The Fuse

Crosspost: How Volkswagen Is Shaping America’s Energy Future

March 17, 2017

Guest Post by T. Boone Pickens | @BoonePickens

Thomas Boone Pickens, Jr., known as T. Boone Pickens, is an American business magnate and financier. Pickens is chairman and CEO of BP Capital, and the architect of the Pickens Plan, an energy plan for America.

This post originally appeared on Medium on March 15, 2017

Volkswagen, the storied German automaker, pleaded guilty last week to three felony counts as part of a $4.3 billion settlement reached with the Justice Department in January over the automaker’s massive diesel emissions scandal.

There’s a great deal of irony in this, and a great opportunity for America’s energy security. Here’s why.

Back when President Obama rolled into the White House for the first time, I was in the midst of an aggressive campaign to address the stranglehold placed on our national security and our economy by addiction to OPEC oil.

The crux of that plan was to expand renewables (wind and solar) in power generation, and replace dirtier-burning and more expensive OPEC oil with our abundant supplies of cleaner-burning domestic natural gas in the transportation sector. The overarching goal was to break the stranglehold OPEC had on our economic and national security.

Washington lawmakers refused to foot the bill for America to go down that path. Now, in an ironic twist of fate, with the VW transgression, we have the Germans poised to finance it for us. And we’re fools if we don’t take advantage of this opportunity.

In 2015, the German automaker, Volkswagen, was found to have installed software on its diesel-powered vehicles that provided false emissions data — data that understated the emissions their vehicles were actually producing.

I’ve always been skeptical that diesel can ever burn as clean as alternatives such as electric cars or heavy-duty trucks fueled by natural gas. The lifecycle costs to produce diesel — from production to refining and out of the tailpipe — are just too great. Going to such lengths to falsify emission data just reinforces my skepticism, and my anger.

Since getting caught, the company has agreed to pay fines of $16 billion to settle claims for cheating. These fines will be paid to the U.S. government and shared among the states. In addition, owners of VW vehicles and the dealers who sold them will share in the proceeds.

We’re not talking chump change here. Texas alone, where I live, is set to get $191 million.

If the money from the settlment is used to provide incentives for the public and private sectors to purchase new, natural gas-powered vehicles, the positive effects on reducing NOx emissions will be magnified many times over the years.

This flap once again underscores the need to get diesel vehicles off the road when and where we can, both for air quality purposes and to reduce our dependence on OPEC oil. One of the most toxic emissions produced by diesel engines is Nitrogen Oxide (NOx). It is generated by all internal combustion engines, but a new natural gas engine developed by Cummins-Westport produced 90 percent less NOx emissions than new diesel-powered trucks. That engine is available today.

State regulators ultimately tasked with spending the VW settlement should have some guidance from those with history, experience and knowledge — including industry, independent experts and environmental authorities.

First, a majority of the funds should be used for vehicles which already perform below current federal NOx limits, such as the Cummins Wesport engine mentioned above.

Second, all vehicles performing below federal NOx limits should be treated equally. States should look to decrease the number of diesel-powered vehicles on the road — especially heavy-duty trucks — and replace them with trucks powered by natural gas.

Why not go right to batteries? Because batteries will not move an 18-wheeler, and they cost at least five times more than comparable diesel-powered trucks. So, while electric cars are all the rage, batteries are not a substitute fuel source for over-the-road trucks.

Finally, while there will be justifiable efforts to use these funds on state fleets, it is even more important to find ways to allow private-sector fleets access to these funds. In fact, that’s where the bulk of the money should go.

Keeping in mind this settlement money is coming from a corporation and not the taxpayers, there will be no shortage of ideas from state regulators on how to spend these funds. States should show leadership by not using it solely to upgrade state fleet vehicles.

The reason is simple. If states use this money to replace aging fleets, this will be a “one-and-done” deal. On the other hand, if the money is used to provide incentives for the public and private sectors to purchase new, natural gas-powered vehicles, the positive effects on reducing NOx emissions will be magnified many times over the years.

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