HOW WILL TRANSPORTATION SYSTEMS BEHOW WILL TRANSPORTATION SYSTEMS BETRANSFORMED IN OUR ENERGY FUTURE?TRANSFORMED IN OUR ENERGY FUTURE?

GEORGE A. HUMEGEORGE A. HUMEApril 28, 2006April 28, 2006

Reference was made to the following internet sites in preparingReference was made to the following internet sites in preparing

this presentation: this presentation:

• • California Energy Commission: California Energy Commission: www.energy.ca.gov/www.energy.ca.gov/

• • US Dept. of Energy, Energy Info. Admin.: US Dept. of Energy, Energy Info. Admin.: www.eia.doe.govwww.eia.doe.gov

• • US Environmental Protect. Agency: US Environmental Protect. Agency: www.epa.gov/otaq/invntorywww.epa.gov/otaq/invntory

• • California Air Resources Board: California Air Resources Board: www.arb.ca.gov/homepagewww.arb.ca.gov/homepage

OLLISLATE ENERGY

Spring 06

WHY SHOULD WE BE INTERESTED AND CONCERNED WHY SHOULD WE BE INTERESTED AND CONCERNED ABOUT FUEL USE IN TRANSPORTATION SYSTEMS?ABOUT FUEL USE IN TRANSPORTATION SYSTEMS?

As the world’s fifth largest economy, California is really a nation state that runs on As the world’s fifth largest economy, California is really a nation state that runs on energy.energy.

Every day, we spend approximately:Every day, we spend approximately: 82 $million for gasoline and diesel82 $million for gasoline and diesel 82 $million for electricity82 $million for electricity 22 $million for natural gas22 $million for natural gas

About 38% of the state’s energy consumption is by the transportation sector and About 38% of the state’s energy consumption is by the transportation sector and currently nearly 100% of the transportation fuel is fossil fuel.currently nearly 100% of the transportation fuel is fossil fuel.

Demand for transportation fuel is projected to increase by 35% in 20 years.Demand for transportation fuel is projected to increase by 35% in 20 years. Petroleum will be the primary source of fuel for transportation for the foreseeable Petroleum will be the primary source of fuel for transportation for the foreseeable

future.future. Improving vehicle efficiency is currently the most effective means to reduce our Improving vehicle efficiency is currently the most effective means to reduce our

dependence on petroleum.dependence on petroleum. Candidate alternative transportation fuel sources include:Candidate alternative transportation fuel sources include:

Ethanol/methanolEthanol/methanol • Gas (LNG, CNG, Propane)• Gas (LNG, CNG, Propane) BiodieselBiodiesel • Gas-to-Liquid fuels• Gas-to-Liquid fuels Electric vehiclesElectric vehicles • Hydrogen • Fuel Cells• Hydrogen • Fuel Cells

In 1999, mobile source emissions of carbon dioxide, methane,and nitrous oxide In 1999, mobile source emissions of carbon dioxide, methane,and nitrous oxide were responsible for more than 215 million tons of greenhouse gases.were responsible for more than 215 million tons of greenhouse gases.

OUTLINE OF FOLLOWING DISCUSSION OUTLINE OF FOLLOWING DISCUSSION POINTSPOINTS

Current status of fuel consumption within the Current status of fuel consumption within the transportation segmenttransportation segment

Summary descriptions of Fuel Efficiency and Alternative Summary descriptions of Fuel Efficiency and Alternative Fuel OptionsFuel Options

The plan to reduce Petroleum Dependency recommended The plan to reduce Petroleum Dependency recommended by the CA Energy Commission and the CA Air Resources by the CA Energy Commission and the CA Air Resources BoardBoard

Fuel consumption projections based on the recommended Fuel consumption projections based on the recommended reduction plan.reduction plan.

