General Motors CEO Dan Akerson

Dan Akerson on positioning GM as a solution for peak oil, resource exhaustion, national energy security and climate change

You don’t think of the head honcho of a major corporation like General Motors (GM) doing something altruistic like changing the company’s vehicle strategy just to save the polar bears.  The GM shareholders hope their CEO will be making choices that improve the bottom line, and aim the company into profitable territory.  A speech by GM’s CEO Dan Akerson last week made it clear the company’s strategy is headed toward a product mix that will help the environment, help the corporate financial profitability status, and help the U.S. achieve climate change and fossil fuel reduction goals.

We already talked about this speech last week when we went over the plausibility that GM is developing electric cars with a 200+ mile electric driving range.  The event was the CERAWeek Energy Conference, and Akerson used his time in the speakers podium to talk about efforts GM is undertaking that will help the U.S. achieve national energy security and fossil fuel reduction goals.  The content of the speech in part validates an idea floating in the news right now – that GM is developing a smaller, 3 cylinder, gas engine for the company’s plug-in hybrids, the Chevy Volt and Cadillac ELR.

A Volt with a smaller gas engine would have a lower curb weight, giving it better fuel efficiency with no other change, and would give more preference to the electric drive train.

But what I found interesting re-reading Akerson’s speech is the thrust of what he was saying, how it speaks about Peak Oil issues without uttering the phrase, and what GM is doing to help the U.S. and other countries solve Peak Oil issues through better fuel efficiency.

Almost the first thing he invoked was the idea that America is “constrained” and therefore “less free” because “demand outstripped supply and America became dependent on imported energy.”  What he’s talking about is the demand for oil in the U.S. is now much greater than the supply of oil in the U.S.

The first warning shots (as he put it) of this dependency on imported oil came with the Arab Oil Embargo.  The popular conception of that event may be Arab anger over some military action undertaken by Israel, but that’s not the only part of the story and in fact I think that spin of the story is merely meant to distract people from the real story.  The year, 1973, is shortly after the U.S. hit its peak of oil production in 1971.  The effect of the first Arab Oil Embargo was to demonstrate that OPEC had the U.S. Economy by the short hairs, and could effectively yank the U.S. around any time it wanted to flex its muscle and cut off oil supplies.  Cutting off oil supplies is a rather blunt weapon, however, and OPEC’s muscle is probably more properly flexed in ramping oil production up and down in order to moderate the price of oil to OPEC’s benefit.

Akerson described the response since as:  “Nearly every President since Richard Nixon has grappled with these issues and their solutions have been remarkably similar: Curb demand using moral suasion and regulatory pressure… Provide incentives to speed the adoption of alternative energy…  and ask the scientists to invent a magic bullet.”

There’s a macroeconomics angle to this – which is the amount of dollars exported by the U.S. to pay for the oil dependency.

Akerson’s speech went on to talk about this and the prediction that the U.S. will be a net exporter of “energy” by 2020.  He describes the causative factor as “the rise of fuel-efficient vehicles, more energy-efficient homes and factories, and the revolution in domestic oil and gas production.”  That revolution in oil and gas production is coming at the cost of the environment, because that “revolution” is happening due to Hydraulic Fracturing and efforts like the strip mining of Alberta to get its tar sands deposits.

That revolution in oil and gas production is causing a horrendous environmental catastrophe.

But Akerson focuses on the economics of the deal.  “The impact on our trade deficit could be enormous.  According to Citigroup, achieving energy self-sufficiency could reduce the current account deficit by up to 2.4 percent of GDP.  At the same time, energy-related CO2 emissions, which peaked at 6 billion metric tons in the 2005 to 2008 timeframe, have fallen and may never again reach that level according to the EIA.”

Further .. “Dr. Daniel Yergin of IHS, reports that the unconventional oil and gas industry now employs about 1.7 million people directly and indirectly – a number that could increase to 3 million by 2020.”

And … “During the same period, federal and state revenues from unconventional energy could increase more than 80 percent to $113 billion.”

The picture painted is that, economically, reduction of fossil oil imports to the U.S. means the U.S. is exporting less money.  That straightens out the U.S. economic picture, and lots of goodness flows at many levels.  Economically speaking, that is.

