L. HELM AND STEPHEN H. SCHNEIDER The energy that people use predominantly comes from burning fuels containing carbon: coal, oil, gas, and wood. When these fuels are burned, carbon dioxide (CO2) is released to the atmosphere. CO2 is called a greenhouse gas because it lets radiant energy into the atmosphere more freely than it lets it out. The effectiveness of this atmospheric heat retention increases with CO2 concentration. Climate is known to fluctuate naturally over all scales in space and time, yet there is strengthening evidence of a changing, indeed warming, climate, over the past 100 years. Further, this warming is consistent with the progressively increasing concentration of greenhouse gases, especially CO2, in the atmosphere. Although scientists do not yet know how much of the current climatic change is natural and how much is due to human activity, there is no question that the burning of fossil fuels is the dominant mode of human CO2 production. There is also no question that a large, rapid climatic change is likely to have a substantial impact on the environment and society. The subject of this discussion is what can or should be done about the greenhouse situation in view of the attendant uncertainties? 1b address this question, first we review briefly the essential climatological context of the greenhouse effect and the uncertainties in our understanding of it. Next we review the range of possible climate futures and their potential societal consequences. This provides a framework in which the spectrum of policy responses can be introduced. Finally several energy policy and technology options are presented. 213

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268 USA Latin Amen ~ Africa 55:2 r it. ;. ~ .; :; ~ . A. 2-..'0"'0;1-' . FIGURE 1 Proven oil reserves as of 1987 (billions of barrels). ROBERT MALPAS Western Europe 22.4 Centrally Planned Economies 79.2 ~ Canada 7.7 Id ~ _ ~ ~ ~ ~ (~ _~7,,] ~~-~ ~~:~ - _ ~ T~ j? ~ '2'~ W ' ~ ~ Asia & Australasia 19.5 technology, which will continue on their own momentum (e.g., advances in miles per gallon driven or flown, lumens per watt, degrees of heat in our buildings, units of information per unit of energy). Yet, paradoxically the very success of technology, because it reduces energy consumption, also reduces the economic incentive to invest further in greater efficiency. On the supply side, technology has two major effects. It is reducing the price at which it is economic to discover and develop oil fields previously considered uneconomic, and it is reducing the price at which alternatives to crude oil become economic, such as harnessing very heavy oil or converting natural gas to gasoline. World resources of very heavy crude oil and natural gas are each as large as reserves of conventional crude oil. The result of all this is best illustrated by long-term forecasts of the price of crude oil. Planners have become wiser: they now forecast a bracket. In 1986 the upper bound was $30 and the lower, $15. The rationale was that above $30, alternatives to conventional crude would become economical, and that below $15, demand would quickly revive and the economic penalties on suppliers would be too hard to bear. Today the upper bound has already been reduced to $25 in lower valued dollars at that. Of course, we applaud these achievements and call for more; but they do undermine efforts toward higher energy efficiency. The public concludes that technology will come to its rescue on every issue. People believe that technology will continue to extend the finiteness of oil, as indeed it has, and that it will reduce the energy needed per unit of output, without any action \

