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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen Summary BACKGROUND AND SCOPE OF STUDY In 2005, drawn by the potential for hydrogen-fueled vehicles to achieve large reductions in U.S. oil imports and emissions of carbon dioxide (CO2)—the main greenhouse gas linked to global climate change—Congress requested that the National Research Council (NRC) assess what resources would be required for a transition in the U.S. light-duty vehicle fleet to hydrogen fuel cell vehicles (HFCVs) by 2020. Specifically, Section 1825 of the Energy Policy Act of 2005 stated: “The National Academy of Sciences’ National Research Council will appoint a committee to carry out a study of fuel cell technologies that provides a budget roadmap (e.g., what investments in R&D, demonstrations, skilled people, [and] infrastructure will be required) for the development of fuel cell technologies and the transition from petroleum to hydrogen in a significant percentage of the vehicles sold by 2020.” In 2007, the NRC formed the Committee on Assessment of Resource Needs for Fuel Cell and Hydrogen Technologies. The statement of task for this study requested that the committee: Establish as a goal the maximum practicable number of vehicles that can be fueled by hydrogen by 2020; Determine the funding, public and private, to reach that goal; Determine the government actions required to achieve the goal; Consider the role that hydrogen’s use in stationary electric power applications will play in stimulating the transition to hydrogen-fueled hybrid electric vehicles; Consider whether other technologies could achieve significant CO2 and oil reductions by 2020; and Establish a budget roadmap to achieve the goal. Early in its deliberations, the committee noted that the congressional focus on impact by 2020 implied an urgency for actions to reduce U.S. oil imports and CO2 emissions. But on the basis of recent studies, including the NRC’s 2004 report The Hydrogen Economy (NRC, 2004), the committee concluded that it would not be feasible to have enough hydrogen vehicles on the road by 2020 to significantly affect CO2 emissions and oil use, although hydrogen could have a substantial impact in the longer run. Thus, the committee extended the time period of its study to 2050 and estimated the technical readiness and potential impacts of HFCVs at 2020, 2035, and 2050. The emphasis throughout the study, as set forth in the statement of task, is on the maximum practicable number of HFCVs, or, as used in this study, the maximum practicable penetration rate (MPR) of HFCVs achievable in the 2008 to 2050 time frame. Rather than a prediction of the future, the committee developed a scenario based on its estimate of the maximum practicable penetration rate, assuming that technical goals are met, that consumers readily accept HFCVs, and that policy instruments are in place to drive the introduction of hydrogen fuel and fuel cell vehicles through the market transition period. In keeping with its statement of task, the committee also considered whether other technologies might achieve significantly greater reductions in oil imports and CO2 emissions than HFCVs over the next several decades. After considering a range of alternative technologies and the budget constraints of the study, the committee chose to quantitatively evaluate, using the MPR approach, one alternative fuel and one alternative vehicle option, namely, (1) fuels derived from biomass (in light of the increased emphasis on this option in the United States) and (2) evolutionary improvements in internal combustion engines (ICEs) and hybrid electric vehicles (HEVs) (in light of the potential of these technologies to increase vehicle efficiency in the short term). These alternative fuel and vehicle technologies also will be needed through 2020 to meet the significantly higher fuel economy standards required by the Energy Independence and Security Act (EISA) of 2007.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen Two other alternative technologies that are likely to contribute to improved U.S. fuel economy are electric vehicles, including plug-in hybrid electric vehicles (PHEVs), and diesel engines in light-duty vehicles. However, these options were not explicitly evaluated by the committee, both because of resource limitations and because uncertainties in the future costs and consumer acceptance of these technologies were judged to be too great for the committee to have confidence in any assumed penetration rates. For all technologies, the study was restricted to light-duty vehicles (automobiles and light trucks), which represent the bulk of the U.S. vehicle market. As a benchmark for evaluating the ability of HFCVs and other technologies to reduce oil imports and CO2 emissions, the committee developed a reference case scenario based on the high-price case of the Energy Information Administration’s (EIA’s) Annual Energy Outlook 2008 (EIA, 2008). This scenario included a significant increase in fuel economy standards as required by the Energy Independence and Security Act of 2007. The committee used the EIA report to estimate factors such as the future number of vehicles of different types on the road, as well as reference case fuel economies and gasoline prices. The committee recognizes, of course, that the projections presented in this study—like any other—contain significant uncertainties and unknowns because of changes that are likely to occur over the next several decades. SYNOPSIS OF STUDY RESULTS The substantial financial commitments and technical progress made by the automotive industry, private entrepreneurs, and the U.S. Department of Energy (DOE) in hydrogen fuel cell and hydrogen production technologies suggest the potential for progress to the point that commercial HFCVs could be introduced in the United States in 2015-2020. However, these vehicles are unlikely to be cost-competitive until several years after 2020 even if the maximum practicable number is reached. It will thus require substantial government action (e.g., subsidies and enactment of regulations), plus continued support for research, development, and demonstration (RD&D), to move HFCVs into the market in sufficient numbers to reduce costs and make the technology self-supporting in the marketplace. Nevertheless, the committee’s analysis also showed that the long-term promise of HFCVs in reducing oil consumption and CO2 emissions is significant, and potentially greater than that of other nearer-term alternatives. Although it was not asked to make a formal analysis of the value of policies to support hydrogen, the committee believes that, in view of the potential risks posed by oil supply disruptions and increasing CO2 emissions from oil use, the magnitude of the potential benefits justifies sustained government support of hydrogen vehicle development as part of a portfolio of options to address these serious national problems. The committee’s analysis indicated that over the next two decades, a combination of improved conventional and hybrid vehicle fuel economy, together with increased use of biomass-derived fuels (known generically as biofuels)—and with sufficient market conditions and policies in place—could deliver substantial reductions in U.S. oil use and CO2 emissions. While HFCVs are unlikely to deliver significant benefits in this period, eventually they can do much better. Thus HFCVs are not direct competitors with other options that are able to deliver more immediate environmental and fuel use benefits. Instead, if employed with these options, collectively they can achieve dramatic, long-term reductions in oil use and CO2 emissions—benefits that could continue to grow beyond the 2030-2050 time frame. Achieving significant benefits of this kind, however, will require additional policy measures to promote the early introduction of fuel cell vehicles and to ensure that hydrogen is produced in ways that do not add to the CO2 burden. CONCLUSION 1: A portfolio of technologies including hydrogen fuel cell vehicles, improved efficiency of conventional vehicles, hybrids, and use of biofuels—in conjunction with required new policy drivers—has the potential to nearly eliminate gasoline use in light-duty vehicles by the middle of this century, while reducing fleet greenhouse gas emissions to less than 20 percent of current levels. This portfolio approach provides a hedge against potential shortfalls in any one technological approach and improves the probability that the United States can meet its energy and environmental goals. Other technologies also may hold promise as part of a portfolio, but further study is required to assess their potential impacts. See Chapter 9. CONCLUSION 2: Sustained, substantial, and aggressive energy security and environmental policy interventions will be needed to ensure marketplace success for oil-saving and greenhouse-gas-reducing technologies, including hydrogen fuel cell vehicles. See Chapter 8. TECHNOLOGY ASSESSMENT To develop the maximum practicable number scenario and associated budget roadmap, the committee assessed the technical progress and future challenges for (1) hydrogen fuel cell vehicles and (2) hydrogen production and delivery systems. Hydrogen Fuel Cell Vehicles Concentrated efforts by private companies, together with the U.S. FreedomCAR Fuel Partnership (FCFP) and other government-supported programs around the world, have resulted in significant progress toward a commercially viable hydrogen fuel cell vehicle since the publication in
