Regulators are hoping to offer additional incentives and credits to spur sales of the vehicles. Hydrogen re-fueling infrastructure will also be supported, though details of how this would be approached were scant. The new rules would also favor vehicles such as the Chevrolet Volt, as CARB feels that it is closer to an electric vehicle than a conventional plug-in hybrid. The Volt has been dubbed a ”transitional zero-emission vehicle”.

Organizations such as the California New Car Dealers Association say that demand for these types of vehicles has been overestimated, but CARB chair Mary Nichols told a conference call that car manufacturers were in favor of the new rulings. “Probably the most heartening aspect of this whole rulemaking was the level of cooperation that we received from the industry. Overall, the degree of support for the package was just extraordinary.”

A Chevrolet Volt owner in Ottawa, Ontario has been blocked by his condominium board from charging his Chevrolet Volt – even though he has offered to reimburse the board for the $1 (approximately) in electricity it takes to charge the Volt at local rates.

Mike Nemat, who bought a Volt a couple months back, lives in a high-rise condominium building where tenants collectively share the cost of things like electricity bills. Nemat has an electrical outlet near his parking spot, originally intended for an engine block heater, that he’s been using to charge his Volt.

Under the condo’s rules, Nemat is allowed to use a block heater, which consumes almost as much electricity as a Volt. But if Nemat wants to use his outlet for charging purposes, the board says he must install a separate electrical meter, at a cost of $3,000. The board claims that they do not subsidize the fueling of other vehicles, and therefore shouldn’t be paying for electricity for the Volt – Nemat offered to reimburse the board for any electricity used, but the board still declined (though without a meter, a precise figure couldn’t be determined), and will disable that particular outlet.

One of Nemat’s neighbors had a pragmatic take on it, suggesting that someone using a toaster or leaving the lights on all night is just as much of a drain on electricity as Nemat’s Volt. Increasing numbers of Canadians in urban areas live in these buildings, and some are friendlier than others – one Toronto condo even hosts Tesla Toronto’s vehicles and allows them use of a 240V charging station. Nemat and his Volt are likely the tip of the iceberg with respect to this issue – as plug-in vehicles and higher density housing take root (and really, a downtown condo owner is the kind of person that a Nissan Leaf is perfectly suited for), there will be increased demand for charging stations.

Disclaimer: The above photo is not Nemat’s Volt. I tested a Volt for a week in December, and parked it at a public garage which has a 240V EV charging station. One day, a Durango took my spot, and so I parked it next to a standard 110V outlet and used the factory trickle charger. I came back to find the unit unplugged, thus ruining my 4-day streak of not using a single drop of gasoline. In typical Canadian fashion, the cord was neatly drapped across the side-mirror, the charge port door had been closed and the trickle charger unit placed off to the side and out of harm’s way. I can only assume it was done by a security guard who thought I was “stealing electricity” from the garage.

Wamp wamp! That’s the sound of the sad trombone playing for the Chevrolet Volt, which missed its 2011 sales target by 2,329 units. General Motors hoped that the Volt would sell 10,000 units in 2011, but it was not to be.

Bloomberg reports that the bow tie brand sold only 7,671 Volts in 2011, but has plants to increase annual production to 60,000 units annually. 45,000 of those will be sold in the United States. The Volt had only been on sale nationwide for the final three months of 2011.

Adding insult to injury is the fact that the Nissan Leaf  had sold 8,720 units through November, compared to 6,142 Volts (according to data from Automotive News). Despite being hyped up as an electric car devoid of range anxiety, consumers evidently didn’t care, opting for the little Nissan instead.

While the Volt was helped by GM authorizing the sale of 2,300 demonstrator units in November, the Leaf, unlike the Volt, has still not been launched in all 50 states, instead remaining on sale solely in the coastal regions and the Chicago metropolitan area. It’s still to early to tell how the NHTSA investigation into the Volt’s battery-related fires has impacted sales, as our data only extends to the month of November, and the NHTSA announcement came on November 25th.

Ethanol trade groups have said that the industry would survive the loss of the subsidy, now that the US ethanol production industry has become established. The industry is still protected by congressional mandates that call for 15 billion gallons of renewable fuels by 2015 and 36 billion gallons by 2022.

The ethanol issue involves a number of powerful players, corn growers and affiliated industries on one side and food interests, automakers and engine builders on the other. Then there’s the EPA to consider. The EPA has approved the use of E15, an 85/15 gasoline/ethanol blend, for use in post 2001 cars. Manufacturers say that without modifications, E15 will damage engines. In February, in a bipartisan move the House voted 285-136 to block the EPA from moving ahead with E15 regulations.

While ending the subsidy would seemingly discourage ethanol’s use, the end of the 54 cents per gallon tariff on imported Brazilian ethanol might do more to encourage that use than the subsidies did. Brazil is one place where it makes sense to use ethanol as a fuel because of Brazil’s huge sugar industry. The ratio of energy needed to produce it vs the energy obtained in the fuel for ethanol made from corn is barely greater than one, 1.3:1, compared to 2:1 for using sugar beets and 8:1 for sugar cane, the feedstock for Brazil’s ethanol. It costs half as much to make Brazilian cane ethanol as it does to make American corn ethanol. According to one academic study transportation costs to US ports eliminate that competitive advantage, but if that was a certainty, Brazilian sugar cane producers wouldn’t have threatened to start a trade war if the tariff wasn’t ended.

