No 1203: Biofuels and Clean Technology

Update: Here is a video of the blogger Q&A session with GM CEO Rick Wagoner hosted by NextGear

I spent the morning at a Q&A with Rick Wagoner (with other auto and clean tech bloggers). Overall, the message from Rick was consistent with others with whom I spoke. But he also noted the future is wide open with respect to alternative energy technology. Here are a few take-aways from this talk.

Coskata relationship just a start
GM’s partnership with Coskata was based on a broad-based search for a company that has a real chance at commercializing cellulosic ethanol. Coskata’s technology has a great opportunity for feedstock versatility that can revolutionize the industry. Moreso, having a healthy Coskata allows GM to more viably approach other parties (including the U.S. Government) regarding distribution options. Currently, the oil industry is resistant to distributing ethanol (this is only part of the story; relatively low volumes of corn ethanol is the other portion). Coskata’s (and others like Range Fuels) make broad availability of E85 more viable and gives GM’s outlook some additional legs.

The most interesting element, however, is that GM would consider additional partnerships of this type in the future.

Won’t repeat EV1 debacle
I asked Rick a question rooted in GM’s experience with the EV1: “How do you define success for this portfolio of technologies in which you are investing”. His response was encouraging. Essentially, success is defined with respect to stages of development in getting a technology into the markeplace. Ethanol/E85 will probably take 10 years to get any meaningful movement on; Battery technology will be used as the technology options continues to become available; hybrids will be defined by cost reduction opportunities that allow for new product roll-outs (such as the 2-Mode Hybrid powertrain). Most importantly, the metric for success will not be number of units sold - a metric that apparently caused GM to kill the EV1 program. That shouldn’t happen with these new initiatives.
CAFE Clarity
Rick spoke very candidly about the need for a change in political context about the government’s role with regard to energy security (with respect to importing oil) and GHG emissions. He made the point that if CAFE standards are a legislation aimed at reducing reliance on imported oil, then the legislation has failed. The apparent conflict, however, is continued subsidies to oil companies which creates a real conflict towards the opportunity in investigating new opportunities (like a politically difficult fuel tax, etc.). He noted that GM is active in evaluating the impact of CAFE (and other international government regulations).

Surprisingly enough, Rick seemed not very passionate either way with regard to the increase in CAFE standards (similarly was Troy Clarke, GM North America). Moreso, they seem content that the bill has been passed and they have some clarity on the future of the company.

Overall, this talk with Rick underscores that the future for GM (and the rest of the industry) is a bit uncertain. There’s not much clarity around what impact high gas prices will have for consumer’s perception of affordability. They clearly want to be a leader in relevant technology - as do their competitors. But given the poor state of GM (and Ford and Chrysler) this period of time could make or break these companies.