Energy & Technology

Wind Power

Quick Facts

  • Wind currently provides about 2.3 percent of America’s electricity.[1]
  • Wind power was 26 percent of all U.S. electricity generation capacity added in 2010.[2]
  • The U.S. Department of Energy found that generating 20 percent of U.S. electricity from wind by 2030 would avoid 825 million metric tons of carbon dioxide (CO2) in 2030, a 25 percent reduction relative to a no-new-wind scenario.[3]
  • The levelized cost of electricity generation[4] (including tax incentives) from a new wind farm can range from around 6-11 cents per kilowatt-hour (kWh).[5] Actual costs for wind power projects will vary depending on project specifics, and the cost of wind power is sensitive to tax incentives.


Wind power harnesses the energy generated by the movement of air in the earth’s atmosphere to drive electricity-generating turbines. Although humans have used wind power for hundreds of years, modern turbines reflect significant technological advances over early windmills and even over turbines from just ten or twenty years ago.

Wind resource potential varies significantly across the United States with substantial resources found in the Midwest and along the coasts (see Figure 1).

Winds generally blow more consistently and at higher speeds at greater heights. As wind speed increases, the amount of available energy increases following a cubic function,[6] so a 10 percent increase in speed corresponds to a 33 percent increase in the amount of available energy.[7] Modern turbines continue to grow larger and more efficient--two important factors that allow a single turbine to produce more usable energy.  Improved materials and design have allowed for larger rotor blades and overall improvements in efficiency (measured as total energy production per unit of swept rotor area,[8] given in kilowatt-hours per square meter) and greater gross generation.

Figure 1: Wind resource potential at 50 meters (164 feet) above ground

Source: NREL[9]


Wind technologies come in a variety of sizes (larger turbines can generally produce more electricity), and styles. Since wind is a variable and uncertain resource, wind turbines tend to have lower capacity factors than conventional power plants that provide most of the nation’s energy. A power plant’s “capacity factor” provides a measure of its productivity by comparing its actual power production over a given period of time with the amount of power the plant would have produced had it run at full capacity over that period. Conventional coal- and gas-fired power plants generally have capacity factors between 40% to 60%.[10],[11] Wind turbines generally have capacity factors that are closer to 25 to 40 percent.[12]  Wind turbine capacity factors have improved over time with advances in technology and better siting, but capacity factors are fundamentally limited by how much the wind blows.

Technologies to harness wind power can be classified into a number of broad categories:

  • Offshore wind

Offshore wind technology has yet to reach full commercial scale and remains a relatively expensive technology. Even so, projects do exist and more are planned. Offshore wind installations could take advantage of higher sustained wind speeds at sea to increase electricity output by 50 percent compared to onshore wind farms.[13]

  • Onshore, utility-scale turbines

A modern utility-scale wind turbine generally has three blades, sweeps a diameter of about 80-100 meters, and is installed as part of a larger wind farm of between 30 and 150 turbines.[14] An individual wind turbine can have a generation capacity of up to 3.0 megawatts (MW).[15]

  • Onshore, Small Wind

The National Renewable Energy Laboratory defines “small wind” as projects that are less than or equal to 100 kilowatts, which are much smaller than utility-scale turbines.[16]  These systems provide power directly to private residential properties and farms, businesses, industrial facilities, and schools. Small turbines can be utility grid connected or coupled with diesel generators, batteries, and other distributed energy sources for remote use where there is no access to the grid.[17]

As of 2011, are 27 domestic small wind manufacturers operating in the United States.[18] In the past 5 years, there has been a trend towards installing grid-connected small wind turbines with greater capacity.[19] For example, sales of turbines smaller than 1 kW capacity were stable or declined from 2006 – 2011, while sales of 1 – 10 kW and 11 – 100 kW grew four and five-fold, respectively.  While capacity additions were steadily increasing each year from 2005 to 2010, there was a 26 percent decline in 2011 from the previous year, returning to 2009 levels of capacity sales.[20]  The brief decline has been attributed to a downturn in the general U.S. economy as well as inconsistent state policies, with several states suspending programs in 2011.[21] In 2011, domestic sales of small wind reached 33 MW – a 13 percent increase over 2010.[22]

Small wind’s growth trend is likely the result of an assortment of state policies, with 2011 reporting over $38 million in tax credits, rebates, grants, and low-interest loans – a 27 percent increase from 2010.[23] 35 states offered some form of rebates, tax credits, or grants for renewable energy sources that could be applied to small wind, including the New York State Energy Research and Development Authority (NYSERDA).[24] While only three states have a specific incentive policy for small wind,[25] including Oregon’s Small Wind Incentive Program[26], more than 25 states offered cash incentives and grants that covered small wind investments.[27] 16 states offered state-wide net-metering, which encourages investment by providing compensation when offsite electricity production exceeds private usage and enters the grid. Finally, 38 states and the District of Columbia have some form of policy that requires a certain percentage of electricity to be from renewable sources, called a Renewable Portfolio Standard (RPS).[28] Many states, including Pennsylvania, allow for distributed energy contributions to RPS fulfillment.[29]

Additional federal government programs contribute to the growth of small wind capacity. In the Wind for Schools program, the Department of Energy funded 33 small wind turbines on educational buildings in 2011.[30] Moreover, a 30 percent Investment Tax Credit for small wind turbines (in effect until December 31, 2016) remained important in 2011, while the U.S. Department of Agriculture provided support to over 200 small wind installations in 30 states, totaling 5.8 megawatts (MW) through the Rural Energy for America Program (REAP).[31]

Table 1. Annual Sales of Small Wind Turbines (? 100 kW) in the United States


Number of Turbines

Capacity Additions

Sales Revenue



3.3 MW

$11 million



8.6 MW

$36 million



9.7 MW

$43 million



17.4 MW

$74 million



20.4 MW

$91 million



25.6 MW

$139 million



19.0 MW

$115 million

Source: EERE,

Environmental Benefit / Emission Reduction Potential

Wind power generates almost no net greenhouse gas emissions. Although electricity generation from wind energy produces no greenhouse gas emissions, the manufacture and transport of turbines produces a small amount. Compared to conventional fossil fuel sources, wind energy also avoids a variety of environmental impacts, such as those pertaining to mining, drilling, and air and water pollutants.[32]

  • Emissions reduction potential in the United States

The U.S. Department of Energy found that generating 20 percent of U.S. electricity from wind by 2030 would avoid 825 million metric tons of carbon dioxide (CO2) annually in 2030, a 25 percent reduction relative to a no-new-wind scenario.[33] This also represents a cumulative CO2 emissions reduction of more than 7,600 million metric tons by 2030.

  • Emissions reduction potential globally

The International Energy Agency’s aggressive technology scenario for reducing GHG emissions included a significant role for wind power—i.e., 1.5 to 4.8 gigatons of annual GHG abatement compared to “business-as-usual,” or 4 percent of total abatement from energy use, and about 12 percent of global electricity production in 2050.[34]


The cost of wind power has fallen significantly over the past few decades.[35] In 1981, the cost of generating electricity from a 50-kW capacity wind turbine was around 40 cents per kWh. Technological and efficiency improvements (such as longer and stronger turbine blades from new advanced materials and designs) allow today’s turbines to produce 30 times as much power at a much lower cost.[36] Technological improvements have the potential to further drive down costs over time.

Wind is cost-competitive with traditional power generation technologies in some U.S. regions.  Recent analyses estimate the levelized cost of electricity[37] generation from a new wind power project to be 6-11 cents per kWh.[38] These costs, however, depend on project specifics (such as the wind turbines’ capacity factor) and are sensitive to the inclusion of tax incentives for wind power. For example, the Federal Production Tax Credit for wind power lowers the levelized cost of electricity generation from wind by roughly 2 cents per kWh.[39] Recent estimates for the levelized cost of electricity generation from new coal-fueled generation run from 6.4 cents per kWh to 9.5 cents per kWh.[40],[41] Similar estimates for the levelized cost of electricity from a natural gas combined cycle plant are in the range of 6.9 to 9.6 cents per kWh.[42]

At present, offshore wind turbines are approximately 50 percent more expensive than onshore installations, yet they produce about 50 percent more electricity due to higher wind speeds.[43]

Current Status of Wind

Wind capacity is growing fast and accounts for the largest share of added renewable energy capacity over the last several years.[44] Cumulative global wind capacity has grown at approximately 26 percent per year since 2003.[45]

  • Wind in the United States

Wind currently provides about 2.3 percent of America’s electricity, but this relative share is growing quickly. Twenty-six percent of all electricity generation capacity added in the United States in 2010 was wind power,[46] while it accounted for 39 percent in 2009.[47] The amount of electricity generated from wind in the United States increased by 61 percent between 2007 and 2008[48] and by 28 percent between 2008 and 2009.[49]  In 2010, United States dropped to second globally in terms of installed wind power capacity (40.2 gigawatts (GW)) after China more than tripled its installed capacity since 2008 (12 GW to 44.7 GW by the end of 2010).[50]

In February 2011, the Departments of Energy and the Interior released A National Offshore Wind Strategy: Creating an Offshore Wind Industry in the United States, calling for the deployment of 54 GW of offshore wind capacity by 2030, with 10 GW of offshore wind capacity by 2020 as an interim target.[51]  Offshore wind projects in Massachusetts and New Jersey could begin construction in 2011, and several other coastal states are in the process of approving possible projects.

  • Wind at a global scale

Since 1996, global installed wind power capacity has grown by a factor of 32,[52] reaching 197.0 GW in 2010,[53] which could meet approximately 2.5 percent of global electricity demand in 2010.[54] The United States accounts for about 20.4 percent of installed global wind power capacity.[55]

Even assuming no new policy interventions – such as renewable portfolio standards or carbon emissions constraints – wind will continue to grow quickly, with installed capacity expected to quintuple in size by 2035.[56] Though some projections estimate it could account for as little as 5 percent of global electricity production in 2035, this share could be as high as 13 percent if policies are put in place to aggressively reduce greenhouse gas emissions and spur technological developments in renewable energy.[57]

A number of offshore wind farms are currently in operation or development globally. The United Kingdom has the world’s largest offshore capacity (1,341 MW), followed by Denmark (854 MW). Additional offshore wind projects in Europe and China began electricity generation in 2010.[58]  The London Array, the world’s largest offshore development, is expected to have a capacity of 1,000 MW.[59]

Obstacles to Further Development or Deployment of Wind

A number of factors pose barriers to the further development of wind resources.

  • Variability and uncertainty

Wind power is inherently variable and uncertain due to weather factors, since winds vary in strength and sometimes do not blow at all. Wind power is uncertain insofar as wind speeds can be forecast with only limited accuracy. These issues can be overcome to some extent by developing better wind forecasting methods and addressing electricity grid interconnection issues between regions. The U.S. DOE estimates that the U.S. could generate 20 percent of its electricity from wind without any new energy storage.[60] To achieve even higher levels of generation, wind power will require enabling technologies such as energy storage and demand-response. Storage options for wind energy include pumped hydroelectric storage, compressed air energy storage, hydrogen, and batteries.[61]

  • Geographic distribution and transmission

Wind resources are unevenly distributed and many of the best wind resources are located far from the population centers that require electricity. New transmission infrastructure is necessary to bring electricity generated by wind resources in remote areas to end users.

  • Siting issues

Related to issues over geographic distribution of wind resources, siting of wind power projects can face opposition from local communities who see wind farms as a form of visual pollution that spoils views and property or have concerns about the potential impacts of the wind farm on wildlife (especially birds and bats) and habitat.

  • Investment uncertainty

Recent wind power growth rates in the United States have been volatile – largely driven by the cycle of lapses and reinstatements of tax policy support, namely the Federal Production Tax Credit. Such uncertainty hurts investment in wind power projects.

Policy Options to Help Promote Wind

  • Price on carbon

A price on carbon would raise the cost of electricity produced from fossil fuels, making wind power more cost-competitive.[62]

  • Tax credits and other subsidies

Stabilizing Federal Production Tax Credit cycles can help sustain investment and growth in wind power (for example, by putting into place incentive programs with longer periods before required Congressional renewal). Other forms of assistance include grant programs and loan guarantees to wind power project developers.

  • Renewable portfolio standards

A renewable portfolio standard (RPS), sometimes called a renewable or alternative energy standard, requires that a certain amount or percentage of a utility’s power plant capacity or generation come from renewable sources by a given date. At present, 29 U.S. states and the District of Columbia have adopted an RPS, while 8 U.S. states have renewable portfolio goals.[63] RPSs encourage investment in new renewable generation and can guarantee a market for this generation. States and jurisdictions can further encourage investment in specific resources, such as wind power, by including a “carve-out” or set-aside in an RPS, as is the case in Illinois, Minnesota, and New Mexico.

