VOICES FROM THE INDUSTRY: The right time for climate change may finally be here

February 11, 2008

While the world's political climate is heating up, its economic climate is cooling down. Meanwhile, the real climate is finally getting the attention it really deserves, as the "tipping point" has been reached.

Green is everywhere these days. New York Times For homes that no longer grow in value. If the personal consumption rates in China rose to the levels of the United States, annual oil consumption in the world would go up more than 100 percent! Oil consumption in India is rising quickly. too. The world simply doesn't have enough available resources at any price.

In the simplest terms, two things caused this mess we're in: greed and oil. Greed isn't going away, so let's talk about oil.

'The fifth fuel'

If 1 cent per gallon equals the equivalent of $100 million in annual purchasing power, then $10 billion were taken from our hands when gas went from $2 per gallon to $3 per gallon a couple of years ago. And while prices may swing down a bit, you might as well start planning on $4 per gallon or $5 per gallon, because oil just isn't easy to find anymore.

If the cost of fuel isn't likely to go down, then what else can be done? Former Hoosier Jim Rogers, CEO of Duke Energy (and former CEO of PSI in Plainfield), has called energy efficiency the "fifth fuel" (after coal, gas, renewables and nuclear).

"It's the lowest cost alternative and it's emissions free. It should be our first choice," he says. The power plant that's not built is the least expensive to build and to operate.

Mr. Rogers has helped develop a plan to turn the utility industry inside-out, by treating efficiency as a production cost. eign Affairs Columnist Tom Friedman has said that the red and blue states should be replaced by 50 green states in the next election.

"Green is the new red, white and blue," he says.

Here's the catch: Almost every explanation of climate eventually mentions "correction." Corrections can be painful, but they eventually solve the problem.

We now have the greatest housing slump since the Great Depression, which has been compounded by its offspring, the credit crunch. Who would have guessed that a bunch of wiseguys packaging and repackaging dubious loans into collateralized debt obligations might be the start of the big "self-correction" to urban sprawl and massive traffic jams.

Meanwhile, the world's greatest economy has been focused on consumerism to the extent that we borrowed money against Utilities would earn their money on the basis of energy saved. Over time the price of a kilowatt hour might go up, but the total cost of electrical power would be held down because the utilities must make us all be more efficient in order to earn their bonuses.

It's a complex argument, but efficiency will increase when efficiency is rewarded. Utilities will be coercing clients, suppliers, developers, designers and builders to work together in a spirit of collaboration and innovation.

Europe, particularly Germany, is way out in front of us in both environmental efforts and energy conservation. Last year, about half of the world's solar equipment was produced in Germany.

The reason is not a breakthrough in the economics or technology of solar power, but a law adopted in 2000 to boost production of renewable energy sources, including solar power, wind power and bio-fuels. The country's utility companies subsidize solar and the other renewables by buying their electricity at marked-up rates that make it easy for the new installations to break even as their clean power enters the utilities' grids.

The Europeans are also striving to construct buildings that are net energy generators, not energy users. The Dutch Air Force, for example, has constructed a hanger that uses the heat collected from the taxiways and ramps. (And Holland has very few really hot days.)

Meanwhile, The Arizona Republic reported in November that "Solar power stocks lose place in sun." When the stock market started sliding, investors took their profits and jumped out of solar stocks, even in Arizona.

The subprime monster that drove the market down has even cast a shadow over the solar-voltaic industry, for now. The cost of energy will quickly tip the scales back to the basic goals of reducing the need for energy, using energy more efficiently and getting energy from renewable sources.

Minimal sacrifice

Whether we get there willingly or through sacrifice, Americans are resourceful. Real sacrifices won't be required, because much of our consumption is wasteful, contributing little to our standard of living.

Jared Diamond, author of "Collapse," makes the point that Western Europe's standard of living is higher by any reasonable criterion, including everything from health and life expectancy to the number of vacation days and support of the arts. We have to ask ourselves whether the amount of fuel we burn is really making our lives better or just making Dubai and Abu Dhabi more spectacular.

As long as the right climate changes, it's about time.

Altemeyer is vice chairman of BSA LifeStructures, the Indianapolis-area's largest architectural firm. Views expressed here are the writer's.
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