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V: REDUCING OIL DEPENDENCY TO INCREASE NATIONAL SECURITY: RE-ENGINEERING THE AUTOMOBILE
The use of oil for transportation is a global problem. Transportation has been responsible for nearly all the growth in oil consumption in countries belonging to the Organization for Economic Cooperation and Development (OECD)-"developed nations"-during the last 20 years, and it is expected to account for most of the growth in oil demand through 2020.1
Clearly, the best place to initiate policies to reduce the need for oil in the developed world, and particularly in the United States, is by reducing the amount of gasoline we put in the tank.
Reducing demand for gasoline, using alternative fuels, deploying new automobile technologies, promoting "smart growth," and investing in new rapid transit technologies could save many times more oil than could come from new drilling in the U.S. This would also truly insulate the U.S. economy from Middle Eastern and Central Asian oil that is subject to instability, a goal that increased domestic production can never achieve.
Reinvigorate Fuel Efficiency Standards
After the 1973-74 Arab oil embargo and the resulting shortages and price controls, the federal government enacted the Energy Policy and Conservation Act of 1975, requiring automakers for the first time to meet certain average fuel economy standards for new car fleets. This has been the only major energy efficiency measure the U.S. has ever attempted. Known as the Corporate Average Fuel Economy (CAFE) standards, the program dictates the average fuel usage, calculated in miles per gallon (mpg), that passenger cars and light-duty trucks sold in the United States must attain. This law has been remarkably effective: - The average fuel economy of new passenger cars has roughly doubled from 14 mpg in the 1970s to 28 mpg today.2
- Gasoline consumption is down roughly 118 million gallons per day from where it would have been in the absence of CAFE standards,3 an amount equal to approximately 913 million barrels of oil per year, or about the total imported annually from the Persian Gulf.
- New cars purchased in 1999 use 3.7 billion gallons less gasoline per year than they would in the absence of CAFE standards.4
Not all vehicles, however, have become more efficient. When CAFE standards were enacted in 1975, light trucks were given less rigorous goals because, as utility vehicles for farming and hauling, they represented a very small percentage of the total U.S. transportation fleet, and no one expected they would one day be used for personal transportation. As a result of the much lower efficiency requirements for light trucks, auto manufacturers moved to take advantage of this loophole. The average fuel efficiency for the exploding number of new SUVs, minivans, and pickups on the road today is only 17.4 mpg, compared to 28 mpg for new cars.5
"Nissan supports the goal of improving the fuel efficiency of the nation's automotive fleet. Conservation makes undeniably good sense from both environmental and energy security perspectives. We cannot escape the reality that our dependence upon imported oil, particularly from so volatile an area of the world as the Middle East, creates unacceptably large vulnerabilities for us. That must change."
Jerry Benefield, President & CEO, Nissan Motor Manufacturing Corp., USA
Testimony before the Senate Commerce Consumer Subcommittee
February 21, 1991.
As a result of the less stringent standards for these increasingly popular "light trucks," the improvement in the total average fuel economy for the entire U.S. automobile fleet peaked in 1988, and has been declining ever since. In fact, the average vehicle being "retired" today is more efficient than the average new vehicle being sold. Overall automobile and light truck fuel efficiency in 2000 was at about the same level it was in 1980.7
Taking steps to reinvigorate the CAFE program by meeting higher fuel efficiency standards is the only way to produce the dramatic savings in oil consumption witnessed in the 1970s and '80s. For example, by raising CAFE standards over a ten-year period to a technologically feasible 40 mpg for the entire fleet of new cars and light trucks, the U.S. could save about 1 billion barrels of oil annually.8 U.S. auto companies have committed to meeting a 42-mpg fuel efficiency standard by 2010 for cars exported to the European Union.
Such an oil savings represents: - 15% of total U.S. oil consumption,
- 26% of current U.S. oil imports, and
- 2.7 times the likely yield of economically recoverable oil from the Arctic National Wildlife Refuge.
Even small improvements in fuel economy offer large benefits: Simply requiring light trucks to meet the current efficiency standard for passenger cars could cut gasoline consumption by 2.1 billion gallons in the first year of the new measure, an amount equal to 45 million barrels of crude oil.9
Experts from industry, government, and academia have all estimated that average fuel economy of about 40 mpg is achievable for the entire automotive fleet of conventional gasoline vehicles, including SUVs, minivans, and pickup trucks within 10 to 15 years, using existing and emerging technologies.
