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A Transportation Energy Policy for America
October 20, 2006

Oil Addiction

America is currently addicted to oil, we consume 20-21Million Barrels of oil Per Day (mbpd), and this number continues to increase at the rate of about 2% per year. Against this, US Crude Oil production is roughly 8mbpd, a level which is declining over time. The US currently uses some 25-30% of global crude oil production, with less than 5% of the world's population.

The need of the US to import 12-13 mbpd of Crude Oil has a significant effect on balance of trade and on foreign policy. Oil is the US's largest import measured by cost or volume, and the country's oil requirement places the US in a position of increased risk from a geopolitical perspective. There is also the fact that at some point, "Global Peak Oil" will arrive (the point at which oil is being pumped out of the ground at its maximum rate), meanwhile global demand also continues to increase at about 2% per year. In a free market, this supply-limited capacity and increasing demand will likely increase the costs of crude oil, increase price volatility, and increase America's requirement to defend its energy interests globally.

The US also produces 30% of the worlds CO2, the largest proportion by any single country, again, despite the fact that the US represents only 5% of the global population. To come closer to the average global CO2 per capita, the US needs to reduce green house gas emissions by 60-70%

The US needs a bold energy policy which accounts for this changing environment, maintains it's "Leading Nation" position, and the standard of living of its citizens. The policy must be:

  1. Evolutionary - progressing incrementally from our current position
  2. Reasonable - not expecting any section of our society to bear an unfair part of the burden
  3. Acceptable - to gain broad support from a wide range of political, scientific, environmental, and business interests.

The application of these criterion increases the chance of a policy being implemented successfully. The real need is to start the journey and to do so quickly!

This paper will look at the US's transportation energy needs over the next 15 years, and suggest policies to transition the transportation sector to a more sustainable operational environment.

Efficiency is a National Imperative

From a quantity perspective, the use of energy is an urgent global problem. Humans use vast amounts of non-renewable resources, but this happens primarily because of inefficient use of energy. At present, energy is directly consumed in the US with an efficiency of less than 35% and indirectly consumed with an efficiency of less than 2.5%. One could easily argue that there are massive amounts of cheap energy available if we would use energy more effectively..

Let us use an automotive example to explain the difference between direct and indirect consumption efficiency. The internal combustion engine in your car operates at an efficiency of somewhere between 25 and 32%, that is, it converts the potential energy in the gasoline into available drive for turning the wheels and running other systems at a ratio of 3.5 to 1, this is direct consumption efficiency.

Indirect consumption efficiency is about what is done with the available energy, if it is used to power a 4000lbs SUV with one person in it, weighing 200lbs, the systems indirect consumption efficiency is just 5%. This is further reduced by inefficiencies in the gearbox and drive systems, and the fact that the system 'throws away' energy when the SUV sits at a red light, and every time the brakes are used. The end result is a systemic indirect consumption efficiency of less than 2.5%. In the SUV case above the overall efficiency of the system is just 0.75%.

From this example we can immediately see:

  1. There is massive potential to improve energy use through improvements in efficiency.
  2. If we could increase indirect efficiency by a multiple of only 4, we don't have an energy problem (or we have delayed it for at least 25 years).
  3. At a multiple of 4 we would have no requirement for imported energy.
  4. Any movement towards more efficient use of resources would have a radically beneficial effect on our production of green house gases.

The policies outlined below focus on systemic direct and indirect efficiency, but in a way that does not require wholesale changes in the way that people live their lives.

Balancing Non-renewable and Renewable Energy Production and Consumption

At present the US consumes energy that is 76% non renewable and 24% renewable (Nuclear and Hydroelectric are included in renewable), this has to move incrementally to balance over the next 25 years, and have the potential to move further towards renewable energy after that, however in the transportation sector the situation is much worse with more than 95% of energy consumption being non renewable.

