Transition Strategies for Alternative Transportation Fuels...
Transcript of Transition Strategies for Alternative Transportation Fuels...
© Jeroen Struben, MIT (2009)
This Research is sponsored by Shell Hydrogen, Ford Motor Company, National Renewable Energy Laboratories, and the MIT Sloan Project on Industry and Organization Studies. All statements are of the MIT authors. The authors claim no conflict of Interest. All experiments results are for qualitative interpretation only!
Transition Strategies for Alternative Transportation Fuels and Vehicles
Jeroen Struben [email protected] Sloan School of Management
Desautels Faculty of Management, McGill University
MIT/Ford/Shell Workshop Meeting,
June 9 2009
2
© Jeroen Struben, MIT (2009)
Many Project Contributors• Co-leads MIT energy transitions in transportation project
– Prof. Jeroen Struben (McGill; research affiliate @ MIT)– Prof. John Sterman (MIT)
• Students past and present– Derek Supple (MIT)– Qi Zhang (MIT)– Jessica Laviolette (MIT)– David Keith (MIT)– Katherine Dykes (MIT)
• Sponsors and informants– David Chock (Ford Motor Company)– Yimin Liu (Ford Motor Company)– Margaret Whalen (Ford Motor Company)– Sandy Winkler (Ford Motor Company)– Nikunj Gupta (Shell Company)– Henk Mooiweer (Shell Company)– Jooske van der Graaf (Shell Company)– Monisola Olaweraju (Shell Company)– Britta Gross (General Motors)– Cory Welch (National Renewable Energy Labs)
3
© Jeroen Struben, MIT (2009)
Summary
• Report latest results from the MIT alternative energy and transportation transition model
– New model enhancements• Additional AFV platforms
• Upstream fuel supply chains
• Enhanced consumer behavior
• Enhanced representation of OEM R&D, learning, technological spillovers
• Carbon Capture and Storage
– Analysis of platform and fuel diffusion• Fuel availability and price uncertainty
• Impact of consumer and OEM responses to carbon prices
• Impact of consumer and OEM responses to early/late breakthroughs with 2G biofuels and/or CCS
• Purpose is to– Further develop our conceptual models on transportation transition
challenges and opportunities
– Improve simulation model
– Explore further critical questions
4
© Jeroen Struben, MIT (2009)
2/3rds of all the world’s petroleum is used by transportation
Use of petroleum product by sector in the US, 1900 – 2005. Data source: US Department of Commerce, 1975. Historical Statistics of the United States, Colonial Times to 1970, Bureau of the Census, Washington, DC. US Energy Information Administration, 2007. Annual Energy Review 2006, Estimated Petroleum Consumption by Sector, US Department of Energy, Washington, DC. (From Schafer et al., MIT Press, forthcoming)
5
© Jeroen Struben, MIT (2009)
0
5
10
15
20
1880 1900 1920 1940 1960 1980 2000
US Petroleum Production and Consumption
Mil
lio
n B
arr
els
/Day
Alaska
Production,Lower 48 States
Consumption
Imports
Reducing Petroleum Consumption a Vital US National Interest
Imports(66%)
Alaska(4%)
Lower 48(30%)
US Oil Consumption, 2008
• Declining domestic production• High and rising import dependence• Vulnerability to supply disruption, geopolitical instability• Local air pollution and health effects• Greenhouse gas emissions
6
© Jeroen Struben, MIT (2009)
If the projected world population of 9 billion people in 2050 lived the way Americans do today...
• There would be 7.6 Billion motor vehicles on the roads
• Transportation alone would consume 440 million barrels of oil per day
– Total world oil production today is 82 million bbl/day
• CO2 emissions from transportation alone would be 62 billion metric tons/year
– Total world emissions from fossil fuels today ≈ 28 billion tons CO2/year
• The current model of development and transportation cannot scale to a world of 9 billion, all of whom aspire to live the way we do
– New energy supply technologies are necessary but not sufficient
– End-use efficiency improvements are necessary but not sufficient
• A new transportation system is coming.
– What pathway?How will be a leader?
– Note only of company but also of national Interest: leadership essential to preserve and enhance domestic innovation, investment, and jobcreation.
The current transportation model does not scale:
Adapted from: MIT Transportation Initiative, Profs. Barnhart, Jaillet, Sheffi, Sterman, Waitz, Zegras
7
© Jeroen Struben, MIT (2009)
Mass mobility wave in motion
The Tata Nano: a $2500 car made for a market of one billion people.
Source: MIT Transportation Initiative, Profs. Barnhart, Jaillet, Sheffi, Sterman, Waitz, Zegras
8
© Jeroen Struben, MIT (2009)
Cutting greenhouse gas emissions enough to stabilize atmospheric concentrations…
Source: Stern Review, Fig. 8.4
9
© Jeroen Struben, MIT (2009)
Is incompatible with this:
…unless we dramatically innovate in transportationaccessibility
AnnualTravel
per Capita(kilometers/year
per person)
Source: MIT Transportation Initiative, Profs. Barnhart, Jaillet, Sheffi, Sterman, Waitz, Zegras
10
© Jeroen Struben, MIT (2009)Many opportunities exist. Why not widespread?
NegaWatts (Negative Costs)
11
© Jeroen Struben, MIT (2009)
Technology Disruptions: Traditional Perspectives
time
Lev
el
of
ad
op
tio
n
Alternative Technology
ConventionalTechnology
Level of adoption
Cu
mu
lati
ve
N
et
Eff
ort
Personal Stereo
Cameras
12
© Jeroen Struben, MIT (2009)
Regulation
Fuel supply &infrastructure
Service
Repair
Conversion
Stationary applications
Canonical Diffusion Examplesversus Network Technologies
Technological improvements
Consumer acceptance
Complement productor market
Color television
Laser printer
Refrigerator
Walkman
VHS player
Document reader/writer
Alternative Fuel Vehicle
13
© Jeroen Struben, MIT (2009)
Year
Sh
are
of
To
tal A
do
pti
on
Diffusion Patterns of Alternative Vehicle Platforms
0 10 20 30 400
0.1
0.2
0.3
0.4
0.5
DOE High
DOE Low
UK
Sweden
US
HFCVDiesel
Year
Sh
are
of
To
tal A
do
pti
on
Diffusion Patterns of Alternative Vehicle Platforms
0 10 20 30 400
0.1
0.2
0.3
0.4
0.5
DOE High
DOE Low
ARG
NZL (Conversions)
HFCVCNG
Year
Sh
are
of
To
tal A
do
pti
on
Diffusion Patterns of Alternative Vehicle Platforms
0 10 20 30 400
0.1
0.2
0.3
0.4
0.5
DOE High
DOE Low
HFCV
Year
Sh
are
of
To
tal A
do
pti
on
Diffusion Patterns of Alternative Vehicle Platforms
0 10 20 30 400
0.1
0.2
0.3
0.4
0.5
DOE High
DOE Low
HFCVHybrid - USSUV - US
Alternative Fuel Vehicle Diffusion: Slow and Fragile
Diesel
Scenarios
14
© Jeroen Struben, MIT (2009)
Alternative Fuel Vehicle Diffusion: Slow and Fragile
Year
Sh
are
of
To
tal In
sta
lled
Base
Diffusion Patterns of Alternative Vehicle Platforms
0 10 20 30 400
0.1
0.2
0.3
0.4
0.5
HFCVHybrid - USSUV - USDieselCNG
15
© Jeroen Struben, MIT (2009)
• Compressed Natural Gas – So far so good: Argentina
– Low penetration: Italy
– Sizzle and fizzle: Canada, New Zealand
– Stalled: California, Europe (excl Italy)
• Diesel – High/self-sustaining: Austria, Germany, France
– Sizzle and fizzle: USA
– Low penetration: Sweden, Ireland
• Ethanol – Sizzle and fizzle: Brazil (100% ethanol)
– So far so good: Brazil (flex fuels)
• Gas-electric hybrid (e.g. Prius)– So far so good USA
• Electric– Sizzle and Fizzle USA: EV1, other pure electrics
• Plug-in Hybrids– Too soon to tell Various (Ford, Toyota, Chevy Volt)
Many programs to introduce Alternative Fuel Vehicles (AFVs) fail
16
© Jeroen Struben, MIT (2009)
Creating a Market That Does Not Exist: Research Question
• How do AFVs enter the market, gain traction, and sustain themselves?
