Wednesday, June 11, 2008

Amory Lovins and His Nuclear Illusion – Part Three (Energy Efficiency and “Negawatts”)

So far I have written two detailed posts on Amory Lovins’ and the Rocky Mountain Institute’s latest nuclear critique. My third post discusses energy efficiency and Amory Lovins’ coined term “negawatts.” There is this widely held belief that becoming more energy efficient means that we will consume less energy. At first glance, that notion seems correct but digging further, I found there’s much more to it. In the case of energy efficiency, RMI overlooks a fundamental effect of efficiency on the energy marketplace.

From RMI’s condensed version:

An even cheaper competitor [to new nuclear plants] is enduse efficiency (“negawatts”)—saving electricity by using it more efficiently or at smarter times.
There are several misperceptions about what energy efficiency really contributes. Here’s what Robert Bryce has to say in the Energy Tribune:
The final – and most important – area in which Lovins has been consistently wrong is his claim that efficiency lowers energy consumption. And when it comes to arguing the merits of energy efficiency, Lovins’s prime nemesis is a dead guy – William Stanley Jevons – a British economist who in 1865 determined that increased efficiency won’t cut energy use, it will raise it. “It is wholly a confusion of ideas to suppose that the economical use of fuels is equivalent to a diminished consumption. The very contrary is the truth.” And in the 142 years since Jevons put forth that thesis, now commonly known as the Jevons Paradox, he’s yet to be proven wrong.
The Jevons Paradox is explained further in The Bottomless Well:
First, efficiency seems to come, regardless - often far more efficiency than the most well-meaning regulators and policy pundits can foresee.

Second, when radically more efficient technologies do emerge, they are quickly embraced by paying customers without any need for government mandates - embraces not just to displace old ways of doing things, but to do all sorts of new things that previously hadn’t been done at all (pp. 106-107).

Two centuries ago, no engine could surpass 10 percent efficiency. By raising boiler temperatures and pressures, engineers pushed performance to about 20 percent efficiency by the turn of the twentieth century. By mid-century, they were up to about 40 percent. Today, the best thermal plants routinely hit 50 percent efficiency. Efficiency gains this large ought to have had a dramatic impact on supply and demand - and they did. The price of transportation and electricity fell steadily. And the total amount of fuel consumed in those sectors rose apace. Efficiency may curtail demand in the short term, for the specific task at hand. But its long-term impact is just the opposite. When steam-powered plants, jet turbines, car engines, light bulbs, electric motors, air conditioners, and computers were much less efficient than today, they also consumed much less energy. The more efficient they grew, the more of them we built, and the more we used them - and more the energy they consumed overall. Per unit of energy used, the US produces more than twice as much GDP today as it did in 1950 - and total energy consumption in the US has also risen three-fold (p. 111).

…efficiency fails to curb demand because it lets more people do more, and do it faster - and more/more/faster invariably swamps all the efficiency gains (p. 112).

It is only when we begin to focus on efficiency in the extraction of energy that the paradox of efficiency comes to seem less paradoxical…The better our energy-extracting technology, the cheaper the energy, and when goods get cheaper, we consume more of them. There’s nothing paradoxical at all about that proposition … Small wonder, then, that efficiency increases consumption. It makes what we ultimately consume cheaper, and lower price almost always increases consumption. To curb energy consumption, you have to lower efficiency, not raise it. But nobody, it seems, is in favor of that (p. 123)
Where’s the data to back up the Paradox?

Below is a chart that shows the electric intensity vs. electricity consumption per person for the U.S. The chart shows that the U.S. became more efficient with its electricity (electric intensity) starting in the 1970s but continued to consume more electricity per person. If efficiency supposedly curbs demand, then the chart should show the red line following the blue line after the 1970s (or at least some change in that direction). It does not.
RMI’s Rebuttal

RMI and Amory Lovins are well aware of the Jevons Paradox and the Energy Tribune article. They attempt to rebut the two by citing the improvements in refrigerators, the implementation of hybrids, and the reduced energy consumption per-capita in California and Vermont. The Paradox describes macro-level behavior. Micro-level data on refrigerators and hybrids do not refute it. For example, the energy savings from refrigerators could simply have gone to plasma-screen TVs, XBoxes, computers or other electrical equipment. The energy savings from hybrids could simply have gone to a new lawn-mower, boat or car.