Not even hot air. In this environmentally responsible day and age, unheated air will suffice to propel this car. Toyota Industries Corporation (not Toyota Motor Corporation) showed a car that is powered solely by compressed air.

No CO2 will be emitted, no polar bears will be harmed. Of course, there will be a bit power needed to compress the air – minor distraction. The principle is quite simple: Tanks are filled with compressed air. The compressed air powers a motor. The motor is actually a simple car air conditioner compressor. Toyota Industries is the world’s biggest supplier of the cool gadgets, the company cranks out about 20 million compressors a year.

The rocket-like car called KU:RIN (Japanese for “air wheel”) broke the speed record for compressed air-powered vehicles (yes, that exists) by speeding up to 129.2 km/h (80.3 mph) on the Ibaraki test track. Which will earn it a place in the Guinness World Records Book.

Of course there is a minor drawback: The KU:RIN is the embodiment of range anxiety. Says The Nikkei [sub]:

“In past tests, the vehicle ran as far as 3.2 kilometers without replenishing the air in the cylinders. The company said it will work on extending the travel distance. It said the model is not intended for commercial production but is for the sake of honing its junior researchers’ skills.”

Munich, Germany, to St. Moritz, Switzerland. It can be a scenic afternoon ride. The nicest route, shown here would take you very leisurely four hours these days. Before the car was invented, it would have taken a few days and a lot of real horses. How about with pure plug-ins?  31 participants embarked on a plug-in rally from Munich to St. Moritz. It started on August 1. It ended on August 5^th. Yep, five days. When I was young, I did that in two easy days on a bicycle. The electric cars took the better part of the week.

To their credit, the battery-powered rally-cars mastered a course of 780 kilometers (484 miles), says AUTO BILD.  They must have taken some scenic detours. Or had a hard time finding out-of-the-way hotels that offered enough sockets for 31 cars to suck from over night. Straight line (and quite beautiful, I tell you) would be 279 km, or just 173 miles.  It also has some wicked mountain passes …

Even with a carefully planned route and four overnight stays, each driver had to follow a careful strategy “to not get stranded: Step on the ‘gas’ only if absolutely necessary, re-gen as much as possible: scoot downhill and happily watch the green bar grow,” says AUTO BILD. The rally was called e-miglia. It was a few hundred km short of 1,000 km, but who’s counting.

Only the “€100,000 Teslas with 7,500 laptop batteries in the back could do 300 kilometers and more” says the paper. And it continues:

“A band of dedicated idealists is fighting for the great cause of electric mobility. One would think this should be the job of the automakers. Those keep their lordly (or embarrassed) distance and leave the pioneering to the man of independent means.”

As a relatively pragmatic person who generally chooses the imperfect-yet-achievable path rather than agonizing over the perfect-but-unattainable goal, this chart [from a fascinating Boston Consulting report, in PDF here]  frustrates me. I understand why Americans choose hybrid-electric cars as their most favored “green car” technology, but from their it gets fairly crazy. EVs are fantastic on paper, but in the real world they’re still far too expensive, their batteries degrade, they have limited range, oh and did I mention that they’re freaking expensive? Biofuels, America’s third-favorite “green” transportation technology can be fantastic in certain limited applications, but the ongoing ethanol boondoggle proves that it will never be a true “gasoline alternative.” Finally, at the bottom of the list, Americans grudgingly accept only relatively slight interest in the two most promising short-term technologies: diesel and CNG. Neither of these choices is radically more expensive than, say, a hybrid drivetrain and both are considerably less expensive and compromised than EVs at this point. So why are we so dismissive of them?

And here’s how deep the irony goes: America is, apparently, far more sensitive to lifetime costs, and is particularly concerned with upfront costs. So if 56% of Americans are not willing to pay any extra upfront for a “green car,” and only 38% are willing to pay more upfront if it pays off over time, why do 64% claim to be interested in EVs? After all, the battery-powered cars that are currently on the market cost considerably more upfront (on average) than comparable hybrids, diesels and CNG cars. Even the most hard-core EV fans admit that buying an electric car now makes no financial sense, and even hybrids must be driven a huge number of miles to pay off its upfront premium compared to a comparable gasoline or CNG car. American consumers had some of the highest “don’t understand” response rates across the board, but when you break down the data you can’t help wondering if there should have been a few more.

But don’t blame Americans. After all, we’re so well-protected from our energy externalities (a topic I covered recently when I called for a serious push to increase gas taxes), that we couldn’t possibly be expected to know or care about fuel-efficient technologies as our $8/gallon-paying bretheren across the pond and around the world. As this chart shows, the US government lags other developed nations and regions in its fuel economy standard… but even this isn’t the real story. After all, the current argument being made by automakers is that they will be forced to put more cost into future CAFE-compliant cars which consumers will not find worthwhile if gas prices don’t rise. Which brings us back to the real issue:

The problem, it seems, is that America still sees “fuel efficient” cars and “green” cars as being fundamentally different. Just look at the rise of high-priced cars that are green for the sake of being green, and offer no chance paying back their additional costs compared to comparable cars that are simply “fuel efficient.” Fisker’s Karma is “green,” while a 335d is “fuel efficient.” Chevy’s Volt is “green” but the Cruze Eco is merely “efficient.” Tesla’s Roadster is “green” but a Lotus Elise is amazingly efficient. I could go on, but the point should be fairly clear: because “green” has become such an aspirational marketing trope, and because we are still so insulated from the price motivation that drives nearly everyone else on earth to save fuel, we can’t even evaluate the “green car” options out there in a way that makes any sense. In my mind, this is a troubling sign of the market failure that comes from hidden externalities… and as a believer in market solutions, I hope American consumers can start looking at alternative drivetrains with more objectivity in the near future.

