Chapter 18

Transportation

[LK: intro here] As we have seen, primary energy includes petroleum, natural gas, coal, nuclear fuel, and renewable energy. US EIA, “Energy in Brief.” Transportation is the second largest user of primary energy in the United States. US EIA, “Energy in Brief.” In 2011, about 28% of the energy used in the United States went to transporting people and goods from one place to another. US EIA, “Use of Energy in the United States Explained.”

In this chapter, you will learn about:

The evolution of transportation technology

The political and policy decisions that have shaped the way that transportation (and the energy use it requires) has developed in the United States and in other countries

The use of alternative energy sources to fuel transportation

The current standards regulating the auto industry

The transportation energy solutions for the future [LK: more here?]

Chapter collaborators:

Brodie Erwin (WF ’12)Cameron Hill (WF ’12)Lea Ko (WF ’13)Derrick Lankford (WF ’12)Tim Stewart (WF ’12)Danielle Stone  (WF ‘12)

Chapter 18 – Transportation

18.1 How American Transportation has Evolved18.1.1 Transportation at the Founding 18.1.2 First Evolution: Railroads and Steamboats18.1.3 Second Evolution: Internal Combustion Engine 18.1.4 Creation of America’s Highway Infrastructure

18.2 Fueling Transportation 18.2.1 Re-emergence of Electric Cars 18.2.2 Compressed Natural Gas Vehicles 18.2.3 Hydrogen Fuel Cell Vehicles

18.3 Biofuels 18.3.1 Mandating Biofuel Production18.3.2 Conventional Ethanol 18.3.3 Biodiesel 18.3.4 Cellulosic Ethanol

18.4 Regulation of Auto Industry 18.4.1 Industry Free Fall and Federal Takeover18.4.2 CAFE Standards: EISA 200718.4.3 Cash for Clunkers 18.4.4 Automotive Air Pollution Regulation

18.5 American Decentralization and Alternatives to Decentralization 18.5.1 Improving the Motor Vehicle Network

18.1 How American Transportation has Evolved

To understand the laws governing transportation in the United States it is important to first analyze how various modes of transportation have evolved over the country’s lifespan and how the laws reacted in response to these changes. Bosselman, 1067.

18.1.1 Transportation at the Founding

At the time of our nation’s founding, animal and wind power [human power?] were the predominant sources of energy for transportation. Bosselman, 1067. Horses and oxen pulled wagons west, canal networks were created to transport goods from landlocked colonies to colonies with sea ports, mail was delivered via horseback, and the high seas were ruled by “tall ships” powered by strong ocean winds. Bosselman, 1067.

The early years of the nineteenth century were marked by debates over the proper role of the federal government in stimulating and improving national transportation. Bosselman, 1067. [purpose? Why national? States not enough?] The first proposal for a national road system came in 1808 when treasury secretary Albert Gallatin proposed an extensive turnpike system from Maine to Georgia. Bosselman, 1067. Gallatin’s plan never came to fruition because of the turmoil brought on a few years later by the War of 1812. Bosselman, 1067. However, as the nation began to grow in the years following the war, Gallatin’s turnpike plan would serve as a template for those seeking to create a national transportation system. Bosselman, 1067. In 1816, Congressman John Calhoun introduced a bill to fund and support a unified national system of roads and canals but again, efforts to develop a national transportation network were derailed this time due to regional squabbles between colonies. Bosselman, 1068. These disagreements continued to systematically block national development of roads and canals until the twentieth century. [LK: make sure we pick up this discussion later in the chapter – would like to know what happened in the twentieth century]

18.1.2 First Evolution: Railroads and Steamboats

The first transportation evolution was powered by steam and initiated by the private sector. Bosselman, 1068. Steam-powered private railroads created the country’s first national transportation system. Bosselman, 1068. Following the Civil War, railroads revolutionized transportation by making it possible to carry heavy loads over long distances much faster and cheaper than its horse drawn predecessors. Bosselman, 1068. The increased comfort and convenience of railroad cars made passenger travel commonplace in American society. Bosselman, 1068. [any statistics? Legal framework?]

The steam engine also made a significant impact on travel of America’s waterways. Bosselman, 1069. In 1807, Robert Fulton garnered widespread support for steamboat travel by

journeying up the Hudson River from New York to Albany. Bosselman, 1069. Within a few decades of this journey paddlewheel steamboats had become a familiar sight on America’s rivers. Bosselman, 1069. These boats carried passengers, a variety of cargo, and even towed barges. Bosselman, 1069. [legal framework?]

The advent of both railroad and steamboat travel marked the first evolution of transportation in American society. The end of the nineteenth century and the development of the internal combustion engine would bring about the second evolution of transportation in the US.

[LK: what about electric railroad trolleys?]

18.1.3 Second Evolution: Internal Combustion Engine

The Duryea Brothers opened the first American automobile manufacturing plant in 1895 and they were quickly followed by a number of others, including famed Henry Ford in 1908. Bosselamn, 1069. The internal combustion engine was soon put into trucks as well as cars and the newly formed trucking industry quickly began to compete with railroads and river barges for the national transportation of goods in the country. Bosselman, 1069.