To affect the transportation sector in a meaningful way, any solution proposed has to be massively scalable; it has to encourage involvement of the population at large, and has to leverage the existing delivery infrastructure. These requirements quickly limit our options. So we will focus on the following:

  1. Improving the efficiency of the internal combustion engine
  2. Adopting energy recovery systems (hybrid regenerative braking)
  3. Adopting the distribution of more efficient energy sources (pluggable hybrids)
  4. Getting the population involved at an operational level in fuel economy
  5. Switching to Bio-fuels

Regarding point 5, this paper concentrates on Bio-diesel as the "bio-fuel of choice", this is for several reasons, firstly, Bio-diesel has a significantly higher energy density than ethanol, by perhaps as much as 50%, therefore the volume requirements are significantly smaller. Secondly, the public probably cannot be convinced to see fuel economy decrease as a result of the transition to bio/eco friendly fuels, as would be the case in transitioning from gasoline to ethanol. Lastly, without significant progress in developing cellulosic ethanol (i.e. from the stems or cellulose of plants , rather than fruits, the sugars and starches, of agriculture) there appears to be no real economical advantage in moving to ethanol over moving to Bio-diesel..

The policies focus heavily on these options above to affect the balance between non renewable and renewable energy.

Transportation Energy Policy

If the US had a comprehensive energy independence strategy, one part would be an aggressive Transportation Energy Policy which might consist of the following major items:

  1. Significantly and urgently reduce our need for imported crude oil
  2. Encourage fuel consumption and efficiency awareness
  3. Encourage the adoption of Bio-fuels, particularly Bio-diesel
  4. Give clear direction to the automotive industry regarding fuel efficiency standards
  5. Implement changes which radically reduce GHG production in the US

Specific Policy Steps

With these policies and goals in mind, the following specific steps will drive the US towards a transportation energy independent, and ecologically more sustainable future:

  1. Significantly revamp Corporate Average Fuel Economy (CAFE) standards to drive fuel consumption efficiency
  2. Legislate to require MPG in advertising
  3. Legislate to require fuel consumption instrumentation in the dashboard
  4. Legislate taxation based on fuel consumption at vehicle purchase and during annual registration/licensing
  5. Support the Bio-diesel industry, facilitating fast infrastructure permitting and making Bio-diesel / diesel blends available nation-wide
  6. Align US and European emissions regulations

Each of these steps is outlined in more detail below, with a view to showing how the policy steps will work both as single measures and grouped together for cumulative benefit

1. Revamp Corporate Average Fuel Economy (CAFE) Standards

Automotive manufacturers should be required to improve the fuel consumption of their fleets by a fixed percentage every second model year. Improvements are likely to be 10%+ per step (the example below is at 11% per step), for both gasoline and diesel cars and trucks. The technologies needed for these short term efficiency steps are not only achievable but are already being used by the global auto companies in other parts of the world. Given the potential gains from areas such as Hybrid, Variable Displacement, Regenerative Braking and switching to diesel, auto manufacturers should be able to concentrate on research and development of longer term technologies and designs including Pluggable Hybrid, Hydraulic Energy Storage, Ultra Capacitors, Battery Efficiency and possibly Hydrogen. It is already clear from 2007 sales figures in the US that $3.00 gas is a consumer barrier, where drivers start to seriously consider their driving habits, and look for cars and trucks that will match their requirements efficiently. This policy does not require the end of "gas guzzlers", there will be some need for high gas consumption vehicles in the future, it does however radically reduce the proportion of such vehicles in the US fleet.

2. Legislate to Require MPG in Advertising

In much the same way as the Tobacco industry is required to declare health warnings using a significant percentage of available advertising real estate, the auto industry should publish MPG figures in similar fashion. This will encourage fuel economy competition amongst the auto manufacturers and educate citizens as to the real fuel cost of the powerful Hemi engine, the Mustang styled after the GT, or the truck that can tow a house.

3. Legislate to Require Fuel Consumption Gauges in the Dashboard

In practice it is often not possible to monitor fuel consumption even in modern cars, or to understand when significant fuel is being used. In the same way that legislation mandates an accurate speedometer, a fuel consumption gauge should be placed in every dashboard, with appropriate warning signs for high fuel usage. This gauge would be inexpensive to install and there are already aftermarket products available that use manufacturers' in-car data. These gauges could be added in a model year change by the manufacturers and would significantly improve driver behavior through immediate feedback. A recent Toyota announcement suggested that this addition could produce a 4% improvement in fuel consumption.