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EFFICIENCY CHILI, ID BUDDER 269 or investment on their part. They also believe that environmental and ecological concerns will be solved by the cavalry technology riding over the hill! (Superconductivity seems to be the name of one of its younger officers!) Lest anyone derives too much comfort from all this, it should be em- phasized that even in the most optimistic energy-efficient scenario available, the United States will, by the year 2000, be importing more than half of its crude oil requirements. Under the heading of technology one must recognize the remarkable increase in the use of electricity in the world. It is unquestionably the most convenient form of energy. It is intensemuch more so than fossil fuels and very easy to control, measure, and program. Its growth strongly favors greater energy efficiency. On an international plane, politics is concerned with ensuring that the world is not unduly dependent on its supply of energy from a particular group of governments whoever they may be. At the national level, politics is concerned with self-sufficiency, if possible, or less dependency if not. It means ensuring sufficient energy to sustain national growth, supplying the basic needs of the poor, and raising revenue by taxing energy. It also means protecting local environments and worrying about emissions from neighboring countries. It is predominantly concerned with supply issues. The following are some random examples. Brazil, South Africa, and New Zealand have invested in expensive options to seek greater self-sufficiency: Brazil, in ethanol; South Africa in converting coal to gasoline; and New Zealand, in natural gas conversion to gasoline. These policies are now heavily subsidized because they were predicated on the expectation of high crude oil prices. In France, a few years ago, President Mitterand almost apologized for the decision to reduce the number of construction starts of nuclear power stations from three per year to two. It was an issue of jobs, national pride, and self-sufficiency. In Great Britain today, politicians are justifying raising electricity prices to improve the economics of building new power stations that use coal, at present highly priced, to subsidize the coal mining industry. Also, Great Britain is about to privatize electricity. The prime considerations are evidently not about demand energy efficiency. The United States faces many political challenges on the energy scene. It consumes for its transportation needs half of the total energy used by all OECD countries for less than one-third of the people and also consumes significantly more energy per unit of gross domestic product (GDP) than any other country in the world, except Canada (Figure 2~. Other than in the less developed countries, this ratio has fallen consistently since the early 1970s. The challenge now is to ensure that it continues to fall in the

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270 0.60 0.55 0.50 =~ 0.45 0.40 0.35 0.30 0.25 0.20 0.15 ROBERT MALPAS - ;- ~ ",_` __ .` United States _ 1965 1970 1975 1980 1985 1990 1995 2000 2005 FIGURE 2 Energy intensity (tons of oil equivalent per thousand dollars). future. Looked at another way, we need to extract more value, in terms of economic growth, from each unit of energy we consume; let us turn the index up the other wa~more or less (Figure 3~. There is much to do in the way of formulating policies that rekindle the public's incentives to use energy more efficiently. Then, to reduce increasing U.S. dependence on crude oil imports, we need to stimulate more indigenous exploration and development of known reserves. 6.5 6.0 ~ 5.5 o t; an - cn in ~5 o _' AL 2.0 I InitPc] Estates 1.5 I I I i I I I 1 1965 1970 1975 1980 1985 1990 1995 2000 2005 FIGURE 3 Productivity intensity (thousands of GDP dollars per ton of oil equivalent), the reciprocal of energy intensity (compare with Figure 2~. High values of this indicator result when an economy is producing more with less energy.

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EFFICIENCY CHILI, ID BUDDED ~ 9 a) >, 8 an 7 o Hi: o . _ ._ - 6 co 4 of o ct) oh - llJ Cal o 271 ~ ~ ~~ If::: Coal Oil Gas Gas Combined GENERATION METHOD Cycle FIGURE 4 Carbon dioxide (C02) emissions for various fuels (million tons per year). Gas-fired combined cycle generation facilities emit half as much CO2 per gigawatt as conventional coal-fired facilities. Environmental fears and the concern for the world ecosystem are global forces that can be harnessed to encourage energy efficiency. The most effective way of reducing atmospheric pollution both in power gener- ation and in transportation the main culprits is to become more efficient at both. The less consumed the less emitted. This is a simple [act, yet public resolve has been allowed to weaken. For electricity generation, ever-greater efficiency and cleaner fuels must be the objective. Methane is by far the best fossil fuel in this respect. It emits less carbon dioxide per unit of energy than any other fuel and generally produces no oxides of sulfur (Figures 4 and 5~. The only count on which gas may perform less well than other fuels is in NOX emissions, although these are, at worst, comparable with those of other fuels (Figure 6~. Gas lends itself more readily to combined cycle generation, thereby raising the efficiency of generation from just under 40 percent to near 50 percent. Gas wins twice, resulting in about half the carbon dioxide emitted per kilowatt than coal. Not much is heard about this in Europe where gas may be underutilized for power generation. Finally, in a brief review of global forces, there are the realities of microeconomics: that is, the criteria by which investment decisions are judged. Two effects act against greater energy efficiency:

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272 ct a) a) ~ 200 o 150 en o Oh of O 50 Oh Oh - llJ O OX Oh ROBERT MA1LPAS _ ~ ~~. ~~ ~~;~;~ : ~~;~:~ :~:~ ~ ~~ If: All: : ~ ~~ i: . ~ ~ E: iF ~ :~ ~~ ~~ ~~;~:~ ;::: If: ~ ~~ ~~ :: .-~-~ .~ ~~ ~~ ~~- ~ i: ~ ~ ~ ~~ ~~ ~~ ~~ ~~ : :~;~ : ~~ ~~ ~~ ~ ~~ ~ ~~ ~. :~-~-~: ~~ ~~ ~~ a ~-~-~-~;~ ~~. ~-~'~'~;~;~ - ~~:~ ~,~.~ ; ~,~ ~~ ;: ~~. ~ ~~.~ ~~ ~~ ~ ~~ ~~ ~~. ~.~.~-~-~;;~ ~~;~ ~-~-~.~-~.~-~ ~~'~.~.~; ~.~.~ :~: ~~.~ i: ~~ i.: :~ ~~ . ; ~~ ~~.~:~ ~~ ~~ Coal Coal Oil Gas Gas 0.5% 3% 2% 0% Combined Sulfur Sulfur Sulfur Sulfur Cycle GENERATION METHOD FIGURE 5 Sulfur oxide (SO=) emissions, by fuel, for the configurations shown in Figure 4 (thousand tons per year). co a) a) Q I,, 40 o + ~ en o - cn of o co en LL Ox 50 45 35 30 25 20 15 to 5 :: ~~ ~ ~ ~ ~ ~~ ~~ ~ ~~ ~~ ~ ~ ~~ ~ ~ ~ ~ :~:~:~::~:~ ~ ~ it: i: a:::: ~~ ~~ ~~ ~~ :: _ ~~;~ :~;~ ~~-~ ~~:~:~;~;~:~ ~:~ _ ~~ ~~ ~~ ~~ E~ ~.~::~:~:~j~:~:~:~ i; ~ ~ ~ ~ ~~ ~~ ~~ ~~ ~~ ~~ ~ ~ ~~ ~~ ~~ ~ ~ ~~ ~:~ ~~:~:~ ~~ ::~:~:~ ~~:~ ::: ~~-~ ~ ~~ ~~;~ ~ ~~ : ? ~~;~ ~~ ~ :~;~ ~~;~;~ ~~ ~~:~:~:~ ~~ ~~:~ ~: :~ ~:~ ~~: ~~ :~:~:~ ~~ ~~ ~~ ~~:~ ~:~:~ ~~ ~~;~ :: ~~ ~~;~ ~ ~~ ~~ ~:~:~ ~~:~:~ ~:~:~ ~~:~ :::: ~~:~ ~:~ ~~ ~ ~~::~ ~ ~~: ~~:~:~:~i~ ~~::~ :: ~~:~ ;~ ~~: ~~ ~~:~:~ ~~ ~~ i: ~~:~:~:~:~:~:~:~: ~~:~ all::: ~~ ~ :::: ~~:~ ~~:~:~ :~ ~ ~~ ~ ~~ ~~j~:~:~ ~~ ~~:~:~:~: ~:~ ~~ ~~ ~~:~: ~~:~:~;~ ~~ ~ ~~ ~~:~ ~ ~~ ~~:~:~ ::~:~;~:;~ ~~;~: ~~:~:~: ~~:~:~:~;~ ~~::~ :~:~;~:~:~::~: : ~::~:::;~:~:~::~ :;: ~~:~;~ :; If:: ~~ ~ :~::~ :: ~~ ~~ ~~:~ :: :~:::~ ~~ ~~ ~ If;:; i: :: ail: ~~ ~~ ~:~ ~ ~~;~;~: ~~ ~~ ~:~ ~~:~ :~:~:~ ~~ ~ ~~ i: ~~ ~~ ~ ~~;~ ~ ~;~ ~~ ~~ ~~ ~ :~:~:~ ~~: :~ ~~ ~~ ~~:~:~ ~:~ : : ::; ~~:~:~;~ ~~ ~~ ~~:~ ~:~:~ ~:~ ~:~ ~:~ hi;: ~~ ;::: ~ ~ ~ ~ ~ ~ ~ ~ ~? ~~ ~ ~ ~ ~ ~~ ~~ ~ ~ ~ ~~ ~ ~ ~ ~ ~~ ~ ~~ ~ ~ ~ ~~ ~ ~ ~ ~ ~~ ~ ~~ ~~ ~~; ~~ ~ i; ~ ~ ~ Coal Oil Gas Gas Combined GENERATION METHOD Cycle FIGURE 6 Nitrogen oxide (NO=) emissions, by fuel, for the configurations shown in Figure 4 (thousand tons per year).