The automobile, unhindered by the need for extensive track systems, spurred on the creation of a national road network. Bosselman, 1069. As more people began to acquire personal automobiles, the pattern of urban development changed and the convenience of driving your own vehicle began to dominate transportation decisions. Bosselman, 1069. By 1910, it was apparent that the nation needed a unified national road system to facilitate automobile travel. Bosselman, 1070.

18.1.4 Creation of America’s Highway Infrastructure

By the outset of World War I, the automobile production in American was around 200,000 cars a year and America’s drivers were getting tired of being stuck in the mud. Bosselman, 1070. [LK: stuck in the mud? Like literally because there were no roadways?] In response, a federal highway agency was created to tie together the road networks being developed by various states. Bosselman, 1070. [LK: what agency?] At the end of WWI, the need for better roads could not have been made more apparent due to the heavy influx of military related truck traffic that the nation saw during the war. Bosselman, 1070. To begin the process of a national highway system, President Wilson implemented an act to create the Federal Bureau of Public Roads. Bosselman, 1070. [LK: what act? More specifics]

By the 1920s each state had created a road-building agency to oversee construction of all major roads. Bosselman, 1070-71. [where are these now?] The decade also saw the creation of

federal-state agency cooperation that still characterizes America’s road building programs to this day: the federal government providing money, research, and oversight while the actual road construction and maintenance is undertaken by state highway offices. Bosselman, 1071. The timing for a national highway plan could not have been better as American auto production reached five million vehicles per year by 1930. Bosselman, 1071. [percentage of population – higher than now]

The Depression that began in 1929 only increased demand for road construction as a method of providing jobs for the unemployed. Bosselman, 1071. Presidents Hoover and Roosevelt continually increased the amount of federal money provided for highway construction throughout the 1930s. Bosselman, 1071. This rush to spend money on roads overrode an engineer’s desire to plan a cohesive system. Bosselman, 1071. Traffic engineers no longer sought to create the most efficient road network, but instead to identify the demands of drivers and supply roads they wanted. Bosselman, 1071.

World War II highlighted the flaws in America’s highway system when compared with the road systems in Europe. Bosselman, 1071. [LK: what flaws in America’s system? What was better about European roadways?] After WWII, a coalition of trucking companies, auto manufacturers, and oil companies lobbied aggressively for better roads. Bosselman, 1071. In response, President Eisenhower persuaded Congress that an extensive upgrade of the highway system was essential to national defense. Bosselman, 1071. [LK: how did Eisenhower persuade Congress of this? What was the argument?]

The modern highway program came into existence due to the creation of the Highway Trust Fund (HTF). Bosselman, 1072. The HTF was ushered through Congress in 1956. The new program saw Congress increase taxes on gas, tires, and other automotive supplies. Bosselman, 1072. [describe tax] Congress also enacted other legislation to place those tax receipts into the HTF to pay for the extensive highway construction that the law called for. Bosselman, 1072. [LK: what was the “other legislation”?] All the key parts were assembled to finally create a national highway network. All that was left to decide was where to place the roads.

[LK: discussion of Citizens to Preserve Overton Park v. Volpe – involves placement of roads]

Then:

Map: Wikipedia

Now:

Map: McGraw Hill

18.2 Fueling Transportation

As ubiquitous as petroleum fuel is today, when the energy source was first discovered, it was rare and exceedingly expensive. Bosselman, 1080. The large Texas oilfields had not been discovered. Bosselman, 1080. Since oil was scarce, the first cars were powered by electricity. Bosselman, 1080. [LK: how were they powered by electricity? Explain]

Today, however, almost every car, truck, plane, and boat is powered by petroleum. Bosselman, 1080. However, as oil prices have risen, and domestic production has declined, there has been a trend toward reviving the electric car. Bosselman, 1080.

18.2.1. Re-emergence of Electric Cars

In 1990, General Motors (GM) unveiled a fully electric concept car called the Impact. Bosselman, 1081. The car was fully powered by electricity with no emissions from the tailpipe. CITE? There was a significant groundswell in interest, especially in California. Bosselman, 1081. There, the California Air Resources Board (CARB) was trying to develop standards for motor vehicles in the hopes to reduce emissions. Bosselman, 1081. [what at federal level?]

In response, CARB adopted a standard for zero emission vehicles (ZEVs). Bosselman, 1081. To encourage development of the ZEV, CARB developed standards for automakers that required companies to produce 2% of their vehicles as ZEVs by 1998 and to 10% by 2003. Bosselman, 1081. In 1996, GM created the Saturn EV1, which had zero emissions and a range of between 50 and 100 miles, depending on the battery design. Bosselman, 1081. GM began leasing the vehicles in December of 1996. Bosselman, 1081. While initially expensive at $640/month, the cost was eventually reduced to $349/month. Bosselman, 1081. At one point, over 800 of these cars were leased to consumers in Southern California. Bosselman, 1081.

