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Study Concludes That Reducing US Transportation Oil Consumption and GHG Will Require a Package of Policies

20 June 2008

Belfer
The scenario that resulted in the lowest increase in transport-sector GHG emissions used an economy-wide carbon price beginning at $10/ton CO2, 2% annual improvement in CAFE, and a gasoline and diesel tax increasing at 10% per year in real terms (tax is not recycled back to consumers). Click to enlarge.

Individual policies, such as the increases in fuel economy standards adopted last year, will not result in significant reductions in US transportation sector greenhouse gas emissions or dependency on oil, according to a new analysis from the Harvard Kennedy School’s Belfer Center for Science and International Affairs.

Using a variant of the National Energy Modeling System (NEMS)—NEMS-ETIP—researchers in the Center’s Energy Technology Innovation Policy (ETIP) group modeled a number of policy scenarios using both the US Energy Information Administration’s “reference” case and “high-oil price” reference case. They developed quantitative estimates of the impact of increases in fuel-economy standards similar to those contained in the EISA in combination with the likely impacts of two different economy-wide climate policies and several different kinds of taxes on transportation fuels.

(The authors note that current 2008 crude oil prices are much higher than either EIA’s reference or “high” oil-price cases. If the NEMS-ETIP assumptions about the oil prices prove to be too sanguine, the higher underlying oil prices would likely result in all of the other policy scenarios modeled more effective, they concluded.)

It is a complex task to meet the policy goals of reducing GHG emissions and oil consumption from transportation sector. Our analysis shows that individual policies largely fail to produce the intended results on their own. Indeed, the new CAFE standards contained in EISA 2007 are not likely on their own to prevent significant growth in US oil consumption and transport-sector greenhouse gas-emissions by 2030, although, critically, they will prevent even larger growth from occurring. The new renewable fuel standards could result in greatly expanded use of ethanol, but whether this outcome materializes will depend on highly uncertain factors, such as ethanol production costs, investments on distribution and refueling infrastructure, and the deployment of flex-fuel vehicles. Even individual policies that seem radical in the US context, most notably taxation of transportation fuels, do not on their own produce the intended results.

Thus, a fundamental insight from this study is that if one wishes to reduce US06 net petroleum imports or to reduce CO2 from the transportation sector, packages of policies will be needed. If meaningful progress towards meeting the goals is to be achieved, such packages are likely to require combinations of bold policies.

Other insights gleaned from the study include:

  • The efficacy of energy and climate policies depends on the underlying world oil prices from now to 2030. The researchers found that if oil prices are relatively high, it is possible to achieve a reduction in net oil imports with a package that includes an initially modest 50 cent/gallon tax on gasoline and diesel that escalates 10 percent per year in real terms reaching $5.02/gallon in 2030. In that case, CO2 emissions from the transportation sector were stabilized close to 2010 levels.

    If, however, underlying world oil prices drop again during the next two decades, none of the policy scenarios modeled achieve the desired goals.

  • Demand for E85 becomes significant only when its price is lower than that of gasoline on an energy basis. Fairly stringent policies may be required to generate this effect.

  • The extent to which volumetric fuel mandates result in reductions in greenhouse gas emissions from the transportation sector will depend on how they are actually implemented. Both a low-carbon fuel standard or carbon tax on transportation fuels, if assessed on a lifecycle basis, could help reduce CO2 emissions, especially in combination with other measures.

  • Policies must be devised to make driving consumers care more about which cars they purchase and how much they drive.

  • Complementing CAFE increases with some form of fuel taxation is important to mitigate the GHG emissions coming from VMT growth.

   

This analysis is one product of a three-year Innovation in Transportation project housed at ETIP. Supported by the Environmental Protection Agency, the Hewlett Foundation, and the Energy Foundation, the Innovation in Transportation project seeks to craft innovative and effective policy strategies for overcoming barriers to the development and deployment of cleaner and more efficient fuels and vehicle technologies.

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June 20, 2008 in Emissions, Fuel Efficiency, Policy | Permalink | Comments (46) | TrackBack (0)

Comments

When did the shift away from a federal 55mph speed limit happen and what was the impact?

Posted by: relocalize | June 20, 2008 at 10:07 AM

When did the shift away from a federal 55mph speed limit happen and what was the impact?

