[Senate Hearing 111-712]
[From the U.S. Government Publishing Office]
S. Hrg. 111-712
ELECTRIC VEHICLES
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
TO
RECEIVE TESTIMONY ON POLICIES TO REDUCE OIL CONSUMPTION THROUGH THE
PROMOTION OF ACCELERATED DEPLOYMENT OF ELECTRIC-DRIVE VEHICLES, AS
PROPOSED IN S. 3495, THE PROMOTING ELECTRIC VEHICLES ACT OF 2010
__________
JUNE 22, 2010
Printed for the use of the
Committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
BYRON L. DORGAN, North Dakota LISA MURKOWSKI, Alaska
RON WYDEN, Oregon RICHARD BURR, North Carolina
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana SAM BROWNBACK, Kansas
MARIA CANTWELL, Washington JAMES E. RISCH, Idaho
ROBERT MENENDEZ, New Jersey JOHN McCAIN, Arizona
BLANCHE L. LINCOLN, Arkansas ROBERT F. BENNETT, Utah
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
EVAN BAYH, Indiana JEFF SESSIONS, Alabama
DEBBIE STABENOW, Michigan BOB CORKER, Tennessee
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Clay, Kathryn, Ph.D., Director of Research, Alliance of
Automobile Manufacturers....................................... 25
Crane, Alan T., Senior Program Officer, National Research Council 41
Dorgan, Hon. Byron, U.S. Senator From North Dakota............... 4
Friedman, David, Research Director and Senior Engineer, Union of
Concerned Scientists, Oviedo, FL............................... 36
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 3
Sandalow, David B., Assistant Secretary, Policy and International
Affairs, Department of Energy.................................. 6
Smith, Frederick W., Chairman, President and CEO, Fedex
Corporation, Co-Chairman, Energy Security Leadership Council,
and Member, Electrification Coalition.......................... 18
Wynne, Brian P., President, Electric Drive Transportation
Association.................................................... 32
APPENDIX
Responses to additional questions................................ 57
ELECTRIC VEHICLES
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TUESDAY, JUNE 22, 2010
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:04 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Jeff
Bingaman, chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. OK. We will go ahead and start the hearing.
Thank you all for coming.
Today we are looking into the issue of how to accelerate
deployment of electric vehicles and specifically how the bill
Senator Dorgan and others have introduced on this subject fits
into a broader policy framework on this.
This has been a subject of great interest here in the
committee and in the full Senate and will continue to be
important as we look to reduce our oil dependency and
greenhouse gas emissions from the transportation sector.
The significant benefit of using electricity to fully or
partially power our vehicles, when it comes to oil security, is
easy to see. Vehicles can achieve efficiencies of well over 100
miles per gallon, save consumers money in the process. The
manmade disaster unfolding in the Gulf provides an obvious
reason to reduce our reliance on oil.
But there are other significant environmental benefits of
electrification as well, and as we bring more renewable sources
into our electricity supply through market mechanisms such as a
renewable electricity standard that we have got in the bill we
have reported out of this committee or by directly pricing
carbon pollution, we can multiple the benefits by using that
sustainable power in our transportation sector as well.
This committee has previously supported research into the
technologies found in these vehicles, as well as deployment
programs such as the Advanced Technology Vehicles Loan Program,
which supports the reopening or retooling of plants to produce
electric vehicles in Tennessee and in Delaware and in
California. Grant programs to support deployment are allowing
plants to be built to produce next generation batteries in
States such as Michigan and Indiana, and federally supported
pilot programs to demonstrate the vehicles are beginning in
several States.
However, to really achieve energy and environmental
security gains, the country clearly needs and the manufacturers
of the technology have to see a substantial market for these
vehicles in order to justify their investments. First, it will
require infrastructure in communities that will give consumers
the confidence that electric vehicles will meet their needs.
Second, consumers must be able to afford the early vehicles
before manufacturers have achieved economies of scale and
technology advances have reduced the costs of production.
Senator Dorgan's bill contains a number of programs aimed at
addressing both of these problems.
I should note that this bill is also a companion to a
fuller bill that Senator Dorgan has proposed containing
complementary tax provisions. That bill has gone to the Finance
Committee.
There is a bill that I have introduced with Senator Snowe,
S. 1620, that is similarly aimed at allowing consumers to
realize the benefits of more efficient vehicles through a
rebate at the point of purchase. I believe making the benefits
of efficiency, as well as the costs of inefficiency, more
visible to consumers at the time that they purchase a vehicle
is an important part of the equation that the Senate will have
to return to when it considers these policies.
[The prepared statement of Senator Landrieu follows:]
Prepared Statement of Hon. Mary L. Landrieu, U.S. Senator From
Louisiana
Thank you, Mr. Chairman for holding this important hearing today. I
have always been a supporter of alternative, more-efficient and less
carbon-intense vehicles, and I think this discussion comes at an
important time.
Our country, and in particular my state of Louisiana, is reeling
from the impacts of what supplying our country with oil, mainly for our
cars, can result in. Everyone knows I am a staunch supporter of the
domestic oil industry, because as Americans we rely on this energy in
our everyday lives--from driving our cars to work or helping to make
consumer goods. I believe that if we are going to consume petroleum
products, we must and can produce it safely at home.
I also believe that the risks--both environmental and
geopolitical--are too high when we import oil from foreign sources.
However, as a country, we consume 20 million barrels of oil a day,
importing more than half of that. While to some it is a laudable goal
to end oil consumption immediately, this is not reality as our economy
runs on oil. Without oil, most of us would not have been able to drive
to work this morning. As such, it begs the question, how is the
transportation sector going to survive without petroleum? If as a
country we are going to reduce our dependence on foreign oil and begin
to move away from petroleum transportation fuels, then we must get
serious about implementing new technologies.
In the immediate future, we can promote more fuel efficient cars,
such as the car being manufactured by the V-Vehicle Company. This car
still has an internal combustion engine, but it gets nearly double the
miles per gallon than current commercially available cars. In addition,
it's affordable and the technology is available so it can be
manufactured immediately.
More fuel efficient cars like the V-Vehicle model, are the current
biggest bang for our buck as we wait for future technologies to become
commercially available.
However, in the long-term, we must look past petroleum-fueled cars
and instead look to alternative non-petroleum vehicles. In the future,
one technology that holds a lot of promise is the plug-in electric
vehicle. Electric vehicles can have several benefits to consumers
including costing pennies to refuel per mile and having zero tailpipe
emissions.
U.S. manufacturers are currently ramping up their capacity to
produce electric vehicles, going from 50,000 plug-in electric vehicles
batteries by the end of 2011, to more than 500,000 by December 2014.
However, this technology still has some kinks that need to be
addressed. There are several areas that I have concerns with including:
1) Can these vehicles be economically affordable for the average
American in the near future, and if not, should we invest in a more
promising technology? 2) What will the added load on the grid mean to
our already feeble transmission infrastructure? 3) How will Americans
dispose of the batteries and what impact will this have on our
environment?
Regardless, no technology is perfect overnight and it will take
ongoing research and development if we are going to make plug-in
electric cars a reality. I believe that this is a worthy task the
Federal government should support as it will be critical as we push
this country toward a more energy secure future.
Thank you.
The Chairman. Let me call on Senator Murkowski for her
comments, and then I also want to give Senator Dorgan a chance
to make a statement since he is the prime sponsor on this bill.
Senator Murkowski.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman. I appreciate
the hearing this morning. I know that there is a great deal of
interest in it, the issue itself. It is reflected here in the
hearing room this morning, and out in the hallway, we have got
a full crowd out there. So clearly an issue of great interest.
This legislation that would promote electric vehicles
through a number of new plans and programs, significantly
increase the Federal support for everything from the charging
stations to the basic R&D.
I think all of us on this committee would agree that
electric vehicles have great promise, great potential, and all
of us want to see them take off and transform the auto
industry.
We are very excited about the Nissan Leaf, Chevy Volt, and
we are equally excited about the vehicles that will shortly
follow, including those from new companies like Tesla and
Fisker.
As we look for ways to increase our energy security,
decrease the cost of energy and create new jobs, electric
vehicles offer a unique opportunity to make progress on all
three of these fronts at once.
So I would also like to commend Senator Dorgan for crafting
some new policies beyond the tax credits and the subsidies that
the Government already offers that could hasten their
deployment.
I think there is a great deal to like in this bill. I think
you will see reflected in my questions, though, that I do have
a couple concerns. As I say, those will be reflected in the
questions.
One is about whether or not we are perhaps tipping the
playing field to advantage a technology that I think has
certainly captured our attention and appropriately so. This is
not new. In the Clinton administration, it was diesel hybrids
that we were focused on. In the Bush administration, it was
hydrogen and fuel cells. For the past several years, the focus
has been on plug-in hybrids.
I am as hopeful as anyone that electric vehicles are here
to stay, but I think we recognize, particularly in this
committee, that sometimes when we try to pick the winners and
losers, we do not do a very good job of it. So the question is,
are we finally right? Even if we are, would it still be better
to adopt an approach that promotes technologies equally and
requires them to compete against one another? I think it is a
fair question and one for good discussion.
I also raise the issue about the spending. I understand
certainly that authorizations are different than the
appropriations and that any tax credits added to this bill are
likely to be offset. But I think we do look at the price tag
with a little bit of raised eyebrows. $4 billion to $6 billion
is a lot. That is certainly out there on the table as we
consider that.
But I am pleased that we have this before the committee and
can have an opportunity to learn a little bit more about it.
Again, Mr. Chairman, thank you for holding the hearing and
to you, Senator Dorgan, for your leadership on this.
The Chairman. Senator Dorgan, did you want to make an
opening statement?
STATEMENT OF HON. BYRON DORGAN, U.S. SENATOR FROM NORTH DAKOTA
Senator Dorgan. Mr. Chairman, I would and thank you for the
courtesy.
I along with Senator Alexander, and Senator Merkley have
worked on this legislation for some while. We have introduced
several versions, one that includes tax credits. That, of
course, goes to the Finance Committee. The bill we're
considering today has been referred to this committee.
Let me make a couple of comments and I will finish
commenting on this issue of picking winners and losers.
I believe it was in the World's Fair in 1900 when Rudolph
Diesel showed up. He had a new engine that would run on
vegetable oil. A few years later, President Taft decided to get
rid of horses at the White House and buy some cars. Among the
cars he bought was the Baker electric car. So back a century
ago, we were talking about a new engine that would run on
vegetable oil and an electric car at the White House. Then a
few years after that, Henry Ford developed the Model T and
selected gasoline to run the internal combustion engine.
This Congress, in 1916, as a result to Henry Ford's
decision, said to the American people, if you are out looking
for oil and gas, God bless you. We want to incentivize you to
do that, talking about picking winners and losers. We would
like to give you very significant tax benefits if you go out
looking for oil and gas. That was almost a century ago and it
continues today because Congress decided that is was what we
wanted to do in this country.
