[Senate Hearing 112-38]
[From the U.S. Government Publishing Office]
S. Hrg. 112-38
ADVANCED VEHICLE TECHNOLOGIES
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON POLICIES TO REDUCE OIL CONSUMPTION THROUGH THE
PROMOTION OF ADVANCED VEHICLE TECHNOLOGIES AND ACCELERATED DEPLOYMENT
OF ELECTRIC-DRIVE VEHICLES, AS PROPOSED IN S. 734 AND S. 948
__________
MAY 19, 2011
Printed for the use of the
Committee on Energy and Natural Resources
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67-290 WASHINGTON : 2011
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20402-0001
COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana JOHN BARRASSO, Wyoming
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
BERNARD SANDERS, Vermont MIKE LEE, Utah
DEBBIE STABENOW, Michigan RAND PAUL, Kentucky
MARK UDALL, Colorado DANIEL COATS, Indiana
JEANNE SHAHEEN, New Hampshire ROB PORTMAN, Ohio
AL FRANKEN, Minnesota JOHN HOEVEN, North Dakota
JOE MANCHIN, III, West Virginia BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Alexander, Hon. Lamar, U.S. Senator From Tennessee............... 5
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Crane, David, President and CEO, NRG Energy, Inc., Princeton, NJ. 36
Cullen, Genevieve, Vice President, Electric Drive Transportation
Association.................................................... 23
Davis, Patrick, Program Director, Vehicle Technologies Program,
Office of Energy Efficiency and Renewable Energy, Department of
Energy......................................................... 9
Ghasemi, Seifi, Chairman and CEO, Rockwood Holdings, Inc.,
Member, Electrification Coalition, Princeton, NJ............... 14
Merkley, Hon. Jeff, U.S. Senator From Oregon..................... 3
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 2
Stabenow, Hon. Debbie, U.S. Senator From Michigan................ 7
Van Amburg, Bill, Senior Vice President, CALSTART, Pasadena, CA.. 28
APPENDIXES
Appendix I
Responses to additional questions................................ 53
Appendix II
Additional material submitted for the record..................... 69
ADVANCED VEHICLE TECHNOLOGIES
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THURSDAY, MAY 19, 2011
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:01 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Jeff
Bingaman, chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. OK. I think we'll go ahead and get started.
Senator Murkowski is delayed just a few minutes, but asked us
to start without her. She will be here shortly.
Thank you all for coming to testify today. Give us your
thoughts on 2 important bills: S. 734 and S. 948. These are
both bills aimed at accelerating the development and deployment
of advanced vehicle technologies.
The topics that we're discussing today have been a high
priority for the committee for some time. These bills are
constructive steps forward in dealing with our energy security,
economic security and ultimately our competitiveness
internationally. So I commend the authors of the legislation.
I'm sure there will be plenty of debate about the causes
and short term fixes for high prices of gasoline at the pump. I
think the case has been settled for some time that now that the
economic and national security costs of our current reliance on
oil are unacceptable. I don't think there's any real debate
that the only way we're going to substantially affect that cost
to our economy and to many of ourselves, our consumers, is to
reduce the amount of oil we use in transportation.
This means both increasing the efficiency of traditional
combustion engines and increasing alternatives for powering
vehicles. They're promising technologies today in alternative
fuels, in increasing energy efficiency and in light weight
materials. But because they are new and produced on smaller
scales they are not yet seen as widely commercially available
and viable. Other technologies remain in even earlier stages,
need more research and development before they're commercially
ready.
These bills that we're discussing today will focus on both
of these areas. Senator Stabenow's bill will provide a useful
structure to do the research and development programs at the
Department of Energy as well as providing tools to effectively
partner with industry to quickly bring advances to the
commercial marketplace. It also brings more focus to the
important medium and heavy duty vehicle segment. This is an
area where substantial fuel savings opportunities exist.
Senators Merkley and Alexander joined together in a bill.
They had Senator Dorgan, who is on this committee in the last
Congress, also joined with them in the previous Congress with
the bill, providing for a targeted approach to overcoming
initial barriers to widespread deployment of light duty
vehicles powered by electricity. The benefits replacing some
portion of oil use with domestically generated and
comparatively cheap electricity are obvious. This likely
accounts for the strong vote that their legislation received in
this committee in the last Congress. I believe the vote here in
our committee was 19 to 4 in reporting that legislation.
So once again this is a very timely topic. We look forward
to getting people's updated views on the issues.
Senator Murkowski has just arrived. Let me call on her for
any opening comments she has. Then we'll call on our 3
colleagues to give us their views.
But, Senator Murkowski.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman. Good morning.
Good morning to Senator Alexander, Senator Merkley. Senator
Stabenow, I also want to thank you for your hard work on this
legislation that we have before us today.
Earlier in the week we considered several bills that are
designed to increase domestic energy production. Now we're
going to be looking at the other side of the equation with a
few of the goals, the bills, that we are putting before us that
look to reduce demand. In my mind those are both going to be
necessary goals for the foreseeable future. Both supply and
demand matter and the policies that we can consider here in
this committee, I think should reflect that.
As I've said a number of times, this is an exciting time to
be working on vehicle legislation. I think that the automobile
industry is once again entering a period that will be marked by
tremendous strides in innovation. Advanced technologies are
already allowing us to use fuel more efficiently. With the
prices at the pump hovering or above $4 a gallon, that's
something that we can all appreciate.
For the first time in a long time it also appears that the
internal combustion engine is facing some real competition.
That's a fine thing. Electric vehicles are perhaps the most
promising of several technologies that could, over time,
dramatically reduce our Nation's oil consumption. I think every
member of our committee would agree that electric vehicles have
great potential. We want to see them transform the industry.
Mr. Chairman, as you've noted, both of the bills on today's
agenda were considered and reported by our committee last
Congress. While I hope we're able to overcome some of the
issues and come to a bipartisan consensus on a path forward. I
do have some concerns, perhaps some greater than others that
will need to be resolved before I can offer my full support.
Of course, the cost is at the top of my concern list. On
Monday, the Federal Government hit its debt ceiling of $14.3
trillion. Given the huge amount of work that it will take to
balance the budget we need to be careful as authorizers to make
sure that everything that we pass is well justified. One of the
best ways to ensure that our work keeps moving through the
legislative process will be to make sure that it's fully paid
for whether by repealing old authorizations or applying some of
the revenues from new energy production.
But beyond cost, we also need to consider the design of
each of these policies.
With respect to the Promoting Electric Vehicles Act, I
believe that a national plan is quite relevant. I also believe
that deployment communities have considerable merit. But I
think we need to be careful. Just a handful of communities will
be selected and public money could very well crowd out the
private investments that are now being made. I've got some
questions about the number of communities that should be
created, the funding limits for those communities and the
technologies that should be eligible for deployment with them.
With respect to the Advanced Vehicle Technology Act, I
certainly appreciate the desire to streamline the current
tangle of authorities for the Vehicles Technology program.
While I agree that one umbrella authority would be an
improvement I do have some concerns about the size of the
umbrella that this bill envisions. There's a role for the
Federal Government to pay in vehicle research. But it is
entirely possible to expand that role too far, especially as
we're dealing with our debt and deficits.
Mr. Chairman, I look forward to the hearing this morning as
we learn more. To work with you to advance responsible policies
that reduce our Nation's fuel consumption.
Thank you.
The Chairman. Thank you very much. Why don't we hear from
our colleagues in the order that they appeared here.
Senator Alexander, did you want to go first? Do you want
Senator Merkley to go first?
Senator Alexander. Let Senator Merkley go first.
The Chairman. Senator Merkley, why don't you go ahead?
We'll hear from you 2 and then from Senator Stabenow.
STATEMENT OF HON. JEFF MERKLEY, U.S. SENATOR
FROM OREGON
Senator Merkley. Thank you, Chairman Bingaman and Ranking
Member Murkowski and members of the committee. I appreciate the
opportunity to testify before you in partnership with my
colleague, Senator Alexander on a topic both of us feel is very
important to the future of our Nation. It addresses one of the
biggest issues that faces America, namely America's addiction
to imported oil.
We're the largest consumer of oil in the world. We depend
on foreign countries like Saudi Arabia and Venezuela for more
than 50 percent of that oil. Many of these countries share
neither our security interests nor our values.
Transportation is the circulatory system of our economy.
Without it, we can't survive. Yet, with 95 percent of
transportation powered by oil we have a system in which
instability in the Middle East or natural disasters far from
our shores or even market manipulation can cause a heart attack
in the American economy. Heart attacks in the economy are not
good.
We need to take charge of our economic health, our economic
future which means breaking our addiction to foreign oil. Since
cars consume one-third of our oil, powering cars by electricity
is a powerful strategy toward that end. A number of reasons why
investing in electric vehicles is good.
First, they promote fuel efficiency. It's a surprise to
many that burning fuels create electricity and delivering that
electricity to cars is more efficient than actually burning the
fuel in individual cars. So we get more bang for our energy
buck.
Second, electric fuels promote fuel diversity. Since
electricity for cars can be generated from a diverse set of
fuels including coal, nuclear, natural gas, hydroelectricity,
wind, geothermal, solar and so forth.
Third, because of that diversity, the price of electricity
has low volatility insulating America from the type of gasoline
price spikes that we're currently experiencing.
Fourth, electric vehicles eliminate pollution from the
tailpipe. Our fleet today emits pollutants that lead to asthma
and contribute to global warming. Electric vehicles are clean,
as electricity they use. Fortunately that electricity is
getting cleaner.
Fifth, the fuels that provide us with electricity will come
right here from America creating jobs at home. 99.99 percent of
the fuels we use to create electricity are here in America. We
import .01 percent from Canada.
By meeting our transportation energy needs from domestic
fuels we reduce economic and security risks. We reduce our
trade deficit. Half of our trade deficit comes from importing
oil. When we replace imported oil with red, white and blue
American made energy, we create jobs here at home.
Sixth, the battery capacity of an electric vehicle fleet is
a positive in that it can eventually create the capacity to
even out electricity demand. For example, in some parts of the
country cars can take advantage of surplus nuclear energy at
night, base load energy. In other parts of our Nation, car
batteries can help absorb surplus supply of wind energy.
So let me turn to the design of the bill. Three main
concepts.
First is to prove the concept of electric vehicle
deployment in targeted deployment communities. It accomplishes
this by providing competitive grants to communities to
accelerate investments in electric vehicle infrastructure
including charging stations, code updates, work force training
and so forth. In this sense it's really taking on the chicken
and the egg problem.
Communities are reluctant to build the necessary
infrastructure until there are enough individuals with cars.
Individuals are reluctant to buy until the infrastructure
exists. The goal of these deployment communities is to learn
from the challenges in diverse areas in order to develop the
best strategies to promote effective, cost efficient
deployment.
A second main goal is to expand the use of vehicles in
fleets. Our bill provides competitive grants to companies that
have fleets such as rental car or taxi cab companies and also
to change the law so the Federal Government could purchase
electric vehicles.
Third, investing in breakthrough battery research to bring
down the cost and improve the battery life. This type of
research will enable us to have batteries that are more
affordable, last longer on each charge and extend battery life
as well as reduce electric vehicle component costs and reuse
spent batteries. It also creates competition to reach the
standard of a 500 mile battery and awards a prize in that
competition.
Now there is a significant cost as our Ranking Member
pointed out, pegged at $3 billion over 5 years. To place that
into context during that 5 year period we will spend
approximately $1.5 trillion on imported oil. So this bill calls
for us to spend $1 for every $2,000 we spend overseas out of
our economy so that we can stop sending those dollars out of
our economy.
Keep them here. Keep them creating jobs here. Have those
dollars circulating through our grocery stores, our small
businesses, our Main Street businesses. So by spending a
fraction of what we're popping out overseas we can greatly
strengthen our economy. I think both of us are deeply committed
to finding that offset that's necessary when we come to the
point of passing this legislation.
So in closing, for the American economy to thrive we need
to have a smart energy policy that breaks our addiction to
imported oil. Accelerating the deployment of electric vehicles
is a key piece of that strategy. It will improve our national
security. It will create jobs by spending our energy dollars
here at home. It will improve our environment.
Thank you.
The Chairman. Thank you very much.
Senator Alexander.
STATEMENT OF HON. LAMAR ALEXANDER, U.S. SENATOR FROM TENNESSEE
Senator Alexander. Thanks, Mr. Chairman. Mr. Chairman,
Senator Murkowski, distinguished colleagues, I appreciate the
invitation to try to take 3 to 5 minutes to persuade you to do
again what you did last year which is to report the Promoting
Electric Vehicles Act to the floor. One difference is the price
of gasoline is higher this year than it was last year. The bill
costs less this year than it did last year.
Last year's vote was, as the Chairman said, by bipartisan
vote of 19 to 4. This is an appropriate role for the Federal
Government. 8 to 15 pilot communities, battery research, short
term, the billion dollars we saved in authorization, we saved
by avoiding duplicating other programs.
Finally if you believe the solution for $4 gasoline and
high energy prices is finding more American energy and using
less, this is the best way to use less. Electrifying half our
cars and trucks would reduce our use of foreign oil by one-
third. Saving money on fuel and stopping the sending of
billions of dollars overseas.
So instead of making the speech about--with the rest of my
time, let me tell you a story. It's the story of Ross Perot and
how he made his money. Back in the 1960s he noticed that the
big banks down in Dallas were locking their doors at 5 o'clock.
They had all these big computers that they weren't using at
night.
So he made a deal with the banks. Sell me your unused
computer time. Then he went to the States and made a deal with
the States to use that cheap computer time to do all their
data. He made a billion dollars.
In the same way, we've got an enormous amount of unused
electricity at night. Conservative estimate is that we have 65
to--we have an amount of electricity that's unused at night.
It's equal to the output of 65 to 70 nuclear power plants
between 6 a.m. and 6 p.m. I suspect that's probably our
greatest unused resource in the United States.
If we were able to use that resource to plug in cars and
trucks at night, we could electrify half our--well, 43 percent
of our cars and trucks without building one new power plant. We
could plug them in at night at electrify 43 percent of our cars
and trucks without building one new power plant. Very ambitious
goal to electrify half our cars and trucks, take a long time to
do it. But it's the best way to reduce our use of oil.
Another reason I think this will work is because it's easy
for consumers and I am one. For 2 years I drove a Toyota Prius
that had an A123 battery in it. It increased my mileage up to
80 or 90 miles per gallon. I just plugged it in at night at
home.
I've now got a Nissan Leaf. I live in an apartment nearby.
I plug it in at night. I don't even have a charger. I just plug
it into the wall. I can drive a couple of hours every day
without buying any gas. Plug it in at night, had no problems.
For that reason almost every car company is now making
electric cars. So if extra electricity is available and they're
easy to use and car companies are making them, then why do we
need the government to be involved? It's a good question.
One is the urgency of the problem. Four dollar a gallon
gasoline is killing our economy, throwing a big wet blanket
over it. The only solution is to find more and use less and
this is the way to use less.
Now to my Republican colleagues.
One, we've been saying for 3 years in our caucus, find
more, use less. We criticize Democrats for wanting to find
more--for wanting to use less without being serious about
finding more. We're subject to the same criticism if all we
want to do is find more and don't have a credible way to use
less. This is the best way to use less oil.
Second, a criticism is this interferes with the
marketplace. It does that, but in a short term, in a limited
way. Short term incentives to jump start nuclear energy, to
jump start natural gas truck fleets, to jump start electric
cars for 4 or 5 years, I think are appropriate given the
urgency of the problem. If I'm here in 5 years, I'll be the
first to say this should be the end of it. If not, I'll come
back and argue for its repeal.
Third, and this is my list of arguments to my Republican
colleagues. Conservative groups across the county have said
national security demands that we do this. Gary Bauer,
President of American Values, Richard Land, President of the
Ethics and Religious Liberty Commission, have endorsed our bill
saying that national security concerns overwhelm any opposition
to it. It's the best way to displace our use of oil.
Finally can we afford it? It's a billion dollars cheaper.
It is an authorization bill. Within the money we spend every
year we should be setting priorities. This should be a
priority.
There's some suggestion that this committee should also
appropriate the money. I would respectfully suggest that we're
in a 2-year period where we have no earmarks because
authorizers didn't like appropriators authorizing. Let's be
consistent and say to authorizers, you shouldn't be
appropriating. Let's just do the job of authorizing and then
work together. Senator Merkley and I are--have pledged to each
other that should you report it and it come to the floor we'll
work together to try to pass it without adding to the debt
working with the Appropriations Committee.
So in summary, thank you for the time to address $4
gasoline and high energy prices. We need to find more American
energy and use less. The single best way to use less is to jump
start electric cars and trucks.
You approved it once before. The problem is worse than it
was then you last approved it. The bill costs less than when
you last approved it. It's an appropriate role for the Federal
Government. We'll work with the appropriators if you report it
to find a way to enact it without adding a penny to the debt.
Thank you for your time.
The Chairman. Thank you both very much for your strong
advocacy for the bill that the 2 of you have introduced.
Senator Stabenow has the other bill that we are looking at
today. I want to give her a chance to briefly describe that
bill before we call our panel of experts.
If you have to go on to other business, we understand that.
Thank you again for being here.
Senator Stabenow.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM MICHIGAN
Senator Stabenow. Thank you, Mr. Chairman.
First, before my colleagues leave, I just want to thank
Senator Merkley and Senator Alexander for a thoughtful and I
think, exciting piece of legislation to really move us forward
on all of the issues that you talked about, but certainly
energy independence, national security. Wwe already have, with
the investment we made in advanced batteries last year in the
Recovery Act, an example of what you can do with a relatively
small amount of dollars that create an explosion of private
investment in battery technology. Senator Alexander, you
mentioned A123 batteries. Their first manufacturing facility is
in Michigan and so we are proud that you are using that battery
technology.
But it's about jobs for us as well. That's the one thing I
would add. This is very much about jobs. So, thank you for your
efforts.
Mr. Chairman, my bill and I want to thank Senator Wyden for
co-sponsoring it, really is a partnership with this vision of
moving us forward on electricification which I think is
incredibly important. The Advanced Vehicle Technology Act does
a couple of things. Both allows us to broaden.
So we're looking at a variety of technologies which I know
the Chairman is very interested in as well. That we are looking
at a variety of opportunities to look at technologies that get
us off of foreign oil but also to look at batteries in a
broader sense. Right now we're looking at automobiles. That's
important. That's a great first step.
But I have seen trucks, not just service trucks, panel
trucks like Fed Ex or UPS or others, but large trucks now that
have the capacity to use battery technologies. Then talk about
getting us off of foreign oil and using less gas. If we can
take those technologies and move them to large vehicles we are
doing even more.
So, the bill that I've introduced which is very similar to
the one passed last year, last September by the committee,
looks to do that, bring all of the advanced technology
partnerships together in one place. But broaden the way we're
looking at it. This is enjoy--this enjoys the support of the
Motor and Equipment Manufacturers Association, Electric Drive
Transportation Association, Hybrid Truck User Forum, Alliance
of Auto Manufacturers as well as a number of individual
manufacturers, suppliers and environmental groups.
This helps support our manufacturers and suppliers to make
the most fuel efficient vehicles through a wide variety of
technologies, which of course, will save consumers money at the
gas station, reduces dependence on foreign oil and creates jobs
which is so important for us. We are putting through S. 734.
We're putting a framework together for vehicle research and
development within the Department of Energy's Vehicle
Technologies Program.
We are improving the program to go beyond the traditional
partnerships. As I mentioned by including suppliers because
component parts whether it's batteries or other component parts
that have motors, engineering parts and so on, is important.
Including medium and heavy duty trucks and that technology is
very important for us in terms of saving energy.
Under the bill Department of Energy would form public/
private partnerships with companies of all sizes, with
universities, other groups, to work on a broad range of
innovative technologies like electric cars, hybrids, natural
gas, advanced batteries, would look broadly at what we can do
to jump start a number of technologies. I should finally just
point out there is no price tag in the bill. It remains the job
of the appropriators to decide where the funding will come
from. We used the term such sums as are appropriated. We also
keep the cost to a minimum by specifically directing the
Department to avoid duplication with other agencies.
So again, thank you Mr. Chairman. I think it's very
important that we bring our activities together in one place
and focus them more on ways to really get us off of foreign oil
by great American ingenuity and technology.
The Chairman. Thank you very much, Senator Stabenow for
your leadership on this legislation. We appreciate your early
and strong advocacy for what we're trying to consider today.
Why don't we call our panel of witnesses today? Let me ask
them to come forward. I'll introduce them at this time.
We have Mr. Patrick Davis, who is the Program Manager with
the Office of Vehicle Technologies in the Department of Energy.
We have Mr. Seifi Ghasemi, who is a Board Member with the
Electrification Coalition also, Chairman and CEO of Rockwood
Holdings in Princeton, New Jersey. Thank you for being here.
Ms. Genevieve Cullen is Vice President of the Electric
Drive Transportation Association.
Mr. Bill Van Amburg is the Senior Vice President with
CALSTART in Pasadena, California.
Mr. David Crane, who is President and CEO of NRG Energy in
Princeton, New Jersey.
So thank you all very much for being here. If each of you
could take about 5 minutes and give us the main points you
think we need to understand from your testimony. We will
include your full testimony in the record as if read. So you
don't need to go through all aspects of it. But again, we
appreciate your being here.
Mr. Davis, why don't we start with you and tell us the
Department of Energy's view on these 2 bills and anything else
you think we need to understand.
STATEMENT OF PATRICK DAVIS, PROGRAM DIRECTOR, VEHICLE
TECHNOLOGIES PROGRAM, OFFICE OF ENERGY EFFICIENCY AND RENEWABLE
ENERGY, DEPARTMENT OF ENERGY
Mr. Davis. Thank you.
Chairman Bingaman, Ranking Member Murkowski and members of
the committee, thank you for the opportunity to discuss the
Advanced Vehicles Technology Act and the Promoting Electric
Vehicles Act of 2011.
The transportation sector accounts for approximately two-
thirds of the U.S. oil consumption and contributes to one-third
of our Nation's greenhouse gas emissions. After housing,
transportation is the second biggest monthly expense for most
American families. As the President said in his recent energy
speech, ``In an economy that relies so heavily on oil rising
prices at the pump affect everybody.'' In addition the
President outlined a portfolio of actions which if taken
together could cut U.S. oil imports by a third by 2025.
The Office of Energy Efficiency and Renewable Energy's
Vehicle Technologies Program develops and promotes energy
efficient, environmentally friendly transportation technologies
that will reduce petroleum consumption and lower greenhouse gas
emissions while meeting driver's expectations of vehicle
performance. Few technologies hold greater promise for reducing
our dependency on oil than electric vehicles. In his 2011 State
of the Union Address, the President spoke of his goal to have
the United States become the first country with a million
electric vehicles on the road by 2015. Meeting this goal will
help the U.S. become a leader in the clean energy economy while
capitalizing on the ingenuity of American industry.
In 2009, the U.S. had only 2 factories manufacturing
advanced vehicle batteries and produced less than 2 percent of
the world's hybrid vehicle batteries. But over the next few
years, thanks to investments from the American Recovery and
Reinvestment Act in battery and electric drive manufacturing,
the U.S. will be able to produce enough batteries and
components to support 500,000 electric drive vehicles per year.
High volume manufacturing coupled with battery technology
advances and material cost reductions will lead to a drop in
battery costs of approximately 50 percent by 2013 compared to
2009 making electric vehicles accessible to more consumers.
Making our cars and trucks more efficient is one of the
easiest and most direct ways to limit our petroleum consumption
and save consumers money. To help increase the fuel economy of
the vehicle fleet DOE is investing not only in electric
vehicles, but also in higher efficiency combustion engines,
vehicle light weighting, ethanol and biofuel development, fuel
cell electric vehicles, manufacturing and vehicle
electrification deployment. The Promoting Electric Vehicles Act
of 2011 includes several important provisions to promote near
term deployment of electric drive vehicles which complement and
supplement the Department's ongoing activities.
The Department recognizes the potential benefits of
activities such as those proposed by the National Plug in
Electric Vehicle Deployment program including technical
assistance, work force training and a targeted communities
program to facilitate the rapid deployment of plug in vehicles.
We believe that such an effort will help create models and
facilitate the local leadership necessary for faster, easy
adoption across the country and would be a natural extension of
the activities undertaken through our Clean Cities Program. The
coalitions that comprise the Clean Cities network bring
together State and local governments, early adopter fleets,
local utilities, infrastructure developers and other key
stakeholders to help advance the deployment of alternative fuel
vehicles.
These partnerships are proven and effective resources for
sharing information at the local level and are prime to support
the roll out of electric drive vehicles and infrastructure. We
believe that both the work force training as well as the
technical assistance component of the proposed National
Deployment Program are vital to the successful roll out of
electric drive vehicles. Again, the Department is well
positioned to disseminate information and provide training and
technical assistance to communities seeking to accelerate EV
deployment.
As an example the Clean Cities network is working today to
share best practices and lessons learned about permitting and
inspection processes as well as opportunities for code official
and first responder training. The program authorizes by the
Advanced Vehicle Technology Act of 2011 would complement
several of the Department's current activities focused on
increasing vehicle energy efficiency. The Department supports
an integrated portfolio of advanced vehicle and fuel research
development demonstration and deployment activities. Ultimately
Senate 734 would further support the widespread
commercialization of advanced vehicle and fuel technologies to
reduce U.S. oil consumption, strengthen our economy and reduce
air pollution and greenhouse gas emissions.
In summary, the Department's transportation portfolio will
save consumers money, reduce our dependence on oil, reduce/
lower our environmental impact and keep America on the cutting
edge of clean energy technologies enabling us to build a 21st
century clean energy economy. Thank you again for the
opportunity to discuss these issues. I welcome any questions
you may have.
[The prepared statement of Mr. Davis follows:]
Prepared Statement of Patrick Davis, Program Director, Vehicle
Technologies Program, Office of Energy Efficiency and Renewable Energy,
Department of Energy
Chairman Bingaman, Ranking Member Murkowski and Members of the
Committee, thank you for the opportunity to discuss the Department's
advanced vehicles technology programs. The Administration is still
reviewing S. 734 the Advanced Vehicles Technology Act and S 948
Promoting Electric Vehicles Act of 2011 and does not have a position on
either bill at this time and so this statement will provide only
general DOE comments.
The transportation sector accounts for approximately two-thirds of
the United States' oil consumption and contributes to one-third of the
Nation's greenhouse gas (GHG) emissions.\1\ After housing,
transportation is the second biggest monthly expense for most American
families.\2\ As the President said in his recent energy speech, ``In an
economy that relies so heavily on oil, rising prices at the pump affect
everybody.'' Emphasizing that ``there are no quick fixes,'' the
President outlined a portfolio of actions which, taken together, could
cut U.S. oil imports by a third by 2025. These include programs that
would put one million electric vehicles on the road by 2015.
---------------------------------------------------------------------------
\1\ http://www1.eere.energy.gov/vehiclesandfuels/pdfs/
vehicles_fs.pdf
\2\ http://www.bls.gov/news.release/cesan.nr0.htm
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The Office of Energy Efficiency and Renewable Energy's (EERE's)
Vehicle Technologies Program (VTP) develops and promotes energy-
efficient, environmentally-friendly transportation technologies that
will reduce petroleum consumption and lower GHG emissions while meeting
drivers' expectations of vehicle performance. VTP's activities promote
energy security, environmental, and economic benefits in both the near-
and long-term.
Few technologies hold greater promise for reducing our dependence
on oil than electric vehicles. In his 2011 State of the Union address,
the President spoke of his goal to have the United States become the
first country with a million electric vehicles on the road by 2015.
Meeting this goal will help the United States become a leader in the
clean energy economy, while capitalizing on the ingenuity of American
industry. Manufacturing products needed for the clean energy economy
will generate long term economic strength in the U.S., creating jobs
across the country while reducing air pollution and greenhouse gas
emissions.
EERE investments past, present, and future are critical to
achieving this goal. In 2009, the U.S. had only two, relatively small,
factories manufacturing advanced vehicle batteries, and produced less
than two percent of the world's hybrid vehicle batteries.\3\ But over
the next few years, thanks to investments from the American Recovery
and Reinvestment Act of 2009 (Recovery Act) in battery and electric
drive component manufacturing, and electric drive demonstration and
infrastructure, the U.S. will be able to produce enough batteries and
components to support 500,000 plug-in and electric vehicles per year.
High volume manufacturing, coupled with battery technology advances,
design optimization, and material cost reductions, could lead to a drop
in battery costs of 50 percent by 2013 compared to 2009, which will
lower the cost of electric vehicles, making them accessible to more
consumers.
---------------------------------------------------------------------------
\3\ http://www.whitehouse.gov/sites/default/files/
blueprint_secure_energy_future.pdf
---------------------------------------------------------------------------
Further policies and research are needed to build on the work under
the Recovery Act. That is why the President's FY 2012 Budget proposes a
new effort to support electric vehicle manufacturing and adoption in
the United States through new consumer rebates, investments in R&D, and
competitive programs to encourage communities that invest in electric
vehicle infrastructure and regulatory streamlining. Specifically, the
Budget proposes to: transform the existing $7500 tax credit for
electric vehicles into a rebate that will be available to all consumers
immediately at the point of sale; advance innovative technologies
through new R&D investments, building on Recovery Act investments, by
investing $588 million for vehicle technologies at DOE; and reward
communities that invest in electric vehicle infrastructure through a
$200 million program which provides an incentive for communities to
invest in electric vehicle infrastructure and remove regulatory
barriers.
general comments on s. 948, the promoting electric vehicles act of 2011
The investments that we have made through the Recovery Act as well
as those in the Budget align with many of the priorities that are
reflected in the Promoting Electric Vehicles Act of 2011--though we do
not take a position on the bill itself. Below, I will discuss some of
the priorities included in this bill:
One of the main elements of the Promoting Electric Vehicles Act is
a deployment program in which communities would be chosen on a
competitive basis to receive grants that would be used to support
integration of electric vehicles through means such as installing
charging infrastructure, updating building codes. The Administration is
supportive of this concept, which is why the President's Budget
includes $200 million to reward communities for leadership in reducing
regulatory barriers and developing comprehensive electric
vehiclefriendly infrastructure.
Specifically, this funding will support a competitive program
within the Department of Energy to help communities across the country
become early adopters of electric vehicles through regulatory
streamlining, infrastructure investments, vehicle fleet conversions,
deployment of EV incentives (e.g., parking, HOV access) partnerships
with major employers/retailers, and workforce training. The FY 2012
Budget includes a proposal that would allow up to 30 communities across
the country to receive grants of up to $10 million each on the basis of
their ability to demonstrate concrete reforms and to use the funds to
help catalyze electric vehicle deployment. This approach builds on bi-
partisan proposals and ideas including some developed by the sponsors
of this bill.
The Promoting Electric Vehicles Act of 2011 includes provisions to
promote near-term deployment of plug-in electric drive vehicles, many
of which may complement and supplement the Department's ongoing
activities, funded both through the Recovery Act and annual
appropriations. However, as stated previously, the Administration is
continuing to review this extensive bill and does not have a position
on it at this time.
S.948 includes provisions which would support technical assistance,
workforce training, and a targeted communities program to facilitate
the rapid deployment of plug-in vehicles. The bill's targeted
deployment program would offer communities of different sizes in
various parts of the country an opportunity to execute various
deployment approaches and develop best practices that can be shared
nationwide to address critical questions about planning and managing
vehicle and charging infrastructure deployment.
The Department notes that the community selection criteria includes
an emphasis on diversity of climate and type of electric utility. Such
diversity in pilot programs, particularly across electricity-generation
sources, would be crucial for estimating the environmental impacts of
expanded adoption of plug-in electric drive vehicles.
