Energy & Technology
Through a recently signed Presidential Memorandum, Barack Obama is continuing the push to regulate greenhouse gas emissions from the transportation sector using its authorities under the Clean Air Act (CAA) and the Energy Independence and Security Act of 2007 (EISA). While the memorandum includes provisions for passenger cars, light-duty trucks, and support of an electric vehicle charging infrastructure, the most notable component involves vehicles that have eluded fuel efficiency regulators.
When it comes to GHG emissions and the transportation sector, the elephant in the room has been medium- and heavy-duty vehicles (freight trucks). The recently released memorandum will bring these vehicles under the regulatory umbrella and increase the likelihood that the transportation sector will contribute its share to economy-wide GHG emission reductions.
- Advanced biohydrocarbons – as defined in this fact sheet – are derived from lignocellulosic biomass (e.g., trees, grasses, wastes, and agricultural or forest residues) or algae and do not compete with the production of feed or food crops.
- Depending on technology advancement and capital investment in biorefineries, some estimates have advanced biohydrocarbons displacing as much as 30 percent of the amount of petroleum consumed in the United States by 2050.
Advanced biohydrocarbons are similar to conventional hydrocarbon fuels such as gasoline or diesel but are produced from biomass feedstocks, such as woody biomass or algae, through a variety of biological and chemical processes. Advanced biohydrocarbons are considered a ‘drop-in’ fuel; in other words, their use does not require significant modifications to existing fuel distribution infrastructure or vehicle engine modifications (for gasoline or diesel powered vehicles), unlike ethanol as it is used today. Similarly, the energy content of advanced biohydrocarbons is equivalent to that of their petroleum-based counterparts (i.e., gasoline and diesel).
Manufacturers can produce advanced biohydrocarbons by four primary pathways:
- Fermentation: In this case, manufacturers pre-treat the biomass with heat, enzymes, or acids to make the cellulose easier to break down into simple sugars using a chemical reaction called hydrolysis. The sugars from the biomass are subsequently fermented using genetically engineered microorganisms. This process is similar to the one used to produce corn or sugarcane ethanol (see Climate Techbook: Ethanol). However, these microorganisms are engineered to break down the biomass to produce hydrocarbons rather than alcohols. This is an important distinction in the genetic modification of the microorganisms because alcohol formation generally would create a poisonous environment, thereby reducing the efficacy of the catalyst. With the modified microorganisms, however, hydrocarbons immediately form an organic layer separate from the microorganisms.
- Gasification: In this pathway, solid woody biomass is leftuntreatedand then converted at very high temperatures into a combination of carbon monoxide (CO) and hydrogen (H2), a mixture termed syngas. Syngas is the starting material for catalytic chemical reactions, such as Fischer-Tropsch synthesis, which convert the syngas into a liquid fuel.
- Pyrolysis: Similar to gasification, untreated woody biomass is heated quickly at high temperatures, but in the absence of oxygen. The high heating leads to the breakdown of the complex structure of the lignin to produce an intermediate bio-oil. Typically, this bio-oil is subsequently refined to a liquid fuel via a catalytic reaction called hydrotreating.
- Algal conversion: There are currently three main pathways to produce a fuel from algae: 1) algae is genetically engineered to secrete bio-oils efficiently; 2) a bio-oil extract from algae is chemically treated to produce a bio-oil; or 3) algae cultures are converted in their entirety via pyrolysis (see above). In any case, the algae can be genetically modified to thrive in otherwise harsh conditions (e.g., high salinity or nonpotable water). In all cases, the bio-oil product derived from algae is subsequently upgraded via hydrotreating and becomes a liquid fuel similar to diesel or gasoline.
Figure 1: Production Pathways for Advanced Biohydrocarbon Fuels
This figure illustrates a) chemical (black), b) biological (green), and c) thermal (red) production pathways for advanced biohydrocarbons derived from i) woody biomass and ii) algae. The production of gasoline or diesel equivalents is dependent on the technology and pathway. Note that while jet fuel can also be produced, it is not discussed further in this summary.