4. Legislate Taxation Based on Fuel Consumption

All new cars and trucks should have an energy efficiency tax at the time of initial purchase and an annual registration/license tax based on their fuel consumption. The effect of this taxation is to level the playing field, from a consumer perspective, regarding fuel saving technologies (e.g. Hybrids are more expensive to build, this would be off-set by this taxation)

The increased fuel economy requirements that the auto manufacturers need to meet will be increasingly difficult to achieve and require significant investment. Taxation based on fuel consumption would generate the monies needed to fund the required investment by the automotive industry. The system would principally be funded in the same way as defense research is funded today, with the Department of Defense and other Federal Agencies allocating funds for specific projects. Product spin out would replicate the NASA model of the 1960's and 70's, licensing developed technologies and eventually releasing the patents for general use.

It is worth noting that cars that would not incur any tax are already available, the key feature here is to move the US car and truck fleet to a more economically efficient position. Total taxation using the financial figures outlined above would generate $56bn in its first year falling to under $30bn by the year 2020. This profile matches the need for research and development of efficient technologies to meet the policies outlined here.

5. Support the Bio-diesel Industry

An important effect of the taxation measures will be to drive higher volumes of diesel cars principally because they already have significantly better fuel consumption for equivalent performance. This has 3 distinct advantages. First, diesel is a more efficient fuel (conservatively assumed to have a 30% higher energy density than gasoline and perhaps 50% higher than ethanol). Second, diesel already has the distribution infrastructure in place, and lastly, diesel can most easily be replaced by a renewable source, Bio-diesel. Europe already has a significantly larger diesel vehicle presence and this should be encouraged in the US. This policy requires diesel to replace 40% of the US car and light truck fleet over 14 years, this is a challenging target, but possible in that time period. The principal drivers for consumers to switch to diesel will be the taxation benefit (lower purchase and license taxation as a result of better fuel economy than an equivalent gas powered car), plus the benefit of lower fuel and operating costs. To facilitate this, adoption standards need to be defined and agreed to regarding fuel properties and quality.

Any incremental diesel consumption should be matched by increases in Bio-diesel production so that Fossil-diesel consumption can fall in line with its availability (we would be using fewer barrels of oil therefore less Fossil-diesel would be produced). In practice this means bringing on-stream massive Bio-diesel capability, perhaps as much as 4.1mbpd by 2020. Unlike the Fossil-diesel industry, the Bio-diesel industry is currently very fragmented. In this fragmented state, development of the needed refining capacity and distribution systems will be slowed. In order to achieve the required ramp-up in Bio-diesel production, the permit and approval process for production infrastructure needs to be significantly shortened as well as other Federal incentives put in place.

Through legislation, require the development of Bio-diesel and Fossil-diesel blends, with incrementally higher Bio-diesel content, moving from B0 (no Bio-diesel content), to B60 (60% Bio-diesel content) in 10%, 3 year increments. Given the inherent efficiency of diesel and the required improvements in fuel consumption, Gas consumption would reduce from 9.1 mbpd to just below 6mbpd over a 15 year period, while Bio-diesel consumption would rise from almost zero today to 2.7mbpd of new usage, plus 1.4mbpd requirement to replace the Fossil-diesel reduced supply associated with the reduction in petroleum over the same period. Fossil-diesel consumption would therefore reduce to 2.6mbpd.

To achieve the required growth in Bio-diesel capacity would require a switch of agricultural land to Bio-diesel as a crop, and to incremental improvements in yield per acre. Current production techniques produce only 2-6 barrels of bio-diesel per acre (bpa), this policy proposes that a significant proportion of the energy tax dollars would go into research and development to improve Bio-diesel yield per acre. Research is already finding that algae can yield bio-diesel much more efficiently than existing crops, this paper assumes a yield improvement from 4bpa to over 50bpa. Should this improvement be achieved, the proportion of arable land being used for Bio-diesel production would be in the order of 10% or some 45-50million acres.

