Trends That Will Affect Your Future … The Hot and Cold of Success

Today, standing next to my car, loading in gas at $2.95 a gallon, I thought about a friend who lives in Austin, Texas. She had just written to tell me she is now spending $40 a week to fuel her Honda, so she can drive to church and sing in her choir. (When you read this, these prices may evoke a fond memory. In Beverly Hills, it is already over $4 a gallon.) Even President Bush has gone on record as saying it is going to be a “tough summer.”1 Like junkies in need of a fix, the United States remains dependent on oil and subject to all the vicissitude’s of doing business in regions with unstable and violent governments or in the midst of a civilization-changing reformation whose outcome is highly problematic.

But in Iceland and Brazil, things look a little different. Brazil expects to become free of petroleum dependency and become energy self-sufficient this year. Iceland plans to do the same in six years. The two nations will do this not by cutting back on consumption but by meeting growing demand for fuel through innovative technologies, coupled with a national will and consistent governmental intentions.

In Brazil, this means converting and expanding its national sugar cane agriculture to produce ethanol. It has taken 30 years to get to the threshold of petroleum independence, and it has not been easy. But, in spite of missteps, incompetence, and corruption, the national will has held true. Brazil has recreated a petroleum-free version of the three components of a modern national energy system. And they are in place and functioning. The sugar cane industry, which dates to the 16th century, grows enough sugar cane to satisfy the world’s sweet tooth and the country’s own need for fuel. The production and the distribution required to complete the independence equation have also been established. Today, gas stations throughout the country have two sets of pumps, one for what Brazilians call “alcohol,” one for gas—and even the gasoline contains 25% ethanol.

Key to making this conversion work was the development of the flex-fuel engine, a technological breakthrough begun by Volkswagen and driven by the national commitment to free the country from petroleum. With flex-fuel, drivers can always opt for ethanol if it is available, and cheaper, and for the alcohol/gas blend, if it is not. Three years after the technology was developed, more than 70% of the automobiles sold in Brazil are flex-fuel, numbering over a million this year. And, in most cases, no premium has been charged for the new engines. The flex-fuel technology is a classic case of how a national commitment driven by the market can quickly bring new technologies on line.

“Renewable fuel has been a fantastic solution for us,” said Brazil’s minister of agriculture, Roberto Rodrigues, in a recent interview in São Paulo, the capital of São Paulo State. It is here that 60% of Brazilian sugar is grown. “And it offers a way out of the fossil fuel trap for others as well.”2 As long as oil prices do not drop below $30 a barrel—it is selling for $72 a barrel as I write this—Brazil’s ethanol industry has nothing to fear from chaos in the Middle East or Africa. And the booming new industry expects that several new technological breakthroughs will make the fuel both more efficient and even cheaper to produce.

But warm weather, vast agricultural fields, and a long growing season are not the only path to energy independence. In the far north, Iceland, which has none of those things, is about to join Brazil in freeing itself from the instability and hate that is the hallmark of so many petroleum-producing regions. They too began 30 years ago when it was decided to heat the capital, Reykjavik, by using steam-powered turbines whose source of energy is the country’s vast reservoirs of subterranean hot water. The 30-year timing is either an odd synchronicity or is telling us something about how long these massive national transformation projects take.

Today, in Iceland, 90% of all homes are heated by geothermal energy.3 The heat of the earth also runs power stations producing electricity from steam at around 240°C, extracted from bore holes between 600 and 1,000 m deep. This same free source is the key to Iceland’s plan to make itself free from petroleum within six years, by using super-heated water drawn from four kilometers beneath the surface that will be broken down into its constituent gases to create hydrogen fuel.3 The only remaining use of oil is in the transportation sector, and that is what the new hydrogen program is designed to address.

This year, Iceland’s first hydrogen-powered buses will go into service, and a network of stations is being constructed. The national policy is to make the country petroleum free, except for the airline industry, which is largely outside of Iceland’s control.

Both of these technologies, ethanol in Brazil and hydrogen in Iceland, are also significantly less polluting, resulting in lower health costs: two more dimensions to the benefits to be gained by leaving petroleum behind as a fuel. It is clear by both these examples, and there are others—Germany’s commitment to wind power, the Scandinavian countries decision to seek energy independence—that only consistent governmental policies committed to energy independence, linked with a population willing to do what it takes to affect such a policy, expressed over a span of decades will achieve the goal. We are about to find out whether we, as a nation, are prepared to rise to the test.