Now, the dilemma is that we use 25 percent of all the oil
that we suck out of the planet every single day; meanwhile, we
makeup only 10 percent of the population and possess only 3
percent of the known oil reserves. A lot of people, myself
included, believe that our need for oil will lead to very
vulnerable circumstances for the country's future.
We import between 12 million and 13 million barrels of oil
a day and 70 percent of the oil that we use in our country,
both imported and domestically produced, is used in the
transportation sector.
So when you think about what is ahead of us, you have to
consider what different approaches we might use with respect to
transportation.
Now, I happen to support virtually all new approaches to
transportation. Last year, the administration cut $190 million
from hydrogen fuel cell research. I put the money all back in
the subcommittee that I chair on appropriations. Why? Because I
believe that in the longer term hydrogen fuel cells are going
to be very important.
But with respect to plug-in hybrids and electric vehicles,
the question is do we want to begin to incentivize different
approaches to moving our transportation fleet. I believe the
answer is yes. We have come up with an approach that says, with
respect to electric vehicles, let us develop a series of
incentives to further battery technology. We would like to see
somebody come up with a 400-mile to 500-mile battery. We set up
deployment communities to serve as test beds for large scale
deployment, which I think are very important. A series of
similar incentives in a piece of legislation that will start
moving in the direction that we think is important for the
country.
The President has talked about having a million electric
vehicles on the roads by 2015 in this country. You know, there
is this old saying, if you do not care where you are going, you
are never going to be lost. That can be true with a country. It
is true when referring to whether we want to set aspirations
and way points in the future to decide where we would like to
head. We did that when we decided that the internal combustion
engine should be fed with gasoline. So let us provide very
significant centuries' worth of incentives for gas and oil. But
in today's era, there seems to be two issues. No. 1, national
security. Our economic security is threatened by being as
vulnerable as we currently are because of our dependence on
oil, which we have little control. No. 2, the issue of climate
change.
Moving in the direction of an electric drive, vehicle fleet
makes a great deal of sense, and I do not see it as picking
winners and losers because, as I said, I support incentivizing
a whole series of alternative approaches to transportation. But
this, it seems, is going to be part of America's future.
One final comment. Every single night when we go to bed, we
have opportunities to plug something in to an electric grid
that is not being used. We built it. It is paid for and it is
not being used. We can use the spare capacity during the
evening hours which was built for prime use during the daylight
hours. We can use the electric grid and not have to spend a
great deal more for that infrastructure, which I think makes a
lot of sense.
I am really pleased with this legislation. It is
bipartisan. I think it will move us in the right direction.
I am pleased you are holding a hearing, Mr. Chairman.
The Chairman. All right. We have two very good panels here.
The first is, of course, the administration, the Honorable
David Sandalow, who is the Assistant Secretary for Policy and
International Affairs in the Office of Policy and International
Affairs in the Department of Energy. He is here to give us the
administration's perspective on this legislation and the
general subject of use of electric-drive vehicles in our
transportation sector.
David, why do you not go right ahead?
STATEMENT OF DAVID SANDALOW, ASSISTANT SECRETARY, POLICY AND
INTERNATIONAL AFFAIRS, DEPARTMENT OF ENERGY
Mr. Sandalow. Thank you, Chairman Bingaman, Ranking Member
Murkowski, Senator Dorgan, other members of the committee. On
behalf of Secretary Steven Chu and the Department of Energy, I
would like to thank you for the opportunity to appear today to
discuss electric vehicles and legislation to promote them.
I would also like to extend a personal thank you to Pat
Davis, the head of our vehicle technology program, who is right
behind me, and all the fine civil servants at the Department of
Energy who have been working for so long on these issues.
The Department shares the committee's goal of accelerating
electric vehicle deployment as a way to address two critical
challenges facing our Nation: reducing our dependence on
petroleum and mitigating greenhouse gas emissions.
Mr. Chairman, this morning I walked out to my garage and
unplugged my car from an extension cord. The battery in my car
gets about 40 miles on a charge. So on my trip to work, which
is about 5 miles, I use barely any gasoline.
On average in city driving, I get over 80 miles per gallon.
I often go weeks or more without refilling the tank in my plug-
in electric hybrid. The car is quiet, cheap to drive, and it
has great pick-up.
Mr. Chairman, electric vehicles are the future. The only
question is how soon.
The Department thanks the committee for the unprecedented
$2.4 billion investment in our Nation's manufacturing capacity
and infrastructure for electric vehicles provided through the
American Recovery and Reinvestment Act. This is speeding our
Nation's transition to electric drive while creating thousands
of jobs. With Recovery Act funds, U.S. manufacturers are
building the capacity to produce 50,000 plug-in hybrid electric
vehicle batteries annually by the end of 2011 and 500,000 by
the end of 2014. We are also deploying nearly 7,000 vehicles
with Recovery Act funds and more than 16,000 electric charging
points, as well as training code officials, technicians,
engineers, and others who are critical to the successful
transition to electrified transportation.
With that as the foundation, I am pleased to provide the
Department's perspective on the Promoting Electric Vehicles Act
of 2010, S. 3495, and I recognize, as you said, Mr. Chairman,
there are companion bills before the chamber.
Mr. Chairman, with your permission, I would like to submit
for the record my full written statement which has our views on
the bill and will also provide technical comments.
Today I would like to offer just a few brief observations
about the proposed act.
The Department of Energy supports the creation of a
national program that includes technical assistance, work force
training, and a targeted communities program to facilitate the
rapid deployment of electric vehicles. We believe that such an
effort will provide much needed resources, create models, and
facilitate the local leadership needed for faster adoption of
electric vehicles across the country.
We agree with the committee's decision to limit the number
of targeted deployment communities to no more than 15
initially. Starting with a smaller number allows us to focus
resources and build teams of experts that can support more
widespread rollout by communicating best practices and lessons
learned to other cities nationwide.
We are already examining ways to work more closely with the
communities on vehicle electrification, by the way. On July 22,
the Department of Energy will host a workshop to engage key
stakeholders in a discussion of critical issues such as
permitting and how to better understand the ways the Department
can support local efforts to deploy electric vehicles and
infrastructure.
The Department thanks the committee for recognizing the
importance of work force training to the successful deployment
and market penetration of electric drive vehicles and for
including a training specific provision in the proposed
national plug-in program.
This legislation also authorizes an R&D program focused on
advanced batteries, electric drive components and other
technologies. We support this authorization, and those
priorities align closely with ongoing activities in our vehicle
technologies program.
As for prizes, we support the concept of an Advanced
Battery for Tomorrow Prize. We appreciate the committee's
including of criteria to address battery size and cost, as well
as range. Understanding that the prize seeks to push the
envelope for state-of-the-art technology, we would like to note
that today's vehicles generally do not require a 500-mile range
and that based on input from our industry partners, we expect a
300- to 400-mile range will meet consumers' vehicle performance
demands.
Mr. Chairman, my children are teenagers. They can scarcely
imagine growing up in a world without personal computers, cell
phones, or GPS devices. Now, I predict that some day one of my
children will have one of their children look at them and say,
you mean, you could not plug in cars when you were young? That
is so weird.
The speed with which we make the transition to electric
vehicles will depend upon the leadership of everyone in this
room and around this country.
The Department of Energy thanks the committee for the
opportunity to comment on this legislation, and we look forward
to working with Congress to implement these programs.
I would be pleased to answer your questions, Mr. Chairman.
[The prepared statement of Mr. Sandalow follows:]
Prepared Statement of David Sandalow, Assistant Secretary, Policy and
International Affairs, Department of Energy
INTRODUCTION
Chairman Bingaman, Ranking Member Murkowski, and other Members of
the Committee, thank you for the opportunity to appear before you today
to discuss electric drive vehicles.
The Department of Energy shares the Committee's goals for
accelerating electric drive vehicle deployment as a way to address two
critical challenges facing our nation--reducing our dependence on
petroleum and mitigating greenhouse gas emissions.
Nowhere are these priorities more challenging than in the
transportation sector, which accounts for two-thirds of our petroleum
consumption and about a third of our greenhouse gas emissions.\1\
Electric drive will play a key role in meeting these challenges. Simply
put, drivetrain electrification can dramatically reduce both petroleum
use and greenhouse gas emissions--whether we're talking about hybrids
or plug-ins that use biofuel and renewable electricity, full electric
vehicles recharged with renewable electricity, or fuel cell vehicles
that use renewable hydrogen.
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\1\ Transportation Energy Data Book: Edition 28, calculated from
data in Table 1.13 and Table 1.16
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The American Recovery and Reinvestment Act (P.L. 111-5) supported
an unprecedented investment in our nation's manufacturing capacity and
infrastructure for electric drive vehicles. With Recovery Act funds,
U.S. manufacturers are building the capacity to produce 50,000 Plug-in
Hybrid Electric Vehicle (PHEV) batteries annually by the end of 2011
and 500,000 PHEV batteries annually by December 2014. As you know--with
more than 95 percent of today's lithium-ion batteries for consumer
electronics made in Asia--this commitment to building U.S.
manufacturing capacity is significant and provides us an opportunity to
lead the world in advanced lithium-ion battery technology.
Recovery Act funds are also supporting the largest-ever coordinated
deployment of nearly 7,000 electric vehicles and more than 16,000
electric charging points. The detailed operational data we collect
through this deployment will provide important insights about vehicle
usage, charging patterns, and potential impacts on our nation's
electrical grid necessary for accelerating broader, long-term
deployment of vehicles and infrastructure. I will also add Recovery Act
funds are supporting a number of programs to educate code officials,
first responders, technicians, and engineers who are critical
components of the human infrastructure needed for the successful
transition to electrified transportation, both in terms of consumer
acceptance and public safety. All together, this $2.4 billion
investment through the Recovery Act supports 48 competitively-selected
and cost-shared electric drive vehicle projects in more than 20 states
that will directly result in the creation of tens of thousands of jobs
in the U.S. battery and auto industries.
With that as a foundation, I am pleased to offer the Department's
perspective on the Promoting Electric Vehicles Act of 2010 (S.3495).
COMMENTS ON THE PROMOTING ELECTRIC VEHICLES ACT OF 2010
The Promoting Electric Vehicles Act of 2010 includes several
important provisions to promote near-term deployment of plug-in
electric drive vehicles, which complement and supplement the
Department's ongoing activities, funded both through the Recovery Act
and annual appropriations.
