Burgess COMMENTARY

Peter Burgess

Energy Indicator

The Calvert-Henderson Energy Indicator focuses on energy intensity in the US Economy. Energy intensity is a a measure of the efficiency with which energy is used within the US economy. This Energy Indicator is a key to the overall efficiency of our economy. The massive blackout of August 2003 drew attention to the electrical grid and the extent to which it had been 'orphaned' by privatization and deregulation. Our GNP has been growing with less energy input in the past 25 years, since the first OPEC oil embargo in 1973. Yet, energy expert, Dr. John A. 'Skip' Laitner, demonstrated with his paper at the 2004 meeting of the International Energy Agency that the potential for further conservation and energy-effifcient technologies has been vastly under-estimated. (See Laitner’s presentation on the Energy Indicator page.) The United States still lags Japan and Europe, using almost twice the energy they use per unit of GNP. This keeps the US vulnerable to the Middle East and OPEC, and the geopolitics of oil, while keeping us in an uncompetitive position in our older manufacturing sectors even as our Internet-based and services economy grows. Our reliance on low-fuel efficiency cars and fossil fuels decreases our flexibility in face of $60 per barrel oil prices.

The Bush Energy plan, still laden with subsidies to the fossil fuel and nuclear industry, may pork-barrel its way through Congress. While President Bush has recently joined those who see hydrogen-powered fuel cells as replacing the internal combustion engine - the new fight will be over whether the hydrogen economy will be based on renewable energy - or whether the nuclear and fossil-fuel industries will win their lobbying efforts to control the production of hydrogen.

All these issues of restructuring our economy came to a head in the debate over climate change. The Kyoto Treaty is now in force and the scientific evidence now overwhelmingly points to the need to reduce such emissions. President George W. Bush acknowledged this by signing the July 2005 G-8 Communique on the urgency of addressing climate change. Many countries and companies have geared up emissions trading regimes based on Kyoto's protocols and these markets are growing rapidly. There is also recognition of the need for greater US energy independence. The war in Iraq and conflict in the Middle East is now expected to keep oil prices about $60 per barrel, together with growing Chinese demand. In real terms, today’s prices are still lower than they were in 1973 when OPEC first quadrupled prices and these oil producers are losing money on the lowered value of the US dollar.

Many analysts, including Amory Lovins of the Rocky Mountain Institute in Colorado, agree that the fossil-industrial transition to the Information Age and what I have called the Solar Age will usher in a prosperous, profitable economy based on renewable resource use and deeper knowledge. Japanese hybrid electric cars averaging 50-60 mpg are capturing market share in the US from Detroit. Shanghai’s public private partnership with Canada’s Palcan Fuel Cells Ltd and the US-based NGO NRDC will produce noiseless, pollution-free motor bikes in 2005 with 2 kw fuel cells powered by hydrogen that can cover 60 miles per canister. Thus energy-efficiency can mean less waste, higher, cleaner profits, more comfortable homes, communities, and travel with less pollution. The transition from here to there is illuminated in the Energy Indicator. Already, the solar, ocean, wind, and other renewable energy sectors are growing rapidly, along with hybrid electric cars, fuel cells and off-grid electric generators. Wind energy is the fastest growing, up 32%, while solar photovoltaics use is up 21% since the mid-1990s. Fuel cells and hydrogen have at last caught the attention of the venture capital and investment community. The electricity price squeeze in California continues leading to increasing use of these renewable clean energy technologies.