strategy+business is published by PwC Strategy& LLC.
or, sign in with:
strategy and business
 / Summer 2006 / Issue 43(originally published by Booz & Company)


Engines of Change

Mr. Jaccard has strong reservations about the value of energy-saving schemes, such as trying to persuade consumers to buy expensive low-energy lightbulbs. He says we can get much further by making proper use of the mix of energy resources available to us, notably the carbon-based fossil fuels. Some substitutions are highly desirable in themselves — for example, in poor countries, the use of bottled gas, instead of wood, for cooking and heating helps reduce the huge health hazard of indoor atmospheric pollution. Other substitutions will be forced upon us as conventional oil and gas run out. Some energy sources, notably nuclear fission, carry perceived or real elements of catastrophic risk that make them difficult to accept. Others are inhibited by physical factors, for example, the difficulty of compressing hydrogen enough to carry a sufficient supply on board automobiles. Over time, if we properly manage the transition from oil and gas to coal and biomass, he says, it can be smooth rather than abrupt and disruptive, with energy costs increasing for most people by a bearable 25 to 35 percent.

It all adds up to a masterly exposition of a highly complicated and contentious subject. The book includes a useful section about the different policy instruments available to government lawmakers and their relative efficacy in securing changes in consumption patterns. But Mr. Jaccard makes one crucial and unproven assumption: that sequestering carbon dioxide — removing it from the smokestacks of coal-processing plants and burying it in the ground — will be economically affordable, physically possible, and benign. Even if that works out, we will only postpone the lamentable day when the coal starts to run out, and we will have to fall back increasingly on nuclear fission, with all its attendant challenges. (Perhaps by then the ultimate white knight of fusion, solar energy made copious and practical, will come to the rescue.)

Energy’s Endgame
These issues find their most acute and popularly visible focus in automotive mobility. Motor vehicles and aviation are the largest and fastest-growing consumers of oil-based fuels. The automobile was the iconic product of the 20th century, driving economic development — and dependent in turn on its cheap and convenient hydrocarbon fuel. This is well put in context in Children of the Sun, a charming and readable book by Alfred W. Crosby, a retired professor of history, geography, and American studies. Perhaps it takes a historian to maintain a sufficiently long and broad view of our social, economic, and cultural dependence on energy. He takes us from the first cooking fires of the Paleolithic age to the perils of nuclear power in the 20th and 21st centuries. The paradigm breakers in this story are the invention of cooking; the sailing ship and firearms, which gave Europeans domination over the world (the Chinese could have had it but sent their fleets back to harbor); coal-based iron smelting (another Chinese miss); Thomas Newcomen’s primitive steam engine of 1712 and James Watt’s reengineering of it, financed by Matthew Boulton’s venture capitalism; Colonel Drake’s oil well, feeding the internal combustion engines of Karl Benz and Rudolf Diesel; and the harnessing of electricity. Professor Crosby’s last paragraph before the coda is sobering: “We children of the sun may be standing on the peak of our energy achievements poised for the next quantum leap upwards...or we may be teetering there, destined to participate in nature’s standard operational procedure of pairing a population explosion with a population crash.”

How then can we maintain mobility in developed countries, extend its benefits to emerging economies, and do so at an acceptable environmental cost? A report called Mobility 2030 attempts to address this dilemma. It is a highly informative primer on the social, economic, and environmental impact of automobiles, produced by the World Business Council for Sustainable Development at the behest of leading firms in the automotive, oil, and tire industries.

Follow Us 
Facebook Twitter LinkedIn Google Plus YouTube RSS strategy+business Digital and Mobile products App Store


Resources for Understanding
Energy and Automobiles
Works mentioned in this review.

  1. Alfred W. Crosby, Children of the Sun: A History of Humanity’s Unappeasable Appetite for Energy (W.W. Norton, 2006)
  2. Kenneth S. Deffeyes, Beyond Oil: The View from Hubbert’s Peak (Hill & Wang, 2005)
  3. Kenneth S. Deffeyes, Hubbert’s Peak: The Impending World Oil Shortage (Princeton University Press, 2001)
  4. European Commission, Cars 21: Competitive Automotive Regulatory System for the 21st Century. Final Report (E.U. Directorate General for Enterprise and Industry, 2005)
  5. Kelly Sims Gallagher, China Shifts Gears: Automakers, Oil, Pollution, and Development (forthcoming from MIT Press, July 2006)
  6. Peter W. Huber and Mark P. Mills, The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy (Basic Books, 2005)
  7. Mark Jaccard, Sustainable Fossil Fuels: The Unusual Suspect in the Quest for Clean and Enduring Energy (Cambridge University Press, 2005)
  8. Amory B. Lovins, E. Kyle Datta, Odd-Even Bustnes, and Jonathan G. Koomey, Winning the Oil Endgame: Innovation for Profits, Jobs, and Security (Rocky Mountain Institute, 2005), Click here.
  9. Matthew R. Simmons, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (Wiley, 2005)
  10. World Business Council for Sustainable Development, Mobility 2030: Meeting the Challenges to Sustainability — The Sustainable Mobility Project, Full Report 2004. Click here.
  11. World Health Organization, World Report on Road Traffic Injury Prevention, Geneva, 2004. Click here.
Sign up to receive s+b newsletters and get a FREE Strategy eBook

You will initially receive up to two newsletters/week. You can unsubscribe from any newsletter by using the link found in each newsletter.