The most significant point in RMI’s rebuttal may be the following:
According to RMI co-founder and Chief Scientist Amory Lovins, Vermont has reduced energy use per household in recent years. And California, he adds, "has held per-capita electricity use flat for 30 years -- saving 65 peak GW and more than $100 billion of power-system investment -- while per-capita real income rose 79 percent."
Proponents of energy efficiency often cite California as an example of what the rest of the nation could do to save energy (as evidenced above). A careful look at the data tells us otherwise. Here’s Max Schulz:
California’s proud claim to have kept per-capita energy consumption flat while growing its economy is less impressive than it seems. The state has some of the highest energy prices in the country—nearly twice the national average, a 2002 Milken Institute study found—largely because of regulations and government mandates to use expensive renewable sources of power. As a result, heavy manufacturing and other energy-intensive industries have been fleeing the Golden State in droves for lower-cost locales. Twenty years ago or so, you could count eight automobile factories in California; today, there’s just one, and it’s the same story with other industries, from chemicals to aerospace. Yet Californians still enjoy the fruits of those manufacturing industries—driving cars built in the Midwest and the South, importing chemicals and resins and paints and plastics produced elsewhere, and flying on jumbo jets manufactured in places like Everett, Washington. California can pretend to have controlled energy consumption, but it has just displaced it.
Conclusion

I agree with RMI that promoting energy efficiency is important and valuable. However, I disagree with RMI on where increased efficiency leads. It does not necessarily lead to decreased consumption. The Energy Tribune sums up this perspective very well when it says:
Efficiency is a wonderful by-product of human ingenuity. It is an essential part of America’s ever-evolving economy. It is part and parcel of the free-market economy working independently of government-mandated efficiency programs. It makes sense to wring more work out of each unit of energy. Energy efficiency conserves capital. It is good for the environment. It is good for rich and poor alike. Efficiency helps reduce the impact of energy price volatility and possible oil price hikes.

But when it comes down to brass tacks, energy efficiency doesn’t necessarily mean less energy use, it usually means more energy use. And that usually means more carbon dioxide emissions. Thus, the idea of “saving the climate for fun and profit” may be just a bit more complicated than Lovins claims.

25 comments:

Nick G said...

The lesson here is quite clear: if efficiency lowers the price of energy, then more will be used than would have been otherwise (although some of increases in consumption may be due to other things). On the other hand, if energy prices rise, then consumption is likely to fall, and the gains due to energy efficiency will go to reduced consumption.

Energy prices are extremely likely to continue rising, due to oil & gas supply problems, delays in coal supply increases, and the internalization of CO2 costs.

Therefore, any gains due to energy efficiency will indeed go to reduced consumption, and Jevon's doesn't apply.

That's not to say that negawatts are sufficient in themselves: we have a lot of new electrical demand coming, like charging plug-in hybrids, and heat pumps to replace oil & gas space heating. We'll be doing pretty well to keep consumption flat.

Anonymous said...

Keep in mind too that there will always be a component of existing capacity being taken out of service because of age, inefficiency, pollution controls, etc. Replacement capacity will have to come from somewhere. Add that in to the growing demand and negawatts alone likely won't be able to carry the load. You're then faced with the prospect of shortages and rationing which, at best, results in economic impact, at worst, costs lives.

Nick G said...

There are two more problems with the Jevon's argument:

First, there's been lots of research into it, and the effect isn't that large, especially in developed economies: if you double efficiency and reduce prices (and therefore reduce consumption by 50%, ceterus paribus), the Jevon's effect is likely to increase consumption by only about 30%, leaving you at 65% of original consumption.

2nd, and more important, effective additional supply from efficiency has the same effect as additional supply from nuclear, wind or other sources: all else being equal, prices will fall, and consumption will go up a little. So, the Jevon's argument is really an argument against doing anything at all about energy supplies.

In reality, of course, additional low-CO2 energy supplies are clearly a good thing, whether they come from efficiency or other sources. It's just that efficiency is so fast, so cheap, and so low-CO2 compared to everything else, that clearly it should get center place. On the other hand, we'll clearly need other things as well - efficiency doesn't eliminate the need for new power sources, especially when we need to phase out coal.

