[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]


            THE FUTURE OF TRANSPORTATION FUELS AND VEHICLES

=======================================================================

                                HEARING

                               BEFORE THE

                      SUBCOMMITTEE ON ENVIRONMENT

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 7, 2018

                               __________

                           Serial No. 115-106
                           
                           
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                    COMMITTEE ON ENERGY AND COMMERCE

                          GREG WALDEN, Oregon
                                 Chairman
JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
  Vice Chairman                        Ranking Member
FRED UPTON, Michigan                 BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas            ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
STEVE SCALISE, Louisiana             DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio                MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington   JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi            G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey            DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky              KATHY CASTOR, Florida
PETE OLSON, Texas                    JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia     JERRY McNERNEY, California
ADAM KINZINGER, Illinois             PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia         BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida            PAUL TONKO, New York
BILL JOHNSON, Ohio                   YVETTE D. CLARKE, New York
BILLY LONG, Missouri                 DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana               KURT SCHRADER, Oregon
BILL FLORES, Texas                   JOSEPH P. KENNEDY, III, 
SUSAN W. BROOKS, Indiana                 Massachusetts
MARKWAYNE MULLIN, Oklahoma           TONY CARDENAS, CaliforniaL RUIZ, 
RICHARD HUDSON, North Carolina           California
CHRIS COLLINS, New York              SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota           DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina


                      Subcommittee on Environment

                         JOHN SHIMKUS, Illinois
                                 Chairman
DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
  Vice Chairman                        Ranking Member
JOE BARTON, Texas                    RAUL RUIZ, California
TIM MURPHY, Pennsylvania             SCOTT H. PETERS, California
MARSHA BLACKBURN, Tennessee          GENE GREEN, Texas
GREGG HARPER, Mississippi            DIANA DeGETTE, Colorado
PETE OLSON, Texas                    JERRY McNERNEY, California
BILL JOHNSON, Ohio                   TONY CARDENAS, California
BILL FLORES, Texas                   DEBBIE DINGELL, Michigan
RICHARD HUDSON, North Carolina       DORIS O. MATSUI, California
KEVIN CRAMER, North Dakota           FRANK PALLONE, Jr., New Jersey (ex 
TIM WALBERG, Michigan                    officio)
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     1
    Prepared statement...........................................     3
Hon. Paul Tonko, a Representative in Congress from the State of 
  New York, opening statement....................................     3
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     5
    Prepared statement...........................................     6
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     7

                               Witnesses

John Maples, Senior Transportation Analyst, U.S. Energy 
  Information Administration.....................................     9
    Prepared statement...........................................    11
    Answers to submitted questions...............................   102
John Farrell, Laboratory Program Manager, Vehicles Technologies, 
  National Renewable Energy Laboratory...........................    25
    Prepared statement...........................................    27
    Answers to submitted questions...............................   105
Joshua Linn, Senior Fellow, Resources for the Future.............    36
    Prepared statement...........................................    38
    Answers to submitted questions...............................   110
Jeremy Martin, Senior Scientist and Fuels Lead, Clean Vehicles 
  Program, Union of Concerned Scientists.........................    36
    Prepared statement...........................................    53
    Answers to submitted questions...............................   113
John Eichberger, Executive Director, Fuels Institute.............    57
    Prepared statement...........................................    60
    Answers to submitted questions...............................   116

                           Submitted Material

Statement of VNG, submitted by Mr. Shimkus.......................    96
Report entitled, ``Fueling a Clean Transportation Future: Smart 
  Fuel Choices for a Warming World,'' Union of Concerned 
  Scientists, February 2016 \1\

----------
\1\ The information can be found at: https://docs.house.gov/
  meetings/if/if18/20180307/106958/hhrg-115-if18-20180307-
  sd090.pdf.

 
            THE FUTURE OF TRANSPORTATION FUELS AND VEHICLES

                              ----------                              


                        WEDNESDAY, MARCH 7, 2018

                  House of Representatives,
                       Subcommittee on Environment,
                           Committee on Energy and Commerce
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:15 a.m., in 
room 2322 Rayburn House Office Building, Hon. John Shimkus 
(chairman of the subcommittee) presiding.
    Members present: Representatives Shimkus, McKinley, Barton, 
Harper, Johnson, Flores, Hudson, Walberg, Carter, Duncan, 
Walden (ex officio), Tonko, Peters, DeGette, McNerney, Dingell, 
and Pallone (ex officio).
    Also present: Representative Loebsack.
    Staff present: Mike Bloomquist, Deputy Staff Director; 
Daniel Butler, Staff Assistant; Kelly Collins, Staff Assistant; 
Adam Fromm, Director of Outreach and Coalitions; Ben Lieberman, 
Senior Counsel, Energy; Ryan Long, Deputy Staff Director; Mary 
Martin, Chief Counsel, Energy & Environment; Brandon Mooney, 
Deputy Chief Energy Counsel Advisor; Annelise Rickert, Counsel, 
Energy; Dan Schneider, Press Secretary; Jason Stanek, Senior 
Counsel, Energy; Hamlin Wade, Special Advisor, External 
Affairs; Everett Winnick, Director of Information Technology; 
Jeff Carroll, Minority Staff Director; Jean Fruci, Minority 
Energy and Environment Policy Advisor; Rick Kessler, Minority 
Senior Advisor and Staff Director, Energy and Environment; 
Alexander Ratner, Minority Policy Analyst; Andrew Souvall, 
Minority Director of Communications, Outreach and Member 
Services; and C.J. Young, Minority Press Secretary.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. The subcommittee will come to order and the 
chair recognizes himself for 5 minutes for an opening 
statement.
    We have experienced very gradual and incremental change in 
the transportation fuels and vehicles over the last several 
decades, but there are signs that the pace of change will 
accelerate in the years ahead. In the not-too-distant future we 
may see cars in showrooms and fuel choices at retail stations 
that are noticeably different than what is available today. The 
purpose of this hearing is to provide an overview of the 
ongoing transition and learn more about what it all means for 
the American driving public.
    I welcome our distinguished panel of experts. While 
nobody's crystal ball is perfect, the individuals and 
organizations represented here have done some of the best 
thinking about the future of personal transportation and I 
thank them for participating in this hearing.
    Many factors are contributing to this evolving marketplace 
in transportation. One driver, no pun intended, is government 
policy. I should stress that this is not a hearing about the 
Renewable Fuels Standard, per se, or the Corporate Average Fuel 
Economy standards, or incentives for electrical vehicles. 
However, these and other federal policies are significant 
contributors to the changing fuels and vehicle marketplace and 
thus are an important part of the overall discussion.
    For example, the Department of Energy is working with other 
agencies and national labs on its Co-Optima program to achieve 
breakthroughs in high octane fuels used in high compression 
engines. The program's goal is to cost effectively boost 
efficiency from the internal combustion engines and in so doing 
help reach a possible and possibly exceed the targets in both 
the RFS and CAFE. I look forward to hearing from Dr. Farrell on 
this and other research for which the National Renewable Energy 
Laboratory is a contributor.
    But policy-driven change is only part of the picture. We 
are also seeing technological advances, whether it is getting 
EVs closer to the point where they make economic sense for more 
people, further progress on natural gas-powered vehicles that 
can take advantage of our domestic natural gas abundance, 
continued improvement in fuel cells, or other avenues of 
research. And for every alternative vehicle breakthrough, there 
are alternative fueling infrastructure challenges for which 
solutions are being developed.
    I might add that today's discussion is not just about 
alternative fuels and vehicles. Research is also underway to 
improve the efficiency of the internal combustion engine and 
help it remain a cost-effective choice in the decades ahead. I 
mentioned Co-Optima and its integrated approach to high octane 
fuels and internal combustion engines that are optimized for 
them, but other research is also achieving breakthroughs in 
getting more efficiency out of the conventional technologies.
    I should also note that advances in autonomous vehicles, 
including passage of the SELF DRIVE Act, have been the subject 
of a lot of good work by the Digital Commerce and Consumer 
Protection Subcommittee under Chairman Latta. Autonomous 
vehicles will also have an effect on the choice of fuels and 
vehicles that will be used in the future. It is all related, so 
we need to be mindful of everything going on in transportation 
research.
    Of course, many factors are behind these transitions. 
Environmental considerations are certainly a factor, energy 
security is also a factor, but we can't lose sight of the most 
important thing and that is the impact on the consumer. We want 
to make owning, operating, and using a vehicle as affordable as 
possible for the American public and I hope this research helps 
in that regard.
    In any event, change is happening in the transportation 
sector and I hope that today's hearing gives us all a better 
understanding of it. With that, my time, I am done with my 
opening statement. Anyone who wants a minute or a half on 
either side, seeing none, I yield back my time and now 
recognize the ranking member of the subcommittee, Mr. Tonko, 
for 5 minutes.
    [The prepared statement of Mr. Shimkus follows.]

                Prepared statement of Hon. John Shimkus

    We have experienced very gradual and incremental change in 
transportation fuels and vehicles over the last several 
decades, but there are signs that the pace of change will 
accelerate in the years ahead. In the not-too-distant future we 
may see cars in showrooms and fuel choices at retail stations 
that are noticeably different than what is available today. The 
purpose of this hearing is to provide an overview of this 
ongoing transition and learn more about what it all means for 
the American driving public.
    I welcome our distinguished panel of experts. While 
nobody's crystal ball is perfect, the individuals and 
organizations represented here have done some of the best 
thinking about the future of personal transportation, and I 
thank them for their participation at this hearing.
    Many factors are contributing to this evolving marketplace 
in transportation. One driver (no pun intended) is government 
policy. I should stress that this is not a hearing about the 
Renewable Fuel Standard (RFS) per se, or Corporate Average Fuel 
Economy (CAFE) standards, or incentives for electric vehicles. 
However, these and other federal policies are significant 
contributors to the changing fuels and vehicles marketplace and 
thus are an important part of the overall discussion.
    For example, the Department of Energy is working with other 
agencies and national labs on its Co-Optima program to achieve 
breakthroughs in high octane fuels used in high compression 
engines. The program's goal is to cost-effectively boost 
efficiency from internal combustion engines and in so doing 
help reach and possibly exceed the targets in both the RFS and 
CAFE. I look forward to hearing from Dr. Farrell on this and 
other research for which the National Renewable Energy 
Laboratory is a contributor.
    But policy-driven change is only part of the picture. We 
are also seeing technological advances, whether it is getting 
EVs closer to the point where they make economic sense for more 
people, further progress on natural gas-powered vehicles that 
can take advantage of our domestic natural gas abundance, 
continued improvements in fuel cells, or other avenues of 
research. And for every alternative vehicle breakthrough, there 
are alternative fueling infrastructure challenges for which 
solutions are being developed.
    I might add that today's discussion is not just about 
alternative fuels and vehicles. Research is also underway to 
improve the efficiency of the internal combustion engine and 
help it remain a cost-effective choice in the decades ahead. I 
mentioned Co-Optima and its integrated approach to higher 
octane fuels and internal combustion engines that are optimized 
for them, but other research is also achieving breakthroughs in 
getting more efficiency out of this conventional technology.
    I should also note that advances in autonomous vehicles, 
including passage of the SELF DRIVE Act, have been the subject 
of a lot of good work by the Digital Commerce and Consumer 
Protection Subcommittee and Chairman Latta. Autonomous vehicles 
will also have an effect on the choice of fuels and vehicles 
that will be used in the future. It's all related, so we need 
to be mindful of everything going on in transportation 
research.
    Of course, many factors are behind these transitions. 
Environmental considerations are certainly a factor, energy 
security is also a factor, but we can't lose sight of the most 
important thing and that is the impact on the consumer. We want 
to make owning, operating, and using a vehicle as affordable as 
possible for the American people, and I hope that this research 
helps in that regard.
    In any event, change is happening in the transportation 
sector, and I hope that today's hearing gives us all a better 
understanding of it. Thank you.

   OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Tonko. Thank you, Mr. Chair. I want to thank you for 
holding today's very important hearing, addressing the future 
of our Nation's transportation fuels and vehicles. And thank 
you to all our witnesses for being here, Mr. Chair. I want to 
commend you on assembling an expert panel that can inform 
members of ongoing trends and impending changes to our Nation's 
transportation sector.
    It is beyond a doubt that our transportation sector is 
changing, that the mix of vehicles and fuels will be 
considerably different in 2050 than they are today. It will 
almost certainly be more diverse and cleaner. There are many 
benefits to reducing dependence on petroleum from improving 
national energy security to protecting consumers against the 
price volatility of the global oil market.
    But the transportation sector is also key to addressing 
climate change. Vehicle miles traveled in the U.S. has 
continued to grow since the Great Recession and greenhouse gas 
emissions from transportation now exceed emissions from our 
power sector. It is clear that effective climate action needs 
to consider how to reduce transportation emissions.
    Reducing emissions in the power sector has occurred much 
more quickly and can be done more cheaply, which is why 
electrification of transportation has become a priority for 
achieving emissions reduction goals. In recent years, 
improvements in electric vehicles have been impressive, 
including reductions in battery cost, increased range and 
greater changing infrastructure options and, increasingly, 
utilities are embracing the tremendous opportunity for increase 
on electricity demand. We can imagine an exciting future where 
vehicles offer the potential to balance loads on the grid as 
energy storage resources.
    While impediments still exist for further EV deployment, we 
are trending in the right direction. Despite the excitement 
around electric vehicles we need to acknowledge that this 
transition is not going to happen overnight. The internal 
combustion engine will continue to make up a significant 
portion of our Nation's vehicle fleet in the coming decades.
    We should also acknowledge that electrification will be 
more difficult to penetrate certain liquid fuel markets such as 
aviation, shipping, and potentially heavy duty vehicles, but we 
must make drastic reductions in greenhouse gas emissions 
immediately. Therefore, we need a multi-track approach backed 
by strong federal policies. This means continuing to make 
significant R&D investments and provide tax incentives for 
electric vehicles as well as supporting the growth of an 
advanced biofuels market.
    Alternative fuels such as biodiesel and compressed natural 
gas can be cleaner options and displace dirtier fuels for heavy 
duty vehicles which is important to not only reduce greenhouse 
gas emissions, but also other hazardous air pollutants. And 
regardless of the fuel choice, we should ensure that vehicles 
are using these fuels as efficiently as possible.
    Undoubtedly, CAFE standards played a role in development of 
technologies to improve fuel economy. Unfortunately, EPA 
Administrator Pruitt is reconsidering the greenhouse gas 
standards for model year 2022 through 2025 light duty vehicles 
and questioning whether the Agency's initial assumptions about 
technology development and costs from 2012 are still accurate 
and reasonable.
    It is clear from the technical assessment as well as the 
robust and conclusive public record that these standards should 
be maintained. They are feasible, can be met at lower cost than 
originally estimated, and can be achieved through a number of 
different technology pathways, many of which are already 
commercially available. In addition to saving consumers at the 
pump, EPA projects that the model year 2022-2025 standards will 
reduce emissions by more than 230 million metric tons by 2050 
and nearly 540 million metric tons over the lifetime of model 
year 2022 to 2025 vehicles.
    Similarly, we know the Administration is considering 
whether or not to support changes to the Renewable Fuel 
Standard. Like CAFE, this is an area that this subcommittee has 
examined and I would caution against unilateral action by the 
Administration which may not benefit consumers, put us on the 
path towards reducing transportation emissions, or increase 
domestic energy security. These federal policies along with tax 
incentives, R&D investments, and state policies are important 
pieces to shaping the future of transportation in our country.
    Ultimately, other countries will continue to embrace 
electrification, low emissions liquid fuels, and fuel economy. 
They realize that their air quality depends on these 
developments and they recognize the threat of climate change as 
real and requires major commitments to reduce emissions from 
all sectors. The United States should continue to lead and 
innovate and ensure that our manufacturers, our automakers, and 
our refineries are able to deliver cutting edge vehicles and 
fuels for the United States and markets around the world.
    With that Mr. Chair, I yield back.
    Mr. Shimkus. The gentleman yields back his time. The Chair 
now recognizes the chairman of the full committee, Congressman 
Walden from Oregon, for 5 minutes.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Thank you, Mr. Chairman, appreciate it. 
Appreciate your leadership on this and so many other issues and 
I welcome our panelists here today.
    As we explore the emerging trends of motor vehicles and the 
fuels that they use, across several federal agencies and 
national labs and throughout the private sector research as you 
all know is underway to make driving cleaner, safer, and more 
efficient. Regardless of whether this work is the result of 
government mandates or market forces, it nonetheless is going 
on and change is coming to the fuels and vehicles marketplace.
    The purpose of this hearing is to get a better sense of 
this change and I welcome our witnesses as part of helping us 
better understand it. Today, we will hear about the 
environmental objectives, efficiency objectives, national 
security objectives, and other policies behind the evolving 
fuels and vehicles marketplace. But as we have this discussion, 
let us not forget the one thing that matters most and that is 
the interest of consumers.
    Family car, it is the second most expensive purchase after 
a house and the average price for a new vehicle has risen to 
more than $36,000, up nearly $600 just from a year ago 
according to Kelley Blue Book. Yes, that is the average price 
and it is quite a burden for households as well as millions of 
small business owners and farmers and ranchers who rely on 
their vehicles to make a living.
    Naturally, the car buying public wants these sticker prices 
to go down rather than continue going up, same is true for 
fuels. The average household uses about a thousand gallons per 
year which makes fill-ups a very significant part of the family 
budget. Struggling families and businesses would like to see 
breakthroughs to bring down the cost of gasoline or alternative 
fuels. It is important to recognize that if new fuels and 
vehicles do not deliver consumer benefits then they likely 
won't deliver any environmental or other benefits either.
    An auto dealer once told this subcommittee that even the 
most eco-friendly car won't do any good if it just sits in the 
showroom, and nobody I know has ever refuted that logic. Bottom 
line, the sources of alternative fuels in the marketplace 
relies heavily upon the ability to bring down the cost per mile 
traveled and the success of alternative vehicles relies on 
avoiding sticker shock.
    So the good news is, the breakthroughs in fuels and 
vehicles can be done in a way that benefits consumers while 
also achieving environmental and other objectives. As someone 
who owns and drives a hybrid on both coasts, I hope we can work 
together to a future that is cleaner, safer, and more 
efficient, and yes, perhaps even less expensive transportation 
modes. I welcome this discussion on how we get there. This 
committee is committed to this effort and my friend from 
Illinois is putting a lot of time into the fuels issue along 
with others and so we look forward to your testimony today.
    And with that, Mr. Chairman, unless anybody wants the 
remainder of my time, I would be happy to yield back so you can 
move along with the hearing.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    Today we are exploring the emerging trends in motor 
vehicles and the fuels they use. Across several Federal 
agencies and national labs and throughout the private sector, 
research is underway to make driving cleaner, safer, and more 
efficient. Regardless of whether this work is the result of 
government mandates or market forces, it is nonetheless going 
on and change is coming to the fuels and vehicles marketplace. 
The purpose of this hearing is to get a better sense of this 
change, and I welcome our witnesses who are a part of it.
    Today, we will hear about the environmental objectives, 
efficiency objectives, national security objectives, and other 
policy reasons behind the evolving fuels and vehicles 
marketplace. But as we have this discussion, let us not forget 
the one thing that matters most, and that is the interests of 
consumers.
    The family car is the second most expensive purchase after 
a house, and the average price for a new vehicle has risen to 
more than $36,000, up by nearly $600 from just a year ago, 
according to Kelley Blue Book. Yes, that is the average price, 
and it is quite a burden for households as well as the millions 
of small business owners and farmers and ranchers who rely on 
vehicles to make a living. Naturally, the car buying public 
wants to see sticker prices go down rather than continue going 
up.
    The same is true for fuels. The average household uses 
about a thousand gallons per year which makes fill-ups a very 
significant part of the family budget. Struggling families and 
businesses would like to see breakthroughs that bring down the 
cost of gasoline or alternative fuels.
    It's important to recognize that if new fuels and vehicles 
don't deliver consumer benefits, then they likely won't deliver 
any environmental or other benefits either. An auto dealer once 
told this subcommittee that even the most eco-friendly car 
won't do any good if it just sits in the showroom, and nobody I 
know has ever refuted that logic. Bottom line--the success of 
alternative fuels in the marketplace relies heavily upon their 
ability to bring down the cost per mile traveled, and the 
success of alternative vehicles relies on avoiding sticker 
shock.
    The good news is that the breakthroughs in fuels and 
vehicles can be done in a way that benefits consumers while 
also achieving environmental and other objectives. As someone 
who owns and drives a hybrid on both coasts, I hope we can look 
forward to a future of cleaner, safer, more efficient, and yes 
cheaper personal transportation, and I welcome this discussion 
on how we can get there.

    Mr. Shimkus. The gentleman yields back his time. The chair 
now recognizes the ranking member of the full committee, 
Congressman Pallone from New Jersey, for 5 minutes.

OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Chairman. This morning we will 
examine the future of transportation fuels and vehicles, a 
future that will be shaped by federal policy.
    While we have made significant progress in reducing 
emissions and improving fuel efficiency, I believe the Federal 
Government can and should do more. Last month, the EPA released 
the latest inventory of greenhouse gas emissions. For the first 
time, the transportation sector has edged out the electric 
power industry as the largest emitting sector. Transportation 
now accounts for 28.5 percent of our greenhouse gas emissions, 
with passenger vehicles contributing most of these emissions.
    While the total emissions from transportation are lower for 
2016 than for the peak year of 2005, the trend is still not 
good. Overall emissions from this sector increased between 2012 
and 2016. History has shown that real progress in fuel 
efficiency and emission reduction from vehicles is a direct 
result of government policies.
    CAFE standards and the emission control programs of the 
Clean Air Act have delivered great gains and the Renewable Fuel 
Standard program has provided us a reliable source of domestic 
fuel that has reduced both our dependence on petroleum and 
emissions from fuel combustion. Similarly, Federal tax 
incentives, research, procurement, and loan programs have 
helped spur the development and deployment of electric 
vehicles, battery technology, advanced biofuels, and other fuel 
and vehicle options.
    But we must do more. Oil prices may be affordable and 
supplies may be abundant right now, but that situation can 
change. Experience demonstrates that the adjustments of rising 
prices is painful for everyone, from individual vehicle owners 
to auto manufacturers and all the businesses in their supply 
chains. A diverse fuel supply combined with enhanced fuel 
efficiency provides an important buffer against rising prices.
    And if we do not do more to reduce transportation sector 
emissions, the effects of climate change are likely to 
accelerate and worsen. Moreover, vehicles are major purchases 
and reliable vehicles can remain on the road for up to 25 
years, so it may take many years to see substantial changes in 
fuel consumption or emission reductions without aggressive 
federal policies.
    And all of this has implications beyond our own borders. 
Two countries with the largest market potential, India and 
China, have signaled their intention to move beyond the 
internal combustion engine. Meanwhile, a number of European 
countries are reducing or phasing out their use. U.S. auto 
manufacturers need to remain at the forefront of this industry 
and that will only happen if they maintain a diverse fleet of 
vehicles with improved fuel efficiency and reduce emissions. 
When U.S. auto succeeds, the country's economy also succeeds.
    So let me say in closing that I am very concerned about the 
direction President Trump is taking on fuels and vehicle 
policies. Low fuel prices are already leading automakers and 
consumers to discount the importance of fuel economy as a 
consideration when making a vehicle purchase. The Trump 
administration's apparent intention to weaken the pending 
combined CAFE and greenhouse gas emission standards for light 
duty vehicles would take us in the wrong direction.
    Meanwhile, the Administration's proposal to rescind EPA's 
glider truck rule which closes a gaping loophole in freight 
truck emission standards has rightly united both truck 
manufacturers and environmentalists in opposition. We need to 
spur innovation and reward it. We need the transportation 
sector to be cleaner and more fuel efficient. However, 
technologies to improve fuel efficiency, reduce emissions, and 
diversify fuel supplies will not appear on the market without 
the technology push provided by strong federal policy.
    And rollbacks are, by definition, not a way to move 
forward. We can have cleaner, healthier air and vehicles that 
cost less to operate delivered by a globally competitive U.S. 
automobile industry if we stay the course.
     And I don't think anyone else wants my time, so I will 
yield back, Mr. Chairman. Thank you.
    Mr. Shimkus. The gentleman yields back his time. We now 
conclude with member opening statements. The Chair would like 
to remind members that pursuant to committee rules, all 
members' opening statements will be made part of the record.
    We want to thank all of our witnesses for being here today 
and taking the time to testify before the subcommittee. Today's 
witnesses will have the opportunity to give an opening 
statement. Your full statements are already submitted for the 
record and your opening statement is to summarize that document 
and then followed by a round of questions from the members who 
will be remaining here.
    Our witness panel for today's hearing will include Mr. John 
Maples, Senior Transportation Analyst, U.S. Energy Information 
Administration, thank you for being here; Dr. John Farrell, 
Laboratory Program Manager, Vehicles Technologies, National 
Renewable Energy Laboratory; Dr. Joshua Linn, Senior Fellow, 
Resources for the Future; Dr. Jeremy Martin, Senior Scientist 
and Fuels Lead, Clean Vehicles Program, Union of Concerned 
Scientists; and Mr. John Eichberger, Executive Director of the 
Fuels Institute.
    We appreciate you all being here today. We will now begin 
with Mr. Maples, and you are recognized for 5 minutes. Thanks 
for being here.

