If peak-oil proponents are the pessimists of the energy world, physicists are the optimists. Peak-oil buffs believe that having less oil will end civilization while energy guru Amory Lovins, a member of the physics camp, tells us that “displacing most, probably all, of our oil … makes money”.
In the early days of the first OPEC crisis, physicists vigorously advocated conservation as the primary defense against OPEC. They claimed it was cheaper than increasing the supply of oil and sometimes cheaper than free. For example, insulation might save more in fuel costs than it cost to insulate [...]. In spite of lacking a degree in physics, Amory Lovins is perhaps the best-known member of what I call the physics camp–though he never did earn his degree in physics.
[…] Without question, the physicists were right about conservation’s importance. And they were right that, as Lovins puts it, conservation does not have to mean “discomfort or privation (doing less, worse or without).” Most of the physics camp, and many economists, agree that some conservation measures are cheaper than free. But Lovins goes further and claims that everything we need in the way of energy policy is cheaper than free. Is he right about this?
As with peak oil, we can look to history to evaluate claims that conservation will be cheaper than free. In his 1990 article, Lovins predicted that four “revolutions” in electric efficiency would greatly accelerate the conservation of electricity. The revolutions were:
1. Technical Progress. For example, better light bulbs.
2. Markets for “negawatts.” Negawatts are watts of electricity not used.
3. Cultural change inside utilities. For example, learning that conservation is profitable.
4. Reforms in regulatory philosophy and practice. In particularly, “decoupling” profits from increased sales.
In short, Lovins predicted that by now we could be using almost no electricity—only about 3 percent of what we used in 1990—and that this conservation effort could save us, counting all costs, over two hundred billion dollars a year.[…].
Lovins’s starting point is that already in 1990, “the best technologies now on the market could save about 92 percent of U.S. lighting energy.” However for all electrical uses combined he claimed that only three quarters of the electricity used was unnecessary. Moreover, Lovins’s tells us that conserving that much would have cost eleven times less than using the saved electricity.
Next he claims that the cheaper-than-free opportunities had doubled in the previous five years, and would do so again in the next five and that he saw “no signs of this slowing down.” Better yet, the cost of conserving, would be decreased by three times every five years.
As it turned out, between 1990 and 2005, electricity use went up 34 percent, not down 97 percent.
The trouble with Lovins’s optimism is that it is not just a little optimism. It overwhelms all other approaches. It says we don’t need […] any government policies. All we need to do is […] keep an eye out for new efficient technologies that will save us money. New technology will crush OPEC, the coal industry and nuclear industry. Global warming will fade away.
Lovins is right to favor conservation, and right to favor the use of markets. Some of his ideas are practical. But three centuries of technical progress have brought unimaginable efficiency gains—and vastly increased use of fossil fuel—without solving our energy problems. Something more is needed than Lovins’s promise of “breakthrough engineering” […]. Lovins objectives are well intentioned, but his hyper-optimism is a barrier to almost every effective energy policy.
These are excerpts from chapter 5 of my forthcoming book Carbonomics.