I would suggest that nuclear advocates would do well to stick to explaining what they know best, which is the benefits of nuclear power. Criticizing other sources of power (such as "negawatts"), will just end up hurting their credibility.

David Bradish said...

NickG,

Where's the criticism? I said efficiency is a good thing.

Nick G said...

"Where's the criticism? I said efficiency is a good thing."

Yes, but then you went on to say:
"However, I disagree with RMI on where increased efficiency leads. It does not necessarily lead to decreased consumption."

You're disagreeing with Lovins - in other words, you're criticizing his argument.

Your disagreement implies that efficiency isn't, in effect, a useful form of energy supply. I think I showed the problems with that line of argument.
____________________

I've always been puzzled by the use of a Jevon's Paradox argument - it really seems to imply that we should forswear energy production and consumption altogether, and go back to a romantic primitivist lifestyle. I don't think it's really something a nuclear advocate wants to hang their hat on.

Nick G said...

David, let me elaborate.

I think what you really meant to say was that efficiency isn't sufficient. I think we'd all agree.

On the question of how best to advocate for nuclear power: I think sensible people (which, occasional appearances to the contrary, is almost everybody) are eager for safe, cost-effective, low-CO2 sources of power. If good arguments can be made that nuclear fits that bill, nuclear will be in demand. I think there's no need to criticize alternatives, no matter how tempting it may be.

If you reflect on how spurious criticisms of nuclear make you feel about their authors, I think you'll see my point.

Ultimately, we need the best information we can get about our energy choices - I think we'll get that by concentrating on explaining what we know best.

Joseph Somsel said...

A valuable debunking of negawatts and its failure to account for human behavior in the real world.

Here's my critique of the negawatt concept:

http://www.energypulse.net/centers/article/article_display.cfm?a_id=488

Basically, when used in energy planning and policymaking, it violates fundamental accounting principles like balancing credit and debit and becomes a "blank check."

Enron used the negawatt concept to fleece the California ratepayers out of millions of dollars during the 2001 electricity crisis.

Anonymous said...

Everyone here is missing a major point, which is that consumption is not strongly tied to impacts on the environment and public health. The characteristics of the technology are the most important issue.

An automobile with a functioning catalytic converter will put out 100 times less pollution than one without (except CO2).

Under a sustainable fuel cycle, one would need about 5 nuclear plants to equal the CO2 emissions of a single coal plant.

When we argue about efficiency, we are arguing about a few percent to a factor of a few. This is a very small lever compared to the lever that can be provided by improved technology.

The large improvement in air quality in California cities is due mainly to the technological change to use catalytic converters in automobiles.

The big issue with reducing CO2 is to make the transition to energy sources which do not emit carbon dioxide, and that will likely involve mainly nuclear energy.

Matthew B said...

Nick, when you said:

I think what you really meant to say was that efficiency isn't sufficient. I think we'd all agree.

That's the key here, Amory Lovins and RMI don't agree. They argue that efficiency alone is enough.

They argue nuclear is unnecessary, and that negawatts can do the job instead.

Nick G said...

Matthew B,

When I said "we", I meant the participants to this conversation on NEI.

I think that 1) in the context of a climate-emergency, we need all of the low-CO2 power we can get; 2) There's a limit to how quickly we can ramp up any one source, no matter how good it is, so 3) coal will be around for at least 30 years; 4) until we replace all coal, it's the swing source for marginal demand, so 5) we need all low-CO2 sources, including nuclear.

I think that's the best argument for nuclear, and I think people will accept it if they are convinced that nuclear is reasonably safe, low-CO2, and cost-effective. Showing that those things are true (or reasonably can be expected to be true with proper public policy) is, I think, the important task for advocates for nuclear power.

Anonymous said "consumption is not strongly tied to impacts on the environment and public health."

Consumption is directly proportional to impacts, and fast, cheap, and highly effective. Which makes more sense: $2-6/watt for new generation, or 3-20 cents per negawatt ($2 for a bulb which reduces consumption by 70 watts, for a CFL, and $100 for a more efficent A/C which saves 500 watts)?

Joseph, that's an interesting anecdote about Enron. Do you have more comprehensive data about the effectiveness of negawatts, and their vulnerability to fraud?