1987 was when it started going away, although it wasn't until 1995 or so that it completely disappeared.

The #1 effect was a lot of us stopped hating the government quite so much.

Posted by: Matthew | June 20, 2008 at 10:12 AM

Thanks Matthew. I guess that was an ancillary benefit. I guess the net benefit from that respect is now negated.

I've decided to drive 58mph on my weekly 230mi round trip commute, and I'm observing a 26% increase in mpg's compared to the EPA highway fuel economy rating. I might take longer to get where I'm going, but at least I can catch up on some NPR.

Posted by: relocalize | June 20, 2008 at 10:20 AM

This is a realistic approach to progressively reduce fossil fuel consumption and associated GHG.

As stated, it may cease to work, if oil price drops significantly below current level. A variable fossil fuel tax could act as a compensation mechanism to keep fossil fuel sale price high and stable enough to accomplish the desired effects.

Canada's opposition Liberal Party leader has recently proposed a $14 billion/year carbon tax with equivalent GHG reduction financial support and Income Tax reductions to achieve similar results. The Conservative Party minority government is deeply against it.

Of course, countries with available bio-mass should promote the sale of locally produced biofuels (instead of imported & local fossil fuel and oil) with lower taxes.

Posted by: HarveyD | June 20, 2008 at 10:23 AM

Individual policies, such as the increases in fuel economy standards adopted last year, will not result in significant reductions in US transportation sector greenhouse gas emissions or dependency on oil……

(The authors note that current 2008 crude oil prices are much higher than either EIA’s reference or “high” oil-price cases. If the NEMS-ETIP assumptions about the oil prices prove to be too sanguine, the higher underlying oil prices would likely result in all of the other policy scenarios modeled more effective, they concluded.)


Reference:

http://www.greencarcongress.com/2008/03/eia-forecasts-s.html

Excerpt:

• The EIA forecasts as its base case real world crude oil prices (defined as the price of light, low-sulfur crude oil delivered in Cushing, Oklahoma, in 2006 dollars) decline gradually from current levels to $57 per barrel in 2016 ($68 per barrel in nominal dollars), as expanded investment in exploration and development brings new supplies to the world market. After 2016, real prices begin to rise, as demand continues to grow and higher cost supplies are brought to market. In 2030, the average real price of crude oil is $70 per barrel in 2006 dollars, or about $113 per barrel in nominal dollars.

Sound crazy doesn’t it?

$68/barrel in 2016
$113/barrel in 2030

But all government agencies use these numbers for planning and funding energy research: such as fuel tax policy, CAFFA fuel standards and planning for electric car development. This is how the administration slows down and confuses all energy considerations including this study.

This garbage in garbage out situation shows how critical honesty in government is needed. The hidden agenda behind what the administration has done and is doing will take historians of the future many years to tease out. But it is now clear we all must be very careful about anything we hear from government of anything that is derived from what our government says. Dishonesty in government fosters propaganda we are all familiar with and I am sure we will see later on in this thread.

Posted by: Axil | June 20, 2008 at 10:24 AM

Any discussion in the study about planning policies that result in shorter distances between destination pairs? Denser development, that sort of thing?

What about the impact of expanding and improving the quality of mass transit, both in cities, for commuters, and long distances?

Posted by: stomv | June 20, 2008 at 10:26 AM

The most important thing that we need in order to eliminate CO2 emissions from transportation is a fast charge infrastructure. Build that and the EVs will come in mass very fast.

Even at $500 per kWh it makes good economic sense over the life of any vehicle to use an EV instead of ICE. Electricity is only 20% to 25% of the cost per mile run compared to gasoline. The saved 75% to 80% is more than enough to pay for the battery even at $500 per kWh. The EV will not get much more than a 100 miles range with current fast charge battery technology but with a fast charge infrastructure this problem is solved. Also note that because you slow charge at home for 90% of the miles run during the year it means that for the 10% of the miles run where you need to make more stops to charge you will still end up doing less trips to the public charge station/gas station during the year than you need to do in an ICE vehicle. So 100 miles range is not a problem that will cost you any extra time during the year.