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen 2004 of The Hydrogen Economy (NRC, 2004). Fuel cell costs have been reduced significantly over the past 4-5 years. Costs projected for high-volume (500,000 units per year) automotive fuel cell production are approximately $100/kW1 for relatively proven technologies and $67/kW for newer laboratory-based technologies, compared to the DOE-FCFP commercialization goal for 2015 of $30/kW. The cost of platinum is approximately 57 percent of the fuel cell stack costs and represents the greatest challenge to further cost reductions. Fuel cell stack life has increased to approximately 2,000 hours compared to the DOE-FCFP 2015 goal of 5,000 hours. Recently, new failure modes have been identified, particularly platinum dissolution into the carbon electrodes. However, focused research to ameliorate these failure modes, together with recent advances in electrode and membrane technology, should further reduce costs and increase stack life. Onboard hydrogen storage to achieve a 300-mile driving range has been the most difficult technical challenge. Identification of solid storage materials to achieve the DOE-FCFP 2015 goals, including the cost goal of $2/kWh, is in the research stage. It is not clear at this time whether a suitable material will be identified that can meet these goals and timing targets. However, in order to achieve the desired driving range between refueling stops, the industry is prepared to use more expensive high-pressure hydrogen storage tanks that consume more space and add to vehicle weight while research progresses toward a more commercially viable hydrogen storage material. HFCV fuel economy is currently about 50-55 miles per gallon of gasoline equivalent (mpgge) for a midsize vehicle with an 80 kW fuel cell. The DOE target of 60 percent efficiency for 2015 corresponds to 80 mpgge for the typical vehicle considered in this report. In summary, paths forward have been identified for further reducing hydrogen fuel cell costs while increasing durability and fuel economy. Based on its technical assessment, the committee concluded that under the maximum practicable number of vehicles scenario, a significant market transition to HFCVs could start around 2015 if supported by strong government policies to drive early growth, even if DOE technology targets are not fully realized. The analysis of potential reductions in oil use and CO2 emissions, discussed below, is based on the committee’s understanding of the current technical status of fuel cell vehicles and the potential for improvements over the next several decades. CONCLUSION 3: Lower-cost, durable fuel cell systems for light-duty vehicles are likely to be increasingly available over the next 5-10 years, and, if supported by strong government policies, commercialization and growth of HFCVs could get underway by 2015, even though all DOE targets for HFCVs may not be fully realized. See Chapter 3. Hydrogen Production Systems To develop a budget roadmap for the maximum practicable number scenario, the committee also evaluated the status of hydrogen production technologies. In the committee’s judgment, the three hydrogen production technologies that have the highest likelihood of commercial viability in the 2015-2035 time frame are (1) distributed steam methane reformation (DSMR) using natural gas as a feedstock for on-site production at a refueling station; (2) centralized hydrogen production from coal gasification with carbon capture and sequestration (CCS); and (3) centralized production from biomass gasification. Carbon-free hydrogen produced using advanced high-temperature nuclear reactors for electrolysis or thermochemical splitting of water might also be possible in this time frame, but the timetable and costs for development and commercialization of advanced (Generation IV) nuclear technology are difficult to estimate. Electrolysis using electricity from the grid may be useful in certain circumstances but is likely to be more expensive than DSMR in most cases. Hydrogen produced from renewable energy sources, such as electricity generated by solar and wind energy, could be viable if these technologies become more extensively deployed and their costs decline significantly (especially solar energy systems). Direct energy conversion systems using photoelectrochemical or photobiological technologies also can be significant long-term contributors to a hydrogen economy if associated technical hurdles can be overcome. Based on its assessment of hydrogen supply options, the committee concluded that in a maximum practicable scenario: DSMR technology can be commercially available in sufficient quantities to fuel HFCVs at the DOE-FCFP cost goal of $3.00/kg hydrogen in 2015, when a transition to fuel cell vehicles might begin. Because a kilogram of hydrogen has about the same energy as a gallon of gasoline but is used twice as efficiently in a fuel cell, $3.00/kg is equivalent to $1.50/gallon. DSMR is likely to be more economical than alternative on-site technologies (such as electrolysis) and will be sufficient to fuel HFCVs through about 2025. Even though DSMR generates CO2 that is not captured, the report The Hydrogen Economy (NRC, 2004) showed that well-to-wheels CO2 from DSMR-HFCV could be less than half that from conventional gasoline-powered vehicles. The quantity of natural gas used through 2025 (approximately a 2 percent increase in projected demand, based on EIA data) should not be large enough to dramatically affect natural gas prices. Delivered hydrogen costs at the outset of the transition will be high because of the underutilization of production equipment with a small number of HFCVs on the road. However, 1 One kilowatt (kW) is equal to 1.34 horsepower. A kilowatt-hour (kWh) is the work done by 1 kW operating for an hour.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen by 2016 the cost of hydrogen is projected to equal that of gasoline on a dollars-per-mile-of-travel basis. The future price of natural gas is the largest determinant of the viability of this option. Hydrogen production via coal gasification plus carbon capture and storage (CCS), with pipeline delivery of hydrogen to refueling stations, could be commercially viable and available by 2025. If coal is used, CCS is necessary to achieve low-carbon hydrogen production. Coal gasification and associated carbon capture technologies are already used commercially to produce hydrogen (albeit on a much smaller scale than natural gas reforming), but they have not yet been integrated with carbon sequestration. Nor has deep geological sequestration of CO2 yet been demonstrated in the United States at the scale envisioned for a commercial hydrogen plant. Thus, the greatest challenge to coal-based hydrogen production is demonstrating the capacity and long-term storage capabilities for geological sequestration of CO2 in deep saline aquifers. However, as part of the DOE Carbon Sequestration Program, there are several industrial-scale, well-monitored demonstration projects currently planned to address issues of commercial viability over the next several years, and three large-scale geological sequestration projects (1 million tons of CO2 per year each) have been operating successfully in other parts of the world for the past 4-12 years. Hydrogen from biomass gasification technology also is advancing and could be competitive by the mid to late 2020s for centralized production with potentially low carbon impacts. Several scale-up projects are now under way. Carbon dioxide from biomass gasification also potentially can be captured and stored to yield “negative emissions” of CO2. While this hydrogen technology currently is not as well developed as the two outlined above, the committee included it as a renewable hydrogen source. Recent advances indicate that the cost could approach $3.00/kg hydrogen with continued technology progress. The main challenges to deploying these technologies are (1) developing the technical capacity and regulatory framework to permit and safely sequester CO2; (2) developing the technical, economic, and environmental knowledge needed to support large-volume biomass production and transportation to central gasification facilities; and (3) establishing public confidence in procedures for efficient permitting and installation of hydrogen production, distribution, and refueling systems. Safety issues, both real and perceived, along with the creation of appropriate codes and standards, are significant barriers to the introduction of HFCVs and the development of a hydrogen refueling infrastructure and pose a significant risk to achieving the maximum practicable penetration rate for hydrogen vehicles. Under