Barring a last-second deal to avert it, the federal government's budget will be cut on Friday by $85 billion for the current fiscal year, which ends in September. These cuts will be applied across the board to every cabinet department and agency of the federal government, though at different rates for defense and non-defense activities, and with some functions exempted by the legislation that set the sequester in place. Energy is no exception, and some of the cuts there may seem surprising, given the President's emphasis on promoting new energy sources. It's worth putting all this into perspective.
Much of the discussion I'm hearing about sequestration, including efforts to replace it with a mix of smaller, more-surgical spending cuts and new tax revenue, seems to miss the bigger picture. Sequestration was devised by the White House and agreed to by Congress as an intentionally repulsive fallback to the $1.2 trillion of detailed spending reductions that were to have been negotiated in exchange for raising the federal debt ceiling by what ended up being $2.1 trillion--already spent in the meantime. There were certainly political reasons why that deal focused on spending cuts, rather than a mix of cuts and new revenue. However, after reviewing the White House's own data on federal revenues and expenditures for the last five years, it would be hard to avoid the conclusion that the US government has a serious spending problem, irrespective of any revenue concerns.
Specifically, the Office of Management and Budget (OMB) expects combined federal revenue for fiscal year 2013 to come in at $2.9 trillion, or 13% higher than the previous all-time, pre-recession peak in 2007. Yet 2013 expenditures of $3.8 trillion would be 40% higher than the 2007 level--a trillion dollars more, in fact. Some of that increase reflects carry-overs from the 2009 stimulus bill, most of which was spent in 2010-12. Even after factoring out expenditures related to the higher unemployment resulting from our weaker economy, federal spending has grown rapidly.
What does sequestration mean for federal energy programs? Before the cuts were postponed for two months, OMB identified annual reductions totaling $2.4 billion from non-exempted programs within the Department of Energy. That included cuts of about 8% to the department's science budget, the Office of Energy Efficiency and Renewable Energy (EERE), ARPA-E, the Strategic Petroleum Reserve, innovative technology loan guarantees, and other activities. Around a billion would be cut from the DOE's nuclear weapons and defense-related work. Yet when applied to the DOE's 2013 budget request, it appears the department would still receive about a billion dollars more after sequestration than it spent in 2008.
DOE isn't the only place that energy spending would be cut. I was surprised when I was alerted by a friend in the renewable energy practice of the Akin Gump law firm that Treasury renewable energy grants in lieu of future tax credits would also be subject to sequestration. The federal low-income heating energy subsidy (LIHEAP) would be cut, too, along with the budget for the Bureau of Ocean Energy Management, which administers offshore oil, gas and renewable energy leases. Together they amount to just over $3 billion in reductions from the roughly $44 billion appropriated for energy-related activities this year.
Across-the-board cuts should never be management's first choice for reducing expenses, because they hack away at necessary and useful functions along with the wasteful ones. However, these cuts are occurring because the administration and Congress couldn't agree on setting priorities for where to cut. After seeing the reactions to the threat of cuts from almost every interest group in America, are we in any position to blame them? When everything is a priority, nothing is a priority. That's what the sequester reflects, nor is it without precedent.
Because of where I live, some of my relatives, friends and neighbors will feel the direct impact of sequestration. They have my sympathy. I'm sure it would be little consolation to them to know that I spent several stretches of my own corporate career under various across-the-board budget cuts, pay freezes, and similar programs that frustrated me, too, because I saw so much muscle cut along with the fat. Parts of the private sector have been through their own versions of sequestration numerous times, some quite recently. It's never ideal, but sometimes it's the only workable option to rein in spending.
With respect to energy the numbers above suggest that, if given some flexibility in how to allocate cuts on this scale, the government should be able to fund all the core functions of the Department of Energy in promoting energy security and helping to develop new technology, while preserving its key organizational capabilities. That might not be true of the department's recent efforts in industrial policy. It remains to be seen whether the Congress and White House can agree on providing that kind of flexibility in the execution of a sequestration policy that now looks virtually certain to go into effect this weekend.