National Academy of Sciences. The Academy has estimated that with the adoption of a range of thermodynamic, mechanical, electrical, and control technologies, the entire passenger vehicle fleet could reach fuel efficiencies of 33 to 46 mpg, depending on vehicle class, with an average of approximately 40 mpg. While the Academy estimates it will take 10 to 15 years to achieve significant market penetration of the new technologies, certain policies could greatly accelerate their adoption.11
Department of Energy. A recent study estimates it would be possible to achieve an average fuel efficiency of approximately 40 mpg by 2015 for all new vehicles. Most of this gain would come from improvements in engine design.12
Society of Automotive Engineers. A peer-reviewed study published by the Society of Automotive Engineers indicates that with the aggressive adoption of existing technology, the entire new U.S. automotive fleet could achieve 41 mpg by 2010-2015.13
More Ambitious Solutions: New Automobile Technologies
In addition to improving fuel efficiency for automobiles and light trucks by modifying the existing internal combustion engine, widespread adoption of more innovative approaches such as alternative fuels, hybrid-electric vehicles, and fuel cells, could dramatically reduce U.S. dependence on oil from abroad.
"Motor vehicles produced in this country and those imported into this country should be more fuel-efficient. We need improvement-especially now when we are faced with the need to develop more effective energy conservation programs because of the uncertainty about future energy supplies and our need to become more energy-independent. If that were not clear a year ago, it certainly should be now in light of the conflict in the Persian Gulf."
Dick Warden, Legislation Director, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW),
Testimony before the Senate Commerce Consumer Subcommittee, 1991.
Alternative Fuels
Alternative fuel vehicles that run on ethanol, methanol, compressed natural gas, propane, or hydrogen-all in plentiful domestic supply-could substantially reduce our nation's dependence on foreign oil.
There are approximately a half million alternative fuel vehicles in use in the United States, the overwhelming majority of which run on propane and natural gas.15 These vehicles reduce U.S. oil consumption by about 4.5 million barrels each year.16
Hybrid-Electric Vehicles
While there are major technological and cost obstacles to the rapid commercialization of completely electric vehicles, technology is advancing rapidly to develop hybrid vehicles that combine a rechargeable electric battery and an internal combustion engine. On many of the hybrid car prototypes, the electric battery is charged using energy normally lost during braking. Hybrids can generally achieve two to three times the fuel economy of conventional vehicles.
Many automakers have developed prototype hybrid cars, but only two have brought them to market in the U.S. Fuel economy for the Honda Insight reaches 61 mpg in the city and 70 mpg on the highway,17 while Toyota's Prius achieves 52 mpg in the city.18
Because they use gasoline, there are currently no performance, convenience, or infrastructure constraints to the sales of hybrid vehicles. Due to the costs of battery technology, the hybrids on the market cost several thousand dollars more than comparable conventional car models. For the present, Toyota has elected to absorb the additional cost of manufacturing its hybrid in order to win a share of the U.S. market. Even if consumers were charged the full cost of these vehicles, however, they would be extremely competitive with conventional autos when fuel savings over the life of the vehicle are taken into consideration. Due to the advantages of hybrids, there is a waiting list of consumers who want to purchase these cars.
In addition to new hybrid passenger vehicles coming to market, several automakers will be developing or introducing hybrid SUVs and trucks: Ford's new hybrid Escape SUV, expected to be unveiled in 2003, will get 40 mpg, twice the fuel economy of small SUVs and four times that of big ones.19 DaimlerChrysler has announced plans to produce a hybrid Dodge Ram 2500 pickup and a 4-wheel-drive Durango sport utility vehicle with 25-30% improved fuel economy.20
If only 10% of new passenger cars and light trucks were hybrids, in 10 years the U.S. could eliminate nearly 10% of the projected increase in Persian Gulf oil imports.21
Fuel Cells
In the long term, no technology has greater potential to reduce our nation's need for foreign oil than fuel cells. Operating much like a battery, fuel cells produce energy without combustion by converting virtually any source of hydrogen-liquid hydrogen, natural gas, methanol, or gasoline-into electricity.
