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Powering the Future: Energy Conservation

June 1, 2001 at 12:00 AM EDT
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MARGARET WARNER: For more on the energy debate over conservation and alternative fuels, we’re joined by Michael Marvin, Council for Sustainable energy, which represents wind and solar energy producers, and companies that make energy efficient products; Dan Reicher, visiting fellow at the World Resources Institute, an environmental research group. He was Assistant Secretary for Energy Efficiency and Renewable Energy in the Clinton Administration. And Myron Ebell, director of international environmental policy at the Competitive Enterprise Institute, a free market public policy group. And from Las Vegas, Herbert Inhaber, President of Risk Concepts, an energy consulting firm; he’s the author of “Why Energy Conservation Fails.” Welcome gentlemen.

Michael Marvin, as you look at the President’s plan, do you think it has, in your view, enough for conservation both conservation and alternative energy?

MICHAEL MARVIN: I think it’s a good start. I think there are greater opportunities. I think when you look at some of the technologies, the newer technologies, it’s important to really look at the market barriers. It’s important to recognize that the federal government can encourage through research and development, through tax credits but also in recognizing that there are simply barriers through the lack of understanding of many of these technologies. I think that’s where the plan did not succeed as well as it should have.

MARGARET WARNER: And how about on the conservation side?

MICHAEL MARVIN: On the conservation side it did some important things. I think there were some missed opportunities as well there. I think anyone who tries to portray this as a conservation versus production is really creating a fool’s choice. It is really not a question of one or the other. Clearly there are a number of things we can do on conservation that should be looked at prior to the necessity of going out and building additional power plants.

MARGARET WARNER: Myron Ebell, your view of the President’s plan in this area?

MYRON EBELL: I think the President’s plan rightly concentrated on rebuilding our infrastructure rather than conservation or energy efficiency. I think it’s good that it is in the plan but I’m glad that it’s a small part of the plan.

MARGARET WARNER: Why?

MYRON EBELL: Because conservation is not the answer unless we come to believe that the government should coerce us into using less energy. If some people use less energy, other people will use more energy. The fact is that conservation and efficiency, our economy is much more efficient now at using energy than it was 10, 20, 30, 40 years ago. But we are still using more and more energy because we are wealthier and wealthier people. And so I think it’s good to encourage conservation and we should expect more technological innovation, which makes our energies more efficient from industry, but I think trying to require people to save and to require industry to become more efficient is counterproductive.

MARGARET WARNER: Pick up, would you, Mr. Reicher, on the point about conservation. Could more be done or do you agree that we’re kind of doing out as much as we can and that’s not where the future is?

DAN REICHER: A lot more could be done, Margaret. We can today, we know how to build homes that are 50 percent more efficient than the average home at no extra net cost to the consumer. We know how to build automobiles that are 50 or 60 percent more fuel-efficient today. Not just small ones, big ones that Americans want to drive. Industry has shown itself capable of producing a pound of steel for dramatically less energy. And we can take that much, much further. There is big opportunity and the unfortunate part of this plan is that while it touts conservation and efficiency, it doesn’t put the kind of muscle behind it that we need. In fact, it cuts the budget for energy efficiency and renewable energy. It weakens one of the most important standards we have in this country, and that is the energy efficiency of air conditioners and it says just like the first Bush plan, the President’s father’s plan — let’s study the idea of improving auto fuel economy. Those are not the right directions to go. We have big technological opportunities; we ought to take advantage of them.

MARGARET WARNER: Mr. Inhaber, do you think there are some missed opportunities here in the conservation area? I know your book is called “Why Conservation Fails.” What do you think of this plan?

HERBERT INHABER: Well, I think it has some good points but I think the prime emphasis is clearly on a production of energy as opposed to conservation. And I think that is the way to go. Let me just give you a few examples, if I may, that I think just about anyone can understand because some of the scientific angles are a little complicated. California is by far the most efficient energy state in the union; that is, they produce more goods and services per unit of energy use than any other state. However, they have run into tremendous energy problems because of lack of energy. So energy efficiency and conservation will not solve the energy problem. The second point I would make is in Las Vegas, it gets pretty hot. I have a pool. I bought it from a previous owner, and the–

MARGARET WARNER: Sorry about that ringing phone. I hope it’s not distracting you. But go ahead.

HERBERT INHABER: Just a little. They have a pool heater attached to it. I don’t use the pool heater because there is no point to heating the pool because it gets pretty warm in the summer. Should I get a check from the government because I don’t use the pool heater? This doesn’t seem reasonable to me. Or conversely, in terms of energy production, if I drill for oil in my backyard and make a million dollars, should the government send me another check for a million dollars? This doesn’t seem to make sense to me. So I think the key is if the government can allow energy production to move forward without too much obstruction, the country will be better off.

MARGARET WARNER: Michael Marvin, address the point that he made and that the President himself has made that California proves that conservation really isn’t the answer because in fact California is highly efficient, and in fact this country is also much more efficient than it used to be and we still seem to need and use more energy all the time.

MICHAEL MARVIN: You are right. We are using more energy, we are one quarter of the world’s economy as the President himself pointed out. Our economy has grown substantially faster than has our energy use. And there seems to be some sort of an argument that there’s an elasticity effect that if we save energy in some place that we’ll just go ahead and use it somewhere else.

MARGARET WARNER: Mr. Ebell made that argument.

MICHAEL MARVIN: I’m not sure I accept that. It seems as if I buy a more efficient refrigerator, I’m not going to stand in front of that refrigerator and open it more often because I know it is more efficient. If I go buy an efficient vehicle I’m not going to quit my job so that I can find a longer commute as though some how or another, it is going to work itself out and equilibrate. From my perspective, if someone is looking to energy efficiency and saying well, it hasn’t solved all problems, therefore, we should stop, then they’ve created, you know, a false analogy. I think we’ve still got great opportunities in California and elsewhere.

