HOUSTON—For some attending the luncheon keynote at CERAWeek by IHS Markit on March 7, it might have been hard to digest. There was the conference host, Dan Yergin, dropping the F-word (“fun”) to describe his experience driving an electric vehicle.
The “zero-emission” weekend driving Chevrolet’s Bolt EV was a pleasant surprise, especially the responsiveness of the car, he told his guest, General Motors Co. Chairman and CEO Mary Barra.
“That’s one of the things that most people think they’re giving something up when they drive an electric vehicle, and they’re not,” Barra said. “That instant torque really makes the vehicle fun to drive.”
It’s one thing for the tree-hugger community to embrace all-electric transportation. It’s quite another when Yergin, vice chairman of IHS Markit and author of “The Prize,” the Pulitzer Prize-winning history of the oil industry, thinks it’s cool.
More telling was the defensive posture taken by several of the most celebrated speakers at CERAWeek:
- Amin Nasser, president and CEO of Saudi Aramco: “Many wrongly believe it is a simple matter of electric vehicles quickly and smoothly replacing the internal combustion engine. It is not an either/or future, but far more complex.”
- Bob Dudley, CEO of BP PLC: “The pace of decline is likely to be very slow. Think plateau.”
- Rick Perry, U.S. secretary of energy: “Look those people [in developing nations] in the eyes that are starving and tell them, ‘You can't have electricity’ because as a society we decided fossil fuels were bad. I think that is immoral.”
But Barra insisted during an interview that day on CNBC’s “Power Lunch” that she didn’t come to CERAWeek looking for a fight with the oil and gas industry.
“I think it is an energy conference,” she told Brian Sullivan. “And I think we have to work together.”
During her prepared remarks at the luncheon, Barra almost seemed to be channeling oil and gas executives as she declared the need for new infrastructure. But it wasn’t pipelines that she sought.
“We encourage the energy and power industry and other stakeholders to partner with us on a robust charging infrastructure that drives consumer confidence and enables people to trust that they can drive their cars anywhere at any time,” she said.
And why should the fossil fuel industry assist in an all-electric vehicle future? Perhaps to not be left behind. Electric vehicles and renewable fuels are global trends that are moving forward.
“The truth is, we see these trends accelerating,” said Andrew Slaughter, executive director of the Deloitte Center for Energy Solutions, at a Rice University transportation conference in January. “Can they accelerate fast enough to totally disrupt the industry in 10 to 15 years? It’s possible but [it would require] a high amount of decline.”
Could these trends match the rapid shift from the horse-and-buggy economy of the 1890s to the motorized economy of the 1910s? Slaughter wasn’t sure. No matter—Barra is powering forward.
“The growth of all electric vehicles is also spurring positive discussion around the need for more renewable power sources,” she said, likely gaining few new friends in the room. “There is great progress being made in this area, but there is more to do.
“We recognize the challenge that coal still generates about 30% of electricity in the U.S. and 65% in China,” she continued. “When we improve the percentage of renewable power sources in our grid, we can further reduce the carbon footprint of EVs.”
That would require more than a few advances in technology as well as wholesale shifts in infrastructure. GM is moving quickly on the technology front.
When Barra ran product development, she posed an either/or question to the board: Go with an EV with a modest range before needing a charge in the near future or wait a little longer to get the model with double the range.
Of course, the board chose to go with twice the range in the earlier time frame, and the electrified vehicle engineering team got it done. The Chevy Bolt EV boasts a range of 238 miles between charges.
But cars equipped with internal combustion engines still constitute 99% of the market, Saudi Aramco’s Nasser noted, and the only way to generate enough electricity to power EVs via renewables will be to make renewables economically viable. He said he believed that would not happen for “a long time.”
That is likely the case. Then again, just a couple of decades ago, the hydrocarbon industry “peak oil” fears. The shale revolution put those fears to rest.
After OPEC and other producers locked in production cuts in late 2015, many doubted that U.S. E&Ps could compete. They could and did.
Both times, the U.S. oil and gas industry confounded the doubters by developing transformational technologies to produce the commodities and later, efficiencies in those technologies to make them economically viable.
Those who are developing electric vehicles and renewable fuels believe they can do it, too.