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Implications of Alternative Fuels on Transportation

Paul Argyropoulos, EPA1


There are obvious links between the U.S. Department of Transportation and the U.S. Environmental Protection Agency just as there are linkages between fuel and the movement of people and goods. Without the highways, vehicles cannot travel with ease and, without the fuels, the vehicles cannot travel at all. While DOT's focus is on the transportation system, EPA's focus is on the environment, though again these two worlds come together in the form of the need for fuels and the vehicle emissions that result from the use of those fuels.

This paper is based on EPA's Office of Transportation and Air Quality's (OTAQ's) perspective. OTAQ's mission is to provide guidance and regulation on emissions from anything that uses fuel to move and some things that don't move including emissions from vehicles both heavy- and light-duty, on-road and non-road, and anything from hand-held equipment to power generation equipment, etc. As part of this mission, OTAQ regulates fuels and requires registration of fuels for compliance purposes. OTAQ requires information about the composition, toxicity, and emissions effects of fuels, and how this use would equate to meeting current emission standards.

The strategy that EPA began to develop and deploy back in the late 80s and early 90s was a systems approach. This approach recognizes that regulations may affect a range of stakeholders, all of whom are sensitive to the possible effects of EPA regulations on the cost structure of their industry. Stakeholders are naturally reluctant to incur new costs that would result in additional costs to consumers. EPA realized that stakeholders need to work together and develop a systems approach so that new regulations are based on common sense and also provide greatest amount of flexibility to the stakeholders with the least amount of impact, while still realizing that not every stakeholder will be happy with the final result. However, EPA believes that this approach yields a larger segment of satisfied stakeholders than would result from unilateral decisions and associated regulations. In keeping with this philosophy, EPA has designed programs to transition the industry into new regulations and provide flexibility, training, and banking programs with development of more stringent programs so that fuels are helping new technologies to be deployed. It makes the technologies easier to meet the emission standards and ultimately saves costs. Another dimension to EPA's systems approach is to consider, to the extent possible, not only the direct effects of regulations, but the indirect effects as well. In the case of fuels, this means that EPA may consider not only the emissions resulting from the use of the fuel, but also the emissions resulting from the production of the fuel.

Turning to alternative fuels, any discussion must start by defining what this term really means and how it is defined. For example, is this a fuel that is different than what we have now, a non-petroleum based fuel, a bio fuel, or a gaseous fuel? From EPA's perspective, “alternative fuels” are any fuels that are used in motor vehicles that differ from the existing fuels, which may include conventional petroleum fuels that have been modified by a change in formulation or it may be a completely different fuel type.

A New Renewable Fuels Standard

One of the major recent government actions was the passage of the Energy Independence and Security Act of 20072, which has the goals of reducing the U.S. dependency on foreign imports of oil and reducing the environmental footprint and greenhouse gas (GHG) emissions though utilization of new fuels and fuel blends. The Policy Act of 2005 had set forth national standards of renewable fuels of 7.5 billion gallons by 2012. The new Energy Independence and Security Act (EISA) changed this goal by significantly increasing this target to 36 billion gallons of renewable fuel by 2022. Currently, EPA is engaged in developing all of the new requirements that will be needed to meet all of the objectives of EISA. In particular, there are new categories for replacement of gasoline that have been expended beyond the on-road sector to the off-road sector to permit credit generation into some other pools as well. However, to be in compliance, there are a number of critical provisions that need to be met.

For a fuel to be used as a renewable product, it has to have been made from an approved renewable biomass and has to come from lands that have been previously cultivated. This criteria has far reaching implications for biofuels, including the need to conduct a life-cycle assessment to follow the distribution and refinement of feed stocks into renewable fuel including tracking where the feed stock originated, what land was it grown on, etc. Each fuel category has an associated standard that must be met with the exception that corn ethanol has been “grandfathered.” Generally speaking, if it is a new fuel from a new facility, it has to meet a 20% GHG reduction over the fuel it is replacing, which was established in the Act as the 2005 petroleum-based fuel. Congress included provisions in the Act to provide for the situation where the new technology does not work or come on line as quickly as projected and the standards cannot be reached. In this case, EPA was granted the authority to issue waivers to the standards.

