Which Federal Regulations Can Best Reduce Petroleum Consumption and Carbon Emissions?
The U.S. is the world’s largest petroleum consumer and second largest emitter of carbon dioxide. For over 20 years the Federal Government has mandated and encouraged replacing petroleum with ‘alternative motor fuels’ (AF), and reducing petroleum consumption through ‘corporate average fuel economy’ (CAFE) standards and ‘renewable fuel standards’ (RFS). Since implementing these regulations significant petroleum motor fuels consumption has been replaced by AF’s or reduced by increased light duty vehicle (LDV) fleet fuel efficiencies. Which of these regulations have been the most effective to date, and which regulations are most promising towards substantially reducing future U.S. petroleum consumption and associated carbon emissions?
U.S. CAFE, AF, and RFS Regulations Brief History – Following the energy crises of the 1970’s the Federal Government passed a series of regulations to establish new LDV CAFE standards (EPCA 1975) and begin replacing petroleum motor fuels with AF’s (AMFA 1988). Alternative motor fuels initially included ‘liquefied petroleum gas’ (propane; LPG), compressed natural gas (CNG), and alcohols (ethanol and methanol). Qualified AF’s later included electric power and hydrogen. Increased ethanol (EtOH) was very strongly supported by the RFS1 (EPAct 2005). The RFS1 mandated annual targets of blending increased volumes of ethanol into petroleum gasoline (up to 10% EtOH; E-10). This RFS1 was increased by an updated RFS2 regulation (EISA 2007). The RFS2 also further increased the CAFE standards.
AF Regulations’ Performance – These Federal regulations primarily focused on replacing petroleum gasoline with AF’s. Refer to the following graph.
Estimate Consumption of AF’s by Alternative Fuel Vehicles, Part 1
Data Source – AFDC AF Consumption. Note: GGE = ‘gasoline gallon equivalent’, LNG = ‘liquefied natural gas’ and Other = electric, methanol and hydrogen AF’s. ‘E-85’ also includes early E-95 consumption.
‘Alternative fuel vehicles’ (AFV’s) are normally designed to operate on specific AF’s such as CNG or LNG. Some AFV’s are designed to operate on multiple fuels such as petroleum gasoline and LPG or ethanol (E-85). These multi-fuel designed AFV’s are normally called ‘flexible fuel vehicles’ (FFV’s). In the early 1990’s LPG was clearly the most popular AF. The development of CNG fueled AFV’s gradually increased over the past 20 years and has become the most dominate AF.
The balance of ‘Other’ AF’s includes electric power (vehicles, or EV’s), methanol and hydrogen. Refer to the following graph.
Estimate Consumption of AF’s by AFV’s, Part 2
In the late 1980’s and early 1990’s methanol demand rapidly grew, and declined shortly thereafter. This methanol market rapid growth-decline behavior was due primarily to strong California Government support policies, followed by loss of the support.
Electric vehicles grew very slowly following regulations such as California’s ‘zero emission vehicle’ program. Despite “Who Killed the Electric Car?” conspiracy theories, EV’s continue to grow during the early 2000’s. Unfortunately the combination of more cost competitive ICE LDV’s and evolving HEV technologies, and the relatively high costs of electric battery technologies, EV usage stagnated during most of the 2000’s.
The development of hydrogen vehicles (fuel cell and ICE) did not become significant until the mid 2000’s. Growth of hydrogen vehicles has been extremely slow in recent years due to very high costs and large gaps in needed technology breakthroughs.
RFS2 and AF Impacts on U.S. Petroleum Consumption – Total AF’s illustrated in the above two graphs have successfully displaced about 460 million GGE in 2010 (the latest year of available AFDC AFV AF consumption data). While quite significant, this level of petroleum gasoline replacement by AF’s has been substantially exceeded by the RFS2 required ethanol blending. Refer to the following chart.
Actual Petroleum Gasoline and EtOH Consumption, and Estimated AF Consumption
In 2010 the EPA established an RFS2 ethanol requirement of 12.9 billion gallons. This is equal to 8,769 million GGE (E-10 + E-85) or almost 24-times the volume of all other (non-EtOH) AF’s. Note: the EtOH used to comply with the RFS2 (E-10) blending requirements does not technically qualify as an AF under AMFA 1988. However, E-85 AF’s do qualify for RFS2 compliance.