Even Bob Lutz now believes that EVs will come quickly I quote “Lutz told the paper he expected one quarter to one half of all new cars between 2020 and 2025 to be electric with either batteries or hydrogen as the energy source.” Source http://www.autobloggreen.com/2008/06/19/lutz-pegs-first-generation-chevy-volt-price-tag-at-40-000/

Funny he still believes hydrogen will make it when it cost at least 2.5 times more to produce than electricity per mile run and the hydrogen infrastructure is perhaps 10 times as expensive to establish as a fast charge EV infrastructure and given the fact that battery technology is currently technically capable and economic whereas hydrogen technology is neither technically capable or economic.

Don’t make it more complicated than it is. Just get the fast charge infrastructure up with government subsidies to overcome initial loses because of few EVs and the market will do the rest of the job to make a zero emission society.

Posted by: Henrik | June 20, 2008 at 10:33 AM


Fuel consuption is already dropping. So far the summer driving season has barely been a shadow of itself. People exchanging SUV's for smaller units is already making an impact. The tide has turned, the public is wanting better cars. We just need to get them to market.

Posted by: Joseph | June 20, 2008 at 10:34 AM

I've decided to drive 58mph on my weekly 230mi round trip commute, and I'm observing a 26% increase in mpg's compared to the EPA highway fuel economy rating.

Interesting that you didn't need a law passed for you to make this choice, isn't it?

Just as we've seen the number of miles driven drop as the price of gas has risen, we're also seeing people drive slower as well. No new laws needed.

Posted by: Matthew | June 20, 2008 at 10:34 AM

Matthew, you are right, I didn't need a law passed since I am personally motivated to minimize my fuel consumption (which is why I telecommute when I can). I also understand longitudinal vehicle dynamics and engine efficiency maps. Joe Public is probably not as informed or motivated.

Posted by: relocalize | June 20, 2008 at 10:51 AM

Joe Public is probably not as informed or motivated.

So why do you suppose *he* is also driving less and more slowly?

Posted by: Matthew | June 20, 2008 at 10:54 AM

Here is a question - could you do it without a fast charge infrastructure, IF most people kept their ICE cars for long drives ?
Lets say you have an SUV. The value has plummeted as no-one wants them anymore.
You buy a 100 mile range EV which you use for daily commuting, and short range stuff.
You do the odd long run in the SUV (@ 58mph as suggested).

All you really need for this is to lower the cost of keeping a car you don't use very much - say limited mileage insurance, or pay per mile insurance.

Many people in the US have 2 or more cars, and it would make a lot of sense if one of these became an EV [ as soon as nice ones became available (not a Reva) ].
Just EVs, not PHEVs which might be too expensive for most people.
Alternately, make it simple for people to share ICE cars for occasional long runs.

Posted by: mahonj | June 20, 2008 at 11:04 AM


"Joe public is probably not as....motivated"

uuhhh, dude, look around. Almost all the hybred models are currently on backoder. Sales of SUV's have plumeted, cars are out selling trucks for the first time in decades. The mass hordes are not going on vacation. Distilate demand is down 300,000 bpd from last year.

Posted by: Joseph | June 20, 2008 at 11:07 AM

As we see from the study of various gas fuel futures, the result is either faster or not quite so fast environmental destruction, but not one is a path to sustainable technology.

@ Henrik ~> Any recharge infrastructure will let BEV's show up fast. Even slow charging is acceptable if it is in shopping malls, restaurant and theater parking. As battery technology improves the BEV will be useful to more and more of the driving situations. The cost savings will be the primary motivation for the shift, and so the technology can be introduced speeder by an encouraging tax structure.

This single change To BEV's will make city life far cleaner and more healthy. Helping our climate is just an added bonus.

Posted by: John Taylor | June 20, 2008 at 11:12 AM

This study isn't worth the paper its printed on. Just look at the smooth linear projections. That alone tells you that new ideas are not present.

Is it really impossible to project that the auto-markets will have more and more electric alternatives over the next 5, 10, 15, and 20 years?

A BEV has no need of any gasoline. It is as if the US auto fleet declined by a complete vehicle. PHEVs will consume but 10-20% of the amount of gasoline. It produces a discontinuous rate function.

Every single gas auto retired, is the equivalent of of ten PHEVs. The adoption of a 50% market penetration of PHEVs and BEVs, would be the equivalent of slashing the US auto fleet from 250 million vehicles to a gasoline auto fleet of but 25-50 million cars. When was the US auto fleet that small size? Back in the 1920s?

