The five authors of Winning the Oil Endgame, a book-length report by members of the Rocky Mountain Institute, paint a grim picture of our fatal attraction to a diminishing resource. But the solutions they propose for waning oil reserves are can-do, market-based, and relatively painless. Relying on existing technology, the strategies create jobs, produce wealth, and enhance national security while improving the environment. In RMI’s vision, business and the military lead the charge toward sustainability. I spoke with Nathan Glasgow, one of the authors.
Amy Kiser: The Pentagon partly sponsored your study. How did this partnership occur?
Nathan Glasgow: The project was co-sponsored by the Office of the Secretary of Defense and the Office of Naval Research. They were interested in the project for tactical, logistic, and strategic reasons; they realized that fuel efficiency may be a key parameter. What we see is a shift away from the military fighting large land-based wars to being deployable anywhere in the world on a moment’s notice. Fuel inefficient platforms slow down this deployability and may also decrease effectiveness. For example, for each fighting force, there are between two and three logistical units. The logistical units are primarily hauling fuel. The savings of any unit of fuel will be multiplied through the supply chain.
Making vehicles lighter and reducing drag are central tenets of your strategy. You see great potential in using carbon composites for auto bodies. But aren’t composites petroleum-based?
Bicycle frames are an example of the transition to carbon composites, aluminum, and lightweight steel, all of which can be used to make cars lighter, stronger, more efficient, and better performing. The amount of petroleum required to manufacture a light, strong vehicle would be rapidly dwarfed by the amount of gasoline saved driving it. Furthermore, these composites have a high potential for being able to be recycled. Large markets do not yet exist because it’s primarily used in aerospace and high-end sports cars, but as the volumes go up, it appears likely that a market for recycling could appear.
A centerpiece of your strategy is ramping up production of biofuels, including ethanol. Many environmentalists dismiss ethanol as a subsidized giveaway to corn-growing states, because the petroleum inputs required to produce it nearly equal the petroleum it replaces in your tank. Is that thinking outdated?
Conventional ethanol technology uses corn in the US and sugarcane in Brazil. Currently, over a quarter of Brazil’s gasoline demand is met with ethanol. There are new ethanol technologies, called cellulosic, which have the potential to be cost-competitive with gasoline without subsidies and also have about twice as much energy output per unit of feedstock input as conventional ethanol technologies. We know of three pilot plants that are making cellulosic ethanol on a small scale. It has yet to be done on a commercial scale, but there’s good pilot plant data and companies are rapidly moving forward to commercialize the technology. We are technology-neutral and would like the market to choose the winners.
Elsewhere, taxes, standards, and government mandates force foreign automakers to push the technological envelope. In the US, those kinds of government incentives are political suicide. Is the market-based approach you favor born of your professional bias as economists or it is rooted in an understanding that certain government solutions will not be embraced here?
The latter. Although we’re trained as economists, we don’t think of ourselves solely as economists. We see the market, up to a point, as being able to lead us in the right direction. To use Amory’s quote, “Markets make a splendid servant, a bad master, and a worse religion.” We think that policies should be market-oriented. That’s not our bias; it’s what we think will work here in the US. Ideally, the government should lead the transition. If they aren’t going to lead, they should follow the states’ lead. And if they aren’t going to do that, we’d just hope they would get out of the way and stop providing perverse incentives.
What’s an example of a perverse incentive?
The so-called Hummer tax credit for small businesses is an example of an incentive not in line with the country’s best interests. Electricity is also usually mispriced, and 48 states reward distribution utilities for selling more electricity and penalize them for cutting customers’ bills.
Do you see California as uniquely positioned to take the lead on some of your recommendations?
Absolutely. California would be great for a number of reasons: one, for the amount of gasoline the state consumes. If California were a country, its oil consumption would rank third in the world. Two, because of the enormous number of new cars in the state. And three, because the state leads the country with automobile emissions statutes. One easy thing that California could do—and this one’s going out to Arnold—is government fleet procurement… for someone in the administration to say, “We’re going to buy best-in-class fuel-efficient vehicles for all our state and local government fleets.” This would not only show consumers that these vehicles are available, safe, and reliable, it would give manufacturers the guaranteed demand they need to produce them. If every state would do this and the federal government would follow, it would send a very strong signal to manufacturers.
RMI proposes a new option to guide consumer choice toward fuel-efficient vehicles: “feebates.” Explain the concept.
A feebate is a combination of a fee and a rebate that a consumer will encounter when they purchase any vehicle. Within any size class, a fee placed on inefficient vehicles will pay for a rebate placed on efficient vehicles. It’s revenue-neutral to the state or federal treasury and it would continuously drive improvement, because you could ratchet up the median point within any size category to push technology.
Many Americans associate the post-oil-embargo 1970s with long lines at the filling station and the advent of ugly compact cars. RMI views that time as a positive touchstone. Why?
We think of that era as an example of what can be done and what has worked before. For example, during the period following the 1979 oil shock, the US cut its oil use 17 percent, while our GDP increased 27 percent. So we’ve done it before, and the roadmap that we suggest to get our country completely off oil is less aggressive than what occurred during that period. With the advent of new, advanced materials it is now possible to have a large pickup truck, but to make it strong and lightweight, which increases its safety and makes it much more efficient.
How do we move beyond the cultural stereotypes that gas-guzzling = tough, that heavy = safe?
The truth is quite the opposite. In the military, making a vehicle more efficient will give it longer range. It will require less refueling, so it will be subject to less vulnerability, increased performance, and lots of other beneficial characteristics. The same is true with light vehicles. These heavy sluggish trucks we drive have slow acceleration because it takes longer to get all that weight up to operating speed. Lighter vehicles accelerate much faster. They would also corner much better because they would have reduced top-side weight. Real-world examples will help change the public misconception. You see a number of stars driving the Toyota Prius right now, and there’s a six-to-nine month wait period to buy one.
There are some great alternatives to petroleum products out there: like the asphalt replacement made from concrete and chipped tires. Who most needs to know about these alternatives?
Decision-makers in general. Companies would lead this transition. There are a number of roles the average citizen could play. One would be to demand more efficient vehicles, as we are doing now with the Prius. The average citizen can share information with people in their local, state, and federal government, as well as heads of companies they may know or boards they may sit on.
It’s a common American sentiment that “technology will save us.” Yet research and development funding is being slashed everywhere you look. Is there a gap between our belief in our own ingenuity and the amount of innovation happening?
It does not appear right now that our federal government is focused on funding large-scale energy efficiency technologies. However, there is a lot of great innovation happening in the business community.
Gasoline prices in America don’t accurately reflect the massive subsidies paid by our tax dollars. Do you think you will live long enough to see honest energy prices?
Absolutely. I’m young! Our message is very optimistic. We’re not a forecasting agency. We are saying what we can do if we make this a national priority. We could get completely off oil within the next few decades.
Winning the Oil Endgame is available for free public download at www.oilendgame.com.