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David B. Goldstein

David B. Goldstein

Posted: January 22, 2010 10:20 AM

Insulation is Innovation, Mr. Gates

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Bill Gates argues in a new blog that to meet long-term climate goals, we need innovation, “not insulation.” NRDC agrees that we need innovation. But the idea that we should chose between insulation and innovation is a mistake. Insulation and other energy efficiency technologies can achieve far deeper emission reductions than people realize.  Mr. Gates is right that we need to keep the long-term goal of 80 percent reductions by 2050 in view when deciding what to do over the near-term, but interim goals are critical to making sure we stay on the path toward meeting our long-term goal. 

The single best thing our country can do to meet our 80 percent by 2050 goal is adopt federal interim and long-term carbon pollution limits. Efficiency will play a key role in meeting these limits.

Compared to the 1970s, manufacturers now produce products with more insulating power than before. New and existing insulation companies have introduced more types of insulation as well. In addition, installers have developed ways to make better use of the products that are already on the market, saving more energy than they would have 30 years ago with the same products by significantly reducing air and moisture flows. If we promote insulation over the next five years, we can expect continuing innovation and improvement in its performance. This improvement will be reflected in a combination of greater cost savings to the consumer -- both in the form of lower construction costs for the retrofit and greater energy savings, reduced fuel usage that will result in lower fuel prices for everyone, and reductions in greenhouse gas emissions. These reductions come on top of the reductions we would have had with the older technologies and methods.

Retrofitting a house today can produce an energy savings of some 25 to 50 percent of the original output. Furthermore, if we try to retrofit all the homes in the nation over the next 15 years, as U.S. Department of Energy proposes, and we do it in a market-based way that fosters competition between better insulation, more efficient furnaces and water heaters, better lighting and appliances, etc., we can expect that new technologies and construction methods will evolve even more quickly. With continuous improvement, this 25 to 50 percent savings will grow over time and accumulate to more than an 80 percent reduction compared to where we are today. It would be as foolish to bet against this as to bet that software in 2025 will be substantially the same as it is today. Similar arguments about continuous improvements in efficiency apply across all major energy consuming sectors.

But markets for insulation don't work well enough to support the needed levels of innovation. Even though insulation and other home retrofit techniques save far more money than they cost (and also increase comfort and safety), very few people take advantage of them. Most homeowners and virtually all renters have no idea about how to get a thorough home retrofit: how much insulation a house needs, how efficient it can become and how much lower the utility bills will be, and who is a reliable contractor. The challenge is to adopt policies that strengthen the market forces that will enable faster innovation in home retrofits and other energy efficiency technologies.

Mr. Gates achieved monumental financial success through innovation. But he did not establish the market structure that allowed his company to prosper. Quite the contrary, he succeeded by noting conditions in the market that would allow the innovative approach that Microsoft would use to work, and exploited that niche. Innovation proceeded for decades because software market conditions supported it.

Through government policies, we need to create the same market conditions for insulation and other clean energy technologies as we have for software and computers, where companies that innovate profit from those innovations and grow. When companies profit from innovation, they will do more of it.

Mr. Gates states that, "you can never insulate your way to anything close to zero." Both theory and practice; however, show that, even with 1980s technology, we can build houses that use near-zero energy. Germany’s Passivhaus project cuts heating by at least 90%, and according to Wikipedia there are at least 15,000 such homes today. This is only one of many near-zero energy projects for both homes and commercial buildings.

Mr. Gates also says that the way to meet a 2050 climate goal is to focus on long term innovation rather than short term implementation. No one makes decisions today for meeting 2050 goals in the business world. I'm confident that Microsoft is not paying people today to design 2050-vintage software.

No, innovation proceeds by designing something today that is just a little better than 2010 technology and trying to introduce it in 2011 or 2012, or maybe even as late as 2015. Current high tech products such as smart phones were realized by incremental innovations on a time scale less than five years, not by having planned in 1970 to sell a smart phone in 2010. Long term results are achieved by repeated innovations on one, three or five-year time scales.

The only entities that make decisions today that affect 2050 technologies are governments. Governments can make long term commitments to provide infrastructure and fund research projects whose goal is long term technology innovation. Climate stabilization will require changes in these types of decisions.

The way to meet our climate goals for 2050 is first to set a carbon pollution limit for 2020, as the energy and climate legislation pending in Congress does. We will also need complementary clean energy policies such as more stringent building codes, appliance efficiency standards, renewable energy standards for utilities, and major investments in Research and Development, as well as clean energy deployment incentives. All of these policies are designed to foster innovation, and where they have been applied in the past, they have done so. A number of these policies are in the climate and energy legislation Congress is considering.

Protecting our climate, and our economic health, will require more attention to pursuing efficiency and other clean energy options at the same time. Both will benefit from market-based policies that encourage innovation. Experts agree that energy efficiency is the largest, fastest, cheapest and cleanest way to meet our climate goals, and recharge our economy. The efficiency savings make us wealthier, and the policies that get us the efficiency will enable more, not less, investment in innovation for the shorter as well as the longer term.

David Goldstein is co-director at the Natural Resources Defense Council's energy program. He is also the recipient of the MacArthur fellowship and Szilard Prize for physics in the public interest. The issues discussed in this blog are developed in depth in his forthcoming book, Invisible Energy, which will be available in early February through Bay Tree Publishing. 

This post originally appeared on NRDC's Switchboard blog.