Economic models greatly overestimate the cost of carbon mitigation in large part because economists simply don’t believe (and hence don’t model) that the economy has lots of high-return energy efficiency opportunities. In their theory, the economy is always operating near efficiency. Reality is very different than economic models.
I have never visited a factory or commercial buildings that didn’t have huge energy-saving opportunities, many of which also increase productivity. I wrote a book several years ago with a hundred real-world case studies: Cool Companies: How the Best Businesses Boost Profits and Productivity by Cutting Greenhouse Gas Emissions. Studies that model such real-world savings, like the 2007 McKinsey & Co. report, find deep emissions reductions are possible at low net cost to the U.S. (and world) economy.
Government has a very important role in enabling these energy savings. The office of Energy Efficiency and Renewable Energy at the U.S. Department of Energy, which I used to run, has lots of (underfunded) programs that deliver savings every day. One typical example showed up in my inbox yesterday, from the Industrial Technologies Program:
Optimizing boiler operation, reducing boiler blowdown, and implementing an ongoing steam trap maintenance program are just some of the steps Chrysler’s St. Louis complex took to save approximately $627,000 per year in energy costs. The complex, which produces mainly cars and light-duty trucks, received a DOE Save Energy Now energy assessment from Energy Expert Riyaz Papar of Hudson Technologies. Papar worked with two Chrysler employees to analyze the complex’s steam system utilizing DOE’s Steam System Assessment Tool (SSAT) software. By implementing several of the assessment recommendations, the complex achieved a simple payback of just over two months and is saving more than 70,000 MMBtu in natural gas annually. To learn more and see which Save Energy Now energy savings recommendations can be applied to your plant, read the case study (PDF 578 KB).
Why don’t companies take advantage of such amazing efficiency opportunities on their own?
That is a long story I discuss at length in my book and will address in a later post. I do recommend reading the case study if you are interested in understanding the kind of savings companies can achieve and the key roll government can play.
Steam accounts for $24 billion a year of U.S manufacturing energy costs, and 40 percent of U.S. industrial carbon dioxide emissions. Yet even large, sophisticated companies with major energy management efforts are missing the huge energy saving opportunities. Until Bush came along, the DOE had a very robust effort to work with the energy-intensive industries to help them 1) adopt technologies that save energy, cut pollution and increase productivity and 2) develop new technologies. Sadly, Bush has gutted many of those programs.
Any President who is actually serious about global warming (and technological solutions), however, would want to dramatically increase funding for these efforts.