• What are viable pathways?
• Where are important pitfalls?
• Where lie important policy leverages?
• What level of coordination is needed ? Who? What kind of coordination? How long?
• What portfolios to build?
17
© Jeroen Struben, MIT (2009)
MIT System Dynamics Group Approach
• Suite of simulation models of AFV introduction, diffusion, competition
– Dynamic
– Spatially explicit
– Behavioral (realistic depiction of decision making)
• Broad model boundary to avoid unanticipated “side effects”
– Integration of vehicle technology, competition among AFVs and with ICE, fuel supply technology, consumer behavior, government policies, other key actors and factors
– Counterfactual analysis
• Grounded in detailed empirical study, quantitative and qualitative data
– Case studies of prior AFV programs and policies
See: Struben J, Sterman J, 2008, "Transition challenges for alternative fuel vehicle and transportation systems" Environment and Planning B 35(6) 1070 – 1097
18
© Jeroen Struben, MIT (2009)
A Broad Boundary
Consumers• Vehicle replacement• Platform consideration • Platform choice
- new/used, car/truck
• Trip choice• Refueling choice• Topping-off behavior
FuelRetailing• Entrance/exit• Location selection• Fuel station capacity
Stacked boxes imply multiple vehicle and fuel platforms (Internal combustion engines, HFCVs, hybrids; gasoline / biodiesel/ electricity etc..)
Vehicle Installed Base
Fueling Infrastructure
Vehicle Installed Base
Fueling Infrastructure
Vehicles In use,Fuel
Supply Chain
Fuel Suppliers & Producers• Entrance/exit• Price Setting• Experience• CCS Investment• Electric Power Mkt
Automotive Producers• Platform portfolio• Production capacity• Experience from R&D and spillovers
• R&D investment, incl.fuel efficiency
• Marketing
Policy makers• Supply subsidies
/taxes• Demand subsidies
/taxes• Campaigns• Pilot programs• CO2 taxes/price
• Spatial disaggregation• Electricity Market
SocioEconomic
Sector Interactions
19
© Jeroen Struben, MIT (2009)
Principal feedbacks
Vehicle Choice Attributes
• Purchase price
• Performance
• Driving Convenience
• Safety
• Operating Cost
• Ecological impact
.
Success
Stagnation
Failure
Time
Share of Vehicles in Use
Vehicles InVehicles InVehicles InVehicles InUseUseUseUse
FuelingFuelingFuelingFuelingInfrastructureInfrastructureInfrastructureInfrastructure
Fuel
Consumption
+
VehicleVehicleVehicleVehicleSalesSalesSalesSales
VehicleVehicleVehicleVehicleDiscardsDiscardsDiscardsDiscards
+
VehicleVehicleVehicleVehicleChoiceChoiceChoiceChoice
Fuel AvailabilityFuel AvailabilityFuel AvailabilityFuel Availability
R1R1R1R1
x
y
DriveDriveDriveDriveAttractivenessAttractivenessAttractivenessAttractiveness +
+
+
VehicleVehicleVehicleVehicleAttractivenessAttractivenessAttractivenessAttractiveness
+
+Vehicles InVehicles InVehicles InVehicles InUseUseUseUse
FuelingFuelingFuelingFuelingInfrastructureInfrastructureInfrastructureInfrastructure
Fuel
Consumption
+
VehicleVehicleVehicleVehicleSalesSalesSalesSales
VehicleVehicleVehicleVehicleDiscardsDiscardsDiscardsDiscards
+
VehicleVehicleVehicleVehicleChoiceChoiceChoiceChoice
ConsumerConsumerConsumerConsumerConsiderationConsiderationConsiderationConsideration
+
+
Fuel AvailabilityFuel AvailabilityFuel AvailabilityFuel Availability
SocialSocialSocialSocialExposureExposureExposureExposure
R3R3R3R3
R1R1R1R1
x
y
DriveDriveDriveDriveAttractivenessAttractivenessAttractivenessAttractiveness +
+
+
VehicleVehicleVehicleVehicleAttractivenessAttractivenessAttractivenessAttractiveness
+
+Vehicles InVehicles InVehicles InVehicles InUseUseUseUse
FuelingFuelingFuelingFuelingInfrastructureInfrastructureInfrastructureInfrastructure
Fuel
Consumption
+
AutomotiveAutomotiveAutomotiveAutomotiveManufacturerManufacturerManufacturerManufacturerCapabilitiesCapabilitiesCapabilitiesCapabilities
VehicleVehicleVehicleVehicleSalesSalesSalesSales
VehicleVehicleVehicleVehicleDiscardsDiscardsDiscardsDiscards
+
+
VehicleVehicleVehicleVehicleChoiceChoiceChoiceChoice
ConsumerConsumerConsumerConsumerConsiderationConsiderationConsiderationConsideration
+
+AutomotiveAutomotiveAutomotiveAutomotive
Economies of Scale,Economies of Scale,Economies of Scale,Economies of Scale,Scope, RDScope, RDScope, RDScope, RD
Fuel AvailabilityFuel AvailabilityFuel AvailabilityFuel Availability
SocialSocialSocialSocialExposureExposureExposureExposure
R3R3R3R3
R2R2R2R2
R1R1R1R1
x
y
+
DriveDriveDriveDriveAttractivenessAttractivenessAttractivenessAttractiveness +
+
+
VehicleVehicleVehicleVehicleAttractivenessAttractivenessAttractivenessAttractiveness
+
+Vehicles InVehicles InVehicles InVehicles InUseUseUseUse
FuelingFuelingFuelingFuelingInfrastructureInfrastructureInfrastructureInfrastructure
Fuel
Consumption
+
AutomotiveAutomotiveAutomotiveAutomotiveManufacturerManufacturerManufacturerManufacturerCapabilitiesCapabilitiesCapabilitiesCapabilities
VehicleVehicleVehicleVehicleSalesSalesSalesSales
VehicleVehicleVehicleVehicleDiscardsDiscardsDiscardsDiscards
+
+
VehicleVehicleVehicleVehicleChoiceChoiceChoiceChoice
ConsumerConsumerConsumerConsumerConsiderationConsiderationConsiderationConsideration
+
+AutomotiveAutomotiveAutomotiveAutomotive
Economies of Scale,Economies of Scale,Economies of Scale,Economies of Scale,Scope, RDScope, RDScope, RDScope, RD
Fuel AvailabilityFuel AvailabilityFuel AvailabilityFuel Availability
SocialSocialSocialSocialExposureExposureExposureExposure
R3R3R3R3
R2R2R2R2
R1R1R1R1
R4bR4bR4bR4b
