Rocky Mountain Institute @ 35: A conversation with Amory Lovins

Amory Lovins is co-founder and chief scientist of the Rocky Mountain Institute, arguably the world’s most influential energy think tank that this year is celebrating its 35th anniversary. Over those 3.5 decades, RMI has provided the vision and intellectual firepower for what now is commonplace: ultra-efficient vehicles; healthy and efficient buildings; utility business models that decouple energy sales from profitability; and other things. And, above all, illuminating a path toward cheap, ubiquitous and nonpolluting energy, growing economies and creating opportunities across the globe.

Much of this began well before RMI was created, in 1982. In the wake of the 1970s energy crisis, Lovins wrote a landmark article for Foreign Affairs, Energy Strategy: The Road Not Taken? in 1976. It described the two energy choices: the hard path, continuing to rely on dirty centralized energy generation; and the soft path, combining energy efficiency with a shift to renewable supply. The article became the journal’s most reprinted article and led President Jimmy Carter to invite Lovins to the Oval Office to have a discussion that helped form the president’s energy policy.

Over the years, RMI, which began in Lovins’ home in Snowmass, Colorado, now operates out of a net-zero-energy building in nearby Basalt, along with offices in Boulder, New York City, Washington, D.C., and Beijing.

On the occasion of RMI’s 35th, I spoke to Lovins about his unwavering vision and the challenges and opportunities he sees going forward. The conversation has been edited for clarity and length.

Joel Makower: When you look back 35 years to the beginning of RMI, what comes to mind about your vision then versus what the organization actually became?

Amory Lovins: Well, we started more as an "energy-and" shop — that is, how energy was linked to population, resources, environment, development, economy and security. And we still bear many of the same concerns and activities, but we no longer have the same diversity of programmatic activities we had then. We had programs in security, water, agriculture, local economic development and the like that we no longer have. On the other hand, now with about 200 people instead of a handful, we have immensely greater depth, reach and effectiveness in energy, and I think that's essential and timely, given where the world is now.

Makower: Some things you were doing were way ahead of their time. A lot of the things that you talked about early on — Hypercars, super-efficient buildings — are just now getting into the mainstream. What have you learned about making change happen?

The people who said it would take 20 years for Hypercars to get to market from a major automaker were almost right: it took 22 years.

Lovins: It takes relentless patience and meticulous attention to detail. It often takes longer than you hope or expect. The people who said it would take 20 years for Hypercars to get to market from a major automaker were almost right: it took 22 years. I'm now driving my first one, whose license plate actually says "HYPERCAR." But although we had two shots at cutting a decade or so off of that lag, they both failed financially for different reasons, and I don't know how we could have overcome either of them.

Makower: You're doing less on the security side, but you still are working on energy and security, even by default, since so much of what distributed generation is about is around a more secure and resilient infrastructure. Why are energy and security still disconnected, except when it comes to propping up Mideast oil regimes?

Lovins: Well, they are connected in the minds of the military, very clearly. It is precisely because of the way energy resilience supports mission assurance that the armed forces are the federal leaders in implementing resilient energy supply. I've been helping make that happen for three decades, and I'm thrilled with how enculturated it is, how embedded in doctrine and how well executed in actual investments and operations.

Our newest managing director, Miranda Ballantine, after a senior post at Walmart, became assistant secretary of the Air Force, where she owned all the bases and facilities, and this was one of her major activities: making sure that the lights would stay on and the stuff would work at bases around the world.

It's interesting that we should be talking about this today because I'm just editing a comment for FERC on the DOE NOPR, which would try to disadvantage resilient electric supplies in favor of unresilient ones, all in the name of resilience, which evidently the author didn't understand.

In fact, a lot of our domestic energy is at least as insecure as what we get through the Strait of Hormuz. And a lot of our federal energy policy has periodically been about pushing the most insecure sources, like the trans-Alaska pipeline, which is an all-American Strait of Hormuz. Jim Woolsey has actually testified to that effect in the House as an oil-friendly Oklahoman, saying this is an extremely vulnerable link, and from a national security point of view, it's the last thing you'd want to do, even if it had good economics, which it doesn't.

A lot of our domestic energy is at least as insecure as what we get through the Strait of Hormuz.

I remember in that hearing, Sen. Lisa Murkowski objected to our mentioning the study that Hunter [Lovins] and I did for the Pentagon in 1981, published as a book in '82 called "Brittle Power: Energy Strategy for National Security" (PDF). That had a foreword by Admiral Tom Moorer, who was President Nixon's chairman of the Joint Chiefs, and by Jim Woolsey, who had been at the time undersecretary of the Navy and later was Director of Central Intelligence and a great ally on these issues. We found in "Brittle Power" that a handful of people could turn off two-thirds of the oil and gas supplies to the eastern states in one evening without leaving Louisiana. But we also found the grid was more vulnerable than that, and it still is.

Makower: So now that some of those chickens are coming home to roost — in Puerto Rico, in wildfires of northern California, in Texas and Florida and many other places around the world — are you seeing this as a teachable moment?

