by Fen Montaigne, Yale Environment 360, via AlterNet.org
Amory B. Lovins is fond of referring to the Rocky Mountain Institute, where he serves as chairman and chief scientist, as a “think and do” tank, and it’s clear that to Lovins the doing is every bit as important as the thinking. Hardly lacking in confidence or ambition, Lovins — in conjunction with his colleagues at the institute — has published Reinventing Fire, his step-by-step blueprint for how to transition to a renewable energy economy by mid-century.
Impressive in both its scope and detail — Lovins discusses everything from how to redesign heavy trucks to make them more fuel efficient to ways to change factory pipes to conserve energy — the book lays out a plan for the U.S. to achieve the following by 2050: cars completely powered by hydrogen fuel cells, electricity, and biofuels; 84 percent of trucks and airplanes running on biomass fuels; 80 percent of the nation’s electricity produced by renewable power; $5 trillion in savings; and an economy that has grown by 158 percent.
In an interview with Yale Environment 360 senior editor Fen Montaigne, Lovins discusses how business and society can pull off this transformation even if the U.S. Congress keeps failing to act, why climate change need not even enter the discussion, and why the oil industry will ultimately forego fossil fuels and jump aboard the green bandwagon. “One system is dying and others are struggling to be born,” says Lovins. “It’s a very exciting time.”
Fen Montaigne: Given that we’re in the midst of what could only be described as a fossil fuel boom, with the discovery of new unconventional sources and new oil sources being found all over the world, how do you speed this transition and get from here to there?
Amory Lovins: Well, I’m not sure what boom you’re talking about. When I read the Wall Street Journal, I see a headline a few weeks ago about coal running out of steam.
Montaigne: China is consuming tremendous amounts of coal.
Lovins: Hang on — I look at the data and I find that in the United States, coal’s share of the electrical services market, which is 95 percent of its market for fuel, has fallen by a quarter from 2005 through 2010, displaced by cheaper gas, efficiency, and renewables. And then when you look in the forward prices and the options market, that spread is going to keep widening. And when I hear how cheap natural gas is, I remember that it’s also very volatile. This has nothing to do with the many uncertainties around fracking, which will take a decade to resolve — if they work out well, we’ll be satisfied with a new option; if they don’t, that’s okay because we won’t need that much gas, so we won’t be very disappointed.
Montaigne: Certainly in China, India, and the developing world there is a fossil fuel boom going on.
Lovins: But in a global context, there is a remarkable boom in efficiency and renewables in China, the world leader in five renewables. Part of the story in China is that the extraordinary vitality of renewables is coming very largely from the vibrant private sector, while all of the nuclear and half the coal business are the old state enterprises. So the story of incumbents and insurgents is partly the story of the reshaping of the Chinese economy from the old and rather bureaucratic command organizations. That is, I think, an encouraging trend.
Last I looked a couple of years ago, the private sector in China was something like 50 to 70 percent of the profits, the growth, and the new jobs. Of course there is still a lot of momentum in the coal bureaucracy in China and India, which together burned half the world’s coal and account for about three-quarters of the projected increase, but I think those projections are looking quite dubious. In China, for example, they have lately retired over 70 gigawatts of inefficient coal plants, so that their coal plant fleet is now more efficient than ours. In 2010, 59 percent of their net new [electricity] capacity was coal. It used to be much higher.
Montaigne: You feel we’re in a period where fossil fuels over the next decade or two are going to be increasingly like whale oil?
Lovins: Yes.
Montaigne: You’ve got the president of Shell writing a foreward to your book. There are prominent quotes from the president of Texaco in one section of the book. How do you persuade these oil companies that are making billions of dollars now and into the foreseeable future to get on board with this renewable energy revolution? What is going to persuade them to be on what you see as the right side of history?