x
y
R1bR1bR1bR1b
+
DriveDriveDriveDriveAttractivenessAttractivenessAttractivenessAttractiveness +
+
+
+
VehicleVehicleVehicleVehicleAttractivenessAttractivenessAttractivenessAttractiveness
+
+Vehicles InVehicles InVehicles InVehicles InUseUseUseUse
FuelingFuelingFuelingFuelingInfrastructureInfrastructureInfrastructureInfrastructure
Fuel SupplyFuel SupplyFuel SupplyFuel SupplyChainChainChainChain
CapabilitiesCapabilitiesCapabilitiesCapabilities
Fuel
Consumption
+
+
AutomotiveAutomotiveAutomotiveAutomotiveManufacturerManufacturerManufacturerManufacturerCapabilitiesCapabilitiesCapabilitiesCapabilities
VehicleVehicleVehicleVehicleSalesSalesSalesSales
VehicleVehicleVehicleVehicleDiscardsDiscardsDiscardsDiscards
+
+
VehicleVehicleVehicleVehicleChoiceChoiceChoiceChoice
ConsumerConsumerConsumerConsumerConsiderationConsiderationConsiderationConsideration
+
+AutomotiveAutomotiveAutomotiveAutomotive
Economies of Scale,Economies of Scale,Economies of Scale,Economies of Scale,Scope, RDScope, RDScope, RDScope, RD
Fuel AffordabilityFuel AffordabilityFuel AffordabilityFuel Affordability
Fuel AvailabilityFuel AvailabilityFuel AvailabilityFuel Availability
SocialSocialSocialSocialExposureExposureExposureExposure
R3R3R3R3
R2R2R2R2
R1R1R1R1
R4bR4bR4bR4b
x
y
InstitutionalInstitutionalInstitutionalInstitutionalCoevolutionCoevolutionCoevolutionCoevolution
R1bR1bR1bR1b
+
+
DriveDriveDriveDriveAttractivenessAttractivenessAttractivenessAttractiveness +
+
+
+
R4R4R4R4
VehicleVehicleVehicleVehicleAttractivenessAttractivenessAttractivenessAttractiveness
+
+
Vehicles in
Use
20
© Jeroen Struben, MIT (2009)
Creating an AFV market: California as Laboratory for Experimentation
• Focus on Central/Southern California– 13.5 Million households– 13 Million ICE vehicles– 6,500 gasoline fuel stations
• Behavioral Dynamics– Willingness to consider an
AFV in purchase decision depends on marketing, social exposure to AFVs, word of mouth from others (favorable and unfavorable)
– AFV purchase decision also conditioned by inconvenience of fuel search and risk of no fuel
– Drivers will go out of their way for fuel – up to a point
– Drivers worried about fuel availability may top off tanks
Population
21
© Jeroen Struben, MIT (2009)
Liquid/gasfossil
gasoline,ethanol, diesel
fuel-cell
hydrogen
gasoline
conventional ICE/gasoline,hybrid
$ $
OE
M r
ein
vestm
ent,
le
arn
ing,
scale
, scope
$ $ $ $ $
Consumer Acceptance
Experiment 1: HFCV Diffusion
22
© Jeroen Struben, MIT (2009)
Example: HFCV• 2006 ICE/Gasoline Technical Parameters
• Hydrogen Fuel Cell Vehicles compared to current ICE: Initial Mature
– $35,000 production cost 2.25 1
– Equal Initial performance 1 1.25
– 35 mi/gge fuel economy 1.67 3
– 6 gge tank capacity 0.3 0.5
• Hydrogen Fuel Stations
– H2 Produced at Station Forecourt via Steam Reformation of Natural Gas
– $2.10 variable cost per gge H2 output (~$9/mcf natural gas, 70% efficiency)
– Selection, permitting, construction delays total 2 years
• Aggressive, coordinated, and persistent policies across the system:
– Intensive 15 yr marketing program to build awareness
– Fleet program involving 500,000 vehicles
– Full subsidy of HFCV vehicle price difference with ICE
– Intensive R&D programs to lower AFV cost and boost performance prior to roll out
– Fuel station rollout totaling about 800 stations
– Fixed $2.50 gge alt fuel retail markup for 10 years, gradual deregulation thereafter
– $0.50/gallon additional gasoline tax
– Cost of R&D, marketing program, fleet program, AFV subsidies, fuel station rollout shared between government, auto OEMs and fuel providers
• Assume no Hindenburgs
Max Range
210 miles
23
© Jeroen Struben, MIT (2009)
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
Adoption Fraction
ICE
HFCV
5,700
Base Case
Spatial snapshot
Spatial snapshot
Fuel Stations
(Max Scale =
23,000 stations)GasolineHydrogen
Rollout StationsTotal 785Urban 87%
SubUrban 5%Rural 8%
Market collapses after subsidies end
Hydrogen Fuel
Cell Vehicles on
the Road
Hydrogen Fuel
Stations
Fuel
Demand
+
Fuel
Availability
+
+
HFCV
Sales
Fuel Station
openings
+
Chicken and Egg
Problem
R
24
© Jeroen Struben, MIT (2009)
Some adoption in urban areas, but poor rural, exurb fuel availability leads to market collapse
Sacramento
Fresno
Bakersfield
San
Jose
San Diego
Los Angeles
To Reno
To
Las Vegas
Tahoe
10
5
99
101
Death Valley
Yosemite
Sequoia
Sacramento
Fresno
Bakersfield
San
Jose
San Diego
Los Angeles
To Reno
To
Las Vegas
Tahoe
1010
55
99
101
Death Valley
Yosemite
Sequoia
4040
1515
1515
Adoption,2030 Sacramento
Fresno
Bakersfield
San
Jose
San Diego
Los Angeles
To Reno
To
Las Vegas
Tahoe
10
5
99
101
Death Valley
Yosemite
Sequoia
Sacramento
Fresno
Bakersfield
San
Jose
San Diego
Los Angeles
To Reno
To
Las Vegas
Tahoe
1010
55
99
101
Death Valley
Yosemite
Sequoia
4040
1515
1515
Fuel Availability,2030
25
© Jeroen Struben, MIT (2009)
Topping Off
1. Rigid
• refill at buffer• buffer fixed
2.�Flexible• refill on average at buffer• buffer fixed
3.�Adaptive• refill on average at buffer• buffer adapts to
perceived fuel availability�
We examine the following behavioral assumptions for driver refueling behavior:
What is the impact
on AFV diffusion?
26
© Jeroen Struben, MIT (2009)
AFV Driver “Topping off”Creates Self-Reinforcing
Fuel Shortages
Gas line during 1979 crisis
27
© Jeroen Struben, MIT (2009)
Topping Off
• Topping off is individually rational when fuel availability is uncertain.