Smell that? It’s the gathering scent of a new industry trend towards natural gas. Honda’s expanded its pioneering Civic GX to 50 states, Sergio Marchionne wants to replicate his Italian CNG success at Chrysler (eventually), and now GM is jumping on the bandwagon while it’s still relatively uncrowded. The Winnepeg Free Press reports that GM has signed a development deal with Vancouver, B.C.-based Westport Innovations which could see a prototype light-duty natural gas-powered engine completed “within 18 months” if preliminary study proves promising. A Westport spokesman boasts

If both parties agree to move ahead with commercialization this would be one of the first pure OEM [natural gas-powered] products

You know, except the Civic GX which has been prowling American streets since 1998. Still, with Chrysler targeting CNG commercialization no earlier than 2017, GM could have a strong head-start on a fuel technology that promises to be a viable and promising gasoline alternative, especially if the NatGas Bill [PDF] passes, expanding $7,500 plug-in tax credits to natural gas vehicles. And GM’s got a strong partner in Westport, which has heavy-duty commercial deals with Cummins and Caterpillar. With Nissan all-in on EVs and years ahead of the competition in terms of global EV production capacity, look for other competitors to hedge their alt-energy bets… and natural gas is rapidly becoming the most popular alternative.

The ominous Hydrogen Year 2015 is popping up again.  Last year, Byung Ki Ahn, general manager of Hyundai-Kia’s Fuel Cell Group said: “There are already agreements between car makers such as ourselves and legislators in Europe, North America and Japan to build up to the mass production of fuel cell cars by 2015.” Going  through the many files produced in Brussels, you find that in Europe “car manufacturers are getting ready for the commercial production of hydrogen vehicles by 2015.”

Now Daimler will begin series production of hydrogen fuel cell cars in 2014. This is what Daimler CEO Dieter Zetsche told Das Autohaus. Together with Linde, a manufacturer of industry gases, Daimler wants to build a small network of hydrogen fuel stations. By 2014, the n umber of hydrogen stations in Germany will rise to 50. Germany alone would need around 1,000 hydrogen stations for a nationwide supply.  And then, motorists will complain that they won’t find any in Italy if they decide to drive to Italy.

A bevy of industry figures and politicos congregated yesterday in Torrance, CA, to celebrate the grand opening of a new gas station. But it wasn’t just any new gas station …

As a collaborative effort between Toyota, Air Products, Shell, South Coast Air Quality Management District (SCAQMD) and the Department of Energy (DOE), the first hydrogen fueling station in the U.S. that is fed directly from an active industrial hydrogen pipeline was opened.

Don’t drive down yet to fill up your hydrogen car (which you are unlikely to have): The station will provide hydrogen for Toyota fuel cell hybrid demonstration program vehicles as well as other manufacturers’ fuel cell vehicle fleets in the Los Angeles area.

The word “hydrogen” triggers associations of “bomb” in some people. Toyota puts that to rest by placing the hydrogen gas station right next to their U.S. HQ in Torrance. Toyota leases the land “for a nominal fee” to Shell, which owns and operates the station. The gas is supplied by Air Products via a pipeline from its plants in Wilmington and Carson, CA. There is some tax payer’s money involved: “SCAQMD and DOE provided project funding assistance,” says Toyota’s press release.

At the inauguration of the gas station, Chris Hostetter, group vice president of product and strategic planning at Toyota U.S. said: “Toyota plans to bring a fuel cell vehicle to market in 2015, or sooner, and we will not be alone in the marketplace.” Let’s see …

Last year, we had picked up signs of a revival  of  the hydrogen fuel cell technology. There was a lot of renewed excitement in the industry about the technology, especially on the Asian and European side of the globe. Everybody seemed to be gearing up to make 2015 the year of hydrogen. Daimler sent a fleet of hydrogen-powered cars around the world.

They are still at it. Forgotten by the fickle media, the hydrogen-powered Benzes are making their long way back from China to Europe, live-blogged by an intrepid reporter of Auto, Motor und Sport who just posted issue #52. Judging from the comments, only a few bother to read.

A few months ago, the hydrogen euphoria seemed to suddenly run out of fuel – around the world. Even the Obama administration cut $70 million from hydrogen funding. That’s not what killed the mood, carmakers in Europe, Korea or Japan never harbored great hopes to get a lot out of U.S. coffers. From repeated talks with insiders at major automakers, I am given the impression that there is not big breakthrough with the hurdles that stand in the way of wholesale hydrogenification of the universe. As there are the problems of polar bear-friendly hydrogen production, efficient distribution and escape-proof storage, only to name a few.

