An Interview with Amory Lovins and Jules Kortenhorst by Laurie Guevara-Stone, RMI, 31 May 2017
As RMI celebrates our 35th anniversary as a nonprofit organization, we are in a very exciting, but also very critical, time in our race to a clean energy future. We recently held a web discussion, 35 Bold Ideas to Win the Clean Energy Race, with RMI CEO Jules Kortenhorst and Cofounder and Chief Scientist Amory Lovins. Program marketer Kelly Vaughn asked them what they think are the compelling proof points for a clean energy future, what individuals can do, what innovative projects RMI is working on right now, and what exciting developments we can look forward to in the market.
Vaughn: What, over the last 35 years, has really inspired you and showed you that there is a reason to maintain hope that this clean energy race can be won?
Lovins: We’ve had gratifying success in launching revolutions in the efficient storage and use of energy. And that includes efficient and superefficient buildings and net-zero buildings. Very efficient industries are raising the bar quite distinctively in many sectors, such as superefficient and electric autos, shared and autonomous Mobility-as-a-Service business models, and reconceiving the whole electricity business around efficient, distributed, renewable, and resilient energy supply. Those are all well underway.
The world has had flat carbon emissions for three years running with 3 percent per year economic growth thanks to a combination of greater energy efficiency, some structural change (especially in big economies like China), and of course renewables now being 55 percent of the new generating capacity the world added last year. It keeps getting cheaper, and as it gets cheaper we buy more, and that makes it cheaper, and we buy more. Well, that positive feedback is just running away. The forecasters can’t keep up.
In efficiency, we’ve figured out how to make big savings cheaper than small ones. We get expanding returns there, too. Then combine this with some powerful policies, not just in the market economies like our own where we have competitive electric markets and so on, but also in places like China, which has shifted very decisively toward efficiency as a global strategy. We see the same thing emerging now in India, where going renewable is cheaper than coal. And those two countries were responsible together for 86 percent of the new coal-fired power plants built in the last decade. Now they’ve got over 300 billion watts in stranded assets because they’re realizing they won’t need them and it’s cheaper not to have them. They’re running the ones they have a lot less, and renewable strategies are taking over. This isn’t easy and there’s still a lot of hard work to do. But the world is now on the right track. It just needs to do it more, better, faster.
Vaughn: Over the past six months, what are the major shifts in global markets that either discourage you or provide confidence that this clean energy race is clearly moving in the right direction?
Kortenhorst: Of course when you look back at the past six months, you have to acknowledge an important transition: We now are under a new administration here in the United States—one that in many ways is looking at a completely different, and we would argue outdated, paradigm about the energy system. Its emphasis on revitalizing coal, its focus on accelerating access to new lands for coastal fuel exploration, and its disregard for the opportunities of energy efficiency force us all to wonder, “Is that really the direction that the United States wants to go?”
At the same time, the distracting contrast with the world around us is really quite clear. Last year in Marrakesh, when countries were together a year after Paris, there was a very clear commitment from country after country to stay the course. A commitment, for example, from China and India is visible not only through the on-the-ground work that they are doing to accelerate the deployment of renewables and energy efficiency, but also in how they are now working together to drive energy innovation. Countries around the world are agreeing that this is the direction of the energy transformation. They acknowledge that clean energy is going to lead to a more competitive economy and they want to be part of that.
But it’s not just at the country level. The increasing role of cities and provinces or states is also important to note. Just two weeks ago, Mayor Bloomberg brought out a book that emphasized the role of subnational governments in accelerating the energy transition. Excitingly, just yesterday, the city of Atlanta, Georgia, announced a new commitment to use 100 percent renewable energy by 2035. So this is spreading; people are recognizing that a renewable-based and efficient energy system is more attractive, is more competitive, is more resilient, and is therefore the way of the future.
We also see companies playing an increasing role in this transition. We are working with over 200 members of our Business Renewables Center to support the buying of renewables across the United States. More and more companies are looking to be part of that transition. All of this is showing huge progress in the cost-effectiveness of the new energy technologies.
We’ve also been tremendously surprised by battery technology. We’ve had to update some of our models because the cost of battery storage is now so much lower than what it was, even in our forecasts one year or two years earlier. These trends are accelerating and are driving faster and faster deployment on a global scale. All of this is very hopeful news. It certainly raises the question of what direction the United States federal government might take. But at state and local levels—and around the world—we’ve seen an accelerating trend that is just unstoppable.
Vaughn: Amory, how would you respond to Jules’s comments about some of the uncertainties that the U.S. political situation has created for our mission, while we’re still seeing these very promising market trends?
Lovins: Well, when you have one nation out of 194 in the Paris agreement with a very different view of energy market realities than others, I think you’re bound to say that however much power they think they have, they won’t be able to get done a lot of the contrary moves they have planned, just as they’ve been frustrated in other ways by existing laws, practices, and market forces. But you know, in the United States we have a system of government brilliantly designed by some very smart people 200-odd years ago to make major dramatic change impossible at a federal level. They did a really good job of it. And therefore—as I articulated in my remarks just after the election—we need to remember that the president is not the federal government. The federal government is not all government. In fact, most of our energy policy has long been made at the state and local levels in this country.
