U.S. Can Free Itself From Oil, Report Says

A prominent energy-efficiency advocate contends in a new report funded partly by the U.S. government that the U.S. can wean itself off of oil by 2050 and save money in the process.

Some observers said energy-efficiency guru Amory Lovins, head of the Colorado-based Rocky Mountain Institute, was being too optimistic in his report. Others said that, particularly amid today's relatively high oil prices, he might have a point.

The report, funded partly by the Pentagon, says the U.S. can roll out enough energy-efficient technology to halve its oil use and then supplant the other half with plant-derived "biofuels" and a reduced use of natural gas, at a cost of just $12 a barrel of oil saved. That is a fraction of the current price of oil; the benchmark crude-oil futures contract settled yesterday at $46.35 a barrel on the New York Mercantile Exchange.

The crux of this push would be replacing today's cars and light trucks with a crop of futuristic fuel-efficient vehicles called "ultralights." These cars and trucks would be made of material such as carbon fiber that halves their weight while still ensuring safety, Mr. Lovins says. Ultralight cars could get about 85 miles to the gallon and ultralight midsize sport-utility-vehicles could get about 66 miles to the gallon, the report says.

Mr. Lovins helped start a small Colorado company that has been trying to get ultralight vehicles onto the road. The report calls for a government subsidy that would speed the technology along -- a so-called feebate. Essentially a tax on consumers who buy gas-guzzlers, proceeds would be redistributed among those who buy fuel-efficient models. Feebates have been proposed before in the U.S., but they have proved unpopular with politicians, who don't want to be perceived as telling Americans what to drive.

Mr. Lovins and his Rocky Mountain Institute are regarded as leading energy-efficiency authorities, hired as consultants by companies to help reduce energy consumption in ways that ultimately save more money than they cost. At the same time, many industry executives call Mr. Lovins too optimistic in his predictions about the potential for revolutionary energy-efficiency savings on a national or global level.

Some observers doubt whether Mr. Lovins's new report would amount to much. "Based on Amory's track record, you have to wonder whether this technology will be adopted any more than his other ideas," said Russell Jones, an economist at the American Petroleum Institute, an oil-industry trade group based in Washington, D.C.

Others, noting that fuel-efficient hybrid gasoline-and-electric vehicles are growing popular amid higher oil prices, say Mr. Lovins is worth listening to. "I'm inclined not to be dismissive of it," said John Casesa, automotive analyst at Merrill Lynch, who argued that investors might be able to make money by following Mr. Lovins's thinking. "From my standpoint, the very fact that most investors do not view this as an important issue right now is an opportunity."

Write to Jeffrey Ball at jeffrey.ball@wsj.com

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