The above chart shows that 6.0% and 0.3% of total GGE gasoline consumption has been replaced by RFS2 EtOH and non-EtOH AF’s respectively. The above data clearly illustrates the greater impact of the RFS2 (conventional corn) EtOH vs. current non-EtOH AF’s.
Impacts of CAFE, RFS and AF Regulations on U.S. Carbon Emissions – Petroleum gasoline currently contributes to 21% of total U.S. carbon emissions. The combination of CAFE standards, RFS2 and (non-EtOH) AF’s have helped reduce U.S. carbon emissions quite significantly in recent years. Refer to the following chart.
U.S. 2010 Carbon Emission Reductions From CAFE, RFS2 and AF Regulations
Data Sources – EIA MER Table 12.5, AFDC U.S. LD Fuel Consumption and VMT, and data from the previous chart. Note: the CAFE reduced carbon emissions are based on the 2000-2010 actual average improved (mpg) efficiency or an 8% reduction in 2010 total petroleum gasoline consumption. EtOH carbon reduction is based on the EPA’s estimated (-24)% full lifecycle fossil fuels consumption compared to average U.S. petroleum gasoline. All other AF carbon reductions are based on the difference of carbon emission factors between the individual AF and the petroleum gasoline replaced.
The largest reduction in U.S. Transportation sector petroleum gasoline associated carbon emissions in recent years is due to increased LDV fleet (CAFE) fuel efficiency, followed by RFS2 ethanol. Reduced carbon emissions attributed to CAFE standards are equivalent to magnitudes greater than the carbon emission reductions reasonably attributed to solar PV power increases 2000-2010 or double the carbon emission reductions attributed to wind power increases 2000-2010. These estimates assume the variable solar/wind power displaces an equivalent (net generation) amount of natural gas fossil fuels consumed in peaking power plants required for power grid reliability; 2000-2010.
The contributions of electric power (EV’s) and hydrogen fuel cell vehicles (HFCV’s) are currently insignificant. Electric vehicle reduced carbon emissions are insignificant due to the fact that 2/3’s of U.S. Electric Power sector net generation is provided by fossil fuels (primarily coal) and that EV’s only make-up about 100 thousand LDV’s of the total U.S. highway fleet of over 250 million vehicles.
Only about 500 hydrogen fuel cell or ICE vehicles currently exist; primarily for test, study or demonstration applications. Also the vast majority of hydrogen is produced from natural gas, which is a fairly carbon intensive process. These factors make hydrogen AF’s impacts on U.S. carbon emissions also insignificant today.
The Most Promising Technologies to Substantially Reducing Future U.S. Petroleum Consumption and Associated Carbon Emissions – The most effective regulation has been increased CAFE standards. The Obama Administration recently increased the CAFE standards should further reduce petroleum consumption through 2025. The second most effective regulation has been the RFS2. This regulation, however, has become very controversial due to the ‘blend wall’, which has created significant uncertainty and potential risks for most consumers and suppliers.
Natural gas AF is the third most effective regulation towards reduced petroleum consumption. Not only has the recent boom in very cost effective natural gas production increased its attractiveness as an AF to petroleum, but natural gas is also an ideal AF to replace both petroleum gasoline and diesel motor fuels.
Liquefied petroleum gas (LPG) is the fourth most effective AF towards reduced U.S. carbon emissions. As shown in the first graph (above) the popularity of LPG has been declining over the past decade. Declining consumption is due to the fact that most LPG AFV’s are FFV’s and unlike natural gas the price of propane has been increasing over the past 10 years. The increased price is likely due to significant propane imports. Higher prices have resulted in FFV ‘fuels-switching’ away from LPG motor fuels.