I would note that the easiest, and most effective path to efficiency is simple regulation: higher A/C SEER, higher lighting efficiency, higher CAFE, etc, etc. Free markets are great, but they have limits: for instance, 40% of residential consumers rent (as do some commercial consumers), and so have a disconnect between consumption and efficiency investment; almost all residential consumers have artificially flat rates (i.e., no daily, weekly or seasonal variation); and of course, many costs (pollution, supply security, CO2, etc, etc) aren't internalized. We clearly need some regulatory change here.

Matthew B said...

Nick G;

You comment on renting is spot on. I had two rentals before I bought a house, and both had forced air electric. I used more electricity in an apartment than I use now in a 3X bigger house since I have a high efficiency heat pump.

Landlords that pay the capital cost but not ongoing cost of heating are going to buy the cheapest up front system they can, hence the resistance heat system. I would welcome some regulation in this area.

Rod Adams said...

My beef with the idea that negawatts are cheaper, quicker and less polluting that alternatives like a vast expansion of nuclear power is the fuzzy arithmetic and lack of a specified time horizon. It is also a major issue that the changes needed for massive contributions by "negawatts" require behavior changes or capital investments by hundreds of millions of often distracted people within a relatively brief period of time.

In contrast, implementing a new generating technology requires far fewer, highly focused people who stand to achieve something great.

When someone tells me that all I need to do to save a lot of energy is replace a few light bulbs, I KNOW they are full of it. Only a tiny percentage of the energy that I use every day comes from lighting in the first place, and I already turn off the lights when I leave a room - lifetime habit.

When they tell me that my neighbors and I would save a lot of energy if we simply replaced our inefficient refrigerators, I again know they are whistling in the wind - 60-90% of the people that I know who have done that still have the old, functioning refrigerator running keeping the sodas and beer cold in the garage.

When they point to CA, and claim great energy efficiencies, I know that they are ignoring the energy content of all of the manufactured goods that they used to create. I know that they fail to remember that southern CA used to be the hub of the aerospace industry, that chip fabricators used to remain in the state so that blue collar workers as well as designers benefited by the early computer boom and I know that very few of the Internet companies in Silicon Valley keep much of their infrastructure actually in the state.

Amory Lovins is a well paid consultant to the establishment who has been working for more than 30 years to discourage use of the only really new and powerful source of energy discovered within the past 100 years. I personally think that his supporters know full well that an argument for "negawatts" is really an argument for the status quo in terms of generation technology and they like that very much. After all, between 65-95% of the total revenue made in the electrical power business goes to the fuel suppliers! They like us to think that we can somehow save money by NOT investing in better, cheaper, cleaner alternative sources of power while displacing their dirty, smelly, costly, obsolete plants.

David, sorry for the rant. You produced an excellent post. My only quibble with the original is that it that is a bit too gentle on Lovins for my taste. Then I read some of the comments in support of Lovins BS and had to chime in.

IMHO Lovins and his followers are some of the most dangerous people on the planet for the long term prosperity of the rest of us, though they have done a great job contributing to the $600 billion in profit made in the past five years by US oil and NATURAL GAS companies.

Joseph Somsel said...

As to the value of negawatts, I can note that my former employer, a large West Coast utility, didn't care much about energy conservation until the state PUC decided to "incentize" them. The PUC authorized a 10% profit on every dollar that the utility spent on encouraging and support conservation by its customers. Suddenly, the airwaves were full of utility ads about conservation and they were giving away low flow shower heads, twisty bulbs, etc etc.

The National Academy of Sciences did a study of conservation efforts and decided that there were NO solid metrics on the success of negawatt programs and that the claims of success were almost certainly inflated. Sorry but you'll have to find your own link to it.

Nick G said...

"My beef with the idea that negawatts are cheaper, quicker and less polluting that alternatives like a vast expansion of nuclear power"

Efficiency is cheaper, quicker and less polluting than any alternative.

"the fuzzy arithmetic and lack of a specified time horizon."

That may apply to utility efforts, but it doesn't apply to simple efficiency standards.

"the changes needed for massive contributions by "negawatts" require behavior changes or capital investments by hundreds of millions of often distracted people within a relatively brief period of time."