  • Development of new transmission infrastructure

One of the greatest barriers to investment in new renewable generation and tapping the full potential of resources such as solar and wind is the lack of necessary electricity transmission infrastructure. While estimated wind and solar resources are vast, frequently the areas with the most abundant concentrations of these resources are remote and far removed from end-users of electricity. Policies that promote the build-out of new electricity transmission lines allow access to these resources and can provide additional incentives for utilities to invest in them.

Related Business Environmental Leadership Council (BELC) Company Activities

Related C2ES Resources

Climate Change 101: State Action, 2011

Wind and Solar Electricity: Challenges and Opportunities, 2009

Further Reading / Additional Resources


American Wind Energy Association (AWEA)

Congressional Research Service

InterAcademy Council, Lighting the Way: Toward a Sustainable Energy Future, 2007

International Energy Agency (IEA), Energy Technology Perspectives 2010: Scenarios and Strategies to 2050, 2010 

 “Levelized Cost of Energy Analysis Version 3.0” Lazard, June 2009

U.S. Department of Energy (DOE)



[1] American Wind Energy Association. 2010 U.S. Wind Industry Market Update. Accessed 19 July 2011

[2] AWEA 2011.

[3] U. S. Department of Energy (DOE). 20% Wind Energy by 2030: Increasing Wind Energy’s Contribution to U.S. Electricity Supply. 2008.

[4] The levelized cost of electricity is an economic assessment of the cost of electricity generation from a representative generating unit of a particular technology type (e.g. wind, coal) including all the costs over its lifetime: initial investment, operations and maintenance, cost of fuel, and cost of capital. The levelized cost does not include costs associated with transmission and distribution of electricity. For all resources, levelized cost estimates vary considerably based on uncertainty and variability involved in calculating costs for electricity.  This includes assumptions made about the size and application of the system, what taxes and subsidies are included, location of the system, and others.

[5]  Lazard. “Levelized Cost of Energy Analysis – Version 3.0” presentation by Lazard, June 2009. Accessed 19 July 2011.

[6] The power (P) available in the area swept by the wind turbine rotor can be calculated using the following equation: P (in Watts = J/s = (kg*m2)/s3))= 0.5 * (air density, ~1.225 kg/m3) * (area of rotor in m2) * (wind speed in m/s) 3. The 33 percent increase in power from a 10 percent increase in speed can be illustrated using a sample calculation (simplifying the equation to represent the first three variables on the left, which are simply multipliers, as X). At 10 meters per second (m/s), P = X*(10)3 = 1000X. If we increase the wind speed by 10 percent, to 11 m/s, P = X*(11)3 = 1331X. Windspeed has increased 10 percent, and available power has increased by 33 percent.

[7] DOE 2008. 

[8] This is the area covered by the rotor blades as they make a rotation. More efficient turbines produce more energy for a given amount of area covered.

[9] National Renewable Energy Laboratory (NREL). “U.S. Wind Resources Map.” Accessed 20 July 2010.

[10]  American Wind Energy Association (AWEA). “Wind Web Tutorial.” Accessed 19 July 2011.

[11] Note that natural gas power plants have lower capacity factors not due to technical limitations but because they are used for load-following and intermediate load duty rather than baseload generation, which is what coal plants are typically used to provide.

[12]  AWEA 2011.

[13] International Energy Agency (IEA), Energy Technology Perspectives 2010: Scenarios and Strategies to 2050. Paris: IEA, 2010.

[14].Vestas. “Turbine overview.” Accessed 20 July 2011.

General Electric.”Wind Turbines” Accessed 20 July 2011.

[15] Ibid.

[17] The DOE provides a range of small wind resources at

[18] American Wind Energy Association (AWEA), 2011 U.S. Small Wind Turbine Market Report (2012),

[19] American Wind Energy Association (AWEA), 2011 U.S. Small Wind Turbine Market Report (2012),

[20] DOE EERE, Wind Technologies Market Report, 2011.

[21] DOE EERE, Wind Technologies Market Report, 2011.

[22] AWEA, 2012.

[23] Reported assistance for 2010 was $30 million, AWEA, 2011.

[24] AWEA, 2012.

[25] DSIRE Database, Incentives/Policies for Renewables & Efficiency,

[27] One fifth used funds from the American Recovery and Reinvestment Act (ARRA) as a primary or secondary source, AWEA, 2012.

[29] Pennsylvania Utility Commission, Alternative Energy,

[30] AWEA, 2012.

[31] AWEA, 2012; DOE EERE, Wind Technologies Market Report (2011),

[32] DOE 2008. 

[33] Ibid.

[34] IEA 2010, BLUE Map scenario.

[35] IEA 2010.

[36] Schiermeier Q., J. Tollefson, T. Scully, A. Witze, and O. Morton. “Electricity Without Carbon.” Nature 454 (2008): 816-822.

[37] See endnote 4.

[38] Lazard 2009.

[39] The PTC is currently 2.2¢/kWh, however one cannot simply add 2.2¢/kWh to cost estimates to yield a cost without the PTC, as the PTC is limited to 10 years and is furthermore not available to all investors.  The analysis is further complicated by the 2009 stimulus bill, which extended the PTC and provided the option of an investment tax credit in lieu of the PTC.  Nonetheless, a rough estimate is that the non-PTC price would be 2 cents per kWh higher than the PTC price.  The in-service deadline for the PTC is December 31, 2012.

[40] These, again, are levelized costs of generation, and do not include transmission and distribution costs.

[41] Low estimate taken from Logan, Jeff and Stan Mark Kaplan, Wind Power in the United States: Technology, Economic, and Policy Issues, Congressional Research Service, June 2008, see High estimate comes from communication with Jeffrey Jones (Energy Information Administration) regarding the levelized cost of electricity generation in the Annual Energy Outlook 2009.

[42] Lazard 2009.

[43] IEA 2010.

[44] Renewable Energy Policy Network for the 21st Century. Renewables 2011 Global Status Report. 2011.

[45]  Global Wind Energy Council (GWEC). Global Wind Report – Annual market update 2010. 2011.

[46] AWEA July 2011

[47] American Wind Energy Association. AWEA U.S. Wind Industry Annual Market Report Year Ending 2009. 2010.

U.S. Energy Information Administration (EIA). Monthly State Electricity Data available online at

[49] Ibid.

[51] U.S. Department of the Interior. “Overview: National Offshore Wind Strategy.”

[52] GWEC. 2011.

[53] GWEC. 2011.

[54] World Wind Energy Association. World Wind Energy Report 2010. 2011.

[55] GWEC 2011.

[56] International Energy Agency (IEA), World Energy Outlook (WEO) 2010. Paris: IEA, 2010.

[57] IEA WEO 2010.

[58] Global Wind Energy Council (GWEC). Global Wind Report – Annual market update 2010. 2011

[59] International Energy Agency (IEA), Energy Technology Perspectives 2008: Scenarios and Strategies to 2050. Paris: IEA, 2010.

[60] DOE 2008.

[61] InterAcademy Council (IAC), Lighting the Way: Toward a Sustainable Energy Future. Amsterdam: IAC, 2007.

[62] “The Future of Energy.” The Economist, 19 June 2008.

[63] Database of State Incentives for Renewables & Efficiency (DSIRE). “Summary Maps” Accessed 22 July 2011.


Small- and large-scale wind turbines can be used to harness the wind's power

Small- and large-scale wind turbines can be used to harness the wind's power

National Enhanced Oil Recovery Initiative Looks for Progress in Energy Policy

Recently, I had the opportunity to attend as an observer the launch of the National Enhanced Oil Recovery Initiative, facilitated by the Center and the Great Plains Institute.  In the short time since the launch, the EOR Initiative has generated notable

Carbon dioxide enhanced oil recovery (CO2-EOR) works by injecting CO2 into existing oil fields to increase oil production.  It is not a new concept. In fact, around 5 percent, or 272,000 barrels per day, of all domestic oil produced comes from oil recovered using this technique, which was first deployed in West Texas in 1972.  Decades of monitoring CO2-EOR sites have shown that in properly managed operations the majority of CO2 is retained in the EOR operation and not released to the atmosphere.  One of the initiative’s goals is to better understand the role of CO2-EOR for carbon storage as this industry grows to produce more than 1 million barrels per day, or around 17 percent of domestic oil supply in 2030.

Medium- and Heavy-Duty Vehicles

Quick Facts

  • Medium-duty vehicles (MDVs) have a vehicle weight of 10,000 to 26,000lbs. Heavy-duty vehicles (HDVs) have a vehicle weight over 26,00lbs.
  • Medium- and heavy-duty trucks and buses are responsible for about 16 percent of total transportation energy use and nearly 18 percent of carbon dioxide (CO2) emissions from transportation.
  • Under a business-as-usual (BAU) scenario, energy consumption by trucks is predicted to grow more rapidly than other transportation modes over the next 25 years.
  • Studies show that technologies to decrease fuel consumption can have a measurable impact on both short- and long-term fuel use and GHG emissions.
  • The U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration (NHTSA) recently proposed a set of complementary CO2 emission and fuel consumption standards, the first regulation of this type in the U.S. for medium- and heavy-duty vehicles.


Although the exact labels sometimes differ, medium-duty vehicles (MDVs) are those vehicles with a gross vehicle weight of 10,000 to 26,000 pounds. The largest of this group (Class 6 trucks) are also referred to as medium heavy-duty trucks.[1] Heavy-duty vehicles (HDVs) have a gross vehicle weight over 26,000 pounds.

The U.S. Department of Transportation (DOT) uses the following system of vehicle classes to group light-, medium-, and heavy-duty vehicles. This classification system is based on Gross Vehicle Weight Rating (GWVR), which is the weight of the vehicle while empty plus the maximum allowed weight from a cargo load.

Table 1: Description of Vehicle Weight Classes

Size Class

Gross Vehicle Weight Rating (GWVR)

Vehicle Registration



Class 1 and 2

Less than 10,000 lb


Light-duty vehicle, most have gasoline engines, most are for personal use

 Pickups, small vans, SUVs

Class 3

10,001 – 14,000 lb


Medium-duty vehicle, gasoline or diesel engine, single rear axle, commercial use

Delivery trucks, ambulances, small buses

Class 4

14,001 – 16,000 lb


Class 5

16,001 – 19,500 lb


Class 6

19,501 – 26,000 lb


Class 7

26,001 – 33,000 lb


Heavy-duty vehicle, gasoline or diesel engine, two or more rear axles, commercial use

Tractor trailers, school and transit buses, refuse trucks

Class 8*

33,001 – 80,000 lb


Heavy-duty vehicle, almost all have diesel engines, two or more rear axles, commercial use


* Class 8 is divided into two sub-groups: class 8a, which includes dump and refuse trucks, fire engines and city buses, and class 8b, which consists of tractor-trailers. A tractor is defined as a highway vehicle that is designed to tow a vehicle, such as a trailer or semitrailer. The majority of Class 8 vehicles are Class 8b tractor-trailers (1,720,000 registered vehicles in 2006).

Source: National Research Council (NRC), Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles, 2010.

Unlike light-duty vehicles, the majority of which are for personal use, there is a range of uses for medium- and heavy-duty vehicles in all sectors of the economy. Some carry passengers, such as urban transit buses, while others move goods across the country. Some vehicles are used primarily on high-speed highways with few stops, while others operate on lower speed urban roads in stop-and-go traffic. The top three uses for medium- and heavy-duty vehicles are construction, agriculture, and “for hire” or transportation of freight.[2] (See also Climate Techbook: Freight Transportation.)

The manufacture and distribution of medium- and heavy-duty vehicles is dependent on a network of suppliers, subcontractors, and other service industries. For example, a major vehicle manufacturer makes the chassis and powertrain,[3] but a separate body or equipment builder determines the final vehicle configuration. The fuel consumption of a medium- or heavy-duty vehicle depends on the decision made by these different actors over the production process. This approach is used for vehicles such as school buses, utility trucks, and delivery trucks and is unlike the manufacture of light-duty vehicles, where automakers are responsible for virtually all aspects of vehicle design (although many parts are manufactured by outside suppliers).