• But topping off lowers effective vehicle range, – Increasing trips to and congestion at fuel stations
– Increasing chances of “bank run” dynamics (gas lines and panic as in USA 1979, UK/France 2000)
◊ Result: Lower AFV attractiveness and adoption
28
© Jeroen Struben, MIT (2009) 2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
Adoption Fraction
ICEHFCV
5,700
Fuel Station Rollout, Rural Emphasis
Spatial snapshot
Spatial snapshot
Fuel Stations
(Max Scale =
23,000 stations)GasolineHydrogen
Rollout StationsTotal 785
Urban 87%
SubUrban 5%
Rural 8%
Adoption Fraction
ICEHFCV
Fuel Stations
(Max Scale =
23,000 stations)GasolineHydrogen
5,700
Spatial snapshot
Spatial snapshot
Total 785
Urban 33%
SubUrban 26%
Rural 41%
Rollout Stations
0
0.25
0.5
0.75
1
Base Case
Successful Policy: Subsidize fuel stations in rural areas
29
© Jeroen Struben, MIT (2009)
AFV Adoption Fraction in 2030
Sacramento
Fresno
Bakersfield
San
Jose
San Diego
Los Angeles
To Reno
To
Las Vegas
Tahoe
10
5
99
101
Death Valley
Yosemite
Sequoia
Sacramento
Fresno
Bakersfield
San
Jose
San Diego
Los Angeles
To Reno
To
Las Vegas
Tahoe
1010
55
99
101
Death Valley
Yosemite
Sequoia
4040
1515
1515
Sacramento
Fresno
Bakersfield
San
Jose
San Diego
Los Angeles
To Reno
To
Las Vegas
Tahoe
10
5
99
101
Death Valley
Yosemite
Sequoia
Sacramento
Fresno
Bakersfield
San
Jose
San Diego
Los Angeles
To Reno
To
Las Vegas
Tahoe
1010
55
99
101
Death Valley
Yosemite
Sequoia
4040
1515
1515
Base Case with Rural Fuel StationRollout Emphasis
Base Case
30
© Jeroen Struben, MIT (2009)
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
Successful Diffusion: OverviewInstalled Base Fraction
ICE
HFCV
Vehicles in Use (LDVs)
(Max Scale = 25M Vehicles)ICEHFCV
Fuel Stations
(Max Scale = 23,000 stations)GasolineHydrogen
13.3M
5,700
0
0.25
0.5
0.75
1
Population
(Max Scale = 60M people)
26.9M
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
31
© Jeroen Struben, MIT (2009)
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
0
0.25
0.5
0.75
1
year
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
Fuel Consumption and Emissions
Fuel Consumption
(Max Scale = 12B gge)GasolineHydrogenBaU
Cumulative GHG Emissions
Well-to-Wheels Per 2010
(Max Scale = 10B T.C02 equiv)Gasoline Supply ChainHydrogen Supply ChainBaU
GHG Emissions per Vehicle
Mile Traveled, Well-to-Wheels
(Max Scale = 6e-4 T.C02/mile)Gasoline AverageHydrogen BaU
32
© Jeroen Struben, MIT (2009)
0
0.25
0.5
0.75
1
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
New Vehicle attributes
Vehicle Performance
Vehicle Fuel Efficiency HFCV Tank Capacity (max scale = 30 kg)
20,000 $/vehicle
6 Kg
35,000 $/vehicle
21 m/g
35 m/gge
1
ICE
HFCV
ICE
HFCV
ICE
HFCV
Vehicle Production Cost
33
© Jeroen Struben, MIT (2009)
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
2010 2025 2040 2055 2070 20850
0.25
0.5
0.75
1
Consumer consideration and vehicle sales
HFCV Market share (New)
ICE, Used Car Fraction
HFCV, Used Car Fraction
• Assumes aggressive, sustained marketing effort, demonstration fleet program to build awareness, increase consumer consideration of AFVs
• Surplus used conventional vehicles depress used car prices, delay AFV adoption
• “Cash for Clunkers” can speed AFV market success, stimulate new car sales
Equilibrium used car fraction
HFCV
ICE
Willingness to Consider a Platform Vehicle Sales Overview
34
© Jeroen Struben, MIT (2009)
0 3 6 9 120
10
20
30
40
0 3 6 9 120
10
20
30
40
Experiment 2: Waiting for the oldies to retire: vehicle life strongly affects AFV adoption
• Market penetration increases rapidly with a reduction in the replacement time (dynamics result from social exposure effects, infrastructure, technology learning effects ignored)
• Policies that reduce the effective replacement rate of vehicles have a large impact on moving us over the tipping point: “Cash for Clunkers”
• IMPORTANT: “Clunkers”must not only be deregistered but shredded, with materials recycled. Cannot be sold into used markets in the US or other countries.
25% installed base
15% installed base
Years
to
in
sta
lled
base f
racti
on
Years to replacement
i-pods automobiles
9 Years
4 Years
AFV diffusion vs. average vehicle life
35
© Jeroen Struben, MIT (2009)
Experiment 3: Multiplatform Competition
Wind, Solar
Liquid/gasfossil
Coal
power grid
Biomass
gasoline, dieselethanol,
hydrogen
$ $
Fuel pro
vid
ers
rein
vestm
ent,
le
arn
ing,
exp
ansio
n,
entr
y/e
xit
OE
M r
ein
vestm
ent,
le
arn
ing,
exp
ansio
n,
scale
, scope
$ $ $ $$ $ $
Nuclear Consumer Acceptance
Conventional ICE/gasoline, hybrid
PHEV / PBEV
(P)HFCV
?
?
36
© Jeroen Struben, MIT (2009)
Exploring PHEV and PHFCV Introduction:Basic Assumptions and Data
• Launch in California
• Initial PHEV costs high (realistic), but…– Charge-at-home capability
– Extensive PHEV R&D, marketing. Funding from various parties.