- Biological and Chemical Catalysts: In each of these four pathways, liquid biofuels are formed as the result of biological and chemical catalysis. Catalysis is a process in which a material (the catalyst) is added to a reactive environment to increase the rate of reaction without being consumed by the reaction. As shown in Figure 1, most of these pathways are processes that are characterized as chemical catalysis. Chemical catalysts have a number of advantages over biological catalysts. The advantages of chemical catalysts include: broader range of reaction conditions, lower residence time (i.e., faster reactions), potential for lower cost fuel production, and the elimination of a sterilization step. However, compared to biological catalysis, chemical catalysis, as it relates to the complex structures of the compounds that make up biomass, is a relatively new field. Developing these processes is a challenge.
Environmental Benefit / Emission Reduction Potential
The environmental benefits of advanced biohydrocarbons are significant. For instance, they have the potential to overcome obstacles related to the use of ethanol: land use changes; transportation and distribution of finished fuel; impacts on other agricultural commodities; and the need for vehicle modification.
The primary feedstocks for advanced biohydrocarbons are woody biomass (primarily food and agricultural waste) and algae — neither of which have the same land requirements as biofuels derived from traditional food or feed crops (such as corn or sugarcane). While there will inevitably be some pressure on agricultural lands and forestry resources, the impacts are less than first generation biofuels.
The development of heterogeneous chemical catalysts, used in combination with biological catalysts to produce advanced biohydrocarbons, has the potential to improve biofuel production efficiency and reduce costs. Furthermore, advanced biohydrocarbon fuels are chemically equivalent to the fuels derived from petroleum, which may make it possible to link biorefining processes to existing petroleum refineries. This has the potential to reduce the environmental impact of construction of new refineries and distribution networks (e.g., pipelines), and other fueling infrastructure.
Advanced biohydrocarbons have the potential to reduce significantly the amount of water used in feedstock production and in fuel processing compared to the crops for “first generation” biofuels and the processing using dilute sugar solutions for ethanol production.
The greenhouse gas emissions reduction potential of advanced biohydrocarbons is significant. However, there are no reliable estimates of the GHG emissions (reported as grams per megajoule, g/MJ) of advanced biohydrocarbons because there are no commercial scale processes that can be used to develop the appropriate energy balance equations.
The Department of Energy (DOE) has estimated that the availability of domestic biomass streams, with “relatively modest changes in land use and agricultural and forest practices,” could yield advanced biohydrocarbons at a volume equivalent to approximately 30 percent of petroleum used in the United States by 2050. The oil yield of algal-based diesels is predicted to be as much as an order of magnitude higher than other biodiesel crops. Assuming a lower limit for the oil yield of algal-based biodiesel (30 percent by weight), only 2.5 percent of existing U.S. cropping area would be required to displace 50 percent of petroleum based diesel use in the United States.
The current cost of large-scale production of advanced biohydrocarbons is unknown, as only bench-scale production has been conducted thus far. As such, only estimates of cost are available at this time.
There are four primary factors that determine the cost of the finished product: the feedstock, chemical processing (e.g., pyrolysis), refining and finishing the crude product, and the transportation and distribution of finished fuel.
Feedstock: The cost of woody biomass feedstocks is dependent on a number of factors including, but not limited to: crop yield, land availability, harvesting, storage and handling, and transportation costs. Huber estimates a cost of $34 to $70 per dry ton, or $5 to $15 per barrel of oil energy equivalent. This is generally consistent with the BRDI review of the literature. They report costs for a number of advanced biofuel feedstock types, including agricultural residues (e.g., corn stover), forest biomass, urban woody wastes and secondary mill residues, herbaceous energy crops (e.g., switchgrass), and short rotation woody crops.
Catalyst: The long-term potential of advanced biohydrocarbons is linked to the ability of producers to produce liquid fuels using cost-effective catalysts. Looking at existing catalytic processes, the DOE has a projected cost of cellulase enzymes for the production of ethanol between $0.30–0.50 per gallon of ethanol. In contrast, the chemical catalysts in the petroleum industry are estimated to cost about $0.01 per gallon of gasoline.
