GLOBE 2014 – Amory Lovins Keynote: Reinventing Fire

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GLOBE 2014 – Amory Lovins Keynote: Reinventing Fire

it’s wonderful to work with a Murray because you never have to introduce him and yet that’s what I’ve been asked to do most people in the energy sector go something like this oh you work with Amy I read his thinking already 30 years ago he’s been a source of inspiration for me for all those times it was about 30 years ago that a Murray started the Rocky Mountain Institute and laid out his vision for a low-carbon energy economy a economy and an energy system that is prosperous that provides us a secure future and above all a clean future amerie came up with the idea of megawatts the idea that it is much better not to use energy than to have to use it and Amy came up as the idea of using carbon fiber in the amote automotive sector and finally we’re seeing traction Amy came up with the idea of deep retrofitting existing buildings in order to make them more energy efficient and we’ve seen that implemented from the White House to the Empire State Building and about two years ago Amy and his team and created a very tangible vision of how we can take the economy to a true low-carbon prosperous future and I’m very pleased amerie that you’ll be telling us about that right now ladies and gentlemen amerie lovins Thank You Jules thank you to all the sponsors and organizers for making it possible for us to be together here at globe again it’s been many years since I was here great city great event I have the honor to share with you the findings of an ambitious synthesis of us energy solutions that I think will have considerable application in British Columbia and in Canada and in fact there is a Canadian team that’s been working for over a year on applying it to Canada so watch this space we have also now brought these ideas to China and are working with three other organizations to in China full-time and one a lot to apply what I’m about to tell you to the Chinese situation using their modelers models data and examples with view to informing the thirteenth five-year plan that’s now emerging what I’ll describe took 60 one of us six quarters to do with a lot of help from industry on both content and peer review and we published a two and a half years ago as a business book called reinventing fire with four words by the president of shale oil and the then chairman of the largest US nuclear and third largest coal fired utility this might surprise you a bit when you burn what’s in it in my country and I fear also in yours lately there’s been a rather odd public conversation about energy and it goes something like this would you rather die of a oil wars or be climate change or C nuclear holocaust that is from proliferation or D all of the above or e none of the above which is the choice were seldom offered so what if we could make energy do our work without working our undoing could we imagine fuel without fear could we actually reinvent fire and we chose that big poetic title because long ago fire made us human then fossil fuels made us modern but now we need a new fire that makes us safe secure healthy and durable that’s now become possible for both our countries in fact it works better and cost less than what we’re doing now so let’s see how that could work for fifth of the world’s energy still comes from burning each year about nineteen cubic kilometers of the rotted remains of primeval swamp goo and as a member of the National Petroleum Council in the United States I should tell you and it’s

true that those fossil fuels have built our civilization created our wealth and enrich the lives of billions of people but the rising costs to our security economy health and environment are eroding if not at weighing their benefits and that’s why we need a new fire switching from the old fire to the new fire changes two big stories oil and electricity and they have almost nothing to do with each other they’re less than one percent connected in North America less than five percent in the world but the uses of these two forms of energy are similarly concentrated three fourths of us oil fuels transport three-fourths of the electricity powers buildings the rest of both runs industry so very efficient transport and land use buildings and factories can save oil and coal and natural gas that can displace both of them but today’s energy system isn’t just inefficient it’s also disconnected aging dirty and insecure so it needs refurbishment but by 2050 we found it could become efficient connected and distributed with elegantly frugal vehicles buildings and factories all relying on a secure modern and resilient electricity system so in the United States for example we can eliminate our addiction to oil and coal by 2050 and use a third less natural gas while switching to threefold more efficient use and three-fourths renewable supplies that’s the transition I’ll describe for you and we found that by 2050 this could cost the united states five trillion u.s. dollars less in net present value than business as usual counting all hidden or external costs like carbon emissions at zero a conservatively low estimate and lower than the price you have put up on on it in British Columbia thank you very much for that and yet we found that this cheaper energy system could support a hundred fifty-eight percent bigger US economy all without needing oil or coal or nuclear energy and this transition would need no two inventions and no new national taxes subsidies mandates or laws thus and running Washington gridlock let me say that again I’m going to tell you how the United States for example could get completely off oil and coal five trillion dollars cheaper with