Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler a few years back.
—John Maynard Keynes

As environmentalists roam up and down the country opposing every power plant in sight and insisting we can live in a world run on "renewable resources," they are almost invariably quoting Amory Lovins, an obscure genius, MacArthur fellow, and author of 27 books who now runs the Rocky Mountain Institute out of a solar-heated aerie in Snowmass, Colorado.

Lovins has been the wunderkind of the environmental movement since 1976, when he published "Energy Strategy: The Road Not Taken?" in the prestigious journal Foreign Affairs. In what became the most widely reprinted article in the periodical's history, Lovins made the startling proposal that America could live without both coal and nuclear energy. His subsequent best-seller, Soft Energy Paths, was sitting on Jimmy Carter's desk when Lovins visited the White House in 1978 to advise the president on energy.

Lovins went on to become one of the principal strategists behind California's revolutionary energy planning, begun under governor Jerry Brown. Today, Lovins readily admits that, "except perhaps for Maine," no state has been more diligent than California in putting his "soft energy path" into effect. Even as California's energy infrastructure collapses, Lovins continues to receive adoring coverage in the press. In April, Business Week named him one of its "Masters of Innovation," saying he has "envisioned a new kind of power grid in which homes and businesses could generate their own electricity." Lovins and his former wife Hunter were named two of nine "Heroes for the Planet" in a special Earth Day issue of Time in April 2000. Since January, he has been the subject of two admiring front-page stories in the Wall Street Journal.

Not content with reforming electricity generation, Lovins has gone on to invent the Hypercar, a lightweight, hydrogen-powered automobile that he informed Fortune will "end the car, oil, steel, aluminum, nuclear, coal, and electricity industries." The Hypercar has been praised in the Economist, Business Week, and the Wall Street Journal, and has received $500,000 in funding from BP Amoco and $1 million from Sam Wyly, the solar-minded Texas billionaire. (Lovins is seeking $250 million.)

In light of the disappointing outcome of California's energy experiment, it may not come as a surprise that Lovins is also a bit of a crackpot. Some of his ideas are sloppy or ill-thought-out. Others are on the fringes of scientific speculation. His proposal to eliminate the coal and nuclear industries through a transition to a hydrogen economy defies the laws of physics.

Still, these ideas have enormous impact. Inevitably, Lovins comes on the scene and conjures up a glorious future where the hard practical realities of the world we know have vanished. These energy utopias then become an excuse for doing nothing in the present. In March, amidst rolling blackouts, Lovins was the keynote speaker at the Silicon Valley Energy Summit, where he argued that Calpine's proposed 600-mw gas plant for San Jose is unnecessary because the Golden State will soon have an energy glut—once his latest conservation proposals are put into action.

As Vice President Cheney prepares to make his energy recommendations to the Bush administration this week, environmental critics have already raised the cry that he will rely too much on power plants and not enough on conservation and renewables. "Cheney's plan is the more-pollution solution," says Greg Wetstone of the Natural Resources Defense Council. After all, didn't Amory Lovins prove twenty years ago that large polluting power plants are unnecessary? California itself remains unconverted. Even as electrical shortages engulf the West, state officials are pushing ahead with plans to eliminate the internal combustion engine by mandating a switch to electric- or hydrogen-powered cars.

A careful look at Lovins's teachings makes it clear why things have gone so far awry in California and why—as these ideas inspire more environmental opposition to new energy development in other parts of the country—they could get worse.

The story begins in 1976, when the nation found itself in the throes of the energy crisis. Through midcentury, we had produced most of our electricity from coal. As concern about air pollution rose in the 1960s, however, we switched to low-sulfur oil. Much of this oil had to be imported—prompting the abandonment of oil-import quotas, which had protected the domestic industry. Just as swiftly, the Arab oil embargo of 1973 made it clear that imported oil was a volatile and unreliable resource. What to do next?

The nation was at a crossroads. Should we go back to coal, which was dirty and required disruptive strip-mining, or should we move ahead with nuclear power? The nuclear effort had received some early support from the Sierra Club, but now environmentalists had their doubts. Nuclear plants sucked up huge amounts of water, there was the potential for accidents, and radioactive wastes had to be disposed of. In addition, of course, there was the ever-present environmental anxiety that nuclear power might actually prove to be reasonably cheap and manageable, opening the door to more mass consumption, suburban sprawl, and industrial progress.

In this moment of uncertainty, Lovins electrified the environmental movement by arguing that neither coal nor nuclear was necessary. In prose worthy of a 19th-century English novel, Lovins wrote:

There exists today a body of energy technologies that have certain specific features in common and that offer great technical, economic, and political attractions, yet for which there is no generic term. For lack of a more satisfactory term, I shall call them "soft" technologies: a textural description, intended to mean not vague, mushy, speculative, or ephemeral, but rather flexible, resilient, sustainable, and benign. . . . Recent research suggests that a largely or wholly solar economy can be constructed in the United States with straightforward soft technologies that are now demonstrated and now economic or nearly economic.