Not for efficiency standards - the kind which, oddly, have been fought so tenaciously by the Current Occupant. For instance, if all light bulbs are more efficient, it requires no thought at all on the part of a homeowner. I would agree that there's a real cost to the time and personal energy homeowners put into raising efficiency, which is often neglected, but efficiency standards solve that, if at the expense of longer timelines.

"Only a tiny percentage of the energy that I use every day comes from lighting in the first place"

That's not true for most people.

"I would save a lot of energy if we simply replaced our inefficient refrigerators...60-90% of the people that I know who have done that still have the old, functioning refrigerator"

Efficiency standards mean that new refrigerators are more efficient - that's irrelevant to the question of whether you keep the old one (which will, of course, eventually die and be replaced itself).

"When they point to CA,"

One the one hand, I didn't point to CA. OTOH, CA residential customers have also restrained their consumption - price matters, and current prices clearly don't include all the costs they should, which leads to economic inefficiency.

"I personally think that his supporters know full well that an argument for "negawatts" is really an argument for the status quo...Then I read some of the comments in support of Lovins"

If you read my comments carefully, you'll see that I disagree with Lovins on nuclear. It's always best to stick to the facts.

"I can note that my former employer, a large West Coast utility, didn't care much about energy conservation until the state PUC decided to "incentize" them"

Makes sense. If the PUC pays you a ROI for building, you'll build. If it pays you to promote efficiency, you'll do that, too.

"The National Academy of Sciences did a study of conservation efforts and decided that there were NO solid metrics on the success of negawatt programs and that the claims of success were almost certainly inflated."

Given how much cheaper efficiency is, one needs more solid criticism than that - if the programs are only 1/3 as successful as claimed, they'd likely still be worthwhile. Still, it's important to note that in the long-run, efficiency standards are more important than utility promotions.

Rod Adams said...

Anonymous:

According to the Energy Information Agency's 2001 survey of household electrical use, only 8.8% of all residential electricity use is from lighting, both indoor and outdoor.

That is a pretty small percentage of electrical power use, and much smaller percentage of overall energy use.

Perhaps my situation is not as unusual as you think.

My comment about refrigerators was meant to indicate that adding a super efficient refrigerato in the kitchen does not reduce energy use if it simply ADDS another running refrigerator to the grid.

Nick G said...

"only 8.8% of all residential electricity use is from lighting"

Well, if you can reduce the average residential bill by 6% (2/3 of 8.8%, based on most residential lighting still being incandescent) with something that has no additional capital cost/hour of operation, why wouldn't you? Further, lighting may be the easiest efficiency, but every other residential application can be made more efficient at a remarkably high ROI.

"adding a super efficient refrigerato in the kitchen does not reduce energy use if it simply ADDS another running refrigerator to the grid."

True, but if we simply make all new refrigerators use 40% less power, over time you'll pretty much use 40% less power for refrigeration than you would have otherwise, having done nothing. The same logic applies across the board.

The point we may be circling round is that efficiency can't do everything - on that we would certainly agree. If we're to reduce our CO2 emissions by 80% in a few decades, it's likely to take maximizing every low-CO2 source we can find, including nuclear.

David Bradish said...

NickG,

I've been out for a couple of days so I obviously haven't been able to respond, but I have a few comments for you.

I don't see how criticizing Lovins' argument is a criticism on efficiency. Efficiency, like I said in the conclusion, is important and valuable to a growing society. I'm simply pointing out that in most cases, efficiency will not curb our energy consumption like RMI believes. It's as simple as that.

You say we should just stick to nuclear issues. I disagree. Nuclear energy is only one part of our energy consumption and we need to discuss, debate and understand how nuclear fits into this picture. It would be a boring blog if all we talked about was nuclear.

I don't pretend to be an expert in efficiency, but from what I've studied, I remain to be convinced that efficiency will reduce overall consumption like the advocates say it can do.

Anonymous said...

Jevon's "paradox" is just plain wrong. The evidence to support it comes from a long period of plentiful resources relative to the human population. People will consume more of a resource if it gets cheaper, and that's what happens when efficiency gains are accompanied by rising supplies. With a much greater population and a resource base that appears to be flattening out, it's increasingly a race to see if efficiency gains can stay ahead of declining resources.

