Amory Lovins and Energy Conservation

There are not many people who can marshall facts and arguments better than physics — trained, Amory Lovins, the Director of the Rocky Mountain Institute in Old Snowmass, Colorado. His specialty for the past fifteen years has been energy and his target — the massive waste of energy in this country.

You do not see Lovins very often on national television and he is not quoted much in the newspapers anymore. His impact is contained in the tightly reasoned articles and books he has written which have made their way into a policy called “least-cost energy.” (LCE)

LCE has now been adopted by some electric utility companies and the National Association of Regulatory Utility Commissioners. It means that the generation of electricity should be guided by the least cost options including investing in conservation rather than in building new generating plants. A megawatt of electricity saved is a megawatt of electricity that does not have to be produced.

Why profit making companies have to discover at this late date the least cost approach reflects the upside world of utility cost-plus rate-making. For example, traditional government rate-policy permits utilities to give volume discounts for bigger buyers of electricity thereby encouraging waste. Also, such rate-making lets utilities increase profits whenever more electricity is sold and decrease profits whenever less electricity is sold, according to Lovins. The more utilities spent on building new facilities, the more they make from their larger rate base.

Consider what creating requirements or incentives for reducing energy consumption through efficiency can mean. Since 1973, the U.S. has saved about $150 billion a year on the annual U.S. energy bill through such efficiencies as fuel savings regulations for cars and tighter private standards for industrial, commercial and residential buildings.

Lovins contends the U.S. has lots of waste left to get out of energy use. “If we were now as efficient as our competitors in Europe and Japan, we would save an additional roughly $200 billion a year. And they are no where near as efficient as is economically optimal. If in fact we went further and simply bought the best buys — if we pursued a comprehensive least-cost energy strategy for the rest of the century, we could get there with cumulative net savings of several trillion of today’s dollars, “he told a recent conference of utility regulators.

Lovins spends a good deal of time instructing executives from the electricity business about how they can stabilize their profits and advance the national interest by investing in conservation instead of giant atomic power plants. No one, to my knowledge, has been able to refute his jolting contention that not finishing a nuclear plant that is 99 percent complete is economically more efficient for the electric consumers than completing the facility.

He points out the madness of tax and other energy policies which subsidize the production of electricity at 50 times more than is energy efficiency. He argues for faster adoption of new electrical lighting products and devices now available that, if widely used, could contribute to a 14-fold savings on electricity and hardware used for lights.

So against this background of opportunity and technical innovation, what has the Reagan government done for eight years? Pushed subsidies for atomic power, lowered safety standards for atomic power, almost shutdown the energy conservation and solar power divisions in the Department of Energy, revoked energy efficiency requirements for federal government buildings and until last year opposed passage of legislation setting energy efficiency standards for household appliances.

To top it all, Mr. Reagan has exempted General Motors and Ford from the 27.5 miles per gallon standard for their car fleets for five years. He has also refused to propose higher vehicle fuel efficiencies in the future, despite ever higher oil import levels (40% of domestic consumption) than the level prevailing during the oil embargo of 1973.

The faster George Bush forgets the Reagan years of corporatism and do-nothingism, the better he will be for the American people.