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and its links with economy, security, development, and environment. He has advised heads
of state, major firms, the U.S. energy and defense
departments, and governments worldwide. He
received the Alternative Nobel, Zayed, Blue
Planet, Volvo, Onassis, Nissan, Shingo, and
Mitchell Prizes, MacArthur and Ashoka Fellowships, eleven honorary doctorates, and the
Heinz, Lindbergh, Time Hero for the Planet,
National Design, and World Technology Awards.
An honorary architect, Swedish engineering academician, and former Oxford don, he has taught
at nine universities. Among his thirty previous
books are Small Is Profitable, Winning the Oil Endgame, and the coauthored business classic Natural
Capitalism. Lovins was named one of Times 100
most influential people in the world and Foreign
Policys 100 top global thinkers. He is cofounder,
chairman, and chief scientist of Rocky Mountain
Institute.
ReinventingFireCoverJacketFinalPS.indd 1
of Natural Capitalism
ISBN 9781603583718
Reinventing Fire
My friend Amory Lovins knows that the most important question of the 21st
century is the how questionhow we turn good ideas into working solutions.
Reinventing Fire is a wise, detailed, and comprehensive blueprint for gathering the
best existing technologies for energy use and putting them to work right nowto
create jobs, end our dependence on climate-changing fossil fuels, and unleash the
enormous economic potential of the coming energy revolution.
President Bill Clinton
Lovins
and
RMI
PO Box 428
White River Junction, VT 05001
802-295-6300
www.chelseagreen.com
$34.95 USD
forewords by
Chelsea
Green
8/30/11 11:23 AM
Introduction
Think about how much our world has changed in just the past two hundred years.
We can fly around the globe in less than two days, buy Chilean grapes at a local
supermarket, enjoy similar amenities whether we choose to work in skyscrapers or in
rural cabins, build mammoth machines and tiny chips, and use a handheld device to
connect instantaneously with people in virtually every distant corner of the planet.
All these advances have sprung from humankinds restless imagination and ingenuityand from one crucial enabler: fossil fuels.
Before the fossil-fuel era, people could only
harvest energy on the spot. They pumped water
with windmills, plowed fields with draft animals,
cooked with wood, and explored the seas with the
wind in their sails. None of these sources could
provide portable energy on demand. But coal and
oil and natural gas were different. They store in
concentrated form immense amounts of ancient
sunlight accumulated over vast areas and geological periods. Tapping into these deposits of plants
and animals that grew tens or hundreds of millions
of years ago allows us to grab and use amounts
of energy unimaginable to our ancestors. Its like
being able to live a life of wealth by withdrawing vast sums of money from a gargantuan bank
account that took eons to accumulate.
Fueled by those ancient deposits, ordinary
people in industrialized countries now use up to
100 times more energy than their predecessors did
before the burgeoning use of coal in the 1700s, the
birth of commercial oil in 1859, and the gas pipelines of the early 1920s. Each of us, in effect, has
been able to harness the energy equivalent of several hundred human workers, not to mention the
hundreds of horses under the hoods of our cars.
The effect has been profound. Fossil fuels
made possible James Watts steam engine and
the Industrial Revolution, the growth of cities,
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four-odd cubic miles a year of that magic carboniferous stuff that keeps the global economy humming? Why go to the trouble of Reinventing Fire?
The short answer: to create wealth (trillions
of dollars worth, as well see in the following
chapters), manage risk, capture opportunity and
choice, and expand innovation and jobs. But the
broader business and social reasons for farsightedly achieving displacement before depletion are
compelling. Beyond opportunities for profit, they
include correcting structural weaknesses in our
economy and threats to our health and our way of
life. Indeed, the list of reasons to wean ourselves
from fossil fuels is long and strong. Lets start with
basic economics.
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trucking companies, airlines, and tourism) at special risk. At least until the past decade, the effects
of oil shocks were amplified because the inflation
they helped trigger typically caused the Federal
Reserve to raise interest rates, choking off economic expansion.
Oil-price volatility would still rattle the U.S.
economy even if all oil were domestic, because
oil prices would still be set in the world market.
And derivatives markets tell us what that volatility is worthwhat youd have to pay a trader to
bear your price risk. For example, price volatility
over the next five years was recently expected
to cost $40 a barrel for crude oil and $124 a barrel ($2.95 a gallon) for gasoline. These costs of
dislocation losses
wealth transfer
400
300
200
100
0
1970
1975
1980
1985
1990
1995
Fig. 1-2.Estimated direct costs of oil dependence to the United States, 19702008
2000
2005
2008
20
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100
historic
projected
80
60
natural gas
40
liquids
(primarily oil)
20
coal
0
1800
1900
2000
1000
2100
2200
2000
year CE
Fig. 1-3.This graph plots the actual global output of the three major classes of hydrocarbons through 2009, then projects the remaining amounts of each believed likely to be recovered if there are no aboveground constraints. 37 The historic
data are accurate but the smoothed illustrative projections are quite approximate, reflecting leading resource experts
knowledge in early 2011 but subject to many uncertainties. The projections include unconventional resources such as
shale gas, heavy oil, tar sands, and shale oil, but not methane hydrates, potential Arctic and Antarctic resources, or
Alaskan North Slope and central Siberian coal.
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increase price volatility. If you believe oil production has peaked or is about to, getting off oil is a
practical and profitable way to reduce those risks;
if not, its negative-premium insurance, prudently
hedging your bets while cutting you costs.
Figure 1-3 also shows how coal depletion, long
assumed to be centuries off, may arrive unexpectedly soon. Coal resources had long been assessed
with little or no attention to their exploitation cost.
