The Quest: Energy, Security, and the Remaking of the Modern World

by Daniel Yergin

  At the time a fierce argument was raging over the source of the smog. Was it caused by industrial pollution, or by the million and a half backyard incinerators that residents used to dispose of their trash? Or could it be something else, the rapidly swelling population of automobiles? Right there, on the spot, Haagen-Smit decided that, using his skills at microchemistry, “it would not be difficult to find out what smog really was.” He put aside his beloved pineapples and turned to creating smog in a test tube.

  Haagen-Smit was right: it was not difficult. “We hit the jackpot with the first nickel,” he later said.2

  Haagen-Smit established that the real culprit was what came out of the automobile tailpipes—emissions from incompletely burned gasoline—along with gases released from storage tanks and auto gas tanks. For this discovery, along with his subsequent focus on air pollution, Haagen-Smit became known as “the Father of Smog.” He was not thrilled with the title; if he was the father, he would ask, who was the mother?

  Haagen-Smit may have identified the cause of smog, but solving it was a confused, complex, and often contentious process that went on for many years. When Haagen-Smit first reported his findings, critics dismissed him as a “scientific Don Quixote.” Some were stunned by Haagen-Smit’s discovery that the automobile that made possible the Southern California way of life was also the scourge of that lifestyle. One citizen wrote to the Los Angeles Times in shock: “We have created one of the finest networks of freeways in the country, and suddenly wake up to discover that we have also created a monster.”3

  Haagen-Smit’s discovery in 1948 would eventually lead to what some believe could be the most important development in transportation since Henry Ford’s Model T—the massive effort in the twenty-first century to bring back something that had disappeared from the roads at the beginning of the twentieth century: An automobile with no tailpipe at all. The electric car.

  THE RACE RESUMES

  Oil had held its seemingly impregnable position as king of the realm of transportation for almost a century. By the beginning of the twenty-first century, however, people were beginning to question how long oil would—or should—hold on to its crown. Yet as late as 2007 in the debate over the future of automotive transportation, the electric car was only a peripheral topic. Biofuels were the focus.

  Within a few years, however, the electric car would move onto center stage. It could, said its proponents, break the grip of oil on transportation, allowing motorists to unplug from turbulence in the oil-exporting world and high prices at the pump. It could help reduce pollution and offset the carbon emissions that precipitate climate change. And it could provide a powerful answer to the great puzzle of how the world can accommodate the move from one billion cars to two billion. The electric car is powered by electricity that can be generated from any number of different sources, none of which need be oil. Perhaps more than any other technology, the electric car represents a stark alternative road to the future for the global energy system.

  The electric vision rapidly became so compelling that expectations for electric cars far exceed the actual impact such cars might have on the world’s auto fleet in terms of numbers, at least in the next decade or two. Yet their presence in the fleet, even if small, will change attitudes about both oil and autos far ahead of the numerical impact. In decades further out, the effect could be much larger. There are, however, two big questions: Can they deliver the performance that is promised at a cost that is acceptable? And will consumers choose to make them a mainstream purchase as opposed to a niche product?

  In the meantime, very big bets are now being placed on the renewed race—between the battery and the internal combustion engine, between electricity and oil—that was supposedly decided a century ago. The outcome will have enormous significance in terms of both economics and geopolitics.

  The conviction is also growing that electric vehicles could constitute a great “new industry,” the epitome of cleantech, and the means to leapfrog to leadership in the global auto industry. This is a big opportunity for companies, entrepreneurs, and investors. But it is seen as much more than an opportunity in the marketplace. A French government minister has declared that “the battle of the electric car” has begun. “Electric vehicles are the future and the driver of the Industrial Revolution,” said one of Europe’s economic leaders. By 2010 the Obama administration had provided $5 billion in grants and loan guarantees to battery makers, entrepreneurs, major auto companies, and equipment suppliers to jump-start the electric car and build out the infrastructure systems that would support it. “Here in the United States,” Obama announced, “we’ve created an entire new industry.”4

  This, indeed, is a game of nations. For countries like China and Korea, it is the opportunity to take a dominant position in a critical growth sector. Conversely, success in electric transportation may be required if the traditional leading countries in automobiles—the United States, Japan, and Germany—are to maintain their positions. If batteries are to be the “new oil,” then the winners in battery know-how and production can capture a decisive new role in the world economy—and the rewards that will go with that.