Even when fuel cells convert the hydrogen in gasoline to energy, they do so much more efficiently than internal combustion engines. A gasoline-powered fuel cell car is 35% more fuel efficient than a standard internal combustion engine.22
Most of the prototype fuel cell cars that have been developed are powered by direct liquid hydrogen, not gasoline.23 And the technology for powering a fuel cell vehicle directly from hydrogen is simpler, less expensive, and more immediately available. If only 10% of U.S. cars were powered by fuel cells using direct hydrogen, the U.S. would save 234 million barrels of oil per year.24 Another important benefit is that hydrogen powered fuel cells produce no damaging air emissions, including greenhouse gases. Gasoline powered passenger cars and light trucks are responsible for 17% of all U.S. greenhouse gas emissions.
Even as major corporations like Dupont, Texaco, and Shell continue to invest in developing fuel cell technologies, fuel cell vehicles are already in use: - Fuel cell buses running on liquid or compressed hydrogen are being used in Chicago, Palm Springs, Toronto, Vancouver, and seven European cities.
- A joint venture between Ford, DaimlerChrysler, and Ballard Power Systems, a leading manufacturer of fuel cells, will supply fuel cell buses for an additional eight European cities in 2002.
The most important constraint to the commercialization of fuel cell technology by automakers is cost. Producers haven't achieved the economies of scale necessary to manufacture a fuel cell that is priced to compete directly with an internal combustion engine. Nevertheless, Ballard, one of the largest makers of fuel cells, has said these power sources can become more affordable by reducing the amount of costly materials such as platinum used in manufacturing, reducing the number of component parts, and mass production. Ballard's partnership with both Ford and DaimlerChrysler intends to begin producing fuel cell vehicles by 2004.25 Lower maintenance costs of fuel cell engines could narrow the cost differential even further.26
U.S. automakers are racing to keep up with overseas competitors to be part of the next generation of fuel-efficient vehicles.
Major automakers are also investing billions of dollars to develop fuel cell vehicles, and the first models are expected to roll off the assembly line between 2003 and 2005.27 - General Motors has repeatedly announced with considerable fanfare that it expects to be the first automaker to sell over a million cars and trucks powered by fuel cells.28
- Ford sees the fuel cell as "game-changing" technology. "If we're not in the fuel cell business, we may not be in the auto business."29
Fuel cells are being adopted increasingly for industrial applications, too. Caterpillar, a leading manufacturer of construction and mining equipment, recently signed an agreement with FuelCell Energy, Inc., to market its fuel cells commercially. The two companies will also develop fuel cell systems, including hybrid products.30
If fuel cell technology is eventually to replace oil as the major fuel source for automobiles, a new fuel delivery infrastructure based on liquid hydrogen, natural gas, or some other fuel will be needed. A report issued in January 2000 by the Department of Energy's National Renewable Energy Laboratory workshop, representing the consensus of major automakers, energy companies, university researchers, and government agencies, concludes, "There are no technical showstoppers to implementing a direct hydrogen infrastructure."31
It will require substantial private and public planning and investment to construct this infrastructure, as it did to build the current gasoline delivery system. One energy company has estimated the total cost for an initial nationwide hydrogen infrastructure to be $19 billion.32 Some corporations and governments have already begun initiatives to make the transition toward hydrogen and fuel cells: - Working together through the California Fuel Cell Partnership, the state government, automakers, and oil companies will place more than 70 fuel cell passenger cars and buses on the road between 2000 and 2003. In addition to testing the fuel cell vehicles, the partnership will also identify fuel infrastructure issues and prepare the California market for this new technology.33
- British Petroleum will launch pilot projects in the United Kingdom and Singapore to demonstrate the viability of new hydrogen fuel delivery systems in those countries. BP will start installing the first hydrogen refueling stations in 2003, one year ahead of the introduction of DaimlerChrysler's hydrogen-powered vehicles to the Singapore market.34
- In 2002, Shell and DaimlerChrysler plan to team up with the government of Iceland to begin a thirty-year transition to hydrogen power and fuel cells.35
Promote Smarter Growth and Better Rapid Transit
Total vehicle miles traveled in the U.S. has doubled since 1970, a growth rate 2.5 times greater than population growth in the country.36 While many factors contribute to this trend, much of the increase results from changes in urban and suburban development patterns.37 The increased separation between jobs and housing,38 greater distances between various destinations, low density development, the absence of pedestrian and bicycle routes, and poor public transit systems, especially in U.S. cities that have recently experienced exponential growth, all contribute to the fact that a typical American city uses an average of 1.6 times more fuel per capita than one in Australia or Canada, and two and a half times more fuel per capita than a European city.39
Computer modeling for cities in the Pacific Northwest suggests ways to curb urban sprawl and curtail the demand for oil by the transportation sector through better planning: - Modeling for the Seattle area has suggested that compact development policies could stop the increase in total vehicle miles traveled in the region and even reduce them 4% by 2020.
