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Small steps, big energy savings

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Not all of the potential solutions to climate change are futuristic, expensive or exotic. In fact, most Americans can find one of the most significant carbon-reducing innovations of the last 30 years standing in their kitchens, keeping the butter hard.

Refrigerators sold in the United States have grown 5% more energy efficient every year since 1975. Today they save 200 billion kilowatt-hours of electricity a year compared to what they'd use if they were still built to 30-year-old standards, or about a third of the annual output of all the nation's nuclear plants. Upgraded fridges have lowered electricity bills for consumers and avoided millions of tons of carbon that would otherwise have been emitted by power plants. Heating and air-conditioning systems also have grown more efficient, and fluorescent lightbulbs are a big step ahead of power-hungry incandescents.

Critics of government efforts to fend off global warming often complain that the economic costs aren't worth the gains -- better to adapt later to a warmer planet than suffer now by turning down the thermostat. This argument relies on a lot of dubious assumptions, starting with the notion that quality of life won't be significantly reduced in a world plagued by drought, wildfires, increased disease and famine, more powerful storms, mass species extinction and higher sea levels. It also assumes that the cost of cleaning up after all that will be less than the cost of preventing it from happening, which is quite a leap.

Nicholas Stern, former chief economist with the World Bank, estimates that failing to invest in cutting carbon would eventually cost up to 20% in lost income worldwide. The final report from the U.N.'s Intergovernmental Panel on Climate Change pointed out that adapting to global warming is a necessity because it's too late to stop the process, but that doesn't reduce the need to head off the worst effects.

Global-warming deniers are right about one thing: Phasing out fossil fuels will be expensive. But the most effective way of doing so not only doesn't add costs, it saves money and boosts economies. Energy efficiency is the fastest, safest and cheapest method currently available for cutting carbon emissions. It's also one of the least understood, because it involves a lot more than adding insulation to buildings or installing power-sipping air conditioners. To make really hefty efficiency gains, the U.S. must follow California's lead in restructuring incentives for utilities, and regulatory agencies should do much more to encourage important innovations such as cogeneration plants.

Killing the kilowatts

The United States is not the energy hog it once was. Efficiency gains are often measured in terms of "energy intensity," which is the amount of energy consumed per unit of gross domestic product. Since the energy crisis of the early 1970s, U.S. energy intensity has declined by an average of 2.1% a year. That's partly because of an economic shift, with a lot of factories closing or moving overseas. But mostly it's because of greater efficiency in areas such as appliances and building standards, as well as fuel economy standards for cars.

Still, the rest of the country has been very slow to embrace efficiency measures compared with California. Ours was the first state to implement efficiency standards for appliances and buildings, and it still has the toughest in the nation. California's zeal for creative energy policy hasn't always paid off for its residents; its disastrous experiment with deregulation in the late 1990s led to rolling blackouts and price gouging. But its efficiency measures have been a boon.

The typical American uses 12,000 kilowatt-hours of electricity a year, while the typical Californian uses less than 7,000. That's partly because of our mild climate and tough efficiency standards, but it's also partly because our pursuit of clean energy has made power very expensive in the Golden State: 11.6 cents a kilowatt-hour, compared to 5.2 cents in coal-crazy West Virginia. Yet even though Californians pay more per unit of power, because they use less of it, they pay lower power bills than residents of other states, averaging about $100 less per capita annually. Efficiency programs are estimated to have saved Californians $5.3 billion over the last decade.

The state has a variety of regulatory schemes encouraging utilities to conserve power and invest in efficiency, but the most important is a concept called "decoupling." In most states, the more power utilities sell, the more money they make, so they have no incentive to encourage conservation. In California, annual targets are set for utility revenues and electricity use. If more money than expected comes in from high sales, the excess is refunded to consumers; if there's a shortfall, the utility is allowed to charge more the following year. Decoupling has spread to a handful of states, but too few. The federal government should encourage more by requiring states to study the issue.