MARGARET WARNER: Mr. Ebell, explain your point further your view and this is a widely held view in certain circles that the more efficient our appliances get, the more energy we use anyway. I mean, use the example of the refrigerator.

MYRON EBELL: Well, sure. We have a refrigerator in our house that’s 1970s area, it’s not very efficient compared to new models. We are thinking about buying a new one if we can afford it. We’re going to buy a bigger refrigerator. People used to have little iceboxes and one television. How many televisions, computers, all the telecommunications gear to people have now? Yes energy efficient houses, more energy efficient houses are being built. Unlike Dan, it is not we who are building them. It’s builders; it’s not the Government that is building energy efficient houses; it’s builders. But people are buying bigger houses. More houses have air conditioning than ever before. People want more comfort. They want more comfortable cars, brighter homes, and safer, for instance safer cars, I think is a key in the automobile efficiency standard debate. — because of course higher automobile mileage requirements have cost more lives than many, many other things week could bring up.

MARGARET WARNER: But let me go back to the other side of this which is the renewable energy, and go to you, Dan Reicher. Could more be done? I mean, as our piece pointed out right now alternative and renewable sources are only 9 percent. If you took out hydropower, it is the only 2 percent. Why is it so low and could it be more?

DAN REICHER: These are low because these are relatively young technologies. We have only been investing in solar and wind and biomass and geothermal for 20 or 25 years. For nuclear it has been 50, 100 years for hydropower. It takes time for the technologies to mature. The great news is the prices have come down dramatically. Wind power is 90 percent less today than it was in 1980. It is now the fastest growing source of electricity in the world. We are adding substantially in the United States. In fact, out on the West Coast, big decisions have made recently to add wind power to the mix because it turns out to be less expensive than some of the traditional sources. The wonderful thing about renewables is once you make the capital investment, once you put up the turbine or put up the solar panel the fuel is free. You’re not subject to the volatility in prices that you have with traditional sources.

But, Margaret, the real answer is that we have to do all these things. We have to mix the renewable energy, we to grow them in our economy and mix them with these other sources. What bothers me is that we have, the Bush plan proposes to cut quite substantially the research and development for renewable energy that really has brought these prices down. And it doesn’t give the kind of support for those technologies that we really need if we’re going to see them grow. And just lastly, there is an exploding world market in these technologies. We’ve lost pieces of that market already to the Europeans and the Japanese. We really risk losing some major opportunities for jobs at home and sales abroad.

MARGARET WARNER: Mr. Inhaber, what is wrong with the federal government providing tax credits and other ways encouraging the development of these sources as it has with nuclear and others?

HERBERT INHABER: Well, with respect to nuclear and hydro, Government did get a return on its investment. Nuclear produces about 20 percent of all the electricity in this country. And hydro , until about a decade or two ago, was ahead of nuclear. So the government did get its investment back on the dams, on the nuclears. With respect to solar and wind, it has proved to be a rather poor investment on the part of the government. And Mr. Reicher has not shown during his tenure as assistant secretary, how the return on the investment would improve. I would ask Mr. Reicher and other people who advocate these forms of energy if they think they are so ready to take off without government intervention, would they be willing to invest most of the money that they’ve set aside for their retirement in solar and wind energy companies? When I ask people this question, I generally don’t get an answer.

MARGARET WARNER: I see Mr. Reicher champing at the bit to give an answer.

DAN REICHER: More directly, I have made the investment exactly in efficiency and renewable energy in my own home. It has been a great experience. I bought a more efficient air conditioner when I needed one, I put in more efficient lights, more efficient windows. And like many states, there’s a program in the state of Maryland to put solar panels on people’s roofs. I’m paying a dollar a day for electricity now.

MARGARET WARNER: But he is also asking in a bigger picture way not just in your home, but whether it is really cost effective for the federal government to pour a lot of money into R &D in these areas?

DAN REICHER: Much more serious question and the answer is absolutely. We’ve poured somewhere on the order of $25 billion to $50 billion into developing our nuclear infrastructure, somewhere on the order of 50 billion for hydro. All the renewable investments that the federal government has made in the last 25 years amount to less than 13 billion. These are young technologies. We need to continue to invest. And we are finally, finally seeing the growth curves occur. 100,000 solar energy systems have been installed in the U.S. since 1997. Thousands of megawatts capable of powering a couple of million homes of wind have been installed in the United States. Big mainstream utilities are saying we want to add these kinds of technologies, particularly wind, into our mix in order to deal with the price volatility, in order to cut air pollution and global warming gases. It is a big opportunity.

MARGARET WARNER: Mr. Ebell, is that the case, that in fact some of the big utility and energy companies are themselves investing in this stuff?

MYRON EBELL: Yes, it is true. But I think I’m not against alternative technologies. It seems to me the markets and the companies involved make better decisions than the government has. The fact is we had this debate in the 70s exactly the same debate, the same sorts of alternative technologies came to the Congress and said if you’ll just give us a subsidy, this is just about to become effective and cost competitive with other forms of energy. And now we’ve spent billions and billions and of dollars and now they’re coming to Congress and say if you continue our subsidies, we’re just about to make it. The fact is that companies and industries can decide what is best to invest in. If these things are ready to fly as Dan says, then they will fly. I really don’t think they need another generation of billions of dollars of taxpayer money.

DAN REICHER: It is important to note there are subsidies as well for the traditional energy supplies.

MYRON EBELL: Oh, yes, and the same problems apply to those.

MARGARET WARNER: You wouldn’t do that either.

MYRON EBELL: No, no.

MARGARET WARNER: Well, thank you all four very much.