The End of Energy Obesity: Breaking Today's Energy Addiction for a Prosperous and Secure Tomorrow

318 Pages·2009·2.26 MB·English

by  Peter Tertzakian

( c o n t i n u e d f r o m f r o n t f l a p ) T $27.95 USA / $33.95 CAN
The END E PETER TERTZAKIAN
PRAISE FOR HR
OT
harmful effects of energy obesity. Should we be ENERGY LZ
of L AUTHOR OF A THOUSAND BARRELS A SECOND
treating the symptoms or the cause? IHA
OOBBEESSIITTYY ANKI WITH KEITH HOLLIHAN Is it any wonder that our energy needs are so
(cid:127) Probes into where the greatest leverage lies for A
N great? Nearly everything that defi nes our way of
mitigating society’s energy-related problems, and
life requires energy-consuming devices, from
shows how surprisingly powerful technological
T cars, planes, trains, and air conditioning to lights
trends will reshape our energy appetite and
“Peter Tertzakian has succeeded once again. He outlines a visionary approach to meeting the
h and computers. And our global appetite for energy
diet—sooner than you may think! serious challenges of the world’s projected population growth, continued economic growth, and > e keeps growing as population and wealth obliges
increasing living standards. This book is a clarion call to policymakers, B
Filled with in-depth insights and practical advice, The business leaders, and energy consumers everywhere.” re E consumption on an unfathomable scale.
a
End of Energy Obesity puts the world’s serious energy —Guy Caruso, Senior Advisor, CSIS, Washington, D.C. (former Administrator,
k
N
issues in perspective, exposes misconceptions, and U.S. Energy Information Administration) in Over the years, we’ve made our devices more effi cient,
g
introduces us to the new technologies that, in the t D only to fi nd, ironically, that it’s made us consume even
next ten years, will reshape our lifestyles and, for the “Peter Tertzakian is one of the great energy thinkers of our time. In this compelling book, he examines the o more energy. We’ve periodically cut back our energy
factors that will drive global energy demand and addresses the critical energy issue of our time: How can d
very fi rst time, make it possible to decrease our overall a o use only to revert back to bad habits. We’ve added
mankind bring its ever-growing demand for energy under control?” y
energy consumption while increasing wealth and the —Hal Kvisle, CEO, TransCanada Corporation ’s f more renewables only to fi nd that fossil fuels still
standard of living. The future of energy is likely to en E dominate. Now we are energy obese. How can the
surprise you. “Anyone interested in understanding the forces that drive confl ict and instability when it comes to energy er N world reduce its energy appetite and change its diet
should read Peter Tertzakian’s important book, The End of Energy Obesity. Mr. Tertzakian makes it clear g of fuels for a prosperous and secure tomorrow?
y
that the road ahead is diffi cult but not impossible. For those interested in how to attack the energy
a E
PETER TERTZAKIAN is Chief Energy Economist problem today for a better future, this is a must-read book.” d
d In The End of Energy Obesity, energy expert and
of ARC Financial Corporation and bestselling author —General John P. Abizaid (Ret.), former Combatant Commander, U.S. Central Command, R
i
c bestselling author Peter Tertzakian explores solutions
of A Thousand Barrels a Second: The Coming Oil and member of the SAFE Energy Security Leadership Council t
i G
o to this question by analyzing the role of technology
Break Point and the Challenges Facing an Energy n
“The End of Energy Obesity is a fresh look at a pressing problem . . . thought-provoking writing that’s a and circumstance on our energy use. Throughout
Dependent World. Passionate about the history and fo Y
must-read for those concerned about the way forward for the industrialized world.” r the book, Tertzakian focuses on the most practical
direction of energy in society, Tertzakian blends three —The Honourable Peter MacKay, Minister of Defence and Minister for the a
options that provide the highest leverage for resolving
decades of experience in geophysics, economics, Atlantic Gateway, Government of Canada pOO
technology, and fi nance to analyze energy trends. ro END our energy problems and reveals how evolving habits,
s The lifestyles, mind-sets, and innovations—that might
Over the years, his prescient advice to corporate “Peter Tertzakian’s prose is fun to read, and the analogies are so apt. For anyone concerned p
about how we go on an energy diet, this book is a must-read.” eBB seem improbable now—will help curb our insatiable
leaders, policymakers, and students has earned him r
—Matthew R. Simmons, Chairman, Simmons & Company International, author of Twilight in the Desert: o energy appetite.
