While I commend the Obama administration and 13 automakers for boosting the Corporate Average Fuel Economy (CAFE) of cars and light-duty trucks sold in the United States to 54.5 miles per gallon by 2025, it is only a baby step toward solving our real problem: oil addiction.
Although President Obama is not the first president to recognize our oil addiction, he is the first one to set a timetable.
At the 2008 Democratic National Convention, he made a pledge at his acceptance speech: "And for the sake of our economy, our security and the future of our planet, I will set a clear goal as president: in 10 years, we will finally end our dependence on oil from the Middle East."
The solution to our oil addiction will certainly include efficiency, but that is not enough. We actually need alternatives to oil for our transportation needs. The use of CAFE standards is the equivalent of trying to green up our electricity generation mix by doubling the efficiency of coal and natural gas plants. While energy plant efficiency is a step in the right direction, we also introduced policy to encourage wind, solar, geothermal and other alternatives. Today, most agree that we are on a pathway to eliminating most coal plants in the United States by 2030.
So how do we get off of oil? How do we insist that all cars use mature domestic energy sources that have been around for decades, like natural gas, methanol, renewable electricity and others?
According to Vijay Vaitheeswaran, a co-author of "Zoom: The Global Race to Fuel the Car of the Future," a two-way grid is part of the solution. He said in 2007 interview in BusinessWeek, "We will see a smart, sophisticated, software-rich car of the future very soon. They are going to be plugging into the wall, they're going to be getting electricity from the grid, and they're going to be feeding electricity back."
So while technology will certainly play a major role in solving our addiction, we need many entrepreneurs, not just a few, to step up to the plate. To do so, we need a level playing field to entice them. A good start would be to put together a plan on how we might achieve the President's target. One essential part would be to identify and remove market barriers to creating a level playing field for entrepreneurs in the personal transportation sectors:
- The barrier of scale: With all the regulatory requirements, a new auto company cannot realistically "pilot" a new car. It realistically takes $2 billion to start a new automaker and meet regulatory requirements at scale.
Most recently, China has led with widespread commercialization of methanol fuels. "Major car companies [in China] such as Geely, Chery [and] First Automobile [are] preparing for mass production of M-85/M-100 vehicles," according to Methanex Corporation, a producer and seller of methanol.
Now other countries are playing catch-up in finding alternative fuel solutions, including the United States. The U.S. Open Fuel Standard Act of 2011 essentially says that by 2017 automakers will no longer be allowed to make cars that run only on gasoline. The bill says that by 2017, 95 percent of all cars made in the United States will be in that category.
Alternative fuels present the potential to overtake the petroleum economy -- and with more support, they may. We need infrastructure change with economic support to create alternative fuels, so we can address serious issues like climate change.
While we are improving vehicle efficiency through CAFE standards, let's work to level the playing field for entrepreneurs so that we can reach the president's goal by 2020 and end our oil addiction soon after. Our economy will thank us.
Jigar Shah is CEO of the Carbon War Room, a nonprofit that harnesses the power of entrepreneurs to implement market-driven solutions to climate change and create a post-carbon economy.
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