Will support for efficiency hold in 2009?

By Elisa Wood
December 18, 2008

The stars are aligned to make 2009 a good year for energy efficiency — or at least, most of the stars.

President-Elect Barack Obama has assembled an energy team that supports clean technologies. Most notably, Obama named Steven Chu as energy secretary on December 15. Chu is a Nobel Prize winner and director of the Lawrence Berkeley National Laboratory, a leader in bringing energy efficiency technologies to market, such as the compact fluorescent light bulb. http://www.lbl.gov/

Obama also is in the process of putting together an economic recovery package that places high priority on energy, including investment in efficiency. The goal is to quickly create jobs by giving ‘shovel-ready’ projects a boost in the sluggish economy. Efficiency projects more easily qualify as ‘shovel-ready’ — set for quick development – than most energy undertakings. Efficiency measures rarely require the kind of time-consuming permitting, engineering and financing of power plant or transmission construction.

So what star is out of place in the sky? The star that governs oil prices. It costs far less to fill up the gas tank now than it did last summer. That is a good thing. The problem is that the US consumer tends to be short-sighted. If gasoline is cheap today, who cares about tomorrow? Energy efficiency falls out of favor.

Joe Loper, senior vice president for the Alliance to Save Energy, warned about this “cycle of complacency” in testimony before the Senate Committee on Energy and Natural Resources December 10. Loper recommended $15 billion in economic stimulus money for energy efficiency to keep the nation’s energy goals on track. Investing in efficiency will not only create jobs, but also will foster continued use of technologies that have already proven their worth. “A silent partner” in meeting the nation’s energy needs, efficiency has reduced America’s energy bill and related carbon emissions by 50% since 1973, he said.

Obama, himself, is worried that declining gas prices may erode support for his aggressive energy agenda. He told Time magazine that lower oil prices make “the politics of it tougher than it might have been six months ago.” http://change.gov/newsroom/entry/the_president-elect_on_his_goals_and_agenda_in_a_time_of_crisis/

We’ll see in the next several weeks if support continues for an overhaul of the nation’s energy portfolio, or if the public follows the wrong star in the sky.

Visit Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets podcast and newsletter.

Energy Efficiency: Not a Sound Bite Business

By Elisa Wood

I’m a star at the neighborhood playground because I write about energy. Let me explain. I have a young son, and often find myself next to the swings talking with other parents. Inevitably we talk about work. Inevitably it comes up that I know a little about energy. And inevitably I'm surrounded by a crowd that wants to know-- demands to know--why the US doesn’t use more green energy.

They are looking for a sound bite answer, like “It is Bush’s fault” or “Exxon is evil.” Instead, I find myself grasping for an answer, even though I’ve been following this business for 20 years -- or more accurately – because I’ve been following this business for 20 years.

Overhauling a nation’s energy infrastructure is no easy task and far more complex than people realize. And unfortunately, this lack of understanding, among politicians and the general public, is what gets us into trouble. Since the 1970s, we have swung back and forth from urgency to complacency about energy independence. We forget about the problems created by our over-dependence on fossil fuels once gasoline prices drop. We seem to operate under the false impression we can fix our energy problems near instantly should we really need to act.

A new World Bank book underscores the complexity of revamping energy infrastructure, in this case, energy efficiency in three countries where demand is growing rapidly. Called “Financing Energy Efficiency: Lessons from Brazil, China, India and Beyond,” the book finds enormous energy savings opportunities in these countries, which are among the top 10 energy consumers in the word. But to realize the savings, the countries must develop “large numbers of relatively small projects scattered among hundreds of thousands of industries and building complexes.”

Needless to say, the logistics are daunting. Moreover, efficiency projects tend to lose when competing for up-front capital against power plants because efficiency is about saving money – a more difficult concept to sell than making money.

But interestingly, it is not lack of capital in these countries that thwarts efficiency but “inadequate organizational and institutional systems for developing projects and accessing funds.” In other words, efficiency is not on the main agenda of business and government.

The challenge for governments is to influence the broad technology choice decisions of investors and encourage them to adopt energy efficiency solutions, according to the book. The problem, the authors say, needs to be fixed on the institutional level and must consider the unique local economies. The book attempts to provide a framework for creating financing systems.

With many case studies on ways efficiency has been financed in various countries, this nearly 300-page book makes it no easier to come up with a quick sound bite for why it is a struggle to green our energy supply. But the authors do give some valuable industry perspective on how to get there as the world prepares for a 53% increase in energy demand over the next two decades. It is worth a look. Written by Robert P. Taylor, Chandrasekar Govindarajalu, Jeremy Levin, Anke S. Meyer and William A. Ward, the publication is available at http://www.esmap.org/filez/pubs/211200830655_financing_energy_efficiency.pdf

Visit energy writer Elisa Wood at www.realenergywriters.com and pick up her free Energy Efficiency Markets newsletter.