the maximum percentage practicable scenario, the committee assumes that these hurdles will be overcome. CONCLUSION 4: If appropriate policies are adopted to accelerate the introduction of hydrogen and HFCVs, hydrogen from distributed technologies can be provided at reasonable cost to initiate the maximum practicable case. If technical targets for central production technologies are met, lower-cost hydrogen should be available to fuel HFCVs in the latter part of the time frame considered in this study. Additional policy measures are required to achieve low-carbon hydrogen production in order to significantly reduce CO2 emissions from central coal-based plants. See Chapter 3. MAXIMUM PRACTICABLE DEPLOYMENT OF FUEL CELL VEHICLES A key task of this study was to “establish … the maximum practicable number of vehicles that can be fueled by hydrogen by 2020.” Based on that number of vehicles, the committee was then to assess the impact on oil use and reduction of CO2 emissions; determine the costs and budgets needed to implement a program of this magnitude; and outline government actions that might be necessary to achieve it. The committee concluded that a goal for the maximum practicable number of vehicles would depend strongly on a host of factors related to future rates of technical progress in both fuel cell vehicles and hydrogen production, as well as future policy actions and consumer preferences. Given the many uncertainties, the committee developed three scenarios to reflect a range of possible HFCV penetration rates, to help guide its judgment in this task: Hydrogen Success (Case 1). This scenario assumes that hydrogen and fuel cell developments meet slightly reduced performance and cost goals compared with those established by DOE and the FreedomCar Fuel Partnership Program (as explained in Chapter 3). This rapid-growth case corresponds to a scenario recently developed by DOE to 2025 (Gronich, 2007), and extended by the committee to 2050. By 2050, 80 percent of new vehicles sold are assumed to be HFCVs (see Figure 6.2 in Chapter 6). This is consistent with other recent modeling studies (Greene et al., 2007). Accelerated Success (Case 1a). This variant assumes a far more aggressive program that doubles the rate of introduction of HFCVs compared with Case 1, while meeting the same performance and cost goals. Very aggressive national policy measures would be needed to drive this accelerated case—for example, much more stringent CAFE standards in response to severe curtailments in oil supplies, or stringent limits on CO2 emissions in response to major new concerns about climate change. Partial Success (Case 1b). The third case assumes shortfalls and delays in reaching the performance and cost goals of Case 1, with penetration rates remaining at historical rates for hybrids, supported by government subsidies.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen Details of all scenario assumptions are elaborated in Chapter 6 of this report. The committee used these scenarios to establish its estimate of the maximum practicable number of vehicles. Analyses were conducted using a model developed by committee members and based on other recent modeling studies and analyses (Chapter 6 provides all details). Results of the analysis include the timing and magnitude of costs for HFCVs and associated infrastructure deployment, as well as the resulting impacts on oil use and CO2 emissions relative to a base case scenario also defined by the committee. In the committee’s view, the Hydrogen Success case (Case 1) best represents the maximum practicable number of vehicles that could be fueled by hydrogen by 2020. The Accelerated Success case (Case 1a), while achieving greater reductions in oil consumption and CO2 emissions, had substantially higher costs and greater technical risks. The Partial Success case (Case 1b), which was more pessimistic about achievable rates of technical progress, was higher in total cost than Case 1 because it took longer to achieve significant HFCV penetration and commercial viability, and Case 1b did not have a significant impact on oil and CO2 reductions over the next few decades. Achieving the Hydrogen Success case, however, would be challenging—requiring significant continued technical progress, consumer acceptance, and policies to achieve market penetration of HFCVs during the early transition period. Thus, it is by no means a “sure thing.” For these reasons, it should be understood throughout this report that the maximum practicable number of vehicles estimated by the committee in response to the statement of task does not represent the committee’s view of the “probable” or “most likely” number of HFCVs on the road by 2020 and beyond. Rather, the estimate of maximum practicable number reflects a judgment about the ability to achieve the performance and cost goals required for market competitiveness, grounded in historically observed rates of market penetration for other new vehicle concepts and technologies, which have not faced the difficulties associated with establishing a major new fuel infrastructure. Although more aggressive scenarios can be envisioned under certain circumstances, in general, the Hydrogen Success case should be viewed as an optimistic estimate of what might be possible—not a forecast of what is likely or probable. Figure S.1 shows the number of hydrogen fuel cell vehicles in the U.S. fleet and the percentage of new vehicles sold over time for the Hydrogen Success case. Trends for HFCVs are compared with those for conventional gasoline-powered vehicles based on a high-oil-price reference case scenario developed by the EIA and extended to 2050 by the committee. After starting at a few thousand HFCVs per year in 2012, the maximum practicable number of HFCVs on the road increases to almost 2 million in 2020, 60 million in 2035, and more than 200 million in 2050 for the Hydrogen Success case. As a percentage of all light-duty vehicles in service, this corresponds to approximately 0.7 percent, 18 percent, and 60 percent HCFVs in the U.S. fleet in these 3 years. The number of HFCVs grows rapidly after the market transition period, during which HFCVs are assumed to be supported by government subsidies and growing consumer acceptance. In the Hydrogen Success scenario, HFCVs compete only with improving conventional gasoline-powered vehicles and become cost-competitive by 2023, as discussed below in this summary. CONCLUSION 5: In the judgment of the committee, the maximum practicable number of HFCVs that could be on the road by 2020 is around 2 million. Subsequently, this number could grow rapidly to as many as 60 million by 2035 and more than 200 million by midcentury, but such rapid and widespread deployment will require continued technical success, cost reductions from volume production, and government policies to sustain the introduction of HFCVs into the market during the transition period needed for technical progress. See Chapter 6. Impact of Fuel Cell Vehicle Deployment on Reductions in Oil Use and CO2 Emissions Another objective of this study was to assess the potential of HFCVs to achieve significant reductions in oil imports and CO2 emissions. Estimating such impacts is difficult because of the complexities and unknowns inherent in any analysis of future transportation systems and fuel options. For example, in recent years, energy prices and equipment costs have escalated dramatically; how these will vary in the future is unknown. The committee used its scenarios to inform its judgments about the potential magnitude and timing of reduced oil use and CO2 emissions associated with adoption of HFCVs. Figure S.2 shows results for the Hydrogen Success case relative to the reference case without fuel cell vehicles. As noted before, the reference case is based on an 2008 EIA high-oil-price scenario extended to 2050 by the committee. Gasoline use—taken as a measure of oil consumption and imports—is reduced by only about 1 percent by 2020; however, by 2035 the reduction in gasoline use grows to about 24 percent and by 2050 to nearly 70 percent. Similar trends are shown in Figure S.2 for potential reductions in well-to-wheels CO2-equivalent emissions that account for all greenhouse gas emissions in the fuel supply chain (see Chapter 6). In the Hydrogen Success case, net annual greenhouse gas emissions are reduced by less than 1 percent in 2020, but subsequent reductions are much greater (i.e., a 20 percent reduction in 2035 and a reduction of more than 60 percent in 2050 compared to the reference case). These numerical estimates, especially for the longer term, are highly uncertain and sensitive to assumptions about the reference case as well as the Hydrogen Success scenario. Unlike savings in oil use, however, net reductions in CO2 emissions do not automatically accrue from the use of hydrogen-fueled vehicles.