– Multistakeholder commitment to deploying PHEVS
• Calibration from established data sources; fuel supply chain and (public) PHEV data from Ford and Shell Hydrogen– For illustrative purposes: electricity predominantly
derived from fossil inputs (coal, natural gas)
37
© Jeroen Struben, MIT (2009)
Installed Base Dynamics for Multiplatform Competition
Time (Year)2010 2020 2030 2040 2050
PHEV Small
Large
PHFCV Small
Large
25% in stalled base share
10
8
6
4
2
0
2010
Insta
lled
Base [M
Vehic
les]
Population Growth = 1.5%
38
© Jeroen Struben, MIT (2009)
38
Conditions favor successful PHEV diffusion
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofMarket ShareMarket ShareMarket ShareMarket Share
PHEVsPHEVsPHEVsPHEVs----PHEVPHEVPHEVPHEVSalesSalesSalesSales++++
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
PHEVs use existing fuel infrastructure
Sustained diffusion through self-reinforcing learning, scale effects
39
© Jeroen Struben, MIT (2009)
Platform Installed Base Distribution in 2050 for Different Competition Scenarios
Households Using Vehicle is[r1u,PTPlus] @ 2050
CON S PHEV LSmall Large Small Large Small Large
Insta
lled
Base [M
Vehic
les]
8
4
0
BasePHEVPHFCV_S (250 station rollout)PHFCV_L (500 station rollout)PHEV+PHFCV_L
ICE PHEV PHFCV
40
© Jeroen Struben, MIT (2009)
• Simulations suggest a viable path to widespread, self-sustaining PHEV diffusion– PHEV has advantages relative to e.g. HFVC:
• Fueling infrastructure already deployed; can transition to carbon-neutral via biofuels
• Self-sustaining diffusion much easier to achieve
– Nevertheless, diffusion is slow, consistent with history of other automotive technologies
– Significant investment still required to pass tipping point
• Marketing; consumer acceptance
• Cost reduction and reliability improvement through learning, R&D, scale
– Nontrivial risks:
• Technical (e.g. battery reliability)
• Economic (cost)
• Social (willingness to consider)
PHEV versus (P)HFCV Diffusion: Preliminary Insights
41
© Jeroen Struben, MIT (2009)
Experiment 4: Biofuel Pathways
Wind, Solar
Liquid/gasfossil
Coal
power grid
Bio (Corn)
gasoline, dieselethanol,
hydrogen
$ $
Fuel pro
vid
ers
rein
vestm
ent,
le
arn
ing,
exp
ansio
n,
entr
y/e
xit
OE
M r
ein
vestm
ent,
le
arn
ing,
exp
ansio
n,
scale
, scope
$ $ $ $$ $ $
Nuclear Consumer Acceptance
Conventional ICE/gasoline, hybrid
PHEV / PEV
(P)HFCV
Bio (Cellulosic)
42
© Jeroen Struben, MIT (2009)
US Corn Production and the Renewable Fuel Standard Projection 1988-2030
Source: USDA (ERS; 09-09 based on ProExporter Projections); Tradex; Renewable Fuels Association, EISA 2007
88 1990 1995 2000 2005
20
15
10
5
0
Year
Yield [10BU/acre]
Area Harvested [10M acres/year]
Production [1000MBU/year]
Corn Price [$/BU]
Ethanol Production [1000MBU/year]
2010 2015 2020 2025 2030
Projected Ethanol Supply
[100 MBU/year] (RFS, EISA 2007)
Ligno-Cellulosic(and other)
Corn
43
© Jeroen Struben, MIT (2009)
Biofuels Experiment, Main Assumptions• Crop yield grows with 1% per year
• Fleet grows, new conventionals are 100% FFV
– As well as full awareness by their drivers etc..
• Market conditions
– Mandate is pursued by indicated blending level that changes over time. Producers understand demand as indicated by mandate.
– Ethanol production for blending and E85 is market driven, but producers receive 50c/gallon subsidy
– Corn price start in equilibrium at 4.5 $/Bushel
– Initialized and calibration to US corn land use, yield, price and production data
• Demographics:
– Population growth 1.5%
– CA to US extrapolation to examine fuel demand impact
• Timing of 2G Biofuels depends on scenario
– One scenario (2G 2015) involves highly optimistic successful availability for commercialization as of 2015 (after which 2G market performance depends on endogenous scaling up and improvements by learning)Experiment is for qualitative interpretation only!
44
© Jeroen Struben, MIT (2009)
Time (Year)2010 2020 2030 2040 20500
0.05
0.1
0.15
Time (Year)2010 2020 2030 2040 20500
0.05
0.1
0.15
Ethanol (Energy) share in gasoline blend
Mandate Blend Target
Blend share with mandate
Blend share without mandate
Blend share – no producer subsidy
E10 ����
E5 ����
45
© Jeroen Struben, MIT (2009)
Principle feedbacks of corn price dynamics
Corn Demand From
Transportation
Mandated Ethanol
Content in
Transportation
Corn Share in
Biofuel Demand
Corn
Price
Corn
Demand
+
+
CornLanduse
+
+
Marginal
Yield
Corn
Supply
+
-
Corn Demand
Non Transport
-
+
-
Innovation
Efforts
+-
Expected Revenue
per Acre
+
BB
+
Biofuel
Demand
-
+
+
DemandSupply
R
Shortage
+
+
B
Innovation
B
Saturation
46
© Jeroen Struben, MIT (2009)
Time (Year)2010 2020 2030 2040 20500
3
6
9
12
Time (Year)2010 2020 2030 2040 20500
3
6
9
12
Corn Price under Mandate
Mandate
No Mandate$/B
ushel
Counterfactual:Fixed ethanol demand
47
© Jeroen Struben, MIT (2009)
US Corn Demand for Transport Biofuel
Time (Year)2010 2020 2030 2040 20500
3000
6000
9000
12000
Mandate
No Mandate
MB
U/y
ear
48
© Jeroen Struben, MIT (2009)
Time (Year)2010 2020 2030 2040 20500
0.08
0.16
0.24
0.32
E85 Prevalence for Flex FuelsE
85 R
efill
share
under
FF
V d
rivers
Mandate
No Mandate
E85 consumption suppressed under mandate
49
© Jeroen Struben, MIT (2009)
Time (Year)2010 2020 2030 2040 20500
2.5
5
7.5
10
Time (Year)2010 2020 2030 2040 20500
2.5
5
7.5
10
0
4
8
12
16
No Mandate - Corn
Only
Mandate - Corn Only Mandate - Corn/2Gbio0
4
8
12
16
No Mandate - Corn
Only
Mandate - Corn Only Mandate - Corn/2Gbio
Total US Ethanol ProductionE
tha
no
l P
rod
uc
tio
n [Q
ua
ds/y
ea
r]
Mandate
Mandate + 2G
No Mandate
Ethanol Price [c/kwh]
2015
2040
NM M M+2G
2G
Bio
Bre
akth
rough
Actual Projected Total
50
© Jeroen Struben, MIT (2009)
Year2010 2020 2030 2040 20500
10000
20000
30000
Sensitivity Analysis: Biofuel Production
20152025n.a.
g*Eth = .2 [1/yr]; gyield= .01 [1/yr]g*Eth = .3 [1/yr] ; gyield=.01 [1/yr]g*Eth = .3 [1/yr] ; gyield=.02 [1/yr]
2GBio Introduction
Targets and Productivity
Co
rn E
qu
ivale
nt
Pro
du
cti
on
[MB
Ue]
51
© Jeroen Struben, MIT (2009)
Petr
ol
Eth
an
ol (E
85)
No M Mandate (Corn) Mandate (Corn + 2G Bio)
Example Scenario Impact on GHG Emissions (2050)(No Carbon Pricing)
Em
iss
ion
In
ten
sit
y
[gC
O2
/mile
]
1200
900
600
300
0
Petr
ol To
tal
Note: Corn / 2G bio mix in ethanol evolves over time, depending on market conditions
Current Main Sources: - Tilman et al. 2006- Searchinger et al. 2008- Fargione et.al. 2008- EPA 2009
Seq.Credit
Seq.Credit
Seq.Credit
+LandU.Corn
Seq.Credit
+LandU.
All
Seq.Credit
+LandU.
Range, as estimates vary widely
We perform scenario analysis, with different emission intensities throughout the fuel supply chain, using inputs
from multiple expert studies. Note that 2G biofuel estimates in particular vary considerably
52
© Jeroen Struben, MIT (2009)
PHEV100%
0
HFCV
Fuel Choice and Efficiency by Platform
Petro Ethanol Electric Petro Ethanol Electric H2
Mile
s/k
wh
*0.0
1 M
iles/g
CO
2
6
4
2
0
Sh
are
of
tota
l m
iles b
y f
uel
ICE202
0
205
0
Scenario: Seq.Credit, LandU., No 2GBio
53
© Jeroen Struben, MIT (2009)
Experiment 5: The Effect of Oil Shocks on PHEV Diffusion
Wind, Solar
Liquid/gasfossil
Coal
power grid
Biomass
gasoline, dieselethanol,
$ $
Fuel pro
vid
ers
rein
vestm
ent,
le
arn
ing,
exp
ansio
n,
entr
y/e
xit
OE
M r
ein
vestm
ent,
le
arn
ing,
exp
ansio
n,
scale
, scope
$ $ $ $$ $ $
Nuclear Consumer Acceptance
Conventional ICE/gasoline, hybrid
PHEV / PEV
$
?
