Reducing Greenhouse Gas Emissions From U.S. Transportation

Reducing GHG from Transportation

Reducing Greenhouse Gas Emissions From U.S. Transportation

Prepared for the Pew Center on Global Climate Change
May 2003

By:
David L. Greene, Oak Ridge National Laboratory and 
Andreas Schafer, Massachusetts Institute of Technology

Press Release

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Foreword

Eileen Claussen, President, Pew Center on Global Climate Change

Transportation accounts for nearly a third of our nation's greenhouse gas emissions, and its emissions are growing more rapidly than other sectors. In this report, authors David Greene and Andreas Schafer find that numerous opportunities are available now and in the future to reduce the transportation sector's impact on climate. Many of these same actions would also address other national priorities, including reducing U.S. dependence on oil imports.

This latest Pew Center report is the first building block in our effort to examine key sectors, technologies, and policy options to construct the "10-50 Solution" to climate change. The idea is that we need to tackle climate change over the next fifty years, one decade at a time. This report points to the following key elements of the 10-50 Solution to transportation.

  • We can start now, and we must start now. Fuel economy for cars and trucks could be increased by 25-33 percent over the next 10 to 15 years using market-ready technology at a net savings, if fuel savings are taken into account. Increasing efficiency of vehicles (aircraft, car, trucks and trains) takes time because fleet turnover typically takes 15 years or more.
  • We will need a sustained effort over many decades. Technologies on the horizon are likely to enable fuel economy improvements in cars and light trucks of 50 to 100 percent by 2030. Transforming land-use patterns to enable more efficient travel, or transitioning to a hydrogen based transportation system, will require decades of incremental change.
  • R&D and voluntary efforts are necessary but not sufficient; mandatory policies are essential. Since fuel economy is undervalued in the marketplace, policies such as mandatory standards and public information are needed to pull technological improvements into the market. Fuel economy has gotten worse recently not because of lack of technology, but because of lack of policy. Hydrogen holds out the tantalizing promise of near-zero greenhouse gas emissions, but government must provide clear policy direction to drive massive private investment by the fuel and vehicle industries.
  • We need a mix of policies, and there are many to choose from. Opportunities for significant emission reductions include implementing a carbon constraint, raising efficiency standards for automobiles, blending low-carbon fuels with gasoline, and changing land-use patterns through urban design and planning. Each of these measures could contribute to reducing GHG emissions, but none is sufficient alone. The authors estimate that a combination of reasonable measures would reduce carbon emissions by about 20 percent by 2015, and almost 50 percent by 2030, compared to "business as usual."

The authors and the Pew Center would like to thank Roland Hwang of the Natural Resources Defense Council, Barry McNutt of the U.S. Department of Energy, Alan Pisarski, and Daniel Sperling of the University of California, Davis for their review of and advice on a previous draft of this report.

Executive Summary

Since the introduction of motorized transportation systems, economic growth and advancing technology have allowed people and goods to travel farther and faster, steadily increasing the use of energy for transportation. Modern transportation systems are overwhelmingly powered by internal combustion engines fueled by petroleum. Emissions of carbon dioxide (CO2), the principal greenhouse gas (GHG) produced by the transportation sector, have steadily increased along with travel, energy use, and oil imports. In the absence of any constraint or effective countermeasures, transportation energy use and GHG emissions will continue to increase.

In the U.S. economy, transportation is second only to electricity generation in terms of the volume and rate of growth of GHG emissions. In terms of carbon dioxide, which accounts for 95 percent of transportation's GHG emissions, transportation is the largest and fastest growing end-use sector.1  Today, the U.S. transportation sector accounts for one-third of all U.S. end-use sector CO2 emissions, and if projections hold, this share will rise to 36 percent by 2020. U.S. transportation is also a major emitter on a global scale. Each year it produces more CO2 emissions than any other nation's entire economy, except China. Given its size and rate of growth, any serious GHG mitigation strategy must include the transportation sector.

This report evaluates potential CO2 emission reductions from transportation in the United States. Measures considered include energy efficiency improvements, low-carbon alternative fuels, increasing the operating efficiency of the transportation system, and reducing travel. Highway vehicles should be the primary focus of policies to control GHG emissions, since they account for 72 percent of total transportation emissions. Passenger cars and light trucks together account for more than half of total sectoral emissions.


Energy Efficiency

By 2015, the fuel economy of new passenger cars and light trucks can be increased up to one-third by the adoption of proven technologies, at a cost below the value of the fuel that would be saved and without reducing the size or performance of vehicles. Before 2030, advanced diesel engines, gasoline or diesel hybrid vehicles, and hydrogen-powered fuel cell vehicles will likely permit new car and light truck fuel economy to be increased by at least 50 to 100 percent, while satisfying current and future emission standards. Efficiency gains of 25 to 50 percent for new heavy trucks will likely also be possible over the next 15 to 30 years. For new aircraft, fuel economy increases of 15 to 25 percent seem feasible by 2015, reaching 25 to 40 percent by 2030.