California is accelerating its efforts to wring more savings out of its utilities, and greater energy efficiency is expected to contribute 17% toward the state's goal of cutting its carbon emissions to 1990 levels by 2020. Yet even California sometimes takes a step backward -- or at least balks at an opportunity to advance.

Last month, Gov. Arnold Schwarzenegger vetoed three key bills that would have set tough efficiency standards for state buildings, new homes and large new commercial buildings. The bills ultimately would have saved money for property owners and helped the state meet its carbon-cutting goals, but they were designated "job killers" by the state Chamber of Commerce. Schwarzenegger has vetoed all but three of the chamber's 41 so-called job-killer bills during his tenure. If he's going to fulfill his environmental promises, at some point he's going to have to break the steel chain between his veto pen and the chamber.

At the federal level, legislation is pending that could dramatically lower carbon emissions and power use. Both houses of Congress have approved energy bills, but many of the best energy-efficiency measures were passed by only one house. So, for example, the Senate bill calls for the first boost in fuel economy standards in two decades, while the House version says nothing about vehicle mileage. The House bill, meanwhile, requires more energy-efficient lightbulbs and sets strong national targets for reducing power consumption in buildings, while the Senate's doesn't. The two chambers are now working to reconcile their bills, and the future of both the economy and the environment hinge on negotiators making the right choices on efficiency.

The power of hot air

One big plus of the House bill is the incentives it contains for a little-known technology called cogeneration. This is a method of using waste heat to generate power, and it has enormous potential.

Power plants, factories and refineries vent steam and hot gases through smokestacks. All that wasted heat is wasted energy. By putting a recovery device in the stack and using the steam to drive a turbine, one can generate electricity to send back into the factory or to the power grid. A 2005 Lawrence Berkeley National Laboratory study of 16 major industries found enough waste heat to generate 96,000 megawatts of power, which is nearly a fifth of nationwide electricity demand. Another method of cogeneration is to build a mini-plant, usually fueled by natural gas, to power large industrial or commercial properties; a single flame generates electricity and heats the buildings while cutting out transmission costs. Both methods dramatically reduce power consumption and thus emissions.

Cogeneration is attracting increasing notice, but it still faces high hurdles. Utilities see the entrepreneurs who build cogeneration plants as competitors and often structure their rates to nullify savings for companies that recycle power. Further, in some states it's illegal for anyone other than a utility to sell electricity. The House energy bill rightly improves access to the power grid for cogeneration facilities and sets up a loan fund to encourage recycled energy in public buildings, but more should be done, such as creation of an investment tax credit for cogeneration plants.

Undoubtedly there is a limit to conservation -- at some point, it will become prohibitively expensive to keep making refrigerators 5% more efficient every year -- but the amount of power that could still be saved using existing technologies is staggering. Lawrence Berkeley researcher Hashem Akbari estimates the savings from a simple fix like requiring white roofs, which would reflect sunlight and therefore lower cooling costs, at more than $1 billion a year nationwide.

Energy-efficiency guru Amory Lovins, co-founder of the Rocky Mountain Institute, has demonstrated the potential savings by making his own home near Denver a model. Lovins grows a crop of bananas in an atrium in his house, built in a climate where winter temperatures can fall past 40-below zero. The kicker: The house doesn't have a heating system. It doesn't need one, because it is so well insulated with coated windows and other innovations. Such houses, or some nearly as efficient, may be the wave of the future in California, where the state Public Utilities Commission last month approved a plan for all residential construction to be "zero net energy" by 2020. This means that, through a combination of super-insulation and renewable power sources such as solar panels, they will be independent of the power grid.

Fighting global warming doesn't have to derail the economy, or even slow it much. Some of the costs of the expensive fixes, such as developing renewable power, capturing carbon from coal-burning plants and refining better bio-fuels, can be offset by the savings from efficiency measures such as better insulation, tougher fuel economy standards and appliances that suck less power. The right combination of saving energy and investing in new forms will pay dividends for the world.

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