?
54
© Jeroen Struben, MIT (2009)
Hypothesis: Higher oil prices improve relative attractiveness of PHEVs
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofMarket ShareMarket ShareMarket ShareMarket Share
PHEVsPHEVsPHEVsPHEVs----PHEVPHEVPHEVPHEVSalesSalesSalesSales++++
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
By strengthening self-reinforcing learning, and scale effects
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes of
----Oil Price
+
55
© Jeroen Struben, MIT (2009)
Year
Rela
tive I
nsta
lled
Base
PHEV Diffusion Patterns
2000 2010 2020 2030 20400
0.25
0.5
0.75
1
1.25
Conventional ICEPHEV
Year
Rela
tive I
nsta
lled
Base
PHEV Diffusion Patterns
2000 2010 2020 2030 20400
0.25
0.5
0.75
1
1.25
Conventional ICEPHEV
Oil Shock Scenario
Oil Shock Scenario
Actual Effect: Negligible!
56
© Jeroen Struben, MIT (2009)
Year
New
Veh
icle
Sale
s S
hare
PHEV Diffusion Patterns
2000 2010 2020 2030 20400
0.2
0.4
0.6
0.8
1
Higher fuel prices lead consumers to choose smaller, more efficient vehicles
Large ConventionalVehicles
Small Conventional Vehicles
Oil Shock Scenario
75% Oil price increase120$/barrel
And there is more…
57
© Jeroen Struben, MIT (2009)
xxxx
OilOilOilOilPricePricePricePrice
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofConventionalConventionalConventionalConventionalVehiclesVehiclesVehiclesVehicles
Market ShareMarket ShareMarket ShareMarket SharePHEVsPHEVsPHEVsPHEVs----
PHEVPHEVPHEVPHEVSalesSalesSalesSales
++++Cost ofCost ofCost ofCost ofDrivingDrivingDrivingDriving
PetroleumPetroleumPetroleumPetroleum
++++ ++++
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
World OilWorld OilWorld OilWorld OilDemandDemandDemandDemand
World OilWorld OilWorld OilWorld OilSupplySupplySupplySupply
----
++++
Demand fromDemand fromDemand fromDemand fromEmergingEmergingEmergingEmergingEconomiesEconomiesEconomiesEconomies
++++
xxxx
OilOilOilOilPricePricePricePrice
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofConventionalConventionalConventionalConventionalVehiclesVehiclesVehiclesVehicles
Market ShareMarket ShareMarket ShareMarket SharePHEVsPHEVsPHEVsPHEVs----
PHEVPHEVPHEVPHEVSalesSalesSalesSales
++++
ConsumerConsumerConsumerConsumerChoice forChoice forChoice forChoice for
Efficient CarsEfficient CarsEfficient CarsEfficient Cars
Cost ofCost ofCost ofCost ofDrivingDrivingDrivingDriving
PetroleumPetroleumPetroleumPetroleum
++++ ++++
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on RoadCars on RoadCars on RoadCars on Road
B1B1B1B1
++++++++
----
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
World OilWorld OilWorld OilWorld OilDemandDemandDemandDemand
World OilWorld OilWorld OilWorld OilSupplySupplySupplySupply
----
++++
Demand fromDemand fromDemand fromDemand fromEmergingEmergingEmergingEmergingEconomiesEconomiesEconomiesEconomies
++++
xxxx
OilOilOilOilPricePricePricePrice
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofConventionalConventionalConventionalConventionalVehiclesVehiclesVehiclesVehicles
Market ShareMarket ShareMarket ShareMarket SharePHEVsPHEVsPHEVsPHEVs----
PHEVPHEVPHEVPHEVSalesSalesSalesSales
++++
ConsumerConsumerConsumerConsumerChoice forChoice forChoice forChoice for
Efficient CarsEfficient CarsEfficient CarsEfficient Cars
Cost ofCost ofCost ofCost ofDrivingDrivingDrivingDriving
PetroleumPetroleumPetroleumPetroleum
++++ ++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on MarketCars on MarketCars on MarketCars on Market
EfficientEfficientEfficientEfficientCar ModelsCar ModelsCar ModelsCar ModelsOfferedOfferedOfferedOffered
++++
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on RoadCars on RoadCars on RoadCars on Road
R2R2R2R2
B1B1B1B1 B2B2B2B2
++++++++
++++
++++++++
----
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
World OilWorld OilWorld OilWorld OilDemandDemandDemandDemand
World OilWorld OilWorld OilWorld OilSupplySupplySupplySupply
----
++++
Demand fromDemand fromDemand fromDemand fromEmergingEmergingEmergingEmergingEconomiesEconomiesEconomiesEconomies
++++
xxxx
OilOilOilOilPricePricePricePrice
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofConventionalConventionalConventionalConventionalVehiclesVehiclesVehiclesVehicles
Market ShareMarket ShareMarket ShareMarket SharePHEVsPHEVsPHEVsPHEVs----
PHEVPHEVPHEVPHEVSalesSalesSalesSales
++++
ConsumerConsumerConsumerConsumerChoice forChoice forChoice forChoice for
Efficient CarsEfficient CarsEfficient CarsEfficient Cars
Cost ofCost ofCost ofCost ofDrivingDrivingDrivingDriving
PetroleumPetroleumPetroleumPetroleum
++++ ++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on MarketCars on MarketCars on MarketCars on Market
AutomotiveAutomotiveAutomotiveAutomotiveR&D in FuelR&D in FuelR&D in FuelR&D in FuelEfficiencyEfficiencyEfficiencyEfficiency
++++
++++
EfficientEfficientEfficientEfficientCar ModelsCar ModelsCar ModelsCar ModelsOfferedOfferedOfferedOffered
++++
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on RoadCars on RoadCars on RoadCars on Road
B3B3B3B3
R2R2R2R2
B1B1B1B1 B2B2B2B2
++++++++
++++
++++++++
----
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
World OilWorld OilWorld OilWorld OilDemandDemandDemandDemand
World OilWorld OilWorld OilWorld OilSupplySupplySupplySupply
----
++++
Demand fromDemand fromDemand fromDemand fromEmergingEmergingEmergingEmergingEconomiesEconomiesEconomiesEconomies
++++
xxxx
OilOilOilOilPricePricePricePrice
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofConventionalConventionalConventionalConventionalVehiclesVehiclesVehiclesVehicles
Market ShareMarket ShareMarket ShareMarket SharePHEVsPHEVsPHEVsPHEVs----
PHEVPHEVPHEVPHEVSalesSalesSalesSales
++++
ConsumerConsumerConsumerConsumerChoice forChoice forChoice forChoice for
Efficient CarsEfficient CarsEfficient CarsEfficient Cars
Cost ofCost ofCost ofCost ofDrivingDrivingDrivingDriving
PetroleumPetroleumPetroleumPetroleum
++++ ++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on MarketCars on MarketCars on MarketCars on Market
AutomotiveAutomotiveAutomotiveAutomotiveR&D in FuelR&D in FuelR&D in FuelR&D in FuelEfficiencyEfficiencyEfficiencyEfficiency
++++
++++
EfficientEfficientEfficientEfficientCar ModelsCar ModelsCar ModelsCar ModelsOfferedOfferedOfferedOffered
++++
VehiclesVehiclesVehiclesVehiclesMilesMilesMilesMiles
TraveledTraveledTraveledTraveled
----
ReplacementReplacementReplacementReplacementRatesRatesRatesRates
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on RoadCars on RoadCars on RoadCars on Road
B3B3B3B3
R2R2R2R2
++++
++++
B1B1B1B1 B2B2B2B2
++++++++
++++
++++++++
----
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
World OilWorld OilWorld OilWorld OilDemandDemandDemandDemand
World OilWorld OilWorld OilWorld OilSupplySupplySupplySupply
----
++++
Demand fromDemand fromDemand fromDemand fromEmergingEmergingEmergingEmergingEconomiesEconomiesEconomiesEconomies
++++
xxxx
OilOilOilOilPricePricePricePrice
