A Call to Arms

The world is at an energy crossroads, and the decisions made about cars and oil in America and China over the next decade or so will set the course for the coming century. That is because energy infrastructure, be that automobile factories or petrochemical refineries, can last for decades, and the greenhouse gases emitted can last even longer. If we are to set our energy system on the right course before real crisis hits in a decade or two, we need to start that transition now.

Zoom, my new book co-authored with Economist colleague Iain Carson, offers a manifesto for the next president and Congress to tackle global warming and oil addiction in a smart, sustainable way that will move America beyond petroleum to a new golden age of energy innovation of the sort last seen a century ago, back in the age of Tesla, Edison and Ford. Even Detroit could yet prove to be the automotive superpower of the twenty-first century. Detroit may be down, but it does not have to be out. And it does not have to bow to Japanese or other foreign rivals, as we show in our book , which is really a car lover's guide to saving the planet

It is not only far-flung island states -- ranging from Iceland to Hawaii to Vanuatu -- concerned about pricey petroleum imports that can embrace a clean-energy future. And it is not just places with hyper-green mies like California and Sweden that can declare a firm goal of becoming completely independent of petroleum. America's industrial heartland can leapfrog ahead too.

The key obstacle now is Washington's backward-looking, obstructionist approach to energy -- a pork-barrel fiesta that Senator John McCain has called the "leave no lobbyist behind" approach. That has led some to despair that nothing good can ever come out of Congress on energy, given the power of the oil and car lobbies. Techno-utopians argue that magical new technologies will save us, while market fundamentalists say that the invisible hand will do the trick. Well-intentioned corporations keen on clean energy and carbon-free technologies make the argument that "corporate social responsibility," not public policy, is the key. And small-government types are anyway suspicious of Washington.

Here is why all of these groups are wrong. When it comes to the thorny geopolitical, environmental, and economic complications involved with cars and oil, America's federal energy policies do matter. The heady mix of perverse subsidies for fossil fuels and the absence of proper "externalities" taxation of gasoline leaves the game rigged in favor of Detroit and guarantees continued oil addiction. This will not change magically unless the incentives facing entrepreneurs and innovators change: clean technologies will not get their just rewards in the marketplace, and new markets for carbon-free energy will not take off, unless we fix what's wrong with energy policy so that the playing field is level.

After all, as Uncle Milty argued famously several decades ago, the business of business is business -- as it should be. Contrary to what some critics claim, there is nothing inherently evil about oil companies pumping oil or carmakers selling cars. That is, in fact, their job -- and for decades, it was socially acceptable for them to do so. The difference today is that society's expectations are changing: a richer, greener, better-informed world is demanding much more from its energy and transportation industries. The social contract is evolving -- but public policies have not yet changed to reflect that progress.

That, in sum, is why government still matters. Only sensible and courageous action by government to take account of the external costs of burning oil can set things on the right course. Those external costs are not reflected in the pump price of gasoline, but of course we pay for them through the Pentagon budget, the suffering of asthmatic children, and the pain of economic shocks. Only if the federal government spurs change, either through market-based regulation or better yet through carbon taxes, will we level the playing field and give clean cars and carbon-free energy a fighting chance.

That will happen only if everyone is ready to abandon the myth of cheap fossil fuels and pay an honest price for gasoline. There are signs that the Great Awakening is changing consumer attitudes on this crucial issue too. Ask ordinary Americans if they will simply support a hike in gasoline taxes, as the New York Times did in 2006, and the majority say no. But when the pollsters asked whether those same people would be willing to support higher gasoline taxes if the money went to reduce oil imports or to fight global warming, a strong majority responded

yes.

That suggests that the country is just ripe for a new approach to this issue. Zoom argues that the next president and Congress should embrace an energy policy that follows the following five first principles

:

1. Americans need to pay honest prices for fossil fuels: The cost of gasoline must reflect the true cost to society imposed by its environmental, geopolitical, and economic harm. The best way to accomplish this is through revenue-neutral taxation and the elimination of subsidies, which would level the energy playing field so that clean alternatives finally have a fighting chance.

2. The business of business is business: Don't expect corporations to act out of goodwill, charity, or "corporate social responsibility" to tackle oil addiction. There is nothing immoral or surprising about oil companies selling oil or car companies selling SUVs, and voluntary schemes and claims of being "beyond petroleum" should be discounted. If Americans want companies to move beyond oil, they must change the social contract through government action.

3. Leave it to the market to pick the winners: The temptation is strong, especially among "moon-shooters" clamoring for an Apollo-type project for clean energy, to look to the government to back promising technologies. However, history shows this is a formula for disaster. No group of officials, no matter how benevolent or well funded, can match the dynamism of markets and entrepreneurs in coming up with innovative technologies and business models that best meet consumers' needs.