The Department recognizes the potential benefits of activities such
as those proposed by the National Plug-in Electric Drive Vehicle
Deployment Program, including technical assistance, workforce training,
and a targeted communities program to facilitate the rapid deployment
of plug-in vehicles. We believe that such an effort will create models,
and facilitate the local leadership necessary for faster EV adoption
across the country, and would be a natural extension of the activities
being undertaken through our Office of Energy Efficiency and Renewable
Energy, Vehicle Technologies Program's Outreach, Deployment & Analysis
(VT/ODA) activities, such as Clean Cities. The targeted deployment
program would offer communities of different sizes in various parts of
the country an opportunity to execute various deployment approaches and
develop best practices that can be shared nationwide to address
critical questions about planning and managing vehicle and charging
infrastructure deployment.
The Department appreciates that the community selection criteria
includes an emphasis on diversity of climate and type of electric
utility. Such diversity in pilot programs, particularly across
electricity-generation sources, will be crucial for estimating the
environmental impacts of expanded adoption of plug-in electric drive
vehicles.
We also agree with the Committee's decision to limit the number of
targeted deployment communities to no more than 15, initially. Starting
with a smaller number would allow us to focus resources and build a
team of experts that can support a more widespread rollout through
communication of best practices and lessons learned to other cities
nationwide. We are already examining ways to work more closely with
communities on vehicle electrification and infrastructure deployment,
particularly in connection with our Clean Cities Program. The
coalitions that comprise the Clean Cities network bring together state
and local governments, early adopter fleets, local utilities,
infrastructure developers, and other key stakeholders in a community to
advance the deployment of alternative fuel vehicles. These public
private partnerships are proven and effective resources for sharing
information at the local level and are primed to support the rollout of
electric drive vehicles and infrastructure. Through Clean Cities, we
are planning a workshop, now scheduled for July 22, to engage key
stakeholders in a discussion of critical issues such as codes,
standards, and permitting of electric charging infrastructure and
electric vehicle deployment best practices. Our goal is to better
understand how the Department can support local community efforts to
deploy EVs and infrastructure.
To maximize the effectiveness of the targeted communities program,
the Department would seek to coordinate this effort with related
ongoing projects to deploy electric drive vehicles and infrastructure.
Our Recovery Act projects for transportation electrification are
building critical expertise through large-scale vehicle and
infrastructure deployment, collecting data on vehicle-grid interaction
and producing valuable lessons learned that can support and help to
accelerate future deployments in other communities. In addition, we
appreciate the thoroughness and detail of the deployment community
selection criteria as outlined in the legislation, which would help to
ensure the selected communities stand up as models for deployment
across the country.
Regarding the specified 120 days for applicants to submit
proposals, we are concerned about asking communities to complete a
significant amount of groundwork and coordination with multiple
stakeholders prior to submitting their applications--much more than
they're used to accomplishing. We believe 120 days may not provide
enough time to complete that important work effectively. We ask that
the Committee consider providing DOE the flexibility to establish the
proposal deadline following some research to better understand
community needs in this regard as long as we work within the specified
360-day timeframe for announcement of community selections.
The Department thanks the Committee for recognizing the importance
of workforce training to the successful deployment and market
penetration of electric drive vehicles, and including a specific
provision in the proposed national plug-in program. The grant program
for training first responders, code inspection officials, dealers and
mechanics, and electricians responsible for charging point installation
will complement and supplement Recovery Act projects and ongoing VT/ODA
activities focused on these critical needs. Our recently-initiated
Recovery Act efforts will provide valuable lessons learned and build a
body of expertise to support implementation of the workforce training
provision in this bill.
We also believe that the technical assistance component of the
proposed national deployment program is vital to the successful rollout
of electric drive vehicles. The Department is well positioned to
disseminate information and provide training and technical assistance
to communities seeking to accelerate EV deployment. As an example, and
as noted earlier, the Clean Cities network is primed to share best
practices and lessons learned about permitting and inspection
processes, as well as other local ordinances and opportunities for code
official and first responder training. I would like to note, however,
that the Department plays a supporting role in the development of model
codes and standards. In regard to this provision, we can bring value to
the process because of our extensive experience working with code
development organizations (CDOs) and standards development
organizations (SDOs) to facilitate consensus around the development and
adoption of vehicle-and infrastructure-related codes and standards. We
are also working to enable the harmonization of codes and standards at
an international level.
The Promoting Electric Vehicles Act includes several other
significant provisions in addition to the National Plug-in Electric
Drive Deployment Program; I will briefly comment on several of them
here.
The bill authorizes a R&D program focused on advanced
batteries, electric drive components, and other technologies
supporting the manufacture and deployment of electric drive
vehicles and charging infrastructure. These priorities are
aligned closely with ongoing activities in the Vehicle
Technologies Program--specifically, our Batteries and Electric
Drive Technology subprogram, which includes advanced battery
R&D and advanced power electronics and electric machines, as
well as our Vehicle and Systems Simulation and Testing
subprogram, which includes work to examine vehicle and
infrastructure interface issues through testing and evaluation.
As for prizes, we support the concept of the ``Advanced
Batteries for Tomorrow Prize.'' We also appreciate the
Committee's inclusion of criteria to address battery size and
cost as well as range. Understanding that the prize seeks to
push the envelope for state-of-the-art plug-in hybrid battery
technology, we would like to note that today's vehicles do not
require a 500-mile range and that based on input from our
industry partners, we expect a 300-to 400-mile range to meet
consumers' vehicle performance demands.
We also understand and appreciate the Committee's interest
in a technical advisory committee focused on plug-in hybrid
vehicles. We place great value in independent reviews and
external input to our program. You may be aware that the
National Academy of Sciences National Research Council conducts
independent biennial reviews of both our light-duty and heavy-
duty vehicle research programs. We would like to suggest to the
Committee that any new review functions be coordinated with
other ongoing and planned review activities.
To conclude, the Department of Energy thanks the Committee for the
opportunity to comment on this legislation and our ongoing related
Recovery Act activities. We look forward to working with Congress to
continue to implement these programs. They will accelerate the
deployment of electric drive vehicles and infrastructure and help us
achieve our national objectives for reducing petroleum use and
greenhouse gas pollution.
The Chairman. Thank you very much. Let me start with a few
questions.
One of our problems--and Senator Dorgan alluded to this a
little bit in his statement, but one of our problems I have
noticed over the years is that the Federal Government gets very
enthusiastic about particular technologies to solve our energy
problems, and we usually demonstrate the enthusiasm with a big
event at the White House and we bring in everybody, all the
CEOs of the car companies, and talk about how we are going to
do something. Then the whole thing goes away after a few years,
and we are on to the next project.
There are programs that are currently being administered by
the Government to promote more development and use of electric
vehicles. How can we be sure that we are not adding other
things that will cancel out some of those? How can we keep the
ones that are working? How can we have some continuity of focus
in this area? What do you see as the provisions in this bill
that would help us do that and the ones that might cause us to
lose that focus?
Mr. Sandalow. Thanks for the question, Mr. Chairman, and I
noted that Ranking Member Murkowski asked a similar question.
It is exactly the right one.
The Federal Government should stay away from picking
technologies. For example, in this area, the Federal Government
should avoid picking between, let us say, lithium-ion batteries
and nickel metal hydride batteries or other types of specific
chemistries and battery applications. Certainly in my view that
would be unwise.
There are technology categories that require public
investment, and electric drive broadly is one of those. In
order for electric drive to thrive, we are going to need an
infrastructure of people and engineers who know how to work
with electric drive technologies. We are going to need charging
points. We are going to need utilities to develop the different
types of tools and regulatory structures that will make these
cars work. So having Congress provide leadership in this
direction and helping set the direction for the Nation for a
broad technology category is, in my view, extremely
appropriate.
As Senator Dorgan has already said in this hearing, 100
years ago Congress did the same thing with respect to oil and
gas technology, and that led to extraordinary prosperity on the
part of the Nation as that infrastructure was built up with
Government support over the course of the past century. We need
to do the same thing in the 21st century, which is invest in
21st century technologies, provide broad direction for
technology categories, and in my view, that is what this bill
and the companion bills before you do.
The Chairman. Let me ask on the targeted communities. It
seems to me we may be far enough along in the development of
this technology that we should be going nationwide with
deployment of the technology. The idea of having targeted
communities that we are going to work with to see if they can
sort of lead the way and everybody else will watch to see how
well they do--we may be too far down the road toward having a
real technology option for people here for us to be thinking
about it that way.
What is your thought on the whole notion of targeted
communities? Especially if we tell DOE to pick 15 targeted
communities and none of them turn out to be in New Mexico----
[Laughter.]
The Chairman [continuing]. I am going to be hearing from a
lot of communities in my State saying why are our tax dollars
going to help these other places. Why is this not available to
all of us?
Mr. Sandalow. Thank you, Mr. Chairman. We should be going
nationwide and we will be going nationwide with this
technology. I predict that consumers and drivers all over this
Nation are going to be buying electric cars when they are
widely available. At the same time, with Federal programs, we
need to start somewhere. There will not be unlimited funds.
Ranking Member Murkowski has already referred to the cost
constraints that we must face in implementing this and any
other program. So in doing that, our view is it is wise to
focus on a limited number of areas since there is essentially
no choice and try to create the knowledge base and the tools in
those areas that the rest of the Nation can learn from.
In this bill before us, there are, I think, very wise
provisions that would balance the different types of
communities that are selected regionally, geographically, in
terms of size of the communities, and by other factors. I think
those are exactly the type of criteria that should be used as
we implement a program like this.
The Chairman. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
I would venture to say that I am probably not going to have
any communities in Alaska either that are going to be the
targeted communities. We need a little bit of range up there.
But I will tell you that we have been plugging our cars in
for a long time. If you do not plug them in, you cannot start
them in the wintertime when it is too darned cold out there. I
think some of our northern neighbors know that as well.
Mr. Sandalow, I wanted to ask you about what is going on
internationally in so far as electric vehicles. How does what
we are proposing here compare to other international efforts?
Are the type and the scope of the policies here in this country
less or roughly on par with what is happening in other parts of
the world?
Mr. Sandalow. Thank you for the question, Senator
Murkowski, and it is an extremely important one.
In my job in the past year, I have had the opportunity to
visit China, in particular, a number of times, as well as other
countries, and I believe it is important for us to focus on the
fact that the rest of the world is moving out quickly on this
technology. In China, there is an electric vehicle deployment
program that has recently grown from 13 cities to 22 cities,
and that country is investing extremely heavily in battery
technology. They are, in fact, selling, they tell us, over 20
million electric scooters every year in that country and
planning to make the transition to electric vehicles in the
years ahead. So this market is moving out quickly.
The question before us is whether the United States will
lead in this technology. I believe we have the opportunity to
do that if we make the types of investments and work together
in the way suggested by this bill in the years ahead.
Senator Murkowski. You mentioned that in China they have
seen an increase in the number of targeted communities that
they have done. Is this typically how you see the rollout of
the electric vehicles coming into countries in different areas,
is there are targeted communities where you start it first,
going to the chairman's question about why not go nationwide?
