Green Tech

CAMBRIDGE, Mass.--Amory Lovins, a renowned author and big thinker on energy, specializes in making the impossible real.

His 4,000-square-foot Colorado home has no furnace, uses a few dollars' worth of electricity a month, and features an indoor tropical garden with banana trees and papaya plants. In conversation, he's quick to pull out his iPhone to show a car prototype inspired by the Hypercar, which is three to five times more efficient than conventional cars.

He's the chief scientist and co-founder of nonprofit advisory firm Rocky Mountain Institute, which develops environmentally friendly solutions using business as a lever. Among the organizations it advises are Ford Motor, Wal-Mart, and the Pentagon.

On Tuesday, Lovins spoke to investors and entrepreneurs at a forum on clean tech organized by Xconomy, where he was interviewed by venture capitalist Paul Maeder about energy and the environment. (On Wednesday, he spoke at Harvard University.)

Rocky Mountain Institute chief scientist Amory Lovins.

(Credit: Martin LaMonica/CNET Networks)

With the U.S. automakers' financial woes and an incoming president high on everyone's minds, Lovins offered his trademark unconventional thinking bolstered by a blizzard of data.

The biggest danger to cash-strapped U.S. auto companies is making incremental changes to their product lines, he argued. Instead, they need to make radically more efficient cars by adopting several technologies aimed at efficiency. (Lovins coined the term "negawatts," which refers to watts that are not used.)

"Right now they view accelerated transformation as a risk and a distraction. I think it's actually a low-risk strategy. When your competitors new and old all around the world are coming up with radically more efficient, safe, (and) durable cars, you can't afford incrementalism," Lovins said in an interview after his talk.

"It would be tragic to bail out the industry now and see it go under in another five years as competitors' faster innovation takes hold," he said.

Pinning incumbent automakers' turnaround on electric powertrains through plug-in electric cars is a myopic view of the available technologies.

Cars can be made half as heavy as they are today by using composite materials such as light but strong carbon fiber, a choice that gives manufacturers more flexibility and reduces costs in production. "Lightweighting" lowers the engineering bar for alternative powertrain technologies as well, he argues. With less weight to haul around, expensive batteries can be smaller and fuel cell vehicles become feasible.

The other technology changes required to set automakers on the right path are aerodynamics and software for remote diagnostics and other tasks.

"Whatever your advanced powertrain is, especially if it's all-electric, it will be a great deal smaller and cheaper and lighter if you first get the platform physics right--making the car light and slippery," he said. "If you don't do that and your competitors do, you're toast."

Many businesses fail to make high-performing products because they don't practice what he calls "integrative design," or making design choices to optimize the entire vehicle rather than individual components. In the case of U.S. auto companies, there's a cultural bias toward powertrain engineering.

Carbon pricing or negawatts?
In buildings, too, existing practices and delay-ridden business processes slow down adoption of efficient home energy systems.

In its projects, the Rocky Mountain Institute has found that building owners can get energy savings of 60 percent with a three-year payback for energy-efficiency retrofits. The group found that new green building constructions can be done for lower capital costs than traditional methods, contrary to the prevailing view.

When asked what words of advice he offers President-elect Barack Obama, Lovins said the new administration needs to coordinate efforts between the Department of Energy and any climate initiatives.

Many investors and consumers expect that putting a price on carbon emissions--through a cap-and-trade system or tax--will make many clean technologies more economical. Lovins thinks carbon pricing is a good idea but it's not essential.

"You could make lots of money off of efficiency with zero carbon price. We know how to save half the oil and gas and three quarters of the electricity in this country," he said. There are, however, "institutional barriers" that block adoption of energy efficiency practices, he said, apparently referring to incumbent fuel and energy companies.

Longer term, he said it's not clear that carbon prices will remain high enough to drive emissions reductions as intended.

Policy and geoengineering
On specific policy levers, he offered two ideas: "decoupling" in the electric utility industry and a "feebate" structure in transportation, even if they are both implemented first at the state level.

Regulations in about 40 states are structured so that utilities make more money by selling more electricity to consumers. With decoupling, utilities are incented to introduce more efficiency.

The per-capita electricity usage in the state of California, for example, has held steady since the 1970s, while its economy has grown, he noted.

The goal of a feebate--combining the words "fee" and "rebate"--is to incent consumers and automakers to value efficient vehicles.

When consumers purchase cars, there is a sliding scale where they receive a rebate for purchasing the most-efficient vehicles and a fee for the least-efficient.

"It widens the price spread between the most- and least-efficient models and...automakers can make more money because there is more technology content in the cars."

With his emphasis on energy efficiency and practical solutions, it's probably not surprising that he, like many other scientists, are wary of geoengineering ideas, such as putting sulfur particles in the air to cool the earth or seed the ocean with iron to stimulate carbon-sequestering algae blooms.

"Geoengineering is pretty scary. We really don't know what we are doing," Lovins said. "On climate science, there's a whole lot we don't know and most of the surprises are bad surprises...When you've got one planet and you've got to keep living there, you don't want to try anything irreversible."

The anxious auto and clean-energy industries have received positive signals from President-elect Barack Obama in the past two days.

In an interview with 60 Minutes broadcast on Sunday, Obama said he intends to pursue a government stimulus package that includes investments to promote clean technologies, even though oil prices have fallen dramatically during 2008.

Interviewer Steve Kroft asked whether cutting oil imports was less important now that the price of oil has plummeted from $147 a barrel earlier this year to under $60.

Obama: It's more important. It may be a little harder politically, but it's more important.

Kroft: Why?

Obama: Well, because this has been our pattern. We go from shock to trance. You know, oil prices go up, gas prices at the pump go up, everybody goes into a flurry of activity. And then the prices go back down and suddenly we act like it's not important, and we start, you know filling up our SUVs again.

And, as a consequence, we never make any progress. It's part of the addiction, all right. That has to be broken. Now is the time to break it.

Obama said a consensus exists among policymakers that a stimulus package is required to prop up the deteriorating economy.

Addressing the question of a bailout for cash-strapped U.S. automakers, Obama said that giving them government money with conditions is the best policy.

He said that allowing the U.S. automakers to collapse would be a disaster but that handing them a blank check won't solve the problem. Instead, he said that the various stakeholders need to come up with a plan for a "sustainable auto industry." From the interview:

So my hope is that over the course of the next week, between the White House and Congress, the discussions are shaped around providing assistance but making sure that that assistance is conditioned on labor, management, suppliers, lenders, all the stakeholders coming together with a plan (for) what does a sustainable U.S. auto industry look like? So that we are creating a bridge loan to somewhere as opposed to a bridge loan to nowhere."

Meanwhile, in his weekly radio address on Saturday that was broadcast as a video online, Obama reaffirmed his plans for long-term investments on green energy.

"It means investing $150 billion to build an American green-energy economy that will create 5 million new jobs while freeing our nation from the tyranny of foreign oil and saving our planet for our children," Obama said.

Energy and environmental policy were certainly not the top topic of the president-elect's public statements, given the pressing nature of the economic crisis and executing the transition between administrations.

But Obama's recent statements, as well as those from his advisers, indicate that energy remains a high priority. The idea is that an energy policy focused on clean technologies can address environmental problems while stimulating the economy.

"The president-elect will move quickly on climate change," Jason Grumet, a high-level Obama campaign's lead energy and environment adviser, told a conference on carbon trading last week.

In addition to spending on energy infrastructure, Obama's energy plan calls for incentives for energy efficiency, a national renewable energy mandate for utilities, a low-carbon biofuels standard, and a cap-and-trade system for reducing greenhouse gas emissions.