A theme that I have been writing and speaking about a lot recently is the obligation of industry CEOs to lead their companies in reducing heat-trapping emissions and accelerating the transition to a low-carbon economy – not only because of the essential societal benefits but because it’s good for business.
Wanted: better capitalists
In a recent talk I gave at the University of Massachusetts Amherst titled, “Needed: Skillful Capitalists to Lead Us to a Low-Carbon Future,” I argued that smartly crafted laws and regulations designed to address major problems (like climate change) often create new markets for American-made goods and services.
I asked why aren’t more forward-thinking companies, who understand the problem of climate change and the opportunities presented by growing demand for clean energy products, stepping up in a more assertive way?
One of my reluctant conclusions was that when it comes to recognizing the need for change and capitalizing on new opportunities, we too often turn out to be not very good capitalists. Americans are global leaders in inventing technologies that produce ever-more-efficient advances, but we can be lousy at assuring that we retain the competitive capacity to manufacture and export the products that result from our innovation.
A foundation for hope in the auto industry
Not long after I gave that talk last month, I read a speech given by General Motors CEO Dan Akerson to the IHS CERAWeek conference in Houston on March 6, that showcases the kind of smart capitalist vision I was looking for.
His eloquent speech suggests that he is a forward-leaning CEO who wants to lead his company into a profitable low-carbon future. If he can convert his vision into reality, he will influence not just one of our largest companies but an entire industry and beyond.
(That leadership is needed in an industry which continues to signal that it doesn’t have the confidence to seize the future. In the most recent example, the industry’s major trade groups, the Alliance of Automobile Manufacturers and the Association of Global Automakers, recently filed a petition with the U.S. Environmental Protection Agency last month to block California’s requirement that 1.4 million electric, plug-in hybrid, and fuel cell vehicles be sold by 2025.)
Akerson, a Naval Academy graduate and veteran corporate manager, is able to speak with the credibility of a CEO who has led his company from bankruptcy to profitability and renewed growth since he took the reins at General Motors in September 2010.
His central message was that thanks to more fuel-efficient vehicles, more energy-efficient homes and factories, and expanded domestic oil and gas production, we are presented “with an historic opportunity to create a national energy policy from a position of strength….”
The pillars of such a long-term energy plan, he said, must include: energy diversity, including renewable energy; energy efficiency, “so we can absorb the impact of prosperity and population growth”; and “long-term investments in nascent technologies to drive CO2 emissions even lower.
“GM’s own experience shows these pillars work,” Akerson said.
GM’s plan to profit, cut carbon, and save fuel
Drawing a contrast between the need to meet the new standards that will nearly double new vehicle fuel economy by 2025 and the auto industry’s earlier efforts dating back to the 1970s oil shocks, Akerson said, “(T)his time around, the past is not prologue, because we are deploying technology that will satisfy customers and make an enormous contribution to energy security at the same time.”
At the risk of tipping “my whole hand to our competitors,” he then shared core elements of GM’s fuel economy plan through the 2016 model year, which I’m proud to note are largely consistent with what UCS’s vehicle engineers have been recommending.
- Reducing vehicle weight. He notes that “a good rule of thumb is that a 10 percent reduction in curb weight will reduce fuel consumption by about 6.5 percent.”
- GM’s target: reducing vehicle weight by up to 15 percent. He reassures consumers that there will be no need to “throw safety, comfort and performance out the window to get there….”
- Optimizing mass efficiency. “(T)he new Cadillac ATS – the brand’s first North American Car of the Year – is actually lighter than a comparable BMW 3-Series.”
- Aggressively investing in advanced materials, including Nano steels, carbon fiber and resistance spot welding for aluminum structures.
- Deploying clean diesel engines “where they make business sense”, such as GM’s new B20-ready Chevrolet Cruze diesel.
- Improving the thermodynamic efficiency of GM’s gasoline engines “using a suite of technologies, including turbocharging, direct injection, variable valve timing and cylinder deactivation.”
Doubling down on electrification
Akerson, however did not stop there. He also doubled down with a strong commitment to vehicle electrification.
“You know, it’s a sport in some circles to poke fun at electric vehicles, especially at this early stage in their commercialization. But the era of using electricity to help improve performance and fuel economy is already here and the trend is only going to grow.”
Akerson said he expects to have some 500,000 vehicles on the road with some form of electrification by 2017 – including “pure electric vehicles like the Chevrolet Spark, extended range EVs like the Chevrolet Volt and Cadillac ELR, and eAssist, a light-electrification technology that allows large cars like the Buick LaCrosse to achieve up to 36 mpg on the highway.”
This is an important commitment from the company that is notorious for pulling the plug on its early electric vehicle program. In some respects, though, I’d rather bet on a company that is building from an earlier failure than one starting out fresh, as there’s a certain stubborn determination to succeed that drives the second attempt.
Praise where praise is due
UCS analysts have been critical of GM’s decisions in past years when the company wasn’t recognizing the urgency of climate change and sufficiently anticipating and investing in the future. We’ve also called out clear signs of progress, such as the industry’s endorsement of federal standards that will cut global warming emissions from their new vehicle fleets in half and GM’s decision to cut ties with climate skeptics like the Heartland Institute.
While we won’t always agree on the ways forward, we should acknowledge and celebrate strong leadership when it comes. CEO Akerson’s Houston speech lays out a compelling pathway to the future, and I applaud him and wish him well in his stewardship of one of America’s most storied companies.