A spokesman of a usually straightforward German automaker said: “If we have a breakthrough in any of these areas, we’ll call you.”  I’m not sitting by the phone.

At the same time, as hydrogen-disillusion sank in (for the umpteenth time), interest in EVs started to rise, even at the formerly most electricity-insulated companies.

There’s been a recent groundswell of interest in natural gas as a fuel for cars in recent months, marked by Honda’s decision to sell a natural gas-powered 2012 Civic in 50 states, Edmunds CEO Jeremy Anwyl’s public paean to the fuel, and the EPA’s relaxation of natural gas conversion regulations. Honda alt-fuel manager Eric Rosenberg enthuses to WardsAuto

We’re the Saudi Arabia of natural gas… Demand [for the Civic GX] has tripled, and that’s actual retail demand. Traditionally, fleet has been about 50% to 55% of demand, but now it’s dropped; now 80% of demand is retail.

And since Chrysler’s new guardian, Fiat, has plenty of (well-subsidized) natural gas experience in Italy, it’s no surprise that Chrysler’s looking to get in on the action (Chrysler’s own experience with the stuff was brief). In fact, just last year Fiat-Chrysler was pushing the idea of natural gas cars as a stopgap until its first EV (the 500) arrives in 2012. Now, presumably because the desired government help wasn’t forthcoming, Bloomberg reports that Chrysler is only promising gassy goodness “by 2017.” Now there’s an interesting way to jump on a bandwagon.

The NYT reports:

The Environmental Protection Agency has revised its alternative-fuel conversion regulations for light and heavy-duty vehicles, making it easier for manufacturers to sell conversions that are compliant with clean-air laws. The 186-page ruling provides an exemption from a Clean Air Act prohibition against tampering when converting an engine to run on alternative fuel.

In the past, a manufacturer of alternative-fuel conversion systems was required to certify its products in the same manner that a vehicle manufacturer certified its vehicles — an expensive and difficult process. The new regulations provide a way to comply with clean-air standards through streamlined testing.

In essence, the rule change creates a graded compliance structure, depending on the age of the converted vehicle, making it easier to retrofit older vehicles. Read all about it at the EPA’s website.

One of the toughest challenges facing industry analysts right now involves determining what the market for electric vehicles actually looks like, what kind of volumes it will support and for how long. It’s a problem that I’ve hashed over at length with an old college buddy who now works at a cleantech investment firm, and let me be the first to say that it’s not an easy problem to pick apart. The number of unknown quantities and moving parts explains why opinions among money managers can vary so wildly even about relatively marginal firms like Tesla.

Luckily, Thilo Koslowski of Gartner Research [and celebrated coiner of the term "the trough of disappointment"] has dedicated himself more thoroughly to the problem, and has some startling findings to report. For example, despite the relentless pro-EV hype present in all levels of the media, Koslowski’s research shows that more consumers are actually considering buying a natural gas-powered vehicle. Looks like Edmunds’ Jeremy Anwyl was on to something when he called for an end to EV tax credits in favor of greater support for natural gas cars.

But even those raw consideration numbers don’t tell the whole story. Koslowski notes

EVs primarily face a market adoption problem, not an infrastructure challenge, to move from early adopters to mainstream buyers. The ideal EV does not exist yet in today’s automotive market and will likely require another technology generation before it arrives. Consumer sentiment regarding EVs is still positive, but is beginning to show areas of concerns for automotive manufacturers when compared to 2010. EVs must provide better cost-value ratios and convince consumers that no significant behavioral changes are needed before becoming a large-scale, consumer alternative for traditional internal-combustion engine (ICE) and hybrid powertrain technologies.

This is sobering news for even the “end-to-end” EV business model, as championed by Project Better Place. The infrastructure-based approach to EV marketing may help eliminate range and depreciation issues (which addresses the behavioral change issue), but the cost-value ratio that Koslowski highlights is still an issue for concern, thanks to high upfront costs. Not that Koslowski writes off infrastructure completely, saying

Infrastructure and service providers are likely the primary beneficiaries of the current EV evolution. Utility companies, in particular, have the opportunity to play a more dominant role in the emerging e-mobility future, because U.S. consumers prefer to have their utilities address their potential EV infrastructure needs.

But the research shows, the nascent EV market is extremely price sensitive. Though 21 percent of consumers say they are considering an EV (more than are considering a new diesel car), Koslowski’s data shows that

nearly one-third of U.S. drivers interested in EVs are not willing to pay a premium price for an electric car, and only 5 percent are willing to pay $10,000 more.

You hearing this Chrysler? As a result of this study,

Gartner maintains its 2009 prediction that in industrialized automotive markets, the number of battery-powered vehicles (plug-in full-electric and plug-in hybrid EVs) as a percentage of all vehicles sold using various types of propulsion technologies will range from 5 percent to 8 percent of all vehicle sales by 2020, and from 15 percent to 20 percent of all vehicle sales by 2030.

Which leads back to the lesson that we seem to be learning over and over again, namely that, a Koslowski puts it

EVs will become one of the design elements in addressing our future transportation needs. Future mobility concepts will consist of diverse powertrain choices and business models that will leverage technology to satisfy consumers’ transportation needs while challenging traditional car ownership

Also,

Governments will need to increase funding of consumer purchase programs in order to achieve substantial EV sales in the short term. If the goal is to reduce dependency on oil and address environmental issues, then governments must broaden their policies and funding to include other powertrain technologies that offer reduced energy consumption or consider encouraging the use of public transportation and alternative mobility solutions, such as car sharing.