many accolades for his work, including an asteroid u ENERGY
The Coming Saudi Oil Shock and the World Economy s
in his name. Always questioning the consensus view, aEE of
n Divided into three comprehensive parts—The Making
Tertzakian writes a weekly journal, is often quoted or “This book explores the critical role networked IT solutions play in changing the way energy is used and d
SS of Our Energy Appetite, Elusive Solutions, and Think-
seen in the media (including an appearance on The delivered. The network truly becomes a platform for monitoring and managing energy consumption s
e OOBBEESSIITTYY ing Out of the Box—The End of Energy Obesity:
Daily Show with Jon Stewart), and is a sought-after in a much more effi cient way, and we expect the benefi ts to accelerate as the network becomes more c
u
speaker at events around the world. pervasive. Tertzakian shows the reader how networked collaboration technologies such as reII (cid:127) Examines what Tertzakian calls the First Principle
TelePresence can enable powerful, face-to-face interactions while reducing our tTT of Energy Consumption, the powerful 6,000-year-
Visit: www.endofenergyobesity.com energy appetite and carbon footprint.” o
m old connection between increases in wealth,
—John Chambers, Chairman and CEO, Cisco
Jacket Design: Edwin Herrenschmidt oYY standard of living, and energy use. Can this
Jacket Illustration: nonfi ction studios r
r
o principle be broken?
> Breaking today’s energy addiction
w
(cid:127) Explains why conventional strategies and policies
for a prosperous and secure tomorrow
for resolving our energy problems are lacking, and
discusses how societies are vulnerable to three
( c o n t i n u e d o n b a c k f l a p )
P1:OTA/XYZ P2:ABC
fm JWBT089-Nirell May1,2009 17:53 PrinterName:CourierWestford,Westford,MA
P1:OTE/PGN P2:OTE
JWBT094-Tertzakian May6,2009 20:7
Additional Praise for
The End of Energy Obesity
“Peter Tertzakian has succeeded once again. In The End of Energy Obesity he has outlined
a visionary approach to meeting the serious energy and environmental challenges of the
world’s projected population growth, continued economic growth and increasing living
standards.Thisbookisaclarioncalltopolicymakers,businessleadersandenergyconsumers
everywhere.”
—GuyCaruso,SeniorAdvisor,CSIS,Washington,D.C.
(formerAdministrator,USEnergyInformationAdministration)
“PeterTertzakianisoneofthegreatenergythinkersofourtime.Inthiscompellingbook
heexaminesthefactorsthatwilldrive21stcenturyenergydemandinbothdevelopedand
developingcountries,andaddressesthecriticalenergyissueofourtime:Howcanmankind
bringitsever-growingdemandforenergyundercontrol?”
—HalKvisle,CEO,TransCanadaCorporation
“Anyone interested in understanding the forces that drive conflict and instability when it
comestoenergyshouldreadPeterTertzakian’simportantbook.Hemakesitclearthatthe
roadaheadisdifficultbutnotimpossible.Forthoseinterestedinhowtoattacktheenergy
problemtodayforabetterfuture,thisisamustreadbook.”
—GeneralJohnP.Abizaid(Ret.),FormerCombatantCommander,U.S.Central
CommandandmemberoftheSAFEEnergySecurityLeadershipCouncil
“TheEndofEnergyObesityisafreshlookatapressingproblem.PeterTertzakianhasfollowed
hisbestsellerofAThousandBarrelsaSecondwiththoughtprovokingwritingthat’samust
readforthoseconcernedaboutthewayforwardfortheindustrializedworld.”
—TheHonorablePeterMacKay,MinisterofDefenseandMinisterfor
theAtlanticGateway,GovernmentofCanada
“Peter Tertzakian has once again taken an extremely complex topic on our unsustainably
high use of energy in the USA and the world and put the topic into a series of food and
bodyanalogies.Hisproseisfuntoreadandtheanalogiesaresoapt.Foranyoneconcerned
abouthowwegoonanenergydiet,thisbookisamustread.”