Mr. Sandalow. It is a great question, Senator. This is a
new technology. So this is just starting to happen in other
countries. But in Israel and in Denmark and some places where
electric vehicles are beginning to be rolled out, yes, they do
happen in relatively concentrated places, and you start in
relatively concentrated places and then branch out. That is not
inconsistent with widespread use of the technology, but
focusing resources in a few places I think in my opinion can
help the widespread dissemination of this approach.
Senator Murkowski. That is all for now, Mr. Chairman.
The Chairman. Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much.
I think we are always going to need oil and gas. This is
not a case of deciding that they are not valuable resources. If
we move toward an electric fleet of transportation vehicles, it
will substantially reduce our reliance on foreign oil, which I
think is very important. It will improve both our energy
security and national security.
I am wondering if you might have a grandchild someday who
will ask you, Grandpa, what is that noise under that hood, and
you will say, well, that is an internal combustion engine
running on gasoline, because the new electric fleet does not
make substantial sounds.
I do not know how fast this moves. I do think Senator
Murkowski asked the question that others will ask about picking
winners and losers, and I am going to ask you about that in
just a moment.
In the appropriations bill that I wrote last year on energy
and water, I required DOE to contract with the National
Academies to perform a study on all alternative transportation
fuel options and then to provide policy suggestions and options
that would lessen our dependence on foreign oil, a
comprehensive road map. I did that because we do not know where
this will end up, but we do have a notion of the kind of
technologies that are now becoming available. This unbelievable
investment in new battery technology can move us from last
place or second or third place to first place. So last year's
appropriations bill will require that we look at all
technologies available.
But let me ask you the question about when we introduced
the legislation dealing with electrified fleets and the
infrastructure required to support such fleets. Senator
Murkowski mentioned that she was worried that such legislation
wiould pick winners and losers. I said, we have historically
provided incentives for similar things. I would like to get
your opinion on the idea of this, picking winners and losers,
because I think this will be a prevalent concern.
Mr. Sandalow. Senator, I think it is extremely important
that we invest in a broad range of technologies in this area,
and with this committee's support, the Department of Energy is
currently investing not just in electrification but also in
biofuels and in hydrogen and in natural gas technologies and in
improving the efficiency of internal combustion engines. But
that should not prevent us from investing heavily in leading
technological approaches such as electric drive.
If I could on this note, I would like to quote Senator
Lamar Alexander, who has been a leader on this issue and, of
course, a cosponsor of your legislation, who said, ``The single
best way to reduce America's use of oil is to electrify our
cars and trucks.'' Now, I think we need to invest in a range of
technologies, but we need to focus in on those that have
extraordinarily high potential and that in my opinion is
electric drive.
Senator Dorgan. I support all the things you have just
described. I mean, I think we should do all of them and do them
well.
The National Research Council put out a study late last
fall that had what I consider to be very unrealistic
expectations for battery costs, it projected very high battery
costs, and very low potential penetration rates for vehicles. I
assume you have access to the same kind of numbers. What is
your assessment of this report which was not very positive?
Mr. Sandalow. We share concerns about that report, Senator.
I am familiar with it, and I think the numbers in that report
were unrealistically high and they are inconsistent with some
of the data that we have received in the course of our work. We
believe both that the costs of batteries today are lower than
were set forth in that report and that the rate of improvement
of battery technologies will be faster, particularly if we
invest in it in the ways suggested in this bill and others.
Senator Dorgan. If nothing else happens, accepting that
some other countries are moving toward an electrified fleet, in
those countries, they will still use the internal combustion
engine. My notion is that as China and India look at the rest
of the world and decide, you know what, we need to be driving
here. We need to be driving something. So you have very low-
priced cars made available with more and more people wanting
those cars, perhaps there will be as many as 300 million to 400
million additional vehicles on the road in the years ahead, all
looking for a gas station once a week. Is that not ominous for
a country like ours that requires a lot of oil from elsewhere
to come into our country, 70 percent of which will be used in
the transportation fleet? Does that not just drive us to say,
you know what, things are going to change. They are changing
already. They are going to change not for the better, but for
the worse. Meanwhile we have other alternatives available right
now. We have an infrastructure that has been built to produce
peak power and it is largely unused at night when we can use it
to plug in our vehicles. Your notion of that?
Mr. Sandalow. There is no question, Senator. We spend
hundreds of billions of dollars a year in this country to buy
foreign oil. I believe the figure in 2008 was $380 billion or
close to it. It is an extraordinary threat to our national
security, and one of the best ways to reduce threats to our
national security is to change our vehicle fleet so that we are
not dependent on that type of oil.
Senator Dorgan. Mr. Chairman, the one thing that is certain
to all of us is that we understand change is very hard, and
yet, inevitably the thing that we will all experience all of
our lives is change. But when you talk about these kinds of
things, picking ideas and moving forward, change is very, very
hard to accomplish because we live in a circumstance wedded to
what we do. I just think this is such an important subject for
us in terms of national security, economic security, and also
protecting our climate.
Thank you, Mr. Chairman.
The Chairman. Thank you.
Senator Burr.
Senator Burr. Thank you, Mr. Chairman.
Welcome, Mr. Secretary.
There is a likelihood North Carolina will be an area that
is picked and the tremendous amount of money going into North
Carolina right now on battery technology, much of which is
coming from the Department of Energy in the over $2 billion
that was available under the stimulus package.
Let me ask you. S. 3495 authorizes another $1.5 billion in
battery R&D. At what point will we have filled the coffers
sufficiently with technology money to believe that we can reach
that critical mass in the technologies that we need for this to
really penetrate the market?
Mr. Sandalow. Senator, I was visiting Davidson with my 17-
year-old----
Senator Burr. A very good pick.
Mr. Sandalow. Thank you--when by coincidence the President
showed up in Charlotte to announce a battery grant at a
facility there. So I am familiar with what is happening in your
State. I think it is a tremendous opportunity all over the
country to create jobs in this area.
I would not want to pick a specific number for research
dollars at this point. I do not think we know. That is
something that will emerge over time. But one thing I am
confident of is that investment in this area will pay dividends
for the American people. As we drive down the costs of battery
technologies, it is going to speed the dissemination of these
vehicles. It is going to reduce our dependence on oil, and it
is going to create jobs. In the past the United States has
thrived when we have had focused efforts on research and
development that have led to extraordinary results. That is the
type of thing we can do in this area, and I think bills like
this will help us get there.
Senator Burr. Even health care, the research and
development that goes on on the research bench is sometimes
weighed against commercialization of that product, that
breakthrough because that researcher is going to have to go out
and find more research money. Now, I am not suggesting that we
are in the same situation on the battery.
But we have got three major challenges, as I see it, to
electric penetration, two of which would be range and cost.
What is the number that we have got to hit for the range that
you bring in enough of the American people that you have now
affected the manufacturing cost? At what price point does it
need to be for that critical mass to be met?
Mr. Sandalow. These are big questions and important ones.
A couple of points on this, Senator. There will be
different driving habits. So I think with respect to the range,
there is no one single answer. There are some people who--like
me, I drive 5 miles back and forth to work every day. I have
got a car that I basically use for that purpose and almost
nothing else. There are lots of Americans who drive cars in
that way. I think the figures are that most Americans drive 30
miles or less every day. But then lots of Americans are out
there driving hundreds of miles every day in big States.
Now, for the Americans who drive short distances, one type
of technology might be better. For the Americans who drive
longer distances, other types of technologies might be better.
So I do not think there is any one single----
Senator Burr. Should our strategy not be how do we get
enough market penetration through electric vehicles that, one,
it affects the manufacturing cost and we are bringing that
down, so we are addressing point No. 2. We are reducing the
costs where it is more affordable for more people. Would that
not in itself fuel additional R&D at the company level to try
to figure out how to address the range so that you are pulling
different customers in the door?
Mr. Sandalow. There is no question. Two points on that.
First, with respect to cost, one point that is worth
remembering and emphasizing is that it costs much less to drive
a mile on electricity than it does on gasoline. That electric
car that I am driving around--it costs me about the equivalent
of 75 cents a gallon to drive. Now, the upfront purchase price
of the car is higher. We need to get that upfront purchase
price down. But driving on electricity is much, much cheaper
because electric motors are more efficient.
You raised the issue, Senator, of the balance between
Government funding and private funding in this area, and that
is an extremely important one. There is certainly an extremely
important role for private sector commercial investment in
research and development. But the public sector also has a role
in doing the type of research that is pre-commercial, the
advanced research that no individual country can benefit from.
That has been the model over many decades. We will not get
where we need to go if all the research and development in this
area is simply in the private sector because there is advanced
research and development that needs to be done. So we need to
be doing that in our public sector as well.
Senator Burr. I agree with you totally. I think that as we
head into this, which is an incredibly important sector, we
have also got to figure out up front where is it we are trying
to get to. We are not just out trying to fuel the research
bench with public and private money. We are trying to have
replacement vehicles over the combustible engine for some
portion of America, and from a national security and economic
security standpoint, long-term it means the majority of
Americans preferring these platforms, and that the combustion
engine is on its way out as we know it today.
I want to make sure our policies send us in the right
direction and just do not send us in one direction that has no
specific area then that we are pivoting to.
Senator Dorgan. Would the Senator yield on that point?
Senator Burr. I would be happy to.
Senator Dorgan. I think generally speaking most that have
been working in this field feel that you need to get a battery
capability for a 300- to 400-mile range. We have a prize in
this legislation for a 500-mile battery. That, of course, is
what we have as an aspiration to develop in the future. But I
think most people feel you are going to need to have a 300- to
400-mile range with the battery.
Mr. Sandalow. If I might also. The Department has
established some targets for battery costs as well, and we are
looking to try to get battery costs down to $300 per kilowatt
hour, for example, which we think will support a commercial
market of pretty substantial size.
The Chairman. Senator Stabenow.
Senator Stabenow. Thank you very much, Mr. Chairman.
First, I think, as I understand it, it is actually a very
important day today because I think we need to say happy
birthday to Senator Murkowski.
Senator Murkowski. No.
Senator Stabenow. That was on my schedule as being your
birthday today. So we will----
Senator Murkowski. It was last month.
Senator Stabenow. Oh, well, they made a mistake. Here I was
trying to celebrate your birthday today. I was ready to sing.
We will not sing. I was ready to sing. With that, we will take
that off the schedule today, singing for Senator Murkowski.
[Laughter.]
Senator Stabenow. So, Mr. Chairman, thank you very much for
your leadership on this issue and to Senator Dorgan as well.