Lovins: Very much so — if those making the decisions care to listen. I've had, of course, many unsuccessful attempts to raise the energy security and resilience issues over the last 36 years. And other than the Department of Defense, most audiences have not been very receptive, because it contradicts their view of what they want to build.

To give an example of why this matters in the, say, Puerto Rican and Caribbean context, we've had a quite extensive effort with Carbon War Room, now part of RMI, and Richard Branson, to switch from diesel to distributed renewables on the islands.

I wrote an essay for the theater commanders in Iraq and Afghanistan in 2010. The title is Efficiency in Micropower for Reliable and Resilient Electricity Service: An Intriguing Case-Study from Cuba. I've not been to Cuba, but I had good information from people who know it well about how in 2005, Cuba had 224 serious blackout days. In 2006, it had three. In 2007, it had zero. And in 2008, two hurricanes in two weeks shredded their eastern grid, but they still sustained vital services, just as they did in recent weeks when the same things happened again. There was immense destruction, but things like hospitals kept working.

What did they do to create this extraordinary increase in resilience? Well, they started with efficiency, with a shipload full of Chinese export, credit-financed, very efficient appliances, comparable to good Energy Star models — things like lights, fans, refrigerators, rice cookers, pressure cookers and pumps. Those were mandatorily deployed all over the country. They switched to a steeply inverted tariff. They had a major public education campaign about Revolución Energética.

Most importantly, they switched the architecture of the grid from extremely centralized, based on 11 geriatric, Soviet heavy-oil plants, to much more distributed. They shut roughly half those plants and connected as netted islandable microgrids. That means that each locality normally interchanges electricity freely through the big grid with other areas, but if the big grid fails, then each locality isolates fractally, meets critical loads as best it can with local resources, and will then later detect, rethink and reconnect if the grid comes back.

In other words, it's exactly what the Pentagon doctrine has now said we should do for all our military bases so that their stuff works. And the misfortune Cuba had when they were doing this in 2005, 2006 and 2007, is that they couldn't get into the long waiting list for wind and solar, which at the time was still quite expensive because everybody else was ahead of them in the queue.

So they bought a bunch of mainly Caterpillar diesel generators. They weren't worried about the oil because Hugo Chavez would give them Venezuelan oil in exchange for doctors. That arrangement, of course, is now fraying with events in Venezuela, and they are now gradually switching to wind and solar, which is where they wanted to be in the first place.

But the combination of efficiency, some demand response and especially the resilient grid architecture produced the kind of result that we could and should have had in the Virgin Islands and Puerto Rico.

Makower: What did you think of Elon Musk's idea of just sending a ton of batteries over there?

Lovins: Well, I haven't assessed it, so I can't comment in detail, but broadly speaking, that sort of system can be built cost-effectively in the Caribbean islands, and very quickly. So I think it's a serious idea well worth exploring and I believe it is getting rapidly and seriously explored. As we've learned in prior hurricanes and floods and other natural disasters in the lower 48 states, there's always a temptation just to get the lights back on as quickly as possible by rebuilding what we already had. And the only strong countermeasure I know of is to plan the reconstruction, and even stockpile what it will take, in advance.

As we've learned in prior natural disasters in the lower 48 states, there's always a temptation just to get the lights back on as quickly as possible by rebuilding what we already had.

Having failed to do that in all of the places that were just blacked out, as far as I know, we're playing catch-up and trying to fix the airplane in the air. But I hope that the extraordinary efforts that utilities, military and others are making to try to restore electricity and other basic services will not prevent us from taking these hard lessons to heart and rebuilding a much more resilient system.

Makower: You're doing some pretty interesting work in China, and they've got some ambitious goals to cut carbon intensity 60 percent in about 12 or 13 years. What are you learning there that you didn't expect, that China is doing that the rest of the world should know?

Lovins: We had the privilege to work with the Energy Research Institute (ERI), an outstanding energy analytic and policy shop that's part of the National Development and Reform Commission, which writes and enforces the five-year plans. And with a lot of help from Berkeley Lab and Energy Foundation China, ERI and RMI, each with about 27 people full time for three years, created a roadmap that ERI is in the course of publishing in three volumes for the revolution in the consumption and production of energy that the paramount leaders called for several years ago.

The findings are even more striking than for Reinventing Fire in the U.S., which we published in 2011. It turned out China could save about $3.2 trillion net present value by running a sevenfold bigger economy in 2050 than in 2010, but using today's energy seven times more productively. It could shift supply two-thirds off fossil fuels — 83 percent of the power sector. It could emit 42 percent less carbon, burn 80 percent less coal and get 13 times more GDP from each ton of fossil carbon.

Our steering committee for that effort included most of the energy authors of the 13th five-year plan, which it naturally influenced. And now RMI has a couple of dozen people in Beijing helping ERI, state grid and many other institutions public and private to pivot from analysis to implementation. So I'm very pleased with how that's going, and I guess the biggest surprise, which is perpetual — it's almost weekly when I see the new numbers come out — is how extraordinarily quickly China can deploy things.