STATEMENTS OF JOHN MAPLES, SENIOR TRANSPORTATION ANALYST, U.S. 
  ENERGY INFORMATION ADMINISTRATION; JOHN FARRELL, LABORATORY 
  PROGRAM MANAGER, VEHICLES TECHNOLOGIES, NATIONAL RENEWABLE 
 ENERGY LABORATORY; JOSHUA LINN, SENIOR FELLOW, RESOURCES FOR 
  THE FUTURE; JEREMY MARTIN, SENIOR SCIENTIST AND FUELS LEAD, 
CLEAN VEHICLES PROGRAM, UNION OF CONCERNED SCIENTISTS; AND JOHN 
        EICHBERGER, EXECUTIVE DIRECTOR, FUELS INSTITUTE

                    STATEMENT OF JOHN MAPLES

    Mr. Maples. Thank you. Chairman Shimkus, Ranking Member 
Tonko, and members of the committee, I appreciate the 
opportunity to appear before you today. The Energy Information 
Administration is the statistical and analytical agency within 
the Department of Energy. By law, EIA's data, analyses, and 
projections are independent, so my comments should not be 
construed as representing those of Department of Energy or any 
other federal agency.
    My statement focuses on the Reference case of the EIA 
Annual Energy Outlook 2018 which presents projections for the 
U.S. energy system through 2050. The AEO 2018 Reference case is 
a business-as-usual, trend estimate using known technology and 
technological and demographic trends and with the assumption 
that current laws and regulations remain unchanged throughout 
the projection period. My oral statement will focus on light 
duty vehicles, passenger cars, and light trucks, which 
accounted for 55 percent of total transportation energy use in 
2017, the base year for the AEO 2018.
    The Reference case includes the CAFE and greenhouse gas 
emission standards as issued by NHTSA and EPA for multi-years' 
2017 through 2025, as well as the California Zero Emission 
Vehicle program adopted by nine additional states-- to see that 
map, see Figure 1 in my written statement--and existing tax 
credits for alternative and advanced vehicles and fuels.
    Total transportation energy consumption peaked in 2017 in 
the Reference case at 13.1 million barrels per day. With CAFE 
standards and advanced technologies, average new light duty 
vehicle economy rises from 33.4 mpg to 48.6 mpg by 2050. Total 
vehicle miles of travel grow 18 percent between 2017 and 2050, 
yet energy consumption decreases by 30 percent by 2042.
    Starting with vehicle sales, sales of conventional gasoline 
vehicles continue to dominate, but the share declines from 87 
percent today to 71 percent in 2050. Electrified vehicles 
including battery electric, plug-in hybrid electric, and full 
hybrid electric grow strongly, rising from 4 percent of new 
sales in 2017 to 19 percent in 2050. Battery-only electrics 
grow to 12 percent due to policies such as California's ZEV 
regulation, declining battery cost, and longer-ranged models.
    Hybrid electric sales rise to 5 percent from 3 percent, 
plug-in hybrid electrics from 1 percent to 2 percent, E85 flex-
fuel vehicles reach 7 percent by 2050, sales of diesel, natural 
gas, propane, and fuel cell vehicles are all at 2 percent or 
less in 2050.
    Now for fuel shares, while petroleum products remain 
dominant for light-duty vehicles to 2050, see Figure 5, 
gasoline with ethanol falls from 99.5 percent to 91 percent by 
2050. The E85 share rises from 0.1 percent to 1.5 percent, 
electricity usage grows to 4.7 percent, diesel to 2 percent, 
and natural gas is negligible.
    The key areas of uncertainty in the Reference case are fuel 
prices, the digital economy, consumer acceptance, and potential 
changes in policies. Higher or lower fuel prices can change the 
relative attractiveness of all vehicle types. In the High Oil 
Price case, the sales shares of conventional gasoline vehicles 
declines to about 62 percent in 2050 compared to 71 percent in 
the Reference case. In the Low Price case, the shares go up a 
couple of percent. In all cases, High and Low Oil Prices and 
the Reference case, fuel consumption decreases.
    On-demand ride-hailing is already affecting how consumers 
utilize personal vehicles and mass transit. At this point, the 
potential energy impact of autonomous vehicles is unclear and 
open to wide variation. Customer acceptance affects the future 
market success of vehicle types and alternative fuels. For 
example, cost and performance, alternative fuel prices, and the 
availability of refueling infrastructure are all going to have 
an impact.
    Finally, the future regulatory environment is uncertain. 
The EIA is currently working on Issues in Focus articles 
associated with the AEO2018 that will cover potential impacts 
on future energy demand. This analysis will likely be released 
in late spring. This concludes my statement and I will be happy 
to answer questions from the committee.
    [The prepared statement of Mr. Maples follows:]
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    Mr. Shimkus. Thank you very much. The gentleman yields back 
his time. The chair now recognizes Dr. John Farrell. You are 
recognized for 5 minutes. Thanks for being here.

                   STATEMENT OF JOHN FARRELL

    Mr. Farrell. Chairman Shimkus, Ranking Member Tonko, 
members of the subcommittee, thank you for the opportunity to 
address this hearing on the future of transportation. My name 
is John Farrell and I am the Laboratory Program Manager for 
Vehicles Technologies at the Department of Energy's National 
Renewable Energy Laboratory in Golden, Colorado. I manage DOE's 
Co-Optimization of Fuels & Engines, or Co-Optima Initiative, 
and a range of other transportation R&D work at NREL. Prior to 
joining NREL, I worked for 15 years at ExxonMobil's Corporate 
Research Laboratory where I oversaw R&D focus on advanced fuels 
and vehicles in collaboration with several leading car and 
truck companies.
    Mobility is foundational to our way of life. Today in the 
United States we are on the cusp of a wave of innovation that 
will dramatically transform our transportation sector. 
Innovations in vehicles, fuels, and infrastructure are being 
driven to a large extent by research led by DOE, NREL, other 
national laboratories, and our key industry partners. Our work 
holds the promise of providing mobility that is more 
convenient, affordable, and energy efficient, while at the same 
time boosting our Nation's economy and our overall global 
competitiveness.
    It is often noted that transportation is poised to undergo 
simultaneous evolutions due to the advent of connected, 
autonomous, shared, and electrification technologies. While the 
impact of these advanced mobility technologies will indeed be 
wide-ranging, it is also true that vehicles with conventional 
internal combustion engines will remain an important component 
of our transportation system for decades to come.
    That is why DOE and NREL are spearheading the Co-Optima 
Initiative which, in collaboration with eight other national 
labs and 13 universities, is conducting research that will help 
fuel producers and engine makers put the most efficient, high 
performance cars and trucks on the road. Much of our work to 
date has focused on identifying the benefits of fuel properties 
such as octane and enabling high efficiency gasoline engines 
and the role that blend stocks such as ethanol could play in 
providing these properties near term.
    Co-Optima gives us the opportunity to save American 
consumers and commercial truck operators up to $35 billion a 
year in fuel expenses while maximizing vehicle performance and 
efficiency, intelligently leveraging domestic resources such as 
non-food biomass, expanding job opportunities, and enhancing 
energy security. Research is also on the way on transportation 
connectivity and automation. By automating driving and other 
functions and enabling vehicles to communicate with each other 
and with the transportation network, this complex arena of new 
technologies foretells a future with reduced congestion and 
smoother traffic flows, saving us all a lot of time and money.
    The Sustainable Mobility program at NREL is working to 
support and complement DOE's SMART Mobility initiative. A major 
goal of this effort is to fully integrate electrified vehicles 
with the electric grid to ensure that when large numbers of 
electric vehicles enter the marketplace they will work smoothly 
with renewable energy sources, with buildings, and with the 
entire expanse of our transportation infrastructure.
    Fuel cell vehicles are now commercially available and have 
a range in refueling times comparable to conventional vehicles 
and achieve no tailpipe emissions. Our R&D has played a 
critical role in the advancement of technology for fuel cell 
vehicles and related hydrogen infrastructure needs. For 
electric vehicle charging infrastructure, NREL and the DOE labs 
are working on technology that will help establish a national 
network of extreme fast-charging stations capable of recharging 
batteries in a fraction of the time currently required, and we 
are exploring wireless in-road charging options for the longer 
term.
    Commercial trucking also stands to benefit greatly from the 
new technology. DOE and NREL are exploring fuel cell and 
battery strategies for truck electrification that could 
substantially reduce fuel expenses, lower maintenance costs, 
and reduce emissions. The lab has forged strong partnerships 
with industry leaders and numerous fleet operators. With fuel 
costs amounting to 40 percent of trucking expenses, greater 
fuel efficiency could save commercial fleet operators and you, 
as consumers, hundreds of millions of dollars annually.
    It is increasingly clear that we will need huge amounts of 
data and super computers to analyze the model at all if we are 
to coordinate and optimize the myriad of new technologies that 
will comprise tomorrow's interconnected transportation network. 
NREL's portfolio of databases each maintain and provide access 
to a wealth of invaluable, real-world, on-road transportation 
and energy systems data. These tools are already making a 
substantial contribution to the numerous R&D activities I have 
described.
    As you can see, mobility R&D is critical to our Nation's 
transportation future. And as we contemplate the resource 
portfolio needed to get us there, we can be assured that the 
global race for new technology solutions will only intensify. 
Maintaining our leadership and innovation is as important now 
as ever. Thank you.
    [The prepared statement of Mr. Farrell follows:]
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    Mr. Shimkus. Thank you. Now I would like to turn to Dr. 
Linn. You are recognized for 5 minutes and again thank you for 
being here.