no act of Congress led by business for profit there are some policy changes required to enable and speed this change but it turns out they can all be done administratively or at a state level because our state’s like your provinces are where in fact most of our energy policy gets made and has been for a long time so the idea here is to use our most effective insta tutions private enterprise co-evolving with civil society and in the u.s. case fed by military innovation to go around our least effective institutions and whether you care most about profits and jobs and competitive advantage or about national security or about environmental stewardship creation care climate and public health reinventing fire makes sense and it makes money now General Eisenhower reputedly said no one’s quite sure whether he actually said it that expanding the boundaries of a tough problem makes it soluble by encompassing more options more synergies more degrees of freedom so instead of chopping a tough problem into smaller bite-sized pieces we should move the boundaries out until they include what the solution requires therefore in reinventing fire we integrated all for energy using sectors buildings transport industry electricity and we integrated four kinds of innovation not only usual to technology and public policy but also to more powerful ones that are normally left out namely design the way we combine technologies and a competitive strategy new business models the whole role of strategy which is often

neglected by economic modelers but these combinations of all four kinds of innovation yield a lot more than the sum of their parts and especially they often create deeply disruptive business opportunities where to start well a very good place to start would be in the automotive sector because autos use nearly half our oil and the United States pays about two billion dollars a day for oil plus an extra four billion dollars a day for the hidden economic and military costs of our oil dependence so let’s start by making Otto’s oil free now two-thirds of the energy needed to move a typical car is caused by its weight and every unit of energy we save at the wheels by taking out weight or drag or rolling resistance saves another six units of energy you don’t need to waste getting it to the wheels so it leverages seven units of fuel savings at the tank and yet for the past quarter century our to town autos have actually suffered an epidemic of obesity they have gained weight twice as fast as we have but happily today we have ultra light ultra strong materials like carbon fiber composites that can make dramatic weight savings snowball and can make autos simpler and surprisingly cheaper to build lighter and more slippery autos need less force to move them so their engine gets smaller and that means you can afford to electrify the propulsion because now you need two or three times fewer of those costly batteries or fuel cells therefore the sticker price of the vehicle can drop to about today’s level and of course the driving costs per kilometer is lower from the start so this specific sequence of innovations can transform automakers from rigging tiny savings out of essentially Victorian steel stamping and engine technologies to the steeply falling costs of three mutually reinforcing technologies the ultralight materials their manufacturing techniques to make structures out of them and electric propulsion and if you’re exploiting three steep and synergistic learning curves while your competitor is out on the flat part of one learning curve you win the sales of such vehicles can grow in their prices can drop even faster with a temporary phpbb aids that fees charged on inefficient new autos paying for rebates on efficient ones you can make it revenue and size neutral there are at least six such systems operating in the world five in Europe one in Singapore and the biggest one in France in its first two years triple the speed of improving auto efficiency the resulting shift to electric autos is going to be as game-changing as shifting from small incremental improvements in typewriters to the dramatic Moore’s Law driven gains in computers and of course computers and electronics are now North America’s biggest industry while typewriter makers have vanished so vehicle fitness taking the obesity out of the car opens a powerful new automotive competitive strategy that doubles the oil savings in 40 years but also makes affordable the electrification that can save the rest of the oil now North America or Japan or China could lead this next automotive revolution the formidable barriers are much more cultural than their technical or economic and we’re helping the new leaders of the auto industry on several conference to tackle them but the current leader is Germany last year Volkswagen started making this 0.9 diesel liter per hundred kilometer to seed carbon fiber plug-in hybrid car there in low-volume initial production and BMW also started ramping up mid volume production of this carbon fiber battery electric car they’ve confirmed that its carbon fiber is paid for by needing fewer batteries and their CEO says we do not intend to be a typewriter maker because he can look across mention to where Olympia used to make excellent typewriters Audi has also shown a less than point nine liter per hundred kilometer carbon fiber plug-in hybrid concept SUV now there are some interesting things that North American

