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

by Daniel Yergin

  “THERMAL RUNAWAY”?

  EVs are already in production and in the marketplace. But as a product for a mass market, it remains a great experiment with big hurdles still to be surmounted.

  Batteries still need to be smaller, weigh less, charge more quickly, and be able to last much longer on a single charge. They also need to prove that they can be long lived, despite the continuing charging and discharging. It will have to be demonstrated that problems like “thermal runaway”—destructive overheating—do not occur. In addition to propelling the vehicle, batteries also need sufficient capacity to power all the other accoutrements that drivers expect, from power steering and air-conditioning to the traveling entertainment center. And the cost needs to come down substantially—unless governments are willing and capable of providing continuing subsidies on a very large scale.20

  Batteries are now a focus of intense and well-funded research around the world, aimed at addressing these questions. The entire effort is also very competitive—indeed, a global “battery race.” At the same time, there is a global debate as to where the “learning curve” battery technology is and how fast it can come down.

  Infrastructure is the second challenge. Today’s automobile system could not operate without the dense network of gasoline stations built up over so many decades. A large fleet of electric cars will need a similar network of charging stations. One car in a neighborhood can be easily accommodated with an extension cord. But what happens to the transformers in the power system when everybody on the block, and on the next block, and on the next three blocks decides to recharge at the same time?21

  Moreover, it is necessary to get beyond the “hand raisers”—those who put their names in the order book prior to the release of a model—and the early adopters. In the 1990s General Motors “subsidized the hell out of the EV1,” said former GM CEO Rick Wagner. “But if customers don’t want to buy, it’s hard to do.” The EV has to attract a large population of drivers. To that end, chargingstations need to be built and powered around urban areas and into the countryside to ensure convenience and reliability—and to ensure that people don’t get stranded.22

  Government can implement only so many regulations, incentives, and subsidies. Buyers have to find the price, functionality, performance, and reliability that they want. That will take time to demonstrate. Specifically, what is called range anxiety—the fear of being stranded with a rundown battery—will be a major factor in what consumers actually do.

  Perhaps the answer to consumer needs will be to parse those needs—different cars for different purposes. People may use a small urban electric runabout for local needs and commuting—a sort of modern version of the Detroit Electrics and Baker Runabouts of the early twentieth century—and drive a bigger oil-fueled or hybrid car for longer trips or weekend getaways. At the same time, as when any kind of new product is introduced, there is always the risk of the unexpected in terms of operations or performance that could negatively affect public acceptance of EVs as a category.

  THE GAP

  Cars per 1,000 population in 2010

  Source: IHS Global Insight

  Finally, there is the matter of power supply. It is generally assumed that sufficient unused electric power–generating capacity, especially at night, is available to accommodate a large fleet of electric cars. That may well be the case, but major growth in electric cars would be a very major new draw on the electricpower industry. What happens if people don’t charge their EVs at night? What happens if instead large numbers of people decide to recharge during peak demand? How will the system cope?

  Then there are the emerging issues. In addition to motion and emissions, the internal combustion engine also produces noise. Early on, silence was a big selling point for electric cars (and hybrids). Yet sound is part of the sensory and situational awareness for safety both for drivers and for pedestrians and bicyclists. Visually impaired groups have raised concerns about the dangers of silent vehicles. In Japan automakers have started making synthesized engine sound available in response to guidelines from the government-sponsored CCCRQHOV, or Committee for the Consideration of Countermeasures Regarding Quiet Hybrid and Other Vehicles. That safety need will have to be met in the United States and Europe as well.

  And what kind of sound should it be? Carlos Ghosn has been among those at Nissan vetting sounds. “It should be something that sounds like an electric car,” he said, “pleasant, not too much, but enough.”23

  ASIA FIRST?

  Given all of the various hurdles, where might be the first major market for EVs?

