Managing demand side is the key

Email Interview with Mr Mike Millikin, Editor of Green Car Congress on Tuesday 22, 2011

Q1. I come from India where with increase in prosperity people have started resorting to buying huge gas-guzzling SUVs, even though the roads are so congested everywhere. In the US, it seems there has not been much concern till very recent about the high incidence of SUVs as the choice for cars. What do you think?

 Although some people consider the popularity of SUVs to be chronic to the US, it seems that market results elsewhere suggest otherwise. Given the opportunity and means, a significant percentage of buyers will opt for a larger, higher, roomier, more powerful vehicle, whether in the US, India, or China.

Q2. I feel the policy environment has not generally been sensitive towards emphasizing fuel efficiency in cars and hence this highly unsustainable and skewed focus on SUVs in our society. I would like to hear your views on this.

I think that you can safely argue that up until recently, policy, in the US at least, has not been tremendously focused on driving radical increases in fuel economy across the vehicle fleet. I think that is in the process of changing, with the new existing national policy in the US on fuel economy and GHG through MY 2016, and the proposed follow-on phase from MY 2017, the coming standards for trucks, and of course the coming of the California Advanced Clean Cars policy package. Under current conditions, there will always be a push and pull between regulators and the industry over the extent of what is economically possible. To be maximally effective, any fuel efficiency regulation needs to be accompanied by a suite of other measures: demand side education (i.e., the buyers); low carbon fuel regulations; a price on carbon; and ultimately ways to reduce the number of vehicle miles travelled. If you resolve the demand side issues–i.e., the ongoing desire for big, powerful vehicles, the perceived need to drive everywhere, and the convenience of highspeed highways, the supply side (i.e., the automakers) will fall into place. As long as the demand side is left unaddressed, however, it’s always going to be a fight, because companies–naturally–want to sell what consumers will buy. And in my opinion, we are a great distance away from appropriately addressing the demand side.

Q3. What attracts you to Greencarcongress?

Transportation is one of the most dynamic and most critical technology areas and markets for economies and climate.

Q4. What are the best ways to wean away the focus from gas-guzzling cars to more efficient ways of transportation?

Focus on the buyers: stiff price on carbon, new zoning approaches, consistent education and messaging, political leadership.

Q5. What is the future of electric cars? Alternative fuel cars?

Everyone in the industry seems quite in agreement that in the long term the future is electric. Open questions right now are the type of energy source (ie., battery and/or fuel cell), cost and rate of adoption. I worry that the current global economic situation will begin seeing the paring back of subsidies for adoption, which in turn will significantly slow the initial deployment ramp.

Q6. What policy support these require from the government?

Money–i.e., subsidies. Carbon pricing. Aggressive GHG regulations

Alternative Fuel Vehicles

source http://www.afdc.energy.gov/afdc/data/vehicles.html

A look at the number of light duty vehicles sold in the US from 1975 to 2010 will show the growing popularity of SUVs over cars. From the 1990s to the first decade of the millennium, before the market was hit by recession, the increase in the light duty vehicle market has almost been cornered by the SUVs. While the number of cars sold during this period has virtually been static around 8 million vehicles, the number of SUVs sold increased from less than a million to about four millions thus absorbing all the increase in light duty vehicles sales almost single-handedly. This increase in the popularity and sales of SUVs is neither desirable nor sustainable.

If we look at the Carbon Dioxide emission trends from 1975 to 2010, it has almost been static from 1987 to 2010 at about 400 g/mi. The fuel economy trend from 1975 to 2010 shows that it has been hovering at about 22mpg since 1987.

Characteristics of Light Duty Vehicles for Six Model Years
		1975	1987	1998	2008	2009	2010
Adjusted CO2 Emissions (g/mi)		681	405	442	424	397	395
Adjusted Fuel Economy (MPG)		13.1	22.0	20.1	21.0	22.4	22.5

Source http://www.epa.gov/otaq/fetrends.htm

It may not come as a surprise looking at the reckless exploitation and splurging of our resources by people and policies, quite unmindful of the future of our children. Though, there has been silver-linings here and there like the National Fuel Efficiency Policy set into motion by President Obama in 2009 and speaking globally, Trans-European Transportation Network (TEN-T), they have been marred by hiccups and it is a long way ahead. The United States Government Department of Transportation Strategic Sustainability Performance Plan of June 2011 does speak of reducing petroleum consumption and increasing alternative fuel use in DOT vehicles but its scorecard is red in reduction in fleet petroleum use.

The society needs to tackle this menace through a multi-pronged approach of which a few are illustrated below:

• Promoting use of public transportation
• Car sharing pools to be encouraged
• Promoting fuel-efficient cars
• Development and promotion of alternate energy cars
• Research and development efforts in biofuels and alternative fuels like hydrogen, propane, ethanol, natural gas, etc
• Development of electric vehicles and their components like batteries, electronic foot brake valve, etc
• Instituting laws and policies to curb inefficiency and inefficient vehicles

The USA government initiatives like creation of fuel economy labels is a good mechanism to create awareness about the economic and environmental advantages of fuel economy. Similarly, vehicle cost calculator  uses basic information about driving habits to calculate total cost of ownership and emissions for makes and models of vehicles, including alternative fuel and advanced technology vehicles and is a good way to sensitize people.

