no furnace, and it’s cheaper not to put one in, because the super-insulation windows and air-to-heat exchanger cost $1100 less to install than a heating system, even if that system were to use no energy. So I took that and put it into saving 99 percent of the water heat, which takes 90 percent of the household electricity, which, if I didn’t make it with solar, would cost $5 per month.
On the 115 degree side, basically, you pay for the things that keep the house from getting hot by getting rid of the air conditioning system. What you are doing is optimizing the house as a system for multiple benefits, rather than optimizing isolated components for single benefits. We have applied this to 1,000 buildings around the world, and to land, sea, and air vehicles, and it works. You tunnel through the cost barrier. Normal economic theory would tell you that the more energy you save, the higher the cost of efficiency, so you have to stop somewhere. However, when you have so much insulation that you no longer require a furnace or ducts or controls, the capital costs go down. By tunneling I mean, let’s tunnel straight through to a generation of buildings that need no HVAC mechanisms. They cost less to build and you save 80 percent on energy.
The surprising thing is that the same applies to industry. We are consistently finding across very diverse industries that retrofits are saving 30 to 60 percent, with 2- to 3-year paybacks. I’m a practitioner. I don’t know much economic theory—I just do it. And none of this would be possible if the stuff had been designed right the first time. We are hatching a plot for the non-violent overthrow of bad engineering, called 10xE.
PM: It’s ironic that you’re growing bananas. I’ve read that they are they are the most energy-intensive food we eat, because of the enormous shipping costs.
AL: I can pick one on my 10-meter commute across the jungle. But it is remarkable to come out of a snowstorm to the bougainvillea and the waterfall and the koi pond and munch on your banana.
PM: You mentioned that security issues are going to keep energy in the forefront, regardless of oil price fluctuations. Who really holds the strongest hand: the consumers or the providers of oil?
AL: Definitely consumers. This is why prices have been doing the loop-the-loop versus volume, just as they did in the 1980s. But it’s a very condensed little loop this time. The last time we really paid attention to oil prices was 1977 to 1985. Oil use fell 17 percent. Imports from the Persian Gulf fell 87 percent and would have been gone in one more year if we had continued. That broke OPEC’s pricing power for a decade. We had more pricing power than OPEC, because we could save oil faster than they could sell less. We could re-run that play a lot better today. And if we were serious about it, we would do what we did to whale oil. In 1850, the third-biggest U.S. industry was whaling. Most houses were lit by whale oil. But whales were getting shy and scarce, eliciting competition with oil from gas and coal. In the 9 years before Drake struck oil, over five-sixths of whale oil’s lighting market went away, to sources that whalers had paid no attention to. The whalers were soon reduced to begging for subsidies on national security grounds.
We have spent the time since the first oil shock developing a very powerful portfolio of ways to replace oil. It’s more than enough to replace all of the oil we use.
PM: Indeed, your book Winning the Oil Endgame is a remarkable book. So many books are about the problem. This is the only one I know of that’s about the solution.
AL: We’re having a lot of fun doing institutional acupuncture.
PM: But if we really stop using oil, what will happen to the economies of Iran, Iraq, and Saudi Arabia?
AL: We have rather rapidly been taking people like Ahmadinejad off our payroll, and they will probably have to find real jobs. Friedman got it right: this will be better for democracy and bad for tyranny and corruption.
PM: Do these notions resonate with folks in the Department of Energy and the Department of Defense?
AL: Very strongly. The Pentagon is now the leader within our government in getting the country off of oil, so that we don’t need to fight over it. They really like the idea of “Mission Unnecessary” in the Gulf. Boeing has flipped the airframe sector upside down in a few years with the Dreamliner, and is rolling those reforms out to all the planes they make before Airbus can steer itself out of the ditch. Wal-Mart is calling for double-efficiency trucks, and getting them into the market where everybody can buy them. We thought the toughest sector to move would be cars and light trucks, and we suggested that the Boeing strategy of leveraging new materials and advanced manufacturing and better aerodynamics would make sense for cars, and sure enough, some outside directors of Ford thought this would be a good idea, so they recruited the head of Boeing to run Ford, and now he’s in Dearborn with revolutionary intent. These are very interesting times.
But the warfighters are our allies. Half of the Pentagon’s people and a third of its budget go for logistics. Half of the casualties in-theater are associated with convoys. Delivering the fuel is far more expensive than the fuel itself—it can cost tens to hundreds of dollars a gallon, depending on
