Almost everyone's heard the well-worn anecdote about the lost city slicker who asks a country fellow for directions and is finally told (after the rural denizen deliberates over several proposed routes), "Come to think of it, son, you can't get there from here." Well, when It comes to finding a solution to our nation's long-term energy—and hence, economic—woes, the leaders of America have, of late, seemed just as directionless as the befuddled traveler in that old joke.
(All right, perhaps we're being a bit harsh. The folks in charge have proposed at least one solution: namely, increasing the rate at which we mine out our limited, nonrenewable resources. Such actions, though, will only lead us to disaster all the more rapidly. It's as if the driver in the tale above, despairing that he'd ever get any worthwhile advice, decided to accelerate down a dead-end road!)
Fortunately, Brick House Publishing recently released a thorough, well-documented proposal for our country's future that shows, in both energy-related and economic terms, precisely how we can "get there from here." The 454-page report, called A New Prosperity: Building a Sustainable Energy Future
The past half century has been a period of unprecedented economic growth for the United States. Much of this growth was fueled with cheap energy, primarily oil and gas, much of it imported. Events of the past few years, however, have called the stability of this economic foundation into doubt.
The SERI [Solar Energy Research Institute] study has redefined a stable foundation for growth in the American economy. The pillars of this new prosperity are more efficient energy consumption and economic use of renewable energy resources.
Specifically, SERI's findings show that through efficiency, the U.S. can [by the year 2000] achieve a full-employment economy and increase worker productivity, while reducing national energy consumption by nearly 25%.
Some 20 to 30% of this reduced demand could be supplied by renewable resources. A strategy built around energy efficiency and the widespread use of renewable resources could result in the virtual elimination of oil imports. It must be emphasized that [our projections] are goals, not forecasts. But the benefits to the nation of attaining these goals are enormous. These figures must be given the serious examination they deserve.
SERI has not assumed that the U.S. must endure freezing homes, stalled traffic, or massive unemployment. Rather, the proposed energy strategy is based on highly optimistic assumptions about both social well-being and economic growth.
Per capita income, for example, is assumed to increase by 45% over the next 20 years. Unemployment would fall from a current 7.4% to 4.0% by 1985 and would remain at that level through 2000. Labor productivity would grow more than 2% per year, as opposed to the 1.25% per year it has averaged since 1968.
Far from being incompatible with vigorous economic growth, the strategy proposed here may actually be essential for such growth. New supplies of oil, gas, and coal will almost certainly be more expensive than the energy that now fuels the American economy. Increased use of these sources would inevitably raise prices, accelerate inflation, and constrain growth. But with an emphasis on efficiency, the cost of supplying basic energy services can increase much more slowly.
The role of the federal government in achieving the proposed goals need not be costly or oppressive. Its role can be largely limited to the following.  It can insure that investors have the information they need for decisions about energy investments.  It can revise existing programs that act to discourage capital investments in efficiency and subsidize or protect investments in energy supply.  It can insure that investors have access to the capital they need for improvements that reduce energy demand.  It can maintain a vigorous research and development program in energy and related fields.  It can insure that national energy investments are consistent with national interests in environment, equity, and security. The government cannot escape responsibility for a national energy policy. Its influence on energy investments will be enormous, whether by design or by accident.
The strategy outlined in this report is rooted in the conservative sentiment that investments should be allowed to flow in the direction that produces the greater rate of return rather than being channeled in less efficient directions through government action. This strategy therefore proposes to remedy many market distortions caused by public policy. It proposes that federal energy spending be both reduced and redirected.
Setting Goals and Getting There
Buildings: One would not commonly think of an investment in building insulation as an alternative to an investment in an oil well, but the two kinds of investments can have precisely the same outcome. For example, the equivalent of about 8.1 million barrels of oil per day (MBD) can be "produced" from existing and new residential and commercial buildings at an average cost that is about half of the cost of providing electricity, oil, and/or gas to these buildings from new conventional sources.
New residential and commercial buildings can be built to use about a quarter of the energy required for heating and cooling the typical unit built in the U.S. today. This efficiency can be achieved with better insulation, tight construction, storm windows, daylighting, and efficient furnaces and air conditioning equipment. A total of 2 MBD could be saved in this way.
Given an aggressive building retrofit program, It should be possible to reduce the demand for energy used by existing structures, still standing in the year 2000, by 4.2 MBD. Programs to insure that this potential is captured must be centered on the objective of creating profitable businesses, capable of delivering technically sound building retrofits. Aiding these emerging businesses will require a national program for applied research in building retrofits. Such a program would examine solar and energy efficiency techniques and provide information and training materials.
