Study sees efficiency as key to meeting energy needs

Study sees efficiency as key to meeting energy needs

By TOM FOWLER and BRETT CLANTON Copyright 2010 Houston Chronicle
March 11, 2010, 11:10PM

Andrew Liveris, left, Dow Chemical Co.’s CEO, speaks with Daniel Yergin, chairman of IHS CERA, during a Q&A session on Thursday.

The big buzz at the CERAWeek conference may be natural gas, but a new study says it’s time to light a fire under energy efficiency to meet future energy demands.

The study, unveiled Thursday at IHS Cambridge Energy Research Associates’ annual meeting in Houston, says that of all the options available, efficiency is the best way to improve the supply-demand balance quickly while keeping costs low and greenhouse gas emissions in check.

“It’s the one thing that’s really embraced across the spectrum,” said Daniel Yergin, chairman of IHS CERA. Enthusiasm for efficiency is high “around the world, at the top of the energy agenda, whether you’re talking about China, Europe or the United States.”

That enthusiasm will be needed because doubts remain about the other paths to a cleaner energy future.

The “Shale Gale,” as CERA has dubbed the surge in natural gas production, can’t do the job alone, a number of panelists said Thursday on the fourth day of the five-day conference.

“We need to be careful thinking everything will be solved by cheap natural gas,” said Theodore Craver, chairman and CEO of electric giant Edison International.

And expanding shale gas drilling to Europe and elsewhere may not be as easy as some expect, warned Jean-Francois Cirelli, vice chairman and president of GDF SUEZ.

The location of the shales is not as well known in Europe as in the U.S., and shale development requires enormous amounts of water and more rigs per acre than conventional drilling. With their smaller land mass, Europeans are more likely to bristle at drilling, Cirelli said.

And technologies like carbon capture and storage, which many see as a way to neutralize the impact of fossil fuel consumption on the environment, face significant technological, political and economic barriers.
Putting it underground

Underground carbon storage is essentially putting waste under people’s property, said Dan Duellman, director of new generation and carbon capture at American Electric Power.

Texas might be comfortable with the storage, given its long history with the oil and gas industry, he said, but carbon storage might be a harder sell in other parts of the country, never mind getting ratepayers to fund the projects.

The high upfront cost of such projects, which may not always result in usable storage sites, is also hard for utilities to swallow, said Jon Long, vice president of asset development for Entergy.

“Drilling into the ground for oil has a lot more upside potential than storing CO2 in the ground for the long term,” Long said.

Howard Herzog, head of carbon capture and storage programs at the Massachusetts Institute of Technology, noted that the Group of 8 nations is calling for 20 large-scale carbon capture projects in the next decade, but he doubts five will start up in that time.
Not easy to promote

But promoting energy efficiency isn’t easy either, according to the study released Thursday.

Politicians find it easier to support programs that create something tangible and generate jobs than policies that curb consumption.

“This is one of those rare, rare areas where you’ll see CEOs like me stand up and say we need government,” Dow Chemical CEO Andrew Liveris said.

“We need to see more collaboration between the public and private sector to set aggressive efficiency standards for things like buildings, for automobiles, for appliances.”

Efficiency is often taken as a synonym for “sacrifice,” but Yergin noted that the U.S. is twice as efficient as it was in the 1970s, and living standards are higher.

“Energy efficiency really means getting more of the things we want while using less energy by improving the productivity of energy use,” Yergin said.
Reasonable upfront costs

To succeed, energy efficiency also must be seen by businesses as “investment grade” — meaning the projects need to have a competitive rate of return and reasonable upfront costs.

It won’t be some massive technological breakthrough that creates efficiency, IHS CERA Director Samantha Gross said, but a steady stream of small improvements over time.

For example, the average U.S. refrigerator today uses only a quarter of the energy it did in 1975 but is 20 percent larger.

Sharon Hong and Monica Hatcher contributed to this story.

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