Profile: Amory Lovins

No ivory-tower scientist, Amory Lovins of the
Rocky Mountain Institute in his latest book “Reinventing Fire”, has a winning
prescription for all four energy-using sectors – transportation, buildings,
industry and electricity – by integrating four kinds of innovation –
technology, policy, design and strategy. Put it all together in a plan for
running a 158%-bigger US economy by 2050 with no oil, coal, or nuclear energy.

Amory Lovins’ Burning Quest to ‘Reinvent
Fire’

By Joel Makower in Green Biz (27 October
2011):

Amory Lovins has a new book out today. That’s
worthy of a news story in itself, since many of his previous works — books and
papers going back to the 1970s — have spurred radical new thinking in energy,
transportation, and building systems. And not just thinking: an impressive list
of companies and governments around the world can trace some of their more
innovative products, processes, and business models to the thinking of Lovins
and his colleagues at the Rocky Mountain Institute, of which he is co-founder,
chairman and chief scientist.

Lovins’ new book, Reinventing Fire: Bold
Business Solutions for the New Energy Era, pulls from the last 30 years of
Lovins’ and RMI’s work. In it, he and his team offer a plan for running a 158
percent-bigger U.S. economy in 2050 with no oil, coal, or nuclear energy.

I recently talked with Lovins about the book,
its implications for companies, and what it will take to make its vision a
reality.

Joel Makower: Amory, let’s start with the
title. Tell me about where the idea of “reinventing fire” came from?

Amory Lovins: Well, fire made us human, fossil fuels made us modern and we now need a new fire that makes us secure, safe and durable. The old fire of fossil fuels has served us very well and created our wealth and enriched the lives of billions. It also has costs to our economy, health, environment and security that are starting to erode the prosperity and security it created, so it’s time for a new fire. Because this is the biggest infrastructure change perhaps in the history of our species, we wanted to give it a suitably expansive title.

JM: And what did you find?

AL: Reinventing Fire shows how to run a very
prosperous 2050 U.S. economy — 2.6 times today’s — with no oil, no coal, no
nuclear energy, one-third less natural gas and a $5 trillion lower
net-present-value cost than business as usual. We also found the transition
requires no new inventions and no Act of Congress and can be led by business
for profit.

JM: Many of us, and especially you, have been
talking about some of these things for a long, long time. How is Reinventing
Fire different from past efforts to push renewables and efficiency?

AL: I think in three main respects and several
minor ones. The first two come from a remark attributed to General Eisenhower:
“If a problem cannot be solved, enlarge it.” That is, the reason you
couldn’t solve it wasn’t that it wasn’t small enough to be bite-sized, but
rather the values were drawn so narrowly that it didn’t encompass enough
options, degrees of freedom and synergies to make it solvable.

So, in that spirit, we integrated all four
energy-using sectors – transportation, buildings, industry and electricity –
and having spent the last three or four decades deeply immersed in practical
work in all four of those, we were in an unusually good position to do that
integration. So we found, as you’d expect, for example, that it is much easier
to solve the automotive and electricity problems together than separate

Secondly, we integrated four kinds of
innovation, not just the usual two – technology and policy – but also design –
that is, how technologies are combined — and strategy — that is, a new
competitive strategies and new business models, which turn out to be even
richer in innovation than technology and policy. And the four together are much
more than the sum of their parts, especially in creating deeply disruptive
business opportunities.

A third point of departure is that this work
is trans-ideological. It doesn’t matter whether you care most about profits,
jobs and competitive advantage or about national security, or about health and
environmental stewardship. We ought to do the same things anyway for whatever
reasons. So, if we focus on outcomes not motives, and do the things we agree
ought to be done from whatever perspective, then the stuff we don’t agree about
tends to become superfluous.

There are many other unusual features of this
work that you will have noticed. It’s about solutions not problems. It’s about
transformation not incrementalism. And it’s about practice not theory. It does
not assume internalization. In fact it explicitly assumes all positive or
negative externalities are worth zero — a conservative estimate. Of course, if
we counted them, the net present value surplus would be a lot bigger than the
$5 trillion that we found just in private internal costs. It’s also a very
collaborative effort — over 60 of us, about three-quarters of our total staff
and I were engaged in this during a year and a half. And we were blessed with
terrific collaboration and support from industry in all four sectors in sharing
data and insights and in peer review. So, we think it’s a fresh, rigorous and
coherent alternative vision that, so far, has been lacking and that we hope
will change the national energy conversation.