He then asked “What should the public and private sectors do to ensure that this extraordinary energy gain pays dividends for generations to come?” and started listing off efforts GM is doing to contribute positively …

Reduce vehicle mass:- “A good rule of thumb is that a 10 percent reduction in curb weight will reduce fuel consumption by about 6.5 percent. Our target is to reduce weight by up to 15 percent.” optimizing mass efficiency.
Develop advanced materials, including Nano steels, carbon fiber and resistance spot welding for aluminum structures
clean diesel engines where they make business sense.
improve the thermodynamic efficiency of our gasoline engines using a suite of technologies, including turbocharging, direct injection, variable valve timing and cylinder deactivation.
vehicle electrification .. “the era of using electricity to help improve performance and fuel economy is already here and the trend is only going to grow… pure electric vehicles like the Chevrolet Spark… extended-range EVs
like the Chevrolet Volt and Cadillac ELR… and eAssist, a
light-electrification technology”
Natural gas as a motor fuel – big trucks – “a typical Class 8 operator could save $2,500 to $3,500 per month by switching to LNG” making an LNG conversion pay for itself in about 2 years.
This is important because – “big rigs burn some 25 billion gallons of diesel annually, which require
2.5 billion barrels of crude to produce.  That’s an amount equal to
about one-third of our total crude imports.”

As I said at the top, this is not about altrustic saving the polar bears stuff.  This is about improving GM’s profitabiity while helping the national energy security picture.  Akerson said it this way: “GM’s commitment will save 12 billion gallons of fuel over the life of the vehicles we build between 2011 and 2017.  That’s 675 million barrels of oil we won’t need – a figure nearly equal to our oil imports from the Persian Gulf in 2011…. will make us a much more formidable global competitor because fuel economy and CO2 regulations are converging across mature and emerging markets.”

In addition to the vehicles, they’re working on the production processes as well.  “2005 to 2010, we reduced our energy intensity per vehicle produced by 28 percent … committed to achieving a 20 percent reduction per vehicle in our global CO2 footprint by 2020…. expand our leadership in reuse and recycling.  Worldwide, 90 percent of GM’s manufacturing waste is reused or recycled, and our goal is to have 125 landfill-free facilities by 2025, up from 104 today.”

That kind of effort contributed $1 billion in revenue during 2011, and “diverted 2.5 million metric tons of waste from landfills, which is the equivalent of 38 million garbage bags.”

This is the sort of direction we want to see the megacorporations take.  Hopefully these things are actual real changes which cause actual real benefit, and isn’t just some handwaving in a report that’s meant to paint GM with a green image.  Assuming that these are real effects –

  • Zero Landfill – should mean much more complete utilization of the materials ripped out of the guts of the earth.
  • Reduced vehicle mass means less material required to build the vehicles, less materials ripped out of the earth
  • Reduced vehicle mass and other efforts improve fuel efficiency, reducing the amount of materials ripped out of the earth
  • Less landfill space consumed by GM’s operations A product mix that aids the U.S. to be financially economically stronger
  • Reduces the negative environmental impact of driving All of this while improving GM’s corporate finances, giving GM a financial incentive to keep this sort of effort going ..etc..

Akerson closed by calling on President Obama to set up a Blue Ribbon Commission “to develop a 30-year energy policy framework with checkpoints every five years…. include a broad cross-section of energy producers and energy consumers,
and they should be given a straightforward charge: Develop a plan to improve our standard of living by extending the duration of the natural gas and tight oil “dividend” for as long as possible. … imagine what could be accomplished if the oil, gas and mining industries… renewable energy companies… utilities… labor groups… and producers of consumer durable goods like GM worked together to negotiate the necessary trade-offs and emerged with clear targets and a timeline to advance our national energy agenda?”


About David Herron

David Herron is a writer and software engineer living in Silicon Valley. He primarily writes about electric vehicles, clean energy systems, climate change, peak oil and related issues. When not writing he indulges in software projects and is sometimes employed as a software engineer. David has written for sites like PlugInCars and TorqueNews, and worked for companies like Sun Microsystems and Yahoo.
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