DOE is already examining ways to work more closely with communities
on vehicle electrification and infrastructure deployment, particularly
in connection with our Clean Cities Program. The coalitions that
comprise the Clean Cities network bring together state and local
governments, early adopter fleets, local utilities, infrastructure
developers, and other key stakeholders in a community to advance the
deployment of alternative fuel vehicles. These public private
partnerships are proven and effective resources for sharing information
at the local level and are primed to support the rollout of electric
drive vehicles and infrastructure. Our goal is to better understand how
the Department can support local community efforts to deploy EVs and
infrastructure.
To maximize the effectiveness of the targeted communities program,
the Department would seek to coordinate this effort with related
ongoing projects to deploy electric drive vehicles and infrastructure.
Our Recovery Act projects for transportation electrification are
building critical expertise through large-scale vehicle and
infrastructure deployment, collecting data on vehicle-grid interaction
and producing valuable lessons learned that can support and help to
accelerate future deployments in other communities. We note that the
deployment community selection criteria as outlined in the legislation,
is crafted to help ensure that the selected communities stand up as
models for deployment across the country.
We also believe that technical assistance is vital to the
successful rollout of any proposed national deployment program for
electric drive vehicles. The Department is well positioned to
disseminate information and provide training and technical assistance
to communities seeking to accelerate EV deployment. As an example, and
as noted earlier, the Clean Cities network is primed to share best
practices and lessons learned about permitting and inspection
processes, as well as other local ordinances and opportunities for code
official and first responder training. I would like to note, however,
that the Department plays a supporting role in the development of model
codes and standards. In regard to this provision, we can bring value to
the process because of our extensive experience working with code
development organizations (CDOs) and standards development
organizations (SDOs) to facilitate consensus around the development and
adoption of vehicle-and infrastructure-related codes and standards. We
are also working to enable the harmonization of codes and standards at
an international level collaborating with the National Institute of
Standards and Technology (NIST) and the Department of Transportation,
as well as with the private sector. Standards and codes for electric
vehicles must be consistent with the broader Smart Grid
Interoperability Panel (SGIP) effort led by NIST.
The Promoting Electric Vehicles Act includes several other
significant provisions in addition to the National Plug-in Electric
Drive Deployment Program; I will briefly comment on several of them
here.
The bill authorizes a R&D program focused on advanced
batteries, electric drive components, and other technologies
supporting the manufacture and deployment of electric drive
vehicles and charging infrastructure. These priorities are
aligned closely with ongoing activities in the Vehicle
Technologies Program--specifically, our Batteries and Electric
Drive Technology subprogram, which includes advanced battery
R&D and advanced power electronics and electric machines, as
well as our Vehicle and Systems Simulation and Testing
subprogram, which includes work to examine vehicle and
infrastructure interface issues through testing and evaluation.
Notably, the President's FY 2012 Budget request will
significantly broaden R&D investments in technologies like
batteries and electric drivesincluding an over 30 per cent
increase in support for vehicle technology R&D and a new Energy
Innovation Hub devoted to improving batteries and energy
storage for vehicles and beyond.
The bill focuses on Federal electric vehicle upgrades. I
note that the Administration shares your commitment to
upgrading the federal fleet and is finalizing the procurement
of 100 electric vehicles.
The bill also discusses partnership with the private sector
surrounding vehicle upgrades, an area where Administration
policies are strong. Specifically, we recently announced the
Clean Fleets partnership. This program is focused on working
with private sector partnerships to help them become leaders in
deploying advance vehicles--including electric vehicles--and
technical assistance is a critical component of the program. In
fact, DOE has developed a wide range of technical tools to help
partner companies to navigate the world of alternative fuels
and advanced vehicles. A diverse collection of cost
calculators, interactive maps, customizable database searches,
and mobile applications puts vital information and analysis at
fleets' finger tips. This is just one example of our activities
in this area--and shows how important we think it is to offer
technical assistance.
We also understand and appreciate the Committee's interest
in a technical advisory committee focused on plug-in hybrid
vehicles. We place great value in independent reviews and
external input to our program. You may be aware that the
National Academy of Sciences National Research Council conducts
independent biennial reviews of both our lightduty and heavy-
duty vehicle research programs.
With respect to the new loan guarantee authorities included
in the bill, we are continuing to evaluate these proposals. At
a minimum, we would want any credit assistance to be the most
efficient and effective means of achieving policy goals, and
therefore any new authorities should comply with Federal credit
policies to mitigate cost and risk to the taxpayer.
comments on s 734 the advanced vehicle technology act of 2011
While the Administration is still reviewing S 734 and has no
position on the bill at this time, it appears that the program
authorized by the bill could complement several of the Department's
current activities focused on increasing vehicle energy efficiency. The
Vehicle Technologies Program is meeting the transportation challenge
with an integrated portfolio of advanced vehicle and fuel research,
development, demonstration, and deployment activities. We are
accomplishing this work in collaboration with industry leaders,
national laboratories, universities, state and local governments, and
other stakeholders. S. 734 could further support the widespread
commercialization of advanced vehicle and fuel technologies to reduce
U.S. oil consumption, strengthen our economy, and reduce air pollution
and greenhouse gas emissions. That being said, we suggest that the
Director of the program be appointed by the Secretary within the Office
of Vehicle Technologies itself to facilitate better coordination across
activities with similar goals and work.
Further, it also appears that Section 102 ``Sensing and
Communications Technologies,'' would unnecessarily duplicate the
existing research, development, and demonstration efforts of the
Department of Transportation's National Intelligent Transportation
Systems Program. We recommend against such duplicative Federal
programs.
In sum, the Department's transportation portfolio will save
consumers money, reduce our dependence on oil, lower our environmental
impact, and keep America on the cutting edge of clean energy
technologies, enabling us to build a 21st century clean energy economy.
Thank you again for the opportunity to discuss these issues, and I
welcome any questions you may have.
The Chairman. Thank you very much.
Mr. Ghasemi, we're very glad to have you here. Go right
ahead.
STATEMENT OF SEIFI GHASEMI, CHAIRMAN AND CEO, ROCKWOOD
HOLDINGS, INC., MEMBER, ELECTRIFICATION COALITION, PRINCETON,
NJ
Mr. Ghasemi. Thank you, sir.
Chairman Bingaman, Ranking Member Murkowski and members of
the committee, I would like to thank you for giving me this
opportunity to speak to you regarding our Nation's dangerous
dependence on imported oil and the enormous opportunity
presented by the electrification of transportation. While I'm
here largely to discuss the Promoting Electric Vehicle Act of
2011, I would first like to take a moment to thank this
committee for its ongoing effort to improve our Nation's
security. I would also like to specifically recognize Senator
Stabenow's legislation for highlighting the importance of
research and development as we adopt new technologies.
The Promoting Electric Vehicle Act of 2011 introduced by
Senator Jeff Merkley and Lamar Alexander, in both my view
personally and that of the Electrification Coalition represents
a critical step in ending the very real economic and national
security threats posed by our dependence on imported oil.
I am Chairman and CEO of Rockwood Holdings, a global
chemical company that employs 9,600 men and women in 100
facilities around the world. I was born in 1944 in the Town of
Mashad in what is now called the Islamic Republic of Iran. I
came to the United States in 1966 to complete my education at
Stamford University. In 1970 I went back to Iran to teach at
the University and work in the manufacturing sector.
All was well until the Iranian Revolution in 1979. At that
time I had 3 strikes against me. I had gone to school and
worked in the United States. My wife was an American and
Jewish. I had been a vocal opponent of the mullahs.
Thankfully my wife and son were visiting the United States
when the revolution occurred. I fled and met them months later.
I was one of the very lucky ones.
This is a very significant part of why I am here. I feel
very passionate about the issue of our dependence on oil from
those parts of the world. I know what oil dependence means. It
means that the in power, oil producing nations such as Iran to
defy U.S. Foreign Policy since they know we need their oil to
run our transportation system.
Oil dependence means that the enabled foreign governments
to impose unreasonably high gasoline prices on U.S consumers
who have no alternative but gasoline to run their cars and get
to work. In 2008 alone, the United States sent $388 billion
overseas to pay for imported oil, half of our National Trade
Deficit. Department of Energy researchers have estimated that
the economic cost of U.S. dependence on imported oil at $500
billion just in 2008 and have added up to more than $5 trillion
since 1970, a third of our total national debt that we are all
so concerned about now.
Between 2001 and 2008 the average price of gasoline
increased from $1.46 to $3.27 costing typical households $2,115
a year in fuel expenses. Some Americans today are paying more
for gas than they are paying for food. It would be ideal,
obviously, if there was a free market solution. But there is
not free market for oil, far from it.
Today more than 90 percent of proven conventional oil
reserves are controlled by foreign governments whose interests
are often at odds with ours. The fundamental reason for
America's dependence on imported oil is the energy demand of
the transportation sector. Transportation now accounts for
approximately 71 percent of American oil consumption. Any
shortage of oil will cause a massive destruction of
transportation system threatening our national security and
economic stability.
But there is a solution. An electrified transportation
sector is a viable alternative. We are not saying it's the only
alternative. But it is a very viable alternative.
Electricity is a diverse, domestic, stable, fundamentally
scalable energy supply whose fuel inputs are almost completely
free of oil. The Promoting Electric Vehicle Act of 2011 is a
great first step toward energy independence. The act would
create a competition for cities and towns would compete to be
elected as deployment communities where all of the elements of
electrified transportation system are deployed at scale. These
communities would move electrification beyond a niche product
into a dominant concept. When the plan is implemented it would
accelerate the production of electric vehicles, components and
infrastructure across the country.
Right now my company, Rockwood, is spending more than $100
million to expand our operations in the United States in places
like North Carolina, Michigan and Nevada. But the fact is that
Chinese electric vehicles will need our materials as much as
any other countries. As an American I want those electric cars
made in the United States.
Let's not go the direction we have gone with personal
computers. Designed by Americans but made overseas. A strong
manufacturing sector is critical to a strong economy. A strong
auto industry is critical to a strong manufacturing sector.
The auto industry in the United States can be the world
leader in a game changing technological leap forward by making
the electric cars of the future. The opportunity before this
committee and indeed before the entire Senate is tremendous. I
truly believe that dependence on imported oil is a clear and
present danger to the national security and economic stability
of the United States.
We can end our dependence on imported oil. We have the
technology. The first step is passing the Promoting Electric
Vehicle Act of 2011.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Ghasemi follows:]
Prepared Statement of Seifi Ghasemi, Chairman and CEO, Rockwood
Holdings, Inc., Member, Electrification Coalition, Princeton, NJ
Good morning, Chairman Bingaman, Ranking Member Murkowski, and
members of the Committee. I would like to thank you for giving me this
opportunity to speak to you regarding our nation's dangerous dependence
on petroleum, and the enormous opportunities presented by the
electrification of transportation.
While I am here largely to discuss the Promoting Electric Vehicles
Act of 2011, I would first like to take a moment to thank this
committee for its ongoing efforts to improve our nation's energy
security. I would also like to specifically recognize Senator
Stabenow's continued dedication to electrification. As her bill today
highlights, research and development will continue to play a critical
role as we adopt new technologies, and we look forward to working with
her moving forward.
I am proud to serve as a member of the Electrification Coalition,
an organization made up of a group of business leaders who represent
the entire value chain of an electrified transportation sector and who
are committed to promoting policies and actions that facilitate the
deployment of electric vehicles on a mass scale.
The Promoting Electric Vehicles Act of 2011, introduced by Senators
Jeff Merkley and Lamar Alexander, in both my view personally and that
of the Electrification Coalition, represents a critical step forward in
our nation's effort to reach that goal, helping us toward ending the
very real economic and national security threats posed by our
dependence on oil.
This is an issue I am very passionate about.
I am Chairman and CEO of Rockwood Holdings, a global specialty
chemicals and advanced materials company that employs 9,600 men and
women in 100 facilities around the world.
I came to Rockwood through a route that is probably a little
unusual.
I was born in 1944 in the town of Mashad in what is now called the
Islamic Republic of Iran.
When I was 15, I went to a special school organized and run by the
international oil companies that, at the time, had the concession for
the exploration, production and refining of the oil from Iran. When I
graduated, I was offered a scholarship by the oil companies to go to
graduate school with a condition that I would come back and work for
them. But by then, I knew where I wanted to be: I came to the United
States to complete my education at Stanford University.
After I completed my education, I went to work with William Lear--
the man who developed the Lear Jet--on his project to develop and build
a steam-powered automobile. Even back then, we were looking for better,
safer alternatives to oil. Steam-powered cars and trucks did not turn
out to be the route to the future, but working on them helped shape
mine.
In 1970, my wife--a third-generation American descendent of Russian
Jewish immigrants--and I moved to Tehran, initially to teach at the
university. I continued my work there in the manufacturing sector,
working with the National Iranian Steel Industries Company to help
develop a steel industry in Iran. It was an exciting, challenging time
for me, my wife, and my son . . . until the Iranian Revolution in 1979.
At that time, I already had three strikes against me. I had gone to
school and worked in the United States. My wife was an American and
Jewish. And I had been a vocal opponent of the mullahs.
Thankfully, my wife and son were visiting the United States when
the revolution occurred. I fled, and met them there months later. I was
one of the lucky ones.
And that is a very significant part of why I am here today.
This is not just dollars and cents to me.
I know what oil dependence means. I know that the mullahs are still
in power today at least in part because the West cannot and will not
take overt action against a major oil-producing nation. Oil dependence
distorts American diplomacy, subverts American goals, and forces us to
accommodate hostile, brutal governments.
The vulnerability of global oil supply lines and infrastructure has
driven the United States to accept the burden of securing the world's
oil supply. Much of the infrastructure that delivers oil to the world
market each day is exposed and vulnerable to attack in unstable regions
of the world. According to the U.S. Department of Energy, each day more
than 40 percent of the world's oil supplies must transit one of six
maritime chokepoints, narrow shipping channels like the Strait of
Hormuz between Iran and Oman. Even a failed attempt to close one of
these strategic passages could cause global oil prices to skyrocket. A
successful closure could bring economic catastrophe.
To mitigate this risk, U.S. armed forces expend enormous resources
patrolling oil transit routes and protecting chronically vulnerable
infrastructure in hostile corners of the globe. This engagement
benefits all nations, but comes primarily at the expense of the
American military and ultimately the American taxpayer. A 2009 study by
the RAND Corporation placed the cost of this defense burden at between
$67.5 billion and $83 billion annually.
And the threat to our economy is no less real.
In 2008, when oil prices spiked, Americans consumed nearly 20
million barrels of oil a day--one-fourth of the world's total. We
imported 58 percent of the oil we consumed, leading to a U.S. trade
deficit in crude oil and petroleum products that reached $388 billion--
56 percent of the total trade deficit. That figure fell back to $200
billion in 2009, but jumped to $265 billion in 2010. In the first
quarter of 2011, with near-record volatility in oil markets and high
prices driver by turbulence in the Middle East, the United States ran
an $84 billion deficit in petroleum trade over a three month period. In
March, crude oil and petroleum products accounted for 65 percent of the
monthly U.S. trade deficit, a figure which eclipsed otherwise strong
growth in U.S. export strength.
And the steps we usually would take to help strengthen the economy
and create jobs in times of weakness are just as easily overcome by oil
price volatility. The total effect of changes to the federal tax code
from 2001 to 2008 code was a decrease in annual federal income and
estate taxes by about $1,900 for the median household. But a typical
household's energy costs rose more than that. In other words, every
penny that the most Americans saved due to federal income and estate
tax cuts over those eight years was spent on higher gasoline bills.
At the beginning of 2001, oil prices were steady at $30 per barrel.
Over the subsequent five years, prices steadily rose, reaching $75 per
barrel in June of 2006. After retreating slightly, benchmark crude
prices jumped 50 percent in 2007, from $60 per barrel in January to
more than $90 in December. In 2008, oil prices soared rapidly,
eventually reaching their all-time high of more than $147 per barrel on
July 3.
Prices only came down when demand plunged along with the global
economy. And now, with prices at the pump once again on the rise, we
must ask ourselves how many times we must repeat this damaging cycle?
Many of the underlying fundamentals that pushed oil prices to record
levels are pushing them up once again today. Oil demand continues to
recover, both in the United States and abroad. Unrest in the Middle
East is only driving prices up faster. Historically, crude oil costs of
more than 4 percent of gross domestic product have occurred
concurrently with recessions. At between 4 and 5 percent of GDP, oil
spending is reaching dangerous levels once again. Our nascent economic
recovery is at risk.
It would be ideal if there was a free market solution to these
threats. But there is no free market for oil. Far from it: today, more
than 90 percent of proved conventional global oil reserves are held by
national oil companies that are either fully or partially controlled by
foreign governments whose interests are often at odds with our own. As
long as we remain dependent on those nations, we remain vulnerable.
At the crux of America's oil dependence is the energy demand of the
transportation sector. Transportation accounts for approximately 71
percent of American oil consumption. Cars and trucks are 94 percent
reliant on oil-based fuel for their energy, with no substitutes
immediately available in anything approaching sufficient quantities.
Any shortage of oil will cause a massive disruption of the
transportation system, creating significant difficulties in day-to-day
life which will inevitably lead to chaos. Put another way, when prices
go up, we have only two choices: drive less or pay more. This is
unacceptable.
A new path forward begins with a statement of fundamental fact: As
long as our cars and trucks are powered by internal combustion engines,
we will continue to be dependent on oil. The solution can be found in
something that nearly every single one of you has either on your belt
or on the table in front of you. The lithium ion batteries that power
our cell phones and laptop computers can one day form the nucleus of an
electrified transportation sector that is powered by a wide variety of
domestic sources: natural gas, nuclear, coal, hydroelectric, wind,
solar, and geothermal. No one fuel source--or producer--would be able
to hold our transportation system and our economy hostage the way a
single nation can disrupt the flow of petroleum today.
Electricity represents a diverse, domestic, stable, fundamentally
scalable energy supply whose fuel inputs are almost completely free of
oil. It would have clear and widespread advantages over the current
petroleum-based system:
1) Electricity is Diverse and Domestic: Electricity is
generated from a diverse set of largely domestic fuels. Among
those fuels, the role of petroleum is negligible. In fact, just
1 percent of power generated in the United States in 2009 was
derived from petroleum. An electricity-powered transportation
system, therefore, is one in which an interruption of the
supply of one fuel can be made up for by others.
This ability to use different fuels as a source of power
would increase the flexibility of an electrified light-duty
vehicle fleet. As our national goals and resources change over
time, we can shift transportation fuels without having to
overhaul our transportation fleet again. In short, an
electrified transport system would give us back the reins,
offering much greater control over the fuels we use to support
the transportation sector of our economy.
Moreover, while oil supplies are subject to a wide range of
geopolitical risks, the fuels that we use to generate
electricity are generally sourced domestically. All renewable
energy is generated using domestic resources. We are a net
exporter of coal, which fuels about half of our electricity.
Although we currently import a net of approximately 11 percent
of the natural gas we consume, more than 80 percent of those
net imports were from North American sources (Canada and
Mexico) in 2010. And in fact, recent advancements in the
recovery of natural gas resources from unconventional
reservoirs like shale gas, coal bed methane, and tight gas
sands have led to wide consensus that our domestic undiscovered
technically recoverable reserves are well in excess of 1,000
trillion cubic feet. We do import a substantial portion of the
uranium we use for civilian nuclear power reactors. Forty-two
percent of those imports, however, are from Canada and
Australia.
2) Electricity Prices are Stable: Electricity prices are
significantly less volatile than oil or gasoline prices. Over
the past 25 years, electricity prices have risen steadily but
slowly. Since 1983, the average retail price of electricity
delivered in the United States has risen by an average of less
than 2 percent per year in nominal terms, and has actually
fallen in real terms. Moreover, prices have risen by more than
5 percent per year only three times in that time period.
This price stability, which is in sharp contrast to the price
volatility of oil or gasoline, exists for at least two reasons.
First, the retail price of electricity reflects a wide range of
costs, only a small portion of which arise from the underlying
cost of the fuel. The remaining costs are largely fixed. In
most instances, the cost of fuel represents a smaller
percentage of the overall cost of delivered electricity than
the cost of crude oil represents as a percentage of the cost of
retail gasoline. Second, although real-time electricity prices
are volatile (sometimes highly volatile on an hour-to-hour or
day-to-day basis), they are nevertheless relatively stable over
the medium and long term. Therefore, in setting retail rates,
utilities or power marketers use formulas that will allow them
to recover their costs, including the occasionally high real-
time prices for electricity, but which effectively isolate the
retail consumer from the hour-to-hour and day-to-day volatility
of the real-time power markets.
By isolating the consumer from the price volatility of the
underlying fuel costs, electric utilities would be providing to
drivers of grid-enabled vehicles (GEVs)--vehicles propelled in
whole or in part by electricity drawn from the grid and stored
onboard in a battery--the very stability that oil companies
cannot provide to consumers of gasoline.
3) The Power Sector has Substantial Spare Capacity: Because
large-scale storage of electricity has historically been
impractical, the U.S. electric power sector is effectively
designed as an `on-demand system.' In practical terms, this has
meant that the system is constructed to be able to meet peak
demand from existing generation sources at any time. However,
throughout most of a 24-hour day--particularly at night--
consumers require significantly less electricity than the
system is capable of delivering. Therefore, the U.S. electric
power sector has substantial spare capacity that could be used
to power electric vehicles without constructing additional
power generation facilities, assuming charging patterns were
appropriately managed.
4) The Network of Infrastructure Already Exists: Unlike many
proposed alternatives to petroleum-based fuels, the nation
already has a ubiquitous network of electricity infrastructure.
No doubt, electrification will require the deployment of
charging infrastructure, additional functionality, and
increased investment in grid reliability, but the power
sector's infrastructural backbone--generation, transmission,
and distribution--is already in place.
Based on these and other advantages, a wide array of automakers is
beginning to introduce grid-enabled vehicles into the marketplace.
There are important differences in drivetrain architectures, with some
vehicles relying solely on battery power (electric vehicles, or EVs)
and others augmented by liquid fuels as well (plug-in hybrid electric
vehicles, or PHEVs). All told, automakers worldwide are developing
dozens of plug-in hybrid and electric vehicles. By 2013, more than 40
models could be available to consumers.
From just a handful of units introduced in 2010, the industry is
beginning to scale up. Announced North American production capacity
will exceed 100,000 vehicles in 2012 and 350,000 by 2014. (These
figures do not include trucks.) Additional volumes will reach the U.S.
market from OEM plants overseas, particularly in the next two years.
High penetration rates of GEVs could radically minimize the
importance of oil to the United States, strengthening our economy,
improving national security, and providing much-needed flexibility to
our foreign policy while clearing a path toward dramatically reduced
economy-wide emissions of greenhouse gases. No other alternative to
petroleum can claim these widespread advantages.
The logical next question is how we can successfully devise and
deploy an electrified transportation system. Here's what we need to
avoid: it has now been more than 10 years since traditional hybrids
were first introduced in the United States. And despite government
support and record high gas prices for part of that time, there are
still only 1.9 million hybrids on the road in the U.S. today--out of
approximately 250 million light-duty vehicles in the fleet.
We cannot let electric vehicles turn into another niche product. We
cannot allow their use to be limited to the environmentalists and
technological enthusiasts who will buy those first waves of them. To
make our nation's investment worthwhile--and, more importantly, to
truly combat our oil dependence--we must put ourselves on the pathway
toward millions, then tens of millions, and then hundreds of millions
of electric cars and trucks.
It is not as simple as flipping a switch. Electrification on a mass
scale is an enormously complex undertaking. The issue is not simply one
of putting electric cars into showrooms. At the most basic level, the
first commercially available EVs and PHEVs will be significantly more
expensive than their internal combustion engine counterparts. The
existing tax credits help offset that cost, but they hardly represent a
transformative policy framework that will give consumers the necessary
confidence to adopt a fundamentally new technology. For electrification
to appeal to consumers, it will truly `take a village.'
For example, drivers will want to know that installing a charger in
their garage will be a seamless and simple process that isn't bogged
down by weeks of red tape. For EV drivers, they will want access to
some amount of public charging infrastructure so that they can feel
confident as they complete a Saturday full of errands and shopping--or
take the family on the highway for the great American road trip.
The proactive engagement and support of utilities will be
absolutely critical. Smart charging will make EVs and PHEVs an asset
for the grid, but dumb charging will make them a liability. One
analysis by EPRI found that plugging in just one PHEV to charge at 220
volts overloaded 36 of 53 transformers examined during peak hours and 5
of 53 transformers during off-peak hours. We are all excited about the
benefits of using EVs and PHEVs to fill valleys in utility load curves,
but this will only work if consumers have the ability to receive
information that incentivizes them to charge their cars at night. Yet,
most public utility commissions don't encourage or allow time-of-use
pricing.
The bottom line is that, for this technology to succeed, the
vehicles will need a network of support--both in terms of regulations
and infrastructure. Without that, they will be relegated to niche
product status. Consumers will have poor experiences, many of the 3,000
utilities in the U.S. will play an absentee role--at best--in the
process, and we will have invested billions of dollars in a battery
industry that finds stronger roots in Europe (where fuel prices are
higher) and in China (where the public imperative is already stronger).
We have to recognize that such a network of support does not currently
exist in most places in the U.S.
That is where this crucial legislation comes in.
The Promoting Electric Vehicles Act would initiate a competition in
which specific geographic areas would vie to be selected as large-scale
deployment communities: areas in which all of the elements of an
electrified transportation system are deployed simultaneously and at
scale, thereby providing a crucial first step toward moving
electrification beyond a niche product into a dominant, compelling, and
ubiquitous concept. These deployment communities would be selected on a
competitive basis. The most attractive regional bids would demonstrate
a clear path to successful integration of GEVs, including:
--A supportive regulatory environment that facilitates concepts
like utility investment in upgraded physical and IT assets;
time-of-use pricing; and a seamless process for permitting
and installing level II EVSEs in residential consumer
garages.
--Support and participation from a broad swath of stakeholders,
including state and local governments, utilities, utility
regulators, large local employers, universities and others.
--A diversity of business plans, allowing innovators and
entrepreneurs to explore the most effective and efficient
models for deployment.
In sum, successful bids should be those in which all of pieces have
been brought together--autos, infrastructure, favorable regulatory
environment, interested consumers--to ensure that large scale
deployment of GEVs has the best chance of success.
Once selected, deployment communities would be eligible for
amplified, targeted, and temporary financial incentives for consumers,
infrastructure providers and utilities. Upon completion of the program,
the Secretary of Energy would be required to produce a final report
evaluating its success, challenges and lessons learned as well as
recommending whether to promote further deployment of electric
vehicles. If the conclusion is that further deployment is warranted,
the Secretary would provide recommendations on how many additional
cities to select, updates to the selection criteria, changes to
incentive structure, and whether other forms of energy storage should
be included. If fully implemented, the legislation would aim to deploy
a total of 400,000 grid-enabled electric vehicles and their
infrastructure in the first deployment communities over a three-year
period.
We believe this approach is critical to avoiding the pitfalls of
the past. These deployment communities would:
1) Demonstrate Proof of Concept Beyond Early Adopters: A
deployment community approach would drive significant
penetration of GEVs into a limited number of auto markets, as
opposed to very shallow penetration in many auto markets. By
demonstrating the benefits of grid-enabled vehicles in a real
world environment, this deployment plan will make consumers,
policymakers and industry aware of the tremendous potential of
electrification of transportation.
In general, consumers are probably unaware that GEVs have
evolved to the point where they can meet most individuals'
daily driving needs. In addition, electric drive vehicles
generally have faster acceleration and operate more quietly
than internal combustion engine vehicles. They hold out the
promise of offering drivers a wide range of features, based on
the electronic package in the vehicle, that are beyond our
imagination today in the same way that iPhone applications
would have been beyond our imagination a decade ago.
The problem is that consumers are not aware of the
opportunities presented by GEVs and are not yet convinced that
they can operate reliably and affordably at scale.
Concentrating investments and other efforts in a limited number
of communities will accelerate the opportunity to demonstrate
that grid-enabled vehicles can meet drivers' needs. In
addition, these projects will demonstrate that a community is
capable of putting the infrastructure in place, operating the
vehicles over their lifetimes, and disposing of them after
their useful life has ended, all in a manner that profits the
participants in the value chain.
2) Facilitate Learning by Doing: While GEVs present a great
opportunity, their deployment also raises a number of
questions. Deploying large numbers of GEVs in concentrated
areas will allow for the collection of information and
experience that is needed to successfully deploy GEVs
nationwide. It will help automakers learn how much consumers
are willing to pay up front for a car that costs less to
operate and has a lower total cost of ownership over its
lifetime. It will allow utilities and charging station
providers to learn when and where drivers want to charge their
vehicles. It will allow utilities and other aggregators to
learn who can best sell power to drivers and what types of rate
structures meet both drivers' and utilities and aggregators'
needs.
Deployment communities will also help determine whether there
is a viable business model for public charging infrastructure.
It is clear that for GEVs to succeed there must be a model in
which each party in the value chain is able to operate
profitably, or in which the government determines that, as a
matter of public policy, certain aspects of the system should
be publicly supported in a manner that facilitates further
competition. Deploying GEVs in a series of geographic regions
around the country where resources can be concentrated and data
can be collected and studied will ultimately accelerate wide-
scale GEV deployment. Therefore, rather than allowing the
market to develop scattershot across the country, it is
critical that the market be encouraged to develop at a
deliberate pace in clearly identified geographic regions in
which a large number of vehicles can be deployed in a
relatively short period of time.
3) Drive Economies of Scale: Concentrating resources in a
limited number of geographic areas will allow participants in
the GEV value chain to take advantage of economies of scale,
particularly with respect to the deployment of charging
infrastructure. Utilities will incur fixed costs to support the
operation of GEVs; those costs will be more affordable if
spread over a greater number of vehicles. Power providers also
can reduce the cost of charging infrastructure through
economies of scale. While it is unclear how many public vehicle
chargers will be necessary for a GEV transportation system to
operate smoothly in a given community, it is clear that some
public charging facilities will be needed.
Previous pilot studies demonstrate that the cost of
installing charging facilities can be reduced significantly
when groups of facilities are installed at once. Furthermore,
these geographic concentrations will stimulate demand for grid-
enabled vehicles at a rate that is likely to be far greater
than if the vehicles are simply purchased by early adopters
scattered around the United States. Early on in the process,
this higher level of demand will simply be the result of
magnified consumer incentives. Subsequently, as individual
metropolitan areas gain exposure to GEVs and confidence
increases, adoption rates should be measurably expedited.
In order to be selected, a community will need to present a
comprehensive proposal, similar to bids to host the Olympic Games. Such
a proposal would need to show capability and buy-in from a wide range
of public and private players, including local governments, utilities,
major employers, and more.
Cities and communities throughout the nation will be eligible to
compete for selection as a deployment community. And the bill makes it
clear that in selecting deployment communities, DOE should seek areas
that are diverse regionally, geographically, climactically, in terms of
their urban and suburban composition, size, typical commuting patterns,
and type of electric utility.
We believe we will also see an important diversity in the business
models that innovators and entrepreneurs will present to explore the
most effective and efficient models for deployment. Again, the
advantage of a competitive, market-based plan like this is that the
best ideas have the opportunity to rise to the top.
We believe the result of passing this legislation will be a great
competition, a race to the top as communities fight to present the most
fertile ground for an exciting new technological rollout. Even those
that are not ultimately selected will have, in order to compete, taken
steps that will ultimately make the adoption and deployment of electric
vehicles and infrastructure more achievable within their borders.
We've already seen cities and other localities across the country
taking the first steps toward electrification, whether it is installing
charging infrastructure, buying the vehicles for city fleets, or some
combination of both and more. They see the benefits and are eager to
take the next step. If we pass this legislation, I think we will see
cities once again, as they have in the past, playing the role of
experimenters and leaders in this exciting new technology.
Incidentally, let me address a concern that others have brought up
about this very aspect of the deployment community idea: that it overly
concentrates resources in a small number of communities.
I strongly disagree with this criticism.
