Californias Pioneering Role

Leadership and innovation are key to curtailing carbon emissions and stabilizing climate change. Neither automakers, oil companies, nor consumers are likely to lead the way, at least on their own, so it falls to governments and entrepreneurs to spur action in the right direction. For a model of how this might happen, we need look no further than California. California is at the forefront of innovation and is focusing increasingly on the fight against global warming. California's reach extends...

Needed Policy Directions

To what extent will cities such as Shanghai be able to diverge from the U.S. model of car dependency If the choice is left to the private desires of individuals, cars will dominate. Research shows that Chinese people embrace cars for their social status as well as their utility.38 The challenge for policy is to enhance the attractiveness of other options, impose the true full cost of driving on those who choose to use cars, and educate consumers about cars' drawbacks. While Chinese mobility...

Will China Take the Lead

As we've just indicated, China is clearly poised to contribute important innovations in the realm of vehicles, fuels, and mobility services. The vehicle world is dominated by global automakers who have corporate cultures and business models attuned to mass markets in the most affluent countries. They design vehicles to satisfy customers in the United States, Japan, and Europe. But Chinese consumers will accept less power, smaller size, and even shorter vehicle life in return for lower prices...

New Business and Manufacturing Approaches

The many product and service innovations just highlighted can play a key role in creating a more sustainable transportation system. But emerging process innovations in China may play a different role. A new approach to manufacturing could sharply reduce the cost of vehicles. Indeed, it's already having this effect. If these low-cost manufacturing processes are coupled with innovative low-carbon vehicles, the world will benefit. This new manufacturing and business model started in America's...

GM More Greenwashed than Green

General Motors has long been known for cutting-edge research, and there's no doubt that its grasp of advanced technology rivals that of Toyota and Honda. Its most impressive accomplishment in recent years was the innovative, high performance EV-1 electric car, unveiled in model year 1997. But GM never seriously marketed it and then quickly gave up on it when sales were slow. (GM's CEO was later to say that axing the EV-1 was his worst decision, noting that it didn't affect profitability, but it...

The Hybrid Electric Vehicle Odyssey

The greatest electric-drive success story to date, apart from China's electric two-wheelers, is hybrid electric vehicles, or hybrids. In hybrids, an electric motor is mated to a combustion engine. The basic principle is to sever the direct connection between engine and wheels so that the combustion engine can operate at a steady load near its maximum efficiency. The engine is downsized, with onboard energy storage devices such as batteries or ultracapacitors assisting the power surges needed...

The Coming Transformations

Today's vehicles, fuels, and transportation designs are functionally similar to those of 80 years ago. While most technological facets of life have evolved, transportation has not. The car-centric transportation system needs to be dismantled and the internal combustion engine vehicle needs to be replaced with something better. The transformations are overdue. The vehicle part of this transformation is the most accessible piece of the puzzle. The next generation of improved technologies is...

Troubled Times Seeking Protection from Imports

The oil price spikes of the 1970s provided the jolt that hastened the invasion of auto imports into the U.S. market. Rising oil prices and lines at gasoline pumps pushed fuel economy to the forefront of consumer minds. With the average car from Detroit getting a paltry 14 mpg in 1973, the Japanese automakers were well positioned with their small, fuel-efficient vehicles. Akira Kawahara, a Japanese auto industry analyst, noted that the Big Three fell into financial difficulties after the energy...

Likely Scenario Continued Japanese Leadership

As energy prices rise and climate change concerns grow, Honda and Toyota are likely to continue leading the charge in advancing low-carbon, energy-efficient vehicles. Having captured the environmental high ground with early leadership on hybrids, they're continually adding new hybrid models and upgrading their technology. Their initiative puts pressure on others to follow. Gasoline hybrids will be followed by plug-in hybrids, battery electric vehicles, and fuel cell vehicles. As mentioned...

Stimulating Chinese Innovation

N late 2007, China surpassed the United States as the single largest contributor of greenhouse gases to the atmosphere.1 If this trend continues, China will increase its production of CO2 emissions at a rate faster than that of all the affluent countries of the world put together.2 Transportation and coal sources are responsible for a significant portion of these emissions, and their share will grow as China's citizens are increasingly able to afford their own cars and coal is converted to...

The Comings and Goings of Battery Electric Vehicles

Battery electric vehicles were first developed in the late 1800s, at the same time as combustion-engine vehicles. They quickly succumbed to gasoline vehicles for the simple reason that batteries were too expensive, bulky, and heavy.15 They made an aborted comeback a century later in the 1990s, spurred on by air pollution concerns and support from electric utilities. California led the way with its 1990 zero-emission vehicle (ZEV) rule,16 calling for 2 percent of vehicles sold in the state to be...