  “THE VALLEY OF SMOKES”

  Long before the first Spanish settlers came to Southern California, the local Indians had called the region the Valley of Smokes, owing to the haze that hung over it, the result of natural emissions combined with smoke from fires. The geography of Southern California is shaped like a bowl, hemmed in with an ocean on one side and mountains surrounding the rest of it. This creates a particular climatic condition called a temperature inversion, in which cooler air off the ocean gets trapped below warmer air and stagnates, breeding pollution. The pollutants rise up into the warmer air, where sunlight acts upon them in a photochemical process, transforming them into the smog that then settles over the basin.

  The first modern smog attacks had hit Los Angeles during World War II, as industrial production ramped up to meet the needs of mobilization. In response, in 1945 Los Angeles established a Bureau of Smoke Control. But as smog attacks continued after World War II and their severity and range increased, it was evident that the smoke was not being controlled. In fact, it got worse.

  CITY UNDER SIEGE

  In the first days of October 1954, the attack began, with no warning. It went on relentlessly for the next several weeks. The conditions for the assault were perfect: the days were hot, and the air just hung there, stagnant, not a breath of wind at all; a dense blue-gray haze that settled over and suffocated the Los Angeles Basin. It stung the lungs, making every breath a source of pain. It burned the throat; it irritated the eyes, causing them to itch and hurt and water and sometimes swell up; it caused lasting respiratory ailments.

  Visibility was reduced to such an extent that drivers on the new freeways had to flick on their headlights in midafternoon, traffic slowed to a crawl, and accidents became endemic. Los Angeles International Airport was closed and planes diverted. At schools, outdoor physical education and recess were canceled, and students were kept inside.

  The city was under siege. Panic and paralysis gripped the area. Police phone lines were swamped by callers, but there was nothing the police could do. “Angered Citizens Voice War on Smog Demand” was the front-page headline in the Los Angeles Times. The mayor of Los Angeles, hauled in front of a grand jury, said there was nothing he could do save issue a proclamation “to halt automobile traffic and to direct people to stay home.” Housewives, marching in Pasadena to protest smog, donned gas masks. So did businessmen gathering for their regular Optimists Club meeting, although the gas masks did make it hard to eat lunch. Behind them, a big placard grimly declared “Why Wait Till 1955—We Might Not Even Be Alive.” Something had to be done.

  But then, at the end of October, the smog disappeared as quickly as it had arrived. “City Revels in Nearly Perfect Smog-Free Day,” reported the Times. A few days later, it declared outright victory: “clear, bright skies” were back. The attack was over—but only until t
he next smog attack.5

  THE AIR RESOURCES BOARD

  The smog attack of 1954—“the worst attack ever”—was the turning point. If smog was going to be banished, government regulation would have to launch a protracted counterattack on automobile emissions. The war against smog was a long one. Over the next decades, Los Angeles was still registering more than a hundred days a year of smog alerts. One smog attack was so severe that Governor Ronald Reagan went on television to urge the public to “limit all but absolutely necessary auto travel.” The smog problem was made even more difficult by the continued flow of new residents; between 1950 and 1980, California’s population literally doubled, and the area was said to have “the greatest concentration of motor vehicles in the world.”6

  In 1967, Governor Reagan signed legislation setting up a new agency, the California Air Resources Board. CARB, as the agency became known, was the true successor to the Bureau of Smoke Control. Reagan appointed as its first chairman none other than the “Father of Smog,” Professor Arie Haagen-Smit. No longer seen as a “scientific Don Quixote,” Haagen-Smit had achieved what was described as a “worldwide reputation as the prime authority on air pollution.” Now, as chairman of CARB, he could do something about the pollution. He would become, as one auto executive put it, “judge and jury” for the auto industry, a role that the agency has played ever since.7

  That same year, California’s severe pollution problems, along with its rapidly growing political heft, persuaded the U.S. Congress to grant California unusual authority. The state was given the right to regulate emissions so long as its standards were higher than the federal government’s.