firms can can bring to this part seven or eight years ago a process developed by one of our spin-offs made by carbon cap which is a test piece for military helmets that have been shaping for several years they made it in one minute and it’s a carbon-fiber thermoplastic form that you can tell from the sound is extraordinarily stiff and strong actually it’s tougher than titanium see I think it we can pass it around as long as you really sure that I’ll get it back again but don’t worry about dropping it Tom Friedman actually collected with a sledgehammer as hard as he could and couldn’t even scuff it now the technology by the way has been sold to a German tier one whose North American operations are in Ontario so it’s now in the supply chain and this sort of manufacturing technique and its 16 competitors can scale and this one in particular can scale to automotive cost and speed with essentially aerospace performance that would save about four-fifths of the capital needed for auto making it would save lives because these materials can absorb 6 to 12 times the crash energy of steel per kilo do so more smoothly and the oil saved in US auto making alone would be equivalent to one and a half Saudis or half an opec that essentially we confined by drilling in the Detroit and sarnia formations and those mega barrels under our auto making centers the saved barrels cost only eighteen dollars each that’s to pay for the electrification since the ultra lighting turns out to be approximately free and that saved oil is domestic secure carbon free and inexhaustible and the the same physics actually i’m going to show you one more slide i hadn’t expected to ready two more that i think will help explain how this happens so let’s go to hear back in two thousand oops when working with a couple of europeans here ones we designed a mid-sized carbon fiber SUV with half normal weight it would get three point six liters per 100 kilometers 67 miles per US gallon on gasoline or two point 06 that’s 114 miles a gallon equivalent on hydrogen and it was an uncompromised crossover midsize SUV i expect you can see a lot of things over the way at the auto show but what was most interesting about it is how it’s made if you looked inside you would find only 14 parts in the composite body and like an airframe they’re suspended from rings not built up from a tub which is our horse and buggy legacy in the car business each part is made with one low pressure die set in a steel SUV body you would have 10 or 20 times more parts each with an average of four progressive steel stamping die set so you just saved about 98 or 99 percent of the tooling cost then each of these parts can be lifted with one hand no hoist the biggest part on the side i can briefly lift with one finger then the parts snap precisely together for bonding so you don’t need the robotic body shop and if you lay color in the mold you get rid of most or all of the paint shop as well so the two hardest can cost Leah steps in auto making wed away and also the propulsion system gets to third smaller so those savings together in manufacturing and powertrain pay for the carbon fiber that’s why the ultra lighting is approximately free and carbon fiber itself is probably about to add a lot cheaper and the unusual design process from the Lockheed Martin skunk works that we used for that project was then I’m told used by Toyota to whom we had told it to design this remarkable concept car seven years ago it has the interior volume of a Prius hybrid but half the fuel use and one-third the weight four hundred twenty kilos if we were ordinary not a plug-in hybrid 400 kilos and it’s featherweight and I

expect they didn’t do it for amusement in fact just to show that the day before they show this car they had totally the world’s biggest maker of carbon fiber announced a big factory to mass produce carbon fiber car parts for Toyota not a phrase previously much heard in the industry and now they’re four or five other automakers in that consortium so folks wagon and BMW will soon gain worthy competitors and not only in Japan now the same physics and the same business logic also applied to big vehicles the one in the upper left was just shown by walmart they’re heavy trucks the biggest civilian fleet in the world I believe are using smarter designs and logistics to haul each case with forty-four percent less fuel than they use nine years ago and the concept truck they just showed will get them further than that in fact it gets towards the technological fuel saving potential of triple deficiency in class eight heavy trucks and that plus triple des quintupled efficiency airplanes now being designed at places like Boeing and NASA and MIT can all together in heavy vehicles save the United States nearly a trillion dollars net present value in fuel but in both the heavy and the light vehicles today’s military revolution in energy efficiency in their cars and planes and land vehicles and trucks is going to speed up the fuel savings in the civilian sector which uses over 50 times as much fuel huge leverage in much the same way that military rd in the past gave us the internet the global positioning system the jet engine industry the microchip industry only this time what it leverages is getting the country off oil so we needn’t fight over oil neither would canadian forces need to fight over oil and then our war fighters can have megan’s in the Persian Gulf mission unnecessary as a advisor to the Chief of Naval Operations I can assure you they really like that idea now we can also use vehicles smarter as we build them better this is a graph of traffic congestion in the United States with the morning and evening rush hours and if that were an electricity load shape we would throw a lot of IT enabled smart grid and demand response and pricing at it to try to flatten out those peaks but by not doing that for road traffic we are wasting many billions of dollars a year in idle people idle vehicles a lot of roads but rather than just standing back and watching traffic double as is