—MatthewR.Simmons,Chairman,Simmons&Company,Intl,AuthorofTwilight
intheDesert:ThePendingSaudiOilShockandtheWorldEconomy
“This book explores the critical role networked IT solutions play in changing the way
energy is used and delivered. The network truly becomes a platform for monitoring and
managing energy consumption in a much more efficient way, and we expect the benefits
to accelerate as the network becomes more pervasive. Tertzakian shows the reader how
networked collaboration technologies such as TelePresence can enable powerful, face-to-
faceinteractionswhilereducingourenergyappetiteandcarbonfootprint.”
—JohnChambers,ChairmanandCEO,Cisco
i
P1:OTE/PGN P2:OTE
JWBT094-Tertzakian May6,2009 20:7
“PeterTertzakianconfrontsuswithouraddictiontoenergyanditsunfortunateandrisky
implications.Foranewgenerationofpolicymakersanxioustomaketherightdecisionsabout
theenvironmentandeconomicgrowth,TheEndofEnergyObesityisatimelyself-helpguide.”
—AlanMcFarlane,CEOWalterScott&PartnersLtd,Edinburgh
The End of Energy Obesity advances The Asymmetry Principle of Energy Consumption –
thatourcollectiveleverageforaddressingglobalenergysupply,security,andenvironmental
challengesliesasymmetricallywithreducedenergyuseratherthanwithnewenergysupply.
Thisiskeytomeetingprudentgoalsformitigatingclimatechangerisks.”
—ErnestJ.Moniz,CecilandIdaGreenProfessorofPhysicsandEngineering
Systems,Director,MITEnergyInitiative
“Perhapsthemostimaginativeenergyeconomistaround,Tertzakianhasagiftforidentifying
complexenergytrendsandrenderingthemreadableandunderstandableforexpertsandthe
generalpublicalike.Thisbookisfulloffreshideasthatopenupnewandpromisingwaysof
thinkingaboutthepotentialrewardsofenergyconservation.”
—ThomasHuffaker,FormerU.S.ConsulGeneral,Calgary,Canada
“Onceagain,PeterTertzakiantakesonaverycomplexandcontentiousissue:theworld’s
seeminglyinsatiableappetiteforenergy.Henotonlydiscussestheconsequencestoprosperity,
environmentandsecurity,butimportantlylaysoutfact-basedandlogicalideasthatrequire
change,butdon’tcompromiseourstandardofliving.”
—GregoryB.Jansen,ManagingDirector,CommonfundCapital,Inc.
“ThecrowdlookedleftasPeterlookedright...again.Inthisnewbookheeloquentlyargues
that solutions to energy obesity lie as much in the demand side as increasingly expensive
supplyadditions.Thebookhighlightstheimportancethatconsumerhabitsintheemerging
industrialsuperpowers,specificallyChinawillhaveontheglobaloilbalance.”
—DavidHewitt,ChinaOilandGasAnalyst,CLSA,HongKong
“This book raises the essential challenge of our age – how to balance our resources and
lifestyles.Whileitfocusesbrilliantlyontoday’senergyissues,providinginsightfulcommen-
taryanddiscerningsolutions,thereisabroadermessageforalltoappreciate.”
—PeterGaffney,Gaffney,ClineandAssociates,U.K.
“Forentrepreneursinvolvedindevelopingnew,cleanenergytechnologies,PeterTertzakian’s
TheEndofEnergyObesityisanessentialread.Thecontexthepresentsputsallenergysystems
intoperspective,andalsoshowsthatsolutionstotheworld’ssustainabilityproblemsextend
intorealmsthatmaynotbeobvioustomostpeople.”
—JonathanRhone,CEO,NexterraEnergyCorp.
“Thisisavisionarybook.Aclearwakeupandroadmapforourenergyfuture.”
—HarleyHotchkiss,FormerchairmanoftheNational
HockeyLeagueboardofGovernors
“PeterTertzakian’sbookisamust-readforanyonelookingforacomprehensiverepresenta-
tionoftheenergy-relatedchallengesthatlieaheadinthecomingdecades.”