And government is not the only (or, I would add, even the most important) actor in energy and climate policy. There will be a lot of turbulence within the president’s party as well, because some of the greatest employment-adding industries are renewables in states like Texas, the national leader by far, thanks to now Energy Secretary Perry and Iowa Senator Grassley. And those interests will be vigorously defended. But I think market forces will win and, through all the turbulence, the same trends will continue. To the extent that the United States forsakes any territory in policy or markets, other countries will happily occupy the vacated space and turn it to their own competitive advantage. One way or another, the job gets done.
Kortenhorst: A big part of the emerging debate at the federal level is our ability to maintain a stable electricity grid in the face of a higher and higher penetration of renewables. It is a very valid concern and an important question. We have been arguing for the longest time that an electricity system that is based on distributed, renewable resources—and a broad variety of both power generation and power demands—yields even more stable and secure systems. But there’s some uncertainty around this in the current administration, and Secretary Perry has just asked for a review on this matter. Now, his thinking is that the way in which we create stability in this emerging electricity system is by reverting back to centralized baseload power.
But Amory, you were just talking to me about a new technology you recently saw that enables us to operate a much more stable grid by virtue of solar power being much more attuned to the variability of the grid. Maybe you can talk about it. It is just one of the indications of the tremendous amount of innovation that is happening in the space.
Lovins: There are now microchips headed for market that enable a distributing technology like rooftop solar panels to look at the environment around them and lock on to the frequency you want, the voltage you want, and heal any faults in the network and tune themselves up to stabilize it under those conditions. In other words, distributed intelligence, rather than the central-planning model the grid has grown up with where there’s a dispatcher somewhere telling all the electrons where to go.
This way, with the distributed intelligence, even if the grid goes down in some places or many places, individual microgrids will continue to operate. That’s actually the way my house works. It’s the way the Pentagon aims to power all its military bases, because they need their stuff to work. And it’s a good illustration of energy meets information technology (IT), and how IT is meshing up with energy. It makes systems smart, and enables them to have these properties of cost reduction, transparency, choice, and resiliency that we could only dream of. Now that’s coming together with new business models, new financial tools, and new ways of settling transactions.
It’s a very exciting time. And I think it’s also significant that the Energy Transitions Commission just released a new report and energy projections a few days ago that the chairman of the Royal Dutch Shell Group called a full-throated call for a largely or wholly renewable future. He was among other leaders from the oil, gas, and electricity industries saying, “This is feasible, it’s profitable, and that’s where we’re headed.”
Download the full transcript of the discussion.
Vaughn: As many of us listen to the news and follow what RMI and other innovative companies are doing, there are many reasons to be positive. But we’re also seeing some of the not-so-great news that makes us want to take action on our own. What would you say individuals can do to really help drive toward a clean energy future?
Kortenhorst: I would say that, as always at RMI, we start with energy efficiency. Just walk through your house and feel the windows and check whether there is cold air or, on a warm day, hot air coming in through the sides of the window. And if so, it is really the simplest step to put some insulating tape in it or if you can afford it, replace your windows. Of course the next step is to think about the vehicle that you drive. Is it an efficient one, and are you considering a plug-in hybrid or even electric vehicle? It is remarkable how quickly these are becoming cost-effective and how the range is expanding so that you can even start to think about travelling from Boulder, which is the office where I work from, to Basalt, over the mountains, in an electric vehicle. Another obvious question is, is it the right moment for you to start thinking about solar panels on your roof?
There is another option that I will mention and it’s one that is often forgotten, but that is to think about the carbon footprint associated with your diet. I love a good piece of meat. I can’t deny it. But the reality is that if you eat a more flexible diet that has more vegetables and maybe a little bit less red meat, you significantly reduce the carbon footprint associated with your food. Finally, when people ask me what can I do, I can’t help but say you can go to our website and you can find the page where you can make a contribution.
Lovins: And of course vote your values. And your values are quite diverse. There are many kinds of people listening to this. There’re even more in the country. But remember that there are many kinds of outcomes from the energy transition that many kinds of people would like for different reasons. You can get a clean, prosperous, secure future that I think we all want for our kids. You could get better national security, greater competitiveness, strong communities and families, greater community, and individual choice. And you don’t have to agree about which of those values is most important. You don’t have to agree about climate science or any other particular outcome. If you like one or more of the many outcomes that the energy transition yields, you could support it. And therefore we focus on outcomes—not just motives—because then everybody can play. And we all want the outcomes, though maybe for different reasons. That’s fine. We have a diverse society. Diversity is good.
How do you organize people to do different things? First you talk to one person, then you talk to two people, and you address their concerns in their language. You talk to them where they’re at, not where you’re at.
Kortenhorst: Amory, tell us a little bit about some of the work going on at RMI right now that you feel is most exciting.
