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TRB Webinar:

Energy Solutions

August 19, 2009, 2:00 PM EDT

Today’s moderator and presentersRobert Rosner, University of Chicago, [email protected]

Dan Bilello, National Renewable Energy Laboratory, [email protected]

John Heywood, Massachusetts Institute of Technology, [email protected]

Steven Plotkin, Argonne National Laboratory, [email protected]

mailto:[email protected]






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U.S. Transportation System Scenarios to 2050 in a

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Slope Maintenance and Slide Restoration




The U.S. Energy Crisis:Solutions to Meeting the Nation’s Energy Needs

“What should be the centerpiece of a policy of American renewal is

blindingly obvious: making a quest for energy independence the moon shot of our

generation“

-- Thomas L. Friedman, New York Times, Sept. 23, 2005.

Robert Rosner, presidingThe University of Chicago

Dan Bilello, panelistDOE National Renewable Energy Lab (NREL)John B. Heywood, panelistMassachusetts Institute of TechnologySteven E. Plotkin, panelistDOE Argonne National Laboratory (ANL)

NRC Transportation Research BoardWebinar, August 19, 2009

NRC Transportation Research Board

Webinar, August 19, 20092

Introducing our panelists:

John Heywood is the Sun Jae Professor of Mechanical Engineering at the

Massachusetts Institute of Technology. His research interests cover internal

combustion engines, automotive technology, energy & transportation, air

pollution, and combustion.

http://meche.mit.edu/people/faculty/?id=43

Dan Bilello is the International and Environmental Studies Group Manager at the

National Renewable Energy Laboratory. He is a member of the International and

Environmental Studies Group in NREL's Strategic Energy Analysis and

Applications Center; and his primary research interests are in international energy

policy and climate change.

http://www.nrel.gov/applying_technologies/staff/dan_bilello.html

Steven Plotkin is a senior staff scientist with Argonne National Laboratory’s

Center for Transportation Research. His research focuses on analysis of

transportation energy efficiency, automobile fuel economy technology and policy.

http://www.transportation.anl.gov/experts/resumes/plotkin.pdf



Setting the stage:

1. Energy demands, US and world-wide

2. What can be done – the energy alternatives:

– Changing the demands: Conservation, tax policies, efficiency, …

– Changing the supply:

• Solar• Nuclear • Wind• Biofuels• Carbon capture w/ fossil fuels

– Changing the distribution and use:

• Grids (‘smart’, continental, …); public transport; life styles; …– … and the key constraints:

• Global & local climate impacts• Energy security, …

3. Why is there so much uncertainty, and what can we do about it?



The global energy challenge facing us …

The common starting point is the global picture of energy consumption.

The key insight is that the vast increase in global energy consumption is not driven

by human population increases, but rather by sharply increased expectations of

living standards in the developing world - China, India, Brazil, …

Figure courtesy DOE/EIA (2009)

100 Quadrillion BTU = 100 Quad = 3.342 TW



The challenge - and the energy ‘supply’ alternatives …

Energy Gap~ 14 TW by 2050~ 33 TW by 2100

10 TW = 10,000 1 GW power plants1 new power plant/day for 27 years

No single solutionDiversity of energy sources required

Renewable FusionNuclearFossilDemand Reduction

(100 Quadrillion BTU = 100 Quad = 3.342 TW)



The modeling efforts associated with IPCC 2007 provide a likely range of future globally-averaged surface temperature rise:

~1.1oC to ~6.4oC

(= ~2oF to ~11.5oF)

Scenarios of mean temperature increase from world-wide human activities …

A broad range of models based on predicted CO2 loading of our atmosphere are in

broad agreement on the consequences for the increase in globally averaged surface

temperature …

Figure courtesy IPCC

This picture based on average values of temperature and precipitation -and does not account for variability or special regional aspects.