—DeborahYedlinBusinessColumnist,CalgaryHerald
ii
P1:OTE/PGN P2:OTE
JWBT094-Tertzakian May6,2009 20:7
The End of
Energy Obesity
BreakingToday’sEnergy
AddictionforaProsperousand
SecureTomorrow
Peter Tertzakian
with Keith Hollihan
John Wiley & Sons, Inc.
iii
P1:OTE/PGN P2:OTE
JWBT094-Tertzakian May6,2009 20:7
Copyright(cid:1)C 2009byPeterTertzakian.Allrightsreserved.
PublishedbyJohnWiley&Sons,Inc.,Hoboken,NewJersey.
PublishedsimultaneouslyinCanada.
Photocredits:PhotoDisc,Inc./GettyImages.
Nopartofthispublicationmaybereproduced,storedinaretrievalsystem,ortransmitted
inanyformorbyanymeans,electronic,mechanical,photocopying,recording,scanning,
orotherwise,exceptaspermittedunderSection107or108ofthe1976UnitedStates
CopyrightAct,withouteitherthepriorwrittenpermissionofthePublisher,or
authorizationthroughpaymentoftheappropriateper-copyfeetotheCopyright
ClearanceCenter,Inc.,222RosewoodDrive,Danvers,MA01923,[phone],
fax[phone],oronthewebatwww.copyright.com.RequeststothePublisherfor
permissionshouldbeaddressedtothePermissionsDepartment,JohnWiley&Sons,Inc.,
111RiverStreet,Hoboken,NJ07030,[phone],fax[phone],oronlineat
http://www.wiley.com/go/permissions.
LimitofLiability/DisclaimerofWarranty:Whilethepublisherandauthorhaveusedtheir
besteffortsinpreparingthisbook,theymakenorepresentationsorwarrantieswithrespect
totheaccuracyorcompletenessofthecontentsofthisbookandspecificallydisclaimany
impliedwarrantiesofmerchantabilityorfitnessforaparticularpurpose.Nowarrantymay
becreatedorextendedbysalesrepresentativesorwrittensalesmaterials.Theadviceand
strategiescontainedhereinmaynotbesuitableforyoursituation.Youshouldconsultwith
aprofessionalwhereappropriate.Neitherthepublishernorauthorshallbeliableforany
lossofprofitoranyothercommercialdamages,includingbutnotlimitedtospecial,
incidental,consequential,orotherdamages.
Forgeneralinformationonourotherproductsandservicesorfortechnicalsupport,please
contactourCustomerCareDepartmentwithintheUnitedStatesat(800)762-2974,
outsidetheUnitedStatesat(317)572-3993orfax(317)572-4002.
Wileyalsopublishesitsbooksinavarietyofelectronicformats.Somecontentthatappears
inprintmaynotbeavailableinelectronicbooks.FormoreinformationaboutWiley
products,visitourwebsiteatwww.wiley.com.
LibraryofCongressCataloging-in-PublicationData
Tertzakian,Peter.
Theendofenergyobesity:breakingtoday’senergyaddictionforaprosperousand
securetomorrow/PeterTertzakianwithKeithHollihan.
p.cm.
Includesbibliographicalreferencesandindex.
ISBN978-0-470-43544-1(cloth)
1.Energyindustries. 2.Energyconsumption. 3.Economicdevelopment.
4.Powerresources. I.Hollihan,Keith. II.Title.
HD9502.A2T4722009
333.79–dc22
2009007447
PrintedintheUnitedStatesofAmerica.