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofConventionalConventionalConventionalConventionalVehiclesVehiclesVehiclesVehicles
Market ShareMarket ShareMarket ShareMarket SharePHEVsPHEVsPHEVsPHEVs----
PHEVPHEVPHEVPHEVSalesSalesSalesSales
++++
ConsumerConsumerConsumerConsumerChoice forChoice forChoice forChoice for
Efficient CarsEfficient CarsEfficient CarsEfficient Cars
Cost ofCost ofCost ofCost ofDrivingDrivingDrivingDriving
PetroleumPetroleumPetroleumPetroleum
++++ ++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on MarketCars on MarketCars on MarketCars on Market
AutomotiveAutomotiveAutomotiveAutomotiveR&D in FuelR&D in FuelR&D in FuelR&D in FuelEfficiencyEfficiencyEfficiencyEfficiency
++++
++++
EfficientEfficientEfficientEfficientCar ModelsCar ModelsCar ModelsCar ModelsOfferedOfferedOfferedOffered
++++
Cost of DrivingCost of DrivingCost of DrivingCost of Drivingon Electricityon Electricityon Electricityon Electricity
----
ElectricityElectricityElectricityElectricityPricePricePricePrice
++++
Cost ofCost ofCost ofCost ofProducing &Producing &Producing &Producing &DistributingDistributingDistributingDistributingElectricityElectricityElectricityElectricity
++++
++++
VehiclesVehiclesVehiclesVehiclesMilesMilesMilesMiles
TraveledTraveledTraveledTraveled
----
ReplacementReplacementReplacementReplacementRatesRatesRatesRates
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on RoadCars on RoadCars on RoadCars on Road
B3B3B3B3
R2R2R2R2
++++
++++
B1B1B1B1 B2B2B2B2
++++++++
++++
++++++++
----
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
World OilWorld OilWorld OilWorld OilDemandDemandDemandDemand
World OilWorld OilWorld OilWorld OilSupplySupplySupplySupply
----
++++
Demand fromDemand fromDemand fromDemand fromEmergingEmergingEmergingEmergingEconomiesEconomiesEconomiesEconomies
++++
xxxx
OilOilOilOilPricePricePricePrice
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofConventionalConventionalConventionalConventionalVehiclesVehiclesVehiclesVehicles
Market ShareMarket ShareMarket ShareMarket SharePHEVsPHEVsPHEVsPHEVs----
PHEVPHEVPHEVPHEVSalesSalesSalesSales
++++
ConsumerConsumerConsumerConsumerChoice forChoice forChoice forChoice for
Efficient CarsEfficient CarsEfficient CarsEfficient Cars
Cost ofCost ofCost ofCost ofDrivingDrivingDrivingDriving
PetroleumPetroleumPetroleumPetroleum
++++ ++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on MarketCars on MarketCars on MarketCars on Market
AutomotiveAutomotiveAutomotiveAutomotiveR&D in FuelR&D in FuelR&D in FuelR&D in FuelEfficiencyEfficiencyEfficiencyEfficiency
++++
++++
EfficientEfficientEfficientEfficientCar ModelsCar ModelsCar ModelsCar ModelsOfferedOfferedOfferedOffered
++++
NonTransportNonTransportNonTransportNonTransportDemand forDemand forDemand forDemand forElectricityElectricityElectricityElectricity
Cost of DrivingCost of DrivingCost of DrivingCost of Drivingon Electricityon Electricityon Electricityon Electricity
----
ElectricityElectricityElectricityElectricityPricePricePricePrice
++++
++++
++++
Cost ofCost ofCost ofCost ofProducing &Producing &Producing &Producing &DistributingDistributingDistributingDistributingElectricityElectricityElectricityElectricity
++++
++++
VehiclesVehiclesVehiclesVehiclesMilesMilesMilesMiles
TraveledTraveledTraveledTraveled
----
ReplacementReplacementReplacementReplacementRatesRatesRatesRates
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on RoadCars on RoadCars on RoadCars on Road
B3B3B3B3
R2R2R2R2
++++
++++
B1B1B1B1 B2B2B2B2
++++++++
++++
++++++++
----
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
World OilWorld OilWorld OilWorld OilDemandDemandDemandDemand
World OilWorld OilWorld OilWorld OilSupplySupplySupplySupply
----
++++
Demand fromDemand fromDemand fromDemand fromEmergingEmergingEmergingEmergingEconomiesEconomiesEconomiesEconomies
++++
----
----
B7B7B7B7
xxxx
OilOilOilOilPricePricePricePrice
Attractivenes ofAttractivenes ofAttractivenes ofAttractivenes ofConventionalConventionalConventionalConventionalVehiclesVehiclesVehiclesVehicles
Market ShareMarket ShareMarket ShareMarket SharePHEVsPHEVsPHEVsPHEVs----
PHEVPHEVPHEVPHEVSalesSalesSalesSales
++++
ConsumerConsumerConsumerConsumerChoice forChoice forChoice forChoice for
Efficient CarsEfficient CarsEfficient CarsEfficient Cars
Cost ofCost ofCost ofCost ofDrivingDrivingDrivingDriving
PetroleumPetroleumPetroleumPetroleum
++++ ++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on MarketCars on MarketCars on MarketCars on Market
AutomotiveAutomotiveAutomotiveAutomotiveR&D in FuelR&D in FuelR&D in FuelR&D in FuelEfficiencyEfficiencyEfficiencyEfficiency
++++
++++
EfficientEfficientEfficientEfficientCar ModelsCar ModelsCar ModelsCar ModelsOfferedOfferedOfferedOffered
++++
NonTransportNonTransportNonTransportNonTransportDemand forDemand forDemand forDemand forElectricityElectricityElectricityElectricity
Cost of DrivingCost of DrivingCost of DrivingCost of Drivingon Electricityon Electricityon Electricityon Electricity
----
ElectricityElectricityElectricityElectricityPricePricePricePrice
++++
++++
++++
Cost ofCost ofCost ofCost ofProducing &Producing &Producing &Producing &DistributingDistributingDistributingDistributingElectricityElectricityElectricityElectricity
++++
++++
VehiclesVehiclesVehiclesVehiclesMilesMilesMilesMiles
TraveledTraveledTraveledTraveled
----
ReplacementReplacementReplacementReplacementRatesRatesRatesRates
AttractivenessAttractivenessAttractivenessAttractivenessof PHEVsof PHEVsof PHEVsof PHEVs
++++
Efficiency ofEfficiency ofEfficiency ofEfficiency ofConventionalConventionalConventionalConventionalCars on RoadCars on RoadCars on RoadCars on Road
B3B3B3B3
R2R2R2R2
++++
++++
B1B1B1B1
B6B6B6B6
PetroleumPetroleumPetroleumPetroleumDemand fromDemand fromDemand fromDemand fromTransportationTransportationTransportationTransportation
++++
----
B2B2B2B2
B5B5B5B5
++++++++
++++
++++++++
----
PetroleumPetroleumPetroleumPetroleumCars on theCars on theCars on theCars on the
RoadRoadRoadRoad
----
++++
B9B9B9B9
ImprovementImprovementImprovementImprovementRate of PHEVsRate of PHEVsRate of PHEVsRate of PHEVs
++++
++++
R1R1R1R1
World OilWorld OilWorld OilWorld OilDemandDemandDemandDemand
World OilWorld OilWorld OilWorld OilSupplySupplySupplySupply
----
++++
Demand fromDemand fromDemand fromDemand fromEmergingEmergingEmergingEmergingEconomiesEconomiesEconomiesEconomies
++++ ++++
----
----
B7B7B7B7
Consumer Responses
Auto OEM Responses
Fuel Supply Chain Responses
PHEV Market Formation:
Overcoming an Established and Resilient Transportation System
-
58
© Jeroen Struben, MIT (2009)
Behavioral Responses Have Been Observed
Data: US Census; http://www.greencarcongress.com/, accessed June 2008; Transportation Energy Data Book, Ed. 26-2007 Table 4.6, Autodata and Ward’s
Vehicle Weight & Performance
US Vehicle Distance TraveledRoad Vehicle Miles (Trillions/year)
3
2.5
2
1.5
0 to 60(sec.)