Yesterday I attended an opening groundbreaking for a
battery facility in Midland, Michigan. Dow Kokam, which is a
partnership, and it is one of 16 different facilities in
Michigan that is now involved in battery manufacturing for
these vehicles. It would not have happened without Senator
Dorgan's leadership on appropriations and Senator Bingaman's.
So thank you to both of you for that.
When we look at this bill, which I wholeheartedly agree
with the goal of this bill, one of the things, Mr. Chairman,
that I want to work with you on and work with the sponsors on
is to make sure that--and I know you share this, but making
sure that we are, in fact, incentivizing purchasing of the
manufacturing of these products in this country so that these
are American made and we are not incentivizing folks coming in
from overseas who already have their own incentives in their
own country. So I am looking at this with an eye to this as we
go through it.
My question first, though, relates to how we incentivize,
in addition to what is being talked about in this bill, and I
think there are some important questions as to how we do this.
We have got to get started doing a few communities or
incentivizing something across the country. We know we have to
get started somewhere.
But one of the places that we can really get started much
more aggressively I believe than where are is in our own
Federal purchasing. I believe that is a piece in the bill as
well. So pointing to the General Services Administration now
between the post office and the agencies of government and the
military, we have over 651,000 vehicles used by the Government.
We did a small piece in the Recovery Act, but that alone could
make a huge difference in creating the market.
So I am asking, do you believe that we are, in fact, doing
enough in this legislation and doing enough in general compared
to what we purchase every year and what we could be doing to
jump-start not just infrastructure in individual communities
but the market as a whole?
Mr. Sandalow. Thank you for the question, Senator.
We can do a lot with Federal procurement of vehicles. This
bill moves us in the right direction on that front. The Federal
Government, the last time I looked, buys over 60,000 vehicles a
year. There are tremendous opportunities, as you suggest, to
use Federal purchasing power in order to make a transition in
this market. So I look forward to working with you, with
members of the committee to move forward on those provisions in
this bill and do whatever we can to improve the ability of the
Federal Government to use its purchasing power to promote the
transition toward electric vehicles and other types of advanced
technologies.
Senator Stabenow. Do you need legislation in order to be
able to do that? Or is that something that the administration
can make a commitment to and proceed on right now?
Mr. Sandalow. The administration is already making steps in
this area with a number of purchasing decisions. This type of
legislation is extremely helpful, Senator, and it sets the
direction of Congress. It makes the intent of Congress clear on
that and provides authorities which will be very helpful to us
in doing exactly that.
Senator Stabenow. Obviously, as you mentioned, the price on
your vehicle was higher, even though you are saving money in
the long run, higher than you would like it to be. We provide
tax incentives and so on. But again, it is just like with
computers. It is just like with anything else. The more people
who are purchasing it, the more the price comes down. So I
think we have a tremendous ability in our marketing--our own
ability in the Federal Government to bring down those prices.
Finally, I would just ask as we look at how we incentivize,
I believe that we absolutely have to incentivize the electric
vehicles as very much a part of our future. But what about
multiple electric drive pathways such as fuel cell electric
vehicles, other kinds of options so we are going to a broader
range around electric vehicles? I do not believe that is in
this bill, and I wondered if you might speak to having a
broader view in terms of the electric vehicle.
Mr. Sandalow. We should certainly be investing in a broad
range of electric drive technologies, and that would include
not just batteries but fuel cells and other types of
approaches. I think the consensus view of most experts is that
battery-drive vehicles will be on the market sooner than those
using fuel cell technologies. So I think it is appropriate to
focus in that direction. But we need to be looking at all
different pathways to reduce our dependence on oil.
Senator Stabenow. Thank you, Mr. Chairman.
The Chairman. Senator Corker.
Senator Corker. Mr. Chairman, thank you. I appreciate the
testimony of the Secretary. I am going to actually wait for the
second panel. I am trying to juggle financial reform and this.
So thank you.
The Chairman. We have all had a chance to ask questions.
Thank you very much for your testimony, and we will allow the
second panel to come forward at this point.
The second panel is made up of Fred Smith, the Chairman,
President, and CEO of FedEx Corporation in Memphis, Tennessee;
Kathryn Clay, the Director of Research with the Alliance of
Automobile Manufacturers here in Washington. Brian Wynne is the
President of the Electric Drive Transportation Association here
in Washington. David Friedman is the Research Director with the
Clean Vehicles Program of the Union of Concerned Scientists
from Oviedo, Florida. Alan T. Crane is the Senior Program
Officer with the National Research Council here in Washington.
Thank you all very much for being here.
We will have our usual procedure here. We will just take
the written statement that each of you have prepared and
submitted and make that part of the record. If each of you
could take 5 or 6 minutes and summarize the main points you
think we need to understand from your testimony, that would be
very appreciated, and then we will have questions.
Why do we not start right here with Mr. Smith and go right
across the table? Thank you for coming.
STATEMENT OF FREDERICK W. SMITH, CHAIRMAN, PRESIDENT AND CEO,
FEDEX CORPORATION, CO-CHAIRMAN, ENERGY SECURITY LEADERSHIP
COUNCIL, AND MEMBER, ELECTRIFICATION COALITION
Mr. Smith. Mr. Chairman, thank you very much for having me
here. Senator Murkowski, Senator Dorgan, other members of the
panel.
I will, as you asked, just summarize my testimony.
I think it is important to state how I got involved in this
because I think it bears on the question.
A number of business and retired military officers came
together several years ago because we shared the concern that
the Nation had an enormous economic and national security
problem in our reliance on imported petroleum, as Senator
Dorgan expressed so well. It was headed by General P.X. Kelley,
former Commandant of the Marine Corps, on the military side and
myself as the co-chair on the business side. It encompassed a
number of major users of petroleum like FedEx Corporation. We
operate 670 airplanes, 85,000 vehicles, burn a billion and a
half gallons of fossil-based fuel a year. So this was a very
significant issue.
The report that we produced with that committee was a
central part of the Energy Act of 2007 which called for
maximizing domestic oil production and reinstating new fuel
efficiency standards. It was from that work that we concluded
that electrification of light-duty transportation offered the
greatest promise to significantly reduce petroleum usage in
general and our dependence on imported petroleum from hostile
parts of the world.
An electrification coalition was put together and that
coalition produced a study called The Electrification Roadmap
whose recommendations and conclusions were then analyzed by the
University of Maryland. The results were really quite profound
because if we keep on a business-as-usual trajectory and
assuming a reasonable GDP growth over the next 25 years, our
light vehicle fuel consumption will increase from a little less
than 10 million barrels of fuel per day to about 14 million
barrels of fuel per day by 2035.
With the adoption of The Electrification Roadmap proposals,
which parallel in the main Senator Dorgan's legislation,
accompanied with the advantages of the new fuel efficiency
standards, those numbers by 2035 decreased to 4 million barrels
a day. That is an incredible swing.
Now, we believe that sometimes things are so self-evident
that you have to jump on this horse, and the reality is the
battery technology that has been developed for our
telecommunications and IT world is now capable of providing
vehicles which have an adequate range in utility. In that
regard, we have a number of all-electric vehicles that we are
testing in California at the moment. We brought it to
Washington not too long ago. But let me give you some numbers
on that which I think gets to some of the points that Senator
Burr made.
This is a vehicle that is manufactured by a joint venture
between Navistar and Modec, which is a European company. It is
made just west of Chicago in a Navistar plant. It is powered by
A123 system batteries. I believe they are made in Michigan.
They could be in the Indiana plant, but I think they are made
in Michigan.
That vehicle has about 2 tons of payload. It has 100 miles
of range per day, which is perfectly adequate for light-duty
pick-up and delivery operations. It costs about 20 percent per
mile to operate compared to a diesel alternative. So there is
an 80 percent benefit in operating costs.
The issue is its acquisition cost, and the acquisition cost
is roughly 80-85 percent higher than the diesel equivalent.
Our belief is, based on talks with battery manufacturers
here and overseas, including in Japan and China, there is a
high likelihood that the cost of those batteries will be halved
over the next 3 to 5 years. Now, 70 percent of that Navistar-
Modec vehicle's cost I just mentioned to you is represented by
the battery. So if you get to that point where you brought the
cost of those batteries down and hopefully have significant
improvements in the power generation as well, the economics of
this are compelling. So you reduce the amount of petroleum used
in the economy, reduce the amount of CO2 emitted.
You obviously produce a great opportunity for American
manufacturing jobs.
We think the recommendations in Senator Dorgan's bill to
put these deployment communities in place--they do not mitigate
the fact that you can get these benefits of the tax credits
anyplace in the United States, but to get those cost
performance metrics to the level I mentioned, you have to have
scale production, and the best way to do that is what is
represented in the legislation in question here in our opinion.
So we feel very strongly that similar to certain
technologies that just have such compelling advantages over
their predecessors like gas turbines and aviation, replacing
the reciprocating engines, that the electrification of light-
duty transportation falls in this category, and we would
strongly recommend for the national security and national
economic risks articulated by Senator Dorgan that this
legislation move forward.
Thank you.
[The prepared statement of Mr. Smith follows:]
Prepared Statement of Frederick W. Smith, Chairman, President and CEO,
FedEx Corporation, Co-Chairman, Energy Security Leadership Council, and
Member, Electrification Coalition
Good morning, Chairman Bingaman, Ranking Member Murkowski, and
members of the Committee. I would like to thank you for giving me this
opportunity to speak to you regarding the Promoting Electric Vehicles
Act of 2010, a bill that I think represents a tremendously important
step forward in our nation's effort to end the very real and pressing
threats posed by our dependence on petroleum.
I am proud to serve both as co-Chairman of the Energy Security
Leadership Council and as a member of the Electrification Coalition,
two organizations dedicated to facing these threats head on.
The Energy Security Leadership Council, formed in 2006, is a
coalition of business executives and retired national security leaders
who believe that our dependence on oil, much of it imported from
unstable and hostile regimes, poses an unacceptable economic and
national security threat.
The Electrification Coalition was formed in 2009, and is made up of
a group of business leaders who represent the entire value chain of an
electrified transportation sector and who are committed to promoting
policies and actions that facilitate the deployment of electric
vehicles on a mass scale.
I became involved in these organizations for a single reason: it is
my belief that after terrorism and the proliferation of weapons of mass
destruction, our increased dependence on petroleum represents the
biggest single threat to our nation's economy and national security.
I can speak to this issue personally. FedEx delivers more than 7
million packages and shipments per day to more than 220 countries and
territories. In a 24-hour period, our fleet of aircraft flies the
equivalent of 500,000 miles, and our couriers travel 2.5 million miles.
We accomplish this with more than 275,000 dedicated team members, 670
aircraft, and some 70,000 motorized vehicles worldwide.
FedEx's reliance on oil reflects the reliance of the wider
transportation sector, and indeed the entire U.S. economy. Oil is the
lifeblood of a mobile, global economy. We are all dependent upon it,
and that dependence brings with it inherent and serious risks.