However, in 2003, CARB changed the rules to encourage the production of hybrid and fuel cell vehicles, instead of insisting on electric vehicles. Bosselman, 1081; See CARB, “2003 Zero Emission Vehicle Program Changes – Fact Sheet.” In response, GM stopped development of the car and, upon expiration of their leases, crushed all of the cars because, as GM claimed, it was afraid of liabilities if people continued to drive them. Bosselman, 1082. [what liabilities?] Many believe that GM caved from pressure from the oil industry, since the electric car never needed the one thing the industry relied on—oil. Bosselman, 1082.

18.2.2 Compressed Natural Gas Vehicles

One alternative to petroleum-fueled vehicles is compressed natural gas (CNG) vehicles. Bosselman, 1082. [how works?]

An advantage of CNG is that it is relatively safe. Bosselman, 1082. The gas has a very high ignition point (1100ºF) so it is rare for the gas to ignite. Bosselman, 1082. The gas is stored in thick steel tubes, which have various mechanism for releasing the gas should a problem occur. Bosselman, 1082. For example, some CNG containers have built in temperature sensors so if the heat reaches a certain level, the gas will be released before it can ignite. Bosselman, 1082.

CNGs are not yet popular in the United States due to the lack of infrastructure and fueling stations for the transportation of gas. Bosselman, 1082. Some counties, like Brazil and Argentina, have over 1 million CNG vehicles. Bosselman, 1082. [percentage of vehicles?]

Other countries have been very progressive in the use of this alternative fuel. New Delhi converted approximately 60,000 rickshaws into CNG-powered vehicles. Bosselman, 1082. And in 2002, the Indian Supreme Court ordered the city’s entire bus fleet to convert to CNG power. Bosselman, 1082. [under what authority?] A government report stated that while the amount of vehicles in New Delhi doubled, the pollution rate has nearly halved. Bosselman, 1082.

The US has had moderate success implementing CNG vehicle requirements. Bosselman, 1083. Many large cities with pollution problems, including Atlanta, Las Vegas, and Los Angeles, have adopted CNG-vehicle requirements that provide for buses, taxis and other highly used vehicles to be powered exclusively by natural gas. Bosselman, 1083. The effect is that the most-used vehicles are being fueled with cleaner fuel so as to drastically reduce the vehicles’ contribution to emission levels. Bosselman, 1083.

One reason the US has lagged in the production/demand for these vehicles is customer preferences. For one, CNG tanks take up a lot of room in vehicles and this severely limit trunk space and vehicle size. Bosselman, 1083. Second, only a few models are in production should a consumer even be interested in purchasing a CNG powered car and there are a limited number of fueling stations across the country. Bosselman, 1083. Finally, despite the safe characteristics of the gas, consumer perception is that cars with CNG tanks are not safe for driving. Bosselman, 1083.

18.2.3 Hydrogen Fuel Cell Vehicles

Fuel cells first began to be used in the space program. Bosselman, 1084. [LK: what is a fuel cell?] Fuel cells work by creating electricity through chemical reactions, rather than through combustion, like gasoline. Bosselman, 1084. In proton exchange membrane cells (PEMs), chemical reactions cause electrons to travel through the PEM, generating electricity. Bosselman,

1084. The only significant byproduct of this process is water. Bosselman, 1084. This process is much more efficient than other forms of energy production, such as internal combustion or steam engines, because there is no heat loss or requirement to turn the reaction into energy through mechanical means. Bosselman, 1084; See Department of Energy, “Comparison of Fuel Cell Technologies.”

Several initiatives are currently underway to increase the application of fuel-cell-powered vehicles. The Chicago Transit Authority currently has three hydrogen-powered fuel cell busses. Bosselman, 1085. Under the Energy Policy Act of 2005, 42 USC § 13201 et seq., the Department of Energy (DOE) can enter into grants for the development and use of such vehicles in local governments. Bosselman, 1085. In 2003, President Bush announced a $1.2 billion Hydrogen Fuel Initiative to aid in the efforts of government and private sector investments into developing commercially successful hydrogen fuel technology. Bosselman, 1085; See CNN, “Bush touts benefits of hydrogen fuel.” However, in 2009, DOE Secretary Chu announced that the department was not continuing research under the program. Bosselman, 1085; See Huffington Post, “Chu Says ‘No’ To Hydrogen Fuel Cell Research.” Despite this setback, California has continued to develop hydrogen initiatives by granting funding to construct new hydrogen fueling stations. Bosselman, 1085.

[what about Honda / see video of UK car show]

Some setbacks for hydrogen fuel cells are costs. Bosselman, 1085. Currently, fuel cells are 10 times more expensive than an internal combustion engine and hydrogen is 3-4 times more expensive to produce than gasoline. Bosselman, 1085. Further, battery-powered cars are about 3 and ½ times more efficient than hydrogen-fuel-powered cars. Bosselman, 1085; See “A Cost Comparison of Fuel-Cell and Battery Electric Vehicles.” Finally, the public’s perception of hydrogen is negative (everyone remembers the Hindenburg), though hydrogen is no more dangerous than gasoline or similar fuels. Bosselman, 1085; See Wikipedia, “Hindenburg Disaster.” [LK: what was Hindenburg?]