JM: Speaking of transforming markets, people
often talk about three big levers that one needs to pull to bring technologies
to scale. One is the technologies themselves, another are the policies and a
third are the markets. Obviously it’s never a matter of pulling any one of
those levers really hard, it’s a matter of pulling them all in sequence. It
seems that the technologies exist that we can do a lot of this as you’ve pointed
out many times; that we can do a lot of this with existing technologies. The
markets are emerging. I’m wondering how much of this is all about policy –
sending the right signals and getting the prices right — and how much of this
is just helping the markets to develop.

AL: We put much more emphasis on
barrier-busting and we did find that certain policy innovations are needed to
enable or speed the transition on the business adoption. But we also found that
none of those required an Act of Congress. They could all be done administratively
or at a state level.

For example, rewarding utilities for cutting
the bill and not sell you more electricity has to happen at a state level,
where utilities are regulated. Allowing fair interconnection and competition on
the grid is partly a state and partly a federal matter, but the federal part is
done administratively by the FERC [Federal Energy Regulatory Commission].
Again, no act of Congress required. For light-duty vehicles, the key missing
element is size and revenue-neutral feebates for efficient new autos, but those
can perfectly well be done at a state level.

None of the results that we describe require
carbon pricing or other internationalization, even though that would be very
helpful and correct. But it’s not essential; it’s certainly not sufficient,
because if you get the prices right but don’t bust barriers then not much
happens. And, in the long run, it’s probably not as important as one might
suppose, because given the very large cheap potential we found on the demand
side, an efficient carbon market will ultimately clear low, so carbon would be
a long-term short.

Of course, this independent view that we
don’t need to wait for Congress to command what unnatural act we should commit
in the marketplace is alien inside the Beltway. But about 2,000 miles west of
the Beltway and have no trouble imagining that the dynamism of our most
effective institutions — namely free enterprise and co-evolution with civil
society — accelerated by military innovation could be used to end-run our
least effective institutions, notably Congress.

JM: What role does the current economy play
and — assuming it’s gonna persist for some while, does it make it easier or
harder to reinvent fire?

AL: Both. Easier because it gives time to
rethink. Typically, a slump is when you look for the next wave of innovation
that will bring you out of it in a more commanding competitive position. And at
a time of fiscal stringency it might be easier to get rid of some of the deeply
distorting energy subsidies.

Also, the heightened competitive pressure of
a recession puts more focus on bringing down costs and risk and. You could
interpret our book as being about design for risk management.

JM: A lot of mainstream companies have been
doing some of these things — or, at least, they feel they’ve been doing these
things. They’ve been gradually ratcheting up the energy efficiency of their
operations – lighting, buildings and the like . They’ve been bringing in
renewables in some fashion, either directly or indirectly. Is that enough?
Assuming not, how do you push companies to go further? What do you find the
best motivators in getting them to step this up in some significant way?

AL: Companies tend to be motivated by
increased revenue, competitive advantage and decreased risk, so we describe all
three in detail at the end of the sectoral chapters — Chapters 2 through 5:
who should do what, depending on the level of adventurousness and how advanced
your practice already is.

I would like to see coming out of the
conversation about reinventing fire, a lot more attention to integrative
design, which, on the demand side is the key to the results we got for
transport and building industries. Integrative design optimizes whole systems
for multiple benefits rather than isolated components for single benefits. And
it often makes very large energy and resource savings cheaper than smaller-dose
savings, so it often deals expanding, not diminishing, returns to investments
in energy productivity and that is a bigger game-changer than any single
technology.

Having now applied integrative design in over
1,000 buildings and $30 billion worth of factories and various vehicle designs,
we’re confident that it’s replicable, scalable, teachable and revolutionary in
its competitive implications.

We suggest some different ways of looking at
supply and supply-demand integration than are commonly done. For example, in
the electricity sector, we use NREL’s ReEDS model to examine business-as-usual,
a new nuclear and so-called clean-coal scenario, centralized renewables and
distributed renewables. And the surprise to many will be that we found these
four electricity futures for 2050 differ immaterially in cost but profoundly in
risk, so it’s very much a risk-management play.

I think some of the novel competitive
strategies will also surprise people — for example, with help from the former
head of McKinsey’s automotive practice we were able, finally, to nail the
production economics and show that ultra-lighting autos is free because it’s paid
for by simpler manufacturing and smaller power trains. But it then makes
electrification affordable. So, by combining very light, slippery but safe
vehicles with electric traction, you’re bringing into play three very steep
learning curves — one in the advanced composite materials, another in the
structural manufacturing and a third in the electric power train. And those three
are strongly synergistic.

