Saul Griffith, Energy Intensity and Trading Negawatts

Image by Changhua Coast Conservation Action via Flickr

Saul Griffith of Squid Labs fame recently gave a presentation at Green:Net looking at the engineering challenge that is climate change/energy renewal. It is an informative presentation and one that builds on previous work he has done to quantify the problem. However, since seeing the math on a BBC documentary and then again in this presentation something has been bugging me and I couldn’t put my finger on it.

Saul certainly produced a fine statement of the engineering problem. Saul isn’t the first to layout the problem in that way David McKay of Cambridge University is doing a more comprehensive expose of it. Either way it is a sobering presentation.

Considered in the context of the system, though, I think some to the base assumptions may be wrong. I expect that the carbon reduction is not a linear progression but will grow slowly until a tipping point is reached at which point the carbon in the economy will drop seemingly overnight.

More importantly, the focus on carbon is leading the world astray. The primary problem isn’t carbon per se rather the energy intensity of the global economy is growing. While global energy intensity per unit GDP grows the sources of energy is relatively academic. The core problem remains the growing energy intensity per unit GDP. This is what has been bugging me about Saul's presentation - it was from the context of carbon and not about energy intensity.

To demonstrate what I mean consider Peak Oil. The Peak Oil problem is only a problem above a certain energy intensity of GDP. Below that level two effects are seen, 1) the life of oil reserves increases and (more importantly) 2) substitution for other energy sources becomes easier. By reducing the amount of oil used by reducing energy consumption less carbon is produced. The advantage is that reducing is far easier than substitution.

The answer to climate change is to set in place incentives and processes that reduce the energy intensity faster than the economy grows. Energy consumption can only be reduced when saving energy is worth more per kW than consuming energy. Some ways of doing this are:

• Net Present Value in Energy for energy generation schemes: Like Net Present Value for evaluating monetary investment this looks at how much energy is needed over the life of the generator. All generators use energy in order to produce energy. Using NPVE will allow the comparison to see how different generation schemes reduce overall energy intensity.
• Energy Audits: The audits would show businesses and consumers where the energy is going and suggest real changes that would make material differences to the energy they use and consume.
• Stamp Duties/Sales blocks for low efficiency housing: Energy efficiency is in for homes with steadily rising standards but new homes only make up a small percentage of the housing stock. The biggest impact in home energy consumption will be made in improving existing housing stock. The only way to incentivise owners to improve energy consumption across the board is to either not allow the sale/rental of homes that don’t meet a certain energy standard or add an energy duty onto of the stamp duty that is determined by the energy consumption of the house.
• Life-cycle energy labels: Transparency works wonders and the more relevant information consumers have about the products and services they consume the better purchasing decisions they can make. Providing a single number that shows how much energy is tied up in a good or service will help consumers pick products and services that consume less energy over their life and so reduce energy intensity of the economy.

In the final analysis reducing energy consumption will only be self-sustaining when the negawatt is tradable. Ultimately, personnel energy budgets or some sort of cap and trade system will work best. Trading negawatts is far more tangible than trading carbon. Carbon is intangible and there is no daily interaction with it. People understand energy; they use it every day and can see its effect. That single fact will see the far more rapid adoption of energy/negawatt trading than carbon trading.

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