In 2008, when oil prices spiked, Americans consumed nearly 20
million barrels of oil a day--one-fourth of the world's total. We
imported 58 percent of the oil we consumed, leading to a U.S. trade
deficit in crude oil and petroleum products that reached $388 billion--
56 percent of the total trade deficit.
A year later, with oil prices averaging just $62 per barrel and oil
consumption down, the United States still ran a $200 billion trade
deficit in crude oil and petroleum products. At current prices and
demand levels, the trade deficit in crude oil and refined products is
set to return to pre-crisis levels near $300 billion.
At the crux of America's oil dependence is the energy demand of the
transportation sector. Transportation accounted for almost 70 percent
of American oil consumption in 2008. Cars and trucks were 94 percent
reliant on oil-based fuel for their energy, with no substitutes
immediately available in anything approaching sufficient quantities.
The volatility of oil prices affects every American. At the
beginning of 2001, oil prices were steady at $30 per barrel. Over the
subsequent five years, prices steadily rose, reaching $75 per barrel in
June of 2006. After retreating slightly, benchmark crude prices jumped
50 percent in 2007, from $60 per barrel in January to more than $90 in
December. In 2008, oil prices soared rapidly, eventually reaching their
all-time high of more than $147 per barrel on July 3.
We are all aware of the sharp financial burden on U.S. households
that faced--and still face--resets in their adjustable rate mortgages.
But it is important to understand that increases in energy costs have
been on an equivalent, or even greater, order of magnitude for the
entire American economy. A typical subprime borrower with a poor credit
history who bought a $200,000 house in 2006 with a 2 year/28 year ARM
with a 4 percent teaser interest rate for the first two years would
have seen monthly mortgage payments increase from about $950 a month
before the reset to about $1,330 after the reset--an increase of about
$4,500 a year. In the meantime, between 2001 and 2008, the average
retail price of gasoline increased from $1.46 to $3.27, costing typical
households $1,990 a year in increased fuel expenses. And that increase
in energy costs affected all U.S. households--not just the one
household in 20 that held a subprime mortgage.
This burden, multiplied across millions of households, was a major
contributor to the ensuing economic slowdown. We saw an explosion in
home ownership, with many purchases being made by people who had
heretofore not qualified for mortgages. When the price of oil and the
price of gasoline began to rise, and inflation on commodities began to
take hold, and interest rates began to increase, you had a tremendous
diminution in purchasing power and cash flow, which contributed to
people having to walk away from their mortgages. The rise in oil prices
was the match that lit the fuse of the mortgage mess and the subsequent
recession. The U.S. economy lost more than 700,000 jobs between
December 2007 and the beginning of September 2008, and the unemployment
rate increased from 4.5 percent to 6.1 percent--all before the
financial crisis truly hit later in September.
And the steps we usually would take to help strengthen the economy
and create jobs in times of weakness are just as easily overcome by oil
price volatility. The total effect of changes to the federal tax code
from 2001 to 2008 code was a decrease in annual federal income and
estate taxes by about $1,900 for the median household. But a typical
household's energy costs rose more than that. In other words, every
penny that the most Americans saved due to federal income and estate
tax cuts over those eight years was spent on higher gasoline bills.
All told, U.S. families and businesses spent more than $900 billion
on refined oil products in 2008, representing 6.4 percent of GDP.
Today, prices are off their highs. But for how long? Oil is back near
$80 per barrel. Many of the underlying fundamentals that pushed oil
prices up are still present today, and once demand--temporarily reduced
due to the recession--begins to pick up again, prices are likely to
follow. Our oil dependence could strangle an economic recovery just as
it is beginning to take hold.
The threat to American national security is equally as urgent. The
vulnerability of global oil supply lines and infrastructure has driven
the United States to accept the burden of securing the world's oil
supply. Much of the infrastructure that delivers oil to the world
market each day is exposed and vulnerable to attack in unstable regions
of the world. According to the U.S. Department of Energy, each day more
than 50 percent of the world's oil supplies must transit one of six
maritime chokepoints, narrow shipping channels like the Strait of
Hormuz between Iran and Qatar. Even a failed attempt to close one of
these strategic passages could cause global oil prices to skyrocket. A
successful closure of even one of these chokepoints could bring
economic catastrophe.
To mitigate this risk, U.S. armed forces expend enormous resources
patrolling oil transit routes and protecting chronically vulnerable
infrastructure in hostile corners of the globe. This engagement
benefits all nations, but comes primarily at the expense of the
American military and ultimately the American taxpayer. A 2009 study by
the RAND Corporation placed the cost of this defense burden at between
$67.5 billion and $83 billion annually.
Oil dependence also constrains U.S. foreign policy. Whether dealing
with uranium enrichment in Iran or a hostile regime in Venezuela,
American diplomacy is distorted by the need to minimize disruptions to
the flow of oil. Too often, oil dependence requires us to accommodate
hostile governments that share neither our values nor our goals,
putting both the United States and its allies at risk.
Finally, petroleum consumption poses a long-term threat to global
environmental sustainability. Curbing emissions is a global issue, and
there is not yet an international consensus on a long-term
stabilization objective or on the changes in emissions trajectory
needed to meet such a goal. International discussions are increasingly
centered on a stabilization level that ranges between 450 and 550 parts
per million (ppm) CO2 equivalent (CO2-eq). In a
recently released report, the International Energy Agency assessed the
make-up of U.S. new passenger vehicle sales that would be required to
meet a 440 ppm target. The analysis found that by 2030, more than 60
percent of new vehicle sales would need to be based on some form of
electrification, ranging from traditional hybrids to pure electric
vehicles.
We cannot continue down this path. We cannot continue to send
untold billions of dollars and jobs overseas to pay for our addiction.
We cannot continue to send men and women into harm's way to protect an
increasingly vulnerable supply line. We cannot continue to put our
future in the hands of hostile nations or fanatical terrorists who can
turn off our crucial oil lifeline at the drop of a hat.
There is a solution. The lynchpin of any plan that is serious about
confronting oil dependence must be the transformation of a
transportation system that today is almost entirely dependent on
petroleum. The solution can be found in something that nearly every
single one of you has either on your belt or on the table in front of
you. The lithium ion batteries that power our cell phones and laptop
computers can one day form the nucleus of an electrified transportation
sector that is powered by a wide variety of domestic sources: natural
gas, nuclear, coal, hydroelectric, wind, solar, and geothermal. No one
fuel source--or producer--would be able to hold our transportation
system and our economy hostage the way a single nation can disrupt the
flow of petroleum today.
Electricity represents a diverse, domestic, stable, fundamentally
scalable energy supply whose fuel inputs are almost completely free of
oil. It would have clear and widespread advantages over the current
petroleum-based system:
1) Electricity is Diverse and Domestic: Electricity is
generated from a diverse set of largely domestic fuels. Among
those fuels, the role of petroleum is negligible. In fact, just
1 percent of power generated in the United States in 2008 was
derived from petroleum. An electricity-powered transportation
system, therefore, is one in which an interruption of the
supply of one fuel can be made up for by others. This ability
to use different fuels as a source of power would increase the
flexibility of an electrified light-duty vehicle fleet. As our
national goals and resources change over time, we can shift
transportation fuels without having to overhaul our
transportation fleet again. In short, an electrified transport
system would give us back the reins, offering much greater
control over the fuels we use to support the transportation
sector of our economy. Moreover, while oil supplies are subject
to a wide range of geopolitical risks, the fuels that we use to
generate electricity are generally sourced domestically. All
renewable energy is generated using domestic resources. We are
a net exporter of coal, which fuels about half of our
electricity. Although we currently import approximately 16
percent of the natural gas we consume, more than 90 percent of
those imports were from North American sources (Canada and
Mexico) in 2008. And in fact, recent advancements in the
recovery of natural gas resources from unconventional
reservoirs like shale gas, coal bed methane, and tight gas
sands have led to wide consensus that our domestic undiscovered
technically recoverable reserves are well in excess of 1,000
trillion cubic feet. We do import a substantial portion of the
uranium we use for civilian nuclear power reactors. Forty-two
percent of those imports, however, are from Canada and
Australia.
2) Electricity Prices are Stable: Electricity prices are
significantly less volatile than oil or gasoline prices. Over
the past 25 years, electricity prices have risen steadily but
slowly. Since 1983, the average retail price of electricity
delivered in the United States has risen by an average of less
than 2 percent per year in nominal terms, and has actually
fallen in real terms. Moreover, prices have risen by more than
5 percent per year only three times in that time period. This
price stability, which is in sharp contrast to the price
volatility of oil or gasoline, exists for at least two reasons.
First, the retail price of electricity reflects a wide range of
costs, only a small portion of which arise from the underlying
cost of the fuel. The remaining costs are largely fixed. In
most instances, the cost of fuel represents a smaller
percentage of the overall cost of delivered electricity than
the cost of crude oil represents as a percentage of the cost of
retail gasoline. Second, although real-time electricity prices
are volatile (sometimes highly volatile on an hour-to-hour or
day-to-day basis), they are nevertheless relatively stable over
the medium and long term. Therefore, in setting retail rates,
utilities or power marketers use formulas that will allow them
to recover their costs, including the occasionally high real-
time prices for electricity, but which effectively isolate the
retail consumer from the hour-to-hour and day-to-day volatility
of the real-time power markets. By isolating the consumer from
the price volatility of the underlying fuel costs, electric
utilities would be providing to drivers of grid-enabled
vehicles (GEVs)--vehicles propelled in whole or in part by
electricity drawn from the grid and stored onboard in a
battery--the very stability that oil companies cannot provide
to consumers of gasoline.
3) The Power Sector has Substantial Spare Capacity: Because
large-scale storage of electricity has historically been
impractical, the U.S. electric power sector is effectively
designed as an `on-demand system.' In practical terms, this has
meant that the system is constructed to be able to meet peak
demand from existing generation sources at any time. However,
throughout most of a 24-hour day--particularly at night--
consumers require significantly less electricity than the
system is capable of delivering. Therefore, the U.S. electric
power sector has substantial spare capacity that could be used
to power electric vehicles without constructing additional
power generation facilities, assuming charging patterns were
appropriately managed.
4) The Network of Infrastructure Already Exists: Unlike many
proposed alternatives to petroleum-based fuels, the nation
already has a ubiquitous network of electricity infrastructure.
No doubt, electrification will require the deployment of
charging infrastructure, additional functionality, and
increased investment in grid reliability, but the power
sector's infrastructural backbone--generation, transmission,
and distribution--is already in place.
