This past January, millions of people attended Focus the Nation, a national teach-in held at over 1900 institutions to discuss solutions to global warming. Focus the Nation’s panels, lectures, and political discussions assessed how to achieve the greenhouse gas emissions cuts desired by most climate scientists and environmentalists, and by many politicians, including Hillary Clinton and Barack Obama. The suggestion of the panel event I attended was “the two percent solution,” which calls for the government to reduce U.S. greenhouse emissions by two percent of year 2000 emissions each year until 2040. This proposal was in line with most current discussions about environmental problems: it focused on government, and on which government method (mainly, cap and trade, carbon taxes, and mandatory limits) will best solve the problems.
These discussions miss a major reality: The private sector”–not government”– is actually leading the way in developing strategies for dealing with emissions cuts and other environmental issues. At my Focus the Nation panel, the only panelist whose comments reflected this was wearing a huge black cowboy hat and responding to the moderator in a louder and more confident voice than everyone else: L. Hunter Lovins, cofounder with Amory Lovins (her ex-husband) of the Rocky Mountain Institute (RMI) and current President of the Natural Capitalism institute. Through the Rocky Mountain Institute, a “think and do tank” based in Snowmass, Colorado, the Lovinses have become pioneers in promoting environmental responsibility based on industrial efficiency.
RMI helps organizations find ways to be more productive while using fewer resources, which usually translates into emitting less greenhouse gas. If a company buys less electricity, RMI argues, less fossil fuel must be burned to produce that electricity, and so less greenhouse gas is emitted into the environment. In RMI’s telling, the efficient use of energy can lead both to profits and to lessened environmental impact.
At Focus the Nation, Hunter Lovins told a joke to demonstrate RMI’s idea that resource efficiency can be profitable: “How many economists does it take to screw in a compact fluorescent light bulb?” she asked. “None. The free market will do it itself.”
Compact fluorescent light bulbs (CFLs) exemplify the sort of efficient technology the Lovinses love. CFLs use 1/5 the energy of standard incandescent light bulbs, and last much longer. By using CFLs, a business can both save money and reduce its greenhouse gas emissions. While one might expect businesses to discover and pursue such efficiencies on their own, RMI’s work shows otherwise. The National Energy Administration found that nine percent of U.S. energy usage is from lighting, mostly provided by inefficient incandescent bulbs. RMI points out that switching to CFLs could decrease nationwide energy usage by about seven percent. Moreover, CFLs are efficient partly because they produce less heat than incandescent light bulbs. Incandescents expend nearly ninety-eight percent of their energy producing heat”– that’s why it burns to unscrew incandescent light bulbs right after you turn them off. By producing less heat, CFLs allow businesses to simultaneously decrease their demand for air conditioning, increase savings, and decrease greenhouse gas emissions.
RMI has built its headquarters to demonstrate the effectiveness of efficiency. Built in the early 1980s, RMI’s main building is so tightly insulated that it does not need a furnace and does not burn fossil fuels for warmth. The building’s insulation envelope is so tight that two small wood stoves produce enough heat to warm the building, which sits 7,000 feet above sea level. The temperature control is so effective that Amory Lovins began growing bananas, a tropical fruit, inside the building. Lovins now jokes that his is the northernmost banana crop in the world.
Daring and creative thinking like this has brought RMI to the attention of some of the world’s biggest corporations. Wal-Mart, the U.S.’s largest private employer and purchaser of electricity, hired RMI in June 2006 to help them make money while protecting the environment. With RMI’s guidance, Wal-Mart now saves $7 million per year by using CFLs. Last January they opened their first highly efficient store in Kansas City, which will use 20% less energy than a typical superstore, thanks to innovations in heating, cooling, and lighting systems.
The Pentagon, meanwhile, is working with RMI to plan a sixty percent decrease in its energy use. This will at the same time improve work conditions, which should in turn increase worker productivity. The plan is to upgrade the Pentagon’s indoor air quality, heating, ventilation, and air conditioning. The estimated improvement in productivity is six percent, for a value of $72 million.
Amory Lovins believes that RMI’s successes mean that its strategies can outpace public, government-mandated efforts at greenhouse emissions cuts. He has bragged in Newsweek that while the Kyoto Protocol has countries cutting emissions by 7% (by 2010, based on their 1990 emissions), RMI client DuPont “emitted 80% less greenhouse gas in 2006 than in 1990, and at a $3 million profit.” While DuPont’s chemical leaks and dumps remain troublesome, it is, with regard to global warming, way ahead of even Focus the Nation’s “two percent solution.”
Lovins also touts Dow Chemical, which in 1996 reduced by 62% the energy it uses to prepare aluminum beverage cans by making their assembly process more efficient. Dow’s energy cuts decreased its greenhouse gas emissions, but Dow didn’t act solely out of concern for climate change: when Dow invested $1 billion in its 10-year environmental sustainability program in the late 1990s, it did so expecting a 30-40% annual return on its investment. According to Lovins, Dow has since saved $3.3 billion while decreasing its energy use by 22%.
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RMI’s ideas for radical efficiency and valuing nature through economic means are laid out in Natural Capitalism, a book co-authored by the Lovinses and environmental guru Paul Hawken in 1998. The book’s basic claim is that the market economy is currently failing to value and use natural capital adequately. Our current industrial system, the book explains, is based on efficient allocations of machines and labor, not of environmental goods and services like oil and atmospheric climate control. Until recently, oil and coal have been so cheap that their costs have been unimportant. But as fossil fuels become scarce, and the impact of their burning becomes more noticeable, we must revalue the importance of nature.