Thursday, February 28, 2013
Thursday, February 21, 2013
The Keystone XL Pipeline: Pyrrhic Victory Ahead?
Last weekend thousands came to Washington, DC to protest against the Keystone XL pipeline project, just a few days after a smaller protest in front of the White House resulted in a batch of arrested celebrities. The State Department's decision on the cross-border permit is expected within a few months. However, unless the President devises an unexpectedly Solomonic solution, one side or the other will come up short. That much is obvious, but I'd suggest that it's also worth considering the possible unintended consequences for the winning side. Keystone could prove a Pyrrhic victory for either environmentalists or the energy industry.
That assessment starts with the fact that both sides have contributed to exaggerating the stakes out of all proportion, especially on the part of those concerned about the climate impacts of a new pipeline to carry crude derived from Canada's oil sands, or "tar sands." With Nebraska having signed off on a new route avoiding the Sand Hills, the entire question now hinges on its global greenhouse gas (GHG) emissions, which would be far less than some claim. Without belaboring this point--not the aim of this posting--you needn't take the word of Transcanada, the pipeline's owner on this. It's straightforward to demonstrate that any expansion of oil sands production would still account for a small share of Canada's GHG emissions, which are in turn a thin sliver of global emissions. Such facts are easily overshadowed by pronouncements such as the oft-cited "game over" assertion from NASA's James Hansen, reminding us that even Ph.D.'s should be cautious when straying so far beyond their expertise.
Likewise, supporters of the pipeline have made numerous expansive claims about its potential economic and employment benefits. Even if those are accurate, they're a lot less relevant at this stage of the debate than they were a year or two ago. This issue has grown far beyond an argument about the facts, or even about a pipeline. It has become a battle over a symbol, and the responsibility for that development rests with the administration, which declined multiple opportunities to issue a simple up-or-down decision, even when the Congress attempted to force the President's hand in late 2011. Blame it on the election cycle, or unwillingness to disappoint one or another important constituency. But extended this long, indecision turned the project into a giant version of Schrödinger's Cat, existing in a sort of limbo that compels attention.
When the pipeline's fate is finally revealed, the consequences could match its inflated, symbolic stature, rather than its actual importance as an energy project. The possible blowback is probably easier to imagine if the pipeline were approved. Outraged environmentalists would be unlikely simply to pack up their signs and go home. Aside from seeking new ways to impede the project, they might turn their attention to other energy projects that are currently uncontroversial, or at least less so than Keystone XL. They might also choose to vent their anger on an administration they were counting on to see this argument their way. The resulting fallout in lost voter enthusiasm might hinder Democratic candidates in the 2014 mid-term elections.
Now imagine what might happen if the pipeline were rejected. As I understand the process, that would require the new Secretary of State to rule that the project is not in the US national interest. That would constitute a serious snub to our largest trading partner and largest source of imported crude oil. Canada won't cut us off, but its government and industry would certainly intensify their efforts to diversify their oil export destinations, by means of other options headed either west or east, by pipeline or by rail. The oil would still get through, but the relationship between the US and Canada would suffer, and environmentalists would be seen as responsible. In any case, what won't happen is the shutdown of oil sands development. If anything, making this oil harder to bring to market could lend further support to high oil prices, and paradoxically preserve the incentive to produce more of it or gain access to these supplies.
The outcome that should worry environmentalists most about that scenario is the prospect of up to 800,000 barrels per day of crude oil loaded onto rail cars--roughly 1,000 a day of them--and moving all over North America. Aside from the increased emissions associated with that mode of transport, compared to pipelines, the risks of a serious accident or spill would multiply. If such an event occurred, it would attract significant attention from media that wouldn't be shy about reminding viewers why this oil was in rail cars in the first place. But even without an accident, opponents of the pipeline are placing an implicit bet that oil prices will stay flat or decline if the pipeline isn't built. If they go up instead, they stand to bear part of the blame, whether accurately or not.
