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Amory Lovins- Oil and Car companies aren't all bad

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Published on Apr 3, 2008

Charlie Rose interviewed Amory Lovins, CEO of Rocky Mountain Institute on November 28, 2006. Mr. Lovins is an energy expert that has been advocating energy independence since 1976.

Charlie Rose (CR): What do you think of the oil companies? And for all of the political rhetoric, someone who knows where they're — where they're honest and where they're not honest and knows where they are accurate or not accurate. I mean it's a broad brush I'm asking you to paint with.
(AMORY) LOVINS: Well, I worked — for and with and sometimes within the oil majors for 33 years now.
CR: And therefore the answer is?
LOVINS: Well, they're different. They're not all in the same tribe. And in fact, there's a big split down the middle of the industry now between those making smart investments and the rest. And.
CR: If you look at advertising, you would assume that BP is one of them, and ...
LOVINS: BP, Shell...
CR: Shell. Shell is another because they have been... Now, would you assume that Exxon Mobil is not?
LOVINS: Well.
CR: Because they are.
LOVINS: They...
CR: ...sort of demonized as the worst?
LOVINS: I'd say they're the best in the industry in execution and probably the worst in strategy.
CR: What does that mean?
LOVINS: Well, they do inadvisable things very efficiently.
CR: That's not good for us, is it?
LOVINS: Well, I don't think it's actually good for their shareholders either. But it turns out that many of their analysts have come to conclusions strikingly similar to those in our book (Winning the Oil Endgame, www.oilendgame.com). Those tend to be the technology analysts. It's the economic forecasters that don't get it.
CR: OK, so when their analysts present that to the CEO of these respective companies, what happens?
LOVINS: It depends. In fact, the head of Exxon Mobil has just changed, and there are already some changes perhaps emerging in policy. It's a very capable company. And I think they could do...
CR: It's the most...
LOVINS: ...the oil endgame stuff better than anybody if they put their minds to it. CR: Say that again.
LOVINS: Well, I think they could do the oil endgame stuff better than anybody if they put their minds to it.
CR: This is your book. [Holds up copy of RMI's Winning the Oil Endgame (www.oilendgame.com).]
LOVINS: Yeah. And in fact, you may have noticed that the just-retired chairman of Shell, Sir Mark Moody-Stuart, wrote one of the two forewords to that book. And in general, the industry likes this book.
CR: And the other part is written by George Shultz.
LOVINS: Yeah.
CR: Yeah.
LOVINS: A very fine economist.
CR: Former Secretary of the Treasury.
LOVINS: And State.
CR: And State, and you know. And OMB [Office of Management and Budget] as well.
LOVINS: Yes.
CR: So what is the problem here? I mean, what do we need to do to have
them go where they ought to go in terms of whatever their responsibility is to the shareholders as well as their responsibility as good citizens, thinking about, you know, the energy policy of their country?
LOVINS: It's a little like the question I was asked by a senior auto making official recently. What should we do about California's attempt to regulate the CO2 that comes out of the cars and helps cause global warming? I said, well, you should throw your engineers at it and let your competitors throw their lawyers at it. Your engineers will beat their lawyers.
CR: Well, you see, I believe that too. So why don't they do that? That's the smart answer. And you're right.
LOVINS: Well, let's just look at what just happened at Ford. They hired the head of Boeing commercial airplanes to be their new CEO. And the business press said, well, that's unorthodox but interesting, because he healed a sick airplane business and introduced lean manufacturing and did tough union negotiations. That's not the important part of his resume. The important part is Boeing is beating the pants off Airbus with a technology leapfrog in the Dreamliner, 20 percent more fuel efficiency — same cost. That leapfrog is based on ultra light, strong materials like carbon fiber composites, which, if brought to the auto industry, will double cars' efficiency and make them safer at no extra cost.
CR: Are we getting to go your bowl?
LOVINS: And — so he knows how to do that. He knows about the ultra-light leapfrog and how to organize people to do that and how to make the weight-saving snowball and integrate the design. Those are all the DNA transplants that auto making needed. And in our book, we actually recommended that Detroit should do what Boeing was doing. That's a winning strategy. So watch this space. It's a sign of how — what the economist Joseph Schumpeter called "creative destruction." In the auto business, this gale is sweeping through. And it is either going to change the managers' minds or change the managers, whichever happens first. There's very encouraging signs, a tectonic plates are creaking loudly.
CR: People will get it or they won't be working.

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