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Prioritizing Climate Change Mitigation Technologies by Cost-Effectiveness:

How do transportation options compare with other sectors?

Nic LutseyPh.D. Candidate

Institute of Transportation StudiesUniversity of California at Davis

California Air Resources BoardChair’s Air Pollution Seminar Series

April 30, 2008

April 30, 2008 2

Outline

• Background: U.S. climate mitigation

• Prioritizing GHG mitigation options– Climate change mitigation criteria– Cost-effectiveness “supply curves”

• Findings– Transportation sector– All economic sectors

April 30, 2008 3

Background: Mitigation Policy

• Emission reduction targets – e.g. to 1990 GHG level by 2020, 80% below 1990 GHG level by 2050– 17 states and 700+ cities (represent 53% of the U.S. population)

• Emission mitigation planning– State GHG inventories – 42 states (93% of U.S. GHG)– State “Climate Action Plans” – 30 states (53% of U.S. GHG)– Sector-specific actions (examples)

• Renewable electricity portfolio targets (~half of U.S. elec. generation)• Vehicle GHG regulations (~half of U.S. auto sales)

• Coordination – regional cooperation to establish emissions trading, common mitigation programs

– Northeastern states (RGGI, NEG/ECP pact)– Western states (WCG GWI, WCI)– Climate Registry – coordination on consistent GHG reporting guidelines – Cities – U.S. Mayor’s Climate Protection Agreement

April 30, 2008 4

Background: Mitigation Areas

• Sector-specific GHG mitigation action areas:– Transportation:

• Vehicle GHG regulation• Fuel standards, mandates, targets• VMT reduction measures

– Electricity generation• Renewable electricity targets, standards• Energy efficiency resource standards• Fossil fuel efficiency (e.g. coal IGCC)• Carbon capture and storage (CCS) technology

– Residential and commercial buildings• Appliance, lighting efficiency• Heating, cooling efficiency• Building codes• Distributed power generation

– Industry (cement, paper/pulp, chemical, refrigerant, landfill)– Agriculture (forestry, soil carbon sequestration, N2O/CH4)

April 30, 2008 5

Background: Mitigation Criteria

• What criteria are most important in prioritizing mitigation actions?

• From state mitigation plans:– Individual action effects

1.) GHG emission reduction potential2.) Implementation cost3.) Variable (lifetime) costs, benefits4.) Ancillary costs, benefits

– Cumulative actions’ effects5.) GHG emission reduction potential6.) Costs, benefits7.) Multi-sector equity (e.g. vehicles vs. electricity)

April 30, 2008 6

Evaluating GHG Mitigation Options

– Collect data for baseline and mitigation technology alternatives

– Bundle cost, benefit, and emissions impact data in one variable

• “Cost-effectiveness”• Cost-per-ton CO2-equivalent reduced

– Rank options by cost-effectiveness– Show cumulative impact at increasing

cost– Highlights:

• Actions under given $/ton cost• “No regrets” actions (net benefits > costs)• Total emission reduction goals

(e.g., 1990 level by 2020)

1 2

3 45

6

7

GHG Emission Reduction

(ton CO2-equiv)C

ost-E

ffect

iven

ess

($ /

ton

CO

2-eq)

• Cost-effectiveness “supply curve” approach:

April 30, 2008 7

Cost-Effectiveness Curve Approach

• Use in various forms

– Initial costs only:

– Include costs and direct benefits:

=

−

eductionREmissionGreenhouse

CostgyTechnoloInitial

tonneessEffectivenCost

)/($

+

=

−

eductionREmissionGreenhouse

mpactICostFuelLifetime

CostgyTechnoloInitial

tonneessEffectivenCost

)/($

Cumulative GHG Emission Reduction (ton CO2-equiv)

Cos

t-E

ffec

tiven

ess

($ /

ton

CO

2-eq

uiv)

123

4

56

7

Initial cost

Net costs (initial cost + direct benefits)

April 30, 2008 8

Cost-Effectiveness Curve Approach

• Methodological Steps– Literature search and screening –

• Assess/screen technologies

– Available data (GHG, cost, benefit)

