Fueling New Ideas

Nonprofit groups are taking a more-active role in finding and promoting alternatives to oil and gas

The United States burns through more than 20 million barrels of oil a day, guzzling 18-percent more per day than it did just five years ago. More than

60 percent of the oil is imported, at a cost last year of some $270-billion. And most of it ends up in cars and trucks, whose tailpipe emissions contribute to global warming.

Yet finding solutions has proven challenging, particularly for nonprofit leaders who have struggled to figure out how philanthropy can best make a difference in solving a problem that already has attracted billions of dollars from government and business.

Over the past several years, however, nonprofit groups have taken an increasingly active role in the search for alternatives to fossil fuels, moved by a new sense of urgency in the wake of what they see as encouraging developments on the legal and political fronts.

“There is a great deal of political concern and media attention about global warming and oil security right now, and philanthropic dollars going into the field have grown,” says Hal Harvey, environmental-program director at the William and Flora Hewlett Foundation, in Menlo Park, Calif., which contributes about $60-million annually to such causes. “But compared to both the scale of the problems and the opportunities at hand, we are still well below where we ought to be. This is a pivotal time.”

Grant makers now spend more than $200-million a year on oil issues and efforts to combat global warming, according to a report issued last month by California Environmental Associates, in San Francisco. Based on interviews with experts and activists, the group also suggests that an additional $600-million a year is needed over the next decade to globally curtail the emissions thought to cause climate change before they make the destructive problem all but irreversible.

Google, the Internet-search company, has made combating global warming a priority for its emerging philanthropic division that could give away a billion dollars over the next 10 years, though grants to the cause have been limited to date.

A major beneficiary of the money now going toward the cause is the Energy Foundation, a grant-making organization in San Francisco supported by Hewlett and other foundations. Its annual budget is now nearly $40-million, 60 percent more than it received in 2003. This year, Hewlett grants to the Energy Foundation will total $14-million.

Among the priorities for the Energy Foundation: helping the Chinese government temper its citizens’ thirst for oil. With the charity’s help, China recently imposed fuel-economy standards for cars, trucks, and other vehicles that are more demanding than those in the United States.

“Foundations do not have the resources to directly fund solutions to our energy challenges,” says Eric Heitz, president of the Energy Foundation. “Where foundations can play a role is in the technical analysis, economic analysis, and public education around the importance of these new technologies and developing model public policies to advance them.”

Among other nonprofit approaches under way:

• The Samuel Roberts Noble Foundation, a nonprofit agricultural-research organization in rural Oklahoma created with oil-industry wealth, is spending $2-million a year to perform cutting-edge research on switch grass, a native plant that can be converted into ethanol.
• Two nonprofit groups — the Union of Concerned Scientists, in Cambridge, Mass., and the Rocky Mountain Institute, in Snowmass, Colo. — have taken it upon themselves to do what they say Detroit won’t: design prototype gas-saving cars.
• The Association for the Study of Peak Oil-USA, a nonprofit organization in Denver, hopes to convince politicians and the public that America’s looming oil problems are serious and imminent, through research, conferences, and campaigns.
• The Energy Future Coalition, a Washington nonprofit group, and other charities are working to unite businesses, farmers, environmental groups, and others interested in biofuels and develop policies to help ease what could be a massively complex energy system that results from the billions of dollars being pumped into studying alternatives to fossil fuels.
• A dozen charities — including the Natural Resources Defense Council, the Sierra Club, and Greenpeace — are working together to push for changes in laws and government regulations. They joined 15 states and municipalities in suing the Environmental Protection Agency two years ago for failing to consider carbon dioxide, a major component of car exhaust, as an “air pollutant” subject to its oversight. The groups have since used the momentum from that court victory to push for stricter federal auto-emissions laws and fuel-economy standards in the states.

Nonprofit leaders involved in the search for alternative fuels say they hope to interest many more of their colleagues in such efforts. “Oil and our oil addiction impacts so much of our daily life that it’s hard to imagine a nonprofit group that touches on environmental or energy-related issues not having some aspect of this fall within their purview,” says Nathanael Greene, senior policy analyst at the Natural Resources Defense Council, in New York.

Rising Prices

Most charities that focus on energy issues argue that governments must take a major role in moving America away from oil.

A report issued last year by the Natural Resources Defense Council says that companies alone cannot make the adoption of biofuels a reality because “the potential rewards are too long-term and too many of the benefits are societal and hard for a single company to capture.”

“With energy, more so than in any other market area, policy drives technology,” says Mr. Heitz, of the Energy Foundation.

However, some advocates in the energy debate say that oil’s rising price, more than anything else, will wean the United States off its use and that conservation methods and the adoption of alternative fuels should be driven by the free market, not government dictums.

“Energy is a commodity like any other commodity in the marketplace,” says Jerry Taylor, a senior fellow at the Cato Institute, a Washington think tank. “The idea that a government subsidy or preference or mandate can magically transform a noncompetitive technology or industry into a competitive technology or industry is an age-old conceit in the U.S. The track record is worse than abysmal.”

Mr. Taylor refers to the Energy Future Coalition as the “Energy Past Coalition,” saying that the charity’s calls for increasing government biofuels research and subsidies harkens back to energy polices of the Jimmy Carter presidency, when the government spent more than a billion dollars on synthetic-fuel programs that proved largely fruitless.

Reid Detchon, who heads the Energy Future Coalition, however, says the Cato Institute and others “underestimate the inertia of the energy market,” as well as the size and urgency of the challenges the country faces.

“It seems very obvious to us that over the next 10 or 20 years there will be more volatility in the oil markets with the definite possibility of dramatic price spikes that could be very damaging to the economy,” he says. “Do we wait until those things happen and then have the market take over, or do we prepare for them in advance?”