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US car giant prepares world for life without -

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ALI MOORE: With oil prices at record highs, motorists may soon become familiar with the phrase
"peak oil". It's the theory that more than half the planet's oil reserves have now been used and
demand will inevitably outstrip supply, driving prices ever higher.

While some experts reject the theory, arguing the planet still holds enormous reserves of oil and
gas, peak oil has won a powerful new backer. This week the head of car giant General Motors
publicly warned the switch to biofuels such as ethanol and electric cars was now inevitable.

Kerry Brewster reports.

SONG: Most people that I know think that I'm crazy and...

KERRY BREWSTER: Petrol heads let it all hang out at Canberra's annual Summernats. It's an all fun,
all Australian celebration of the car, but the party is winding up.

JOHN KAYE, NSW GREENS MP: The day of the gas guzzler is over. It's not the Greens or the
environment movement that will end the gas guzzler, it is Mother Nature herself.

KERRY BREWSTER: This week from the car capital of Detroit, the giant US manufacturer General Motors
chief executive conceded that the petrol engine's days were numbered. Chief executive Rick Wagoner
says oil supply has peaked, and that the race is on for replacement fuels.

RICK WAGONER,CHIEF EXECUTIVE, GENERAL MOTORS: We need to develop alternative sources of propulsion
based on diverse sources of energy.

KERRY BREWSTER: At the massive Detroit car show, the battle lines are drawn. Jostling for the
spotlight, rivals are showing off their green machines. Electric petrol hybrids, ethanol friendly
engines and more. All clean, healthy competition, according to Toyota Australia.

DAVID BUTTNER, TOYOTA AUSTRALIA: If it's a race to find the best way forward, then the best results
we're going to get, the faster we're going to really modify the existing technologies, but also the
faster we're going to find those new technologies.

KERRY BREWSTER: The cost of crude cracked $US100 a barrel last month and experts predict the price
for crude will keep rising as global demand grows faster than supply. For Australians, it means
higher prices at the pump, possibly $2 a litre for petrol this year. It's not just private
motorists affected, consumers will pay for the ever increasing costs of moving goods long distance.

JOHN KAYE: This is going to have a huge impact on the way we transport ourselves around cities,
around the country.

KERRY BREWSTER: John Kaye uses pedal power. Before he became a NSW Greens' MP, he was an electrical
engineer with a PhD from California's prestigious Berkeley University. He has spent decades
researching energy sources and arguing the case for fossil fuel alternatives.

JOHN KAYE: To ignore the warning coming from the senior executives of General Motors would be to
condemn us to a future where we lose the ability to move. Those economies that thrive and prosper
will be those that invested in mass public transport, urgently and immediately.

KIM CARR, MINISTER FOR SCIENCE AND INNOVATION: The major question arises in regards to the
productivity of the nation, the major social questions that arise about the questions that relate
to where people live. It is, of course, a major issue for the society to deal with. That's why the
Labor Government is moving forward to work with the States to ensure that we have the opportunities
available through the development of appropriate infrastructure.

KERRY BREWSTER: More and more US corn and canola fields are producing ethanol. But the drive to
make biofuels from crops is driving up the price of grains worldwide. Last year, Mexicans struggled
to pay for their staple food - the corn bread, tortilla.

LEIGH MARTIN, TOTAL ENVIRONMENT CENTRE: We need to make sure that diversion of crops into the
creation of ethanol doesn't simply drive up fuel prices and that we don't create other global
warming problems by clearing vegetation to create crops for generating ethanol.

KERRY BREWSTER: The European Union, which has set a 10 per cent biofuel target, is increasingly
concerned about the wholesale clearance of rainforests in Indonesia, Brazil and Latin America to
make way for biofuel crops.

JOHN KAYE: In a greenhouse constrained world where we're already having difficulties with
agriculture, the last thing we want to do is put transport in competition with food supply, and
that's precisely what bioethanol will do.

KERRY BREWSTER: Here in Australia, it's mostly wheat being grown for ethanol. And now, there's a
car to fit - a GM Saab that runs on 85 per cent ethanol. The fuel to power it will be on sale in
Sydney, Melbourne, Adelaide and Brisbane.

A recent CSIRO study predicted that if all currently exported wheat was used to make ethanol, it
would replace between 11 per cent and 22 per cent of petrol used. But, Australia would be forced to
import wheat in drought years.

KIM CARR: There are issues that relate to the question of the uses of land supply. There are
questions that relate to whether fuel or food is produced from the crops that are available. There
are new technologies, however, that mean coming onboard, which means that we are able to think
about different ways in which we can produce biofuels into the future.

SONG: Most people that I know think that I'm crazy and I know at times I act a little hazy...

KERRY BREWSTER: More than a million new cars hit Australia's roads last year, the most popular
still, the 6 cylinder Holden Commodore. But a small and growing proportion, just under 4,000, were
imported petrol-electric hybrids. They have batteries that charge on the road, and use around 50
per cent less fuel. Unlike most other drivers, Jacqueline McCann can still laugh when the talk
turns to petrol prices.

JACQUELINE MCCANN, MOTORIST: Well, it's very, very cheap to run, I probably fill it up once every
three weeks, and it's a nice stylish car. It's smooth to drive, it's got everything I need.

KERRY BREWSTER: You're making a lot of savings on petrol?

JACQUELINE MCCANN: Making a lot of savings on petrol and you can't be unhappy about that.

KERRY BREWSTER: The fully electric car is on the drawing boards of the big car makers. General
Motors says they're inevitable.

RICK WAGONER: So are electrically driven vehicles the answer for the mid and long term? For sure.

KERRY BREWSTER: But the future electric plug-in cars will only be as clean as their sources of
energy. Australia relies overwhelmingly on coal, unless it shifts to cleaner sources of
electricity, the electric plug-in car would be a step backwards in terms of CO2 emissions.

JOHN KAYE: A transformation of the transport system in Australia from gasoline based to electricity
generated by coal would cause an 18-million tonne a year increase in our greenhouse gas emissions.

fired power stations and clean coal, other sources of electricity, those are important challenges
that have to be addressed as part of the overall solution.

KERRY BREWSTER: The Holy Grail is the hydrogen powered car. BMW showed off its prototype in
Melbourne today. The company says governments must develop the solar and wind energy sources to
drive the creation of hydrogen from sea water.

GUENTHER SEEMANN, BMW: If you want to clap hands you need two hands, right? From our part we showed
that a car manufacturer is able to produce an engine with zero emission. The other side is the
totally infrastructure which is needed to run such cars. And this a car company cannot do alone.

KERRY BREWSTER: So how have Australian car makers progressed in the race to the clean, green car?
General Motors Holden unveiled a prototype for an electric-petrol car in 2000, but the project
stalled. Today, it's a Sydney Museum piece.

The Federal Government is encouraging local manufacturers to go green. It'll give the industry up
to half a billion dollars through its green car innovation fund.

ANDREW MCKELLER: There are plans under way now to introduce a whole range of new technologies, a
whole range of new capabilities.

KIM CARR: The Australian motor companies are going to rise to the challenge faced by climate
change. In my judgment, we will see new technologies emerge in Australia. We want to do all we can
to encourage the commercialisation of those technologies so that Australians do have the options to
drive Australian made, green cars.

ALI MOORE: Kerry Brewster with that report.