Electric power (EV’s) and hydrogen (HFCV’s) have yet to develop to the levels needed to significantly impact U.S. petroleum consumption and carbon emissions. Unlike natural gas and LPG (fossil fuels) that still emit significant carbon compared to petroleum gasoline or diesel, EV’s and hydrogen (fuel cell) powered vehicles have the potential to produce very low or zero vehicle carbon emissions in the future. As coal is replaced by advanced nuclear and ‘dispatchable’ renewable power (hydropower or wind & solar with large power storage capability), the carbon footprint of EV’s will decline substantially. Hydrogen fuel cell vehicles also have promising technology innovation possibilities. When hydrogen can be economically produced from sources other than natural gas and fuel cell innovations make hydrogen power vehicles reasonably cost effective compared to conventional EV’s this option to petroleum ICE LDV’s will also become a significant part of the solution to reducing future U.S. petroleum consumption and associated carbon emissions.
Needed Regulatory Actions to Reduce Future U.S. Petroleum Consumption and Carbon Emissions – There are a large number of regulatory options to substantially reducing future U.S. Transportation Sector petroleum consumption and emissions. Feasible options include taxing strategies such as carbon taxes, cap-and-trade or consumption taxes (sales, VAT, excise, or tariffs). While in theory possibly taxing petroleum or the associated emissions could send ‘signals’ to consumers to purchase less or purchase something else (lower carbon), the ability of such regulatory strategies to successfully achieve a significant improvement in the U.S. carbon emissions is highly debatable and likely risky (to the economy).
Current CAFE standards have not only historically proven to be very effective towards reducing U.S. petroleum consumption , but are also likely best positioned to encourage or mandate developing the needed technologies to substantially reduce future petroleum consumption and emissions. The Obama Administration’s increased CAFE standards up to 54.5 mpg for LDV’s was a reasonable start. However, this latest CAFE regulatory action unfortunately once again compromised the standard’s possible performance by adding another compliance ‘loophole’: vehicle AC refrigerant leakage credits. Compliance loopholes have historically compromised CAFE standards possible performance. Due to past compliance credit loopholes such as reclassifying SUV’s as lower mpg LD Trucks and the generous compliance credits allowed for selling FFV’s that never operate on AF’s, the U.S.’s LDV fleet actual average fuel efficiency has stagnated through the 1990’s to the early 2000’s. For example, the AMFA 1988 loopholes led to manufacturers’ producing about 15 million E-85 FFV’s. Analysis of actual E-85 AF consumption shows that only a few percent of the total E-85 FFV’s routinely or ever operated on E-85.
To successfully and substantially reduce future U.S. petroleum consumption and associated carbon emissions means increasing the future CAFE standard possibly up to 100 mpg. This 100 mpg standard could feasible begin by 2040. To avoid weakening future CAFE standards performance all the obvious compliance loopholes must be eliminated. Actual compliance with a 100 mpg CAFE standard will require some combination of lighter-smaller, high-efficiency ICE LDV’s, substantial HEV’s and PHEV’s, and full development of EV’s and possibly HFCV’s.
President Obama’s 2011 goal of putting 1.0 million EV’s on the road by 2015 may not currently look too promising, but would be the necessary beginning to what is required to substantially increase future U.S. CAFE standards up to 100 mpg in 2040. This would require the majority of all near future LDV purchases to become primarily EV’s, or PHEV’s with large (50-mile +/-) battery capacities. To feasibly achieve up to an 80% reduction of the Transportation Sector’s petroleum consumption and associated carbon emissions by 2050, EV/PHEV sales must rapidly increase up to 5-10 million vehicles per year levels.
Reducing future U.S. Transportation Sector petroleum consumption and associated carbon emissions by up to 80% in 2050 will require rapidly transitioning current ICE LDV fleets to primarily EV’s and possibly HFCV’s. This will require major retooling of the Automotive Industry and a massive conversion of on-road vehicle refueling infrastructures. While the costs of these transitions will be substantial (> $1.0 Trillion), such a regulatory strategy may be more in line with truly growing the U.S. economy, reducing the need for high risk imports (increased energy security), and actually achieving significant reductions in total U.S. carbon emissions.
Energy Consultant and Professional Engineer. 35 years experience in petroleum & clean energy businesses. Education: Chemical Engineering/Chemistry degrees from U.C. Davis and MBA from Saint Mary's College/U.C. Berkeley. Lifetime student of the natural sciences. Experienced in refining design/operations/maintenance, economics & project development/management, business development, energy ...
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