Alternative Fuels as Stalking Horses

Although alternative fuels haven't dislodged or even challenged petroleum fuels (with the unique exception of Brazilian ethanol), they've indirectly played a pivotal role in improving petroleum fuels and engines as stalking horses. The role of methanol in spurring the reformulation of gasoline and diesel fuels, mentioned earlier, is just one example. In a broader sense, the threat of alternative fuels played a central role in the radical reduction of vehicle emissions in the 1990s. Consider...

Cellulosic Biofuels Taking Food Out of the Picture

Only one cogent argument can be made on behalf of corn ethanol, other than inflating the profits of corn and ethanol producers corn ethanol could be a stepping-stone to more promising biofuels made from inedible organic matter. More promising biofuels do exist. These are fuels made from the vast array of cellulosic plant materials grasses, fast-growing trees, municipal trash, and crop residues. These are the advanced biofuels called for in the 2007 Energy Independence and Security Act. These...

Biodiesel The Populist Choice

Another recently embraced biofuel is biodiesel. Unlike ethanol, which is used in gasoline spark ignition engines, biodiesel replaces diesel fuel and is the only prominent nonfossil alternative for diesel engines. For this reason, and because it's renewable, it has gained considerable attention. Its potential is quite limited, though, at least for the foreseeable future. Biodiesel is derived from animal fats and plant oils. Currently it's mostly made from waste oils, such as frying oils...

Hydrogen The Dream of a Clean Transportation Economy

The hydrogen dream dates back to Jules Verne's 1874 book The Mysterious Island and even before. Hydrogen is the simplest chemical element, with one electron and one proton. It's very abundant but never found by itself it's always bound with other molecules. It's the hydro in hydrocarbons and is embedded in all organic matter. The great challenge is the difficulty and expense of extracting hydrogen from these other materials. The path to hydrogen as an alternative fuel isn't clearly defined...

Resistance to Alternative Fuels

For the past century, gasoline and diesel derived from oil have been the least-cost option for consumers. As documented in chapters 4 and 5, other fuels can't even get a toehold in the marketplace. By 2006, alternative fuels made FIGURE 6.1 U.S. purchases of small cars versus large trucks, 1975-2008. Source U.S. Environmental Protection Agency, Light-Duty Automotive Technology and Fuel Economy Trends 1975 through 2007, Appendix E, September 2007. (Washington, DC, U.S. EPA). Note Small cars...

The Holy Grail Fuel Cell Vehicles

Fuel cell vehicles build on battery electric and hybrid electric technology. The concept is simple fuel cells convert chemical fuels into electricity without combustion (see figure 2.4). While a number of distinct fuel cell technologies exist, the automotive world has settled on a design that combines hydrogen with oxygen from the air and does not operate at high temperatures.38 Other fuel cell technologies have been rejected because they require pure oxygen, instead of breathable air, and...

Methanol The First Stalking Horse

Confronted by huge and growing fuel demands and seeking its own solution to spiraling oil prices and imports, California began eyeing methanol around 1979. In light of its access to abundant coal reserves in nearby states, California concluded that its best alternative fuel option was methanol made from coal.12 As oil prices started to fade in the early 1980s, energy security became less compelling and air quality emerged as the rationale for continued support of alternative fuels. With this...

Emergence of the Oil Giants

The U.S. oil industry grew out of John D. Rockefeller's Standard Oil Company.35 Rockefeller formed the company in 1870. He was remarkably successful in linking the entire stream of oil activities, from upstream oil fields to downstream refineries and fuel stations. He focused on reducing costs to a bare minimum and building profit through volume. Standard Oil, organized as an opaque trust, eventually garnered 90 percent of the U.S. market and much of the international market as well. But...

How the Major Companies Stack Up on the Environment

ExxonMobil has been more conservative on environmental issues and more dismissive of climate concerns than any other major oil company. Its longtime chairman, Lee Raymond, routinely dismissed fears of global warming, claiming there was still significant uncertainty about the causes of climate change. A January 2007 report by the Union of Concerned Scientists accused ExxonMobil of spending millions of dollars to manipulate public opinion on the seriousness of global warming, and of drawing upon...

US Corn Ethanol Special Interests Steamroll the Public Good

The U.S. corn ethanol story in some ways shadows the Brazilian experience. The United States also began subsidizing ethanol production in the 1970s. Corn was the lowest cost feedstock available and it soon dominated ethanol fuel production. The subsidies started out at 40 cents per gallon in 1978 and grew over time. American corn ethanol turned out to be quite expensive, substantially more than Brazilian sugarcane ethanol. Corn requires much more energy for farming and doesn't generate nearly...