Refining and Upgrading: Estimates for refining and upgrading the bio-oil produced from pyrolysis or hydrolysis suggest that these steps account for about 33–39 percent of the capital costs of producing the finished product. The range varies due to the variable amount of refining and upgrading required based on the pathway.
Transportation: The cost of transporting biomass feedstocks can increase production costs considerably. The savings derived from economies of scale at centralized facilities are often offset by the increased transportation costs of the raw material(s). Developing a distribution system that is built on local and distributed production facilities rather than large centralized facilities will help reduce transportation costs.
In terms of net production, various start-up companies have claimed that they anticipate that in the long term, advanced biohydrocarbons will be competitive with conventional petroleum products at oil prices of about $40–60 per barrel.
Advanced biohydrocarbons are currently in the development and demonstration stage. A variety of processes have been demonstrated using bench-scale reactors to produce liquid fuels and liquid fuel components (e.g., aromatic compounds). Most estimates suggest that commercial scale production of advanced biohydrocarbons will begin within the next five to ten years.
Most recently, the DOE’s ARPA-E awarded seven projects (out of 37) a total of $37.2 million (out of $151 million) in areas related to advanced biohydrocarbons as part of their solicitation for Transformational Energy Research Projects.
The DOE awarded $78 million for the development of ‘drop-in’ renewable hydrocarbon biofuels such as advanced biohydrocarbons and associated fueling infrastructure.
Within the past year alone, five major oil companies – BP, Chevron, ExxonMobil, Royal Dutch Shell, and Total – announced joint ventures with biofuel companies to work on the development of advanced biohydrocarbons.
Obstacles to Further Development or Deployment
Currently, there are no low-cost technologies to convert the large fraction of energy in biomass or the bio-oils derived from algae into liquid fuels efficiently. Production costs must be reduced considerably, and the production volumes necessary for widespread use still need to be demonstrated. The lower limit benchmark for commercial scale processing of biomass is about 150,000 metric tons per year.
Ultimately, the optimization of advanced biohydrocarbon production processes is an essential step to allow biorefineries to produce up to commercial volumes. These barriers exist in processes such as selective thermal processing, liquid-phase catalytic processing of sugars and bio-oils, and catalytic conversion of bio-gas.
- Selective thermal processing via pyrolysis
- The production of bio-oil using fast pyrolysis results in a product that is high in oxygen content. This bio-oil is not compatible with the existing fueling infrastructure, so the oxygen needs to be removed, typically via hydrotreatment or hydrocracking. This process can be expensive and requires large quantities of hydrogen.
- Another concern is that bio-oils tend to be acidic and can cause corrosion in standard refinery units. Furthermore, they are toxic and require careful handling.
- Liquid-phase catalytic processing of sugars and bio-oils
- There is a need to increase our understanding of the intermediate processes during liquid-phase catalytic processes, namely the composition of the intermediate components, to help researchers tailor the finished product.
- Catalyst development for biohydrocarbon production is difficult because of the aqueous (i.e., water-based) environment. The catalysts developed in the petroleum and petrochemical refining industries are unstable under aqueous conditions as they operate in the gas phase or in organic solvents.
- There are also limitations related to the stability of the catalyst. For instance, a catalyst that works on bench scale may break down when applied to biomass feeds because of the various impurities present in the feedstock.
- Catalytic conversion of bio-gas
- Cost-effective production of bio-gas is challenging because the quantity of biomass required for commercial production is either not readily accessible or is currently being used for other purposes. Currently, gasification is done on a small scale (10,000-20,000 barrels per day of oil equivalent) at the local level which increases the costs of fuel distribution.
- The clean-up of bio-gas is an important step to streamline the processing of advanced biohydrocarbons. Bio-gas can contain impurities due to the various biomass feedstocks used in its production, which may require the development of feedstock-dependent catalysts.