First, these plans do nothing that would limit or impede the
current nationwide incentives for electric vehicles. Today, a maximum
tax credit of $7,500 on qualified electric drive vehicles exists
nationwide. Additional credits exist for infrastructure. This bill does
not in any way impact the maximum vehicle tax credit available to
consumers nationwide. What we are talking about is added incentives,
which will spur added demand.
Second, the benefits accrue far beyond the deployment communities
themselves. While money will flow into these communities, they should
more correctly be thought of as funnels through which a substantial
portion of the funds will flow on their way elsewhere around the
country. Much of the money that flows through deployment communities
will end up in the towns and cities where the vehicles and charging
infrastructure and their components are manufactured. When a factory
reopens in a depressed area to build or support these vehicles--as
we've already seen in places like Elkhart, Indiana and Livonia,
Michigan--that is a real and tangible benefit for hardworking
Americans.
Third, if this program succeeds, it will drive down costs for
electric vehicles for consumers throughout the nation. It will also set
the nation on a path toward greater energy security and economic
prosperity through sharply reduced oil dependence. This effort is about
building a new transportation system from the ground up in a fiscally
responsible, competitive fashion. That's good for the entire nation.
While electrification of the light-duty, personal-use passenger
vehicle market is the most important long-term objective for increased
energy security, the early development of the GEV industry will benefit
from a more diverse market. Particularly during the period from 2011 to
2015, commercial and government vehicle fleets could represent a large
share of the market for plug-in hybrid and fully electric vehicles. In
fact, recent purchase announcements by a host of commercial entities--
General Electric, FedEx, Frito Lay, Hertz, Enterprise, and PG&E to name
a few--suggest that this dynamic is already rapidly emerging.
Commercial and government fleet operators should be well-prepared
to address a number of the early challenges constraining adoption of
grid-enabled vehicles. By matching the proper vehicle, battery and
drivetrain technology to required payload requirements, drive cycles,
and usage profiles, fleet operators can minimize upfront investment
costs. Total investment in public and private charging infrastructure
can also be efficient and optimized. Perhaps most importantly, grid-
enabled vehicles could appeal to a significant number of fleet
operators in a short timeframe. In that case, fleet operators would
account for important early demand volumes in the development of the
large-format battery industry in addition to catalyzing the ramp-up of
electric drivetrain component supply chains.
Nonetheless, the supply chains for many of the grid-enabled
vehicles that will appeal to fleet operators--particularly light-and
medium duty trucks--are still developing, and vehicles are being
produced annually in the tens, not the thousands. This translates into
a high cost structure--one that will certainly come down over time as
the industry grows. However, cost reductions could be accelerated
through limited public policies designed to minimize risk to early
adopters.
Recognizing these opportunities, the Promoting Electric Vehicles
Act offers targeted, temporary incentives to both the public and
private sectors to encourage early fleet adoption of plug-in vehicles.
Commercial entities that commit to purchasing significant volumes of
GEVs would be eligible for grants to help offset upfront costs of
vehicles and infrastructure. The bill also authorizes funds to be made
available to federal agencies to help offset the incremental costs of
electric drive.
In summary, this bill recognizes a simple fact: electrification
will not move past niche product status without careful policy
coordination designed to overcome early obstacles. I fully understand
that this is a challenging time for suggesting increased government
expenditures for any project, no matter how worthwhile. However,
certain aspects of the threat of oil dependence and the solutions
contained in this bill make this a unique issue.
First is the urgent national security threat posed by our
dependence on oil. While we cannot and should not ignore costs, threats
to national security have always occupied a unique place of priority in
our budget considerations. And make no mistake: the dangers posed by
our oil dependence are not theoretical. Our safety and security are
threatened by oil dependence, and every single day that we do not act
is another day that we remain vulnerable.
Second is the economic cost of inaction. Department of Energy
researchers have estimated that the economic costs of U.S. oil
dependence were $500 billion in 2008 alone--and more than $5 trillion
since 1970.
And perhaps most telling: every American recession for almost four
decades has been preceded by--or occurred concurrently with--an oil
price spike. Simply put, you cannot have a healthy economy when energy
prices are too high. This is something I cannot emphasize strongly
enough: electric vehicles in general, and these proposals to deploy
them in particular, not only can help strengthen our economy, but are
critical to it.
I work in a manufacturing business.
Right now, we are spending more than $100 million to expand our
operations in the United States, in places like North Carolina,
Michigan, and Nevada.
Now here is the truth: Rockwood Holdings is expanding, and will
continue to expand wherever electric cars are made. As Chairman and
CEO, I can tell you that Chinese EVs need the materials we supply just
as much as any other country's automobiles. But as an American, I can
tell you this: I want those cars made here.
Let's not go in the same direction we have gone with personal
computers: designed by Americans and made overseas. A strong
manufacturing sector is critical to a strong economy, and a strong auto
industry is critical to a strong manufacturing sector. So how can our
auto industry revive itself, and regain the global stature it once had?
It can be the world leader in a game-changing technological leap
forward by making the electric cars of the future.
The opportunity before this Committee, and indeed before the entire
Senate, is tremendous. It may also be one of our last chances. I truly
believe that oil dependence is a clear and present danger to the
national security and the economic stability of the United States. We
have made some progress in recent years, but now it is time to take the
leap. We can end our dependence on oil once and for all, and the first
step is passing the Promoting Electric Vehicles Act of 2011.
Thank you again for your time and attention.
The Chairman. Thank you very much. Appreciate your being
here to testify.
Ms. Cullen, go right ahead.
STATEMENT OF GENEVIEVE CULLEN, VICE PRESIDENT, ELECTRIC DRIVE
TRANSPORTATION ASSOCIATION
Ms. Cullen. Good morning, Chairman Bingaman, Ranking Member
Murkowski, members of the committee. I'm Genevieve Cullen, Vice
President of the Electric Drive Transportation Association. I'm
pleased to be here today to discuss S. 948, the Promoting
Electric Vehicles Act and S. 734, the Advanced Vehicle
Technology Act.
The Electric Drive Transportation Association is the cross
industry trade association promoting the advancement of
electric drive technology and electrified transportation. Our
members represent the entire value chain of electric drive
including the leading and emerging vehicle battery and
component manufacturers, as well as electricity providers,
smart grid and infrastructure developers. Collectively our
membership is building the vehicles, hybrids, plug-ins and fuel
cells, as well as the infrastructure of an electrified fleet.
We are investing aggressively and moving forward rapidly in
expanding electric drive options to consumers. Plug-in
passenger cars and trucks are already on the road and more than
20 models of battery electric, plug in and hybrid vehicles will
be available by 2013. Across the country collaborative efforts
between utilities, charging infrastructure providers,
governments and auto makers are underway. They are preparing
communities, grids and consumers to take advantage of grid
connected vehicles.
In addition to the consumer interest in the arrival of grid
fueled or plug-in vehicles. The ability of the grid to displace
oil consumption also has significant national security and
economic implications. The acute pain currently being felt at
the pump, while not inconsequential, is just a recurring
symptom of the larger problem, our dependence on foreign oil.
We import more than half of our needs, as has been noted
here today. Transportation accounts for 72 percent of that
consumption. Electricity on the other hand is domestically
produced from diverse, conventional and renewable resources.
The energy security benefits of electric drive are
accompanied by the economy wide benefits of growing U.S.
technology and manufacturing leadership. Electrification of the
fleet also has substantial documented benefits to public health
and the environment. Still with all these potential benefits
reaching commercial scale on a national basis is an enormous
undertaking.
There are 250 million light duty vehicles on the road. It
will take about 20 years to turn the fleet over. The industry
is working to bring multiple vehicles to market in the next
couple of years. We, our members, are working to ensure that
consumers in communities have the information they need to
maximize their benefits. For national security, economic and
environmental reasons we can and we should accelerate these
electrification efforts with Federal policy.
My statement for the record provides more detail, but I
just wanted to highlight a couple elements of the bills before
the committee.
S. 948, the Promoting Electric Vehicles Act, takes a
comprehensive approach to plug-in vehicle development and
deployment. We support the establishment of a national program
that includes planning, technical assistance and work force
training. These programs are vitally important to achieving
mass market penetration at a national scale in the near term.
Support for community deployment as part of a national
effort can help move regional markets and can help aggregate
information on charging needs and habits, grid integration and
successful collaborative models between public and private
stakeholders. We support giving the Department of Energy
flexibility in determining the size and number of communities
with the goal of maximizing both the distribution and the
effectiveness of the effort. We would like to continue to work
with this committee to identify the most effective balance
between the national and community deployment programs.
Further as vehicle electrification includes diverse
technology configurations that meet equally diverse
transportation needs. We also believe it is appropriate to
include recognition of the applicant community's efforts in
deploying fuel cell electric vehicles in the program as the
House counterpart bill does. We also support the bill's effort
to promote electrification in private and Federal fleets which
can play a significant part in moving markets and in helping
manufacturers achieve economies of scale. However, we would
like to see a comprehensive approach that recognizes all the
electric drive technologies including fuel cells and hybrids
and provides flexibility in meeting fleet needs while reducing
oil consumption in building markets.
S. 734, the Advanced Vehicle Technologies Act provides an
important road map for Federal vehicle technology research and
development. The bill would ensure that the Department of
Energy pursues a portfolio of technologies that includes near,
medium and long term technology development. We strongly
support such an approach.
Another key element of S. 34 is its recognition of the
extraordinary potential for efficiency advances in the medium
and heavy duty segment. Although they are 4 percent of the
vehicles on the road, they represent 20 percent in gas and
diesel consumption. The U.S. is a leader in medium and heavy
duty vehicle electrification, but emerging technologies are
expensive to develop and to deploy. Public/private investment
can help speed the performance advances in technology cost
reductions in this segment of the market.
Taken together these bills can advance us toward our
national goals of reduced dependence on foreign oil, increased
competitiveness in the global energy technology market and a
more sustainable transportation sector. I thank you for the
opportunity to testify. I look forward to your questions.
[The prepared statement of Ms. Cullen follows:]
Prepared Statement of Genevieve Cullen, Vice President, Electric Drive
Transportation Association
Good morning, Chairman Bingaman, Senator Murkowski, and members of
the committee. I am Genevieve Cullen, Vice President of the Electric
Drive Transportation Association. I am pleased to be here today to
discuss S.948, the Promoting Electric Vehicles Act of 2011 and S. 734,
the Advanced Vehicle Technology Act of 2011.
I would also like to express our appreciation for this Committee's
early and on-going work on alternative fuels and vehicles and your
recognition of the importance of electric drive technologies in
reducing dependence on foreign oil in the transportation sector.
The Electric Drive Transportation Association (EDTA), founded in
1989, is the cross-industry trade association promoting the advancement
of electric drive technology and electrified transportation. EDTA
members include the leading--and emerging--vehicle, battery and
component manufacturers, as well as electricity providers, smart grid
and infrastructure developers and others.
Collectively, our membership is building the vehicles--hybrids,
plug-ins and fuel cells--and infrastructure of an electrified fleet.
Because electric drive can be configured in many combinations and
applied across vehicle platforms (including cars, trucks, buses and
even bulldozers), it is able to meet the multiple, diverse demands of
consumers and industry while displacing imported oil with domestically
produced electricity.
Industry is investing aggressively and moving forward rapidly in
expanding electric drive options to consumers. Plug-in passenger cars
and trucks are already on the road today and more than twenty models of
battery electric and plug-in hybrid vehicles will be available by 2013.
Across the country, in states including Arizona, Washington,
Oregon, California, Michigan, Tennessee and Texas, collaborative
efforts between utilities, electricity infrastructure providers,
governments and auto makers are underway, preparing communities and
consumers to take advantage of grid-connected vehicle options.
In addition to the consumer interest in the arrival of grid-fueled
(or ``plug-in'') cars and trucks, the ability of the grid to displace
oil consumption also has significant national security and economic
implications. Reliance on oil, and hence the global oil market, is
extremely costly to us as a nation. The acute pain currently being felt
at the pump, while not inconsequential, is just a recurring symptom of
the larger problem of our dependence on foreign oil. We import more
than half our oil needs and transportation accounts for 72 percent of
that consumption. Electricity, on the other hand, is domestically
produced from diverse conventional and renewable sources.
The energy security benefits of electric drive are accompanied by
the economy-wide benefits of growing U.S. technology and manufacturing
leadership--instead of spending about $380 billion a year to pay our
foreign oil bill. At the micro-level, electricity is 1/4 to1/5 the cost
of oil--3 cents versus 12-15 cents per mile.
Further, electricity prices are more stable and do not exhibit the
volatility of gas prices. It is estimated that each one dollar increase
in the annual average price of a gallon of gasoline reduces average
American household discretionary spending by roughly ten percent.
Electrification of the fleet also benefits public health and the
environment. According to an EPRI/NRDC study, plug-in vehicles, even
charged from a national grid that is dominated by coal, will reduce
greenhouse gas emissions by one third compared to conventional
vehicles. Pure battery and fuel cells vehicles use no petroleum and
have zero tailpipe emissions.
Still, with all of these potential benefits, reaching commercial
scale on a national basis is an enormous undertaking. There are 250
million light duty vehicles on the road and it takes an estimated 20
years to turn over the fleet. The industry is working to bring multiple
vehicles to market in the next couple of years and we are working to
ensure that consumers and communities have the information they need to
maximize the benefits of grid-connected vehicles. For national
security, economic and environmental reasons, we can--and we should--
accelerate these electrification efforts with federal policy.
As set out in the EDTA Policy Action Plan, we support a
comprehensive push toward electric drive that includes a robust public
and private commitment to advancing technology breakthroughs with
research and development. The Action Plan also calls for a national
initiative to promote deployment of plug-in electric drive vehicles
that includes support for regional deployment efforts.
The bills before the committee today will help to advance
electrification in the near term and ensure our technology leadership
over the longer term. Deployment support and a consistent research and
development policy will reinforce and expand what the market is doing,
while creating U.S. jobs, increasing global competitiveness and
enhancing our national security.
My statement for the record provides more detailed comments on the
bills, but I would like to briefly highlight some particular areas.
S. 948, the Promoting Electric Vehicles Act of 2011, would create a
national program that includes deployment planning on a national scale,
technical assistance, that would include training on codes and
standards for building and safety inspectors, best practices for
infrastructure permitting and inspections, as well as workforce
training for state and local government who need assistance in
designing and implementing their deployment programs. These programs
are vitally important to the goal of achieving mass market penetration
at a national scale in the nearer term.
Support for community deployment, as part of a national effort, can
help move regional markets and can help aggregate information on
charging needs and habits, grid integration and successful
collaborative models between public and private stakeholders. We
support giving the Department flexibility in determining the size and
number of communities, with the goal of maximizing the both the
distribution and the effectiveness of the effort. We would like to
continue to work with the committee to identify the most effective
balance between national and community deployment programs.
As vehicle electrification includes a variety of technologies and
configurations, we also believe it is appropriate to include
recognition of the applicant communities' efforts in deploying fuel
cell electric vehicles in the program, as in the House counterpart
bill.
The bill includes important provisions to promote adoption of plug
in vehicles in private and federal fleets, which can play a significant
part in moving markets and achieving economies of scale. However, we
would like to see a comprehensive approach that recognizes all of the
electric drive technologies, including fuel cells and hybrids. A
comprehensive approach will provide flexibility for meeting fleet needs
while reducing oil consumption and helping to build markets for
advanced vehicles, components and infrastructure.
S. 734, the Advanced Vehicle Technologies Act, provides an
important roadmap for federal vehicle technology research and
development. The bill recognizes the importance of a portfolio
approach, not only in electric drive, but across conventional and
alternate vehicle technologies. There are many synergies in vehicle
systems improvements; federal research and development policies should
maximize the over-lapping values of these developments. Advances in
battery and energy storage technology and reductions in costs can
benefit hybrid, plug-in and fuel cell vehicles.
The Advanced Vehicle Technologies Act would also ensure that the
Department of Energy maintains a portfolio of near, medium and long
term technology development activities. We strongly support such an
approach. Incremental advances in existing technologies can have great
benefits for the current fleet. But, as has also been noted here today,
a consistent and forward-looking energy research policy is also needed
to identify the transformational technologies whose development cycles
may be longer than industry can support alone.
Another key element of S. 734 is its recognition of the
extraordinary potential for advancement in the medium and heavy duty
segment. Medium and heavy duty vehicles consume more than 52 billion
gallons of fuel each year and are responsible for 21 percent of U.S.
greenhouse gas emissions from transportation. Efficient hybrid and
plug-in hybrids can increase the vehicles' efficiency by 20 to 50
percent. Battery electric medium and heavy duty vehicles eliminate oil
use entirely. Increased efficiency also means reduced emissions. For
example, putting 10,000 hybrid electric trucks to work would reduce
diesel fuel use by 7.2 million gallons per year and reduce carbon
dioxide emissions by 83,000 tons.
The U.S. is a leader in medium and heavy duty vehicle
electrification but emerging technologies are expensive to develop and
deploy. Public/private investment can help speed the performance
advances and technology cost reductions in this segment of the market.
Together, these bills can advance us toward our national goals of
reduced dependence on foreign oil, a more sustainable transportation
sector and increased competitiveness in the global energy technology
market.
I thank you for the opportunity to testify here today and look
forward to your questions.
comments on specific provisions
S. 948
TITLE I National Programs
EDTA supports the establishment of a national program to help
deploy plug-in electric vehicles and infrastructure. With an overall
goal of electrification of the fleet, we recommend that the required
planning and petroleum reduction goal-setting include all the electric
drive technologies.
For grid connected vehicles, EDTA supports a robust national-scale
effort that helps communities to plan and execute transportation
electrification.
We support establishing national Technical Assistance and Workforce
training programs as part of that effort. These should be of sufficient
scale to meet national needs and national scale goals.
regional deployment
It is important to establish the right synergy between the national
program and the community deployment strategy to ensure that the
overall effort moves us toward electrification nationally: The combined
program should reinforce the efforts that are underway, help new ones
begin and serve as a real time information source for the public and
private stakeholders. We agree with the discretion provided to the
Department to determine the appropriate number of communities and size
of awards.
As vehicle electrification includes a variety of technologies and
configurations, we also believe it is appropriate to include
recognition of the applicant communities' efforts in deploying fuel
cell electric vehicles in the program, as in the House counterpart
bill. Alternatively, the criteria for evaluating applications to
communities could also recognize communities that are also planning
for, and investing in, fuel cell vehicles and infrastructure.
access to capital
EDTA supports expansion of loans and loan guarantees for fleet and
battery purchases and infrastructure installation. Easing access to
capital helps to build industry economies of scale, speed deployment
and advance energy storage options for utilities and others power
providers while minimizing federal outlay.
federal fleets
S. 948 also promotes the adoption of plug-in electric drive
vehicles in federal fleets by providing funds for purchasing vehicles
as well as transparency and accountability for their use, which EDTA
strongly supports. However, EDTA supports increasing the overall
electrification of the federal fleet and we would also like to see a
comprehensive approach that recognizes all of the electric drive
technologies, including fuel cells and hybrids, which will provide
flexibility for meeting fleet needs while reducing oil consumption and
helping to build markets for advanced vehicles, components and
infrastructure.
private fleets program
Accelerating the adoption of electric drive in private fleets will
help manufacturers achieve economies of scale while helping businesses
reduce their fuel costs. We support the bill's proposed private fleet
program but would like to work with you to identify the most effective
size for eligible fleets. While it is appropriate that the program
leverages large volume purchases by setting a 100 vehicle threshold, it
may also be useful to provide a mechanism to allow smaller fleets to
access this option. Including a small fleet-set aside or a purchase
aggregation option would help smaller businesses with car and truck
fleets to avail themselves of more efficient vehicle options.
TITLE II Research & Development
We support S. 948's expanded commitment to research and development
Public and private investments are essential to accelerate technology
breakthroughs for vehicles, components, infrastructure and grid
integration and will help us reduce dependence on foreign oil and
enhance our ability to compete in the global advanced energy market.
Regarding the Section 204, authorizing a National Academy of
Sciences study on collection and preservation of data collected from
plug-in vehicles, due to the privacy and potential record-keeping
liabilities for multiple information stakeholders, we would suggest
that there be an opportunity for stakeholder input in the required
recommendation for procedures, technologies and rules relating to the
collection, storage and preservation of such data.
TITLE III Miscellaneous
utility and distribution planning
Title III establishes a utility planning process for plug-in
electric drive vehicles under the Public Utility Regulatory Policies
Act. As fuel and power providers, utilities need to identify demand and
energy management and smart grid integration strategies. Protocols for
the interaction of utilities and charging infrastructure entities will
also need to be identified. The key is establishing the right balance
between national standards for charging technologies and flexibility in
business models. Our members are currently reviewing the Section 301
federal regulatory directives to ensure that these are achieved.
battery disposal
Regarding the bill's provisions prohibiting disposal of advanced
batteries used in plug-in electric drive in landfills, we believe that
at this time it is more appropriate to conduct a study to identify
specific environmental risks and the best options for safe recycling
and ultimate disposal before an outright ban is imposed on all advanced
battery disposal. In the interim, promoting secondary uses of
automotive batteries and advanced materials will ensure that these
batteries remain in use beyond their automotive life and that their
valuable components are recovered
S. 734
EDTA also strongly supports Senator Stabenow's portfolio approach
to vehicle technologies research, development and deployment. The bill
authorizes a comprehensive program that recognizes the increasing role
of sensing technologies and telematics and the need for advanced
manufacturing to accompany advanced technology. Electrification has
enormous potential in medium and heavy duty vehicles and will be
critical in meeting new fuel economy and emissions standards.
Establishment of a program to advance medium and heavy duty commercial
and transit vehicles will provide a path for greater industry and
government cooperation in speeding the development and adoption of
electric drive truck technologies.
Battery recycling research and development is also important in
establishing secondary value streams of critical components and helping
industry meet the highest environmental standards for recycling.
The Chairman. Thank you very much.
Mr. Van Amburg, go right ahead.
STATEMENT OF BILL VAN AMBURG, SENIOR VICE PRESIDENT, CALSTART,
PASADENA, CA
Mr. Van Amburg. Chairman Bingaman, Ranking Member
Murkowski, committee members and guests, thank you very much
for this opportunity to talk about how to reduce oil use in
transportation via advanced vehicle technologies and fuels.
As we noted in our written testimony, the U.S. really
stands at a very important opportune point right now in its
history. Several of the technologies that we're really talking
about today and would be affected by these bills represent
areas of keen American leadership in technology. They can
support expanded job growth, both in our manufacturing base and
in new high tech jobs that we hope to create.
These are jobs that would be in our traditional
manufacturing sectors. Such as the upper Midwest, Ohio,
Michigan, Indiana, Illinois, but as well in manufacturing in
high tech sectors all across the United States. These efficient
technologies also lead directly to reducing oil consumption.
Now my organization, CALSTART, has been intimately involved
with advanced transportation technologies since 1992 when we
were founded, across all fuels and tech. Our mission is really
to grow this industry with the goals of creating jobs out of
it, reducing emissions and increasing energy security in the
transportation sector. We work with more than 150 companies and
agencies to achieve this, everything from the large truck and
car OEMs and suppliers down through mid and small sized
technology innovators bringing new technologies to the market.
Now we've said this several times, but transportation does
account for 70 percent, roughly, of the petroleum used in this
country. So it's a key target. The committee is right to focus
its efforts on this. It often is not a well recognized fact. If
we want to move the needle on energy security, we really need
to focus on the transportation sector.
Now a driving force of our work and for policies that we
would recommend is to avoid what we call silver bullet single
solutions. To support and encourage something we call silver
buckshot. A portfolio approach of multiple technologies and
multiple fuels which we think is what it will take to achieve
oil use reduction and other co-benefits that we're trying to
achieve such as emission reductions.
Now at its core there are really 2 strategies on the
vehicle side, if we want to attack oil consumption, use less
fuel to do the same work, really efficiencies such as in
hybrids and electrics. Switch the fuel you use to alternative
or biofuel or non-petroleum sources such as natural gas. Even
better and we're starting to really see this capability grow
right now is to combine these 2 strategies such as approaches
as biofuel or natural gas hybrids that we're starting to see.
It's also, of course, important to know that we make sure
that policies promote change across vehicle platforms. Now we
all know passenger cars are pretty frankly, sexy. They get a
lot of attention. But when we really look at, as we noted from
some of the other speakers, for our goods movement, for
commerce in this country, trucks and buses do the bulk of the
work and they use about a third of the fuel.
So it's very timely. These bills do take on looking at how
do we address bringing in the medium and heavy duty sector. It
also happens on a per vehicle basis that it's big bang for the
buck. These large vehicles use far more fuel on a platform
basis than cars do. They have a tremendous opportunity for cost
effective fuel savings, as we go forward.
It's also an industry segment and I've spent my last 10
years in this. That is, facing new regulatory requirements from
EPA. It's set for greater fuel economy in this sector.
Partnerships to assist this sector would be especially timely.
The technologies and fuels needed to reduce oil consumption
are just available though. That's something that really has
changed. It's been a sea change in this country from the last
10 years. They are ready to move forward as we outlined in our
written comments. Certain sectors, in fact, our prime areas of
U.S. leadership, and I would call out medium and heavy duty
hybrid and electric vehicles as an area where the United States
currently leads the world in that technology sector.
Now in working with manufacturers, suppliers and fleets
trying to look across multiple technologies and fuels, they've
identified with us kind of the key areas that would help the
industry to move forward.
They believe that this would be in purchase assistance to
these early vehicles.
Getting deployment going when we have low volumes and high
costs.
Longer term partnerships on research and development
focused on efficiency and oil consumption reduction.
Partnerships with industry to help them shift their
manufacturing to these new technologies.
Now in terms of the legislation you're considering based on
the policy drivers I've mentioned, CALSTART supports the
Advanced Vehicle Technology Act.
It does focus on greater efficiency as a policy outcome.
It encourages innovation across vehicle platforms, not just
light duty.
It addresses a key concern which is consistent R and D.
We believe it will drive continued job growth in areas of
strategic advantage to the United States.
We're also very intrigued with the Promoting Electric
Vehicles Act.
It is bold.
It targets vehicle deployment across multiple vehicle types
which is key.
It really aligns with the Administration's goals of
expanding Federal Government purchases of advanced and all
fueled vehicles.
All of which are good. We would encourage that we look at
these bills across a portfolio approach though, not a single
issue. Really try and build a portfolio for this Nation across
multiple, all fuels and technology approaches.
Again, going forward we believe good policy that
establishes performance goals is inclusive of a range of
technologies and fuels and targets key areas of need that help
encourage industry growth will reduce oil consumption, enhance
energy security and also create jobs in this country.
Thank you very much for the time to address you today.
Looking forward to questions.
[The prepared statement of Mr. Van Amburg follows:]
Prepared Statement of Bill Van Amburg, Senior Vice President, CALSTART,
Pasadena, CA
CALSTART thanks the Senate Committee on Energy and Natural
Resources, its chairman, ranking member and its members for the
opportunity to testify and share our knowledge with you on policies to
effectively reduce oil consumption in transportation via advanced
vehicle technologies and fuels, including electric drive technologies.
The United States stands at an opportune moment with these new
transportation technologies. Several of these technologies are areas of
U.S. leadership with significant job growth potential if they are
expanded. They also directly reduce oil use via increased energy
efficiency or fuel switching, providing an avenue for reducing oil
imports, cutting operational costs for users, as well as reducing air
emissions and improving air quality. The adoption of advanced
technologies also importantly supports U.S. manufacturers building
these leading-edge products here and for export to the international
market.
CALSTART via its national programs together with its industry,
fleet and public partners, is working to speed the development and
market adoption of high-efficiency, clean transportation technologies,
such as hybrid and electric drive, and alternative and clean fuels, for
the light (passenger car), medium and heavy-duty vehicle platforms--
cars, trucks and buses. Via specific programs, such as our national
Hybrid and Advanced Truck Users Forum (HTUF) partnership with the U.S.
Army, our renewable natural gas (RNG) efforts, electric vehicle
infrastructure and biofuel projects, we have identified the key
benefits and also barriers to progress which we welcome the chance to
explain. There is an opportunity for smart, targeted partnerships
between industry and government to speed the impacts--in oil reduction
and job growth--from these new capabilities.
Our testimony will follow this outline: A brief introduction to
CALSTART; the Multiple Solutions Needed to Reduce Oil Use; a brief
overview of the State of the Industry; and Gaps and Barriers. The
legislation you are considering will be discussed as part of this
structure.
What is CALSTART?
CALSTART is North America's leading advanced transportation
technologies consortium. It is a national, fuel and technology neutral,
non-profit organization with more than 150 private industry company as
well as public agency members. It is dedicated to expanding and
supporting a high-tech advanced transportation industry that addresses
energy security through reducing imported oil use while also reducing
air emissions and creating economic opportunity. We operate across all
fuels and technologies, and across all vehicle platform sizes, from
two-wheeled vehicles through heavy-duty trucks. We target those
solutions that can achieve multiple benefits.
CALSTART serves as an unbiased, strategic broker to spur advanced
transportation technologies, fuels, systems and the companies that make
them. It works across four areas to expand and support this industry:
operating technology development and demonstration programs with
industry partners; consulting to ports, fleets and others on
implementation of new fuels, vehicles and technologies; providing
services to industry members to expand their capabilities; and
supporting and guiding the creation of policies that increase the
efficiency and reduce the emissions of U.S. transportation.
CALSTART plays a leading national role in facilitating the
development of advanced propulsion systems and alternative fuels. For
example, it helped create the capability for heavy-duty hybrid drive
systems in transit buses in program partnerships with DARPA, and now
leads efforts in advanced commercial vehicle hybrids, fuels cells,
hydrogen and biofuels. Founded in 1992, CALSTART is headquartered in
California but operates nationally in its programs.
As one example of CALSTART's work across multiple technologies and
fuels, one of our major programs in efficiency and oil reduction is the
Hybrid and Advanced Truck Users Forum (HTUF). HTUF is operated by
CALSTART in a unique partnership with and under contract to the U.S.
Army Tank-Automotive Research, Development and Engineering Center
(TARDEC)--National Automotive Center (NAC)\1\. Its focus is to speed
the development and deployment of dual-use (military and commercial)
technologies to increase the efficiency of commercial and military
vehicles.
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\1\ The NAC is the Army's outreach arm to the commercial
transportation industry, and is charged with both understanding the
capabilities of the commercial vehicle industry and working to increase
the capabilities of the industry to build advanced vehicles and
technologies that can support emerging Army and military needs.
---------------------------------------------------------------------------
It initially targeted market growth in promising hybrid-electric
and hybrid-hydraulic medium-and heavy-duty drivelines and then electric
vehicles, and now is expanding focus on alternative fuel-hybrids. The
goal is to build a competitive, sustainable medium-and heavy-duty
hybrid and efficient vehicle market. By working with first-mover fleets
and targeting their vehicle performance needs for efficiency with
industry partners, HTUF has proven to be a highly successful program to
jump-start the commercial hybrid, electric and efficient truck industry
in North America. Its track record of success, and the results in terms
of industry development and product launches, has benefited truck
makers and suppliers as well as military planners keen on supporting a
dual-use commercial manufacturing capability for advanced trucks. HTUF
is credited with removing one to two years from the product development
cycle, and now works with more than 80 national fleets representing
more than 1-million vehicles on the road, and all major truck makers
and system suppliers.
Another example is in renewable natural gas (RNG), a domestic, bio-
based form of natural gas that adds additional domestic supply and can
even further reduce emissions from clean natural gas. CALSTART
developed first partnerships with Sweden, an early leader in the use of
RNG for transportation, and has helped focus partnerships and funding
on its production and use in the U.S. Each region of the nation has
unique fuel opportunities, from waste and bio sources, that can be
tapped to create transportation fuel. CALSTART has been active in
working with second generation biofuel companies to assist their
growth, as well.