None of this supports Lovins' overall position. The flaw in the negawatts argument is that you obviously cannot conserve your way to zero. Add to that the fact that world population continues to rise, and that more people around the world are trying to raise their lifestyles, and it should be clear that in addition to all the efficiency gains we can find, we need to be expanding the supply of energy resources. Add to that the urgency of replacing as much of the high-emission energy sources we now use with low-emission sources, and the case for both renewables and nuclear power is clear.

David Bradish said...

Anon,

What do you mean the Jevons Paradox is wrong? You said:

People will consume more of a resource if it gets cheaper, and that's what happens when efficiency gains are accompanied by rising supplies.

That's basically the definition of the Paradox.

Anonymous said...

What's wrong is that the "paradox" isn't paradoxical at all. The usual statement of the paradox is that conservation efforts lead to more consumption of a resource. Wrong. Conservation efforts lead to less demand for a resource, which may cause it's price to drop, which will then create more demand for it. The critical link in the chain is economic - there's a hidden assumption that you'll end up lowering the price by increasing efficiency. However, in an environment of scarcity, it is possible, even likely, that the efficiency gains will not be enough to offset the price increases that will occur as the resource becomes scarcer. Therefore it's entirely possible for efficiency to improve and for prices to rise and therefore for demand to fall in the face of the improvements.

David Bradish said...

Anon, conservation has nothing to do with the Paradox. It's only about efficiency. And it's paradoxical because people naturally think efficiency will lower demand when it doesn't.

Anonymous said...

Sorry, I tend to use the terms conservation and efficiency interchangeably because they're both ways of lowering the demand for a resource. The difference can be hard to define. Suppose I switch to a more fuel-efficient vehicle. Was this an efficiency improvement or a conservation measure? Does your answer depend on the nature of the old or new vehicle, and if so, why? Europeans use much less oil per capita than we do, and part of the reason is that they drive smaller cars and use more public transportation. Is that conservation (because riding a train isn't the same as tooling along in a Suburban), or are they deriving the same benefit (person-miles of transport) with greater efficiency?

Returning to Jevon and Lovins, I'm reacting to this quote from your article:

And when it comes to arguing the merits of energy efficiency, Lovins’s prime nemesis is a dead guy – William Stanley Jevons – a British economist who in 1865 determined that increased efficiency won’t cut energy use, it will raise it.

I don't believe this is necessarily true because the effect acts only indirectly through an economic mechanism that we can in theory control. For example, if a way was found to double the efficiency of cars, thus lowering the demand for gasoline, a gas tax could be used to ensure that overall consumption of gasoline did not rise as the new technology was rolled out.

I am also reacting to your paragraph titled:

"Where’s the data to back up the Paradox?"

You should a chart of late-20th-century America, but as I've stated, the data was collected during an environment of abundance, not of scarcity. In fact the chart itself offers a clue as to what we're more likely to see going forward - look carefully at the late 70s and early 80s. There is a small but noticeable decline, followed by a rebound. We were not then in a true environment of scarcity. To get a more complete picture, you might want to look at per-capita oil consumption. And for an even broader perspective, you should have a look at per-capita petrol consumption in Europe over the same period, which would show the effect of capturing the efficiency gains through introduction of fuel taxes.

I know you're not suggesting we waste energy. Raising Jevons is like red meat for me, because it's used all the time by peak-oil doomers to "prove" that we can't escape the collapse of our civilization.

David Bradish said...

Anon June 17, 2008 7:16 PM,

Good points.

Raising Jevons is like red meat for me, because it's used all the time by peak-oil doomers to "prove" that we can't escape the collapse of our civilization.

If that's what the peak-oil doomers say then I would definitely take issue with it. We will never run out of energy. We will simply change it from one form to another (the law of conservation of energy). We may run out of oil but that doesn't mean our civilization will collapse. It's through the advancement of technology that we will continue to sustain our energy growth. Check out the Bottomless Well. It discusses much more in depth of why we will never run out of energy through the "logic of power."

Anonymous said...

When efficiency does increase consumption, then the next nuclear power plants should therefore be less efficient in order to reduce consumption.

Congratulations, David, what a great concept.

David Bradish said...

When efficiency does increase consumption, then the next nuclear power plants should therefore be less efficient in order to reduce consumption.

That's the concept. But why reduce consumption? A person lives a higher quality of life the more energy and electricity they consume.