Volume 18
Issue 7
October 28, 2004
Amory Lovins and RMI Release
Winning the Oil Endgame
Academy Fellow Amory Lovins and the Rocky
Mountain institute have just
released Winning the Oil Endgame, an independent, peerreviewed synthesis (partially
funded by the US Defense
Department) for American
business and military leaders that "charts a roadmap
for getting the United States
completely, attractively, and
profitably off oil. America claims 25% of annual
global oil consumption.
"Our strategy integrates four technological
ways to displace oil:
• Use oil twice as efficiently;
• Then, substitute biofuels;
• [Use] natural gas [more efficiently];
• And, optionally, [use] hydrogen [fuel].
"Fully applying today's best efficiency technologies in a doubled-GDP 2025 economy would
save half the projected U.S. oil use at half its
forecast cost per barrel. Non-oil substitutes for
the remaining consumption would also cost
less than oil. These comparisons conservatively
assign zero value to avoiding oil's many "externalized" costs, including the costs incurred
by military insecurity, rivalry with developing
countries, pollution, and depletion. The vehicle improvements and other savings required
needn't be as fast as those achieved after the
1979 oil shock."
"The route we suggest for the transition beyond
oil will expand customer choice and wealth and
will be led by business for profit. We propose
novel public policies to accelerate this transition that are market-oriented without taxes
and innovation-driven without mandates. A
$180-billion investment over the next decade
will yield $130-billion annual savings by 2025;
revitalize the automotive, truck, aviation, and
hydrocarbon industries; create a million jobs in
both industrial and rural areas; rebalance trade;
make the United States more secure, prosperous, equitable, and environmentally healthy;
encourage other countries to get off oil too;
and make the world more developed, fair, and
peaceful.
"It will cost less to displace all of the oil that the
United States now uses than it will cost to buy
that oil. Oil's current market price leaves out its
true costs to the economy, national security,
and the environment. But even without including these now "externalized" costs, it would still
be profitable to displace oil completely over
the next few decades.
"In fact, by 2025, the annual economic benefit
of "that displacement would be $133 billion
gross (or $70 billion net of the displacement's
costs).
"To achieve this does not require a revolution,
but merely consolidating and accelerating
trends already in place: the amount of oil the
economy uses for each dollar of GDP produced,
and the fuel efficiency of light vehicles would
need only to improve about three-fifths as
quickly as they did in response to previous oil
shocks.
FedEx to Build California's Largest
Corporate Solar Power System
FedEx Corporation and the City of Oakland have
announced this week that FedEx Express will
construct California's largest corporate solar
electric system atop its hub at Oakland Airport.
The 904-kilowatt solar array will provide approximately 80% of the peak load demand for the
company's Oakland facility, which employs 1,700
people.
FedEx's solar generation system will cover
81,000 square feet on the roofs of two buildings. Sunlight will be converted directly into
electricity by 5,769 photovoltaic modules,
comprised of more than 300,000 solar cells.
In addition to generating electricity, the solar
panels help insulate the buildings, reducing
their heating and cooling costs.
The electricity generated by the FedEx Oakland solar electric system will be the equivalent used by more than 900 homes during the
daytime.
Renewable energy flows in waves
Wave and tidal stream machines are the latest
exploratory technology in the rush to find alternative energy sources to replace fossil fuels
with soaring price tags.
"Britain has one of the best wind, wave and
tidal resources in Europe," said Martin Wright,
managing director of Marine Current Turbine
(MCT), the company that built the world's first
large-scale tidal stream machine.
The global wave industry is still small and Britain wants to develop it on a large commercial
scale and then export the technology.
"It's a bit of an international race to develop
the technology," said Tim German, manager of
Cornwall Sustainable Energy Partnership.
Proponents say if they harnessed the energy
of the ocean, they could have enough energy
to power the planet. Britain's available wave
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power has been estimated to be around
double the country's energy consumption.
The Wave Hub will consist of an underwater
cable connected to the national grid and extending approximately nine miles out to sea.
Developers are already running tests and
some are linked into national grids. A feasibility study is being conducted to develop
a test centre called The Wave Hub. It would
be located 12 to 15 kilometres (10 miles) off
the beach at Hayle in Cornwall and cover an
area up to 20 square kilometres (7.7 square
miles). The hub could eventually produce
30 to 40 megawatts of electricity each year
which would be directly linked into the national grid via an old power station.