The proposed rulemaking for the second Renewable Fuels Standard (RFS 2)3 requires that some renewable fuels must achieve GHG emissions reductions compared with the gasoline and diesel fuels they displace. To receive credit toward meeting the new standards, refiners must meet these requirements. For each fuel pathway, the proposed rulemaking takes into account GHG emissions produced over the full life cycle of the fuel. This includes production and transport of the feedstock, land-use change, production, distribution, blending of the renewable fuel, and use. The resulting life-cycle GHG emission level is then compared with the life-cycle GHG emissions of 2005 petroleum baseline fuels that are displaced by the renewable fuel. For renewable fuels to quality for RFS 2, they must meet or exceed the minimum GHG reduction thresholds. The thresholds for the four categories of renewable fuels are as follows:

Ultimately, the implication of this Act is that there will be a shift in the distribution of fuels with renewable fuels obtaining a much higher volume than ever before. Under EPA's original Renewable Fuels Standard (RFS 1)4, alternative fuels were only anticipated to displace 1%-1.5% of conventional fuels in the U.S. by 2012. However, under ESIA the expected change is much more dramatic with an anticipated 16% replacement by 2022. Further, within the transportation sector, petroleum-based liquid consumption is expected to be flat, replaced in part by bio-fuels.

Examining the projected distribution of biomass liquids in 2022, it is still expected that a large component of alternative fuel will be based on corn ethanol, bio diesel, bio-butanol, or a renewable fuel feed stock. There is a tremendous amount of technology that is currently in existence that has the potential to turn feedstock into a product that is very similar to conventional gasoline and diesel. It is clear that transportation will still be utilizing a type of liquid transportation fuel well into the future. However, how quickly technology develops, market penetration, and shifts in purchasing are still somewhat unknown. The recent drop in cost of crude oil has affected the price of gasoline and diesel. However, despite this reduction in price there continues to be a shift in the type of vehicles that the public is purchasing, with movement toward smaller, more fuel efficient vehicles. With changes in technology and shifts in the vehicle fleet, will come changes in GHG emissions.

The reduction of GHG emissions appears to be a priority for the new administration, although many have been working on this issue for a long time. The reality is we are going to see a shift in the change in the mix of types of energy sources – more in broad sector perspective rather than transportation sector. For example, we are still going to see a lot of the transportation sector GHG emissions associated with the shift into electricity, because the energy source for production of electricity is unknown. Quantifying this shift will be big factor in the evaluations of the impacts of GHG emission from the transportation sector. Again, if demand shifts, there could be a shift in types of vehicles utilized by the public and a resulting change in the mix of energy sources used for transportation. So, projections of reduced GHG emissions result partly from reduced travel demand, partly from increased vehicle efficiency, and partly from a shift from petroleum to other alternative fuels, such as renewable fuels, which may have lower associated carbon dioxide emissions.

Research Needs

There are a number of different areas where further research is needed, some of which are included below. One key area of future research will be to conduct a closer examination of the projected changes in fuel use as a result of EISA. Historical trends can provide some insight into whether these projections are reasonable, but there have been many changes in recent months that may impact these projections. New research is needed to incorporate these changes and assess the impact of these changes on the EISA projections.

Additional research is needed on several other topics, including continuing discussions on the costs and benefits of energy security and independence, the importance of maintaining gains in public protection regarding emission controls, and others. One emerging question on sustainability that warrants research is to quantify the trade-off between the use of crop-based feedstocks for transportation fuel versus for food production. For example, ethanol requires a large quantity of corn for production, which necessarily competes against the use of the same corn for livestock and poultry feed.