                    STATEMENT OF JOSHUA LINN

    Mr. Linn. Thank you distinguished members of the 
subcommittee for inviting me to speak today. My name is Joshua 
Linn. I am an Associate Professor in the Department of 
Agricultural and Resource Economics at the University of 
Maryland and a senior fellow at Resources for the Future, a 
nonprofit and nonpartisan environmental economic think tank. 
The views I express today are my own.
    New technologies are fundamentally changing the vehicles 
people buy and the way they travel. Each year, passenger 
vehicles become more efficient, safe, and fun to drive. New car 
buyers can choose among an expanding number of vehicle options. 
Information technologies continue to create new travel options 
such as ride sharing or ride-hailing services and bike share 
programs.
    The future may bring ever increasing levels of automated 
driving. These are exciting technological developments, but 
their implications for energy security and the environment are 
complex. My central point today is that these innovations 
benefit the U.S. economy and that well-designed policies can 
foster innovation while ensuring that societal objectives are 
met. I will make several specific points based on observations 
of recent consumer and automaker behavior.
    First, tightening standards for fuel economy and greenhouse 
gas emission standards have imposed costs on both automakers 
and consumers. Following a long period of constant fuel economy 
standards, the National Highway Traffic Safety Administration 
and EPA have been tightening these standards. My research 
suggests that consumers undervalue recent improvements in fuel 
economy.
    Over the past decade, automakers have gradually raised fuel 
economy to meet tightening standards. Based on data covering 
about a half million recent new vehicle buyers between 2010 and 
2014, on average, consumers are willing to pay only about $50 
for $100 worth of fuel savings. The fact that consumers do not 
want to pay the full hundred dollars implies that automakers 
cannot pass on all the costs to consumers.
    The regulatory agencies assume that when automakers adopt 
fuel-saving technology, they raise vehicle prices sufficiently 
to cover costs. But if consumers only pay half the value of the 
fuel savings and the technology costs more than consumers are 
willing to pay, automakers can't raise prices sufficiently to 
cover costs without harming their sales. Thus, undervaluation 
implies the cost of tighter standards are borne by both 
consumers and automakers.
    My second point is that tighter standards have affected 
vehicle horsepower and other attributes as well as fuel 
economy. An automaker raises the vehicle's energy efficiency 
when it adopts fuel-saving technology. The automaker can then 
decide whether to use the additional efficiency to boost fuel 
economy, horsepower, or both.
    Typically, consumers are willing to pay more for horsepower 
than for an equivalent amount of fuel economy. Consequently, in 
the 1990s and 2000s when standards were changing, or not 
changing, automakers adopted fuel-saving technology and added 
the efficiency, and used the efficiency to boost horsepower and 
increase vehicle size without affecting fuel economy.
    During that time, horsepower tended to improve about 2 
percent per year on average. Then, when standards began 
tightening, automakers used those energy-saving technologies to 
boost fuel economy rather than horsepower. In other words, 
consumers are foregoing the horsepower improvements under 
tighter standards that would have occurred if the standards had 
been left untightened. These foregone improvements appear to be 
costing consumers several billion dollars per year as compared 
to about $20 billion in fuel savings that they are getting from 
the higher fuel economy.
    The third point is that so far the total cost of the 
standards appear to have been modest. The costs are difficult 
to observe, but research by my RFF colleagues suggest that 
marginal costs may have been $40 to $60 per metric ton of 
carbon dioxide, based on trades of compliance credits. These 
numbers are suggestive, but they are also modest because they 
are comparable to previous estimates of the social cost of 
carbon dioxide or the fines paid under the fuel economy 
standards for noncompliance.
    The tightening standards for vehicle fuel economy and 
greenhouse gas emissions have induced technology adoption and 
probably some innovation. The automobile industry has 
demonstrated quite a lot of ingenuity which has kept the total 
cost of the standards to a modest level. As long as standards 
continue to provide automakers flexibility to figure out the 
best compliance strategies, I fully expect these patterns to 
continue in the future.
    The fourth point is that gasoline-powered vehicles are 
likely to continue dominating the market for some time. Many 
policies incentivize consumers to buy or lease plug-ins. These 
policies combined may amount to $10- to $20,000 per vehicle of 
direct subsidies or indirect subsidies that may be funding 
charging infrastructure and the like. Nevertheless, consumers 
appear to continue buying, preferring gasoline powered 
vehicles. Declining battery costs and other innovations will 
surely increase the plug-in market share, but just how much is 
difficult to say.
    Finally, new information technologies are transforming the 
way people travel. This is generally reducing travel costs and 
likely to increase total travel as well as total vehicle use. 
Fortunately, these changes can be addressed by adjusting the 
way that the standards are set. Right now, they provide equal 
incentives for changes in fuel economy regardless of how much 
the vehicle is driven allowing for that possibility that 
vehicles are driven different amounts would correct this 
inefficiency of the standards that has existed all along, but 
which these changes in travel may be exacerbating.
    So again I want to thank you for inviting me to speak today 
and look forward to your questions.
    [The prepared statement of Mr. Linn follows:]
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    Mr. Shimkus. Thank you. The chair now recognizes Mr. Jeremy 
Martin and you are recognized for 5 minutes. Dr. Martin, I am 
sorry.

                   STATEMENT OF JEREMY MARTIN

    Mr. Martin. Thank you very much. Chairman Shimkus, Ranking 
Member Tonko, and members of the subcommittee thanks for the 
opportunity to testify today.
    As has been noted, it is an exciting time to work in 
transportation. We are entering a period of change more 
profound than any since the automobile era began a century ago. 
But while autonomous vehicles get a lot of the attention, 
changes in our fuels and vehicles also have important 
implications for our economy and our environment. So thanks for 
holding this timely hearing and inviting me to share my views.
    The fuels of the future will be cleaner and more diverse 
and the transition to these fuels is already underway. Any 
examination of transportation fuels must start with oil. 
Petroleum-based fuels are the dominant source of global warming 
pollution in the transportation sector which recently surpassed 
the electricity sector to become the leading source of U.S. 
carbon dioxide emissions.
    There is no path to climate stability that does not involve 
drastically cutting our oil use. The Union of Concerned 
Scientists has developed a plan to cut projected oil use in 
half in 20 years through improvements in efficiency and 
innovative clean fuels including electricity and advanced 
biofuels. The largest near-term opportunity to cut oil use 
comes from efficiency improvements which are not only important 
to the climate but also protect consumers from oil price 
volatility.
    Oil price volatility remains a major risk. EIA's 
projections for a decade from now suggest that gasoline could 
cost anywhere from $2.19 a gallon to $5.21 a gallon, depending 
on the price of oil. This price risk is mitigated by the 
improving fuel efficiency of our fleet. No matter what the 
price of gas, consumers save because of cost-effective vehicle 
efficiency standards. The EIA forecasts that 10 years from now, 
thanks to these standards, the average driver will use a 
hundred gallons less to drive 10,000 miles than they do today. 
Using less oil is the best insurance against oil price 
volatility, so protecting vehicle efficiency standards is 
critically important.
    But while oil is the largest part of the mix today, this is 
starting to change. For 50 years, from 1958 to 2008, oil 
supplied at least 95 percent of U.S. transportation energy. But 
oil's hegemony began as the last coal-fired steam locomotives 
were replaced with diesels and it ended when refineries and 
gasoline distributors adopted a 10 percent blend as the main 
source of gasoline.
    Ethanol used as a high-octane blending component of 
gasoline is less expensive and less polluting than the fossil 
fuel alternatives. But the rapid scale up of corn ethanol to 
supply this fuel also had negative consequences, putting 
pressure on agricultural commodity markets, exacerbating water 
pollution associated with corn farming, and land conversion as 
corn acreage expanded to meet the new demand.
    More recently, the growth of biofuels has come mostly from 
biodiesel produced from soybean oil and other lower value fats 
and oils, and biomethane, a waste-based transportation fuel 
that displaces fossil fuels while supporting the capture and 
destruction of methane, a potent climate pollutant. Cellulosic 
ethanol from corn kernel fiber and corn stalks is also growing, 
albeit more slowly than originally hoped.
    Looking into the future, the importance of electricity as a 
transportation fuel is no longer a matter of dispute, although 
how quickly this transition occurs remains uncertain. Today, 
U.S. companies are leading the way on EV technology, but 
without the support of policies the U.S. will cede the field to 
economic competitors. This will not stop the inevitable 
transition to electric vehicles. However, this transition will 
take time and will proceed at different rates in different 
parts of the transportation sector. Petroleum and biofuels will 
remain an important part of our fuel mix for decades to come, 
so it is important to use them wisely.
    Smart deployment of biofuels can support the progress of 
vehicle efficiency. The success of E10 demonstrates that 
ethanol is most valuable when it is used for its high-octane 
properties and the Co-Optima project shows the potential to 
build on this success. Automakers motivated by rising vehicle 
efficiency standards are currently putting engine technologies 
in the market such as turbocharging that would benefit from the 
deployment of high-octane fuels. However, until cost effective, 
high-octane fuel is reliably available, automakers won't sell 
cars with the higher compression and downsized engines required 
to realize the benefits of the co-optimized system.
    Phasing in a new fuel gradually for use by optimized 
vehicles will avoid shocks to the agricultural commodity 
markets and extend the useful lifetime of investments of 
ethanol production while making even deeper cuts in oil use 
than will be possible if we remain stuck at the E10 blend wall. 
Policies to support fuels and vehicles of the future should 
focus on cutting oil use and supporting the growth and 
innovation in the cleanest vehicles and fuels and this work is 
far from done. Thank you.
    [The prepared statement of Mr. Martin follows:]
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    Mr. Shimkus. Thank you very much. Now I would like to turn 
to John Eichberger, Executive Director of Fuels Institute. 
Welcome. You are recognized for 5 minutes.

