What's Wrong With This Picture: Fixing Transportation Edition
President Obama devoted his weekly address to energy and transportation policy this week, speaking to the nation from an Allison hybrid bus transmission plant in Indiana. A White House blog post accompanying video of the President’s speech included a large infographic on “The Obama Energy Agenda And Gas Prices,” the transportation-oriented section I’ve excerpted above. This one section is actually a fairly good representation of Obama’s auto-related energy policy preferences, and illustrates why I often find myself criticizing the president here at TTAC.
One half of the graphic is devoted to electric vehicles, which it shows becoming rapidly cheaper without offering any sourcing for the numbers (Churlish cynicism, you say? Sadly, a little cynicism is called for when it comes to the White House and EVs). The numbers actually come from this DOE report [ PDF], published last summer, which cites the DOE’s Vehicle Technology Program and assumes 100 mile range and 3 miles per kWh is a “typical battery.” Because the industry uses $/kWh, we’ll call this “typical” battery a 33 kWh unit… and find that the government assumes a 2021 price per kWh of about $150. The 2015 price breaks out to around$300/kWh. For some perspective, a Boston Consulting Group study released early last year found that
Given current technology options, we see substantial challenges to achieving by 2020.
Without a major breakthrough in battery technologies, fully electric vehicles that are as convenient as ICE-based cars—meaning that they can travel 500 kilometers (312 miles) on a single charge and can recharge in a matter of minutes—are unlikely to be available for the mass market by 2020.
Is Obama banking on Germany’s “miracle battery” or is there some other major battery breakthrough that has changed the game in the last year? Sure, Nissan claims to have beat down its Leaf battery costs to $375/kWh, but that was probably only possible due to its risky global tool-up to around 300k units worth of annual battery production scale, from Oppama to Sunderland to Smyrna. Will anyone else bet that big on EV batteries between anytime soon? At this point nobody seems anxious to bet bigger on EVs than Nissan has, making $150/kWh by 2020 seem highly unlikely.
But critics of Obama’s overemphasis on EVs can’t go much farther beyond dismissing his “1 million EVs by 2015” goal as naive or unlikely to succeed… and ultimately such criticism will only inspire more EV subsidies. It’s the other half of Obama’s transportation “Energy Agenda” that’s the most fertile territory for serious attack. And no, not the “cleaner buses” point… it’s Obama’s reliance on biofuels as the second major plank of his energy strategy that rankles.
Huge swaths of the American business community have joined up with environmental groups to protest the continuing subsidization of ethanol, most recently when the EPA announced the E15 approval Obama trumpets in his infographic. That extra money for 10,000 E15-capable pumps? That’s because no gas station owner will pay to install a pump for a kind of fuel that only cars built since 2001 can use… and which the auto industry has tried to ban. And why E15 in the first place? Because blenders can’t sell enough E10 to blend the government-mandated amount of ethanol and collect their $6b this year in “blender’s credits” to do so. A subsidy to support a subsidy which in turn props up yet another subsidy (I may have missed a subsidy in there somewhere). You can’t make this stuff up.
Finally, we have the “commercialization of cellulosic ethanol,” a red herring that’s been touted by ethanol backers for at least three years now. The latest on that front? A case study posted at energybulletin.net notes
Based upon information provided by the corporation proposing the biorefinery, Frontier Renewable Resources LLC, owned by Mascoma Corporation and J.M. Longyear, I would not consider cellulosic ethanol to be efficient from an energy perspective.
The facility would have 6 boilers rated at 90 million BTU/hour that will operate 24/7 for 347 days per year according to information provided in the U.S. Department of Energy’s (DOE) Environmental Assessment. Converting the BTUs to megajoules, the boilers would generate 4.7 billion megajoules per year of energy that will be used to make ethanol.