Lovins: Mainly risk management, and as a member of the National Petroleum Council, having worked in this industry for 38 years, I’ve seen a lot of concern about risk. Oil is like airlines. It’s a great industry and a bad business. Look at its fundamentals. It is extremely capital-intensive, long lead time, based on a wasting asset of which you only own about 6 percent and the rest can be taxed away or confiscated at any time. It is a business overflowing with all kinds of risk — technical, political, financial. It is unpopular politically. Its subsidies are at some political risk in this country. Put all that together and you have a magnificent recipe for headaches. Why would you want to be in a business like that?
Montaigne: You’re making huge profits at this point.
Lovins: Well, sometimes yes, and sometimes it gushes red ink. So the smarter leaders in that industry have been trying to get out of the business since at least 1973, and have constructed some pretty intelligent portfolios of both activities and options that are getting rather rapidly diversified. Some companies that were not very foresighted, even though they were operationally excellent, are starting to smell the coffee.
I think there is a bright future for what we now think of as the oil industry in the new energy era, using its formidable capabilities and assets, but in different ways. A lot of refineries will turn into biorefineries; a lot of drilling will go to geothermal, possibly carbon sequestration and other pursuits. The fuel logistics will diversify into hydrogen — which of course is mainly a business of the oil industry right now and it’s a very big business — and into electricity and biofuels. Shell is already the world’s biggest distributor of biofuels. The average cost of getting our U.S. transport system off oil is about $18 a barrel for the efficiency and electrification part, or if you include the biofuels to run the trucks and airplanes to the extent they’re not on hydrogen, it might be at most about $25 a barrel. So I don’t much care what the world oil price is, this is a better bet and it very much better manages the risks.
Montaigne: In the spheres that you write about — transportation, electricity generation, industry — what pieces of the puzzle need to be put in place in the coming decade or so to do this massive scaling up that’s going to be required to attain your vision of an economy that by 2050 is primarily powered by renewable sources?
Lovins: Broadly we need to pay attention to allow or require full and fair competition, preferably at honest prices. And to use our most effective institutions to end-run our least effective institutions.
Montaigne: For example?
Lovins: Well, we use private enterprise, co-evolving with civil society and sped up by military innovation, to end run Congress. The transition we describe requires no act of Congress. It’s led by business for profit.
Montaigne: So you want the private sector to end-run the dysfunctional political system?
Lovins: At the federal level, yes. There are policies required to unlock or speed the transition we described, but they could all be done administratively or at the state level, where most of the action is.
Montaigne: From a technological point of view, how do you scale up wind and solar to the point where it can be generating the volume of electricity that you envision by 2050?
Lovins: The way we’re scaling it up now. U.S. photovoltaics have doubled each of the last two years. World [photovoltaic] growth last year — a difficult year for many industries — was 70 percent. And 68 percent of Europe’s new capacity last year was solar and wind. Wind, for example, is generally competitive without subsidy, even though the global wind industry will of course shift its projects in a given year to wherever they get the most subsidy, as you would expect. But even without subsidy they have a very strong business case.
Montaigne: So you foresee in the U.S., Europe, and China a steady accretion of this scale and volume for these new sources?
Lovins: Yes, and China is leading the plummeting cost and rocketing volume of most of the renewables. They’re the world leader in five. They aim to be in all. The ones they lead are photovoltaic, wind, small hydro, biogas, and solar thermal for hot water.
So this is actually quite a big business. Clean energy was a $260 billion investment flow in 2011. Europe has now more than one million new renewable jobs. The big winner is Germany. They have more solar workers than America has steel workers. [German Chancellor Angela] Merkel bet that it would be smarter to send their energy money to their own engineers, manufacturers, and installers than to keep paying it to [Russia’s] Gazprom. She’s right, and it was a winning bet.
Montaigne: But do you think there will be within a matter of decades technologies we can’t envision that could even further accelerate this transition?
Lovins: Oh, yes. I think there will be many, and actually although we’re not counting on any new inventions, we do give examples of emerging technologies in the lab about to get to market that are going to be quite powerful.
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