The Nexus of Energy, Environment and the Economy WIN, WIN, WIN

1
The Nexus of Energy, Environment and the
EconomyWIN, WIN, WIN

• International Board of Direction
• ITE
• Oct 31, 2008
  Alan E. Pisarski

2
The Starting Point

• Three Interacting Factors
• Energy Security
• GCC/GHG
• Economic Activity
• Look For Win / Win / Win They Do Exist
• Vehicle Fuel Efficiencies
• Stationary Fuel Efficiencies
• Fuel Shifts

3
THE FACTUAL BASE
4
U.S. Greenhouse Gas Emissions
4
4
5
Surface Transportation is the main issue for now
6
Petroleum high in energy/pound
7
Energy Intensity

• Btu per of GDP declines about a third from 2006
  to 2030 (-2/yr since 1992)
• Decline of energy intensive industries
• Energy Efficiency
• 1990 2006 Pop 20 Energy 18
• 2006 2030 Pop 22 Energy 19

19801.0
8
Annual Energy Outlook DOE 2008 background
forecasts
2006 2030 Change pre EISA 2007
Primary Consumption 99.5 q 118.0 q -5.3 q
CO2 emissions / 6,851 mmt - 522 mmt
Cum emissions 2008 - 5,300 mmt
Q quadrillion Btu 172 million bbls
oil/yr EISA Energy Independence and Security
Act 2007 MMT million metric tons Mbbls
million barrels
9
AEO 2008 Transportationforecast changes from pre
EISA
2006 2030 Change pre-EISA 2007
Liquids used 13.9 mbbls/day 22.8 mbbls/day -2.1 mbbls/day
Imports 60 54 -2.4 mbbls/day
Petrol Transport 96 88
LDV mpg 20 27.9 40
10
Transportation now leads in energy consumption (q
Btu)
2006 2030 Change pre-EISA
Energy consumed 28.2 q 33.0 q - 6.3 q
Annual growth 1.4 .7 Cut in half
11
THE TRENDS ARE LARGELY POSITIVE

• CO2 Is Almost Self-stabilizing
• Energy Intensity/GDP Declining
• Energy Intensity/Capita Stable
• Transportation VMT Slow Growth
• Vehicle Fuel Efficiency
• Demography
• Price Will Be Key Factor

12
4 a gallon has come and gone

• Will it be back? When?
• Who is affected?
• What happened to vmt?
• What happened to commuting?
• Are there answers
• Short Term ?
• Long Term ?

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VMT DECLINE STARTED HERE! COST OR STICKER SHOCK?
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(No Transcript)
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Decline in VMT by Month 2008-2007
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Decline in VMT by Month 2008-2007
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Decline in VMT by Month 2008-2007
July - 3.6
Aug. - 5.6
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TWO REACTIONS

• BOO !
• Less VMT trips not taken less economic
  activity
• Now is the worst time to be cutting economic
  activity

• HURRAY!
• Schadenfreude!
• Those suburbanites had it coming!
• At last we are at the Tipping Point
• Now there will be a rush to the center for people
  and jobs

19
VMT trend is not just gas prices

• WEAK ECONOMY
• Discretionary trips in Vacation Season
• DEMOGRAPHY - a long term trend

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TREND IN PERSONAL VMT by age-sex
Source Commuting in America III
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END OF THE BOOM

• 1980-90
• 18.5 Million
• 1990-2000
• 13.3 Million
• 2000-2010
• Maybe as many
• Our problem may be too few commuters not too
  many!

Source Commuting in America III
22
A little Perspective Here!How much are we really
talking about?

• 3.3 drop for year
• Last year I drove 300 miles a week 15,000
  miles/yr
• This year I drove 290 miles a week
• 1 five mile trip lost per week

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(No Transcript)
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IS FUEL CHEAP AT 4?
Cost/ gal Fuel Efficiency Cost/ mile
1981 2007 3.09 16.4 18.8 cents
2007 2.85 22.4 12.7 cents
2008 approx. 4.00 23.7 16.8 cents
PLUS WE ARE 20 RICHER THAN THEN!
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VMT Response Where did it go?

