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Date:06/22/2010
Session:111th Congress (Second Session)
Witness(es):Alan T. Crane
Credentials:  Study Director, Committee on Assessment of Resource Needs for Fuel Cell and Hydrogen Technologies, and Senior Program Officer, Board on Energy and Environmental Systems, Division on Engineering and Physical Sciences, National Research Council, The National Academies
Chamber:Senate
Committee:Energy and Natural Resources Committee, U.S. Senate
Subject:Policies to Reduce Oil Consumption Through the Promotion of Accelerated Deployment of Electric-Drive Vehicles

Alternative Transportation Technologies To Reduce Oil Consumption and Carbon Emissions

Statement of

Alan T. Crane
Senior Program Officer
Board on Energy and Environmental Systems
National Research Council
The National Academies
and
Study Director
Transitions to Alternative Transportation Technologies—Plug-in Hybrid Electric Vehicles

before the

Committee on ENERGY AND NATURAL RESOURCES
U.S. Senate

June 22, 2010

Good morning, Mr. Chairman and members of the Committee. My name is Alan Crane. I was the study director for the National Research Council report Transitions to Alternative Transportation Technologies—Plug-in Hybrid Electric Vehicles and its predecessor report Transitions to Alternative Transportation Technologies—a Focus on Hydrogen. The National Research Council is the operating arm of the National Academy of Sciences, National Academy of Engineering, and the Institute of Medicine of the National Academies. The National Academy of Sciences was chartered by Congress in 1863 to advise the government on matters of science and technology.

These two studies were requested by the U.S. Department of Energy to estimate the maximum practical rate at which alternative vehicle technologies could grow in the marketplace, the resources that would be required to make that possible, and the oil consumption and greenhouse gas emissions reductions that would result. Today I shall talk mainly about the Plug-in report which was released in final form recently. I would like to respectfully request that this report be included in the record. Plug-in hybrid electric vehicles (PHEVs) and hydrogen fuel cell vehicles (HFCVs) have many similarities, and I shall provide some comparisons. I should note that the report did not consider full electric vehicles.

The committee that conducted these studies also examined biofuels and advanced fuel efficiency of conventional vehicles to compare the benefits of different approaches. One of the most important conclusions of the committee in both reports is that a balanced portfolio of R&D options is critically important for the long-term future. None of these technologies by itself is likely to solve our oil problem, but collectively they have the potential to essentially eliminate oil use in the light duty vehicle fleet by 2050. However, achieving this objective will require a broad, well-funded R&D program and a long-term commitment to deployment by the federal government and industry.

PHEVs and HFCVs differ from the biofuels and advanced efficiency options in that they probably will be too expensive, at least at first, to simply be mandated by standards. Government subsidies will be required to push them into the mass market.

PHEVs can get an earlier start than HFCVs because batteries are more nearly ready for mass production than fuel cells, and fewer infrastructure changes are required. The committee estimated that the maximum practical penetration rate for PHEVs would result in 4 million on the road in a fleet of about 275 million light duty vehicles in 2020, growing to 40 million on the road in 2030. This would require a rate of growth about twice that of conventional hybrid electric vehicles over the past 10 years.

Batteries are by far the costliest component of PHEVs, and the rate at which costs can be reduced is uncertain. All proposed PHEVs will use lithium-ion (Li-ion) batteries, similar to the technology now used in laptop computers, power tools, and other small devices. Several Li-ion chemistries are under development with the objective of optimizing performance for automotive propulsion. None yet meet all essential goals for cost, battery life, and weight. Cost is expected to be the most difficult goal.

The incremental cost of a PHEV with a 10 mile range on its batteries alone (PHEV-10) over an equivalent conventional vehicle (non-hybrid) would be about $6000 now. A PHEV-40 (40 mile range) would cost about $16,000 more. These current costs are based on batteries ordered several years ago for installation in vehicles built in 2010 and 2011. Battery costs will decline significantly, but some of the other costs required for PHEVs (e.g. power electronics and electric motors) probably less so. Total incremental costs for PHEV-10s are expected to decline to less than $4000 and for PHEV-40s to about $10,000 by 2030.

Dramatic cost reductions are not very likely without breakthroughs in battery technology. Lithium-ion batteries are already manufactured in great quantities, and those designed for vehicle applications are not greatly different from those for laptops. Thus cost reductions from manufacturing economies of scale will be limited. While the committee’s estimates of future costs are higher than some (but not all) others, that may be because the committee assumed that durability and safety goals had to be met before cost goals. Today’s lithium-ion batteries typically last three to four years, but at least 10 years will be required for a truly viable commercial PHEV. Batteries with shorter lifetimes would be less expensive, but would require replacement.

