Transportation and Energy: National and Global Challenges David L. Greene Oak Ridge National Laboratory Howard H. Baker, Jr. Center for Public Policy The University of Tennessee 2011 Lake Arrowhead Symposium on the Transportation-Land Use-Environment Connection Lake Arrowhead, California October 16, 2011 1
Transportation is work. Work = Force Distance = Joule = Energy Activity Share Intensity Fuel-efficiency = ASIF (Lee Schipper) 2
The U.S. and world transport systems face serious problems that can only be solved with the help of public policy. GHG mitigation Energy security (Oil Dependence) Sustainable Energy Insuring energy resources that permit future generations to achieve a level of well being at least as good as our own. Graedel, T.E. and E. van der Voet, 2010. Linkages of Sustainability, Energy, chs. 18-22, MIT Press, Cambridge, MA. 3
Petroleum provides 95% of the energy for global transport, which accounts for 27% of global final energy use. IEA, Energy Technology Perspectives 2010. 4
What few projections there are of transport energy use to 2050 expect a doubling or more. International Energy Agency, 2008. Energy Technology Perspectives, Figure 2.21. 5
Highway vehicles also predominate in U.S. transport: Lightduty vehicles account for 60%, heavy-duty trucks 22%. All bus energy use plus all passenger rail equals 0.3%. Transportation Energy Use by Mode, 2009 0.1 0.9 1.4 (exajoules) 0.5 6.4 2.3 17.4 Light-duty Vehicles Buses Heavy Trucks Air Water Pipeline Rail Passenger Rail Freight 0.2 Davis, S.C., S.W. Diegel and R.G. Boundy, 2011, Transportation Energy Data Book Ed. 30, Tables 2.6 7 2.13. 6
MegaJoules per Passenger-Kilometer Average energy intensities can be misleading. Marginal changes could be better or worse. Still, double, triple or quadruple transit ridership and the effect on transportation energy is small. 3.0 AVERAGE Energy Intensities of Passenger Modes in the U.S., 2009 2.78 2.5 2.32 2.40 2.0 1.5 1.61 1.85 1.60 1.65 1.84 1.0 0.5 0.0 Passenger Cars Light Trucks Motorcycles Transit Bus Airlines Intercity Rail Rail Transit Commuter Rail Davis et al., 2011. Transportation Energy Data Book, Ed. 30, table 2.12 7
The U.S. transportation system emits more CO 2 than any country in the world except China. CO 2 comprises nearly all of transportation s GHG emissions. Agriculture Residential Commercial Industry Transport CO2 CH4 N2O HFCs 0 500 1000 1500 2000 2500 Million Metric Tons
According to the NAS, to limit the global average temperature rise to 2 C (avoid dangerous climate change) implies the U.S. limits its C emissions to 170 GtCO 2 eq.
Carbon Reservoirs Atmosphere 800 GtC (2004) Biomass ~500 GtC N. Gas ~260 GtC Oil ~270 GtC Soils ~1,500 GtC Coal 5,000 to 8,000 GtC Unconventional Fossil Fuels 15,000 to 40,000 GtC Source: Edmonds, 2005 14
QUADS It s about petroleum. Our transportation sector consumes petroleum at the rate of 6,300 gallons per second. 35 U.S. Transportaton Energy Use, 1950-2009 30 25 20 15 10 5 Electricity Biomass Petroleum Natural Gas Coal 0 1950 1960 1970 1980 1990 2000
2009 Dollars per Barrel The real problem we face over oil dates from after 1970: a strong but clumsy monopoly of mostly Middle Eastern exporters operating as OPEC. Prof. M. Adelman, MIT, 2004. RANDOM WALK? (Hamilton, 2009 Energy Journal, 30(2), 179-206). $120 World Crude Oil Prices, 1930-2010 $100 $ 2009 $ Nominal After OPEC $80 $60 $40 Before OPEC $20 $0 Source: BP Statistical Review 2010. 1930 1940 1950 1960 1970 1980 1990 2000 2010
OPEC members own 70% of the world s proven oil reserves and more than half of ultimate resources of conventional oil. National oil companies own more than 80%. 123.0 28.4 143.3 152.2 1028.8 OPEC Non-OPEC Former USSR USA Canada Oil Sands Source: BP Statistical Review of World Energy 2010, Oil: Proved Reserves.