• FREIGHT
• Local Distribution opportunities
• Load changes
• Big Fleet gains

• TRIP CHAINING Big payoffs
• CARPOOLING
• Work some gains
• Non-work more
• CUTS IN TRIP LENGTH
• CUTS IN TRIPS MADE
• SHIFTS TO TRANSIT?
• Maybe 2

26
Would 5 or 6 gas change America?

• LIFE STYLE PREFERENCES WILL DETERMINE GOALS AND
  TECHNOLOGY WILL RESPOND
• The consumer benefit of automobility is colossal
  think of toll costs 4/gal
• Europe at 9/gal still has traffic jams
• SERIOUS EFFECTS
• slower access to automobility of minorities and
  lower income populations
• Rural stress
• Less access to broader worker pool
• Depresses auto sales
• FLEET TURNOVER RATE WILL BE KEY

27
STATE OF THE PRACTICE
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GOOD WORK BEING DONE

• Many (maybe too many!) players
• Here and abroad
• Technologies
• National Modeling DOE NCEP, EPA
• Metropolitan Modeling Wash COG, others?
• Policy
• NCEP
• US CHAMBER

29
Key Studies

• OUTSIDE US
• Eddington link between Transport and Economy
• Stern Economic Review of Climate change
• King review of low carbon car opportunities
• UK Dept for Transport attempts to meld all
• INSIDE US
• McKinsey assess opportunities and costs
• NCEP assess impacts of policies
• Institute for 21st Century Energy US C of C made
  recommendations for energy security
• Energy Security Leadership Council

30
GHG responses are different from Air Quality
Approaches

• Reducing GHG and fuel use works with self
  interest
• Immediate cost savings
• Maybe some trade-offs
• Greater appreciation of role of technology
• Short term/long term factor is more significant
• Low cost
• Immediate action
• Present value analysis

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A Question!

• What Part Of Gains In Air Quality In The Past 20
  Years Have Come From
• Technology?
• Changed Behavior?

32
A Question!

• What Part Of Gains In Air Quality In The Past 20
  Years Have Come From
• Technology
• 95 to 105
• Changed Behavior 5 to -5

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A Question!

• What Part Of Gains In Green House Gases In The
  Next 20 Years Will Come From
• Technology?
• Changed Behavior?

• What Part Of Gains In Air Quality In The Past 20
  Years Have Come From
• Technology
• 95 to 105
• Changed Behavior 5 to -5

34
EPA approach as model

• Change behavior or change technology?
• GHG is even more true
• No conflicts over trade offs re costs or bens
• AQ increased costs for unclear bens
• Safety was key tradeoff issue
• GHG is reduced costs and maintain bens
• McKinsey Study Consumer Surplus

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4 PARTS TO REVIEW PROCESS

• EMISSIONS NOT VMT
• AVOID THE CONFORMITY PROCESS
• STAY OUT OF NEPA PROJECT BASED
• PROCESS IS BROKEN
• PROJECT, HOTSPOTS METRO BASED
• GHG IS GLOBAL
• FOCUS ON COST-EFFECTIVENESS

36
EARLY TIMING IS A MAJOR FACTOR STUFF STAYS
AROUND A LONG TIMEM Norman

• SHORT TERM
• Speed Eco-driving
• Congestion Operations
• Trip Chaining
• Work at Home
• Work Schedules
• Fleet Optimization
• Carpooling
• Load Factors
• Non-Motorized Means

• LONG TERM
• New Facilities
• New Vehicles
• Fleets Public/Private
• Private Individual
• New Technologies
• New Fuels
• Land Use Changes
• Redistributed O-Ds

37
Time Focus is Different

• GHG is cumulative therefore early solutions are
  superior to longer term
• A form of present worth analysis is appropriate
• In some ways opposite to air quality
• Need to focus
• Near term 1-5 years
• Mid-term 5-20 years
• Long-Term 20 years

38
Near term

• Attack current congestion
• Focus on operations, speeds, flow
• Non-construction-based mode shifts
• Carpooling, trip chaining, use current transit,
  work at home, non-motorized opportunities
• Construction and Reconstruction are potential
  negatives to be recognized in b/c analysis
• Refocus research and planning
• more efficient mechanisms for construction and
  maint. (concrete, steel, construction machinery,
  etc.)

