Fueling change

Veteran green-energy pioneer Amory Lovins has a road map that businesses and governments the world over can use to reduce their reliance on fossil fuels and generate significant savings, profits and growth.

It can be tempting for businesses to see green energy use as corporate window dressing, a drain on organizational profits or something incidental to the serious business of a hydrocarbon-fueled global economy.

Yet Amory Lovins, co-founder, Chairman and Chief Scientist at the influential green Rocky Mountain Institute think tank, believes this is a serious mistake for any business focused on long-term survival and profitability – and not just because of recent high global oil prices.

“Fossil fuels made us modern; now we need a new ‘fire’ that makes us safer, more secure and healthier.”

Amory Lovins
Co-founder, Chairman and Chief Scientist, Rocky Mountain Institute

In his new book Reinventing fire, he argues that committing to phasing out fossil fuel use in the medium to long term can actually improve employee productivity, cut energy bills, make manufacturing processes more efficient and mitigate risk.

While the world may still rely overwhelmingly on fossil fuels for transport and power, Lovins believes their cost has begun to outweigh their benefi ts. “Fossil fuels have created our wealth and modern civilization; they just happen to come with increased economic and societal costs that are eroding the prosperity they created,” says Lovins. “Fossil fuels made us modern; now we need a new ‘fire’ that makes us safer, more secure and healthier.”

The inherent cost of fi nding, extracting and burning fossil fuels makes renewable energy more than competitive, Lovins argues, even before factoring in environmental impacts. “The external costs of getting and burning fossil fuels are paid for through our taxes. More of our tax revenues are going toward dealing with the health, environmental, economic and societal costs of burning
fossil fuels.”

The big solutions for the next 30 years lie in four main areas of business activity – transport, buildings, industry and electricity generation. They include high-tech initiatives such as lightweight airplane design, smarter power grids and traffic systems. Others are more straightforward: congestion charging and better building insulation.

The paybacks can be substantial. Efficient building retrofits would pay for themselves four times over through extra productivity, he explains: “A tiny rise in labor productivity has the same effect as eliminating your entire energy bill.”

Since many of these solutions are based on making better use of existing, everyday technology, developing economies arguably have the greatest gains to make. “On average, developing countries are three times more energy intensive than developed countries,” he says. “They are wasting large amounts of their resources when they can least afford to do so. Poorer people in emerging economies spend, on average, 20% to 30% of their limited income on buying energy, compared with 5% in Western economies. If you can get cheap solar power to light huts in African villages, you’re saving their gas bill to the tune of US$38b a year.”

Parts of the developing world are already leapfrogging the West in renewables adoption, says Lovins: “In Kenya, more households now get their energy from solar than off the grid. Installing efficient solar panels in a village can get productivity up. A simple [solar powered] telecoms network can double a village’s income in its fi rst year of use.”

In 2011, more than half of the growth in renewables came from developing countries, particularly China, which has ambitious cleantech initiatives. Lower global prices for solar products are just one benefit.

Chinese companies, rather than the state, are leading this transformation. By contrast, the West has looked to its governments to lead investment in renewables, whether through tax breaks, feed-in tariffs or plant construction.

Despite some successes, in Sweden and Denmark in particular, Lovins believes businesses need to lead the transition in the West too.

Those that fail to keep pace with the changes will find themselves at an increased commercial disadvantage, hindering their ability to innovate and attract the best people.

As for the shale gas revolution happening in the US, which has the potential to be replicated globally, Lovins does not foresee it threatening the investment case for renewables or sparking a general transition away from fossil fuels. “They are natural partners, but the renewable power revolution will flourish at any plausible gas price.”

The article was written by:

  • Derren Hayes

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