Hurricane Sandy and a Missed Opportunity

Last week as I was sitting in the dark waiting for Hurricane Sandy to pass and the lights to come back on I recalled a series of events from a decade ago that the storm made freshly relevant.

In 2000, when I was the president of a coalition of institutional investors and environmental groups called Ceres, I visited an exceptional research lab at General Motors to be introduced to their new concept car, the Hy-Wire. This was an automobile straight from Star Trek: powered by a hydrogen fuel cell, the bulk of the energy system and battery sat on a low-slung "skateboard" design. Each of the wheels contained a separate powerful electric motor guided by an electronic "drive by wire" system. Separate bodies — from sleek roadsters to family friendly mini vans — could be lowered on to the skateboard and docked, raising the possibility that one could own one body for commuting and another for recreational use. This was a brilliant design worthy of American engineering genius in the twenty-first century.

There were, of course, problems with converting America's fleet of automobiles to fuel cells. One difficulty was how to produce the hydrogen to power the cars. The easiest answer was to build hydrogen reformers that could convert natural gas into hydrogen, either at a major regional facility, at an individual gas station, or, in some designs, on board the vehicle itself. One of the biggest challenges in turn was to how to convert America's gas stations to supply the natural gas and hydrogen. It was a classic version of economic chicken and egg. Without the fuel cell cars, there would be no demand for the hydrogen. Without the hydrogen, there would be no demand for the cars.

A few months later, I found myself on a panel at MIT discussing America's energy future with a senior executive from British petroleum. We touched on the subject of fuel cell infrastructure, and I asked him about the size of the problem. How many gas stations were there in the United States? I asked. About 150,000, he said. How much would it cost to convert a gas station to provide hydrogen? I continued. Anywhere from $500,000 to $1,000,000, he replied. And did every gas station have to be converted to provide adequate supply? No, he said, they anticipated that only about a third of existing stations would need to switch to provide adequate coverage.

I did the math. "So you are saying that the price of converting every gas station in the country at the maximum price would be about $150 billion?" I asked. Yes, he said. "And if the price were only $500,000 and we only did 1/3 of them, we could do the job for $25 billion?" Yes, he agreed. We came to the conclusion that a reasonable cost for the whole job would be about $50 billion.

That looks like a lot of money, but at less than 1/3 of 1% of a single year's GDP, it seemed a bargain price to change America's automotive fuel source so profoundly. The investment had the potential to completely revitalize America's auto industry, alter our fuel sources, and, because hydrogen fuel cell reforming emits less than half the carbon emissions of internal combustion engines, catapult us into a clean energy future. When the discussion came up in the press, however, political and business analysts ridiculed the idea that Congress would ever commit $50 billion to such a switch.

All these numbers came back to me as I waited out Hurricane Sandy. According to Bloomberg Business Week, the cost of this one event — intensified by climate change — will be more $50 billion. In 2005 Hurricane Katrina cost $146 billion. The price of the 136 major storm events over the last thirty years — which have been intensifying in impact — exceeds $897 billion.

As American we often pride ourselves on our common sense, which is summed up in old adages that go back to the frontier. "An ounce of prevention is worth a pound of cure," is a phrase that has inspired the safety programs of America's best manufacturing facilities and service companies. But somehow we have not been able to turn this into national action on energy.

We turned down the opportunity to spend $50 billion to change America's future ten years ago, and yet we have seemed more than willing to spend many times that amount cleaning up climate damage after it has taken place. And this does not count the deep human suffering piled on top of these economic numbers.

Another favorite adage in business is that "we manage what we measure." Having now measured the damage that has been falling on us like pianos from the sky, will we now manage to invest in those actions that will protect us from greater devastation ahead?

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