You may know that in 2013, China added in that year more photovoltaic capacity than the U.S. had added since developing the technology 59 years earlier. And three years later, China was installing at triple that pace. It was putting in basically three soccer fields an hour. And in the month of June, I'm told, they added 11 gigawatts of PV in order to get in ahead of a price decrease. Eleven gigawatts in a month is a gigawatt every three days. We don't know how to do that, but they do. It's extraordinary.

Makower: One of the memes that we're hearing these days is "the electrification of everything." When you hear that goal, how do you respond? Is it, "Well, yeah, I talked about that 30 years ago"? Or is it, "No, I don't think so. That's not going to work, and here's why"?

Lovins: Well, there's no point saying the first. If people didn't hear it 30 years ago, they might not hear it now, and it's nice to have others saying it. On the other hand, I think if you get into detail, it's a bit exaggerated.

The two big nuts to crack are not current electric end uses nor electric light-duty vehicles, but rather heavy vehicles, mainly trucks and airplanes, and high-temperature process heat for industry.

In each case, there's actually a nice diversity of options. Both trucks and airplanes will have, I believe, robust competition between hydrogen, liquefied for airplanes and heavy trucks, and advanced biofuels. High-temperature process heat could perfectly well come from solar, including solar co-generation — that's a logical place for some of the solar thermal electric technologies to get applied as they have trouble keeping up with PVs — and hydrogen.

The hydrogen, if you look back in the two sections on it in Winning the Oil Endgame, which the Pentagon co-sponsored 13 years ago, was assumed then to come from reforming natural gas. And indeed, the silver lining for today's hydrocarbon owners is that in general the hydrogen in a hydrocarbon is worth more without the carbon than with the carbon, because you can use hydrogen so much more effectively than hydrocarbons — for example, in fuel cells — and you can generally make more money taking hydrogen out in a reformer than putting hydrogen in a refinery.

That said, though, the heat equivalent of 1 cent of kilowatt-hour electricity is oil at $17 a barrel. So when you then do the full calculation, counting the efficiency of using fuel or electricity, including the cost of the equipment to produce and deliver and use the stuff, minus any demand-response credits for electrolyzers, I think you conclude that renewable hydrogen is going to be highly competitive in many applications.

Makower: And that's before you start counting other externalities.

Lovins: Yeah, so I'm not yet counting a carbon price, although of course I would love to have one — it would be good economics and good for the economy. But in good sites, unsubsidized PV and wind are now both around 3 cents a kilowatt hour, heading for 2 and perhaps for 1. And any of those three numbers could yield competitive hydrogen for heavy vehicles and process heat.

In good sites, unsubsidized PV and wind are now both around 3 cents a kilowatt hour, heading for 2 and perhaps for 1.

I'm surprised at how many people assume that biofuels are the only option for airplanes. That hasn't been true for probably 20 years. There's a lot of very good work that's been done by all the major airframe makers, the Air Force and others on how to run airplanes on liquid hydrogen. They're called cryoplanes. The liquid hydrogen is the highest-energy fuel per unit mass; that's why we use it for rocket fuel.And in an airplane you care more about mass than bulk, so a cryoplane would be redesigned. It would look bulkier but weigh less. And in a typical mid-size, 757-category aircraft, in typical commercial emission profiles, you would expect about 15 percent higher efficiency using hydrogen-optimized turbojets.

Now, that turns out to be enough, with efficient processes, to offset the energy needed to liquefy the hydrogen, so the energetics and economics are actually rather similar to kerosene. The long-run economics are better; environmental impacts are much lower. So it would take a whole new fleet of airplanes, but I think it's a serious contender.

Makower: So, are you more or less optimistic now than you were 35 years ago?

Lovins: I wasn't optimistic then. I'm not optimistic now. Nor am I pessimistic. I live and work in a sphere we called "applied hope," which is neither theoretical hope nor mere glandular optimism. You can read about that in a UC Berkeley College of Natural Resources commencement speech called Applied Hope, which I commend to your attention.

Makower: So maybe I used the wrong word. Does your applied hope anticipate that we'll be able to get where we need to go in the time we have?

Lovins: Technically and economically, yes. I think there's no question that we are moving with unprecedented speed, unprecedented for at least centuries, if not forever, into an energy transformation that is not constrained by the inertia of incumbents, but sped by the ambition of insurgents.

The issue is not "What do we know how to do and can make money at?" but rather, "How adroitly can we get the incumbents out of the way or enlisted in the new opportunities?" And that depends both on their very difficult cultural change and leadership challenges, and on whether we come up with good ways to relocate their trapped equity out of stranded assets and into successor investments.

Makower: So in that spirit, what's the story you hope to be able to tell in five years on the occasion of RMI's 40th anniversary?

Lovins: That those obstacles are dissolving satisfactorily. That the energy revolution has continued to gain speed, scope and depth. And that by 2050, if not before, we can visit the industrial museums featuring today's dominant technologies and try to figure out how to explain to our grandkids what all the energy fuss was about.

Makower: And of course, we'll fly there in electric planes.

Lovins: Or hydrogen.