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

by Daniel Yergin

  Some of the most important innovations in buildings today hearken back to principles that went into buildings prior to the twentieth century and before people gained control over their environment—before they began to “manufacture weather.” But of course today that means acting on those principles in far more sophisticated ways, using advanced technology and tools, and a scientific and engineering understanding that was not available even in the recent past. The thermal mass of the building is used, like those stones walls were once used, to store energy during the daytime in order to provide heating at night.

  “In a way,” said Leon Glicksman of MIT, “all this is going back to the solutions that evolved over the years, but with the high-tech versions.” But he did add a caution: “A building is something that will last fifty or a hundred years. Some things might work the first year. But what happens if it doesn’t work down the line? It’s a big risk if you try something new and it doesn’t work out.”14

  A factor that can have decisive impact on how buildings use energy is mind-set, the attitudes of people who use buildings. Some sense of what mind-set can do can be found in Japan, where conservation is embedded in policy and in everyday life.

  MOTTAINAI: “TOO PRECIOUS TO WASTE”

  Japan is the global pace-setter for optimizing energy use, and it has been such since the 1970s.

  The crises of those years deeply shook Japan, which suddenly found its path of high-speed growth disrupted. The shocks also reminded the Japanese of their vulnerability as a nation in terms of energy. The resulting crises unified the nation. “Everybody worked together,” Naohiro Amaya, a vice minister of the Ministry of International Trade and Industry, had remembered some years later. “The Japanese are accustomed to crises like earthquakes and typhoons. Even though the energy shock was a great shock, we were prepared to adjust.” Amaya added: “Instead of using the resources in the ground, we would use the resources in our head.”15

  Thus was launched Japan’s drive for energy efficiency. The Japanese would focus a good part of their considerable engineering and technical talents on energy ingenuity, on getting more value out of every unit of energy. Not every idea worked, to be sure. In the mid-1970s, in an effort to reduce the need for air-conditioning in the summertime, a new look in men’s fashion was promoted for office workers. It was business suits whose jackets were short-sleeved. Despite its being modeled by the prime minister himself, the shoene rukku—or “energy conservation look”—somehow just never took off.

  What did work was putting resources into increasing the efficiency of the energy operations and processes across Japanese society. This was not as hard as it might be for other societies. For it was really a reconnection with a cultural tradition of thrift and care that was deeply embedded in a historical experience shaped by limited land and stringency in resources. This orientation contrasts with America’s historical experience, which is based on ample land and abundant resources and a vaster and more confident geography.

  Yoriko Kawaguchi was Japan’s minister of the environment and then its foreign minister. Today Kawaguchi sits in the upper house of Japan’s parliament but still remembers her reaction when she came to the United States the first time, as a high school exchange student. “At Christmastime, my American family unwrapped presents and then threw the wrapping paper away. I was very surprised because in Japan we would carefully fold up the wrapping paper to use it again. It’s what we would call mottainai.”

  Mottainai, she explained, is a difficult word to translate into English. Indeed, it is so difficult that at one point a meeting was convened within the Japanese Ministry of Foreign Affairs to thrash it out. The conclusion was that the best translation was “too precious to waste.”

  “Mottainai is the spirit in which we have approached things over a thousand years because we never really had anything in abundance,” Kawaguchi continued. “So we’ve had to be wise about resources. I was taught at home, every child was taught at home, that you don’t leave a grain of rice on your plate. That’s mottainai. Too precious to waste.”16

  This sense of mottainai has underpinned Japan’s approach to energy efficiency, which was codified in the Energy Conservation Law of 1979. The law was expanded in 1998 with the introduction of the Top Runner program. It takes the most efficient appliance or motorcar in a particular class—the “top runner”—and then sets a requirement that all appliances and cars must, within a certain number of years, exceed the efficiency of the top runner. This creates a permanent race to keep upping the ante on efficiency. The results are striking: the average efficiency of videocassette recorders increased 74 percent between 1997 and 2003. Even television sets improved by 26 percent between 1997 and 2003. Further amendments to the law mandate improvements by factories and buildings, and require them to adopt efficiency plans.17

  The government has used a wide range of tax credits to facilitate new investments. It also imposes direct fines to penalize for efficiency targets not achieved. Such fines are something unlikely to be accepted in the American system. But values, the resource position of the country, and the political system—all these make it an acceptable policy in Japan.

  This commitment to efficiency was tested mightily in the new energy crisis in the summer of 2011. Owing to the Fukushima Daiichi nuclear accident, part of Japan faced a significant electricity shortfall. In such circumstances, mottainai was not a matter of choice, it was a duty.

  A SMARTER GRID

  The conservation gap can be closed through technology—or, rather, through the intersection of technology, know-how, and behavior. Kateri Callahan, the president of the Alliance to Save Energy, described the infrastructure that efficiency requires: “While other fuels need ‘hard’ infrastructure like pipe and transmission lines,” energy efficiency requires its own infrastructure of “public policy support, education and awareness and innovative financing tools.” There are also technologies that need to be integrated into that infrastructure.