Similarly, besides work on the vehicle development side, CALSTART
since its beginnings has been very active in electric vehicle
infrastructure deployment and technology and built out with partners an
initial 500 site recharging network for EVs in the mid 1990s. Today the
organization is active in understanding with first movers the best
strategies for new recharging site deployment at home and work site,
and in particular the opportunities for commercial vehicle recharging.
multiple solutions needed to reduce oil use
To successfully increase our national energy security and reduce
our dependence on oil, particularly imported oil, requires a suite of
technology and policy options and approaches. While it is tempting to
fix on attractive single solutions, CALSTART strongly believes there is
no ``silver bullet'' able to address our national energy challenges, no
one fuel or technology that alone can effectively reduce our petroleum
use to the degree needed. Rather, we have followed and recommend a
``silver buckshot'' strategy, advocating a portfolio approach to
policy, technology development and market support decisions.
However, it is also important to note that focus is critical when
it comes to the long term goal of reducing our oil dependence and
imports. In considering the bills before you and others that may be
proposed, this committee is rightly addressing the most important
single sector when it comes to oil use: transportation. Nearly 70
percent of the oil used in the United States goes for transportation
according to the U.S. Energy Information Agency. Some assume that there
is more oil used in power production or other uses. However, that is
not the case. Therefore, to effectively address energy security and oil
use, we must make transportation the top focus of our national efforts.
There are two main strategies to successfully reduce oil use in
transportation, and both are required to be effective:
1. Use less fuel to do the same work--in other words,
increase efficiency, such as with hybrid, electric drive and
other technologies; and
2. Switch to non-petroleum fuels, such as natural gas and
bio-based fuels.
Where these strategies can be combined, as in alternative fuel
hybrids or other approaches, you can further increase your
effectiveness in cutting oil use on a per vehicle basis. This is an
area of high interest for technology and product development going
forward and CALSTART is operating several projects around this
combination strategy.
At the same time, while it is critical to support technologies and
fuels furthering these strategies, it is equally important to drive
these strategies across all vehicle types. Partly because they achieve
the highest visibility, passenger cars have received the bulk of the
attention in the past when it comes to research and development
partnership funding and in manufacturing assistance and market
introduction. However, there is both a need and a strategic opportunity
for greater focus on commercial vehicles--the medium-and heavy-duty
trucks and buses that move most of the goods and provide the services
in our country. Medium-and heavy-duty vehicles use roughly a third of
the fuel consumed in U.S. transportation, and on a single vehicle basis
are easily the highest fuel use vehicles on our roads. The fuel saved
by a single truck can equal the fuel savings from ten to thirty or more
cars. They represent a ``big bang for the buck'' opportunity for oil
reduction that has been insufficiently addressed. However, this is not
an argument to switch efforts from cars to trucks; rather, it is a
request to include trucks (medium-and heavy-duty vehicles) with cars in
all your policy decisions to increase their effectiveness.
There is a strategic opportunity in this sector, as well, for
economic leadership and job growth. The U.S. is currently the world
leader in advanced efficiency technologies for trucks and buses,
particularly in hybrid and electric drivelines, presenting a tremendous
opportunity for job growth and even for expanded exports. A recent Duke
University--Center on Globalization, Governance and Competitiveness
report identifies these technologies as areas in which the United
States has a strategic advantage as an early leader. The particular
areas it researched were electric hybrid and hydraulic hybrid drive
systems and the growing high tech component industry supply chain in
the United States to produce them. Indeed, CALSTART sees a tremendous
opportunity for export of such components and products, given U.S.
leadership. We are currently working on a program to develop industry
partnerships for product export opportunities in these technologies to
China with our U.S. industry partners. We have already seen growth in
exports of such products as advanced natural gas engine systems from
North America.
Additionally, UCS and CALSTART last year completed a report on the
economic and job growth opportunities from high efficiency trucks.
Called ``Delivering Jobs.'' it documented that 124,000 jobs can be
created along with $24 billion in economic savings over the next two
decades through expansion of efficiency throughout medium-and heavy-
duty vehicles.
This is of even greater importance given the emerging regulatory
pressure to increase efficiency from the National Highway
Transportation Safety Administration (NHTSA) and the Environmental
Protection Agency (EPA). They are currently in a joint rule making
process leading to the first standards for fuel efficiency in medium-
and heavy-duty vehicles. The rules should be finalized this summer and
go into effect as early as 2014. Policies that can support the
industry's work to develop and produce these new technologies will be
extremely timely and helpful.
In view of the above observations, the Advanced Vehicle Technology
Act (AVTA) you are considering can be of great assistance to industry
to address both greater efficiency and the integration of non-petroleum
fuels in vehicles. We applaud its inclusion of medium-and heavy-duty
vehicles together with passenger cars and light trucks, as we strongly
believe this properly acknowledges the contributions of both segments
of transportation to oil use and its reduction. We need strategies to
reduce oil use across all vehicles platforms, and the approaches will
vary across vehicle sizes. It may sound trivial, but a big rig or
refuse truck is not a car! While the high level strategies required are
the same, as noted above, the state of technology and the effectiveness
of different solutions will vary by size, use and type of vehicle. The
AVTA could provide this segmented approach, because of its design,
allowing custom strategies by vehicle type across all vehicle types.
The proposed legislation also sends an important longer term signal
that is critical to manufacturers and suppliers in the light, medium-
and heavy-duty vehicle industry. Research and development efforts to
date have often suffered from on-going changes in focus and sometimes
the selection, in our view, of single solutions rather than encouraging
multiple solutions based on performance outcomes. They also have short
funding horizons that do not align with the four to five year
development cycle of technologies into products, or the longer cycle
needed to justify investment in new technologies. A multi-year horizon
for a partnership and development process better fits what industry has
said would assist it to focus its investments in new efficiency and
fuel technologies.
By way of example, recently CALSTART completed the report,
``Speeding High Efficiency Truck Adoption: Recommended Policies,
Incentives and Investments.'' It was performed via research and a task
force of industry stakeholders, including fleet vehicle users,
manufacturers and suppliers. The findings from the report are highly
instructive. First, they identify the top measures the industry feels
would speed the development, production and purchase of more-efficient
vehicles.
The top measures identified by industry were those measures to
assist vehicle purchase, thus encouraging greater production and
supporting industry investment, and longer term R&D efforts, to partner
with industry to keep the next generation of technology in the product
``pipeline'' and moving to market. The AVTA would address one of the
top two areas of need that industry has identified as prime barriers to
its progress and therefore to achieving faster and greater oil
reduction.
Secondly, it makes a strong case that R&D and other investments and
partnerships need to focus on results that achieve multiple benefits,
or co-benefits. For instance, while reducing oil use is critical for
energy security, it would be counter-productive to reduce oil use
through policies that increase emissions and therefore reduce air
quality, or which export jobs from the nation. The most valuable
approaches achieve these multiple benefits. Greater efficiency and
targeted fuel switching can meet these goals.
The report attempts to quantify and monetize these co-benefits, in
the form of the public value provided--in this specific case--by
greater efficiency in vehicles (in the report, trucks and buses). There
are significant co-benefits that can be achieved with efficiency in
vehicles, including direct energy security savings and criteria
emission reductions. In place of efficiency as a metric, oil reduction
could be a metric as well, assuming emission reductions and other
benefits are met. In the face of limited resources and increasing needs
for reductions in oil and emissions, we likely cannot afford only
single benefit outcomes. Driving multiple solutions that can achieve
these multiple benefits is smart public policy and also supports
industry competition and growth.
It is also worth noting in this context that the Obama
Administration has just announced its plan to form a partnership with
private fleets to speed their purchase of advanced technology and
alternative fuel vehicles. As part of this partnership, the President
also made a commitment that by 2015 the federal government will
purchase only alternative fuel, hybrid or electric vehicles for
replacement vehicles in its fleets. This is a dramatic proposal, and
one in principal CALSTART very much supports as it has the government
``walking the talk'' on petroleum reduction with its own assets. If
actually enacted, this will send a strong signal to industry as well as
contribute useful purchase volumes to help decrease costs. In this
regard, the Promoting Electric Vehicles Act certainly aligns with part
of the Administration's goals and could help to support it. It will be
important to understand potential overlaps between the legislation and
executive branch commitments.
This legislation also rightly encourages electric drive vehicle
deployments across vehicle weight classes, taking advantage of the
breakthroughs now occurring in electric trucks and buses. By also
targeting deployments in those regions most interested in and
supportive of the technology, it can also support regional energy
solutions, which, as highlighted earlier in these comments, is an
important consideration for successful U.S. energy policy.
There is certainly pragmatism and some focus to be gained from
legislation and approaches encouraging important segments of this
overall portfolio, which can be centered on specific driveline
technologies or specific fuel types. CALSTART supports many of these
specific approaches, but strongly encourages their consideration as
part of a larger policy strategy and portfolio. Individual solutions
should be supported as they combine as part of a broader strategy--for
instance, a balanced policy of both increased efficiency and increased
fuel switching. Longer term, CALSTART strongly supports moving to
performance-based approaches to encourage this balance, with incentives
and R&D driven and rewarded by their ability to achieve the multiple
outcomes (oil reduction, emission reduction, job growth) desired.
state of the industry
Advanced technologies for efficiency, and effective alternative and
bio-based fuels available for switching, are at a new threshold level
in America: they are ready for greatly expanded deployment, support and
use. Approaches that ten years past were still in early or
developmental stages are more mature and increasingly cost effective,
particularly on an operational basis when capital costs for ownership
can be reduced at the time of purchase. The currently high cost of fuel
is an important additional inducement to consider these technologies
and fuels. However, the great price volatility of fuel confuses
manufacturers and users alike in terms of when to make investments in
vehicles with these technologies and fuels. Both the bills the
committee is reviewing attempts to address the reality of these
technologies and address some of their barriers.
Higher vehicle capital costs--in the form of incremental cost
beyond the conventional vehicle--are generally still relatively high
because of low volume production and first or second generation
designs. This is certainly the case with hybrid electric and hybrid
hydraulic technology in commercial vehicles, and to a similar extent
with natural gas and other dedicated alternative fuel vehicles, still
in low volume early production. Hybrid technology in trucks, for
instance, is roughly ten years behind its introduction in cars--they
are different market segments. Additionally, there are also some
barriers in terms of first-time costs for fueling infrastructure in the
case of certain fuels and technology. This is true of the re-emergence
of electric drive in passenger cars and its new emergence in all-
electric commercial trucks. It is also one of the barriers to be
addressed with natural gas and other gaseous fuels, though growing
business opportunities exist for private infrastructure development.
Having observed the early market stage of these technologies and
fuels, it is important to note their potential effectiveness. Natural
gas has made a strong case for itself in high fuel-use medium-and
heavy-duty bus and truck platforms, particularly in locations where
there is sufficient fueling demand to support investing in fueling
infrastructure. All truck makers now have natural gas models. Transit
and school buses, refuse collection trucks and cargo haul tractors are
examples of growing early markets for natural gas vehicles.
Infrastructure installed for these uses can have multiple uses for
other natural gas vehicles, including light duty cars and pickups. The
business case for a user is the low cost of the fuel which is
significantly under current diesel and gasoline costs. Natural gas,
while currently certified to the same emission levels as diesel and
gasoline, has the potential for significantly lower emissions, as well.
Several current and potential R&D projects are aimed at the next
generation of ultra low emission natural gas engine. Hybrid technology,
now established in cars, is just now entering early production in
trucks but has attracted every truck maker to the early market with
several platforms. The first production units were hybrid electric
designs; this year the first hybrid hydraulic systems will enter
production. Best uses include and provide options to transit bus,
refuse collection, as well as any type of delivery vehicle, from parcel
and package through heavy food and beverage tractors. Hybrid technology
is now expanding into the tractor-trailer market in heavy regional
delivery applications. While it provides some value today in long haul
trucks, it is not as well suited to provide reductions in that
application currently as are other technologies, though that is likely
to change over time. The business case is highly driven by fuel savings
and some maintenance savings (such as brakes). All electric vehicles
can perform exceptional roles in the light duty arena for commuting,
urban delivery, and fixed route, return-to-base operations. Similarly,
the medium-and heavy-duty electric truck and bus market is starting to
grow by targeting similar applications. Ranges of 70-100 miles per day
in delivery and shuttle operations are starting to show potentially
strong business case benefits and are proving out their ability to
perform the mission. The advances in energy storage during the last
fifteen years has provided this base and will now continue to improve,
at reduced cost, over time.
From this plateau and these initial capabilities, the focus of
development efforts is now on better system integration and design
engineering to reduce manufacturing costs in most of these systems.
There is also increased interest in designs that can, in the future,
combine alternative fuels with greater efficiency, such as with natural
gas hybrids. Transit bus users are exploring this potential, and there
is interest in refuse and other higher fuel use applications. Because
of increasing pressure to reduce emissions under new EPA ozone rules
now under review, there is also growing interest in zero-emission
transportation, including zero emission freight haul, particularly in
larger urban regions with large port and distribution operations.
CALSTART is now working to outline a multi-year project to
commercialize zero-emission freight haul vehicles around a major
corridor in Southern California which will have need of further
developments in all the technologies and fuels mentioned above.
So far, unlike what befell the U.S. automotive industry until just
recently, the leaders in these medium-and heavy-duty technologies are
U.S.-based manufacturers. This is a significant advantage to the
nation. However, that leadership is not assured. More than six truck
makers and ten system makers are now developing products in first
applications, but the effort has not yet achieved critical mass. To
break out, these first efforts must succeed and expand.
gaps and barriers
Given these observations, CALSTART has identified with its industry
and fleet partners the core needs for continuing momentum in
technologies and fuels that reduce oil use, and they fall along the
general stages of development:
Need for consistent, targeted funding of research and
development in advanced vehicles systems and partnerships to
assist manufacturers transition to new technologies
Need for funding partnerships with fleets and manufacturers
to speed pilot projects and validate performance and
reliability
Need for fleet-focused purchase assistance in the early
market stage to speed introduction and rapidly increase
manufacturing volume
In terms of R&D, the core technology development needs now are for
improved system integration and manufacturability, reduced energy
storage costs specific to commercial vehicle designs, efficient
components (to enable even greater fuel economy gains in all vehicles,
and more capable hybrid and electric vehicles), optimized and downsized
engines, advanced combustion schemes, power generation, light-weight
materials, and advanced control systems.
The commercial vehicle segment has not been a high enough priority
for funding in the past. It has also been assumed that investments made
in passenger cars are sufficient to support commercial vehicle needs.
The truth is, there are important differences between commercial and
consumer--truck and car--vehicles in terms of duty cycles, system
architectures, market needs and business cases. A portfolio of smart,
targeted funding over a multi-year period and covering all the stages
identified above and aimed at the needs of the commercial industry
would have significant impacts.
No one approach alone will provide the full solution needed.
Similarly, no one policy approach is sufficient. We strongly encourage
a portfolio approach to technologies and fuels, balancing the strategy
to achieve the end goal of reduced oil use via efficiency and fuel
switching, or their combination.
It is important to note that assistance is needed now. The industry
is at a critical stage and on the threshold of a successful launch.
However, this launch can also be viewed more broadly as the first stage
of a transformation of transportation technology. What is required is a
commitment to a portfolio of change over a longer term to send clear
policy signals to the end user and manufacturer. Ideally, the level of
partnership should be commensurate with the needs and the challenge.
Again, thank you to the committee, members and staff for the
opportunity to provide this testimony and share the progress to date we
have seen in advanced efficient technologies and fuels that can reduce
oil use and emissions in cars, trucks and buses of all sizes. These
technologies are areas of U.S. national leadership, and together with
the other benefits, can be important for job creation, export
opportunities and economy growth.
The Chairman. Thank you very much.
Mr. Crane.
STATEMENT OF DAVID CRANE, PRESIDENT AND CEO, NRG ENERGY, INC.,
PRINCETON, NJ
Mr. Crane. Thank you, Chairman Bingaman and Ranking Member
Murkowski, Senator Stabenow, Senator Franken.
For the average American commuting in a gasoline fuel
vehicle, $4 a gallon equates to approximately $200 a month. In
Houston and Dallas, where our eVgo electric vehicle fueling
package is being sold now, we offer an electric vehicle owners
the opportunity to downsize that $200 a month to $89 a month,
allowing an extra $111 a month or more than $1,300 a year.
Money that can be used to build a better life.
Above that with each electric vehicle that displaces a
conventional vehicle we take a little step as a Nation toward
eliminating our country's 4 decade long dependence on foreign
oil. We take a little step toward improving the air quality in
our cities and towns which is deteriorating from tailpipe
emissions. We take a step toward a consumer product driven
revolution that will foster American technology, American
entrepreneurs and American jobs. What will be a new and
exciting sector of the economy.
The goal of Congress at this critical juncture in the
electric car revolution must be to turn each such little step
into tens of millions of little steps that collectively make a
giant leap forward toward national energy independence. 100
million electric vehicles, which would represent one out of
every 3 vehicles on American roads, would eliminate our
country's oil imports from the Middle East. This is a worthy
objective and we applaud you for focusing on this compelling
national opportunity.
As you do, however, we ask you to keep in mind that the
electric vehicle revolution, like all great consumer product
revolutions, will be driven primarily by the private sector and
by the American consumer. There is much that you can do to
enhance and accelerate the EV breakthrough. So long as everyone
recognizes that the government's role is to support and
supplement, not super cede private sector initiative.
So let me tell you a little bit about what the private
sector is already doing to accelerate EV deployment.
Significant market penetration of electric vehicles depends on
4 things, the car, the sticker price, the cost of use and the
convenience of use. The car and the sticker price depends upon
the auto makers. At NRG we're taking on the cost of use and the
convenience questions.
Principally by attacking range anxiety, which is the single
greatest drawback commonly associated with electric vehicle
ownership. Our new enterprise called eVgo has begun a $25
million program to install a network of fast chargers around
both Houston and Dallas/Fort Worth. By next year any EV driver
in those cities typically will never be more than 5 miles away
from one of our convenience chargers.
We bundle unlimited and free access to these public
chargers with a home charger purchased and installed in the EV
owner's garage and with all the electricity that EV owners can
use for the flat fee of $89 a month. No matter what happens in
the Middle East that fee is fixed for 3 years.
It's cheap, easy, convenient and with it, the EV owner's
range anxiety instantly becomes range confidence. I can tell
you while it's still early days, we have gotten a very high
percentage of EV owners in Texas signing up for our plan. We're
working on plans to bring this eVgo network to other suitable
locations around the country. Other companies are developing
similar plans in other cities.
So what is it that the government can do?
The government can help by assisting American consumers get
over the high initial cost of owning EVs during this period
when manufacturers are still going through the expensive
process of ramping up large scale production both of electric
vehicles and of electric vehicle battery packs.
The government can help by creating and encouraging a range
of convenience benefits for electric vehicle owners including
most notably, giving electric vehicles access to HOV lanes on
the Federal highway system.
The government can help starting right here in your
committee by reporting out S. 948. We suggest only that you
scrub the bill to ensure that it in no way disadvantages
communities and companies that take early action to promote
electric vehicle ownership. Provide electric vehicle
infrastructure on their own initiative.
For as we have seen in the area of mobile telephony is
where the U.S. Government facilitates rather than frustrates
the private sector that American jobs are created and the
American consumer benefits. In this case from a revolutionary
product that ultimately will make the average American's daily
life cheaper, easier, cleaner and more fun.
Thank you very much.
[The prepared statement of Mr. Crane follows:]
Prepared Statement of David Crane, President and CEO, NRG Energy, Inc.,
Princeton, NJ
Thank you, Chairman Bingaman. Mr. Chairman, Ranking Member
Murkowski, and distinguished Members of the Committee, I appreciate the
opportunity to testify before you today on the topic of one of the most
exciting technological innovations of our era--the electric vehicle.
introduction
Today America is experiencing ``deja vu, all over again''. As the
U.S. summer driving season approaches, gasoline prices have risen above
$4/gallon in large parts of the country and the cost of one fill up of
a full size SUV is trending towards $100. And not only is there
absolutely no assurance that the gasoline price increases will
moderate, every American knows that their hard won income going into
their gas tank is headed from there straight overseas to help less than
friendly foreign regimes.
With the continued instability in the oil producing regions, we all
face the prospect that soon may come a day when the long lines and
short tempers of the 1979 oil crisis again visit our shores and make us
wish we could procure gasoline at any price. Back then, the U.S.
Government responded by enacting higher CAFE standards and lower speed
limits and by encouraging car pooling through the creation of ``HOV''
lanes, none of which have worked over the ensuing thirty plus years to
curb our country's addiction to foreign oil.
But now, for the first time, technological innovation has produced
a solution that has the potential to break our dependence on foreign
oil. Mass produced plug in electric vehicles, powered by batteries with
a range double that of the distance driven by the average American
vehicle on any given day, are coming to various markets around the
country as we speak produced by multiple American and global car
manufacturers and start ups and more are on the way.
The electric vehicle revolution is happening and it will be driven,
as it should be in the United States, by the private sector and by the
American consumer. What the U.S. Government needs to decide is whether
it wants to be a catalyst or a hindrance to the accelerated deployment
of electric vehicles. Given the enormous geopolitical and balance of
trade benefits to that will inure to the United States as a result of
substantially reduced dependence on foreign oil, we feel strongly that
the Government should support and supplement, but not supersede, the
private sector's initiatives in this critical area.
evgo
Our view is that vehicle ownership in the United States is
primarily about the car, the cost (sticker price and operating cost)
and the convenience of ownership and use. The car and the sticker price
depend upon the automakers. Our company, NRG Energy, aims to address
comprehensively the cost of use and the convenience questions. We have
established a new enterprise, called eVgo, which has announced and
begun implementation of a plan to turn the ``range anxiety'' normally
associated with electric vehicle ownership into ``range confidence''.
In order to do this, we already have begun a $25 million program to
install a network of convenience fast chargers around both the Houston
and Dallas Fort Worth metropolitan areas.
We bundle free and unlimited access to this ``freedom station''
charger network with the purchase and installation of a 220 volt ``home
charger'' in the EV owner's garage and all the off-peak electricity the
EV owner can `pump' into $89/month charged through the car owner's home
electricity bill. Not only is our eVgo package exceptionally
convenient, both from an ease of use perspective and from a billing
perspective, it provides the opportunity for breathtaking cost savings
to the American driver who otherwise will be averaging $150-200/month
in gasoline bills at $4/gallon.
Our subscription model is a very different approach from the way
Americans are used to paying for fuel, but I can assure you that they
get it. While it is still early days, we are pleased to report that an
overwhelming majority of electric vehicle buyers who have received our
eVgo sales presentation have signed up for one of our plans.
What we have done is just the beginning. Our freedom charger
network in Houston and DFW will be fully built out by next year. We
also are working on plans to expand these comprehensive charging
networks to other cities around the United States. And we are not
alone. Other companies, some in similar lines of business as NRG, have
announced plans and begun efforts to deploy public charging
infrastructure.
role of government
Like most new technologies, the cost of electric vehicles must come
down in order to bring about mass adoption. But we have also learned
through talking with our own customers and many others around the
country, that auto buyers are becoming more and more excited about the
value proposition of electric vehicles. Drivers have started to become
enamored of the idea of conveniently charging their electric vehicles
in their home overnight while sleeping, filling up their cars with fuel
at a fraction of the cost per mile of gasoline, and the reduced
maintenance on a car that requires no oil changes or tune-ups.
The growth in demand and supply of electric vehicles can be
accelerated with smart government policies designed both to enhance the
convenience of electric vehicle ownership and to provide direct and
indirect financial support aimed at helping consumers and businesses
get over the initial high costs of new technologies like EVs, advanced
batteries, and charging networks.
Regarding convenience, there is much the Government can do at low
to no cost. It can train. It can promote electrical standards and
processes to expedite the installation of home and community chargers.
It can require preferential parking allocations for EVs at Government
facilities and can encourage the same at privately owned parking
facilities. Most importantly, the Government can acknowledge that its
decades-long attempt to promote car pooling has failed and it can
declare that all HOV lanes in the interstate highway system henceforth
are instead zero emission lanes. All of this, as I said above, the
Government can achieve for little to no money.
At today's hearing, we are discussing the Promoting Electric
Vehicles Act of 2011 (S. 948). This act would authorize the funding of
deployment communities to encourage the more rapid deployment at scale
of electric vehicles. We think there is a very real role for deployment
communities as envisioned in the current Senate bill provided that the
bill is modified to reflect that the leading deployment communities, to
a certain extent, are already being identified by private sector
decisions, such as charger networks sufficient to provide full range
confidence, as well as the current EV makers selection of the markets
to which they wish to allocate their EV product.
To our way of thinking, such communities are best thought of as
``early deployment communities''--places that the private sector has
identified as having most of what it takes to make it attractive to
invest in EV infrastructure. Of course, residents of these communities
still need the key policy drivers for EV deployment--a break on the
initial cost of the first wave of electric vehicles.
However, not all communities are such attractive targets--for
example, they may be too small or have too weak a distribution grid to
attract early private infrastructure investment. Despite this, we
believe EV infrastructure deployment should occur across the country,
in a variety of communities, and for that reason the deployment
community concept as laid out in the bill is a great way to jump start
early EV adoption in such communities.
But we think the bill should also be clarified to ensure that any
community in which a private entity commits to deploy a critical mass
of charging infrastructure should also qualify for additional cost
sharing for cars and chargers--and additional incentives for the
community itself to deploy convenience benefits. In fact, by leveraging
private investment, we believe this approach, in combination with the
existing deployment community concept, can spread existing federal
dollars over more communities in more states, and help deploy more
electric vehicles--leading to an earlier end to our dependence on
foreign oil.
In closing, let me say that this is an exciting time to be in the
electric vehicle infrastructure business. I believe electric vehicles
represent the next great consumer revolution, much like we have seen
with the personal computer and cell phones. Buyers around the country
have had the chance to see these cars and test drive them. A lucky few
now already own a Chevy Volt or a Nissan Leaf. Their response, and the
EV ownership experience more generally, have been overwhelmingly
positive. Government policy obviously affects the auto industry but,
for all Americans, the car purchase decision fundamentally is consumer-
driven. At NRG, we believe electric vehicle policies like those I have
described today actually represent something we have needed as a
country at least since 1979--a consumer-driven energy policy for the
United States.
Thank you Mr. Chairman, this concludes my remarks.
The Chairman. Thank you. Thank you all very much for your
testimony.
Senator Coons has to be over on the Senate Floor to give a
speech. So I--at least I was advised of that. I wanted to give
him a chance to ask his questions so he can take my place as
the first questioner. Then we'll go to Senator Murkowski and
the other members and then I'll ask my questions after the
others have completed.
Senator Coons.
Senator Coons. Thank you very much, Mr. Chairman for
accommodating my schedule. Thank you very much for convening
this hearing on these 2 important pieces of legislation by
Senator Stabenow and by Senator Merkley and Senator Alexander,
who were here before.
I'm from a State that happens to have a strong and early
interest in the electrification of vehicles. I believe, as I
think many of us do, that this has enormous potential for
America's manufacturing future, for America's energy
independence, for allowing us to retake the lead in the global
manufacturing and delivery of cutting edge vehicles. So I'm
strongly supportive of the Merkley/Alexander bill and hope to
be joining them in actively supporting its adoption.
Mr. Davis, if I might. One of my concerns is about the
speed of the adoption of some of the critical provisions of the
bill. In particular, deployment communities if we are to
authorize a significant investment that will, I think, result
in valuable learnings about what kinds of consumer issues are
arising in the deployment of charging stations and in the
adoption of electric vehicles, not just by 2 to 3 percent of
the population, but more broadly by up to half.
There are some critical learnings there. If it takes 3 to 4
years for the Department to issue regs and do the competition
and roll it out, it may miss a critical window. What
reassurance can we have that the Department is prepared and
able to rapidly act on the deployment community's concept?
Mr. Davis. Thank you, Senator for the question.
I think we would act very quickly as we did in the Recovery
Act projects where a month after passage of that legislation we
had a solicitation on the street. We had projects selected
approximately in August of that year. So that's about 6 months
after passage of the legislation. Then we went through the
contracting process and most of those projects were in place
within a year of passage.
So we would act, hope to act, as quickly in this regard to
implement this program.
Senator Coons. Thank you. I think that would add a lot of
confidence to folks who are looking to support this because I
think early adoption speed is critical.
Second, as we move forward in advancing battery technology
and battery research. As Senator Stabenow referred to earlier,
there was some key investments being made. Ms. Cullen, I'd just
be interested in your assessment of vehicle to grid potential.
The University of Delaware has done some fairly cutting
edge work in this. There's an early stage deployment underway.
I've been really struck at the capacity of a future electric
vehicle fleet to do what a number of the panelists have
referred to, use the excess capacity, the enormous excess
capacity that's there. Then help with grid load balancing.
What's your view about how promising vehicle to grid
technology is?
Ms. Cullen. Senator, you are right. It is a promising part
of the grid fueled equation. At the moment we are making the
vehicles work as vehicles.
But the grid has enormous spare capacity. Vehicles can
serve as an energy storage device and can maximize the
efficiency of the grid's existing capacity. Going forward
vehicle to grid capabilities will enable the consumer and the
utilities to both maximize the benefit of grid fueled
transportation and allow the energy stored in the mobile load
in the cars to serve as load leveling as in managing variable
sources like renewable power. Over time if we reach the mass
penetration that we're hoping for that serve, as in fact, you
know, a larger mobile load available to the grid.
Senator Coons. Thank you, Ms. Cullen.
Mr. Crane, if I might. You raised some questions about
making sure that the bill as it comes out of committee as it
goes to the floor, not needlessly compete with or interfere
with private sector efforts. I just want to commend NRG for the
eVgo deployment you're describing.
My hope is that we will work to find a way that the match
level and the timing and the details of the deployment
community's portion of this bill will in fact, complement those
places in the country where there is some early stage
deployment. Any more detailed comments about how you'd
accomplish that objective?
Mr. Crane. A couple things. We've had experience in the
past couple years dealing with the executive branch of the
Federal Government. There's a strong strain in the Federal
branch that if the private sector is willing to do something
than the government shouldn't be spending money in that area.
So what--since this bill, if passed and appropriated, you
know, put some pretty big incentives to become a deployment
community. You don't want the private sector to hold off
investment hoping that, you know, that you could get that
money. The other thing is we don't want to have to compete
against people who are getting things for free from the Federal
Government. Even as we speak the package we're offering in
Houston has been duplicated in the city of Austin at a much
lower rate because they were given a bunch of free chargers as
part of the stimulus package.
Of our $89 package, approximately $30 a month is actually
to pay for the cost of the charger that goes into your home. So
you just have to be careful about the effect, the potential for
distortions. Having said that, we think if the deployment
community thing is done right, it can be very effective. As
long as early--as long as communities that go early are not
prejudiced relative to other people who may be waiting to
start.
Senator Coons. Thank you for the input. Thank you to all
the members of the committee. I am particularly grateful for
the hard work the Electrification Coalition has done and SAFE
has done in advocating for this. I look forward to supporting
this bill.
Thank you, Mr. Chairman for accommodating my schedule.
The Chairman. Thank you very much.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman. Thank you to
the witnesses here this morning. I have to tell you that when
we first looked or when I first looked at the community
deployment, I thought this is not going to work in my State.
The range is just too great.
I forget which one of you mentioned range anxiety. But when
it's 365 miles from one big town to the only second other big
town, there's a lot of anxiety along the road. But we've got a
lot of island communities. Island communities that are powered
by hydropower, clean energy resource that we're looking at and
saying we could make a difference here. So again the
technologies are exciting.
I wanted to ask you a question, Mr. Davis, about the
legislation that we have before us, S. 948. The proposal there
as contrasted with the Administration's proposal. Their FY 2012
budget request seeks to provide up to 30 communities with up to
$10 million each to help deploy the electric vehicles under 948
the number is going to rise 25 fold, 250 million per community.
So we've got 2 proposals. One with $300 million in total
funding. Another with $2 billion in total funding. Which is the
right number to begin really moving out? Is it somewhere in
between or can you speak? Because there's a lot of ground in
between $300 million and $2 billion.