                  STATEMENT OF JOHN EICHBERGER

    Mr. Eichberger. Thank you Mr. Chairman. And good morning, 
committee. Thank you for having me here today.
    Real quick about the Institute, we founded in 2013 and we 
are a nonprofit, collaborative, peer-reviewed research 
organization. We are unbiased. We do not advocate for any 
outcomes. Our goal is simply to deliver objective analysis of 
market conditions and trends to help decision makers make more 
informed decisions. That said, the comments I am delivering 
today are my own and they do not represent any specific 
position of anybody who is part of the Fuels Institute.
    Let me start by noting I have read the written statements 
of all my co-panelists and there is almost nothing in their 
written statements with which I disagree. It is absolutely an 
exciting time to be part of this industry. There is so much 
going on. Every day there are new headlines and new reports to 
digest and analyze to where the market is heading. But the 
headlines don't always reflect reality and it is important to 
understand the fundamentals of the market if we want to 
appropriately anticipate the direction the market might be 
heading.
    I truly do believe the electric vehicles will represent a 
majority of vehicles in the future. Where I differ with a lot 
of other people is the definition of when that future might 
arise, and this is not because I don't believe the viability of 
the technology. It is because I look at the size of the market 
and I know it is going to take time to make a significant 
change.
    To demonstrate my point I do have a chart. It is in my 
written statement, but I will have it on the screen here in a 
minute too. I wanted to take a look to see how long it takes 
for the market to evolve and so what I did is I plotted if we 
were to introduce a new feature into every vehicle sold as of 
January 1st, 2017, how long would it take to get to a 
significant share of the market?
    The numbers I ran using EIA forecast for sales and 
scrappage rates means it would take 7 years before that feature 
was present in 50 percent of the vehicles on the road. That is 
a long turnaround to get something on the market. By contrast, 
battery electric and plug-in hybrid electric vehicles sold 1 
percent of the vehicles last year. They represent 1 percent of 
the vehicles sold last year.
    So we have got a long way to go. And that sales rate in 
2017 was a 26----
    Mr. Shimkus. Will the gentleman suspend for a minute?
    Mr. Eichberger. Sure.
    Mr. Shimkus. Are we going to put his slide up?
    OK, thank you.
    Mr. Eichberger. Thank you, Mr. Chairman.
    [Chart shown.]
    Mr. Eichberger. So if you take a look, that is the chart 
rate in terms of if every vehicle had a new feature, 100 
percent market conversion, 7 years to get a 50 percent market 
share. EVs were 1 percent of sales last year, there is a 26 
percent growth rate over 2016. And this next chart, if I can 
have that one up, I wanted to find out what would happen if we 
continued an aggressive sales rate.
    [Chart shown.]
    Mr. Eichberger. So this plots a 26 percent and a 20 percent 
annual growth rate for battery and plug-in hybrid vehicles 
through 2035. This results in a potential market share of 43 
percent of cars sold in 2035, but only 10 \1/2\ percent of 
vehicles on the road. That is the size and scope of this 
market. It is going to take a long time. Even with aggressive 
sales it is going to take time to get some turnover, which 
means in 17 years 90 percent of the vehicles on the road will 
still be powered by an internal combustion engine and fueled 
with liquid fuels.
    The size of the market is enormous. We must not lose sight 
of that. Of course there are many factors that could accelerate 
the pace of change as outlined in my written testimony. But 
regardless, the internal combustion engine is going to dominate 
the market for decades to come and we are already seeing that 
market evolve. Downsized engines, start-stop applications, 
boosted engines, compression ignition, hybrids, variable 
compression ratio engines, auto engineers are charting new 
advancements all the time overseeing the benefits yielded to 
consumers.
    Among the top as it has gained a lot of attention recently 
over the last several years is to design an engine optimized to 
run on a specific higher-octane fuel. I have seen numerous 
technical reports indicating that this could provide a great 
benefit to efficiency, emissions, and performance for 
consumers. Fuels Institute, we have our own report coming out 
hopefully this May which seeks to answer some key questions 
about a high-octane fuel future.
    These questions include how would we produce the fuel, what 
are the constituents that would go into building that fuel? 
What would be the cost and feasibility and scalability? What 
are the distribution issues? What is the anticipated level of 
demand for the new fuel and how long might it take to reach 
market maturity? There is potential here, but tradeoffs are 
probably going to be required and the transition is going to 
take time.
    The vehicles and fuels market is changing. Engines and 
fuels will become cleaner, more renewable and more efficient, 
but all transitions take time. I urge the committee to be 
suspicious of any prediction of eminent disruptive change. Most 
are focused on one causal factor and dismiss the numerous other 
factors that will influence consumer decisions. Changing 
today's transportation system will not be like introducing the 
car engine that replaced the horse and buggy. It will not be 
like introducing the smart phone which transformed pretty much 
all commerce and social interaction as we know it.
    Each example of a major, successful, disruptive event 
delivered compelling, immediate, and tangible value to the 
consumer that improved their quality of life in some real way 
and I question what options are we seeing in the transportation 
sector that could deliver similar value and cause 
transformative disruptive change? Whatever change is on the 
horizon, if the consumer cannot access it or does not want to 
buy it, it will not succeed and we wasted time and resources.
    I believe change ultimately is coming, but for the 
foreseeable future the market is going to look remarkably 
similar to the market we have today and the transition to 
something different will be measured and incremental. Thank you 
very much for inviting me today.
    [The prepared statement of Mr. Eichberger follows:]
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    Mr. Shimkus. I thank all of you for the testimony. We will 
now move to the question and answer portion of the hearing and 
I will begin by recognizing myself for the first 5 minutes. I 
am going to go on my own, my own route here for a minute.
    Dr. Farrell, they are always afraid when I start doing 
this. Two things, one is obviously I am very interested in the 
Co-Optima study and the potential for high-octane fuel which 
has been elaborated by many of you here today. In your opening 
statement you mentioned the terminology, non-food biomass. So 
being from a corn state, would you, is that just stover and 
stalk or would part of that definition be hybrid corn or GMO 
corn that is planted specifically for the fuel market?
    Mr. Farrell. So the research that we have been doing on 
biomass-based routes to producing new fuels acknowledges that 
the current technology for producing ethanol from corn is well 
established and there are no real R&D challenges associated 
with that. When we start looking at cellulose to make ethanol 
as well I think we acknowledge that that technology is already 
commercial, albeit at low scale, but it also doesn't have the 
same resource to challenges.
    Within Co-Optima we have been looking at the opportunities 
to look at a wide range of woody biomass, of energy crops, of 
stover, of waste residues to provide the feedstocks that will 
be able to provide high efficiency blend stocks including 
ethanol and other alcohols as well. So the research is really 
in focus where the greatest uncertainty lies.
    Mr. Shimkus. Great, I appreciate that. Then I want to go to 
Mr. Eichberger and I appreciated the charts. That is why I 
wanted to get them up there. I think that is very helpful in 
just trying to figure out and there is public policy that 
probably bend that a little bit.
    Mr. Eichberger. Of course.
    Mr. Shimkus. But let's just take a short term window of 10 
years, what a traditional--and we have had this discussion 
before, they used to be we called them gasoline stations. In 10 
years we may call them what and what would they look like?
    Mr. Eichberger. In 10 years they are going to look a lot 
like they look today and we call them convenience stores, going 
back to my previous job. We are going to see some 
diversification. We may see additional fuel blends. We are 
seeing some E15 on the market. That may increase. We may see 
some more electric vehicle charging stations on the market. 
Over the next 10 years we are not going to see a dramatic 
change in consumer behavior or the cars they are driving, so 
the market for fueling stations will evolve with the vehicle 
and the consumer. But we will see some diversification and new 
strategies coming forward to satisfy consumer demand.
    Mr. Shimkus. And then to everyone, 10 years, different 
question, going into an auto dealership, what do you think we 
will see as we walk around either the showroom or get out into 
the lot?
    Mr. Maples? Just a guess, This is kind of a 35,000-foot 
view of where we think we are going to be in 10 years.
    Mr. Maples. Well, in 10 years, I would agree with the rest 
of the panelists that this is going to be primarily a 
combustion engine environment. So the vehicles that you are 
going to see are going to be a lot more efficient, probably 
some level of hybridization whether that is a microhybrid which 
doesn't deliver motive power, or some other full hybrid, plug-
in hybrids, and then of course EVs, and then I think that will 
be driven primarily by the mandates.
    Mr. Shimkus. Dr. Farrell?
    Mr. Farrell. I agree with Mr. Maples. I would note that 
many OEMs are announcing intentions of producing far more 
models based on those provided powertrains. So we will see more 
electrified options, but I think the showrooms will look 
predominately the same.
    Mr. Shimkus. Dr. Linn?
    Mr. Linn. Yes, thanks. So suppose we are on the same path 
of fuel economy and emission standards and California is 
pursuing the Zero Emission Vehicle program, and other states, 
in that case I certainly would agree we will see a lot more 
options and probably more effort to broaden the market for 
those vehicles.
    Mr. Martin. Yes. I would certainly expect more EVs. I think 
that is the most visible change. And there is some uncertainty 
about how much travel people will do in vehicles they own 
versus rides that they hire, in which case they wouldn't need 
to go to a dealer.
    Mr. Eichberger. Mostly internal combustion engines, we will 
see a lot more battery electric vehicles. We have to keep in 
mind a lot of the automotive industry's announcement of 
electrification is going to be dominated by hybrids, so a lot 
more hybrids.
    Mr. Shimkus. Great. And my time is expiring, but the other 
thing that drew my attention was Dr. Linn when you talked 
about, and this is my district, we will pay for more 
horsepower. We won't pay for more mileage. I am summarizing 
that research, but I think that correctly points to at least 33 
counties in southern Illinois.
    With that I will yield back my time and turn to the ranking 
member of the subcommittee, Mr. Tonko, for 5 minutes.
    Mr. Tonko. Thank you, Mr. Chair. Thank you again to our 
witnesses. This morning we have covered a lot of ground. There 
are many federal and state policies, technology developments 
and global trends and other nations' mandates that will shape 
the future of fuels and vehicles.
    So, Dr. Martin, in Mr. Eichberger's testimony he points out 
that because of the long time that a vehicle remains on the 
road, adoption of new engine technologies or fuels and 
increases in fleet fuel economy take decades to fully penetrate 
the transportation sector.
    As was mentioned earlier, according to EPA's most recent 
greenhouse gas emission inventory, the transportation sector 
has now overtaken the electricity sector as the largest emitter 
of greenhouse gases in the U.S. and in recent years, the trend 
is upward for emissions in this sector. I am concerned about 
the implications of this for all air emissions including 
greenhouse gas emissions.
    To make significant emissions reductions in this sector 
don't we need both cleaner fuels and more electric vehicles?
    Mr. Martin. Yes. We absolutely need to make progress on 
both fuels and vehicles and to do so quickly. The long term 
that the vehicles stay on the road means it is even more 
important to do this up front.
    Mr. Tonko. So what do you see as our best options in the 
cleaner fuels category?
    Mr. Martin. In cleaner fuels there is a range of low carbon 
fuels out there. Of course, I think it is important to 
recognize electricity as a transportation fuel as a piece of 
that story as well as the biofuels we have been deploying 
which, you know, are getting significantly cleaner over time. 
And there is a lot more potential for biofuels. There is ample 
feedstocks to scale that up and to do it in ways that are 
cleaner and cleaner over time.
    Mr. Tonko. And how much cleaner is today's average 
electricity generation than gasoline?
    Mr. Martin. My colleague is just updating the analysis that 
we do of the mile per gallon equivalent of cars, of electric 
vehicle in terms of total pollution, and I think in terms of a 
weighted average across the country we are up to about 90 miles 
a gallon equivalent for EVs when you weight that based on where 
the vehicles are actually being charged.
    Mr. Tonko. And electric vehicle sales have been increasing, 
but they still make up a very small portion of the vehicles on 
our roadways. Should we be investing more in the infrastructure 
to support electric vehicles, public charging areas, for 
example, to further reduce range anxiety and other barriers to 
electric vehicles?
    Mr. Martin. It is certainly important to invest in 
infrastructure for electric vehicles. I think one of the things 
in our experience is that range anxiety is a larger factor 
before people buy an EV than after they buy one, especially 
with the range increasing. So, most people are finding that 
charging at home and charging at work is adequate to meet the 
vast majority of their needs.
    Mr. Tonko. And I noticed in the executive summary of your 
2016 report that you referred, ``years of stagnation in the 
improvement of the efficiency of passenger cars. Would you 
agree that strong federal regulation, CAFE standards in 