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen FIGURE S.1 (Left) Hydrogen fuel cell vehicles in the U.S. light-duty fleet and (right) fraction of new hydrogen vehicles sold each year for the Hydrogen Success case. This case assumes HFCVs compete only with gradually improving conventional gasoline-powered vehicles, and represents the committee’s best estimate of the maximum practicable number of HFCVs deployable by 2020. FIGURE S.2 (Left) Annual gasoline consumption and (right) annual well-to-wheels greenhouse gas emissions for the Hydrogen Success case relative to a reference case with no hydrogen vehicles. Case 1 assumes that HFCVs compete only with gradually improving conventional gasoline-powered vehicles. Rather, the Hydrogen Success scenario assumes that policy measures are enacted prior to 2020 to incentivize or require the control of CO2 emissions from the central stations used to produce hydrogen and that production from such plants begins around 2025, with hydrogen delivered by pipeline to refueling stations. Prior to that time, the production of hydrogen from distributed natural gas reformers results in CO2 emissions, although at half the level of today’s gasoline vehicles on a well-to-wheels basis. CONCLUSION 6: While it will take several decades for HFCVs to have major impact, under the maximum practicable scenario fuel cell vehicles would lead to significant reductions in oil consumption and also significant reductions in CO2 emissions if national policies are enacted to restrict CO2 emissions from central hydrogen production plants. See Chapter 6. Timetable for Market Transition The potential benefits of reduced oil consumption and CO2 emissions described above assume that HFCVs are deployed in increasing numbers according to the committee’s Hydrogen Success scenario. Since HFCVs initially are far more expensive than conventional vehicles, the financial subsidy required to deploy them (and thus achieve future benefits) depends strongly on how long it takes HFCVs to compete economically in the marketplace with conventional gasoline vehicles. To estimate that transition period, the committee first estimated the total annual expenditures needed to purchase and operate increasing numbers of HFCVs as shown in Figure S.1. The unit cost of fuel cell vehicles was assumed to decline along a learning curve with increasing production. Hydrogen supply costs also declined with increasing production. These costs included the cost of energy feedstocks and other operating costs, plus the capital cost of infrastructure
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen for refueling stations and hydrogen production facilities (including pipelines from central production plants in later years). Infrastructure cost estimates assumed the initial introduction of HFCVs in selected large cities and then in other locations over time, according to scenarios developed by DOE (see Chapter 6). The committee then compared the year-by-year costs of purchasing and fueling the number of HFCVs dictated by the Hydrogen Success scenario to the annual cost of purchasing and fueling the same-size fleet of gasoline-powered vehicles. This analysis assumed that consumers would value fuel on a cost-per-mile-traveled basis rather than cost-per-gallon-equivalent. When the sum of vehicle costs plus fuel costs for the HFCVs became less than that for gasoline vehicles, the hydrogen vehicles were projected to be economically competitive on a life-cycle basis. That crossover was taken as the end of the transition period. For the Hydrogen Success scenario, that year was 2023. By that time a total of about 5.5 million fuel cell vehicles are produced, according to this scenario. The breakeven year for competitiveness is sensitive to various assumptions, including HFCV costs and the costs of hydrogen and gasoline over time. However, the results described above are not significantly affected by recent changes in fuel economy standards for new vehicles.2 Chapter 6 presents further details of the transition period analysis. CONCLUSION 7: The unit costs of fuel cell vehicles and hydrogen in the Hydrogen Success scenario—the maximum practicable case—decline rapidly with increasing vehicle production, and by 2023 the cost premium for HFCVs relative to conventional gasoline vehicles is projected to be fully offset by the savings in fuel cost over the life of the vehicle relative to a reference case based on the EIA high-oil-price scenario. At that point, according to the committee’s analysis, HFCVs become economically competitive in the marketplace. See Chapter 6. A Budget Roadmap for the Market Transition Producing and deploying the number of HFCVs shown in Figure S.1 will not happen by itself—significant government support will be needed to achieve this result. Even with such support there is no guarantee that the technical and economic performance improvements assumed in the Hydrogen Success case can be achieved in the given time frame. There are risks as well as potential rewards with these new technologies. Nonetheless, if the substantial potential benefits of hydrogen vehicles suggested in Figure S.2 are to be realized, substantial financial investments also will be required from both industry and government. As requested in its statement of task, the committee estimated a budget roadmap of total annual costs to government and industry for (1) conducting the research, development, and demonstration required for the transition to hydrogen and (2) deploying the maximum practicable number of fuel cell vehicles required for the transition. The estimated costs for these activities are summarized below. Research, Development, and Demonstration Costs for the Transition Because most future spending plans for RD&D are proprietary and there is very little information on which to base such estimates, those provided here are rough at best. The committee’s estimates for government spending were based on budgets for DOE, the main government agency supporting RD&D on hydrogen. The DOE 2007 (budgeted) R&D funding and 2008 (requested) RD&D funding for the hydrogen program are each approximately $300 million—a level the committee judged to be adequate. Estimates of future budgets assumed that funding for individual programs was discontinued once a program was completed (such as the current program for distributed natural gas reforming), and that funds were added for projects that appeared appropriate for increases (such as biomass gasification). Funding for some areas was held constant (in constant dollars) when it was judged that considerable work was still needed (such as for fuel cells). These rough estimates of annual government RD&D funding were projected to 2023, the breakeven year for HFCVs in the Hydrogen Success case (see Chapter 7). The total RD&D funding requirement for 2008-2023 was estimated to be roughly $5 billion in constant 2005 dollars. This number could be adjusted up or down, depending on the need for new programs and demonstrations. For the U.S. private sector, a current RD&D funding level of about $700 million per year was estimated based on a study commissioned in 2005 by a collaboration of several world fuel cell councils, adjusted for the United States (as discussed in Chapter 7) and supplemented by additional public information from small private U.S. companies. Much of the estimated spending needed in 2008 to 2012 would be for demonstration vehicles prior to commercial-scale manufacturing. Subsequently, private RD&D in conjunction with government programs would likely address remaining technical issues and opportunities for improvements to vehicle and hydrogen production technologies. Thus, total U.S. private spending on RD&D for the hydrogen transition from 2008 to 2023 was estimated to continue at an average of $700 million per year, totaling roughly $11 billion in constant 2005 dollars. Although no RD&D funding estimates were projected beyond 2023, the committee fully anticipates the need for continued RD&D funding by both government and the private sector in the Hydrogen Success scenario. In particular, increased emphasis on hydrogen production with low or 2 The CAFE standards enacted in December 2007 phase in a 35 mpg requirement for new cars from 2011 to 2020.