Mr. Davis. Yes, I appreciate your question, Senator. Fully
recognize the large difference between the 2. However, the
goals of the 2 programs are similar.
To work with cities to remove barriers to EV adoption.
To streamline permitting.
To put in place policy measures.
Ultimately to help install charging infrastructures as well
as encourage vehicle adoption.
In the Administration's program, which was a $200 million
total effort, we envisioned up to 30 awards up to about $10
million each. We did envision that as a shorter term program
than what's envisioned in the bill. We would like to get it out
quickly and help jump start this market.
Obviously the larger program in the bill would last longer
term. Help us move farther down the road, if you will. Sorry
for the driving metaphor.
But I think ultimately the most important thing is to
balance the roll out of vehicles with programs like this. So
obviously our shorter term and smaller effort as proposed by
the Administration needs to be--needs to work in concert with
the roll out of vehicles and the numbers of vehicles as they
roll out. Same thing with the larger program, you wouldn't want
to pre-build infrastructure before the vehicles are there.
So we would have to look carefully at the proposed
introduction of those vehicles and time it with the
implementation of the larger program.
Senator Murkowski. Let me ask a question that is often
asked here in this committee. That's whether it's appropriate
that we be picking winners and losers. We're talking about
electric vehicles here. Sometimes we don't have a very good
track record when we try to pick who we think the winners
should be.
Should we consider allowing natural gas and other
alternative fuels to at least qualify, especially if it looks
like these fuels are going to be more cost effective or if
perhaps electric vehicles aren't going to be available in
sufficient quantities? I throw that out to the panel. Because I
think it is something that we need to discuss here.
Mr. Ghasemi.
Mr. Ghasemi. Thank you. Our proposition here is that our
national security and economic stability is threatened by
imported oil. Whatever we can do to reduce imported oil, we are
for it.
If we can drill more and we have the reserves, do that. We
should support that.
If we can increase fuel efficiency so that we use less gas,
that would be good.
If we can use natural gas to power our heavy trucks, that's
a good idea.
What we are saying is that electrification of
transportation is a technology that we have. The technologies
in your hand or in your pocket, or in front of you in form of
the cell phones and laptops that you have, that--a bigger
version of that lithium ion battery will drive the car. There
is nothing new about this.
We have the infrastructure. Every house in this country has
a garage. Every street has a lamp post.
Therefore, electrification of coalition presents a very
immediate and interesting option. That's what we are asking for
your support. We are not asking for your support at the
exclusion of other alternatives.
The other alternatives are good. They have their own merit.
I hope that there is enough money to push all of these
programs.
But electrification is a technology which is here and it
can be done very quickly. I think adoption of that and the rate
of production, you mentioned about are the cars available? The
cars are going to be made available if the consumers demand
them. The consumers will demand that if the infrastructure is
there.
Senator Murkowski. You all seem to be nodding your heads.
So I will take that as assent.
Mr. Van Amburg.
Mr. Van Amburg. I would just build on that in the sense
that I think 2 things. I firmly believe that electric drive
technologies, hybrid, electric and others are real strategic
opportunity for our country right now. I do think that we have
some opportunities we do want to push forward.
Having said that, I do think that we really do need to have
this portfolio of approaches. So as you, as a committee, and as
the Senate looks at these various bills that will be coming
forward. I think it would be good to be looking at having a
portfolio of choices that we can have.
Whether those happen in one very large bill which is often
very difficult to pass or a smart collection of smaller bills
that can put together the different fuels and technology
approaches that really are on the cusp and need to be pushed
forward. We would certainly approve of that.
I think down the road I would recommend that one of the
things we should be thinking about is performance standards. I
think having incentives of R and D based around the performance
goals we want to achieve. Let's say it's energy security,
petroleum reduction.
Then allowing whatever can best achieve that to move
forward and get incentives or support would be a wise strategy
to look at. I think now we certainly see a couple of key
strategic opportunities for key technologies to move forward.
But I think long term we should be thinking about performance
based standards.
Senator Murkowski. Thank you. Thank you, Mr. Chairman.
The Chairman. Senator Franken.
Senator Franken. I think it's a great hearing. I'm just
really glad we're having this. Thank you both to the chairman
and the ranking member.
Electric vehicles and hybrid electrics along with biofuels
are going to be key to reducing our reliance on fossil fuels
and imported oil in the future. Mr. Ghasemi, I agree with you.
It's a national security issue.
I'm proud to say that according to the Department of
Energy's Clean Cities Program, St. Paul based twin cities,
Clean Cities Coalition displaced 134 million gallons of
gasoline, more than any other coalition from 2005 to 2009. St.
Paul has been partnering with the Department to roll out
electric vehicle charging stations and purchase electric
vehicles for the city fleet which is something that government
can do. So I think they would be well positioned to take
advantage of the policies that we're discussing in these bills.
I have a few questions just about the overall technology
and the different models for charging vehicles. I'd just like
to throw this out. I'll throw this to anybody.
The Israeli model to me is very interesting which is
essentially if you use propane you use your propane tank and
then you go in and you go to the hardware store or the propane
store and get a full tank. You hand in your empty tank and get
a full tank. So in Israel what they're talking about is you
drive up to the charging station, I guess. They just,
[pop], pull out your battery and,
[pop], and put in a charged one.
I mean, I think it's good mainly because of the sound
effects.
[Laughter.]
Senator Franken. But also it seems it would be fast and
then the charging station would have the technology to charge.
You wouldn't have to do that yourself at home. Although I think
doing it at home is not such a bad idea.
What are the strengths of that in this country and the
shortcomings? I understand Israel is a smaller country.
Mr. Crane. If I could--well first the fact that it's a
smaller country is important.
Senator Franken. That's why I mentioned it.
[Laughter.]
Mr. Crane. Yes. I think the second thing is that in Israel
a large number of the cars are company cars. Apparently, I'm no
expert on this, but Israelis are used to a uniformity of car
choice that we think American consumers would not accept that
people want to want them because one of the things about taking
batteries in and out is you have to have a fairly standard
configuration of where that battery is on the car and what it
looks like.
The third thing from our perspective and I should say the
company that's doing that in Israel also wants to do things in
the United States. So they would have a very different point of
view, you know, from our company. But I think the third thing
that concerns us is that the battery pack is the most expensive
part of the electric vehicle.
So the battery switching model requires that you have an
inventory of spare batteries and the equivalent of service
stations in this country. From our perspective we don't see how
that could possibly be the most cost effective model to have to
stockpile an inventory of what's the most expensive part of the
car.
Senator Franken. Yes, but presumably, you know, you'd just
be charging it and then giving that one to the next car. I
mean, it wouldn't be that----
Mr. Crane. No, but I mean when you limp into a station if
they don't have a charged battery, you know, so----
Senator Franken. Right and you'd have to have--yes, yes.
Mr. Crane. Yes, there needs to be a cushion, you know, in
terms of----
Senator Franken. OK, but you're a kind of company there
being competition. Is anybody from a company or from a
standpoint of not in competition?
Ms. Cullen. Senator, I have members who are in various
models of----
Senator Franken. Right.
Ms. Cullen. Charging. As Mr. Crane points out there are
areas in which battery swapping actually is suitable. It's
Hawaii, Israel, perhaps the island communities that Senator
Murkowski talked about where there is a uniformity in battery
and in cars.
Again, as was pointed out there is a great diversity in
cars and batteries and that cost carrying an inventory of these
batteries is expensive. The beauty of the electrification--the
suite of electrification technologies is there's a lot of
different vehicles and configurations. There's a lot of ways to
go about charging.
If you want to be a person like Senator Alexander said, he
doesn't even have a charger. He just uses the 120. He just, you
know, plugs in at home. Whether you want to have a 220 charger
to speed things up. Whether you want to charge at work and have
that as your primary charge spot. There are lots of options
that--
Senator Franken. What I liked about charging at night, of
course, is something you mentioned, which is you can do it in
off peak hours. I think that would be a wonderful way. I know
I'm running out--I'm out of time.
But I think that's a wonderful aspect of this which is that
we have this excess capacity that we could be using at night.
That's when the wind blows more often than during the day. So
this intermittent technology, like wind, could be of greater
use.
I think that's another--that's an advantage to doing it,
obviously at home. But at the charging station they could use
the benefit of that as well.
Thank you. I'm out of time. But this is, you know, an
unbelievable potential. Thank you.
The Chairman. Senator Stabenow.
Senator Stabenow. Thank you very much, again, Mr. Chairman
and Ranking Member Murkowski for holding the hearing. To all of
you, I think this is a very, very important discussion.
Personally I believe that as whether it's from jump starting
the economy or getting off of foreign oil or jobs. I mean, when
you look at what we can do around energy, having a
comprehensive energy policy, being aggressive, being focused on
where we can save dollars, save energy. This really is the
discussion that I think we need to be having.
I would say just to start and I have some questions. But I
think it's important to note that we really have moved down the
road. I mean, we're half way down the road on advanced
batteries and electric vehicles. I think this is important to
note.
I mean, we--just as we have done, I think, back starting
maybe before but certainly 1916 with incentives on oil and gas
exploration which made sense to be able to drive a new
industry. We were putting incentives in. We put incentives in
on loan guarantees or on nuclear.
We do various things to be able to encourage technologies
that we think are important. We did that in the Recovery Act
with the $2 billion in batteries investments. Which have really
exploded in terms of what we've been able to do already.
But we've also done that in tax policy with things like up
to 7,$500 to purchase a new vehicle. I mean, we have started
down this road. So my interest and sense of urgency about what
we're talking about with Senator Merkley and Senator
Alexander's legislation is it completes that.
So we're not leaving it half way there because it deals
with concerns of anxiety of consumers about can I use this? Is
it comfortable? Is it easy? It deals with the infrastructure
and the other needs that we have.
At the same time I think, as I said, regarding my
legislation, it is very important that we look at everything.
So that we're--and I think it's very compatible to do both. My
question is, starting with Mr. Davis, talking about batteries.
We're told that because of the investments we've already
made, we're starting from making 2 percent of the world's
advanced batteries and that by 2015, it will be 40 percent. If
we can actually make that happen, that's pretty extraordinary
in just a few years. But and a lot of that's happening in
Michigan. I'm very proud of that.
But can you speak about steps that the Advanced
Technologies Program can take to work with private businesses
to drive down costs, to really help, continue to help create
the batteries and other ways that the Department of Energy can
help to deploy these new technologies effectively?
Mr. Davis. Thank you for the question, Senator. Also thank
you for the State of Michigan and the battery manufacturing
facilities, that are being built there and the cost share
provided that matched the government $1.5 billion with their
own $1.5 billion to build $3 billion in battery manufacturing.
That is partly what is going to bring the cost down.
But in addition to the cost reductions through high volume
manufacturing there will be an evolution of that manufacturing
process. In addition we're seeing great improvements in the
laboratory that are going further reduce that cost. We think
today we're looking at a model battery cost of about $600, $650
per kilowatt hour just a couple--just last year we were at $800
per kilowatt hour, the year before about $1,000 per kilowatt
hour. We measure that cost in a peer reviewed modeling process
that looks at the cost of today's best technology if produced
in mass quantities.
So we're very confident that the cost of batteries is
coming down. We see things in the laboratory now that are going
to lead to a battery cost in the middle of this decade of about
$300 per kilowatt hour. Still not where you would ultimately
want to be, but getting pretty close.
So, as was pointed out by Mr. Crane, the battery is the
most expensive component in electric vehicles today. It is
critical to get that cost down. But the good news is we're on
the right pathway to get to do so through our R and D supported
by the Department of Energy. We have a clear pathway to get to
a reasonable cost in the middle of the decade.
Senator Stabenow. Thank you. Just very quickly, Mr. Van
Amburg, when you talked about trucks, medium and heavy duty
vehicles, could you just speak for a little bit more about the
opportunities that exist in that area and what Department of
Energy can do to help facilitate that?
Mr. Van Amburg. I think it's a twofold strategy right now.
No. 1 it is a very exciting area because I think it's been
underserved. I think we have focused and rightly, we have
focused on light duty. But I think we've left a big area
underserved.
There is this current technology area and I would say it's
hybrid electric, hybrid hydraulic----
Senator Stabenow. Yes.
Mr. Van Amburg. Plug in electric and pure electric. There's
just a range of technologies available are really world
leadership areas. I think the 2 biggest areas we need to do
there are we need to focus on better engineered and integration
designs for future versions. I think the Department of Energy
can be of tremendous help I think in the Advanced Vehicle
Technology Act. That could be one of the target areas.
But No. 2, I think we need to deploy vehicles. One of the
concerns that I have right now with our growing leadership in
advanced batteries is that we have to have the vehicles to put
them in or we won't have the markets for this great production
capability we now have. So I think the bills that really can
move vehicle volumes forward are critical. I don't think that's
been a primary areas that DOE feels is within its purview for
the most part. They do try to sync up with it.
I think if there can be more efforts to really push what's
the good work out of the lab into the next step in deployment
and linking those efforts together that would be very
beneficial. But getting more vehicles on the road in trucks, in
particular right now, would be critical to getting the volumes
up and the prices down.
Senator Stabenow. Thank you, Mr. Chairman.
The Chairman. Thank you.
Let me just follow up on this idea of how do we get more
vehicles deployed. It seems to me that maybe I'll address this
to Mr. Davis. The Federal Government is a very large purchaser
of vehicles. Do we have an idea as to what percent of the
vehicles the Federal Government is planning to purchase in
2012, for example, Fiscal Year, will be electric or electric
hybrid vehicles or vehicles even operating on natural gas,
something other than just gasoline powered vehicles?
Mr. Davis. Thank you for the question, sir.
We'd be glad to follow up with the precise numbers. I'm
going to work from memory here. The Federal fleet is about
600,000 vehicles. We purchase about 60,000 vehicles per year.
The good news there is with the Presidential directive
issued earlier this year we're moving to by 2015 essentially
having all those purchases be alternative fuel vehicles. So we
are very rapidly moving in that direction. I don't have the
precise number of vehicles that would be purchased in 2011 or
2012 that meet those criteria, but be glad to follow up.
The Chairman. Are those criteria performance based? Is that
like Mr. Van Amburg was talking about? I mean are those--do you
say to agencies and departments of the Federal Government
through that directive, you know, choose something other than
gasoline or something that gives us substantially improved
vehicle fuel efficiency to the extent it does use gasoline?
Mr. Davis. So the goal is by 2015 to have all those
vehicles be alternative fuel vehicles. What are we talking
about there? We're talking about electric vehicles. We're
talking about vehicles that run on biofuels or natural gas or
propane. So they are vehicles that essentially supplant
petroleum.
The Chairman. So a hybrid electric Prius, that I now drive,
would not qualify.
Mr. Davis. I'm not----
The Chairman. Because it does use gasoline.
Mr. Davis. I think I'd have to follow up on that.
Senator Stabenow. I'm just going to interrupt. If it was a
Chevy Volt, it would qualify.
The Chairman. I see.
Senator Stabenow. Yes.
The Chairman. Even though it uses gasoline.
[Laughter.]
Mr. Davis. I'm not sure all the rules that would govern
those purchases have been finalized yet. But we'd be glad to
follow up and----
The Chairman. I think it would be useful to know the extent
to which the Federal Government is leading by example in this
area and how it's chosen to do so.
On the issue of local governments, you know, every city and
town in the country has a fleet of garbage trucks. What is in
place now to encourage and assist those communities and towns,
cities and towns, to find alternative fueled garbage trucks
whether they're electric or natural gas or whatever? Does
anybody know?
Is this something that you look at, Mr. Van Amburg or not?
Mr. Van Amburg. We do look at it. We've had a partnership
for the last 10 years with the U.S Army actually, the National
Automotive Center out of Warren, Michigan, with a hybrid truck
users forum. Now it's dealing with electric and advanced
trucks.
We've tried to work with the refuse industry. There's been
a pretty good penetration actually, of natural gas vehicles
into the refuse. Industry is about on the order of around
17,000 or so--or actually around 3,000 refuse trucks that are
natural gas right now.
The Chairman. Out of how many?
Mr. Van Amburg. The fleet is around 90,000 plus. So there's
still a huge backlog of potential vehicles that could be----
The Chairman. So a little over 3 percent?
Mr. Van Amburg. Yes. Yes. So we have a long way to go in
that area. I think some of what could be helpful is incentives
or goals that people could set out with some assistance to
achieve those goals in each of these sectors.
There's opportunities in each of the vehicle sectors
including the medium and heavy sector.
The Chairman. Ah, yes, Mr. Davis.
Mr. Davis. I would like to point out that are Clean Cities
Program operates almost 100 clean city coalitions across the
country and works with local communities to promote alternative
fuel vehicle purchases and infrastructure. One of the things
that has been stressed in the almost 20 years of their
existence is natural gas vehicles and vehicles such as delivery
trucks and refuse vehicles. As pointed out by Mr. Van Amburg,
natural gas is particularly good choice in that area as well as
hybridizations since refuse vehicles stop and start a lot.
The Chairman. But I'm right, am I not, that the Clean
Cities Program is a program to share information and provide
technical assistance. It is not--it does not carry with it any
financial incentives or requirements or anything like that?
Mr. Davis. Primarily what it does is help local communities
and share information and facilitate, but we do run an annual
solicitations through the Clean Cities Program that help pay a
percentage of the incremental cost of vehicles or more
importantly in the case of natural gas, establish
infrastructure because the infrastructure in natural gas
fueling station can be a significant barrier to putting in
place vehicles.
The Chairman. OK. My time is up.
Senator Murkowski.
Senator Murkowski. Mr. Chairman, I'm just curious to know
whether the garbage trucks that are run on natural gas are any
quieter at 5:30 in the morning than the garbage trucks in my
neighborhood which I have to believe are probably not powered
by natural gas. But if it is that's a huge breakthrough and we
want to encourage that.
[Laughter.]
Ms. Cullen. Senator, there are electric garbage trucks that
are silent.
Senator Murkowski. Are they? There we have it. There we
have it.
Mr. Davis, I want to ask you about the situation with the
batteries and Senator Stabenow is gone now. But you were
discussing just a moment ago about the joint venture with DOE
and the State of Michigan and the benefits that we have seen
there. Just this morning I was just handed this article a few
minutes ago.
But apparently in Energy Daily, this morning there's a
story about what they call a corporate breakup between Johnson
Controls and SAFT. Those 2 were working on this joint battery
venture. They got $300 million from DOE from stimulus funds,
another $150 million from the State of Michigan that you just
referred to.
But apparently there's been this breakup here. The article
goes on to say that this is clearly a bad time for this to be
coming about because a whole handful of other--of vehicle
manufacturers are in line waiting for these batteries. Whether
it's Ford's first plug in, they're scheduled to go to market
2012. They're waiting for these batteries.
The point of the article is it says, it's pretty unclear as
to the impact that this breakup might have on what's going on
with the development and deployment of the batteries. Can you
give me an update or let me know what's happening here?
Mr. Davis. Sure, I'd be pleased to. Thank you.
The battery manufacturing portion of the Recovery Act
includes 6 major battery manufacturing facilities. So we're
talking about one here. That one is a contract with Johnson
Controls. They're subcontractor is this joint venture between
Johnson Controls--SAFT.
Senator Murkowski. OK.
Mr. Davis. So our relationship, our contractual
relationship, is with Johnson Controls, the parent of that. The
subcontract is with Johnson Controls-SAFT. I have talked to the
head of Johnson Controls battery work. This should not impact
our program at all, should not impact the building of their
facilities which is underway right now.
There will be some, you know, legal actions between those
2. They're going to work out their dissolution. But we don't
expect it to impact our project or the delivery of batteries.
Senator Murkowski. So even though they had the contract to
build this out and this contract is not going forward, that's
not going to somehow or other, delay the roll out or--I mean,
we've got a lot of Federal dollars that are on the line here
that we want to see deployed and moving. You seem pretty
confident this isn't going to be an issue.
I appreciate it may just be one of 5. But again, you've got
$300 million here from DOE. I think we'd like to know that
that's going to actually end up in advancing these
technologies.
Mr. Davis. Sure. Under that contract they are building 2
separate facilities. Johnson Controls--now of course, this just
happened.
Senator Murkowski. Right.
Mr. Davis. It just happened yesterday. So we are going to
be working with Johnson Controls to work through this process
and ensure there's no delay. But our initial read is it
shouldn't delay the construction of those factories.
My understanding is that part of the reason that the
dissolution is happening is the--as you look forward there's
disagreement about how much investment is going to have to be
provided by companies to keep these--this technology and these
factories viable. So in Johnson Controls position is this is
actually a step forward to ensure viability in the long term.
Senator Murkowski. I'm sure DOE will be keeping a close eye
on it.
Mr. Ghasemi, you have spoken very clearly, very
articulately here about our need to reduce and eliminate our
dependence on foreign oil. I absolutely concur. I agree with
you. We need to do more. It goes back to Senator Alexander's
very neat bumper sticker. We need to produce more and use less.
One of the things that concerns me is our growing reliance
on foreign sources for our minerals. When we're talking about
batteries as we just are here, I think we recognize that
whether it's permanent magnets or batteries, we've got to get
back to these raw component parts that come from the Earth.
Unfortunately when we're talking about rare Earth minerals the
vast majority, some 97 percent of that right now is coming from
China.
Do you worry as much about our increasing reliance on
others for those very critical elements that we need to reduce
our reliance on foreign sources of oil? I'd hate to trade our
reliance on foreign oil for our reliance on foreign minerals.
So I'm just curious for your perspective on that.
Mr. Ghasemi. Thank you, Senator. That's an excellent
question, obviously.
I think that the difference between electric cars and
gasoline cars when it comes to that issue is that if you have
an electric car every morning for it to go the distance you
don't need to put any rare Earth into it or any mineral into
it. You just put electricity in. So making electric car battery
is a onetime effort. Once you have it the cars can drive for
many years.
The second thing is that we have enough of these cars most
of these materials can be recycled. I mean, if you had 150
million of these cars running around and each year we were
recycling 10 percent of them that would almost give you enough
of these materials to make the new car. So the reliance on
those critical materials is an issue that should be addressed.
I think the United States needs to make sure that those
sources are there. I'm very happy to say that a few--2 years
ago we worked very closely with the Department of Energy to
make sure that one of those resources which is lithium is
properly made in the United States. So I think those efforts
should continue.
But the magnitude of the dependence gets significantly
reduced if you are driving these electric cars verses gasoline
which we need every morning.
Senator Murkowski. I appreciate that. I thank all the
witnesses.
The Chairman. Senator Franken.
Senator Franken. Just 2 real quick questions.
One, we're talking, Mr. Van Amburg, you talked about silver
buckshot. There's one piece of the buckshot that I didn't hear
about today and it was hydrogen. Does anyone have--and I notice
that the Administration in their budget request reduced the
request for funding for hydrogen.
Where are we on hydrogen because it, you know, I've been
driven in hydrogen vehicle that was fabulous.
Mr. Davis. Thank you, Senator. I should note that in the
State of Minnesota one of the major leaders in this areas, 3M,
is helping push the technology forward. DOE has funded hydrogen
for some years and fuel cell technology and happy to report
that the cost of fuel cell technology has decreased rapidly,
approximately 80 percent since 2002. Right now we're at about
$51 per kilowatt with our ultimate goal to get to about $30 per
kilowatt to be competitive with current technology.
We do recognize that our strategy is to sustain a balanced
research and development portfolio with an emphasis on nearer
term technologies such as batteries and electric drive. The
fuel cell program is still robustly supported and looking at
nearer term applications such as stationary fuel cells and a
fork lift as an early market opportunities to get fuel cell
manufacturing ramping up to the point where it could more
readily enter the vehicle market.
Mr. Van Amburg. Senator, if I could just add to that. I
think Pat rightly identifies where some of the key first
markets really are looking to be in fuel cells. But there is
another one and that interestingly is the transit bus
marketplace.
A transit bus is often because of their platform size and
the fact that they're out in the middle of cities and get seen
a lot and the emissions are pretty critical, are early leaders
in technology. They led in natural gas. They led in hybrid.
We've been working on a national program with the FTA, the
Federal Transit Administration on this. What we're seeing, as
what Pat said, not only the costs come down on the fuel cells.
But the life cycle lengthen out because you really need it to
be much longer than it is.
We're seeing 6,000 to 10,000 hours now which really starts
to get us into some interesting useful lives in a transit bus
platform. But it's also using a fuel cell that's more similar
to a stationary fuel cell in size so the cost points don't have
to come down quite as much as you would in a car. So we're
thinking transit bus operations may be another place where
we'll see fuel cells in the nearer term.
Senator Franken. Miss Cullen.
Ms. Cullen. If I may, the Electric Drive Transportation, as
I pointed out, we represent the whole spectrum of electric
drive technologies, which includes fuel cells because that's
what a fuel cell creates is electricity. So hydrogen powered
fuel cells are very much within the gambit of the technologies
that we're promoting. My members in the automotive and in the
medium and heavy duty side are very much pushing forward on
fuel cell vehicle applications.
They've made substantial investments on their own and
worked with the Department of Energy. They're hoping that the
Department of Energy will continue its commitment to those
technologies. They are pushing toward, as you're probably
aware, rolling out automotive in the light duty segment in the
2015 timeframe.
Senator Franken. Thank you. One last and it may sound like
a small concern, but I think there's concern among the blind
community about electric vehicles and that they don't make
sound. We're talking about the garbage truck at 5 in the
morning or whatever.
Is there--what is the consideration there for pedestrians
and, I mean, most of us hear before we step off a curb. We hear
the thing coming. What kind of considerations are being made
there?
Ms. Cullen. The automotive industry is working closely with
NTSA and they are communicating with each other on establishing
a uniform set of sounds, a safety standard. For instance on
creating a signal to those who need it without--while
maintaining the lower noise profile of electric drive vehicles.
Senator Franken. Right.
Ms. Cullen. For instance the Nissan Leaf has a low speed
sound that you can hear outside the vehicle but not inside the
vehicle. Standardizing the sound is another consideration that
the companies are talking about so that everyone would
recognize it as an oncoming vehicle opposed to having a series
of ringtones, for instance.
Senator Franken. Right. OK. Thank you.
The Chairman. Senator Murkowski, did you have additional
questions?
Senator Murkowski. I don't.
The Chairman. Thank you all very much. I think it's been a
useful hearing. We appreciate your excellent testimony.
That will conclude our hearing.
[Whereupon, at 11:42 a.m., the hearing was adjourned.]
APPENDIXES
----------
Appendix I
Responses to Additional Questions
----------
Responses of David Crane to Questions From Senator Bingaman
Question 1. I'm happy to hear you've been able to design a charging
network to provide charging for electric vehicles in the Houston and
Dallas areas with your own funds. Obviously, it's too early to tell how
the economics of those plans will work out. With regard to other cities
where you might roll this out in the future, are there common features
you'll be looking for? Are there communities that because of size,
density, or other factors, where you don't currently see your model
working? Do you see the government only having a role in those
communities, or can they simply take a lesser role in communities with
a higher commercial potential for private actors?
Answer. We've seen very encouraging early results in Houston and
Dallas, and our hope is to soon expand beyond Texas. There are three
key factors we analyze initially when considering new markets: 1)
Projected supply of electric vehicles; 2) Regulatory framework and its
potential impact on third-party charging providers; 3) The interest of
local utilities in working with us. Of these, projected EV supply is
particularity important; the success of our business depends on
generating subscription package revenues.
When companies like ours make significant private sector investment
in communities, there is less of a need for government support and, as
a result, more government dollars can be sent to smaller, less dense
communities. We believe it is crucial for the government to focus on
cost effectiveness: deploying the most vehicles, in the most cities--
for the least number of public dollars.
Question 2. You obviously see the potential for enough market
penetration in electric vehicles to support your business model. What
gives you the confidence in the market to make the substantial up-front
investments you're currently making?
Answer. First, we are encouraged by automakers' commitment to EVs.
Nissan and GM have rolled out production vehicles, while Ford, BMW and
others have models on the way. Another key driver is the significant
private investment we've seen in EV charging infrastructure, batteries
and other technologies--from companies like ours and others. Third, we
see a growing weariness from consumers when it comes to high and
volatile gasoline prices, and a general sense that shipping billions of
dollars overseas for oil is not a good thing. EVs are gaining
popularity as a potential remedy for these things. Finally, we see
enormous potential for EVs to bring about the next consumer technology
revolution--and there is real value in NRG being a first-mover in this
area.
Responses of David Crane to Questions From Senator Murkowski
tax credits vs new programs
Question 1. As you know, the tax credit for alternative fuel
infrastructure expires at the end of this year. If it comes down to a
decision between creating new programs and extending existing tax
credits, which would you consider more important?
Answer. The existing tax credits--both for EV infrastructure and
for EVs themselves--are important to our business. Building our public
networks comes at significant cost. For example, each of our public
``Freedom Stations'', containing a Level 2 and a DC charger, costs well
over $100,000 installed. As we build out our networks in early years,
defraying these costs through the infrastructure tax credit is
extremely important. That said, we do see a cost-effective ``Deployment
Community'' playing a very important role in bolstering EV readiness in
typical cities across the country, and especially in smaller, less
dense communities.
evgo
Question 2. Please summarize the scale of investments that NRG is
making in Dallas and Houston. How many customers will those programs be
able to accommodate?
Answer. Our initial investment in Houston will be around $10
million, and we plan to exceed that number in Dallas. Every EV charging
package we sell today includes a Level 2 home charger installed at no
up-front cost to our customer. This robust home charging network
combined with the 50 Freedom Stations we plan to install in Houston and
the 70 planned for installation in Dallas-Forth Worth will accommodate
more than the projected number of EV buyers in each city in coming
years.
texas
Question 3. NRG chose two cities in Texas to launch its eVgo
program. Can you describe any competitive advantages those cities, and
potentially the state of Texas itself, hold for the deployment of
electric vehicles? What made NRG choose cities in Texas over
communities in other states?
Answer. NRG has a large presence in Texas today, including our
retail businesses Reliant Energy and Green Mountain Energy. As a state,
Texas has long prided itself on welcoming new ideas and clearing
regulatory hurdles to realize these new ideas. Texas also has a
competitive retail electricity market, which enables us to work with a
variety of energy retailers, to offer eVgo to a variety of customers.
In addition, Houston has a robust electric distribution system that can
accommodate significant EV penetration. For all these reasons, Houston
has proven to be a great launch pad for eVgo. The city, one of the
country's energy hubs, has a robust car culture and an intense focus on
public and private sector innovation.
nonfinancial benefits
Question 4. In your testimony you mentioned there are several
policies that the government could enact at very little cost, including
convenience measures such as zero emission lanes and preferred parking
spots. Please describe the impact you believe those policies could have
on electric vehicle sales and deployment.
Answer. Convenience benefits excite consumers, and that is very
important to us because the success of our business depends on the
sales of charging packages to actual EV buyers. A recent Accenture
consumer survey on EVs confirmed that benefits like priority parking
and zero emissions lanes are potentially large consumer catalysts in
the decision to buy an EV. Americans spend a lot of time in their cars,
and EVs represent a new and exciting way to drive. If we can add
further conveniences to the EV driving experience like those mentioned
above, we will add even greater momentum to the overall EV movement.
community deployment program (s. 948)
Question 5. How can a community deployment program for electric
vehicles be structured to ensure that public money does not crowd out
private investment? Do you believe S. 948 strikes an appropriate
balance?
Answer. When companies like ours make significant private sector
investment in communities, more government dollars can be sent to
smaller, less dense communities. We believe it is crucial for the
government to focus on cost effectiveness: deploying the most vehicles,
in the most cities--for the least number of public dollars. We believe
that S.948 could this crucial role, with certain changes to the bill to
ensure cost effectiveness and to make sure the procedural requirements
for a successful application do not prevent or inhibit private
investment in publicly available charging equipment.
community deployment program (s. 948)
Question 6. In your testimony, you introduced the concept of
``early deployment communities'' and recognized that significant
private investment is already being made in some communities to
facilitate the deployment of electric vehicles. Please expand on this
concept, and any advantages it may offer.