particular, are needed to improve the efficiency performances 
in vehicles?
    Mr. Martin. Yes, absolutely. I think the record is very 
clear and I think others alluded to that as well. Without 
strong standards the consumers won't see the benefits of 
improved efficiency and will remain vulnerable the next time 
oil prices go up.
    Mr. Tonko. Well, the Trump administration may be moving 
toward weakening the combined CAFE and greenhouse gas standards 
that were proposed by the Obama administration in spite of a 
midterm review document that found there are technologies 
available now and some that will be ready soon that will allow 
them to meet the standards. I am very concerned that this will 
return us to the years of stagnation that we experienced 
before. Is that a fair assessment?
    Mr. Martin. Yes, absolutely. That is a very real risk. And 
I think what we saw before was that American automakers become 
less competitive when they allow their fleets to stagnate and 
don't invest in improving efficiency and reducing oil use.
    Mr. Tonko. So what are some of the most effective ways to 
accelerate the transition to cleaner fuels and vehicles?
    Mr. Martin. Well, I think the standards that we have in 
place making sure those are strong and remain strong through 
2025, the technical assessment report makes a very strong case 
for leaving them as they are and setting stronger standards 
that go further beyond 2025, and looking for ways to support 
electrification, advanced biofuels, and integrating these 
things thoughtfully together as we move forward.
    Mr. Tonko. Well, in the debates about the lifecycle effects 
of different fuels and vehicles it is often pointed out that 
although electric vehicles do not emit anything directly, they 
may be drawing power from electricity sources that produce 
emissions. There is certainly a lively debate about the direct 
and indirect emissions associated with different biofuels, but 
we tend to assume all gasoline is equal in terms of its 
associated emissions.
    Dr. Martin, is all oil the same in terms of its emissions?
    Mr. Martin. Yes, it is a great point. There is a huge 
variability in different sources of oil, different extraction 
methods, and different refining processes in terms of the 
extent of emissions in the production of oil and gas. And since 
we use and will continue to use such a large amount of gasoline 
and diesel, these emissions from the oil and gas sector are 
quite large and there is a lot of opportunity to reduce those 
or opportunity for them to go up if they are not attended to 
carefully.
    Mr. Tonko. All right. With that, Mr. Chair, I yield back.
    Mr. Shimkus. You got full use of that 5 minutes. That was 
very efficient.
    Mr. Tonko. I think we call it Tonko time. Thank you, Mr. 
Chair.
    Mr. Shimkus. The Chair now recognizes the gentleman from 
Texas, Mr. Flores, for 5 minutes.
    Mr. Flores. Thank you, Mr. Chairman. I would love to have 
10 minutes because this has been a fascinating discussion. I 
would like to thank the panel for being here.
    Mr. Eichberger, let me start with you, two quick questions. 
One is, today most gas stations carry some combination of 
regular, a mid-grade, and then a premium grade. What do you 
think the opportunity is in terms of giving consumers choices 
in the future where they could dial in from E0 to E85? Is there 
anything technologically that would prevent that?
    Mr. Eichberger. I have not seen any units entering in the 
market to do that. There is nothing technologically to prevent 
them from it. I think there are some logical reasons why we 
wouldn't want them to do that in terms of controlling the 
emissions profile of the fuels. Having consumers make their own 
gasoline at the dispenser I don't think is a great idea.
    Mr. Flores. Oh, you would have to put limits on it, of 
course, so that you wouldn't hurt the emissions restriction or 
the emissions profile that you are trying to achieve.
    The next question I have for you is what are the challenges 
of facing the use of ethanol above E10 and can these challenges 
be overcome?
    Mr. Eichberger. So there are compatibility issues. Every 
piece of equipment that a retailer uses to dispense fuel has to 
be listed as compatible with that fuel and up until about 10 
years ago there were no dispensers listed for above E10. Some 
underground equipment is not listed. The transition is getting 
easier, but the challenge becomes that a lot of retailers 
aren't the original investors in the underground storage tank 
systems so they may not even know what equipment they have 
underground. If they can't certify what is underground they 
can't move forward with that higher fuel.
    Dispensers are fairly easy to upgrade. You can get E25 
dispensers for about the same price as an E10 dispenser. But 
you have to be absolutely certain that what you have 
underground is compatible as well.
    Mr. Flores. OK, thank you.
    Dr. Farrell, in the past, policymakers have sort of talked 
about fuels policy and vehicles policy separately, so we have 
heard a lot of chatter about EVs. We have talked about the 
Renewable Fuel Standard even though this hearing is not about 
that. We have talked about vehicle mileage standards and so 
forth.
    Tell me about what your thoughts are in terms of 
integrating all policies, fuel policy and vehicle policies, 
into one coherent comprehensive policy.
    Mr. Farrell. I think the opportunity that we are exploring 
within the Co-Optima program is really to understand from the 
technology standpoint what the options are. So that is one of 
the key benefits that we have been able to apply is 
understanding where those tradeoffs are in the way we are 
unconstrained by what is currently available in the 
marketplace. Our hope is that that will be the basis for an 
informed policy discussion which we are not participating in 
but we fully hope to inform.
    Mr. Flores. And I just, you didn't say this, but I am 
getting the inference or the implication that you think these 
policies should be combined from a policymaker's perspective.
    Mr. Farrell. I think from the consumer standpoint, if the 
goal is to get higher performing fuels and vehicles in the 
marketplace then looking at these as an integrated system is 
the most effective way.
     Mr. Flores. OK. Thank you very much. The next question for 
you is you are researching alternatives to the internal 
combustion engines. You are also looking at ways to improve the 
efficiency of the internal combustion engine. How much better, 
let's say, if you look 10 years in the future what would the 
internal combustion engine look like and what would the 
efficiency improvement be versus a 2018 engine?
    Mr. Farrell. Sure. If we look at the Department of Energy's 
goals for the internal combustion engine operating on today's 
fuels, by 2030----
    Mr. Flores. You could assume they don't have to operate on 
today's fuels. Again we are integrating all policy, but go 
ahead.
    Mr. Farrell. Yes. We will build upon.
    Mr. Flores. OK. I am with you.
    Mr. Farrell. So based on current fuels we are looking at 25 
percent fuel economy benefit by 2030. By----
    Mr. Flores. What percent again?
    Mr. Farrell. Twenty five percent.
    Mr. Flores. OK.
    Mr. Farrell. By co-optimizing it and allowing additional 
benefits to be realized we can get an additional 10 percent or 
35 percent versus today. So that is a significant benefit that 
is available.
    Mr. Flores. OK, great. And do you have a feel for what the 
cost differential would be in terms of cost per vehicle to get 
there?
    Mr. Farrell. Since we are looking at something 10 years 
down the road, the cost implications are difficult and the OEMs 
basically have the opportunity to trade off costs with some 
other areas, so we don't have good cost estimate at this point.
    Mr. Flores. OK, thank you. I look forward to following the 
research as you move forward.
    In terms of one of the biggest challenges to the adoption 
of electric vehicles is their high upfront cost, also the 
limitations of current battery technology. Tell me a little 
about, if you have done any research on this, in terms of 
moving beyond lithium, what that implies for cost. Lithium has 
a huge environmental impact that is negative, so tell us about 
where you think the EVs could go moving beyond lithium.
    Mr. Farrell. Sure. For the near term, I think everybody 
thinks that lithium-based batteries will be the main source of 
battery power for vehicles. The cost targets that the DOE has 
set for the 2022, 2023 timeframe can be achieved with 
improvements to current lithium technologies, but to get cost 
parity with ICEs requires varied costs that are about a factor 
3 lower than they are today. That will require new battery 
chemistries. Some of those may still rely on lithium, but some 
of the more expensive materials such as cobalt, which has some 
strategic element constraints to it, will have to be removed in 
order to get those cost constraints down.
    Mr. Flores. OK. I would love to have more time, but I have 
run out of time. Thank you for your answers.
    Mr. Duncan [presiding]. I thank the gentleman and the Chair 
will now go to Mr. Pallone for 5 minutes.
    And I guess Mr. Peters would be next.
    Mr. Peters. I will assume my best New Jersey accent to fill 
in for Mr. Pallone. Thank you, Mr. Chairman, and thank the 
witnesses for being here.
    I had a question for Mr. Linn. So there is a company called 
Achates Power in my district that received one of the largest 
ARPA-E grants to do an efficient opposed-piston engine. They 
are doing a lot of that for defense. It has implications for a 
larger use. It boosts fuel economy, decreases emissions and 
also, for the benefit of Mr. Shimkus, his residents, it 
increases horsepower.
    I wonder what the ability or what you would expect in terms 
of innovations like that absent government intervention through 
front end research grants or through some other regulatory 
approach that would make sure that we do these incentives here 
in the United States?
    Mr. Linn. All right. So there are already incentives just 
from consumers and what they want, right, to improve vehicles. 
We see that over decades, vehicles today are a lot different 
and a lot better than they were 30 years ago in all sorts of 
dimensions.
    The way that the sort of policies can affect things are 
really in two ways, right. One is providing greater incentive 
to target those innovations toward improving fuel economy, 
reducing fuel consumption and emissions. The other is on the 
more basic research side to address the fact that there may be 
various reasons why the private actors aren't conducting as 
much research and innovation as they should be.
    And so there are reasons to do both of those and that would 
encourage more innovation and then also direct it toward 
meeting these public social objectives.
    Mr. Peters. I am wondering too like what would be the 
incentive of if you expected higher prices from something like 
a carbon tax obviously I think people would be more 
incentivized to invest in these kinds of things. Do you agree 
with that?
    Mr. Linn. Yes, certainly. We see, when gas prices change we 
see the way consumers make decisions about what vehicles to buy 
certainly changes. And so, by implication, carbon price would 
provide similar types of signals.
    Mr. Peters. Maybe ask Mr. Maples what sort of assumptions 
you made about the price of fuel as you have calculated the 
deployment of electric vehicles what assumptions you made about 
future costs of fuel?
    You have to turn your microphone on. Want to turn your 
microphone on again, please?
    Mr. Maples. Oh, sorry. In our Reference case, I think we 
have fuel prices going up to $3.47 a gallon by 2050. Again EVs 
do get a benefit on the fuel side. The problem with the CAFE 
standards, or not the problem, but the issue with the CAFE 
standards and how that affects EV sales, you have an incumbent 
technology that is improving by, say, 30 percent in which, in 
effect, means a reduction in fuel cost of 30 percent. So that 
payback differential when comparing a gasoline vehicle to an 
EV, for example, is getting smaller.
    Mr. Peters. Right.
    Mr. Maples. So it is making it more difficult for the EV to 
compete against the gasoline vehicle over that projection. So 
while there are fuel savings that are available for EVs, it is 
really the incremental cost of the vehicles that matter.
    Mr. Peters. California's Air Resources Board has simply set 
a level of cars that have to be on the road, electric cars that 
have to be on the road in the State by a certain time. That is 
essentially letting the car manufacturers decide how they are 
going to get to that point, but it has obviously created a lot 
of deals on hybrids and EVs that have attracted customers.
    You didn't make any assumptions in your analysis about the 
government doing anything like that nationwide, correct?
    Mr. Maples. That is correct. So we only have the eight 
States that have currently or, excuse me, the nine States plus 
California have currently adopted. We do allow credit trading 
among those States, so there is an optimization, if you will, 
to achieve that standard.
    Mr. Peters. Right. And that would be much more efficient 
for California too if we were able to expand that beyond, and I 
certainly think if we could get the rest of the country on 
board we would be willing to talk about that.
    The other thing is, I wonder if you have made any 
assumptions about what foreign automakers are going to do in 
this space. We have heard the Chinese announce that they want 
to do, I think it was 20 percent of all car sales to be, or 20 
percent of all cars to be electric. Did you consider that and 
would that kind of action by other countries and our 
competitors affect your analysis in terms of the rate of 
deployment?
    Mr. Maples. So we don't specifically address that in the 
AEO, but we do have a feedback, a function in the model that as 
you build more of these vehicles there are economies of scale 
that occur. So we get pretty significant reductions in battery 
costs and improvements in our performance of batteries for 
those vehicles over the projection, so they are getting far 
more cost effective than they are today.
    Mr. Peters. Right. And I would just finally conclude by 
saying to Mr. Shimkus whose move is that if you drive a Tesla 
it is American made, it goes pretty fast. I think you would 
enjoy it. Thank you. I yield back.
    Mr. Duncan. I thank the gentleman and apologize for the 
name mixup. I will now go to the gentleman from Michigan, Mr. 
Walberg.
    Mr. Walberg. Thank you, Mr. Chair, and thanks to the panel 
for being with us. Coming from Michigan we are pretty proud and 
committed to internal combustion engines. We appreciate some of 
the research that is going on. The University of Michigan is 
