Wednesday, March 3, 2010
Electrifying our National Strategy
Warren Buffett predicts that we’ll all be driving electric vehicles (EVs) in 20 years. The Oracle of Omaha knows a thing or two about sound investments and he’s placing his bets on EVs. It makes economic, environmental and energetic sense. What doesn’t make sense is the dismal record of Buffett’s native land to capitalize on this insight.
Electric vehicles exceed the energy efficiency, environmental, and economic virtues of their conventional counterparts. Internal combustion engines have less than half the 95% efficiency rate of EV motors. The latter are also less carbon intensive: even if the electric grid that charged EVs were entirely coal-powered, EVs would still emit less carbon emissions than petroleum-burning cars. EVs are consumer friendly, requiring less maintenance and sporting a significantly lower cost of ownership for budget conscious Americans. Beyond the cost benefits of electricity over gasoline, EVs, like solid-state computer drives, have fewer moving parts and hence less need for service and repair. At a more macro level, EVs do not require the same massive infrastructural support as liquid fuels. More public EV plugs will be needed, but a home garage plug will suffice for the charging needs of most commuters. Moreover, when combined with a smart grid EVs might serve as energy reservoirs that could be tapped during peak electricity demand. Finally, EVs can empower America to make significant headway in weaning itself off its oil addiction. Indeed, transportation accounts for over two thirds of total U.S. oil consumption.
In 2008, Berkshire Hathaway made its foray into the EV market by investing $232 million in 2008 for a 10% share of BYD, China’s number one battery and electric car company. That share is now worth almost $2 billion. Berkshire’s record gains from this investment flow from BYD’s innovations in the EV industry, including a breakthrough in lithium ion ferrous phosphate technology and a plan to produce the world’s first mass-produced plug-in hybrid.
BYD’s (and Buffet’s) good fortunes are also a sign that China is doing something right: it is thinking big about bold investments in EVs. The Chinese government has made “independent innovation” in the EV industry a national goal. By 2011, Beijing plans to invest $1.5 billion dollars in EV R&D, to convert entire government and taxi fleets into EVs, and to incentivize local government and individual EV purchases through rebates and tax credits of more than $7,000 per passenger vehicle and up to $86,000 for trucks and buses. The Chinese government wants its domestic manufacturers to produce half a million EVs by the end of next year to secure China’s place as a leading EV producer and exporter.
The U.S. goal is strikingly less ambitious. President Obama has committed $2.4 billion in stimulus funding for EV and battery R&D to help pave the way for domestic production of 1 million EVs by 2015 (0.5% of our vehicle fleet). In the 1990s, when Chevy produced its S-10EV, GM its EV1, and Ford its Ranger EV, the U.S. seemed poised to dominate the EV market for years to come. Fifteen years and an $80 billion bailout later, the Chinese have picked up where America left off and are happily eating GM’s lunch.
There is hope for American producers and the Obama administration though. It’s not too late to develop and implement a comprehensive energy strategy that places 21st Century technologies like smart energy grids and EVs where they rightfully belong. Washington has to recognize that the electric stakes are high. Fortunately, there are rays of hope coming from the Department of Energy, which has granted Tesla almost half a billion dollars in loans to develop a mass-market version of its pricey high-tech all-electric Roadster sports car. Let’s hope this is a first step for the U.S. auto industry towards regaining a competitive edge in the EV market. After all, the U.S. shouldn’t trade its dependence on foreign oil for one on foreign green technology.
Carolyn Avery
Electric vehicles exceed the energy efficiency, environmental, and economic virtues of their conventional counterparts. Internal combustion engines have less than half the 95% efficiency rate of EV motors. The latter are also less carbon intensive: even if the electric grid that charged EVs were entirely coal-powered, EVs would still emit less carbon emissions than petroleum-burning cars. EVs are consumer friendly, requiring less maintenance and sporting a significantly lower cost of ownership for budget conscious Americans. Beyond the cost benefits of electricity over gasoline, EVs, like solid-state computer drives, have fewer moving parts and hence less need for service and repair. At a more macro level, EVs do not require the same massive infrastructural support as liquid fuels. More public EV plugs will be needed, but a home garage plug will suffice for the charging needs of most commuters. Moreover, when combined with a smart grid EVs might serve as energy reservoirs that could be tapped during peak electricity demand. Finally, EVs can empower America to make significant headway in weaning itself off its oil addiction. Indeed, transportation accounts for over two thirds of total U.S. oil consumption.