officially forecast we can cut needless driving by for very powerful techniques we can charge drivers for the road infrastructure they use not by the liter but by the kilometer we can use smart IT to enhance public transport and empower car and ride sharing we can allow lucrative smart growth and new urbanist real estate bottles so more people are already where they want to be and don’t need to go somewhere else and we can use IT to make traffic free-flowing and together these proven methods can give us the same or better access within the u.s. case 46 to eighty-four percent less driving saving another point four trillion dollars plus another point three trillion from smarter use of trucks 40 years hence a far more mobile US economy can use no oil and saving or displacing each barrel for 25 US dollars rather than buying it for upwards of 100 saves for trillion dollars net present value that would be 12 trillion if we had counted just the hidden economic and military costs of us oil dependence Canada has certain costs of oil dependence as well now to get mobility without oil to phase out the oil we can first get efficient and then switch fuels so the purple wedge is the savings already baked into the government forecasts the big blue wedge below it is all the savings they didn’t count from a vehicle fitness and resulting electrification and then the Aqua below that is for more productive use of vehicles we can then run those one or two liter per hundred kilometer autos on any mixture of electricity hydrogen and in orange advanced biofuels heavy trucks and airplanes can realistically use advanced biofuels or hydrogen but no

vehicle will need oil in fact the trucks could even use natural gas but they won’t need oil and any biofuels the u.s might need at most three million barrels a day could be made two thirds from wastes without displacing cropland and without harming climate or soil so our little team speeds these oil savings by what we call institutional acupuncture where the business logic is congested not flowing properly we insert little needles in selected points and partners bike forward and Walmart and the Pentagon to get that Chi flowing and this long transition is already well enough under way that even five years ago mainstream analysts were starting to see peak oil not in supply but in demand Deutsche Bank City Financial Times had forecast that world oil use may peak in this decade and then decline because like whale oil in the 1850s oil is becoming uncompetitive even at low prices before it becomes unavailable even at high prices the electrified autos needn’t add new burdens to the electricity system rather when smart autos exchange electricity and information through smart buildings with smart grids they add to the grid valuable distributed storage and flexibility that helped the grid to accept variable solar and wind power so electrified autos make the auto at electricity problems easier to solve together than separately and they also converge the oil story with our second big story saving electricity and then making it differently and those twin revolutions in electricity promised more numerous diverse and profound disruptions than in any other sector because we’ve got 21st century technology and speed colliding head-on with twentieth and even 19th century institutions rules and cultures now changing how we make electricity gets easier if we need less of it today most of it is wasted despite all the years of good work and power smart and so on and the efficiency technologies keep improving faster than we install them so the unbought reserve of nega wats saved wats keeps getting bigger and cheaper but as buildings and Industry start to catch up and get efficient faster than they grow electricity use instead of growing one percent a year as efficiently forecast could start shrinking one percent a year despite the electrified autos and in fact u.s electricity demand peaked in 2007 it’s been drifting down ever since same in Germany same in Denmark and the electricity used adjusted for weather per dollar of real GDP actually fell in 2012 alone by non precedent and three point four percent in one year but we can keep demand dropping as the economy grows by reasonably accelerating existing trends over the next 40 years us buildings which I’ll remind you use three-quarters of the electricity can use a can triple or quadruple their energy productivity and that would save 1.4 trillion net u.s. dollars with a thirty-three percent rate of return so the savings are worth four times their cost industry can also accelerate and double its energy productivity with the twenty one percent internal rate of return and to do these things by 2050 we just need to ramp up by 2030 the national average adoption of efficiency to the levels that are Pacific Northwest states right over the border from here already achieved nine years ago now a key to such big savings is a disruptive innovation we call integrative design that can often make very large energy savings cost less than small or no savings turning diminishing returns into expanding returns that’s how our 2010 retrofit is saving two-fifths of the Empire State building’s energy remanufacturing it’s 6514 windows on site in a temporary window factory on a vacant floor into super windows that pass light but block heat plus better lights and office equipment and the like cut the maximum cooling load by a third and then renovating smaller chillers instead of adding bigger ones saved 17 million dollars of capital costs paid for most of the other improvements and cutting the payback to just three years that is by the way the same pay back that a major energy service company had