  Some Asian megacities present a combination of circumstances that appear conducive for the spread of EVs. Their physical infrastructure is still being built out, and thus is more ripe for “greenfield” development of chargingstations and other equipment than older urban areas in the United States and Europe. At the same time, air pollution in these cities can be stifling, and coughing, disgruntled citizens have been pressing governments to improve air quality.

  Asian countries may also be helped along by the fact that a much greater percentage of their residents are, or will be, first-time (or second-time) car buyers. This means they have fewer preconceived notions of what a car “should be” in terms of size and performance, as compared with their counterparts in more advanced countries. Moreover, many residents of developing Asian megacities, especially those in China, already have the experience of being transported in EVs, at least the two-wheel variety, in the form of electric bicycles.

  “People want to have a car in the family,” said one senior Chinese official. “The government cannot prevent that trend. But very important is what kind of car.” And new policies make clear that Beijing wants a growing proportion of those cars to be electric.24

  The Chinese government has categorized “New Energy Vehicles” as one of its seven strategic sectors for economic development. It is bolstering this commitment with significant subsidies that will make purchasing EVs more feasible and more attractive. Additionally, national and local governments are instituting EV procurement programs for their own fleets, ensuring a market for the vehicles.

  Though the role of the state is more pronounced in China than in the United States, the most prominent Chinese electric car company, at least internationally, is a private one called BYD. It began in 1995 as a greenfield battery company, started by a then twenty-nine-year-old chemistry graduate named Chuanfu Wang. The company began by manufacturing nickel-cadmium batteries and then transitioned to manufacturing lithium-based batteries to compete with batteries made by Sanyo and Sony. By 2002, within just seven years of its founding, BYD had become one of the world’s top four manufacturers of rechargeable batteries for cell phones. Wang was celebrated in China as the “Battery King.” BYD had achieved this preeminence by ruthless technical intensity, beating the Japanese on costs, and, as Wang put it, by “much trial and error.” In addition, as Wang said, “In China, people of my generation put work first and life second.”25

  In 2003 BYD bought a derelict state-owned auto company. By 2008 it had the best-selling sedan in China. That same year, Warren Buffett bought 10 percent of the company for $230 million; the company started selling what it said was the first mass-produced plug-in hybrid—though sales were minuscule. Two years later it introduced all-electric cars with the aim of conquering not only the Chinese market but also the global market, just as it did with its batteries. In 2011 it dispatched its F3DM plug-in hybrid to the United States to begin undergoing the regulatory process for the American market and to go on display in Omaha, Nebraska, at the annual meeting of Warren Buffett’s company, Berkshire Hathaway.26

  THE HYDROGEN HIGHWAY

  But the electric car is not the only zero-emissions option. From a theoretical standpoint, a fuel cell is a very attractive device. It is similar to a battery in that it extracts energy from chemicals in the form of electricity. It also has no moving parts. However, unlike a rechargeable battery, which has to be recharged with electr
icity that is produced somewhere else, or a single-use chemical battery, a fuel cell typically uses onboard gaseous hydrogen to generate its own electricity. It is a bit like a battery with a gas tank. Fuel cells combine hydrogen and oxygen electrochemically. As a result, the only things that hydrogen fuel cells emit are electricity and water, and, crucially, they have the potential to provide power density that can compete with liquid fuels.

  Hydrogen and the fuel cell first got serious automotive attention after California’s original 1990 zero-emissions edict. Among automotive companies, Honda, Toyota, and GM have continued to be boosters of fuel-cell technology. In its early years, the George W. Bush administration promoted research for the fuel-cell auto, what it called the “freedom car.”