– Technology-based

– Timeframe: GHG technologies to be deployed from 2010-2025

– Cost-effectiveness curve development • Estimation and accumulation of cost, GHG-

reduction data

• Assume US EIA fuel prices (at 7% discount rate)

• Develop sector-specific curves

• Combine in multi-sector curve

– Multi-Sector Assessment –• Synthesis various economic sectors’ GHG

mitigation strategies and their contribution to overall US GHG emissions reductions

April 30, 2008 9

Technology Areas

• Sector-specific areas to analyze for GHG reductions– Transportation

• Light duty vehicle efficiency (rated incremental, “on-road”, HEV)• Commercial truck efficiency• Biofuels (ethanol, biodiesel)• Aircraft

– Residential and commercial buildings• Appliances• Lighting• Heating, ventilation, and air-conditioning (HVAC)• Distributed power

– Electric power sector• Fossil-fuel switching (coal – to natural gas)• Carbon capture and sequestration (CCS)• Renewable (wind, solar, biomass)• Nuclear

– Industry (cement, paper/pulp, chemical, refrigerant, landfill)– Agriculture (forestry, soil carbon sequestration, N2O/CH4)

April 30, 2008 10

Vehicle Technology Options

• Incremental vehicle efficiency– Engine (gasoline direct injection, variable displacement)– Transmission (5 and 6-speed auto, continuously variable)– Body, road load reduction (light-weighting, aerodynamics)

• “On-road” fuel efficiency improvements– Tire inflation, rolling resistance– Maintenance, low-friction oil– Efficient accessories, alternator

• Advanced drivetrain technology– Electrified drivetrain (HEV, PHEV, EV)– Fuel cell electric (hydrogen or other fuel)

• Reducing other non-CO2 GHGs:– Air conditioning (HFC-134a)

– Nitrous oxide (N2O), Methane (CH4)

April 30, 2008 11

Austin, T.C., R.G. Dulla, and T.R. Carlson, 1999, Alternative and Future Technologies for Reducing Greenhouse Gas Emissions From Road Vehicles, Sierra Research, Inc., Sacramento, Calif., for Natural Resources Canada.

DeCicco, J.M, F. An, and M. Ross, 2001, “Technical Options for Improving the Fuel Economy of U.S. Cars and Light Trucks by 2012-2015,” forthcoming American Council for an Energy Efficient Economy (ACEEE), Washington, D.C.

Energy and Environmental Analysis, Inc (EEA), 1995, Automotive Technologies to Improve Fuel Economy to 2015, prepared for the U.S. Congress Office of Technology Assessment, June.

National Research Council (NRC), 2002, Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards, National Academy Press, Washington, D.C., July.

Plotkin, S., D. Greene, K.G. Duleep. 2002. Examining the Potential for Voluntary Fuel Economy Standards in the United States and Canada. ANL/ESD/02-5, Argonne National Laboratory, Argonne, Illinois.

Weiss, M.A., et al., 2000, On the Road in 2020, Energy Laboratory Report MIT EL 00-003, Massachusetts Institute of Technology, Cambridge, Mass., Oct.

Transportation

Incremental efficiency technology for light-duty vehicles:

Assumptions: vehicle life of 189k, 17 years; ~$2.35/gallon gasoline (U.S. EIA, 2007); 7% discount factor for future fuel savings. Sources: Austin, et al, 1999 (Sierra); DeCicco et al, 2001 (ACEEE); EEA, 1995; NRC 2002; Plotkin et al, 2002; Weiss, M.A., et al., 2000 (MIT)

0

500

1000

1500

2000

0% 5% 10% 15% 20% 25%

Percent reduction in tailpipe g CO2 per mile

Incr

emen

tal L

DV

cos

t($

2008

/veh

icle

)

EEAANL 2002Sierra ResearchNRC High-Cost/Low-MPGNRC AverageNRC Low-Cost/High-MPGACEEE DerivedMIT 2020 DerivedAVERAGE

20%

April 30, 2008 12

Transportation

“On-road” efficiency technology for light-duty vehicles:

Assumptions: vehicle life of 189k, 17 years; ~$2.35/gallon gasoline (U.S. EIA, 2007); 7% discount factor for future fuel savings. Based on IEA and ECMT, 2006

ShiftIndicator

Light

DualCoolingCircuits

Efficient A/C

TireInflationMonitor

LowRR

Tires

EfficientAlternator

LowFriction

Oil

-$150

-$100

-$50

$0

$50

$100

$150

0% 5% 10%

Percentage point improvement in "on-road" FE correction factor

Mar

gina

l cos

t eff

ectiv

enes

s of

tech

nolo

gy d

eplo

ymen

t ($/

tCO

2)

High costMid costLow cost

Idle start/stop

(42V)

Electric water pump

Heated battery

April 30, 2008 13

Transportation

Hybrid electric vehicle technology for light-duty vehicles:

Assumptions: vehicle life of 189k, 17 years; ~$2.35/gallon gasoline (U.S. EIA, 2008); 7% discount factor for future fuel savings; 0.8 on-road fuel economy degradation factor; U.S. electricity mix Sources: Graham et al 2001 (EPRI); Plotkin et al 2001 (ANL); Lipman and Delucchi, 2003; Weiss et al 2001 (MIT); An et al 2001; Markel et al (NREL), 2006

Moderate HEV

Full HEV

Plug-in HEV

-$100

$0

$100

$200

$300

$400

$500

0% 10% 20% 30% 40% 50% 60%

Percent test cycle gram/mile GHG reduction

Cos

t-ef

fect

iven

ess -

life

time

($20

08/to

nne

CO

2)

April 30, 2008 14

Transportation

Light-duty vehicles GHG cost-effectiveness curve:

Incremental efficiency

(-20% by 2020)

Improved "on-road" efficiency shortfall (from 20% to 10%)

Cellulosic ethanol

(21% by 2030)

Alternative A/C refrigerant

(HFC-134a to CO2)Hybrid-electric vehicles

(50% sales by 2025)

-100

-50

0

50

100

150

0 100 200 300 400 500 600 700

Cumulative GHG reduction in 2030 (million tonne CO2e/yr)

Cos

t effe

ctiv

enes

s ($

2008

/tonn

e C

O 2e

)Including initial technology and lifetime operating costs

April 30, 2008 15

Transportation

Light duty vehicle GHG-reductions through 2030:

0

400

800

1,200

1,600

1990 1995 2000 2005 2010 2015 2020 2025 2030Year

Ligh

t dut

y ve

hicl

e G

HG

em

issio

ns

(mill

ion

tonn

e C

O2e

/yr)

ReferenceIncremental fuel consumption improvement (-20% by 2020)'On-road' fuel consumption factor improvement (20% to 10% by 2020)Cellulosic ethanol increase (21% motor fuel by 2030)Alternative air-conditioning refrigerant (HFC-134a to CO2)Hybrid gasoline-electric vehicles (50% sales by 2025)U.S. 1990 GHG emission level

April 30, 2008 16

Transportation

Commercial truck (Class 2b, Class 3-6, Class 8) GHG-reduction:

Based on An et al 2000; Langer, 2004; Vyas et al 2002; Schaefer and Jacoby, 2006; Muster, 2001; Lovins et al, 2004

Class 7-8 (Heavy Duty)

Efficiency

Biodiesel (B5 by 2020)

Cellulosic ethanol (21% by 2030)

Class 2b (Light Duty)

Efficiency

Class 3-6 (Medium Duty)

Efficiency

-150

-100

-50

0

50

100

150

0 25 50 75 100

Greenhouse Gas Emission Reduction in 2030(million tonne CO2e/yr)

Cos

t effe

ctiv

enes

s ($

2008

/tonn

e C

O 2

e)

April 30, 2008 17

Building Sector

0

500

1,000

1,500

2,000

2,500

3,000

2005 2010 2015 2020 2025 2030

Year

Bui

ldin

g G

HG

em

issi

ons

(mill

ion

tonn

e C

O2/

yr)