Answer. The key to the early Deployment Community concept--to any
Deployment Community concept--is that taxpayer dollars need not be
spent to duplicate charging infrastructure investments being made by
the private sector. For example, if significant private charging
equipment investment has already been made in a community, it would not
make sense to require that community to start over from square one--
e.g., by building a wide ranging stakeholder group to support
investment in charging equipment--in order to qualify for federal
benefits. If such a community can show that is has the proper
investments, agreements, and plans in place, its citizens and in
certain cases businesses, should qualify for convenience benefits, and
additional incentives to buy EVs and install charging equipment.
______
Responses of Bill Van Amburg to Questions From Senator Bingaman
Question 1. You make a strong case for increased focus on medium
and heavy-duty trucks for research and development, as Senator
Stabenow's bill outlines. Arguably, existing R&D authority as well as
such programs on the deployment side such as Clean Cities should be
sufficient to allow the Department to address this need. In your view,
what's the main value of the structure laid out in S.734?
Answer. The structure laid out in S.734 has several very valuable
elements, not least of which is the specific recognition of medium and
heavy-duty vehicles as a targeted area of R&D. S.734 provides and
providing a suggested allocation of resource for this segment that
matches its fuel use impact. In the past, medium-and heavy-duty
vehicles have not received commensurate support in Department budgets,
normally funded--if at all--to significantly lower levels than light-
duty passenger cars. Indeed, many of the specific heavier vehicle
programs were funded via Congressionally-directed projects. Even the
Department's 21st Century Truck Program (21CTP) often lagged for
insufficient resources, as noted in the National Academy of Sciences
report. Again, this is not an argument against light-duty vehicle
investments, but is an argument for balanced investments that include
the larger and higher fuel use commercial vehicle platforms. U.S. firms
are now world leaders in several important technology categories for
commercial vehicles (hybrid and electric technology in particular, to a
great degree thanks to programmatic support and focus from the
Department of Defense), in contrast with other technology areas that
are dominated by companies outside of the U.S. This is important from a
job creation and retention perspective, and there is a strategic
opportunity to maintain our leadership through consistent and focused
R&D co-funding with industry.
Another important design element of S.734 is its language opening
up Department program considerations to a broader array of firms,
especially medium-and heavy-duty vehicle component and system suppliers
and technology developers. Original Equipment Manufacturers (OEMs) are
vital players and have always been included at the center of Department
programs, but spurring innovative new technology requires tacit
inclusion of the supply and developer segment. These companies have
been arguably under-served, yet they are increasingly where innovation
and new technology originates and where early support, in particular
R&D, needs to focus resources. This approach matches what is a
concurrent trend in the automotive and truck industry to increasingly
``push down'' technology and system development from OEM to Tier 1 and
other suppliers. The current and successful ARPA-E program has shown a
strong model for assessing and targeting technology innovators at the
early stage of development. Previously, the DARPA Advanced Vehicle
Program of the mid 1990s stood out for its portfolio approach to
technology development, funding innovative technology developers in a
fast-track approach to drive power system and alternative fuel
development and demonstration. Heavy-duty hybrid drivelines were a
significant and notable outcome of these efforts. In the national
Hybrid Truck Users Forum (HTUF) program which CALSTART operates in
partnership with and under contract to the U.S. Army TARDEC-National
Automotive Center (NAC), the focus has been to move from R&D to broader
deployment and validation stages, which is another under-served but
critical stage in vehicle commercialization. Yet even at this stage, a
continued focus on the supplier segment, together with the OEMs, is
vital for successful pre-production and production launches. New
technology commercialization benefits from and requires greater
inclusion of the industrial segments most active in developing
innovative designs and systems. S.734 recognizes this and includes the
``wiring instructions'' in its language that encourages it. It also
encourages the Department to connect its programs more explicitly with
other complementary programs which operate at different stages of the
commercialization process. This echoes another observation of the
National Academy of Sciences review of the 21CTP. This could assist
with a more seamless and connected national approach to driving
innovation, from R&D to validation and demonstration through early
deployment.
One final area of design in S.734 that we believe would be of
crucial importance is its longer timeline and consistent focus on
developing higher efficiency technologies. We have researched the key
barriers to faster and more effective advanced vehicle development and
deployment with OEMs, suppliers and vehicles end-users, and their
responses have been unambiguous. They can most benefit from three areas
of support: 1) End-user purchase assistance (such as vouchers or tax
credits) to speed early production vehicle deployments; 2) Consistent
and multi-year R&D and validation funding partnerships; and 3)
Assistance to shift manufacturing capabilities to new technologies.
S.734 addresses the issue of consistent and longer term R&D
partnerships.
The Department has tried to address this on its own but resources
have varied considerably year by year and the focus has shifted across
various technology and fuel solutions making longer term investments by
industry more difficult. More consistent long term investment signals
would give industry greater confidence in their own investment
decisions and would better leverage any public funding. S.734 does not
pick a specific technology or fuel solution, but instead targets
outcomes: greater efficiency. In essence, it is outlining a performance
standard against which R&D decisions can be measured, without
specifying the specific fuel or technology to achieve it. We believe
this can open up and spur innovation. Those technologies of high
interest, such as electric drive systems, would benefit under such a
design, but so would other innovative approaches such as hydraulic
hybrids, alternative combustion cycle engines, active aerodynamics and
other technology.
Moreover, the longer program horizon would set this goal in place
over multiple years, rather than just a single year or program
solicitation. It would send a signal that for half a decade at least,
greater fuel efficiency was the driving force of Department R&D efforts
across all vehicle platforms. Given the new, first-time fuel efficiency
regulations being placed upon medium-and heavy-duty vehicles, and the
expanded fuel efficiency requirements for light-duty cars and pick-ups,
the timing and timeline of such an R&D effort could not be more
opportune.
The Chairman is right to observe that existing authority likely
exists for the Department to proceed in the manner outlined above but
funding allocations have not matched this model, in particular for
medium-and heavy-duty vehicles. S.734 would provide strong
Congressional wiring instructions for the Department in funding
allocations and program focus for spurring greater efficiency in
vehicles.
Question 2. I'm interested in the programs you've seen to aid in
the deployment of heavy-duty fleet vehicles such as buses and refuse
trucks. Beyond research and development are there gaps remaining in the
federal programs that we could help fill in order to allow more
deployment of alternative fuel vehicles in this segment?
Answer. The single biggest gap at the federal level is assistance
that directly spurs the purchase of early production (low-volume)
advanced, efficient and alternative fuel vehicles. The U.S. would
greatly benefit from more consistent R&D funding, as noted in question
one, but we have generally done a better job at the R&D level than at
the deployment level. From a commercialization perspective, it is the
equivalent of leaving the race when the finish line is in sight.
Indeed, the U.S. has been a world innovator in several technology
categories but often does not reap the benefit of its inventions when
it comes to production and manufacturing because it does not
consistently help new technology ``cross the chasm'' from demonstration
to deployment. This has a social cost in terms of lost jobs and
manufacturing.
This is particularly an issue with new vehicle technologies, which
often face a steep cost premium in early low volume production because
of limited production scale, supply chain costs and initial engineering
designs. Limited, short term assistance at the right time in these
markets could have a huge benefit in moving U.S. technology more
effectively from prototype to product.
This is a major issue in the medium-and heavy-duty vehicle arena
even more so than light-duty. For instance, while there is a $7500 tax
credit for electric passenger cars at the federal level, there is no
equivalent for what are the first hybrid and electric trucks and buses.
Given that a truck or bus can use ten to thirty times or more fuel than
a car, targeted federal assistance could also have huge fuel efficiency
leverage and outcomes for the same amount of funding. For instance, a
hybrid refuse truck would likely reduce its fuel burn by 20-30 percent,
cutting petroleum use by well over a thousand to two thousand gallons
per year per vehicle. A passenger car rarely even uses 500 gallons
total. Again, this is not an argument against light-duty incentives at
all; it is an argument for balanced and commensurate assistance aimed
at policy outcomes. Indeed, there is currently no federal level
deployment assistance, including no tax credits, for medium-and heavy-
duty hybrid, electric or natural gas vehicles.
The most successful current program to change purchase decisions
and spur advanced vehicle purchase and deployment is a state program,
operated by the California Air Resources Board (ARB). Known as the
Hybrid Truck and Bus Voucher Incentive Program (HVIP), the program is
designed as a point-of-sale purchase voucher for medium-and heavy-duty
hybrid (all types, electric and hydraulic) and electric trucks. These
trucks are in their initial early production, low volume stage. HVIP
voucher amounts have been set at roughly half of the incremental cost
of these vehicles--the level fleets and manufacturers agreed was
sufficient to cover the extra costs not yet paid for by the fuel saving
benefits of the trucks. HVIP is slated to last roughly 4-5 years and is
in its second year; to date this single state program has spurred
nearly 1,000 hybrid and electric truck purchases and deployments in
fleet use. The California Energy Commission recently built on HVIP's
success by adding funds to HVIP to better assist electric trucks, and
then crafted a separate but equivalent program for natural gas and
propane truck purchases. The design is the same: to reduce the upfront
cost of early production vehicles sufficiently to spur fleet purchase.
Illinois' EPA office operates another interesting program called
the Illinois Clean Diesel Program. While not as targeted as HVIP, it
does greatly streamline the grant funding process for the Diesel
Emission Reduction Act (DERA). Fleets and manufacturers alike agree
that long form, proposal-based grant programs are costly for them to
pursue, delay timing on purchases and have little to no certainty of
outcome. They are useful, but not as effective at deployment as would
be desired. In contrast, the Illinois Clean Diesel program is notable
for streamlining the process by establishing set funding amounts
available for different technology options fleets can chose, and then a
first-come first-served short application form to qualify. This greatly
reduces fleet proposal writing and quantification effort, and allows
them to focus on procurement decisions.
It is worth noting that in the heavy transit bus world there is an
existing structure in place to assist with alternative fuel and
advanced bus purchase. Under the Federal Transit Administration (FTA)
formulas, the federal government pays for 80 percent of new bus
purchase costs with local agencies paying 20 percent. This formula has
encouraged agencies to increase their purchase of natural gas and
hybrid transit buses because it has the effect of reducing the
incremental cost impact to them. There is no such support for school
buses or smaller privately run shuttle or circulator buses, however.
These were some of the successful operating examples noted in a recent
study ``Speeding High Efficiency Truck Adoption: Recommend Policies,
Incentives and Investments'', CALSTART 2011 (http://calstart.org/
Libraries/Publications/Speeding_High-
Efficiency_Truck_Adoption.sflb.ashx). Highlighting the success of these
examples, and based on research and data from fleets and industry, the
report then recommended that the ideal structure for spurring faster
deployment of high efficiency trucks and buses would be a performance-
based purchase voucher at the federal level. In essence, the voucher
would provide a purchase incentive to a range of solutions that
achieved different levels of fuel efficiency improvement (above any
levels required by regulation). In the report, a draft voucher
framework was proposed that would be partly based on the early market
incremental costs and partly on the ``co-benefits'' achieved through
greater efficiency. For instance, beyond the direct fuel savings to
fleets, a more efficient truck through its operation has petroleum
reduction and energy security benefits to the nation, in addition to
emission reduction benefits. These were factored into the voucher
levels to reflect the higher benefits provided by reducing fuel use in
the highest fuel using vehicles. A potential high efficiency voucher
based on these parameters is illustrated below, as cited in the
report:*
---------------------------------------------------------------------------
* Graphic has been retained in committee files.
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This voucher uses fuel efficiency as the metric. Petroleum
reduction could also be used as a metric, in which case emission
reduction benefits would need to be ensured in to qualify.
Such a voucher could be managed through existing federal programs
but would require a change in approach for those programs. For example,
Clean Cities could serve as a logical channel for expanding deployment
via purchase vouchers. However, the program would need to be both
better funded, and then operated--at least in part--as a disperser of
vouchers to qualified purchasers, rather than as occasional source of
grant fund solicitations. This change actually could serve to greatly
strengthen and better utilize the Clean Cities structure and role in
deployments.
The downside of Clean Cities is that it does not reach the entire
nation; though it does touch most of the regions with impacted air
quality. Alternately the Department's national solicitations that do
focus on deployment could do so in the form of a performance-based
purchase voucher.
Another possible approach would be to authorize a voucher structure
via the national Energy Efficiency and Conservation Block Grant
program, which currently is partly allocated to each state by formula.
Some of the block grant funds could be dedicated or allocated
specifically to vehicle deployment using a voucher formula, with
disbursement authority left to the state.
A third structure could be to add additional descriptive language
for the use of Congestion Mitigation and Air Quality (CMAQ) funds
emphasizing that they may be used for advanced and alternative fuel
vehicles, and suggesting a performance-based voucher as an effective
tool for streamlined success. CMAQ funds can be used for clean vehicle
deployments, but this is not widely used or understood by the receiving
agencies. Such language could clarify and encourage the practice.
Finally, a structure like the Diesel Emission Reduction Act could
be augmented with a directive that some of the funds be used for
streamlined deployment. DERA funds have been popular but focus mostly
on retrofit kits and involve complicated long-form proposals be
submitted. A simplified voucher approach could be a useful addition to
the program and could be administered by each region, allowing regional
differences to be reflected. Having noted this, DERA funding is
currently zeroed out in the Administration budget. EPA's SmartWay
program is an example of an existing program that programmatically
could administer such a streamlined voucher, though additional funding
would be required.
______
Responses of Genevieve Cullen to Questions From Senator Bingaman
Question 1. Critics of this approach might argue that powering
vehicles from the grid requires too many changes in behavior from the
consumer so it is unlikely these vehicles will be able move beyond
niche markets. Can you give us any insights from the manufacturers in
your coalition on how they see electric vehicles moving to mass-market
status?
Answer. Increased electrification of the vehicle fleet is already
occurring, but the speed of adoption is variable, based on
technological advances, reduced market hurdles for vehicles and
infrastructure, and consumer education about grid-connected vehicles
and their benefits.
Announced production plans, as assembled in the Department of
Energy status report issued in February of this year, show aggressive
production schedules for the manufacturers included in the survey. The
report illustrates that leading vehicle manufacturers (not all leading
manufacturers were included in the tally) already have plans for
cumulative U.S. production capacity of more than 1.2 million electric
vehicles by 2015.
EDTA member companies have announced varying production targets and
have plans for (or are already) rolling out vehicles in initial markets
to be followed by national expansion. While their plans differ, they
share an ambitious commitment to achieving electric vehicle adoption on
a national scale. The right national policy initiatives can help speed
the fulfillment of that goal.
Demand has been rightly noted as an essential component of
commercial-scale adoption in the near term. Grid-connected
transportation options provide consumers with savings on fuel and
maintenance, freedom from price-volatility and the opportunity to
reduce oil use and emissions. But consumers need to understand how
these benefits apply to them and how these vehicles fit their driving
needs.
While ``plugging-in'' is a new practice for fueling, it is not new
to consumers who now routinely come home and recharge their phones,
laptops and iPods--or seek out an outlet at a coffee shop or airport
when travelling. Daily and opportunistic charging is increasingly
integral to the way we live and work.
Multiple market analyses show that consumers want electric
alternatives in transportation, either because electricity is cheaper
than gas, is cleaner than gas, is a domestic fuel that they can access
at home or because electric drive has great performance. Often,
consumers realize it's all of the above.
However, consumer education is clearly needed. Buyers need
credible, accessible information to identify the best configuration for
their driving needs and their options for recharging.
It is expected that most drivers would do the vast majority of
charging at home. Their workplace would be second. While plug-in hybrid
electric vehicles (PHEVs) will have longer absolute range without
charging, drivers with pure battery electric vehicles (BEVs) and those
who want to extend the battery-only propulsion of their PHEVs will want
accessible and convenient public charging options, in parking garages
and retail stores, for instance.
EDTA is engaging in a national consumer education effort through
our website GoElectricDrive.com and with coordinated efforts with our
members in roll out markets and service territories. There are also
numerous independent initiatives being undertaken by electric
utilities, local governments and public interest organizations.
As part of a national electrification effort, information sharing
and coordination across these initiatives will help reduce the costs of
assembling and disseminating important information about vehicle and
charging choices, performance, safety and costs. Coordinated education
efforts also leverage research and readiness efforts that have already
been completed.
Question 2. In your written testimony, you pointed to the need for
access to capital in order to achieve economies of scale. Obviously,
the members of your association are in very capital-intensive
industries. Can you talk at all about why the existing programs at the
Department of Energy, such as the Advanced Technology Vehicles
Manufacturing Program and the Loan Guarantee Program, are unable to
meet the need?
Answer. The Advanced Technology Vehicles Manufacturing Program
(ATVM) and the Loan Guarantee Program are both important programs that
help reduce the cost of capital and leverage private sector investment
in advanced vehicle manufacturing. The programs are already building
U.S. manufacturing while contributing to job growth in the advanced
energy sector. And because the loans are repaid with interest,
taxpayers get a return on their investment while the national return on
investment includes jobs and increased competitiveness in the global
advanced energy market.
The scope of these successful programs could, however, be expanded
to recognize other advanced vehicle opportunities. For example, the
ATVM program is limited to light duty vehicles. Medium and heavy duty
vehicles and related component manufacturing in the U.S. would grow
with access to the program.
Support for fleet purchases is also a worthwhile expansion as
first-cost hurdles are even more challenging in large purchases. Beyond
the benefit to the fleet buyer, those large purchases also help to
build the market for new technologies and speed achievement of
economies of scale that will bring costs down.
Responses of Genevieve Cullen to Questions From Senator Murkowski
tax credits vs new programs
Question 1. As you know, the tax credit for alternative fuel
infrastructure expires at the end of this year. If it comes down to a
decision between creating new programs and extending existing tax
credits, which would you consider more important?
Answer. Recognizing that sobering economic realities require tough
choices, we believe that reducing our dependence on foreign oil must be
among our priorities. To achieve that major goal, there is no single
silver bullet policy. Changing the way we transport people and goods
will require a comprehensive approach. Such an approach should include
incentives to reduce market hurdles, such as the critically important
tax credit for alternative fuel infrastructure that will help consumers
and businesses install recharging equipment for plug-in vehicles.
A comprehensive approach should also reinforce deployment efforts
that cities and regions around the country are making--or planning to--
make. By leveraging individual, business and local and state government
interest and investments, a comprehensive electric drive policy will
accelerate adoption of the technology and help us achieve a more secure
country, a stronger economy and a cleaner environment.
community deployment program (s. 948)
Question 2. In your written testimony, you note that you would like
to ``continue working'' with the committee to strike the right balance
between national and community-oriented deployment programs. Can you
provide further thoughts on what type of changes, if any, you'd seek to
this bill?
Answer. Our goal is national-scale deployment of electric drive
vehicles and infrastructure. In establishing national programs for
technical assistance and workforce training alongside concentrated
community efforts, we would like to ensure that one effort does not
supplant the other. While we have not, as an organization, identified
the exact proportions of the complementary efforts, we would like to
see the national program on a scale that meets the national
opportunity, and we would like to see the deployment efforts be
sufficiently numerous to reinforce the national effort while serving as
area-specific deployment models.
house bill
Question 3. To the extent possible, please summarize EDTA's views
on H.R. 1685, the Electric Drive Vehicle Deployment Act.
Answer. EDTA has not taken an official position on H.R. 1685.
Directionally, our goal is national-scale deployment of electric drive
vehicles and infrastructure. In establishing national programs for
technical assistance and workforce training alongside concentrated
community efforts, we would like to ensure that one effort does not
supplant the other. While we have not as an organization identified the
exact proportions of the complementary efforts, directionally we would
like to see the national program be on a scale to meet the national
opportunity and the deployment efforts be sufficiently numerous to
reinforce the national effort while serving as area-specific deployment
models.
Response of Genevieve Cullen to Question From Senator Stabenow
Question 1. Ms. Cullen, as you note in your testimony, my Advanced
Vehicle Technology Act (S.734) would ensure that the Department of
Energy is working with industry on a wide range of technologies such as
electric vehicles, hybrids, medium and heavy-duty trucks, fuel cells,
batteries and other technologies. Can you please describe the benefits
of such an approach and what steps the Department of Energy can take to
offer a level playing field for all advanced vehicle technologies
Answer. A portfolio approach to vehicle technologies is important
because the transportation sector is both large and diverse. A research
and development policy should look at all of the options that can meet
the needs of the sector, and the programs should reflect the varying
stages of development, deployment challenges and petroleum displacing
potential of the portfolio's technologies.
For instance, electrification is a continuum of technologies. The
U.S. will need efficient hybrids, zero-petroleum battery electric and
fuel cell vehicles for different applications and for meeting petroleum
and emissions reduction goals
The Department of Energy should operate under a consistent, long-
term framework that ensures continuity in their efforts across the
portfolio and allows the Department to pursue near, medium and long
term solutions.
______
Responses of Seifi Ghasemi to Questions From Senator Bingaman
Question 1. As you may know, we've been working on a number of
proposals to help accelerate the deployment of advanced technologies in
the United States. We've heard testimony in the past that our
competitors, such as China, are moving aggressively to provide market
support and insure low-cost capital is available for these new
technologies. Based on your experience with an international company,
how do you assess the current position of the United States in terms of
competitiveness in these growing markets?
Answer. As a general matter, the United States is at a competitive
disadvantage to European nations, Japan and China with respect to the
deployment of advanced electric drive vehicle technology, particularly
with respect to vehicle adoption in the short-to medium-term. Although
there are several challenges that plug-in vehicles must overcome to
become mainstream products, the threshold challenge may be their
substantial up-front cost premium, a premium that is unlikely to be
recovered over the vehicle's life based on current vehicle costs, in
the absence of any government incentives.
Plug-in vehicles typically are more expensive than gasoline
vehicles, primarily due to the cost of their batteries. That additional
cost is offset by lower fuel and maintenance costs. Because gasoline
costs are substantially higher in Europe than in the United States,
cars that operate on electricity have a comparative advantage in Europe
over the United States. Moreover, smaller electric cars that travel
shorter ranges may be more consistent with the typical European car
than the typical American car, easing the consumer transition from a
gasoline to an electric drive vehicle. At the same time, if Europeans
drive fewer miles overall than Americans, that could increase the
payback period of the vehicle, perhaps dampening demand somewhat.
Electric drive vehicles may also be at an additional comparative
advantage in Europe because they are needed to meet European greenhouse
gas (GHG) emission requirements. Europe's regulation of GHG emissions
is more stringent that the United States' approach. In order to meet
their regulatory obligations, European automakers are looking
increasingly at alternative fuels. Electricity offer the greatest
opportunity for GHG emission reduction for vehicles, suggesting greater
interest in electric drive vehicles to help meet emissions
requirements.
China also appears to be at a comparative advantage to the United
States with respect to the deployment of electric drive technology,
however, for different reasons. Chinese leaders have identified vehicle
electrification as a high strategic priority, viewing domestic
deployment of GEVs as a relatively straightforward energy security
strategy. As the Chinese economy has grown rapidly, oil consumption has
outpaced production, requiring an increase in imports. Between January
2004 and September 2009, Chinese oil imports grew by 80 percent.
Growing Chinese oil demand has been driven by the transportation
sector. In 2007, the International Energy Agency (IEA) forecast that
annual light-duty vehicle sales in China would surpass those of the
United States in 2016, but did so in 2009. Total light-duty vehicles
sales in China were 13 million compared to 10.4 million in the United
States, and this growth is forecast to continue for decades. In 2008,
there were 65 million registered vehicles in China, a figure forecast
to rise to 150 million in 2020 and nearly 230 million by 2030.
The impact of this growth in vehicle ownership will depend heavily
on technology. Based on existing technology and policies, the IEA
forecasts that roughly two-thirds of global oil demand growth will
occur in China and India in coming decades, with nearly one-third of
all growth occurring in the Chinese transport sector. If electric drive
technologies are deployed in high concentrations, the growth in Chinese
oil demand clearly could be curbed, and imports could be reduced from
their current baseline forecasts.
Chinese leadership also is dealing with consequences of urban
pollution. Many cities are highly polluted and adding hundreds of
millions of cars to the nation's fleet will exacerbate this problem.
Therefore, China has also identified electrification as a critical
environmental sustainability measure that will support economic growth
with cleaner transportation services.
Perhaps most importantly, China has identified electric vehicle
manufacturing as a strategic industry that will allow it to maintain
its global manufacturing dominance. Chinese automotive production in
China in 2009 was 13.6 million vehicles making China the largest auto
producing nation in the world. Production is expected to reach 30
million vehicles by 2030. While this growth is significant, the bulk of
this production currently feeds domestic demand. Due to the significant
technological and scale advantages that the established global
automotive manufacturers have in internal combustion engines, it is
also unlikely that Chinese automakers will be able to organically
establish a strong global presence.
Electric drive vehicles, however, will introduce a value chain
shift that could favor China from both a technological and from a
supply chain perspective. As a major supplier of lithium batteries for
cell phones, China has established the production capability and value
chain to cost-effectively produce lithium batteries in scale. China
also is advantaged in electric motors due, in part, to its position in
rare earth materials production. Rare earth materials, specifically
neodymium, contribute approximately 30 percent of the material cost of
permanent magnet motors, one of the key motor types used in electric
propulsion systems.
China has supported its electrification strategy with credible,
long-term public support. In 2009, the central government began an
initiative to develop sufficient electric vehicle infrastructure for
large scale deployment in about 20 cities. Wuhan, a city of more than 9
million people, is the lead city in the project. It is working with
Nissan to develop the infrastructure, and the automaker will provide
the city with 600 EVs at no cost. This will be followed with
infrastructure investments over the succeeding four years in the cities
of Shanghai, Beijing, Shenzhen, and several other cities ranging in
size from 1 to more than 10 million people. The government's initial
goal was to have installed capacity to produce 500,000 grid-enabled
vehicles by 2011.
These initiatives are naturally supported by government funding.
Ten billion yuan ($1.5 billion) has been set aside to nurture research
and development. The government is also offering a 60,000 yuan ($8,800)
per-vehicle incentive for EVs and a 500,000 yuan ($73,000) incentive on
bus purchases. China has provided battery and GEV companies with
generous low-interest loans from state banks and has a multi-year
technology development program on which it spent over $160 million
between 2006 and 2008. State Grid, the largest state-owned utility, is
planning the construction of charging infrastructure.
Despite the aggressiveness of China's approach to EVs, it still
faces many of the same challenges that EVs face elsewhere. Consumer
acceptance is still a large unknown. The costs of ownership will have
to come down significantly as government subsidies and incentives
disappear. Even when the total cost of ownership becomes favorable for
EVs, the up-front vehicle cost will still be significantly higher than
conventional vehicles and the payback period is longer than most
consumers or commercial fleet owners are willing to accept. A vehicle
financing market, virtually non-existent in China, could help overcome
this challenge, as could a market for used automotive grade batteries.
Notwithstanding these challenges, there is no doubt that China is
making a substantial effort to make EVs work in an effort to become
world leaders in this technology.
The comparative advantage that plug-in vehicles have in Europe as a
result of fuel prices and in China by virtue of the government's
commitment to their success is one that poses meaningful risks to the
United States. The automobile manufacturing value chain is worth
hundreds of billions of dollars to the United States economy each year.
We do not want plug-in vehicle technology that was developed in the
United States to be exported and manufactured abroad, further eroding
the United States' manufacturing base and exporting U.S. jobs.
That concern can be seen, for instance, in the global development
of the advanced battery industry. The battery is likely to be the
single the most expensive component in most plug-in vehicles. In fact,
over the life cycle cost of owning and operating a plug-in vehicle,
much of the value that currently is captured by gasoline suppliers and
the gasoline supply chain will be captured by the battery manufacturers
and their supply chain. We should all prefer to see as much of that
value as possible stay in the United States and support American jobs.
Without proper support, however, that may not occur. As the Department
of Energy data depicted in the accompanying chartzzzz8 shows, most of
the global production of advanced batteries takes place in Asia, with
growth in China and Korea eroding Japan's dominance in this market. In
the absence of U.S. government assistance, this trend might continue,
foretelling the continued decline of the automotive sector in the
United States with all of its attendant consequences.
---------------------------------------------------------------------------
* Chart has been retained in committee files.
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We believe that in the very long run, electrification of light-duty
vehicles may be nearly inevitable because electricity is more secure,
stable, reliable and cleaner than petroleum. If we do not take the
steps necessary to accelerate that transformation beyond what might
occur in the absence of government incentives, other nations will make
that transformation first, capturing much of the value created by the
new transportation economy. Government incentives are needed,
therefore, to accelerate the transformation in the United States and
promote our competitiveness in this market for decades to come.
Question 2. The capital intensity of both the manufacturing and
supporting infrastructure for electric vehicles seems like it would be
daunting for new entrants. Yet, that's where much of the early
technological innovation is usually introduced. Can the grant programs
envisioned in this bill be sufficient to entice entrepreneurs as you
describe in your testimony?
Answer. We believe that the grant programs envisioned in the
Promoting Electric Vehicles Act will be sufficient to entice
entrepreneurs to participate in the plug-in vehicle market. First, many
of the companies that are involved in the plug-in vehicle value chain
already are relatively small and/or new companies, and possess the
entrepreneurial character I described in my testimony. New companies
have been established to develop and market electric vehicle supply
equipment (chargers), software to support the vehicle charging process,
vehicle batteries, and vehicles themselves. In fact, there may be more
startup companies developing plug-in vehicles than any other category
of alternative vehicles in recent decades. Even when existing companies
are entering this space, they often are doing so through their non-
traditional business units.
Second, we believe that the deployment community approach
facilitates the entrance of entrepreneurs into this market. There are
several challenges to the wide-scale adoption of plug-in vehicles where
government incentives can help overcome crucial obstacles. The nature
and character of those obstacles, however, may vary from community to
community. By focusing some portion of the government's overall
commitment to plug-in vehicles in a limited number of communities
through a flexible grant program, it is possible to narrowly tailor the
use of the funds to address specific problems in the participating
communities. Reducing the size of the challenges to ones faced by
particular communities may allow smaller companies without the
resources of larger established companies to compete and provide their
solution. This approach not only creates opportunities for smaller
entrepreneurial companies that may have solutions to the challenges
faced by a particular community, but also will help ensure that the
government earns the greatest payback on its investment in plug-in
vehicles.
______
Responses of Patrick Davis to Questions From Senator Bingaman
Question 1. With regard to deployment communities for electric
vehicles; the Administration's approach appears to contemplate
distributing smaller grants to a greater number of communities, than is
contemplated in S. 948. Has the Department been able to gather any
information on the needs of various communities in order put in place
the various pieces of infrastructure that will be needed? How can we be
certain that the grants are the right size to have the desired effect?
Answer. While the proposed competitive community grant program, by
itself, would not be enough to achieve the President's goal of putting
one million electric vehicles on the road by 2015, it would help to
achieve this ambitious goal by providing an incentive for communities
to invest in infrastructure, complementing investments that have
already been made under the Recovery Act Transportation Electrification
demonstration program. Moreover, the grants through this program,
modeled after ``Race to the Top,'' would leverage benefits beyond their
immediate monetary value by rewarding communities that can demonstrate
a broader plan to facilitate EV readiness through steps like
streamlining codes and regulations to make it easier to install
infrastructure. The Department has examined various ways to implement
the proposed program, considering options for the potential number of
communities and amount of funding per award, among other factors.
Although there would be a cap on the amount of funds available for an
individual award, communities will be able to propose funding amounts
that they believe will meet their needs and allow them to implement the
programs proposed in their applications. In addition, to help inform
decision-making, the Department has obtained input from various
stakeholders over the last year. For example, in July 2010, Clean
Cities hosted the Plug-In Vehicle and Infrastructure Community
Readiness Workshop, which provided both an opportunity for the
Department to hear from local communities about their needs as well as
a forum for technology deployment experts to share best practices and
lessons learned. While the Department does not share the details of its
solicitation plans with potential applicants, the Clean Cities network,
which includes more than 80 locally-based coalitions, is an important
resource for understanding community experiences with vehicle and
infrastructure deployment and is helpful for identifying ways in which
the Department can support local efforts.