Consumer Responsiveness to Higher Gasoline Prices

A bedrock belief of economists and environmentalists alike is that increases in fuel prices and gasoline taxes influence consumer demand and are therefore the silver-bullet solution to oil and global warming problems. The facts don't support their belief. Contrary to media hyperbole, the evidence is overwhelming that car drivers are increasingly less responsive to moderate increases in fuel prices. Dramatic fuel price increases, however, might be another story. When U.S. gasoline prices began...

The Rise of Honda and Toyota

Environmental and energy concerns played a pivotal role in the successful entry of the Japanese car companies into America.55 Two events set the stage high gasoline prices and stringent new emission standards. The new focus on air pollution and fuel economy pried open the market for the Japanese. When Congress adopted stringent emission standards in 1970, with the three U.S. companies loudly complaining about the difficulty and expense of meeting the new regulations, Honda saw an opportunity....

Ford Environmentalism with No Teeth

In 1997, two years before becoming chairman of the board of Ford Motor Company, William Clay Ford Jr. was saying publicly that the auto industry needed to show leadership on climate change and not be seen as dragging its feet as it had with safety, smog, and fuel economy. He closed a speech by saying, Environmental stewardship is a heartfelt concern of our customers and of policymakers around the world. It should be a top priority for the auto industry in the twenty-first century. The challenge...

Brief History of Alternative Fuels

The history of alternative fuels goes back to the very first days of the car industry. In 1900, more than half the cars were running on ethanol, steam, and electricity.9 Many of Karl Benz's early diesel engines ran on peanut oil, a biofuel. Henry Ford's first car ran on alcohol, and his wife, Clara, drove an electric vehicle. Thomas Edison invested considerable time and money in improving batteries. Electric vehicles were the safest, quietest cars on the road. Back then, petroleum fuels were...

Brazilian Cane Ethanol A Policy Model

Ethanol is the most successful alternative fuel to date, though in surprising ways. Beginning in the 1970s, motivated by the Arab oil embargo and high oil prices, many small distilleries were built across Asia, Latin America, Europe, Africa, and the United States to convert starch and sugar materials into ethanol fuel. Everything from cassava and grapes to fruit cannery wastes and cheese whey were processed. Even excess low-quality wine in France was converted into ethanol fuel and still is ....

Big Oils Investment in Biofuels Will It Step Up

Regardless of the obliviousness of the national oil companies, the shift in Big Oil attitudes does seem genuine. The shift is highlighted by a July 2007 report by the National Petroleum Council, an organization that advises the U.S. Secretary of Energy and represents the U.S. oil industry. The report, chaired by Lee Raymond, the ex-CEO of ExxonMobil, emphasized the difficulty of meeting increasing energy demand and for the first time recommended increased emphasis on energy efficiency,...

Modeling Environmental Responsibility as Good Business

Toyota Compare With Ford And Table

While the Prius has been a huge marketing success, Toyota isn't number one when it comes to the environment. Honda is clearly the greenest car company today. It says environmental leadership is at the core of its responsibility as an automaker and corporate citizen. The company has published many statements and reports over the years reiterating its commitment to environmental quality and the public interest. The Honda Environmental Statement, dating back to June 1992, states that as a...

The Prius Risking a Commitment to Energy Efficiency

Honda's and Toyota's success isn't a story of technological superiority. The Detroit companies have access to the same state-of-the art technology. General Motors built the world's first fuel cell car in the 1960s, has been designing hybrid electric prototypes since that time, and sold the first commercial electric car in the 1990s. Ford also has considerable expertise in battery and hybrid electric cars, aided in part by its participation in the Partnership for a New Generation of Vehicles...

Transportation Trends Headed in the Wrong Direction

2030 Global Warming Map

We need to admit that current global transportation trends aren't sustainable and that today's transportation system, particularly in America, is highly inefficient and expensive. Despite much rhetoric about energy independence and climate stabilization, the fact is that vehicle sales, oil consumption, and carbon dioxide emissions are continuing to soar globally. One-fourth of all the oil consumed by humans in our entire history will be consumed from 2000 to 2010. And if the world continues on...

Acknowledgments

Like all book projects, many left their mark. We are indebted to those who lent their time, support, and expertise, helping us in so many ways. First and foremost, we extend our gratitude to the William and Flora Hewlett Foundation and to Hal Harvey, their former Environment Program Director, for their support at key times. We would also like to thank the Energy Foundation for their support, especially with the marketing of our book. Next we owe a tremendous thank you to Lorraine Anderson for...