The plant is projected to produce 40 million gallons of ethanol/year according to the DOE’s Environmental Assessment and Frontier’s air pollution permit application, which has an energy content of 3.3 billion megajoules of energy. The boiler energy consumed in making ethanol would be 1.43 times more than the energy content of the ethanol that they plan to produce. According to the DOE’s Environmental Assessment, timber harvesting, wood processing and wood transportation would require approximately 3.75 million gallons of diesel fuel per year. When diesel fuel energy use is included in the energy required for the production of the ethanol, the ratio of energy consumed/energy produced increases to 1.59.
Sound good? It had better, because the goal is to build four more or cellulosic”or “advanced” (read: made from anything other than corn) ethanol plants in order to meet the ( recently reduced) cellulosic ethanol blending mandates. Or, not. Remember, by law we have to use 36b gallons of this stuff by 2022, whether it makes any sense or not.
Ultimately, Obama’s transportation “Energy Agenda” is severely lacking in substance in terms of both long-term strategy and short-term policy. Half of the agenda seems to be waiting for EVs to cheapen up, while the other half seems to be not escaping the endless trap of ethanol subsidies (at a time when it such an escape seems most likely). Without trotting out the familiar campaign slogans (as I’m hoping to start a conversation on policy rather than politics), this is hardly the bold, new direction that Obama’s fans and detractors alike seem to expect from him (oh shoot, there’s a political lesson there… please ignore it). Between natural gas, battery swap infrastructure and (gasp) a gas tax, there are plenty of options in Obama’s toolbox for charting a more daring, effective course for US energy and transportation policy… we’re just waiting to hear something, anything new.
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Here we go again with the indelible 'magic market'. The market is great for some things and is an integral part of technological innovation and production (and social life in general). But the market is not the sole, or even the primary cause of all major technological innovations throughout history. This is a myth. While the market has certainly played a significant role in some research innovations, many of the major scientific and technological innovations throughout history did not take place in the free market, but were the direct result of government directed, institutionally driven, goal-oriented funding and support. The clearest examples of this are found in the military, which is a vivid example of government funded, goal-oriented research that has resulted in many major technological innovations throughout all of history. You don't need to look any further than the Second World War, where government directed, non-market research gave rise to many of the most important innovations of the twentieth century, including such things as the computer, the jet engine, and numerous other major new technologies. In fact, government backed research during the Second World War was so successful that it became the model for developing government funded research programs within the universities (a program that has been gradually replaced and displaced by private sector funding of those institutions). As for the case regarding ethanol, I must admit to being skeptical as well, but who knows? So please, while the market is important and vital, it is not the magical source of all major innovations, and it could well be argued that it has played a much lesser role in scientific advance and technological innovation historically compared to government supported and directed research.
I have no qualms about telling people how to live. In my line of work I have seen scores of new housing developments in many of our states and the vast majority should be returned to the soil. The developments are built for the convenience of the builder and for their profit maximization; the owners get stuck with houses that are car-locked. Yet the houses are on small lots that are typical of walkable neighborhoods. So the buyers in these communities get neither land which might be the benefit of being car-marooned; and they don't get the benefit of convenient services which might be the benefit of small lots. They get the worst of all worlds. With just a slight bit of forethought, these communities could be assets to the country instead of the driving force behind our once per decade oil wars. They might even be connectable to the community via mass transit. Instead, we double, triple, and quadruple down on the most fossil fuel intensive form of housing ever invented, while the residents of those homes get no more land than if they lived in a better planned more walkable community. I'm not suggesting people give up their 2 acre ranchettes; I'm saying the majority of new development lots are the same size as the lots in highly walkable areas that can be served by public transit. My family lives in a walkable area. One of our two family cars could be an electric car with a 10 mile range. We could charge this car for that range with a PV system that costs less than $5000 today and will cost $2500 in 5 years. If our development patterns were just a little smarter, most families get by with one ICE and one electric car. And yes, the "freedom lovers" will complain about "getting by", but perhaps those freedom lovers can be first to sign up for the army in our next oil war too.