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this presentationis brought to you by arizona stateuniversity's global institute of sustainability anda generous investment by julie ann wrigley. wrigley lectureseries-- world-renowned thinkers andproblem-solvers engage the community in dialoguesto address sustainability challenges. my name is chris boone.
i'm the dean of the school ofsustainability at arizona state university. it's my pleasureto welcome you here to this veryspecial event-- what we call our wrigley series. we call it the wrigleyseries because we're able to use some funds froma generous donor, julie ann wrigley. so the basic messageis, keep chewing gum
and we'll be able to continueto offer these great speaker series. so the wrigley lectureseries on sustainability brings world-renowned thinkers,as well as problem-solvers, to speak to us-- the communityas well as the university. they are chosen specificallyfor the effective work do they do in addressingsustainability challenges and not just talking aboutthe challenges themselves but talking about thesolutions to those challenges.
a variety of individuals,in committee, decide on who we thinkwould be the most provocative and interestingspeakers to bring to this named and it's my pleasurenow to introduce one of those committee members--one of our own professors, professor harvey bryan, whonominated our speaker tonight. harvey is on our faculty inthe school of sustainability. he also shares an appointmentwith herberger school of design and the arts.
so, harvey, if you wouldplease come forward and introduce our speaker,i'd appreciate that. [applause] thank you, dean boone. welcome. i believe we're going to havea truly inspiring conversation tonight. and it will be aconversation a little later. what i'd like to do isthe official introduction.
and then i'd like to dosomething-- follow up with something alittle more personal. so amory lovins is a physicist,environmental scientist, writer, chairman, and chiefscientist at rocky mountain institute. he has worked in the field ofenergy policy and related areas for four decades. harvard- and oxford-educated,he was named by time magazine as one of the world's 100 mostinfluential people in 2009.
he has promoted energyefficiency and the use of renewables and thegeneration of energy at or near the point of use. he has over a dozenhonorary doctorates. he's a fellow of the americanassociation for advancement of science-- a macarthur fellow. he was named time magazine'shero for the planet. he's a recipient of theblue planet prize, the volvo prize, the heinz prize.
if i had to name them all, wewould be here all night, so-- his books include softenergy paths, brittle power, natural capitalism, small isprofitable, winning the oil endgame, and his latestbook, reinventing fire-- which he will be having a booksigning after the lecture. i've just one moreitem, which gets me to the personal side, whichis another publication-- an article, actually,not a book, which for me was the shot thatstarted the alternative-energy
revolution. it was "energy strategies--the road not taken." it was published in october1976 in foreign affairs, which is the official journal of thecouncil for foreign relations. which, if you knowthat organization, it's pretty much anestablishment group. so it is a little disingenuousfor executives from the legacy energy companies orutilities to say today they didn't see this coming.
because i think amory laid outa plan for a clean-energy future 38 years ago. so it's not new. in 1978, i startedgraduate school in the energy and resourcegroup at university of california, berkeley. and we call ourselves ergies. any ergie alums outthere-- there may be a few. we have them here at asu.
only to discoverthat amory was going to be regents' lecturerthis coming year. and so that starteda lot of fun for me, because that was anincredible experience. the seminars, the informaldiscussions during that time, was truly transformational. i remember onecolloquium where we had about four faculty andmaybe about 15, 20 students. and in that one group we hada future presidential science
adviser, a future chairmanof the california energy commission, four futuremacarthur fellows, and the rest allbecame academics or ran environmental ngos. and amory was leading usall in that discussion. so some of you mayknow me and know that i can be a littleimpatient with students-- and even, sometimes,my colleagues-- who don't seem to understand theprofound and transformational
changes that are happeningin the energy arena and in the world. well, you can thank this guy forsome of that impatience that i have, ok? please welcome amory lovins. thank you. after that generousintroduction, i can't wait to hearwhat i'm going to say. but what i'd liketo do, briefly,
before we get intothe conversation part of the evening,is summarize for you the results of ayear and a half of effort by 61 of us at therocky mountain institute to figure out americanenergy solutions. it's a business bookcalled reinventing fire. and i should perhaps startby explaining the title. we have this peculiarpublic conversation about energy in thiscountry that, if it
were boiled down andexpressed clearly, would be a stupidmultiple-choice test. namely, would you ratherdie of a, oil wars, or b, climate change, orc, nuclear holocaust, or d, all of the above? oh, i missed one-- ore, none of the above, which is the choicewe're seldom offered. but what if we couldmake energy do our work without working our undoing?
could we imaginefuel without fear? could we reinvent fire? and we chose that big, poetictitle because, long ago, fossil fuels-- well, firstof all, fire made us human, and then fossil fuels madeus modern in the past couple of centuries. but now we need a new fire thatmakes us safe, secure, healthy, and durable that works nowand actually costs less than what we are doing.
so let's see how it would work. four fifths ofthe world's energy still comes from burning,each year, four cubic miles of the rotted remainsof primeval swamp goo, extracted and deliveredwith great skill. and those fossilfuels have built our wealth, createdour whole civilization, enriched the lives ofbillions of people. but also they have risingcosts to our security, economy,
health, and environmentthat are eroding, if not outweighing,their benefits. that's why we need a new fire. and moving from theold to the new fire means changing two big stories. oil and electricity each putstwo fifths of the fossil carbon into the air. and they have almost nothingto do with each other. less than 1% of ourelectricity is made from oil.
but they have similarlyconcentrated uses, in that three quarters ofthe oil fuels vehicles, three quarters of theelectricity powers buildings, and then the rest ofboth runs factories. so, if you make all theuses more efficient, you can save oil and coal andnatural gas to displace both. but today's energy systemisn't just inefficient. it's also disconnected,aging, dirty, and insecure, so it needs refurbishment.
but by 2050 it could becomeefficient, connected, and distributed, with elegantlyfrugal vehicles, buildings, and factories all relying ona resilient, secure, modern electricity system. so the united states canget off the oil addiction we've got and thecoal addiction by 2050 and also use a thirdless natural gas while switching totripled efficiency of use and three-quartersrenewable supplies.
and our kind ofgrand synthesis found that by 2050 thistransition could end up costing $5 trillionless than business as usual, in netpresent value, assuming that all hidden or externalcosts like carbon emissions are worth zero-- aconservatively low estimate. and yet this cheaperenergy system could support a158% bigger economy without needing any oil orcoal or, for that matter,
nuclear energy, using abouta third less natural gas. and this could be donewithout any new federal taxes, subsidies, mandates, or laws. and it could be donewithout any new inventions. no new laws? huh? well, let me say it again. i'm going to tell you how toget the united states completely off oil and coal by 2050,$5 trillion cheaper,
with no act of congress,the transition led by business for profit. and the idea is to use ourmost effective institutions-- private enterprisecoevolving with civil society and sped by militaryinnovation-- to go around our leasteffective institutions. and whether you care mostabout profits and jobs and competitive advantageor about national security or about environmentalstewardship, climate
protection, creationcare, public health, reinventing fire makessense and makes money. and this is a verytransideological approach. now gen. eisenhowerreputedly said that if a problem'stoo difficult to solve, make it bigger. move out the boundariesto include everything the solution requires. don't just chop the probleminto smaller, bite-sized pieces.