Lovins's central argument was that the generation of electricity was uneconomical and inefficient.

The laws of physics require, broadly speaking, that a power station change three units of fuel into two units of almost useless waste heat plus one unit of electricity. . . . At least half the energy growth never reaches the consumer because it is lost in elaborate conversions in an increasingly inefficient fuel chain dominated by electrical generation.

Although Lovins's arguments often became dense and difficult to follow, his conclusions always remained the same: Stop building power plants, start conserving energy.

Some 8 percent of all U.S. energy end use, and similarly little abroad, requires electricity for purposes other than low-temperature heating and cooling. Yet since we actually use electricity for many such low-grade purposes, it now meets 13 percent of U.S. end-use needs—and its generation consumes 29 percent of U.S. fossil fuels. . . . By applying careful technical fixes, we could reduce this 8 percent total to about 5 percent (mainly by reducing commercial overlighting), whereupon we could probably cover all those needs with present U.S. hydroelectric capacity plus the co-generation capacity available in the mid to late 1980s. Thus, an affluent industrial economy could advantageously operate with no central power stations at all!

The process would be economical all the way. Energy conservation was cheaper and faster to implement than new power plants were to construct. Buildings could be redesigned to conserve heat. Electric motors hadn't changed since the 1920s and were ripe for improvement. Lovins later coined the term "negawatts" to describe this strategy. Many industrial uses required steam. Much energy at power plants was vented as steam (think of the cooling towers on nuclear reactors). Why not match the two? Small "co-generation" plants at manufacturing sites could generate electricity while using the waste steam for industrial purposes. Much of our energy is consumed as low-grade heat (below the boiling point of water). Yet we were meeting these needs by turning water into steam in 10,000-degree nuclear reactors, using the steam to run electrical turbines, transmitting the electricity along high-voltage lines to homes, and there using it to heat water to 150 degrees. "It's like cutting butter with a chainsaw," Lovins said pithily. Appropriate and benign technologies could do the job much more efficiently.

Natural gas and even coal (burned cleanly in "fluidized beds") would serve as "transition fuels" for the co-generation era. As these smaller generators came on line, the grid itself would decentralize, becoming more flexible and robust. Even before PCs began replacing mainframes as the major source of computing power, Lovins was arguing that small, "distributed" sources of power could take the place of large nuclear or coal facilities. As the transition occurred, renewables and alternative energies could be phased into the system. Windmills, solar panels, small hydroelectric dams, geothermal sources, even backyard generators burning "clean" coal or natural gas could eventually produce most power. As conservation brought consumption down and alternative energies came on line, the supply and demand curves would meet. By 2025 we would be living in Energy Utopia—a world run entirely on renewable resources.

The alternative "hard path," on the other hand, promised a brittle, unreliable world of extended transmission lines and nuclear power. "It is important to recognize that the two paths are mutually exclusive," wrote Lovins. "Because commitments to the first may foreclose the second, we must soon choose one or the other—before failure to stop nuclear proliferation has foreclosed both." No state took these teachings more seriously than California.

For the last 20 years, California has done nothing but follow the soft energy path. The state has spent billions on conservation through countless mandates and incentives to the utility companies to subsidize conservation investment and cut consumer demand. These efforts have been largely successful. California now ranks dead last among the 50 states in electrical consumption per capita.

At the same time, the state has built nothing larger than small co-generation plants. With the exception of two nuclear reactors commissioned in the early 1970s, no new central generating stations have been added to the grid since 1980. The largest co-generator is the 385-mw Arco Watson plant completed in 1988. The most recent is a 158-mw plant built by Campbell Soups in 1997. By contrast, the Diablo Canyon nuclear facility contributes 2,100 mw of power.

Every other power source added to the grid has been "clean and renewable." The Golden State has over 100 windmill facilities generating 1,400 mw, 3 percent of the state's capacity. It has 43 geothermal sites generating 2,500 mw. It has the world's largest complement of solar-electric cells, generating 413 mw. It gets 30 percent of its power from hydroelectric dams (more than half of them out of state). It has 56 more renewable-energy projects generating 1,100 mw on the drawing boards—including plans to burn methane for electrical power at nearly every landfill in the state. (Each new windmill and landfill adds about 2.5 mw.) Altogether, California gets 12 percent of its electricity from small-scale renewables—more then ten times the average for the rest of the country.