Stopping the Keystone XL pipeline won't result in appreciably lower US or global oil consumption, or a material change in global GHG emissions. The key to oil's emissions lies on the consumption side, where most of them occur, and thus in focusing on the hundreds of billions of dollars per year spent by developing and transitional countries on sheltering their industries and consumers from the price of oil, along with countries that still generate significant amounts of electricity from oil. Nor would approving the pipeline restore the US economy to its pre-financial-crisis growth rate. The energy security benefits that it would bring, like the climate benefits opponents seek, are more about reducing risk. Yet whether or not you agree with the editors of Bloomberg that keeping "Canadian oil flowing to U.S. refineries in the most efficient way, within the bounds of safety" is the principle that should guide Secretary of State Kerry, no one has benefited from dragging the decision out this long. The winners might end up regretting that as much as the losers.
That assessment starts with the fact that both sides have contributed to exaggerating the stakes out of all proportion, especially on the part of those concerned about the climate impacts of a new pipeline to carry crude derived from Canada's oil sands, or "tar sands." With Nebraska having signed off on a new route avoiding the Sand Hills, the entire question now hinges on its global greenhouse gas (GHG) emissions, which would be far less than some claim. Without belaboring this point--not the aim of this posting--you needn't take the word of Transcanada, the pipeline's owner on this. It's straightforward to demonstrate that any expansion of oil sands production would still account for a small share of Canada's GHG emissions, which are in turn a thin sliver of global emissions. Such facts are easily overshadowed by pronouncements such as the oft-cited "game over" assertion from NASA's James Hansen, reminding us that even Ph.D.'s should be cautious when straying so far beyond their expertise.
Likewise, supporters of the pipeline have made numerous expansive claims about its potential economic and employment benefits. Even if those are accurate, they're a lot less relevant at this stage of the debate than they were a year or two ago. This issue has grown far beyond an argument about the facts, or even about a pipeline. It has become a battle over a symbol, and the responsibility for that development rests with the administration, which declined multiple opportunities to issue a simple up-or-down decision, even when the Congress attempted to force the President's hand in late 2011. Blame it on the election cycle, or unwillingness to disappoint one or another important constituency. But extended this long, indecision turned the project into a giant version of Schrödinger's Cat, existing in a sort of limbo that compels attention.
When the pipeline's fate is finally revealed, the consequences could match its inflated, symbolic stature, rather than its actual importance as an energy project. The possible blowback is probably easier to imagine if the pipeline were approved. Outraged environmentalists would be unlikely simply to pack up their signs and go home. Aside from seeking new ways to impede the project, they might turn their attention to other energy projects that are currently uncontroversial, or at least less so than Keystone XL. They might also choose to vent their anger on an administration they were counting on to see this argument their way. The resulting fallout in lost voter enthusiasm might hinder Democratic candidates in the 2014 mid-term elections.
Now imagine what might happen if the pipeline were rejected. As I understand the process, that would require the new Secretary of State to rule that the project is not in the US national interest. That would constitute a serious snub to our largest trading partner and largest source of imported crude oil. Canada won't cut us off, but its government and industry would certainly intensify their efforts to diversify their oil export destinations, by means of other options headed either west or east, by pipeline or by rail. The oil would still get through, but the relationship between the US and Canada would suffer, and environmentalists would be seen as responsible. In any case, what won't happen is the shutdown of oil sands development. If anything, making this oil harder to bring to market could lend further support to high oil prices, and paradoxically preserve the incentive to produce more of it or gain access to these supplies.
The outcome that should worry environmentalists most about that scenario is the prospect of up to 800,000 barrels per day of crude oil loaded onto rail cars--roughly 1,000 a day of them--and moving all over North America. Aside from the increased emissions associated with that mode of transport, compared to pipelines, the risks of a serious accident or spill would multiply. If such an event occurred, it would attract significant attention from media that wouldn't be shy about reminding viewers why this oil was in rail cars in the first place. But even without an accident, opponents of the pipeline are placing an implicit bet that oil prices will stay flat or decline if the pipeline isn't built. If they go up instead, they stand to bear part of the blame, whether accurately or not.