In short, EVs are not a silver bullet. Koslowski seems to imply (though doesn’t explicitly say) that government investments in infrastructure could help in the long term, but he definitely seems to think Vs will need consumer-end subsidies in the short term. And this need for subsidies coming and going makes alternatives like hybrids and natural gas vehicles (not to mention public transportation and car sharing) more attractive.

Gas prices are getting into the area where they affect consumers’ buying decisions. According to a new Kelley Blue Book study, more than 80 percent of car shoppers say that gas prices have influenced their buying decisions. 58 percent already have downgraded.  But what about switching to diesel or hybrid instead? Be careful when you do that, says Edmunds: Choosing a green alternative can cost you a lot of green.

“Now that federal tax credits have expired, car buyers may be surprised to learn how long it takes for savings at the pump to offset the additional expense of buying a hybrid or diesel car,” says Ronald Montoya, consumer advice associate at Edmunds.com.

Some of the worst choices, says Edmund, are the BMW X5 xDrive35d (takes 25.2 years before savings kick in), the Volkswagen Jetta TDI (13.8 years) and the Nissan Altima Hybrid (10.3 years.)

To help you choose the greenest car that saves you the most green, Edmunds compiled the list of Top 10 Diesels and Hybrids With the Shortest Break-Even Periods for 2011.

Surprise, surprise, the list is monopolized by an unlikely candidate: Mercedes-Benz.

5 of the Top Ten are Daimlers. The leader of the list, the 2011 Mercedes-Benz GL-Class Diesel, even is $961 cheaper than the gasoline model. Buy it, and you started saving before you drove off the dealer lot.

#2 is the Lexus  HS 250h Hybrid.

Lincoln lovers get a good deal with the  MKZ Hybrid.

The Prius comes fourth, it takes you a little more than half a year to break even.

Remember: All cars on the list are the best performers. If your green diesel or hybrid is not on the list, then you most likely won’t see any savings before the lease is up.

(I was toying with the idea of pointing out that there are no EVs on that list. But then I dropped it. I’m worried someone would brand me as an EV hater.)

When Renault, Nissan and Daimler signed a three-way deal last April, batteries were not included. Each side thought they had the better one. Nissan has a Leaf, and what does Daimler have? Now they must have something. Daimler doesn’t want to rely entirely on Renault for the electric motors. They are talking with other suppliers, amongst them Bosch and Conti. “It is perceivable to sell the motors to other manufacturers,” said Weber, “in order to create more volume.”

Confused? You are not alone. Reuters got so lost in the fog of war when they wrote about the “battle for a foothold in the lucrative market for zero-emission vehicles” that they headlined their story with “Renault, BMW agree on Smart, Twingo supply deal.”

Alberta is a province in Canada. A lot is agricultural, but what is much more important are the treasures beneath the soil. Alberta sits on more than 1.7 trillion barrels of bitumen, better known as oil sand. That’s about equal to the world’s total proven reserves of conventional petroleum. Canadians are troubled that EVs might ruin these riches.

Oil sand competes with electric vehicles in insidious ways: Electric vehicles are expensive. They only make sense when the oil price goes up. It costs money to extract the oil from the sands. The higher the price of oil, the more sense it makes to harvest the sands. At 2006 prices, 170 billion barrels were considered economically recoverable from the sticky sands. That put Canada’s oil reserves in second place behind Saudi Arabia. However, it represents only 10 percent of what’s there. The people of Alberta should be as interested in higher oil prices as the proponents of EVs, one would think: The higher the price, the more sand can be turned into oil. Instead, the people of Alberta are getting very nervous.

“Electric cars could make driving cheaper and cleaner, but also could put some Albertans out of work,” worries the St. Albert Gazette. “Cars are a major source of greenhouse gas emissions. Electric cars could take care of those emissions, but what would that do to the demand for Alberta oil?”

The Albertans are one step ahead of us. Instead of getting anxious about vanishing oil reserves, they get apprehensive about a sinking demand by a wide adoption of EVs. Which would put Alberta out of business. They still remember the 80s when oil became cheap and most of their mines closed. They became rich again by the middle of the last decade. Now, Canada is the largest foreign source of oil for the United States, supplying nearly a million barrels a day from oil sand, says the Gazette. Checking data by the U.S. Department of Energy, the number makes sense. However, it also makes sense to say that Canada only supplied 22 percent of the imported oil in one of the last months of 2010.

Be it as it may, reading the papers about the success of EVs, Albertans are worried about a bust cycle. People did what people do when they don’t know what to do: They assembled a panel of experts.  The panel will first meet next Tuesday in Edmonton.

Talk organizer and St. Albert resident Perry Kinkaide already sees a new boom ahead for Alberta: It could mean a new auto industry in Alberta, he suggests, as oil companies shift from using oil as fuel to oil as a starting product for lightweight electric car parts. “In the old days you needed to be near steel. In the new days, you may need to be where the oil is.” Comforting thoughts – for Albertans.

