Editor’s Note: Meeting the Challenge is an open-ended series from EnergytechStocks.com intended to build a blueprint for how the world can meet the incredible increase in all forms energy that will be needed by 2030 without endangering the environment or nations’ security. In the coming weeks and months, recognized experts will share their ideas, and important new investment themes (including some that could turn out to be worth many billions of dollars) should emerge.

Posted: September 11, 2007

In parts 1 and 2 of this series of stories about how John Felmy, chief economist at the American Petroleum Institute, thinks the world can meet the challenge of securing its energy future, Felmy has concentrated on the daunting tasks of lining up trillions of dollars of new investment in oil production and undertaking a concerted diplomatic effort to keep the world’s old and new oil flowing.

In parts 3 and 4 and 5, we turn to Felmy’s reasons for optimism about the future, starting with what might be surprising to some: the promise he sees in plug-in hybrid electric vehicles.

Why surprising? Because, as an oil guy, one might expect Felmy to see plug-ins as a threat. On the contrary, Felmy strongly believes that meeting the world’s energy challenge will require utilizing all available options. “We’re going to need it all,” he says, echoing one of the conclusions of a recent blue-ribbon report on the future of energy by the National Petroleum Council.

Plug-in hybrid electric vehicles (PHEVs) are expected to be capable of going up to 40 miles or farther solely on electricity. Powering the vehicle will be as easy as plugging it in to an ordinary electrical socket. A number of manufacturers, including General Motors and Toyota, are expected to introduce plug-ins over the next few years. Surveys show that if consumers understand what a plug-in vehicle is, acceptance should be high, even with the vehicle’s expected higher price tag.

Felmy told EnergyTechStocks.com that plug-in vehicles could be key to alleviating the problem of securing enough petroleum to operate the world’s rapidly growing number of cars and trucks. But he added that plug-ins will come at a price that goes beyond its likely higher price tag.

To provide the necessary electricity, Felmy said, “You’re going to have to use a lot of coal,” which will lead to environmental concerns that will have to be solved through development of CCS (carbon capture and sequestration) technology. As with Felmy’s previously-stated political and economic concerns regarding global oil production, he is concerned about the political and economic uncertainties surrounding CCS.

Felmy’s concerns extend to energy infrastructure in general. He keeps asking himself, “How are we going to do this?” – meaning, how are such things as new power plants and transmission wires, and other things such as new railroad infrastructure to haul additional coal, going to get built. “You can’t sweep the infrastructure question under the rug,” Felmy says. “Infrastructure is going to be a daunting issue.”

Part 4 of Felmy Series will run Thursday, September 13