and therefore, inreinventing fire, we integrated allfour sectors that use energy-- transport,buildings, industry, and electricity. we happen to have worked inequal depth in all those, so that made it easier. and also we integratedfour kinds of innovation, not just the usual two--technology and public policy-- but also two even morepowerful ones that are normally
left out, namelydesign-- the way we combine technologies-- andstrategy-- new business models, new competitive strategies. and these combinationsgive you a lot more than the sum of theparts, especially in creating some deeplydisruptive business opportunities. where to start? well, in this country we payabout $2 billion a day for oil
and another $4 billion a dayfor the hidden economic and military costs ofour oil dependence. so it would make sense tostart by getting autos off oil, because they useabout half of it. and to do that we just startwith the physics of the car. two thirds of the energyneeded to move a typical car is caused by its weight. and every unit of energywe can save of the wheels by taking out weight, ordrag or rolling resistance,
saves another sixunits of energy we don't need to wastegetting it to the wheels and therefore savesaltogether seven units of fuel at the tank. huge leverage frommaking cars lighter. except for the pastquarter century, they have sufferedepidemic obesity. they now weigh over two tons. they've gained weighttwice as fast as we have.
however, we now have verylight, strong materials like carbon-fiber compositesthat can make dramatic weight savings snowball and can makeautos simpler and surprisingly cheaper to build--lighter and more slippery. autos also need lessforce to move them, so their engine gets smaller. and then you can afford touse electric propulsion, because you need twoor three times fewer of the costly batteriesor fuel cells.
therefore, the stickerprice of the car converges towards today's level. driving cost per mile ismuch lower from the start. so that specificsequence of innovations can shift automakers fromwringing tiny savings out of essentially victoriansteel-stamping and engine technologies to the steeplyfalling costs of three mutually reinforcingtechnologies-- namely the ultralight materials,their structural manufacturing
techniques, andelectric propulsion. and if you're exploiting threesteepened, synergistic learning curves while your competitoris out on the flat part of one of them, you win. sales can grow andprices can drop even faster with atemporary policy called a "feebate," which, like allthe policies i'll mention, can be done administrativelyor just at a state level, where we always make most ofour energy policy, anyway.
and "feebate" means rebatesfor efficient new vehicles paid for by fees oninefficient ones. this is running nowin various forms in five europeancountries, plus singapore. and the biggest europeanprogram, which is in france, actually tripled the speed ofimproving car efficiency just in its first two years. now this shift toelectric autos is going to be asgame-changing as the shift
from incrementallyimproved typewriters to the dramatic moore'slaw-driven gains in computers. and, of course, computersand information technology are now america'sbiggest industry. typewriter makers have vanished. so vehicle fitness, takingthe obesity out of the car, opens a very powerful, newautomotive-competitive strategy that doubles the oil savingsand also makes affordable the electrification that canreplace the rest of the oil.
and it also derisksthe auto industry, to a considerable extent. now a lot of different countrieslike america or china or japan could lead thisrevolution and overcome its formidable barriers,which are mainly cultural. we're helping some of theleaders in the industry to do that. but the currentleader is germany. volkswagen has begun, lastyear, low-volume production
of this two-seat, carbon-fiber,plug-in hybrid car getting 235 miles per gallon equivalent. bmw is ramping upmidvolume production of this carbon-fiberelectric car, whose carbon fiber they say is paidfor by needing fewer batteries. and their ceo says,we do not intend to be a typewriter maker. because he can look acrossmunich to where olympia used to make excellent typewriters.
there are otherthings in the works. even two years ago, audi showedan over 250 mile a gallon carbon-fiber, midsize,suv concept car. and there's someinteresting things that american industrycan bring to the table. i brought alongtonight my carbon cap, which is a test piecefor military helmets that have been shippingfor several years. this was made sevenyears ago in one minute.
and if i hit it, you'll beable to hear from the sound how extremely strongand stiff it is. [metallic thwack and resounding ring] we can pass it around, if you'recareful to get it back to me afterwards. don't worry about dropping it. it's tougher than titanium. tom friedman whackedit with a sledgehammer and couldn't even scuff it.
so, now that we have technologythat can make complex, two by two meter partsin about a minute with near-aerospaceperformance, if you scale that kind of techniqueto us automaking it can save 80% of the capitalneeded in that industry. it can save a lot of lives,because this stuff can absorb six to 12 times as muchcrash energy per pound to steel and do so more smoothly. and the oil saving,just for the us,
would be equivalent to one anda half saudis or half an opec from drilling in avery perspective play called the detroit formation. and those negabarrels underdetroit, saved barrels, cost only $18 eachbecause you only need to pay for the electrification. the ultralighting isapproximately free, paid for by much simplerautomaking and a smaller propulsion system.
and those negabarrels are alsodomestic, secure, carbon-free, and inexhaustible. of course, the same physicsand the same business logic also apply to heavy vehicles. walmart's usingabout 44% less fuel to move a case ofmerchandise than they did in 2005, thanks to bettertruck design and better logistics. you may have noticed alsothey just showed a concept
truck with terrific aerodynamicsand carbon-fiber trailers and so on. altogether, thetechnical potential alone is to triplethe fuel efficiency of those heavy trucks. and if you combinethat with the tripled- to quintupled-efficiencyairplanes being designed at places like boeingand nasa and mit, you've got nearly $1 trillionof heavy-vehicle fuel savings
available. and in both heavyand light vehicles, today's military revolutionin energy efficiency is going to speedall these advances in the civilian sector,which uses over 50 times as much oil as the military, muchas military r&d has created the internet, theglobal positioning system, the jet-engine industry,the microchip industry, thus transforming thecivilian economy.
only this time the leveragecan speed our nation's journey off oil so we don'tneed to fight over oil, so our war fighters can havenegamissions in the persian gulf-- mission unnecessary. they really like that idea. also, as we design andbuild vehicles better, we can use them a lot smarter. this is a typical congestiongraph during a day, showing the morningand evening rush hours.
and if that were anelectricity load shape, we would throw a lot ofit-enabled smart grid and demand responsepricing at it to try to flattenout those peaks. but, by not yet doingthat for road traffic, we're wasting manybillions of dollars a year through idle people, idlevehicles, and idle roads. but, rather than justwatching traffic double, as is officially forecast,we could actually
use four proven techniquesto reduce needless driving. we could use smart it tocharge drivers for their road infrastructure by themile, not by the gallon, and some more it toenhance public transport and to enable carsharing and ride sharing. we could encourage developersto do more new urbanist and smart growth modelsso more folks are already where they want to be and don'tneed to go somewhere else. we could use it to maketraffic free-flowing.
and when you add up the provenperformance of those four techniques, we couldactually get better access in this country with about 46%to 84% less driving, saving another $0.4 trillion dollars. so, 40 years hence, a farmore mobile us economy could be using no oil. and it turns out savingor displacing each barrel costs an average of about $25. well, if you dothat and, instead
of buying the barrelfor over $100, that's $4 trillionnet present value. if i had counted, by theway-- which we did not-- the hidden economic and militarycosts of us oil dependence, that saving would be$12 trillion dollars. now, to get mobilitywithout oil, we can first get efficientand then switch fuel. so, to phase outthe oil, we start with the efficiency inthe government forecast,
add the vehicle fitness,add the more productive use of vehicles, andthen those 120 to 240 mile per gallonequivalent cars can run on any mixture ofhydrogen in green electricity in yellow and advancedbiofuels in orange. the heavy truckscan realistically use hydrogen oradvanced biofuels, or the trucks coulduse natural gas. but none of them will need oil.
and the total amountof biofuel required is so small you couldget two thirds of it from waste and all ofit without displacing cropland or harmingsoil or climate. so our little teamspeeds this journey off oil through what we call"institutional acupuncture." where the businesslogic is congested and not flowing properly,we insert needles in carefully chosenpoints, in partners
like ford and walmartand the pentagon, to get that qi flowing. and this long transitionis already so well underway that even five yearsago mainstream analysts were starting to see "peakoil," not in the supply but in demand. because, as with whale oilin the 1850s, oil is becoming uncompetitive even atlow prices before it becomes unavailableeven at high prices.
