Academic journal article Journal of International Affairs

Energy Surprises for the 21st Century

Academic journal article Journal of International Affairs

Energy Surprises for the 21st Century

Article excerpt

Twenty-three years ago Amory Lovins was heavily criticized as wildly optimistic for predicting that energy efficiency would play a major role in shifting United States energy use patterns, thus reducing overall consumption far below official forecasts.(1) He argued that energy would shift in more economically and environmentally benign directions, while energy intensity (primary energy consumed per real dollar of gross domestic product [GDP]) would markedly decrease without threatening continued economic growth.

Today, total U.S. energy use is slightly below the level suggested in Lovins' 1976 "soft energy path"(2) graph (see Figure 1), and in all but five of the intervening years the amount of energy consumed per dollar of GDP has fallen--for a total drop of more than 35 percent since 1973. Renewable energy sources are only now regaining momentum after a decade of federal hostility exemplified by reductions of more than 90 percent in research and development budgets and suppression of public information.(3) Improvements in technology and integrated whole-systems design techniques, as well as greater attention resulting from competitive pressures, are increasing the potential for a "third wave"(4) of energy efficiency, reversing the period of stagnation from 1986 to 1996.

[Figure 1 ILLUSTRATION OMITTED]

In addition to such oft-discussed trends as fuel price deregulation, electricity restructuring--and, in many countries, privatization of state-owned industries--other less-recognized forces of change are afoot. This article provides an overview of some of the issues and innovations that are likely to alter the global energy sector in the early 21st century From superefficient energy use to the emergence of hydrogen as a viable energy carrier, from climate concerns to security dilemmas, the relationships between these important concepts and the energy industries are as intricate as they are full of potential to promote growth, profits and opportunity

ENERGY EFFICIENCY AND ELECTRICITY RESTRUCTURING

Historically, energy resource discussions have focused on supply. But people don't want barrels of oil or kilowatt-hours of electricity per se; they want the services that energy ultimately provides, such as hot showers, cold beer, comfortable buildings, light, torque and mobility Focusing on these desired services, delivered by the end-use application of energy, allows consideration of a broader range of options than simply the energy supplied by the local grid or pipeline. Considered from the demand as well as supply side of the equation, what is the cheapest, cleanest way to deliver each of these services? Often the better, more cost-effective way is using less energy more productively, with smarter technologies. Efficient end-use can thus compete with new supply as an energy resource.

Today harnessing market forces and using widely demonstrated synergistic design, technology and management techniques can deliver the high quality of life available in Western economies at much lower financial and environmental cost. Industry surveys of utility-directed "demand side management" efforts to save electricity show saved watts--or "negawatts"--typically costing in the range of 0.5 to 2.5 cents per saved kilowatt-hour, with well-run industrial and commercial programs usually falling toward the low end of that range.(5) While scores of specific market and regulatory barriers prevent fuller realization of efficiency's potential, clever firms are finding ways to turn these obstacles into business opportunities.(6) They would be able to do so far faster and more thoroughly if simple, high-leverage reforms in public policy rewarded least-cost results, such as rewarding electric distribution utilities for minimizing the cost of energy services rather the price of kilowatt-hours.(7)

In the short run, the restructuring of segments of the U.S. electricity sector could unfortunately shift the focus away from efficient outcomes and back toward the sale of bulk electricity as a cheap commodity. …

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