Because the energy efficiency of new vehicles will rise gradually, and because it takes time to turn over the entire fleet of vehicles in use, by 2015 the increase in energy efficiency achieved by all transportation vehicles in use will be only about half that achieved by new vehicles. With policies to ensure the use of cost-effective technologies to increase fuel economy, by 2015 it should be possible to boost the average efficiency of vehicles in use by 10 to 15 percent, reducing GHG emissions by about 11 percent. By 2030 GHG emissions reductions on the order of 25 percent should be achievable. These estimates take into account the tendency for slight increases in travel when fuel costs are lowered by efficiency gains.


Alternative Fuels

Despite 25 years of effort, alternatives to petroleum have not displaced more than a few percent of petroleum fuels. Petroleum fuels are supported by an extensive and well-functioning infrastructure. They also have high energy density, low cost, and a demonstrated ability to adapt to environmental challenges. In the near term, lower-carbon alternative fuels such as natural gas and liquefied petroleum gases will continue to be viable in niche markets. Lower-carbon replacement fuels, such as alcohols or ethers produced from biomass, can be blended with gasoline to displace several percent of petroleum use. If methods of producing ethanol from cellulose can be commercialized and if current tax subsidies are continued, renewable liquid fuels blended with petroleum fuels could reduce transportation's CO2 emissions by 2 percent by 2015 and 6 percent by 2030.

Technological advances in fuel cells, hydrogen production, and hydrogen storage are needed to accomplish a transition to a largely hydrogen-powered transportation system. Such a transition will also require intensive planning, major commitments by government, industry, and the public, and supportive public policies. If achieved, however, a transition to hydrogen produced from renewable or nuclear energy or from fossil resources with carbon sequestration, could eliminate most of transportation's GHG emissions sometime after 2030.


System Efficiency

While changing behavior has the potential to reduce transportation fuel use and GHG emissions, large and sustainable reductions have never been achieved in this manner in the United States. Increasing wealth and vehicle ownership combined with decreasing household size and population densities has led to steadily declining vehicle occupancy rates. The same trends have historically contributed to declining market shares for mass transit, although mass transit ridership has been growing over the past few years. On the freight side, shippers increasingly value speed and reliability, favoring truck and airfreight, the most energy-intensive modes. Still, GHG emission reductions of a few percent can be achieved with concerted effort, and much might be possible if innovative strategies could be found to increase vehicle occupancy rates without diminishing service or convenience.


Reducing Transportation Activity

Mobility gives people access to opportunities and enhances the efficiency of the economy. Reducing transportation activity per se is not a desirable goal. Where there are environmental damages (such as GHG emissions) unaccounted for in private transportation decisions, increasing the cost of travel to reflect these impacts is beneficial from both an economic and environmental perspective. In particular, internalizing the externality of climate change through carbon cap-and-trade systems or direct pricing of the carbon content of motor fuels is an especially attractive option. An even greater impact can be achieved by redistributing certain fixed costs of motor vehicle travel so that they fall on carbon fuels. One example is collecting a portion of vehicle insurance fees as a surcharge on motor fuel. This could reduce GHG emissions from motor vehicles by 8 to 12 percent and could improve the overall economic efficiency of highway transportation.

The patterns of land use and development that have evolved over many decades are inefficient from a transportation perspective. If the geography of cities can be transformed to provide equal or greater accessibility with less travel, both the environment and the economy would benefit. Experimentation and modeling analyses indicate that travel reductions of 10 percent may be achievable in the long run, without loss of accessibility. The ability to consistently achieve and sustain such reductions has not been demonstrated in the United States, and much remains to be learned about planning and realizing more transportation-efficient patterns of land use.


Policy Options

There are plenty of practical and effective policies for reducing transportation's GHG emissions. The policies described in this report are not the only policies that can be effective; rather, they are representative of the kinds of policies a comprehensive strategy would include. A reasonable combination of policy measures should be able to reduce U.S. transportation sector CO2 emissions by 20 to 25 percent by 2015 and by 45 to 50 percent by 2030 in comparison to a transportation future without any efforts to control carbon emissions. If the demand for transportation energy use continues to grow at 2 percent per year through 2030, achieving these reductions will result in CO2 emissions in 2030 that are about the same as the current level.

