Greening Detroit: the Automotive Industry Could Pave the Way to Green Transport

Building the Green Economy, Quipu Economic Forum, Zero-combustion paradigm :: Comments (1)

17 November 2008 :: by J.E. Robertson

CafeSentido.com :: Just a couple of years ago, the conventional wisdom dictated that financial minds must view “green technology” as pie in the sky, an unaffordable idealistic quest for something beyond the “easy” solution of endless oil. Then, almost overnight, the financial markets discovered that oil was not infinite, that the entire US economy was beholden to the pricing whims of an international cartel —this was long known, but tolerated—, and failure to go green could cripple the world’s most powerful democracy.

The price of crude oil skyrocketed from under $20/barrel at the end of the 1990s to over $150/barrel at its peak, in 2008. A national movement with millions of supporters was spawned to “repower America”, and now the We campaign pushes green energy as a moral imperative, to solve the climate crisis and to provide the reliable energy needed for a sustainable economic recovery. The credit crisis has crippled the auto industry, and there is talk of total collapse.

As travel fell off and consumers moved toward fuel-efficiency as the number one consideration in car purchases, amid record profits for the major oil companies, the price of oil started to come down, and is now below $60/barrel. There is concern that with the credit freeze and the renewed prospect of “easy oil”, investors will vanish and the greening of the American economy will again be set back 20 years.

But Detroit’s “Big Three” automakers are desperately seeking an immediate infusion of billions of dollars in cash, a “bridge loan” to help them avoid bankruptcy and continue functioning. It is likely that should any of the three fall into bankruptcy, there simply will not be emergency business credit available to allow it to continue functioning, restructure and emerge from bankruptcy. A very serious possibility is that the incoming administration will demand massive improvements in fuel economy and green technology, in exchange for help.

President-elect Barack Obama has said he views the current time of crisis as an historic opportunity to make the right choices about correcting our mistakes. And, he has specifically said he views as a very real and useful possibility, the requirement that the automakers retool definitively, so they emerge as the definitive 21st-century green-transport industry, more than able to survive and compete in a new energy and fuel-economy climate.

There need not be any element of such an agreement that would be punitive, but rather, the mandatory retooling would lead to the potential to benefit from incentives for green technology innovation in transport. Such incentives have been viewed by the industry and by petroleum interests as hostile to growth, because they legislate market behavior, but since all incentives do this, and auto companies are now seriously viewing their dependence on petroleum as a fatal liability, no matter the price of oil, now is the moment to implement such strategies.

In a time of painful economic upheaval, with credit still near stagnant across the economy —CitiGroup has announced it would lay off an additional 53,000 employees in its efforts to stay afloat—, it cannot be argued that we would be smarter to emerge from this crisis with the same weaknesses built into our basic economic infrastructure. If in good times, it is unnecessary to spend money or direct market behavior, then in times of crisis, it is potentially the smartest way to govern a viable recovery.