Question 2. In your comments on S. 734 you mention that the section
on ``Sensing and Communications Technologies'' appears to be
duplicative of a Department of Transportation program. Does DOE
currently conduct research in this area within the Vehicle Technology
Program? Is the language in S. 734 on ``coordination and
nonduplication'' requiring the Secretary to ensure activities do not
duplicate programs in other research agencies ineffective to deal with
this?
Answer. The Department's Vehicle Technologies Program does not
currently conduct vehicle-tovehicle sensing and communications
technology research, but in accordance with non-duplication provisions
in S. 734, would work closely with the Department of Transportation to
leverage and complement, rather than duplicate, their ongoing research
activities with regard to vehicle-to-vehicle and vehicle-to-
infrastructure communications.
Question 3. You spoke a bit about advances in fuel economy
technology in such things as electric drive that can make a big
difference in coming years. Can you speak a bit more about the
opportunities with existing technologies like turbo or super charging?
What are the emissions and fuel economy opportunities there?
Answer. Engine downsizing and technologies such as turbo charging
can increase fuel economy by 7.5% or more.\1\ The auto industry is
relying, in part, on these technologies to meet corporate average fuel
economy (CAFE) standards through 2016, while simultaneously meeting
applicable emissions standards. Both turbocharging and supercharging
enable engine downsizing and higher efficiency by compressing air
entering the cylinders, thereby increasing power produced from a given
engine displacement. In case of turbocharging, additional benefit is
utilization of waste heat energy of the engine exhaust for the
compression of intake air. We envision the future CAFE regulations to
necessitate broader introduction of these technologies. R&D
opportunities in this area include cost reduction through novel high
strength, high temperature materials and innovative bearing
technologies, improving modeling capabilities for high speed gas flows,
as well as development of designs suitable for very small air charging
devices. It is important to note that air charging devices for
turbocharging and supercharging represent just one of many technologies
that will allow continuing improvements in the fuel efficiency of
internal combustion engines. Others include new combustion regimes,
advanced fuel injection systems, novel propulsion materials, advanced
sensors and control algorithms, and reduction in friction and parasitic
losses.
---------------------------------------------------------------------------
\1\ See http://www.fueleconorny.gov/feetech_engine_more.shtml
---------------------------------------------------------------------------
Responses of Patrick Davis to Questions From Senator Murkowski
community deployment program funding (s. 948)
Question 1. Please state the administration's views on the most
appropriate funding levels, per community and overall, for a one-year,
three-year, or five-year deployment program.
Answer. The Administration has proposed a $200 million competitive
community grant program, which would support up to 30 awards of up to
$10 million each. The Department views this as a nearer-term effort
that, if funds are appropriated, it would execute quickly, with
projects of 1--3 years in length.
additional technologies (s. 948)
Question 2. Please state the administration's views on whether
alternative fuel vehicles aside from electric vehicles should be
eligible for the targeted community deployment program.
Answer. The Administration is committed to taking bold steps to
make the transportation sector more energy efficient. These efforts
include the historic investments in advanced vehicle and fuel
technologies, public transit, and high speed rail under the Recovery
Act, as well as the ambitious new fuel economy standards put into place
for cars and trucks--which will raise average fuel economy to 35.5
miles per gallon by 2016, and save 1.8 billion barrels of oil over the
lifetime of the vehicles covered. The Administration is also taking
steps to encourage the use of biofuels. The Department continues to
support programs such as the Clean Cities Initiative that cover a broad
portfolio of petroleum reduction strategies.
These actions are already helping to lower transportation costs by
reducing our dependence on oil, provide more transportation choices to
the American people, and revitalize the U.S. manufacturing sector. But
we need a sustained effort, and focusing on electric drive vehicles
offers an opportunity to quickly reduce our dependence on petroleum,
which is why the President set an ambitious goal that by 2015 we would
have 1 million electric vehicles on the road, becoming the world's
leader in advance vehicle technologies. To help reach this goal, the
Administration supports a number of steps to speed up the adoption of
electric vehicles, including more effective tax credits for consumers,
research and development, and a new competitive grant program to
support communities that create an environment for widespread adoption
of these advanced vehicles in the near term.
With new electric drive vehicles beginning to enter the market, and
with auto manufacturers announcing new roll outs over the next couple
of years, now is the right time to support local community efforts to
overcome critical barriers to successful market introduction and
initial growth. The competitive community grant program would support
highly-leveraged projects to deploy an early electric vehicle charging
infrastructure, appropriately streamline permitting processes, and
implement innovative incentive programs that facilitate market growth
and catalyze private-sector investment.
current vtp funding request (s. 734)
Question 3. The Department requested $588 million for the Vehicle
Technologies Program for Fiscal Year 2012. How is that funding split
between light duty and heavier vehicle classes? How is it split between
various technologies and research areas?
Answer. With the President's fiscal year (FY) 2012 budget request
of $588 million, the Vehicle Technologies Program plans to continue its
support of a broad range of advanced vehicle technologies including
electric drive, advanced combustion, fuels, and materials technologies
that are applicable to light-, medium-, and heavy-duty vehicles (see
table below for split among research areas). Of the total requested
amount, $200 million would support a new competitive grant program to
help communities accelerate the deployment of electric vehicles, with a
focus on efforts related to electric charging infrastructure. The
remaining $388 million would support work related to light-, medium-,
and heavy-duty vehicles, as well as work that cross-cuts vehicle
classes, including enabling technologies and outreach, deployment, and
analysis activities. The precise division of FY 2012 funds for work
supporting different vehicle classes will depend on the selection of
projects under a recently-closed FY 2011 solicitation and new
solicitations planned for FY 2012. The program's best estimate at this
time, however, is that approximately $290 million would support work
related to light-duty vehicle technologies, approximately $46 million
would support work related to medium-and heavy-duty technologies, and
approximately $250 million (including the $200 million for the
competitive community grant program referenced above) would support
activities that do not easily align with a particular vehicle class. It
is important to note that the program's support for light-duty vehicle
technologies generally reflects their significant contribution to
highway transportation use, compared to other vehicle classes: light-
duty vehicles account for 76% and heavy trucks account for 19% of U.S.
highway transportation energy use (buses and medium trucks account for
the remaining 5%).
VEHICLE TECHNOLOGIES PROGRAM FY 2012 CONGRESSIONAL BUDGET REQUEST
------------------------------------------------------------------------
Activity FY 2012 Request ($000)
------------------------------------------------------------------------
Batteries and Electric Drive $188,000
------------------------------------------------------------------------
Vehicle and Systems Simulation and Testing $58,000
------------------------------------------------------------------------
Advanced Combustion Engine R&D $49,000
------------------------------------------------------------------------
Materials Technologies $38,000
------------------------------------------------------------------------
Fuels Technologies $18,503
------------------------------------------------------------------------
Outreach, Deployment, and Analysis $236,500
------------------------------------------------------------------------
TOTAL $588,003
------------------------------------------------------------------------
vehicle technologies program (s. 734)
Question 4. Please provide the committee with a list or table
showing federal appropriations to the Vehicle Technologies Program over
the past ten years.
Answer. The following table outlines federal appropriations to the
Vehicle Technologies Program over the past ten years:
VEHICLE TECHNOLOGIES (DOLLARS IN THOUSANDS)
----------------------------------------------------------------------------------------------------------------
FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
----------------------------------------------------------------------------------------------------------------
195,855 190,403 185,095 177,620 171,952 186,271 183,580 208,359 235,916 304,223
----------------------------------------------------------------------------------------------------------------
vehicle technologies program (s. 734)
Question 5. S. 734 would authorize work on basic research, applied
research, development, demonstration, engineering, construction,
manufacturing, and commercial application activities. it would also
create several new programs. Will you compare what this bill authorizes
and requires to the current scope of activities at DOE? How are DOE's
resources currently split between those processes?
Answer. Within the Department's Office of Energy Efficiency and
Renewable Energy (EERE), the Vehicle Technologies Program (VTP)
supports applied research, development, demonstration, and deployment.
Approximately 90% of its current budget covers applied research,
development, and demonstration, and approximately 10% covers deployment
activities. The Department's Office of Science supports basic research,
and the Advanced Research Projects Agency-Energy (ARPA-E) focuses on
high-risk, high-payoff, early-stage applied research, which, if
successful, is transferred to VTP or to the private sector for
continued development. All three offices/programs coordinate very well
with one another and staff communicate regularly. While S. 734 would
authorize construction and manufacturing, historically, VTP has not
been involved in the installation of manufacturing facilities. American
Recovery and Reinvestment Act of 2009 (Recovery Act) manufacturing
projects are the exception. The Recovery Act provided an opportunity to
grow our nation's domestic manufacturing capacity for electric drive
vehicle components--with Recovery Act funds, VTP awarded $1.5 billion
to U.S.-based manufacturers to produce batteries and their components
and to expand battery recycling capacity and $500 million to U.S.-based
manufacturers to produce electric drive components for vehicles,
including electric motors, power electronics, and other drivetrain
components.
vehicle technologies program (s. 734)
Question 6. Last Congress, in questions that were asked for the
hearing record, the Department noted that it had no issue'' with this
bill as long as it was ``intended as a supplemental authorization to
previous authorizations.'' Please explain that statement. Does the
Department support the consolidation of all of its existing vehicle
technology authorities into one simpler and more straightforward
authority?
Answer. Generally, the Department supports the consolidation of
existing vehicle technologies R&D authorizations for appropriations
into a simpler and straight-forward authority. The previous bill
covered a broad technology portfolio that included the advanced
technologies currently addressed in the Vehicle Technologies Program,
as well as hydrogen and fuel cell vehicle technologies currently
addressed in the Hydrogen and Fuel Cell Technologies Program; however,
it authorized specific funding levels that the Department believed may
not have been alone sufficient to appropriately support activities in
both programs. In contrast, S. 734 authorizes funding levels ``as may
be necessary.''
Responses of Patrick Davis to Questions From Senator Stabenow
Question 1. The Department of Energy via the National Energy
Technology Laboratory awarded approximately $45 million in grants to
automotive and engine manufacturers under the Systems Level Technology
Development, Advanced Technology Powertrains for Light-Duty Vehicles
program. What is the status of the program including the project teams
led by Ford, Delphi and Bosch, specifically regarding the federal funds
already allocated, the stage of each project, the federal funds pending
for each project, and the timeline for project completion and their
subsequent fuel economy gains?
Answer. The Advanced Technology Powertrains for Light-Duty Vehicles
Program includes projects with Ford, Delphi, Bosch, and Cummins. All
projects are well under way and making progress. The status of the
Ford, Delphi, and Bosch projects, specifically, is as follows:
Ford has been allocated $6,478,340 and has completed concept
evaluation of new engine architecture and systems, performed
single cylinder engine and flow reactor analyses for advanced
lean combustion capability, and initiated CAD design of the new
multi cylinder engine components and systems. The pending
Federal funds are $8,521,660. The project is scheduled to end
on 12/31/2014 with a demonstration of a 25% fuel economy
improvement in a mid-sized sedan using a downsized, advanced
gasoline turbocharged direct injection (GTDI) engine while
meeting Tier 2 Bin 2 emissions on the FTP-75 cycle (Federal
Test Procedure).
Delphi has been allocated $4,788,205 and has completed
initial development work on needle bearing camshafts, electric
cam phasers, electric water pump, electric oil pump, cooled
Exhaust Gas Recirculation (EGR), thermal management, and
advanced valvetrain systems and has begun integration/testing
on a base engine. Work has also commenced with single-cylinder
engine testing. The pending Federal funds are $2,692,377. The
project is scheduled to end on 8/31/2014 with a demonstration
of a 35% fuel economy improvement over the base engine while
meeting Tier 2 Bin 2 emissions on the FTP-75 cycle.
Bosch has been allocated $5,500,000 and has completed an
initial 1D engine model and installed a homogenous charge
compression ignition (1-ICCI) mule engine at the University of
Michigan. An initial prototype boosting system has been
designed for the test engine. The pending Federal funds are
$6,182,468. The project is scheduled to end on 9/29/2014 with a
demonstration of a 25% fuel economy improvement over the base
engine while meeting Tier 2 Bin 2 emissions on the FTP-75
cycle.
Question 2. Mr. Davis, I noticed in your testimony that the
Department of Energy was still reviewing my legislation, but had a
possible concern about duplication with efforts at the Department of
Transportation regarding sensing and communication technologies. I know
that the Department of Transportation has been working on sensing
technologies to promote safety, but this section is intended to
encourage research and development of sensing technologies specifically
interacting with the electric grid and even vehicle to vehicle
interactions.
I agree that we should be taking steps to avoid duplication, which
is why I'd like to point out for you that within Section 101 of my
legislation, page 11, there is a phrase to ensure that the Department
of Energy does not duplicate work being done by other agencies.
Therefore, I'd like to ask you if there are any other areas where
you see the possibility for duplication and encourage you to work with
me to ensure that we address those issues.
Answer. The Department agrees that R&D of sensing technologies is
important, especially for vehicle-to-grid applications, and the
Department has efforts helping to establish standardized vehicle-to-
grid communications. We will work closely with the Department of
Transportation (DOT), which is very active in this area (and in
vehicle-to-vehicle interaction, in particular), to leverage resources
and expertise and avoid duplication of effort. We understand that the
Department of Transportation is conducting research related to battery
safety that may lead to regulation and we will need to coordinate with
DOT in that area as well. We know of no other R&D areas of obvious
duplication and will continue to work closely with our Federal partners
at DOT, the Environmental Protection Agency, and Department of Defense
to ensure our programs are well-coordinated and highly-leveraged to
make the best use of taxpayer dollars.
Question 3a. I like the idea of helping communities coordinate to
deploy electric vehicles and charging stations, provide technical
assistance, and upgrade various local and state regulations. This all
can help to spur these technologies nationwide.
With so much interest in deploying these technologies, how will you
determine which communities will receive this grant funding, and how
many communities do you anticipate will eventually receive funding?
Answer. The Department would select proposals for award using a
robust merit review process that involves an independent panel of
subject matter experts who carefully evaluate each proposal against the
specific criteria published in the funding opportunity announcement.
While the specific selection criteria have not been finalized, we
envision factors such as the following as being important to a
successful application:
Does the community have credible plans to overcome
permitting barriers?
Has the community engaged the right partners and key
stakeholders to be successful?
Has the community proposed innovative incentives to promote
adoption?
How is the community using local and private funds to highly
leverage the available Federal funds?
Does the total number of charging points proposed represent
a very high value for the funding?
With the amount included in the budget request, we plan to award up
to 30 grants to strategic, local community partnerships across the
country, with individual awards of up to $10 million each. Given auto
manufacturers' plans to sell electric vehicles in cities across the
country, we do not expect to focus on a limited number of geographic
areas and instead expect to select projects based on their merit using
criteria such as those listed above.
Question 3b. I like the idea of helping communities coordinate to
deploy electric vehicles and charging stations, provide technical
assistance, and upgrade various local and state regulations. This all
can help to spur these technologies nationwide.
As a follow up, how will DOE work to ensure fairness for
neighboring communities that are not chosen, but are close to
deployment communities? Will this policy hamper development in areas
not chosen?
Answer. The Department would select proposals for award using a
robust merit review process that involves an independent panel of
subject matter experts who carefully evaluate each proposal against the
specific criteria published in the funding opportunity announcement.
Cities and communities would be encouraged to form strategic local/
regional partnerships and submit a single proposal. Areas that are not
selected for funding under this competitive opportunity, however, would
still benefit from the library of resources available through the
Department's Clean Cities initiative. These include cost calculators
and electric vehicle supply equipment (EVSE) mapping tools, guidebooks
to facilitate permitting, and a host of other training and information
resources. Another important attribute of the Clean Cities initiative
is its unique ability to share information across its nationwide
network of more than 80 local coalitions, as well as to neighboring
communities. Not only would the competitive grant program provide an
excellent opportunity to document valuable lessons learned and best
practices that can be communicated publicly, but the areas selected
would comprise a new network of experts to serve as models and a
resource for other communities interested in electric drive vehicle
deployment.
Question 4. I support the idea of using deployment communities to
assist with electric vehicle adoption nationwide. I also believe that
it is important to establish the right balance between national and
community deployment. Most vehicles remain idle at home or at work 80
percent of the time. While it is important to upgrade the communities'
ability to provide public charging to consumers, I also believe we
should give incentives directly to the consumer to install charging
stations at home. For early adopters, the majority of charging will be
done at home.
How do we find the right balance between incentivizing electric
vehicle deployment within particular communities and ensuring we are
allowing for this development nationally?
Answer. Although the Department cannot provide funds to support
electric drive vehicle deployment in every community across the
country, there are programs and policies that can support any community
interested in accelerating local market growth. For example, the
Department would select projects for award under the competitive
community grant program giving consideration to factors including (but
not limited to) whether it has credible plans to overcome permitting
barriers, whether it has engaged the right partners and key
stakeholders needed to be successful, and whether it has proposed
innovative incentives to promote adoption. Programs and policies to
address these factors may be easily transferable, and communities that
meet these criteria and are selected for funding would serve as models
that provide important lessons learned, share their experiences, and
communicate best practices to the benefit of communities nationwide. In
addition, the existing tax credit of up to $7,500 for electric drive
vehicles provides an incentive to potential users nationwide. The
President has proposed transforming this tax credit for purchasers into
a credit for the seller or the person financing the sale. The credit
would be passed through to consumers, giving them the ability to
receive the benefit of the credit at the point of sale to provide an
even greater, up-front incentive for consumers interested in electric
drive vehicles. These programs and policies are designed to enable
early market success, reduce technology cost, and remove barriers such
as onerous permitting processes--which, in turn will facilitate
technology introduction across the country.
Appendix II
Additional Material Submitted for the Record
----------
May 9, 2011.
The Detroit News
asian power embraces advanced-tech vehicles
By CHRISTINE TIERNEY
Shanghai--During the first 80 years of the auto industry, American
and European automakers didn't have to worry about pollution or oil
supplies. Oil was plentiful and gas was cheap. But by the time China
got into the car business, those concerns loomed large.
China's huge cities already were choking in smog, and the world's
oil reserves were expected to dwindle. Even while Chinese automakers
were learning the basics of carmaking a few years ago, planners in
Beijing set out to develop an electric car industry that wouldn't rely
on oil.
China's automakers don't seem any closer now than others to solving
the technological challenges that have stumped the industry: how to
pack more energy in batteries while reducing their size and cost.
Chinese auto executives admit they have a long way to go to master the
technology.
But American, European and Japanese auto executives and officials
are taking China's efforts very seriously. The Chinese government has
set ambitious production targets and will provide close to $15 billion
between now and 2020.
Half the money will go toward research and development of ``new
energy vehicles,'' a term that covers plug-in and electric cars. But
money also will be spent on infrastructure, such as the installation of
36,000 charging outlets in Beijing within three years, and pilot
projects in 25 cities.
``Where they're ahead is at the political commitment level,'' said
Oliver Hazimeh, a partner at PRTM, a Waltham, Mass.-based consulting
firm, which conducted a study with the World Bank on China's electric
car plans.
``The Chinese government is very strongly behind electrification,
and they also have the raw materials,'' lithium and rare earths used to
make components for electric cars, Hazimeh said.
The implications for the United States and other countries are
huge: Because of the size of its market, China is likely to influence
standards and technological choices, and its carmakers will want to
compete globally with plug-in and electric cars.
lawmakers slam incentives
BYD Ltd., a leading Chinese automaker, aims to export electric cars
to the United States and Europe next year.
Already, U.S. lawmakers claim that some of China's electric car
policies, notably its incentives, discriminate against U.S. and other
foreign brands.
According to China's New Energy Vehicle Development Plan, the
government wants 1 million hybrid vehicles and 500,000 plug-in and all-
electric vehicles on China's roads by 2015. By 2020, it wants 5 million
plug-in and electric cars in circulation, with some private analysts
estimating the figure will be higher.
By then, China aims to have between three and five proficient
electric car manufacturers and two or three battery specialists.
``People are taking this seriously,'' said Michael Dunne, president
of Hong Kong investment advisory firm Dunne & Co. ``What the government
wants to happen usually happens in China, even though the road getting
there often looks muddled.''
The motivation driving China's strategy is geopolitical, he said.
``It's 90 percent about energy security, and less than 10 percent about
the environment.''
Other countries also have set goals, emission rules and incentives
to encourage the use of electric cars. President Barack Obama said in
2008 he wants to see 1 million plug-in and electric cars on American
roads by 2015. Chancellor Angela Merkel wants to have 1 million
electric cars in Germany by 2020.
A bill before Congress would offer grants and other incentives to
help establish 10 electric car ``deployment communities.''
Meanwhile, the Chinese are ready to offer as much as $15,000 in
incentives in some cities--more than what's available to consumers in
California. And ``they have large-scale pilot projects, much larger
than those in other regions,'' said Hazimeh.
execs aware of challenges
At the Shanghai auto show last month, Chinese automakers displayed
a raft of electric cars--the BYD e6, a Great Wall electric SUV, the
Chery Riich M1-EV and the BAIC C30.
U.S., European and Japanese executives touring the show said
Chinese production methods had improved, but didn't see any
technological breakthroughs. Chinese auto executives are candid, too,
about the challenges.
At a conference in Shanghai last month, an executive with Jianghuai
Automobile Co., a state-owned firm that has sold 585 electric cars to
its employees and those of other state-owned firms on a trial basis,
said it's not ready to sell electric cars to retail customers.
``Our technology doesn't allow us to sell to retail customers,''
Yan Gang, vice president of Jianghuai Automobile, told the CBU 2011
Global Automotive Symposium. ``Retail customers are too demanding.''
Wu Jianzhong, chairman of Zotye Holding Group, was clearly
discomfited when asked at the conference about a Zotye-made electric
taxi that caught fire in April in the city of Hangzhou. Wu apologized
and said a center would be established to monitor the electric taxis.
But he wouldn't discuss the event, pending an official inquiry.
``The incident caused huge damage to us,'' Hu Jiangyi, deputy sales
director of State Grid Corp., commented later.
Despite the mishaps, China's automakers are ramping up plans to
produce electric cars, with most of the output slated for municipal,
provincial and federal fleets in the next few years.
State-owned BAIC Group, a Beijing-based manufacturer, is new to the
electric car business but expects to produce 150,000 new energy
vehicles by 2015, up from 3,500 this year, Deputy Chief Engineer Lin Yi
said.
Jianghuai Automobile, based in Hefei, hopes to be making 100,000
new energy vehicles a year by 2015.
But some manufacturers question how the government's funds are
being allocated. ``Money is going to those who don't need it,'' said
Deng Zhongyi, vice president for sales at BAK Batteries. ``Most battery
producers are private companies, and most battery producers are pretty
weak.''
In China's fragmented auto industry, many firms will fall by the
wayside in the years ahead, but a few contenders are likely to emerge,
analysts say.
BYD, a leading manufacturer of lithium-ion batteries, has won
investor backing from U.S. billionaire Warren Buffett and has joined
forces with Germany's Daimler AG to develop electric cars for the
Chinese market.
``There's a favorable environment here for electric vehicles,''
Daimler CEO Dieter Zetsche told reporters at the Shanghai auto show.
Given the size of China's market--more than 18 million vehicles
were sold last year--the government's push to develop alternative
technologies is logical, he said. ``They can't develop the way Europe
and the United States did, with the current technology.''
______
Statement of NGVAMERICA
introduction
NGVAmerica is pleased to offer the following written statement with
regard to this hearing. NGVAmerica is a national organization dedicated
to the development of a growing and sustainable market for vehicles
powered by natural gas and biomethane. NGVAmerica represents more than
130 member companies, including: vehicle manufacturers; natural gas
vehicle (NGV) component manufacturers; natural gas distribution,
transmission, and production companies; natural gas development
organizations; environmental and non-profit advocacy organizations;
state and local government agencies; and fleet operators.
The purpose of the Committee's hearing on May 19, 2011 is to
receive comments and hear testimony concerning ``policies to reduce oil
consumption through the promotion of advanced vehicle technologies and
accelerated deployment of electric-drive vehicles.'' The hearing
announcement specifically references S. 734 and S. 948.
natural gas vehicles should be a part of future energy legislation
Today, natural gas vehicles are uniquely positioned to help the
United States achieve a number of critical policy objectives. The
increased use of natural gas vehicles can reduce our dependence on
foreign oil while reducing greenhouse gas emissions and urban
pollution. And, equally important, increased use of natural gas
vehicles will benefit the economy by stimulating demand for domestic
natural gas and by lowering fuel cost to businesses, fleets and
consumers that operate natural gas vehicles. Thus, energy legislation
that is intended to reduce reliance on oil consumption should also seek
to promote the use of natural gas vehicles. We are pleased to see that
S. 734, ``The Advanced Technology Vehicle Act of 2011,'' specifically
recognizes the need to includes natural gas vehicles, compressed
natural gas and liquefied natural gas vehicles in future federal
research, development and demonstration activities. We agree with the
bills focus on targeting near-term strategies as well as long-term
strategies that will reduce transportation reliance on petroleum. And
we agree with the focus on assisting and partnering with industry in
the development of light and heavy duty natural gas offerings. One area
where we would offer a recommendation for improving the bill would be
to point out that the medium and heavy duty program called for in Title
II should also include liquefied natural gas fueling infrastructure in
addition to compressed natural gas fueling infrastructure. Given the
fact that the bill specifically identifies LNG elsewhere, this omission
appears to be unintentional.
Another area where, in our estimation, the bill could be improved
would be to specifically identify natural gas utilities as stakeholders
and partners who can aid in the development of natural gas vehicles.
The bill specifically identifies electric utilities but does apparently
recognize a similar role for natural gas utilities.
Prioritizing among the many technologies identified in S. 734,
however, will be difficult. We hope that the committee and members of
Congress will work with the Department of Energy to ensure that
adequate funding is provided for natural gas-related activities given
the significant near-term and long-term opportunities it presents for
reducing petroleum reliance.
The House of Representatives has already introduced HR 1380, a bill
intended to promote the use of natural gas vehicles. We would urge the
Committee Members to support the HR 1380 when it is introduced in the
Senate. HR 1380 is discussed in greater detail below.
an abundant and economical domestic resource
Reliance on foreign oil exacts a high toll on the U.S. in terms of
direct economic costs and indirect energy security costs. In the past
three years (2008--2010), the US spent nearly $700 billion on imported
petroleum. More recently, the tab for imported oil has been much higher
as oil prices have once again exceeded $100 per barrel. In the coming
decade, the EIA forecasts total expenditures for petroleum imports to
top $3.3 trillion dollars. See EIA, 2011 Annual Energy Outlook , Table
11 (April 2011). Our reliance on oil not only affects our trade balance
but makes the U.S. vulnerable to price spikes and supply disruptions.
And high oil prices results in a windfall for regimes that may not be
friendly to the U.S. Fortunately, the U.S. has an unprecedented
opportunity to displace petroleum with domestic natural gas. In the
past several years, a wealth of new data has been developed
demonstrating that the U.S. has an abundant supply of readily
available, economically priced natural gas.
The U.S. Energy Information Administration, the Potential Gas
Committee and other expert bodies now estimate that we have up to a 100
years supply of natural gas. The Potential Gas Committee's 2011 bi-
annual report indicates that the U.S. now has a total future supply of
2,170 trillion cubic feet of natural gas. This is 89 Tcf more than
estimated in the 2009 report. As was the case with the 2009 report, the
2011 report includes the highest resource estimate in the Committee's
history; PGC has now been estimating natural gas supplies for 46 years.
Increased demand for natural gas helps to keep our economy growing
by supporting new jobs and economic development. In 2008, U.S.
production of 20 Tcf of natural gas supported nearly 3 million jobs
(``The Contributions of the Natural Gas Industry to the U.S. National
And State Economies'', IHS Global Insight 2009, p.1) Even a modest
increase in demand for natural gas as a transportation fuel could
create tens of thousands of jobs associated with producing natural gas.
Natural gas also benefits our economy because it is a low cost
energy that helps businesses grow while at the same time controlling
costs. Natural gas is priced much lower than petroleum. The two fuels
no longer track one another and haven't for many years. The current
contract price for natural gas (NYMEX May delivery) is $4.377 per
million Btu, which equates to a per-barrel of oil price of only $25.39
at a time when oil is trading well above $100 a barrel. The difference
in price relates to the fact that petroleum prices are set by world
markets. An increase in demand in China or India leads to an increase
in the cost of oil consumed here in the U.S. However, the same is not
true for natural gas. The U.S. market for natural gas is currently
insulated from most overseas events. Given the fact that large
quantities of natural gas cannot be readily shipped from North America
to other markets, the supply and demand for natural gas here in the
U.S. set the price that U.S. consumers pay. Because of the abundant
supply of natural gas that exists here in the U.S., natural gas prices
relative to oil prices are expected to remain much lower in the coming
years. In fact, the EIA estimates that differential between diesel fuel
and natural gas for transportation could be as much as $2 per diesel
gallon equivalent in the future.
translating opportunity into advantage
How should we use this natural gas? Market price signals tell us
that transportation fuel and vehicles are the highest valued
application of all natural gas uses. Outside the U.S., demand for
natural gas vehicles is growing at a rapid pace. In the last seven
years the market for NGVs has more than tripled with a compound growth
rate of over 17 percent per year. In fact, NGVs are the fastest growing
alternative to petroleum vehicles in the world. In 2003, there were
only about 2.8 million NGVs globally. Today, there are over 13.2
million NGVs in operation worldwide. This rapid growth points to the
fact that rapid scaling up of NGVs is possible. The International NGV
Association forecasts that, by 2020, there will be 65 million NGVs on
the world's roads. Unfortunately, the U.S. currently ranks fourteenth
in the world in total number of NGVs.
Most of the new natural gas vehicles sold outside the U.S. are
either conversions of light-duty gasoline vehicles or are produced by
light duty OEMs, including: Ford, GM, Toyota, Honda, Nissan, Hyundai,
Fiat, Volkswagen and Mercedes. Fiat alone makes 14 separate NGV models,
and more than 100,000 NGVs were sold in Italy in 2009, comprising some
7% of the new vehicle market. Most U.S. manufacturers currently offer
natural gas vehicles in places like Europe, South America and Asia, but
only Honda currently offers a light duty OEM NGV product--the Honda
Civic GX.
For a number of reasons, including the sheer geographic size of
America, the strategy of the US NGV industry has been to focus on high
fuel-use fleets: trash trucks, transit buses, short-haul 18-wheelers,
school buses, urban delivery vehicles, shuttles of all kinds, and
taxis. Today, the U.S. only has about 120,000 NGVs. Vehicle demand has
been growing, but slowly. However, because of the large fuel use per-
vehicle, the amount of natural gas used (and petroleum displaced) has
been increasingly at a robust pace. NGVAmerica estimates that, last
year, natural gas vehicles used about 43 billion cubic feet of natural
gas. That is the equivalent of about 320 million gallons of gasoline
that was not imported. At today's fuel prices, this represents about a
billion dollars not spent on foreign oil.
Fortunately, the U.S. currently leads the world in offerings of new
medium-and heavy-duty NGVs. In the past several years, virtually all
the major truck and bus manufacturers in the U.S. have begun offering
factory-built NGVs. The impressive list of manufacturers includes:
Kenworth, International/ESI, Peterbilt, Mack, American LaFrance/Condor,
Crane Carrier, AutoCAD Truck, Capacity, Thomas Built Bus, Blue Bird
Bus, Optima, NABI, El Dorado, New Flyer, Daimler/Orion, Freightliner,
Gillis, Workhorse Chassis, Elgin, Allianz/Johnston, Schwarz, and Tyco.