doing some great research on various things including 
autonomous. There are other options that probably assist in 
reducing the use of fuels including ride sharing and things 
like that, but at this present time the internal combustion 
engine is in a pretty good place and having a NASCAR track in 
my district I kind of like it as well.
    Mr. Maples, you mentioned in your testimony that there are 
several technologies available to improve the fuel economy of 
internal combustion vehicles. For instance, you mentioned 
microhybrid or stop-start technology which feels really weird 
at times if you are not used to that. That is for sure. You 
project that will be included in about 20 percent of the 
gasoline vehicles by 2025. By some estimates, this technology 
can improve fuel economy by 5 percent.
    Why is it that it is only being offered to a small 
percentage of vehicles according to your understanding?
    Mr. Maples. So within our evaluation and projection of 
technology penetration we have a menu of probably 83 
technologies that are available to improve the efficiency of 
gasoline vehicles over the projection and so the extent to 
which any of these technologies are successful or how 
competitive they are against other options that are available 
to manufacturers to improve efficiency.
    So engine downsizing, turbocharging, some of what has been 
discussed here, improved valve train designs and how those 
designs operate within that engine can make a big difference 
and then there is transmissions and then lightweighting. And so 
we have a considerable amount of lightweighting that also 
occurs in the vehicle that again has an impact on the amount of 
efficiency improvement that is being gained across this menu of 
technology.
    Mr. Walberg. So because of those multiple options, options 
like the stop-start technology, that is the reason why it is 
not included in a larger percentage because we have better 
approaches for various vehicles than that?
    Mr. Maples. That is correct. So it is getting employed in 
those vehicles that where it is most cost-effective to do the 
microhybrid, the integrated start-stop.
    Mr. Walberg. What are some--OK, go ahead.
    Mr. Maples. So for others like the pickup trucks we see a 
lot more lightweighting in the aluminum, other high strength 
steel, transmissions being employed and turbocharging 
downsizing, you see more penetration there.
    Mr. Walberg. And the cost factors there are justified? 
Turbocharging, I assume, is a more expensive approach, but you 
are getting performance out of it?
    Mr. Maples. Correct.
    Mr. Walberg. OK. Are Corporate Average Fuel Economy 
standards enough to encourage greater fuel efficiency or are 
additional incentives or requirements necessary?
    Mr. Maples. Well, yes. EIA doesn't comment on policy, so I 
will----
    Mr. Walberg. Any other members of the panel that could 
comment on that? Yes, sir?
    Mr. Martin. I think on the previous point, the fact that 
the standards could be met without the full penetration of some 
of these cost-effective technologies like stop-start technology 
reflects the ability to hit higher standards. And so, I think 
there are certainly opportunities to go beyond what is in the 
CAFE standards either by setting more stringent standards or 
additional policies to support rollout of oil saving fuel 
efficiency technology sooner.
    Mr. Walberg. Thank you. I yield back, Mr. Chairman.
    Mr. Shimkus. The gentleman yields back his time. I think 
the next colleague to turn to is my friend from California, Mr. 
McNerney, for 5 minutes.
    Mr. McNerney. Well, I thank the chairman for your generous 
yielding and I thank the ranking member. But also the 
panelists, I have enjoyed your discussion.
    So, history has shown that the petroleum industry is very 
volatile over about a 10 or 12 years' time cycle. We have been 
at a kind of a low point for a number of years now. Mr. Maples, 
you can't foresee what is going to cause these shifts usually. 
Do you see a change in the cycle coming and what effect that 
would have?
    Mr. Maples. So we do project that oil prices are going to 
increase in our AEO projection, but we also offer scenarios 
that show different potential outcomes of the Low Oil Price 
case and the High Oil Price case to try to bound at an upper 
level and a lower level what those oil prices could be.
    Mr. McNerney. What is your upper bound?
    Mr. Maples. Could I get back to you to----
    Mr. McNerney. Sure.
    Mr. Maples. Yes.
    Mr. McNerney. Absolutely.
    Mr. Eichberger, your projections seem realistic based on 
just the size of the fleet out there and the inertia that it 
has, but have you looked at what fuel prices will do in terms 
of accelerating the fleet turnover?
    Mr. Eichberger. Yes. Fuel prices would accelerate it. We 
can take a look at that trend of hybrids. In the past, when 
fuel prices were 3.50 interest in hybrids of people in the 
market to buy a car was 82 percent. When prices dropped down 
below 2, it dropped down to 41 percent and sales of hybrids 
dropped as well. So fuel prices is a signal to consumers to 
start shopping around for something different.
    Mr. McNerney. Thank you.
    One of the things that I want to drill down a little bit is 
standards. Mr. Linn, you talked a little bit about standards. 
Do you think that higher CAFE standards is beneficial to the 
American economy and the American consumer and the auto 
industry or any of the three or all of the three?
    Mr. Linn. So I would say based on the research I have done 
that so far the standards to the sort of individual consumers 
and to automakers themselves have been more or less a wash. 
There are benefits and costs and they sort of even out. That is 
just narrowly on the benefit and cost to the industry itself 
and then there are the societal benefits for reducing oil 
consumption, reducing emissions. Once you add in those then, 
benefits would seem to outweigh the costs.
    Mr. McNerney. Yes.
    Mr. Martin, you had a little different take on that. Could 
you elaborate?
    Mr. Martin. Well, I think that there is a large benefit 
from fuel economy standards and the consumer savings in fuel 
dramatically outweigh the additional cost of the vehicle over 
the lifetime of the vehicle. In fact, for a vehicle that is 
financed the costs probably outweigh, the fuel savings offset 
the costs basically on the day you drive off the lot. So that 
is what our analysis reflects, substantial benefits to 
consumers from fuel economy standards even under low oil prices 
and if oil prices go up substantially larger benefits.
    Mr. McNerney. Well, it seems that the auto industry is 
always fighting these standards and in my mind it is 
essentially harming itself by doing so. Would you agree with 
that?
    Mr. Martin. Yes, absolutely. They may have a preference not 
to invest in new technology and to keep selling the technology 
they have, but this will leave them vulnerable to oil price 
changes in the future. And particularly in a moment when 
electrification is accelerating, getting behind the curve on 
technology and oil saving technology, I think, is more critical 
in a moment of rapid change then it might have been in decades 
past.
    Mr. McNerney. Well, you mentioned that the U.S. is leading 
in the EVs and car technology now. Is that partly due to the 
CAFE standards? Then what is going to happen if the CAFE 
standards go away?
    Mr. Martin. I think in fuel efficiency technology for the 
fleet the CAFE standards are certainly very important. EVs have 
other drivers in addition to fuel economy standards, but I 
think the range of support for electric vehicles, whether it is 
support for research, support for tax incentives, or standards, 
without those, one would expect less investment and less 
progress from the U.S. industry which could put it in a less 
competitive position over time.
    Mr. McNerney. All right, thank you.
    I am not going to try to be more efficient with my time. 
Mr. Chairman, I yield back.
    Mr. Shimkus. The gentleman yields back his time. The chair 
now recognizes the gentleman from South Carolina, Mr. Duncan, 
for 5 minutes.
    Mr. Duncan. Thank you, Mr. Chairman. And there is a lot of 
focus on an infrastructure package that the White House is 
working on that we will be taking up, and I think a big part of 
infrastructure should be our electrical grid. That is 
hardening, but that is also getting ready for the EVs of the 
future.
    So, Mr. Farrell, what are the challenges for the electric 
grid, thinking of a future of considerably more EVs, and does 
our grid have the capacity to handle it at this point and what 
suggestions might you have going forward?
    Mr. Farrell. I think estimates of the projections of EVs 
into the marketplace suggest that the impact on the grid will 
be manageable. The overall change in load is a small percentage 
of the current because of the large base in which we are 
building. So the challenge is not necessarily global, it would 
be local, especially if we adopt fast-charging technologies 
which are going to be required to give very rapid fills of 
batteries on passenger cars, or even especially on trucks and 
buses the local impacts could be substantial.
    So most of the work that we are doing right now, in terms 
of key research in these, are identifying from the 
infrastructure standpoint what are the impacts of putting 
several megawatts of power into vehicles on a very rapid on-off 
cycle how to manage that in terms of the grid reliability.
    Mr. Duncan. Right. Generally, looking at infrastructure in 
this country I have to ask how we are going to pay for it. 
South Carolina just had a massive gas tax increase in our State 
to pay for infrastructure roads and bridges needs. EVs don't 
pay any gas tax when they refuel and therefore they could 
arguably not contribute to the upkeep of the highways even 
those they are using those roads.
    So, Mr. Maples, are we not already subsidizing EVs because 
they are not subject to the gas tax, and what are your thoughts 
on this and should EVs be charged something for maintenance and 
infrastructure? Should they be subject to some sort of gas tax, 
so to speak?
    Mr. Maples. So currently in our analysis that is correct. 
We are using basically a residential electricity price for the 
cost of fuel for electric vehicles. So I am aware that some 
States have registration fees to try to cover the gasoline 
taxes that aren't currently being paid by electric vehicles so 
that could be an option, but otherwise there would have to be 
something implemented at either a refueling site, a public 
refueling site, or somehow that electricity metered differently 
within the home when they are recharging to capture whatever 
those taxes should be.
    Mr. Duncan. Right. I can make the argument that there are 
not enough EVs on the road right now to have a dramatic impact 
but, as Mr. Peters was saying earlier, the car companies are 
getting prepared for this massive increase in the number of 
electric vehicles that we will see in this country and I think 
we need to prepare for their impact on the roads and bridges 
and they ought to pay their fair share.
    Now the electrical suppliers, the companies like Duke 
Energy and others, are collecting taxes from the ratepayers, 
but I don't see how that is translating to the infrastructure 
needs so I think that is something that Congress needs to work 
on.
    I want to talk more on the rise of electric vehicles and 
highlight the research work that International Transportation 
Innovation Center is doing in tandem with my alma mater, 
Clemson University, in the Greenville, South Carolina area. 
They are building a global market of open and closed automotive 
test beds for the most advanced innovations in connected, 
automated, and sustainable mobility.
    Clemson University and ITIC collaborate on a variety of 
research activity with the Department of Energy, and Clemson 
also has a project under the DOE's Office of Energy Efficiency 
and Renewable Energy called Boosting Energy Efficiency of 
Heterogeneous Connected Automotive Vehicle Fleets. That is a 
big title for something, golly. That is government at its best, 
in my opinion, or worst maybe. They utilize their partnership 
to develop anticipative and collaborative traffic and vehicle 
control algorithms to achieve 10 percent energy savings.
    Mr. Farrell, what are the challenges that you see with 
integrating, I guess, not only, I guess I am thinking more 
autonomous vehicles than I am just electric vehicles in 
general. But as we think holistically about EVs and driverless 
cars and traffic signals, recharging stations, this is a 
tremendous investment on somebody's part, maybe not necessarily 
the Federal Government and the taxpayer.
    Are you all thinking, Mr. Farrell, about that and how are 
you all involved in that just real quickly because you have got 
10 seconds.
    Mr. Farrell. So our primary role is to understand the 
energy implications of an expanded autonomous and connected 
fleet, and analyses that we have done showed that under some 
conditions in the worst case scenarios you could triple energy 
consumption or you could get a 60 percent reduction. So the key 
is how to integrate it in an effective way to minimize the 
energy impacts.
    Mr. Duncan. And you are working with research universities 
along those--yes.
    Mr. Farrell. That is right.
    Mr. Duncan. Thank you, Mr. Chairman. I yield back.
    Mr. Shimkus. The gentleman yields back his time. The Chair 
now recognizes the gentleman from Georgia, Mr. Carter, for 5 
minutes.
    Mr. Carter. Thank you, Mr. Chairman. Thank all of you for 
being here.
    Gentlemen, I have the honor and privilege of representing 
the entire coast of Georgia, from South Carolina all the way 
down to the Florida State line, about 110 miles of coastline. 
As you can imagine, marine travel and boats are important to 
us. And very important, as all of you know and as anyone who 
owns an outboard motor knows, fuels can be very damaging to 
marine vehicles, to marine boats and outboard motors. It causes 
a lot of deterioration, a lot of wear and tear and that is 
something I am concerned about.
    Mr. Maples, I will go to you first and just ask you, is the 
EIA doing anything to look at marine engines and are you 
factoring anything in to the future of transportation as a 
result of the fuels that we are having and being forced to use 
in marine vessels like this?
    Mr. Maples. So we do, so we look at the freight industry 
marine sector and then we also look at recreational boating and 
we make projections of energy consumption in both, and we do 
track the gasoline and diesel consumption in recreational 
boating separately from that of the rest of the transportation 
sector.
    Mr. Carter. What is biobutanol? Tell me about that. Are you 
familiar with it?
    Mr. Maples. I am not that familiar with it.