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EFFICIENCY HI, AD BUDDED Trucks Aviation High Temperature Process Heat Low-Temperature Space Heating Lighting 273 Domestic Appliances Refining Fossil-Fired Power Generation 0 10 20 30 40 50 60 70 80 90 100 1 10 PERCENT CHANGE FIGURE 7 Current and potential improvement in end-use efficiency (percent change from 1973~. 1. Investments in electricity generation, for example, are based on long lead times, utility rates of return, and payback periods of 15 to 20 years or more. On the other hand, decisions affecting energy demand, taken daily by millions of individuals and corporations worldwide, are based on very short payback periods of 3 to 6 years. 2. There is no way, at present, to reflect in these decisions their long- term consequences for both future supplies and the ecosystem. How can they be brought home to the public, to a present-day value of some sort, even if only qualitative, but nevertheless vivid and real? Cars Current U.S. Average Do not get the impression that nothing is happening with respect to greater efficiency. New aircraft are typically 20 percent more efficient than the stock average. The concept of the energy-efficient house is gaining ground, albeit slowly. In Europe the high-speed 185-mph train is developing and gaining popular appeal. It is more efficient, comfortable, and trouble- free than short air flights. The channel tunnel between England and France will be a further boost. But far more could be done, given the proper incentives, by harnessing existing technology as we develop future technologies (Figure 7~. If the current pace of demand continues and the current rate of improvement in energy efficiency is assured by the year 2020, more than twice as much total energy will be required as is used today. The bulk of

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274 12 10 8 Z 6 o J J m 4 2 o ROBERT MALPAS ~0il [~1 Gas Coal it Nuclear ~ Hydra :.:.:.:.:.:.: :.: .... . .::.:... .................................................... _ -.-.- Conventional +340% + 1 85% + 1 40% +68% High Tech . . . - + 48% illlillill1lllll1llllfT +58% +35% + 1 00% _ it. +34% 1 987 2020 2020 FIGURE 8 Current and possible future energy requirements for the noncommunist world (billion tons of oil equivalent). without the potential benefits of technology, demand will be more than twice current levels by the year 2020. this, it is forecast, can be met only by tripling the consumption of coal the least elegant source of energy used widely today and even this assumes that the use of nuclear power will more than triple. Yet, by harnessing the obvious benefits of technology, the outlook for world energy demand in 2020 could be radically different (Figure 8~. How can we reach the other, much more acceptable scenarioof achieving the same world economic growth over the next 30 years for not much more than current total energy consumption? This will only occur if greater prominence is given to energy demand issues and policies, and if engineers provide the lead. The proposition of using less to produce more, both to conserve resources and to reduce waste, is at the very heart of all engineering philosophy. It is an objective that can find universal support. Greater efficiency, which facilitates greater growth, is a '~virtuous circle" worth striving for and surely on the side of the angels. I call on engineers because it is engineers who harness the extraordinary advances in science. "Science," said Von Karman, "discovers what is; engineers turn this knowledge into things that have never been." So engineers and technologists in general are best equipped to know what can be by using today's science and technology, and what might be by using tomorrow's. Engineers who complain about the short-term attitudes of the public, financiers, accountants, and politicians have somehow allowed themselves