18.3 Biofuels

The increase in price and the limited ability for domestic production of oil fields has sparked a nationwide interest in biofuels. The federal government and some states enacted tax credits and subsidies to increase investment and development of biofuel products. Bosselman, 1085-86; See Congressional Budget Office, “Using Biofuel Tax Credits to Achieve Energy and Environmental Policy Goals.” Many tout this type of fuel as a method for energy security, while others believe the benefits are illusory since biofuels affect food supply and are not economically feasible with present technology. Bosselman, 1086. [LK: what is the energy security argument?]

[describe different types / emissions] [LK: what are biofuels?]

18.3.1 Mandating Biofuel Production

Section 1501 of the Energy Policy Act of 2005, 42 USC § 3201 et seq., required the EPA to establish Renewable Fuel Standard (RFS) to increase the volume of renewable fuel that can be blended with gasoline. Bosselman, 1086; See EPA, “Renewable Fuels: Regulations & Standards.” The act raised the standard from 9 billion gallons in 2008 to 36 billion gallons by 2022. Bosselman, 1087.

Critics of these mandates claim that the renewable fuel mandate is to put money into the pockets of corn farmers and corn-based ethanol producers. How Stuff Works, “Biofuel Criticism.” Due to concerns about corn-based ethanol, the Energy Independence and Security Act of 2007 (EISA), 42 USC § 17001 et seq., requires that corn-based ethanol production reach a peak in 2015 so that other types of more-advanced biofuels can be created. Bosselman, 1087. Additionally, the EPA Administrator has authority to temporarily waive part of the biofuels mandate to ease market concerns should they arise. Bosselman, 1087.

[LK: confused as to the relevance of corn farmers and corn-based ethanol producers… is this how biofuels are produced? If so, give description of the process before jumping into the corn discussion]

The statute defines different types of fuel: Transportation Fuel: motor vehicle fuel Renewable Fuel: fuel from biomass Advanced Biofuel: fuel from biomass other than cornstarch

o This category includes Biomass-based diesel, Cellulosic biofuel, Biogas, and Sugar-based ethanol

Conventional Biofuel: ethanol from corn starch Additional Renewable Fuel: renewable jet or heating fuel. Bosselman, 1088.

Here is a chart showing the projected volume of biofuel production and the proportion by source of the produced biofuel.

Chart: ??? [LK: could not find source]

18.3.2 Conventional Ethanol

As of 2009, the majority of ethanol came from cornstarch, with only experimental amounts coming from other biofuels. Bosselman, 1088. In the United States, most ethanol is blending into gasoline at up to 10%. Bosselman, 1088. The resulting fuel is called E10 or “gasohol.” Bosselman, 1088. Since the 1970s, cars and light trucks built for the United States market have been able to run on this E10 blend. Bosselman, 1088. Certain car makers also produce a limited number of Flexible Fuel Vehicles, which can run on a blend of gasoline and ethanol containing up to 85% ethanol. Bosselman, 1088-89. However, this “E85” is hard to find because it requires a separate supply stream to bring in the ethanol and mix it with the gasoline onsite. Bosselman, 1089.

[LK: what about the regulation of ethanol? Any relevant statutes?]

Impact on Energy Security. With the utilization of biofuels on the rise, it remains to be seen whether such biofuels will ever make a dent in our use of oil imports. Bosselman, 1089. While 36 billion gallons of renewable fuels sounds like a large number that would impact oil usage, US oil refineries produced around 150 billion gallons of gasoline and around 40 billion gallons of diesel last year. Bosselman, 1089. [LK: last year? Are we referring to 2011? State year] It is estimated that biofuels displaced about 1% of fossil fuel usage in the transportation sector. Bosselman, 1089. [LK: this is a worldwide estimate – what about the US?]

One of the major issues surrounding ethanol is its benefit in relation to its cost. [LK: what does this mean?] While it may seem to be a “renewable” source of energy, much public debate and scholarship centers around whether it takes more imported, “unclean” energy to produce usable ethanol than that usable ethanol itself provides in energy. Bosselman, 1089. To make ethanol, and biodiesels generally, a great amount of fossil fuels must be used. Bosselman, 1089. Cornell Ecologist David Pimental has concluded that “Ethanol production using corn grain require[s] 29% more fossil energy than the ethanol fuel produced.” Bosselman, 1089; David Pimental and Tad W. Patzek, Ethanol Production Using Corn, Switchgrass, and Wood, 14 Natural Resources Research 65 (2005).