PRICING TRENDS OF PETROLEUM PRODUCTSPRICING TRENDS OF PETROLEUM PRODUCTSIN CALIFORNIAIN CALIFORNIA

PROJECTED VEHICLE MILES TRAVELED PROJECTED VEHICLE MILES TRAVELED (VMT) (VMT)

(2005 - 2025)(2005 - 2025)

PROJECTED DEMAND FOR ON-ROADPROJECTED DEMAND FOR ON-ROADGASOLINE AND DIESELGASOLINE AND DIESEL

PROJECTED TRANSPORTATION FUEL USEPROJECTED TRANSPORTATION FUEL USE(2000 - 2025)(2000 - 2025)

FUELS FOR AVIATION GAS TURBINESFUELS FOR AVIATION GAS TURBINES

Several different kerosine related formulations of aviation turbine Several different kerosine related formulations of aviation turbine (jet) fuel are produced to satisfy military and civilian specifications (jet) fuel are produced to satisfy military and civilian specifications and the unique needs of various operational uses.and the unique needs of various operational uses.

CivilianCivilian MilitaryMilitary JET A-1JET A-1 JP-4 (mil. JET B)JP-4 (mil. JET B) JET AJET A JP-5 (naval use)JP-5 (naval use) JET B JET B JP-8 (MIL JET A-1 +)JP-8 (MIL JET A-1 +)

Annual consumption of aviation gas turbine fuel approximates 20% Annual consumption of aviation gas turbine fuel approximates 20% of the transportation sector’s total petroleum consumption.of the transportation sector’s total petroleum consumption.

Researchers at Penn State have produced very small quantities of a Researchers at Penn State have produced very small quantities of a jet fuel (provisionally designated JP-900) comparable to JET A or jet fuel (provisionally designated JP-900) comparable to JET A or JP-8, but derived from at least 50% bituminous coal.JP-8, but derived from at least 50% bituminous coal.

TIRES AND FUEL EFFICIENCYTIRES AND FUEL EFFICIENCY

Proper tire inflation can increase fuel efficiency as much as 3%.Proper tire inflation can increase fuel efficiency as much as 3%.

Original equipment tires generally have significantly lower rolling Original equipment tires generally have significantly lower rolling resistance and better fuel economy than the average replacementsresistance and better fuel economy than the average replacements

The CA Energy Commission is funding tests of tire rolling resistance The CA Energy Commission is funding tests of tire rolling resistance and other characteristics and will publish comparative results to aid and other characteristics and will publish comparative results to aid consumers in the purchase of replacement tires.consumers in the purchase of replacement tires.

Some tire companies have begun marketing more fuel efficient tires Some tire companies have begun marketing more fuel efficient tires as part of their product lines. as part of their product lines.

CHARACTERISTICS AND EXPERIENCECHARACTERISTICS AND EXPERIENCEIN USING ALTERNATIVE FUELSIN USING ALTERNATIVE FUELS

Information from EPA, Transportation and Regional Information from EPA, Transportation and Regional Programs Division, fact sheets on the following clean Programs Division, fact sheets on the following clean alternative fuels will be reviewed:alternative fuels will be reviewed:

EthanolEthanol MethanolMethanol Liquefied Natural GasLiquefied Natural Gas PropanePropane BiodieselBiodiesel Fischer-Tropsch “manufactured” dieselFischer-Tropsch “manufactured” diesel

DEMAND REDUCTION DUE TO USE OFDEMAND REDUCTION DUE TO USE OFFUEL EFFICIENCY OPTIONSFUEL EFFICIENCY OPTIONS

DEMAND REDUCTION DUE TO USE OFDEMAND REDUCTION DUE TO USE OFFUEL SUBSTITUTION OPTIONSFUEL SUBSTITUTION OPTIONS

FEDERAL FUEL ECONOMY STANDARDSFEDERAL FUEL ECONOMY STANDARDSPROGRAMPROGRAM

Known as the Corporate Average Fuel Economy (CAFE) Known as the Corporate Average Fuel Economy (CAFE) standardsstandards