Summer (JJA), by 2095

A local consequence: Illinois’ climate will effectively ‘migrate’ south …

7

Figure courtesy Don Wuebbles [UIUC]



Agriculture (e.g., growing seasons, harvest periods, pests, …)

Infrastructure, infrastructure support, viz.,

– Transportation systems (roads, rail, …)

– Storm water management

– Water and air quality

– …

Health care system needs

Parks and lakes: recreation, tourism, …

Energy use/demands

These changes in local climate will have measurable non-climate consequence …

http://www.usgcrp.gov/usgcrp/nacc/greatlakes.htm

http://www.seagrant.wisc.edu/climatechange/

http://www.ucsusa.org/greatlakes/

http://www.usgcrp.gov/usgcrp/nacc/greatlakes.htm�

http://www.seagrant.wisc.edu/climatechange/�

http://www.ucsusa.org/greatlakes/�



Every one of the alternatives faces challenges …

coalgas

heat mechanicalmotion electricity

hydrowind

fuel cells

solar

communication

digital electronics

lightingheating

refrigeration

power grid

transportation

industrynuclearfission

fusion

Is there a unifying vision?

Sequestration?

Limited supply?Economics?

Non-proliferation?

Spent fuel disposal?

Fundamental

science

understanding?

Cannot do it all …

Social impacts …

Renewable Nuclear fusion

Nuclear fission

FossilDemand reduction

Economics?

Fundamental

science

understanding?

Distribution?



… and is there a way of plausibly analyzing the overall system?

Consider a portfolio of competing energy technologies for supplying (for example) base

power: coal, oil, natural gas, nuclear, solar, wind, biofuels/renewables, …

For each technology, we would like

1. Reliable (= verified & validated) predictions of performance/capabilities and costs

• Full accounting of life cycle costs, avoided costs, …• Projections based on science-based engineering (e.g., must allow analyses to go outside the

narrow performance envelope for validated point designs typically defined by today’s state of the art engineering)

– Sizing up the potential impacts of transformational technologies

• Static and dynamic analysis capability2. Competitive trade-offs and develop full portfolio analyses (viz., determine an

optimal mix of technologies for given constraints)

3. Detailed sensitivity analyses

• Investment decisions (R&D, technology readiness, …)• Critical path analyses• Safety …

… and the ultimate dream: to couple these analyses capabilities to climate, social,

economic, … , factors



What do we have today? … a very personal view

Yes on #1 [=Reliable (= verified and validated) predictions of

performance/capabilities and costs], for some technologies (e.g., Argonne’s

GREET & PSAT models)

– Typically static; a select few are dynamic

– Typically limited by existing designs (which were used to do V&V), with weak if

any reach-back to science-based simulation capabilities

– Weak (if not totally absent) standards for modeling methodologies, data

interchange, module interchange (viz., module interfaces), …

But we cannot (for example)

– Credibly compare all existing energy technologies at a systems level (#2)

– Credibly carry out sensitivity analyses, … (#3)

– Easily compare the results of different modeling efforts

– Credibly evaluate transformational technology impacts

This means, among other things, that

– Our investment decisions do not have the rigor one might expect …

– We cannot demonstrate that we know how to optimize our energy portfolio



Where does this leave us?

What is the way forward in more rigorous analyses?

– Comparative economic costs

– Comparative climate impacts

– Comparative social impacts

– Comparative transformational technology needs (and costs) …

– …

Do we wait, or do we plunge on ahead?

– How urgent is the need to address the climate change issue?

• How tolerant are “we” of mistakes?• How risk averse are “we” – or should “we” be?• Can “we” count on ‘innovation’?

– Do we need a larger vision – a national energy policy?

– How would a national energy policy couple (or not) to the international realm?

– …



And that brings us to …

Our Panel Discussion

NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy operated by The Alliance for Sustainable Energy

Dan Bilello

Strategic Energy Analysis Center

August 2009

Transportation Research Board

The Role of Renewable Energies in

Reducing Oil Imports: Status and

Prospects

National Renewable Energy Laboratory Innovation for Our Energy Future

Source: New Energy Finance, IGreenTech, MF WEO Database, IEA

WEO 2007, Boeing 2006 Annual Report

Adjusted for reinvestment. Geared re-investment assumes a 1 year lag

between VC/PE/Public Markets funds raised and re-investment in projects.