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen zero carbon emissions—such as from renewable energy sources—is expected to be an area of growing importance, both during and after a transition to HFCVs. CONCLUSION 8: The committee estimates that total government-industry spending on RD&D needed to facilitate the transition to HFCVs is roughly $16 billion over the 16-year period from 2008 through 2023, of which about 30 percent (roughly $5 billion) would come from U.S. government sources. Government and private spending beyond 2023 also will likely be required to support longer-term needs, but such estimates were beyond the scope of this study. See Chapter 7. Vehicle Deployment Costs for the Transition The committee’s estimate of private plus government expenditures required to deploy the maximum practicable number of fuel cell vehicles by 2020 and beyond (as reflected by the Hydrogen Success scenario) is shown in Figure S.3, which indicates total annual costs for the two main components of commercial deployment: vehicle costs and hydrogen fuel costs. Capital investments for infrastructure to produce and deliver hydrogen account for approximately half of the annual hydrogen costs, with the remaining half being operating costs, mainly the cost of natural gas for hydrogen production. Total annual costs grow rapidly as increasing numbers of vehicles are deployed. The cumulative cost of fuel cell vehicles purchased during the transition period 2012-2023 is about $170 billion, or an average of $30,000 per vehicle (see Table S.1). Of this, $40 billion (an average of $7,000 per vehicle) represents the additional investment for HFCVs over the roughly $130 billion “base vehicle” cost of an equivalent number of conventional vehicles. The additional cost of supplying hydrogen over this period is $16 billion. Thus, the cumulative expenditure for the transition totals $184 billion, most of which (91 percent) is for the production of vehicles, with the remaining 9 percent for hydrogen supply (roughly half for infrastructure and half for operating costs). If the RD&D costs discussed above are added to the vehicle and hydrogen production costs, the budget roadmap shown in Figure S.3 would increase by approximately $1 billion per year ($16 billion total). This would bring the cumulative total to $200 billion for the period 2008-2023. Table S.1 summarizes the cumulative costs of the budget roadmap. FIGURE S.3 Total annual expenditures for vehicles and hydrogen supply for transition to the breakeven year for the Hydrogen Success case, excluding RD&D costs. The cumulative cost, shared by government and industry, totals $184 billion, of which 91 percent is the cost of fuel cell vehicles and 9 percent is the cost of hydrogen supply (about half for infrastructure costs and half for additional operating costs, mainly natural gas feedstock). The additional $16 billion in private plus government RD&D costs over this period would bring the overall total to $200 billion.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen TABLE S.1 Summary of Cumulative Budget Roadmap Costs for Transition to Hydrogen Fuel Cell Vehicles (maximum practicable number of vehicles by 2020) Cost Elements Total Cumulative Cost, 2008-2023 Average Cost per HFCV on Road 2008-2023a “Base vehicle” cost of conventional vehicles $128 billion $23,000 Average incremental fuel cell vehicle cost relative to conventional gasoline vehicles $40 billion $7,000b Total purchase cost of fuel cell vehicles $168 billion $30,000c Infrastructure capital cost for hydrogen supply $8 billion $1,500 Total operating cost for hydrogen supply $8 billion $1,500 Total cost of hydrogen supply $16 billion $3,000 Total cost for vehicles and hydrogen fuel supply $184 billion $33,000 Estimated government share of total vehicle and hydrogen fuel supply cost $50 billion $8,500 Government RD&D funding $5 billion $1,000 Private RD&D funding $11 billion $2,000 Total funding for government and private RD&D $16 billion $3,000 Total cost for vehicles, hydrogen, and all RD&D $200 billiond $36,000 Estimated government share of total cost for vehicles, hydrogen, and RD&D $55 billion $9,500 aRounded estimates based on 5.54 million HFCVs on the road in 2023. bThe final (learned-out) incremental cost per vehicle in 2023 is $3,600. cThe final (learned-out) cost per vehicle in 2023 is $27,000. dIncludes $128 billion “base vehicle” cost of conventional vehicles that would have been purchased instead of HFCVs. NOTE: All costs in constant 2005 U.S. dollars. Beyond 2023 the hydrogen vehicle and infrastructure system pays for itself. Government Share of Transition Costs The question of how the vehicle production and hydrogen supply costs shown in Figure S.3 should be shared between the federal government and private industry has no simple or single answer. In the committee’s judgment, a realistic estimate of the government share of total costs to facilitate the maximum practicable transition to HFCVs (based on the Hydrogen Success scenario) would be the incremental cost of purchasing HFCVs, plus about half the total cost of building and operating the infrastructure needed to supply hydrogen during the transition period. Those incremental costs are shown in Figure S.4. In this case, the added cost for vehicles totals $40 billion over the transition period (as noted above), while hydrogen infrastructure costs add another $8 billion. Various factors could either reduce or raise these costs to some degree (see Chapter 7). The committee estimated the total government cost for this scenario to be approximately $50 billion (an average of $8,500 per vehicle during the transition period). Adding government RD&D costs to the figures above would increase the budget roadmap by approximately $300 million per year, or a total of $5 billion. This would bring the cumulative government investment to $5 billion (an average of $9,500 per vehicle) from 2008 through 2023, as summarized in Table S.1. This translates to an average of roughly $3 billion per year over 16 years (2008-2023). To put these amounts in perspective, the U.S. government subsidy for ethanol fuel in 2006 was approximately $2.5 billion and, if extended at the current rate, could grow to $15 billion per year in 2020 due to the recently enacted (December 2007) energy bill.3 3 The Volumetric Ethanol Excise Tax Credit (VEETC) of 51 cents per gallon benefits all ethanol blended with gasoline, which was about 5 billion gallons in 2006, according to DOE data. Although the VEETC is set to expire after 2010, Congress is debating various ways of extending it, as it has since the credit was first created in 1978. The Energy Independence and Security Act of 2007 established a renewable fuel standard that would reach 30 billion gallons by 2020, most of which is likely to be ethanol. A credit of 51 cents per gallon applied to that amount would represent a subsidy in excess of $15 billion per year.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen FIGURE S.4 Annual government expenditures through the transition to 2023. Estimated expenditures are based only on the incremental costs of fuel cell vehicles over conventional vehicles, plus the capital cost for hydrogen infrastructure, for the Hydrogen Success scenario (excluding RD&D costs). The cumulative cost is $48 billion, of which 83 percent is the cost of vehicles and 16 percent is the cost of hydrogen infrastructure. Government RD&D costs over this period total an additional $5 billion. Other Cost Considerations While the committee’s budget roadmap considered only the funding required to launch the maximum practicable scenario for fuel cell vehicles, it is unlikely that federal funding would terminate after the breakeven year for transition, as assumed here. Rather, continued expenditures at some level would be expected, although the committee did not attempt to estimate such requirements. Note, too, that the budget roadmaps presented here do not reflect the savings to consumers from reduced expenditures for gasoline during 2012-2023 (estimated at roughly $17 billion) or the loss of government tax revenues from gasoline sales displaced by hydrogen (roughly $5 billion). Also, the budget estimates do not include any costs for technical educational or training programs to support the transition, because the committee estimated no shortage of workers with the needed skills during this period (see Chapter 7). Other types of training programs (e.g., safety training) are likely to be needed. There is considerable uncertainty in predicting the costs of deploying HFCVs, in particular technical success, oil prices, and carbon policy. To the extent that HFCVs exceed the technical and cost targets assumed in the maximum practicable analysis, the government’s share of costs could be reduced. Similarly, to the extent that HFCV imports from non-U.S. automakers contribute to the hydrogen transition, the magnitude of U.S. government-supported vehicle costs also would be reduced. But progress may be slower than assumed here, and pushing HFCVs into the market would then be more expensive than shown in Figure S.3. Before companies and the government start ramping up the funding for the transition in about 2015, it will be important to fully assess the state of the technology and expectations for the market. Insofar as progress is either faster or slower than expected, it will be important to adjust policies in response, while avoiding the perception that promotional policies are not durable. Finally, the committee notes that the budget roadmaps developed in this study apply only to the transition period through 2023. However, the successful introduction of HFCVs also would involve substantial longer-term expenditures—primarily by the private sector—for infrastructure, energy resources, and other requirements of a full-scale HFCV-based transportation system. Estimates of longer-term