Lovins: Where to start? Well, I’m just back from Delhi, where we helped the prime minister’s office and the government’s strategic planning agency, NITI Aayog, run a design charrette with very powerful national-government and private-sector representation to transform India’s mobility. And this is taking off like a rocket. A lot of the stuff we are recommending—and a report—is already happening. They’re moving so fast. And this was actually suggested to me a year ago by the energy minister, the same guy whose auction designs made renewables cheaper than coal. So you have to take this guy very seriously. And he said, can you help me come up with a way to make every two-, three-, and four-wheeled personal vehicle in India electric by 2030? And he meant old and new, by the way. The level of ambition is just astonishing, and we’re helping that happen, bringing in best practice from all over.
Then, I mentioned the energy–IT mash-up. We’ll be making an exciting announcement rather soon about ways to harness a wonderful new technology that tells you at any given moment which power plant is just about to turn on if you use more electricity. So if you have a choice in letting your devices turn on—and quite often you do without inconvenience—you could do it in a way that will minimize your carbon emissions and indeed your costs. And this is all done by smart chips. You don’t need to actually do anything. But having that information, which comes right off the websites of the grid operators streamed to our energy-using devices, we can give very large benefits to society, and we’re engaged in the way to make that happen.
Similarly, we’re excited about a new technology you may have heard of called blockchain, which enables secure and just about cost-free financial transactions, even at a very small scale. If you could do things like attach labels to your electricity (which we’ve never had before) so you’d know where it’s coming from as it’s being made, you could make smarter choices about what you’re using and when. And if you want to do microtransactions or, actually, let your devices do microtransactions, like selling certain capabilities of your electric car when it’s parked to swap power and services with the grid, you could do that. The car could do it transparently, in the background, securely, at practically no transaction cost. And that adds enough value to the grid to pay half the total cost of your electric car.
The same is true of our hallmark work in buildings, and of other ways where we can bring modernization to developing economies. Jules, we’re working with new business models there, too.
Kortenhorst: Very exciting work is going on in our buildings sector. We learned a lot of lessons from our own building here in Basalt, which is a net-zero energy building. In fact, it’s built in the Roaring Fork Valley, where Aspen is located, where it is bloody cold in the winter and nice and warm in the summer, but we just don’t have an air conditioning system. We don’t have a heating system. The point being that we have learned the lessons here and we’re now rolling out this model, this technology, to other parts of the country.
And we’re involved in building projects in the Midwest, building projects in California where we’re demonstrating how net-zero buildings or even whole zero-energy districts can transform the way we think about energy in the built environment. Excitingly, that is also happening in China. In fact, in China, a lot of our work is now centered around implementing the vision that was embedded in Reinventing Fire: China, the study that we published together with the Chinese government about a year ago. And the cornerstone for implementation that the Chinese government has identified is cities. They believe that cities are the scaling mechanism, just as we talked about earlier here in the U.S. So we’re supporting the Alliance of Pioneer Peaking Cities, cities that are mandated to peak their carbon emissions early, helping them put in place plans that actually significantly reduce their emissions.
And the third portfolio activity that I want to mention—because it is so exciting—is the work that we do in developing economies. One of the exciting parts of the agreement reached in Paris a year and a half ago is that 195 countries committed. Not just the rich developed countries, but countries including the poorest, like Rwanda and Sierra Leone, the countries at the bottom of the economic pyramid, committed to reduce their emissions, limit their emissions growth, or switch to a renewable energy system. So we are working in Rwanda. We’re working in Sierra Leone. We’re working in Uganda. But we’re also working with small island nations in the Caribbean and beyond to help them plan the transition to a much more cost-effective and also sustainable energy system. And because of the dramatic fall in the cost of, particularly, solar for those countries, we are seeing those solutions are not just sustainable, but also economically advantageous for these countries. So that’s very exciting.
Vaughn: One trend that we’re seeing is that these developing economies are trying to provide increased energy access and electricity for their populations with renewable, more localized minigrids and such. Can you speak a little bit about how RMI is expanding its horizons through some of our growing international portfolios?
Kortenhorst: The work in the countryside in Africa is a really important illustration. Of course we also look at the centralized energy system in some of these countries. But there is increasingly a recognition that, particularly in rural Africa, the right way to provide access to energy is not through the illusion of an electricity grid being extended at some point (which would be very unaffordable), but to put in place a minigrid or a home system that provides electricity in a very cost-effective way.
Lovins: And of course the key to that is efficiency. Berkeley Lab has demonstrated, for example, that with this much solar panel [gestures], you can run a 26-inch color television, a very efficient one, a bunch of lights to light up your whole house, a clock radio, a mobile phone charger, and a fan. That’s a pretty good start at a decent life. And it’s less than half the cost of doing the same thing inefficiently with a lot more solar cells. So again, less capital spreading more benefit to more people a lot faster. And it’s not only about electricity. I was just on the phone the other day with the research director for the alliance that does clean cookstoves all over the world, where one and half billion people or so are cooking on wood and dung. Billions of people per year are dying of resulting lung disease from indoor air pollution and losing their eyesight from smoke and so on. Well, they do terrific work on stoves. I added ten things to work toward on their agenda about developing more efficient pots, which then integrate with the stove. So now we’re figuring out how to get that into their agenda worldwide.
This is the second in our series exploring the important issues discussed in the webinar. Part 1 is available here. Stay tuned for the next post coming soon or download the full transcript of the discussion.