Total Global New Investment in Clean

Energy 2004 – 2008


Note: VC/PE, Public Markets and Asset Finance only. Excludes re-investment adjustment

Wind

Solar

Biofuels

Biomass

Efficiency,

Services

and other

Other

Renewables

Wind

Solar

Biofuels

Biomass

Efficiency,

Services

and other

Other

Renewables

New Investment 2007 and Average Growth

2005-07 – By Sector

46% pa

growth

92% pa

growth

199% pa

growth

68% pa

growth$50.2bn

$28.6bn

$19.2bn

$11.5bn

$5.1bn

Source: New Energy Finance

26% pa

growth$3.1bn

97% pa

growth


Renewable Energy Cost Trends

Levelized cost of energy in constant 2005$1

Source: NREL Energy Analysis Office (www.nrel.gov/analysis/docs/cost_curves_2005.ppt)1These graphs are reflections of historical cost trends NOT precise annual historical data. DRAFT November 2005


Global Renewable Electricity CapacityDeveloping World, EU, and Top Six Countries, 2006

Gig

aw

att

s


Worldwide Production of Bioethanol,

2007

National Renewable Energy Laboratory Innovation for Our Energy FutureNational Renewable Energy Laboratory Innovation for Our Energy Future

Getting to “Speed and Scale” –Key Challenges

Implementing Renewable Gigawatts at Scale

Reducing Energy Demand of Buildings, Vehicles, and Industry

• Cost of renewable electricity

• Performance and reliability

• Infrastructure robustness and capacity

• Dispatchability of renewables

• Coordinated implementation of model building codes

• Valuation of Energy efficiency

• Consumer Expectations & Innovation

• Performance and reliability of new technologies

Displacement of Petroleum-Based Fuels• Non Food Feedstock Technology and costs

• Life cycle sustainability of biofuels

• Fuels infrastructure, including Codes/Standards

• Alternative Technologies and Mode Shifting

National Renewable Energy Laboratory Innovation for Our Energy FutureNational Renewable Energy Laboratory Innovation for Our Energy Future

Technology Innovation Challenges RemainThe Next Generation• Wind

– Improve energy capture by 30%

– Decrease costs by 25%

• Biofuels– New feedstocks– Integrated biorefineries

• Solar– New materials, lower cost

manufacturing processes, concentration

– Nanostructures

• Zero energy buildings– Building systems

integration– Computerized building

energy optimization tools

• Advanced vehicles– Plug-in hybrids/electrics– Alternative fuels


Options for Reducing Oil Imports:

Fuel and Vehicle Options

Near-term technologies (hybridizat ion, lightw eight materials, alternat ive fuels) enable a t ransit ion to more advanced vehicles

Technical Risk

Po

ten

tial

to R

ed

uce O

il I

mp

ort

s

(in

clu

din

g m

ark

et

risk)

High

High

Low

Low

Key:

- vehicle opt ions

- fuel opt ions

Hydrogen

Ethanol

Corn

Cellulosic

Hybridizat ion

P-HEVs

Convent ional

Vehicles

Biodiesel

Advanced

Combust ion

Lightw eight

Materials

Energy

Storage

w ith inclusion

in advanced

vehicles

Heavy Vehicle

Sys Opt

longer-term potent ial;

benefit ing from HEV,

materials, & other R&D

Fuel

Cells


Feedstocks

Lignocellulosic

Biomass (wood, agri,

waste, grasses, etc.)

Sugar/Starch Crops(corn, sugar cane, etc.)