Axel Meisen, chair of foresight at Albert Innovates Technology Futures, toots in the same vuvuzela: “Alberta should think of other uses for petroleum than for fuel, such as carbon fiber. This light, strong material will be popular in electric cars, and could see use in bridges and other buildings.”

Al Cormier, the talk’s facilitator and executive director of Electric Mobility Canada, a national industry group that promotes electric vehicles, also sees no reason for alarm. EVs surely are the wave of the future and will lower the demand for oil, but “assembling an electric vehicle probably takes just as long as assembling a regular vehicle,” Cormier says, and he does not expect any job losses there. If the cars are assembled in Alberta.

The proceedings of the panel’s meetings will be available at www.abctech.ca.

Now here comes an heretic thought: If EVs  indeed become wildly successful and kill the demand for oil so much that Alberta will have to close oil sand mines and take to assembling electric motors and plastic parts, does that mean that us Luddites can drive down to the gas station and say “Fill ‘er up” for, say, $1.80 a gallon?

Even the most ardent EV proponents, like Nissan, think that by 2020, the market share of electric cars will be 10 percent.

Tesla CEO Elon Musk has some better predictions, brought to us by Reve:

• By 2030 the only cars sold in America will be electric cars.
• By 2020, it will be dirt cheap to have long range vehicle lithium ion batteries packs.
• By mid-century the vast majority of cars on the roads will be electric .

(Well duh, if only electric cars will be sold by 2030…)

Recently the ethanol industry has “suffered” from a problem that epitomizes the problematic nature of government subsidies. Known as the “blend wall” this obstacle was created not by negligence on the part of the industry, but by the fact that its lobbying efforts have been far more effective than its marketing efforts. The problem, in a nutshell, is that the 2007 Renewable Fuel Standard mandates a steady increase in the amount of ethanol blended into the national fuel supply, from 9 billion gallons per year (BGY) in 2008 to 36 BGY in 2022… but with gasoline consumption falling and with standard pump gasoline capped at a maximum of ten percent ethanol (recently raised to 15% for vehicles built after 2007), the industry that’s supposed to get America off gas needs more gas to blend its ethanol into. As a study in the American Journal of Agricultural Economics puts it

Total national consumption of gasoline in the United States has been about 140 billion gallons in 2010 and is expected to fall over time due to increasing fuel economy standards. Thus, at present, if every drop of gasoline were blended as E10, the maximum ethanol that could be absorbed would be 14 billion gallons. In reality, 10% cannot be blended in all regions and seasons. Most experts consider an average blend of 9% to be the effective maximum, which amounts to about 12.6 billion gallons. U.S. ethanol production capacity already exceeds this level. Thus, our ability to consume ethanol has reached a limit called the blend wall.

The solution: well, the EPA’s ruling allowing 15% ethanol blends was supposed to fix the problem, but according to this report, that “fix” would only buy some four years before the industry is back to bumping against the blend wall. The solution?

With ethanol as the primary biofuel and either blend limit (E10 or E15), a substantial increase in E85 would be required to fulfill the mandate.

Do you remember E85? A few years ago, automakers like GM were deep into the “Flex Fuel” craze, touting the 85% ethanol blend as America’s opportunity to free itself from foreign oil dependence. But after the so-called “tortilla riots” in which Mexicans protested the rising cost of corn driven up by ethanol (not to mention a growing awareness of ethanol’s environmental costs) GM has become a far less vocal proponent of ethanol, as the Alliance of Automotive Manufacturers has even gone as far as to sue the EPA to stop E15 ethanol blends. And no wonder the enthusiasm for E85 in particular has taken a hit recently: not only does it use the most ethanol, thereby incurring the greatest impacts on food prices and the environment, but the EPA has even stated that

E85 needs to be priced competitively with (if not lower than) conventional gasoline based on its reduced energy content, increased time spent at the pump, and limited availability

And despite the huge government subsidies enjoyed by the ethanol industry, E85 simply isn’t priced anywhere near competitively. But the problem isn’t limited to the issues listed above either: E85 has to be so appealing to consumers that they choose to purchase a “Flex-Fuel” or E85-capable vehicle from the limited models that offer such capability.

Given the blend limits on E10 (or the blend wall), additional ethanol consumption can come from only E85. However, this leads to a new dynamic that further exacerbates the challenge. Unlike E10, which is a derived demand from gasoline, E85 acts as a substitute for E10 in equation. Thus, the effect of increasing E85 is to crowd out some of the ethanol used to blend E10, further lowering the E10 blend wall.

And the blend wall isn’t the only challenge: because E85 must be used to soak up the government’s ethanol mandates, there would also be a pump and Flex-Fuel vehicle (FFV) bottleneck as well. The study concludes that, even with E15 coming from from normal gas pumps

Ethanol in E15 consumption would grow from 13.1 BGY in 2010 to a peak of 19.7 BGY in 2016, before falling to 17.5 BGY in 2022, as the continued growth in E85 once again crowds out the use of the lower-blend fuel. By 2022, there needs to be around 90.4 million FFVs on the roads, served at 236,208 E85 dispensers. The total cost of installation for E85 dispensers and FFVs is $23.4 billion, or an NPV of $8.0 billion for this scenario. Thus, compared with the E10 scenario, the adoption of an E15 blending limit would reduce the consumption of E85 by 6 BGY in 2022 and lessen the demand for FFVs and E85 dispensers. This would save an NPV of $3.1 billion, or 28% of the Scenario 1 E10 NPV.

