could do a lot more a lot faster with soft technologies than we used to think we could. . . . • • Now I do not think you will find any Uepirtment of Energy publication which compares the capi_tal int~nsity of all the alternatives-including soft technolog1es-w1th each other. They like to play a little shell game with the costs. The way it works is that they take things they like to build, like different kinds of power stations and synthetic fuel plants, and compare their costs with each other. Then when it comes to the things they have not historically been so excited about, like conservation and solar, they will compare those costs not with the competing hard technotogies, but instead with t~e historically cheap (and heavily subsidized) oil and gas which we are running out of, and wh1ch all of these things are therefore meant to replace. So the Department says oil costs us, depending on wryere it comes from, say $10 or $_20 a b~;rel- $20 to $25 for imports, and we will therefore reJect as uneconomic" the more expensive kinds of soft technologysome kinds of biomass fuels and solar heat which might coµie in at $20 to $25 a barrel-because they might cost more than the oil. But at the same time, we are asked to put zillions of dollars,of your money into subsidies for synthetic fuels at • $30 to $60 a barrel, or nuclear electricity at $100 a barrel. · That is just nuts, or more formally, that leads to a misalloca- , tion. ! . by lower economic growth. Through a variety of energy saving techniques, businesses and consumers saved an equivalent of 3.8 million barrels per day of additional supply in 1978 - compared to the 1.45 million barrels per'day equivalent actual increase in:energy supply. In pther words, efficiency improvements contributed 2½ times as much to economic growth as did expanded oil imports, nuclear power and coal production combined. Without these improvements, oil imports would have grown 3 times as fast as they did Clearly, what we ought to be doing is to compare all our investments with each other, not some with each other and some with the cheap oil and gas. And when we do tha,t, W$! find that the cheapest things to do are the efficiency improvements, then the soft technologies, then, quite a way after that, the synthetic fuels, and worst of all the central electric systems. Our national energy policy has, of course, taken it in reverse order-worst buys fir.st. We are now in Phase Two: we hav~ gone from power stations to synthetics_. We have not yet discovered•the relatively cheap ways to do 1t. (including rate structure reform) and 4) fuel switching (using gas surpluses for conversions away from oil). In addition to lower overall energy use by 1985, this plan would avoid costly subsidies and environmental impacts caused by synfuel development, investments in • breeder reactors and fusion devices, forced industrial conversions to coal and forced setting of thermostats. For those interested in current national energy policy questions there could not be a more timely piece of reading. Send one to your congressn:ian. ENERGY CONSUMPTION TRENDS: BY ENERGY TYPE perspective from which it makes its assumptions. A "least cost" strategy simply means the 'performance of required energy services at minimum cost to consumers. As energy policy it implies the operation of a fairly traditional market system which allows for a diversity of competitive technologies to compete against each other. Sound like business as usual? No, says author Roger Sant, the United States through its energy policies has tended to treat energy as a diminishing domestic commodity, rather than trying to unleash new competitive forces and multiply consumer chbices. Had energy supply ,and equipment been structured to minimize consumer costs over the last 10 to 15 years, the per capita cost for the same amount of energy services in 1978 could have been reduced by 1 7 percent. In addition, this situation would hav,e involved a significantly different mix of energy sources, with the overall shares of oil, coal (non-electric) and purchased electricity reduced by 28, 34 and 43 percent respectively. Efficiency technologies, on the other hand, would have captured 22 percent more (or nearly one-third) of the energy service market. What prevepted this were things like heavy government R&D focused on increasing utility-supplied electricity, • forced industrial conversion to coal, and lack of government attention focused NEP II (approx.) PRESENT .THE .' 91.7 TRENDS EASY PATH 81.9 77.5 2.9 21.3 75.9 NUCLEAR 1.6 3.0 17.9 3.2 HYDRO 14.0 18.3 COAL 19.8 22.0 17.8 20..0 GAS 37.8. 38.7 38.1 32.8 OIL 1978 ·1995 PROJECTIONS PRIMARY ENERGY PRODUCTl,ON (Quads per year) between 197 ~ and 1978. Interestingly, 61 percent of increased efficiency came from industrial refinements, 22 percent from higher motor vehicle mileage and 17 percent from improved residential and commercial heating and appliances. The Easy Path Plan proposes that this trend be accelerated by selected legislative action in four areas: 1) motor ' vehicle efficiency, 2) building heating efficiency, 3) electric usage efficiency The Least-Cost Energy Strategy, Minimizing co·nsumer Costs Through Competition, Roger W. Sant, 1979, 50 pp.,, from: The Energy Productivity Center Mellon Institute Arlington, VA A variation on the efficiency theme, The Least Cost Energy Strategy is most fascinating because of the economic on reducing oil consumption in the building sector - as opposed to transportation and industry. Not surprisingly Sant is down on ~nergy price controls - but, in part, because they put new options, such as solar hot water heating, and efficiency applications from cogeneration to storm windows, at a competitive disadvantage. In fact, he says, those opting for a clean enviornment and the soft energy path should find that the "least cost" approach serves their interests well. An interesting argument. I'll have to think about it. ■ November 1979 RAIN Page 7
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