Lexus: The hybrid debate blog

The reason that petrol rules our economy is that it has traditionally been a cheap, convenient way to store energy. It can be transported easily and converted quickly to propulsion via combustion-driven pistons. But, regardless of climate change, the world’s oil supplies are dwindling. Research by the International Energy Agency suggests we will run out in 30-35 years. The automotive industry is being forced to react and, in this context, the hybrid car represents a fuel diversification strategy as much as a response to environmental activism.

As the cost of petrol rises, more and more drivers will be persuaded to adopt hybrids. Indeed, for our notional future to come about, we may need to reach "peak oil", the point at which the rate of oil production begins its inexorable decline.

Of course, other commodities could rise in price - coal, gas, even water. That’s why oil companies are diversifying into other fuels. Shell, for example, is collaborating with the German government to research the use of agricultural waste for power generation. All the major oil companies, in fact, are seeking to control the most promising alternative energy sources by buying out patents and forging strategic alliances or joint ventures with smaller companies. If hybrids were to become mainstream vehicles in the future, they’d still be powered ultimately by the same brands.

Ancillary industries, on the other hand, would see big changes. For example, if a large number of hybrids were plug-ins, then energy demand would shift significantly away from petrol, with implications for refining, haulage and methods of electricity generation.

Equally, if bio-fuels became a predominant fuel type for hybrids then companies in the agricultural sector would stand to benefit. A recent report by the Organisation for Economic Co-operation and Development (OECD) suggests that the EU’s target of achieving 10-20% of its energy from biofuels would have a detrimental effect on its agriculture, but it ignores the fact that most biofuels are imported from Brazil and Malaysia. European farmers could in fact benefit significantly by growing and processing enough crops to power their own cars - and potentially other vehicles and machinery - with biodiesel or ethanol.

"Distributed energy generation" like this will play a crucial role in the shift towards clean driving technology. As plug-in hybrid vehicles (PHEVs) proliferate, so drivers will have many more options about how to charge their batteries. They could, for example, top them up with rooftop wind turbines, as well as through the wall socket. As public awareness of sustainable living grows, so drivers will find it easier to generate energy for themselves rather than looking to external suppliers. A variety of companies will start up to provide these supplementary solutions. Ultimately, we could see the local generation of whole new fuel types, such as liquid hydrogen, via tap-water "reformers" or even exotic solar panels.

In this context, the traditional energy companies will have to become masters of technology rather than merely suppliers of raw and processed materials.