Hearings and Business Meetings

SD-366 Energy Committee Hearing Room 09:30 AM

Mr. Amory Lovins

How innovative technologies, business strategies, and policies
can dramatically enhance energy security and prosperity

Invited Testimony to United States Senate Committee on Energy and Natural Resources
Hearing on Energy Independence, SD-366, 0930–1130 Tuesday 7 March 2006

AMORY B. LOVINS , CHIEF EXECUTIVE OFFICER
ROCKY MOUNTAIN INSTITUTE
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Both energy independence and its purpose, energy security, rest on three pillars:

1. Making domestic energy infrastructure, notably electric and gas grids, resilient.
2. Phasing out, not expanding, vulnerable facilities and unreliable fuel sources.
3. Ultimately eliminating reliance on oil from any source.

Listing them in this order emphasizes that achieving the third goal without the first two creates only an illusion of security. Hurricane Katrina might as well have read my 1981 finding  for DoD that a handful of people could cut off three-fourths of the Eastern states’ oil and gas supplies in one evening without leaving Louisiana. We should worry not only about already-attacked Saudi oil chokepoints like Abqaiq and Ras Tanura, but also about the all-American Strait of Hormuz proposed in Alaska.  DOE policy that didn’t undercut DoD’s mission would:
• shift from brittle energy architecture that makes major failure inevitable to more efficient, resilient, diverse, dispersed systems that make it impossible; 
• avoid electricity investments that are meant to prevent blackouts but instead make them bigger and more frequent;
• stop creating attractive nuisances for terrorists, from vulnerable LNG and nuclear facilities to overcentralized U.S. and Iraqi electric infrastructure; 
• acknowledge that nuclear proliferation, correctly identified by the President as the gravest threat to national security, is driven largely by nuclear power. 

Each of these self-inflicted security threats can be reversed by cheaper, faster, more abundant, and security-enhancing alternatives, available both from comprehensive energy efficiency and from decentralized supply. For example, nuclear power has already been eclipsed in the global marketplace by resilient, inherently peaceful, lower-cost, and lower-risk micro¬power.  That’s a big win for national security and profitable climate protection,  and a vindication of competitive markets over central planning.

Energy independence is not only about oil. Many sources of LNG raise similar concerns of security, dependence, site vulnerability, and cost: Iran and Russia won’t be more reliable long-run sources of gas than Persian Gulf states are of oil. Fortunately, half of U.S. natural gas can be saved by end-use efficiency and electric demand response with average costs below $1 per million BTU—four times cheaper than LNG —making LNG needless and uncompetitive.

America’s oil problem is equally unnecessary and uneconomic. Seventy-seven weeks ago, my team published Winning the Oil Endgame—an independent, peer-reviewed, detailed, transparent, and uncontested study cosponsored by the Office of the Secretary of Defense and the Chief of Naval Research.  It shows how to eliminate U.S. oil use by the 2040s and revitalize the economy, led by business for profit. Welcomed by business and military leaders, our analysis is based on competitive strategy for cars, trucks, planes, and oil, and on military requirements.

Our study shows how the U.S. can redouble the efficiency of using oil at an average cost  of $12 per saved barrel, and can substitute saved natural gas and advanced biofuels (chiefly cellulosic ethanol) for the remaining oil at an average cost of $18 per barrel. Thus eliminating oil would cost just one-fourth its current market price, conservatively assuming that its externalities are worth zero. Side-benefits would include a free 26% reduction in CO2 emissions, a million new jobs (three-fourths in rural and small-town America), and the opportunity to save a million jobs now at risk. America can either continue importing efficient cars to displace oil, or make efficient cars and import neither the cars nor the oil. A million jobs hang in the balance.

The key to wringing twice the work from our oil is tripled-efficiency cars, trucks, and planes. Integrating the best 2004 technologies for ultralight steels or composites, better aerodynamics and tires, and advanced propulsion can do this with two-year paybacks.  For example, new low-cost carbon-composite manufacturing techniques can halve cars’ weight and fuel use, improving safety, comfort, and performance without raising manufacturing cost. 

Oil elimination’s compelling business logic would drive its eventual adoption. But sup¬¬portive public policy could accelerate it without requiring new taxes, subsidies, mandates, or federal laws; this could be done administratively or by the states.

Many innovative policies could also transcend gridlock. Size- and revenue-neutral feebates  could speed the adoption of superefficient cars far more effectively than gasoline taxes or efficiency standards, and would make money for both consumers and automakers.  Novel policies could also support automotive retooling and re¬train¬ing, superefficient planes, advanced biofuels, low-income access to affordable personal mobility, and other key policy goals, all at zero net cost to the Treasury.

Early implementation steps are encouraging. Our analysis led Wal-Mart to launch a plan to double its heavy truck fleet’s efficiency and to consider tripled efficiency a realistic goal.  The Department of Defense is also recognizing fuel-efficient platforms as a key to military transformation. Military needs for ultralight, strong, cheap materials can transform the civilian car, truck, and plane industries—much as DARPA created the Internet, GPS, and the chip and jet-engine industries—and thus lead the Nation off oil so we needn’t fight over oil: negamissions in the Persian Gulf, Mission Unnecessary. 

The surest path to an energy policy that enhances security and prosperity is free-market economics: letting all ways to save or produce energy compete fairly, at honest prices, no matter which kind they are, what technology they use, where they are, how big they are, or who owns them. That would make the energy security, oil, climate, and most proliferation problems fade away, and would make our economy and democracy far stronger.