Ford and the American Carbon Consumer

Last week I attended a conference at the University of Michigan for college and graduate students from a variety of backgrounds to address energy sustainability through field trips, lectures, and debates.  The take-home message was that accelerating world population and living standards is creating enormous pressure on the global energy system, which exacerbates climate change, international conflict, and economic strain.  The only clear long-run solution is a transformational shift in energy use and technology.

Despite some of the fascinating technologies of the future that I saw throughout the conference - including a car powered by fuel cells, a solar cell lab, and cutting-edge green architecture - I was most impressed by my visit to a facility dating back to 1928:  The Ford Motor Company's River Rouge plant outside Detroit.  One might wonder why I, as someone deeply concerned with energy sustainability, was captivated by this colossal factory which contributes towards the million gas-guzzling Ford F150 pickup trucks sold each year.

Seeing the River Rouge factory brought the industrial concept of "efficiency" to life almost a century after Henry Ford invented the modern assembly line.  Doors and truck beds floated by on mechanical tracks along the ceiling, while trains of moving platforms carried truck cabs along the floor so that workers could easily hop on and off to install sunroofs, floor boards, and the like.  My guide pointed to the number "243" on a large screen: "See that?  That is how many trucks have been manufactured since 6 AM."  Looking at my watch, that was approaching one truck every minute.

I see Ford's state-of-the-art industrial processes as an opportunity.  Create similar plants for wind turbines and solar cells, and the price of renewables will become competitive.  Do the same for electric cars and meters for the Smart Grid, and we're talking about an energy revolution.  The key is to drive consumer behavior.  People demand Ford trucks (many of them, in fact), and decades of engineering breakthroughs have allowed Ford to provide these trucks at high quality and low price.  Change consumer behavior by creating a price on carbon, and Ford will respond.

There is an important distinction.  While regulating producer behavior has more limited effects (e.g. CAFE standards narrowly promote fuel efficiency), stimulating shifts in consumer behavior spurs comprehensive and outside-the-box changes by producers.  How might Ford react to consumers demanding low-carbon products?  Providing more hybrids is an obvious option, but imagine if Ford identified more profitable uses for its high-efficiency factories given rising demand for renewable energy.  By converting its plants, Ford could mass-produce the Model T of wind turbines.  Additionally, a carbon cost would have a considerable impact on Ford's energy-intensive industrial processes, leading Ford engineers to come up with new breakthroughs, this time in energy efficiency.

Ford is already responding to changing consumer behavior.  In my tour, Ford marketing people showed off the major renovation of the River Rouge factory to improve its environmental impact, which includes one of the largest green roofs in the world and fuel cells that use toxic paint emissions to create electricity.  A PR move?  Definitely.  But, if consumers care, Ford will do it - and at River Rouge, it's to the tune of $2 billion.

With all the political debate surrounding the climate change bill, it's easy to forget the simplicity of the underlying problem:  While no one pays to emit carbon, everybody will suffer the consequences.  Whether through a tax or a cap, put a price on carbon because consumers will react, and no force compares to the speed and power of American-style consumerism.  Industry, technology, and a complete transformation of the energy system will follow the money - just ask Henry Ford.

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