but electrified autos don'tneed to add new burdens to the electricity system. rather, when smart autosexchange electricity and information through smartbuildings with smart grids, they're adding to the gridflexibility and distributed storage that help the grid toaccept varying solar and wind power. so electric autos make the autoand electricity problems easier to solve togetherthan separately.
and they alsoconverge the oil story with our second big story,saving electricity and then making it differently. and those twinrevolutions in electricity are bringing more profoundand diverse and numerous disruptions than inany other sector, because 21st-centurytechnology and speed are now colliding head-on with 20th- andeven 19th-century institutions, rules, and cultures.
now, changing howwe make electricity gets easier if weneed less of it. today most of it'swasted, and we keep improving themeans of saving it faster than they're installed,so the unbought reserve of negawatts keeps gettingbigger and cheaper. but as buildingsand industry start to catch up and get efficientfaster than they grow, america's electricityuse, instead of growing 1%
a year as officiallyforecast, could shrink 1% a year, net of the extra use forthe efficient electric autos. and, in fact, us electricityuse hit a maximum, as did gasoline use, in 2007. and they both have beengoing down ever since, even as the economy grows. the electricity used,weather-adjusted, to make $1 of gdp fell, justin the year 2012, by 3.4%. and we can keep demand goingdown by reasonably accelerating
existing trends. specifically, overthe next 40 years, us buildings-- which,i'll remind you, use three quartersof the electricity-- can triple or quadrupletheir energy productivity, saving $1.4 trillion net presentvalue, with a 33% internal rate of return. that is, the savings areworth four times their cost. industry can doubleits energy productivity
with a 21% internalrate of return. and to get thosethings done by 2015 we would just need by2030 to have achieved on national average theadoption of energy efficiency that the pacificnorthwest states already achieved nine years ago. whatever exists is possible. now a key to such big savingsis a disruptive innovation we call "integrativedesign" which often makes
very big energy savings costless than small or no savings, turning diminishing returnsinto expanding returns. that's how our 2010retrofit is saving two fifths of the energy inthe empire state building. we first set up a little,temporary window factory on a vacant floor andremanufactured all 6,514 windows into super windows thatinsulate several times better and that are almost perfectin passing light but blocking heat.
those plus other improvementsreduce the peak cooling load of the buildingby about a third. and then we were able torenovate smaller chillers, rather than adding biggerchillers, saving $17 million of capital cost, which paid formost of the other improvements and reduced the paybacktime to just three years. a major energyservice company had offered a three-yearpayback, but their saving was only 7% becausethey were optimizing
components in isolation. we saved six times more withthe same three-year payback by optimizing the wholebuilding as a system. and our latestcost-effective deep retrofit of a difficult, 48-year-oldfederal office building in denver isexpected to save 70%, still cost-effectively,making it more efficient than themost efficient new us office building.
let's try another kind ofbuilding-- my own house. judy and i live at 7,100feet in western colorado, near aspen, wheretemperatures have gone as low as minus 47 f.we've had as much as 39 days of continuous midwinter cloud. a few weeks ago, we had 26inches of snow in 24 hours. it doesn't have to looklike this to work like this. this house actuallyis an archetype of the europeanpassive-house movement, which
has over 30,000 housesand apartments which, like ours, need noheating but have roughly normal construction cost. now, if we go intothe central atrium, under glass that insulateslike 14 sheets of glass but looks like two and costsless than three, two years ago in a february snowstormthis is what it looked like. you can see twoof the five banana crops that were then ripening.
now, two years later, we havesix banana crops ripening-- numbers 48 through 53. and actually tworecent crops a year ago harvested themselveswhen their 65-pound weight pulled down the tree. now when i firstmoved in, in '84, this house was usingabout 1% the normal amount of space of water-heatingenergy, a tenth the normal householdelectricity, half
the normal water-- allwith a 10-month payback. today's technologiesare a lot better, so we've retrofitted them. and we're measuringabout 300 data streams to see howmuch better they are. trouble is, themonitoring system seems to be using moreelectricity than the lights and appliances. and similar design techniquesand integrative design
have been used to eliminateair conditioning up to at least 115 f, with lowerconstruction cost and better comfort, or to save 90% ofthe air-conditioning energy in steamy bangkok, with normalconstruction cost and better comfort. probably abouteverybody in the world lives in a climate somewherebetween old snowmass and bangkok. but, wherever you live, thekey is integrative design
that gets many benefitsfrom each expenditure. so this white arch that holdsup the middle of my house has 12 different functions,but it has only one cost. integrative designcan also increase the half-trillion dollars ofconventional energy savings in industry. dow chemical, for example, hasalready captured $9 billion of those savings on a$1-billion investment. but there's a lot more to do.
for example, three fifthsof the world's electricity runs motors. half of that runspumps and fans. we can make all thatequipment a lot better. but first we should tacklebigger, cheaper savings that are normally left out. they're not in anyofficial study. they're not in anyengineering textbook i know. and they'restrikingly effective.
for example, pumps, thebiggest use of motors, move liquid through pipes. but a typicalpumping loop, which happened to be in a carbonfactory in shanghai, was redesigned touse at least 86% less pumping energy notby using better pumps or motors or controlsbut just by replacing long, thin, crooked pipes withfat, short, straight pipes. and that, of course, makesthe pumping equipment smaller,
so the capital cost goes down. in our own house,we've got a 97% saving on pumping energy thatway, at lower cost. so this is not rocket science. it's not even a new technology. it's just rearranging ourmental furniture as designers. what does that mean forthe electricity that goes three-fifths to motors? well, if you feed 100 units of,say, coal into the power plant,
there are so manycompounding losses that only a tenthof that fuel energy actually comes outthe pipe as flow. but if we go fromright to left, we can turn those compoundinglosses around backwards into compounding savings. and every unit of flow orfriction we save in the pipe compounds back again tosave 10 units of fuel in cost and pollutionand what hunter lovins
calls "global weirding"back at the power plant. and as you go backupstream, the components get smaller and cheaper. so our team has lately foundsuch snowballing energy savings in over $40 billion worth ofdiverse industrial redesigns, from this hewlett packard datacenter and texas instruments chip fab to rio tintoand anglo american mines and shell hydrocarbonfacilities and a bunch more. and typically our retrofits ofsupposedly pretty good designs
have a design saving around30% to 60% of the energy, with two- orthree-year paybacks, while in new facilitiesthe savings often get bigger-- about40% to 90-odd percent but generally withlower capital cost. now, if you needless electricity, because you save so muchin buildings and industry, it gets easier andfaster to speed the shift to newsources of electricity,
chiefly renewables. and china is leadingtheir explosive growth and their plummeting cost, shownhere on a logarithmic scale, for photovoltaicmodules and wind farms. and both of those,in good us sites, are already marketplace winners,beating new combined-cycle gas plants on levelized cost. actually, in germanyand parts of australia it only costs about half asmuch to install a solar system
as it costs in this country. we all buy the sameequipment, but they're more streamlinedat putting it in. so we're figuringout how they do that, and our costs areplummeting, as well. but even at double thegerman-installed system costs, in about 20 statesdevelopers will happily come to your house, putphotovoltaics on your roof-- with no money down, which soonwill be a cash-back offer--
and beat your utility bill. well, if you combine thatwith several other equally unregulated products,you can end up with a virtual utility,kind of utility in a box, that willbypass the power company, just as cell phones bypassedwireline phone companies. and that's alreadyhappening in hawaii, where they have very expensive,oil-fired electricity and 10% or 15% of the houseshave already gone solar.