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen capital requirements and other resource needs for the Hydrogen Success scenario can be found in Chapters 6 and 7 of this report, along with a discussion of issues such as long-term labor force requirements that remain for future study. CONCLUSION 9: The estimated government cost to support a transition to hydrogen fuel cell vehicles is roughly $55 billion over the 16-year period from 2008 to 2023, primarily for the production of fuel cell vehicles ($40 billion of incremental cost) and, to a lesser extent, for the initial deployment of hydrogen supply infrastructure (about $10 billion) and R&D (about $5 billion). No shortages are foreseen in the critical workforce skills needed to accomplish the transition. However, further study is necessary to assess the longer-term costs, institutional issues, workforce issues, and impacts of undertaking the major hydrogen infrastructure development required to support widespread use of HFCVs. See Chapter 7. Actions Required by Government to Implement the Transition Six types of actions and policies are needed to exploit the potential of hydrogen to reduce oil use and CO2 emissions from the transportation sector, consistent with the Hydrogen Success case described in this report: Actions to ensure continued development of HFCVs technologies, Actions to deal with the high initial cost of HFCVs, Actions to develop the initial infrastructure needed to support HFCVs, Actions to reduce the cost of the initial distributed infrastructure for hydrogen, Policies that promote energy security by improving the end use efficiency of transportation fuels, and Policies that limit greenhouse gas emissions to ensure that hydrogen produced using domestic energy resources results in little or no emission of CO2 to the atmosphere. More specifically, to stimulate RD&D to overcome remaining technical hurdles and encourage long-run penetration of hydrogen vehicles, a technology-push approach (i.e., not relying simply on market forces) is required. Such an approach would have to employ policies and incentives that are carefully targeted, substantial, durable, and gradually phased out over time with continued technology progress. However, the design and the choice of such policies are neither simple nor straightforward. Targeted policies to kick-start a market for hydrogen vehicles could include such measures as federal tax credits, subsidies for hydrogen vehicle purchases, or minimum sales share quotas imposed on vehicle manufacturers. If financial incentives are used, they would have to be substantial, given that life-cycle costs for hydrogen vehicles are currently much higher than for comparable gasoline vehicles. Without large incentives, consumers also may be reluctant to switch in significant numbers to a new and unfamiliar type of vehicle and fuel. As noted above, policy measures that significantly limit CO2 emissions also will be required to ensure that hydrogen is produced in ways that do not add to the burden of greenhouse gas emissions. Durable incentives, lasting 15-20 years or more, also would be critical for setting private sector expectations about the long-run payoffs to investments with high up-front costs. However, subsidies should be progressively phased out over time as long-term penetration targets are approached, in order to limit government funding requirements and encourage firms to act more quickly in the earlier years of the program. Coordination of financial incentives with the technical progress of the program is therefore crucial. Ultimately, however, the heart of any policy actions to promote substantial HFCV penetration must be the incentives or requirements for auto manufacturers to develop and mass-produce hydrogen vehicles consistent with the budget roadmaps presented above and motivated by the goals of national energy and environmental policies. Chapter 8 provides further discussions of policy design. CONCLUSION 10: Policies designed to accelerate the penetration of HFCVs into the U.S. vehicle market will be required to exploit the long-term potential of HFCVs. The committee concluded that these policies must be durable over the transition time frame but should be structured so that they are tied to technology and market progress, with any subsidies phased out over time. Such policies are likely to deliver significant long-term reductions in U.S. oil demand, but additional policies limiting greenhouse gas emissions will be required in order to also reduce CO2 emissions significantly. See Chapter 8. SYNERGIES WITH THE ELECTRIC POWER SECTOR The committee also was asked to consider the role that hydrogen in stationary electric power might play in stimulating a transition to hydrogen-fueled vehicles. There are potential synergies between the transportation and electric power sectors that could benefit both sectors in the near term and longer term. In the near term, the electric power sector has the potential to accele rate the volume of hydrogen available for fuel cell vehicles during the transition period by producing electricity targeted for electrolysis of water to generate hydrogen for transportation. While large central electrolyzers appear not to be competitive with other central plant technologies, the use of small-scale electrolyzers at a refueling site could play an important role during the start-up phase (from about 2012 to 2025), when the cost burden of larger-scale natural gas reforming plants is a potential barrier to hydrogen supply. The committee’s analysis indicated that small-scale elec-
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen trolysis, although in general more expensive than hydrogen from distributed natural gas reforming, might nonetheless supply hydrogen to areas with limited access to natural gas or to other locations in particular situations. Electric utilities, working with state utility commissions, could provide economic incentives to reduce the cost burden of the electrolysis process. The impact of electricity cost on hydrogen production cost is discussed in Chapter 3. In addition, DOE and several companies have R&D programs to reduce the cost of electrolysis. In the longer term (e.g., 2025 through 2050), there is a potential for synergy in the use of hydrogen for stationary power generation and for transportation. The key enabling technologies envisioned as sources of hydrogen in the committee’s scenarios are gasification plants fed either by biomass or by coal with CCS. Coal-based hydrogen at the scale envisioned is anticipated to use the same type of equipment used in integrated gasification combined cycle (IGCC) power plants projected to be built in the future. Thus, hydrogen produced from gasification can be used as a fuel either for stationary power generation or for export to the transportation market. For coal-based hydrogen production, CCS will be required to avoid significant CO2 emissions. Biomass gasification, however, is a potentially carbon-neutral source of hydrogen. Although other power plant technologies, such as nuclear and renewable energy systems, also could be used to generate carbon-free hydrogen (mainly via electrolysis), gasification-based systems are the most economical approach in the committee’s assessment. A potential synergy not explicitly modeled in the committee’s analysis is that IGCC plants with CCS also offer a potential remedy to the “chicken-and-egg” problem of providing incentives for initial investments in large-scale hydrogen production facilities needed to reduce future hydrogen costs during and after the transition period. The flexibility of gasification systems to provide electric power as well as hydrogen can significantly reduce the financial risks associated with large-scale hydrogen production during the scale-up phase of HFCV commercialization. As noted above in the discussion of technical readiness, several key issues still must be resolved to achieve the potential synergies described. Foremost is the need to demonstrate the production of coal-based hydrogen or electricity with CCS at a commercial scale (e.g., an electrical equivalent of several hundred megawatts) within the next decade. In the committee’s view, such demonstrations are required to enable decisions about the applicability and deployment of central hydrogen production with CCS in the 2025 time frame, as assumed in the Hydrogen Success scenario. Again, utilities and other companies, working with their regulatory commissions, could be given incentives to pursue the large-scale demonstration of these technologies more rapidly. CONCLUSION 11: With appropriate policies or market conditions in place, potential synergies between the transportation sector and the electric power sector could accelerate the potential for reduced oil use and decreased CO2 emissions as benefits from the use of hydrogen in both sectors. In the near term, electrolysis of water at refueling sites using off-peak power, and in the longer term (after 2025), cogeneration of low-carbon hydrogen and electricity in gasification-based energy plants, are potential options that offer additional synergies. See Chapter 5. POTENTIAL OF ALTERNATIVE TECHNOLOGIES The committee also was asked to consider whether other technologies would be less expensive or could be implemented more quickly than HFCVs to achieve significant reductions in CO2 emissions and oil imports. The committee concluded that a rigorous assessment of the costs and impacts of all technologies that