  Fuel cells continue to face major challenges. The fuel cells themselves—the device that converts hydrogen or another chemical feedstock into electricity—are expensive and will require substantial investment and breakthroughs for commercialization. One industry estimate is that their price would have to be reduced by a factor of twenty for them to become somewhat economical.27

  If the cells themselves are expensive, so is the hydrogen that is now mainly used in oil refineries and petrochemical plants to make high-quality products. Hydrogen does not exist independently in nature. It has to be manufactured from something else, which today, primarily, is natural gas, although it could also be manufactured using nuclear power. Storing and transporting hydrogen for automotive applications is also technically complex and certainly costly. As electric cars require considerable investment for the stations and infrastructure that will charge batteries, so hydrogen vehicles will require a good deal of investment in infrastructure—in this case, in hydrogen-fueling stations.

  When he was governor of California, Arnold Schwarzenegger launched with much fanfare a network of hydrogen-fueling stations that he dubbed “California’s Hydrogen Highway to the Environmental Future.” But that particular highway did not get all that far. By 2010 there were fewer than two dozen stations in the entire state selling hydrogen fuel.28

  Another possibility is a fuel cell powered by natural gas rather than hydrogen—so-called solid oxide fuel cells. Some think, however, that natural gas fuel cells are better suited for stationary uses, such as off-grid power generation, rather than as power sources for automobiles.

  WHAT ABOUT NATURAL GAS?

  A potential rival to the EV would be the NGV—otherwise known as the natural gas vehicle. This is a vehicle powered by an internal combustion engine but that uses natural gas, instead of gasoline or diesel, as fuel.

  Despite the fact that natural gas often costs significantly less than gasoline on an energy basis, natural gas vehicles make up only 1 percent of the total light vehicles in the world. They are primarily taxicabs and other vehicles in Asia and Latin America. There was a spurt of NGV sales in Italy, owing to significant tax subsidy. In the United States, NGVs amount to less than one tenth of 1 percent of the total vehicles on the road.29

  Any significant expansion of NGVs would face major challenges beyond the cost of converting an existing gasoline vehicle to run on natural gas or of manufacturing a natural gas vehicle. Billions of dollars would also have to be spent to create a natural gas fueling infrastructure, just as is the case with the recharging infrastructure for electric cars. Because of the lower energy density of natural gas, vehicles fueled by it would have less range or fewer miles per tank. Natural gas cars would also need to give up trunk space to accommodate a natural gas tank. Moreover, NGVs would be competing against increasingly more fuel-efficient, conventional internal combustion engine cars, reducing the economic advantage, as well as going against strong policy support for biofuels and electric cars. Finally, natural gas vehicles may not be the most efficient way to use natural gas in the transportation sector. Generating electricity with natural gas and then using it to fuel a vehicle could prove more cost-effective than burning the natural gas directly in the vehicle.

  One possible market for NGVs are centralized fleets of taxis, trucks, and buses that go relatively short distances and can be easily and cheaply refueled at a central depot. Another market is heavy-duty long-distance trucks that would operate on low-temperature liquefied natural gas. But the challenges include the need for LNG refueling terminals, the higher costs of LNG trucks, and the much lower energy density of LNG compared with diesel, which would be problematic when it comes to hauling heavy loads. It would also limit the secondhand market for the trucks, which is an important element in the economics of their owners.

  THE CARS OF THE FUTURE

  Electric cars, hybrids, biofuels, natural gas vehicles, more efficient internal combustion engines, fuel cells at some later date—the race to reshape transportation and for “the car of the future” is once again on. Or, perhaps, it will be plural—“the cars of the future.” In the last race, a century ago, the internal combustion engine won hands down—on the basis of cost, convenience, performance, and range. But this time there may not be a single winner but rather different vehicles for different purposes.

  One way or the other, oil’s almost total domination over transportation will either be whittled away or more drastically reduced. Cars will certainly get more efficient. It seems pretty certain that electricity will play a bigger role in transportation, either in hybrids or all-electric vehicles. Considerable effort continues to go into second-generation biofuels. Regardless of what powers cars, they are likely to get smaller in coming years, in part as baby boomers in the United States, Europe, and Japan retire. Moreover, surprises in the quest for a clean, secure form of transportation may well happen.