6. Align US and European Emissions Standards

The US currently has a number of emissions regulations being implemented on a state by state basis. This effectively generates a number of discrete distribution markets for auto suppliers; in short, they need to supply different cars to different geographies. This completely undermines their investment model, where the efficiencies of mass production are lost (imagine if TV's across the US used different standards, how much more expensive would a Nevada specific television be, and how much more expensive the distribution costs for programming). By aligning with the European emissions regulations, and jointly stiffening them over time, the US encourages investment in improvements in efficiency and improves the return on investment for manufacturers. This is particularly true of diesel, and therefore Bio-diesel, as a fuel.

Does having different global standards for emissions help any country?

The Environmental Challenges and Opportunities

It is becoming clearer that humans are affecting the climate on our planet, specifically with the emission of green house gases (GHG), Carbon Dioxide (CO2) produced from fossil fuels is coming under particular scrutiny as a potential cause of global warming. The switch to renewable Bio-diesel outlined in this policy paper reduces net CO2 emissions from the transportation sector by some 700 million tons per year over the 13 year implementation period, and puts net CO2 production on a more sustainable trajectory in subsequent years.

The Mechanical Engineering Challenges

At first blush, the CAFE requirements may seem very aggressive. In fact, the systems are already available and being adopted in small measure to achieve the first 6-8 years of incremental improvements required. Increased adoption of Hybrid and Variable Displacement technology has the potential to improve fuel economy by the amounts required. Development of pluggable hybrid technology could potentially meet all of the efficiency improvements required over the entire timeline of the policy.

Economics in the auto industry is highly geared to scale production and from this perspective, there is a requirement for large scale design and tooling investment. This investment can be aligned with vehicle model changes over time. Aligning with vehicle model changes allows the evolving escalation of CAFE requirements. If the model replacement cycle is on average 7-10years and the design cycle an additional 3-4 years, work needs to commence immediately on adopting existing proven technologies.
To drive the massive investment required in the automotive industry, 50% of the revenue gained from the MPG related taxation should be used to fund the development and implementation of technologies to be licensed to the industry, rather than the technologies being proprietary to a specific manufacturer.

The Bio-engineering Challenges

The development of a Bio-diesel led economy relies heavily on the potential to improve the yield from organically grown crops. Initially using soy-bean and probably moving in the direction of algae, crops can transition towards the needed efficiency yields over time. Several research studies have made progress on these challenges and could undoubtedly be accelerated in a better funding environment. Approximately 25% of the MPG related taxation would be invested in solving these bio-engineering challenges.

The Scientific Challenges

The scientific community has been significantly under funded in terms of basic research around the areas of energy usage efficiency, energy storage and utilization and new energy sources. This policy will fund these activities using 25% of incremental tax revenues. This would be done in the same way that NASA did during the 1960's to put a man on the moon, a National Energy Agency (NEA) will carry out primary research and control the investment spend of third parties, then license subsequent developments to the industry.

The Business Challenges

There is significant re-tooling to be completed to ramp production of existing and new technologies, however given the legislative creation of demand, the business community will look to take advantage of the opportunities created.

There is bound to be significant angst in the automotive sector as the demands on it outlined in this policy take effect, however, all of the major manufacturers who sell significant volumes of cars and trucks in the US, already have mainstream technology they are distributing in high petro-taxation countries globally which are capable of meeting the demands outlined in this paper. In fact, in some cases, there are models available internationally and here from the US Big 3, where the most efficient variant is not available in the US (try and find a diesel Calibur that does 37mpg in the US, if it were available , the model range would be significantly more efficient.

National Leadership Challenges

Probably the most challenging hurdle is "leadership". The changes defined in this document require the highest level of buy-in and endorsement by government and industry and will require explaining to the American people. As has been seen by the adoption of Hybrid cars, there is significant willingness from a cultural, environmental, and social perspective to adapt to the needed changes. It is the President's role to encourage the nation to accept our new reality, and to energize the nation to meet the challenges that we must face. Please write the President and your congressional representatives asking them for action and leadership on this critical issue.

Comments to:

Kevin Hughes

Kevin has lived in the US for 7 years after moving from the UK, he is an independent consultant specializing in the implementation of complex and critical technology projects. He has been involved in large projects with Toyota, GM, and Nissan internationally, and Federal and State projects in both the US and UK. He believes that the building bank of evidence about global warming has reached the point where the US needs to act.