Cheap fossil fuels underlie many corporations’ structural division between operations and capital investments. Corporations are organized to deal separately with scarce materials (capital investments) and scarce labor (operations), setting up departments to handle each. Energy, though, is not centrally managed”– and competition between the investments and operations divisions often leads to missed opportunities for energy savings. These missed opportunities lead to unnecessary greenhouse gas emissions.
Take the case of a company purchasing wiring for a new factory. Its capital investments department will purchase the cheapest wiring available; its operations staff will pay the electrical bills, not repairing the wiring until it breaks completely. Each department thereby maximizes efficiency of its particular specialty, but the company has failed to account for its natural resource use. In this instance, valuing natural capital would take the form of increasing the thickness of the factory’s electrical wiring. This can increase the electrical efficiency of those wires by over 30%”– an efficiency that translates directly to savings on electric bills. These savings can then, in less than two years, pay for the investment in thicker wiring, and the company reaps additional benefits by spending less on electricity every year for the lifetime of the wires.
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RMI’s success is based on showing that increases in efficiency lead both to increases in profits and decreases in greenhouse gas emissions. Examples like Dupont and Dow Chemical show that this relationship works sometimes, but other cases suggest otherwise. Ultimately, the connection between increases in efficiency and decreases in greenhouse gas emissions depends on the elasticity of demand for energy: how do changes in efficiency affect people’s energy consumption habits?
Imagine you have $100 to spend on gasoline each month. Your old car required $100 of gasoline each month, but you bought a new hybrid which needs only half as much gasoline”– $50 worth. You now can continue to buy the same amount of gas you always have, and save $50 per month. Or you can continue to spend $100 on gas, giving you extra gas and therefore the ability to, for example, take that scenic long route home from work.
If you opted for the extra gas, the elasticity of your demand for energy is high”– your demand for energy changes when more is available. If increased efficiency leads you to buy more gas and drive more, you will emit more greenhouse gases. But if your elasticity of demand for energy is low, you might take the $50 you just saved and walk to the nursery to buy a tree. In this case, your demand for energy stayed the same, and the efficiency of your new hybrid led your greenhouse gas emissions to decrease.
While both choices seem to make sense, historical evidence suggests that people are more likely to buy more gas than to pocket the savings.
In 1865, William Stanley Jevons’ The Coal Question examined coal usage in Britain. Coal technology between 1830 and 1860 had become considerably more efficient, giving people a choice similar to the one described above”– they could save money by using the same amount of coal as before the technological improvements, or they could use more coal. They overwhelmingly chose to use more coal, increasing consumption by a factor of ten and causing severe pollution. Seeing this, Jevons admonished: “It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth.”
Horace Herring, a British academic, tells a similar story. In the early 1900s, light bulbs with tungsten filaments began replacing those with carbon filaments. These new bulbs used one-fourth the energy of their carbon filament predecessors. With the new, energy-efficient bulbs gaining popularity quickly, the decreased demand for energy caused a drop in electricity prices. Low prices allowed for enormous changes”– electricity could now be used for street lights, and electrical bulbs could be sold cheaply and in large quantities to the general public, creating a new market in household electric light bulbs. Thus, as in Jevons’ coal example, availability of a new efficient technology led people to buy and use energy as never before. In this case, electricity use skyrocketed because the new tungsten technology allowed for increased efficiency.
Improvements in energy efficiency technology, can lead consumers to increase their consumption so much that they erase any potential positive effects of the technology on the environment. Two Finnish sociologists recently presented the problem concisely in the Journal of Consumer Policy: “Will consumers actually substitute one good for another, or will they want to have it all: the television on, the newspaper on the table, and electronic news pointlessly self scanning as the consumer of all this information dozes on the couch?”
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Increased demand is just one problem with turning to efficiency to solve environmental problems. Another is that efficient technologies are inapplicable to other ecological problems. The ongoing mass extinction of non-human species is caused in part by human destruction of habitats. No matter how many hybrid cars are running on our roads, or how green our new Wal-Marts are, we still destroy habitat space with every super store built. Efficient fishing technologies may decrease greenhouse gas emissions, but they also increase the rate we can destroy marine biota. Even alternative energy technologies like windmills, which provide energy without contributing to global warming, take up habitat space and must be constructed with scarce natural resources.
These problems don’t get as much publicity as energy use and greenhouse gas emissions, but they do make one point clear. Environmental problems from species extinctions to greenhouse warming all depend fundamentally on people’s demands. If people demand less energy, then efficient technologies can ameliorate climate change. If people don’t demand super Wal-Marts, habitat destruction can be avoided. This has led some environmentalists to call for people to consume less and use fewer resources. Historical examples show consistent trends of people demanding more consumption and resources, which is what makes RMI’s focus on increasing efficiency so appealing: RMI reconciles the desires of people (and corporations) to consume with a strategy for environmental protection. RMI’s suggestion, which it has proven with some major initiatives, is that people can continue to consume without destroying the environment.
This suggestion only holds if people do not demand exponentially more energy over time, which would itself be a radical change. The most compelling criticism of RMI’s focus on efficiency is that it seems to ignore the deeper shifts in societal goals and practices that may be required to achieve environmental sustainability. This criticism aside, the Lovinses’ implementations of resource efficiency have cut greenhouse emissions while making green living more palatable and accessible to the general population. RMI’s work enables organizations”– and, potentially, the general public”– to value the environment in the usual course of business and life. Incremental increases in awareness can be the root of the broader, necessary societal change. It is important to pursue viable steps toward living in harmony with nature”– especially steps as realistic and measurable as RMI’s.
ELIAV BITAN is a Columbia College junior, is a History major and a Managing Editor of The Current. He likes trees and books, and is afraid that the two might contradict each other.