POWERING THE FUTURE.
Detroit, MI August 27th, 2008 – Todays conference is about the four E,s , Economy , Environment, Energy ,Election. I would within this broad context like to discuss two further E,s , namely, Extended Range Electric Vehicles and Ethanol. To be precise Cellulosic Ethanol.
Howe’ver first may I make some comments on the currrent and future energy enviroment.
For decades successive administrations have avoided a specific energy policy instead relying on Market forces to do the job for them.
It is my humble belief that this has been a serious mistake and has worked against the best interests of the American people .
Oil is the lifeblood of our economy , Americans consume 25% of the Worlds oil. It must have been obvious that demand from the developing world will increase, that much of the worlds supply comes from vulnerable countries, that fossil fuels contribute substantially to Global Warming. Most of all the majority of our oil comes from a cartel which manages production and is the major influence on price.
Simply put the fundamentals did not exist for market forces to work in the best interests of the American consumer.
The consequences are that we increased oil imports by over 300% since 1985, this has caused a massive trade deficit as we transfer over $700 billion annually overseas.
The price of Oil has increased from $3 per barrel in 1973to over $100 today.
This has been by far the most rampant increase of any major commodity.
As the biggest user our economy , our rate of inflation has suffered the most . This has impaired our ability to compete globally and contributed to increasing unemployment.
Most of all it has put our country at great risk in terms of continuity of supply.
To be forewarned is to be forearmed.
It is estimated by 2050 the global demand for energy will double from 15 terawatts to 30 terawatts.
Oil comprises 35% of todays energy , this implies that if we do not find alternative sources of energy to power our transport we will have to increase production of oil two fold.
The question is do we have enough reserves globally, if so what will be the cost and environmental damage of extraction and where is that oil located.Last but certainly not least what will be the environmental damage.As a note Russia which is the second largest producer is expected to see reduced output in the next two years
For certain we do not have enough oil in the USA even if we drill every where and we will continue to be reliant on Foreign oil and all the negative consequences of that.
Now as a member of Generation “A” , the ageless generation I am pretty sure all will be okay for me but my concern is my children and Grandchildren.
WE need an energy plan for them that achieves the following objectives:
Achieve energy Independence by using renewable resources.
Conserve and reduce use of energy.
Reduce Environmental impacts.
The Benefit’s of this will be :
Economic growth through development of Innovative Technologies.
Turn the rustbelt into the Green belt.
Create high value employment.
Reduce eventually eliminate the trade Deficit.
Develop Export potential and aid for developing countries .
Establish a global balance of economic power.
By increasing supplies of alternative fuels we can stabilize crude oil prices.
How can we do this?
In fact I see the answer almost every day as I walk the beach here in Orange county.I see the sun, the waves and feel the wind and the tide, all available to meet our needs in terms of electricity.
Its more than possible Portugal within a few years will generate 65% of it’s electricity from these resources
Then there is the kelp, representative of cellulosic ethanol. One of the two parts of my plan
Currently we import 73 billion gallons of oil a year . There is over 1 billion tons of organic waste available each year in the USA, sufficient to make 70 billion gallons of cellulosic ethanol at a cost of under $1 per gallon.
The capital investment required is between $350 and $400 billion .
We can build plants on mature landfills around the country.Adjacent to the markets
Use methane from the landfills to power the plants . This reduces the need for future land fills . Also if we need more cellulosic ethanol we can grow switch grass between Boone Pickens windmills and instead of looking at oil rigs in our great oceans we can have kelp farms.
It is possible look at Brazil , today more than 55% of it’s transport energy comes from ethanol.
The technology is available . Blue Fire Ethanol plans to have it’s first Pilot plant up and going by the end 2009 in Lancaster CA.
Its first large scale plant will be up and going by the end on 2010.
The technology utilized by Blue Fire has been tested in a facility in California from 1995 to 2006 and in Japan. Incidentally the ticker symbol for Blue Fire is BFRe which is prophetic.
Other companies are in this space and have equally compelling projects.By 2020 there is no reason why we cannot be producing 70 billion gallons of cellulosic ethanol enough to replace all imported oil
In fact with each passing year as oil prices escalate and renewable energy prices stabilize the economic benefit of renewable fuels becomes more compelling
All these companies are looking for is for funding for the first plant not the second one. Also an infrastructure of E85 pumps around the country.
This is where the Government comes in. AS it dictates fuel standards for vehicles so it should set a standard for every Gas station in the USA to have an E85 pump.The E 85 vehicles will follow. They already exist.
A point which should not be lost is cellulosic Ethanol is 86% less harmful than oil to the enviroment , may be for my Grandchildren the most compelling argument of all.
Talking of my Grand children they are already ahead of me in terms of conservation. They already drive electric vehicles.
The second part of my plan is to reduce oil consumption thru technology.
There are several power train technologies in development and it is my belief in future the auto market will segment by power train as well as body style
To my mind the most exciting development is the extended range electric vehicle which combines the benefit’s of electric vehicles with the range and infrastucture usage of the gasoline engine.
The new Fisker Karma is a fantastic example of this . A totally uncompromised sedan which satisfies the heart and the conscience.
At $87000 it offers supreme driving pleasure with less than 6 seconds 0 to 60mph . A top speed of over 125mph, Rear wheel drive handling and luxury in sync with desire and environment. The exterior and interior styling is the most attractive in class.
It can travel the first 50 miles on an electrical charge. On an extended drive over 300miles it can return more than 100mpg.
In time this technology will cascade down to lower price cars and will become a critical part of each manufacturers portfolio essential to meeting the new CAFE standards . In time we will have a fleet of vehicles on the road which is at least 20% more fuel efficient than now
In fact if we can reduce our Fuel usage by 10% by 2020 and replace imported oil with cellulosic ethanol by the same date we will achieve the goals of our energy plan.
It does require vision, determination, coordination and clear measurable metrics from Government.
The governments financial engagement does not have to be great , simply seed money for new technology pilot projects , thereafter private capital takes over. Initially tax concessions for enviromental buyers. This could be funded by rescinding special concessions for the oil companies which the Economist quoted could be as high as $ 250 billion a year. Even if it’s 10% of that and it is invested each year in green technology then we will achieve our objectives.
Last but not least we need a catalyst for economic recovery. In the nineties it was the Dot Com boom and consumer lead recovery as it was early this century.
This time the consumer cannot lead the recovery, our asset base has collapsed our savings are gone , our disposable income is eaten up by health care, home payments and gas.
The only hope we have is to invest in Green tech , create good jobs, reduce energy costs and this will trickle down in to all other areas of our economy.
Another point is our manufacturing sector has shrunk to 10% of our economy compared to Germany over 20%.This is unhealthy and does not bode well for developing technology and manufacturing which is vital for a strong military.
Germany rebuilt it’s economy on the back of premium technology for the oil age. It has the highest exports per capita in the world despite it’s high cost and social welfare economy.
We can do the same with Green tech, we have the expertise , the volume base, the most compelling need. We can and must lead the world
What we need is a plan built on vision and leadership and determination to win.