Sales of medium- and heavy-duty vehicles have declined by 30 percent, over a five-year period from 2004 to 2009, although the percent changes differ by size class.[4] This decline can be attributed to the economic downturn and more stringent diesel emission requirements. For example, sales of Class 8 trucks, which have the highest yearly sales among medium- and heavy-duty vehicles, dropped by nearly 50 percent from 2006 to 2007. This change can partly be attributed to an increase in vehicle price due to new emission control devices, which also lowered engine efficiency. The decrease in new engine efficiency may make it difficult for truck owners to upgrade if fuel prices increase, unless future engines can become more energy efficient and comply with emission control requirements at the same time.Sales for Class 8 vehicles continued to decrease in 2008, although to a lesser extent, in part due to the economic recession.[5]

Energy Use and Emissions

Medium- and heavy-duty trucks and buses are currently responsible for about 16 percent of total transportation energy use (4,525.5 trillion Btu) and nearly 18 percent of the carbon dioxide emissions from transportation in 2009.[6] Although class 8 trucks are only 42 percent of the heavy- and medium-duty truck fleet, they account for most of the fuel consumed (78 percent).[7]

Figure 1: Annual Range in Vehicle Fuel Consumption (gal), by size class

Source: NRC, Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles, 2010.

Figure 2: Total Energy Use (trillion Btu) by Mode, 2009

Source: U.S. Department of Energy (DOE) Energy Information Administration. Annual Energy Outlook, 2011.

From 1970 to 2003, energy consumption by heavy trucks grew at a rate of 3.7 percent annually. In comparison, passenger car energy consumption grew 0.3 percent annually over the same period. The divergence in growth rates is a function of a faster increase in miles driven and, to a smaller extent, improvements in car fuel economy. However because medium- and heavy-duty vehicles are designed to move goods, a more accurate measure of truck efficiency is in terms of the energy used to move a ton of goods over a given distance – for example, gallons of diesel or gasoline per ton-mile. From 1975 to 2005, fuel consumption per ton shipped over a given distance (per ton-mile) has decreased by more than half; the rate of improvement has slowed since then, in part due to pollution control requirements that have reduced engine efficiency.[8]

Under a BAU scenario, energy use by medium- and heavy-duty freight trucks is predicted to grow over the next 25 years than other transportation modes.

Figure 3: Average Annual BAU Growth in Energy Use by Mode, 2009-2035

Source: U.S. DOE Energy Information Administration. Annual Energy Outlook 2011.

A study by the National Academy of Sciences found that the best way to calculate fuel consumption for medium- and heavy-duty vehicles is to use load-specific fuel consumption (LSFC), which is measured in gallons of fuel per load-tons per 100 miles. There is an inverse relationship between load-specific fuel consumption and load: generally the higher the load the vehicle carries, the lower the LSFC.[9] As mentioned previously, trucks and buses are load-carrying vehicles with fuel consumption depending on the weight of the load being carried. A loaded HDV can weigh more than double the empty weight of the vehicle. In comparison, a loaded light-duty vehicle weighs only 25 to 35 percent more than its empty weight.[10] Thus, the day-to-day fuel consumption of a HDV can vary significantly, depending on the load being carried.

Technologies to Reduce Fuel Consumption

There is a range of technologies to reduce fuel consumption in medium- and heavy-duty vehicles. The specific technologies used will depend on vehicle size, type, and use.

Powertrain technologies: The powertrain is a group of components that includes the vehicle engine and transmission. The following powertrain technologies can be used to lower fuel consumption:

  • Diesel engines: Diesel engines used in MDV and HDVs are highly efficient, turbocharged, direct fuel injected, and electronically controlled. Nevertheless there are a number of technologies that be used to reduce fuel consumption, such as dual turbochargers[11] used in a series configuration and variable-valve actuation.[12]
  • Gasoline engines: Gasoline engines are used in Class 2-6 vehicles. These engines can benefit from technologies to reduce fuel consumption: variable-valve actuation and cylinder deactivation,[13] direct injection, turbocharging and downsizing, and electrically driven accessories (rather than mechanically). With some changes, these engines can be configured to use natural gas, propane, hydrogen, ethanol, methanol, and other lower-carbon intensity fuels.[14]
  • Transmission improvements: Transmission improvements include designs that increase the efficiency of the transfer of power from the propulsion system to the wheels (e.g., automated manual transmissions, Lepelletier transmissions) and designs that allow the engine to operate at higher efficiencies (e.g., increases in the number of speeds, continuously variable transmissions).
  • Hybrid powertrains: There are two main types of hybrid technologies that can be used in medium- and heavy-duty vehicles. The first, a hybrid electric, uses an electric motor and generator, an energy storage device and power electronics, as well as an internal combustion engine. Hybrid electric vehicles are use across almost all weight classes, from light-, medium-, and heavy-duty vehicles. Since they provide little benefit at steady highway cruising, they are not as useful for long-haul trucks. The second, a hydraulic hybrid, has a hydraulic system using pressurized fluid, instead of electric power, as an additional power source alongside the engine. The hydraulic system is suitable for vehicles such as refuse trucks, transit buses, and delivery vehicles, which operate in stop-and-go traffic.[15] The fuel consumption benefits of these technologies will depend on the vehicle use and duty cycle.

Alternative fuels: Lower-carbon fossil fuels, including natural gas and biodiesel blends, can reduce conventional air pollutants as well as GHG emissions in medium- and heavy-duty vehicles.

Box 1: The U.S. Department of Energy's Clean Cities Program recommends the following currently available fuel and powertrain alternatives by vehicle type

Vehicle Type


School Bus

Compressed natural gas (CNG) or propane is the most popular. Hybrid electric and plug-in electric hybrids are also available

Shuttle Bus

CNG, propane, hybrid electric power, and fuel cells

Transit Bus

Hybrid-powered transit buses, CNG and liquefied natural gas (LNG). There are some fuel cell demonstrations currently in progress.

Refuse Truck

CNG, Biomethane from landfill gas. Good application for hybrids, particularly hydraulic hybrid systems, because of stop-and-go operation.


Diesel electric hybrids (but not for long-haul trucks), CNG and LNG operation available for some models


Hybrids and plug-in hybrids. Vans that run on a set route (e.g., package delivery service) are well suited for all-electric. CNG and propane are also available.

Vocational Truck

CNG, propane, all-electric, and hybrid vehicles

Source: U.S. DOE. “Clean Cities’ Guide to Alternative Fuel and Advanced Medium- and Heavy-Duty Vehicles.” Accessed 16 May 2011.

Other technologies and techniques to improve vehicle fuel economy include the following:

  • Aerodynamics: Techniques that reduce aerodynamic drag improves fuel efficiency by reducing the amount of work needed to move the vehicle. For example, a heavy-duty truck (tractor-trailer) operating on uncongested highways can save about 15 to 20 percent in fuel consumption from aerodynamic improvements. [16]
  • Rolling resistance: About one-third of the power required to propel a Class 8 truck (at highway speeds, on level roads) can be accounted for by tire rolling resistance. Low rolling resistance tires could reduce the fuel consumption in these vehicles by 4 to 11 percent and to a lesser extent for other size classes.[17]
  • Operational measures: Operational measures include more fuel-efficient driving techniques and idle reduction. For tractor-trailers, these can reduce fuel consumption by an estimated 7 percent.[18]

Box 2: Efficiency Improvements for Tractor-trailers

Although tractor trailers (Class 8 trucks) already have highly efficient diesel engines, there remain potential improvements in engine design (highlighted above) that can help reduce fuel consumption. Reduction in aerodynamic drag can be obtained from better cab shaping, replacing mirrors with cameras, closing the gap between cab and trailer, and adding a short boat-tailed rear. Other methods to reduce fuel consumption include: improving freight logistics and driving techniques, using higher capacity trucks, reducing truck idling, and improving product packaging so products need less space and more products can be carried in one trip. One importance means of reducing truck idling is the use of cab heaters and other devices that allow drivers to sleep in the truck while parked without having to run the main engine.

Source: Greene, D. and S. Plotkin. Reducing Greenhouse Gas Emissions from U.S. Transportation, 2011.

GHG Reduction Potential

A study by National Academy of Sciences evaluated a wide range of technologies and estimated the potential fuel consumption reduction when applied to six different medium- or heavy-duty vehicles. The study estimated that fuel consumption from tractor-trailers (Class 7 and class 8 trucks) could be cost-effectively reduced by 51 percent in the 2015 to 2020 time frame.[19]

Table 2: Fuel Consumption Reduction and Cost-Effectiveness for New Vehicles in 2015

Vehicle Class

Fuel Consumption Reduction (%)

Capital Cost ($)

Breakeven Fuel Price ($/gal)





Class 6 box truck*




Class 6 bucket truck*




Refuse truck




Transit bus




Motor coach





* A box truck has a “box-shaped” cargo area; a bucket truck has an aerial work platform with a bucket that uses a hydraulic lifting system.

Source: NRC. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles, 2010.

A joint study by the Northeast States Center for a Clean Air Future and the International Council on Clean Transportation found similar results. In that case, fuel consumption for new tractor-trailers could be reduced by 20 percent and up to 50 percent from 2012 to 2017. Over the long term, this would reduce fuel consumption and CO2 emissions from these trucks by 30 percent in 2022 from BAU levels and 39 percent by 2030.[20]

Policy Options

Vehicle Standards: In October 2010, the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) proposed a set of complementary standards as part of the “Heavy-Duty National Program.” The EPA expects to issue the final rule in August 2011. The program includes CO2 emission standards and fuel consumption standards, proposed by EPA and NHTSA respectively. The standards cover model years 2014 to 2018 and would apply to any vehicle with a gross vehicle weight at or above 8,500lbs: tractor-trailers, heavy-duty pickup trucks and vans, and vocational vehicles, which include buses and refuse and utility trucks. The standards use a load-based metric to account for the fact that these vehicles are used primarily for transporting goods and equipment, in addition to passengers, and thereby use more fuel and emit more CO2 when compared to moving lighter loads.

For tractor-trailers, the CO2 emission and fuel consumption standards are expected to achieve 7 to 20 percent reduction in GHG emissions in MY 2017, depending on size class and type, from a 2010 baseline.[21] For heavy-duty pickup trucks and vans, MY 2018 standards would result in a reduction in GHG emissions of 17 percent for diesel vehicles and 12 percent for gasoline vehicles. For vocational vehicles, the standards would achieve an emission reductions from seven to 10 percent, also depending on size class, for MY 2017.[22]

Additional emission standards are also included under the EPA proposal – for HFC emissions from vehicle air conditioner, which would apply to pickups, vans and tractors and for N2O and CH4 from all heavy-duty engines, pickups and vans.[23]EPA is currently reviewing comments to the proposed rulemaking, which was released in October 2010.

SmartWay Program: In 2004, the EPA launched the SmartWay Program, a collaboration between government, business, and consumers. The program is designed to promote fuel efficient vehicles, help truck owners and freight transport operators choose efficient vehicles, and save energy and lower operating costs through improved logistics, and thereby reduce GHG emissions and air pollution, improve fuel efficiency, and strengthen the freight sector. The program works with shippers, carriers, truck stops and other related groups and currently has more than 2,600 partners.[24]Before the introduction of vehicle standards (above), the SmartWay voluntary certification program was the main approach to deal with GHG emissions from medium- and heavy-duty vehicles.

The program facilitates the adoption of fuel efficient technologies in the freight sector, using the following methods:

  • Certified vehicles: Under the SmartWay program the EPA certifies tractors and trailers based on certain design criteria, including aerodynamic improvements, 2007 or newer engines, and idle reduction technology. These certified vehicles are available from eight major truck manufacturers, which offer at least one model meeting SmartWay specifications.
  • Verified fuel savings products: EPA evaluates fuel savings and emission reduction or technologies in the following categories: Idle Reduction Technologies, Aerodynamic Technologies, Low Rolling Resistance Tires, and Retrofit Technologies. To help companies upgrade existing vehicles, the EPA offers "Upgrade Kits," a group of fuel savings technologies and emission-control devices that reduce GHG emission and other air pollutants. According to EPA estimates, installation of these kits may improve fuel economy up to 15 percent.[25]
  • Financing: SmartWay offers financing options that provide companies with the capital to invest in fuel-saving technologies. In 2009, the EPA was awarded $30 million from the American Recovery and Reinvestment Act of 2009 to develop financing programs for trucks, school buses, and non-road vehicles and equipment. In addition, SmartWay provides a clearinghouse web site where trucking companies can apply for private loans for SmartWay Certified Tractor or Certified Trailer or SmartWay approved fuel efficiency technologies.
  • Federal Excise Tax Exemption: Under the Energy Improvement and Extension Act (EIEA) of 2008, retailers of certain fuel efficiency technologies (idling reduction devices and advanced insulation) are exempt from the federal excise tax.