In addition to significantly reduced demand in buildings, renewable technologies could provide them with the equivalent of 2 to 2.5 MBD. Wood stoves, small wind generators, active and passive space heating, solar hot water, daylighting, and photovoltaics could provide up to 30% of the energy requirements of all buildings by the year 2000.
Industry: Industry is already moving rapidly to increase efficiency, but there is much room for improvement due to the relative inattention given to fuel efficiency before 1973: The performance of Industrial mechanical drives can be increased by 23%, the efficiency of delivering heat to Industrial processes can be increased by 35% by using improved boilers and controls, and the efficiency of aluminum electrolysis can be improved by 33%.
These estimates are all relatively conservative because they are based solely on technologies already available.
Programs designed to improve industrial efficiency should concentrate on insuring that industries have adequate access to the capital needed to improve efficiency and that the marketplace receives the right signals to Insure that Industries pay the full cost of the energy they use. This will require an adjustment in the federal tax code to encourage industrial investment. It is particularly important that capital be found to replace the obsolescent plants that now use a large fraction of the nation's industrial energy. A special "scrap and build" program to accelerate the rebuilding of American industrial plants could be funded from any windfall profits receipts available from energy decontrols or other sources. In addition, special attention must be given to encouraging industrial research and developing new approaches to efficiency.
Improved efficiency could result in saving the equivalent of 5 MBD in industry by the year 2000. About half of these savings are already expected to occur. The other half would result from the new programs suggested. It would also be possible to provide the equivalent of 5 MBD from national biomass resources (although only about three-fourths of these resources are likely to be used directly in industry), and as much as 0.5 MBD from direct solar heat.
Transportation: Most of the energy required for transportation in the U.S. is used in cars and trucks. The fuel economy of the average car on the road in 1978 was about 14.3 miles per gallon. It should be possible to Increase this to 60 MPG or more without major sacrifices in comfort, safety, or performance. If the average car on the road in the year 2000 obtains 55 MPG, the nation would consume nearly 3 MBD less gasoline than it does today, even with significant increases in both the population and the miles driven by each person. The average cost of saving this fuel could be less than a dollar a gallon. Improved fuel economy can be achieved through increased emphasis on small, efficient engines and with policies for increased performance standards or taxes; for example, a "gas guzzler" tax keyed to high efficiency and a fuel or petroleum tax. Methanol and other alcohol fuels derived from biomass could deliver up to 25-45% of the fuel needed to operate the national transportation system by 2000. Use of these fuels can be encouraged with research on methanol production and engines that use methanol, conversion of federal fleets to use methanol, and fuel taxes. Methanol is an attractive synthetic fuel since it can also be produced from coal and natural gas.
The efficiency of national freight services has been declining recently because of a continuing shift of freight from rail to truck. This decline in freight service efficiency must be reversed. Road fees that tax trucks for their full share of road construction and maintenance and a relaxation of the regulations that prevent the rail industry from raising needed revenues are an essential beginning. It should also be possible to increase the efficiency of both aircraft and trucks at least 30% with adequate research. Programs to improve freight service efficiency could save 1 MBD by the year 2000.
Utilities: Uncertainties about future energy demands have already greatly complicated the investment strategies of the nation's gas and electric utilities. The problem is particularly difficult for electric utilities, since a decision to build a plant that will be under construction for a decade or more requires an accurate forecast of future electrical demand. Many companies have found themselves with expensive overcapacity, the result of overestimating demands.
The analysis presented in this report suggests that the ambiguity about future electric demands is likely to increase rather than diminish. Net national demand for electricity could well grow more slowly than 1.5% per year even given a rapid growth in demands for electric vehicles and electrolysis-produced aluminum.
The planning dilemma presented by these circumstances has no easy resolution. The central question is whether utilities should adjust construction programs on the assumption that cost-effective, demand-reducing investments will succeed, or whether they should assume that such investments will not play an important role and run the risk of overinvestment. The thesis in this study is that the best response to such a complex problem may be to confess that public regulation is unlikely to anticipate an optimum solution, and that some move in the direction of deregulation deserves careful attention.
