The catastrophic oil spill in the Gulf of Mexico reminds us all that the end of an oil-fueled era can’t come fast enough. Oil dependence is an expensive problem that America doesn’t need. The good news is the oil habit is a profitable one to kick.
In the Pentagon-cosponsored 2004 book "Winning the Oil Endgame," Rocky Mountain Institute lays out a plan to eliminate U.S. oil use by the 2040s and simultaneously revitalize the economy.
Based on over two decades of research, WTOE details how eliminating oil dependence can strengthen our economy, enhance domestic security and reduce our impact on the environment. And getting off oil, the study showed, costs an average of only one-fifth its present price, showing that this transition can be led by business for profit.
Since the book’s publication, implementation—spurred by RMI’s “institutional acupuncture”—has moved even faster than hoped.
Walmart’s demand for doubled-efficiency trucks to replace its fleet by 2015 is pulling efficiency techniques into the market where everyone can buy them, and the company has already cut its fuel use by 38 percent per ton-mile.
Boeing’s 787 Dreamliner, which saves 20 percent of its fuel at no extra cost, is about to enter service —while its former CEO, Alan Mulally, is making Ford a market leader with efficient and electric vehicles.
The whole automotive industry is adopting electric drive and, increasingly, the lightweight, low-drag designs that can make it affordable. Meanwhile, new rules are requiring all cars and light trucks to become more efficient (though less than in China). And the Pentagon’s new rules that value saved fuel about five to 100 times more than previously will spur radical efficiency gains that will then come to the civilian sector—much as military R&D already gave us the Internet, GPS, and the jet-engine and microchip industries.
Saving Energy to Save Money
It is a long-held misconception that protecting the climate and reducing energy accidents will inevitably force a trade-off between the environment and the economy. Yet smart businesses know that protecting the climate is profitable, not costly.
Using energy more efficiently offers an economic bonanza because saving fossil fuel is far cheaper than buying it.
Over the past decade, chemical manufacturer DuPont has boosted production nearly 30 percent but cut energy use 7 percent and greenhouse gas emissions 72 percent, saving more than $2 billion so far. Five other major firms—IBM, British Telecom, Alcan, NorskeCanada and Bayer—have collectively saved at least another $2 billion since the early 1990s by reducing their carbon emissions more than 60 percent.
These are merely a few examples that I highlighted in my article, “More Profit with Less Carbon,” featured in Scientific American in September 2005. Since then, Dow has reported a $9 billion return from its $1-billion efficiency investment.
Modular carpet maker Interface, in statistics released last year, outlined the benefits of transitioning from oil dependence to a leader in sustainability. According to its Ecometrics data, the company reduced its net greenhouse gas emissions 71 percent compared to 1996, and reduced energy consumption per unit of production by 44 percent—while turning a profit. As the least oil-dependent firm in its oil-based industry, it was least harmed by sky-high oil prices.
Reward Efficiency, Not Waste
When accounting for environmental impact and profitability, RMI emphasizes that the reward structures that drive major U.S. industries need to be in synch with national goals.
Take transportation, which uses about 70 percent of the oil used in the U.S.
Instead of funding bailouts for specific companies, or pushing incremental technology improvements, policymakers can change the rules to improve vehicle efficiency radically without increasing costs.
New rules that regulate car efficiency by size rather than weight classes offer a very helpful example that will encourage automakers to make vehicles both lighter (hence more efficient) and safer. However, the Department of Energy’s advanced vehicle funding remains about 99 percent for advanced propulsion (chiefly electrification) and less than 1 percent for reducing vehicles’ weight and drag—a prerequisite to making electrification affordable, and an even more effective way to save oil quickly and massively.
Innovative state or federal policies, such as feebates, can encourage the continuous improvement of fuel economy by charging fees on inefficient new cars and paying corresponding rebates for efficient ones. In its first year of implementation, such a system in France cut inefficient cars’ sales 42 percent and increased efficient cars’ sales 50 percent—a stunning validation of an RMI concept suggested in the 1970s.
Leveling the Playing Field
If we tamp down demand by using energy more efficiently and cost-effectively, substituting supply becomes much easier. Conflicts between biofuels and food can be eliminated. Electric cars can be adopted far more quickly and need two-thirds less infrastructure. Efficient use helps renewable technologies do more and deliver the biggest bang for the buck.
This is not some far-off idea of the future. We can do this today, using current technologies and sound business practices.
The last time the U.S. paid attention to oil, in 1977 through 1985, GDP grew 27 percent while oil use fell 17 percent, oil imports fell by half, and oil imports from the Persian Gulf fell 87 percent (they’d have been gone in one more year if policy had held firm).
Lately we’ve begun making progress again in getting off oil: U.S. gasoline demand peaked in 2007, and industrialized countries’ oil demand peaked in 2005. “Peak oil” is starting to emerge on the demand side. But just imagine what America could do if we started paying attention.
New techniques continue to emerge that provide all the services now obtained from oil, but without using oil, at enormous savings. RMI looks to build on this progress, driven largely by American innovation and entrepreneurship, as we embark on our most ambitious and important work yet.
Reinventing Fire is RMI’s strategic focus and central project. It will map the transition from oil, coal, and ultimately gas to efficiency and renewable energy. Led by business for profit, Reinventing Fire will engage powerful partners across key sectors—buildings, transportation, industrial processes, and electricity—to bust the barriers to shifting away from fossil fuels.
The business case for efficiency and renewables is stronger than ever. It requires dogged determination, but its rewards are immense. Whether you care most about national security, or jobs and profits, or climate and environment, getting off oil is an idea whose time has come.
America’s strength has been built on burning primeval swamp goo. Now we have more modern options. Let’s adopt them.