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EFFICIENCY MACHL4VELLI, AND BUDDAH 275 to be painted into a corner, to become a service. They should be out there, in front, illustrating the opportunities and their benefits, both qualitative and quantitative. Consider how biotechnologist entrepreneurs have shown that hard-headed investors will put their money into "expectation." The price/earnings ratios of biotechnology stocks are about the future not about quarter-by-quarter results. The challenge facing demand-driven energy policy options is how to influence short-term decisions to take into account long-term opportunity and potential penalties. In this we must seek help from economists. The challenge is similar to that which engineers and technologists constantly face in industry. So let me share with you a simple, powerful, equation imparted several years ago by a colleague; I use it in the task of harnessing technology for profitable growth. "Change," said my friend, "is a function of dissatisfaction, vision, and a practical first step." Dissatisfaction involves the feeling that we can do better, rather than just complaining about how awful things are. Vision is, of course, what engineers and technologists can provide by articulating what might be. The praci!calprst step is what engineers must fashion. This is true also with energy. There is plenty of dissatisfaction and fear. The vision needs to be articulated and propagated by engineers, strongly supported by economists. What specifically should engineers do as a profession? The following are some suggestions. First of all, the drive for greater energy efficiency should be at the top of all our agendas, and should remain there for the next decade. This is not the case today. Perhaps technical meetings could be used more effectively toward this end. Led by the National Academy of Engineering, the Council of Academies of Engineering and Technological Sciences brings together the academies of six nations, and several others are now eager to join this group. This mechanism could be used to have a strong voice, which would be heard worldwide. Second, the excellent studies on energy conservation being carried out by many organizations should be actively supported: in the United States for example, this includes Harvard, Princeton, Berkeley, and the World Resources Institute. Perhaps a new ratio should be developed to measure the productivity of energy, such as gross national product (GNP) per unit of energy. This would heighten public awareness and thus could become a powerful force toward greater energy efficiency. Third is for engineers and economists to devise means and measures to bring home to the public both the quantitative and the qualitative, long- term consequences, penalties, and benefits of day-to-day energy decisions. This is not an easy task, but it must be made to capture the imagination and support of the young, for it is their future we are talking about.

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276 ROBERT MALPAS Perhaps a concept introduced by Professor Henry Jacobi of the Mas- sachusetts Institute of Technology might help. He spent some time in Britain developing economic evaluation techniques for projects with long lead times, such as oil exploration. The concept is one of "options for the future," that is, to give a present-day value to the options for the future created by a decision made todayoptions which would not exist but for that decision. It is particularly useful for investments in new areas of business, new products, and new processes. Other action might be taken to join with, or initiate, a worldwide review of public policy measures that have been successful in promoting greater efficiency through, for example, incentives, penalties, subsidies, and taxes. This would also deter policymakers, who might otherwise be tempted to use them, from those measures that have failed. For example, the CAFE (corporate average fuel economy) legislation in the United States has been remarkably successful in raising the efficiency of U.S. automobiles. This was the only such policy in the worldand a very effective one but the public seems to have turned its back on this. On the other hand, subsidizing energy to help the poor in less developed countries has not worked. Over the longer term, it has failed to alleviate poverty and has been a disincentive to energy efficiency. Finally, even higher priority should be given to improving the safety of operation and the waste disposal of nuclear power stations. Nuclear energy is the cleanest of all fuels and produces no atmospheric waste. It is the ultimate answer to fears of the greenhouse effect, acid rain, and other forms of pollution. One is surprised that environmentalists do not promote it, demanding that it be made safer than it already is. Such actions as these, plus setting out to understand the ecosystem more fully, seem the minimum that engineers should be actively promoting. If the engineering profession can be persuaded to slip into higher gear for more concerted and international action toward greater energy efflciengy, and to assume its natural role as an agent of change, perhaps some words of warning from a wise "business" philosopher are in order. He said: There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all who profit by the old order, and only lukewarm defenders in all those who would profit by the new order. This lukewarmness arises partly from fear of their adversaries, who have the law in their favor; and partly Mom the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it. Who wrote that, you may wonder? Schumpeter? Keynes? Friedman? Drucker? It was written by Machiavelli in lhe Prince (chapter 6), published in 1517.

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EFFICIENCY HI, AD BUDDED NOTE 277 This discussion tacitly assumes world GNP growth of 3 percent per year and world population growth of 2 percent per year from the present until 2020. REFERENCE Goldemberg, J., T. B. Johansson, ~ K N. Reddy, and R. H. Williams. 1987. Energy for a Sustainable World. Washington, D.C.: World Resources Institute.

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