4. Government must act: While bureaucrats should not push favored technologies, the conventional laissez-faire argument for government to do nothing falls short. There is a clear case for government intervention in energy and environmental policy due to the costly externalities involved in burning fossil fuels. In addition to externalities pricing, there is a strong case for specific regulations (such as a market-minded substitute for the federal fuel-economy standards) and especially for investment in the much-neglected areas of technical education and basic energy research.

5. Individual action is the essential catalyst for change:The key to driving change in America's political system is grassroots rebellion. As individuals and communities come together as part of this Great Awakening to demand better from the country's leaders, political leaders of vision will at last have the chance to step forward and answer their call.

If the next president and Congress have the courage to craft a new energy policy based on this market-minded manifesto, America may yet prove the petro-pragmatists wrong by leaving oil behind long before the world runs out of it.

Will it really happen? We argue that Americans will follow political leaders with vision and courage, who put forth a comprehensive, bipartisan, long-term strategy to tackle oil addiction and global warming. No one likes to pay taxes, but Americans do respect straight talk and have always had a strong sense of fair play. If political leaders take the trouble to explain the notion of oil's external harms and make the case for subsidy and tax reform, citizens will rally to the cause.

And if the next president and Congress really do embrace an innovative policy and stop propping up the tired old giants of the fossil-fuel and automobile businesses, then radical change will be possible. Entrepreneurs and innovators would then ramp up their investments, and we could see a technological revolution that makes clean, efficient, gasoline-free cars possible so that the developing world's legitimate needs for energy and aspirations for mobility can be satisfied, while the rich world's concerns about the environment are met too.

But Washington, D.C., will act only if ordinary Americans -- voters, consumers, drivers one and all -- speak up, step out, and demand an end to business as usual. As Saint Thomas More argued five centuries ago, government is simply too important an enterprise to leave to the scoundrels; it is the duty of honest, everyday folk to get involved and to make sure our country heads in the right direction.

By taking the real problems posed by cars and oil seriously while debunking wild-eyed claims made by the chorus of despair, the authors hope this book will serve as a call to arms. The challenges are daunting, but the solutions are within grasp if readers mobilize and energize the political process in favor of clean energy. Indeed, there is every chance that they can turn this crisis into opportunity, transforming the grease and grime, soot and sulfur industries that built the twentieth century into the clean, sustainable building blocks of the twenty-first century.

The global race to fuel the car of the future is on.

Vijay V. Vaitheeswaran is co-author, with Economist colleague Iain Carson, of the new book Zoom: The Global Race to Fuel the Car of the Future (Twelve, October 2007), which is short-listed for the Goldman Sachs/ Financial Times Business Book of the Year Award

Comments

[yappnmutt]

nothing NEEDS to be done. everything will be done for us in the market to push all the things the blog considers essential for a change of heart in the US. of course, this is predicated upon whether the american market pays attention or continues to fight the status quo. the market i'm talking about that the blog doesn't address are outside markets from the eu to china, japan and latin america. the brazil ethanol project was a manhattan type project that succeeded only after fixing mistakes. japan is financing the developement of a self fueling hydrogen car. miniature wind energy devices and electromagnetic energy sources and anything else that may help(practically) receive gov't money. china is about to solarize and windisize all of its off grid residents giving the business the economies of scale to propel the industry. as with every aging empire the US is will fall behind new technologies as new empires are able to skip legacy technologies and move into the new economic era that the energy revolution presents.

[HeevenSteven]

Vijay, Hello and welcome from a fellow Mech E.

Several years ago, I simultaneously read your book "Power to the People" and Vaclav Smil's "Energy at the Crossroads" I highly recommend both to readers here. I just ordered ZOOM.

I hope this isn't a one stop blog to promote your book; please continue to post here, even if you're preaching to the choir. The grass roots rebellion isn't going to germinate in the MSM. I also wish you would explain to readers here that "Peak Oil" is red herring and as Smil calls it a "Catastrophic Cult"

Although a carbon tax seems to be necessary step to solving our problems, it seems a distant political reality. I like the grass roots idea; how about "Power From the People" for your next title. The only way to change government is to change corporations; and to change corporations, we have to change people.

[mamacat]

Vijay,
thank you for addressing this very important issue. The problem of getting oil out of our cars can be solved, but will it?
It would appear that there are a lot of people in and out of government who would rather fight for oil than work to get away from burning it.

[FearlessFreep]

You advocate "revenue-neutral taxation." Does that mean taxes earmarked for specific spending?