Other EPA Programs: Other programs coordinated by EPA include the National Clean Diesel Campaign (NCDC)and Clean School Bus USA. Both these programs focus on reducing traditional air pollutants, yet also have the benefit of reducing GHG through strategies that reduce fuel consumption and thereby GHG and tailpipe emissions. National Clean Diesel Campaign works with manufacturers, fleet operators, air quality professionals, environmental and community organizations, and state and local officials to reduce emissions from diesel engines. The program focuses on projects that use diesel technologies, operational strategies and alternative/renewable fuels to reduce emissions and provides grants and funding for technology adoption.[26]

Clean School Bus USA is a public-private environmental partnership that tries to reduce children’s exposure to diesel exhaust and air pollution from diesel school buses. The program focuses on reducing emissions through anti-idling strategies, engine retrofits, clean fuels, and bus replacement.[27]

DOE Clean Cities: Clean Cities is a government-industry partnership, sponsored by DOE and designed to reduce petroleum consumption in the transportation sector. The program works with local and state organizations to adopt technologies that reduce fuel consumption, such as:

  • Alternative and renewable fuels
  • Idle-reduction measures, targeted to buses and heavy-duty trucks
  • Fuel economy improvements
  • New transportation technologies

Clean Cities facilitates the adoption of these technologies by providing funding and financial incentives to support projects.[28] Its network includes almost 90 coalitions and local partners, which represent about three quarters of the U.S. population. Among the program's accomplishments is increasing the number of alternative fuel transit buses from 6 percent in 1997 to 20 percent in 2007.[29]

Box 3: Case Studies

UPS - UPS has the largest commercial fleet in the United States with over 93,000 trucks in its fleet.[30]Its alternative fuel fleet includes more than 1,900 compressed natural gas, liquefied natural gas, propane, hydrogen fuel cell, electric and hybrid electric vehicles.[31]In 2006, the company was the first to test a full-series hydraulic hybrid truck, built through a partnership between U.S. Environmental Protection Agency (EPA), Eaton, International Truck and Engine, and the U.S. Army National Automotive Center. A hydraulic hybrid uses two power sources to propel the vehicle – a small, fuel-efficient diesel engine and hydraulic components, which removes the need for a mechanical transmission and drive train.[32]

The company has also used a variety of operational measures to reduce vehicle fuel consumption. UPS uses careful routing to avoid unnecessary driving, including the company's famous “right turn policy,” which reduces the number of left turns a driver must make. According to company estimates, this policy reduced delivery routes by 30 million miles and saved 3 million gallons of gas.[33]The company also has an anti-idling program that reduced the amount of time delivery vehicles idle by 24 minutes per driver per day.[34]

FedEx - FedEx operates the second largest commercial fleet in the United States, with over 65,000 vehicles.[35]In 2000, FedEx partnered with Environmental Defense Fund (EDF) to begin developing more efficient delivery trucks. The company uses a variety of alternative energy vehicles, and as of 2010, has one of the largest hybrid fleets, with nineteen all-electric vehicles in London, Paris, and Los Angeles.[36]The company has a goal of improving the efficiency of the entire fleet by 20 percent by 2020 from 2008 levels. It plans to use a number of strategies including route optimization, smaller, more efficient vehicles, and couriers who delivery packages by foot or bicycle in New York City and London.[37]

New York City Transit - In 2000, NYC Transit was the first public transportation system to use ultra-low sulfur fuel, which reduces emissions from diesel buses. The agency also has the largest hybrid-electric bus fleet in the world, more than 1,000 vehicles in 2009. In a study by the National Renewable Energy Laboratory, these hybrid-electric buses had an average fuel economy that was 34 percent higher than that for diesel buses.[38]

Maryland Hybrid Truck Initiative - The Maryland Hybrid Truck Initiative is a partnership between the Maryland Energy Administration (MEA), the U.S. Department of Energy, Maryland Clean Cities, ARAMARK, Efficiency Enterprises, Nestlé Waters North America, Sysco Corporation, and United Parcel Service. Launched in early 2011, the Initiative aims to facilitate the deployment of heavy-duty hybrid truck, including 143 Freightliner hybrid electric vehicles (HEVs) and Freightliner Custom Chassis hydraulic hybrid vehicles (HHVs).[39]

State Programs: Thirty-nine states have polices that affect medium- and heavy-duty vehicles. These policies include the following:

  • Financial Incentives: tax credits for vehicle retrofit, new vehicle purchase, and refueling infrastructure; grants for fleet modernization, truck stop electrification, and retrofits;
  • Idle Reduction: fines for excessive idling; weight exemptions for vehicles containing idle reduction technology;
  • State Fleet Procurement: mandates to alternative fuel vehicles and retrofit existing vehicles to be more fuel-efficient; and
  • R&D: funding for research and development.

For a map of the states and a description of their policies, see “U.S. States and Regions: Medium- and Heavy-Duty Vehicle Policies

California Standards: In addition to some of the programs mentioned above, the State of California also regulates heavy-duty truck under its 2006 Global Warming Solutions Act. The program is designed to reduce GHG emissions by improving tractor and trailer aerodynamics and tire rolling resistance, using EPA’s SmartWay technologies. The first part of the program began in January 2010; new MY 2011 tractors and trailers purchased after this time must be SmartWay certified. Older vehicles will need to be retrofitted with SmartWay technologies over time, beginning in January 2013.[40]

Related Business Environmental Leadership Council (BELC) Company Activities

Related C2ES Resources

Greene, D. L., & Plotkin, A. (2011). Reducing Greenhouse Gas Emissions From U.S. Transportation.

Climate TechBook. Freight Transportation

Further Reading / Additional Resources

U.S. Environmental Protection Agency (EPA), Office of Transportation and Air Quality. SmartWay.

Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[1]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[2]See Table 5-7, in U.S. Department of Energy (DOE). Transportation Energy Data Energy Book 29. Oak Ridge, TN: Oak Ridge National Laboratory, 2010.

[3]The powertrain consists of a group of components that includes the vehicle engine and transmission

[4]U.S. DOE. 2008 Vehicle Technologies Market Report. Golden, Colorado: National Renewable Energy Laboratory. July 2009; and Table 5-3, in U.S. Department of Energy (DOE). Transportation Energy Data Energy Book 29. Oak Ridge, TN: Oak Ridge National Laboratory, 2010.

[5]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[6]U.S. DOE. Annual Energy Outlook 2011. 26 April 2011. Accessed 15 May 2011.

[7]National Renewable Energy Laboratory. “Vehicle Technologies and Program Market Data.” 30 June 2010. Accessed 15 May 2011.

[8]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[9]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[10]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[11]In turbo-charging, the intake air is compressed with some of the exhaust gas energy, which would otherwise be wasted. Thus, more air can be taken in and more engine power can be produced from a given engine size.

[12]Variable valve actuation alters the degree of lift and/or the timing of valve opening and closing within an internal combustion engine.

[13]Cylinder deactivation shuts down some of the cylinders in a multi-cylinder engine when they're not needed, thereby increasing fuel economy during periods of light load.

[14]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[15]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[16]Greene, D. and S. Plotkin. Reducing Greenhouse Gas Emissions from U.S. Transportation, 2011.

[17]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[18]Greene, D. and S. Plotkin. Reducing Greenhouse Gas Emissions from U.S. Transportation, 2011.

[19]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[20]Miller, P., Ed. "Heavy-Duty Long Haul Combination Truck Fuel Consumption and CO2 Emissions." NESCCAF and ICCT, 2009.

[21]The range of possible reductions is due to the different standards depending on cab type and roof type. For example, the gallon per 1,000 ton-mile standard for Class 7, Day Cab, High Roof trucks is 11.4 for MY2017, while Class 8, Sleeper Cab, Low Roof Trucks have a standard of 6.3 gal/1,000 ton-mile.

[22]U.S. EPA. “EPA and NHTSA Propose First-Ever Program to Reduce Greenhouse Gas Emissions and Improve Fuel Efficiency of Medium- and Heavy-Duty Vehicles: Regulatory Announcement.” October 2010.

[23]Green Car Congress. “NHTSA, EPA propose first greenhouse gas and fuel efficiency standards for heavy-duty trucks and buses.” 25 October 2010. Accessed 12 May 2011.

[24]U.S. EPA. SmartWay. Accessed 13 Apr 2011.

[25]U.S. EPA “Benefits: Upgrade Kits.” 12 May 2011.

[26]U.S. EPA. “NCDC: Basic Information.” 15 April 2011. Accessed 12 May 2011.

[27]U.S. EPA. “Clean School Bus USA: Basic Information.” 20 October 2007. Accessed 13 May 2011.

[28]U.S. DOE. “Clean Cities: About the Program.” 6 May 2011. Accessed 13 May 2011.

[29]U.S. DOE. “Clean Cities: Goals, Strategies, and Top Accomplishments.” May 2010.

[30]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[31]UPS. “Alternative Fuels Drive UPS to Innovative Solutions.” Accessed 13 April 2011.

[32]UPS. “Saving Fuel: Alternative Fuels Drive UPS to Innovative Solutions.”, 25 Feb 2011. Accessed 13 April 2011.

[33]Davis, Scott. Speech: “Right Turn at the Right Time.” Accessed 16 May 2011.

[34]UPS. “Saving Fuel: The Benefits of No Idling” 10 Mar 2011. Accessed 13 April 2011.

[35]Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; National Research Council, Transportation Research Board. Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles. Washington, DC: National Academies Press, 2010.

[36]FedEx. “Alternative Energy: Cleaner Vehicles.”, 3 January 2011. Accessed 13 April 2011.

[37]Environmental Defense Fund. “EDF and FedEx: Driving Toward Cleaner Trucks.” Accessed 13 April 2011.

[38]Barnitt, R. and K. Chandler. "New York City Transit (NYCT) Hybrid (125 Order) and CNG Transit Buses: Final Evaluation Results." Boulder, CO; NREL, 2006.

[39]Maryland Hybrid Truck Initiative. Accessed 13 April 2011.

[40]California Air Resources Board. “Presentation: Heavy-Duty Vehicle Greenhouse Gas (Tractor-Trailer GHG) Emission Reduction Regulation.” 21 March 2011. Accessed 12 May 2011.


 Technology and policy solutions to save oil and reduce greenhouse gas emissions from medium- and heavy-duty vehicles.

In Brief: Clean Energy Markets: Jobs and Opportunities

In Brief: Clean Energy Markets: Jobs and Opportunities

July 2011 Update (originally published February 2010)

Download this Brief (PDF)

This brief discusses how investment in clean energy technologies will generate economic growth and create new jobs in the United States and around the globe. The United States stands to benefit from the expansion of global clean energy markets, but only if it moves quickly to support domestic demand for and production of clean energy technologies through well-designed policy that enhances the competitiveness of U.S. firms.

Clean energy markets are already substantial in scope and growing fast. Between 2004 and 2010, global clean energy investment exhibited a compound annual growth rate of 32 percent, reaching $243 billion in 2010. Forecasts of investment totals over the next few decades vary according to assumptions made regarding the nature of future global climate policies. Over the next decade, assuming strong global action on climate change, cumulative global investment totals for clean power generation technologies could reach nearly $2.3 trillion.

Recognizing the potential of these markets, the European Union, China, and other nations are moving to cultivate their own clean energy industries and to position them to gain large market shares in the decades ahead.

  • The European Union continues to lead the world in clean energy investments, spending nearly $81 billion in 2010. Since 2009, China has invested more money per year in clean energy technologies than the United States, investing $54.4 billion in 2010 compared to the United States’ $34 billion. Over 85 percent of today’s market for clean energy technologies is outside of the United States, primarily in Asia and Europe.
  • Germany’s clean energy investments of $41.2 billion were the second most for any country in 2010, surpassing the now third-place United States.
  • China now boasts the world’s largest solar panel and wind turbine manufacturing industries, accounting for nearly 50 percent of manufacturing for both technologies.
  • Danish wind manufacturers produce close to 22 percent of annual global installed wind capacity.

These countries have taken deliberate steps to position themselves as leaders in the 21st century clean energy economy. History shows that it matters where industries are first established, and countries can use policy to foster domestic “lead markets” for particular industries, giving them the foothold that can lead to significant growth in global market share. In the United States, well-crafted climate and clean energy policy can give nascent clean energy industries such a foothold by creating domestic demand and spurring investment and innovation. Strong domestic demand creates not only export opportunities but also jobs – many of which must be located where the demand is, thus fostering domestic job growth even when industry supply chains are globally dispersed.

National climate and clean energy policy in the United States can help create jobs and domestic early-mover industries with the potential to become major international exporters. Such policy should provide incentives for investment in clean energy, for example through a clean energy standard, that requires a certain amount of electricity be obtained from clean energy sources, or a market-based mechanism that puts a price on carbon. The time to act is now: through policy leadership at home and abroad, the United States can position itself to become a market leader in the industries of the 21st century.

Click here for the press release.