Read/Post Comments (6)

Comments (6)

Lorraine C. from CA
10/20/2006 6:10:17 PM

Excellent recommendations, particularly with regard to coordinating with Europe. Having just been there I realized how many alternative car models are in use there that do not even appear in our markets - smaller, more efficient ones at that. Just this morning Thomas Friedman of the NY Times urged Gov. Schwarzenegger to support Prop 87 which would make many of your suggestions possible.

Ron Bengtson from ID
10/20/2006 6:46:10 PM

3. Legislate to Require Fuel Consumption Gauges in the Dashboard

This is something that could easily be done. An inexpensive microprocessor with special microcode could be designed into the fuel system to measure the flow of gas through the fuel pump and calculate MPG via the mileage provided by the odometer.

I would like to see the capability to upload the statistics to my home pc or laptop to track my cars MPG performance. And, perhaps have the stats available via electronic reader for the annual smog check-up so the state can verify avg MPG on vehicle models.

I like this idea because it is something that can be done today, with existing technology and it would give the people real feedback so individuals can be certain of their car’s MPG performance.

And, this is something Chris Wolfe has the business background to make happen. Hey Chris, what do you think? Is there a market for this?

Kevin Hughes from CA
10/21/2006 4:07:56 AM

Thanks for the feedback, trying to get a copy to the goverator (and his wife) as we speak


Chris W from CA
10/23/2006 8:35:53 PM

I am very much in favor of driver feedback that can effect driving behaviour. These have been in use in the trucking industry for years. The more real-time, the better - few people would look at after the fact reporting for normal passenger data (perhaps a worried parent checking on the teenagers). A simple, cost effective means of making everyone "think" about efficiency and make this part of our national DNA. The automakers could do this tomorrow if mandated - same as making all gasoline powered cars "ethanol capable".

Harvey Sherback from CA
11/3/2006 9:57:18 PM

Americans for Energy Independence
Board of Directors
Chris A. Wolfe

November 3, 2006

Dear Chris Wolfe, Americans for Energy Independence Board of Directors & Staff,

Thanks for your many efforts to slow climate change. I sent the following letter to all of the California State  Senate and Assembly Members. Thanks once again.