many of them aredropping off the grid. and that's starting to spreadacross the united states. we just put out a reportcalled the economics of grid defection showing thatthat grid parity of distributed solar power plusdistributed storage-- to do what the griddoes, without the grid-- should cross the countrypretty much within the asset life of what utilities now own. so that sort of thinggives utility executives
nightmares and venturecapitalists sweet dreams. but also, of course,the incumbent utilities can perfectly well turn it intoa new business opportunity. there's a bunch ofintelligent ways to incorporate the insurgencyinto the incumbents' business models. and actually we havetwo separate branches of our electricitypractice at rmi-- one working with attackers,one working with defenders,
because competition is good. so we're-- [laugh] and here's the big picture. worldwide, starting in 2008,half of all the new generating capacity added inthe world each year has been renewable, the twofastest-growing parts being wind and photovoltaics--which actually just crossed over wind last year. and together thoseand minor renewables
are adding over 80 billionwatts in each of the past three years. they're getting a quartertrillion dollars of investment. and the reason theyscale so incredibly fast is you no longer need to builda cathedral to make electricity, taking 10 years and costingbillions of dollars. because in thattime you can instead build a whole series ofphotovoltaic plants-- say, one a year-- each of whichwill produce each year so
many solar cells that thatone year's production from one plant will produce, eachyear, as much electricity as your cathedral wasgoing to produce when you got it done in 10 years. so that's why solaris scaling worldwide faster than cell phones. and china, in 2012, mademore new electricity from nonhydro renewablesthan from all coal and nuclear sources combined.
so it's no wonderthat in this country we have more solar jobs thatwe have coal or steel jobs. and the solar jobs aregrowing 10 times faster than general employment. but china, last year,added more solar cells that we have in america,even though we invented them. and these sourceshave now far surpassed the installed capacity ofworldwide nuclear power, which already was losing net capacitybefore the fukushima accident.
and worldwide orders forcoal and nuclear plants are fading away, becausethey have no business case. however, we are oftentold that only those coal and nuclear plants cankeep the lights on, because they are 24/7whereas solar and wind power are variable and thussupposedly unreliable. well, both parts of thatstatement are wrong. first of all, "variable"does not mean "unreliable." during a stormy wintermonth the red line
shows the output offrance's wind power, and the blue lineshows the forecast of that output one day ahead. i'll bet we wish wecould forecast demand that accurately. and then no generator is 24/7. they all break. and big ones are typically downabout 10% or 12% of the time. and when a big onefails, you just
lost 1,000 megawattsin milliseconds, often for weeks or months,often without warning. that's why the grid was designedto back up failed plants with working plants, tomanage this intermittence of big thermal power plants. and, in exactly thesame way, the grid can manage the forecastablevariations of solar and wind power by diversifyinga portfolio of those sources by type and location andforecasting it and integrating
it. national renewableenergy lab has shown how to run very nicelya fully reliable 80% or 90% renewable us power system. now this can also workin a smaller area. so, to pick a difficultcase, let me show you the isolated grid of texas. in 2050, in a typicalsummer week, it might have a load shape likethat, or smaller and less peaky
but still about30 billion watts, if you use the electricityefficiently in a way that saves money. well, let's meet all ofthat with renewables. 86% on an annual basis, froma mixture of wind and solar. you can see how variablethey really are. the other 14% fromthe other renewables, which are dispatchable. you can have themwhenever you want.
so that's things likegeothermal, small hydro, burning municipal solidwaste, burning feedlot biogass in combustion turbines,burning energy studies, solar thermal electric--with heat storage to run it into orthrough the evening. so we're now 100% electricin this simulation, but it's not a greatmatch to the load shapes. we have both surplusesand deficits. however, we cantake the surpluses
and store them in two kindsof distributed storage, fully built out--namely ice-storage air conditioning and smartcharging and discharging of electric vehicles. and we can then recover thatdistributed storage when we need it and the fill in thelast bits with unobtrusively flexible demand. and now we have reliablepower every hour of the year. all the moving partsfit together properly.
and only 5% of the renewableoutput is left over. so the economicswill be quite good. now this is not just theory. some countries,particularly in europe, already run their grids withexactly this choreography. germany, the fourth-biggesteconomy in the world, is about a quarterrenewable electricity. denmark in 2012 was 41%renewable electricity, scotland 40%.
first half of lastyear, spain 48%. portugal 70%, up from17% eight years earlier. small countries can move fast. and we're starting to see thesame in some american states. iowa and south dakota areabout a quarter wind-powered, texas about a tenth-- somedays closer to a third. our own utility, xcel, incolorado has been over 60% wind-powered for an hour. the lights stayed on.
the big island inhawaii is 57% renewable, heading for 70% inabout three years. so so much for thesupposed reliability limits to wind and solarpower and the supposed need for bulk storage, whichnone of these countries have added. and there's another veryimportant trend going on, namely a shift towards moredistributed generation. denmark used to run on just afew big coal-fired power plants
but, over threedecades, has shifted to a constellation ofwind, in blue-- 84% owned by the farmers and theircommunities-- and ag waste cogen, in brown. they're headed for allrenewable energy of all kinds by 2050 at essentiallyno extra cost. and they've also beenreorganizing their grid in a cellulararchitecture that makes cascading failures impossible.
now-- brings usback to the american grid, which is so agingand dirty and insecure that we need to replaceit, anyway, by 2050. and it turns out,whether we replace it with more of what we've gotor with new nuclear build and so-called "clean coal," orwith centralized renewables, or with halfdistributed renewables, it all costs thesame, regardless. it's about $6 trillionnet present value.
but those four futures differprofoundly in their risks around national security,technology, fuel, water, finance, climate, and health. this is a risk-management play--same cost, different risk. now, for example, we havethis very overcentralized grid that is vulnerable tocascading and potentially economy-shattering blackoutscaused by operational problems like squirrels or solar stormsor superstorms or earthquakes or physical attackor cyber attack.
and practically all of thisstuff has happened lately. but that blackout riskdisappears, and all the six other kindsof risk are best managed, with distributedgenerators reorganized into local microgrids thatnormally interchange power freely through the grid butcan stand alone at need. they can disconnect fractally,reconnect seamlessly. that is the pentagon'sstrategy for its power supply, because they needtheir stuff to work.
of course, so do the rest ofus whom they're defending. that's why my houseis built that way. it works with orwithout the grid. and, at about the samecost as business as usual, this resilient gridarchitecture could maximize national and communitysecurity, and customer choice and innovation, andentrepreneurial opportunity. so let me summarizethe electricity story. together, efficient useand diverse, dispersed, or
distributed, resilientrenewable supplies are starting to transformthe whole sector. utilities used to build justdifferent kinds of big power plants and occasionally littlebits of efficiency renewables, and we would reward them,as we still do in 36 states, for selling you more energy. i believe that is thepractice here, as well. on the other hand,in about 14 states we've changed the rulesto reward utilities
for cutting your bill. and what typically happens thenis the investment rapidly goes the other way up. it shifts massively towardsefficiency, demand response, renewables, cogeneration,distributed storage, smart grids--especially in the three fifths of the states whereelectric savings or demand response can bid directly intothe same auctions as the supply side.
we had a recent auctionwhere 92% of the winning bids came from the demand side,because it was cheaper. competition is amazingwhen you let it work. so we actually have agreat deal of choice. our energy future isnot fate but choice. and that choiceis very flexible. back in '75, ourgovernment and industry all insisted thatthe primary energy needed to make $1 of realgdp could never go down.