offered to save just seven percent so we got six times bigger savings by optimizing the building as a system rather than the components in isolation our latest cost-effective deep retrofit of a difficult 48 year old US government building that faces the wrong way is expected cut its energy use seventy percent probably making it more efficient than the best new US office building for the 30,000 odd European passive buildings the like ours need no heating but have about normal construction costs and they don’t need to look like this to work like this now you can see most of the way towards the right at the bottom there’s this blue atrium those windows insulate like 14 sheets of glass would look like to and cost less than three our best ones are like 22 sheets of glass so let’s go into that atrium and it looks like this in a februari snow storm in fact when I took that picture a couple of years ago we were ripening five banana crops at once right now we’ve got six numbers 48 through 53 you can see at the upper left some recent banana crops that a year ago harvested themselves when there are 30 kilos of weight pulled down the tree and this is again with without a the normal furnace now in 1984 when I moved in this house was saving 99% of the normal space and water heating energy half the water ninety percent of the household electricity all with a 10-month payback today’s technologies which we’ve retrofitted lately are much better so we’re monitoring 300 data streams to see how much better the trouble is the monitoring equipment seems to be using more electricity than the lights and appliances and the same techniques of integrative design have now been used to eliminate air conditioning up to 46 Celsius in ordinary-looking tract houses with lower than normal construction costs and better comfort they’ve been used in steamy Bangkok to save ninety percent of air conditioning energy with normal construction costs and better comfort probably about everybody in the world except perhaps a few of our intimate friends live in a climate somewhere between Bangkok and old snowmass but wherever you live the key is integrative design that gives multiple benefits from single expenditures so the white arch you see at the top building up the middle of my house actually has 12 different functions but only one cost integrative design can also increase the half trillion dollars of conventional energy savings in industry Dow Chemicals already captured over 9 billion dollars of those savings on a 1 billion dollar investment but there’s a lot more to do for example three-fourths of the world’s electricity runs motors half of that runs pumps and fans we can make all that equipment a lot better there’s about 35 things you can retrofit into a typical industrial motor system to save about half the energy with about a year payback but first we ought to be capturing the bigger cheaper savings that are normally ignored and are not in any official study and are not in the engineering textbooks yet for example pumps the biggest use of motors move liquids through pipes and but a typical industrial pumping loop was redesigned to use at least eighty-six percent less pumping energy not by getting better pumps or motors or controls but by replacing long thin crooked pipes with fat short straight pipes this is not rocket science this is good Victorian engineering rediscovered and of course as we rearrange our metal furniture as designers we’re also saving capital costs because less friction in the pipes means smaller pumping equipment and less capital costs well we did that in our own house we save ninety-seven percent of the pumping energy with lower capital costs so what are such savings mean for the electricity that is three-fifths used in motors well from the coal or other fuel burnt in the power plant there are so many compounding losses that only a tenth of that fuel energy actually comes out the pipe as flow but we can take those compounding losses from left to right and turn them around backwards into compounding savings from right to left every unit of flow or friction we save in the pipe compounds back again to save 10 units of fuel and cost and pollution and powder lovins calls global weirding back at the power plant and of course as you go back upstream the components get smaller and cheaper so our team has lately found such snowballing energy savings in over forty billion dollars worth of diverse industrial redesigns

from this hewlett-packard data center and Texas Instruments chip fab to Rio Tinto in anglo-american minds and shell hydrocarbon facilities and typically our retrofit designs save about thirty to sixty percent of the energy with two or three-year paybacks whereas in new facilities savings are a bit bigger say 40 to 90 odd percent but almost always with lower capital costs now needing less electricity would in turn ease and speed the shift new sources of electricity chiefly renewables China leads their explosive growth and their plummeting costs shown here on a logarithmic scale for photovoltaic modules in blue and wind farms in green both of those in good us sites are already market place winners beating new combined cycle gas plants on levelized cost to power even though they’re generally subsidized less than non renewables are permanently by the middle of last year new solar power in the western US was selling for as little as five cents or less a kilowatt hour Midwestern wind power for less than half that much now in Germany the installed photovoltaic system costs only half as much as the average American ones even though we all by the same equipment they just install it more efficiently our installers are are catching up but today in 20 states or so entrepreneurs like Lyndon rive foods Solar City who heard about in the earlier panel this