The result is as game-changing as switching
from electric typewriters to Moore’s Law-driven computers. And, indeed, BMW has
already confirmed that in their i3 — one of three carbon-fiber electric cars
announced for mass production by three German automakers in the next two years
– the carbon fiber is paid for by needing fewer batteries.

JM: You mentioned BMW, and that’s the first
company you’ve mentioned in this conversation. It gets me to where I wanted to
go next: Are there any poster-child companies that you would say represent
Reinventing Fire?

AL: Not comprehensively. The nearest would
probably be Interface. But there are many others that we mention for
outstanding achievement in particular areas. For example Dow, in efficiency.
Certain real estate developers, like the way Tony Malkin adopted integrated
design for the Empire State Building retrofit.

In automotive, the three companies that are
starting 2012 or 2013 volume production of electrified carbon fiber cars are
BMW, Volkswagen and Audi, but there others making important progress and by my
count, somewhere between four and seven automakers have adopted or are moving
notably toward the strategy we outline. In the United States, I’d say Ford is
probably in the lead but there’s plenty of competition emerging and there’s a
lot happening behind-the-curtain in Japan and in Korea.

In electricity, it’s a much more fluid and
diverse field of players. This is the sector that’s facing the most numerous,
diverse and profound disruptions of any sector as 21st-century technology and
speed collide with 20th- and 19th-century institutions, business models, cultures
and rules. Generally, when you have a complex system dependent on fast and slow
variables it doesn’t end well, so this is one of these inflection points at
least as big as the internet where vast fortunes will be made or lost and we
need to keep the lights on meanwhile.

Some utilities are starting to realize that
the threat of radical bypass from unregulated products that can amount to a
virtual utility is worse than what cell phones did wire-line phone companies,
but that this doesn’t have to be treated as a competitive threat. There are a
half-dozen business models that could make it into an important opportunity.
And of all the alternative strategies, the one that’s clearly unwise is
Ostrich, which is where some companies still find themselves frozen, like deer
in the headlights, with all this turbulence coming at them.

So we’re starting to work with a number of
utilities to think through new business and regulatory models and their
strategic implications. Certainly there are very important hardware vendors and
service providers and aggregators on both the supply and the demand side and
clean electricity is about a $200 billion-a-year business, and growing
explosively worldwide.

JM: After all these years, are more or less
helpful that we can get this right?

AL: I think the talent and the business
leadership are certainly there to do it, with or without help from Congress.
Our hope in putting out this coherent alternative vision, very rigorously
grounded in the existing technologies and meeting the sectors’ normal hurdle
rates, but with less risk, is going to stimulate the more bold and foresighted
business leaders to be early adopters on a scale that will create competitive
pressure for emulation because that’s how we do our outreach at RMI.

JM: I’ll take that as “hopeful.”

AL: We certainly wrote this in a spirit of
implied hope. And I think the scope for driving it from the C suite, not from K
Street, is going to be attractive across the political spectrum because
everybody’s tired of gridlock. And the notion that business can lead the energy
transition may be novel but it’s rapidly gaining credence and momentum.

Short Biography of Amory Lovins:

Physicist Amory Lovins is Chairman and Chief
Scientist of Rocky Mountain Institute (www.rmi.org) and Chairman Emeritus of
Fiberforge Corporation (www.fiberforge.com).

His wide-ranging innovations in energy,
security, environment, and development have been recognized by the Blue Planet,
Volvo, Onassis, Nissan, Shingo, and Mitchell Prizes, MacArthur and Ashoka
Fellowships, the Benjamin Franklin and Happold Medals, 11 honorary doctorates,
honorary membership of the American Institute of Architects, Fellowship of the
Royal Society of Arts, Foreign Membership of the Royal Swedish Academy of
Engineering Sciences, and the Heinz, Lindbergh, Right Livelihood, National
Design, and World Technology Awards.

He advises governments and major firms
worldwide on advanced energy and resource efficiency, has briefed 20 heads of
state, and has led the technical redesign of more than $30 billion worth of
industrial facilities in 29 sectors to achieve very large energy savings at
typically lower capital cost.

A Harvard and Oxford dropout, he has
published 29 books and hundreds of papers and has taught at eight universities,
most recently as a 2007 visiting professor in Stanford University’s School of
Engineering.

In 2009, Time named him one of the 100 most
influential people in the world, and Foreign Policy, one of the 100 top global
thinkers.

Source: www.greenbiz.com, www.rmi.org