Press Release: Members of Congress Support New National Enhanced Oil Recovery Initiative

Press Release
July 12, 2011

Contact: Tom Steinfeldt,, 703-516-0638
Patrice Lahlum,, 701-281-5007

Members of Congress Support New National Enhanced Oil Recovery Initiative
Industry, State, NGO Leaders to Develop Recommendations to Improve U.S. Energy Security

WASHINGTON, D.C. – Industry, government and organizational leaders gathered in Washington, DC, today to launch a national enhanced oil recovery initiative aimed at increasing the supply of domestic oil produced through enhanced oil recovery using carbon dioxide (CO2-EOR).

Senator Kent Conrad (D-ND), Senator John Hoeven (R-ND), and Congressman Mike Conaway (R-TX) were on hand to help kick off the National Enhanced Oil Recovery Initiative (EOR Initiative). Senator John Barrasso (R-WY) and Senator Richard Lugar (R-IN) offered written statements in support of the initiative.

The EOR Initiative includes executives from oil and gas, electric power, ethanol, pipeline and other industry sectors; state officials; technical experts; and environmental advocates. The group will develop recommendations for federal and state policymakers on how to ramp up CO2-EOR to improve U.S. energy security, create economic opportunities, support high-paying jobs, and reduce greenhouse gas emissions. The slate of recommendations is expected to be released in early 2012.

“We know where the oil is, we just need the CO2 to help produce it,” said Robert Mannes, President and CEO of Michigan-based Core Energy, LLC. “We are the only company engaged in commercial CO2-EOR in the Great Lakes Region, and we have a limited amount of CO2. With additional supplies of sufficient volumes of CO2 we could produce a significant amount of oil, providing much needed jobs and revenue to local economies.”

The EOR Initiative will marshal support from diverse constituencies for accelerated nationwide expansion of CO2-EOR projects. Commercially proven, safe, and environmentally sound, CO2-EOR stands out as a compelling and largely unheralded example of American private sector technological innovation that can support a wide range of urgent national priorities.

“Carbon capture and sequestration technology combined with enhanced oil recovery addresses our growing demand for energy, the need for sound environmental policy, and provides the kind of economic and energy security that can only come from increased domestic production,” said Texas State Rep. Myra Crownover. “I look forward to working with the other members of this initiative on improving and expanding opportunities for EOR production throughout the United States.”

Reasonable policies to advance CO2-EOR could produce significant amounts of new American oil and advance the development of infrastructure needed for long-term carbon capture and storage. An estimated 35-50 billion barrels of economically recoverable oil could be produced in the United States using currently available CO2-EOR technologies and practices, or potentially more than twice the country’s proved reserves.

“The fiscal struggles facing federal and state governments combined with a challenging political climate demand new ideas for U.S. energy policy,” said Eileen Claussen, President of the Pew Center on Global Climate Change. “The diverse interests represented in this group offer a unique opportunity to secure broad support for sensible policies that increase domestic oil supply and limit emissions – a win for our nation’s economy, security, and the climate.”

In CO2-EOR, carbon dioxide is injected into oil wells to help draw more oil to the surface, while the carbon dioxide remains underground in deep geologic formations. Expanding CO2-EOR will increase domestic production from already developed oil fields, while reducing greenhouse gas emissions and creating economic opportunities.

“EOR has the potential to bring Americans together around a common agenda of energy security, job creation, and environmental stewardship, and overcome the energy policy gridlock that’s putting our nation at risk,” said Brad Crabtree, Policy Director at the Great Plains Institute.

The EOR Initiative is facilitated by the Great Plains Institute and the Pew Center on Global Climate Change. Financial support for the EOR Initiative is provided by the Joyce Foundation, the Edgerton Foundation and the Energy Foundation. Additional funding is being sought from foundations, industry, and other private-sector sources.


Related Materials


Statements from Members of Congress in support of the National Enhanced Oil Recovery Initiative

In addition to remarks delivered today by Senator Kent Conrad (D-ND), Senator John Hoeven (R-ND), and Congressman Mike Conaway (R-TX) at the National Enhanced Oil Recovery Initiative kick-off event in Washington, DC, the following statements of support were issued by Senator John Barrasso (R-WY) and Senator Dick Lugar (R-IN).

Sen. John Barrasso (R-WY)
“Wyoming has been a leader in the field of enhanced oil recovery (EOR).  It’s a valuable part of America’s energy future.  I congratulate the National Enhanced Oil Recovery Initiative for its important step forward in this area.  Increasing EOR production and advancing technology innovation will help grow our economy in an environmentally responsible way.  The good news is that EOR is viable without heavy subsidies or Washington mandates.  I look forward to reviewing the Initiative’s work.”

Sen. Richard Lugar (R-IN)
“Enhanced oil recovery is a win for fiscal responsibility, a win for energy security, and a win for environmental stewardship. I commend members of the National Enhanced Oil Recovery Initiative for taking up this opportunity and look forward to reviewing their recommendations. Addiction to foreign oil imperils United States’ national security and makes our economy more vulnerable to conflict, terrorist activity, and natural disasters far outside the United States. My Practical Energy Plan would propel about 1.8 million barrels of oil per day by enabling a truly national infrastructure to connect oil resources with the CO2 necessary to harvest it, including from sources in Indiana, and generate substantial taxpayer returns.”

More information on Senator Lugar’s plan is available at


Quick Facts

  • In 2011, approximately 967 million gallons of biodiesel were produced in the United States, compared to 10 million gallons only 10 years earlier.[1]
  • As of 2011, 158 biodiesel plants were operating in 42 states,[2] with total production 100 times the 2001 level.[3] Production in 2011 rebounded to 967 million gallons with the reinstatement of the biodiesel tax credit, after dropping to 343 million gallons in 2010.[4]
  • U.S. biodiesel is projected to increase in supply, from 0.6 million barrels per day (mmb/d) in 2011 to 0.8 mmb/d by 2020.[5]
  • The EPA recently announced that the 2013 Renewable Fuel Standard mandate for biodiesel would increase to 1.28 billion gallons from 1 billion gallons in 2012.[6]


Biodiesel is a nonpetroleum-based diesel fuel composed of fatty acid methyl ester molecules[7] derived from vegetable oils, animal fats, or recycled greases. It is similar to conventional petroleum-based diesel fuel and can be used in compression-ignition (diesel) engines with little to no modification. Biodiesel also has some favorable properties compared to conventional diesel (e.g., no sulfur content, lower particulate matter, and lower lifecycle greenhouse gas emissions).

Since commercial biodiesel use began in 2001, production and consumption have expanded considerably (see Figure 1). After showing steady annual increases, production and consumption fell from 2008 to 2010, partly because the biodiesel tax credit, providing a $1.00 per blended gallon incentive, expired at the end of 2009. However, production recovered strongly in 2011 after the biodiesel tax credit was reinstated at the end of 2010.[8] Additionally, demand for biodiesel is increasing as blenders need to reach new mandates under the Renewable Fuel Standard (RFS) (for more, see C2ES Renewable Fuels Standard (RFS2))[9] Over 900 million gallons were produced and nearly that much consumed in 2011 (see Table 1).

Figure 1 United States Annual Biodiesel Production and Consumption, 2001 - 2011

Source: Energy Information Agency (2012),

Table 1. Biodiesel Summary, million gallons, 2009 – 2011
















Gross Imports





Gross Exports







Biodiesel production involves the extraction and esterification[10] of oils or fats using alcohols. Compared to the production of other biofuels, the technology used to produce biodiesel is relatively simple and well developed.

  • Biodiesel feedstocks

The feedstocks used in biodiesel production vary by region. The most common feedstocks by region are: soybean oil in the United States; rapeseed (canola) and sunflower oil in Europe; and palm oil in Indonesia and Malaysia. Biodiesel can also be produced from numerous other feedstocks, including vegetable oils, tallow and animal fats, used fryer oil (also called yellow grease), and trap grease (also called brown grease, from restaurant grease traps). The relatively low price of soybean oil in the U.S. makes it the most common feedstock, accounting for approximately 57 percent of U.S. biodiesel production.[11] The chemical properties of the biodiesel (cloud point, pour point, and cetane number) depend on the type of feedstock used (see endnote for further explanation). Following soybean oil, the next three most common biodiesel feedstocks are corn oil, yellow grease, and brown grease.[13]

  • Production pathways

To produce biodiesel, the feedstock is chemically treated in a process called transesterification, in which the oils or fats are combined with an alcohol (usually methanol) and a catalyst to produce fatty acid methyl esters (the chemical name for biodiesel molecules). The major byproduct of the reaction, crude glycerin, is usually sold to the pharmaceutical, food, and cosmetics industries.

Figure 2. Biodiesel Production Pathways

Source: U.S. Department of Energy, Energy Efficiency and Renewable Energy. 2009. “Biodiesel Production.”

Cetane number is the combustion quality of the fuel during compressed ignition. Biodiesel has about 93 percent of the energy content of petroleum diesel, on a per gallon basis, and a cetane number between 50 and 60. For comparison, petroleum diesel sold in the United States has a cetane number between 38 and 42. The chemical composition of biodiesel, especially its higher cetane number, translates to better engine performance and lubrication. However, its lower energy density results in a decrease in fuel economy (2-8 percent).[14]

Since biodiesel’s combustion properties are similar to those of petroleum-based diesel fuel, biodiesel can be legally blended with conventional diesel in any fraction, unlike raw oils not registered with the EPA.[15] As opposed to the use of ethanol, the use of biodiesel does not require many significant modifications to the fuel system. Individual engine manufacturers determine which blends can be used in their engines. The most common blend of biodiesel in the United States is 20 percent biodiesel, 80 percent petroleum diesel (B20). Some newer vehicles are also capable of using pure biodiesel, B100.[16]

Biodiesel is also commonly used as a fuel additive (in lower level blends of 2 to 5 percent) to reduce emissions of particulates, carbon monoxide, hydrocarbons, and other air pollutants from diesel-powered vehicles. For example, low-sulfur diesel fuel currently used in the United States is lower in lubricity—the characteristic of diesel fuel necessary to keep diesel fuel injection systems properly lubricated—than higher- sulfur diesel fuels. Since biodiesel has no sulfur content and high lubricity, it can be blended with low-sulfur diesel to improve lubricity without increasing sulfur emissions.

One of the disadvantages of biodiesel is that it can gel or freeze, possibly causing engines to stall in cold winter temperatures. For example, 100 percent soy biodiesel can begin to form ice crystals at 32ºF (0ºC), whereas petroleum diesel generally forms ice crystals at about 10º or 20ºF (-12º to -5ºC). Proper blending with petroleum diesel and other fuel additives can counteract this problem; B20 blended with specially formulated cold weather petroleum diesel forms ice crystals at -4ºF (-20ºC).[17]

Environmental Benefit / Emission Reduction Potential

By replacing conventional diesel fuel, the use of biodiesel can lower greenhouse gas emissions from the transportation sector. The potential greenhouse gas reductions from switching to biodiesel from petroleum-based diesel depend largely on the type of feedstock used to produce the fuel.

Depending on the feedstock used, one gallon of biodiesel can reduce greenhouse gas emissions by 12 to over 80 percent when compared to a gallon of conventional diesel, on a lifecycle basis. The California Air Resources Board (CARB), as part of its analyses in support of California’s Low Carbon Fuel Standard, calculated that when soybean oil is used as a feedstock, the average reduction in direct lifecycle emissions per gallon is about 78 percent.[18] This reduction only considers the direct lifecycle impacts of biodiesel production, processing, and combustion, and does not include any potential impacts of indirect land use change (see Obstacles to Further Development or Deployment of Biodiesel). According to CARB, when the indirect land impacts are included, soybean-based biodiesel would reduce greenhouse gas emissions by only about 15 percent compared to petroleum-based diesel.[19]

Using animal fats and recycled greases instead of agricultural crops can result in greater greenhouse gas reductions since energy inputs (e.g., fertilizers and farming equipment) are not directly needed to grow the feedstocks. These feedstocks also have the added benefit of recycling waste products, although the overall availability of these waste feedstocks is limited.


The cost of producing biodiesel depends on a number of factors, including the following:

  • the feedstock used in the process;
  • the capital and operating costs of the production plant;
  • the current value and sale of byproducts, which can offset the per-gallon cost of production; and
  • the yield and quality of the fuel and byproducts.

The overall cost of biodiesel production depends mainly on the feedstock used and its price.[20] The prices of most feedstocks are subject to market fluctuations, which can also make biodiesel production costs vary over time. The price of conventional diesel provides the baseline against which to compare the cost of biodiesel production and determines the economic viability of large-scale biodiesel production.