10 9 8 7 6 5 4 3 2 1
iv
P1:OTE/PGN P2:OTE
JWBT094-Tertzakian May6,2009 20:7
Contents
Acknowledgments vii
Introduction ix
PART I THE MAKING OF OUR ENERGY
APPETITE
Chapter 1 After the Banquet 3
Chapter 2 Whetting the Energy Appetite 19
Chapter 3 The First Principle of Energy
Consumption 39
Chapter 4 The World’s Factory 55
PART II ELUSIVE SOLUTIONS
Chapter 5 Breaking Our Energy Diet 77
Chapter 6 Price and Value 95
Chapter 7 Eating Our Efficiencies 115
v
P1:OTE/PGN P2:OTE
JWBT094-Tertzakian May6,2009 20:7
vi CONTENTS
Chapter 8 Complex Carbons 127
Chapter 9 The Maddening Allure of the First
Principle 137
PART III THINKING OUT OF THE BOX
Chapter 10 The Asymmetry Principle 147
Chapter 11 Beyond Nostalgia 165
Chapter 12 Conservation 2.0 181
Chapter 13 Dissolving Distance 195
Chapter 14 A Low-Carb, Highly-Scalable Diet 215
Chapter 15 The Energy Health Craze 229
Epilogue: Leadership on the Commons 249
Notes 265
Glossary 271
Bibliography 279
About the Author 289
Index 291
P1:OTE/PGN P2:OTE
JWBT094-Tertzakian May6,2009 20:7
Acknowledgments
When I started this project at the beginning of 2008, I thought
writing another book would be easier than my first. Keith
Hollihan—who helped me with A Thousand Barrels a Second:
TheComingOilBreakPointandtheChallengesFacinganEnergyDependent
World—agreed, especially when he heard my new ideas and how I had
outlinedtheflow.Itwasnoteasy.Writingthisbookwasoneofthemost
challengingundertakingsofmycareerbecauseitinvolvedcontrastingthe
rigorsofquantitativeeconomicanalysisagainstabstractprognostications
about our civilization’s social condition. The latter was exciting, but
daunting new territory for me. Thanks go to Keith for working on a
projectthattook50percentlongertocreatethanwefirstexpected.His
contributions as a sounding board, writer, and editor once again helped
me turn what is otherwise dry subject matter into what I hope you will
find accessible, thought-provoking material—and enjoyable too!
This book would not have been possible without the fresh and
inquisitive mind of Beata Komierowski, a young economist who was
never shy about challenging what I thought was my wisdom, but was
really entrenched convictions that needed modernizing. Her edits were
vii
P1:OTE/PGN P2:OTE
JWBT094-Tertzakian May6,2009 20:7
viii ACKNOWLEDGMENTS
invaluable, and her data mining and detailed quantitative analysis can be
found throughout the book.
Long-time friend Scott Fawcett, who works at Cisco, was a real
championofmyideasearlyon,anddeservesmuchgratitude.Bysetting
up numerous interviews with high tech experts around the world and
givingmeunfetteredaccesstoCisco’sTelepresencesystems,heandother
Cisco employees helped me validate what were just conjectures at the
start of the project—and helped save many gallons of jet fuel!
Friend and coworker Nancy Smith was a trusted reader that tire-
lessly and candidly provided me with feedback,constructive advice, de-
tailed edits, and above all, encouragement. Thanks as well to the many
others, including Derek Evans, Deborah Yedlin, Peter Gaffney, Tom
Huffaker, Dale Edmonston, Philip Chang, Sebastian Gault, John Stew-
art, Subodh Gupta and Norval Scott, who took time to read, discuss,
and comment with enthusiasm.
My research group at ARC Financial has always provided me with
inspiration. Thanks go to Kara Baynton, a trusted, longtime colleague
whomanagesthegroup,especiallywhenI’moffwritingbooks.Herdili-
gentresearchfeedsherneedtodebateme—evenifit’s“justbecause”—
andhelpskeepmythinkinghonest.Inaddition,myunderstandingpart-
ners at ARC are always patient with me when I undertake big projects,
and this time was no exception. Through it all, my assistant Cicilia
Selinger kept me organized and helped with time-consuming details
like formatting.
Thanks to B.G. Dilworth of the B.G. Dilworth Agency who again
gaveno-nonsenseadviceandhelpedsecurethepublisher,JohnWiley&
Sons. Gratitude there goes to Debra Englander, Executive Editor, who
believed in the project from the start, Kelly O’Connor who patiently
waited for the manuscript to be finished, Kevin Holm who produced
the book, and the many others at Wiley who made this book possible.
Diagrams in the book and the cover design were diligently prepared
by Edwin Herrenschmidt of nonfiction Studios, who once again didn’t
complain about the tight timelines given.
Finally, thanks go to my family. More than ever before, my wife Jan
andmytwosonsAlexanderandAndre´ aretobethankedfortheirloving
patience. They have always been supportive of my pet projects, but this
time their tolerance of my preoccupations went far beyond acceptable
family norms. This book, like my last, is dedicated to them.