Impact on Greenhouse Gases. Another pressing policy issue will be the effect, whether helpful or harmful, which the production of ethanol will have on climate change. Bosselman, 1090; See USA Today, “Ethanol comes with environmental impact, despite green image.” Unlike the use of combustible fossil fuel, the burning of ethanol returns recently captured carbon into the atmosphere – thus producing (in theory) no net increase in atmospheric carbon. Bosselman, 1090. But because ethanol production is often fueled by fossil fuels, carbon emissions from those processes must be added into the equation when considering the environmental effect of ethanol production. Bosselman, 1090.

The net impact of biofuels on global warming depends on a number of factors. Those factors include: how the biomass is being used; how the feedstock is grown; the fuel production, refining, and delivery methods; the energy resource being displaced; and how the land would have been used otherwise. Bosselman, 1090. However, there is increasing evidence than the total environmental impact from producing “clean” biofuels is often more damaging than using fossil fuels. Bosselman, 1091. Many governments are responding to these findings. Bosselman, 1091. For example, Germany recently canceled tax exemptions for biodiesel at the pump and is about to pass a mandate that only biofuels meeting certain sustainability criteria will count towards the national quota. Bosselman, 1091. [LK: update here – did the mandate pass?]

Impact on Food Prices. The impact of using corn to produce ethanol has consequences that are reflected across many markets, food or otherwise. For instance, in 2008, using corn to make ethanol decreased the supply for livestock feed, which make prices for that feed higher. Bosselman, 1092; See Congressional Budget Office, “The Impact of Ethanol Use on Food Prices and Greenhouse-Gas Emissions.” In turn, the price of meat rose as well. Bosselman, 1092. Corn syrup prices rose as well, which increased the price of a wide range of processed foods that use corn syrup as a sweetener. Bosselman, 1092. In response, Texas appealed to the EPA for some exemptions caused by a mandated ethanol program, to no avail. Bosselman, 1092. [LK: exemptions to what?]

In the international community, criticism of corn-based ethanol production has been severe. In 2008, UN special rapporteur for the right to food, Jean Ziegler of Switzerland, went so far as to say that “Producing biofuels is a crime against humanity.” Bosselman, 1092.

Impact on Rural Development. Midwestern farmers have been some of the most vocal supports of ethanol. Bosselman, 1092. In recent times, selling corn for ethanol production was so profitable that many farmers abandoned their plan to grow soybean and grew corn instead. Bosselman, 1092. The main benefits for these farmers have been increased crop prices from the construction and operation of biofuel plants. Bosselman, 1092. However, the benefits to these rural communities have been mixed. Bosselman, 1092. Growth in ethanol production has generally hurt livestock producers by driving up the cost of feed. Bosselman, 1092. In addition, high corn prices and low fuel demand make ethanol a tough market for farmers. Bosselman, 1092.

Delivery Infrastructure. Nearly all US ethanol production facilities are located in the Midwest, close to where the vast majority of corn and soybean crops are grown. Bosselman, 1093. As these fuels are usually delivered on rail cars and barges, instead of through pipelines, the high shipment cost makes a substantial impact on the price of ethanol. Bosselman, 1093. [cannot be transported in pipelines] [LK: more here – any relevant regulation on the delivery of ethanol?]

18.3.3. Biodiesel

Those in the agricultural industry have been promoted the idea of “biodiesel,” which is diesel fuel made of agricultural material. Bosselman, 1093; See Biodiesel, “Biodiesel Basics.” For example, the idea of vegetable oil for fuel has been around since the creation of the diesel engine. Bosselman, 1093.

[LK: more here – What types of agricultural material is biodiesel made from? How is it made? Benefits? Drawbacks?]

The most common blends of biofuels with petroleum are in 2%, 5%, and 20% increments (known as B2, B5, and B20, respectively). Bosselman, 1094. Individual engine warranties generally accept B5 and will sometimes acknowledge B20 as well. Bosselman, 1094. The most common sources of biofuel production in the United States are soybean oil. Bosselman, 1094. In Europe, rapeseed and sunflower oil is most often used. Bosselman, 1094. Biodiesel is becoming quite popular in European markets. Bosselman, 1094. [LK: how is it becoming popular? How is it used?]

One interesting method of biodiesel production being explored is through algae. Bosselman, 1095; See Oilgae. Scientists are searching among thousands of algae species to find one that has the most efficient and desirable characteristics for biofuel production. Bosselman, 1095. One

American venture, Sapphire Energy, hopes to make millions of barrels a day from tens of thousands of acres devoted to algae farms across the Gulf Coast and Pacific Northwest. Bosselman, 1095.

[LK: update here – how is the project progressing?]

Chinese scientists are also honing in on algae as a source of biofuel production. Bosselman, 1095. To mitigate the impact on cropland, scientists note that the coastline of mainland China stretches for some 18,000 kilometers and has extensive “swamp wetland and marches suitable for large scale cyclic cultivation of oil-bearing microalgae.” Bosselman, 1095.