39
Mid-term

• Critical Transportation Factors
• Vehicle power trends
• Sources of electricity
• Travel demand PMT/VMT demographic trends
• Outside scope of profession?
• Scale of energy-intensive industries
• Efficiency gains in other sectors
• Restructuring of energy distribution

40
Long Term

• Life Styles
• Energy intensive vs non-intensive industries
• Wealth-producing productivity
• Efficiencies in other sectors
• Substitutes for mobile fuels
• Ultimately its all about electricity

41
POLICY ISSUES AND EXPECTATIONS
42
Emphasis on System Operations

• The 4-legged stool is now a standard item in
  transportation GHG topic
• System Ops is now the fourth leg

43
EMPHASIS ON OPERATIONS NO REGRETS NO DOWNSIDES
Economy Energy GCC
Speed Eco-driving ? ? ?
Congestion Ops ? ? ?
Trip Chaining ? ? ?
Work Schedules/WAH ? ? ?
Fleet Optimization ? ? ?
Load Factors ? ? ?
Non-Motorized Means ? ? ?
44
Emphasis on flow and speed control
CO2 reductions can be accomplished by reducing
congestion and improving operational efficiency
Source University of California, Riverside
45
STATE GHG ASSERTIONS

• 60-80 cut in GHG below 1990 by 2050
• Too many are just Political assertions of
  aspirations without substance
• Transportation leadership not involved
• There is stunning degree of innumeracy when it
  comes to the numbers surrounding climate change
  legislation. "
• Statement by outgoing Chairman of Presidents
  Council on Environmental Quality

46
STATE GHG ASSERTIONS

• TRIUMPH OF RHETORIC OVER REALITY
• The legislation expresses the sentiments the
  Congress would like to have us believe they
  hold!
• George Will

47
LAND USE OPTIONS

• Very long term
• Limited opportunities (population doubling
  rate)
• Scale responses small
• Density is one of the key life style choices
• Inconsistent with affluent, technologically
  developed society
• Options and opportunities not requirements
• Let it happen not make it happen

48
LAND USE OPTIONS

• There is a colossal existing potential for people
  to live more efficient life-styles if they
  choose. We can go to the nearest
• Job
• School
• Food store
• Restaurant
• Doctor
• Religious Facility

49
ULI on Land Use Potential

• It is realistic to assume a 30 percent cut in
  VMT with compact development.
• smart growth could reduce total
  transportation-related CO2 emissions from current
  trends by 7 to 10 percent as of 2050.
• Assumes
• 67 of development in place in 2050 is new or
  rehab
• 60-90 of that development is smart growth
  (equivalent to 15 housing units per acre)
  25,000 sq. mi.
• -- Growing Cooler by ULI, CCAP, et al,
  2007

50
EFFICIENCY VS EQUITY

• The Efficiency/Equity argument is fundamental to
  any regulatory process
• EQUITY your share of solution should equal your
  share of the problem!
• EFFICIENCY do most cost-effective first and
  solve more of the problem per

51
Emphasis on Emissions vs VMT

• Issue is global climate change and energy
  security
• Focus on fuels and efficiencies
• VMT reduction is often a different agenda
• The largest CO2 abatement opportunities in the
  transport sector lie in initiatives to improve
  fuel efficiency. ECMT

52
On planning A TEST

• Ask about a proposed project
• What share of my resources am I going to commit
  to solve what share of my problem?