Biodiesel production costs from waste feedstocks (e.g., yellow or brown grease) depend on the source and procurement method. For example, in some areas, providers of these feedstocks pay biodiesel processors to collect waste materials; in other cases, biodiesel producers have to purchase them directly from these providers. In either case, biodiesel produced from waste feedstocks is cheaper, although the overall supply of these feedstocks is limited.[21]

Soybean oil provides approximately 60 percent of the U.S. biodiesel feedstock, with 7.6 pounds of soybean oil required for each gallon of biodiesel.[22] With consistent low pricing in 2011 (around $0.50 per pound of soybean oil), the market was favorable for increased biodiesel production.[23] Biodiesel costs more than petroleum diesel, but in 2011, the price of biodiesel was competitive, averaging $3.91 per gallon for B20 blend and $4.18 for B99-B100 compared with $3.81 per gallon of petroleum-based diesel (see Figure 3).[24]

Renewable Identification Numbers (RINs) have become increasingly important in overall biodiesel costs. RINs are a traceable serial number attached to a batch of renewable fuel produced, as required by the EPA as part of the RFS. In 2011, biodiesel RINs averaged $0.75 per gallon. Because of the higher ethanol equivalence in biodiesel, one gallon of biodiesel generates 1.5 RINs, earning blenders $1.13 per gallon of biodiesel. These RIN values, coupled with the Biodiesel Tax Credit, encouraged increased biodiesel production at the close of 2011 and throughout 2012.[25]

Figure 3. Cost per Gasoline-Gallon Equivalent (GGE) of Biodiesel (B99/B100), Biodiesel (B20), and Diesel (2000 - 2012)

Source: Department of Energy, Alternative Fuel Data Center,

Current Status of Biodiesel

Using vegetable oil for fuel has been around since the invention of the diesel engine itself. The first diesel engine, invented by Rudolf Diesel in 1898, ran on a “biofuel”—peanut oil—although this was not the same as biodiesel used today since it was not transesterified. Although this engine type was later modified to run on petroleum-based fuels, the development of biodiesel continued throughout the 20th century. Unlike other biofuels, biodiesel can be produced using relatively little equipment; in fact, instructions and materials for “home brewing” biodiesel are readily available via the Internet.[26]

Globally, biodiesel production has increased from 71.3 thousand barrels per day in 2005 to over 400 thousand barrels per day in 2012 (see Figure 4).[27] Between 2005 and 2012, production more than doubled in Europe.[28] In 2011, the European Union still accounted for a plurality of the world’s biodiesel production, at roughly 44 percent, down from 55 percent in 2009. The United States produced about 16 percent of the world total in 2011, up from 10 percent in 2009.[29]

In the United States, the Energy Independence and Security Act (EISA) of 2007 mandated one billion gallons of biodiesel use annually by 2012. EPA extended that mandate to 1.28 billion gallons for 2013 (see C2ES Renewable Fuels Standard (RFS2)). By the end of 2011, an estimated 7.1 percent of total U.S. soy crops (5.45 million acres) were used for biodiesel. Preliminary figures for 2012 show these figures jumping to 13.6 percent of total U.S. soy crop (10.02 million acres) as soybean oil use increases to fulfill an estimated 66 percent of the 2012 biodiesel mandate in the RFS2.[30] Projections for 2013 and 2014 show these figures leveling off at around 14.5 percent of the total soybean crops.[31]

Figure 4. Biodiesel Production (Thousand Barrels Per Day), 2005 - 2011

Source: EIA, (2012)

In the United States, between October 2010 and September 2011, 4.2 billion pounds (14 percent) of domestic soybean oil was used to produce biodiesel – up from 1.1 billion pounds of soybean oil in 2010.[32]  This figure is expected to increase to 5.2 billion pounds of soybean oil in 2012, or about 27 percent of total domestic soybean oil production.[33] Additionally, 2.5 billion pounds of animal fat was used for biodiesel in 2010, increasing to 7.3 billion pounds in 2011.[34] As of 2011, a total of 158 biodiesel plants were operating in 42 states,[35] with a total annual production capacity of 2.7 billion gallons.[36]

Increased consumption of soy-based biodiesel can result in increased prices for that feedstock. Improving biofuel conversion efficiency, feedstock yields, and technologies to advance other feedstocks can lessen the pressure on a single feedstock.[37] Significant research efforts are underway to develop new feedstocks like jatropha, algae, and camelina, many of which could contribute to the biodiesel supply over the longer term. Researchers are also studying synthetic biofuel production that generates a diesel-type fuel through biomass gasification and catalytic conversion using the Fischer-Tropsch process (biomass-to-liquid, or BtL).[38] Fischer-Tropsch diesel has better cold weather performance compared to current biodiesel and could be substituted more easily and directly for petroleum-based diesel.

Finally, efforts are also underway to make renewable jet fuel. Typical biodiesel cannot be commingled with jet fuel in any product pipelines in any quantity. Instead, researchers are treating oil  from renewable sources with hydrogen to produce a drop-in biofuel, called hydrotreating, which allows it to be used alongside traditional jet fuel, without adverse effects on existing infrastructure and equipment.

Obstacles to Further Development or Deployment of Biodiesel

  • Economic issues

The growth of the biodiesel industry has been significant in recent years, but it is not expected to continue growing at the same pace given challenging economic conditions and the leveling off of government requirements after 2012, though EPA increased the 2013 requirements above the mandated level for that year.[39] If the price of petroleum-based diesel drops and the relative costs of biodiesel increase, possibly by allowing policies promoting biodiesel to expire, the incentive to produce the fuel will be reduced. In the United States, biodiesel production dropped in 2009 (to 516 million barrels) and again in 2010 (343 million barrels), while global production from 2009 to 2010 showed the smallest increase (9 percent) since data gathering began.[40] Though the market rebounded strongly in 2011, uncertainties of long-term market conditions remain because of price fluctuations and the unclear future of tax incentives.

  • Land use change

As with other biofuels produced from agricultural feedstocks, the production of biodiesel has direct and indirect impacts on land use. The clearing of grassland or forests to plant biofuel crops is a direct land use change that can affect the greenhouse gas emissions due to the loss of a carbon sink. The practice of clearing peatland in Malaysia and Indonesia to produce palm oil for biodiesel has raised particular concerns about land and net greenhouse gas impacts of biodiesel.[41]

Indirect land use change occurs when increased demand for a crop for fuel production leads to increased prices for the crop. This in turn results in food and fuel crops being planted in additional locations, increasing the land use emissions associated with crop production. Although it is important to include emissions across the complete lifecycle of fuel production and use when examining potential greenhouse gas reductions from biodiesel use, accounting for land use changes is particularly challenging and uncertain, and it requires a number of estimates and assumptions.

  • Impact on agricultural commodities and environmental resources

Like corn ethanol, biodiesel produced from soy, palm, rapeseed, or sunflower oil competes with other uses for those products, including food, feed, and timber. In addition to impacts on land use and agricultural prices, biofuel production can also affect water supply; habitat and ecosystems; and soil, air, and water quality.

  • Infrastructure Limitations

Today, most biodiesel is transported by rail because rural production sites are typically far from biodiesel consumers.[42] Even where pipeline infrastructure exists, biodiesel is often prohibited because of its solvent properties and related concerns about equipment damage. There are some exceptions where low-level blends (B5 and lower) of biodiesel are able to use existing infrastructure, such as in the Colonial Pipeline, which allows for low percent blends on its Georgia pipeline, or Kinder Morgan’s Plantation System, which allows low blends from Mississippi to Virginia.[43]

In contrast to existing infrastructure issues, existing retail infrastructure is relatively adaptive to distributing biodiesel because of the ability to more easily update and install retail infrastructure. Low percent blends of biodiesel can be sold at any pump while higher blends (above B20) require a new or upgraded pump. B20 stations increased over 11 percent between January 2011 (637 stations) and January 2012 (710 stations).[44]

Policy Options to Help Promote Biodiesel

Federal, state, county, and local governments currently support biofuels in a variety of ways. Similar to policies to promote corn ethanol, government support includes: (1) mandates on the minimum levels of biodiesel consumption, and (2) subsidies or tax credits for biodiesel production and/or use.

  • Mandates requiring biofuel use

Under authority given to it by the EISA of 2007, the EPA mandates annual renewable fuel volumes for sales of cellulosic, biodiesel, advanced biofuel, and total renewable fuels from 2008 to 2022. The EPA’s current policy is called the Renewable Fuels Standard (RFS2) (see Table 2 for the requirements over time). In order to qualify under the RFS2, biomass-based diesel fuels must meet a 50 percent reduction (below traditional diesel fuels) in lifecycle greenhouse gas emissions. The RFS2 made important changes from the RFS1 (mandated under the Energy Policy Act of 2005); including the extension to 2022 of renewable fuel mandates and the inclusion of biodiesel in addition to gasoline replacements.

Table 2. RFS Ethanol Equivalent Volume Requirements, 2011 – 2013 (billion gallons unless noted)

Fuel Type



2013 (proposed)

Cellulosic biofuel

6.6 million

10.45 million

14 million





Advanced biofuel




Total renewable fuel (Including ethanol)




Note: Volumes are ethanol-equivalent, except for biodiesel that is actual volume,

Source: EPA (2013)

  • Subsidies and tax credits

Currently, suppliers of biodiesel can claim a $1 per gallon tax credit. The tax credit has been in place since 2005, though it has lapsed twice, in 2010 and 2012. It was reenacted retroactively for 2012 and covers biodiesel production activity through 2013.[45] Additionally, many state and local policies encourage biodiesel in the form of infrastructure grants, alternative fuel tax credits, use in public school bus fleets, blending tax credits, and production incentives. For more on state level policies, see C2ES resource Biofuels: Incentives and Mandates.

As with other biofuels, policies should consider lifecycle emissions to ensure that biodiesel production contributes effectively to greenhouse gas emission reductions. Policies that do this include the federal RFS2 and California’s low carbon fuel standard, which is specifically designed to lower the overall carbon intensity of the transportation fuel supply. For more information on biofuel policies, see Climate TechBook: Biofuels Overview.

Related C2ES Resources

Climate TechBook: Biofuels Overview

Climate TechBook: Ethanol

Biofuels for Transportation: A Climate Perspective

State Map – Biofuels: Incentives and Mandates

Further Reading / Additional Resources

U.S. Energy Information Administration,

National Biodiesel Board

Biomass Research and Development Board

U.S. Department of Energy (DOE), Office of Energy Efficiency and Renewable Energy



[1] Energy Information Administration (EIA), Petroleum and Other Liquids Navigator, Biodiesel Overview.

[2] National Biodiesel Board,

[3] U.S. Energy Information Administration (US EIA), Biofuels issues and trends, (2012),

[4] Energy Information Administration (EIA), Petroleum and Other Liquids Navigator, Biodiesel Overview.

[5] EIA AEO,

[6] EPA, EPA Proposes 2013 Renewable Fuel Standards (2013),

[7] Methyl ester is the chemical name for biodiesel molecules.

[8] US EIA, Biofuels issues and trends, 2012.

[9] US EIA, Biofuels issues and trends, 2012.

[10] Esterification is the general name for a chemical reaction in which two reactants (typically an alcohol and an acid) form an ester, a type of organic compound, as the reaction product.

[11] Using annual estimates. During November 2012, 244 million pounds of soybean oil was used, followed by 48 million pounds corn oil, 35 million pounds yellow grease, and 28 million pounds white grease. EIA, Monthly Biodiesel Production Report: February 1, 2013,

[12] Cloud point refers to the temperature below which the wax in diesel (or biowax in biodiesel) precipitates out and begins to “cloud.” Pour point is the temperature at which the diesel fuel thickens and will no longer pour, usually a temperature lower than the cloud point. Cetane number is a measure of the ignition quality of diesel-based fuels; a higher cetane number results in improved combustion.

[13] EIA, Monthly Biodiesel Production Report: Feb 1, 2013,

[14] U.S. Environmental Protection Agency (EPA), Biodiesel: Technical Highlights, updated February 2010.

[15] EPA, Guidance for Biodiesel Producers and Biodiesel Blenders/Users, 2007,

[16] U.S. Department of Energy (DOE), Energy Efficiency and Renewable Energy, B20 and B100: Alternative Fuels, updated 3 February 2009.

[17] NREL, Biodiesel Handling and Use, 2009,

[18] CARB. (2011, July 1). Detailed California-Modified GREET Pathway for Transportation Fuels. Retrieved July 11, 2011, from California Air Resources Board:

[19] Ibid.

[20] EIA, Biofuels in the U.S. Transportation Sector, updated February 2007.

[21] International Energy Agency (IEA), IEA Energy Technology Essentials: Biofuels Production. Paris: IEA, 2007.

[22] US EIA, Biofuels issues and trends, 2012.

[23] U.S. Energy Information Administration, Biofuels issues and trends,

[24] EIA, Weekly Retail Gasoline and Diesel Prices: Annual,

[25] US EIA, Biofuels issues and trends, 2012.