And who, pray tell, would bear the $8b cost of forcing Americans to buy a fuel they don’t want? Oh, and by the way, the study notes that

the cost estimates provided here are clearly underestimates of total cost

And if E15 is proven to be harmful to non-FFVs, we’re back to “scenario 1″ in which the “underestimated” cost rises above $11b. And all this is necessary only to make sense of a subsidized mandate that will cost taxpayers at least $6b per year next year alone. The ethanol industry has clearly gone down the government subsidy rabbit hole, and it’s time for the madness to stop.

EVs are the darling of the media. In Europe, the Leaf is the COTY. In the U.S. and Canada, the range extended Volt is the COTY. Then why are most big European manufacturers (except Renault) and most Japanese manufacturers (except Nissan) dragging their heels when it comes to wholesale electrification of their fleets? Maybe because they are working on wholesale adoption of hydrogen. As previously reported, there are agreements between automakers and governments in Europe, North America, Korea and Japan to prepare for the mass introduction of fuel cell cars by 2015. Japan is ahead of the game.

Thirteen Japanese companies (no bad omen in Asia, nine would be bad, four would be really bad) got together to move ahead with hydrogen: Toyota, ,Nissan, Honda on the manufacturer side teamed up with supplier-side companies JX Nippon Oil & Energy, Idemitsu Kosan, Iwatani, Osaka Gas, Cosmo Oil, Saibu Gas, Showa Shell, Taiyo Nippon Sanso, Tokyo Gas, and Toho Gas. Note the presence of gas and gasoline companies. Note the presence of Nissan.

Today, these 13 companies jointly announced:

1. As development of fuel-cell systems progresses, Japanese automakers are continuing to drastically reduce the cost of manufacturing such systems and are aiming to launch FCVs in the Japanese market—mainly in the country’s four major metropolitan areas—in 2015. The automobile industry hopes to popularize the use of FCVs after their initial introduction as a way of tackling energy and environmental issues.
2. Hydrogen fuel suppliers are aiming to construct approximately 100 hydrogen fueling stations by 2015, based on the number of FCVs expected to initially enter the market, to ensure a smooth launch and to create initial market.
3. With an aim to significantly reduce the amount of CO2 emitted by the transportation sector, automakers and hydrogen fuel suppliers will work together to expand the introduction of FCVs and develop the hydrogen supply network throughout Japan. The two groups are looking to the government to join them in forming various strategies to support their joint efforts and to gain greater consumer acceptance.

We are picking up more and more signs of an impending revival  of  assumed dead fuel cell technology.

Here is another one:  The Nikkei [sub] says that the Japanese government is supporting an initiative to draw a hydrogen from a surprising source: Oil refining. And they need to be ready by 2015.

One of the many uses of hydrogen is in oil refining. In this case, to remove sulfur from oil. The hydrogen used in this process doesn’t have to be high quality, 90 percent pure suffices.

Fuel cells expect 99.9 percent pure hydrogen. The sponsored project aims to produce high purity hydrogen, based on the “industrial” hydrogen technology, “with an eye toward creating a new source of income,” as The Nikkei says.

The Japanese government will bear half the cots of a cheap project. It is estimated to cost 500 million yen ($ 6.15 million) over a three-year period.  It wants to be ready in time before 2015. Why 2015?

Japan’s Ministry of Economy, Trade and Industry expects a “wide adoption of fuel cell vehicles by fiscal 2015” and “seeks to secure a steady supply of high-purity hydrogen.” Again: Why 2015?

It just so happens that Toyota is dead set on selling its first mass produced fuel cell car by 2015. In Korea, Byung Ki Ahn, general manager of Hyundai-Kia’s Fuel Cell Group, said recently: “There are already agreements between car makers such as ourselves and legislators in Europe, North America and Japan to build up to the mass production of fuel cell cars by 2015.” Indeed, if you go through the many files produced in Brussels, you find that also in Europe “car manufacturers are getting ready for the commercial production of hydrogen vehicles by 2015.” In those many files was the EU master plan, as shown above.

What is this, a hydrogen conspiracy?

EVs are, nice wouldn’t there be (putting range and price aside for a moment) one niggling problem: The power has to come from somewhere. And currently, the exhaust that will no longer be produced by the car, will come out of the smokestacks of a mostly coal fired power plant. Wouldn’t it be nice if we could power our cars from sunshine alone? Definitely renewable. And free. Honda is trying to do just that.

Sorry, forget about solar panels on roof and hood of the car. The power produced that way literally won’t get you far. But what about much larger solar panels on the roofs of your house or large parking garages? Now we are getting in the realm of the possible.

Honda said today that they will conduct a joint trial with Japan’s Saitama Prefecture to “examine the potential of low-carbon transportation systems driven by solar power,” as The Nikkei [sub] reports.

The study focuses mainly on train stations, where cars are parked during the day until the salaryman returns from the city. Large solar panels on the roofs of these stations could provide sufficient power to recharge the battery for the short ride home. Which also has the benefit of a clearly defined range.