Goals for National Growth
Taken together, the goals outlined in this study suggest possibilities for an enormous growth in national income over the next two decades. Plainly, national energy consumption could be even lower than the levels discussed here if some of the goals for growth are not achieved. How can so very much more work be accomplished using less energy? The answer is straightforward. The United States currently uses energy less efficiently than any other country in the industrial world. Just introducing technologies that are already widely employed elsewhere would produce dramatic reductions in energy use without diminishing our economic productivity or detracting from the comforts of current lifestyles. If, in addition to drawing the best from abroad, we also take advantage of the full repertoire of Yankee ingenuity now sitting on our own shelves, we can—over a 20-year period—move from last place to first. Through intelligent market choices calculated to increase the productivity of energy use, we can rebuild our nation as the world's most efficient industrial state. In an era of mounting energy prices, the country that makes the most efficient use of energy will possess a key advantage in the global marketplace. It will also have controlled a major source of inflation.
It is also important to understand that the quality of personal life can be increased with the strategies proposed in this analysis. In fact, homes will almost always be made more comfortable when they are made more efficient. The quality of the natural environment can be improved in direct proportion to a decrease in the consumption of fossil fuels. Mobility can be increased if efficient cars make it possible for people to keep driving instead of relying heavily on mass transit. Equity can also be served: The growth in services can be used to increase the amenities available to low-income families more rapidly than to high-income families. A strategy that maximizes energy-use efficiency, therefore, has the effect of improving the quality of life rather than decreasing it. Far from requiring sacrifice, it provides more alternatives and more freedom.
The Potential for New Business
Encouraging the nation's industries and buildings to increase their energy productivity will create an enormous array of profitable new businesses. Most of this growth will be straightforward extensions of existing businesses, although there will be a need for the manufacture of a variety of new parts and materials (insulation, glass, plastics, heat exchangers, computer controls, photovoltaic cells, and many others). There will be a greater need for skilled architects, engineers, and designers familiar with the subtleties of energy efficiency. Businesses will grow around the need to install, finance, insure, maintain, and operate new energy systems as well as around opportunities to audit existing facilities and undertake retrofits.
The total incremental investment required by this strategy over the 20 years would be in the range of $750 to $800 billion. This enormous number can be put in some perspective, however, by comparing it to the national energy bill in 1980: about $360 billion.
None of the proposed $750 billion will be spent on imported oil. Because it will be used to purchase domestic goods and services, it will have a desirable multiplying effect upon the American economy. The total investment must be compared with the investment that would be required in the absence of the programs proposed here. One can take the case of commercial buildings for an example. Later analysis will show that the investment of $110 billion in solar and efficiency equipment in commercial buildings results in a net national saving of at least 7.5 quads of energy per year by the year 2000. If 7.5 quads of energy were generated by new power plants, the capital costs of the plants would be $114 billion (assuming $1,000 per installed kilowatt). This does not count the capital needed to maintain the fuel cycle, and it does not include the costs involved in operating the facility over a number of years.
The New Prosperity
Historian Frederick Jackson Turner wrote convincingly about the effect of the disappearance of the "American Frontier" on the nation's spirit. For a period afterward, the nation's prospects seemed more constrained; there appeared to be nowhere for the nation's agricultural base to expand and grow. As later historians such as David Potter have pointed out, however, the disappearance of the frontier coincided with the advent of the modern American industrial revolution. The daring, the intelligence, and the resources that had previously been devoted to settling the geographical extremities were now harnessed to the task of building a modern economic state. The result has been a century of rapid growth.
Now, as the end of the twentieth century approaches, the nation appears to be exhausting yet another frontier. This time, the limiting factor is not unsettled land but inexpensive fuel. Again, some researchers are offering disturbing predictions about the consequences for America's future.
The central conclusion of this study is that, again. the nation is focusing too little attention upon the opportunities afforded by its changed circumstances. We have today a unique opportunity to begin rebuilding the nation's economy on a more productive and sustainable base. Although we have largely squandered the last eight years, enough time still remains. The change must be rapid, but it can be deliberate.
Imaginative use of technologies available to improve the productivity of fuels in short supply, along with widespread adoption of technologies to utilize renewable resources, constitute the heart of the cheapest, fastest, and safest strategy through the next 20 years.
Adoption of this strategy, however, will require us to overcome a six-decade-old set of preconceptions about the linkage between growth and energy. It no longer makes sense to equate an increase in national wealth with a growth in energy consumption. We are today at the threshold of a wide-reaching revolution in the physical and biological sciences. It is too early to predict in detail the outcome of these advances. But one fact is clear: They are teaching us how to do far more with far less. Efficiency and sustainability will be the hallmarks of the new prosperity.
EDITOR'S NOTE: The full SERI report, A New Prosperity: Building a Sustainable Energy Future, documents in detail the evidence for the conclusions presented above and is available—for $19.95 plus $1.00 shipping and handling—from Brick House Publishing Company.