Each model year (MY) manufacturers are required to:Each model year (MY) manufacturers are required to: - Achieve average of - Achieve average of 27.5 mpg27.5 mpg for fleet of new passenger cars for fleet of new passenger cars - Achieve average of - Achieve average of 20.7 mpg20.7 mpg for fleet of new light duty trucks (includes for fleet of new light duty trucks (includes

minivans and SUVs). Increased to 21.6 for MY 2006 and 22.2 for MY2007 minivans and SUVs). Increased to 21.6 for MY 2006 and 22.2 for MY2007

Despite its flaws, as a result of CAFE, gasoline consumption is Despite its flaws, as a result of CAFE, gasoline consumption is down roughly 2.8 million barrels/day from what it would be without down roughly 2.8 million barrels/day from what it would be without CAFE and greenhouse gas emissions translate to a 7% reduction in CAFE and greenhouse gas emissions translate to a 7% reduction in CO2.CO2.

RECOMMENDED PLAN TO REDUCE RECOMMENDED PLAN TO REDUCE CALIFORNIA’S PETROLEUM DEPENDENCECALIFORNIA’S PETROLEUM DEPENDENCE

(as proposed by CA Energy Commission & Air Resources Board)(as proposed by CA Energy Commission & Air Resources Board)

I. Adopt a statewide goal of reducing demand for on-I. Adopt a statewide goal of reducing demand for on-road gasoline and diesel to road gasoline and diesel to 15%15% below the 2003 demand below the 2003 demand level by 2020 and maintain that level for foreseeable level by 2020 and maintain that level for foreseeable future. future.

II. Work in the national political arena to gain II. Work in the national political arena to gain establishment of federal fuel economy standards that establishment of federal fuel economy standards that doubledouble the fuel efficiency of new cars, light trucks and the fuel efficiency of new cars, light trucks and SUVs.SUVs.

III. Establish a goal to increase use of non-petroleum III. Establish a goal to increase use of non-petroleum fuels to fuels to 20%20% of on-road fuel consumption by 2020 and to of on-road fuel consumption by 2020 and to 30%30% by 2030 by 2030..

INCREMENTAL STEPS IN PLAN TO REDUCEINCREMENTAL STEPS IN PLAN TO REDUCEPETROLEUM DEPENDENCEPETROLEUM DEPENDENCE

Near-Term ActionsNear-Term Actions (implemented now - 2010) (implemented now - 2010) - Use more fuel efficient replacement tires & inflation- Use more fuel efficient replacement tires & inflation - Improve fuel economy in government owned fleets- Improve fuel economy in government owned fleets - Improve vehicle maintenance- Improve vehicle maintenance Mid-term ActionsMid-term Actions (implemented 2010 - 2020) (implemented 2010 - 2020) - Double fuel efficiency of LDV to 40 miles/gallon- Double fuel efficiency of LDV to 40 miles/gallon - Use natural gas-derived Fischer-Tropsch as 33%- Use natural gas-derived Fischer-Tropsch as 33% blending agent in diesel fuelblending agent in diesel fuel Long-term ActionsLong-term Actions (implemented 2020 - 2030) (implemented 2020 - 2030) - Introduce fuel cell LDV in 2012, increasing to 10% of - Introduce fuel cell LDV in 2012, increasing to 10% of sales by 2020 and 20% by 2030.sales by 2020 and 20% by 2030.

DEMAND EFFECTS OF PETROLEUMDEMAND EFFECTS OF PETROLEUMREDUCTION GOALREDUCTION GOAL

IMPACT OF HYBRIDS AND LT. DUTY DIESELSIMPACT OF HYBRIDS AND LT. DUTY DIESELSON PROJECTED GASOLINE USEON PROJECTED GASOLINE USE

OVERALL SUMMARY OF EFFECTS OF OPTIONS OVERALL SUMMARY OF EFFECTS OF OPTIONS IN ON-ROAD DEMAND FORECASTIN ON-ROAD DEMAND FORECAST