- Modeling for Portland estimated that "smart growth" policies could reduce vehicle miles traveled in the region by almost 17% by 2040.40
Other studies show that by increasing urban residential densities, the number of vehicle miles traveled could be reduced by 20-30% per capita.41
Forward to Chapter VI: Conclusion
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Footnotes
1. Report of the National Energy Policy Development Group, National Energy Policy, May 2001, pp. 8-16.
2. Business Roundtable, "The Role of Technology in Responding to Concerns about Global Climate Change," July 1999, p. 20.
3. The National Academy of Sciences, "Effectiveness and Impact of Corporate Average Fuel Economy Standards," July 2001, p. ES-4.
4. Calculations based on the number of new cars sold in 1999 and assuming each is driven 11,860 per year. Source: 1999 Passenger Car Sales from U.S. Department of Transportation, Bureau of Transportation Statistics, National Transportation 2000, Table 1-16 (http://www.bts.gov/btsprod/nts/Ch1_web/1-16.htm), and number of miles driven per vehicle per year from DOE's Energy Information Administration, Annual Energy Review 2000 (http://www.eia.doe.gov/emeu/aer/pdf/pages/sec2_23.pdf).
5. Ibid.
6. Business Roundtable, "The Role of Technology in Responding to Concerns about Global Climate Change," July 1999, p. 20. Also James A. Baker Institute for Public Policy and Council on Foreign Relations, "Strategic Energy Challenges for the 21st Century," p.20.
7. U.S. Environmental Protection Agency, "Light-Duty Automotive Technology and Fuel Economy Trends 1975-2000," December 2000.
8. U.S. Department of Energy, Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy Technologies by 2010 and Beyond, September 1997, Table 5.7. Calculations assume a conversion factor of 172 million barrels of oil per quadrillion BTUs of energy.
9. Based on 1999 sales for pickups, vans, and SUVs from U.S. Department of Transportation, Bureau of Transportation Statistics, National Transportation Statistics 2000, Table 1-18; (http://www.bts.gov/btsprod/nts/Ch1_web/1-18.htm), and number of miles driven per vehicle per year from DOE's Energy Information Administration, Annual Energy Review 2000; (http://www.eia.doe.gov/emeu/aer/pdf/pages/sec2_23.pdf).
10. U.S. Department of Energy, "Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy Technologies by 2010 and Beyond," September 17, 1997, pp. 5.38-5.42. Approximately 10% of fuel economy gains come from the introduction of some hybrids and fuel cell vehicles.
11. The National Academy of Sciences, Effectiveness and Impact of Corporate Average Fuel Economy Standards, July 2001, pp. 3-16-3-24. Estimate is based on fuel economy per class of vehicle and current market share of vehicle classes.
12. U.S. Department of Energy, "Scenarios of U.S. Carbon Reductions: Potential Impacts of Energy Technologies by 2010 and Beyond," September 17, 1997, pp. 5.38-5.42. Approximately 10% of fuel economy gains come from the introduction of some hybrids and fuel cell vehicles.
13. Arif, J. DeCicco, and M. Ross, "Assessing the Fuel Economy Potential of Light Duty Trucks," Society of Automotive Engineers' Paper No. 2001-01FTT-31, June 2001. Estimate assumes a conservative 2% market penetration of hybrid-electric vehicles.
14. 1999 Sales for pickups, vans, and SUVs from U.S. Department of Transportation Statistics 2000, Table 1-18 (http://www.bts.gov/btsprod/nts/Ch1_web/1-18.htm); number of miles driven per vehicles per years comes from the Department of Energy's Energy Information Administration, Annual Energy Review 2000 (http://www.eia.doe.gov/emeu/aer/pdf/pages/sec2_23.pdf).
