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Letter from Davos – Day Two
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Guest writer Mindy S. Lubber is President of Ceres and the Investor Network on Climate Risk

As the climate change conversations heat up here at Davos, the question was finally asked, "Why are we not ready to act on the central truth that energy conservation and energy efficiency are the cheapest, quickest, largest source of energy?? Or as David Gergen, Harvard professor and adviser to many U.S. presidents said, using Amory Lovins’ oft-used phrase, “Are we ready to address negawatts? The U.S. is the Saudi Arabia of negawatts.?

I am delighted that the message coming from Davos this year is loud and clear – that we must address climate change and energy security, that we must act now, and that voluntary efforts are woefully inadequate to the challenge we face and so there must be mandatory policy solutions.

Much of the talk here is about the role of new technological solutions. Leading venture capitalist John Doerr said today that green tech will be the greatest economic opportunity of the century. And there is ample discussion and debate about carbon taxes, gas taxes and limits on carbon pollution. This is all healthy and productive, but perhaps that foundation director hit the nail on the head – one of the simplest, lowest-cost, most easily implemented solutions is the distinctly un-sexy, old-fashioned notion of energy conservation. Rather than sit around waiting for all these promising new technologies such as wind farms, solar panels, geothermal energy and cellulosic bio-fuels to enter the mainstream, and all the complex policy discussions to sort themselves out (not to mention the tedious political processes needed to implement them), we can do a lot today by conserving energy. It’s a no-brainer.

As I recall, a recent McKinsey study suggested that, through energy
efficiency alone, we could reduce the worldwide growth rate of energy consumption by more than 50 percent over the next 15 years, and do it with existing, readily available technology. (Energy efficiency is a topic we've discussed frequently here on Worldchanging. To get a sense of the incremental power of seemingly small increases in efficiency, read this post. - Ed.)

A major step toward unleashing this progress in the U.S. would be federal action to encourage energy efficiency. PG&E, one the largest utilities in the nation, has energy efficiency programs in place that have already prevented 61 million tons of greenhouse gas emissions from entering the atmosphere and helped California obviate the need for some 24 new power plants, saving its customers billions of dollars in the process. Why, you might ask, would a utility company want to save customers billions of dollars it could be earning? Because under California law, its revenues are fixed by regulators. PG&E collects what it needs to run its business and provide a fair return to investors. Its financial health doesn't depend on selling more energy. The financial disincentives that otherwise stand in the way of encouraging customers to conserve are absent.

Aggressive energy efficiency standards and other programs are a big reason why per capita energy use in California has remained flat over the past 30 years, while the rest of nation has increased energy use by 50 percent. It's a reason why California is one of the only states in the U.S. that has reduced greenhouse emissions from its power plants since 1990, while overall emissions from the nation's 100 largest power companies jumped by 27 percent.

Given the California experience, I lament what is happening in Texas. And what we are hearing about Texas is about to happen in China and India. Texas' approach to energy is very different. The state is considering building 19 new power plants, 11 of them coal-fired power plants proposed by TXU that would cost an estimated $10 billion while more than doubling its annual greenhouse gas emissions. There's a better way to avoid meet Texas' growing energy demand while cutting consumer bills and helping the environment: energy savings.

A new report, prepared by Optimal Energy for NRDC/Ceres (my company), shows that by investing $11 billion in proven energy-saving programs used in other parts of the country, Texas would see $49 billion of economic benefits over 15 years – four dollars of economic benefit for every dollar invested. Altogether, the energy saving programs could reduce peak energy demand in Texas by more than 18,500 megawatts – equivalent to the output of 20 large power plants – over the next 15 years due to dramatic reductions in electricity use.

Sometimes the most obvious, the most doable and the most manageable solutions get short shrift. Here in Davos, people are beginning to talk about such a return to basics. This is the conversation we need to be having.

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Comments

Some excellent points here. I'm reminded of a recent conversation with a colleague about water efficiency in shower fittings. In Europe, showers have hot and cold knobs, just like the U.S., but they also have on/off knobs, so the correct temperature is maintained when you turn the shower on and off. So it becomes much more pleasant to turn off the water when you sud up, because when you turn it back on, it doesn't come back boiling or freezing.
I draw this analogy because it's a very simple mechanical difference that, if properly used, creates enormous efficiencies. I suspect there are a lot of these opportunities in electricity if we can figure out a way for business to profit from them instead of lose business. PG&E sounds like a great example.


Posted by: Lyle Solla-Yates on 26 Jan 07

Hi Lyle,

You can get a little switch at your local hardware store for less than $10. Saw it on the internet here: http://www.goodcommonsense.net/shsashva.html

You unscrew your shower head put that valve in between the head and the pipe and screw it back on. Takes no more than 5 minutes. From now on you can enjoy almost constant temperature after you lathered up too :-)

I am happily using it, Mark.


Posted by: Mark Finnern on 27 Jan 07

Dear Mindy Lubbers,

Perhaps you could report on discussion(s), if there have been any, in Davos this year that focus upon economic contraction and convergence. From what I am learning, the presenters this month and at recent annual meetings of the World Economic Forum appear to unilaterally and adamantly insist upon continuous, unbridled economic growth rather than "contraction and convergence" of the large-scale economic activities of gigantic business conglomerations.

As you are likely aware, economic contraction and convergence could present us with a viable way of responding ably to global challenges that loom ominously before humanity and, thereby, preserving the integrity of Earth and its ecosystems from being ruinously depleted, degraded and dissipated.

One such global challenge requires us to reduce large-scale CO2 emissions worldwide in a reality-oriented way, based upon the best available good scientific data.

Good and mounting scientific evidence indicates that the current scale and rate of growth of the seemingly endless expansion of economic globalization in a small, finite planetary home the size of Earth could be approaching the point of unsustainability.

I agree with you that we need to return to basics, which to me means remembering the way the world in which we live works and recalling the requirements of biological and physical reality to which species of the natural world are subject. Any assistance you can provide is appreciated.

Thank you,

Steve


Posted by: Steven Earl Salmony, Ph.D., M.P.A. on 29 Jan 07



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