These estimates of GHG reductions achievable by 2015 are based on: (1) proven energy efficiency technologies and low-carbon replacement fuels, (2) levels of efficiency improvement at which the value of the fuel saved is greater than or equal to the cost of technology, (3) no change in vehicle size or performance, (4) pricing and other policies that do not increase the overall cost of transportation and, (5) a carbon cap-and-trade system equivalent to approximately $50 per ton of carbon. Greenhouse gas reductions estimated to be achievable by 2030 are based on: (1) efficiency improvements that depend on technological progress judged highly likely by 2020 with a focused R&D effort, and (2) continuation or moderate extensions of pricing and behavioral policies adopted for 2015. GHG emissions would be lower if growth in demand for transportation fuel is slower, or with more stringent energy efficiency standards, a tighter carbon emissions cap, or if technological innovation is more rapid than assumed here.

Fuel efficiency improvements, especially of cars and light trucks, offer the largest potential for reducing CO2 emissions from transportation over the next 30 years. Several policies can contribute to realizing this potential, including fuel economy standards. Fossil fuel or carbon pricing policies would encourage fuel economy improvements while simultaneously discouraging transportation demand. Pricing measures alone, however, would probably not be sufficient to achieve the above indicated emission reductions. A price of $100 per ton of carbon, which translates into $0.25 per gallon of gasoline, might increase fuel economy by about 5 to 10 percent and reduce light-duty vehicle travel by about 1 to 3 percent, far below the estimated potential of a comprehensive strategy.

The long lead times required to turn over the entire fleet of vehicles and the supporting infrastructure mean that policies must be implemented now to create the impetus for change in order to achieve the reduction levels indicated in this report. Within the next 15 years, energy efficiency improvements, various pricing policies, and low-carbon replacement fuels are the key components of a comprehensive effort for reducing GHG emissions. Over the longer term a large-scale transition away from petroleum fuel toward low-carbon alternative fuels should be considered. Among the most promising low-carbon fuels for the longer term is hydrogen, which has many desirable fuel characteristics and can be produced from a variety of zero-carbon feedstocks or from fossil fuels with subsequent carbon sequestration. Obstacles, however, remain in areas such as hydrogen storage and the cost of hydrogen fuel cell vehicles. A transition to hydrogen will require an entirely new infrastructure for producing, transporting, distributing, storing, and retailing hydrogen, and possibly for sequestering CO2 emissions generated during its production.

Many of the policy measures discussed in this report do much more than reduce CO2 emissions. For example, improving fuel efficiency of the U.S. transportation system reduces dependence on foreign oil imports and increases the global competitiveness of the U.S. vehicle industry. Similarly, more efficient land-use patterns not only increase the ridership potential of public transportation modes but also relieve traffic congestion. Taking these multiple benefits into account spreads the costs of controlling CO2 emissions and adds incentives for taking action.

The size and rate of growth of transportation's GHG emissions make them impossible to ignore. The interconnectedness of transportation to nearly every aspect of human activity, the provision of most transportation infrastructure as public goods, the important external costs associated with transportation activity and energy use, and other market imperfections mean that no single policy is likely to achieve the needed reductions in transportation GHG emissions. A suite of policies will be necessary. Devising and implementing an effective, comprehensive strategy will be a difficult and complex task, but it can be done.

1. The end use sectors are industry, residential, commercial, transportation and agriculture. Electric utility GHG emissions are apportioned to the sectors according to their electricity use.

Conclusions

By combining a variety of policies, U.S. transportation-related carbon emissions could be cut by 20 to 25 percent by 2015 and by 45 to 50 percent by 2030, in comparison to a continuation of current trends in energy efficiency, petroleum dependence, and traffic growth. Curbing the growth of transportation's GHG emissions will require a combination of meaningful policies and technological progress. A successful policy portfolio will involve all modes of transportation and will include a variety of measures, from fuel economy and fiscal policies to infrastructure investments. In the longer run, technological progress — and policies that promote it — must provide the means for continued efficiency improvements and ultimately for a transition to low-carbon energy sources for transportation. There are many specific forms of policies that can achieve the same objective.

Reducing transportation's GHG emissions will not be easy because demand for mobility of both people and goods will almost certainly continue to grow. Increasing transportation activity will result in growing energy use and GHG emissions, unless the energy efficiency of vehicles can be increased, alternative energy sources developed, and ways found to improve the ability of land use and transportation systems to provide accessibility with less motor vehicle travel.

The international effort to protect the global climate, especially efforts to reduce GHG emissions from transportation, provides a unique opportunity for the United States to work cooperatively with other countries to reduce worldwide demand for oil. Both near-term and longer-term actions to reduce GHG emissions from transportation will produce major benefits for U.S. energy security in the form of reduced oil imports and reduced economic losses from oil price shocks. Actions to reduce GHG emissions taken in concert with the other oil-consuming nations of the world will undermine the market power of the OPEC cartel, amplifying the United States' own efforts to increase energy security. By staying out of the global effort to reduce GHG emissions, the United States may be squandering its best chance to solve the oil dependence problem.