The area of public policy and market drivers is another area for additional research. Public policy is the center of everything, but there are so many things now are affecting these policies. Climate change is a significant policy issue, but there are so many other factors, including the economy, that ultimately are going to factor into whether a consistent and balanced public policy can be developed that simultaneously meets the needs of a variety of stakeholders and of potentially conflicting viewpoints. Finally, research is needed to understand the infrastructure needs for alternative fuels. There are infrastructure issues associated with alternative fuels that need to be studied, including the need to haul biomass to a refinery, and the associated infrastructure requirements for this activity. This research needs to address questions such as pipelines, highways, etc. that will be needed.

Workshop Presentation

Innovations for Tomorrow's Transportation: Implications of Alternative Fuels on Transportation. Paul Argyropoulos. Office of Transportation and Air Quality. US Environmental Protection Agency. Workshop on Research Statements. January 2009

EPA's Side of the Coin: Set Fuel, Vehicle and Engine Standards. Montage of 16 pictures showing vehicles and work equipment that use combustible fuel.

EPA's System Approach: Enabling Benefits, Flexibility, Minimizing Costs and Garnering Support. Three groups of text and pictures. Highway: In most cases ~90% reduction in emissions by enabling engine and catalyst technology through low sulfur fuel. Pictures show an example of light-duty vehicles (1999) and heavy-duty vehicles (2001). Non Road - Farm, Industrial, Construction. A picture shows an example of clean non-road diesel (2004) equipment. Locomotive/ Category 1&2, Diesel Marine Proposal. Pictures show a locomotive and a tug boat.

Alternative Fuels 'Speak' for Transportation Sector? Main text heading : It's Important to Speak from the Same Baseline. Subordinate text heading: What are Alternative Fuels?, with bullet list having two items: Non Petroleum Based? and As defined in legislation?, followed by two list items: Energy Policy Definition/s of Alternative Fuels?, Energy Policy Definition of Bio/Renewable Fuels. Subordinate text heading: Any advanced fuel/s linked to current and future advanced vehicles and engines?. Five graphics show logos of energy companies.

One Important Giant Step?: Energy Independence & Security Act - Renewable Fuels Standard. Bullet list with six items and line chart. List items include: Modifies Current RFS program beginning in 2008; Volumes increase to 9 Bgal/yr in 2008 - escalating to 36 Bgal/year by 2022; Establishes new renewable fuel categories and eligibility requirements, including GHG reduction thresholds!; Provides new waivers and paper credit provisions; Includes new obligation for fuels; Includes new studies and reports. Line chart plots billions of gallons over time from 2006 through 2022 for two data sets. RFS1 starts just below a value of 50 billion gallons in 2006 and trends upwards slowly to a value just under 75 billion gallons in 2011, and remains flat to end at a value of about 90 billion gallons in 2022. RFS2 starts at a value of about50 billion gallons in 2008 and climbs steadily a value above 35 billion gallons in 2022. Chart legend: RSF2 much higher volumes.

Baseline Perspectives / Projections (For General Reflection). Subtitle: AEO Early Release - 2009.

Renewable Fuel Displacement of Conventional Fuels. Bullet item list, one area chart, and one stacked bar chart. List items include: Under RFS 1 - In 2012 renewable fuels would displace 0.8 to 1.6 percent of the petroleum that would otherwise be used by the transportation sector; Under RFS 2 - Projections are ~16 percent displacement in 2022. Area chart title: Petroleum-based liquids consumption is projected to be flat as biofuels use grows. The projection from the year 2009 to the year 2030 shows a flat trend under 20 million barrels per day, with biofuels increasing slightly to fill the gap to about 24 million barrels per day in 2030. Stacked bar chart title: EIA Annual Energy Outlook 2009 Reference Case Presentation, December 17, 2008. Billion credits are plotted for the years 2007, 2022, and 2030. The trend for corn ethanol shows an increase from a value of about 6 to a value of about 13 in 2022, leveling off to about the same value in 2030. Net ethanol imports are projected to rise between 2022 and 2030, as is biomass to liquids over the same time period.

