Plus operates a fleet out of Vancouver, running 90% off of the biofuels from food waste collected from the UBC campus. :)
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Use biofuels then tear down more rain forest for biofuel farming, use up more water resources to farm land and also affect food prices.
Use electricity then build more coal/nuclear power plants and still have greater pollution. Use water and find fresh water reserves in many places get extremely low/disappear. Use compressed air and find yourself using electricity to operate and large loss of energy in conversion.
I could add pros/cons to each of those examples, but that's arguing the details and not the problem. Suffice to say, if any of these sources of energy had been given the same attention that internal combustion had, we would have more effective alternatives on the market now. As it is, most have made leaps and bounds in efficiency in the few decades they've been pursued.
The problem is a matter of extremes.
Go back to my first example, the biofuels from UBC campus. It works for the UBC fleet, because they can process their own fuel, from their own waste, and power the vehicles. The vehicles operate within a certain range, never outside of Vancouver city, so the vehicles can refuel when they return to campus. It saved the university money, and cut down on a lot of waste. The problem is that UBC does not produce nearly enough waste to power vehicles for everyone in the city.
And to me, that's the problem. People are attacking the issue as a matter of finding something to replace oil. It's probably a combination of tradition and economies of scale. But if we replace our massive dependancy on oil with a massive dependancy on something else, I don't think we're really fixing any problems. I really think our era of cheap consumption needs to end.