18.3.4. Cellulosic Ethanol

Cellulosic ethanol is ethanol produced from wood, grasses, or the non-edible parts of plants. Wikipedia, “Cellulosic ethanol.” While these types of fuel have potential, their true potential is widely unknown because the generation of these biofuels will require significant scientific breakthroughs for breaking down the cellulosic material. Bosselman, 1096. [LK: be more specific – what problems with breaking down the material? What breakthroughs are necessary?]

Cost is also another problem associated with these fuels. One study has found that the cost was around $111 million for a conventional grain ethanol plant but around $854 million for an advanced biorefinery. Bosselman, 1096. In addition, many of the possible sources of cellulose ethanol, such as rice straw, wheat straw, forest thinning and switchgrass, have significant transportation costs. Bosselman, 1096.

[LK: the drawbacks of cellulosic ethanol are clear but what are the potential benefits?]

In the final Renewable Fuel Standard adopted by the EPA on February 3, 2010, the agency exercised its discretion to set the 2010 standard for cellulosic biofuel at 6.5 million gallons – a target much lower than hoped for by the EISA. Bosselman, 1097; See EPA, “Renewable Fuel Standard (RFS).” However, even though the existing output of cellulosic biofuels came only from pilot and demonstration projects, the EPA found “a number of companies appear to be poised to expand production over the next several years.” Bosselman, 1097. [LK: update here – EPA was supposed to make a determination for 2011 in November of 2010 and for each succeeding year annually – what was the EPA’s determination?]

[LK: in general, discussion of the environmental impacts of biofuels??]

18.4 Regulation of Auto Industry

EISA requires automakers to raise their corporate average fuel economy (CAFE) levels to 35 mpg by 2020. Bosselman, 1112. The EPA regulates auto emissions under the Clean Air Act. Bosselman, 1116.

Passenger vehicle emissions regulation has traditionally focused on carbon monoxide, sulfur, and ozone. Bosselman, 1117-18.

[LK: expand here! What is a CAFE level? Give more info on the regulation of emissions and what it means for the auto industry. Also turn into paragraph form!]

18.4.1 Industry Free Fall and Federal Takeover

[introduction]

Restructuring U.S. Automaking. [this story needs to be filled out – told more chronologically]

A series of events during the first decade of the twenty-first century led to the near-collapse of the American automobile industry. Bosselman, 1126. First, consumers became reluctant to purchase major items after the terrorist attacks on September 11, 2001. Bosselman, 1126. In response, automakers offered large incentives that were successful in encouraging purchasers, but led companies to believe they could sustain those levels of production. Bosselman, 1126. Eventually they were forced to reduce production volume, but had to keep many workers under union agreements. Bosselman, 1126. Further, during the 1990s, American automakers successfully lobbied for regulations that favored fuel-inefficient vehicles and paid large dividends rather than reinvesting profits to improve their performance. Bosselman, 1126-27.

As a result, in 2008, Chrysler and GM received an emergency loan of $17.4 billion from the federal government, which was increased to $65 billion in 2009. Bosselman, 1127; See US News, “Bush Offers Chrysler, GM   $17.4 Billion Bailout – With Strings.” In spite of this, GM filed for bankruptcy in June of 2009. Bosselman, 1127; See CNN, “GM Bankruptcy: End of an era.” At the time, it was estimated that the “rescue” of the car industry could cost American taxpayers close to $100 billion. Bosselman, 1127; See The Wall Street Journal, “GM Collapses Into Government’s Arms.” Nonetheless, the [industrty has returned to profitability and the government stands to make money] [LK: update here – how is the auto industry now post-bankruptcy? Find place for this article -http://www.scientificamerican.com/article.cfm?id=transforming-the-auto-industry]

The year 2007 marked a historic turning point in the American automotive industry. Edmunds Auto Observer, “2007: A Historic Year for US Vehicle Sales.” The Great Recession hit the industry especially hard. Bosselman, 1111. New vehicle sales plummeted starting in the autumn of 2007, reaching decade lows. Edmunds Auto Observer, “2007: A Historic Year for US Vehicle Sales.” For the first time, US automakers’ share of the domestic market fell below 50%. Edmunds Auto Observer, “2007: A Historic Year for US Vehicle Sales.” Sales continued to fall

in 2008, dropping to their lowest levels since 1992. Edmunds Auto Observer, “2008 US Auto Sales Are Worst Since 1992.” By the time 2009 was over, sales had reached their lowest point since 1982, and the Federal government had invested over 80 billion dollars in an attempt to bail out General Motors and Chrysler. CITE?? By the end of the year the hemorrhaging had stopped and manufacturers began to experience a very slight rebound. CITE? But the consequences would reverberate for several years and raise serious questions concerning the role of the Federal government and its interference in the marketplace. Both GM and Chrysler eventually declared Chapter 11 bankruptcy, after the government had provided billions in emergency loans to keep the companies afloat. Bosselman, 1127. The government assumed ownership and management authority until the companies could steer through the proceedings and repay the loans. CITE? To date, the government still holds a considerable equity share in GM, although it sold its remaining interest in Chrysler to FIAT in July of 2011. US NEWS, “US Sells Remaining Chrysler Shares to FIAT.”