Natural Oils(plants, algae)

Intermediates

Syn Gas

Bio-Oils

Lignin

Sugars

Transportation Fuels

Ethanol &

Mixed Alcohols

Diesel*

Methanol

Gasoline*

Diesel*

Gasoline* & Diesel*

Diesel*

Gasoline*

Hydrogen

Ethanol, Butanol,

Hydrocarbons

Biodiesel

Green diesel

Gasification

Catalytic synthesis

FT synthesis

MeOH synthesis

Pyrolysis &

Liquefaction HydroCracking/Treating

Hydrolysis

APP

Catalytic pyrolysis

APR

Fermentation

Catalytic upgrading

MTG

Transesterification

Hydrodeoxygenation

Ag residues,

(stover, bagasse)

Pathways to Biofuels

* Blending Products

Fermentation


Current & Target Biofuels Costs

P. Nair, UOP, 2008


Vehicle Options….

Conventional

Vehicles

Hybrid Electric

Vehicles

Plug-in Hybrid

Vehicles

Hydrogen Powered

Vehicles (including

Fuel Cells)


Plug-In Hybrid Electric

Vehicles (PHEVs)

• Dramatically reduce use of

imported oil

• Dramatically reduce per mile fuel

cost (ignoring for moment capital

cost of battery)

• Perhaps most importantly, open

up several very important doors

beyond transportation


And the Opportunity they Offer is Just

Around the Corner

Toyota Prius

plug-in parallel hybrid electric vehicle (PHEV) in 2010

Chevy Volt

range-extended

electric vehicle (EV+)

in 2010


And Many Others –

Here Now or Coming Soon

Mitsubishi

Chrysler ecoVoyager

BMW Mini E

http://www.autobloggreen.com/photos/quick-drive-mini-e/1181228/�

http://image.automotive.com/f/concept-cars/mitsubishi-introduces-second-electric-vehicle-concept/1008396+w260+cr1+re0+ar1/mitsubishi-i-miev-concept-front-left.jpg�


Heavy-Duty PHEVs are Here Too

Odyne PHEV

Aerial Lift Truck

Purolator

Quicksider Full

Electric

Smith Electric


Challenges for Plug-Ins

• Improving batteries

– Cost

– Calendar and cycle life

– Safety of Li-Ion

– Cold temperature performance

– Volume and packaging

• Reducing power electronics cost and volume

• Developing efficient chargers

• Standardizing plugs for charging

• Avoiding negative peak time charging impacts


A Systems Long View of the FutureClean, Diverse & Secure Intelligent, Resilient, Flexible

& High CapacityEfficient & Integrated

Technology advances are required

H2Fuel Cell Vehicle

Near-Zero Energy Buildings

Industry

Distributed Resources

Near-Zero Emission Hydrocarbons

Advanced Nuclear

Renewable Energy

e-

e-e-


Vision for a Sustainable Community



So Maybe the Future Can Look More Like This

With Much of that Electricity Coming from Wind, Solar, or other Renewable Energy

National Renewable Energy Laboratory Innovation for Our Energy FutureOperated for the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy by Midwest Research Institute • Battelle

Visit us online at www.nrel.gov

http://www.nrel.gov/�

Transportation Energy and Emissions:

Reduction Opportunities and Policies

Required to Implement Them

John B. Heywood

Sloan Automotive Laboratory

Massachusetts Institute of Technology

Energy Solutions: TRB Webinar Session

August 19, 2009

1. Implementing near-term fuel economy requirements

2. An “Action Plan for Cars”

3. Electrification of vehicles

4. Challenges inherent in 2050 GHG targets

Topics:

2 8-19-09

An Important Requirement

3

Essential that targets and implementation policies are based

on quantitative and robust analysis of the opportunties and

their potential impacts.

8-19-09

4

Average Fuel Economy of New U.S.

Light-Duty Vehicles

Chart shows unadjusted fuel economy values from NHTSA.8-19-09

We have estimated, versus model year:

1. Efficiency of future powertrain options (naturally-aspirated

gasoline, turbo DI gasoline, low-emissions diesel, hybrid,

PHEV, BEV, fuel cell).

2. Average vehicle weight reduction (materials substitution,

redesign, size shift).

3. Increase in vehicle performance (power/weight ratio, 0 to

60 mph time): Emphasis on Reducing Fuel Consumption,

% ERFC.

4. Sales mix characteristics required to meet average miles

per gallon target.