Stopping the Keystone XL pipeline won't result in appreciably lower US or global oil consumption, or a material change in global GHG emissions. The key to oil's emissions lies on the consumption side, where most of them occur, and thus in focusing on the hundreds of billions of dollars per year spent by developing and transitional countries on sheltering their industries and consumers from the price of oil, along with countries that still generate significant amounts of electricity from oil. Nor would approving the pipeline restore the US economy to its pre-financial-crisis growth rate. The energy security benefits that it would bring, like the climate benefits opponents seek, are more about reducing risk. Yet whether or not you agree with the editors of Bloomberg that keeping "Canadian oil flowing to U.S. refineries in the most efficient way, within the bounds of safety" is the principle that should guide Secretary of State Kerry, no one has benefited from dragging the decision out this long. The winners might end up regretting that as much as the losers.
Wednesday, February 13, 2013
The State of the Union's Two Energy Revolutions
It was no surprise that energy and climate change featured prominently in last night's State of the Union speech, giving me plenty to discuss in my on-camera interview with Reuters this morning. The President devoted an entire section of his address to these topics, leading into it in a very upbeat way: "Now is the time to reach a level of research and development not seen since the height of the Space Race. And today, no area holds more promise than our investments in American energy." You'd never guess from that introduction that this president faces a strikingly different energy challenge than his seven most recent predecessors. There are two energy revolutions underway in the US, and the unplanned one is racing ahead of the one to which he devoted most of his remarks--and most of his efforts on energy for the last four years.
Let's start with the positives. Even more than in last year's speech, President Obama presented energy as a bigger opportunity than a problem. He described our impressive recent progress in oil and natural gas production, renewable energy generation, and the reduction of greenhouse gas emissions. As fact-checkers have pointed out, he stepped into aspiration when he claimed credit for doubling automobile fuel economy--a goal that might or might not be attained by 2025--but even this fits within a broad set of energy trends that are all finally moving in the right direction.
The President also endorsed a very good idea that has been floating around for a long time, but has never been seized upon. He suggested funding R&D for electric and natural gas vehicles and biofuels with the revenue from federal oil and gas lease bid premiums and royalties. This "Energy Security Trust" would yoke the success of future energy technology to the enormous cash cow represented by the vast oil and gas resources beneath public lands and waters. He'll have to sort out the allocation of revenues with the states, who surely won't want the new set-aside to come from their share. If he can work that out, the government will have an even bigger vested interest in ensuring that responsible oil and gas development on these lands proceeds, in order to advance energy innovation.
Yet as pleased as I was with those aspects of his remarks, I couldn't help noticing that he still speaks about renewable energy in much the same way he did four years ago, as though we've learned nothing in the meantime. He wants us to out-China China in investing in solar energy, despite the fact that many of China's leading solar manufacturers are struggling with the same low margins that have led to a string of solar bankruptcies in Europe and the US, as rampant global over-capacity fuels cutthroat competition. He also apparently wants to make the wind Production Tax Credit permanent, rather than reforming and phasing it out, as even the leading US wind energy trade association has suggested. The fact remains that no government on earth can afford to subsidize renewables at the current generous rates all the way up to full-scale deployment. They need to be encouraged to become fully competitive with conventional energy as soon as possible and then set free.
Nor has the President lost his enthusiasm for citing statistics like the doubling of the energy that "we generate from sources like wind and solar." Yet increasing wind power from 1.3% of US electricity generation to 3%, and solar from 0.02% to 0.1%, are not what has set the stage for the US to become a significant net exporter of various forms of energy, and possibly even energy independent. He spoke strongly in favor of natural gas last night and briefly noted oil's gains, but it's not clear that he sees them as the engines of economic growth that they could be for the next decade and beyond.
Perhaps that's because after a long stretch in which US efforts on climate change and energy security seemed perfectly aligned, they are now moving out of sync. The 12% reduction in energy-related CO2 emissions since 2007 is largely attributable to fuel switching from coal to gas in the power sector, along with reduced oil demand in a lethargic economy. There's additional scope for both; however, if all the present trends continue it will become harder to fit the reality of surging oil production and looming natural gas exports into a constrained emissions box.
