Climate Progress: An insider's view of climate science, politics, and solutions

Joe Romm, one of the fastest bloggers in the post-typewriter era, was both quick and correct in his analysis of T. Boone Pickens’ energy plan. If you’re reading this, Mr. Pickens, have your people call Joe’s people. You guys need to talk.

Since Pickens’ $58 million ad campaign is likely to be with us for awhile, I’d like to add some thoughts to Joe’s, particularly about the highest and best use of America’s remaining and responsibly recoverable natural gas supplies.

First, my two cents on wind: As Joe points out, Pickens’ wind strategy is on the right track. In effect, the former oilman is proposing that America do what Texas is doing. Texas leads the nation in wind power. In a series of progressive actions in recent years, the state legislature established a renewable energy portfolio standard that was quickly achieved, and put a program in place to identify where the electric grid should be expanded to reach places where the wind blows most. Today, Texas is considering an investment of $6.4 billion to build new transmission capable of moving 17,000 megawatts of new wind power.

Pickens doesn’t want to wait for the bureaucracy. He’s investing $2 billion to build the world’s largest wind farm and plans to pay for the transmission lines that will carry the power from the Texas panhandle to Dallas.

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Energy efficiency is by far the biggest low-carbon resource available (see Part 1). It is also, as we’ll see, every bit as renewable as wind power, solar photovoltaic, and solar baseload.

People who have little experience with what serious energy efficiency investments can do for a company or a state — this means you, neoclassical economists who consistently overestimate the cost of climate mitigation! – think it is a one-shot resource wherein you pick the low hanging fruit. In fact, fruit grow back. The efficiency resource never gets exhausted because technology keeps improving and knowledge spreads to more and more people.

After leading the country in comprehensive efficiency efforts that have kept per capita electricity demand flat for three decades, California does not merely believe it can continue at this pace, they plan to accelerate their efforts and actually keep electricity demand itself flat. I have discussed California’s efforts and plans in previous posts (see Policies in Need of Californication and California makes efficiency “business as usual”), and will discuss them further in Part 3.

The focus of this post is the best corporate example of the inexhaustible nature of the energy efficiency resource — Dow Chemical’s Louisiana division.

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Energy efficiency is the most important climate solution for several reasons:

1. It is by far the biggest resource.
2. It is by far the cheapest, far cheaper than the current cost of unsustainable energy, so cheap that it helps pay for the other solutions.
3. It is by far the fastest to deploy.
4. It is “renewable” — the efficiency potential never runs out.

This post focuses on #1 — the tremendous size of the resource. Part 2 explains why it is The limitless resource, Part 3 explains why efficiency is The only cheap power left, and Part 4 explains How California does it so consistently and cost-effectively. Part 5 explains why efficiency has the highest documented rate of return of any federal program.

Of the 14 or so wedges we need to deploy globally by 2050, I have argued that about two are electricity efficiency, one is recycled energy (cogeneration), and one is vehicle fuel efficiency (cars globally averaging 60 mpg) — see “450 ppm (or less) Part 2: The Solution.” The International Energy Agency also thinks about four wedges are efficiency, see “IEA report, Part 2: the 450-ppm solution.” And so does Price Waterhouse Coopers, see here.

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[This question is the subject of a hearing Wednesday morning where I am a witness. At least that's how I view the House Select Committee on Energy Independence and Global Warming hearing on selling oil from the Strategic Petroleum Reserve. A live webcast should be available here.]

The headline question is not an abstract one for the American public. Taxpayers do have $100 billion in oil we bought since 1975 that was placed in the Strategic Petroleum Reserve (SPR).

Despite the name, the SPR does not have any strategic value. It was created at a time when people worried that countries could withhold oil from us. But now we have a global market. The only impacts of some country withholding a significant amount of oil, say two million barrels a day (which is a little more than 2% of global consumption), is

1. The producer loses $100 billion a year!
2. Prices rise.

I have not yet found a plausible “crisis” scenario in which we would use large amounts of that oil, assuming the current situation is not close to being dire enough. Since its inception, there have been only two emergency sales of crude oil from the SPR. After Hurricane Katrina disrupted oil flow from the Gulf of Mexico in 2005, 11 million barrels of oil were sold. In the wake of the Persian Gulf War 21 million barrels were sold in 1990-91. [In 1996-97, 28 million barrels were sold for nonemergency reasons.] In other words, a mere 32 million barrels were sold over the years during crises.

I can’t imagine we’re going to keep this relatively useless “reserve” for many more decades.

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