[cuddletuffy]

i want to say one last thing. i make the points i make, because we do not have any margin for error chasing technological solutions to peak oil and global warming. any drop used beyond peak that doesn't help us rebuild our society to cope with a post peak oil world is irresponsible on a colossal scale.

if technological innovation is the way out of this mess, then we have absolutely no margin for error. i sincerely hope that i am wrong about the gravity of peak oil and the absolute, immediate and imperative need to conserve and not rest our hopes on as yet unforeseen technological development. i suspect that i am not, given what we currently know about the Net-Energy-Returns of petroleum vs. any other known sources and potential sources of energy.

finally, i want to say that global warming is serious, but just as serious is peak oil. after a decent amount of study of this issue, it seems clear to me that the most serious and immediate solution to both problems is conservation.

that means that we won't be able to live exactly as we currently live - with, "growth", as the ideal and best measure. that isn't necessarily a bad thing. however, it means that we will find out who really believes in taking personal responsibility and who doesn't.

[cuddletuffy]

you said nothing about conservation. conservation is the surest and most important thing we can do. i am not an expert on this subject, but i have done a decent amount of research. there is no single solution. hydrogen, the great hyped hope, is a myth. hydrogen has a net energy loss of 50%. entropy, the most fundamental law of nature. all of the other fuel sources combined cannot replace the energy return on energy invested of petroleum based fuels. there aren't nearly enough words for discussion of the many other alternatives.

i hope you are right and we innovate our way out of this mess. even if someday we could, when would that someday be? it is an unknown. so, to get back to 8th grade science, what are the variable(s) and what are the controls? well, we can absolutely conserve. this might put downward pressure on prices though with peak oil it isn't likely in the long term.

lastly, the largest subsidy for oil is our massive military spending. it is compounded by the debt service payments. i hope you realize that what you propose regarding the real costs of oil requires society directly confronting the military industrial complex. the inevitable and looming economic collapse of america will force this confrontation as well. i am not saying it is a bad thing, but the MIC is prepared for this confrontation.

anyone who is serious about this issue better have an alternative ideology, plan, and message in place. make no mistake, american imperialism, as we currently see, is directly opposed to changing our energy policy. it is a savage beast that will not give up its golden goose without a vicious fight.

i hope you make a lot of money on your book. i hope it does a serious analysis of conservation and realistic assessments of alternative energy. there is one book that has, it is: "The Party's Over" by Richard Heinberg.
http://www.richardheinberg.com/partys-over.html

[joebaggadonuts]

Tax incentives for developing non-oil and non-carbon technologies for energy production, while eliminating the tax incentives FOR oil production and use would go a long way to solving the problem. Let the market respond and the problem will be solved. Unfortunately even you Vijay fail to see that government is supposed to help achieve even this because you want it to be neutral on HOW to solve the problem.

So far, they want to keep their thumb on the oil side. Or at least Nuclear. Only those technologies which require centralized businesses which can pay to keep them in power are favored by the bulk of our existing politicians. It's enough to make us sick. Literally.

If they wanted to they could impose a regulation which would require electric utilities to allow all individual users to send their over production into the grid and get paid a fair price for it. That would spur the sunbelt to install EV roofs and the like. Small businesses would rise to the challenge. But no, government in your view should simply stand aside and try to price "externalities." Another boondogle. Just adjust the tax code in favor of what we want. That alone can solve the problem.

If you want it solved faster, tax oil consumption. Then, of course, you will have a revolution.

[joja]

How about eliminating tax incentives for Big Oil to drill outside the US, too?

Oh, yeah, and remember the Alaska Pipeline of the 1980s? Wasn't that supposed to end our dependence on foreign oil, and that's why we taxpayers were asked/forced to subsidize the project? Know where that oil went/is going? To the highest bidder -- Japan (last I heard).

And why can't we be given a choice of what kind of vehicle we drive -- electric or internal combustion? I don't want one of those hybrids that are nothing more than methadone-like crutches that keep Big Oil in the game. Why can't I have both an electric car for commuting to work and an internal combustion vehicle for cross-country vacations? Why does it always have to be something that Detroit dictates?

The whole culture of thinking has to be changed. We have to demand the right to choose what we want and stop being told what we want.

[MrXfromplanetX]

Yeah the oil companies aren't that bad. They're just business men trying to make a buck. That's why they've got hundreds of thousands of people killed over the past 50 years http://youtube.com/watch?v=ldgbOxDX6DE

This is pretty cool http://frostfireseeds.com/gm-aims-to-make-60-000-volt-electric-cars-in-first-year

but GM started to make an electric car before, only to kill it. http://www.sonyclassics.com/whokilledtheelectriccar/
You can rent this on Netflicks.