The economic theory to understand the behavior of the OPEC oil cartel was developed more than half a century ago by Heinrich von Stackelberg. P C 1 1 S ( P) ( P) 1 = price elasticity of world oil demand ( < 0 ) S = OPEC share of world oil market ( 0 < S < 1 ) µ= non-opec supply response ( -1 < µ < 0 ) Elasticity = % change in quantity / % change in price = d ln(y)/d ln(x) Short- and long-run elasticities differ by an order of magnitude!
2009$/Barrel The random walk of oil prices since 1974 takes place within the partial monopoly framework. $120 OPEC Cartel Market Share and World Oil Prices: 1965-2009 (Annual Averages) $100 1980 2008 1979 $80 2010 2007 $60 1985 2009 1974 $40 1986 $20 1965 $0 25% 30% 35% 40% 45% 50% 55% OPEC Market Share Source: 1965-2009 BP Statistical Review 2010. Oil Production - barrels and Oil - crude oil prices since 1861.
What is oil dependence? Oil dependence is primarily an economic problem with major national security implications caused by, use of market power by oil producing states, importance of oil to the economy and, lack of economical substitutes for oil. Oil dependence is NOT an externality.
Billions of 2008 $ Oil dependence cost the US more than $500 billion in 2008. Oil independence doesn t mean using no oil or importing no oil. Costs of Oil Dependence to the U.S. Economy: 1970-2010 $500 $400 $300 Wealth Transfer Dislocation Losses Loss of Potential GDP $200 $100 $0 1970 1975 1980 1985 1990 1995 2000 2005 2010
Millions of Barrels per Day The cartel s market power was strengthened by growing world demand, its increasing market share and the peaking of US crude oil production in 1970. 25 20 15 U.S. Petroleum Supply, 1950-2009 Imports Other Crude Oil 10 5 0 1950 1960 1970 1980 1990 2000 Source: Energy Information Administration, Annual Energy Review 2009, table 5.1.
The International Energy Agency foresees a plateau in non-opec conventional and unconventional oil production from now to 2030. Source: International Energy Agency, World Energy Outlook 2010, OECD, Paris.
Even including oil sands, BP sees non-opec production flat or declining after 2010. Source: BP Energy Outlook 2030, London, January 2011.
Projections made before the run-up in oil prices expected peaking of non-opec supply with OPEC filling the gap.
ExxonMobil s 2009 & 2010 energy outlooks, considering recent high oil prices, were not much more optimistic about non-opec crude oil supply. Source: ExxonMobil, The outlook for energy: a view to 2030, January 14, 2009. http://www.exxonmobil.com/corporate/energy_outlook.aspx
Billions of Barrels But do we know how much oil there is? US Geological Survey Estimates reflect 2 trillion barrels of uncertainty about how much exists and can be produced. Estimated Conventional Oil + NGL Resources to 2030: USGS 2000 5000 4500 4000 3500 Undiscovered Reserve Grow th Proved Reserves Cumulative 3000 2500 2000 1500 1000 500 0 Ahlbrandt et al., 2005 Cumulative Production & Reserves as of 1995 95% 50% 5% Probability Level
The RATE of world oil use is large relative to any of the USGS estimates. 2002 67% 979 33% Billions of Barrels The 2007 NPC report expects 1.1 trillion barrels of oil production over the next 25 years. More than consumed in in all of human history. Remaining recoverable crude oil* Not reserves, ULTIMATE RESOURCES Cumulative Production to end of 2005 Cumulative Production to the end of 1995 was 710! Over ¼ of all oil ever consumed was consumed between 1995 and 2005. * From USGS 2000, USGS 1995, and MMS 1996
The path of least resistance is producing liquid fuels from unconventional fossil resources at prices the world has shown it is willing to pay. But, production is more capital intensive, and Source: International Energy Agency, World Energy Outlook 2008, OECD, Paris.
GHG emissions from oil sands are 20% to 80% higher than gasoline from conventional oil and liquid fuels from coal (CTL) would likely more than double CO 2 emissions (without Carbon Capture & Storage). Source: Farrell, 2006.