5) Electric Miles are Cleaner Than Gasoline Miles: Vehicle
miles fueled by electricity emit less CO2 than those
fueled by gasoline. Several well-to-wheels analyses conclude
that vehicles powered by the full and proportionate mix of fuel
sources in the United States today would result in reduced
carbon emissions. As renewable power increases its share of the
electricity portfolio, and to the extent that new nuclear power
comes on line, which I believe is important, the emissions
profile of the U.S. power sector and the GEVs powered by it
will continue to improve over time. Moreover, to the extent
that GEVs are charged overnight using power from baseload
nuclear or off-peak renewable power, their emissions footprint
can be nearly eliminated. In 2007, the Natural Resources
Defense Council and the Electric Power Research Institute
published a well-to-wheels analysis of several different
automotive technologies fueled by a range of sources commonly
used to generate power. Their analysis concluded that using a
PHEV would reduce carbon emissions as compared to a petroleum-
fueled vehicle even if all of the exogenous electricity used to
charge the PHEV was generated at an old coal power plant.
Whereas a conventional gasoline vehicle would be responsible
for emissions, on average, of 450 grams of CO2 per
mile, a PHEV that was charged with power generated at an old
coal plant would be responsible for emissions of about 325
grams of CO2 per mile, a reduction of about 25
percent. Emissions attributable to the vehicle could be reduced
to as low as 150 grams of CO2 per mile if the
exogenous power was generated at a plant without carbon
emissions and ranged between 200 and 300 grams of
CO2 per mile if the power used was generated using
other fossil fuel generation technologies. In other words, no
matter where the power consumed by a PHEV is generated, the
overall level of emissions attributable to its operation is
lower than that of a conventional gasoline vehicle. The EPRI/
NRDC study findings were consistent with a 2007 MIT study that
examined the same issue.
In short, high penetration rates of GEVs could radically minimize
the importance of oil to the United States, strengthening our economy,
improving national security, and providing much-needed flexibility to
our foreign policy while clearing a path toward dramatically reduced
economy-wide emissions of greenhouse gases.
No other alternative to petroleum can claim these widespread
advantages. This is not to say that other alternatives have no role to
play in a post-petroleum transportation sector. On the contrary.
Natural gas, for example, may be used successfully in fleet vehicles,
particularly those that can be centrally refueled, such as taxis,
buses, specialized harbor and airport vehicles, and refuse-collection
trucks. Even more importantly, natural gas will play a crucial role in
providing electricity, a role in which it can be far more efficiently
deployed than in actual vehicles. Other alternatives may also offer
advantages in niche uses. But none offers the array of advantages that
electricity does.
The logical next question is how we can successfully devise and
deploy an electrified transportation system.
Here's what we need to avoid: it has now been more than 10 years
since traditional hybrids were first introduced in the United States.
And despite government support and record high gas prices for part of
that time, there are still only 1.6 million of them on the road out of
more than 250 million vehicles in the light duty fleet.
We cannot let electric vehicles turn into another niche product. We
cannot allow their use to be limited to environmentalists and
technological enthusiasts. To make our nation's investment worthwhile--
and, more importantly, to truly combat our oil dependence--we must put
ourselves on the pathway toward millions, then tens of millions, and
then hundreds of millions of electric cars and trucks.
It is not as simple as flipping a switch. Electrification on a mass
scale is an enormously complex undertaking. The issue is not simply one
of putting electric cars into showrooms. At the most basic level, the
first commercially available EVs and PHEVs will be significantly more
expensive than their internal combustion engine counterparts. The
existing tax credits help offset that cost, but they hardly represent a
transformative policy framework that will give consumers the necessary
confidence to adopt a fundamentally new technology. For electrification
to appeal to consumers, it will truly `take a village.'
For example, drivers will want to know that installing a charger in
their garage will be a seamless and simple process that isn't bogged
down by weeks of red tape. For EV drivers, they will want access to
some amount of public charging infrastructure so that they can feel
confident as they complete a Saturday full of errands and shopping--or
take the family on the highway for the great American road trip.
The proactive engagement and support of utilities will be
absolutely critical. Smart charging will make EVs and PHEVs an asset
for the grid, but dumb charging will make them a liability. One
analysis by EPRI found that plugging in just one PHEV to charge at 220
volts overloaded 36 of 53 transformers examined during peak hours and 5
of 53 transformers during off-peak hours. We are all excited about the
benefits of using EVs and PHEVs to fill valleys in utility load curves,
but this will only work if consumers have the ability to receive
information that incentivizes them to charge their cars at night. Yet,
most public utility commissions don't encourage or allow time of use
pricing.
The bottom line is that, for this technology to succeed, the
vehicles will need a network of support--both in terms of regulations
and infrastructure. Without that, they will be relegated to niche
product status. Consumers will have poor experiences, many of the 3,000
utilities in the U.S. will play an absentee role--at best--in the
process, and we will have invested billions of dollars in a battery
industry that finds stronger roots in Europe (where fuel prices are
higher) and in China (where the public imperative is already stronger).
We have to recognize that such a network of support does not currently
exist in most places in the U.S.
That is where this crucial legislation comes in.
This bill would initiate a competition in which specific geographic
areas would vie to be selected as large-scale deployment communities:
areas in which all of the elements of an electrified transportation
system are deployed simultaneously and at scale, thereby providing a
crucial first step toward moving electrification beyond a niche product
into a dominant, compelling, and ubiquitous concept. These deployment
communities would be selected on a competitive basis. The most
attractive regional bids would demonstrate a clear path to successful
integration of GEVs, including:
--A supportive regulatory environment that facilitates concepts
like utility investment in upgraded physical and IT assets;
time of use pricing; and a seamless process for permitting
and installing level II EVSEs in residential consumer
garages.
--Support and participation from a broad swath of stakeholders,
including state and local governments, utilities, utility
regulators, large local employers, universities and others.
--A diversity of business plans, allowing innovators and
entrepreneurs to explore the most effective and efficient
models for deployment.
In sum, successful bids should be those in which all of pieces have
been brought together--autos, infrastructure, favorable regulatory
environment, interested consumers--to ensure that large scale
deployment of GEVs has the best chance of success.
Once selected, deployment communities would be eligible for
amplified, targeted, and temporary financial incentives for consumers,
infrastructure providers and utilities. The bill envisions in between
five and 15 deployment communities in the first phase of the program.
Within five years of the bill's enactment, the Secretary of Energy
would be required to produce a report evaluating its success and
justifying a decision to either expand to a second phase of additional
cities or end the program. If fully implemented, the legislation would
aim to deploy a total of 700,000 grid-enabled electric vehicles and
their infrastructure in the first deployment communities over a five-
year period.
We believe this approach is critical to avoiding the pitfalls of
the past. These deployment communities would:
1) Drive Economies of Scale: Concentrating resources in a
limited number of geographic areas will allow participants in
the GEV value chain to take advantage of economies of scale,
particularly with respect to the deployment of charging
infrastructure. Utilities will incur fixed costs to support the
operation of GEVs; those costs will be more affordable if
spread over a greater number of vehicles. Power providers also
can reduce the cost of charging infrastructure through
economies of scale. While it is unclear how many public vehicle
chargers will be necessary for a GEV transportation system to
operate smoothly in a given community, it is clear that some
public charging facilities will be needed. Previous pilot
studies demonstrate that the cost of installing charging
facilities can be reduced significantly when groups of
facilities are installed at once. Furthermore, these geographic
concentrations will stimulate demand for grid-enabled vehicles
at a rate that is likely to be far greater than if the vehicles
are simply purchased by early adopters scattered around the
United States. Early on in the process, this higher level of
demand will simply be the result of magnified consumer
incentives. Subsequently, as individual metropolitan areas gain
exposure to GEVs and confidence increases, adoption rates
should be measurably expedited.
2) Demonstrate Proof of Concept Beyond Early Adopters: By
demonstrating the benefits of grid-enabled vehicles in a real
world environment, this deployment plan will make consumers,
policymakers and industry aware of the tremendous potential of
electrification of transportation. In general, consumers are
probably unaware that GEVs have evolved to the point where they
can meet most individuals' daily driving needs. In addition,
electric drive vehicles generally have faster acceleration and
operate more quietly than internal combustion engine vehicles.
They hold out the promise of offering drivers a wide range of
features, based on the electronic package in the vehicle, that
are beyond our imagination today in the same way that iPhone
applications would have been beyond our imagination a decade
ago. The problem is that consumers are not aware of the
opportunities presented by GEVs and are not yet convinced that
they can operate reliably and affordably at scale.
Concentrating investments and other efforts in a limited number
of communities will accelerate the opportunity to demonstrate
that grid-enabled vehicles can meet drivers' needs. In
addition, these projects will demonstrate that a community is
capable of putting the infrastructure in place, operating the
vehicles over their lifetimes, and disposing of them after
their useful life has ended, all in a manner that profits the
participants in the value chain.
3) Facilitate Learning by Doing: While GEVs present a great
opportunity, their deployment also raises a number of
questions. Deploying large numbers of GEVs in concentrated
areas will allow for the collection of information and
experience that is needed to successfully deploy GEVs
nationwide. It will help automakers learn how much consumers
are willing to pay up front for a car that costs less to
operate and has a lower total cost of ownership over its
lifetime. It will allow utilities and charging station
providers to learn when and where drivers want to charge their
vehicles. It will allow utilities and other aggregators to
learn who can best sell power to drivers and what types of rate
structures meet both drivers' and utilities and aggregators'
needs. It will help determine whether there is a viable
business model for public charging infrastructure. It is clear
that for GEVs to succeed there must be a model in which each
party in the value chain is able to operate profitably, or in
which the government determines that, as a matter of public
policy, certain aspects of the system should be publicly
supported in a manner that facilitates further competition.
Deploying GEVs in a series of geographic regions around the
country where resources can be concentrated and data can be
collected and studied will ultimately accelerate wide-scale GEV
deployment. Therefore, rather than allowing the market to
develop scattershot across the country, it is critical that the
market be encouraged to develop at a deliberate pace in clearly
identified geographic regions in which a large number of
vehicles can be deployed in a relatively short period of time.
Now, let me go into this idea of deployment communities a little
more in depth.
First, I'd like to talk about the competition.
In order to be selected, a community will need to present a
comprehensive proposal, similar to bids to host the Olympic Games. Such
a proposal would need to show capability and buy-in from a wide range
of public and private players, including local governments, utilities,
major employers, and more.
Cities and communities throughout the nation will be eligible to
compete for selection as a deployment community. And the bill makes it
clear that in selecting deployment communities, DOE should seek areas
that are diverse regionally, geographically, climactically, in terms of
their urban and suburban composition, size, typical commuting patterns,
and type of electric utility.
We believe we would also see an important diversity in the business
models that innovators and entrepreneurs would present to explore the
most effective and efficient models for deployment. Again, the
advantage of a competitive, market-based plan like this is that the
best ideas have the opportunity to rise to the top.
