Sparking an Economic Recovery

For all of human history, energy has come in one basic form: Fire. But, for entrepreneurs—investing in the new energy paradigm means opportunity.

PBS Nightly Business Report’s series “How to Fix the Economy” included a conversation with Rocky Mountain Institute Chief Scientist Amory Lovins on Reinventing Fire, and how energy innovation can spark an economic recovery.

Watch below (segment begins at 10:50)

Watch Tuesday, Nov. 1, 2011 on PBS. See more from Nightly Business Report.

Three-quarters of our energy is used in buildings. To an entrepreneur this is a huge opportunity. More efficient buildings will save the country almost $2 trillion.

“The efficiency savings in America’s buildings are worth almost 4 times what they cost,” Lovins said. “The internal rate of return is 33 percent. Plus, you get side effects like healthier, more productive people which are more valuable than the saved energy.”

Another economic opportunity: getting cars off oil saves $4 trillion through better engineering and use.

“What RMI found through our research is startling,” Lovins said. “You can run a 2.6 times bigger economy in 2050 with no oil, no coal, no nuclear and one-third less natural gas $5 trillion cheaper in net-present-value (counting no externalities) than business as usual requiring no new inventions, no acts of Congress—led by business for profit. It is not simple, not easy, but it is a lot easier than not doing anything.”

The central insight in the book: The energy problem is easier to solve as a whole than piece-by-piece. Reinventing Fire encourages America’s leaders to start looking at the entire system. But how does that work? Consider the recent retrofit of the Empire State Building as a prime example.

“With partners, we cut energy use by two-fifths with a retrofit in a difficult old building by optimizing the building as a system,” Lovins said.

By remanufacturing over 6.5 thousand windows on-site into superwindows, updating lights and office equipment, the team cut peak cooling load by one-third. Then, instead of having to dig up 5th Avenue to replace and expand the old chillers, they could renovate and reduce them in place. That saved over $17 million, which helped pay for other efficiency upgrades, making the payback for only three years.

A quiet revolution is fixing the U.S. economy—making it more energy efficient, and creating jobs in spite of the gridlock Washington. One example is the drive to make cars using advanced materials. Lightweight cars are easier to power with smaller electric motors.

“In the auto business, lightweighting is the key to stunning competitive advantage because it allows automakers to activate three very steep learning curves that strongly reinforce each other” Lovins said. “Carbon fiber, structural manufacturing and the electric powertrain: when you put these three together, it is as game-changing as going from typewriters to computers.”