- In addition to the conversion to bio-gas and the clean-up, the final step of conversion of bio-gas to liquid fuel requires considerable advancement in areas including the Fischer-Tropsch Synthesis, reactor technologies, and the integration of catalysts and reactors.
Policy Options to Help Promote Advanced Biohydrocarbon Fuels
Federal, state, county, and local governments support advanced biohydrocarbons in a variety of ways. Although current policies are aimed at alcohol transportation fuels, recent debate over the potential environmental and societal impacts of using feed and food crops for energy production has bolstered interest in biofuels produced from non-food feedstocks. Current support for advanced biohydrocarbons generally falls into three categories: 1) policies that mandate levels of use of biofuels, 2) policies that offer subsidies or tax credits for fuel production and/or use, and 3) and research initiatives.
- The Energy Independence and Security Act (EISA) of 2007 established a Renewable Fuel Standard that requires the production of 100 million gallons of cellulosic biofuel in 2010 and increasing over time to 16 billion gallons of cellulosic fuel in 2022.
- The Low Carbon Fuel Standard in California requires a 10 percent reduction in the carbon intensity of transportation fuels sold in California by 2020. In order to meet these requirements, one of the strategies that can be pursued is the introduction of advanced biohydrocarbons. The credit towards the LCFS is ultimately a function of the volume sold and the reduction in lifecycle emissions of the fuel as compared to the baseline fuel, i.e. gasoline or diesel.
Existing taxes and subsidies
- Registered cellulosic biofuel providers are eligible to receive a tax incentive up to $1.01 per gallon of biofuel that is sold and used by the purchaser in the purchaser's trade or business to produce a cellulosic biofuel mixture; sold and used by the purchaser as a fuel in a trade or business; sold at retail for use as a motor vehicle fuel; used by the producer in a trade or business to produce a cellulosic biofuel mixture; or used by the producer as a fuel in a trade or business. Biodiesel blenders can claim a tax credit of $1 per gallon. Note that only blenders that have produced and sold or used the qualified biodiesel mixture as a fuel in their trade or business are eligible for the tax credit.
Other tax and subsidy policies that may be considered:
- Promote additional tax incentives for processes and biorefineries that use biomass feedstocks from non-food sources.
- Support distribution and transportation infrastructure, including tax incentives to attract the required capital investments.
- Promotion of public-private partnerships for interdisciplinary research for the entire supply chain of advanced biohydrocarbons. For example, the recent DOE awards for $78 million of funding for advanced biofuels research are matched by $19 million in private and non-federal cost share funds.
- Support for research on non-food feedstock production in areas such as increased crop yields.
- Continued and focused support for the research and demonstration of conversion technologies in biohydrocarbon processing. The National Advanced Biofuels Consortia, led by NREL, received about $34 million of the recent DOE award for research to develop “infrastructure compatible, biomass-based hydrocarbon fuels.”
- Continued and increased support of bench- and pilot-scale research into the production of advanced biohydrocarbons.
Related Business Environmental Leadership Council (BELC) Company Activities
Related C2ES Resources
Further Reading / Additional Resources
Biomass Energy Data Book, 2008.
Green Car Congress, Bio-Hydrocarbons.
National Biofuels Action Plan, October 2008, Biomass Research and Development Board
Biomass Research and Development Initiative (BRDi), “The Economics of Biomass Feedstocks in the United States, A Review of the Literature,” 2008.
Chisti, Y. (2007). Biodiesel from microalgae. Palmerston North: Biotechnology Advances.
Hubert, GW, et al. “Synthesis of Transportation Fuels from Biomass: Chemistry, Catalysis, and Engineering.” Chemical Reviews, 2006, 106, pp. 4044-4098.
Perlack R., L. Wright, A. Turhollow, R. Graham, B Stokes, and D. Erbach, Biomass as Feedstock for a Bioenergy and Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual Supply, USDA/DOE, DOE/GO-102005-2135, ORNL/TM-2005/66, April 2005.