15. Congressional Research Service, "Alternative Transportation Fuels and Vehicles," January 2001, p. 6.
16. U.S. Department of Energy, Energy Information Administration, Alternatives to Traditional Transportation Fuels 1998, January 2000. According to DOE, natural gas replaces 92.1 million gallons of gasoline annually, and liquified petroleum gas (LPG) replaces 243.6 million gallons. (CRS Report for Congress, RL30758, "Alternative Transportation Fuels and Vehicles: Energy, Environment, and Development Issues," p. 6.) In calculating the 4.5 million barrels of oil saved per year, half of the gasoline replaced by LPG-powered vehicles is assumed to come from natural gas processing, according to information from the National Propane Gas Association (personal communication, November 7, 2001). The other half comes from crude oil refining, and does not necessarily lower the amount of oil or petroleum products used, and so is not included in the calculation.
17. http://honda2001.com/insight/homepage.html.
18. http://prius.toyota.com.
19. USA Today, "Ford: 2003 hybrid SUV to get 40 mpg," April 7, 2000.
20. Ward's Engine and Vehicle Technology Update, "DC to increase economy with two hybrids," May 1, 2001, p. 6.
21. Calculations based on mileage per vehicle from EIA's Annual Energy Review 2000 (http://www.eia.doe.gov/emeu/aer/pdf/pages/sec2_23.pdf), a doubling of average passenger car fuel efficiency, and a 65% improvement in average light truck fuel efficiency.
22. General Motors Corporation, Argonne National Laboratory, BP, ExxonMobile, and Shell, Well-to-Wheel Energy Use and Greenhouse Gas Emissions of Advanced Fuel/Vehicle Systems, April 2001, p. 22.
23. "Driving for the Future," California Fuel Cell Partnership; http://www.fuelcellpartnership.org/brochure.html.
24. Based on fuel consumption from EIA's Annual Energy Review 2000; http://www.eia.doe.gov/emeu/aer/pdf/pages/sec2_23.pdf.
25. "Ballard Reduces Fuel Cell Costs," Detroit News, November 30, 1999.
26. Congressional Research Service, "Advanced Vehicle Technologies," March 2000, p. 5.
27. "General Motors Allies with Toronto Fuel Cell Maker Hydrogenics," The Canadian Press, October 7, 2001. Ford intends to launch its first commercial fuel cell vehicle in 2004 ("Ford Signs Fuel Cell Deal with Goal of 2004 Launch," Associated Press, September 27,2001. Honda will unveil a hydrogen fuel cell car by 2003 ("Hydrogen Fuel Cell Car in Honda's Pipeline," Atlanta Journal-Constitution, July 13, 2001).
28. "GM Bets on Gasoline Fuel Cells," Automotive News, May 21, 2001.
29. Ford Motor Company, "California Fuel Cell Partnership: Auto Company Perspective," in Hydrogen: The Common Thread, 12th Annual U.S. Hydrogen Meeting Proceedings, March 2001.
30. "Caterpillar, FuelCell Energy Ink Deal," Energy Daily, Vol. 29, No. 221; Friday, November 16, 2001.
31. National Renewable Energy Laboratory, Blueprint for Hydrogen Fuel Infrastructure Development, January 2000.
32. Don Huberts, Chief Executive Officer, Shell Hydrogen, "Financing the Hydrogen Infrastructure," in Proceedings of the 12th Annual U.S. Hydrogen Meeting, March 6-8, 2001.
33. http://www.fuelcellpartnership.org/aboutus.html.
34. "BP to build Singapore stations for hydrogen cars," Reuters, October 23, 2001.
35. http://www.shell.com/hydrogen-en/content/0,6013,30718-56069,00.html.
36. U.S. Department of Transportation, Federal Highway Administration, Highway Statistics-Summary to 1995, and annual editions for 1996 and 1997.
37. U.S. Environmental Protection Agency, "Our Built and Natural Environment: A Technical Review of the Interactions between Land Use, Transportation, and Environmental Quality," January 2001, p. 19; http://www.epa.gov/livability/pdf/built.pdf.
38. The average length of work trips increased 36% from 1983 to 1995. U.S. Department of Transportation, Federal Highway Administration, Our Nation's Travel: 1995 NPTS Early Results Report, 1997.
39. Newman, Peter, and Jeffrey Kenworthy, Sustainability and Cities, Island Press, 1999, p. 69.
40. Op. Cit., pp. 105.
41. Holtzclaw, John, "Explaining Urban Density and Transit Impacts on Auto Use," Presented to State of California Energy Resources Conservation and Development Commission, January 1991.
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