53
TRANSPORTATION VS OTHER OPTIONS

• Options in other sectors are greater.
• Main focus is, and should be, electricity
  generation.
• WHY IS TRANSPORTATION SINGLED OUT AS ONLY ONE TO
  HAVE OUTPUT CUT?
• No one suggests farm output or industrial output
  should be cut by 25

54
Transport is most dependent on high energy
density fuels

• Cost effectiveness (cost per tonne of CO2) is
  the fundamental determinant of which abatement
  policies to adopt and how much the transport
  sector should contribute towards economy-wide CO2
  abatement goals --- it is important to achieve
  the required emissions reductions at the lowest
  overall cost to avoid damaging welfare and
  economic growth.
• Transport and other sectors are expected to
  contribute less to overall emissions reduction
  strategies.
• ECMT Council of Ministers Transport and
  Environment Jun 2006

55
Big win win win opportunities with no loss of
consumer benefits
Source McKinsey Co.
56
Fuel/GHG saving caveats

• McKinsey maintaining Consumer Surplus
• CAFÉ safety trade-offs
• Fuel and insurance trade-offs ?
• Infrastructure needs

57
THE QUANTITATIVE VS THE ASSERTIVE

• IN THE EARLY STAGES OF A NEW CHALLENGE THE FOCUS
  IS TYPICALLY QUANTITATIVE
• WHAT,WHY,HOW MUCH ?
• GAINING A SENSE OF SCALE
• GAINING A SENSE OF FACTORS AND RELATIONSHIPS
• BUT, THIS CAN QUICKLY LEAD TO THE ASSERTIVE AND
  TO ADVOCACY ROLES AS PLAYERS SENSE
  THREATS/OPPORTUNITIES

58
Data, models etc.

• ADVOCATES HAVE ADOPTED A NEW JUSTIFICATION FOR
  THEIR CAUSE
• Heavy hyperbole
• Most data issues are in rates and performance
  effects
• GHG savings/ of expenditure
• Comparative performance statistics

59
Data, models etc.

• EMFAC (CARB) MOVES EPA
• CO2 consequences of transportation construction
• Weak on Fuel efficiencies long term
• Weak on Fuel types long term (electrics 2.4 cap)
• Sensitive to stop/start
• Life cycle analysis weak
• Fleet information characteristics VIUS

60
The Metrics

• Economic Efficiency
• Costs per unit of problem solved
• Between transportation and other options
• Within transportation
• Performance Measurement
• Delivery timing and budget
• Risk Reward

61
The emphasis should be on setting priorities and
quantification but
LOTS OF LOW ON
MINOR PROBLEM Lots of rhetoric Advocacy Earmarks
REAL PROBLEM Quantification key Setting Priorities Cost-Effectiveness MAYBE
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Cost-effectiveness


Category Description CO2 Cost Effectiveness Range
Telecommute Programs 10 to 40
Signal Optimization 30 to 50
Park Ride Lots (Transit and HOV) 100 to 500
Transit Service improvements 100 to 800

Cost-effectiveness of Example Transportation
Emissions Reduction Measures ( per ton of CO2
reduced)
WASH COG MODEL
63
The Right Answer Should At Least Be Among The
Options Available!

• This Is A Real Problem Even Independent Of Global
  Warming
• Fuel costs
• Energy Security
• Economic Uncertainties
• This Is A Real Problem With Little Resources
• Selling Bad Solutions To A Real Problem Should Be
  Out!
• Research / Economic Analysis / Performance
  Measurement Should Be Key

64
The King Study, UK

• Reduce emissions per vehicle by 50 by 2030
• Emissions saved now are more important than
  those saved later
• Long term decarbonization of road transport
• Almost COMPLETELY decarbonize road transport,
  at least in the developed world, by 2050!