In that context, the President's call for a new, "bipartisan, market-based solution to climate change," and his threat to act via executive order if Congress fails, left enormous gaps of necessary detail. Does President Obama really want another bitter contest over cap-and-trade, as one might conclude from his reference to the McCain-Lieberman efforts of 2003-5, or is "market-based" to be interpreted as a carbon tax, which is coming back into favor in some circles? What was entirely missing was the necessary admonition to Congress to avoid larding any future climate bill with the kind of distortions and pork-barrel spending that turned its most recent effort, the bill by Reps. Waxman and Markey--both of whom were presumably in the room last night and deserve to feel slighted--into a 1427 page monstrosity.
Judging by my inbox this morning, many people liked what they heard last night concerning energy and climate. Groups as diverse as the Blue-Green Alliance and the American Petroleum Institute cited portions of the address in support of their agendas. And at least in the Energy Security Trust idea there were hints of the revitalized energy vision I was hoping for, in which the US rides the wave of shale-driven energy transformation while innovating the technologies of renewable energy, transportation and energy efficiency to the levels necessary to take over from oil and gas by mid-century. There's always next year.
Let's start with the positives. Even more than in last year's speech, President Obama presented energy as a bigger opportunity than a problem. He described our impressive recent progress in oil and natural gas production, renewable energy generation, and the reduction of greenhouse gas emissions. As fact-checkers have pointed out, he stepped into aspiration when he claimed credit for doubling automobile fuel economy--a goal that might or might not be attained by 2025--but even this fits within a broad set of energy trends that are all finally moving in the right direction.
The President also endorsed a very good idea that has been floating around for a long time, but has never been seized upon. He suggested funding R&D for electric and natural gas vehicles and biofuels with the revenue from federal oil and gas lease bid premiums and royalties. This "Energy Security Trust" would yoke the success of future energy technology to the enormous cash cow represented by the vast oil and gas resources beneath public lands and waters. He'll have to sort out the allocation of revenues with the states, who surely won't want the new set-aside to come from their share. If he can work that out, the government will have an even bigger vested interest in ensuring that responsible oil and gas development on these lands proceeds, in order to advance energy innovation.
Yet as pleased as I was with those aspects of his remarks, I couldn't help noticing that he still speaks about renewable energy in much the same way he did four years ago, as though we've learned nothing in the meantime. He wants us to out-China China in investing in solar energy, despite the fact that many of China's leading solar manufacturers are struggling with the same low margins that have led to a string of solar bankruptcies in Europe and the US, as rampant global over-capacity fuels cutthroat competition. He also apparently wants to make the wind Production Tax Credit permanent, rather than reforming and phasing it out, as even the leading US wind energy trade association has suggested. The fact remains that no government on earth can afford to subsidize renewables at the current generous rates all the way up to full-scale deployment. They need to be encouraged to become fully competitive with conventional energy as soon as possible and then set free.
Nor has the President lost his enthusiasm for citing statistics like the doubling of the energy that "we generate from sources like wind and solar." Yet increasing wind power from 1.3% of US electricity generation to 3%, and solar from 0.02% to 0.1%, are not what has set the stage for the US to become a significant net exporter of various forms of energy, and possibly even energy independent. He spoke strongly in favor of natural gas last night and briefly noted oil's gains, but it's not clear that he sees them as the engines of economic growth that they could be for the next decade and beyond.
Perhaps that's because after a long stretch in which US efforts on climate change and energy security seemed perfectly aligned, they are now moving out of sync. The 12% reduction in energy-related CO2 emissions since 2007 is largely attributable to fuel switching from coal to gas in the power sector, along with reduced oil demand in a lethargic economy. There's additional scope for both; however, if all the present trends continue it will become harder to fit the reality of surging oil production and looming natural gas exports into a constrained emissions box.
In that context, the President's call for a new, "bipartisan, market-based solution to climate change," and his threat to act via executive order if Congress fails, left enormous gaps of necessary detail. Does President Obama really want another bitter contest over cap-and-trade, as one might conclude from his reference to the McCain-Lieberman efforts of 2003-5, or is "market-based" to be interpreted as a carbon tax, which is coming back into favor in some circles? What was entirely missing was the necessary admonition to Congress to avoid larding any future climate bill with the kind of distortions and pork-barrel spending that turned its most recent effort, the bill by Reps. Waxman and Markey--both of whom were presumably in the room last night and deserve to feel slighted--into a 1427 page monstrosity.