    Mr. Carter. Anyone on the panel familiar with it a little 
bit? As I understand it, it is an alcohol produced from 
renewable plant-based energy sources or advanced feedstocks 
such as cellulosic biomass like wood residues. And from what I 
understand, at a 16.1 percent volume blend it actually has 
positive impacts on engines and it is less corrosive.
    Does anyone know, have we looked at this as a possible 
fuel? I am open to anyone who is willing to----
    Mr. Eichberger. So biobutanol has been discussed for quite 
a while. It is sometimes labeled with the moniker of a drop-in 
ready fuel, so compatibility issues are not a big issue 
supposedly. It has had a little trouble getting some market 
share and there is some limitation in terms of its----
    Mr. Carter. Can you tell me why? Is it----
    Mr. Eichberger. Quite frankly, I think it is a lobbying 
thing.
    Mr. Carter. A lobbying thing.
    Mr. Eichberger. There are a lot of stakeholders looking for 
a piece of this pie and this is another ingredient trying to 
get a piece of the fuels market and there is a lot of 
competition for it and I think there is some regulatory hurdles 
maybe to be overcome. I am not----
    Mr. Carter. OK. What are the regulatory hurdles? Can we 
help with that? Because if it is actually as it says, if it has 
positive impacts on engines and is less corrosive this is what 
we need to be looking for. Listen, I get calls all the time in 
my office about marine engines and about having to use this 
fuel corroding these engines.
    Mr. Eichberger. The EPA has looked at it. You can ask EPA 
specifically what is their criteria for considering biobutanol 
and blend levels and its interaction with other constituents in 
fuels. It is going to come from the EPA analysis of how it 
interacts.
    Mr. Carter. OK. But are there regulatory hurdles that have 
to be overcome, is there anything we can do in Congress to 
assist this?
    Mr. Eichberger. I have been told there are. I do not know 
specifically what they are.
    Mr. Carter. OK, fair enough. Fair enough. While I have you, 
while I am talking to you I will skip over to the question I 
have for you. The marine manufacturers again have, they have 
raised some concerns about how the fuel blends are marketed to 
consumers. For instance, one of them, E15 fuel blends in some 
scenarios are being marketed as unleaded 88. Are you familiar 
with that?
    Mr. Eichberger. I am familiar with that, yes.
    Mr. Carter. What is going on with that? Why are they being 
labeled like----
    Mr. Eichberger. The retailers who are selling E15 blended 
fuels are seeking an opportunity to grow their sales and 
because E15 has an octane rating of 88 they are able to market 
it as 88. They do affix the EPA-required label for which 
vehicles E15 is allowed to be used in according to EPA. But 
they are----
    Mr. Carter. Do you think that causes some confusion among 
the----
    Mr. Eichberger. There is a lot of confusion with consumers 
on all fuels. They like to not have to think about what fuels 
they are buying, so when we are thinking about bringing new 
fuels to the market we have to really think about how we 
educate the consumer. There is no consistency in terms of how 
the retailers are selling their E15 other than affixing that 
EPA-required label advising consumers which vehicles they can 
use them in.
    E15 is not approved for marine vessels and so that is 
specifically labeled on that fuel it is only for 2001 and newer 
vehicles and not these other vehicles.
    Mr. Carter. Let me ask you all. Do you all think we can 
make it any more confusing? Can we all get together and see if 
we----
    Mr. Eichberger. We can make it more confusing, absolutely.
    Mr. Carter. Gee. Well, we are doing a pretty good job right 
now, I guarantee that.
    Let me skip over and, Mr. Farrell, I will go to you and ask 
you this question. Again I represent South Georgia so, plenty 
of pine trees. What about cellulosic fuels? Are we doing 
anything with that?
    Mr. Farrell. Yes. The Department of Energy is indeed 
looking at advanced cellulosic routes to produce biofuels that 
could have advantageous energy and emissions profiles, so that 
is an active area of interest.
    Mr. Carter. Right. Thank you very much.
    Thank you, Mr. Chairman. I will yield back.
    Mr. Shimkus. The gentleman yields back his time. I am going 
to ask unanimous consent, Mr. Johnson, if you wouldn't mind, 
for us to go to Mr. Loebsack because he is patiently waiting 
and Buddy Carter went over time before you got in the door. So 
with that I will recognize the gentleman from Iowa who has 
waited patiently, for 5 minutes.
    Mr. Loebsack. Well, thank you very much, Mr. Chairman, and 
thanks for holding this hearing today and for allowing me to 
waive on. I really do appreciate this on the subcommittee 
today. There is a heck of a lot that has been talked about 
today, very fascinating stuff.
    My main concern as you might imagine being from Iowa is the 
RFS so I am going to talk about that for a second. But I do 
want just a couple of quick notes. Mr. Walberg talked about 
having a NASCAR track in his district. I have one in Newton, 
Iowa, but they also host every year the Iowa Corn Indy 300 at 
that NASCAR track, so I had to get that in. We also have a 
National Advanced Driving Simulator at the University of Iowa. 
They do a lot of great work on the issues related to what you 
folks are talking about.
    And I recently had a ride inside Iowa City with a Tesla 
that is advanced to be autonomous. I had a few worries as we 
were going through town, braking in time and all the rest, but 
it was actually pretty fascinating. So there is a lot to look 
forward to, I think, in the future as far as research on these 
different vehicles is concerned.
    As Mr. Shimkus might expect, I do want to talk about the 
RFS a little bit today. It is a hotly debated topic, obviously. 
And I know that this is not about the RFS, but as Mr. Shimkus 
said, per se, it is not about that today. But it is going to be 
important going forward, I think, when it comes to fueling our 
automobiles and other vehicles down the road. There are a 
number of changes, I think, that are being discussed with 
respect to the RFS right now in Congress and I think a lot of 
them would be very harmful to rural America to farmers.
    And I do appreciate the fact that Dr. Martin mentioned it 
is not just ethanol we are talking about here, it is biodiesel 
as well and it is advanced cellulosic, so it is a variety of 
things that we are talking about. But the RFS really has 
substantially benefited, I think, the U.S. economy over the 
years. It has created jobs in both renewable fuels and industry 
and overall agricultural industry as well, led to a pay raise 
for American farmers, about $6,800 per American farm it has 
been estimated, and has directly affected folks living in rural 
communities. It has lowered gas prices, I think, by giving 
consumers choice at the pump which we all know leads to more 
money in the pocket of our constituents, so that is very 
important.
    My home State of course leads the nation in biofuels 
production, Iowa, and I am very proud of that. It supports 
probably close to 50,000 jobs in Iowa alone and accounts for a 
sizable proportion of our economy. Biofuels, I think, are a 
clean, homegrown, and high-octane alternative to fossil fuels 
which is very important that we have an alternative to fossil 
fuels, I think, for national security as much as anything as 
well.
    The EPA has estimated as biofuel production has increased 
since 2007, total cropland acreage has actually dropped not 
risen, as some say. And, additionally, the USDA reports that 
demand has never been higher for conservation programs as well. 
I think there are some myths out there that we have to be very 
careful when we talk about the RFS that we set people straight 
on this.
    Americans are consuming more and more gasoline. Gasoline 
consumption set a new record high in 2018 of 9.35 million 
barrels per day with further increases expected in 2019, and 
yet another reminder, I think, why we have to maintain a strong 
RFS. I know that domestic oil production is soaring, but we all 
know that production won't last forever and that falling oil 
prices are not going to last forever as well.
    I am running short on time. I could give a lot more facts 
and figures, but I think in the interest of time and given the 
fact that I am waived to this committee today, this 
subcommittee today, I do just want to ask Mr. Martin. With all 
the different statistics that we know in mind, how would you 
say the RFS and strong CAFE standards help to address continued 
increase in gasoline consumption and carbon emissions?
    Mr. Martin. Right. So I think vehicle fuel, vehicles policy 
to make vehicles more efficient, fuels policy, and also to get 
electric vehicles going, these things work together to cut oil 
use and reduce all the burdens that high oil use has on the 
U.S., saving consumers money and reducing greenhouse gas 
pollution and all the other challenges associated with oil 
pollution. So I think the RFS of course is supporting the 
development of alternative fuels, but all those pieces fit 
together.
    Mr. Loebsack. Right, I appreciate that. And I do appreciate 
the comments about E15 that were mentioned too, because it is 
the case that I know some folks have concerns about that. Mr. 
Carter did. But the fact of the matter is that we can make sure 
that we label this correctly so that people do not have 
problems with their engines. And I know that Senator Cruz has 
some concerns about that as well.
    But I want to continue to work forward with the President, 
with the Administration, with the relevant folks to make sure 
that we do have a strong RFS and that we do in fact continue to 
contribute to our rural economies. I think it is just 
absolutely essential and I think we can have cleaner air and I 
think we can reduce our dependence on fossil fuels and make 
sure that we have better security for our country as well so we 
are not fighting wars for oil down the road.
    So thank you again, Mr. Chair, for having me and I 
appreciate it. Thanks so much.
    Mr. Shimkus. The gentleman's time is expired. Again the 
chair wants to thank the gentleman from Ohio and then recognize 
him for 5 minutes.
    Mr. Johnson. OK. Thank you, Mr. Chairman. I appreciate that 
and I was happy to yield.
    Mr. Eichberger, many of us that are not from California are 
not big fans of the State's disproportionate role in dictating 
fuels and vehicle policies. Could you talk a bit about 
California's role in technology forcing with regards to fuels 
and vehicles and what it may mean for the rest of us?
    Mr. Eichberger. Probably not to that extent. What I can 
articulate is of the electric vehicles that are being sold in 
the market, half of them are being sold to California. I think 
that is encouraged a lot by the Zero Emission Vehicle program 
they have and the other States that have the ZEV program, and 
it does drive some decisions by the automakers to satisfy the 
largest market in the union.
    Mr. Johnson. OK, all right. Well, thank you.
    Mr. Maples, the Annual Energy Outlook for 2018 has 
projections out to 2040 and you see the gasoline-powered 
internal combustion engine remaining the most popular choice 
over that span. Can you explain the staying power of the 
internal combustion engine?
    Mr. Maples. Sure. So again I think this really comes down 
to, for the alternatives to the internal combustion engine the 
cost of those alternatives and then the availability of 
alternative fuels in that refueling infrastructure, in general, 
just a consumer acceptance.
    The gasoline vehicle is going to get much better. I think 
we have talked about that some here today. You are going to see 
significant improvements in fuel economy there, significant 
reductions in fuel costs for consumers of those vehicles, which 
I think is going to make it even more difficult for some of 
these alternatives to compete against it.
    Mr. Johnson. Yes. I don't rebuild cars myself, but I know 
that here in America ever since the automobile was first 
developed it began creating an enthusiastic consumer base for 
old cars, rebuilding cars, automobile enthusiasts, and so I 
think consumer acceptance for a lot of the new technologies is 
a big part of this factor that is keeping the combustion engine 
as the mainstay. Would you agree with that?
    Mr. Maples. I think that is correct. OEMs right now, for 
example, I don't think there are any propane vehicles that are 
available produced from an OEM, or natural gas.
    Mr. Johnson. Right.
    Mr. Maples. But they do sell them as convertible if a 
consumer wanted to go and have those converted over. So 
otherwise we have plug-in vehicles as an option and then flex-
fuel vehicles.
    Mr. Johnson. Sure, OK.
    Also to you, Mr. Maples, to what extent is fueling 
infrastructure an impediment to increased market penetration of 
alternatives?
    Mr. Maples. I think with any of these alternative vehicles 
there are hurdles and the question is how many hurdles have to 
be overcome in order for these options to be successful. Policy 
plays a role, but certainly one of the, I think, biggest 
hurdles is availability of refueling of those vehicles.
    Mr. Johnson. OK, all right.
    Mr. Chair, with that I yield back a whole minute and 33 
seconds.
    Mr. Shimkus. The gentleman yields back his time.
    Seeing that there are no further members wishing to ask 
questions for this panel, I would like to thank all of our 
witnesses again for being here today. Before we conclude, I 
would like to ask for unanimous consent to submit the following 
documents for the record: A letter from VNG, which is a natural 
gas vehicle group; and this, Fueling a Clean Transportation for 
the Future from the Union of Concerned Scientists. \*\ Without 
objection, so ordered.
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    \*\ The information has been retained in committee files and can be 
found at: https://docs.house.gov/meetings/if/if18/20180307/106958/hhrg-
115-if18-20180307-sd090.pdf.
---------------------------------------------------------------------------
    [The information appears at the conclusion of the hearing.]
    Mr. Shimkus. In pursuant to the committee rules, I remind 
members that they have 10 business days to submit additional 
questions for the record and I ask that witnesses submit their 
responses within 10 days if possible upon receipt of the 
questions.
    Without objection, the committee--before I do that, I 
really appreciate it. I think it was a great hearing. Members 
were very participative and we learned a lot. So I do 
appreciate and, without objection, this committee is adjourned.
    [Whereupon, at 11:49 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

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