65
We obtain about a 1 increase in engine
efficiency per year at present the question
is How do we choose to use it?
HSP
1975
135
1986
MPG
13
22
66
We obtain about a 1 increase in engine
efficiency per year at present the question
is How do we choose to use it?
2006
225
HSP
1975
135
1986
MPG
13
22
67
We obtain about a 1 increase in engine
efficiency per year at present the question
is How do we choose to use it?
2006
225
?
HSP
1975
135
1986
MPG
13
22
68
New Volks

• has an average diesel fuel consumption of just
  0.99 litres per 100 kilometres
• Ughhhhh multiply by 3/18 add 47 carry the one

69
New Volks

• has an average diesel fuel consumption of just
  0.99 litres per 100 kilometres
• Ughhhhh multiply by 3/18 add 47 carry the one
  235 mpg NOT BAD !

70
A key policy feature will have to be Adaptation
to GCC?

• Adaptation Actions by individuals or systems to
  avoid, withstand, or take advantage of current
  and projected climate changes and impacts.
  Adaptation decreases a systems vulnerability, or
  increases its resilience to impacts. (Pew Center
  on GCC)

70
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Potential impacts on new and existing
transportation infrastructure?

• Permanent inundation of roads, bridge approaches
• Weakening of land, substructure supporting roads,
  bridges
• Temporary flooding of roads
• Coastal Interior
• Increased stream flow, erosion and bridge scour
• Pavement cracking, deformation
• King Gee, FHWA

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This will be reflected in all stages

• Transportation Planning
• Preliminary engineering and NEPA
• Project design and construction
• Operations and maintenance

72
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Adaptation Options

• Maintain and manage
• Higher maintenance costs
• Protect, strengthen
• Sea walls, buffers, design changes
• Relocate
• Move key facilities, instead of rebuilding
• Promote redundancy
• Emergency management

73
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The Central Finance Issues

• Make it to next legislation? Yes? No?
• Usual Sources of Revenue very limited
• Taxes no growth inflation losses
• Bonding market is suffering
• Tolls and Pricing Toll model weakened
• Cap and Trade or Carbon Tax ?
• POSSIBLE STIMULUS PACKAGE
• TOUGHEST REAUTHORIZATION EVER!

75
Carbon taxes

• Supported by Economists
• Less complex, less bureaucratic than cap and
  trade
• Tax starts low and grows in fixed steps
• Percentage to RD
• Revenue neutral goal taxes recycled or
  substituted

76
RECOMMENDATIONS
77
WORK WHERE THE LIGHT IS GOOD

• ISSUES PLAY TO THE STRENGTH OF THIS ORGANIZATION
• FOCUS ON AREAS IN YOUR PURVIEW
• FIGHT FOR QUANTITATIVENESS
• PLAY A ROLE IN PUBLIC INFORMATION
• BE KNOWLEDGEABLE PLAYER IN OTHER AREAS

78
Governments Failures are in Public Information

• Promote slower speeds
• Promote 4 day week or 9 day bi-week
• Promote other flex-time
• Promote Working at Home
• Promote carpooling

79
IN YOUR PURVIEW

• ADVANCE STRONGER SUPPORT FOR ENHANCED OPERATIONS
• ADVANCE GOALS FOR NEW TECHNOLOGIES
• ADVANCE MORE EFFECTIVE PLANNING PROCESS
• EMPHASIZE THE QUANTITATIVE
• DATA
• MODELS
• PERFORMANCE MEASURES
• COST-EFFECTIVENESS
• SUPPORT EXPANDED RESEARCH
• ROLE IN ADAPTATION TECHNOLOGY OPTIONS

80
RELATED AREAS

• SUPPORT FUEL EFFICIENCIES
• SUPPORT NEW FUEL OPTIONS
• SUPPORT MORE EFFECTIVE FEDERAL/STATE LEGISLATION
  AND TRANSPORTATION PLANNING RE GHG
• SUPPORT APPROPRIATE TAXATION
• FLEET TURNOVER IS KEY ISSUE

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THANK YOU

• alanpisarski_at_alanpisarski.com

82
Annual Energy Outlook DOE 2008 background
forecasts
2006 - 2030 Notes
GDP 2.4 annual down .4 from 2007 estimate
Labor Productivity 2.3 annual down .4 from 2007 estimate
Employment 0.9 annual No change