  In shaping the future, developing countries will be critical participants in a way they have not been in the past. Emerging markets will fuel growth in the global auto market, and thus the direction of technology as well as environmental standards. China’s surpassing the United States as the world’s largest car market in 2009 was a landmark. As a result of this shift, the policies of governments in developing countries will have increasingly greater impact on the global auto market. Indeed, a day may well come when China, because of the dynamism of its market, becomes the defining force for the world auto industry, or when a Chinese environmental regulatory agency becomes the new CARB for the world.

  The key criteria for victory, or at least a place in the winner’s circle, will be the delivery of increasingly efficient cars that also meet the tests of environment, energy security, cost, and performance. The contest will require major advances in technology and multibillion-dollar investments, and it certainly will be shaped in part by the preferences of governments. In such uncertain circumstances, companies are hedging their futures by placing multiple bets to the degree that they can. “We’re investing billions and billions, and basically we’re going for everything—from diesel to hybrids to batteries,” said Dieter Zetsche, the CEO of Daimler.

  “We have taken the point of view that fuel efficiency is important to all customers,” said Bill Ford, Ford’s chairman. “But we still don’t know what the winning technology will be. Any (long-term) sales projections today don’t mean anything. So many different things are at play. I can’t give a number. It’s throwing a dart.”30

  TO THE FUTURE

  Where does this leave oil and the internal combustion engine? Probably in an assured position of dominance at least for the next two decades. But there will be much more efficient internal combustion engines. Cars based on the ICE technology can come into today’s fleet quickly. And they will not require a new infrastructure system.

  Internal combustion engines do a remarkable job of generating power in an affordable and compact package. The secret to the success of the ICE lies in the energy density of liquid fuels—simply put, oil. The small size and power output of the gasoline and diesel-fuel engines will continue to make them fierce competitors—technologically speaking. Moreover, the scope certainly exists for improving the efficiency of cars—whether in gasoline and diesel engines themselves,
or through “lightweighting” cars with new materials, and thus reducing emissions.

  “A key question is how to halve the fuel consumption of the 2035 car fleet,” observed John Heywood, professor of mechanical engineering at Massachusetts Institute of Technology and the former director of the university’s Sloan Automotive Laboratory. “We can make vehicles that are twice as good as those today,” says Heywood. “But the next question is, how many? If it’s only 15 percent of the fleet, it’s of little impact. If it’s 95 percent, it’s a hell of a big thing.”31

  Yet one near certainty is that the transportation system of today will evolve significantly over the coming decades. Energy efficiency and lower emissions will continue to be major preoccupations. If issues of cost and complexity and scale can be conquered, the battery will begin to push aside oil as the motive force for much of the world’s automotive transportation. But the internal combustion engine is unlikely to be shunted aside easily. The new contest may, for some time, be less decisive than when Henry Ford used his Model T to engineer victory for the internal combustion engine against the electric car.

  But the race has certainly begun. The outcome will do much to define our energy world in the decades ahead in terms of where we get our energy, how we use it, and who the winners will be. But it is much too soon for anyone to take a victory lap.

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  CONCLUSION: “A GREAT REVOLUTION”

  Sadi Carnot, the son of one of Napoléon’s ministers of war and himself a soldier as well as a scientist, was convinced that one reason for Britain’s victory in the Napoleonic wars at the beginning of the nineteenth century was its mastery of energy, specifically the steam engine. Determined to right that balance and impelled by deep curiosity as to how the steam engine actually worked, Carnot undertook a study that he published in 1824 as Reflections on the Motive Power of Fire. To his disappointment, it received virtually no attention at the time of publication. Carnot would die a few years later, at age 36, during a cholera epidemic with no knowledge of the profound impact his work would have. For he had written what was almost certainly the first systematic analysis of how man had actually harnessed energy. His work would prove a crucial input into the formulation of the second law of thermodynamics, and the “Carnot cycle” would become a staple of engineering.