Where is the discontinuity in rate of change from adopting a new technology like electrified autos?

The nice smooth linear projections show, It doesn't exist and was never considered.

Where is the discontinuous rate changes, shown from price spikes, resulting in a 3-5% drop in consumption just this year?

It isn't there. So this "study" is nothing but a total waste of time. It just goo and dribble.

Posted by: stas peterson | June 20, 2008 at 11:16 AM

@ Matthew,

Are you done hating your mother for making you brush your teeth?

Have you forgiven the Department of Health for insisting that all restaurant employees wash their hands?


Posted by: dolared | June 20, 2008 at 11:17 AM

Oops, sorry, Joe/Jane Public. I digress regarding the public's motivation to reduce oil consumption. We are probably a biased bunch on this website. Regarding public information, where is this element? Is it just me or is school about being a "good" consumer rather than a "smart" consumer.

Ultimately, reducing greenhouse gas emissions and oil consumption in transportation will come naturally by the consumers' response to increasing oil prices.

If a more proactive approach is sought, a 55mph speed limit is cheap and highly effective - not to mention the increased revenue from speeding violations (sorry Matthew). Significatnly introducing new technology to market will take years/decades. Changing the speed limit could happen within a few months (if not over night).

Posted by: relocalize | June 20, 2008 at 11:53 AM

If a more proactive approach is sought, a 55mph speed limit is cheap and highly effective [...]

Highly effective? I'm guessing you are quite young; do you not know that the 55mph speed limit was one of the least-obeyed laws in the land? As you allude to, the only thing it is effective at is generating ticket revenue.

Posted by: Matthew | June 20, 2008 at 12:03 PM

@Mahonj and @J. Taylor

The EVs will be sold in volume even without a fast charge infrastructure but such an infrastructure is necessary in order to eliminate CO2 emissions in transportation. Most importantly, society will benefit more in all regards (economic, environmental and from the security/strategic point of view) if we make it possible right now to replace all ICE vehicles with purely electric vehicles.

From a social point of view the ones who need to get affordable transportation the most are also those that can’t afford to buy both a short range EV and an ICE for their transportation needs and range extended EVs will also be more expensive because they are more complex. Therefore, also to help >all people< with their transportation needs we should invest in a rapid deployment of a fast charge infrastructure. The government could perhaps limit subsidies to highway fast charge stations only because this is where they are needed the most. It could very well be that the shopping malls, restaurant and theater parking will do it all by themselves to attract customers. But chargers at these places will not really help people doing a long distance trip.

Posted by: Henrik | June 20, 2008 at 12:21 PM


The 55mph speed limit was literally a death sentence here in the desert. UofA, ASU, NM state, LV tech and SoCal all did studies. The results were frightening.

Posted by: Joseph | June 20, 2008 at 12:31 PM

The 55mph speed limit was literally a death sentence here in the desert.

Natural selection also reduces GHG emissions.

Posted by: | June 20, 2008 at 01:09 PM

Joseph: care to explain? (I don't live in a desert)

Posted by: Neil | June 20, 2008 at 01:10 PM

As you allude to, the only thing it is effective at is generating ticket revenue.

Still better than punishing hardworking people with work-taxes.

Posted by: | June 20, 2008 at 01:15 PM

What is all this stuff about fast charge infrastructure and 100 BEV range? Make an affordable (under $20k) plug in hybrid with 20 mile all electric and you will cut the average person's gasoline use (and bill) by 50%. Make it modular and upgradable so it can go 40 miles electric with another battery and you capture more market.

Forget the infrastructure for now, that will develop. Just subsidize the replacement of any car over 10 years with an affordable plug-in hybrid and scale the subsidy for income. That will put them on the road next year -- in volume. Honda, where is that Civic hybrid?

Also, increase depreciation rates on hybrid or electric buses, and leasing companies will flood the market with them -- quickly. Help Schools buy electric buses with 100 mile range, and they can recharge between morning and afternoon -- and save money to spend on education.

Posted by: JMartin | June 20, 2008 at 01:30 PM

How come no one's concerned about SO4, CO, NO, benzine and particulates anymore? These are real dangerous toxics that continue to emerge from tailpipes to far worse effect than CO2.

Posted by: chokin | June 20, 2008 at 02:18 PM

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