Reference

With appliance reductions

With building shell (and above) reductions

With HVAC (and above) reductions

With lighting (and above) reductions

With distributed generation (and above) reductions

-200

-150

-100

-50

0

50

0 100 200 300 400 500 600

Building Sector GHG reductions in 2030 (million tonne CO2e/year)

Cos

t effe

ctiv

enes

s ($

2008

/tonn

e C

O2e

)

Appliance efficiency (18 technologies)

Building shell efficiency (13 technologies)

HVAC efficiency (10 technologies)

Lighting efficiency (10 technologies)

Distributed power (2 technologies)

Technology areas in residential and commercial buildings:

April 30, 2008 18

Electricity Generation

Electricity generation GHG-reductions:

Coal-to-gasshift

Nuclear

Geothermal

Coal IGCC Coal CCS

Natural gas CCS

Solar thermal

Solar photovoltaic

Wind

Biomass

-25

0

25

50

75

100

125

150

175

200

0 200 400 600 800 1000 1200

GHG reduction in 2030 (million tonne CO2e/year)

Cos

t eff

ectiv

enes

s (2

008$

/tonn

e C

O2

e)

Lifetime cost accounting

April 30, 2008 19

Industry Sector

GHG abatement in other industrial sectors:

High-GWP “F gases”

Steel and iron

Cement

Combined heat and power (CHP)

Landfill gas management

Paper and pulp

-200

-150

-100

-50

0

50

100

150

200

0 50 100 150 200 250 300 350 400 450

Industry GHG reductions in 2030 (million tonne CO2e/year)

Cos

t eff

ectiv

enes

s ($

2008

/tonn

e C

O2 e)

Initial cost accounting

Lifetime cost accounting Technology Areas:

April 30, 2008 20

Agricultural Sector

GHG abatement in agriculture and forestry:

Afforestation

Forest management

Soil carbon sequestration

Biofuel offsets (biomass for transp. Fuels, power plants)

Reduced fossil fuel inputs

Livestock manure management (enteric ferm. and manure CH4)

N2O-related soil management strategies

Areas included:

0

10

20

30

40

50

60

70

80

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

GHG reduction in 2030(million tonne CO2e/yr)

Cos

t eff

ectiv

enes

s ($

/tonn

e C

O2 e

)

US EPA, 2005

April 30, 2008 21

Multi-Sector GHG Abatement

• Issues in integrating GHG abatement measures– Interaction effects, or “double counting”

– Cross-sector linkages• Building sector efficiency – electricity generation technologies

• Agriculture sector biomass production – transportation/electricity biomass usage

• Handling of data– Choose mutually exclusive GHG-reduction measures

– Adjust baseline emissions characteristics for measures that interact (and recalculate GHG emission reductions and cost effectiveness ratios)

– Selection of studies and technologies to be consistent across sectors

April 30, 2008 22


Synthesis of all sectors’ GHG cost-effectiveness curves:

Automobile efficiency

Truck efficiency

Biofuels

Aircraft efficiency

Renewable electricity

Carbon capture and storage

Nuclear power

“Clean coal” IGCC

Appliance

Building shell

HVAC efficiency

Distributed power

Livestock management

Landfill gas-to-energy

Hydrofluorocarbon

Technologies included:

-150

-100

-50

0

50

100

150

200

0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000

GHG reductions in 2030, all sectors (million tonne CO2e/year)

Cos

t eff

ectiv

enes

s ($

2008

/tonn

e C

O 2e

)

Lifetime cost accounting Reductions to reach 1990 GHG level

Reductions to reach 10% below 1990 GHG level

April 30, 2008 23


Impact of energy savings in GHG cost-effectiveness curves (Why aren’t “no regrets” technologies more widely adopted?):

Slow diffusion of technologies

Information availability

Consumers do not value or consider future energy savings

Principal-agent problem (purchaser ≠ energy-saver)

Other technology costs/limitations that are not included

Institutional barriers

“Efficiency gap” factors:

-150

-100

-50

0

50

100

150

200

0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000


Cos

t eff

ectiv

enes

s ($

2008

/tonn

e C

O 2e

)

Initial cost accountingLifetime cost accounting

Reductions to reach 1990 GHG level

Reductions to reach 10% below 1990 GHG level

April 30, 2008 24


What is the impact of the lower cost mitigation measures?