Vehicle Miles (millions) Gallons (millions) In the near term improving energy efficiency is the most promising strategy. The CAFE standards decoupled VMT and energy use. (>60 Bgals. saved in 2008) And the public likes the standards. Miles of Travel and Fuel Use by Light-duty Vehicles: 1965-2008 3000000 2500000 2000000 1500000 1000000 500000 Vehicle Travel Fuel Consumption 225000 200000 175000 150000 125000 100000 75000 50000 25000 0 1965 1970 1975 1980 1985 1990 1995 2000 2005 0
The overall energy efficiency of U.S. passenger vehicles is 1%. Fuel to wheels ~16%, payload ~1/16 th of total mass. Though this is an extreme example, it is reasonable to infer potential for major improvement. Bandivedekar et al., 2008, On the Road in 2035, MIT Sloane Automotive Res. Lab. 28
Incremental Retail Price Equivalent Proposed fuel economy standards require more than a doubling of miles per gallon by 2025. Can it be done cost-effectively? $18,000 $16,000 $14,000 $12,000 $10,000 Fuel Economy Cost Estimates: MIT On the Road in 2035 NAS 2002, NAS 2011 and 2011-2017 TAR NRC 2002: 2012 MIT: 2035 TAR Path A: 2025 TAR Path C: 2025 NRC 2011: 2020 NRC Optimistic: 2020 Battery Electric Vehicle $8,000 $6,000 $4,000 $2,000 2035 Advamced Conventional Vehicles 2035 Hybrid Vehicle H2 FCV PHEV 30 $0 0% 50% 100% 150% 200% 250% 300% 350% 400% 450% Percent Increase in Kilometers per Liter Gasoline Equivalent Energy
Million Metric Tons CO 2 Eq. The proposed 2017-2025 US standards will put light-duty vehicles on a path toward oil independence and an 80% reduction in CO 2 emissions. 1600 1400 1200 1000 800 600 400 200 0 Effect of Fuel Economy Standards on Light-duty Vehicle GHG Emissions No Mitigation AEO 2011 New Standards One 80% Path 2010 2015 2020 2025 2030 2035 2040 2045 2050
Reduction in Fuel Consumption The EU, the US and China are also implementing efficiency standards for heavy-duty vehicles. (US: 9-23% reduction in fuel consumption) Technological Potential to Reduce Fuel Use per Vehicle Kilometer for Heavy-duty Vehicles by 2020 (NRC, 2010, p. 133) 60% 50% $1.10 $4.20 $4.80 $2.70 $6.80 40% 30% $1.70 Weight Hybrid Trans. 20% Roll. Res. 10% Aerodyn. Engine 0% Tractor trailer Straight box Pickup diesel Refuse truck Transit bus Motor coach
Other modes also have substantial potential to reduce fuel consumption cost-effectively. Air transport uses 10% of transport energy. Next Gen aircraft -40% fuel burn vs. 2005 by 2020: IATA wing-body double-bubble : -50 to -70% by 2035 Water transport is 7% of transport energy use -60% by 2050: IEA (includes speed reduction) -15% to -30 by 2020 at <$100/tCO 2 : IMO Rail Transport uses only 4% of transport energy -18% to 24% near term: IEA, USDOT -50% by 2050: Argonne Nat l Lab. 32
Achieving reductions in energy intensity of 50% or more could hold global transport energy use to today s level in 2050 and reduce the need for alternative low-carbon energy by a factor of 4. Table 1. Impact of Transport Energy Efficiency Improvement on Energy Use in 2050 (Exajoules) Extrapolated Efficiency Efficient Energy Use Energy Use Growth Rate Energy Use Improvement Energy Use With Rebound Mode 2007 % 2050 (% reduction) 2050 2050 Road 103 2.0% 241 70% 72 87 Air 11 3.0% 39 60% 16 18 Water 9 2.0% 21 50% 11 12 Rail 5 1.0% 8 50% 4 4 TOTAL 128 309 102 121 33
A balanced, cost-effective strategy for mitigating GHG emissions and reducing petroleum dependence will include more than efficiency improvement. And there are other transportation issues. REAL SOLUTIONS FOR CLIMATE CHANGE
Billions of Gallons The Renewable Fuels Standard 2 is ambitious but cellulosic biofuel is off to a very slow start. 2011 requirement of 250 million gallons reduced to 6.6 million. Major questions remain. 40 35 30 25 20 15 10 5 0 EPA Renewable Fuels Volume Requirements Total Renewable Fuel Advanced Biofuel Cellulosic biofuel 2008 2010 2012 2014 2016 2018 2020 2022
Exajoules Holding transportation energy use to today s level would buy time for an energy transition and help make it affordable. But it won t happen without technological advances and effective public policy. 350 300 250 200 Potential Impact of Energy Efficiency on World Transportation Energy Use in 2050 Rail Water Air Road 150 100 50 0 2010 2050 Extrapolated 2050 Energy Efficiency 2050 Efficiency + Rebound 36
The great energy transformations of the past were driven by technology and market forces. Achieving a transition for the public good poses a new challenge. Biomass Coal Petroleum Animals Natural Gas Nuclear Source: A. Grubler, 2007, International Institute for Applied Systems Analysis. 37
THANK YOU. 38