Vehicle Mix and Technology Flip. Two pictures representing passenger vehicles flank a set of graphs that includes an area chart and two stacked bar charts. Area chart title: New Alternative Light Vehicle Sales (percent of total sales). The projection shows slight increase in alternative fuel capable vehicles, a dramatic increase in electric drive vehicles between the year 2010 and 2030. Stacked bar chart, left, title: New light-duty vehicle sales shift from light trucks back to cars. This trend is evident in the plot for mid-size cars. Stacked bar chart, right, title: Mid and full hybrid systems dominate new light-duty vehicle sales by 2030.

GHG's: Sector Impacts and a Changing Mix. A set of graphs including an area chart, stacked bar chart, and line chart. Are chart title: Generation mix gradually shifts to lower carbon options. The trend shows slight increase in coal, natural gas, somewhat larger increase in renewable from 2009 to 2030. Stacked bar chart title: Electricity generation is the dominant source of carbon dioxide emissions growth. Values for delivered electricity are plotted for three categories, buildings, industrial, transportation, and compared to values for electric power generation. Petroleum dominates in the transportation category, while coal dominates in the electric power generation category. Line chart title: Growth in energy-related carbon dioxide emissions slows with slowing growth in energy use and a shift to less carbon-intensive fuels. Projections for the AEO 2009 reference case show slight increase between 2009 and 2030 to under 6,500 million metric tons, while projections for the AEO2008 reference case show a larger increase to 6,700 million metric tons over the same period.

Projections for Liquid Transportation Fuels. A stacked bar chart shows data for the year 2007 and projections for the years 2015 and 2020. The trend for motor gasoline is down, and the trend for diesel and bio fuels is up, while that for other fuels is flat. A line chart shows trends for new light duty vehicle fuel economy. After remaining flat through the year 2008, trends for light truck, combined, and car fuel efficiency plot steadily upward to the year 2030. The text accompanying the chart indicates: At the same time, efficiency is expected to rise.

A Couple Initial Questions. Bullet list with three main points and subordinate text: (1) Are projections accurate? (2) Based on real or theoretical technology?; Fuels and Vehicles; (3) What could change & drive a shift or redirection in transportation market or public policy? Reflection on 2008 energy market and economy.

Key Goals and Challenges in the Policy Debates - All requiring additional or new research. Bullet list with six items and an arrow to the right: Energy Security; Energy Independence; Protect Public Health and Environment; Control Climate Change; Sustainability for Food, Fuel and Resources; Sound Economics.

Public Policy and Market Drivers: Multiple Inputs -- Multiple Parties -- Multiple Perspectives -- Varying Interests. Word chart with converging bubbles in the center, highlighting the text: Public Policy. A dozen issues are spelled out around the bubbles, indicating the various issues and scenarios that accompany the formation of public policy.

Dawning of New Age of Programs and Analysis for Sustainable Transportation (Fuels, Vehicles and Engines). Complex text chart. At the center, six circles feed into a central circle representing Clean Efficient Transportation Fuels, Vehicles, and Engines. The outer circles include conventional crude oil, traditional vehicles and engines, traditional renewable feedstocks, advanced cellulosic feedstock, and advanced vehicle and engine technology. The text multiple interests, multiple inputs crowds around the outer set of circles.

What Information / Research is Needed to Address the Issues?. Floating text boxes surround the title of the slide, indicating the various inputs that may be considered. A graphic shows the cover of the National Biofuels Action Plan.

Thoughts for Further Discussion: Implications of 'Alternative' Transportation Fuels on Transportation. Three summary points are provided, with bullet items and subordinate text indicating the range of issues available for discussion. (1) When will Alt fuels make a significant difference in GHG emissions?, with bullet item EPAct / EISA, Other Policies - Timing / impacts on energy security and GHG; (2) Federal Roles for Fuels (Energy) and Vehicles? with bullet item Fuels / Energy - Pro's and Con's of potential energy sources considering fuel / vehicle systems and bullet item Vehicles - Pro's and Con's of potential transportation unit options considering fuel / vehicle systems; (3) Should federal policies guide 'Transportation for Tomorrow' or should markets? with bullet item Historical Perspective - Both have and expect both will continue to influence direction.

1 Extracted from Oral Presentation by Battelle Staff.




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