Regalbuto, J. “Cellulosic Biofuels – Got Gasoline?” Science, Vol 325, 5492, pp. 822-824, August 2009.
NSF. “Breaking the Chemical and Engineering Barriers to Lignocellulosic Biofuels: Next Generation Hydrocarbon Biorefineries”. Ed. George W. Huber, 2008, 180 p.
Green Car Congress, “Terrabon to Open New Demonstration Facility Next Week for Biomass to Renewable Gasoline Technology,” October 2008.
Wu, M.; Mintz, M.; and Wang, M. Water Consumption in the Production of Ethanol and Petroleum Gasoline,” Env Mngmt, 44, 981-997, 2009.
 See Perlack R., L. Wright, A. Turhollow, R. Graham, B Stokes, and D. Erbach, Biomass as Feedstock for a “Bioenergy and Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual Supply,” USDA/DOE, DOE/GO-102005-2135, ORNL/TM-2005/66, April 2005. In their report, Perlack et al. answer the question as to whether the “land resources of the United States are capable of producing a sustainable supply of biomass sufficient to displace 30 percent or more of the country’s present petroleum consumption.” Their scenario assumes “relatively modest changes” in land use and agricultural and forestry practices. In other words, the report evaluates the resource availability, rather than the economic viability of biomass as a feedstock for transportation fuels.
 An example of a biological catalyst is yeast in the fermentation of sugars yielded from the starch in corn or sugarcane. Biological catalysts in fermentation (to produce alcohol) have been used for thousands of years.
 Heterogeneous catalysts are those that are in a different phase (i.e., gas, liquid, or solid) than the reactants.
 Wu, M., Mintz, M., and Wang, M. “Water Consumption in the Production of Ethanol and Petroleum Gasoline,” Env Mngmt, 44, 981-997, 2009.
 Perlack et al. 2005.
 Chisti, Y. Biodiesel from microalgae. Palmerston North: Biotechnology Advances. 2007.
 Biomass Research and Development Initiative (BRDi), “The Economics of Biomass Feedstocks in the United States, A Review of the Literature,” 2008.
 Hubert, GW, et al. “Synthesis of Transportation Fuels from Biomass: Chemistry, Catalysis, and Engineering.” Chemical Reviews, 2006, 106, pp. 4044-4098.
 National Science Foundation, “Breaking the Chemical and Engineering Barriers to Lignocellulosic Biofuels: Next Generation Hydrocarbon Biorefineries,” Ed. George W. Huber, 2008, p. 180.
 NSF/Huber 2008.
 Regalbuto, J. “Cellulosic Biofuels – Got Gasoline?” Science, Vol 325, 5492, pp. 822-824, August 2009 and Green Car Congress, “Terrabon to Open New Demonstration Facility Next Week for Biomass to Renewable Gasoline Technology,” October 2008,” October 2008.
 LS9. “LS9 Secures $25 Million in Latest Round of Funding.” Press Release, September 2009.
 Shell and Codexis. “Shell and Codexis Deepen Collaboration to Speed Arrival of Next Generation Biofuel.” Joint Press Release, October 2009.
 Gevo, Inc. “Major Oil and Gas Company, Total, Invests in Advanced Biofuels Leader Gevo.” Press Release, April 2009.
 NSF/Huber 2008.
 U.S. Department of Energy. Alternative Fuels and Advanced Vehicles Data Center – Federal and State Incentives and Laws. Last accessed March 19th, 2010.
With the long-awaited release of the Kerry-Lieberman clean energy and climate bill (The American Power Act) and EPA’s final action on its “tailoring” rule, two important clues emerged this week to the unfolding mystery of whether or not we will have climate legislation this year. And buckle up and enjoy the ride -- two more major developments are just around the corner. On Wednesday, the National Academy of Sciences will be releasing three of its panel reports on America’s Climate Choices and sometime in the next two weeks Senator Murkowski may bring forward for a vote her effort to overturn EPA’s endangerment finding.