Judging by my inbox this morning, many people liked what they heard last night concerning energy and climate. Groups as diverse as the Blue-Green Alliance and the American Petroleum Institute cited portions of the address in support of their agendas. And at least in the Energy Security Trust idea there were hints of the revitalized energy vision I was hoping for, in which the US rides the wave of shale-driven energy transformation while innovating the technologies of renewable energy, transportation and energy efficiency to the levels necessary to take over from oil and gas by mid-century. There's always next year.
Thursday, February 07, 2013
Comparing US Energy Growth in 2012
2012 was a remarkable year for energy in the US, with
domestic output of oil, gas, wind and solar energy all advancing strongly. This was the result of an unfolding
revolution in unconventional oil and gas, along with federal, state and local
incentives and regulations promoting renewable energy. Yet despite extensive media coverage and vocal
constituencies for each of these energy sources, I haven't seen any recent
efforts to compare their respective contributions to US energy supplies.
That may be due in part to the confusing array of energy
units involved. It's daunting to match up oil in 42-gallon barrels (bbl), gas
in cubic feet or British Thermal Units (BTUs), and wind and solar in kilowatts
(kW) or Megawatts (MW) of capacity, or kilowatt-hours (kWh) or Megawatt-hours
(MWh) of actual generation. Conversion
factors among these various units are easy to find on the internet. However,
meaningful equivalencies are complicated by important distinctions between
liquid or gaseous fuels and grid electricity, and the fact that these energy
sources compete with each other only in specific situations.
For purposes of comparison, since wind and solar routinely
compete with gas-fired generation, let's assume that the output of wind
turbines and solar panels can be equated to the power from a natural gas
turbine with an effective heat rate of 7,000 BTU/kWh. That recognizes the efficiency losses in fossil
generation and the premium value of electricity to end users. Gas and gas-equivalent renewables can be further
equated to oil using the standard conversion factor of 5.8 million
BTU/bbl. So even though wind and solar rarely
compete with oil in the real world, because less
than 0.6% of US electricity is now generated from petroleum products or
byproducts, we can still assess their relative contributions to America's
energy economy in familiar terms. Please
note that Energy Information Administration (EIA) data on production and generation for
the full year won't be available until the end of the month, so the figures below are based
on published data for the most recent available 12-month periods.
Through November oil production posted impressive gains last year , as noted several times in the presidential campaign and debates. Thanks to surging tight oil (shale oil) production in North Dakota, Texas and elsewhere, US crude oil output increased by 748,000 bbl/day on a December-November basis, or around 13%. In fact, November's production of 6.9 million bbl/day was the highest for any month since November 1993. Recent production looks even higher.
Natural gas also grew rapidly in 2012, with "marketed gas production",
including gas liquids like ethane, propane and butane, growing by 1.4 trillion
cubic feet for the 12 months ending in November 2012, compared to the same
period a year earlier. That's equivalent
to adding at least 650,000 bbl/day of oil.
US gas production appears to have set an all-time record last October.
Wind power
also had a banner year, with developers installing a record 13,124 MW of new capacity in the US. Much of that growth was attributable to
companies accelerating projects in anticipation of the scheduled December 31,
2012 expiration of the federal Production
Tax Credit, or PTC, the main US tax incentive for wind energy. As it turned
out, the Congress extended
the PTC for another year as part of the recent "fiscal cliff"
deal. On the basis of the most recent 12-month
comparisons from the EIA, US wind farms generated 18 billion kWh more
last year than the previous year. That
equates to 126 billion cubic feet (BCF) of natural gas, or around 59,000
bbl/day of oil.
That brings us to solar, which was on pace
to set a record of around 3,200 MW of new installations in the US in 2012. On a December-November basis new solar panels
added roughly 2.5
billion kWh of reported generation last year, equivalent to 17 BCF of gas
or 8,100 bbl/day of oil. This probably doesn't capture the contribution of all
grid-independent installations, but it's unlikely to be off by more than a
factor of 2.
