Reading the past few months’ headlines, it’s impossible not to ask whether we’re in a perfect storm in which fears around energy-supply reliability, cost and environmental effects are coming together. If we’re in that perfect energy storm, deep and effective energy productivity improvement are needed from both effective energy management and innovation. Even if these fears prove groundless, countries, cities and companies that achieve the highest levels of productivity and innovation are likely to have a substantial competitive edge over their rivals. This column is being written on a flight from Copenhagen to Atlanta after a short trip to Germany and Denmark. This trip brought thoughts around energy innovation, management and competition to the top of mind.
The oil spill in the gulf, now thankfully capped, was the largest in history, with the full effects still to be known, and again draws attention to the United States’ oil dependence. About 70% of the United States’ oil is imported and mostly used in light cars and trucks, on average using more than twice as much fuel per passenger mile as in German vehicles. With a billion Chinese citizens getting on the road, how much longer can our oil-use patterns be sustained? Countries are attacking this in many innovative ways. In the process, they’re building new industries of the future including high-speed rail, electric cars, super-efficient clean diesel hybrids and completely new ideas such as the recently announced Chinese “people mover” concept that will straddle freeways with cars driving underneath. Some will go the way of the steam-powered airship. Some will grow into the multi-billion dollar corporations of the future.
Electricity supply in the United States has grown more vulnerable. The number of blackouts across the country is inexorably increasing. In the least reliable regions, they now total more than 200 minutes a year, and even in the most reliable regions they last more than 90 minutes annually. These don’t include those caused by catastrophic events such as hurricanes or ice storms. Homes and buildings are the major electricity consumers. The imperative to slow or even reverse demand on the grid is triggering all kinds of innovation — from smart grids to new approaches for building efficiency and management, distributed cogeneration and renewable generation.[pullquote]
My hotel in Copenhagen had triple-glazed windows and integrated controls. It was clad with solar panels and connected to district heating and cooling, energized by a combination of renewable, waste and fossil energy supplies. It was a two-minute walk to both light and heavy rail, located in a new business park, which included hundreds of homes as well as offices. It even had a current energy performance certificate displayed in the lobby. Combined, this approach to building and neighborhood design vastly reduces electricity and other energy consumption.
Some parts of the world are pushing the regulatory envelope to reduce parasitic electricity demand with deep-standby requirements. Some are even starting to develop networked cooling systems fed by waste-heat from industry and power plants. One example, Helsinki, is even considering the use of waste-heat from a nuclear plant to heat and cool the city. Industry is reacting to these grid vulnerabilities with higher levels of electrical efficiency, improved management and control, and on-site clean and renewable generation.
Weather is overwhelming the headlines. Globally, the past decade was the warmest in recorded history, with June, 2010, hitting an all-time record. As I travel, it’s impossible to avoid weather stories. This summer, a heat storm caused widespread fires across Russia, with the record temperatures and smoke causing 350 deaths a day in Moscow. The resulting importance for the rest of the world is that now the grain fields of Russia and the Ukraine that feed millions are damaged and exports are being restricted. Floods of previously unknown levels are destroying the livelihood and infrastructure of more than 20 million Pakistanis. The effects in an area critical to global terrorism can only be imagined, but it’s hard to see them being positive. China had the worst floods in its history, stretching national rescue efforts and killing hundreds in mudslides. The United States had sustained record heat storms, one of the major contributory causes of increasing blackouts as air-conditioning demands stress the grid.
Are these signs of human-induced climate change through energy use? As a pattern, they’re completely consistent with the predictions of the worlds’ climate scientists, though any single event is impossible to link definitively to our energy use habits. If these patterns continue, the debate on climate-change legislation could easily change quickly. This will only accelerate the imperative to energy and fuel efficiency, even faster innovation and disaster mitigation.
The headlines are telling us we’re in a perfect storm around energy. Whether we are or not, management that fails to consider this as a possibility might end up on the wrong side of history. Assessing both the opportunities and risks is no longer optional and clearly warrants CEO and board-level accountability.
Peter Garforth is principal of Garforth International LLC, Toledo, Ohio. He can be reached at [email protected].