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In the history of the world, civilizations have risen and fallen.  Fundamental to the success or failure of any nation is its access to natural resources.  Food and shelter have always been the fundamental building blocks of human civilization, and core to providing these fundamentals is energy.  Energy is required now, more than ever to both sustain our world, and also to help it thrive.  In the coming decades, energy will perhaps be the single largest catalyst to the ultimate success or failure of every nation.

For decades, the US and Western Europe have dominated the global economy.  Now, China, India, Russia and Brazil are the new growth engines.  Fundamental to the rise of each of these nations has been the access to both abundant and cheap energy, supplied largely by fossil fuels.  Coal and natural gas have been the dominant fuels for industrial and domestic energy supply.  Certainly nuclear has contributed a fair share as well.  The transportation industry has been nearly 100% fueled by oil.  While each of these nations largely source its non-transportation energy from domestic fuel sources, in almost every case, each of these nations import a majority or large amount of its transportation fuel in the form of imported oil.

While Western nations have economically and politically dominated the world for the past few centuries, they are now becoming fragile under the burden of decades of overspending and increasing dependence upon foreign supplies of energy.  And, specific to transportation fuel, the past few decades have witnessed, as T. Boone Pickens has said, “the greatest transfer of wealth form one group to another group in history.”

Many scientists argue the use of fossil fuels is adversely and irreversibly changing our global climate. Even the famous oil man Pickens agrees climate change is real. Many others argue that our supply of oil and other fossil fuels are dwindling to the point where we will literally run out in the not too distant future.  Of course, there are those that counter these arguments to the contrary, especially now with the advent of shale drilling technology.  No matter which side of these issues you are on, it seems logical that none of us know 100% for sure either side is correct. 

In any case, the risk of being wrong about the adverse effects of climate change or about our supplies of fossil fuels could be catastrophic to our civilization.  What if the predictions about catastrophic climate change are accurate?  Who would want to have the conversation with their grandchildren trying to explain that we misjudged these issues when we had the time to do something about it?  What if we do deplete our fossil fuels supplies to the point where the world is at war over these fundamental resources?

At minimum, Western nations are finally waking up to the fact that they are transferring vast amounts of their domestic wealth each and every day to other nations; and nations that don’t necessarily have the same interests as they do.  For decades, Western nations’ addiction to oil has resulted in those nations entering wars costing them thousands of lost lives, trillions of dollars of wealth transferred, unstable capital markets and political uncertainty.

It is time to change.  We cannot wait another day debating the effects of climate change, or the supplies of fossil fuels.  We must embrace renewable, sustainable energy, while at the same time bridge the gap to these sustainable supplies in a smarter manner.  Governments must take a leadership role in establishing a real and strategic energy policy.  These policies should require dependence on domestic, sustainable supplies of energy.  International trade is a good thing, but transporting massive amounts of fossil fuels over vast distances, just doesn’t make economic or environmental sense for anyone.

The utility industry in Western countries is already embracing this challenge via deployment of renewable energy production and energy optimizing smart grids.  Not only are these new projects mitigating risks around potential climate issues, they mitigate risks around fossil fuel supplies, and at the same time keep nearly 100% of the fuel supply, wealth and job creation within their country’s borders and control.   However, sustainable, GDP friendly domestic electricity supplied by utilities for industrial, commercial and residential use does not solve the other “800 pound gorilla in the room” that is transportation fuel.  Or does it?

The answer is obvious.  Electric utilities will be the centerpiece of the puzzle to this energy quandary we find ourselves in.  The answer to this fundamental issue of where we get our future energy supply could be found with a “re-birth of the utility industry”.  More than 100 years ago the availability of electricity to every home and business in the civilized world seemed like an impractical, hypothetical impossibility. It would be too costly, too complex, and the demand would simply never be there.  We all know the rest of that story.

We are now on the verge of the next Evolution in Electricity, and that is “de-oiling” the world’s transportation industry via electric, compressed natural gas (CNG), and hydrogen vehicles.  It won’t just be “traditional” EVs like the Nissan Leaf, Chevy Volt or Tesla that will transform our energy world, natural gas fueled trucks and eventually hydrogen powered vehicles will all be a part of the future energy landscape.  The technology is available today; it is efficient, and eventually will become more cost effective and safer than the vehicles we drive today.  Certainly improvements will need to be made, and they most certainly will.  Can anyone imagine today using the mobile phones or computers of the 90’s or even 2000’s?  We cannot let the naysayers complaining about range anxiety, or other trivial issues like battery life slow down the momentum of EV’s.  We will optimize these technologies, and make electric, CNG and hydrogen vehicle technology the new normal for transportation.

Utilities historically have taken the ‘backseat” when it comes to politically charged issues around the transportation industry. However, in this instance, they need to take the driver’s seat.  Utilities stand to be one of the biggest winners in this energy revolution.  There has never been, and likely will be no other time in the history of this industry where it can literally double itself in a relatively short period of time.  When electric vehicles are completely dominating the automotive world, utilities will be more critical than ever to the sustainability and vitality of each respective nation by providing reliable, abundant, domestic energy. 

The new found abundance of natural gas in the US will be supplied to power large trucks and fleets as well as serving to be the fuel for electricity generation for plug in EVs and even the fuel for tomorrow’s hydrogen fuel cell vehicles.  Today, nearly 95% of hydrogen fuel is manufactured using natural gas.  Certainly either plug-in EVs or hydrogen fueled vehicles could also be powered by solar, wind, nuclear or even coal power generation.  First and foremost, these domestic sources of energy will transform countries like the US to become as energy independent as they ever have.  And, as an added bonus, the economies of these domestically fueled nations will soar to new heights keeping GDP at home with millions of new jobs created from a wide variety of new energy related jobs, not to mention killing the vast transfer of wealth to which Mr. Pickens eluded.

Utilities should actively and vibrantly promote these vehicles now.  Utilities are trusted advisors to their customer base and are influential members of the business and political community.  They should take advantage of this status and lead the way for the revolution.  Not only should they help promote the industry getting started, they should commit publicly to ensuring the cost effective, reliable and widely available fueling of these vehicles. 

Utilities should take the lead on:  Working with auto companies to help promote the vehicles; Providing and promoting widespread availability of public charging stations; Providing simple, cost effective in-home charging capabilities; Offering dynamic, affordable charging rates; And finally ensure an overall customer friendly, “cool” experience.

While utilities will be big winners from the electrification of transportation, all of us collectively will be the biggest winners.  A renewed sense of freedom and wealth will permeate not only Western nations, but also those around the world.  Global free trade of products and services will thrive when there is more certainty and control from within each nation as it relates to energy supplies. 

Unfortunately it often takes a crisis for human nature to act in a transformational way.  The crisis is here whether we realize it or not.  It is time for all of us to act, and it is time for utilities to lead.

Brian Jones

Senior Principal

Energy & Utilities

SAP

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