Methodology for Determining LDV Sales

Mix Needed to Meet Various CAFE

5 8-19-09

6

Vehicle scenarios

Scenario%

ERFC

Avg. new

vehicle

weight

(kg)

% light

trucks

(vs. cars)

% Market share by powertrains

NA SITurbo

SIDiesel HEV

PHE

V

Total adv.

powertrain

2008 - 1,870 48% 90.9% 4.6% 1.7%2.8

%0.0% 9.1%

2015 Federal CAFE target = 31.6 MPG

-Lightweight 75% 1,514 40% 73% 13% 4% 9% 0% 27%

-Downsize 75% 1,502 30% 82% 9% 3% 6% 0% 18%

- Adv.

Powertrain75% 1,554 40% 67% 16% 5% 10% 1% 33%

- Combination 75% 1,528 35% 73% 13% 4% 8% 0% 27%

2016 National Fuel Efficiency Policy target = 35.5 MPG

-Lightweight 75% 1,480 40% 26% 37% 12% 23% 1% 74%

-Downsize 75% 1,530 30% 26% 37% 12% 23% 1% 74%

- Adv.

Powertrain75% 1,580 40% 14% 43% 14% 27% 1% 86%

- Combination 75% 1,520 35% 26% 37% 12% 24% 1% 75%

Average new vehicle weight reported includes effect of downsizing/shift towards cars 8-19-09

7

2020 Scenarios that will meet CAFE 35 MPG target

%

ERFC

% Veh.

weight

reduction

% Market share by powertrains

NA SI Turbo SI Diesel HybridTotal adv.

powertrains

2020 limit 100% 17% - - - - 50.0%

Adjust ERFC,

weight, adv.

Powertrains

99% 16% 51.5% 24.3% 7.8% 16.5% 48.5%

Low ERFC 75% 17% 42.9% 28.5% 9.1% 19.4% 57.1%

Lower ERFC 50% 17% 32.4% 33.8% 10.8% 23.0% 67.6%

Improve avg.

powertrain

efficiency by

+10%

75% 17% 75.9% 12.1% 3.9% 8.2% 24.1%

Assumptions:

- Market share of light trucks (vs. cars) = 50% in all scenarios

- Ratio of Turbo SI : Diesel : Hybrid is fixed at 3 : 1 : 2

- 17% avg. light-duty vehicle weight reduction = -320 kg = -710 lb8-19-09

1. John Heywood, with team of 12 colleagues and

students, has developed this “Action Plan”: The set of

policies needed to reduce U.S. LDV petroleum

consumption and GHG emissions.

2. This set (for vehicles) comprises:

a. Specifying fuel economy targets for CAFE beyond

2020

b. Increasing fuel taxes by 10¢/gallon each year for at

least 10 years

c. Implementing a fuel-consumption-based “feebate

incentive system” at time of vehicle purchase

d. Establish driver education programs focused on

“high fuel economy driving” behavior

e. Improve the fuel consumption labeling provisions on

new (and used) vehicles

An Action Plan for Cars

8 8-19-09

3. Recommendations related to fuels are:

a. Develop the knowledge base and analysis

procedures for full life-cycle GHG accounting for

fuels

b. Develop a robust U.S. national strategy in the

transportation fuels area

c. Based on that strategy, identify the incentives and

policies needed to increase the supply and effective

use of the more promising fuels

An Action Plan for Cars - Continued

9 8-19-09

10

Oil Supply Scenario

Source: Cambridge Energy Research Associates, 60907-9, Press

Release, November 14, 2006 (graph adapted by Sperling, D., and

Gordon, D., Two Billion Cars, 2009).

8-19-09

11

1. Need for “prototype production” phase, with volumes in

tens of thousands, which lasts 5-10 years.

2. Initial costs of these vehicles are significantly higher (e.g.

currently HEV ~ $5,000, PHEV (30 mile range) ~

$10,000, BEV ~ $15,000 depending on range).

3. Long-term projections suggest these price differentials

may reduce by factor of 2.

4. Impact of BEV range limitation on vehicles’ attractiveness

is major uncertainty.