The release of the K-L bill demonstrates both how far we have gone and how distant the goal remains. The bill achieved support from some key elements of the business community and goes much further in adding in elements (nuclear power and a hard price collar) that could expand its base of support. But the loss of Senator Graham as a co-sponsor and the absence of any bipartisan backing underscore the challenges it faces in achieving the 60 votes it will need to avoid a filibuster in the Senate. The Senate clock also continues to wind down making it harder to find floor time to move a comprehensive bill forward.
EPA’s recently issued interpretation of when greenhouse gases become regulated pollutants and its final tailoring rule show EPA’s willingness to make reasonable use of the existing Clean Air Act to tackle climate change. By delaying the effective date when new source review will apply to greenhouse gases, and limiting new source requirements for best available control technology to only the largest sources (estimated to impact approximately 900 additional major sources annually), the agency put to rest the fears of some that the Agency’s rules would sink the economy and harm small businesses. The rule shows that the existing Act, though cumbersome, can be used as a tool to reduce greenhouse gas emissions.
Both EPA’s action and the upcoming National Academy panel reports provide the perfect preface to the expected vote in the Senate on overturning EPA’s endangerment finding which links greenhouse gas emissions to health and welfare impacts from climate change. To argue for overturning the finding, some Senators will point to recent controversies: the errors in the IPCC report; the hacked e-mails referred to as “climategate;” and even the DC snowstorms of last winter as evidence that the science of climate change is somehow suspect. Despite the media attention these have received, none in any way undercut the overwhelming case underlying concerns about climate change. Three independent investigations have each cleared the scientists who authored the e-mails of charges that they manipulated data or infringed on the peer review process. The IPCC has corrected the two mistakes (the expected date of the melting of Himalayan glaciers and the percent of land in the Netherlands under water) uncovered to date in its reports – out of a total of thousands of pages, two mistakes neither of which undercuts the IPCC’s key conclusion that “warming of the climate system is unequivocal” and “that most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic GHG concentrations.” Finally, notwithstanding Washington D.C.’s blustery winter, globally 2009 proved to be one of the warmest years on record. The NAS panel reports this week are likely only to reinforce these conclusions, further calling into question any votes in support of overturning EPA’s endangerment finding based on denying what we know about climate science.
Others in the Senate, including Senator Murkowski, make the case that the goal of overturning the endangerment finding is really about the need to take the worst option (EPA regulations) off the table and thereby protect our economy from the potentially dire consequences of EPA action particularly on small businesses. They argue that this would allow our elected representatives the opportunity and time to address this issue. But the limits EPA adopted in its tailoring rule (and its earlier decision to delay implementation) appear to take off the table these concerns about widespread and costly controls on small sources. Although legal challenges to the tailoring rule are possible, they would take time to work their way through the courts, and if they were successful, Congress would then be in a far better position (and have a more compelling case) to provide a narrow legislative fix addressing a specific problem.
When the debate on overturning EPA’s endangerment finding moves to the Senate floor (10 hours of debate is permitted), many will be wondering why the Senate isn’t instead focusing its debate on finding the common ground solutions urgently needed to get our nation on a path that enhances our energy independence, spurs the growth of new technologies, and slows climate change.
Steve Seidel is Vice President for Policy Analysis
Our corporate energy efficiency conference opened by answering the big question: What actions should businesses take to reduce energy use?
- Don't just set goals, set big hairy audacious ones even if you may not know exactly how to achieve them, asserted PepsiCo.
- Efficiency is done better together – you have to get all your business units moving forward on efficiency, advised IBM.
- Make the data visible – quarterly scorecards on efficiency measures lead to shared knowledge, clear measures against goals and the ability to hold leaders accountable and reward those who deliver results, suggested Dow Chemical.
- Show them the money – you need to show everyone from the board room to the boiler room that energy efficiency is good for business, stressed Toyota.
So how do you do all this? The solutions-oriented conference provided answers through panels covering the various components of corporate energy efficiency.
