John A. “Skip” Laitner, Senior Fellow American Council for an Energy-Efficient Economy (ACEEE) Industry Meets Government: Impact on Energy 32 nd USAEE/IAEE North American Conference Anchorage, Alaska July 30, 2013 The Economic Imperative and Opportunity of Long-Term Energy Efficiency

And as we are reminded by my favorite American philosopher, Gary Larson, small differences in assumptions can lead to very big differences in outcomes!!

Sometimes We Actually Do Need to Reinvent the Wheel In 1970 teenager Frank Nasworthy actually did reinvent the wheel and it popularized inline skating. Energy service companies developed new business models that expanded, for example, the deployment of CHP systems. And the Raspberry Pi may transform energy efficiency in new ways.

The University of Cambridge noticed that many PhD students in computer science had never mucked with the internal workings of a computer. Hence, the Raspberry Pi. I paid $53.95 on Amazon. What might that reduction in cost and size mean for prospective energy efficiency improvements? How might we model it? What is the Raspberry Pi? Held in my hand, a credit card- sized computer that can be plugged into your TV and keyboard. It can be used for many of the things a desktop PC does, like spreadsheets, word-processing and high-definition video games.

Two Views on Energy Energy as a commodity tracked by the Energy Information Administration; or Energy as the capacity to do useful work. To ensure the appropriate development of innovation that ensures sustainable economic activity, the emphasis needs to be on “energy as work.”

Energy as Work Energy = Exergy + Anergy = Constant Source: Kümmel (2011) Work = Exergy * Efficiency Source: Ayres and Warr (2009), and Laitner (2013)

useful energy Ergo, efficiency is more like ≈ 14% (Ayres & Warr 2009 and Laitner 2013 forthcoming) What is Wrong with this Picture? Ergo, 43% efficient! With an assumption that buildings and industry are 80% efficient – which ain’t true at all... But really? And the very fine print ?

Jumping to the End of the Story The insight? Instead of tiny increments, the U.S. will be better off “Thinking Big” about energy productivity and energy services, rather than relying on the usual set of very costly and conventional energy resources. The 2012 ACEEE report, “The Long-Term Energy Efficiency Potential: What the Evidence Suggests,” shows how slashing energy use by 40 to 60% ‒ through highly cost-effective efficiency investments ‒ could generate up to 2 million jobs while saving all residential and business consumers a net $400 billion per year, or the equivalent of about $2,600 per household annually. Source: The Long-Term Energy Efficiency Potential: What the Evidence Suggests (2012). Washington, DC: ACEEE.

MORE BY WASTE THAN INGENUITY? Exploring the full energy efficiency potential: ~250 billion barrels of oil equivalent in the U.S. through the year Conventional assumptions about the efficiency potential... an anemic 14% energy (in)efficiency

“We shape the world by the questions we ask” Physicist John Wheeler

Source: Ayres and Warr 2009 with data updates from 2005 to 2010 by Laitner (2013) 1950 to1980: from 8% to 12% 1980 to 2010: from 12% to only 14% U.S. Exergy Conversion Efficiency That is, the Ratio of Useful Work to Total Exergy

In the U.S. from the period Exergy efficiency: 1.45% /year* Economy-wide productivity: 2.24%/year From the period Exergy efficiency: 0.42% /year* Economy-wide productivity: 1.72%/year What we will find is that to regain and maintain a robust economy, we can no longer afford “business-as-usual;” rather we must scale to the level of an energy revolution... Emerging Insights in the Critical Role of “Used Energy” to Enhance Productivity * * Here energy efficiency refers to the conversion of total primary energy to used energy Source: Laitner 2013 (forthcoming).

Offering just three of so many different examples, if we’re willing to really look! Opportunities for Efficiency? And imagining industry more as a source of multiple innovations than as a consumer of energy

Optimizing our Nation’s Traffic Signals  There are an estimated 272,000 traffic signal systems throughout our country today.  Stop and start driving and poorly timed signals cause unnecessary fuel consumption on our nation’s highways.  Retrofitting these systems with smart sensors and dynamic programming techniques can improve traffic flow so that we reduce our highway fuel consumption 5- 10% per year.  The cost? About $10-12 per household. The savings? About $150 per household per year – and possibly more!

Developing Intelligent Efficiency  Not yesterday’s idea of real energy efficiency, but interconnected systems – what we can call “Intelligent Efficiency” – could reduce energy use by about one- fourth of today’s levels, while still maintaining jobs and a robust economy.  With new information technologies and advanced sensors and controls, for example, both Schneider Electric and Rockwell Automation offer services to manufacturing firms that can reduce electricity use by up to 40 percent and reduce oil and gas requirements by up to 35 percent. Source: A Defining Framework for Intelligent Efficiency (2012). Washington, DC: ACEEE.

Improving Commercial Buildings  A 2007 DOE-sponsored study suggested that if all commercial buildings were rebuilt by applying a comprehensive package of energy efficiency technologies and practices, they could reduce their typical energy use by 60 percent.  Adding the widespread installation of rooftop photovoltaic power systems could lead to an average 88 percent reduction in the use of conventional energy resources.  Cost-effective technologies as feedback and intelligent infrastructure can all be an enabler of this success.

Some Concluding Thoughts

The Current Mix of Prices and Policies Don’t Seem to be Working

On the Other Hand, Getting the Prices and Policies Aligned in Ways to Promote Useful Work....

Paraphrasing John Maynard Keynes

Underpinning This Overview: A Selected Bibliography Ayres, Robert U. and Benjamin Warr The Economic Growth Engine: How Energy and Work Drive Material Prosperity. Northampton, MA: Edward Elgar Publishing, Inc. Kümmel, Reiner The Second Law of Economics: Energy, Entropy, and the Origins of Wealth. New York, NY: Springer. Laitner, John A. “Skip.” “Linking Energy Efficiency to Economic Productivity: Recommendations for Improving the Robustness of the U.S. Economy.” Washington, DC: American Council for an Energy-Efficient Economy (forthcoming August). Laitner, John A. “Skip,” Stephen Nadel, R. Neal Elliott, Harvey Sachs and Siddiq Khan The Long-Term Energy Efficiency Potential: What the Evidence Suggests. Washington, DC: ACEEE. Note: Other citations can be provided on request.

Contact Information John A. “Skip” Laitner Principal Economist and Consultant Economic and Human Dimensions Research Associates Senior Fellow, American Council for an Energy-Efficient Economy (ACEEE) Senior Fellow, CNA Public Research Institute Tucson, Arizona c: (571) And also check out our new website: EnergyStressTest.com