  The powers of CARB also expanded beyond the state. For Congress granted other states the unusual option of choosing whether to adhere to either federal emission standards or those set by CARB for the state of California. This made Sacramento, along with Washington, a national regulator of air quality.

  Eventually its position would also turn the California Air Resource Board into the de facto national authority. This role stems from the fact that, by itself, California represents about 12 percent of the nation’s car market. Other parts of the country, particularly the Northeast and Florida, take their cues from CARB. The overall result is that CARB’s ability to regulate auto emissions covers a third of the nation’s auto sales. And if a third of the fleet is under orders, the other two thirds will follow, as it is very hard for automakers to make two different sets of the same model. Thus, if CARB issues an order with major impact on automobile design, it is likely to be a quasi-national regulation. And, given the scale of the U.S. market, the impact would be felt on the rest of the world. As the head of the agency said, with some modesty in 2011, “CARB punches above its weight.”

  CARB, along with another agency, the South Coast Air Quality District, sought to reduce emissions with what were called technology-forcing regulation, compelling industry to come up with solutions by certain deadlines. Over time the technological solutions were found. The most important was the catalytic converter, which assured a thorough burn of the gasoline and thus much reduced smog-inducing emissions. By the 1990s the number of annual smog-alert days had dwindled to fewer than ten. And by the end of the 1990s, the smog-causing emissions coming out of the tailpipe of a new car were only 1 percent of what they had been in the 1970s; 99 percent had been eliminated.8

  Technology-forcing regulation had worked on smog. CARB also wanted to exercise its mandate in an effort to eliminate all tailpipe emissions. It did so by ordering the introduction of the ZEV, or zero-emissions vehicle. The aim was nothing less than to find a replacement for the internal combustion engine or set in motion a transition to alternative fuels. In 1990 CARB issued its most ambitious technology-forcing regulation to date. It was the regulation that would reopen the door to the electric car. It ordered that by 1998 2 percent of all new cars sold in California had to be ZEVs, zero-emission vehicles, and 10 percent by 2003. That meant no emissions at all out of the tailpipe, which was another way of saying no tailpipe and no internal combustion engine.

  Major car companies set out to deliver exactly that. Considerable investment went into the effort. Yet it was all but an abject failure. “Who Killed the Electric Car?” is the question a documentary film asks about General Motors’ EV1—Electric Vehicle 1—which was designed to meet CARB’s stringent regulations and on which GM spent a billion dollars. While the film places primary guilt on the auto industry, the answer is something else. As a CARB member put it, “The one real culprit” was “the battery.” Batteries sufficient to provide the range and driving time that people wanted simply did not exist at the time.

  Another killer was lack of public acceptance. Several of the car makers leased their EV models to drivers. In addition to leasing, Toyota actually tried to sell an all-electric version of the RAV4, its small SUV. This was in the same period in which it was introducing the Prius. The uptake on the Prius by consumers was many, many times greater than that for the RAV4.

  “We kept hearing about pent-up demand for electric vehicles,” recalled one Toyota executive. “Well, it turned out that the initial pent-up demand was about 50 vehicles.”9

  Thereafter, despite “gobs and gobs of advertising” and considerable government subsidies, the RAV4 sold at the less than brisk rate of about five vehicles a week. That worked out to a little over 250 vehicles a year, whereas a model needs at least 100,000 sales a year to be anything more than a “niche.” Sufficient numbers of people simply were not interested in buying electric cars, and CARB eventually had to back away, however reluctantly, from this particular order. But only for a time.