1983 Year 2008
Car and Light Truck Sales
Car
Truck
Annual Monthly
1980 Year 2008
Weight(.lbs)
59
© Jeroen Struben, MIT (2009)
Vehicle average fleet efficiency responds to real prices with a very long delay. Prices jump in 1973, but efficiency remains nearly constant until 1980. Prices fall to about $20/bbl by 1986 and efficiency gains stall in 1992 as automakers use technical improvements to boost performance instead of mileage, and as consumers switch to larger vehicles and SUVs.
0
20
40
60
80
1950 1960 1970 1980 1990 2000 2010
2007 $
/bb
lReal Petroleum Price, 2007$/bbl
10
12
14
16
18
20
1950 1960 1970 1980 1990 2000 2010
US Motor Vehicle Fleet Efficiency
Mil
es/G
all
on
Source: Energy Information Administrationwww.eia.doe.gov/emeu/aer/txt/ptb0208.html
60
© Jeroen Struben, MIT (2009)
Experiment 6: Varying CO2 Prices
Wind, Solar
Liquid/gasfossil
Coal
power grid
Biomass
gasoline, dieselethanol,
hydrogen
$ $
Fuel pro
vid
ers
rein
vestm
ent,
le
arn
ing,
exp
ansio
n,
entr
y/e
xit
OE
M r
ein
vestm
ent,
le
arn
ing,
exp
ansio
n,
scale
, scope
$ $ $ $$ $ $
Nuclear Consumer Acceptance
Conventional ICE/gasoline, hybrid
PHEV / PBEV
(P)HFCV
?
?
61
© Jeroen Struben, MIT (2009)
Automotive Responses to CO2 Price
Time (Year)2010 2020 2030 2040 20500
0.25
0.5
0.75
1
Small
Large
Relative Fuel Economy New Vehicles
CO2 Price200 $/tCO2
100500
The actual average fuel economy depends on consumer choice and fleet replacement
2
1.5
1
0.5
0
62
© Jeroen Struben, MIT (2009)
CON S
CON L
PHEV S
PHEV L
PHFCV S
PHFCV L
$50/tCO2 carbon tax has moderate impact on platform installed base shares
I. Mand+2GBio+AFVsII. As I +CO2_50, no 2GBioIII. As I +CO2_50IV. As I +CO2_100
Vehicle Installed Base in 2050 (Millions)
12
8
4
0
Note: PHFCV’s do best in absence of 2Gbiofuels
63
© Jeroen Struben, MIT (2009)
CO2 Emissions im[Fuel,Trans] @ 2025
400
300
200
100
0
CO2 Emissions from transportation under varying CO2 Scenarios
EL ETH
I. Mand+2GBio+AFVs+SeqCr/LanduCornII. As I +CO2_50III. As II +Hydro-El (California EL Mix)IV. As II + Late TaxV. As I +CO2_100VI. As I, no 2GBio
CO2 Emissions (California)
2020 2050
EL Petro H2 ETH EL Petro H2 ETH
[MTCO2e/year]
411 258 342 247 325 433
64
© Jeroen Struben, MIT (2009)
Other Analysis Performed, in Progress, and Planned
• Extensive model testing• Further PHEV analysis
– Base scenario using: CAFE, (CA) renewable fuel standards, Waxman-Markey, etc..– Sensitivity to technical, economic, behavioral uncertainties (e.g. CCS, biofuel
commercialization timing)– Policy analysis
• Competition with and interactions between PHEV & other AFVs– Alternative PHEV technologies– Conventional hybrids– Biofuels/biodiesel– HFCV, H-ICE– Pure electric (e.g. BetterPlace)
• Fuel supply chain scenarios:– Biofuels: 2nd Generation (cellulosic; waste inputs)– H2 from sustainable sources (e.g. Nocera process, biofuels)– Electricity peak and base load, battery supply chains, storage
• C-Price and CCS Scenarios• Interactions among all items above• Other regions
65
© Jeroen Struben, MIT (2009)
AFV Diffusion:Counterintuitive Dynamics
• Focusing initial fuel station rollout on urban areas, where initial AFV demand likely highest, leads to urban focus, market failure.
• More costly exurb/rural focus builds sustainable, profitable AFV and alt fuel market, with greater urban market share, larger NPV for all key actors (Auto OEMs, fuel providers, consumers, government and environment).
• A more efficient AFV can slow or prevents adoption due to negative impact of lower fuel demand on alt fuel profitability and infrastructure investment.
• Plug-in Hybrids not vulnerable to infrastructure dynamics; diffusion more rapid and durable, assuming technical risks overcome.
• Success rapidly reduces gov’t fuel excise tax revenues; fuel tax must rise over time to maintain revenues (and compensate for drop in world oil price induced by lower consumption).
• Faster AFV sales leads to surplus used conv. vehicles. Low used car prices limit AFV diffusion. Early decommissioning of conventional cars (Cash for Clunkers) a high-leverage policy.
• Others…
66
© Jeroen Struben, MIT (2009)
Summary: Transition strategies for alternative transportation fuels and vehicles
• Understanding AFV diffusion requires sensitivity to– Technical, economic and socio-behavioral factors
– Understanding counterintuitive dynamics
– Worse-before better dynamics
• Effective policy making and market success requires coordinated/shared understanding, long-term commitment– Value and challenge of coordination among key stakeholders
• Auto OEMs (entrants)
• Fuel providers, electric utilities, power producers
• Fed, state governments
• The modeling process is designed to enable learning with, and coordinate across different market players