by Sir Mark Moody-Stuart

In this compelling synthesis, Amory Lovins and his colleagues at Rocky Mountain Institute provide a clear and penetrating view of one of the critical challenges facing the world today: the use of energy, especially oil, in transportation, industry, buildings, and the military. This report demonstrates that innovative technologies can achieve spectacular savings in all of these areas with no loss of utility, convenience and function. It makes the business case for how a profitable transition for the automotive, truck, aviation, and oil sectors can be achieved, and why they should embrace technological innovation rather than be destroyed by it. We are not short of energy in this world of ours; we have large resources of the convenient hydrocarbons on which our economies are based, and even greater resources of the coal on which our economies were originally built. But there are two serious issues relating to its supply and use.

First, some three fourths of the reserves sit in a few countries of the Middle East, subject to actual and potential political turmoil. Second, there are the long-term climatic effects of the burning of increasing amounts of fossil fuels. While the normal rate of change of technology is likely to mean that we will be on one of the lower impact scenarios of climate change and not at the apocalyptic end favoured by doom mongers, it is reasonably certain that our world will have to adapt to significant climate change over the next century. These two factors mean that, unless there is a change of approach, the United States will inexorably become increasingly dependent on imported energy—be it oil or natural gas. At the same time, on the international scene, the United States will be criticised by the rest of the world for profligate use of energy, albeit to fuel an economy on whose dynamism and success the rest of the world is also manifestly dependent. Furthermore, thoughtful people wonder what we will do if the booming economies and creative people of China and India have energy demands which are on the same development curve as the United States.

The RMI team has approached this economic and strategic dilemma with technical rigour, good humour, and common sense, while addressing two key requirements often overlooked by energy policy advocates.

First, we have to deliver the utility, reliability and convenience that the consumer has come to expect. As business people we recognise this. It is no good expecting people in the United States to suddenly drive smaller, less convenient or less safe vehicles. We have to supply the same comfort and utility at radically increased levels of energy efficiency. Most consumers, who are also voters, have only a limited philosophical interest in energy efficiency, security of supply, and climate change. Most of us have a very intense interest in personal convenience and safety—we expect governments and business to handle those other issues on our behalf. There is a very small market in this world for hair shirts. Similarly, we cannot expect the citizens of China and India to continue to ride bicycles in the interests of the global environment. They have exactly the same aspirations to comfort and convenience as we do. This book demonstrates how by applying existing technologies to lightweight vehicles with the use of composites, by the use of hybrid powertrains already in production, and with the rapid evolution to new technologies, we can deliver the high levels of convenience and reliability we are used to at radically increased levels of energy efficiency, while also maintaining cost efficiency.

The second critical requirement is that the process of transition should be fundamentally economic. We know in business that while one may be prepared to make limited pathfinding investments at nil or low return in order to develop new products and markets, this can not be done at a larger scale, nor indefinitely. What we can do, and have seen done repeatedly, is to transform markets by delivering greater utility at the same cost or the same utility at a lower cost, often by combining more advanced technologies with better business models. When this happens, the rate of change of markets normally exceeds our wildest forecasts and within a space of a few years a whole new technology has evolved.

A good example of the rapid development and waning of technology is the fax machine. With astonishing rapidity, because of its functional advantages over surface mail, the fax machine became globally ubiquitous. The smallest businesses around the world had one and so did numerous homes. The fax has now become almost obsolete because of e-mail, the e-mail attachment and finally the scanned e-mail attachment. The connectivity of the Internet, of which e-mail is an example, has transformed the way we do business. What this book shows is that the delivery of radically more energy-efficient technologies has dramatic cost implications and therefore has the potential for a similarly economically driven transition.

The refreshingly creative government policies suggested here to smooth and speed that transition are a welcome departure from traditional approaches that often overlook or even reject the scope of enterprise to be an important part of the solution. These innovative policies, too, merit serious attention, especially as an integrated package, and I suspect they could win support across the political spectrum.

The technological, let alone policy, revolution has not been quick in coming to the United States. Yet as has happened before in the automobile industry, others are aware of the potential of the technology. Perhaps because of Japans obsession with energy security, Toyota and Honda began some years ago to hone the electric-hybrid technology that is likely to be an important part of the energy efficiency revolution. As a result, U.S. automobile manufacturers who now see the market opportunities of these technologies are turning to the proven Japanese technology to deliver it rapidly.

I believe that we may see a similar leapfrogging of technology from China. China is fully aware of the consequences on energy demand, energy imports, and security of supply of its impressive economic growth. Already China is using regulation to channel development into more energy-efficient forms. The burgeoning Chinese automobile industry is likely to be guided down this route—delivering the function and convenience, but at greatly increased levels of efficiency. And it is not just in the automobile industry—by clearly stated national policy it applies to all areas of industrial activity. This has great implications both for the participation by U.S. firms in investment in China, and also in the impact of future Chinese manufactures on a global market that is likely to be paying much greater attention to energy efficiency.

As a businessman, I am attracted by the commercial logic and keen insight that this report brings to the marketplace struggle between oil and its formidable competitors on both the demand and the supply sides. Indeed, during my time in both Shell and AngloAmerican, RMI's engineers have helped ours to confirm unexpectedly rich deposits of mineable "negawatts" and "negabarrels" in our own operations—an exploration effort we're keen to intensify to the benefit of both our shareholders and the environment.

As a lifelong oil man and exploration geologist, I am especially excited to learn about the Saudi Arabia-size riches that Amory Lovins and RMI's explorers have discovered in what they term the Detroit Formation—through breakthrough vehicle design that can save vast amounts of oil more cheaply than it can be supplied. And as a citizen and grandparent, I am pleased that RMI proposes new business models to span the mobility divide that separates rich and poor, not just in the United States, but in many places in the world. Concern about such opportunity divides is increasingly at the core not just of international morality but also of stability and peace.

This book points the way to an economically driven energy transformation. And its subtitle "Innovation for Profit, Jobs, and Security" is both a prospectus for positive change and a reminder that both the United States and other countries can be rapid adapters of innovative technologies, with equally transformative economic consequences. As someone who has spent a lifetime involved in energy and changes in energy patterns, I find the choice an easy one to make. The global economy is very much dependent on the health of the U.S. economy, so I hope that the U.S. indeed makes the right choice.

This report will help to launch, inspire, and inform a new and necessary conversation about energy and security, economy and environment. Its outcome is vital for us all.

—Sir Mark Moody-Stuart

About the Author
Born in Antigua, Mark Moody-Stuart earned a doctorate in geology in 1966 at Cambridge, then worked for Shell starting as an exploration geologist, living in the Netherlands, Spain, Oman, Brunei, Australia, Nigeria, Turkey, Malaysia, and the UK, and retiring as Chairman of the Royal Dutch/Shell Group in 2001. He is Chairman of Anglo American plc, a Director of HSBC and of Accenture, a Governor of Nuffield Hospitals, President of the Liverpool School of Tropical Medicine, and on the board of the Global Report-ing Initiative and the International Institute for Sustainable Development. He is Chairman of the Global Business Coalition for HIV/AIDS and Co-Chair of the Singapore British Business Council. He was Co-Chair of the G8 Task Force on Renewable Energy (2000–01) and Chairman of Business Action for Sustainable Development, an initiative of the ICC and the World Business Council for Sustainable Development before and during the 2002 World Summit on Sustainable Development in Johannesburg. During 2001–04 he served on the UN Secretary General s Advisory Council for the Global Compact. He was knighted in 2000. With his wife Judy, he drives a Toyota Prius and is an investor in Hypercar, Inc.