Business can become more competitive, profitable, and resilient by leading the transformation from fossil fuels to efficiency and renewables.
An old Chinese proverb goes, ‘When the wind changes, some build walls and some build sails.’ “Which one will you be?” asks Michael Tucci of the Rocky Mountain Institute, an energy think tank employing 75 scientists in a quest to create the next big thing – new energy sources. Global warming aside, the volatile price of oil and the threat of pollution should be enough reason to realize that oil is not a sustainable energy source.
The dreams of our ancestors, which latched onto this miracle substance to drive the development of humankind at a pace unseen in our history, have come to an end as our consumption of oil has reached unsustainable proportions. To put this in perspective, each person uses 3 tons of coal, 1,000 gallons of oil and 75,000 cubic feet of natural gas a year, by the simple act of being a consumer in an energy-hungry civilization.
If you were to study a graph showing the consumption of fossil fuels over the last 100 years, you would find that the rise in GDP matches this consumption almost exactly. The wealth of humanity is directly linked to the diminishing wealth of the planet. Add to this the fact that we now live on average 30 years longer than we did 100 years ago and we can safely assume that the planet is slightly more stressed than it used to be.
There are a few dynamics we need to watch as we strive toward new energy sources according to Tucci. One is the price of oil per barrel, recently highlighted by the effects of political turmoil in the oil- rich Arab states. “Oil has also become more expensive to find,” says Tucci. “Oil is controlled by governments with their own agendas, unlike the oil tycoons of the 1970s who were in the game for their own enrichment.
The volatility we find in today’s oil markets don’t make good business sense either. Businesses are shackled by these fluctuations and are unable to plan properly.” Tucci’s solution? A longterm view aimed at reducing need and replacing fossil fuels with renewable energy. “Efficiency, then renewables,” he states. Our current energy systems were built in a time of plenty, where economies of scale followed a different matrix. This system has ensured that a staggering 75-90 percent of all fossil fuels are wasted.
An amazing 70 percent alone is wasted at source, at the power station. Along the supply chain further wastage occurs on the power grid, motors, pumps, switches and pipes. If you were to start with 100 units at the power plant you’d only get 10 units out at the end user. “Savings and efficiencies are actually to be found downstream, not at the end,” explains Tucci.
“If you look at the energy systems that have been overhauled in Europe, for example, you’ll find that people there consider themselves to have a quality of life equal to those living in the United States. This comes down to a simple process of efficient system design to ensure a continuation of a lifestyle to which we have become accustomed. We can have a quality lifestyle and be energy efficient, the two are not unsuited,” he says.
Most countries have an energy grid which is centralized, pretty much how the phone system was in the 1930s. So much has changed in other industries since then, take technology for example, yet the energy systems remain a challenge and open for radical innovation. Tucci illustrates this brilliantly, “If you took Thomas Edison to a TV station today he wouldn’t recognize a thing.
Take him to a power plant and he’d feel right at home, nothing much would have changed at all.” With exciting change and innovation taking place in almost every other sector, it’s time for energy to arrive in the 21st century.