MTBE A Cautionary Tale
Methyl tertiary-butyl ether MTBE marks the story of a small, incremental fuel change that cascaded into public scandal with billions of dollars in lawsuits and some important lessons for alternative fuels. MTBE is made from natural gas. When added to gasoline it increases the oxygen content and makes the fuel burn more cleanly. MTBE was initially a darling of both the oil industry and air quality regulators. It was attractive to the oil industry because it boosted octane and used an otherwise...
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...
Efforts by the National Government
As in the United States, leadership is unlikely to come from the national government. The Chinese government has done its best to elevate the car, and its efforts have been quite effective. It's building a network of national roads, seeking new oil supplies, and supporting automotive R amp D at universities. While it's concerned about the cost of imported oil, it's less sensitive to local pollution and road costs. It also has less authority at the local level where the burden of dealing with...
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...
The Role of Venture Capitalists and the Emerging Clean Tech Industry
California has large advanced-technology clusters in the San Francisco and Los Angeles areas plus smaller clusters in the Sacramento and San Diego areas. A 2004 study identified more than a hundred advanced clean vehicle technology firms either headquartered or with major operations in the state.32 Hundreds of other smaller start-up companies also abound. Power electronics, advanced propulsion systems, alternative fuels, energy storage, and lightweight materials are all at the ready. The 2004...
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...
A 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
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
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...