morning will happily come install solar power on your roof with no down payment and be tree utility bill I expect soon that offer may turn to cash back and such unregulated products could ultimately add up to a virtual utility that could bypass power companies just as cell phones bypassed our line phone companies this sort of thing gives you to electricity executives nightmares and venture capitalists sweet dreams and it’s happening right now in Hawaii where ten or fifteen percent of all the houses are using solar power and many have dropped off the grid done their own storage and found it’s cheaper that way a wave of grid defection that we’ve recently analyzed could sweep across the continent well within the lives of existing utility assets or of course incumbent electricity providers could turn that insurgency and to new business opportunities and we’re working both sides of that street we have to electricity practices one helping defenders one helping attackers competition is good now here’s the big picture worldwide in each of the past six years half of all the new generating capacity has been renewable and this graph shows the amount of wind and solar capacity solar just crossed wind this year this past year added each year this is not the cumulative capacity this is the net additions because electricity production has become a scalable global commodity a manufactured product China in 2012 made war wind power the nuclear power they doubled each you know each year their wind power for five years running last year China added more solar power than the United States has and we invented the stuff and the global clean energy sector has brought Europe over a million renewable energy jobs it’s created more American solar jobs than we have coal or steel jobs and in each of the past three years these modern renewables got a quarter trillion dollars of global private investment and added over 80 gigawatts so they have far surpassed the global installed capacity of nuclear energy whose dwindling annual net additions actually turn negative before the Fukushima accident and the coal and nuclear plant orders are dwindling worldwide because they don’t have a business case too much cost too much financial risk now the the reason for this rapid growth is that modern renewables scale up in a fundamentally different way we used to build a cathedral it would take maybe three years to license for years to build but meanwhile each year you can build a solar factory that each year thereafter produces enough solar modules that each year thereafter they will produce as much electricity as your Cathedral would have produced after seven years or ten years and that’s why solar output skills up incredibly quickly in this case 15 times faster in the illustration we’re often told though that only Cola nuclear

plants can keep the lights on along with big hydro dams because they are 24 7 while wind and photovoltaics are variable and thus supposedly unreliable but neither part of that statement is true first variable does not mean unpredictable we can predict solar and wind power at least as accurately as demand in this stormy winter month forecast output of France’s wind farms almost exactly match the actual output one day later and the remaining error vanished some hours before actual dispatch second no generator is 24-7 they all break and when a giant kohler nuclear plant fails a billion watts vanishes in milliseconds often for weeks or months often without warning grids routinely handle that intermittence by backing up failed plants with working plants and in exactly the same way grids can handle the forecast able variations of solar and wind power from a portfolio diversified in type and location forecast and integrated with renewables at other places or of other kinds let me give you an example of how this can work the isolated Texas grids summer electric loads in 2050 can get a lot smaller with profitable efficiency but it’s still about 30 billion watts so let’s meet all of that renewably will put in enough wind and solar to meet eighty-six percent of the annual load and then the other fourteen percent will get from the other renewables that are dispatchable you can have them whenever you want so that’s geothermal small hydro solar thermal electric burning municipal waste burning energy studies burning feedlot biogas in in existing combustion turbine so now we have a hundred percent renewable supply except it doesn’t match the load shape very well but now we can take those surpluses and put them into two kinds of distributed storage we can use them to to charge up both ice storage air conditioning and smart electric vehicles and then in yellow we can get that distributed storage back when we need it fill in the last bits with some unobtrusively flexible demand now we have hundred percent renewable supply every hour of the year we didn’t put in any bulk storage to get that result and there’s only five percent left over now the sort of choreography is not just theoretical some European countries without adding bulk storage are already delivering last year twenty five to fifty eight percent renewable electricity far more reliable than America’s actually the most reliable in Europe is from Denmark and Germany there’s about 10 times more reliable than United States electricity also Iowa and South Dakota are over a fourth wind power today so they in Europe have far transcended renewable power supposed reliability limits you know whatever exists is possible and the National Renewable Energy Lab in the US has exhaustively analyzed how this choreography could work for the lower 48 states you can see the wind power in sort of salmon color and the bright orange concentrating solar in the southwest