so it was heretical when i putan article in foreign affairs magazine saying it couldgo down by threefold. what happened? well, it's down byover twofold, so far. and yet now we have much bettertechnology, integrative design, more mature financing andmarketing and delivery channels that give us a veryclear line of sight to tripling efficiency allover again at only a third the real cost thatwe used to think.
so, to solve-- i mean-- tosolve the energy problem, we just needed to enlargeit and integrate it. and the results may atfirst seem incredible. they surprised even us a bit. but, as marshall mcluhansaid, "only puny secrets need protection. big discoveries," hesaid, "are protected by public incredulity." now combine the electricityand oil revolutions,
and you have the bigstory, reinventing fire, where business enabledand sped by smart policies in mindful marketscan get off of the now uneconomic technologies of oiland coal and nuclear by 2050. and i dare say we're not theonly country that can do that. but in the us case, we found itwas $5 trillion bucks cheaper to do that, while growing theeconomy 2.6-fold and reducing carbon emissions 82% to 86%,all using existing technology. now, if you like any of thoseoutcomes-- any one or more
will do-- you could supportthat transition without needing to like every outcomeand without needing to agree about whichoutcome is most important. so, by focusing onoutcomes, not motives, we can turn conflictand gridlock into a unifying solution toour common energy challenge. and then we'd also find thatthese best buys are also the most effective solutionsto the big global problems that hazard every country'ssecurity and prosperity.
our little teamat our nonprofit, rocky mountain institute,is helping smart companies and other places like asu to getunstuck and speed this journey by various sectoralinitiatives and projects. we're also applyingthis same work to china, to inform the 13thfive-year plan. i'm just back frombeijing, where we've had our secondset of review meetings, and it's getting quite exciting.
of course, there's a lotof old thinking still out there, as well. maurice strong, whoused to be an oilman, said "not all thefossils are in the fuel." but when edgar woolardwas chairing dupont, he reminded us that firmshampered by old thinking won't be a problem,because, in the long run, they won't be around. so what i've describedfor you is not just
a once in a civilizationbusiness opportunity. it's one of thegreatest transformations in the history of our species. because we humans are reallyinventing a new fire-- one that's not dug frombelow but flowing from above. i've even heard theologianstalk about energy from hell andenergy from heaven. and this new fireis quite different. it's not scarce but abundant,not local but everywhere,
not transient but permanent,not costly but free. and, but for the transitionaltail of natural gas and a bit of biofuel grown inways that sustain and endure, this new fire is flameless. and, very efficientlyused, it really could make energy do our workwithout working our undoing. each of you owns a piece ofthat $5 trillion dollar prize. and our book details howyou can capture that. so, with the conversation begunand at reinventingfire.com
and with a ted talk anda foreign affairs paper and a huge amount oftechnical resource online, let me invite each of you toengage even more-- with us, with each other, with everybodyaround you-- to help make the world healthier, richer,fairer, cooler, and safer by together reinventing fire. and thank you all andthis remarkable place for who you are and what you do. what chair would you like?
thanks. you pick it. ok. all right. amory, thank you so much. there's a term i've beenhearing lately called "ecosystem services." and everyone's talking likeit's a brand-new thing. what would you have called"ecosystem services" 20, 30,
40 years ago? we called them"ecosystem services." there's a lot ofthat in a book we did with paul hawkencalled natural capitalism. exactly. yeah. pointing out that things likecycling nutrients, cycling water, pollination,regulating the climate are all services wecan't live without.
and, as ray andersonpointed out, the economy is a subset of theenvironment, not the other way around. and why do you think we'vebeen able to sort of almost lie to ourselvesabout that being true? like, how have we hadan artificial existence with that, before now thealarm bells are ringing? well, there's this prevalentand contagious brain disease called "economic theory."
it is sometimescurable, and there are some very goodeconomists out there. but if you get tooconfused between the map and the territory, you couldeasily persuade yourself that human transactionalrelationships seen through the lens of priceare how the world works and that we can safely ignorethe biological context, the envelope that contains,sustains, and provisions all of this economic activity.
i actually wastold, the other day, of an economicsprofessor who had said-- when told climatechange is about physics, he said, well, don't worry--economic law will always overcome physical law. [laughter] that's a little scary. that is a little scary. so i met amory lovins in 2007,when i started carbon nation.
a buddy of mine inengland-- i called him really late at night,because it was early in the morning. i said, i'm going to makethis film about solutions to climate change. and he said, i just read thisarticle in the new yorker about amory lovins. you've got to meet him. so you were actuallyperson number 1
i wanted to interviewfor the film. and he was about personnumber 3 that we actually got, in new york, the first time. and then, that summer,rocky mountain institute had its 25th anniversary. and i'll just tell areally quick story. so bill clinton speaks. he opens the event. lots of energy from that.
he goes scooting out towherever he was going. and this room's buzzing. and see amory kind offutzing with the belt buckle of a very old gentleman. and i thought, that's gotto be his uncle or his dad. and it turned outit was your dad. he was 96. so i decided to stay couple dayslater so i could interview him. and so we got tointerview your dad.
and one of thethings he said was that you were reading the newyork times when you were four-- and understanding it. do you remember that? oh, sort of. sort of? and then you go toharvard at age 16-- but you didn't finish. but somehow they invited youto oxford, to become a don.
how did that happen? how did the-- how did you notfinish at harvard, and you got yourself to oxford? well, i dropped outof harvard halfway through because they wereclosing loopholes ahead of me, not just behind me. i wanted to study whati wanted to study, and they wanted me tosettle down and get a major.
and i said, this is auniversity, isn't it? why can't i studywhat i want to? they said, no, we'vegot to protect you from your exuberantlytransdisciplinary impulses-- --in case it doesn'twork out well. so i transferred tooxford as a grad student, because they didn'tknow what to do with me. and then i was runningout of money again. and my squashpartner said, well,
i've got this nicescholarship at merton, the richest old college. and it's running out, so they'regoing to advertise it again. why don't you apply? all they could do is say no. so i applied. halfway through theshort-list interview, found i was beinginterviewed for much more exalted postdoc thingcalled "junior research
fellowship," whichwould make me a don, because they both usedthe same application form and there was no placeto check which one you were applying for. so anyway, i got that one. and that was goodfor three years. and i could dowhatever i wanted, but they wouldn't--with one exception. they wouldn't let me doa doctorate in energy.
because this was in '91-- '71. sorry, '71-- right. 1971. uh-- so that's two years beforethe arab oil embargo. and they said, energy? what's that? it's not an academicsubject, is it?
we haven't a chair in it. pick a real subject. so i said, sorry, i thinkit's about to become really important. i need to go workon it, and i'll just resign the fellowship. so they now have a chair in it. now what in 1971 made you thinkabout energy as important when most people in the world didn't?
well, anybody who waspaying attention in '71 knew that the whole systemis about to blow up. and even in the-- what were those indicators? read the-- am i going too far back? read the damned newspapers. i mean-- look at economics.
look at the middleeast politics. but broadly, even in themid-'60s it was obvious there were two existential threatsto civilization from our energy system, namely climate changeand nuclear proliferation. and we'd better be darned surewe didn't have either one, let alone trade offone for the other. and through decades of dumbpolicies, we now have both. but there's still a lot wecan do about both of them by taking economics seriously.
and it was alsoobvious that if you looked at the wholetangle of challenges around population, resources,environment, development, security, economy, energywas kind of a master key that could unlock a lot ofthose and teach us how to think about the others, like water. so i thought that wouldbe a really fruitful area to look into. and so i did.
