Presented at FUELING AMERICAN GROWTH

HOW ENERGY INDEPENDENCE WILL POWER THE FUTURE Hudson Institute Washington DC May 7, 2015.

Michael D. Jackson Research Director

Agenda

• Background • Alternative Fuel Success Factors • Summary

Fuel Freedom Foundation

• Non-partisan initiative dedicated to reducing U.S. dependence on petroleum

• Initiate changes necessary for gasoline, diesel, natural gas, ethanol, methanol, and electricity to compete on equal footing – Overcome the regulatory, commercial, and practical

barriers that impede innovation in fuel production, consumption , and true market competition

Decoupling of Natural Gas and Oil Prices

Ref: EIA AEO 2015 Reference Energy Prices

U.S. Natural Gas Supply Opens Possible Use in Transportation

Battery Electric VehiclesElectricity

Plug-in Hybrid Electric Vehicles

Methanol Internal Combustion Engine Vehicles

Natural Gas

Liquified NG

Compressed NG

Hydrogen Fuel Cell Vehicles

Ethanol

Synthetic Gasoline

Many Past Examples of Successful Alternative Fuel Applications

Early Light and Heavy Duty Methanol Vehicles

Medium Duty CNG and Heavy Duty LNG Trucks

Existing Fleet of FFVs and Potentially Larger Population with Vehicle Conversions

Agenda

• Background • Alternative Fuel Success Factors • Summary

What’s Needed for Alternative Fuel Success

• Consumer Value Proposition • Acceptable Vehicle Attributes • Adequate Fueling Infrastructure • Acceptable Business Case for Producers and

Retailers • Positive Societal and Environmental Impacts

Consumer Value Proposition

• Lowest costs per mile • Vehicle costs minimized

– OEM FFV no to small incremental costs – Low conversion costs

• Competitively priced fuel at the pump – Priced based on energy mileage (energy content and vehicle efficiency) – Price also needs to account for higher conversion costs, lack of

infrastructure, added fueling or additional time to fuel

Time

Gasoline and Diesel

Past Experiences with Alternative Fuels

Goal of Alternative Fuels

Life Cycle Cost ($/mile)

Vehicle Attributes

• Economics only one factor that drives purchasing decision • Attributes that need to similar

– Performance ~power and torque (not fuel economy) – Vehicle range ~ 350 to 400 miles consistent with once a week fueling – Storage and interior space – Safety

• Sellable attributes – Green image – HOV lane access in some states – Lower life cycle costs

Fueling Infrastructure

• Ease and comfort of use • Density of Stations • Pricing

Reasonable Business Case Throughout Supply Chain

• Production • Distribution • Blending • Retailing

Positive Environmental Impacts

• Equal or better tailpipe emissions – NMHC, CO, NOx, PM and toxics

• Equal or better fuel cycle emissions – Greenhouse gas emissions – Criteria emissions

• Equal or better multi-media Impacts

GHG Impacts of Fuel and Vehicle Technologies

GHG Takeaways • Higher octane fuels enable higher IC engine efficiency

– Ethanol and methanol blends – Refining HC processing

• High efficiency ICE coupled with electrification provides a cost effective pathway to achieving GHG reductions – DI, turbocharged, downsized, down speed, high compression

• Need to minimize future fuel and vehicle costs – High octane gasoline an option but possibly more expensive if

hydrocarbon processing used – Ethanol or methanol may be the best fueling options either in lower

level blends or in higher level blends – Need also to minimize battery storage

Agenda

• Background • Alternative Fuel Success Factors • Summary

Summary • Natural gas supply in U.S. opens opportunity to introduce less

expensive natural gas derived fuels like ethanol and methanol • Current U.S. fleet of FFVs coupled with conversions creates

demand to justify production • Possible tailpipe emission benefits with existing fleet • Alcohol fuels will enable more efficient newer vehicles—

lowering GHG impact—at potentially lower costs than alternatives

• Much work needed to overcome barriers to fuels competition

Summary

Thank you for your attention

Contact information Michael D. Jackson mike.jackson@fuelfreedom.org www.fuelfreedom.org 1 408 230 2014

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