Ford was the only major US automaker that did not take the government bailouts. Ironically, Ford owed its good fortune to its own ineptitude. The company was performing so terribly prior to the market collapse that it was forced to mortgage its assets in 2006 to secure a 25 billion dollar loan. Financing was much easier to secure in 2006 when Ford needed it compared to 2008 when GM and Chrysler needed it. Consequently, Ford found a private source of liquidity and GM and Chrysler appealed to the political process. CITE? Cannot find this info in the Bosselman book.

The blow to the auto industry coincided with a sharp rise in commodity prices. In particular, the price of oil skyrocketed to $145/barrel during the summer of 2008. The risk was thought to be caused by speculation surrounding the increase in oil demand of developing nations, especially China and India. CITE???

While the aforementioned market conditions were beginning to develop, Congress passed a revision to the existing CAFE standards in the Energy Independence and Security Act (EISA). Bosselman, 1112. EISA was signed into law by President Bush in December of 2007. Bosselman, 1112.

18.4.2 CAFE Standards: EISA 2007

The new CAFE standards call for a 40% increase in average corporate fuel economy. Bosselman, 1112. [LK: what does this mean? What is average corporate fuel economy?] They require automakers to meet certain incremental improvements each year, eventually hitting 35 mpg by 2020. Bosselman, 1112. The 35-mpg figure includes both passenger vehicles and light trucks between model years 2011 and 2020. Bosselman, 1112. Since trucks inherently consume more fuel owing to their greater size and weight, this means that the fuel economy of passenger cars must improve to even greater than 35 mpg to make up the difference. Bosselman, 1113.

Automakers can build whatever mix of vehicles they desire, as long as the average meets 92% of the standard for that year. Bosselman, 1113.

[LK: what are the proposed regulations? Bosselman states that proposed regulations for the next group of model years were published later in 2009 – what were these regulations and have any subsequent regulations been proposed/published since 2009?]

18.4.3 Cash for Clunkers

In the summer of 2009, Congress and President Obama introduced a program called the Car Allowance Rebate System, commonly referred to as “Cash for Clunkers.” Wikipedia, “Car Allowance Rebate System.” The program had 2 goals: 1) put more fuel-efficient vehicles on the road, and 2) help boost new car sales, which had been declining precipitously for 2 years, in order to stimulate the economy. Committee on Energy & Commerce – Democrats, “New GAO Study Confirms ‘Cash for Clunkers’ Program Helped Economy, Environment.” Clash for Clunkers worked like this: people with old, low-mpg cars were eligible for a $3,500 – $4,500 credit towards the purchase of a new, high-mpg car. Wikipedia, “Car Allowance Rebate System.” Although the program officially started on July 1, 2009, the processing of claims did not begin until July 24, 2009 and the program ended a month later, on August 24. Wikipedia, “Car Allowance Rebate System.” It was supposed to last until November, but so many people participated that the funding was exhausted before then. Wikipedia, “Car Allowance Rebate System.” Altogether, the government provided $2.877 billion in credits, under the $3 billion provided by Congress to run the program. US Department of Transportation, “Cash for Clunkers Wraps up with Nearly 700,000 car sales and increased fuel efficiency, US Transportation Secretary LaHood declares program ‘wildly successful.’”

Cash for Clunkers produced some very interesting effects. For starters, it resulted in Asian automakers gaining a larger share of the US market. Reuters, “Japanese, Koreans gain most from cash for clunkers.” Toyota benefited the most, accounting for 19.4% of Cash for Clunkers sales, followed by GM with 17.6%, Ford with 14.4% and Honda with 13.0%. US Department of Transportation, “Cash for Clunkers Wraps up with Nearly 700,000 car sales and increased fuel efficiency, US Transportation Secretary LaHood declares program ‘wildly successful.’” The program also raised the price of used cars, due to the fact that the program required trade-ins to be scrapped, thus taking otherwise useable used cars out of the national supply. CITE?? Some commentators argue that the net effect of the supply shortage amounted to a tax on the poor. Foundation for Economic Education, “The ‘I Hate the Poor’ Act of 2009.” Others claim that Cash for Clunkers was a resounding success. CNN, “Cash for Clunkers: Real Stimulus.” A recent study from the University of Delaware found that the costs of the program exceeded the benefits by an average of $2,000 per car, with total costs outweighing all benefits by $1.4 billion. Wikipedia, “Car Allowance Rebate System.” [benefits vs costs – more details]

18.4.4 Automotive Air Pollution Regulation

The EPA regulates automotive emissions under the Clean Air Act (CAA). Bosselman, 1116. Initially, the Agency focused on sulfur and particulate emissions. Bosselman, 1116. The regulations themselves are fairly straightforward and simply set certain levels that the industry must meet. [much more here] [LK: what section of the CAA allows the EPA to regulate automotive emissions? What are the regulations themselves and what are the current levels that the industry must meet? EXPAND]

Over time, the industry has made huge improvements in emissions, mostly through technological innovation such as the catalytic converter, advanced combustion systems, and computerized engine management. Bosselman, 1116. Recently, the debate over emissions has centered on whether and to what extent the EPA should regulate carbon emissions, which were not traditionally considered a pollutant under the language of the statute. [LK: what statute?] See Massachusetts v. EPA (US 2007) (finding that the EPA does have authority to regulate carbon dioxide). [LK: maybe discussion of the case here?]

