The business leader's guide to the low carbon economy

The big three American car companies are cautiously optimistic. After a dreadful 2009 when sales plunged to 10m and the auto giants teetered on the brink of collapse, sales in 2011 are predicted to be up to 14m. After federal bailouts GM and Chrysler are still in business while Ford is even profitable.

The US manufacturers are wrong to be optimistic. They specialise in a product – the oil powered internal combustion engine – that is coming to the end of its product life cycle. The internal combustion engine has had a good run for 100 years but its days are numbered.  Just as the era of the steam locomotive ended its 130 year run in the 1960’s, so the internal combustion engine will start to be phased out over the next 10 years or so. The future of personal transportation is electric and the big three just don’t get it.

Chinese car manufacturers do though. The China Association of Automobile Manufacturers is committed to putting half a million all electric vehicles on the road by 2015. While this is only about 0.5% of the total number of cars in China, the quantity of electric vehicles will rise rapidly as both the price of oil and the Chinese demand for cars moves ever upwards.

A 1.5 tonne aeroplane, the Solar Impulse, has just set a new world record for the highest and longest flight by a solar powered aircraft. It landed near Bern, Switzerland, this morning, after flying for 26 hours and reaching 8,700m. Charging on board lithium ion batteries from sunlight in the day enabled it to stay aloft during the night, so in theory a solar powered plane could stay in the air indefinitely. The team’s next goal is to fly non stop around the world, probably in 2013.

The technology of photvoltaics will have to come a long way before there is any commercial application to flight. Viable alternatives to fossil fuels already exist for trains, motor vehicles and ships, but so far aircraft rely entirely on petroleum. Anyone who can come up with an alternative, non CO2 emitting means of powering an aircraft is going to become very rich indeed.

Yesterday a convoy of electric cars drove from Coventry to Birmingham, to publicise the fact that both cities now have a network of electric car charging points. The cars themselves are part of a year long experiment in London, Newcastle, and other British cities to see how ordinary drivers respond to electric cars for everyday journeys. Local government in the UK is very enthusiastic about electric vehicles – London Mayor Boris Johnson wants to see 100,000 electric cars on the streets of London within the next few years, and is busy installing more than 25,000 charging points throughout the city. National government is enthusiastic too, although Business Secretary Vince Cable has refused to confirm that the current administration will honour a Labour pledge to give a £5,000 grant to anyone who buys a new all electric vehicle from 2011 onwards.

Yes, this really is an electric car

Electric cars are far from perfect – the batteries are heavy, expensive and don’t last very long – but it’s already clear that electric cars will take over from petrol and diesel. At the moment electric cars are more expensive to build, but cheaper to run, than petrol. As the technology develops, and the price of oil continues to rise, sometime in the next five to ten years old fashioned petrol cars will simply be too expensive in comparison with their electric rivals. And even if you recharge your electric car from the national grid as it is now – ie mostly powered by fossil fuels – the overall emissions of CO2 per mile are still less than that of a typical petrol or diesel car.

A good rail network is an essential part of a low carbon economy. A train uses roughly a tenth of the energy of a car or plane to transport a given number of people a given distance. That’s why it’s shameful that the UK currently has only 100 km of high speed rail – from London to the Channel Tunnel – compared to France’s 1700 km or Japan’s 2500km. Though compared to the US, which has no high speed rail at all, we don’t look so bad.

Yesterday’s announcement by the curiously named Transport Secretary, Lord Adonis, may change all that. He says that if re-elected, a Labour government will begin construction of a new fast rail route – High Speed Two – from London to Birmingham in 2017, with possible future extensions to Leeds and Manchester. Conservative transport shadow Theresa Villiers responded by saying that if the Tories take the reigns of power in a few month’s time, they’ll begin building High Speed Two in 2015, all the way to Leeds and Manchester, with an extension to Scotland to follow.

More on High Speed Two

The annual Geneva motor show is one of the big events in the petrolhead’s calendar, second only in importance to Detroit. Except that his year’s show is not quite the celebration of all things petrol driven as once it was: When Lotus, Ferrari and Porsche join Toyota, GM, Ford and Chrysler to showcase hybrid petrol-electric vehicles, you know that change is in the air.

According to Carlos Ghosn, Nissan/Renault’s boss, a hybrid is like a mermaid – if you want a fish, you get a woman: if you want a woman, you get a fish. Why not go all the way and build a completely electric car? That’s exactly what Nissan plans to do with the release of its all electric Leaf car.

OK, so batteries are currently heavy, expensive and don’t give you the range of a hybrid. But Nissan is working on these. Since the company began developing its lithium-ion batteries in 1992, it has increased their power density by a factor of ten, while reducing their cost by a factor of 16. And it’s partnering with an outfit called Better Place, to put a network of battery swap stations, initially in Denmark and Israel, and then throughout the world.

You can of course already buy an electric car. The Tesla Roadster gives you 0 – 60 in 3.9 seconds, a top speed of 125 mph and a range of 200 miles for £86,750. If you are content with a range of 50 miles and a top speed of 50mph the G-Wiz is a more modest £8000. But no one has yet produced an affordable mass market car. That will change with the launch of the Nissan Leaf in Japan and the US this December.

As mainstream manufacturers like Nissan get in on the act, prices will come down. Even if the upfront costs of an electric car are relatively high, the running costs are very low: The G Wiz, for example, costs about 1p per mile to drive – in running costs the equivalent of a petrol car that does 600 miles to the gallon.

As oil prices continue to rise, it’s likely that more manufacturers will, ahem, take a leaf out of Mr Ghosn’s book.