and the wind the photovoltaics in yellow winking on and off during the course of a summer few weeks and the the black bits are fossil and nuclear which and their scenarios goes down to just 10 or 20 percent over time now they’re one of the most important examples of the decentralization trend sweeping the industry is Denmark which over three decades has shifted from essentially all centralized coal-fired power plants to a constellation of decentralized wind turbines eighty-six percent owned by farmers and their coops and communities and AG waste cogeneration and Denmark plans a hundred percent renewable energy not just electricity by 2050 they’re on track or ahead of schedule they don’t think it will cost extra and they’ve also been reorganizing their grid in a cellular architecture that makes cascading blackouts impossible now in America we have this aging dirty

insecure electricity system that we have to replace any way by 2050 and we could replace it with more of what we’ve got or new nuclear and so-called clean coal or centralized renewables or half distributed renewables surprise they all cost the same but they differ profoundly in their risks around national security fuel water finance technology climate and health seven kinds of risk same cost different risks this is a risk management play when we choose our electricity future for example we have this over centralized grid just as you do very vulnerable to cascading and potentially economy shattering blackouts caused by operational problems like say squirrels tree limbs ice storm solar storm super storms earthquakes physical attack cyber attack all these things have happened lately although the solar storms haven’t been big for a while and that’s just a matter of when not if but that blackout risk disappears and all six other kinds of risks are best managed if we pick distributed renewables organized in micro grids that normally interconnect freely but can stand alone at need so they can disconnect fractally reconnect seamlessly that is actually the pentagon strategy for supplying power to its own bases because they need their stuff to work well the rest of us whom they’re defending need our stuff to work too that’s why my house works this way with or without the grid and at about the same cost as business as usual that resilient grid architecture could maximize national and community and family security customer choice entrepreneurial opportunity and innovation so let me summarize the electricity story together efficient use and diverse distributed renewable resilient supply are starting to transform the whole sector turn it upside down traditionally utilities build giant coal and nuclear and gas plants of course originally in Canada a lot of hydro dams maybe they built little efficiency renewables and those utilities were rewarded as they still tend to be they are in 36 of the United States for selling you more electricity but now especially where regulators instead reward them for cutting your bill the investments are going other way up the massive is shifting the market is shifting massively towards efficiency renewables combined heat and power distributed storage smart grids ways to meld them all together reliably and that is most true in the 30-odd of the United it’s where demand side resources are allowed to bid directly against supply in the same auctions we had a big auction recently where I believe 92% the winning bids came from the demand side because that’s cheaper so our energy future is not fate but choice and that choice is extremely flexible in 1975 the US government and industry all insisted that the amount of energy used to make a dollar of real GDP could never go down so it was heretical when I suggested in an article in foreign affairs magazine it could go down threefold how are we doing well it’s down over to fold so far and now we have so much better technologies costing only a third as much we have integrating integrative design and better finance and marketing a delivery channels so we now have very clear line aside to how to triple efficiency all over again at even lower cost so to solve the energy problem we just needed to enlarge it and integrate it the results may at first seem incredible but as that great Canadian Marshall McLuhan said only puny secrets need protection big discoveries you said are protected by public incredulity now combine the electricity and oil revolutions and you have the really big story reinventing fire where business enabled and sped by smart policies in mindful markets can lead the United States and I daresay many other countries like yours completely off oil and coal by 2050 saving in the u.s. case five trillion dollars growing the economy 2.6 fold strengthening security and by eliminating oil and coal and gradually phasing out gas cutting carbon fossil emissions by 82 to eighty-six percent now if you like any of those outcomes any one or more will do you could support this transition without needing to like every outcome and without needing to agree about which outcome is most important so focusing on outcomes

