Breakthrough: Now, to Refine the Energy Solution.

by Helen Aki, Breakthrough Generation Fellow

There's a simple relationship between energy and civilization: more energy means more activity, growth, and prosperity. The defining challenge of our era is to think responsibly about how we use energy, as we strive to meet the demands of developing nations, struggle with a failing economy, and mitigate climate change.

Part of the problem is that we've taken energy for granted. Energy fuels everything we do. But we've outgrown our youthful years of abundant oil, as a nation and as a planet. Richard Smalley estimated in 2004 that if the world population were to stabilize at 10 billion people, they would demand 60 terawatts of energy in order to live prosperous, secure lives--more than four times what we currently use. At the same time, the oil that drove America's progress is becoming less and less viable as an energy source. It is becoming increasingly clear that the most sophisticated and effective option is not to simply throw more energy, any energy, at the problem(s). So what now?

1. The economic problem

The price of crude oil has fallen 18% since its $147.27 high in July, and Americans have driven 4% less this year than last year, causing some to (dubiously) link high oil prices to lower demand. But lower gas prices don't necessarily signify a reprieve: economically, socially or politically. Since demand for oil is inelastic, its decrease implies that overall economic activity has slowed. As Colin Barr wrote for Fortune magazine on Monday, "falling oil prices also suggest that the recession the U.S. has so far avoided is well on its way." Instead of real rejuvenation, these accounts of America's constrained access to oil bear a closer resemblance to what happens if you cut off a person's air supply: they first protest, then grow acquiescent and sluggish, and finally slump to the ground.

Witnessing this desperate struggle, both Presidential candidates look to American petroleum reserves, reasoning that even if modestly expanding domestic oil production won't really reduce at-the-pump prices, it will tide us over until we find something that will. To oppose drilling is to place limits on the American economy, a politically tenuous proposition. As Lawrence Kudlow writes,

The public is putting aside global warming and choosing instead new-energy production, a stronger economy, and more job creation. Voters want growth, not austerity. They want Ronald Reagan, not Thomas Malthus.

This sounds reasonable. Energy is the driving force of civilization. When there is more energy, there is more growth, more progress, more prosperity. Since oil equals energy, and we need all the energy we can get, then, drill away!

2. "New energy production," the old way

As renewable energy proponents, our argument goes something like this: Sure, drill for more oil, but doing so will just expand the liability of dependence on an energy source grown obsolete. While oil may be energy, not all energy is oil: what we need are clean, cheap sources of new, renewable energy, scaled to replace and out-pace fossil fuels, and flexible enough to meet the needs of our civilization.

Yet our justification for clean-energy deployment often sounds remarkably similar to the argument for offshore drilling: we need everything we can get. It makes sense. Between replacing fossil fuels and mitigating climate change, and the idea that we might need "eighteen wedges" of positive climate projects, the challenge is sufficiently intimidating for us to to fall back on demanding "everything we can get...(but probably not coal or oil, except maybe China can use coal)."

Not only do we need a plethora of sustainable new energy technologies, we also need to deploy ready-to-go, interim technologies, like nuclear power plants and carbon capture and storage, in order to rapidly wean us from coal and oil and propel us into a new century of energy use. Sound familiar? It's just a temporary fix, but it will save us from economic recession and social disruption in the short-term, while we figure out what to do with ourselves.

But "taking everything we can get" is neither the only nor the best option available to us.

3. Make every joule count

As a mature society, we need to start behaving as if every joule counts--not stingy, but smart. Streamlining the way we use energy may not be as exciting as simply finding lots more energy to use, but as the old adage goes, "A penny saved is a penny earned." Voters may prefer growth to austerity, but these are not mutually exclusive qualities. Call it "efficiency" instead of "austerity" if it sounds better, but if it's implemented in the right places, maximizing efficiency stimulates, not stifles, growth.

The Japanese understand this better than most. Efficient production means cheaper goods, and can provide an economic advantage. Taiichi Ohno (1912-1990), who created the Toyota production system, pioneered the use of a conceptual framework around the elimination of muda, the Japanese term for waste or purposelessness. At the time, Toyota was on the verge of bankruptcy, and couldn't afford to spend money on new equipment or large quantities of parts. Ohno understood that energy used to produce muda, rather than the end product, was detrimental to the functioning of a business. He set about removing muda from all aspects of production--not just from putting parts together, an accomplishment exemplified by the assembly line of the Ford Model T, but from all aspects. (For more about Ohno's philosophy, see my extended version of this post.)

The same rigorous inspection of all elements of production, with an understanding of the system as a whole, can be applied to society as a whole in order to maximize economic gains. However, it is important to strike a balance. Since so much energy goes into production, the greatest efficiency gains are achieved "downstream," e.g. at the consumer. This is why efficiency measures are so frequently construed as antithetical to economic growth, since simply "consuming less" obviously reduces energy demand, but also reduces economic activity.

I've grown up with such a "downstream savings" attitude, and personally, I think it's a good idea to generally "use less," but there's certainly less money to be made from doing so. The profitability comes in a little further upstream, from efficiency retrofits such as installing combined heat-and-power (CHP) on industrial factories, and other money-saving efficiency measures. These measures are far enough downstream that they demand vastly decreased energy inputs, but high enough upstream that they place no constraints on economic activity. The key here is strategy: the right measure in the right place can nurture growth. This is a much more sophisticated approach than sucking up all the oil we can find.

4. The future

Mitigating climate change, maintaining economic stability, and meeting the terawatt challenge (the capacity to generate 60 terawatts to sustain prosperity for a stable population of 10 billion): these are the problems that 21st-century America, and the world, must now confront. Depending on how you approach them, some attempts at solutions sound better than others. If you prioritize widespread energy availability, it might not make sense to break from coal and oil just yet. If climate change seems more urgent, then we should move away from fossil fuels at all costs. These overlapping but conflicting perspectives have mostly served to hinder progress.

What America needs to do is make the right choices. Increasing the supply of energy is only meaningful if we also improve how we use energy. Think of our path to the future as a river dotted with stepping stones: we've got to cross, but it will be much more effective if we take the right steps. Efficiency retrofits are part of improving the system. So are new high-voltage transmission lines for renewable electricity and an updated smart grid; electrifying personal transport and railroads; large-scale federal investments in research, development, demonstration and deployment of clean energy; internalizing the cost of carbon in the form of a cap and carbon credits; preparing the next generation for our energy future.

Over the past 10 weeks, we have been talking about and identifying a number of "next steps" to take. I think it's time we start taking them.

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