Volume 18 Issue 7

October 28, 2004

Amory Lovins and RMI Release $180-billion investment over the next decade will yield $130-billion annual savings by 2025; Winning the Oil Endgame revitalize the automotive, truck, aviation, and Academy Fellow Amory Lovins and the Rocky hydrocarbon industries; create a million jobs in Mountain institute have just both industrial and rural areas; rebalance trade; released Winning the Oil End- make the United States more secure, prosper- game, an independent, peer- ous, equitable, and environmentally healthy; reviewed synthesis (partially encourage other countries to get off oil too; funded by the US Defense and make the world more developed, fair, and Department) for American peaceful. business and military lead- "It will cost less to displace all of the oil that the ers that "charts a roadmap United States now uses than it will cost to buy for getting the United States that oil. Oil's current market price leaves out its completely, attractively, and true costs to the economy, national security, profitably off oil. America claims 25% of annual and the environment. But even without includ- global oil consumption. ing these now "externalized" costs, it would still "Our strategy integrates four technological be profitable to displace oil completely over ways to displace oil: the next few decades. • Use oil twice as efficiently; "In fact, by 2025, the annual economic benefit • Then, substitute biofuels; of "that displacement would be $133 billion • [Use] natural gas [more efficiently]; gross (or $70 billion net of the displacement's • And, optionally, [use] hydrogen [fuel]. costs). "Fully applying today's best efficiency technolo- "To achieve this does not require a revolution, gies in a doubled-GDP 2025 economy would but merely consolidating and accelerating save half the projected U.S. oil use at half its trends already in place: the amount of oil the forecast cost per barrel. Non-oil substitutes for economy uses for each dollar of GDP produced, the remaining consumption would also cost and the fuel efficiency of light vehicles would less than oil. These comparisons conservatively need only to improve about three-fifths as assign zero value to avoiding oil's many "ex- quickly as they did in response to previous oil ternalized" costs, including the costs incurred shocks. by military insecurity, rivalry with developing countries, pollution, and depletion. The ve- FedEx to Build California's Largest hicle improvements and other savings required Corporate Solar Power System needn't be as fast as those achieved after the 1979 oil shock." FedEx Corporation and the City of Oakland have announced this week that FedEx Express will "The route we suggest for the transition beyond construct California's largest corporate solar oil will expand customer choice and wealth and electric system atop its hub at Oakland Airport. will be led by business for profit. We propose The 904-kilowatt solar array will provide approxi- novel public policies to accelerate this transi- mately 80% of the peak load demand for the tion that are market-oriented without taxes company's Oakland facility, which employs 1,700 and innovation-driven without mandates. A people.

FedEx's solar generation system will cover power has been estimated to be around 81,000 square feet on the roofs of two build- double the country's energy consumption. ings. Sunlight will be converted directly into The Wave Hub will consist of an underwater electricity by 5,769 photovoltaic modules, cable connected to the national grid and ex- comprised of more than 300,000 solar cells. tending approximately nine miles out to sea. In addition to generating electricity, the solar panels help insulate the buildings, reducing Developers are already running tests and their heating and cooling costs. some are linked into national grids. A feasi- bility study is being conducted to develop The electricity generated by the FedEx Oak- a test centre called The Wave Hub. It would land solar electric system will be the equiva- be located 12 to 15 kilometres (10 miles) off lent used by more than 900 homes during the the beach at Hayle in Cornwall and cover an daytime. area up to 20 square kilometres (7.7 square miles). The hub could eventually produce 30 to 40 megawatts of electricity each year flows in waves which would be directly linked into the na- tional grid via an old . "We hope to have the machines in the water by 2006," said Mike Patching, project man- ager for Scott Wilson Oceans, the firm man- aging 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. Wave and tidal stream machines are the latest exploratory technology in the rush to find al- ternative energy sources to replace fossil fuels China's Olympian Effort to with soaring price tags. "Britain has one of the best wind, wave and Clean Air Before 2008 tidal resources in Europe," said Martin Wright, China, already the world's fastest grow- managing director of Marine Current Turbine ing car and energy market, has earmarked (MCT), the company that built the world's first US$7 billion of its total $37 billion Olympic large-scale tidal stream machine. budget to clean up the capital. The global wave industry is still small and Brit- Beijing has set a clean air target of 227 days ain wants to develop it on a large commercial this year. By the end of September, Beijing scale and then export the technology. had registered only 175 such days, the "It's a bit of an international race to develop China Daily reported on Tuesday. the technology," said Tim German, manager of "We are now facing great pressure to real- Cornwall Sustainable Energy Partnership. ize the goal," Cheng Ying, an official at the Proponents say if they harnessed the energy city's environmental protection bureau, of the ocean, they could have enough energy was quoted as saying. "Smoke from burning to power the planet. Britain's available wave is always a headache for the environment

2 at this time of year." for the average midsize sport utility vehicle, Improving air quality is key to the city's huge according to the U.S. Environmental Protec- drive to be ready to host the 2008 summer tion Agency. Olympics. Pre-Olympic plans call for relocation of 200 pol- GE Wind Sales Soar luting Beijing factories and treatment of more General Electric Energy announced last week than 90 percent of sewage in the cities noxious it currently has $1.3 billion in wind turbine or- canals by 2008. ders waiting to be filled. The orders represent Seven of the world's ten most polluted cities are 1.5 gigawatts of new wind capacity. in China. Of that, 750 megawatts are for new wind In addition to their efforts to curb coal use, au- projects to be built in the US by the end of thorities also plan to introduce ethanol gasoline next year to take advantage of the newly and ban leaded petrol in major cities. reinstated Renewable Energy Production Tax Credit (PTC) before it expires (again) at the Electrical Prices by Source end of 2005. Green power, especially wind, is already compet- ing with traditional sources. At today's average US Tax Policy Toward Energy wholesale prices, wind costs 4.2 cents per kilo- To receive the 1.8 cent per kilowatt hour watt hour, compared with 4 cents for coal, 6.8 credit, wind developers must complete proj- cents for natural gas, 9.1 cents for oil and 10 cents ects during the calendar year when the PTC is for , according to Kyle Datta, man- in force. The credit can then be taken for the aging director at the Rocky Mountain Institute. next 20 years. At this point, the alternative energy business Hummer SUV Un-supersized in the US remains dependent upon favorable tax treatment. As the price of oil surpasses $55 per barrel, so the current H2 model now costs $70 to fill in However, last year President Bush asked California, for example. At that, the fuel doesn't Congress to raise the tax break for 6,000- last long. H2 sales are slumping. plus-pound luxury vehicles from $25,000 to $75,000. It went to $100,000. The Federal While over 1,000 Americans have died in Iraq government is phasing out the tax deduction defending freedom or petroleum (depending (worth 1/3 of an equivalent credit amount to on whom you believe), the dealers of HumVees many people) of $500 for hybrid vehicles next are busily meeting GM requirements to convert year. their dealerships to huge glass and steel Quon- set huts, evoking military architecture. The new 2004 tax law is still vastly more attractive to people who buy SUVs like the The new "slimmer" H3 is expected to approach Hummer: a potential net tax cut of $35,000 for 20 miles per gallon in highway driving and get the person who bought the SUV before Oct. about 16 miles per gallon in the city, a G.M. 11; $26,000 for the person who buys between official said. That is better than the roughly 12 now and Dec. 31; and $15,750 for the person miles per gallon that the H2 gets. But it re- who buys that SUV next year. mains about 10 percent below the standards

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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