my first professional paperon climate change was in '68. and by '76, with a lot ofgood discussions at shell, my foreign affairs paper hadreframed the energy problem around the end-useleast-cost approach. what amount and quality andscale and source of energy will do each desiredjob in the cheapest way? and that set offa furious debate. after a year or so,the dust had settled, and it's now theapproach anybody uses
that really wants to understandwhat's going to happen. and it's proven veryfruitful in other fields. now it's been attributedto you, the phrase "the pioneers get the arrows"-- "and the settlers get the land." that's not mine, and idon't know whose it is. it's not yours? that's a very old one. ok, there you go.
enough said on that one. now, when you were atoxford, and you were a don, and you look likeyou-- that was the path to a long careerat oxford, right? that-- mhm. and then you left-- and, in fact my squashpartner is still professor ofeconomics at oxford.
proof in the pudding. so you left to protest thebuilding of a copper mine in wales? well, not exactly. i left because i wantedto work on energy. but in the meantime i hadfallen in with dave brower, who built a lot of the modernus environmental movement-- greatest conservationistin the 20th century. most remarkable man.
and i met him because i-- tohelp-- he owned some bad knees. i'd been doing a lot ofmountaineering and mountain photography in north wales. and it turned out the world'slargest mining company wanted to start a bigcopper mine in the middle of the national park thereand dredge the mawddach estuary for gold, and ithought that was a bad idea. so meanwhile i'd beensending some slides to dave because nationalgeographic said, well,
he might like thissort of thing. for us they're tooatmospheric and not representational enough. so i sent them to dave toask if he had some advice, because i was runningout of money to buy film. kodachrome and processingwere very expensive, and i was a starving student. and my cophotographer philip[inaudible] evans, who was the lab technicianin the physics
department-- and thefinest color landscape photographer inbritain, it turned out-- had done a bunch ofstuff that dave liked. and one day he said, i'vegot this contract with mccall to do a dozen of theseexhibit-format books on the earth's wild places. one of my authors just got sick. i'll give you a half hourto decide if you guys want to do a book on north wales.
so we did. and it turned intoa case study of british national-park policy. and, as a result ofthat and a bbc film we helped with, themining company rio tinto went away mad, and thecopper's still in the ground. actually, had they mined itthey might have gone broke, because the coppermarket crashed as they would have been attheir maximum outstretch of cash
flow. but they didn't takemy efforts to help in quite the gracious spiritin which they were meant. [chuckle] there's not a picture of youwith some flowers around it, at the rio tinto headquarters? well, actually, we arethere favorite consultant, and they are ourfavorite client. because now, for manyyears, their chairman
advised by the then-head offriends of the earth uk, who was leading the campaignagainst their mine, they have become theleader in greening the global mining industry,which has a lot of work to do. and isn't it funny howthese things come around? when you realize, as somebodyremarked in adam kahane's recent book power and love, ifyou're not part of the problem, how can you be partof the solution? and sometimes, after dinnerwith some of the rio tinto
executives who werenot around then and don't know thishistory, i recount to them how we first met. and we all have agood chuckle over it. now you mentionedinstitutional acupuncture. do get acupuncturetreatment, yourself? occasionally. yeah? and do you meditate, as well?
there's a lot of studentshere, and i've found meditation to be incredibly helpful. and i-- well, mountaineeringis a meditation. music is a meditation, sure. so, yes. i don't have a-- asregular practices. i'd like to. although in my youngerdays i did on occasion.
and you play piano, as well. well, i used to. my last recital was in '71. oh. [laugh] but you have a nicepiano, that's for sure. so, systems. i'd have to saythat, since i've come to asu, that's been one ofthe things i've learned most.
the newest idea isobviously not new at all. but it's becomevery clear to me-- it's been very welldescribed to me. talk to me about howthe word "systems" or the concept of systems hasplayed in your thinking, which maybe made you lookway ahead of the game just because you werelooking at a bigger picture? maybe what eisenhower'stalking about-- making a bigger problem.
hmm. well, i've alwaysbeen one of those who dig wholes-- uh--[laugh] with a w-h. and i guess it's partly beingimmersed in nature a lot and realizing how everythingis connected that made it clear that a lot of the way oursociety's gotten in trouble is the cartesian, reductionistfallacy that if you take something bigand complicated and interconnected and chopit into a lot little pieces
it'll be the same asthe sum of the parts. even aristotle knewbetter than that. how did that grabhold, that concept of reductionist science? well, it was very powerfulin its application to create things like theindustrial revolution. but its unexpectedconsequences come about because that's not the waybit, complicated systems really work-- like nature or societies.
and i also had veryeclectic interests, because although originally ihad a long educational track in physical science, ihad a parallel track that went chronologically-- music,classics, math, linguistics, some law, a little medicine,a lot of mountain photography. and at that point istarted to diversify, because in our lineof work you need to pick up a couple ofnew disciplines a year. you never know whatthey're going to be.
and if you do thatfor a few decades, everything remindsyou of something. so i've taught now at 10universities but only subjects i've never studied, becausethen i can have beginner's mind and it's much more fun. do they know that whenthey're hiring you? if they read my resume, yeah. and actually i was verylucky to discover early-- and i'll just let youall in on it, in case
you don't know the secret yet. there are few if any disciplinesthat a smart and motivated person can't learn asmuch about in six months as most-- not all, but most--people in the field know. once you realize that,you can be utterly uninhibited in romping aroundin anybody's intellectual turf you want. there aren't reallyany boundaries. it's all academic tribalism thatcreates artificial boundaries.
any culturalanthropologist would have a field day with this. so you just, you know, jumpthe fences, walk on the grass, and go learn whatever youneed and want to learn. and the more eclecticit is, the better. we have too manynarrow specialists. we need people who can makenew kinds of connections. and if, indeed, youknow some physics and some cultural anthropologyand some ancient history
and some chineseliterature and art history, and even a bit ofeconomics, you'll probably be able to figureout important, new ideas that are actually useful-- thevision across boundaries. the silo-spanning orsilo-busting-- a lot of which does go on here. and it's a great credit to yourpresident and your university that that thinkinghas found a home here. yeah, i've never beenin a university before,
and i haven't found any kindof silo situation for myself. i just go where i want togo, and it's working fine. what is triggering--what's inspiring you right now that maybe youhaven't put into your slideshow? what's sparking? well, the, uh-- we have a lot ofexciting stuff going on at rmi, particularly with our verydynamic new ceo, jules kortenhorst. but i think i'm most excitedby how the china work is going.
let me tell you a little story. when natural capitalism cameout, in '99, within a few weeks some unknown hero at thechinese embassy in london had a copy inbeijing on the desk of [inaudible] whowas the number two ideologist of thechinese communist party and a most remarkable man. he wrote the slogans thatshape the nation's mind. so think of him as a reallyhigh-level ad-executive
creative for 1.3 billion people. and he read thisthing and thought it's the greatestthing since boiled rice and just what china needed atthis stage of her development. so, with our blessing,he decided to publish it. and he had it translatedby a crack team. he wrote a preface inthe name of the party saying it's politically kosher. he came up with a fabulous titlefor it-- [speaking chinese]--
which is literally treatise onor ideology of natural capital. but in those fivecharacters, it bows to marx, lao-tze, confucius,environmentalism, capitalism, business management cultureand several other axes-- and i'm not evencounting the homophones. he had it published by hisdaughter's house, shanghai popular science press. he had it launched by[inaudible] in shanghai. during the course of this,we became acquainted.