motives can turn gridlock and conflict into a unifying solution to our common energy challenge and these best buys also turn out to be the most effective solutions to the big global problems that hazard every country’s security and prosperity now at our little public charity Rocky Mountain Institute we’re helping smart companies get unstuck and speed this journey by many sectoral initiatives and projects these and other newer ones but of course there’s still a lot of old thinking around to as the Canadian former oilman Murray strong said not all the fossils are in the fuel but do pods former chairman Edgar Willard reminds us that firms hampered by old thinking won’t be a problem because they won’t be around in the long run now what I’ve described for you is not just a once in a civilization business opportunity it’s one of the greatest transformations in the history of our species we humans are really inventing a new fire and it’s not dug from below but flowing from above I’ve even heard theologians talk about energy from hell and energy from heaven and this this new fire is quite different it is not scarce but bountiful not local but everywhere not transient but permanent not costly but free and but for the transitional tale of natural gas and a bit of biofuel grown in ways that sustain and endure this new fire is flameless and very efficiently used in a way that makes money it really could have an able energy to do our work without working our undoing each of you owns a piece of that prize wherever you live our book details how you can capture it so with the conversation begun a tree and fending fire calm let me invite each of you to engage with us with each other with everybody around you to help make Canada and the world healthier richer fairer cooler and safer by together reinventing fire thank you for who you are and what you do and all your good work we have time for a few questions so if you’d please come to the middle microphone I’ll be happy to try to address them and some of them I believe have already been crowd source does that red clay you clay as the manager of project of course you you’re aware of how keenly enthusiastic our customers in the National Development Reform Commission are receiving the reinventing fire concept and actually the chinese edition of the book is coming out the next few weeks so we have about 40 researchers eight or nine months into a two year effort to analyze how this would work in China it’s very clear to us already although we don’t have the exact numbers yet that will be able to come up with a dramatically lower energy future for China meeting all of their economic growth assumptions but with much lower emissions and costs and they’re already moving away from coal rather dramatically in 2012 for example the generation of electricity in china increased more by more chair watt hours a year from non-hydro renewables than from all fossil and nuclear sources combined so they were still installing forty-three percent of their new capacity as coal plants but they were running the coal plants a lot less because the renewables are cheaper to run as well as cleaner and anybody who like us has been in Beijing in recent weeks we’ll know why that matters to health when the air becomes unbreathable it really gets your attention now the tar sands are I think very aptly characterized in an excellent report by carbon tracker org who put a number of oil patch financial analysts on to it try carbon tracker org slash k XL I believe as among the very most expensive

hydrocarbon projects in the world in dollars per barrel and this means they’re actually a very risky play because if there’s a slight dip in the oil price or an increase in the amount of capital needed or the cost of that capital the business start hemorrhaging money very quickly I’ve actually consulted in industry in calgary before tried to impress this upon the firm’s that were hoping to do tar sands I’m afraid some of them have gone ahead anyway and I think their capital is very much at risk so I don’t know what President Obama will say about the pipeline but if he does not approve it I think there’s an appreciable chance of that much more costly alternative transport to market would be required I think that would make the challenge of cost-effective oil from tar sands even greater and it’s already a formidable challenge and I think in the long run the energy investors might thank him for having saved them from the worst ravages of the bubble when it does collapse into course there is there are some similar considerations somewhat different in detail about massive LNG exports from this province I’ve actually designed lng liquefaction plants and we know how to make them a lot more efficient but it’s a very expensive business it takes a lot of energy to liquefy the gas and transport it and that plus leakage along the gas supply chain end to end tends to eat up offset more than offset depending on details the carbon saving in switching from coal to gas and by the way the Asian market is not infinite there are many competitors many of whom already had lng plants so it’s awfully late to come to that party the great deals in Japan have been pretty much snapped up in the past few years and I think by the time you could get LNG exported you would find that the subsidies had eaten up the expected royalties so that doesn’t look like a great deal either but remember the fundamentals here what both of these resources have to compete with is not just coal that has to compete with efficiency and renewables that are already taking over the market in China as they are in the United States as they are in much of Europe know kind of hydrocarbon is going to compete with the 18 dollar a barrel nega barrels from efficient cars that don’t need any oil know kind of electricity is going to compete with super efficient buildings and passive solar design which by the way was invented in China I described by house to our Chinese visitors as 3,000 year old North Chinese architecture which was passive solar plus modern North American super windows so I think we need to look at the whole competitive landscape and a hydrocarbon rich country like Canada especially needs to do so in order to avoid costly investment errors that would actually [ __ ] rather than advance climate protection so I hope that is helpful and thank you again for your kind attention you