Getting off oil
Investing in energy efficiency will be good business, argues Amory Lovins,
CEO of Rocky
Mountain Institute, a not-for-profit consultancy on natural resources
The world uses a cubic mile of oil a year, costing almost
$2 trillion. Oil and cars are the world¡¯s biggest
and most entrenched industries. Yet an inexorable
half-century transition beyond oil has begun, squeezing
oil between effi cient use and alternative supplies.
Lamp oil from whales lit most American homes
in 1850. Yet in the next nine years, just before Drake
struck oil in Pennsylvania, fi ve-sixths of whale oil¡¯s
lighting market fl ed to cheaper competitors. Likewise
in 2007 powerful ways to save and replace oil,
which have been quietly emerging for 30 years, will visibly
start to rout oil from its strongholds.
Fleet turnovers take time: putting the fi rst half-million
hybrid cars on the road took nearly a decade. Yet in 2007
20 new hybrid models will enter the American market,
and operating effi ciency will fi nally become entrenched
as carmakers¡¯ top design priority, locking in oil savings
for decades. Biofuels, too, will continue double-digit
growth as Brazil¡¯s 2006 oil independence and Sweden¡¯s
2020 off-oil goal spur emulation.
Some 94% of the world¡¯s oil reserves are held by governments,
which do not know or will not reveal the size
of their holdings. But no matter how much oil there is,
we should save it whenever doing so is cheaper than buying
it, and nowadays that is always. Unlike short-term
behavioural changes, effi ciency investments are irreversible:
you do not scrap fuel-frugal boilers or remove roof
insulation when fuel prices drop, so effi ciency ratchets
up. And frugality will involve more than incrementalism:
effi ciency often yields expanding returns.
Each day a modern car burns fuel derived from 100
times its weight in ancient plants; yet a mere 0.3% of that
fuel moves the driver. Tripled-effi ciency, ultralight petrolhybrid
suvs were designed in 2000, paying back in one
year at European and Japanese fuel prices or two years at
America¡¯s much cheaper pump prices. In 2007 the Automotive
X Prize will start moving such designs to market.
Just in America, they will ultimately save 8m barrels of oil
a day¡ªequivalent to fi nding a new, secure and inexhaustible
Saudi Arabia under Detroit.
In 2007, too, Toyota will emerge as the leader in supereffi
cient plug-in hybrid cars: electric for short commutes,
petrol-hybrid for long trips. This could double the already
doubled petrol effi ciency of a Prius. Next, make that car
ultralight and its petrol effi ciency redoubles. Biofuel it
and you quadruple petrol effi ciency again, to 30 times today¡¯s
norm. Sound like the whale-oil story yet? Oil prices
will drop¡ªbut effi ciency will remain cheaper still.
Full practical use of the best effi ciency technologies
in all applications would halve American barrels burnt
per dollar of gdp, to a quarter of the 1975 level. The average
cost: $12 per saved barrel. Saved natural gas and
advanced biofuels could replace the remaining oil for $18
per barrel. So eliminating American oil use by the 2040s
costs $15 per barrel¡ªone-fi fth its 2006 price. It surely
follows that getting off oil¡ªthus abating 42% of
global carbon-dioxide emissions¡ªwill be led by
business for profi t.
That transition already shapes competitive
strategy. Wal-Mart¡¯s new heavy trucks will be a
quarter more effi cient in 2007 than in 2006. By
2015 they will be twice as effi cient, saving over $300m
a year. Next will come trebled effi ciency, which yields a
60% internal rate of return.
In 2007 Boeing¡¯s 20%-more-effi cient but same-price
787 will take fl ight. In Detroit, Schumpeterian ¡°creative
destruction¡± will accelerate as smart money favours
leapfrogs; markets will change managers or their minds,
whichever happens fi rst. Ford¡¯s new chief executive, Alan
Mulally, whose effi ciency-based Boeing strategy is beating
Airbus, will bring to Ford Boeing¡¯s focus on ultralight
materials (the 787 is 50% advanced composites), systems
integration and breakthrough design.
The greening of the Pentagon
In Washington, dc, a surprisingly strong voice in 2007
for getting off oil will be the world¡¯s biggest buyer both
of oil and of renewable energy¡ªthe Pentagon. This is
not just because oiligarchs tend not to be freedom-loving
democrats and sometimes foment instability and confl ict.
Rather, the risk and cost of vulnerable fuel convoys, easy
prey to roadside bombs, will persuade military leaders
that only super-effi cient platforms dragging dramatically
slimmer fuel logistics tails, or none, can fi ght persistent,
dispersed, affordable wars.
This strategic shift will not just save hundreds of lives
and tens of billions of dollars a year. It will also speed key
technologies, like ultralight materials, that can triple the
effi ciency of civilian cars, trucks and planes¡ªjust as military
r&d created the internet, gps, and the jet and chip
industries. Thus the Pentagon will start to lead America,
and the world, off oil so nobody need fi ght over it.
A vision will form of a United States that can treat
countries with oil the same as countries without oil, and
gives others no reason to suppose it is motivated by oil.
The bet of Russia¡¯s President Vladimir Putin that he could
hold fuel customers to ransom will eventually turn sour.
China¡¯s 2005 adoption of energy effi ciency as a top development
priority will start paying off. Decisive evidence
will emerge that stabilising the earth¡¯s climate is in fact
not costly but profi table (because saving fuel costs less
than buying it). And as we all drill for wasted oil to power
our buildings, factories and vehicles, the market- and
community-driven rise of energy saving¡ªor ¡°negabarrels¡±¡ª
will begin laying visible foundations for a richer,
cooler, fairer and safer world. ¡ö
Eliminating American oil use by the 2040s costs
$15 per barrel¡ªone-fifth its 2006 price
---------------------------------
Don't pick lemons.
See all the new 2007 cars at Yahoo! Autos.
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