  All that requires changes in how utilities are regulated so that there is as clear incentive to invest in conservation as in building new plants. In the words of James Rogers, CEO of Duke Energy, “We need to create a business model in which reducing megawatts is treated the same way from an investment point of view as producing megawatts.”18

  But it also requires the deployment of technologies that, a decade or two ago, were much less developed or did not even exist. What this involves is modernizing the system of moving electricity all the way from generation to its final use in home, office, or factory. This entire effort goes by the shorthand of “smart grid.” The term has become almost ubiquitous, wildly popular, and the subject of considerable enthusiasm. After all, who wants to be against a “smart grid” or in favor of a “dumb grid”? But the concept has many definitions. As the head of one of the world’s largest utilities put it, “the concept of a smart grid is rich, complex, and confusing.” After all, it is not a single technology but a host of technologies. Yet in one form or another, it largely comes down to the application of digital technology, two-way communication, monitoring, sensors, information technology, and the Internet. The smart grid is also something of a movement, and as such it is the recipient of substantial and increasing investment from the federal government, utilities, industry, and investors.

  The best-known subset is grouped around advanced metering infrastructure, otherwise known as the smart meter. Current meters, which in some sense have been around all the way back to the days of Samuel Insull, may be read once a month. The smart meter, by contrast, is a two-way device packed with much more capability. It eliminates the need for meter reading by sending information directly back to the utility, which thus knows in great detail what is happening to its load in real time. At the same time, it provides homeowners with situational awareness about how much electricity they are using at any given moment. With the addition of a home-area network, that knowledge can be broken down appliance by appliance, so that the smart refrigerator or the s
mart television can talk to the smart meter. With all this knowledge—whether displayed on a control box, on the Internet, or on their cell phone—homeowners can turn things down or even turn them off to save money.

  The smart meter could, when overall demand is at the highest, enable the utility to reduce usage inside the house. For instance, during a heat wave that is straining the power system, the utility could reach out to people’s thermostats (with their approval) and raise the average setting from 68 degrees to 73 degrees. (Some utilities are partway there with “paging” devices that enable them to cycle off air-conditioning every 15 minutes out of every hour.) If the electric car becomes common, the smart meter would also play a crucial role in managing recharging so that it is done late at night, off-peak, when demand is the lightest. The smart meter can do one more thing: verify energy savings. That could be essential if the utility is “paying” people to be more energy efficient.

  All this is directed toward achieving two objectives: One is sharing peak demand, which reduces the need to use the most expensive generating plants, saves money, and could reduce the need to build additional expensive new generating units. The second is to promote greater energy efficiency overall, which both saves energy and cuts down on CO2 emissions.

  This all sounds very compelling. Actual implementation is challenging. The first-mover among countries is Italy, which completed installing “smart meters 1.0” for 80 percent of its load in 2006. One reason Italy moved so early was to manage demand; another, to reduce electricity theft. But Italy’s experience shows that integrating these new technologies is complex. Somebody has to pay for it, and it is not cheap.

  Then there is the critical matter of pricing. To get the maximum value from a smart meter system, consumers have to save money by reducing their consumption during times of peak demand. But that requires “dynamic pricing,” which is another way of saying paying different rates at different times of day. With dynamic pricing, electricity costs you less if you run your dishwasher at eleven p.m. and not at seven p.m. during peak demand. However, it is not at all clear that most consumers want prices that vary or whether they actually much prefer stable, predictable prices. That will be a crucial test for the smart meter.19

  And there is also a question of privacy. How much do consumers want to share the details of their electricity consumption with the utility, and who will own that data, anyway? To what degree do consumers want utilities and third parties to become directly involved in controlling the operation of appliances inside their homes? Maybe they will be more amenable if the utility “pays” for that right with some financial incentive. These behavioral questions will do much to determine the extent of the impact of the smart meter.

  The transmission system in the United States, the high-voltage system that carries electricity from the generating plant to the substation, is not “dumb.” The United States has one of the most advanced transmissions networks in the world. At the same time, it is also something of a patchwork, having been built over many years and operating under a complex overlay of federal and state regulation and multiple ownership.

  But the grid does need to be made smarter and to be expanded and reconfigured to cope with the growing load of renewable energy. Traditional coal or nuclear or gas-fired generation is predictable and can be dispatched in a measured way. Renewable generation fluctuates; it depends on how much wind is blowing and whether the sun is shining. Thus, the grid needs to become more flexible and sophisticated to absorb the increasing but variable supply of renewable energy. That will require new investment in transmission capacity and in the digital capability to integrate larger amounts of renewables into the grid and keep the overall system balanced, manage voltage, and avoid disruption. That is the urgent challenge that Germany faces with its target of doubling renewables’ share of its electricity to 35 percent by 2020.

