From AFX News Limited

LOUISVILLE, KY -- A top General Motors Corp. executive said Monday that the nation should accelerate the push toward renewable energy to fuel automobiles and said the conversion to ethanol as a leading contributor is "entirely realistic" in a few years.

Speaking at an automotive conference, GM Vice Chairman Bob Lutz said that instead of being satisfied with incremental change, the country should make it a priority to replace fossil fuel with renewable energy in "huge chunks."

"We think there is far more to be had, far quicker, for a far greater benefit to the country if we adopt a national policy of a wholesale switch," Lutz told reporters after his speech at a downtown hotel in Louisville.

The auto industry could respond by making vehicles capable of running on such alternative fuels as E85, an ethanol blend of 85 percent ethanol and 15 percent gasoline, he said. The problem now, he said, is the industry is capable of building "flexible fuel" vehicles but there's not yet a sufficient distribution system for ethanol.

Lutz said that ethanol could become a major energy component within a few years if energy policy becomes the top national priority -- similar to the "Manhattan Project" in which scientists designed and assembled the first atomic weapons.

"I think a timeframe like five years looks entirely realistic," Lutz said.

Lutz also said that GM is well-positioned to compete globally, noting that 2007 has so far been "a pretty good year" for the world's largest automaker.

"General Motors has more global resources, more global talent than any other company out there," he said.

Last month, Detroit-based GM reported a 2006 fourth-quarter net profit of $950 million, but the company still lost $2 billion for the year. It also lost $10.4 billion in 2005, and is shedding thousands of jobs and closing plants to shrink its factory capacity so that it can compete with Asian automakers, mainly Toyota Motor Corp.

Lutz said that GM's North American turnaround plan is making "great progress." He was upbeat about GM's latest vehicle introductions but said the rollouts come amid "intense market pressure."

"This industry is more than 100 years old, and it has definitely seen some dog-eat-dog days, but I'd venture to say that it's never seen a period of more intense, more pressure-packed competition than right now."

Lutz's most pointed comments, though, came on what type of energy should fuel the industry's vehicles. He said his biggest worry is that the "global-climate-change mania" in Washington will be coupled with "perhaps ill-conceived ways to curb fuel use."

He said GM has the technology to improve fuel efficiency standards for its vehicles by 25 percent to 30 percent. But the technology is costly, he said, and doesn't represent the "transformational solutions" achievable by switching to renewable fuels.

Lutz suggested importing ethanol from such producers as Brazil while U.S. ethanol production capacity is ramped up. "I'd much rather import from Brazil than from some of the countries that we're getting the oil from today," he said.

He said the oil industry also should play a role in the conversion.

"We get told what to do by the government all the time," Lutz said. "How about telling the oil companies that they are to put in one ethanol station for every gas station that has over five pumps."

Lutz said that GM has "hit the pause button" for additional models among its "large, rear-wheel drive" cars until the company gets a clearer signal from Washington on fuel-efficiency standards.

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