Harvard Kennedy School of Government
Carl Pope, Principal at Inside Straight Strategies and Former Executive Director for the Sierra Club (’92-’10); Carol Lee Rawn, Director, Transportation Program, Ceres; and Robbie Diamond, Founder, President and CEO of Securing America’s Future Energy (SAFE)
Diamond: electric vehicles are a "holy grail" of energy solutions. After 40 years from first oil crisis, US oil production is growing at historic rates while demand for liquid fuels (oil) is declining or flattening. We now import about 40% of our oil and do not export crude, by law, but lightly refined products. We spend the same percentage of our economy on oil as we did 40 years ago. Bush tax cuts and Obama payroll tax holiday both equaled the higher oil prices in those periods. Extra cost of OPEC is on the order of $7 billion per year now. Every recession since 1973 has been preceded or coincident with oil price increases. 92-93% of our transportation sector is oil. By 2030, the projection is 91% oil for transport.
Carl Pope: oil is future largest climate threat; climate security requires cheaper oil; competition is key; monopoly and volatility keep competition down
Greenpeace's carbon bombs, known resources that should not be tapped, are mostly oil, We use 90 million barrels per day, if demand were 75 million barrels, the price would fall and exotic oil (shale oil and others) would become too expensive to produce. To get on the right carbon path, world demand should be 45 million barrels per day with a price of $45 oil - the sources of which are Saudi, Middle East, and China.
In cars, hybrids, electric and CNG vehicles are all currently cheaper to operate than internal combustion gasoline cars. One reason is lack of distribution channels, locked out by oil companies. Another is the price volatility of oil which drives biogas and others out of the market - they can't weather long periods of loss. Cities could mandate alternative fuel distributions, index oil taxes to oil prices to even out price spikes, something like a renewable portfolio standard for transportation fuels, and build global oil substitution partnerships. CA, OR, WA as well as the Northeast have talked about a liquid fuel portfolio standard (ring fenced market)
Carol Lee Rawn - US ghg emissions are one third from transportation. Low carbon fuel standard (lcfs) are being developed with CA leading the way using a life cycle analysis. These measures could result in over $4 billion in savings
Q: OPEC as a shadow tax?
Pope: yes, but no availability of alternatives. Saudis have charged about $280 per ton carbon "tax" on oil. Qatar has levied about $180 per ton on natural gas to Japan. BP chief economist wrote recently that oil survives only where it has a monopoly
Diamond: Saudis and others are not selling their cheapest to produce oil and holding vast reserves. Electricity has a diversified fuel base and the only other national distribution channel for transportation. Brazil's flex fuel vehicles saw the prices of the different fuels equalizing.
Pope: no distribution for e85 even though there are 9 million US flex fuel vehicles [out of 254 vehicles on the road]
Diamond: most subsidies are general corporate subsidies. Better idea is to use revenues to gov from oil industry to fund alternatives
Pope: OPEC is big subsidy
Q: lessons from Sierra Club beyond coal project?
Reduce political power by reducing market share.
Q: stranded costs, the 80% of the known reserves that should not be burned?
Pope: industry is schizophrenic. Shell is no longer going to pursue reserves after two disappointing quarters but reneges after third disappointing quarter. "I expect the majors to recognize the reality but it is lucrative for them to slow the future down." In a 45 million barrel world the majors know they'll lose.
Pope: France is one place where you would expect electric vehicles to take off but it hasn't. French pay the Poles to take night time electricity but the national utility is not interested in small customers like electric vehicles even though gasoline is $8 per gallon
Projection is that global oil transportation demand grows at 1 million barrels per year.