[26] For example:

[27] Energy Information Administration (EIA), International Energy Statistics, Biodiesel Production tables,

[28] Ibid.

[29] Ibid.

[30] Wisner, R. Soybean Oil and Biodiesel Usage Projection & Balance Sheet (2013),

[31] Wisner, R. Soybean Oil and Biodiesel Usage Projection & Balance Sheet (2013),

[32] EIA, Biofuels issues and trends, 2012.

[33] EIA, Biofuels issues and trends, 2012.

[34] EIA, Biofuels issues and trends, 2012.

[35] National Biodiesel Board,

[36]U.S. Energy Information Administration, Annual Energy Outlook 2011,

[37] Biomass Research and Development Board, Increasing Feedstock Production: Economic Drivers, Environmental Implications, and the Role of Research (2009),

[38] The Fischer-Tropsch process is a chemical reaction in which synthesis gas (often called syngas) – produced from a mixture of carbon monoxide and hydrogen from biomass or fossil fuels, such as natural gas and coal – is converted into liquid diesel

[39] C2ES, Renewable Fuel Standard 2,

[40] Energy Information Administration (EIA), International Energy Statistics, Biodiesel Production tables,

[41] Rosenthal, Elisabeth. "Once a Dream Fuel, Palm Oil May Be an Eco-Nightmare," New York Times, 31 January 2007.

[42] EIA, Biofuels issues and trends, 2012.

[43] EIA, Biofuels issues and trends, 2012.

[44] DOE AFDC, “Alternative Fueling Station Total Counts by State and Fuel Type,”

[45] U.S. DOE, Alternative Fuels Data Center, Biodiesel Income Tax Credit,


Carbon Markets Take Flight (In Europe)

This post originally appeared on Txchnologist

At a time when many are adopting the narrative that carbon markets are faltering, the European Union (EU) is aggressively pursuing the expansion of theirs to include aviation. One of only two mandatory greenhouse gas (GHG) cap-and-trade systems in the world, the EU Emissions Trading Scheme (ETS) plans to fold in a new sector beginning in January 2012. Our research shows reducing GHG emissions from aviation is critical if we are to mitigate the impacts of global climate change. Low-carbon fuel technology and other technologies for airplanes are advancing at a rapid clip, but we need a climate policy – either a price on carbon or something else – to get over the hump.

Anaerobic Digesters

Quick Facts

  • Anaerobic digesters provide a variety of environmental and public health benefits including: greenhouse gas abatement, organic waste reduction, odor reduction, and pathogen destruction.
  • Anaerobic digestion is a carbon-neutral technology to produce biogas that can be used for heating, generating electricity, mechanical energy, or for supplementing the natural gas supply.
  • In 2010, 162 anaerobic digesters generated 453 million kWh of energy in the United States in agricultural operations, enough to power 25,000 average-sized homes.[1]
  • In Europe, anaerobic digesters are used to convert agricultural, industrial, and municipal wastes into biogases that can be upgraded to 97 percent pure methane as a natural gas substitute or to generate electricity. Germany leads the European nations with 6,800 large-scale anaerobic digesters, followed by Austria with 551.[2]
  • In developing countries, small-scale anaerobic digesters are used to meet the heating and cooking needs of individual rural communities. China has an estimated 8 million anaerobic digesters while Nepal has 50,000.[3]

Figure 1: Number of operating anaerobic digesters in select European countries.

Source: Country Report of Member Countries, Istanbul, April 2011. IEA Bioenergy Task 37.


Anaerobic digestion is a natural process in which bacteria break down organic matter in an oxygen-free environment to form biogas and digestate. A broad range of organic inputs can be used including manure, food waste, and sewage, although the composition is determined by the industry, whether it is agriculture, industrial, wastewater treatment, or others. Anaerobic digesters can be designed for either mesophilic or thermophilic operation – at 35°C (95°F) or 55°C (131°F), respectively.[4] Temperatures are carefully regulated during the digestion process to keep the mesophilic or thermophilic bacteria alive. The resulting biogas is combustible and can be used for heating and electricity generation, or can be upgraded to renewable natural gas and used to power vehicles or supplement the natural gas supply. Digestate can be used as fertilizer.


Anaerobic digestion has a defined process flow that consists of four distinct phases: pre-treatment, digestion, biogas processing and utilization, and disposal or reuse of solid waste.

  1. In pre-treatment, wastes may be processed, separated, or mixed to ensure that they will decompose in the digester;
  2. During digestion, waste products are broken down by bacteria and biogas is produced;
  3. Biogas produced is either combusted or upgraded and then used to displace fossil fuels. During upgrading, scrubbers, membranes, or other means are used to remove impurities and carbon dioxide (CO2) from biogas; and
  4. Reuse or disposal of solid digested waste. Digested waste has a high nutrient content and can be used as fertilizer so long as it is free of pathogens or toxics, or it can be composted to further enhance nutrient content.[5]

Digestion process

Digestion, or decomposition, occurs in three stages. The first stage consists of hydrolysis and acidogenesis, where enzyme secreting bacteria convert polymers into monomers like glucose and amino acids and then these monomers are transformed into higher volatile fatty acids. The second stage is acetogenesis, in which bacteria called acetogens convert these fatty acids into hydrogen (H2), CO2, and acetic acid. The final stage is methanogenesis, where bacteria called methanogens use H2, CO2, and acetate to produce biogas, which is around 55-70 percent methane (CH4) and 30-45 percent CO2.[6]

Types of anaerobic digesters

Though there are many different types of digesters that can be used for agricultural, industrial, and wastewater treatment facility wastes, digesters can be broadly grouped based on their ability to process liquid or solid waste types (Table 1).

Table 1: Types of Anaerobic Digesters

Type of waste

Liquid waste

Slurry waste

Semi-solid waste

Appropriate digester

Covered lagoon digester/Upflow anaerobic sludge blanket/Fixed Film

Complete mix digester

Plug flow digester


Covered lagoon or sludge blanket type digesters are used with wastes discharged into water. The decomposition of waste in water creates a naturally anaerobic environment.

Complete mix digesters work best with slurry manure or wastes that are semi-liquid (generally, when the waste’s solids composition is less than 10 percent). These wastes are deposited in a heated tank and periodically mixed. Biogas that is produced remains in the tank until use or flaring.

Plug flow digesters are used for solid manure or waste (generally, when the waste’s solids composition is 11 percent or greater). Wastes are deposited in a long, heated tank that is typically situated below ground. Biogas remains in the tank until use or flaring.

Uses of Anaerobic Digesters

Anaerobic digesters are utilized in many situations where industrial or agricultural operations produce a significant organic waste stream. In addition, municipal solid waste (MSW) landfills produce landfill gas from natural decomposition of organic material in the waste that can be captured for use as an energy source. Many MSW sites now have wells to capture biogas produced from waste decomposition.[7]Wastewater treatment plants (WWTPs) can also be converted to operate anaerobically, and they can be used to produce biogas from a variety of wastes.


In agriculture, animal and crop wastes are typically used as a feedstock for anaerobic digesters. Domestically, there are about 162 agricultural anaerobic digester systems. They collectively produced approximately 453,000 megawatt-hours (MWh) of energy in 2010, enough to power 25,000 average U.S. homes.[8]Different types of digesters are used depending on the existing waste management system for a given farm.

Figure 2: Components and Products of a Biogas Recovery System.

Source: Managing Manure with Biogas Recovery Systems: Improved Performance at Competitive Costs. EPA AgSTAR


Organic waste generated by industrial processes, particularly waste from the food processing industry, can be used as a feedstock for an anaerobic digester. Food waste makes an excellent feedstock, as it has as much as 15 times the methane production potential that dairy cattle manure does.[9] Food waste substrates may also be combined with manure to improve methane generation in a process known as co-digestion. Much like agriculture, different digesters are used depending on the moisture content of the waste feedstock. Biogas is typically used for heat or other energy production when produced from industrial wastes.

Wastewater treatment plants (WWTP)

Wastewater treatment facilities employ anaerobic digesters to break down sewage sludge and eliminate pathogens in wastewater. Often, biogas is captured from digesters and used to heat nearby facilities. Some municipalities have even begun to divert food waste from landfills to WWTPs; this relieves waste burdens placed on local landfills and allows for energy production.[10]

Municipal solid waste (MSW)

The compaction and burial of trash at MSW facilities creates an anaerobic environment for decomposition. As a result, landfills naturally produce large amounts of methane. Gas emitted from MSW facilities is typically called landfill gas, as opposed to biogas. The primary difference between the two is the lower methane content of landfill gas relative to biogas – approximately 45-60 percent compared to 55-70 percent. There are 510 MSW facilities in the U.S. that utilize landfill gas capture to reclaim naturally emitted methane, which generate enough energy to power 433,000 homes. [11]

In a landfill gas collection system, gas is directed from various points of origin in waste facilities to a central processing area using a system of wells, blowers, flares, and fans. It is then upgraded and either flared to reduce odor and greenhouse gas (GHG) emissions or combusted to produce energy or heat. Since it has lower methane content than biogas, it requires greater upgrading in order to become a substitute for natural gas. The figure below depicts a MSW landfill gas system.

Figure 3: Diagram of a Landfill Gas Collection System.

Source: Landfill Gas. City of Ann Arbor, MI.

Environmental Benefit/Emission Reduction Potential

Anaerobic digesters make several contributions to climate change mitigation. First, in many cases, digesters capture biogas or landfill gas that would have been emitted anyway because of the nature of organic waste management at the facility where the digester is in operation. By capturing and combusting biogas or landfill gas, anaerobic digesters are preventing fugitive methane emissions. Methane is a potent GHG with a global warming potential 25 times that of CO­2. When the captured biogas or landfill gas is combusted, methane is converted into CO­2 and water, resulting in a net GHG emissions reduction. Some digesters simply incorporate flares designed to burn the biogas they capture instead of using it for heat or energy applications. This is usually done when it is not cost-effective to install heat or energy generation equipment in addition to the digester.

Another benefit of anaerobic digesters is the displacement of fossil fuel-based energy that occurs when biogas is used to produce heat or electricity. Biogas is generally considered to be a carbon-neutral source of energy because the carbon emitted during combustion was atmospheric carbon that was recently fixed by plants or other organisms, as opposed to the combustion of fossil fuels where carbon sequestered for millions of years is emitted into the atmosphere. As such, substituting energy from biogas for energy from fossil fuels cuts down on GHG emissions associated with energy production.

GHG emissions are also reduced when the nutrient-rich digestate created from anaerobic digestion is used to displace fossil-fuel based fertilizers used in crop production. This digestate makes a natural fertilizer that is produced with renewable energy as opposed to fossil fuels.

Additional environmental benefits outside of GHG reduction stem from the use of anaerobic digesters. For one, the process of anaerobic digestion reduces waste quantities by decomposing organic material. This alleviates the disposal burden on municipal landfills and cuts down on environmental problems associated with landfilling or stockpiling large amounts waste, including problems such as water supply contamination, eutrophication—where oxygen levels in surrounding bodies of water may decrease due to algal blooms brought on by nutrient loading— and land resource constraints. Anaerobic digesters and the combustion of biogas also eliminate noisome odors created by organic decomposition. For MSWs, landfill gas capture facilities prevent hazards associated with the accumulation and subsurface migration of flammable landfill gas.[12] Finally, anaerobic digesters reduce the number of pathogens present in many types of waste.[13]


The net-cost of anaerobic digesters and the production of biogas depend on a number of factors, including the following:

  • the methane production potential of the feedstock used;
  • digester type;
  • volume of waste and intended hydraulic retention time;
  • the amount of waste available as a feedstock;
  • the capital and operating costs of the digester type needed for a particular application;
  • the intended use of the biogas produced; and
  • the value of the fertilizer produced as a byproduct of digestion.

The type and size of the digester used will have a large impact on cost, as some digesters are more costly to construct and operate. The use of biogas will also have an effect on the net-cost of an anaerobic digester. Depending on the project and the region in which it is being developed, the type of fuel a digester is displacing will have an effect on its net-cost. For instance, substituting upgraded biogas for natural gas—as opposed to using it to produce electricity—in an area where electricity is a less expensive energy source will make a project more cost-effective. In some cases, the use of a digester will have external benefits that may not be reflected in its cost. For example, anaerobic digestion may cut down on municipal waste disposal costs by decreasing the amount of waste deposited in landfills. It may also decrease environmental regulation compliance costs, such as those associated with water protection or odor control.