compete with HFCVs would require a level of effort beyond the scope and resources of the current study. Thus, the committee approached this task as one intended to provide context for the development of HFCVs—not one intended to identify specific “technology winners” that might be preferable to HFCVs. For purposes of analysis, the committee therefore chose to focus on the impacts, but not the costs, of one vehicle alternative and one fuel alternative for reducing oil use and CO2 emissions: (1) evolutionary internal combustion engine vehicles (ICEVs), including gasoline-hybrid electric vehicles, and (2) the use of biofuels—specifically ethanol and biodiesel—to replace petroleum-based fuels. The committee did not evaluate the impact of other vehicle or fuel technologies as explained above, but it recognizes the potential of advanced technologies such as PHEVs to achieve significant reductions in oil use and CO2 emissions if they are successfully deployed. Such technologies are discussed further in Chapters 4-6. The following sections briefly summarize the committee’s assumptions regarding potential developments in advanced conventional vehicles and biofuels. To assess the potential impacts of such developments on reducing oil use and CO2 emissions, the committee analyzed these assumptions using the same analytical model it employed to assess potential impacts of HFCVs. In addition, the committee attempted to match the degree of technological optimism and aggressive implementation of the Hydrogen Success case for both alternative cases. Results of those analyses also are summarized below. Advanced Conventional Vehicles Conventional power trains and vehicles have continued to improve since the invention of the automobile more than 100 years ago. The committee found significant potential to continue this evolution through improvements in engine and transmission efficiency, aerodynamic design, and reductions
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen in rolling resistance, weight, and accessory loads. Much of the recent progress in these areas has been directed to enhancing vehicle performance and size rather than reducing fuel consumption. However, if future improvements to gasoline-powered vehicles were used exclusively for fuel economy gains, this study estimates that oil consumption and greenhouse gas emissions per mile of travel for new vehicles could be reduced by almost 30 percent in 2020, more than 40 percent by 2035, and about 50 percent by 2050 compared to average vehicles in 2006. In all cases, however, policy measures (such as the 2007 CAFE standards) and/or significant long-term increases in fuel costs probably will be required to realize these potential fuel economy gains in a significant number of on-road vehicles. Absent such policies or large fuel cost increases, the committee expects that much of the conventional technology potential will either remain unused or be directed to attributes other than fuel economy. The committee further estimated that evolutionary improvements in current gasoline-electric hybrid vehicles—a more revolutionary and more recent approach to power train design—could reduce fuel consumption and greenhouse gas emissions per mile for new vehicles by about 50 percent in 2020, more than 60 percent by 2035, and nearly 70 percent by 2050 compared to today’s conventional gasoline vehicles. Reaching this full potential will likely require adoption of many of the evolutionary vehicle and power train improvements for conventional vehicles, as well as further progress on battery technology. Chapter 4 elaborates on the technical basis for the efficiency improvements outlined above. These technologies will increase the initial costs of vehicles, but savings in fuel cost will accrue over the life of the vehicle and thus could offset costs to the consumer on a life-cycle basis. CONCLUSION 12: Continued advancements in conventional vehicles offer significant potential to reduce oil use and CO2 emissions through improved fuel economy, but policy measures and/or significant long-term increases in fuel cost probably will be required to realize these potential fuel economy gains in a significant number of on-road vehicles. See Chapter 4. Biofuels Automotive fuels produced from crops or other forms of biomass have the potential to further reduce oil imports and CO2 emissions. As in the case of vehicle technologies, biomass feedstocks and conversion technologies span a range of levels of development and maturity. There is also a corresponding lack of information about when processes in the early stages of development might become commercial. Therefore, this study used options for which more data were available to assess the potential of biofuels to offer earlier reductions in oil use and CO2 emissions compared to HFCVs. Such assessments are by no means straightforward because of the complexities and uncertainties in accounting for oil use and greenhouse gas emissions across the chain of processes involved in biofuel production (see Chapter 4). Recent papers in the literature addressing the potential for soil root carbon CO2 release from land use changes indicate the difficulty of these complexities. The most common biofuel produced in the United States is ethanol made from fermenting corn kernels. Because the energy content of ethanol is less than that of gasoline, roughly 30 percent more ethanol by volume is needed to replace each gallon of gasoline. Furthermore, because petroleum-based fuels are used in growing and producing corn ethanol, net reductions in both oil use and greenhouse gas emissions are greatly diminished relative to the impacts of equivalent energy from gasoline. Although some agricultural and ethanol production practices could yield greater reductions (such as ethanol produced from sugar cane), others—such as processes using coal-based energy or the clearing of existing forest to plant corn—could increase greenhouse gas emissions compared to gasoline. The committee also found that the potential to drive up food prices made it unlikely that more than about 25 percent of U.S. corn crops would be devoted to ethanol, which would limit corn-based ethanol to about 12 billion gallons after 2015 (the energy equivalent of less than 6 percent of the reference case gasoline demand for light-duty vehicles in that year and a still smaller percentage in later years). The technology to produce cellulosic ethanol—ethanol from woody biomass, grasses, or crop residues—is not yet demonstrated for commercial production but is actively being developed. The committee found that if successful, it could reduce oil use by more than 90 percent and greenhouse gas emissions by roughly 85 percent compared to equivalent gasoline use in light-duty vehicles. The committee estimated that domestic resources for cellulosic biomass would allow production of about 45 billion to 60 billion gallons of cellulosic ethanol by 2050, potentially displacing about 20 percent of the baseline gasoline demand estimate for that year. Biodiesel, a fuel produced from animal or plant oils such as soy, would reduce oil use and greenhouse gas emissions similarly to cellulosic ethanol. Producing biodiesel is a simpler process that is already commercial. If biodiesel were produced from current sources (e.g., soybeans), the potential impact on commodity prices would limit its potential to roughly 30 percent of the soy crop, which would provide slightly more than 1 billion gallons of biodiesel by 2020. This would displace a very small fraction of diesel demand in that year, based on committee estimates. The potential for biodiesel fuels was thus judged to be small unless breakthroughs are achieved in areas such as oil production from algae. CONCLUSION 13: Although use of corn- and oil-based biofuels can provide some benefits in reducing U.S. oil use and CO2 emissions, cellulosic biofuels will be required