one day, we were floatingdown the huangpu river, through shanghai, and i thinkhe's looking kind of wistfully over at the docks area. i said, do knowthat part of town? he said, oh, yeah, i wasin manual labor over there for 10 years in thecultural revolution. and, as i talkedto him some more, i think, wait a minute-- thisguy sounds like a taoist. so i pull out my littlestone that says "tao,"
and he lights up. he didn't know there werewestern taoists, let alone that i was one. and, at that point, wewere instant brothers. except he doesn't tell meone thing-- he has leukemia, and he dies six monthsafter the book comes out. whereupon his former boss, theretired number-one ideologist, who was the topeconomist in china, whom i met in '87, tongdalin, takes up the campaign.
and, in memory of his friend,and for the sake of china, he puts this translatedbook personally in the hands of the then andthe later paramount leaders of china, all theprovincial governors, all the members ofthe state council, saying "you must read this." and, because of who heis, many of them do. and the academy spends abouta year and a half vetting it and summons me to answerquestions about it.
and they seem to bedirectionally satisfied, because i'm told this hada lot to do with china in '05 adopting energyefficiency as its top strategic priority fornational development. now we wrote the thing foramerican business leaders, not for ideologists of thechinese communist party. but what the hell--we'll take it. isn't it funny howthese things work? and i have the intuitionnow that we may just
have the right team and theright ideas at the right time to have a similarly usefuleffect on the emerging 13th five-year plan, whoseenergy authors actually make up our steering committee on thisproject-- various ministers and state counselorswho are very enthusiastic about this approachof finding the maximally practical and cost-effectiveefficiency renewables, including integrateddesign, to be applied to the chinese systemusing chinese models, data,
examples, analysts. so we've teamed up withtheir top two energy outfits that work for the nationaldevelopment and reform commission, which writesthe strategy of the country and enforces it, and with thechina energy group of lawrence berkeley national lab. and, uh-- very excitedby how that's going. so we've got the base case now. we're nine months intoa two-year effort,
and sometime this fall we shouldhave the reinventing fire china scenario withdramatically lower energy use for the same economicoutput, lower cost, much less carbon emissionand air pollution. so, less water use. and it's, uh-- that's scale. that is scale. it is remarkablehow-- well, these
are people of very high quality,personally and professionally. and most of them areengineers, by the way. a very technocratic government. and the most powerful ofthe four state counselors we work with, 10 minutes intomy first meeting, was saying, well, now i see what you've got. when you're ready tomove on a, b, and c, i want to take themto state council tomorrow and makethem national policy.
can you imagine some ofour government officials doing that? it'd be pretty amazing. so there's microphonesright there and right there, on each of the three levels. so if anyone hasany questions, you can start lining upas i continue down a little more lineof questioning. so here you are atarizona state university.
we clearly have a president andan administration and a faculty world and a student bodythat love what you're doing. and i would imagine a few ofthem, especially students, would like to go tochina with you all. am i right? am i wrong? yeah, i see one hand. ok, so she wants togo, and he wants to go. how would-- what about apipeline between asu and china,
via rmi? is anybody talking aboutanything like that? oh-- i don't know. so we could learn whatthe chinese are learning and bring it back, or-- well, i'd have to consultwith my colleagues. just a thought. this project is run by dr. jon--j-o-n-- creyts-- c-r-e-y-t-s-- who, uh-- a formermckinsey partner.
and we have a number ofnative chinese on staff and more on the way. obviously there arelanguage barriers, and my mandarin's not very good. i could see how thelanguage would be an issue. so we've got a questionright over there. yes, thank you. i'm jamie kern. thank you so much forcoming out and sharing--
thank you so much for comingout here and sharing everything on a very commonsenselevel with us. my question is, other thaneducating the entire public on the matter tochange policy, how can we go about-- whichis extremely difficult and rarely happensbut would be great-- how do you go abouttaking this information and turning it intoactionable work and getting the governmentsor the jurisdictions
or, in arizona's case, thecorporation commission, or on a nationallevel, some activity towards arenewable-energy future? well, we like to work witheffective institutions. and they're differentin each place. so we tend to work much morewith the private sector, in the united states, and withthe most capable government agencies like ndrc in china--completely different way of doing things,but whatever works.
if you're trying tochange things here-- well, actually, there's a chineseproverb, [speaking chinese], column which means"heaven is high, and the emperor's far away." but it applies equallyto both our countries. they're both big anddiverse and complicated. and i expect in arizonapeople think that washington's pretty far away. and you do your own thing here.
so you have to understandyour local ecosystem. and you understand it a lotbetter, i'm sure, than i do. but whatever group orindividual you're dealing with, just follow the oldsaul alinsky principle of talking to folkswhere they're at, not where you're at. talk to their concernsin their language. don't feel you have toinflict your truth on them. and it also helps tobe apolitical-- that
goes beyond nonpartisan--and to practice what you might call "aikidopolitics," in which you honor others' beliefs asyou would your own, whether you agreewith them or not. you don't fightwith an opponent, you dance with a partner. and you are committedto process, not outcome, in the conviction thatfrom a good process will emerge in a betteroutcome than anybody
had in mind in the first place. and then yourresponsibility is to ensure that whoever needsto take credit for the outcome will do so,whether they deserve it or not. it's like the tao te chingremarks about water-- that that which is ofall things most yielding can overcome that which is mosthard is a fact known by all but used by none. being substanceless,it can enter in even
where there are no cracks. all right, there'sa question up top. did i see one? hi. a couple of timeson the media-- this is going to be adetailed question-- i've heard representatives fromvarious power-generation companies make the argumentthat rooftop photovoltaics are actually unfair to people whodon't do that because everybody
has to use the sameinfrastructure, and these people are payingless in their utility bills and therefore less forthe infrastructure. and therefore everybodyelse has to pay more. why doesn't the media say,yes, but if we have more locally generatedenergy you don't need as much infrastructure? mmm. i wonder if they would applythe same argument if i buy
a more efficient refrigerator. it's-- you know, photovoltaicsare a negative load. it's kind of the same story. so i should pay morefor my refrigerator, just because otherpeople have to pay. so there are difficultieswith the argument, and the so-called costtransfer is often exaggerated, sometimes by counting all ofthe solar-generated electricity, even though rather littleof it is typically sold back
to the grid from your house. most of it youjust use, yourself, and it counts likea negative load. but there is a germ oftruth in the argument, namely that netmetering-- which i've benefited from in colorado,before it was law-- does break at scale. so if you are going to go toa very large scale, enormously larger than net meteringtoday-- so it might actually
become an issue worthtalking about-- then you probably want adifferent tariff structure. and we're actuallyhelping a muni in colorado think this one through,in fort collins. the idea would be abidirectional value tariff where the utilityand the customers pay each other the fair valueof the services they exchange. because if you're makingphotovoltaic energy, you're not justmaking kilowatt hours.
you're providingon-peak capacity-- very reliable on-peak capacity. you're providinglocal resilience. you could provide a mixtureof real and reactive power. you are helping unloaddistribution transformers so they last longer. you're helping with betterdistribution, circuit management, andfault management. you can provide fastregulation, which
is a very valuable service,for frequency and voltage stability. there's a whole hostof ancillary services you're providing that havean ascertainable value. and our e-lab, electricityinnovation lab, has put out a nicereport on that that's, like all its reports, openon our website, rmi.org. well, it turns out inthe more detailed studies that these servicesback to the system--
you're not justusing the system, you're helping thesystem-- are often worth more than the whole costof the photovoltaic system. and there is thereforea benefit you're providing that ought tobe properly credited. and if the valueexchanged is properly compensated both ways,that scales up just fine. and it then displaces thecostly new or replacement infrastructure, as yousuggest, and provides better
service at lower costfor all customers and, if it's structured right,can enable the provider to make more profit and less risk. so i think that's avery good way forward. but we are stillat an early stage in this rapidlychanging industry of thinking throughtogether the new business and revenue and regulatorymodels-- grid integration, grid security.