Recent reassessments of coals economic geology
are more sobering, suggesting that peak coal
will occur within decades even in such coal-rich
countries as the U.S. and China. Physical depletion could take much longer, but the cheap coal is
going fast.
Obviously, weaning ourselves from fossil fuels
isnt easy. Every American president since Richard
Nixon has vowed to break the countrys addiction
to imported oil, yet U.S. oil-import dependence
hit 60% in 2005 before falling back to 49% in 2010.
U.S. coal use also rose from 15 quadrillion BTU in
1980 to nearly 21 quadrillion in 2010. Its mining is
deeply embedded in some regions way of life, and
a huge fleet of power stations burns it.
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lubricants, asphalt, fertilizers, and other materials. (When Russian chemist D. I. Mendeleyev
said in 1877 that crude oil was far too precious to
burn, he was right.) The U.S. Energy Information
oil
natural gas
coal
93
nuclear
biomass
hydro
transportation
end-use energy
other
renewables
industry
buildings
61
electricity
20
40
60
80
100
quadrillion BTU/y
Fig. 1-4.U.S. energy use in 2010, measured in the U.S. in quads or quadrillion BTU (million billion British thermal
units) and in the rest of the world as a 5.5% larger number of EJ (exajoules, or billion billion joules)46
primary energy
natural gas
coal
nuclear
transportation
end-use energy
electricity
20
40
hydro
other
renewables
industry
buildings
60
117
biomass
76
80
100
120
quadrillion BTU/y
Fig. 1-5.RMIs extrapolation to 2050 from the Energy Information Administrations 2010 forecast of U.S. energy supply
and use to 2035.47
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by converting, delivering, and using it more efficiently. By 2009, wringing more work from each
barrel, ton, therm, or kilowatt-hour had become the
biggest energy source in the U.S. economy. In that
year, it fueled half of all economic activity and provided 174% more energy services than oil-burning
did. For businesses, this principle, called raising
energy productivity, is a veritable gold mine. It
delivers the same or better services every day at
lower cost, while also reducing the risk of energy
price spikes or supply failures. We can then use less
energy but get even more work out of it. Almost
unnoticed, the U.S. economy actually did that in
nine of the past 36 years by raising energy productivity even faster than GDP grew. The following
chapters show how we could do it every yearboth
by wringing more work from our energy and by
using more productively the services it provides.
primary energy
natural gas
oil
biomass
other renewables
71
hydro
coal
hydrogen
transportation
buildings
industry
41
end-use energy
electricity
20
40
60
80
quadrillion BTU/y
Fig. 1-6.The following chapters will show how we can run the same 2050 economy as in figure 1-5, but with half the
delivered energy, with less risk, and for $5 trillion less (in 2010 net present value).48
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No Miracles Required
The next four chapters explain how to optimize,
execute, and combine these three principles in all
four energy-using sectors of the economytransportation, buildings, industry, and electricity
generation. But our story is about more than just
reducing each sectors fossil fuel use. Whats especially exciting is how in each sector, those three
principles launch self-reinforcing cycles that bring
more gains in the other sectors. In just one example, switching to electric cars to eliminate oil use
could also make the electricity grid more efficient
and resilient, speeding the electricity sectors path
to replacing fossil fire with renewable energy. Such
leapfrogs are challenging, but with business leadership and policy support, theyre also realistic,
already under way, and strikingly rewarding.
If you think things must always remain as they
are, remember that history tells a different story.
Energy sources have been coming and going for
millennia. Renewable energy technologies such as
wind and solar have become widespread several
times in the past few millennia, only to be displaced by a glut of apparently cheap fuel, which
then dwindled, making room for the renewables
to be rediscovered.49
But some sources go away and never come
back, simply because their time has passed. No
matter how dominant their roleeven if they
bestride the earth like a colossusthere comes
a time when competitors overtake them. Thats
been happening for both oil and coal. The U.S.
stopped directly using coal for transportation by
1920 and for buildings by 1960. Industrial coal use
has halved in the past 40 years, U.S. coal output
peaked in energy terms in 1998, and coals last
big use, for power generation, probably peaked
in 2007. Now the costs of using oil and coal are
climbing, even as the price of renewables drops
inexorably. The curves are already crossing. The
endgames of oil and coal have already begun.
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When upstart competitors knock off the dominant source of energy, the end can be swift and
cruel for the established industry. Consider how
one type of oila versatile, convenient, ubiquitous
oilwas snuffed out way back in the mid-19th
century.50 In 1850, most American houses were
lit by whale-oil lamps. Today we think of whaling fleets only when we read Moby Dick or visit a
whaling museum, but in 1850, whaling was Americas fifth-biggest industry. The demand for whale
oil was so great that whales were getting shy and
scarce. But rising whale-oil prices brought competition, mainly from kerosene and gas, both at that
time synthesized from coal. Entrepreneurs started
selling cheap kits to convert lamps from whale oil
to coal oil, repaying their cost within months.
By 1859, when Drake struck oil in Pennsylvania, creating another source of kerosene, more
than five-sixths of whale oils lighting market had
been taken over by these competitors, in less than
a decade. The inattentive whalers were astounded
to find they had run out of customers before
they ran out of whales. The whaling industry
was reduced to begging for federal subsidies on
national-security groundsand soon American
whaling was history. The remnant whale populations had been saved by technological innovators
and profit-maximizing capitalists. And within
another few decades, kerosene lighting was history too, replaced by Edisons 1879 electric light.
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