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen for such benefits to be significant. Lower-cost biofuel production methods and conversion processes will have to be developed for large-scale commercialization, but the initial high costs of biofuels, together with other barriers, may limit their market potential, absent policy interventions or significant oil price increases or supply disruptions. See Chapter 4. Impacts of Alternative Technologies on Oil Use and CO2 Emissions To evaluate whether alternative technologies might be implemented more quickly than HFCVs to achieve significant reductions in oil use and CO2 emissions, the committee extended the modeling framework described above for HFCVs to include two alternatives—evolutionary vehicles and biofuel technologies. As with hydrogen, such modeling estimates are uncertain because of the complexities and unknowns inherent in any analysis of future transportation systems and fuel options. Insights from modeling were nonetheless of significant value in informing the committee’s judgment about the potential impacts of alternatives to hydrogen. Toward this end, the committee developed and analyzed additional scenarios for the two selected alternative technologies with technological optimism and aggressive implementation similar to those for the Hydrogen Success case (the maximum practicable case). Case 2 (ICEV Efficiency) focused on improvements to conventional vehicles. This case shows (based on the analysis in Chapter 4) that aggressive implementation of evolutionary technology improvements for gasoline vehicles raised the average on-road fuel economy (which is typically 20 percent lower than the Environmental Protection Agency’s “sticker” miles per gallon [mpg]) of the light-duty fleet to about 30 mpg by 2020 and to nearly 40 mpg by 2035, with a small additional improvement by 2050. Conventional hybrid vehicles were estimated to improve to about 45 mpg by 2020, and then to about 55 mpg by 2035 and about 60 mpg by 2050. In Case 2, the growing penetration of hybrids gained them an 80 percent share of the total vehicle market by 2050 (see Chapter 6). These estimates assume that the evolutionary technologies result in efficiency improvements and that consumers buy them. Case 3 (Biofuels) assumed aggressive development and use of biofuels to power the conventional vehicles of the baseline scenario. Most of this biofuel was in the form of cellulosic ethanol, which was to reach commercialization by 2010 (based on DOE’s biofuels roadmap), followed by rapid expansion to 16 billion gallons per year in 2020, 32 billion gallons per year in 2035, and 63 billion gallons per year in 2050. Grain-based ethanol production was assumed to reach a maximum of 12 billion gallons per year by 2015 and to remain at that level through 2050. Full details of the assumptions used to analyze alternative vehicles and biofuels appear in Chapters 4 and 6 of this report. Here, the major results and implications of that analysis are highlighted. The results from Case 2 (ICEV Efficiency) (Figure S.5) indicate that aggressive fuel economy improvements in conventional light-duty and hybrid vehicles follow the reference case, which includes the 2007 CAFE standards through 2020, but then could potentially deliver greater reductions in U.S. oil demand and CO2 emissions compared to the Hydrogen Success scenario, through about 2040. Subsequently, under the assumptions of this scenario, the rates of growth in the benefits of potential efficiency improvements begin to slow at a time when benefits from the Hydrogen Success case are still increasing. Breakthroughs and rapid market penetration in other developing vehicle technologies, such as plug-in hybrids and diesel hybrids, potentially could increase the benefits of reduced oil consumption and CO2 emissions above those shown in Case 2 (ICEV Efficiency), particularly in the 2030-2050 time frame. The results of Case 3 (Biofuels) (also shown in Figure S.5) suggest that biofuels alone also could potentially reduce oil FIGURE S.5 Comparison of (left) annual gasoline use and (right) annual greenhouse gas emissions (as equivalent CO2) for Cases 1-3 compared with the reference case.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen demand and greenhouse gas emissions (measured as equivalent CO2 of all greenhouse gas emissions over the fuel cycle) sooner than the Hydrogen Success case, if cellulosic ethanol comes online by 2010 and grows aggressively thereafter. As with Case 2 (ICEV) efficiency improvements, however, the rate of growth in benefits from biofuels implementation begins to slow toward the end of the analysis period. In 2030-2040, the Hydrogen Success case has the potential to provide greater reductions and, by 2040, delivers two to three times the reductions in oil use and CO2 emissions as the aggressive biofuels scenario. Chapter 6 also presents the results of several additional cases involving combinations of alternative technologies. Although these scenarios give quantitative results different from those shown here, the qualitative conclusion is similar—that is, alternative technologies can deliver significant oil use and CO2 emission reduction benefits earlier than HFCVs, but the largest sustained longer-term benefits are achieved using hydrogen fuel cell vehicles. CONCLUSION 14: The committee’s analysis indicates that at least two alternatives to HFCVs—advanced conventional vehicles and biofuels—have the potential to provide significant reductions in projected oil imports and CO2 emissions. However, the rate of growth of benefits from each of these two measures slows after two or three decades, while the growth rate of projected benefits from fuel cell vehicles is still increasing. The deepest cuts in oil use and CO2 emissions after about 2040 would come from hydrogen. See Chapter 6. BENEFITS OF A PORTFOLIO APPROACH Based on a comparison of the three scenarios in Figure S.5, the committee concluded that no single approach is likely to deliver both significant midterm and long-term reductions in oil demand and greenhouse gas emissions. Thus, conventional and hybrid vehicle technology, biofuels, and HFCVs should be considered not as competitors over the next few decades, but as part of a portfolio of options with a potential to deliver significant energy security and environmental benefits across a variety of time horizons. Other technologies not analyzed in this study, such as plug-in hybrids, battery electric vehicles, and other types of internal combustion engines, also should be examined as potential candidates for this portfolio. As in other domains, a portfolio of technology options is most likely to improve the chances of success while reducing the risks in the event that any one option fails to deliver on its promise. Because advanced conventional vehicles, hybrid vehicles, and biofuels can deliver benefits in a shorter time frame, they may be able to more quickly reduce the potential impacts of climate change and reliance on oil imports, while also providing the time needed to further develop and commercialize hydrogen-based fuel cell technologies. Also, should the impacts of climate change or oil shocks mobilize an aggressive policy response, acceleration of HFCVs into the market could provide a path toward a zero-petroleum and potentially low-carbon option that can persist beyond the large, but eventually limited, potential of vehicle efficiency and biofuels alone. To explore the value of a portfolio approach, the committee constructed Case 4 (Portfolio), which combines all three options of vehicle efficiency, biofuels, and HFCVs (see Chapter 6). Compared to the reference baseline scenario, the results showed that this portfolio of options has the potential to nearly eliminate oil demand from light-duty vehicles by the middle of the century, while reducing greenhouse gas emissions by almost a factor of 10 relative to the assumed baseline case (Figure S.6). Achieving this potential is likely to require a portfolio approach that takes advantage of the synergies among these technologies. For example, many of the technologies needed to improve the fuel economy of conventional vehicles, including weight reduction, improved aerodynamics, lower rolling resistance, and low accessories loads, also will be essential for fuel cell vehicles to reach the FIGURE S.6 Impact of combining the potential of HFCVs with advanced conventional vehicles, hybrid vehicles, and biofuels in a portfolio approach—Case 4: (Left) annual gasoline use and (right) annual greenhouse gas emissions.
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Transitions to Alternative Transportation Technologies — A Focus on Hydrogen efficiency levels assumed in this study. Similarly, advancements in battery and electronics technology for hybrids will likely find direct application in fuel cell vehicles, while some technologies used to produce biofuels also could be adopted for hydrogen production (such as gasification of biomass or on-site reformers using biomass). CONCLUSION 15 (same as Conclusion 1): A portfolio of technologies including hydrogen fuel cell vehicles, improved efficiency of conventional vehicles, hybrids, and use of biofuels—in conjunction with required new policy drivers—has the potential to nearly eliminate gasoline use in light-duty vehicles by the middle of this century, while reducing fleet greenhouse gas emissions to less than 20 percent of current levels. This portfolio approach provides a hedge against potential shortfalls in any one technological approach and improves the probability that the United States can meet its energy and environmental goals. Other technologies also may hold promise as part of a portfolio, but further study is required to assess their potential impacts. See Chapter 9. REFERENCES EIA (Energy Information Administration). 2008. Annual Energy Outlook 2008: With Projections to 2030. Report DOE/EIA-0383. Washington, D.C. Greene, D., P. Leiby, and D. Bowman. 2007. Integrated Analysis of Market Transformation Scenarios with HyTrans. Oak Ridge National Laboratory, Oak Ridge, Tenn. Gronich, S. 2007. 2010-2025 Hydrogen Scenario Analysis. Presentation to the committee, February 20. NRC (National Research Council). 2004. The Hydrogen Economy: Opportunities, Costs, Barriers, and R&D Needs. Washington, D.C.: The National Academies Press.