Synthesis of all sectors’ technologies <$50/tonne CO2e:

43% below 2030 baseline

16% below 1990 level in 2030

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

1990 1995 2000 2005 2010 2015 2020 2025 2030Year

GH

G e

mis

sion

s (m

illio

n to

nne

CO

2/yr

)

ReferenceWith transportation reductionsWith building (and above) reductionsWith industry (and above) reductionsWith agriculture (and above) reductionsWith electricity generation (and above) reductions

April 30, 2008 25

Synthesis of all sectors’ GHG cost-effectiveness curves (selected transportation measures highlighted):


-150

-100

-50

0

50

100

0 500 1000 1500 2000 2500 3000 3500 4000 4500


Cos

t effe

ctiv

enes

s ($

2008

/tonn

e C

O 2e

)

HD truck (Class 7-8) efficiency

LDV incremental efficiency

LDV "on-road" efficiency

MD truck (Class 3-6) efficiency

Cellulosic ethanol

LDV HEV efficiency A/C refrigerant

Reductions to reach 10% below 1990

GHG level

April 30, 2008 26

Transportation GHG Abatement

Transportation GHG-reduction through 2050:

0

500

1,000

1,500

2,000

2,500

3,000

1990 2000 2010 2020 2030 2040 2050

Year

Tra

nspo

rtat

ion

GH

G e

mis

sion

s(m

illio

n to

nne

CO

2/yr

)

ReferenceWith LDV incremental efficiency reductionsWith LDV "on-road" efficiency (and above) reductionsWith cellulosic ethanol (and above) reductionsWith A/C refrigerant replacement (and above) reductionsWith LDV hybrid efficiency (and above) reductionsWith HDV efficiency (and above) reductionsWith aircraft efficiency (and above) reductionsPath to achieve 80% below 1990 by 2050

April 30, 2008 27

Conclusions

• Transportation– Energy savings makes vehicle efficiency options very attractive

– Many available technologies are cost-effective contributors to overall GHG mitigation targets through 2030

– Near-zero GHG emission vehicles and/or substantial VMT reductions required for deeper 2050 GHG reductions

• All economic sectors– On achieving the target of 1990 GHG emission level in 2020-2030

time period (40% reduction from baseline) . . .• Feasible with known technologies

• Feasible with measures at cost < $50-per-tonne CO2e

• Many technologies in many economic sectors will be required

• Many “no regrets” actions with net economic benefits to operators of efficiency technologies (e.g. appliance, lighting, buildings, and vehicles)

April 30, 2008 28

Conclusions

• Acknowledgements– Dissertation fellowship from ITS-Davis’ Sustainable Transportation

Center (STC), with funding from Caltrans and U.S. DOT

– Dissertation committee members: Dan Sperling, Joan Ogden, and Tim Lipman

• Contact– [email protected]

• Questions?

April 30, 2008 29

Comparison with Other Studies• As compared to McKinsey study, Reducing U.S. Greenhouse Gas

Emissions: How Much at What Cost (Creyts et al, 2007)

-150

-100

-50

0

50

0 1000 2000 3000 4000 5000

GHG reduction in 2030, all sectors (million tonne CO2e/yr)

Cos

t eff

ectiv

enes

s ($

/tonn

e C

O 2e

)

This dissertation (net cost accounting)

McKinsey (low-range)McKinsey (mid-range)

McKinsey (high-range)

April 30, 2008 30

Other Benefits of GHG Mitigation Actions

With inclusion of generic $25/tonne CO2e co-benefit:

-150

-100

-50

0

50

100

0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000


Cos

t eff

ectiv

enes

s ($

2008

/tonn

e C

O2e

)

Init ial cost accounting

Lifetime cost accounting

Hypothetical ancillary cost accounting

Reductions to reach 1990 level of GHG

emissions

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