The Quest: Energy, Security, and the Remaking of the Modern World

by Daniel Yergin

  Andris Piebalgs was trained as a physicist in what was then the Soviet Union. Following the breakup of the Soviet Union, he became a diplomat for the now independent Baltic nation of Latvia. He was later selected to be the EU’s energy commissioner; that is, the energy minister for all of Europe. For the next five years, he was at the center of the complex and contentious intricacies of energy policymaking with the 27 separate countries that compose the EU.

  One evening he was in Washington, D.C., at a dinner at the home of the EU ambassador. Piebalgs had come over for a renewable energy conference that had filled the Washington Convention Center with over three thousand people and had overflowed with enthusiasm and optimism.

  Over drinks before dinner, Piebalgs was asked—in light of the EU’s aggressive 2020 efficiency targets—about the relative popularity of renewables versus efficiency.

  “Renewables are more popular,” he said. “Renewables are supply side. They provide new energy. Efficiency is something that pays back over the years. Energy efficiency involves a lot of nitty-gritty, a lot of incentives and a lot of regulations.

  “And there’s no red ribbon to cut.” Conservation—energy efficiency—may be so obvious as a solution to cost and environmental issues. But there is no photo op, no opening ceremony where government officials and company executives can cut a ribbon, smile broadly into the camera, and inaugurate a grand new facility. He shook his head as he considered one of the most powerful of the life lessons he had learned from his deep immersion in global politics.

  “It’s very important to be able to cut a red ribbon.”20

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  CLOSING THE CONSERVATION GAP

  As people moved from the countryside and crowded into cities in the nineteenth century, urban heat waves could be ferocious in their effect. “Apprehension of a Pestilence” and “The Rising of Today’s Sun Awaited with Absolute Terror” were headlines in 1878 when one such heat wave struck parts of the United States. In 1901 one of the nation’s worst heat waves left hundreds and hundreds of fatalities in the East and the Midwest. Local hospitals stopped sending horse-drawn ambulances to pick up those felled by heat prostration because the horses themselves were collapsing from the heat. So severe was the heat in 1901 that for the first time ever, the New York Stock Exchange allowed its members to remove their suit jackets on the trading floor.1

  Traditionally, buildings had been constructed to serve as the bridge between the natural elements and the human requirements for shelter, heating, cooling, and lighting. In the Southwest, forts like the Alamo used adobe walls to help stay cool during the hot days but warm during the chilly nights. In cities, stone buildings were designed with recessed windows to shade against the sun, and with central courtyards to bring light and ventilation to the interior rooms. But as people congregated in the cities and buildings rose in height, and as industrial knowledge expanded, increasingly sophisticated and varying uses of energy were employed to deliver the heat, cooling, light, and power that were required to make these structures livable and productive—and to enable cities as a whole to function.

  Today in the United States, the residential and commercial sectors (including the electricity used in buildings) consume about 40 percent of total U.S. energy and three quarters of electricity, and emit substantial amounts of CO2. In other countries, the share is even higher: in Britain, 50 percent of total energy. In China, buildings’ share of energy use is much less, but that will rapidly change as that country adds at least 10 million new residential units a year. Now the challenge is not only how to construct livable buildings but also how to use all of the energy that goes into them more efficiently. That means addressing design, behavior, and the difference between the potential of efficiency and the reality—what is called the conservation gap.2

  PATENT NUMBER 808897: “MANUFACTURED WEATHER”

  Over the nineteenth century, inventors and businessmen had struggled to find a way to control the heat and humidity that could disrupt industrial processes. By the last decade of that century, crude refrigeration systems had been deployed to help sanitize the great meat-packing industry in the “hog butcher to the world,” Chicago. After the heat wave of 1901, the New York Stock Exchange finally decided that it had to do something more than just permit floor traders to take off their jackets. And so it commissioned a massive refrigeration system. But the system did not work very well; the air was clammy and uncomfortable. Cooling was not enough; humidity needed to be controlled. But how?3

  Willis Carrier was a 25-year-old engineer from Angola, New York, who had an intuition for mechanical engineering, a gift for mathematics, and a flair for visualizing solutions. Working for the Buffalo Forge Company, he had helped a magazine printer figure out how to control humidity, which was causing colored ink to end up smudged on the wrong part of the page.

  Carrier himself, however, was not satisfied with his solution. Humidity—more specifically, how to produce precise levels of water vapor in the air—continued to preoccupy him. Then one evening while waiting for a train on a fog-enshrouded platform in Pittsburgh, he had a breakthrough. As he paced up and down, Carrier noticed that despite the fog, the air was dry. Reflecting on the character of the fog, he had the “flash of genius.”