  The smart grid movement has one other very important objective—increasing reliability. The smart grid can enhance reliability with a “self-healing” capability. It is impossible to ensure that weather-related events, such as an ice storm or a hurricane, do not cause outages. However, what should be a minor operational problem can, on rare occasions, have a domino effect and create a blackout over a large area. Currently utilities often find out about outages only after receiving a torrent of phone calls from angry customers who suddenly find themselves stranded in the dark, groping to find a flashlight.

  That would change with the smart grid. A self-healing grid includes sensors that enable real-time monitoring, and computers that would assess trouble and present options for fixing it to human operators. This would be facilitated by two-way communications between outposts along the grid and technicians back in control rooms. Increasing situational awareness for the utility could go a long way toward reducing the duration of power outages and limiting their effects. It would also help limit the fallout from an external assault—a terrorist attack on the electricity infrastructure. Overall, this part of the smart grid could speed up response to any disruptions and reduce traditional “truck roll”—the dispatch of emergency repair teams—by solving problems in the control room.20

  The smart grid, in its entirety, could have what has been described as a “transformational impact on how utilities operate their system, interact with their customers, and conduct their businesses.” It could also be a major step forward in applying technology to promote much greater energy efficiency in buildings. However, introducing a set of new technologies, which have to be integrated into an existing system, is not only complex, it also comes with risks and setbacks. There have been a number of early examples of technology glitches and cost overruns as utilities roll out pilot programs.

  One possible risk will require careful assessment and attention in terms of design: to assure that a more complex system, which is more interactive and relies more on information technology and the Internet, does not open doors that make it vulnerable to hacking, cyber attacks, or outright cyber war. The threats are real. One study found that there was “little good news about cybersecurity in the electric grid and other crucial services that depend on information technology and industrial control systems. Security improvements are modest and overmatched by the threat.”21

  Overall, new technologies and new practices can do much to improve the operations throughout the electricity system and to increase the efficiency with which buildings use energy. The full impact will only become clear over time. Surprising answers are likely to emerge out of the complex mix of technology, policy, economics, and how people live their lives—just as they did in Willis Carrier’s head on that fog-enshrouded platform in Pittsburgh in 1902.

  PART SIX

  Road to the Future

  33

  CARBOHYDRATE MAN

  The researcher was sitting in his office in Cambridge, Massachusetts, on a sleepy May afternoon in 1978 when the phone rang. “Admiral Rickover is on the line,” said the assistant’s voice. In a moment the admiral himself came on. He had just read an article by the researcher, and he had a message he wanted to deliver.

  “Wood—fuel of the future. Wood!” he declared in the manner of one not used to being contradicted. “Fuel of the future!”

  And with not much more than that, the Father of the Nuclear Navy—and the progenitor of nuclear power—abruptly hung up.

  What Rickover was pointing at that afternoon was the potential for biological energy and biomass: energy generated from plant matter and other sources, and not by fossil fuels or uranium. The nation had just gone through an oil crisis and was on the edge of another. Now the man who had created the nuclear navy in record time was announcing that the future was about “growing” fuels.

  Today legions of scientists, farmers, entrepreneurs, agribusiness managers, and venture capitalists use words like “ethanol,” “cellulosic,” and “biomass” rather than “wood.” But they share Rickover’s vision of growing fuel.

  The best-known agricultural fuel is ethanol: ethyl alcohol
made, in the first instance, from corn or sugar. In terms of technology, it’s hardly different than brewing beer or making rum. Beyond this is the “holy grail”: cellulosic ethanol, ethanol fermented and distilled on a massive scale from agricultural or urban waste or specially designed crops. Another agricultural fuel is biodiesel, made from soybeans or palm oil or even from the leftover grease from fast-food restaurants. Some argue that the still-better choices would be other biofuels, such as butanol. And then there is algae, which functions like little natural refineries.

  THE BIOFUEL VISION

  Whatever approaches prevail, biofuels suggest the possibility of a new era, characterized by the application of biology and biotech and understanding of the genome—the full DNA sequence of an organism—to the production of energy. The rise of the biofuels brings a new entrant into energy: the life scientist. Only in the last decade has biology begun to be applied systematically to energy.

  Over this same period biofuels have generated enormous political swell in the United States, starting of course with the traditional advocates: farmers and their political allies who have always looked to ethanol as a way to diversify agricultural markets, generate additional revenues, and contribute to farm income and rural development. But there are new supporters: environmentalists (at least some), automobile companies, Silicon Valley billionaires, Hollywood moguls, along with national security specialists, who want to reduce oil imports because of worries about the Middle East and the geopolitical power of oil. More recently, they have all been joined by formidable new players: the U.S. Navy and Air Force, which are promoting biofuels development to improve combat capabilities and increase flexibility—and to diversify away from oil. The air force is experimenting with green jet fuel. The navy has a goal that half of its liquid fuels be biofuels by 2020 and laid out a vision of the “Great Green Fleet.”