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Breaking the Cartel

Fortnightly Magazine - September 2008

energy independent—unlike Europe, which is dependent on Russia.

Electric cars are the key. The infrastructure isn’t such a challenge, because most people in America park their cars in garages, and they can plug in at night to buy off-peak electricity from the grid. This means we’re in a better position to move to electric cars than other countries are, where most people park their cars on the street.

There’s an enormous focus right now on plug-in hybrids, which are a very good idea. But we don’t need to wait for plug-in hybrids. Most people don’t drive more than 20 miles a day, so a pure electric car will be quite sufficient for their daily needs. About two-thirds of American households have more than one car anyway, so not all cars need to have a full 300-mile range. You can have one long-haul car and the rest can be short-haul cars that are pure electric.

 

Fortnightly: What changes do you advocate in U.S. energy policy?

Luft: In transportation, the most important thing is an open-fuel standard. Every car sold in America should be flex fuel, so gasoline can compete at the pump against a variety of alternative fuels. If cars are gasoline only, that doesn’t allow competition.

We also have to bring utilities into the transportation sector to offer competition, and to make that happen we need tax credits for early adopters of electric cars. That was a big factor in building the market for the first hybrid cars.

Also utilities should look into the concept of co-generating fuel and power. Integrated coal gasification allows you to produce syngas, which can be made into methanol for use in flex-fuel vehicles. And some utilities are looking into using their CO 2 stream to produce algae, which can be used as a feedstock for producing liquid fuels. There are many opportunities for utilities to enter the transportation fuel market, and to make money competing against Big Oil.

 

Fortnightly: Climate change is probably the hottest topic in the utility industry today. What interplay do you see between utilities’ roles in climate change and energy independence?

Luft: You know, the way I see the whole climate-change debate is that you can only address climate change from a position of prosperity. Only rich nations can afford to deal with climate concerns.

Our oil dependence is now undermining our prosperity. Page one is to address energy dependence and the $70 billion we’re bleeding every year because of it. Utilities should focus on contributing to America’s national security and economic security, by providing viable competition to

the Big Oil cartel. Only then can we address climate change.

 

Endnote:

1. In May 2008, Sen. Chuck Grassley (R-Iowa) released documents he said showed the Grocery Manufacturers Association—which represents Kraft, Nestle and other processed food companies—had launched “ a national smear campaign against ethanol .” Kraft Foods published a study in June linking food price increases and ethanol mandate. Also in June, Nestle SA CEO Peter Brabeck-Letmathe authored an op-ed column in the Wall Street Journal titled “ Biofuels are