Manufacturers are betting that the U.S. will get serious about its
desire to displace petroleum demand and increase the use of alternative
fuels like natural gas. With proper government policies, like those
proposed in S. 734, and incentives, like those proposed in HR 1380,
sales of these trucks and use of natural gas could grow substantially
in the coming years. NGVAmerica estimates that current fuel consumption
of natural gas for vehicles could grow to one and a quarter trillion
cubic feet or the equivalent of about 10 billion gallons within 15
years. At the level of fuel prices currently projected, that would
lower fuel costs to businesses by up to $20 billion a year and reduced
payments for imported petroleum by more than $40 billion per year.
NGVAmerica believes that there could be a substantial market for
natural gas vehicles in all applications. However, the most immediate
opportunity for displacing petroleum and increasing the use of natural
gas as transportation fuel lies with light-, medium-and heavy-duty
fleets--especially trucks, buses and other heavier vehicles. As noted
above, America currently has a large selection of medium and heavy duty
vehicles available here in the U.S. This is significant since trucks
are the economic lifeblood of America. Everything we buy moves by
truck. Reducing the cost of trucking reduces the cost of everything,
benefiting businesses and consumers alike.
enacting meaningful policies
Currently, NGVs cost more to buy than comparable gasoline or diesel
powered vehicles. But they cost less to operate. The more miles a
vehicle is driven each year, the faster the payback and the more likely
the owners can justify the investment in NGVs. For some of the most
fuel intensive fleets and vehicle applications, NGVs already are
economic. However, to expand the use of NGVs and maximize NGVs' oil
displacement potential, the first-cost or incremental cost of NGVs
needs to be brought down rapidly. And this will only happen with large
scale production and increased economies of scale. H.R. 1380, the New
Alternative Transportation to Give Americans Solutions (NAT GAS) Act of
2011 provides the means to accelerate demand for NGVs and to help
manufacturers achieve economies of scale and build-out much needed
fueling infrastructure. HR 1380 would provide federal incentives for
the production, purchase and use of natural gas vehicles and the
expansion of the NGV fueling infrastructure.
It is important to note that there is no free market when it comes
to the leading transportation fuel, i.e., petroleum. It is
significantly distorted by the cartel power of OPEC. All other
transportation fuels and technologies are at an extra-market economic
disadvantage. Nothing would please OPEC more than for Congress to
assume that, left on its own, the marketplace would solve the problem
of our addiction to foreign oil. Federal intervention to offset the
policies of OPEC is essential.
That is why NGVAmerica strongly supports H.R. 1380, and hopes
similar legislation will be introduced in the Senate soon. There is
broad bipartisan support for this bill. Although only introduced on
April 6th, H.R. 1380 already has 186 bipartisan co-sponsors. As
proposed, these incentives would be available for only a five year
period. During that time and long thereafter, it would make NGVs the
economic choice for many more fleets. This legislation would accelerate
NGV use, which, in turn, would bring more NGV manufacturers into the
market, increase competition and drive down the first-cost premium of
NGVs.
NGVs are a here-and-now technology. This fact is highlighted by the
investments and commitments by fleets already taking place in the
market place in the U.S. Highlighted here are some of the growing
examples of how natural gas is helping meet the needs of fleets:
AT&T operates more than 2,400 vehicles powered by natural
gas and has a goal of expanding the fleet to 8,000 by 2013;
UPS has more than 1,100 natural gas powered vehicles, and is
expanding its fleet of vehicles powered by liquefied natural
gas. The company has said it would convert a much larger share
of its trucking fleet to LNG if the fueling infrastructure was
in place;
The Los Angeles County Metropolitan Transportation Authority
earlier this year held a retirement ceremony for its last
diesel bus, and 2,221 of its buses are now running on
compressed natural gas; a number of the other smaller transit
agencies around the country have successfully switched their
entire fleet over to using natural gas. In Washington, DC, the
local transit authority operates nearly 500 natural gas transit
buses, and several feeder systems (outlying counties) also
operate natural gas buses.
Ryder System Inc. is purchasing 202 heavy-duty natural gas
vehicles that will be used in its Southern California network;
Waste Management, the largest refuse company in the country,
has more than 900 vehicles running on either compressed natural
gas or liquefied natural gas;
The Dallas Area Rapid Transit system recently announced it
will purchases 452 natural gas powered transit buses--the
largest single order of natural gas transit buses currently in
place.
As these fleet examples highlight, NGVs do not need technical
breakthroughs to capitalize on the potential of natural gas as a
transportation fuel. What is needed most is to grow demand for these
vehicles faster. Federal leadership in leading the way and providing
incentives will make this happen. By providing critical incentives, the
NAT GAS Act would help jumpstart that growth. In addition, federal
agencies can help by implementing rules that are favorable to the
increased use of natural gas and by leading by example through the
purchase of natural gas vehicles for their fleets. And while NGVs do
not need technological breakthroughs to be commercial, NGVs can be
further improved by, for example, integrating hybridization technology
with natural gas power. Therefore, it is important that the federal
government support research, development and demonstration programs,
like the ones proposed in S. 734, because, as that bill notes,
manufacturers have ``increasing limited resources'' for such
activities. Federal assistance and public private partnerships can
ensure that natural gas vehicles continue to improve over time,
delivering increased performance and delivering increased fuel
efficiency.
conclusion
The U.S. has an unprecedented opportunity to displace petroleum
with domestic natural gas. Now is the time to act to encourage the
increased use of natural gas vehicles. We have an abundant supply of
readily available, low-cost domestic natural gas. The fact that this
fuel is domestic, low-cost, and clean means that America can achieve
multiple national goals (energy security, clean air, economic security)
all the while helping fleets and businesses to lower their costs, thus
improving economic prosperity. Today, nearly every major truck or bus
manufacturer in the U.S. is now offering factory-built NGV models.
Federal policies and incentives, however, are needed to aid in the
successful market penetration of these vehicles and to help accelerate
their use so that the benefits of increased natural gas use can be
realized.
______
The PEW,
Clean Energy Program,
Washington, DC, May 18, 2011.
Hon. Honorable Jeff Bingaman,
Chairman, U.S. Senate, Committee on Energy and Natural Resources,
Dirksen Building, Room 304, Washington, DC.
Hon. Lisa Murkowski,
Ranking Member, U.S. Senate Committee on Energy and Natural Resources,
Dirksen Building, Room 304, Washington, DC.
Dear Chairman Bingaman and Ranking Member Murkowski:
In light of the Committee's May 19 hearing on policies to reduce
oil consumption, the Clean Energy Program of the Pew Charitable Trusts
would like to urge prompt consideration of legislation that would
accelerate the deployment of electric drive vehicles in the United
States. Such legislation includes Senator Stabenow's Advanced Vehicle
Technology Act of 2011 (S. 734) and Senator Merkley and Alexander's
Promoting Electric Vehicles Act of 2011 (S. 948), each of which would
make great strides in weaning our nation from oil and developing clean
and home-grown transportation alternatives.
National policies that promote vehicle electrification are critical
to reducing America's dependence on foreign oil, reinvigorating U.S.
manufacturing and minimizing environmental impacts while enhancing the
nation's competitiveness in the global clean energy economy. As the
attached Detroit News article illustrates, rapid expansion of the
Chinese electric car industry is of potential concern to U.S.
executives and officials. If the United States committed to deploying
10 million charging stations and making 25 percent of new vehicles
electric by 2020, it would yield benefits that could help strengthen
economic, national and environmental security far into the 21st
century.
In 2009, this country imported 11.7 million barrels of crude oil
and refined petroleum products per day. At $100 a barrel, this amounts
to sending foreign countries--some of them hostile to U.S. interests--
more than $1.1 billion to meet our daily energy needs. To ensure
stability in the world oil markets, American troops are deployed on
oil-security missions, costing U.S. taxpayers $67 billion to $83
billion a year, according to the Rand Corporation. Furthermore,
increasing domestic crude oil production--by 11 percent in the Obama
administration--has not prevented gas prices from rising at the pump.
Meanwhile, increasing demand for electric vehicles has resulted in
new battery and component manufacturing facilities across the United
States. The Department of Energy estimates that the United States will
have the capacity to produce 40 percent of the world's advanced vehicle
batteries by 2015, and other experts predict that battery manufacturing
could grow to $100 billion a year by 2030. Investments in charging
infrastructure offer significant economic opportunities as well. The
U.S. market for supply and installation of residential charging points
alone is expected to reach almost $1 billion by 2020.
Electric vehicles emit far fewer greenhouse gases than conventional
vehicles. Although power plants use various types of fuel to generate
electricity, even plug-in hybrid electric vehicles powered by older
coal plants emit approximately 25 percent fewer greenhouse gases
compared with conventional vehicles. With transportation accounting for
nearly one-third of all U.S. greenhouse gas emissions, broad adoption
of electric vehicles will dramatically lower this sector's greenhouse
pollution.
To fully realize the benefits from large-scale adoption of electric
vehicles, national policies are needed to help stimulate demand and
ensure that electric vehicles do not encounter technical or logistical
obstacles. The Advanced Vehicle Technology Act would call for a broad
research and development program on advanced vehicle materials,
technologies, and processes that can substantially reduce or eliminate
petroleum use and emissions by passenger and commercial vehicles. The
Promoting Electric Vehicles Act of 2011 would create short-term
deployment communities across the country to help spur market
penetration of electric vehicles and to serve as laboratories for
modeling nationwide electrification. These bills embrace positive and
significant steps towards relieving our oil dependence, and we urge
their passage in Committee and in the full Senate.
Thank you for your consideration. If you have any questions, please
feel free to contact Shannon Heyck-Williams in our government relations
department at (202) 887-8801, or [email protected].
Sincerely,
Phyllis Cuttino,
Director.
______
Better Place,
May 20, 2011.
Hon. Al Franken,
309 Hart Senate Office Building, Washington, DC.
Dear Senator Franken:
We noted with interest your question regarding various paradigms of
electric vehicle (EV) infrastructure deployment and charging services
at the Senate Energy Committee's May 19th hearing on legislation to
promote transportation electrification technologies. In particular, we
were pleased to learn of your interest in the battery switch model
currently being deployed by Better Place in country-wide networks for
Israel, Denmark, and Australia, as well as commercial demonstrations in
China and the US. The mission of Better Place is to eliminate our
dependence on oil and the way we do that is by making cars that don't
use oil less expensive and more convenient than ones that do.
With that said, please allow us to clarify some things that were
not made clear at the hearing.
The battery-separation model pioneered by Better Place is designed
to eliminate three major barriers to mass adoption of electric cars--
cost, convenience and range. With our service, the consumer buys the
car--but not the battery. As a result, electric cars on the Better
Place network are NOT premium cars--they are priced similarly to their
gasoline equivalents. The first car on the Better Place network will be
the Renault Fluence ZE, a five-passenger, high performance sedan that
consumers in Israel and Denmark will be able to purchase later this
year together with an eMobility subscription to Better Place at roughly
the same price they would pay to own a comparable gas car.
To address convenience and range, Better Place deploys
infrastructure in two parts. First, charge points enable the car to be
plugged and charged at home, at work, and at strategic public
locations. Second, Better Place deploys a network of battery switch
stations, which switch a depleted battery out for a full one in about
two minutes--faster than it takes to fill a tank of gas. Better Place
demonstrated this ``instant charge'' technology in a Tokyo taxi
commercial scale pilot in 2010, in which the automated battery switch
process averaged 59.1 seconds.
The net result of the Better Place model is a guaranteed mobility
service that can move electric vehicle adoption from a niche product to
a mass market solution, giving consumers a vehicle ownership experience
that is not subject to the volatility of prices at the pump. That, we
believe, is a market-based solution that tips the market and breaks
dependence on oil for cars in a decade or less.
The issues raised at the hearing appeared based on perceived
complexity and cost of battery switching. The solution is not free, but
it is far more economical, even in the US, than sending billions of
dollars overseas for foreign oil. Moreover, the global economics of
electrification and the Better Place solution is sound, since there are
two driving market forces at work today, rising oil prices and the
declining cost of batteries. That is why Better Place has raised $700M
from private investors, including some of the world's largest banks
such as HSBC and Morgan Stanley.
Our commercial networks in Israel and Denmark are slated to open at
the end of this year, and our network in Australia will get underway in
2012. At the same time, the Chinese government is taking aggressive
action to become the capital of the electric car industry, and
government and industry there are increasingly embracing the battery
switch model. Recently, we announced an agreement with China Southern
Grid, one of the world's largest utilities, to collaborate on EV
charging and battery switching technology, starting with the
metropolitan area of Guangzhou, the third largest city in China.
With our first global headquarters in Silicon Valley, we are
actively engaged in leading EV markets in North America (California,
Hawaii, Toronto) to pilot and scale EV charging networks. You may want
to speak with your colleague from Hawaii, Senator Daniel Inouye, who
was present last month as we inaugurated a demonstration charging
network in his state. Next year Better Place plans to launch a public-
private partnership program in the San Francisco Bay Area that will
deploy a regional corridor of battery switch stations to serve a fleet
of sixty zero emission taxicabs.
Witnesses at the ENR hearing appeared to discount the applicability
of the model beyond small countries; however, the fact of the matter is
that there is no way to offer unlimited drive in an all-electric car
along vast distances without switchable batteries. We have had the
pleasure of hosting several of your Senate colleagues at our Global
Visitor Center in Israel, as well as former Governor Tim Pawlenty, and
we invite you to do the same.
By visiting our home page at http://www.betterplace.com you can see
a short video explaining our solution and showing our battery-switch
system, called ``Drive * Switch * Go.''
Once again, thank you for your interest in EVs in general and the
battery switch model in particular. We hope these clarifications are
useful to you, and we would welcome the opportunity to answer any
questions that you or your staff may have about Better Place.
Sincerely,
Mike Granoff,
Head of Oil Independence Policies.
______
Statement of Kyle Pistor, Vice President, Government Relations,
National Electrical Manufacturers Association
Chairman Bingaman and Ranking Member Murkowski and Members of the
Committee, the National Electrical Manufacturers Association thanks you
for allowing us the opportunity to provide testimony as the Committee
considers S. 948, the Promoting Electric Vehicles Act of 2011,
introduced by Senators Merkley and Alexander.
NEMA is the trade association of choice for the electrical
manufacturing industry. Founded in 1926 and headquartered near
Washington, D.C., its approximately 450 member companies manufacture
products used in the generation, transmission and distribution,
control, and end-use of electricity. My comments are submitted on
behalf of the member companies of the NEMA Electric Vehicle Supply
Equipment and Systems (EVSES) Section which manufacture products or
assemblies installed for the purpose of safely delivering and managing
electrical energy between an electric vehicle and an electrical source.
NEMA is committed to the integration of EVs into our transportation
economy. We applaud the leadership demonstrated by Senator Merkley and
Senator Alexander in crafting a bill that takes a major step forward in
preparing our infrastructure for the deployment of electric vehicles.
Rapid deployment of electric vehicles requires robust market
penetration of charging infrastructure--at home, at the office, and on
the road, from coast to coast.
EVSES put the consumer in control of their recharging needs. With
various payment methods, voluntary interaction with the electric grid,
and the ability to charge the vehicle when power is at its cheapest,
EVSES makes owning and operating an electric vehicle cost-effective,
safe, and convenient.
NEMA supports many provisions in S. 948. Investment in deployment
programs will help to identify the challenges facing EV adoption and
best practices for overcoming these challenges. When shared with other
communities across the country, our national approach to incorporation
of EV and EVSE will be much more informed. NEMA also supports programs
designed to assist both the federal government and private sector in
upgrading their fleets to electric vehicles. Fleets often lead the way
in adopting new technologies and in this case, have the most to gain in
terms of energy savings. Reducing barriers to adoption is important.
We recognize that in addition to this Committee, other committees
of jurisdiction will have an important role to play a successful
legislative strategy, and we hope this Committee will work closely with
them. NEMA supports a multi-year extension and expansion of the Section
30C Alternative Fuel Vehicle Refueling Property tax credit, currently
set to expire in 2011.
Because safety is paramount, NEMA believes this credit should
expressly allow all necessary electrical equipment, infrastructure, and
installation costs that are necessary to deliver power to charge the
electric vehicle. Further, NEMA is committed to the proposition that
installation of EVSES and related equipment be done in compliance with
the National Electrical Code.
Because the rollout of EVs requires a robust infrastructure
strategy, we are pleased to offer our support of these provisions in
the Promoting Electric Vehicles Act.
Thank you for the opportunity to provide this testimony.
______
Statement of Shane Karr, Vice President, Federal Government Affairs,
the Alliance of Automobile Manufacturers
The Alliance of Automobile Manufacturers (Alliance) appreciates the
opportunity to express our views on S. 734, the Advanced Vehicle
Technology Act of 2011, and S. 948, the Promoting Electric Vehicles Act
of 2011. The Alliance is a trade association of twelve car and light
truck manufacturers including BMW Group, Chrysler Group LLC, Ford Motor
Company, General Motors Company, Jaguar Land Rover, Mazda, Mercedes-
Benz, Mitsubishi Motors, Porsche Cars, Toyota Motors, Volkswagen Group
and Volvo Cars. Auto manufacturing is a cornerstone of the U.S.
economy, supporting 8 million private-sector jobs, $500 billion in
annual compensation, and $70 billion in personal income tax revenues.
Together, Alliance members account for nearly 80 percent of annual
motor vehicle sales in the U.S.
We commend the sponsors of S.734 and S.948 for their leadership in
promoting the successful deployment of advanced technology vehicles.
Automakers are fully engaged in development of vehicles and advanced
technologies to help reduce gasoline consumption and emissions,
including greenhouse gas (GHG) emissions. There is no silver bullet or
single technology that will solve this nation's energy and
environmental challenges. Meeting the diverse and complex requirements
of the transportation sector will only be possible through a portfolio
of advanced powertrain technologies. We'd like to take this opportunity
to provide general feedback on both S.734 and S.948.
s. 734: advanced vehicle technology act of 2011
Even in the face of the worst economic circumstances in decades,
automobile manufacturers have worked hard to maintain our research and
development efforts on a broad portfolio of advanced vehicle
technologies. We are pleased that S. 734 recognizes the critical
importance of ongoing research to develop and commercialize next
generation technologies. As you know, the Department of Energy's
Vehicle Technologies Program, enables the Department to partner with
automobile and truck makers, suppliers, academia and the national labs
to carry out a broad array of advanced technology vehicle and component
part research and development programs. S. 734 reauthorizes and updates
the program, emphasizing the need and opportunity for automakers and
suppliers to partner with DOE to develop and implement technologies for
more fuel efficient vehicles. The research, development, deployment,
and commercial applications projects promoted by this legislation will
help accelerate the production of the next generation of vehicle
technologies, which in turn will help reduce our nation's dependence of
foreign oil and cut greenhouse gas emissions. The Alliance appreciates
Senator Stabenow's efforts to promote jobs in the auto sector and speed
the production of advanced vehicle technologies.
s. 948: promoting electric vehicles act of 2011
We agree with the vision of the bill's authors that strong federal
involvement is needed to help make communities across the nation ready
for greater deployment of electric drive vehicles. Achieving widespread
acceptance of these technologies will require aligning regulatory
efforts; developing a supporting infrastructure; providing research and
development; providing incentives for consumer adoption; and removing
other market barriers. S. 948 includes provisions that contribute to
progress on many of these fronts.
As an industry, however, we have concerns about an approach that
would limit investments to a handful of communities, particularly at
such an early stage of electric vehicle deployment. Attempts to
prejudge the market bring tremendous risks, and the problem is
compounded by making just a few large bets, particularly so early in
the process. Using the grant program to ``seed'' activities in as broad
a number of communities as possible is a more appropriate and equitable
solution for the American public--avoiding limitations on automakers'
potential customer base for these vehicles and maximizing the chances
of success for public investments overall--even if this means that any
individual deployment community would receive less total funding.
In addition, electric drive vehicles need to be developed in the
broadest possible ways--with hybrid, battery electric, plug-in hybrid,
and fuel cell vehicles offering unique benefits in different vehicle
segments. For this reason, we believe this legislation should allow
manufacturers, fuel providers, and communities the flexibility to
invest in multiple electric drive pathways, including fuel cell
electric vehicle and related hydrogen infrastructure, which are not
currently included in S. 948.
Finally, for any technology to be successful it must be consumer
driven, and a national program that helps the consumer with the most
pressing need, residential charging, offers the best opportunity for
sustainable growth and deployment of electric drive vehicles. Business
models must be developed that will allow the private sector to deploy
charging infrastructure in the full range of residential situations
including high rise, garden apartments, town houses. A range of
innovative solutions to address the challenges facing both residential
and workplace charging should be funded and we believe the most
efficient solution is to build on the Department of Energy's existing
programs.
Automakers are committed to advancing electric mobility. Our member
companies have already announced plans to launch plug-in hybrid,
extended range hybrid, battery electric, and fuel-cell vehicles in the
coming model years, and are hard at work developing the next generation
of electric drive vehicles that will follow. We look forward to working
with the Committee, Senator Merkley, and Senator Alexander to address
the infrastructure and consumer acceptance issues that will be so
important to the ultimate success of these vehicles, and their
contribution to our national goals.
conclusion
S. 734 and S. 948 highlight the role advanced technology
powertrains will play in enhancing energy security and reducing GHG
emissions. Automakers are investing and will continue to invest in
these technologies. Their success will depend on consumer acceptance,
affordability, and an infrastructure to support these vehicles.
We also want to remind and encourage the Members of the Committee
to support an approach to vehicle fuel economy requirements that
results in a single, national fuel economy standard--one that
recognizes and balances the challenges inherent in bringing these
technologies into the marketplace, understanding and effectively
accounting for the technological feasibility, safety, and economic
practicability, including impact on U.S. jobs. Automakers are currently
working constructively with the Environmental Protection Agency, the
National Highway Traffic Safety Administration and the California Air
Resources Board on a single, national program for model years (MY)
2017-2025. This is a difficult process involving significant
assumptions and uncertainties. It is imperative that the necessary
analyses and studies be completed and fully evaluated prior to these
standards being set. This will help ensure that a single, national
program for fuel economy and GHG emission standards exists and that it
continues to provide clarity and certainty, without pricing consumers
out of the market or preventing them from choosing from a broad range
of vehicles and technologies that can meet their diverse needs.
The Alliance looks forward to working with the sponsors of these
bills and the members of this Committee. Thank you for considering our
views.
______
Statement of the National Propane Gas Association
In the past several Congresses, numerous pieces of legislation were
introduced that would have incentivized the development, production and
use of various alternative fuel vehicles, notably vehicles that operate
on compressed natural gas (CNG), biofuels, ethanol, hydrogen and
electricity. Unfortunately, in many cases this legislation neglected to
also support propane autogas as a vehicle fuel and propane autogas
vehicle alternatives. This makes no sense, considering that propane
autogas is also defined in law as a clean alternative fuel.
The National Propane Gas Association is concerned that legislation
such as the Advanced Vehicle Technology Act of 2011, while well-
intentioned, falls short because it would fund Department of Energy
(DOE) research and development and commercial application projects for
hybrid, electric, hydrogen, and compressed natural gas vehicles and
related technologies, but leaves out equally useful and relevant
propane autogas vehicle alternatives. Passing legislation that
incentivizes only one, or a select few, fuels places the Congress in
the position of ``picking winners'' among alternative transportation
fuels. Alternative fuel choices should be made by the marketplace, by
the companies, fleets and consumers across the country who are tasked
with making individual decisions about which alternative fuels and
vehicles suit their needs best. The government should not intercede in
this process.
At the end of the day, the propane industry is seeking parity in
government treatment of alternative fuels. In fact, we believe that,
given a level playing field, propane autogas and autogas vehicles can
play a lead role in addressing many of the stated objectives outlined
in the Advanced Vehicle Technology Act of 2011, most notably improving
United States-based vehicle technologies that reduce our dependence on
petroleum based fuel, improving emissions, and improving consumer
choice of vehicle technologies. Propane autogas has everything going
for it except inclusion in this legislation:
Propane autogas is a clean American fuel.--98.7% of U.S.
propane supply is produced domestically, the balance coming
largely from Canadian imports. 66% of propane supply is derived
from natural gas production. This compares very favorably to
the current U.S. transportation sector which is 95% reliant on
petroleum, 60% of which comes from overseas. Even better news
is that U.S. propane production from natural gas is expected to
increase rapidly between 2010 and 2020 (See Appendix).
Propane autogas vehicles have a positive emissions reduction
profile.--Propane autogas vehicles are 19% lower in CO2
emissions than gasoline powered vehicles. Propane autogas
vehicles also produce significantly lower particulate matter,
carbon monoxide, nitrogen oxide and hydrocarbon emissions than
gasoline or diesel vehicles.
Propane supply is abundant.--In 2010 the North American
market (U.S and Canada) was a net exporter of propane. This
trend is likely to continue as shale gas, and natural gas
liquids production in conjunction with shale gas, increase.
Propane autogas vehicles are here now.--Over the past
several years, more and mcommercial, state and local government
fleets have been transitioning to propane autogas as a cost-
effective, environmentally sensitive domestic fuel.
Propane autogas is easily the most accessible alternative
transportation fuel currently available in the marketplace and is the
most popular alternative transportation fuel worldwide. Recognizing
this market, Ford and General Motors are now producing propane autogas
vehicle platforms and many smaller companies are now converting
existing vehicles to run on propane autogas. With gasoline and diesel
prices rising fast and our country's continued reliance on foreign oil
it would be a mistake for the government to limit consumer choice in
the alternative fuel vehicle marketplace by promoting one or more
alternative fuels to the detriment of others.
In sum, propane autogas is a clean, domestic and abundant fuel that
is already displacing imported petroleum products in the American
marketplace. The propane industry conceptually supports the goals of
the Advanced Vehicle Technology Act of 2011. However, we strongly urge
the Committee, when considering this legislation, to abide by the
principle of fuel neutrality by including an equitable ``all of the
above'' approach that includes propane autogas opportunities to federal
alternative fuel vehicle programs.
As an industry, we the look forward to working with the Energy and
Natural Resources Committee, as well as our partners in the broader
alternative fuel industry to craft smart equitable alternative fuel
transportation solutions for the American public.
appendix.--npga statement on the advanced vehicle technology act (s.
734)
Propane is a Domestically Produced Energy Source.
Domestic Propane Supply is Expected to Grow Over Time
Sources of U.S. Odorized Propane Supply
In 2010:
Domestic refinery and natural gas plant production of
propane accounted for 98.7 percent of total U.S. consumer grade
(odorized) propane supply, with net propane imports accounting
for the remaining 1.3 percent. Most of the net imports came
from Canada, with the remainder imported via LPG tanker ship
from a variety of international sources.\1\ Hence, more than
99% percent of U.S. odorized propane supply was produced in
North America.
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\1\ In both 2009 and 2010, excluding Canadian imports, the U.S. was
a net propane exporter to the rest of the world
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From a resource perspective, about 78.5 percent of the
odorized propane consumed in the U.S. was sourced from
hydrocarbon resources (crude oil and natural gas liquids)
produced in the U.S. An additional 5.5 percent was sourced from
hydrocarbon resources (crude oil and propane from natural gas
liquids) produced in Canada. Hence, about 84 percent of the
odorized propane consumed in the U.S. in 2010 was produced from
North American hydrocarbon resources.
--This percentage has been increasing for the last several years.
In 2007, about 75 percent of odorized propane consumed in
the U.S. was produced from North American hydrocarbon
resources.
66 percent of the odorized propane consumed in the U.S. was
produced as a co-product of natural gas production, and
separated from the natural gas stream at gas processing
fractionation plants, along with ethane, butane, and other LPG
products. Gas processing plants separate the natural gas
liquids--ethane, propane, and butane--from wet gas that comes
from producing gas and oil wells.
32 percent of the odorized propane consumed in the U.S. was
produced by U.S. crude oil refineries alongside the production
of gasoline and distillate fuel oil.\2\
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\2\ Refineries produce both propane (60%) and propylene (40%).
Propane and propylene are both widely used in the chemical feedstock
market. Only a very small amount of propylene is sold into the consumer
market for niche uses such as welding; the vast majority of propylene
is used as chemical feedstock. Natural gas plants produce almost
entirely propane, with very little propylene.
--We estimate that 13 percent of the odorized propane consumed in
the U.S was produced in U.S. refineries from oil produced
in the U.S, about 5 percent of the odorized propane
consumed in the U.S. was produced in U.S. refineries from
crude oil imported from Canada, and one percent from crude
oil imported from Mexico.
propane supply outlook
The propane supply outlook is very positive. The percentage of
odorized propane produced from North American hydrocarbons has been
increasing for the last few years, from 75 percent in 2007 to 84
percent in 2010. This trend is expected to continue as recent changes
in domestic natural gas supply outlook are expected to increase the
volume of propane produced from natural gas processing facilities.
The propane supply outlook is primarily dependent on North
American natural gas and crude oil production trends. More than
84 percent of the odorized propane consumed in the U.S. is
produced from natural gas and crude oil produced in North
America.
The U.S. EIA is projecting domestic crude oil production to
increase steadily over the next 10 years, increasing by more
than 10 percent between 2010 and 2020.
ICF and most other industry experts are projecting U.S.
natural gas production to increase substantially in the next 10
years. The U.S. EIA is projecting total dry gas production to
increase by 10 percent between 2010 and 2020, with shale gas
production increasing by 71 percent. ICF is projecting higher
growth with U.S. natural gas production to increase by about 30
percent between 2010 and 2020. The growth in natural gas
production is expected to result in significant growth in
liquids production.
--U.S. reserves of natural gas liquids have been increasing
steadily since 2003, with a total increase of about 37
percent from 2003 through 2009. Growth in 2009 alone
exceeded nine percent.
Most of the growth in natural gas production will come from
the new shale gas resource base. Much of the shale gas resource
base is ``wet'' gas with a high proportion of natural gas
liquids.
--ICF estimates that shale gas resources that would be economically
producible at $5.00 per Mcf (slightly above today's natural
gas prices) exceed 800 TCF, and include more than 25
billion barrels of natural gas liquids. These new resources
are roughly equivalent to the total level of existing
proven reserves for U.S. natural gas liquids production,
and are expected to result in steady growth in natural gas
liquids production as these resources are developed.
On a $/Btu basis, the value of natural gas liquids currently
is well above the value of the natural gas itself. Given recent
changes in natural gas supply outlook, this disparity is
expected to continue.
--As a result, the economics of natural gas exploration and
development have shifted in favor of ``wet'' gas with a
higher percentage of liquids--and a higher percentage of
propane.
Production of propane from natural gas is expected to
increase rapidly between 2010 and 2020, leading to a
substantial increase in North American propane supplies
exported to international markets if domestic demand does not
increase.
impact of potential new consumer propane demand on propane markets
Since 2004, domestic production of propane and propylene has
been relatively stable, while total demand has been falling.
--According to API, consumption of consumer grade propane has
fallen by about 23 percent from peak demand levels in 2000.
--Demand for propane/propylene used as a petrochemical feedstock
has varied from year-to-year around the long term average.
Since 2004, propane/propylene imports have been declining,
while propane/propylene exports have been increasing.
--In 2009 and 2010, excluding Canadian imports, the U.S. was a net
exporter of propane/propylene.
These trends are expected to continue in the future.
--Continuing improvements in end-use propane efficiency due to
higher appliance energy standards and improved building
efficiency codes are likely to offset most if not all
growth in consumer propane demand in the next few years.
--Propane production from natural gas is expected to grow steadily
as natural gas production increases, providing additional
propane supply for both the petrochemical and consumer
propane markets.
The existing propane supply and distribution infrastructure
was designed for a significantly larger market than exists
today, and remains generally sufficient to support significant
growth in propane demand.
--Regional changes in demand and supply patterns are likely to
require new infrastructure investment regardless of
potential growth in demand.
Despite the decline in U.S. demand, propane/propylene prices
have remained more closely linked to the international oil
price and propane prices than to natural gas prices. This price
relationship is likely to continue regardless of foreseeable
increases or decreases in domestic demand for propane/
propylene. However, as propane supply increases, propane prices
are likely to decline somewhat relative to gasoline and diesel
fuel prices.