In 2008, Berkshire Hathaway made its foray into the EV market by investing $232 million in 2008 for a 10% share of BYD, China’s number one battery and electric car company. That share is now worth almost $2 billion. Berkshire’s record gains from this investment flow from BYD’s innovations in the EV industry, including a breakthrough in lithium ion ferrous phosphate technology and a plan to produce the world’s first mass-produced plug-in hybrid.
BYD’s (and Buffet’s) good fortunes are also a sign that China is doing something right: it is thinking big about bold investments in EVs. The Chinese government has made “independent innovation” in the EV industry a national goal. By 2011, Beijing plans to invest $1.5 billion dollars in EV R&D, to convert entire government and taxi fleets into EVs, and to incentivize local government and individual EV purchases through rebates and tax credits of more than $7,000 per passenger vehicle and up to $86,000 for trucks and buses. The Chinese government wants its domestic manufacturers to produce half a million EVs by the end of next year to secure China’s place as a leading EV producer and exporter.
The U.S. goal is strikingly less ambitious. President Obama has committed $2.4 billion in stimulus funding for EV and battery R&D to help pave the way for domestic production of 1 million EVs by 2015 (0.5% of our vehicle fleet). In the 1990s, when Chevy produced its S-10EV, GM its EV1, and Ford its Ranger EV, the U.S. seemed poised to dominate the EV market for years to come. Fifteen years and an $80 billion bailout later, the Chinese have picked up where America left off and are happily eating GM’s lunch.
There is hope for American producers and the Obama administration though. It’s not too late to develop and implement a comprehensive energy strategy that places 21st Century technologies like smart energy grids and EVs where they rightfully belong. Washington has to recognize that the electric stakes are high. Fortunately, there are rays of hope coming from the Department of Energy, which has granted Tesla almost half a billion dollars in loans to develop a mass-market version of its pricey high-tech all-electric Roadster sports car. Let’s hope this is a first step for the U.S. auto industry towards regaining a competitive edge in the EV market. After all, the U.S. shouldn’t trade its dependence on foreign oil for one on foreign green technology.
Carolyn Avery
Labels: Energy
Wednesday, May 14, 2008
A Kernel of Truth about Corn Ethanol
Ethanol has suddenly become the bête noir of renewable energy. First came the arguments that Congress was too heavily subsidizing a crop that, even if entirely converted to ethanol, could only replace 12% of our demand for gasoline. Then Science magazine published a study concluding that over its lifecycle ethanol creates more carbon emissions than gasoline. And now critics claim that ethanol production is causing food prices to rise. So much for the carbon-conscious, farmer-friendly fuel that was going to help make us energy independent. What went wrong?
The problem with corn ethanol is in the kernel. We already force-feed corn to naturally grass-eating cows, and contribute to the country’s obesity epidemic by dousing processed food with high-fructose corn syrup. Dietary alternatives to grass and sugar need not be replicated in the energy sector. Au contraire! The energy balance of corn ethanol is 1.3, compared to 8 for ethanol made from sugar cane, and up to 36 for cellulosic (such as switchgrass) ethanol. On the environmental side of the equation, corn ethanol creates 22% less emissions than gasoline, compared to 56% less for sugar cane, and 91% less for cellulosic. If we must, let’s keep making corn ethanol – with the stalks and leaves.
Advanced batteries and biofuels are the key to propelling our transportation sector out of a virtually complete (97%) dependence on oil. Congress is right to support biofuels, but should do so by setting energy balance and carbon emission goals, offering rewards accordingly, and then letting the market pick the winners.
