For decades, Tom Casten of Recycled Energy Development has preached the gospel of saving money, resources and the planet by simply not wasting heat.

The typical power plant uses only one-third of the energy produced by burning fuel (usually coal) to generate electricity. The remaining two-thirds of that energy escapes as waste heat. Mr. Casten says that we easily could — and should — harness this heat to warm water or even cool buildings. (You can cool with a heat source by using an absorption chiller.)

By harnessing waste heat, the same fuel would do twice the work. We'd have doubled efficiency.

The simultaneous production of heat and electricity is called cogeneration.

Electrical generation is not the only heat-wasting culprit. Various industries — the production of metals, glass, and silicon, among other things — release waste heat as a byproduct. In these cases, heat could turn turbines and generate electricity.

Indeed, Casten estimates that industrial waste heat alone could supply about 200,000 megawatts of electricity in the US. That's 20 percent of the US's electricity needs, or 95 nuclear power plants not built.

In other words, we could burn fewer fossil fuels, spend less money, and fight global warming simply by harnessing the heat now flowing out of the country's collective flues and smokestacks.

So why don't we?

In a word, outdated laws. The near monopoly on electrical transmission by utility companies doesn't help either. In most states, for example, it's illegal for all but a utility to erect electrical transmission lines across a public thoroughfare. So if you generate electricity with the heat coming out your smokestack, you can't get it anywhere. There goes the incentive to do something with the waste heat.

A new, in-depth article by the New Republic's Bradford Plumer explains how things got this way:

Because they were shielded from competition, most utilities saw little reason to innovate or upgrade their lumbering fossil-fuel plants, since they’d just be forced to pass on any savings to consumers. A Fortune article in 1969 savaged utility executives as “generally unimaginative men, grown complacent on private monopoly and regulated profits.” After the OPEC crisis in the ’70s exposed the industry’s clumsiness in the face of adversity, Congress tried to promote competition on the generation side in some states. But deregulation was only partial, and most Americans still have little, if any, choice of utility.

One problem: utility companies have little incentive to change. Plumer writes:

Perhaps the most urgent state-level reform would be to alter how electricity rates are structured, so that utilities’ profits don’t just hinge on pumping as many electrons as possible through their wires. After all, there’s broad consensus that the cheapest, fastest way to reduce carbon-dioxide emissions is to use power more prudently. Lawmakers have usually tried to do that through a blizzard of government mandates—from building codes to appliance standards. But these mandates only do so much if utilities are constantly trying to sell more power. So, a handful of states have tinkered with an approach called “decoupling,” in which utilities are guaranteed a fixed revenue each year, and can increase profits by cutting costs and selling less power. In California, which pioneered decoupling back in 1982, energy use per capita has flattened (even as it’s ballooned in most states), and utilities spent nearly $1 billion in 2008 on things like helping customers trade in their creaky, power-hogging fridges or promoting green buildings. Yet many utilities and regulators are wary of abandoning a business model that has persisted for nearly a century.

And yet, change is not impossible. In fact, judging from past examples, Sean Casten, Tom Casten's son and CEO of Recycled Energy Development, argues that rapid change — quicker than what's proposed in the climate bill currently in the Senate — is quite possible.

In an online essay, he points out that in the 1970s after various government programs went into effect, oil use fell by 17 percent. In the same period, economic production increased by 27 percent. The US's consumption of foreign oil dropped by half in a little over five years.

New policies sparked a similar, radical shift in 1998, he says, when government "mandated non-discriminatory access to the transmission grid." Private companies could finally transmit energy they generated.

In just 10 years, these entrepreneurs added almost 200 gigawatts capacity to US electrical generation potential. That's double what US nuclear reactors supplied. Therein lies a lesson, says Sean Casten: The country's first 800 gigawatts of capacity took nearly a century to get up and running. But after deregulation, it took only decade to increase that to 1000 GW.

And this acceleration happened without any public investment whatsover. Private money fueled the growth. Simply opening up the electric grid to the private profit incentive — a first in US history — could work wonders. These same lessons apply to the current debate around energy and mitigation of climate change, says Casten.

And he concludes his essay by calling for more ambitious energy policies:

[O]ur climate debate remains mired in the swamp of diminished expectations. Policymakers seem to think they have to treat energy companies with kid gloves — as if demanding big changes will somehow be too much for them to bear, resulting in a devastating blow to our economy. But this view simply doesn’t square with history. With even minor reforms, enormous changes can occur.

The climate debate tends to be framed by armies of lobbyists who support specific technologies — coal, nuclear, renewable, carbon sequestration — and argue about which of these approaches should be near-term winners and losers of government largess. Yet more dramatic change is clearly possible. History suggests that the pace of greenhouse-gas reductions can be vastly quicker and cheaper than we anticipate. Why couldn’t we replace 2% percent of today’s fleet with cleaner technologies each year, as we already shown possible after the 1992 EPACT? Why couldn’t we move even faster and replace 5% per year as New England has demonstrated? Might it be possible to move faster still?

History provides us optimistic answers to these questions, and suggests that our optimism is much more likely to be limited by our ambition than any capital, technical, thermodynamic or commercial constraint. Tackling climate change and changing the electricity system can be easier, cheaper, and faster than we think. Once we start.

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