With oil from the wreck of the Deepwater Horizon rig continuing to flow into the Gulf of Mexico and the direct cost of cleaning up the worst environmental disaster in United States history well over $2 billion, it’s clearly time to find new solutions for our energy needs.
Part of the problem is that the decision to continue relying on oil has always been portrayed as the lesser evil of a difficult choice between continuing on along the profitable path of “business as usual” and that of sacrificing profits to develop expensive new alternative technologies.
This is wrong.
Environmentalists and business leaders should never have been at odds over this issue. Those who are not convinced by evidence of global warming should be inspired by the need to power our ever-developing world in a safe, reliable way. The failures of the attempts to repair the leak demonstrate that the oil industry has reached the limits of its engineering capabilities.
The existing large reserves of oil are in tough-to-reach spots, and many are in politically unstable countries. Oil company employees are now battling to extract oil from deep oceans and freezing tundra, and under threat of terrorism and civil war. The years of cheap and easy oil are over.
In 2008, Virgin, Stagecoach, ARUP and a handful of other British companies formed the Industry Task-Force on Peak Oil and Energy Security to look at concerns about energy security.
In a recent report, the task force released findings showing that the world’s oil supplies will peak within the next decade. Rising demand from the developing world and the likelihood that governments and regulators will impose more stringent safety codes on oil exploration companies – BP has just agreed to set aside $20 billion to compensate people affected by the spill in the Gulf – mean that we need to find alternatives to oil dependence, fast.
Though many are arguing otherwise, a planet-wide switch to alternative fuels is possible. Researchers and scientists have made huge advances in the fields of wind, solar and bio-fuel technology – technologies that are already in use, as can be seen by the wind farms sprouting up around the world.
One Virgin-backed start-up business, Gevo, uses the fermentation of sugar cane, grain crops and sugar beets to create isobutanol, an environmentally friendly fuel that can be used to power existing models of automobiles without any modifications. In future, we hope to switch to more planet-friendly plant biomass. Ours is just one of the many start-up companies in this field working on technologies that may someday help to replace oil.
One of the biggest obstacles alternative energy companies face is that of scale. If we are going to succeed, governments around the world have to find ways to support the building of a new infrastructure – especially adapting refining plants and creating cost-effective distribution systems.
We need to encourage adoption by clients in greater numbers to make it work. Only this will help new companies increase sales, bring costs down and persuade even more customers to buy these new fuels. Such a sweeping change requires the kind of capital that only a combination of government legislation and private enterprise can drive.
President Obama recently asked Americans to join him on a “national mission” to develop and adopt alternative sources of energy. His push to switch from dirty fuels to clean fuels is backed by more than $80 billion in funding for clean energy investments via the American Recovery and Reinvestment Act.
Last year our foundation, Virgin Unite, brought together a group of entrepreneurs, known as the Carbon War Room, to work on speeding and scaling solutions to develop a low-carbon economy. We believe the best way to direct our efforts is to target market failures where we can generate a huge impact on carbon reduction. We are doing this by bringing together entrepreneurs, NGOs, governments and businesses in sectors to identify opportunities, establish focused task forces, and find funding so existing solutions can scale rapidly. Similarly, governments should bring together industry players, regulators, financial institutions and NGOs to pool their expertise and capital to make the switch to alternative fuels and renewable energy a reality.
The 20th century is sometimes thought of as the age of easy oil, but it’s time to rewrite that story: easy oil was never easy on the planet. We now face the challenge of finding real alternatives, which means we have an opportunity to develop industries for the future – to create real, sustainable wealth. If we do not all embark on this quest, we risk our very survival. As former Costa Rican President Jose Maria Figueres – my esteemed colleague in the Carbon War Room – says, “There is no Planet B.”
Richard Branson is the founder of the Virgin Group and companies such as Virgin Atlantic, Virgin America, Virgin Mobile and Virgin Active. He maintains a blog at www.virgin.com/richard-branson/blog. You can follow him on Twitter at twitter.com/richardbranson. To learn more about the Virgin Group www.virgin.com.
Questions from readers will be answered in future columns. Please send them to BransonQuestions@Entrepreneur.com. Please include your name and country in your question.