Saturday, October 18, 2008

Should we be green or greedy?

Today’s episode is brought to you courtesy of one of the prime motivators of behavior. With all the news of the housing, banking, and economic crisis there has to be a connection between greed and green. The oracle of Omaha, Warren Buffet, has a saying “be fearful when all are greedy and be greedy when all are fearful”. Warren Hard-Thing Buffet has stepped in to buy a part of GE and also holds several other recent investments in hurting companies.

The connection between greed and green is just a substitution of one letter - the d for the n. Does it make sense to say “be fearful when all are green and be green when all are fearful”? Yes it does! When all the politicians claim to have alternative energy policies one should be fearful. We have the recent cases of hydrogen and ethanol to point to where there was this mass stampede by those who set policy to waste time, money, and precious food on thermodynamic dead ends. Should we be green when all are fearful? Yes there is a real opportunity to save ourselves and our planet by being green!

One silver lining from this economic mess is that Smart Cars are in and SUVs are out. The US consumed 4.4% less liquid hydrocarbons in the first eight months of this year versus last year. There is no doubt the trend will continue. We did however consume 3.5% more natural gas and 0.7% coal in the first eight months compared with last year. As liquid hydrocarbons account for about the same total energy use in our economy as natural gas and coal combined, we did manage to lower our total energy use so far this year. Also as natural gas is less carbon intensive than either liquid hydrocarbons and coal, our collective carbon footprint is also lower in 2008.

The real solution to our economic crisis lies in ending the decline in housing prices and putting people to work in new jobs. A good fraction of new jobs could well be in manufacturing more efficient vehicles, manufacturing and installing wind turbines or solar electric power generation systems. Several years back I gave a talk at a meeting in DC that pointed to the need in the USA for a new car company. My hypothesis was that we should “standardize” around an engine and drive train platform from a company like Toyota and mass customize the body, interior and paintjob of the car to suit motorist’s individual needs. VW bugs and Model T Fords were kind of like this business model but my idea is to go even further, where one engine/drivetrain company provides all the “inside” equipment for a vehicle and others assemble and customize vehicles for the consumers. This was the “Intel Inside” model for PCs when there was an opportunity to drive costs down and increase performance. If only I could get the ear of old Warren, I could then convince that I could produce the Berkshire Hat-Away roaster, a car that goes as fast as a Carrera yet costs as little as a Corolla. No doubt a few of us on the Tiburon Peninsular would don our British racing green driving caps, speed down the boulevard in the Berkshire with rag top down and salute the electromotive forces of fear and greed.

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