HEV, PHEV, BEV Deployment Issues

8-19-09

12

5. Many pragmatic issues:

• Availability of recharging locations

• Recharging power requirements for “fast recharge”

• Cumulative impact on electricity grid over time

• Battery performance, weight, and cost issues

• Near-term: we need to slow down and develop the

technology

6. Electricity as viable longer-term energy option?

• Systems analysis of an evolving transportation

electricity supply option needed

• GHG emissions of future electric grid, and of electricity

used in transportation, a major question

HEV, PHEV, BEV Deployment Issues – Cont.

8-19-09

13

1. Will require significant reduction in impacts in 5 to 10

separate independent areas: e.g., vehicle technology,

alternative fuels, vehicle usage, etc.

2. Note that:

0.8 × 0.8 × 0.8 × 0.8 × 0.8 × 0.8 = 0.26

3. Six independent factors each achieving a 20% reduction

yield at 75% reduction.

What will it take to reduce GHG

Emissions 75%

8-19-09

Achieving a 70 - 80% Reduction in

Transportation’s GHG Emissions by 2050

Meeting these 2050 GHG emission targets will need:

• Major improvements in powertrain and vehicle

efficiency

• Major vehicle size and weight reduction

• Stronger emphasis on fuel consumption reduction

over performance and other attributes

• Substantial build-up of alternative green (low CO2)

sources of transportation energy

• Reductions in mobility impacts through mode shifts

and conservation

• Extensive management of transportation

infrastructure and its several modes

• Changes in urban land-use patterns

• And other “transforming” changes14 8-19-09

The Path to a Green Fleet Has Some PotholesSteve Plotkin Argonne National Laboratory

Energy SolutionsTransportation Research Board WebinarAugust 19, 2009

2

What I’d like to discuss:

A common vision for 2030: a super-efficient fleet,

major penetration of plug-in hybrids and maybe

hydrogen fuel cell vehicles…and plenty of fuel for

them….much of it renewable

Why it’s going to be very tough to achieve this vision:

– Market issues: costs, consumer behavior

– We don’t have the economic incentives right

– We don’t have other government policy right

What can we do to get beyond these roadblocks

3

The year 2030: A converging vision of the U.S. light-duty vehicle fleetConventional midsize cars at 40+ MPG (unadjusted)

Full range of hybrids, with up to 80+ MPG

Numbers of plug-ins and hydrogen fuel cell vehicles

Some elements of this new fleet:

– Low loads

• 0.20-0.22 Cd (aerodynamics) for midsize cars

• Weight reduction of 20% (at least)

• Low rolling resistance tires (Cr = 0.006)

– Super-efficient drive trains

And we’d like plenty of fuel….preferably low carbon fuel

4

Technically this seems possible, but…….

Fuel economy estimates assume no change in

performance, contrary to robust upwards trend

Weight reductions also contrary to trends

Aerodynamic “leading edge” seems frozen, though

averages are getting better

Battery costs and performance continue to

improve….but a substantial gap remains (ditto fuel

cells) from where they need to be

Infrastructure requirements for some advanced

technologies – especially hydrogen fuel cells –

greatly increase economic risk

5

And what is “cost effective” to society may be anything but to the consumer…….

Discount rate for

future fuel savings

Source: ANL Multi-Path Study

Fuel Savings Minus Vehicle Price Difference

2030 MIDSIZE CAR

"Literature Review" Vehicle Costs, $3.15 Gasoline Case

Referenced to 2007 SI conventional vehicle

-15000

-10000

-5000

0

5000

10000

SI Conv

CI C

onv

SI Full

HEV

SI PHEV10

SI PHEV40

CI F

ull H

EV

CI P

HEV10

CI P

HEV40

FC H

EV

FC P

HEV10

FC P

HEV40

EV

Life

time

Sav

ing

s - V

ehic

le P

rice

Diff

eren

ce, $

4%

10%

20%

Discount rates for future fuel savings

ll

HEV

EV10

6

In gauging the potential for advanced vehicles, remember that the competition is changing….

