In early May, 100 of the nation’s top business leaders gathered for a summit at a private resort nestled on 250 acres in California’s Napa Valley. The attendees, gathered at the invitation of Silicon Valley venture capitalists, included CEOs and other top executives from such Fortune 500 corporations as Wal-Mart, Proctor & Gamble and BP. They had been invited to discuss ways to end America’s fossil-fuel addiction and save the world from global warming. But in reality they had come to make money for their companies — and that may turn out to be the thing that saves us.
For three days, the executives listened as their colleagues and business rivals described how they are using new technologies to wean themselves from oil and boost their profits in the process. DuPont has cut its climate-warming pollution by seventy-two percent since 1990, slashing $3 billion from its energy bills while increasing its global production by nearly a third. Wal-Mart has installed new, energy-efficient light bulbs in refrigeration units that save the company $12 million a year, and skylights that cut utility bills by up to $70,000 per store. The company, which operates the nation’s second-largest corporate truck fleet, also saved $22 million last year just by installing auxiliary power units that allow drivers to operate electric systems without idling their vehicles. In a move with even more far-reaching potential, Wal-Mart has ordered its truck suppliers to double the gas mileage of the company’s entire fleet by 2015. When those trucks become available to other businesses, America will cut its demand for oil by six percent.
The executives gathered at the retreat weren’t waiting around for federal subsidies or new regulations to tilt the market in their direction. Business logic, not government intervention, was driving them to cut energy costs and invest in new fuel sources. “We haven’t even touched the low-hanging fruit yet,” Kim Saylors-Laster, the vice president of energy for Wal-Mart, told the assembled CEOs. “We’re still getting the fruit that has already fallen from the trees.”
As the discussions at the summit demonstrated, America’s top executives know something that the Bush administration has yet to realize: America doesn’t need to wait for futuristic, pie-in-the-sky technologies to cut its reckless consumption of oil and coal. Our last, best hope to stop climate change is the free market itself. There is gold in going green, and the same drive to make a buck that created global warming in the first place can now be harnessed to slow the carbon-based pollution that is overheating the planet. And green investment will not just enrich a few corporations. We know from past experience that it will strengthen America’s economy, not to mention our national security, our economic independence and the effectiveness of our world leadership. During the oil crisis sparked by OPEC in the 1970s, American business and government went into overdrive to promote conservation and develop alternatives to Middle Eastern oil. Between 1977 and 1985, Detroit boosted the fuel efficiency of its automobiles from eighteen to 27.5 miles per gallon. Oil use shrank by seventeen percent — while the economy grew by twenty-seven percent. Even more important, oil imports from the Persian Gulf plunged by eighty-seven percent, breaking the cartel’s power over America’s economy. Had we stayed the course, we would not have needed to import a single drop of oil from the Middle East after 1986 — achieving true energy independence that, in all likelihood, would have enabled us to avoid the devastating attacks of September 11th, as well as both Gulf wars.
“We customers have more market power than the oil cartel,” says Amory Lovins, the physicist whose efforts to get big business to go green have made him the Paul Revere of energy independence. “OPEC has its megabarrels, but we are the Saudi Arabia of megabarrels — the energy we save through conservation and energy efficiency. The reality is, we can save oil faster and cheaper than the oil cartel can conveniently sell less oil.”
So why, if we can profitably slash planet-warming pollution, does the world face a climate crisis? The answer is simple: market failure.
The global climate crisis is the result not of an orderly free market, but of a distorted market run amok. A truly free market is the planet’s best friend. Free markets promote efficiency. “Efficiency,” after all, means the elimination of waste — and pollution is waste. The pollution that is catastrophically heating the Earth is the result of market failure; the incapacity of a poorly designed marketplace to place a proper value on an essential asset — the atmosphere. That market failure has brought us to the brink of a planet-wide environmental collapse.
King Coal and the oil barons like to pretend that their industries dominate the energy sector because their products are cheaper and more efficient than alternative fuels, giving them a competitive advantage in the free market. This is a myth. The dominance of fossil fuels is the direct result of corporate welfare and crony capitalism that would make a Nigerian dictator balk. Direct federal subsidies to Big Oil — everything from loan guarantees and research support to outright tax breaks and waived royalty fees — amount to as much as $17 billion a year. That taxpayer money distorts the marketplace, artificially lowering the price of gasoline and making it difficult for other fuels to compete. Little wonder that the oil industry was able to report profits of more than $137 billion last year.
Hidden subsidies to the industry are even higher than the direct benefits it receives from our government. Studies show that oil pollution causes at least $4.6 billion in damages each year to crops, forests, rivers, buildings and monuments — destruction that Big Oil is not held liable for. The industry also fails to pick up the annual tab for the $54.7 billion that Americans pay to treat the host of debilitating illnesses caused by oil pollution. In addition, taxpayers spend as much as $100 billion each year to defend the industry’s infrastructure around the world, maintaining bases in the Middle East and providing military escorts for oil tankers bound for America. And that does not include the more than $100 billion that the Pentagon has spent annually in Iraq since the war began — another expense that should appear on Big Oil’s tally sheet.