Both consumption and net imports of liquid fuel such as oil should shrink over the next 20 years in the U.S. because of stricter fuel economy standards, expansion of renewable fuels standards and policies to promote a hybrid highway. This assessment is based on the 2008 and 2009 Annual Energy Outlook projections, provided by the Energy Information Administration and research on plug-in hybrid electric vehicles conducted at the Department of Energy's national laboratories.
Energy Insights from Policy Expert Marilyn Brown
Plugging In A Hybrid Highway
The rise of the coveted automobile is often characterized as one of the great achievements of the 20th century. During the first half of the century, the gasoline-powered vehicle evolved from a fragile, cantankerous and faulty contraption to a streamlined, reliable and widely affordable product. These automotive engineering feats were enhanced by the creation of an interstate highway system and urban infrastructure that have offered many people unprecedented mobility.
However, the gasoline transportation monoculture of today now threatens to preempt more sustainable alternatives. Americans today own more than one vehicle for every licensed U.S. driver, and 99 percent of these are fueled by gasoline. At the same time, 85 percent of the world's population does not have access to a car, but they aspire to car ownership, especially residents of the rapidly growing South and East Asia nations. In China, for example, the conventional vehicle fleet is expected to grow from 37 million in 2005 to 370 million by 2030.
Is this sustainable? To date the world has consumed around 1 trillion barrels of oil. Although oil production has gone on since the 19th century, 99.5 percent of this consumption has occurred over the last 60 years. It is not clear how long the world can produce enough oil to meet the aspirations of the its rapidly expanding economies. What is clear is that growing global oil demand will be met increasingly from resources in Saudi Arabia, Iraq and Iran (since these three countries have almost half of the world's remaining proven reserves of conventional oil) and that prices will rise as reserves shrink. Americans have seen gasoline prices decline this year, with crude oil prices plunging to below $70 per barrel as the result of a recession-driven dip in consumption and a concomitant rise in U.S. inventories. However, this short-term softening of oil prices will not last long, as economic recovery resuscitates U.S. (and Chinese) demand for oil.
The U.S. continues to import oil at near-historic rates, but this will soon change as a result of three policy interventions: (1) stricter fuel economy standards, (2) expansion of renewable fuels standards and (3) policies to promote a hybrid highway. The Energy Information Administration predicts that the first two of these policies will shrink U.S. imports from 58 percent today to 41 percent by 2030. Creation of a hybrid highway to serve plug-in electric vehicles could further cut U.S. oil imports to perhaps 20 percent (see chart above).
First, the Energy Independence and Security Act of 2007 established increased fuel economy standards, culminating in a fleet-wide average of 35 mpg by 2020. In May of this year, President Obama accelerated this to 35.5 by 2016, a fuel economy gain averaging more than 5 percent per year. At the same time, he consolidated three separate standards (administered by DOE, EPA and the State of California) into a single national policy addressing both fuel economy and greenhouse gas emissions.
Second, the U.S. Congress first passed into law a Renewable Fuels Standard (RFS) in 2005, requiring refiners, blenders and importers to use specified volumes of renewable fuels in the nation's overall fuel mix. A set of more challenging and far-reaching goals was set under the Energy Independence and Security Act of 2007. This legislation commits the U.S. to a five-fold increase in its use of transportation biofuels from 9 billion gallons of biofuels in 2008 to 12 billion gallons in 2010, 15 billion gallons in 2015 and 36 billion gallons in 2022. A key component of the RFS is that cellulosic and other advanced ethanol production is required to increase from 0.1 billion gallons in 2009 to 6 billion gallons in 2015 and 21 billion gallons in 2022.
Third, President Obama set a goal to have 2 million plug-in hybrid electric vehicles (PHEVs) in the U.S. vehicle fleet by 2012/2013. PHEVs operate entirely on electric power for perhaps 20 to 40 miles, until their battery capacity is exhausted. At that point, an internal combustion engine is triggered, enabling continued transport. Several different systems have been envisioned for recharging PHEVs' batteries to re-activate all-electric operation. Individuals could recharge at home in the evening when electricity rates could be discounted; they could park at a recharging station at work in order to recharge for the commute home; or the "Better Place" model of battery replacement stations could be used.
Pilot programs with "Better Place" battery replacement vendors are currently being established in Israel (where Shai Agassi first developed the battery interchange idea), California and Hawaii, Denmark, Australia, Canada and Japan. Any one or combination of these "models" could underpin the expansion of hybrid highways. The result would be a transition from petroleum fuels to electric power and the substantial reduction of greenhouse gas emissions, as shown, for instance, by research on Atlanta's transportation options conducted by Georgia Tech.
The hybrid highway is an attractive opportunity for breaking our addiction to oil because the U.S. electric power system is underutilized most of the time. Analysis has shown that the idle capacity of the U.S. electric grid could fuel a majority of U.S. cars, pick-up trucks, SUVs and vans. One of the most thorough studies of the potential for a national hybrid highway to reduce our oil dependence, conducted by researchers at the Pacific Northwest National Laboratory, estimates that PHEVs run by the nation's spare electric power could displace 6.5 million barrels of oil a day, or 52 percent of the nation's oil imports. Thus, a reduction of oil imports to 20 percent of U.S. transportation fuels seems feasible.
PHEVs also reduce greenhouse gas emissions in every region of the country, although the magnitude of this benefit depends on the local electricity generation mix. As Oak Ridge National Laboratory scientists have shown, the ramifications of using PHEV's depend on where and when the vehicles are plugged in. Maximizing these benefits requires decarbonizing the U.S. power sector. While Sulfur oxides (SOx) and particulates would increase because of the pollutants associated with coal and natural gas power generation, emissions in urban areas would improve because they would shift from tailpipes to more remote power plants.
Recognizing the potential of PHEVs, the American Clean Energy and Security Act (H.R. 2454) has several provisions that would support the development of a hybrid highway. Section 121 would require each electric utility to develop a plan to support the use of PHEVs; it would also direct utilities and regulators to establish protocols and standards for integrating plug‐in electric drive vehicles into smart grid systems, and to consider time‐of‐use pricing. In addition, Section 123 would establish a program within DOE to provide financial assistance to automobile manufacturers to facilitate the manufacturing of PHEVs that are built in the United States.
As the era of cheap oil comes to an end, the U.S. is poised to change – by improving vehicle efficiencies, expanding biofuels and using plug-in hybrid electric vehicles with various battery recharging options to electrify our transport system. Rather than relying on global oil supplies from volatile countries around the world, these options will help the U.S. get over its addiction to oil.