“Joint use,” i.e. sharing of EVs, will also be studied.

To protect society from being unduly menaced,  the U.S. House of Representatives passed S. 841, the Pedestrian Safety Enhancement Act, which would require the U.S. Department of Transportation to set standards for alert sounds in electric or hybrid vehicles. The U.S. Senate last week unanimously passed the bill, cnet reports. The bill now goes to the White House for approval from President Obama. Who won’t refuse to sign such a honking bill.

“According to a Nissan-affiliated dealership, one-third of people who preordered a Leaf had canceled their reservations by October, saying their garages were not equipped with a plug.”

Call me a cro-magnon cave dweller, but whenever I read these “car of the future” stories, I am reminded of a discussion I had with a Volkswagen engineer, some time in the late 70s. I was a wide-eyed copywriter and believed anything.

“I am working on the car for the year 2000,” the engineer announced.

“Wow! What will it be?” the wide-eyed copywriter asked in awe.

“For one thing, it will have four tires. A steering wheel. And guess what: A combustion engine.” It had expected wings. History did prove the engineer right.

That episode whizzes through my mind again as I read a story in this morning’s Nikkei [sub]. It reports that hybrids, which supposedly are everywhere, account for less than 2 per cent of the world passenger-vehicle market. J.D. Power predicts that this year, worldwide hybrid sales will again miss the 1 million mark. Total 2010 world hybrid volume is estimated at 934,000. It’s up from 728,000 in 2009, but largely on overall industry growth. Lest we forget, 2009 was the car industry’s worst year in decades.

More than two thirds of the world’s hybrids come from Toyota. When asked about the not quite a million worldwide, Toyota spokesman Paul Nolasco quips: “At least it’s a million more than 13 years ago.” Toyota launched the world’s first mass produced hybrid, the Prius, in December 1997. So far, it has sold 2 million in total and is the world’s best selling hybrid. It is also Japan’s top selling car.

Given the above, it is interesting that this article, originally penned by the Financial Times, is distributed widely by The Nikkei. About half of this year’s hybrid growth comes from Japan, where hybrid sales were powered by tax incentives. No more of those since September.

The U.S. comes second to Japan in hybrid-affinity. Here, J.D. Power forecasts total sales to reach 315,000 this year, up 8 per cent from 292,000 in 2009. The overall car market will grow 12 percent, hybrids are losing market share. 315,000 hybrids into 11.5 million cars expected to sell in the U.S. in 2010 makes for a total hybrid market share of 2.7 percent.

Europe may even be considered as hybrid hostile. JD Power predicts that EU hybrid sales will reach 107,000 units this year, a mere 0.7 percent of the European market. Now you understand why EU carmakers, when it comes to alternative propulsion, are a lot of talk and precious little market action.

In the emerging markets of China, India et al, hybrids are pretty much unsalable. BYD sold 230 F3DM hybrids this year in China. Toyota’s Prius never got above 4,000 units in the world’s largest car market.

“There have been so many small, efficient gas-engine cars launched in the last year, that in pure dollars and cents terms it doesn’t make sense to buy a hybrid any more,” said Jesse Toprak of Truecar.com. “You have to drive it for 10 years just to make up the premium you pay over a gas engine.”

Says The Nikkei: “The modest sales projections highlight the extent to which many consumers are reluctant to pay more for new-technology cars, even if they promise lower emissions or fuel costs.”

Something to keep in mind when making wide-eyed predictions for the success of EVs. Hybrids have no built-in range anxiety, they don’t have the chicken or egg problem of a charging infrastructure. Just like EVs, hybrids cost a little more, and this remains an impediment to market success. EVs cost a whole lot more and come with a huge can of worms.

There is another thing this cro-magnon writer has learned the hard way in the industry: Customers lie through their teeth when it comes to the environment. In studies, they want to protect the planet at all costs. In the showroom, they make their own little cost-benefit analysis. If there is too much cost and not enough benefit, they won’t bite. If environmental responsibility comes knocking, customers quietly tell the environmental responsibility: “What can me alone do for the environment? Go away.” In the emerging markets, and that’s where the growth is, they want mobility with a roof over their heads at a price they can afford.

Oh, and trucks are back.

Equal time: While Prez. Obama test-sat the Volt’s European sibling, the Ampera, in Lisbon, Nissan had its own celebrity test driver for the Leaf EV. “John Roos, U.S. ambassador to Japan, test-drove Nissan’s “Leaf” electric vehicle in Yokohama one afternoon in mid-November, just before the APEC summit got under way,” reports The Nikkei [sub]. Then the Ambassador deeply inserted his foot in his mouth. He said he was particularly intrigued by the way the Leaf was able to charge its battery with solar power, a feat he saw at a “smart-city” exhibition sponsored by the Yokohama city government. Roos then asked officials running the demonstration whether the technology could help reduce oil dependence in Hawaii. Oops, wrong question.

If there is one place where an EV makes the least amount of sense in terms of reducing the use of crude, then it’s Hawaii.  According to Newsweek, the island state draws “about 90 percent of its energy from imported crude.”  Sure, they want to wean themselves from the oil habit, but there is only so much you can do with sunshine and scenic waterfalls. And range anxiety? I wouldn’t want to brave the road to Hana in a Leaf,