Thursday, 14 October 2010

The next clean fuel

The great race to find a clean energy source that will end the dependence on foreign oil has thrown up several candidates - hybrids, electric-only, fuel cell, even hydrogen. While each of these has its own challenges in terms of safety, cost, reliability etc, the biggest hurdle in each case is on the demand side. Consider that the car market worldwide is about a 500 million vehicles. If you wanted to embrace a new form of energy, you would need to convince car manufacturers and energy companies alike that there was a big enough market to make it worth their while to make a different type of car and provide a different type of fuel.

How big would that market need to be? Probably more than a million, which is about how many hybrids are on the roads nowadays. Let's say its 5 million, or 1% of the total car market. So now you need to bring together 5 million people who would be willing to commit upfront to a new car/fuel combination, and perhaps even put down some money to back up their commitment. Then you have to get the car companies and the energy companies to agree that they will start making these cars in large enough numbers that it provides them a good return on investment and hopefully also leads to additional demand. By now, you have anti-trust lawyers all over this idea and it would be squashed before you can even say so long OPEC!

There is another way to bridge to the future, though, using a fuel that is already available and compatible with the existing transportation infrastructure - diesel (the other clean fuel!) While it is the fuel of choice for most heavy vehicles, diesel has suffered from the belief that it is dirty and noisy and has problems starting under cold conditions, which has made it a non-starter for passenger cars in the US. That might have been the case 30 yrs ago (most fuels were dirty back then!) but today's diesel is probably as clean as you can get (< 10 ppm sulfur in most of Europe and the US, and slowly but inevitably getting there in the rest of the world). And the technology exists to get diesel fuel that flows at even -20F, so unless you are living in the high latitudes (in which case you might consider the need to even drive), you should not really have any problems with diesel

So how do you make the shift from gasoline (petrol) to diesel? To start with, you first need to make sure that the demand for diesel is really there. How do you do that? Not by asking people for their choice. No, that won't work. The only way to really ensure a demand for diesel is to CREATE it. Yes, folks, this has to be a good old fashioned sales job, something that most American companies are good at doing. Savvy marketing has been the driver for most products sold in the US, from humble toothbrushes to fancy electronics. Marketing creates a need even if there was none to begin with - and in this case, there is clearly a need for fuel. So why not put the best minds from Madison Avenue to come up with a marketing campaign for diesel cars and allow Americans to almost overnight boost their fuel economy to levels mandated for 2020?

Of course, once the demand is created, you have to ensure that the supply is also keeping pace. That's a challenge for the 150+ refineries in the country, but once the pricing indicates that diesel is here to stay, every single one of them will start to swing over to make more diesel, as they usually do in the winter. That could mean a glut in the short term and huge drops in price, which would result in even more people switching to diesel.

Car companies have to be part of this too, and not just one or two, but en masse. It would be a win-win for them as well, since they could continue to sell cars with IC engines and not have to change over to an entirely manufacturing process for the drivetrain etc. The smarter ones will make the cars smaller, like they do in Europe, and get even better mileage. The dumb ones like GM will just change what's under the hood but leave everything else the same - but at least they will get a 10% or more boost in fuel economy.

This really is the easiest solution that satisfies everyone from energy and auto companies to politicians to environmentalists (think of all the biodiesel manufacturers suddenly having a huge outlet for their products?). And that's precisely why it will be overlooked. Unfortunately, we seem to believe that the way to the future is about being complicated and trying to engineer a hydrogen powered vehicle or squashing bugs to secrete oil. That maybe the case in a hundred years, but if we want to demonstrate that society can wean itself off one energy source and move to another, how about we try it with something simple?

No comments:

Post a Comment