Yet California has the nation's only energy crisis. The state must import 20 percent of its electricity, most of it from hydroelectric dams in Oregon and Washington and coal and nuclear plants in Arizona and Nevada. What went wrong?

Lovins argues that the problem is "freeloading" by neighboring states. "The 17-state Western System Coordinating Council is supposed to be a vehicle for the integrated resource planning that is still required by federal law, in case you didn't notice," he commented in a recent interview. "It's supposed to ensure reliable supply by making sure you have a supply-demand balance. Well, the balance was unbalanced by those other 16 states, particularly 3 or 4. The villains would be—and I'm not sure in which order—Nevada, Arizona, New Mexico, and Colorado. They did essentially nothing on the demand side. If Nevada had built more efficient houses and casinos, we'd have a much better balance of supply and demand in the western pool today."

A fairer and more logical explanation would be that the soft path and the theory that alternative energies could replace central generating stations proved to be woefully misbegotten.

Let us give credit where credit is due. Lovins's predictions about the potential of energy conservation have proved startlingly accurate. Today the nation's overall consumption is slightly below the seemingly impossible trajectory that Lovins first traced in 1976. "Energy consumed per dollar of GDP has fallen more than 35 percent since 1973," he points out.

As prophetic as he proved to be about energy conservation, however, Lovins wildly overestimated the potential of alternative sources. This should have been apparent from the beginning. Take Lovins's proposal in Soft Energy Paths for a U.S. transportation sector run on crop-based "gasohol." He makes his argument in a single paragraph, using the beer and wine industries as a benchmark:

The required scale of organic conversion can be estimated. Each year the U.S. beer and wine industry, for example, microbiologically produces 5 percent as many gallons (not all alcohol, of course) as the U.S. oil industry produces gasoline. Gasoline has 1.5 to 2 times the fuel value of alcohol per gallon. Thus a conversion industry roughly ten to fourteen times the physical scale (in gallons of fluid output per year) of U.S. cellars and breweries, albeit using different processes, would produce roughly one-third of the present gasohol requirements of the United States. . . . The scale of effort required does not seem unreasonable.

Lovins's statistics are correct. But notice he doesn't bother to calculate how much organic material would have to be run through such a system. The figures are easy to estimate. Hop fields and vineyards occupy about 40 million acres of farmland. Averaging Lovins's conversion figure of 10 to 14 gives us about 480 million acres, half the cropland in the United States. But beer and wine are only about 5 percent alcohol (whereas gasohol is 100 percent alcohol). This means multiplying again by 20, which gives us 9.6 billion acres—ten times the entire cropland of the United States—to produce one-third of the fuel we needed for transportation in 1977.

(When confronted with these figures, Lovins argues that hops and grapes are not a good measure of gasohol's potential. "You could produce enough liquid fuels out of all the farm and forest wastes that are produced and disposed of today. That's enough to run an efficient U.S. transportation system"—meaning a system three or four times more efficient than what we have now.)

Lovins's biggest mistake was his presumption that generating electricity is inherently inefficient. First, the conversion losses have been reduced from two-thirds to one-third in the newest power plants. But second and more important, electricity itself is so versatile and fungible that it creates its own efficiencies. Lovins correctly notes that we now use 35 percent less energy per dollar of GDP than we did in 1975. But we use only 3 percent less electricity.

In 1975, we consumed 28 percent of our energy as electricity. Today the figure is 40 percent. Much of our improved energy efficiency has come precisely through this conversion. In 1975, 40 percent of household natural gas was wasted in pilot lights. Today we have electronic ignition, which produces enormous savings. The potential for further conservation is just coming into view as the Internet and other electronic networks disseminate timely information.

As we capitalize on electricity's greater efficiencies, alternative energies become more and more unfeasible. Electricity cannot be stored. It must be consumed as it is generated. This plays havoc with alternative energies, which are largely dependent on the weather. You couldn't possibly power California by littering the countryside with windmills or solar cells, as Greenpeace and other environmental groups now advocate. The electric current would come and go with the wind and sun. Once windmills made up more than 25 percent of the grid, random fluctuations in frequency would start damaging electric-powered equipment. Even hydropower is highly seasonal, dependent on rainfall and snowmelt. By contrast, many nuclear plants now run nearly two years without interruption. Alternative energies can never be more than a supplement to the more reliable base-load plants.

Aware of these problems, Lovins has brought forth a grand new synthesis—the hydrogen economy, utilizing "the most common element in the universe." The key breakthrough is the fuel cell, a device that uses hydrogen to produce an electric current, with 170 degree water the only by-product. Lovins's Hypercar runs on such fuel cells. Moreover, Lovins has made the Hypercar part of a larger scenario that he claims will (1) power the entire transportation sector, (2) solve our air pollution problems, and (3) "end the car, oil, steel, aluminum, nuclear, coal, and electricity industries"—all in one blow. (The auto companies themselves are experimenting with hydrogen cars. In February, BMW introduced a model that can do 140 mph.) All this becomes particularly interesting as California prepares to mandate that 10 percent of all new cars sold in the state be "non-emissions vehicles" by 2003.