But the country does need to focus its priorities more and expedite measures that discourage gas-guzzling cars and promote fuel efficient cars. The policy to phase out the inefficient vehicles in a time-bound manner needs to be rigorously implemented. The compact vehicles along with the alternate fuel/hybrid vehicles need preferential tax regime to propel their growth. In dense habitations, better public modes of transportation, enhanced parking fees and other measures to discourage congestion like car sharing pools can be explored.

Investment in research and development of alternative fuels remain one strong focus area despite the Solyndra debacle. The alternative fuel research industry has been active which needs every possible support from the government. A glimpse of the research (process to convert biomass to hydrocarbon fuels) in the universities in this area can be seen at:

It is here that strategic investments need to go into the future. R & D especially in the high technology end can have long gestation periods which add to the already high costs. The country is facing a resource crunch and is struggling to create jobs. In such a scenario, research institutions bear the brunt of the cut in governmental aids. The government then needs to intervene creatively and can generate funds for research and development in key areas through industry participation and collaboration. The government should put an inefficiency tax on all the gas-guzzling cars which can go towards the research development and which in turn can replace the humongous vehicles on our roads with more efficient cars.

Let us start small. All the mails that we transact electronically, let us tag the subject line with AlFuVe, particularly when the addressee is government. We should add this tag to all our conversations too, like those on twitter, facebook, etc. Let us also send emails to government to keep their agenda on focus as much as we can. Let us do what we can to secure our children’s future.

 

Moving Ahead – Electric Vehicles

(source : flickr/photos/travel_aficionado)

Businessmir reports that sales of new cars and light commercial vehicles (LCVs) in Russia have grown 45%, or by 593,345 vehicles, in the first nine months of 2011, to 1,921,282. Now that is an indicator of where are we leading to in terms of vehicle congestion on the city roads and the resultant pollution levels. President Barack Obama announced in July that he would raise the fleetwide fuel-economy average for passenger vehicles to 54.5 miles per gallon by 2025 as part of his plan to reduce dependence on foreign oil. However, the proposed rule, due out by Sept. 30, will now take longer than planned to write and won’t be out until mid-November (source : businessweek).

I believe there is an urgency to take measures to maximize fuel efficiency of fleets and of manufacturing operations and to minimize the CO₂ intensity of fleets. There has to be a medium term strategy for a gradual shift to a market dominated by alternate fuel vehicles. As the emerging economies are increasing their income and consumption levels, more and more vehicles are being added to the already congested city roads and there is a dire need to move over to new technology cars like Electric Vehicles. It is important for the automotive industry to keep pace with the requirement of times lest they are rendered irrelevant sooner than later.

There has been growing awareness and response to the issue and it is heartening to note over the virtual space the clutter of bytes announcing movements in this direction. Whether Ford Motor Co announcing collaboration with their partners in China to save costs in making Electric cars and moving towards producing more fuel-efficient vehicles or ABB working on their network of direct current (DC) fast charging stations for electric vehicles in Austria, that is the direction ahead for the automotive industry. Fossil fuel subsidies worldwide rose to at least $470bn in 2010, according to analysts at the OECD and International Energy Agency and that should propel all the stakeholders to prop up the Electric Vehicle industry.

According to Global Industry Analysis, Inc  global Electric Vehicles market will reach 2.6 million units by 2015. According to another forum at onlineev:

Sales of electric cars will skyrocket in the next five years, according to a recent study conducted by Pike Research, which specializes in research in that area. But while the growth will be steep in percentage terms, electrics and alternative-propulsion vehicles will still have a very long way to go before they replace the conventional gasoline-powered car as the dominant vehicle type. Hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs) and battery-electric vehicles (BEVs) will all share the stage as electrified vehicles continue to gain momentum. But in the overall scheme of the global car market, they will still be niche players. According to the report, cumulative sales of plug-in electric vehicles (PEVs), the category that includes both PHEVs and BEVs, will reach 5.2 million units by 2017, up from just under 114,000 vehicles in 2011. By the same year, cumulative sales of HEVs will represent an additional 8.7 million vehicles, for a combined total of 13.9 million units in all electrified vehicle categories.

Tata Nano, the world’s cheapest car was unveiled at Delhi Auto Show in January 2008 and sells for about $2500 in India. At the Detroit Motor Show Tata Technologies presented its ‘Better Innovation’ event at the Detroit Science Center and Ratan Tata,Tata Motors’ chairman, while speaking at the Delhi Auto Expo confirmed that his company was working on a Nano variant for the American market. Here is what he said, “We also recognize there is a market for the Nano not only in developing countries, but possibly in the developed countries. For the United States we need a car which has a larger engine and we need additional crash test modifications and we are in the process of doing it. We should be there in about three years.” Most think he is referring here to an electric motor. PTI reports that the small car being showcased by the Tatas is expected to be retailed  at under US$ 10,000. If the 4 seats Nano EV retails between $5,000 and 9,000 it is likely to be the world’s cheapest electric vehicle EV. (source : onlineev)

Promoting Fuel Efficient Cars

Energy saved today is energy generated for future. The resources on our planet are limited and hence let us not be mortgaging the future of our children by splurging on extravagant gas-guzzling cars today. For our regular use, where a small family car can do, why go for a SUV? When we can do with public transportation, why use one car per person? Why not encourage hybrid and fuel efficient cars?

If it causes your heart to ‘tweet’ even a bit, please join hands in promoting efficient ways of owning and driving a car. Please visit https://notogasguzzlingcars.wordpress.com/ to expound your views. For more on this please also visit http://twitter.com/#!/anamsun and Facebook/Green car.

 

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Promoting Fuel-efficient Cars

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