China could beat the U.S. in the race to replace crude oil with a viable competitor, but the U.S. is more likely to create a greater number of alternative fuel breakthroughs, according to a report global technology consultant Accenture released Wednesday.
China could beat the U.S. in the race to replace crude oil with a viable
competitor, but the U.S. is more likely to create a greater number of
alternative fuel breakthroughs, according to a report global technology
consultant Accenture released Wednesday.
The world's first- and second-largest economies are taking divergent routes to
cutting back dependence on foreign oil, both possibly yielding results that
could reverberate around the globe. In the alternative energy arena,
Beijing
continues to focus most of the country's alternative energy investment and
effort on developing batteries to fuel hybrid or all-electric cars and trucks
and implementing the infrastructure needed to service such vehicles.
That focus could grow alternative energy usage in transportation faster in
China than in the U.S., where the government is spreading its largesse around a
greater number of emerging technologies and allowing the market to sort out
which will proliferate.
"In
China
,
alternative fuel disruption may come up faster, but the
U.S.
might
find something that becomes a breakthrough," Melissa Stark, Accenture's
global lead on clean energy, said in a telephone interview.
China
sits
on one of the world's largest reserves of lithium and its manufacturing sector
enjoys advantages of scale and labor costs. All together, that allows it to
make lithium batteries for an average of $7,400 each, more than 25% less than
the world average, according to Accenture.
The U.S. Department of Energy has been more of an equal-opportunity gambler. In
a country that is a world leader in corn and soybean production, grain-based
biofuel production has so far enjoyed the greatest success. But the government
has spread grants and other subsidies among a wider slate of emerging
alternative energy sources, including algae, wind and advanced non-lithium
batteries, while the private sector has also played a large role.
"There's a push on innovation--there's a lot of competition among
technology that is pushed, but also resisted by, different groups," Stark
said.
The two countries' approaches will eventually compete on a global stage. Different
countries may have to either move their energy dependence from foreign-based
crude oil to foreign-based lithium deposits, or license technology from the
U.S.
,
Stark said.
One industry that will almost definitely be a loser will be the
U.S.
refining industry. Despite the current gains in crude oil futures and gasoline
prices,
U.S.
gasoline demand is expected to fall by 30% by 2030, Stark said. So, as diesel
appears to be emerging as the hydrocarbon fuel of choice for overseas markets,
refiners who can't adapt will have to shrink operations or close.
Under that scenario, Valero Energy Corp. (VLO) could be an example of what
awaits other
U.S.
fuel
producers. The largest independent refiner in the country, Valero in the past
few years has acquired 10 ethanol plants and part ownership in a pilot plant
that makes fuel derived from wood. It also sold two oil refineries it
considered no longer profitable.
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