"We hope to have the machines in the water
by 2006," said Mike Patching, project manager for Scott Wilson Oceans, the firm managing the feasibility study.
The technology is expensive. Developers will
need help from the government to get to
the point where the economies of scale will
allow the wave industry to stand on its own.
Britain wants 15 percent of the country's
electricity needs to be met with renewable
energy by 2015 and has allocated 50 million
pounds to develop marine renewables.
China's Olympian Effort to
Clean Air Before 2008
China, already the world's fastest growing car and energy market, has earmarked
US$7 billion of its total $37 billion Olympic
budget to clean up the capital.
Beijing has set a clean air target of 227 days
this year. By the end of September, Beijing
had registered only 175 such days, the
China Daily reported on Tuesday.
"We are now facing great pressure to realize the goal," Cheng Ying, an official at the
city's environmental protection bureau,
was quoted as saying. "Smoke from burning
coal is always a headache for the environment
at this time of year."
Improving air quality is key to the city's huge
drive to be ready to host the 2008 summer
Olympics.
Pre-Olympic plans call for relocation of 200 polluting Beijing factories and treatment of more
than 90 percent of sewage in the cities noxious
canals by 2008.
Seven of the world's ten most polluted cities are
in China.
In addition to their efforts to curb coal use, authorities also plan to introduce ethanol gasoline
and ban leaded petrol in major cities.
Electrical Prices by Source
Green power, especially wind, is already competing with traditional sources. At today's average
wholesale prices, wind costs 4.2 cents per kilowatt hour, compared with 4 cents for coal, 6.8
cents for natural gas, 9.1 cents for oil and 10 cents
for nuclear power, according to Kyle Datta, managing director at the Rocky Mountain Institute.
Hummer SUV Un-supersized
As the price of oil surpasses $55 per barrel, so
the current H2 model now costs $70 to fill in
California, for example. At that, the fuel doesn't
last long. H2 sales are slumping.
While over 1,000 Americans have died in Iraq
defending freedom or petroleum (depending
on whom you believe), the dealers of HumVees
are busily meeting GM requirements to convert
their dealerships to huge glass and steel Quonset huts, evoking military architecture.
The new "slimmer" H3 is expected to approach
20 miles per gallon in highway driving and get
about 16 miles per gallon in the city, a G.M.
official said. That is better than the roughly 12
miles per gallon that the H2 gets. But it remains about 10 percent below the standards
for the average midsize sport utility vehicle,
according to the U.S. Environmental Protection Agency.
GE Wind Sales Soar
General Electric Energy announced last week
it currently has $1.3 billion in wind turbine orders waiting to be filled. The orders represent
1.5 gigawatts of new wind capacity.
Of that, 750 megawatts are for new wind
projects to be built in the US by the end of
next year to take advantage of the newly
reinstated Renewable Energy Production Tax
Credit (PTC) before it expires (again) at the
end of 2005.
US Tax Policy Toward Energy
To receive the 1.8 cent per kilowatt hour
credit, wind developers must complete projects during the calendar year when the PTC is
in force. The credit can then be taken for the
next 20 years.
At this point, the alternative energy business
in the US remains dependent upon favorable
tax treatment.
However, last year President Bush asked
Congress to raise the tax break for 6,000plus-pound luxury vehicles from $25,000
to $75,000. It went to $100,000. The Federal
government is phasing out the tax deduction
(worth 1/3 of an equivalent credit amount to
many people) of $500 for hybrid vehicles next
year.
The new 2004 tax law is still vastly more
attractive to people who buy SUVs like the
Hummer: a potential net tax cut of $35,000 for
the person who bought the SUV before Oct.
11; $26,000 for the person who buys between
now and Dec. 31; and $15,750 for the person
who buys that SUV next year.
Copyright © 2004 World Business Academy, 428 Bryant Circle, Suite 109, Ojai, CA 93023
Academy Phone 805 640-3713 Fax 805 640-9914 Website www.worldbusiness.org
Senior Editor, David Zweig, [email protected] Phone 510 547-3223
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