What looks good against today’s (conventional) car may not look so good against tomorrow’s.

Net Benefits: Fuel Savings Minus Vehicle Price

2030 MIDSIZE CAR"Optimistic" Vehicle Costs, High Fuel Costs

Referenced to 2007 SI conventional vehicle

-10000

-5000

0

5000

10000

15000

SI C

onv

CI C

onv

SI F

ull H

EV

SI P

HEV10

SI P

HEV40

CI F

ull H

EV

CI P

HEV10

CI P

HEV40

FC H

EV

FC P

HEV10

FC P

HEV40 E

V

Lif

eti

me

Sa

vin

gs

- V

eh

icle

Pri

ce

,

$

4%

10%

20%



Referenced to 2030 SI Conventional Midsize Car

-10000

-5000

0

5000

10000

CI C

onv

SI Full

HEV

SI PHEV10

SI PHEV40

CI F

ull H

EV

CI P

HEV10

CI P

HEV40

FC H

EV

FC P

HEV10

FC P

HEV40

EV

Lif

eti

me

Sa

vin

gs

- V

eh

icle

Pri

ce

,

$

4%

10%

20%



Referenced to 2030 SI Full HEV Midsize Car

-15000

-10000

-5000

0

5000

SI Conv

CI C

onv

SI PHEV10

SI PHEV40

CI F

ull H

EV

CI P

HEV10

CI P

HEV40

FC H

EV

FC P

HEV10

FC P

HEV40

EV

Lif

eti

me

Sa

vin

gs

- V

eh

icle

Pri

ce

,

$

4%

10%

20%


7

We don’t have the economic incentives right

Gasoline is too cheap (most of the time)

And even gasoline is expensive, we can’t trust that

it will stay that way…harming technology

development

Oil price volatility also damages incentives for both

new oil supplies and low carbon alternatives

Infrastructure risk favors oil infrastructure-

compatible fuels – most of which are high carbon

Private incentives for new transmission lines –

critical for renewable electricity – are insufficient

(and there are numerous regulatory roadblocks)

And private incentives for R&D are limited

Not surprisingly, fuel price is crucial to the cost-effectiveness of efficiency technology

8

2030 Midsize Car SI HEV

Sensitivity of Cost-Effectiveness to Fuel Price

Literature Review Costs

-2000

0

2000

4000

6000

8000

10000

12000

4.50 3.15 2.50 2.00

Gasoline Price, $/gallon

Fu

el S

av

ing

s -

Ve

hic

le

Pri

ce

Dif

fere

nc

e

4%

10%

20%

Discount rate

for future fuel savings


9

Nor do we have government’s role right

United States has been reluctant to use eithermarket incentives (gasoline taxes?) or regulation to

push the market towards higher efficiency vehicles

(although new CAFE standards will help)

Oil price volatility comes partly from OPEC’s

market manipulation – negative impacts on U.S.

energy security deserve a government response

Government energy R&D is small compared to

what’s at stake

Electricity deregulation has not been accompanied

by a “fix” for the removal of transmission capacity

requirements

10

I conclude:

Without a big external push, successful

technologies are likely to be incremental…and

these may block plug-ins and fuel cell vehicles

Good possibility that much potential fuel

economy benefit will be lost to “hedonic”

improvements – in power/safety/size/luxury

Without a change in fuel policy, the most likely

future is renewed shortages of conventional oil,

lack of low carbon alternatives, and high

prices…..and a turn towards higher carbon

alternatives

We need to face reality!

11

Policy options Incentives for vehicle development – gasoline

taxes, feebates, fuel economy standards, annual

fees based on fuel economy/GHG emissions, etc.

Incentives for new fuel development – much more

difficult, and much depends on balance of

concerns – energy security vs. climate change

– Opening up restricted areas to oil development

based on realistic environmental review

– Carbon taxes on fuels

– Transmission capacity expansion for renewable

electricity

Massive increase in government-sponsored R&D

for both vehicles and fuels

And more….we need a national debate

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