  This flash led to Patent 808897—“Apparatus for Treating Air”—which heated or cooled water to control temperature and humidity, and helped cleanse the air. Others ridiculed his idea of “manufactured weather.” The Buffalo Forge Company itself was so worried about the reputational risks from this uncertain innovation that it set up a wholly owned subsidiary named for its chief engineer, the Carrier Air Conditioning Company.4

  But Patent 808897 worked in practice. It marked the invention of the modern air conditioner—and, along with that, provided the solution to one of humanity’s most intractable living problems. By 1911 Carrier had produced the formula that came to be venerated as the Magna Carta of the air-conditioning industry. In 1922 Carrier installed an air-conditioning system in Grauman’s Metropolitan Theater in Los Angeles. The first one to go into a department store was in Detroit in 1924 in response to the tendency of customers to faint from the heat, when crowding into the store on bargain days. By 1930 air-conditioning had been installed in Madison Square Garden, in both the Senate and the House of Representatives, and in the dining car of a train running between New York and Washington, D.C. The first fully air-conditioned high-rise office building went up in San Antonio, Texas, in the late 1920s. Air-conditioning began to spread around the world; by 1937 an air-conditioned bus was running between Damascus and Baghdad. After World War II, air-conditioning made it possible for Houston to shed the indolent, oppressive swampy mugginess of its summers and become the “oil capital of the world” and, eventually, the fourth-largest U.S. city. In the late 1950s, air-conditioning started to become a standard feature of homes in the warmer parts of the United States. Without it, the Sunbelt as we know it today would not exist.5

  The skyscrapers that were built across the world in those postwar decades would have been uninhabitable without the large air-conditioning and centralheating systems developed over the past half century. HVACs—the massive heating, ventilation, and air-conditioning systems—cycle fresh air completely through buildings.

  The spread of air-conditioning changed the course of global economic development and made possible the expansion of the world economy. Lee Kuan Yew, the founder and former prime minister of modern Singapore, once described air-conditioning as “the most important invention of the twentieth century,” because, he explained, it enabled the people of the tropics to become productive. Singapore’s minister of the environment was a little more explicit, saying that, without air-conditioning, “instead of working in high-tech factories” Singapore’s workers “would probably be sitting under coconut trees.”6

  Energy and electricity made possible the expansion of services and comfort in the residential and commercial sector. That posed no problem so long as there was little reason to worry about
cost and availability of energy or about greenhouse gases. But that has changed.

  Some projections now point to the potential for 15 to 20 percent improvements in energy use in buildings. Others see much greater possibilities: 25 percent across the sector and, on a cost-effective basis, as much as 50 percent in new buildings. None of that, however, is going to happen easily.

  “A lot of people are convinced that the easy things have already been done,” said Professor Leon Glicksman, who founded the department of building technology at MIT two decades ago. “Some people think that all the problems are solved, and that there’s no need to do more. It’s one of the most conservative industries I’ve ever encountered. There’s little R&D. And it’s highly fragmented. It’s hard to get people together. Everybody does his or her little piece. And a lot of people don’t understand that there is no silver bullet.”7

  Yet much is changing across this sector, affecting how buildings are constructed and how they work—and perhaps how people live.

  GOING MAINSTREAM

  The changes actually began in the 1970s with disruptions in energy supply and sharp rises in energy prices. Higher prices had their expected effect. Thermostats were lowered in the winter and raised in the summer. Homeowners put on storm windows. Government policies at both federal and state levels started to promote greater efficiency through tax incentives, regulations, and mandates.

  California was a pioneer. The state was rocked hard by the 1973 oil crisis not only because of its dependence on the car but also because its utilities burned a lot of oil. The next year, Governor Ronald Reagan, convinced by arguments about frugality and reducing energy waste, overruled his own staff and approved the establishment of the California Energy Commission. Thus did Ronald Reagan become the progenitor of the commission that set about writing increasingly strict rules for energy efficiency that became a model across the United States. Other states followed.8

  Utilities began to promote conservation through information programs and by sending energy auditors out to poke around in attics, measuring insulation, and in basements, to check out furnaces. These efforts expanded into utilities’ demand side management (DSM) programs, which were aimed at helping homeowners and building operators to manage and reduce consumption. At the same time, manufacturers, prodded by mandatory standards and labeling requirements, brought more efficient appliances to market. A chaotic welter of competing state regulations was finally consolidated into uniform national standards. The federal government also started to award energy stars to appliances that were rated above average. Architects and builders focused on more efficient design. “Energy conservation did go mainstream,” observed Lee Schipper of Stanford University. “Builders thirty years ago did not understand the application of double and triple glazing in windows,” he said. “They do today.”9

  THE GADGIWATTS

  There is a puzzle: Despite the mainstreaming of conservation, U.S. residential energy consumption is 40 percent higher than in the 1970s, and commercial building consumption has almost doubled. The reasons are growth and innovation. The number of single-family homes increased substantially; so did the number of houses with air-conditioning. The expansion in size of houses is even more striking: square footage is up about 70 percent since the 1970s. Energy use per refrigerator has been cut in half since 1993, but energy used for refrigerators per home is roughly constant because many homes now have two refrigerators.10

  The other major reason for the growth in home energy use are the “gadgiwatts”—more and more electricity is consumed by gadgets that largely did not exist in the 1970s. In those years, 91 percent of household electricity was consumed in just seven categories—stoves, indoor lights, refrigerators, freezers, water heaters, air conditioners, and space heating. Only 9 percent was “other.”