Harnessing market forces is a very useful but probably insufficient strategy for mitigating transportation's GHG emissions. Even a carbon cap-and-trade system, as beneficial as it would be, would be hindered by the tendency of households to undervalue fuel economy. It would be unlikely to bring about an appropriate level of investment in long-term transportation energy technologies and would not guide important investments in transportation infrastructure and the built environment. A combination of policies is needed to promote energy efficiency, stimulate investments in research and development, improve land use and infrastructure planning, and harness market forces.

For at least the next decade, the U.S. transportation system will continue to be powered primarily by conventional, petroleum-based liquid fuels. As a result, the most productive options to reduce GHG emissions will be fossil fuel or carbon pricing policies, energy efficiency improvements, and the blending of low-carbon replacement fuels with petroleum liquids.

Over the next 15 to 30 years, new technologies will be introduced, and the stock of transportation vehicles will be turned over twice, making much larger increases in energy efficiency possible. The world is also likely to have begun an important transition from conventional petroleum to alternative energy sources. The path of least resistance would be a gradual transition to increased use of unconventional sources of liquid hydrocarbon fuels, yet promising technologies are emerging that could lead in a very different direction, toward major roles for hydrogen and electric motors. It is not too soon to begin planning for and developing the technologies for an energy transition for transportation. The use of unconventional fossil fuels entails higher costs and more severe environmental consequences. An alternative, cleaner, more economically efficient energy future for transportation is possible, if the right technologies can be developed.

Increasing the efficiency of energy use now will buy more time for the transition and for the development of alternative technologies. Other decisions made over the next 10 years in R&D and also in infrastructure investments will influence the path taken. The paths that lead toward very low GHG emissions will require bold changes in technology and investments in infrastructure. At the same time, continued improvements in energy efficiency will be valuable whichever path is chosen. If the high-carbon fossil fuel path is chosen, continuing efficiency gains will be needed to hold carbon emissions in check. If the low-carbon path is chosen, higher efficiencies will help reduce the costs of clean technologies.

An attractive alternative to a petroleum-based transportation system is one based on hydrogen. Hydrogen can be produced from a variety of energy resources with minimal environmental impacts with the right technologies. Hydrogen, however, is not yet ready to compete with petroleum. Technological advances are needed in hydrogen storage, in the robustness and cost of fuel cells to produce power from hydrogen, and in economical and environmentally benign hydrogen production. The federal government's newly created FreedomCAR and hydrogen initiatives and California's Fuel Cell Partnership aim to create a transportation system powered by pollution-free hydrogen fuel cells. Even with the best efforts of these programs, it will be at least 15 to 20 years before hydrogen can achieve significant success in the marketplace.

The United States is the source of one-fourth of the world's GHG emissions. It is also the owner of the world's largest transportation system, the fastest growing source of CO2emissions in the U.S. economy. The U.S. transportation system is a key target for GHG emissions reduction. There are many responsible and cost-effective actions that can be taken to restrain the growth of GHG emissions from transportation. Action can begin today, and pathways exist to a low-carbon future for transportation. Formulating and implementing an effective, comprehensive strategy will not be easy, but it can be done.

About the Authors

David L. Greene, Oak Ridge National Laboratory

A Corporate Fellow of Oak Ridge National Laboratory, David Greene has spent 25 years researching transportation and energy policy issues for the U.S. government. His research interests include analysis of policies to mitigate greenhouse gas emissions from transportation, energy and transportation demand modeling, economic analysis of petroleum dependence, and understanding market responses to advanced transportation technologies and alternative fuels. Dr. Greene earned a B.A. degree from Columbia University in 1971, an M.A. from the University of Oregon in 1973, and a Ph.D. in Geography and Environmental Engineering from The Johns Hopkins University in 1978. He has published over one hundred fifty articles, which have appeared in various professional journals, books, and technical reports. In recognition of his service to the National Academy of Science and National Research Council, Dr. Greene has been designated a lifetime National Associate of the National Academies.


Andreas Schafer, Massachusetts Institute of Technology

Andreas Schafer is a Principal Research Engineer at the Center for Technology, Policy & Industrial Development and the MIT Joint Program on the Science and Policy of Global Change at the Massachusetts Institute of Technology. Previously, he spent 5 years with the Energy Systems group at the International Institute for Applied Systems Analysis (IIASA), Laxenburg (Austria). His research interests cover the modeling of the demand for and supply of energy and transportation systems and the introduction of technology under environmental constraints. He holds a M.Sc. in Aero- and Astronautical Engineering and a Ph.D. in Energy Economics both from the University of Stuttgart, Germany.