Originally published in Business Week Online in March 2006
This version was too long to meet their publication standards, but due to the complexity (and controversial nature) of the subject, the longer version is reproduced below:

Whether I talk to fellow venture capitalists, speak to Washington officials, or merely overhear conversations at the supermarket, it's clear we have reached one of those rare moments of broad societal accord. We all agree the U.S. has become overly dependent on fossil fuels- particularly foreign energy. We all want to do something substantive to eliminate that dependency. It's a consensus- at least in terms of recognition of the problem- transcending party affiliation, occupation, income level or age.

Yet astonishingly, that consensus has been accompanied by a virtual absence of leadership- particularly from Washington. In this January's State of the Union address, our "addiction" to foreign oil was belatedly acknowledged; a national goal of displacing 15% of Middle-eastern oil imports¹ by 2025 was proposed; and vague "new technologies" were trotted out as the solution.

But talk about snatching defeat from the jaws of victory! On the one, rare occasion while the entire country stands united towards a common goal, Washington can't even imagine a real plan, let alone inspire the public to individual action. Our country isn’t addicted to “foreign oil” in particular- we’re addicted to energy in general²- and the President’s plan only substitutes one drug for another.

A decision avoided. An opportunity squandered.

It doesn't have to be this way. I believe a careful look at the underlying numbers, followed by simple appropriate actions, could lead us to:

• Twice the real energy savings in half time targeted by President Bush- that is, a 30% reduction in total energy use by 2015.
• A virtual absence of economic and societal pain.

Moreover, we could achieve these goals by utilization of currently available technologies, with no need to engage in expensive searches for supposed energy-policy "silver bullets" like hydrogen power. The result would be more efficient use of the energy we already have at hand--and automatically emitting less CO₂ into the atmosphere.

Efficiency offers the clearest, most easily traversed path to energy independence. Not conservation -- not production-- not alternative fuels.

Don't get me wrong- I'm in favor of conservation and doemstic energy production and a greater reliance on renewables. But time is of the essence, and none of these three choices are straightforward. Realistically, insufficient numbers of people will choose conservation by turning down thermostats to 65 in winter or buying compact cars. Nor will domestic energy producers be able to extract what isn't there. Despite the smoke and mirrors thrown up by vested interests, the world is truly running out of oil. Chasing more production is a poor use of limited economic resources- especially with a ballooning deficit to pay down and deferred social programs to fund. Alternative fuels will eventually become an economic reality, but we need action now.

But efficiency is different. Think back thirty years, to the first energy crisis. Out of that "panic" arose the federal government's EnergyStar program, which set energy efficiency standards and made them visible to producers and consumers alike, with those ubiquitous yellow stickers on major appliances. And then let the free market sort out solutions. Today, refrigerators consume five times less power, are more reliable and emit no greenhouse gases. Have the policies that created refrigeration efficiencies left major controversy in their wake? No. Economic pain? No. It happened so quietly and beneath the surface that we are scarcely aware anything happened at all.

These are the kind of policies we require throughout the economy. But first we need a clear picture of the challenge, and then encourage only those efficiency savings which pay for themselves.

And the first step is to follow the numbers

• In the U.S. 40% of energy is consumed by transportation, 30% for industries, and 30% on buildings.
• The average U.S. resident consumes 1,000 gallons of gasoline every year.
• To produce 1,000 gallons of ethanol energy from switch grass requires about one acre of land, and about 150 gallons of energy to run the farm and refinery. Thus, to produce the 120 billion gallons of gasoline we consume annually requires at least 120 million acres of land- - more than 25% of the 450 million acres the U.S. currently has under cultivation. Add to that the enormous infrastructure costs in trucking and refining capacity and you have a proposal that is only modestly plausible for the U.S.-and even less so for the rest of the world, which lacks this country's breadbasket agricultural lands. Moreover, other countries would likely place a higher priority on feeding their population rather than transportation. They would note that the same acre of land could instead feed 20 people.
• Corn nets only 200 gallons of ethanol/acre, and thus requires more than 600 million acres.
• Diesel-powered automobiles consume 20%- 40% less energy for the same mileage than gasoline. Unlike hydrogen power- which is an awkward and inefficient automotive fuel system- this mature technology requires no sacrifice of performance.
• More than 25% of all electricity is used for lighting.
• We could eliminate 90% of all electricity used for lighting, by switching to smart LEDs which are already 8 times more efficient than incandescent lighting and, over the long-term, less costly.
• Leaving computers and TVs on "standby" wastes another 7% of all electricity. Typical microwave ovens consume more energy in standby mode than they use in cooking.
• Architectural changes that make better use of "daylighting" and solar heat gain could save an additional 15% of all building energy use.
• Factory-built homes save at least 30% more energy than traditional "stick"-built homes- because of tighter construction and better attention to details-and at no extra cost.

From just these numbers alone it is obvious opportunities for greater energy efficiency abound throughout the economy. Just phasing in LED lighting and diesel engines would, by themselves, achieve my proposed energy goals.

To catalyze change, we need a combination of public and private initiatives, which I call measure, motivate and mandate:

Measure

• Tag all energy consuming devices with an estimated yearly energy cost, and provide suggestions on how that cost could be reduced.
• Install energy meters on every new home, and any renovation greater than $10,000 - showing how much electricity, hot water, etc., is being used in terms of dollars. You can't save what you can't see.

Motivate

• Establish energy cost-sharing programs for those projects that save both energy and increase productivity (see BW essay on Phantom Productivity ). For example, help offset the cost of improved diesel catalytic converters in exchange for their vastly improved fuel economy. Or, offset the added cost of a power meter on an outlet strip, which would motivate people to turn off computers at night.
• Develop energy teaching modules, and make them part of the no-child-left behind program. Energy literacy is an essential skill for all citizens.
• Grant National Medals of Freedom to the greatest contributors to energy independence.

Mandate

• Set standards on all new buildings and renovations above $25,000 to improve energy efficiency by 5% compared to benchmarks, with the benchmarks rising over time. Any excess above 5% could be traded as a credit in other projects.
• Raise CAFE targets by 30% over the next ten years. With diesel or hybrid power, this bold reduction is easily within reach, and cost effective over the life of the car. And if you want, you can still drive your SUV.

We need Washington to lead- but cannot wait to follow. As individuals, everyone can become more energy savvy. Buy a more efficient car and water heater. Install LED lights. Build your new home with south facing windows. Advocate for energy-sensitive, local zoning codes. And demand leadership. The price of deciding not to decide is too high a price to pay.

(1) The President's original statement was a 75% reduction in Middle East energy imports by 2025. But the Middle East is the source of only 20% of our oil imports. So his proposed import reduction is 0.75x20%=15%. Imported oil makes up 60% of all oil consumed, and oil is 40% of all domestic energy consumption. If the intent was to actually SAVE this much energy, the President's plan at best saves 0.15x0.6x0.4=3.6% of all energy over the next 19 years.

(2) Energy use per GDP has gone down by almost half over the last 30 years- and that's mostly due to a shift from manufacturing to services, as well as remarkable efficiency improvements such as the refrigerator example above. Unfortunately, our energy use per person has been dead flat for the same 30 years. Its like eating less ice cream, but more candy...

Useful links. Note each site has slightly different ways of calculating sector energy use, so care is required when comparing conclusions:

www.architecture2030.org
www.energystar.gov
www.eia.doe.gov
www.aia.org/adv_architectsandclimatechange