The CAA also gives the EPA the authority to regulate the composition of fuels such as gasoline. Bosselman, 1117; See 42 USC § 7545. A famous example of the exercise of this power is the phase out and subsequent ban on leaded gasoline that occurred during the 1970s and 1980s. Bosselman, 1117. [LK: explain and describe how the EPA exercised its CAA power] The EPA can regulate any fuel additive if it finds that the substance may “reasonably be anticipated to endanger the public health or welfare.” 42 USC § 7545(c)(1). Under the EPA, [LK: do you mean CAA?] emissions of carbon monoxide, sulfur, and ozone have all declined on a per-vehicle basis. Bosselman, 1117-18. Diesel emissions have also dropped. Bosselman, 1119.

18.5 American Decentralization and Alternatives to Decentralization

In part because the US has historically invested more money in interstate highways than mass transit, America remains a very decentralized nation. Bosselman, 1128. The Interstate Highway Act of 1956 was interpreted as a guarantee that all taxes on gasoline and related equipment would be used exclusively for road construction. Bosselman, 1129. During the 1990s, Congress enacted the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), which significantly increased the funds available for non-highway modes of transportation. Bosselman, 1130. While ISTEA did produce plans that brought attention to a greater variety of modes of transportation, it did not cause a dramatic shift away from highways as transit. Bosselman, 1130. In 1998, the Transportation Equity Act for the Twenty-First Century (TEA-21) continued to support initiatives directed toward a broad range of transportation alternatives. Bosselman, 1130. However, in 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), 23 USC § 101 et seq., took a step back toward the historical preference for highways because its design made it easy for states to build roads and hard for

them to build transit projects. Bosselman, 1131. [LK: how did SAFETEA-LU make it hard for states to build transit projects?]

In the United States many alternative forms of public transportation are only found in large cities. Bosselman, 1131. However, statistics show that alternative public transportation use is on the rise. Between 1995 and 2002, transit trips increased by 20% nationwide. Boselman, 1131. Another mode of transit that is emerging is known as bus rapid transit. Bosselman, 1132; See Wikipedia, “Bus Rapid Transit.” [LK: what is bus rapid transit??] Commuting by bicycle is also on the rise, increasing by 43% between 2000 and 2008. Bosselman, 1132. While high-speed rail is used in many European and Asian countries, it is not yet a reality in the United States. Bosselman, 1133. While legislation has been passed to encourage planning for high-speed rail programs, it has been estimated the high cost of instituting high speed rail means that widespread use of high speed rail in the United States will not become a reality until gas prices are $18 per gallon. Bosselman, 1133. [LK: expand here – what was the legislation? Obama administration gave $8 billion to CA, FL and OH to plan and develop high speed rail programs in 2010 -- what is the status of these projects?]

Map: US Department of TransportationAnother approach to dealing with transportation issues has taken the form of urban

planning, known as new urbanism. Bosselman, 1134. By promoting more dense urban development, planners can reduce the need for automobile travel. Bosselman, 1134. [much more here] [LK: what is new urbanism and how does it work?]

18.5.1 Improving the Motor Vehicle Network

Even with the increase in alternative forms of transportation, many believe that the motor vehicle network will still need to be improved to handle more traffic. Bosselman, 1134-35. One idea for improving the motor vehicle network is peak-hour pricing, which would charge drivers a premium for traveling at peak times. Bosselman, 1135; See Wikipedia, “Congestion Pricing.” However, implementation on a large scale has proven daunting, as demonstrated by the opposition to the failed congestion fee proposal for Manhattan by New York City Mayor Bloomberg in 2007. Bosselman, 1136; See Wikipedia, “New York Congestion Pricing.” [LK: what happened in New York?] Success in other cities around the world, such as London, may encourage more American cities to implement similar programs. Bosselman, 1136; See Wikipedia, “London Congestion Charge.” [LK: differences between New York system and London system that made one fail and the other successful??]

Another proposal for improving the Motor Vehicle network is “connected vehicles,” which is a term used to describe vehicle wireless connectivity throughout the automotive community. Bosselman, 1137. [how does this work?] This connectivity has raised privacy concerns for some, who claim that it would create a personal tracking system, but others point to the safety and sustainability benefits that connected vehicles would provide. Bosselman, 1137. China has designed a train/motor vehicle combination in which a train/bus rides on top of cars. MotorCrave, “Chinese Straddling Train/Bus Design Rides On Top of Cars.” [LK: expand here and what is the image below of?]

Diagram: The Detroit Bureau