Although the above chart shows that wind and solar power have
a long way to go to match the recent energy contributions of new fossil fuel production, both have earned credibility by advancing to the point of
being measurable on the same scale as oil and gas. Both also contribute to reducing emissions. At the
same time, the significance of developments in US unconventional hydrocarbons
leaps off the page. In just the last
year, for the second year in a row, shale gas has added domestic energy
production roughly equivalent to the entire current output of all US non-hydro
renewable electricity generation: wind, solar, geothermal, biomass and
waste power. Tight oil added a like amount in 2012. We're clearly in the midst of an energy
transformation, but it doesn't much resemble the one that was anticipated just
a few years ago.
This is an updated version of a posting that was previously published on the
website
of Pacific Energy Development Corporation.
Friday, February 01, 2013
Green Car Tech: Workhorses Trump Thoroughbreds?
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| Fisker Karma at 2013 DC Auto Show |
A few data points to support that conclusion: First, the Fisker Karma, undeniably sleek and reminiscent of my favorite Hot Wheels® car of long ago, was arguably the most exotic car there. It sat unattended and largely ignored. More significantly, the 2013 Green Car Technology Award announced at the show by Green Car Journal went to Mazda's "SkyACTIV" suite of technologies. These include improvements in engines, transmissions and chassis that Mazda plans to roll out across its fleet, along with the North American launch of a clean diesel version of its Mazda6 sedan later this year. Among the other finalists were Ford's stop-start and EcoBoost technologies, Fisker's "EVer" plug-in hybrid powertrain, and Fiat's Multi-Air gasoline engine efficiency package. Half the candidate technologies related to EVs and hybrids, while the other half focused on making conventional cars incrementally more efficient--in the process raising the bar that EVs and hybrids must vault.
Yesterday's policy day also provided a chance to meet with the team from Robert Bosch, LLC, which among its many business lines supplies under-the-hood gear for clean diesels and efficient gasoline cars, as well as hybrids. Our conversation focused on clean diesel, which remains the least-appreciated big-bang fuel efficiency option in the US, despite its wide adoption in Europe, where diesels enjoy about a 50% share in "take rate", reflecting consumers' choices when more than one fuel option is available in a given model. Diesel take rates range from 30-60+% here, too, but with only 20 diesel models available in the US last year--many of them German luxury models--overall diesel penetration in new cars was just under 1%. That could start to change this year. Bosch's Andreas Sambel, Director of Diesel Marketing and Business Excellence, indicated 22 new models slated for 2013 introduction, with the total increasing to 54 models by 2017.
We also discussed future improvements in diesel passenger car technology. Bosch sees ample opportunities to maintain diesel's edge over steadily improving gasoline-engine efficiency. Possible enhancements include engine downsizing, higher injection pressures (already 29,000 psi), the addition of stop-start, and combustion improvement via something called "digital rate shaping"--my jargon takeaway of the day. I was surprised to hear that diesel-hybrid models are already available in Europe, since conventional wisdom holds that doubling down on two expensive efficiency strategies can't be cost-effective. Mr.Sambel offered the view that hybrids are becoming a distinct market segment, and that fuel choice within that segment will appeal to some buyers. I'll have to watch for further signs of this intriguing development. I certainly concur with his take that there is unlikely to be a one-size-fits-all solution. Don't expect an imminent winner among the proliferating powertrain and fuel choices available to motorists, including biofuels and CNG/LNG.
This year's DC Auto Show includes a wide selection of nicely sculpted steel and glass, but at least from a "green car" perspective the technologies that made such a big splash a few years ago are becoming a bit mundane. That's just as well. EVs still haven't taken off, yet, with only 53,000 sold in the US last year out of a much-recovered 14.4 million car total, despite lavish tax incentives. However, with oil prices stubbornly high and US gasoline prices on the verge of setting new records for this time of year, the evolutionary improvements in fuel economy that were honored and displayed at the DC Convention Center will find plenty of takers. For the near-term they'll contribute far more to saving oil and reducing emissions than a few more EVs could.