The EPA has issued some cost estimates for digesters in livestock operations. These estimates, based on farm and animal size, are expressed in animal units (AUs) equal to 1,000 pounds of live animal weight. Costs estimates are as follows:

  • Covered lagoon digester: $150-400 per AU
  • Complete mix or plug flow digester: $200-400 per AU

These estimates are based solely on the upfront capital costs associated with installing a digester and do not include operating costs or costs of installing energy generation equipment like turbines.[14]

Current Status of Anaerobic Digesters

Experimentation with controlled, industrialized anaerobic digesters began in the middle of the 19th century. In 1895, Exeter, England used biogas from a sewage treatment facility to power street lamps. While the relatively low cost of fossil fuels has stymied anaerobic digester development in industrialized nations since then, small-scale digesters have been employed by developing nations to provide heat and energy.[15] For example, in China it is estimated that 8 million small-scale digester systems are in operation today, mostly providing biogas for cooking and lighting in households.[16]U.S. farms first began using digesters in the 1970’s. Around 120 agricultural digesters existed by the 1980’s because of federal incentives, but costs and performance issues inhibited further development.[17]A new series of incentives and policies has helped to motivate new growth in agricultural digesters. For example, incentives in the form of grants and loan guarantees offered through the EPA’s AgStar program, and policies in the form of renewable electricity portfolio standards, have helped to catalyze digester installation. Today, there are around 162 agricultural anaerobic digester systems, many of which are new. They collectively produced around 453,000 megawatt hours (MWh) of energy in 2010.[18] Average figures for industrial digesters do not exist, but new digester technology has made it easier to process waste and incentives have made the use of industrial digesters more cost effective.

Many MSW facilities have begun to utilize landfill bioreactors to produce electricity, eliminate odors, and prevent hazards. Currently, the EPA estimates that around 510 MSW facilities combust landfill gas to generate electricity and heat and an additional 510 MSW facilities could be converted for electricity generation cost-effectively.[19]

WWTPs have also begun to employ digesters in greater numbers because of their waste reduction and energy benefits. The EPA estimates that 544 large WWTPs (those that process more than five million gallons of wastewater per day) currently utilize anaerobic digesters to produce biogas. This represents around half of the WWTPs of this size nationally.[20]

Several European nations have ambitious targets for biogas usage in vehicles. Germany and Austria have mandates requiring that 20 percent biogas be used in natural gas vehicles. Feed-in tariffs established for biogas in Germany have also catalyzed the development of anaerobic digesters. Currently, 6,800 agricultural digesters exist in Germany, an increase from 4,000 in 2009.[21] Sweden, which has nearly 11,500 natural gas vehicles, estimates that biogas meets half of its fuel needs, and continues to support the use of biogas as a vehicle fuel. Globally, it is estimated that 70,000 vehicles will be powered with biogas by 2010.[22]

Obstacles to Further Development or Deployment of Anaerobic Digesters


Controlled anaerobic digestion requires sustaining somewhat delicate microbial ecosystems. Digesters must be kept at certain temperatures to produce biogas, and the introduction of inorganic or non-digestible waste can damage systems. Performance issues with agricultural digesters in the 1980’s stalled their development and damaged their reputation amongst farmers.[23]Improvements have been made to the current generation of digesters, but questions about long-term reliability still remain.

Investment uncertainty

Installation, siting, and the operation of digesters remain costly. When biogas is utilized for energy, agricultural digesters have a payback period of around 3 to 7 years[24]; WWTP digesters have a payback period of less than 3 years, and less if food wastes are also accepted as co-digestion fuel.[25] Financial incentives have helped to catalyze the development of digesters with longer payback periods, but uncertainty about long-term support for digester projects, in the form of tax incentives or subsidies, has impeded development.

Interconnection with the electricity grid

While the Energy Policy Act of 2005 required net metering (the ability for electricity consumers to sell electricity generated on-site back to a utility) to be offered to consumers upon request in every state, disparate policy implementation and electricity rates have hindered wide-scale adoption of anaerobic digesters for electricity generation from agricultural sources. California, for example, does not allow utility providers to apply standby charges, minimum monthly charges, or interconnection fees,[26] but utility providers do not buy back excess electricity, leading many farmers to burn-off excess gas rather than to provide the utilities with free energy to the grid.[27] Further hindering adoption are varying limits on the amount of electricity that may be sold back to the grid under net metering rules.[28] The situation should improve as electricity providers gain experience in incorporating anaerobic digesters into the electrical grid.

Policy Options to Help Promote Anaerobic Digesters

Price on carbon

A price on carbon, such as that which would exist under a GHG cap-and-trade program, would raise the cost of coal and natural gas power, making anaerobic digesters more cost competitive.

Renewable Portfolio Standards

A renewable portfolio standard (sometimes called a renewable or alternative energy standard) requires that a certain percentage or absolute amount of a utility’s power plant capacity or generation (or sales) come from renewable sources by a given date. As of June 2011, 30 U.S. states and the District of Columbia had adopted a mandatory renewable or alternative energy portfolio standard and an additional seven states had set renewable energy goals. Renewable portfolio standards encourage investment in new renewable generation and can guarantee a market for this generation.

Tax credits and other subsidies

Ensuring that current incentives, such as the Federal Production Tax Credit, remain in place in the long term will sustain investment and growth in biogas production. Other forms of assistance, like grant programs and loan guarantees to anaerobic digester project developers, will also catalyze the development of digester projects.

Feed-in Tariffs

Feed-in tariffs require that utilities purchase energy from certain generation facilities at a favorable rate. As demonstrated in Germany, a feed-in tariff that mandates the purchase of biogas energy from anaerobic digesters and provides a financial return to digester projects could catalyze their development.

Related Business Environmental Leadership Council (BELC) Company Activities

Related C2ES Resources

Further Reading/Additional Resources

International Energy Agency Bioenergy: Biogas Production and Utilization, 2005

California Integrated Waste Management Board: Current Anaerobic Digestion Technologies Used for Treatment of Municipal Organic Solid Waste, 2008

U.S. Environmental Protection Agency (EPA)

[1] The Agstar Program. U.S. Farm Anaerobic Digestion Systems: A 2010 SnapshotU.S. EPA. U.S. EPA. Accessed June 2, 2011.

[2] IEA Bioenergy Task 37. Country Reports of Member Countries, Istanbul, April 2011. International Energy Agency. Accessed June 3, 2011.

[3] IEA Bioenergy. Biogas Production and Utilisation. International Energy Agency. May 2005. Accessed June 3, 2011.

[4] Lukehurst, C. T., Frost, P., Al Seadi, T. Utilisation of digestate from biogas plants as biofertiliser. IEA Bioenergy. June 2010. Accessed June 3, 2011.

[5] Fabien, Monnet. An Introduction to the Anaerobic Digestion of Organic Waste. Biogas Max. Remade Scotland, November 2003. Accessed June 13, 2011.

[6] Ibid.

[7] Oregon Department of Energy. Biogas Technology. Oregon Department of Energy. Accessed June 3, 2011.

[8] Supra note 1.

[10] Ibid.

[11] Landfill Methane Outreach Program. Frequently Asked Questions. U.S. EPA. U.S. EPA. Accessed June 6, 2011.

[12] Landfill Methane Outreach Program. Basic Information. U.S. EPA. U.S. EPA. Accessed June 6, 2011.

[13] Supra note 7.

[14] The Agstar Program. Managing Manure with Biogas Recovery Systems. Improved Performance at Competitive Costs. U.S. EPA. U.S. EPA, Winter 2002. Accessed June 13, 2011.

[15] Supra note 5.

[16] Supra note 3.

[17] Supra note 7.

[18] Supra note 1.

[19] Supra note 12.

[20] U.S. EPA Combined Heat and Power Partnership. Opportunities for and Benefits of Combined Heat and Power at Wastewater Treatment Facilities. U.S. EPA. U.S. EPA, April 2007. Accessed June 6, 2011.

[21] Supra note 2.

[22] Alternative and Advanced Fuels. What is biogas? U.S. DOE. U.S. DOE. Accessed June 13, 2011.

[23] Supra note 7.

[24] Supra note 14.

[25] Supra note 9.

[26] DSIRE. California – Net Metering. Accessed June 13, 2011.

[27] Mullins P. A., Tikalsky S. M. Anaerobic Digester Implementation Issues. Phase II – A Survey of California Farmers (Dairy Power Production Program). California Energy Commission. December 2006. Accessed June 13 2011.

[28] DSIRE. Net Metering Map. June 2011. Accessed June 13, 2011. 


Biological and mechanical systems to capture greenhouse gases from certain industrial and agricultural operations

Biological and mechanical systems to capture greenhouse gases from certain industrial and agricultural operations

Recovery Act’s Impact on Energy Spending

The American Recovery and Reinvestment Act of 2009 (Pub.L. 111-5, Recovery Act, ARRA) is the economic stimulus package passed by Congress on February 13, 2009, and signed by President Obama four days later. As of February 2011, the package was expected to total $821 billion in costs through 2019 delivered through a combination of federal tax cuts, temporary expansion of economic assistance provisions, and domestic spending to advance economic recovery and create new jobs, as well as save existing ones. From advancing smart grid development to supporting appliance rebate programs, the Recovery Act has allowed the United States to make significant headway in building the foundation of its clean energy economy. We recently released an update to our 2009 white paper on the U.S. Department of Energy's (DOE) Recovery Act spending. The publication summarizes DOE ARRA spending, the Recovery Act's effects on employment, and highlights a number of notable projects. 

Getting It Right on Fuel Efficiency

This post also appears in the National Journal Energy & Environment Experts blog in response to the question: What should drive fuel efficiency?

At a moment when it appears to many that our government can’t do anything right, the current approach to regulating vehicle fuel economy and greenhouse gas (GHG) emissions is a bright spot.

After decades of failing to tighten corporate average fuel economy (CAFE) standards, and several years when California and other states began to take the matter of setting vehicle GHG standards into their own hands, the federal government finally got its act together. In 2007 Congress enacted the Energy Independence and Security Act of 2007, tightening CAFE. In 2010, NHTSA and the U.S. Environmental Protection Agency (EPA) jointly set GHG and CAFE standards, and California agreed to conform its rules to the federal ones. NHTSA and EPA are hard at work at a second round of standards for light duty vehicles, as well as the first-ever set of similar rules for medium and heavy duty trucks.

We now have the Congress, federal and state regulators, industry and public interest groups aligned on a policy framework that is meeting important national goals of reducing oil dependence and GHG emissions, providing regulatory consistency and certainty to the industry, and creating a climate favorable to investment and innovation.

The auto industry is responding successfully. The plug-in hybrid electric Chevy Volt won the 2011 Motor Trend Car of the Year, 2011 Green Car of the Year, and 2011 North American Car of the Year. It’s also selling well. But PHEVs are just part of the story. The Chevy Cruze and Hyundai Elantra are among the nine vehicles in the U.S. marketplace that get more than 40 miles per gallon. They were also among the 10 top-selling vehicles last month. Higher sales of fuel-efficient vehicles across the board contributed to strong sales and combined profits of nearly $5.9 billion for the three U.S. automakers in the first quarter of this year.

Higher gasoline prices are heightening consumer interest in these vehicles. But we cannot rely on oil prices alone to drive us to the next generation of vehicles. Oil prices are too volatile to motivate the sustained business investment we need. And the price we pay at the pump doesn’t reflect the true cost of oil to our country. Half of the 2010 U.S. trade deficit was from oil – that’s $256.9 billion we sent overseas last year alone. The U.S. EPA estimates that the energy security benefit of reducing oil dependence is on the order of $12 per barrel. And gasoline burning inflicts enormous damage on our air quality and climate. For example, the transportation sector is responsible for more than a quarter of U.S. GHG emissions and is a major contributor to smog.

The beauty of the fuel economy and GHG standards is that they are performance based. They set targets based on important public policy goals – i.e., oil savings and GHG reductions – but leave it to industry to find the best way to meet them. They don’t “pick winners.” They should remain the core of our public policy framework for transportation.

But our current set of vehicles and fuels may not be up to the job of meeting our long-term goals. In order to level the playing field with the incumbent technologies that have benefited from nearly a century of infrastructure development and fuel-vehicle optimization, we need to make some public investment to jumpstart alternative vehicles and fuels. This has to be done carefully. We need a savvy, adaptive strategy that ensures that any subsidies are only temporary, leverages public investment with private dollars, spawns experiments and learns from them, and rewards environmental and efficiency performance.

It is not clear whether hydrogen, natural gas, electricity, or biofuels are the long-term solution to our energy and environmental challenges. But we need to continue to keep the pressure on all of them through performance-based standards, research them all, subsidize limited deployment to see how they perform in the real world, and leave it to industry and consumers to determine their ultimate success in the marketplace.

Judi Greenwald is Vice President for Innovative Solutions

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