[realitytrumpsbull]

Bullcrap again. If you want clean energy,
you don't need 'the government' to do that
for you, you need to go to your local bookstore,
and ask for something called 'a science book',
and then, go read the thing, cover-to-cover.
In that exalted tome, you will discover many
interesting things, such as a basic discussion
of inertia. To save you some reading, give you a head-start, consider this: An object at rest
will continue to remain at rest, unless acted
on by an outside force. Conversely, an object
in motion will continue to stay in motion,
unless acted on by an outside force. CIVIC
inertia is the problem here, for, if we reason
that We, The People, are in fact 'the government' then go yell at yourself in the
mirror for 5 minutes, or until you think you've
learned your lesson. Then, go finish reading
that science book.

Maybe, MAYBE, if more of you guys studied
ACTUAL science instead of political science,
then this country wouldn't be trillions in the
red and as dependent on the middle east for oil
as a heroin junkie is on their dealer. What say,
worth two hours of reading time, maybe?

There's energy all around us, but people
are 2 parts too ignorant, and 1 part too
lazy to really make the green-tech thing
catch fire and go. Time's a wastin', as the
Duke might say, "We're burnin' daylight". Those
were some prophetic words...and he was just
trying to get some people on a movie set to
chase cows or something...

[cuddletuffy]

you make good points. i agree waiting for the government is insanely stupid. that said, if the innovations are that easy to make, where is that clean, green new mode of transportation you invented because you studied the basic laws of motion? =8-)

[mikegoodyearaz85338]

"That will happen only if everyone is ready to abandon the myth of cheap fossil fuels and pay an honest price for gasoline"


So would "big oil" be environmental heroes if they were to charge us more? Or does your plan call for government to replace "big oil" as the greedy, price fixing, price gouging villian?

Reducing demand by raising prices usually works. Except gasoline is pretty inelastic when it comes to price and demand.

But I am willing to compromise, and I would agree to do what ever Al Gore gets the Chinese to do about cutting carbon emissions.

[ponderman]

Most people don't have a clue as to the size of our economic system that has evolved around the combustion engine automobile. Millions of jobs and billions of dollars are generated by our love affair with the horseless carriage.

If people want change, meaning clean energy alternatives, somebody better figure out how to provide the jobs that will become obsolete.

In a speech a couple of years ago, Alan Greenspan said that we undoubtedly have the technology to render the combustion engine obsolete, but it would devastate our economy.

[NorCalNative]

There is much to like about your five-point plan. I can't help but wonder however, how important and how much impact there might be from the act of removing oneself from the auto culture by embracing human powered vehicles such as electric bicycles.

Today's electric bikes go 15-20mph and have a
range of about 20-25 miles. For driving through congested cities, 15-20mph will have you beating almost ALL other traffic. The bicycle is not the solution for everyone nor does it meet all needs. But for healthy adults and "aware" kids, bicycles can and should replace "short" auto trips. Riding to school, to the store, to pick up the kids, to work and back can all be done with planning and an electric bicycle.

Automobiles are not a requirement of human life. Raping the planet for fuel to substitute for human power is something we should really give great weight to. Using the earth's energy on able humans is a waste. Bicycles are the only real environmental choice.

[cuddletuffy]

very well said. fossil fuels should be used solely for essential commercial transport and agriculture and used in conjunction with wind and solar for the electric grid. what a shameful and disgraceful waste of energy the american 20th century dream turned out to be. that includes wasting energy on unnecessary technologies when a simple bicycle would do.

[Nommo]

Far more than green cars, we need green mass transit. Efficient mass transit. The same mass transit that has not recovered from the decimation brought on primarily by GM.
How soon we forget. The auto manufacturers have little real stake in designing and building fuel efficient cars. Why should they take the hit when the oil companies are doing nothing to make their product more environment friendly?
That small percentage that might stop driving their cars if a functional mass transit system were available might be enough to tip the scales for the auto companies. Right now, there's a lot more loot to be made with fast and big.
Stack a Prius against the competition and ask yourself if you'd really rather that Mazdaspeed 3 with 280 ft/lbs. of torque for its 3100 lb.
Really?

[hopeless277]

My job REQUIRES me to drive 25 miles each way to work everyday. It takes 50 minutes. I could do my work from home but my CEO has Exxon stock. What can I do??

[Henry]

Vijay:
Noticed any energy efficient ideas emanating from the prarie chapel ranch out in Crawford, TX?
Won't this whole thing require that abstraction know as "leadership"?

[ImmanuelGoldstein]

It's going to require something more radical than that. It's going to require HERESY.

Heresy against the religion of automobile worship, which is the real universal American church (even athiests belong!) whose temples are the gas stations and auto dealerships.

Once more with feeling:

Cars are the PROBLEM not the SOLUTION.