Harvey Sherback


Being that plug-in Hybrid vehicles are primarily powered by electricity, the question then becomes how do we generate the electricity to power these new cars? We are told that we are going to need more hydro, natural gas and nuclear power plants in California as well as coal-fired plants in Arizona, Nevada and New Mexico to recharge all these Hybrids. It's imperative that we secure a clean source of energy to run these millions of electric vehicles.
"Each day more solar energy falls to the Earth than the total amount of energy the planet's 5.9 billion inhabitants would consume in 27 years. We've hardly begun to tap the potential of solar energy." U.S. Department of Energy-NREL 
Introducing the car that's powered by the sun: THE SOLAR PLUG-IN HYBRID ELECTRIC VEHICLE (SPHEV)
Here are 8 ways to recharge the SPHEV's lithium-ion battery using sunlight:
Instead of a paint job, the Hybrid's body is coated with a photovoltaic (PV) surface which, from sun-up to sun-down, is continuously charging the vehicle's lithium-ion battery. A protective highly transparent polymer coat is sprayed on top of the Hybrid's PV surface.
San Jose, California, "SunPower’s A-300 solar cell is unique because the metal contacts needed to collect and conduct electricity are on the back surface, away from the sunlight. This design eliminates reflective metal contacts on the front of the solar cell, improving the solar cell's performance and creating a uniformly black appearance that looks like a painted surface."
SunPower Corporation:
The Hybrid's Solar Electric Car Windows generate electricity using a thin-film photovoltaic material that looks like tinted glass.
"Applied Films is a leading provider of technologically advanced thin film deposition equipment for both the solar architectural glass and automotive glass markets."
Applied Films:
A photovoltaic glass sunroof filters much of the sun's harmful rays while generating clean electricity to power the Hybrid's lithium-ion battery. The 2006 BMW 760i has a solar-powered sunroof panel that powers an automatic air-recirculation system which cools the car's interior when it's parked in the hot sun.
"Based in Aliso Viejo, California, XsunX, Inc. is developing Power Glass? When Power Glass is exposed to light, the light is converted into electrical energy for use as a power source."
Power Glass is semi-transparent making it ideal for sunroofs.
XsunX, Inc.:
Plug-In Solar Electric Sun Shades have a PV surface on the sun-facing side of the shade which generates clean electricity while blocking the sun's rays which heat up the car's interior and fade the upholstery. The large windshield on the Toyota Prius is ideal for using the Plug-In Solar Electric Sun Shade. It can be plugged into the car's cigarette lighter or plug-in port to recharge the Hybrid's battery.
A Rear Window Solar Electric Sun Shade powers the Hybrid's lithium-ion battery while protecting the rear window shelf and upper back seat areas from the sun's UV rays. The shade retracts into a protective metal tube at the base of the window.
The Hybrid's Solar Electric Sun-Visors have a photovoltaic surface on both sides of the visor. When flipped-down, the sun-visor's thin-film PV surface faces the windshield to generate electricity. When the Hybrid is parked, the flipped-down Solar Electric Sun-Visors open like a book, doubling in length, creating twice the charge to the lithium-ion battery.
A photovoltaic surface can be vacuum deposited onto the SPHEV's dashboard. The Solar Electric Dashboard can power the Hybrid's dashboard systems. When parked, the Solar Electric Dashboard recharges the car's battery. The Hybrid's rear window shelf can also be coated with a photovoltaic surface to generate clean solar electricity.
Aerodynamically designed, Hybrid accessories such as Side Mirrors, Rear & Side Window Louvers, Wind Wings, Air Deflectors, Spoilers and Wind Fairings can all be coated with a photovoltaic surface which generates electricity to charge the vehicle's battery.
Plugging our Solar Plug-in Hybrid Electric Vehicles into our solar powered residential and commercial sockets would greatly reduce CO2 emissions. With the massive implementation of solar electric roof shingles and panels across the rooftops of California, thanks to programs like the California Solar Initiative, we can plug our SPHEV's into our solar powered sockets.
The following information describes current Hybrid technology.
Ford Motor Co.
January 10, 2006
"The Reflex features an advanced hybrid propulsion system that harnesses diesel, electric and solar power. This combination of power can deliver maximum fuel economy, up to 65 mpg, without compromising performance. Contributing to Reflex's power and performance are unique headlamps and tail-lamps that integrate solar panels. The Ford-patented battery-charging lighting system improves fuel economy by using the sun's power to charge the on-board batteries. The vehicle's roof also features solar electric powered fans that cool the car's interior when parked."      
Ford Reflex:
Another method of producing renewable energy for the SPHEV is the use of thermoelectric generators which are solid-state devices that convert heat directly into electricity. These devices are positioned to absorb the heat from the Hybrid's engine and exhaust system. The generated electricity is used to charge the vehicle's lithium-ion battery. Thermoelectric devices have been used by NASA for decades.
In the long view, solar energy production is intrinsically attractive, not only environmentally but also economically. Sunlight is readily, regularly, and widely available. It is renewable and easily accessible without the massive expense of mining, drilling, or constructing huge dams or other facilities. Shares in renewable energy companies have far outpaced the broad market indexes. Solar power stocks gained an average of more than 110% last year and are way ahead of the market in 2006.
The Solar Plug-In Hybrid Electric Vehicle is our chance to slow climate change while enhancing California's economy.
Harvey Sherback

Peter Blackman from AZ
1/24/2007 1:20:56 AM

Great solutions but I believe we need to think outside the box. I listened to a visionary recently talk about the potential of carbon. Carbon is 5 times stronger than steel with half the weight of aluminum. If we could reduce the weight of cars we would definitely have better efficiency.

He also talked about hydrogen produced by the sun as a clean fuel. New solar panels are with a 41% efficiency are just around the corner along with wind power could be used to produce the hydrogen.

He believes the next revolution will be the hydrogen and carbon revolution.

Lighter cars will go further on whatever fuel is used.
We could have hybrid cars made of carbon(that do not rust) that run on hydrogen made from the sun and batteries charged by the sun.

This goes against the grain of capitalism and producing consumeable products but some day we need to start thinking about what is good for all of us rather than what is good for the few.

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