The conference marked the launch of our recent report, "From Shop Floor to Top Floor: Best Business Practices in Energy Efficiency" authored by William Prindle, Vice President of ICF International. Held April 6-7 in Chicago, the two-day conference brought together a diverse audience, including representatives of numerous companies with products ranging from software to soft drinks.
The conference was kicked off with presentations from six companies whose best practices in energy efficiency were highlighted in the report's case studies (Best Buy, Dow Chemical, IBM, PepsiCo, Toyota, and UTC). Subsequent panels examined issues such as overcoming financial barriers in pursuing energy efficiency projects, gaining senior level support for energy efficiency, engaging employees, suppliers and customers in energy efficiency efforts, and the challenges of gathering and reporting energy efficiency data.
In every panel session there was an abundance of questions, and lively discussions spilled out into the hallways during breaks. Panelists discussing financial barriers to energy efficiency were asked about building a financial case for employee engagement programs, PACE financing, and tradable energy efficiency certificates. Attendees had panelists pondering the idea of a best-of-the-best list within the joint U.S. DOE/U.S. EPA ENERGY STAR program and how to include supply chain efficiency metrics in labeling. How to keep employees engaged in energy efficiency measures and bringing suppliers into the fold were other key questions asked of conference panelists.
While the discussions mostly focused on what companies can do to be more energy efficient, the broader issue of climate change was not far from everyone's minds. Former Senator John Warner, a keynote speaker, was asked about the right message that would get Congress moving on climate change legislation. And keynotes John Rowe, CEO and Chairman of Exelon, and our President Eileen Claussen both noted that policy that puts a price on greenhouse gas emissions is essential to moving the United States to a low-carbon economy and addressing climate change.
Videos and presentations from the conference are available on our Web site.
Aisha Husain is an Energy Efficiency Fellow.
Previous posts in this series discussed how the demand for electricity from plug-in electric vehicles (PEVs) would affect the grid as well as a potential problem related to clustering. This final post describes an opportunity for these vehicles to help increase the stability of the grid and hold down utility rates for consumers. As a reminder, a PEV is either an all-electric vehicle (EV) or a plug-in hybrid electric vehicle (PHEV).
In our previous post in this series, we provided evidence that the existing electrical grid has enough spare capacity to accommodate plenty of plug-in electric vehicles (PEVs), if the right incentives are put in place. In this post, we will discuss a technical problem that has its roots in social behavior.
The transition from traditional powered vehicles to electric vehicles will not be without its hiccups. While the aggregate impact of PEVs on the grid is likely moderate, one concern is clustering, which can be thought of as the realization of the famous comic strip Keeping up with the Joneses. If people buy what their neighbors have, this could lead to a clustering of PEVs in certain neighborhoods which might place excessive demand on local areas of the grid.
One of the main concerns over the electrification of vehicles is their impact on the electrical grid. Will they lead to power outages due to the increased demand in certain areas? Will a marked increase in electricity demand raise prices for consumers who don’t own a plug-in hybrid electric vehicle (PHEV) or an all-electric vehicle (EV)? In a series of blog posts, we’ll take a look at a claim from some utilities that vehicle electrification could actually help improve the stability of the grid while keeping costs low through a process called frequency regulation.
In this post, we’ll try to answer the capacity question. In order to determine whether the grid has the capacity to handle the influx of Plug-in Electric Vehicles (PEVs or PHEVs/EVs), utilities must estimate at what time of day these vehicles will demand power from the grid and how many of them the grid can charge at a time without causing power disruptions.
Earth Day – it’s the perfect day to start your energy diet. It’s great to hug a tree, (in fact, that’s how you measure the carbon it sequesters) but for most of us, it’s even better to wrap our arms around that tangle of charger cords and pull the plug. Reducing your energy consumption is the very best way to honor Mother Earth – and save money – this year and every year.
Since I am perpetually on a diet, let me share some of the best strategies for getting started:
A group of nearly 50 companies and organizations, including the Center, sent President Obama a letter this month asking the Administration to lead the way to providing all consumers access to their energy information. The April 5 letter calls for giving consumers access to this information via devices such as computers and phones; making it easier for them to monitor and manage their energy use.
