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TAX CUTS
AREN'T THE ONLY WAY TO STIMULATE THE ECONOMY Thomas Feiler is managing director of the Rocky Mountain Institute, an entrepreneurial, nonprofit organization that seeks to foster the efficient and restorative use of resources to create a more secure, prosperous, and life-sustaining world. Steve Rosenfeld interviewed Mr. Feiler for TomPaine.com. TomPaine.com: You and your colleagues at the Rocky Mountain Institute have said that energy security starts with using less energy, that is, using energy more efficiently to do the tasks that make up people's daily lives. What do you mean by that, what's called 'demand-side management?' Thomas Feiler: Well, [the] first thing to say is the debate about energy security is often very misleading, in as much as we like to talk about domestic versus foreign energy sources, as opposed to the basic architecture of the system. The architecture of the system is what provides us security. And with regards to the architecture of the system, the best thing you can do on energy security is simply use less of it. By using less energy, you put less demands on both the system itself and less demands to be purchasing oil, especially coming through very vulnerable places. So, for instance, our oil right now is coming through two very vulnerable choke points. First through the Persian Gulf, which has a number of political problems, especially now. And, of course, the Alaskan Pipeline, which is equally vulnerable to all sorts of mischief. As we saw just three weeks ago, a drunk walked out of a bar in Fairbanks and with a hunting rifle shot the Alaskan pipeline, shut it down for about a day, and lost about 300,000 barrels of oil onto the ground. So the first thing we need to do is think about how we use energy, and secondarily, how we can get the energy that we do need, in a more secure fashion. TP.c: Rocky Mountain Institute has reported that American businesses could annually save $300 billion if they recovered and used energy that's now lost between the generating point and its eventual use. Can you explain where this figure comes from, and what needs to happen to make this energy savings a reality? TF: Since the first oil shocks [in the 1970s], the U.S. economy has probably saved about $150 billion to $200 billion a year in energy use. There's still about $300 billion of waste that's out there. Currently we use energy only about 10 percent as efficiently as the laws of physics would dictate. Just to put that in proportion, the energy lost in electric power plants, here in the U.S., is more than all the energy used by the Japanese economy. TP.c: How is it actually calculated? TF: It comes from essentially two different places. First is, as I said, just taking a look at the physics of the way we use energy. We use energy very inefficiently. And the second is taking a look at simple things that businesses, individuals and government can do to save energy. In the automotive industry, for instance, let me give you a couple of examples. The Honda Insight, which most of you know [is] a hybrid electric-gasoline engine, gets on the order of 70 miles a gallon. If every car were as energy efficient as the Honda Insight, we'd currently be saving more oil than OPEC (Organization of Petroleum Exporting Countries) produces. A little bit more conventional car is the Toyota Prius, which is essentially a Toyota Camry with a hybrid gas-electric engine, and it get about 50 miles per gallon. If every car as energy-efficient as the Toyota Prius, not only could we displace all foreign sources of oil in our economy, but we could also make our entire Kyoto [Protocol] commitment for reducing carbon emissions and incidentally, have enough left over for Canada, Mexico and South America. These are just one of many technological innovations, which exist right now, which allow consumers to use energy far more efficiently. TP.c: You've also pointed out that among the business community, consultants have for many years advocated cutting labor costs as a way to improve profits. But your point is that energy is an equally significant cost center, but one that businesses have not targeted for greater efficiencies and savings? TF: It's one that they just haven't looked to, nearly as much as they ought to. You know, if you take a step back, the Industrial Revolution 250 years ago, was constrained by the ability -- the primary constraint of the Industrial Revolution was skilled labor. We didn't have enough skilled laborers at the time. For instance, the textile mills that were introduced in the late 1700s allowed one Lancashire weaver to do the work that was previously done by 200 spinners. This was just one of many technological innovations which increased the productivity of labor by 100 fold. We're at a very similar place right now with regard to energy productivity. Technologies exist right now, techniques exist right now that would allow us to use energy four, ten, even a hundred times more productively, to get a hundred times more productive value out of every unit of resources. TP.c: So when taken against the current political debate in Washington, where there are discussions about the best way to stimulate the economy, your point is there are many ways to create favorable conditions and in fact cash savings for businesses. TF: Absolutely. The management consultants and economic gurus are running around the world right now telling us to redouble our efforts to increase labor productivity, and that that is a way for businesses to become more competitive, we see that a very different business model is in order. Namely, making the energy resources more productive. Instead of firing workers, let's fire unneeded kilowatt hours and unneeded therms of energy. Every dollar you save in energy goes directly to the bottom line. And leading companies are producing profits and they are increasing their competitive positions within the industry by taking a look at ways to profitably reduce resource use. TP.c: And, of course, when we're talking about energy efficiency, we don't just mean generating power at the home and in office buildings, but also in developing and selling more efficient engines for cars and other consumer appliances? TF: The first step is to take a look at what you're using energy for and see if there is a more productive way to get that end use accomplished by using less resources. Then you look to the supply -- what is the most economical way that you can supply the energy that you do need. There's a radical transformation of scale going on in the electric generation industry right now. In other words, it was true for most of the 20th century, that every power plant that you built was always larger, because it increased economies of scale. We exhausted those economies of scale in the early '70s. And the power plants that are being built -- that are being built now -- are much smaller than [those being built in] the 1970s. In fact, they're more on the scale of the power plants that were built in the 1930s and 1940s. This is the result of technological innovation. The smaller, more distributed power plants are simply more efficient, more reliable -- they're better machines, than the very large centralized power plants. This has, also, a number of implications for energy security. One of the discussions that was going around the energy community after September 11 attacks was, what if one of those airliners had been directed not at a building but, say, at a nuclear power plant? The bottom line here is that our energy infrastructure is highly centralized. Electricity production is highly centralized in a couple hundred very large power plants. Our pipeline system is highly centralized. You could take out about 75 percent of the natural gas delivery to the East Coast and never leave Louisiana. It's just one of many examples of how a highly centralized system is very vulnerable to all sorts of mischief. And taking advantage of technological change and more efficient energy sources, which are distributed, will not only produce economic benefits, but will also produce energy security, and indeed national security benefits. Source: http://www.tompaine.com/features/2001/11/05/index.html |