  The “other” category has since grown to be 45 percent of electricity. That includes some things that were around in the 1970s, such as dishwashers and televisions. But it also includes all those devices and gadgets that have become integral to daily life and depend on “the gadgiwatts”—computers, printers, VCRs, fax machines, microwave ovens, telephones, cable services, flat-screen televisions, DVD players, smart phones, tablets, and any number of hand-held devices that need to be recharged.

  The same thirst for energy and electricity exists in increasingly high-tech, highly wired office towers. Moreover, information technology has spawned whole new complexes and new demand: the thousands of data centers that house an estimated 15 million-plus servers worldwide—a number that could grow to more than 120 million by 2020. These centers draw heavily on electricity to power processors, memory, and other computer operations, and also to deliver the cooling required to remove the heat that is generated by the servers.11

  This potential savings in energy efficiency in buildings has been described by energy economist Lawrence Makovich as the “conservation gap.” But realizing conservation potential is not so easy. The auto fleet may turn over every 12 years or so, but buildings last 50, or 75, or 100 years, or more. They can be retrofitted but only up to a point. Pricing will affect the time and amount of money that building owners and operators will put into improving the energy operations of existing structures. These investments involve rate of return and trade-offs with other investments. “The question of choice and trade-offs in efficiency investments compared with other allocations of capital is often overlooked,” observes a report from the World Economic Forum. “The investment grade test is important for sustainable investment in energy efficiency.” Like any other investment, efficiency has to compete with other choices.12

  Nonfinancial barriers also stand in the way of efficiency. One is the disconnect between the interests of the builder and the eventual buyer. Builders, who put in insulation and appliances and decide on the thickness of the walls and the quality of the windows, are building on “spec.” Their focus is on keeping costs down to promote sales. New homebuyers, on the other hand, actually have to pay the monthly energy bills, and they would benefit from greater energy efficiency. By that point, the builder is long gone, but the choices made by the builder remain. Similarly, for rental units, owners may not have an incentive to put in more efficient appliances because it is the tenants who pay the energy bills.

  Homeowners expect quick paybacks on efficiency investments. Lack of knowledge is a chronic issue. How many homeowners actually have any idea how much they will save with tighter insulation or by turning down the thermostat? Some of these issues can be corrected with zoning regulations and other requirements, appliance labeling in terms of energy efficiency, and dissemination of comprehensible information. Focus and measurement can bring unexpected results in commercial buildings.

  Simon Property Group is one of the largest operators of shopping malls in the country, including some of the best known, ranging from Stanford Shopping Center and Laguna Hills Mall in California to the Houston Galleria to Pentagon City near Washington, D.C., and The Westchester in New York. Between 2003 and 2009, Simon reduced its energy use by 25 percent. “As much as 60 percent were generated by the implementation of best practices and by using common sense and paying attention,” said George Caraghiaur, the executive at Simon responsible for energy efficiency. “That means shutting off lights, keeping doors closed, and not cooling the entire plant. Basically, it’s telling our mall managers to do the kind of things our parents told us to do.”13

  Best practices also include “not easy to see” things, he said, such as proper maintenance of heating and air-conditioning systems. The other 40 percent required investment in such things as lighting, more efficient cooling systems, and management controls. The investment can be in very big new systems. It can also go into readjusting the soft drink machines so that they don’t cool cans at night when no one is buying drinks because the mall is closed.

  EFFICIENCY BY DESIGN

  Efficiency by design is becoming part of the approach to buildings. Green building is an initiative that started off as a fringe acti
vity and is now firmly in the mainstream. It is already changing the way buildings are constructed and is stimulating research and development in an industry—construction—in which R&D has not been anything resembling a priority.

  In the 1980s a number of organizations began to develop methodologies for rating the environmental aspects of building construction, operations, and upkeep—thereby encouraging efficiency and conservation. The best known are those of the U.S. Green Building Council and its LEED, the Leadership in Energy and Environmental Design program. LEED generates a set of guidelines and certifications for new buildings and remodeling, for both energy and environmental goals. It operates on a points system with ratings ranging from “certified” to “silver” to “gold,” and, the most highly prized of all, “platinum.”

  But devising a system to rate the environmental impact of buildings—and everything that goes into them—is no easy thing. For instance, should the environmental assessment for a building focus mainly on energy use and carbon emissions, or should it also include sustainable forestry, toxic waste disposal, urban congestion? Geography complicates matters further. Water, for instance, needs to be treated differently in Arizona than in Maine. In short, energy and environmental accounting isn’t easy. As a result, some efficiency experts question the methodology of programs like LEED.

  Integrated design is now seen as a key to achieving higher levels of energy efficiency in the fragmented building world. That means architects, developers, engineers, and consultants working together from initial design to the final construction. This collaboration tries to ensure that a building’s walls, heating and cooling system, ventilation, and lighting are all well integrated—bringing substantial savings. For instance, a high-performance envelope—that is, the outer walls—would eliminate the need for separate heating systems near the windows and reduce the size of the main heating and cooling equipment.