There is only one problem with the Age of Hydrogen: Where do you get the hydrogen? Although hydrogen is indeed the most common element in the universe, free H₂ exists only in outer space. On Earth, it is all tied up in chemical compounds. The most available sources are natural gas and water. Extracting hydrogen requires energy. Thus, hydrogen, like electricity, is not a "natural resource." Like electricity, it only carries energy derived from other resources. Nevertheless, Lovins is undeterred. Here's what he would do.

In the natural gas scenario, methane (CH₄) would be combined with oxygen at the wellhead. This would produce pure hydrogen (H₂) and carbon dioxide (CO2). The carbon dioxide, of course, is just another "greenhouse gas," but Lovins would re-inject it into the gas wells, keeping it out of the atmosphere and increasing subterranean pressure that would make more gas easier to extract. "Existing natural gas resources—roughly 200 years of supply at current rates of consumption—could provide a long bridge to a fully renewable energy system," he says.

But is that much natural gas really available? After all, our domestic production has leveled off, and we import 17 percent of our gas from Canada. Lovins sees no problem. He subscribes to the theory of Cornell astronomy professor Thomas Gold that not all natural gas is necessarily biological in origin. There may be huge "astronomical" deposits at depths of five to ten miles beneath the earth's surface. "There's a heck of a lot of methane in the solar system that doesn't come from living things," says Lovins. "It is ubiquitous and abundant on Earth as well." Although Gold's theory has scattered support in the scientific community, it is by no means proven. Even if it proves true, there is no guarantee that deep deposits will be virtually unlimited.

Given an almost infinite supply of natural gas, of course, just about any energy strategy becomes practical. (Gold himself doesn't see the need for Lovins's hydrogen scenario.) But in the event those supplies do not turn up, Lovins has another scheme. This involves producing hydrogen by electrolysis—splitting water (H₂0) using an electric current.

According to the plan, individual buildings all over the country would install "hydrogen appliances"—small electrolytic devices using "cheap off-peak power" from the "ubiquitous electrical grid" to produce hydrogen. Some of the hydrogen would be fed into the buildings' fuel cells, to supply their electricity, heat, and hot water. The remaining H₂ would power the Hypercars.

But that's not the end. Each of these Hypercars—equipped with its own fuel cell—would in turn become a "plug-in 20-plus-kilowatt power plant." While parked ("96 percent of the time"), they would be connected to a building's hydrogen supply and the electrical grid. Using its own fuel cell, each Hypercar would pump electricity back onto the grid. "Ultimately, plug-in Hypercars could provide 5 to 10 times as much generating capacity as all utilities own," says Lovins, "enough in principle to displace essentially all central thermal power stations at a profit." This would be "the last nail in the nuclear coffin."

Let's look carefully at what Lovins has devised here. He has invented a system that uses electricity to produce hydrogen to produce electricity. And by the time he's through, he thinks he'll have so much electricity that he'll be able to replace the electricity he started with. But this violates one of the fundamental laws of physics—the conservation of energy. No system can produce more energy at the end than it has at the beginning. With heat loss and work done, the product will always be less usable energy. Once again, Lovins has made the mistake of concentrating on the capacity of the system while ignoring the energy required to fuel the system. A fleet of Hypercars might indeed have far greater generating capacity than the entire electrical grid, but it will still require energy input. That input can come only from the existing grid itself—which is what Lovins thinks he can eliminate.

What Lovins has invented here is a perpetual motion machine—a machine that runs on its own output. It is the philosopher's stone of physics. It is also the mechanism by which Lovins and his disciples believe the nation can avoid making the difficult choice between coal and nuclear energy.

None of this is to say that conservation and renewables are not worth pursuing. The Bush administration was foolish to defund these efforts—although this week's proposals may change the emphasis. Conservation and renewables should be supported—if only to keep environmentalists happy.

In the end, though, the nation still faces the clear choice it confronted in 1978: coal or nuclear? To this point, environmentalists have tacitly accepted coal. As a result, we now burn 400 million more tons of coal a year than we did in 1980. Yet if greenhouse gases are indeed affecting the earth's climate—as environmentalists themselves believe—that choice must be reexamined. The Bush administration is wisely considering nuclear power. Environmentalists may not agree. But if they don't, they must admit that they choose to go on burning fossil fuels. There are no other alternatives.

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