Ernest J. Moniz is a physics professor and Director of the Laboratory for Energy and the Environment at MIT, where he has served on the faculty since 1973. Dr. Moniz served as Under Secretary of the Department of Energy from 1997 to 2001 and, from 1995 to 1997, as Associate Director for Science in the Office of Science and Technology Policy in the Executive Office of the President. He is currently a member of the President's Council of Advisors on Science and Technology. Dr. Moniz holds a doctorate in theoretical physics from Stanford University.
It is often said that energy efficiency has the potential of being the single biggest contributor to meeting the world’s energy needs. What are your views on this?
Moniz: Energy efficiency is very important, but it needs to be aligned with policies that capture its benefits — policies designed to reduce energy demand. For example, the internal combustion engine has become increasingly efficient. But in the U.S., the benefits of that efficiency have not been reflected in reduced energy use. Instead, the enhanced efficiency has allowed more horsepower for the same energy use.
What are the key areas in which energy efficiency goals can be aligned with policies to reduce demand?
Moniz: In terms of greenhouse gas emissions, there are two areas. One is electricity supply to residential and commercial buildings. That area alone consumes roughly 70 percent of commercially-produced electricity in the U.S., roughly half of which is produced by coal. The second focal point is oil for transportation. As a result, there are four primary leverage points for addressing carbon dioxide emissions’ challenges: Build efficient buildings and vehicles, de-carbonize electricity, and emphasize low-carbon fuels. That’s the agenda.
Let’s look at buildings. What’s the energy-saving potential of systems that help to manage electricity consumption?
Moniz: There is no question about the energy-saving potential of demand-response technology. In 2008 the U.S. National Academy of Sciences published a report that estimated that by 2020, even with the existing building stock, we could reduce energy use by about 18 quadrillion BTUs per year through efficiency projects that would have a reasonable payback period. And that was just through demand response in buildings. On the simplest level, this amounts to agreements between energy providers and major consumers whereby the consumer agrees to cut usage by a set amount during periods of high demand. Total energy use in the entire U.S. is roughly 100 quads. So 18 quads is a very large number. But getting this implemented in the absence of a federal regulatory climate is difficult.
In terms of transportation, new mileage standards were recently introduced…
Moniz: Correct. New standards will double the average fleet mileage requirement from 27.5 to 54 miles per gallon over the next 12 years. That amounts to a very substantial improvement in efficiency.
In addition to technological and economic levers, what can be done to motivate people to use less energy?
Moniz: Consumer behavior can play an important role in saving energy. For example, Walmart performed a study to see how customer behavior changes if frozen foods are in closed glass compartments rather than energy-wasting open freezers. Retail experts had expected that closed doors would reduce the number of consumers reaching for items. But the study found that the presence of doors reduced costs not only through reduced energy bills but also because consumer behavior led to less reshelving needs. Signage is another lever. For instance, students here at MIT have experimented with signs informing users that swinging doors exchange about eight times as much air as revolving doors. They found that the signs did indeed influence behavior.
What impact do energy labels for appliances, lighting products and vehicles have?
Moniz: Consumer information on energy efficiency is increasingly important as gasoline and electricity prices rise and as concern for the environment grows. Consumers also increasingly associate efficient products with quality, be it Energy Star labels for appliances or Leadership in Energy and environmental Design ratings for buildings. The European move towards labels that reflect energy, emissions, ecology, and ergonomic factors is very interesting.
As a member of the President’s Council of Advisors for Science & Technology — PCAST — what energy efficiency policies have you proposed or supported?
Moniz: Of all the challenges to the energy system in this country, the one that I believe remains the overarching challenge is the development of a timely response to the risk of climate change. That is even more important than energy security. And clearly, if we want to respond to the risk of climate change, then we must go to the very heart of our energy supply system and its basis in fossil fuels. In view of this, the answer to the problem is very simple: put a price on carbon dioxide. Regardless of how that is implemented, it would stimulate technology development and alter behavior through price signals. Demand management provides the least costly near term options.
What should the U.S.’s long-term agenda be for improving its energy efficiency?
Moniz: Three elements are essential for U.S. energy policy in the near term: Demand reduction, natural gas for coal, and accelerated innovation toward economically attractive zero-carbon solutions. Demand-reduction is happening to some extent with actions such as the new fleet mileage policy for vehicles, which I mentioned earlier. But the really big untold story is the substitution of coal with natural gas. Already, as a result of increased gas use, coal use for the production of electricity in the U.S. has fallen from about 50 percent a few years ago to 45 percent last year. And utilities have identified nearly 20,000 MW of coal-fired electricity generation for shutdown, with inexpensive natural gas as the replacement. Also, thanks to the recently announced restrictions on mercury emissions, as required by the Clean Air Act, 60,000 to 90,000 MW of generating capacity could migrate from coal to natural gas generation in this decade. All in all, this could amount to as much as a 20 percent reduction in CO2 emissions in the U.S. electricity generation sector — a trend that would put the U.S. on a very reasonable trajectory in terms of CO2 emission reduction.
More than 50 percent of primary energy is lost in the form of heat. What can be done here?
Moniz: There is a great deal of untapped potential in the U.S. in the area of combined heat and power. A study conducted about ten years ago found that just on the institutional level — hospitals, universities, etc. — there was probably on the order of 80,000 MW of potential in the U.S. MIT has used a cogeneration system for electricity, heating and cooling for 15 years. Utilities are becoming increasingly interested in this because tapping into thermal management solutions can mean that they do not have to build peaking power plants or make additional investments in transmission and distribution. A number of U.S. cities use district heating — indeed, New York city has used it since the late nineteenth century — and there is growing interest in this area. Still, the U.S. is behind Europe and Canada in this regard.
Which countries are making meaningful progress in improving energy efficiency?
Moniz: Germany is the best example that I know of in this regard. Particularly in the building sector, they have made tremendous progress.
Is the competitiveness of U.S. products at risk as a result of a lack of emphasis on energy-saving technologies?
Moniz: Energy cost is one factor in gauging manufacturing competitiveness. While important, I wouldn’t say it’s a dominant factor.
Why isn’t the U.S. moving more decisively toward efficient use of energy?
Moniz: Two reasons. First, the energy business is a multi-trillion-dollar-per-year business. It is a highly capitalized business with assets that have many decades of life on the supply side. It is a commodity business. It is an essential service business for society, which means that reliability is valued over innovation. It is a business that has developed incredibly efficient supply chains. It is a highly regulated business — a factor that will never change because of the services it supplies. And being highly regulated, it attracts much political interest. All in all, this is a very slow-moving business with major incumbency questions. The second issue is that energy efficiency involves an up-front capital investment for a life cycle economic benefit. And it is often difficult to overcome that hump. Policies that can translate energy efficiency into consumer savings are important. Instruments such as energy service contracts — where someone makes an investment for you and then shares the benefit — are interesting. But here too we are confronted with a major problem: Because states, and in some cases towns, have jurisdiction over energy generation and distribution, we do not have a national policy. I personally believe that many of our problems cannot be addressed efficiently without a greater degree of uniformity in electricity regulation across the country. If you look at industries such as trucking, airlines, and telecommunications, they have all experienced pretty fundamental changes in terms of their regulatory footprint in the last quarter century. The electricity sector, on the other hand, still reflects a 1930s regulatory structure in many ways. This does not align with the physical and digital reality of the grid today. It is a fundamental mismatch.