DOE’s R&D program is focused appropriately on cost reduction and performance improvement and on looking for breakthroughs. At this point, however, it is not clear what sorts of breakthroughs might become commercially viable. Furthermore, even if they occur within the next decade, they are unlikely to have much impact before 2030, because it takes many years to get large numbers of vehicles incorporating new technology on the road.

In addition to costs, the necessity of charging the batteries essentially every day to deliver their promised fuel savings may be a constraint on PHEV growth. It is not clear how many people have a safe source of power, preferably in a garage, and the willingness to plug it in regularly.

If PHEVs meet the maximum practical penetration rate, the savings in oil and carbon emissions will be significant. PHEV-40s could cut gasoline use by 55 percent by 2050, and PHEV-10s by 40 percent, relative to a reference case with no PHEVs or increased efforts on other technologies. However, much of this improvement could also be gained from improved efficiency of conventional vehicles and hybrid electric vehicles (HEVs). The high efficiency scenario analyzed by the committee, with a high fraction of HEVs, also showed a reduction of 40 percent in gasoline use. A PHEV-10 is expected to save 19 percent of the gasoline that an equivalent HEV would use, while a PHEV-40 would save 55 percent. In comparison, HFCVs directly reduce gasoline use because the hydrogen will be produced from natural gas or other non-oil sources.

PHEVs show less improvement in GHG emissions than in gasoline consumption because of the additional emissions from electricity generation. If carbon emissions from the electric sector are limited, the reductions would be greater, almost following the reductions in gasoline use.

The PHEV projection considered only the impact of a given number of PHEVs regardless of cost. PHEVs will be expensive relative to conventional vehicles, but they are cheaper to operate (driving costs per mile are less than for conventional vehicles), and eventually vehicle costs may decline sufficiently to achieve life-cycle cost competitiveness. A transition period with substantial policy intervention and/or financial assistance for buyers from government and possibly manufacturers will be necessary until the higher costs of PHEVs are balanced by their fuel savings.

Transition costs will depend on how fast vehicle costs decline. At the rate considered to be optimistic by the committee, subsidies of over $400 billion could be required for PHEV-40s. However, if DOE’s ambitious goals for battery cost and durability are met by 2020 only $24 billion would be required. These numbers are based on battery packs that would be required for mid-size cars. In so far as those would be smaller than the average that will be used in the entire fleet, this analysis may underestimate the transition costs.

Because of uncertainties in battery pack costs at this point in the initial commercialization of PHEVs, the committee feels that it is important that the cost issues be reevaluated in 3 or 4 years after industry has some commercial experience with the technology.

Following are the major conclusions of the committee. These are explained more thoroughly in the summary of the report.

1. Lithium-ion battery technology has been developing rapidly, especially at the cell level, but costs are still high, and the potential for dramatic reductions appears limited.

2. Costs to a vehicle manufacturer for a PHEV-40 built in 2010 are likely to be about $14,000 to $18,000 more than an equivalent conventional vehicle, including a $10,000 to $14,000 battery pack. The incremental cost of a PHEV-10 would be about $5,500 to $6,300, including a $2,500 to $3,300 battery pack.

3. PHEV-40s are unlikely to achieve cost-effectiveness before 2040 at gasoline prices below $4.00 per gallon, but PHEV-10s may get there before 2030.

4. At the Maximum Practical rate, as many as 40 million PHEVs could be on the road by 2030, but various factors (e.g., high costs of batteries, modest gasoline savings, limited availability of places to plug in, competition from other vehicles, and consumer resistance to plugging in virtually every day) are likely to keep the number lower.

5. PHEVs will have little impact on oil consumption before 2030 because there will not be enough of them in the fleet. More substantial reductions could be achieved by 2050. PHEV-10s will reduce oil consumption only slightly more than can be achieved by HEVs.

6. PHEV-10s will emit less carbon dioxide than nonhybrid vehicles, but save little relative to HEVs after accounting for emissions at the generating stations that supply the electric power.

7. No major problems are likely to be encountered for several decades in supplying the power to charge PHEVs, as long as most vehicles are charged at night.

8. A portfolio approach to research, development, demonstration, and, perhaps, market transition support is essential.

This concludes my statement. Thank you for the opportunity to testify. I would be happy to address any questions the Committee might have.

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