  THE RETURN OF THE EV

  With the opening of the new century, several factors started to converge to give new life to the electric vehicle.

  Environmental pollution from auto exhausts has created anguish and been a major topic of public policy in the United States. In the decades since, other urban areas, from Mexico City to Beijing, have come to suffer under similar affliction and have also sought to find relief from air pollution. Moreover, now there was something new: concern about climate change. Although transportation on a global basis is responsible for about 17 percent of CO2 emissions, the absolute volume of emissions is large and could get much larger. Rising oil prices also renewed interest. The electric car held out the prospect of insulating consumers from high prices, and blunting the impact of oil price shocks.

  One other development built support. The introduction of hybrids had a major impact on the psychology of motorists. Hybrids served as a kind of mental bridge to electric cars by creating public acceptance of battery-driven vehicles and what they could mean: a much larger role for electricity in transportation.

  This convergence propelled the electric car out of the automotive museum and back onto the street. Today, in contrast to a century ago, there are two primary types of electrically powered vehicles. One is a direct lineal descendant of the sort that Thomas Edison sought to get out on the road, a pure batteryoperated electric vehicle: the EV. It operates only on electricity and is charged from an electric socket. But now there is a variant, the plug-in hybrid electric vehicle, the PHEV. It is an immediate descendant of the hybrid but is much more of an electric vehicle than the Prius-type hybrid. It is “plugged in” to its primary fuel source: electricity. However, after the plug-in hybrid runs for some distance on electricity and the battery runs down, a combustion engine takes over, either recharging the battery or directly providing power to propel the car, or both.

  Research and experimentation with plug-in hybrids had been going on for decades, but hardly anyone paid notice. That changed in 2007 when GM unveiled its PHEV Chevy Volt as a sporty concept car at the Detroit Auto Show. Its public debut got so much attention and created such a clamor that GM decided to actually push the Volt into production. Within 12 months the model would come to symbolize the shift in focus from biofuels to EVs.

  By the time of the 2008 presidential campaign, “Detroit’s p
lug-in electric car, the Chevrolet Volt,” said one political observer, had become “a must-have prop for U.S. presidential candidates.” Despite GM’s crushing economic problems, candidates Barack Obama and John McCain could not get close enough to the vehicle. McCain proudly announced that “the eyes of the world are now on the Volt.” For his part, Barack Obama promised during the campaign to have a million such plug-in hybrids and electric cars on the road by 2015.10

  THE ROAD MAP

  Since then, policy support both for plug-ins and pure electric vehicles has grown significantly around the world, as has a great wave of energy-associated innovation, a good deal of it supported by government policies and mandates. This wave has been powered as well by scientific and technological curiosity and by the economic prospects.

  In the United States, policy entrepreneurs, supported by NGOs, have had a strong impact in making the case. The Electrification Coalition, established in 2009, laid out a “road map” for the electric car that was adopted by both Democrats and Republicans alike.

  The coalition’s chairman, Frederick Smith, founder and CEO of FedEx, made clear that FedEx itself was very interested in moving toward electric vehicles to deliver its parcels. But Smith saw much more than that. “We cannot let electric vehicles turn into another niche product,” he said. “We cannot allow their use to be limited to environmentalists and technological enthusiasts. To make our nation’s investment worthwhile—and, more importantly, to truly combat our oil dependence—we must put ourselves on the pathway toward millions, then tens of millions, and then hundreds of millions of electric cars and trucks.”

  As Fred Smith saw it, meeting the needs exclusively with oil in a world in which the number of automobiles was going to double would be challenging and risky. That made diversifying fuel sources critical, and electricity, with improving batteries, looked like the most practical way. The need for charging was not such a great obstacle. “You have to plug in the car, but I plug in my BlackBerry every night because of the value I get from the BlackBerry.”11