those are the hard issues thatthe 40-odd leaders in e-lab are thinking through-- reallyinventing the next electricity industry. and it's also a safe placefor incumbents and insurgents to talk to each otherand create mutual value, rather than just lobbinggrenades in public. wouldn't it, um-- under that scenario,where there's so much benefit that thesolar panels offer
into the system-- a systemthat's owned by and run by the utility-- wouldn'tit make sense, then, for the utility tojust be throwing a bunch of solar on people'srooms and being a part of that? yep. i mean, look. if you're an incumbentand i'm an insurgent, and i'm running around puttingsolar on your customers' roofs and you think of it asa competitive threat,
well, let's see--what could you do? you could play ostrich. that's not a good strategy. just ignore it. or you could try,as some do here, to fight it or taxit or block it. that turns out to be not avery smart strategy either, because, among other things,it annoys the customers. so they're more likely todrop off later and think
bad thoughts about you. but there are several ways youcould actually create value from the insurgency. you could buy my companyand offer your product as your branded offering. you could be a financier. you don't have to make moneyby building big power plants. you can make money as a bankerand probably at less risk, and it has some nice features.
you could be an integratorof all technically qualified offerings. you could do othercoopetition models with me and with othervendors in competition. there's a lot of ways tocreate mutual value, here. and the smartest utilitiesare figuring that out. where are those smart utilities? well, i've been-- not to givetoo much away-- i've been meeting with several of them.
i met with thechair and ceo of one just a few daysago, in the midwest. there are some very interestingthings going on in san diego. i was wondering. the fort collins municipalutility-- little one-- is doing some very nice work. so is the austin muni. there are a lot of smartpeople in big and small shareholder-owned utilitiestrying to think this through.
and they need all thehelp they can get. it's not easy. no, it's complicated. the one parallel thati see is if we all go to electric vehicles,then we're not buying gas, therefore we're not payingthe federal gas tax. therefore our roadsaren't being-- you know, the road repair'snot being funded. have you guys walkedthrough that one at all?
well, you know, which is whywashington state and colorado have just put a small, like,$50-a-year tax on electric cars as their contributionto highway upkeep. but i think this is notjust an electric car thing. as your car gets moreefficient, you're paying less gasoline tax. or if you switch to a nontaxablefuel like hydrogen for a fuel cell-- which you canmake yourself-- you know, bootleg in your garageout of natural gas
or propane or electricity--who's going to know? then you're dropping out ofthe gasoline-tax payment. the sensible way to do thatshowed up in my graph earlier. it went by a bit fast. but that's to chargedrivers for the road infrastructure they use-- you said "by miles." --by the mile,not by the gallon. and that also overcomesanother awkward problem
that about a third of americansare too old, young, poor, or infirm to drive,but they end up paying the socializedcosts of the drivers. and i think it makesmore sense for drivers to get what they pay forand pay for what they get. so, if you imaginea coalition of, let's say, aarp andpoverty advocates and disabled advocates andyouth advocates saying, why are we paying for drivers'costs, when we don't drive,
that would be politicallypretty potent, especially in this state. it would be. you have a question over here. yes. and we just have timefor one more question, and then we'll have ourreception and book-signing. all right, lauren--keeping us in line. sorry.
we got-- you've beenup there a long time, so why don't you go ahead and-- i was just wondering. you know that plasticthing you had? i was wondering why automanufacturers haven't adapted it. it's not plastic. or-- well, it sort of is plastic.
is it? it's thermoplasticplus carbon fiber. and carbon fiberis made of propane, but it could be made ofcarbohydrates, if you prefer. molecules is molecules. got it. i'm [inaudible]. but, to his question, whyisn't that being used more? well, i mentioned the firsttwo carbon-fiber production
cars are in productionin germany now. actually, there'ssome others that are kind of street-licensedformula one like mclaren. and there are carbon-fiber partscreeping into lots of cars, for lots of reasons. but, in fairness,there were both technical and economicobstacles to widespread use of that material. and there are 17 competingproduction processes.
i just mentioned one ithink is particularly good. but i used tochair that company, so i know something about it. is that brightsource? no, that was fiberforge. but that technology has now beensold to diefenbacher, a leading german [inaudible] one. so that's going tothe supply chain. there are still areaswhere maturation is needed.
but it's not so muchin the manufacturing anymore as in thingslike learning the best techniques forsimulating crash behavior and having to change theinternal process for how you design and build a car. you have to reorganizethe whole company, and it's quite awrenching cultural change. and it's particularlyhard because this industry historically counted costby the part or by the pound,
but you buy it by the car,so it was harder for them to see it's ok to spendmore on the body in black in order to pay less on thepower train and assembly and so on, and it comesout about the same. and they also hada very bad habit of treating sunk costsas unamortized assets and making strategic decisionsbased on accounting, not economics. as if it were better to writeoff obsolete stuff later,
when you don't have a company,then now, when you do. so they just had to writeoff a huge amount of stuff. that was very painful, and thatbankruptcy or near-bankruptcy does concentrate themind wonderfully. so now there's a new setof leaders in detroit who think rather differently. i was going to go for one more,but he-- oh, there you are. let's just-- one more question. thank you, peter.
and thank you, mr. lovins. my name's kevinkelleher, and i'm a student at asu in supply chainmanagement and sustainability and cofounded astudents sustainability consulting group. and on behalf ofstudents and anyone else here who's seeking tohelp fight the good fight that your organizationdoes, i've followed your work for awhile,and i really appreciate it.
and the informationabout what china's doing is really inspiring, butit's also really frustrating. that might be the biggestunderstatement of the year, from an american perspective,in how ineffective our government is and howhard it is to make advancement in this area. so do we go to theprivate sector? and, if so, where do we go? organizations like tesla?
i don't think you're going tohire all of us at rmi, right? probably not. we're only about 100 people. well, i would suggestyou brighten the corner where you are. and there are very excitingthings going on, here at asu, which i trust youare fully involved in. but if we all put ourshoulder to that wheel, we can do something uniqueand remarkable here.
and it is already gettinginto the superlatives column among universities inamerica and in the world. and i think that's a wonderfulplace to focus your efforts. you don't need to solve thewhole country's problems right now. you know, asu today,and america tomorrow, and the world next week. we'll take it ina piece at a time. just one little thing.
so you've got folks thinkingfederal government-- bleah-- not working fast,and all that stuff. one, you've got thedepartment of defense, which is a huge part ofour federal government, doing a lot. and then you've gotgovernors doing some more, and then you've gotmayors doing a lot. can you talk to that? this is a prettydecentralized country.
federal energy policy isimportant in a few areas like ferc's interstateregulation-- a few other areas. but really, most ofour energy decisions that really matterto what happens are in a state and local level. and that is the realm, indeed,of mayors, city councils, county commissioners,public-utility commissions. and it's messy local politics. but also, don't thinkit's all about government.
most of what reallyhappens in our society is through the interplayof private enterprise with civil society. and at rmi, when hunterand i set that up, in '82, we thought through whatwas going to happen and figured we wouldbe wise not to have a presence inwashington, not to lobby, not to litigate,but to work chiefly with business, because wewanted to get stuff done.
and that has workedout very well. that's a greatnote to end it on. everybody, let's giveamory lovins a hand. of sustainability foreducational and noncommercial use only.
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