The announcement that President Obama asked Rick Wagoner, the CEO of General Motors, to resign prompted me to compare the electric utility industry and the automobile industry.

Some in the electric utility industry such as Exelon and Duke Energy have figured out how to profit from reducing global warming.  They recognize that global warming is real and anticipate that the government will impose a mechanism for charging for the Carbon produced by burning fossil fuels.  Coal and gas fired power plants will have to pay something in the neighborhood of 20 to 30 dollars per ton of carbon they emit.  Exelon is the largest operator of nuclear power plants in the United States.  Since nuclear power plants do not produce carbon, Exelon will not incur the carbon costs.  So the economics of nuclear power plants will improve relative to the fossil fueled plants.  Exelon anticipated these events, embraced them and then figured out how to profit from the situation.  

I contrast this to the US auto industry which has resisted regulations to raise fuel efficiency standards.  Trucks and SUVs are highly profitable products where as US compact cars sometimes are sold at a loss.  Raising efficiency standards or raising gas prices would hurt the sales of the profitable truck and SUVs. To protect their business,  the US auto industry chose to resist and try to keep the status quo.  They said that they do not control what kind of vehicles are popular.  They claimed they just make what Americans want.  Meanwhile Toyota and Honda invested in efficient engines and then hybrids.  The Japanese figured out what the trends were and positioned their businesses to profit.  

Leaders in the US auto industry could have invested more in fuel efficient cars and then lobbied Congress to raise the efficiency standards.  Instead, the US auto industry is a wreck:

GM’s CEO has resigned.
GM is trying to sell their Hummer division
Chrysler wants to do a deal with Fiat because Fiat has a popular fuel efficient car.
We continue to pour billions of dollars of your money into the auto industry

It seems like Detroit lived in the past when there was abundant inexpensive oil and global warming was unheard of.

We can apply this lesson to our everyday lives at home and in our businesses.  Recognize that global warming is not something you can ignore.  The cost of energy will increase because the world is getting more crowded, more people can afford a better lifestyle which uses more energy, oil is getting harder to find, and a carbon emissions will be taxed.  

You have probably heard Americans represent only 5% of the world population but use 25% of the world’s energy.  The carbon emissions are not a sustainable situation.  The US needs to reduce its carbon footprint.  Meanwhile there are millions of Chinese, Indians, etc that can afford a better lifestyle which means they will consume more energy.

America can apply its capitalism, talent, and wealth to invent clean renewable energy sources.  It will improve our country and we can be a leader and export the technology to the rest of the world.

What can you do?  Here are a few ideas:

• Make your house more energy efficient – insulation, weather-stripping, CFL bulbs, programmable thermostats, geothermal…
• Invest in efficient appliances – dishwaher, refrigerator, washer/dryer…
• Unplug unused appliances – Do you have a 2nd, 3rd, or 4th  refrigerator that you really do not need?
• Consider how big a house you need when you are moving to a new house.  
• Consider fuel efficiency when buying a car.
• Can you carpool, consolidate trips, use mass transit?
• Support renewable energy.  Install a Photovoltaic solar system, tell your state and Federal officials you support clean renewable energy.