Carolyn Avery
The problem with corn ethanol is in the kernel. We already force-feed corn to naturally grass-eating cows, and contribute to the country’s obesity epidemic by dousing processed food with high-fructose corn syrup. Dietary alternatives to grass and sugar need not be replicated in the energy sector. Au contraire! The energy balance of corn ethanol is 1.3, compared to 8 for ethanol made from sugar cane, and up to 36 for cellulosic (such as switchgrass) ethanol. On the environmental side of the equation, corn ethanol creates 22% less emissions than gasoline, compared to 56% less for sugar cane, and 91% less for cellulosic. If we must, let’s keep making corn ethanol – with the stalks and leaves.
Advanced batteries and biofuels are the key to propelling our transportation sector out of a virtually complete (97%) dependence on oil. Congress is right to support biofuels, but should do so by setting energy balance and carbon emission goals, offering rewards accordingly, and then letting the market pick the winners.
Carolyn Avery
Labels: Energy
Tuesday, April 15, 2008
'Producing' Energy Security
Geopolitical turbulence, soaring trade imbalances, and global warming are among those seemingly intractable problems that our current model of globalization has wrought. These are also the issues that will dominate the next U.S. presidency. So why isn’t any candidate offering us a big idea that would turn these challenges into opportunity?
Energy security could be the linchpin of a national competitiveness strategy that would help free us from the vagaries of unfriendly oil-propped regimes while supporting a green re-industrialization of America. What we have been lacking thus far to capitalize on homegrown energy resources is good public policy.
Consider solar for example, the world’s fastest-growing energy technology, with production doubling every 2 years:
- The U.S. has more solar resources than any other developed country, yet Germany – a country with solar resources equivalent to those of Alaska – has the fastest growing photovoltaic (PV) market
- The U.S. pioneered a number of solar power technologies in the 1980s. Yet since 1995, our share in the photovoltaic market has dropped from 45% to 9% (about equal to China’s share) and of the top ten solar companies in the world, none are from the U.S.
- Japan – a country the size of Montana – has installed more PV power than the whole of the United States. Japan is not only the number one PV producer, but is also exporting half of its PV production
Whether it is in the wind power market, biofuels, or hybrid technology, the United States is not number 1. As a result, we are forgoing investment and job opportunities, let alone leadership in the industries of the future.
Market forces alone don’t create energy security – good government policies do. This is why we need for the next President to commit to a ‘green’ Apollo project for the United States wherein we would price carbon via cap and trade or a carbon tax, reinvest the revenue into renewable technology research and commercialization, and support the development of a domestic supply chain. We can only achieve energy security if we produce more clean forms of energy here. In doing so we will reduce our deficits, open new investment opportunities, and create thousands of good jobs. Any takers?
Carolyn Avery
Energy security could be the linchpin of a national competitiveness strategy that would help free us from the vagaries of unfriendly oil-propped regimes while supporting a green re-industrialization of America. What we have been lacking thus far to capitalize on homegrown energy resources is good public policy.
Consider solar for example, the world’s fastest-growing energy technology, with production doubling every 2 years:
- The U.S. has more solar resources than any other developed country, yet Germany – a country with solar resources equivalent to those of Alaska – has the fastest growing photovoltaic (PV) market
- The U.S. pioneered a number of solar power technologies in the 1980s. Yet since 1995, our share in the photovoltaic market has dropped from 45% to 9% (about equal to China’s share) and of the top ten solar companies in the world, none are from the U.S.
- Japan – a country the size of Montana – has installed more PV power than the whole of the United States. Japan is not only the number one PV producer, but is also exporting half of its PV production
Whether it is in the wind power market, biofuels, or hybrid technology, the United States is not number 1. As a result, we are forgoing investment and job opportunities, let alone leadership in the industries of the future.
Market forces alone don’t create energy security – good government policies do. This is why we need for the next President to commit to a ‘green’ Apollo project for the United States wherein we would price carbon via cap and trade or a carbon tax, reinvest the revenue into renewable technology research and commercialization, and support the development of a domestic supply chain. We can only achieve energy security if we produce more clean forms of energy here. In doing so we will reduce our deficits, open new investment opportunities, and create thousands of good jobs. Any takers?
Carolyn Avery
Labels: Energy
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