In a career spanning more than 50 years in the energy industry, Amory Lovins has authored more than twenty books on the subject and co-founded an influential think tank that has considerably influenced our thinking on energy today.
For his work, Lovins has been showered with numerous awards and accolades.
But he is not done yet.
The topic that most occupies Lovins thinking nowadays is energy efficiency. “Principally, I am talking about using our energy resources productively,” he explains. In his 2011 book - Reinventing Fire - Lovins made a case for energy transformation in society using business- and market-driven techniques. While the book touched upon energy efficiency, it did not present a substantive case for its use in designing energy policy.
Recently he updated the case by authoring a paper on the topic that provided proof of its utility through numbers. “It is really the second shoe dropping,” says Lovins. “Now we have empirical evidence (about the utility of energy efficiency).”
“Most people imagine energy to be a dwindling and decreasing cost resource when, in fact, it is an expanding and increasing cost resource, if you do it right,” he explains. Energy efficiency becomes cheaper if you forgo fancy widgets and combine existing technologies in an effective sequence, he says.
An Integrative Design Home
Lovins’ Colorado home, which was the subject of extensive press coverage, is an example. The home was built on 6,000 year old Chinese architecture principles in 1982 and is situated 8,000 feet above sea level. It has no heating systems and Lovins runs a banana farm on solar at that altitude. “We paid to get rid of them (heating systems),” he laughs.
The home relies on walls that are twice as thick as regular ones to get through cold Colorado winters. “If we would’ve optimized insulation, then we would’ve have had to add more of it in the coming years. We optimized the house instead and added more of the insulation in the beginning,” he explains.
Windows are equipped with microscopically thin layers of gases, such as krypton and xenon, to let in light and prevent heat from getting out. Modern technology has been incorporated in order to cut down on consumption and save on electricity. For example, an Asko dishwasher installed in the house has sensors to stop washing, if the water coming out of it is clean.
“Integrative Design” is Lovins chosen term for the design choices made while furnishing and building the house. In this approach, energy efficiency systems are considered holistically, instead of as piecemeal additions to existing equipments.
The design system does not require new technology, says Lovins. “We can raise the bar on energy efficiency not by inventing better technology. All of that (better technology) existed more than a decade ago. Instead we combine the existing technology in a better sequence,” he explains. Of course, the new approach requires a rethinking of the entire concept of measuring energy efficiency from a component level, rather than a systemic level. The BMW i3, Lovins’ vehicle of choice, is an example of the “brilliant simplification” that can result when energy efficiency choices are made at the component level.
While it is attractive, integrative design is also expensive. At standard prices approaching $45,000, the BMW i3 is not exactly a mass-market car. Ditto for Asko dishwashers, which can cost upwards of $2,000. Most homeowners also cannot afford the bells and whistles of high-tech gadgetry and thick insulation to protect themselves from harsh winters. The concept of using energy efficiency to drive less electricity consumption has also come for criticism by economists, who claim that it increases electricity consumption instead of reducing it. Â Â
Market-based incentives for Energy Policy
Market-based incentives can help nudge manufacturers and consumers away from carbon-intensive methods to more energy-efficient ones. Lovins discussed them in a recent op-ed for the New York Times. During our conversation, he remarked on two such interventions.
The first one is a feebate. Lovins’ nonprofit - The Rocky Mountain Institute - has conducted extensive research into the design and implementation of feebates over the years. In its simplest form, a feebate consists of a fee or a rebate that may apply depending on whether a customer chooses to adopt a certain energy efficient method over another.
A benchmark energy efficiency figure, established by the government, makes the determination regarding whether a fee or a rebate is applicable. The feebate will influence but not determine a customer’s choice. For example, a customer can choose to go with competing models from the same or different car manufacturer. One of them may be energy efficient and earn a rebate  while the other may be less energy-efficient and have a fee applicable to its overall cost.
“In choosing how efficient to go within that class (of vehicle), you are applying a societal discount rate,” says Lovins. “You are taking a long view of cost and benefits to society over 15 years.”
Political consensus for feebates can be achieved by making the feebate mechanism self-funding. Essentially, the fees would fund rebates for customers who choose energy efficiency. Six countries around the world have already adopted some form of feebates to encourage the shift towards energy efficiency, with Norway being the most prominent example. Within the United States, Lovins suggests starting regional in markets like California. “Others will follow,” he says.
Lovins is also in favor of carbon taxes. But they should be accompanied by “systematic barrier busting” of the existing process, he says. By that he means that incentives for carbon pricing should be distributed across the board and information gaps (within the existing market for pricing carbon) should be plugged. “Getting the price right is important but not sufficient,” says Lovins.
A Case Against Nuclear
For the most part, Lovins is enthusiastic about technology developments, such as storage and blockchain, occurring in the energy sector. But he is not in favor of small modular nuclear reactors, which some say will reinvent the industry. “There is no business case for them,” he declares, adding that such reactors “will come to nought.” He cites a 2018 study which calculated that unsubsidized nuclear reactors will produce electricity at twice the cost of existing ones, which, in turn, is three to six times that of renewable energy. One could argue that increased commercial production and integration into the grid could make small nuclear reactors cheaper.
But Lovins contests that claim. “By the time small modular reactors (if successful) could begin mass-production, their carbon-free rivals would get another two times cheaper, based on observed learning curves (which nuclear power has never demonstrated),” he says, adding that small modular reactors are decades behind small modular renewables, which scale well. “So nuclear can never catch up,” he says.
There is also the subsidy case against nuclear, argues Lovins.”If the nuclear one-third of the prohibitive capital cost of today’s reactors were free, the non-nuclear two-thirds would still be two to six times out of the money,” he says.
According to Lovins, owners of distressed nuclear plants are going state-by-state and “carving” out a market for their product through subsidies. “If you shut down those reactors, you could save on opportunity costs and buy carbon and efficiency,” he says.
An International Outlook
The energy sector has come a long way since 1972, when Lovins started his stint there. Back then, he was an Oxford grad student who could not pursue a doctorate in energy policy because there was no such subject at the University. Of course, now energy policy is integral to the study and understanding of energy markets. Rhetoric and conversations about climate change have taken on an increased urgency. Efficiency and renewable energy have become an important part of the energy equation while coal plants, once the dominant source of energy for grids, are on their way out. Â
The Rocky Mountain Institute is studying application of new technologies, such as blockchain, to the industry and it has expanded operations across multiple continents. According to Lovins, a majority of its operations are international and span 15 to 20 languages. “Some lessons (in the energy sector) are universal and some are local,” says Lovins and adds that each division learns from another.