With timely and actionable information on energy consumption, households and businesses can avoid inefficiencies that drive up consumer costs and greenhouse gas emissions. Through its Make an Impact program, we also works to weave sustainability and energy efficiency into the fabric of its partners’ corporate culture. The program provides accessible information to employees and their communities on ways to reduce energy use, lower their carbon footprint, and save money. These savings can be significant: If every U.S. household saved 15% on its energy use by 2020, GHG savings would be equivalent to taking 35 million cars off the road and would save consumers $46 billion on their energy bills each year.
We recently released a report that describes the petroleum sector from production to consumption and examines options for including greenhouse gas (GHG) emissions from petroleum use under climate policy (e.g., GHG cap and trade). Currently, policymakers are considering multiple approaches for coverage of petroleum under comprehensive climate and energy legislation. In deciding how to address a sector of the economy or a particular fuel, policymakers must balance the goals of ensuring maximum coverage of emissions, minimizing administrative complexity and burden, avoiding creating perverse incentives or market distortions, and promoting emission reductions.
While the details of the Kerry-Graham-Lieberman climate and energy proposal in the Senate are yet to be released, press reports indicate that the trio is likely to adopt a new approach to covering transportation fuels—the so-called “linked fee.” Unlike other proposals in the House or Senate, the Kerry-Graham-Lieberman approach would reportedly levy a “carbon fee” on transportation fuels with the fee amount linked to the carbon price from a GHG cap-and-trade program covering at least electric utilities. The forthcoming details of how the “carbon fee” is linked to the cap-and-trade market will determine whether such an approach can lead to significant emissions reductions from transportation and whether such an approach can yield the economy-wide emissions reductions needed to protect the climate.
Our new report includes information relevant to the linked-fee approach. For example, the report calculates that about 80 percent of combustion emissions from petroleum use are attributable to transportation fuels that are already subject to federal fuel excise taxes. Untaxed transportation fuels and large and small stationary combustion sources account for the remainder of emissions from petroleum use. This means that a linked fee could be implemented at least in part by covering the same entities that currently pay the fuel tax.
Another Senate proposal, the Cantwell-Collins Carbon Limits and Energy for America's Renewal (CLEAR) Act, creates an economy-wide cap-and-trade program—in this case just covering CO2 emissions from fossil fuel use. The CLEAR Act adopts an entirely “upstream” point of regulation that would make “first sellers” (i.e., coal mine and natural gas and oil well owners) responsible for surrendering cap-and-trade allowances for end-use emissions from the fossil fuels they sell. As the new Pew Center report explains, there are about a half million oil wells in the United States. Of the nearly 14,000 domestic well operators tracked by the U.S. Energy Information Administration (EIA), the 10 largest (e.g., BP, Chevron) account for about half of total production, and the 670 largest account for about 90 percent of production.
The House-passed comprehensive climate and energy bill (H.R. 2454, the Waxman-Markey American Clean Energy and Security Act of 2009) also included an economy-wide GHG cap-and-trade program. Waxman-Markey, however, would require petroleum refiners and importers to surrender cap-and-trade allowances equal to the GHG emissions from the final end use of their products (e.g., tailpipe emissions from vehicles). This point of regulation for petroleum would achieve complete coverage of combustion emissions and regulate a small number of entities and facilities (about 150 refiners with 67 different owners and a larger number of importers and points of entry). Of note, Waxman-Markey adopted different points of regulation for different emission sources--including large sources (e.g., coal and natural gas power plants and industrial sources) and local natural gas distribution companies (residential, commercial, and small industrial natural gas users).
With different proposals in play, our new report can inform policymakers and others considering options for reducing GHG emissions from petroleum use and help advance approaches that balance the goals of emissions coverage, administrative ease, and cost-effective and significant emission reductions.
Steve Caldwell is a Technology and Policy Fellow