Winning the Oil Endgame
RFF Policy Leadership Forum w/ Amory B. Lovins
September 21, 2004
Amory B. Lovins
CEO, Rocky Mountain Institute
Cited by Newsweek as "one of the western world’s most influential energy thinkers" and by The Wall Street Journal as among those "most likely to change the course of business in the ’90s," Amory Lovins has long been an influential force in energy policy. Over the past 25 years, his research has focused on transforming the hydrocarbon, automobile, real estate, electricity, water, semiconductor, and related sectors toward advanced resource productivity. He has long sought to harness market forces to promote resource efficiency.
In 1982, he co-founded Rocky Mountain Institute, an energy-oriented think tank in Snowmass, Colorado, and he has served as an adviser to scores of industries and governments worldwide. His clients have included Allstate, BP, Dow, General Motors, Mitsubishi, Bank of America, Xerox, and more than 100 electric and gas utilities.
Trained as an experimental physicist, he received degrees from Harvard University and Oxford University. He holds nine honorary doctorates, and has been the recipient of a MacArthur Fellowship, the Heinz, Lindbergh, Right Livelihood, World Technology, and Time magazine "Hero for the Planet" awards, the Happold Medal, and the Nissan, Shingo, Mitchell, and Onassis Prizes. He is the author or co-author of 30 books, including the just-published Winning the Oil Endgame.
Video of this RFF Policy Leadership Forum and commentary on Lovins' remarks follow below.
President and Senior Fellow, Resources for the Future
Amory B. Lovins
CEO, Rocky Mountain Institute(Download Presentation)
Question and Answer
Amory Lovins at RFF
“Our Energy Future Is Based on Choice—Not Fate”
U. S. dependence on oil can be eliminated by proven and attractive technologies that create wealth, enhance choice, and strengthen national security, according to Rocky Mountain Institute CEO Amory Lovins, who spoke at an RFF Policy Leadership Forum on September 21. The revolutionary thinking of the “consultant physicist” has earned him international recognition, including a MacArthur Fellowship, an award from the Heinz Family Foundation, and eight honorary doctorates.
America’s consumption of oil risks both the nation’s competitive strength and its security, Lovins noted, and he outlined strategies for dramatically reducing U.S. oil usage through better efficiency, competitive biofuels, and saved natural gas. His presentation focused on the automotive industry and drew from Winning the Oil Endgame: Innovation for Profits, Jobs, and Security, his new study that was supported in part by the Department of Defense.
Lovins believes that unless key changes are made in the U.S. auto industry soon, “Japan, the European Union, and China will eat Detroit for lunch.” Foreign auto competitors are researching lighter, more fuel-efficient cars, and American manufacturers cannot afford to be left behind, he said. In addition, U.S. overdependence on oil contributes to energy insecurity, geopolitical rivalries, price volatility, and climate concerns.
Avoiding these consequences—and an energy future dictated by OPEC or marred by sizable cost-and-benefit trade-offs—is possible, Lovins asserted, declaring that “the United States has more market power than OPEC.” While OPEC may control the supply, the United States controls the demand. U.S. manufacturers and consumers proved this during the 1970s oil crisis by curbing demand enough to essentially break the OPEC cartel.
A Superefficient Future?
By 2025, Lovins projected that cars and light trucks, such as SUVs, pickups, and vans, will account for half of U.S. oil use, a situation that is essentially untenable. The way out, he said, will come from ultralight materials like carbon-fiber composites can halve vehicle weight, increase safety, and boost efficiency to about 85 miles per gallon for a midsize car or 66 m.p.g. for a midsize SUV. Much of these energy savings comes from the ultralight materials, because according to Lovins, currently three-quarters of fuel use is accounted for by the weight of the vehicle.
Lovins faulted consumers and automakers alike for limiting their views on what is possible. Confronted by basic auto industry and policy assumptions that trade-offs are inevitable and that superefficient cars will only sell with government intervention, Lovins wondered, “what if superefficiency makes a better car?” A breakthrough in successfully these improved vehicles, he noted, would create a car consumers would want to buy anyway.
Traditional objections that lightweight vehicles would be too expensive and unsafe are no longer valid, Lovins argued. Carbon-fiber vehicles are simpler and cheaper to manufacture, he said, citing an SUV prototype made up of 14 body parts that snap together. Ease of manufacturing doesn’t mean unsafe, however. Though light, carbon fiber is strong, absorbing six to twelve times as much energy per pound as steel.
Rocky Mountain Institute’s new report identifies four integrated steps to this new future for energy and the automotive industry:
double the efficiency of using oil;
apply creative business models and public policies;
provide one-fourth of U.S. oil needs by spurring the development of a major domestic biofuels industry; and
save half the projected 2025 use of natural gas.
To achieve this, Lovins calls for investments of $180 billion over 10 years, with $90 billion earmarked for transportation equipment and the other $90 billion allocated to build an advanced biofuel industry. Considering the United States currently spends $120 billion per year on oil imports, these investments could produce $150 billion per year in societal value by 2025—including one million new American jobs, the majority of them in rural areas.
The auto industry once switched, in six years, from open-wood bodied cars to 70 percent closed steel ones, Lovins said, “With the right steps taken now, we can win the oil endgame within a decade.”