We believe the result of passing this legislation will be a great
competition, a race to the top as communities fight to present the most
fertile ground for an exciting new technological rollout. Even those
that are not ultimately selected will have, in order to compete, taken
steps that will ultimately make the adoption and deployment of electric
vehicles and infrastructure more achievable within their borders.
We've already seen cities and other localities across the country
taking the first steps toward electrification, whether it is installing
charging infrastructure, buying the vehicles for city fleets, or some
combination of both and more. They see the benefits and are eager to
take the next step. If we pass this legislation, I think we will see
cities once again, as they have in the past, playing the role of
experimenters and leaders in this exciting new technology.
Incidentally, let me address a concern that others have brought up
about this very aspect of the deployment community idea: that it overly
concentrates resources in a small number of communities.
I strongly disagree with this criticism.
First, these plans do nothing that would limit or impede the
current nationwide incentives for electric vehicles. Today, a maximum
tax credit of $7,500 on qualified electric drive vehicles exists
nationwide. Additional credits exist for infrastructure. This bill does
not in any way impact the maximum vehicle tax credit available to
consumers nationwide. What we are talking about is added incentives,
which will spur added demand. In fact, the goal of this legislation--
700,000 vehicles--represents higher penetration rates than the total
currently announced North American electric vehicle production capacity
for 2015.
Second, the benefits accrue far beyond the deployment communities
themselves. While money will flow into these communities, they should
more correctly be thought of as funnels through which a substantial
portion of the funds will flow on their way elsewhere around the
country. Much of the money that flows through deployment communities
will end up in the towns and cities where the vehicles and charging
infrastructure and their components are manufactured. When a factory
reopens in a depressed area to build or support these vehicles--as
we've already seen in places like Elkhart, Indiana and Livonia,
Michigan--that is a real and tangible benefit for hardworking
Americans.
Third, if this program succeeds, it will drive down costs for
electric vehicles for consumers throughout the nation. It will also set
the nation on a path toward greater energy security and economic
prosperity through sharply reduced oil dependence. This effort is about
building a new transportation system from the ground up in a fiscally
responsible, competitive fashion. That's good for the entire nation.
This leads us to another criticism: that what this bill proposes is
just another demonstration project that may in fact end up being
counterproductive, showing that electric vehicles and plug-in hybrid
electric vehicles are not ready for prime time.
My response to that is simply that it will not happen.
Again, we are talking about 700,000 electric vehicles here,
representing a significant percentage of all vehicles within the
deployment communities. That is not a pilot project. That is a
carefully-planned rollout for a major new technology at scale. All of
the major automakers who have committed to electrification have adopted
similar targeted rollouts, choosing specific communities, so clearly
they see the value in careful planning.
And let's look at the alternatives. Vehicles deployed in small
pilot programs will likely end up solely in the hands of enthusiasts,
whether environmentalists or people simply interested in new
technology. While they should be able to get these vehicles, it is not
enough. These vehicles must penetrate the market sufficiently to
demonstrate that they can meet the needs of average drivers or they
risk being relegated to niche status, as happened to hybrids, in which
case their deployment would be too limited to make any meaningful
headway toward our shared goal of reducing oil dependence. On the other
hand, a widespread national rollout without careful planning will stall
electrification before it has a chance to succeed. This approach is the
happy medium, the one that allows us to build toward true penetration
and scale in a responsible manner.
The bill we are discussing today recognizes a simple fact:
electrification will not move past niche product status without careful
policy coordination designed to overcome early obstacles. Grid-enabled
vehicles require a network to thrive--a network that includes
regulatory support, some amount of infrastructure, and progressive
utilities. There are very few communities where such an environment
exists today. And this says nothing of the higher costs of purchasing a
GEV and consumers' general uncertainty in adopting an unfamiliar
technology.
A targeted regional deployment program featuring a competitive
selection process will sharply increase the number of places where a
supportive GEV network exists. Strong financial incentives for vehicles
and infrastructure in these regions will drive high concentrations of
cars onto the road in a short period of time and help achieve scale in
battery manufacturing. The program will drive businesses and investment
into deployment communities and help create jobs. The consequences of
this approach will be to associate GEVs with renewed economic growth in
deployment communities while setting the stage for a broader rollout in
phase two.
Finally, let me say this: we understand that this is a challenging
time for suggesting increased government expenditures for any project,
no matter how worthwhile. We also, however, believe that certain
aspects of the threat of oil dependence and the solutions we recommend
make this a unique issue.
First is the urgent national security threat posed by our
dependence on oil. While we cannot and should not ignore costs, threats
to national security have always occupied a unique place of priority in
our budget considerations. And make no mistake: the dangers posed by
our oil dependence are not theoretical. Our safety and security are
threatened by oil dependence, and every single day that we do not act
is another day that we remain vulnerable.
Second is the economic cost of inaction. In the midst of a well-
supplied oil market and weak oil demand growth in developed economies,
the United States is still on pace to run a $300 billion deficit in
crude oil and petroleum products in 2010. At the same time, most
analysts expect the medium and long term to be characterized by rapid
oil demand growth in emerging markets coupled with weak increases in
global oil production capacity. The result will be a return to tight
oil markets and volatile oil prices in the future. The IEA expects this
scenario to play out by 2014. Other analysts expect the crunch to come
by 2011. In either case, the United States cannot wait to act.
Finally, the environmental catastrophe unfolding in the Gulf of
Mexico is making clear once again yet another aspect of the danger
posed by our dependence. The longer we remain addicted, the more oil we
will have to produce from more and more technically and environmentally
challenging areas. The only way to turn from that dangerous path is to
end our dependence. And the only way to do that is by ending oil's
chokehold on our transportation system.
Other energy policies have their strengths and may very well be
worthwhile on their own merits and in the pursuit of their own goals,
but if they do not include a detailed, well-defined pathway to a post-
petroleum transportation sector, then--for all of their other potential
benefits--they will not have a significant impact on the economic and
national security dangers posed by our oil dependence. If we do not
answer that crucial question, then we are not addressing energy
security in the way that we must to secure our future.
The public is demanding action. Electrification is truly bipartisan
not just here in Washington but across the country. Americans often
agree on challenges more than solutions, but that is not the case here.
This proposal is popular, and it is popular for a reason.
This is no longer a question of technology. The technology is here,
which is not something we can say with as much confidence about many of
the other potential alternatives to petroleum. People are rushing to
sign up to get in on the first wave of Nissan LEAFs. The Chevy Volt,
the CODA, and other electric vehicles are on their way as well. But the
technology is not enough. What we really need is the sustained
commitment that will lead to a true transformation. It's simply a
matter of organization, and--more importantly--a matter of national
will and a matter of execution.
Here is what I know, as the leader of a company that both depends
on and helps to strengthen the mobility upon which our global economy
is built: If we support this new path, if we build these deployment
communities that are so crucial to jumpstarting a new, national
transportation system, then that is a game changer. It is a game
changer for businesses like mine, for employees, for consumers, for the
economy, and for the country. A new future is ours for the taking, but
only if we choose it and support it.
Thank you for your attention.
The Chairman. Thank you very much.
Kathryn, go right ahead. We are glad to have you back here
with the committee. Kathryn, of course, worked for Senator
Domenici on the committee staff for many years.
STATEMENT OF KATHRYN CLAY, PH.D., DIRECTOR OF RESEARCH,
ALLIANCE OF AUTOMOBILE MANUFACTURERS
Ms. Clay. Thank you, Mr. Chairman. It is very nice to be
back.
Mr. Chairman, Ranking Member Murkowski, Senator Dorgan, and
other members of the committee, good morning. My name is
Kathryn Clay, and I am the Director of Research for the
Alliance of Automobile Manufacturers. The alliance is a trade
association made up of 11 car and light-duty truck
manufacturers, including BMW, Chrysler, Ford, General Motors,
Jaguar/Land Rover, Mazda, Mercedes-Benz, Mitsubishi, Porsche,
Toyota, and Volkswagen. On behalf of the member companies of
the alliance, I would like to thank you for giving me the
opportunity to speak with you about S. 3495, the Promoting
Electric Vehicles Act of 2010 sponsored by Senators Dorgan,
Merkley, and Alexander.
Automakers share the goals of reducing greenhouse gas
emissions and enhancing energy security. We support a national
economy-wide approach that will result in emissions reductions
from all sectors with the least negative economic impact for
the Nation.
At the same time, we recognize our responsibility as
automakers to help reduce emissions from the transport sector
and to reduce our dependence on foreign oil. We have
demonstrated our commitment by supporting the One National
Program for greenhouse gas emissions and fuel economy standards
for light-duty vehicles for the years 2012 through 2016 that
was announced--the final version--earlier this year. The Energy
Independence and Security Act of 2007, which originated in this
committee, required a 40 percent increase in fuel economy
standards by 2020. The One National Program accelerates this
pace by 4 years, reducing oil consumption by a further 1.8
billion barrels and lowering greenhouse gas emissions by an
additional 950 million metric tons. Building on this
commitment, automaker CEOs recently stood with the President
announcing support for a new process for further standards from
2017 through 2025.
As part of this, automakers are committed to advancing
electric mobility to meet these aggressive standards. Our
member companies have announced plans to launch a range of
electric drive vehicles, including plug-in hybrid, extended-
range hybrid, better electric and fuel cell vehicles in the
coming model years.
Before turning to the specific legislation at hand, let me
address an issue that is critical to the deployment of electric
drive vehicles in general, and that is the issue of how
upstream emissions will be treated in future rulemakings with
regard to electric drive vehicles.
Until we significantly alter how we produce electricity in
our Nation, including upstream emissions and the vehicle
greenhouse gas standards will mean that electric vehicles will
rate only marginally better than conventional internal
combustion engines and comparatively worse than the
conventional hybrids we have on the roads today. As a result,
including upstream emissions creates a huge disincentive for
producing electric vehicles versus less costly and less game-
changing technologies. This approach would also be unfair in
that it would treat plug-in vehicles differently than other end
uses of electricity, making vehicle manufacturers uniquely
responsible for utility emissions, emissions over which
automakers have no control.
Turning now to the legislation, while we share the goal of
the bill to promote electric drive vehicles and support many of
the bill's provisions, we do disagree with key elements of the
approach taken in S. 3495 and at this time cannot support the
bill as written. Let me explain why.
Our first major concern is that the legislation does not
include fuel cell electric vehicles and related hydrogen
infrastructure. The flexibility to invest in multiple electric
drive pathways is important because hybrid, better electric,
plug-in hybrid, and fuel cell vehicles each offer unique
benefits in different vehicle segments.
Our second major concern is that the deployment community
approach would create a few big winners and far too many losers
among communities across the Nation that have already expressed
an interest in participating in the transition to electric
drive. Trying to prejudge the market brings tremendous risk,
and the problem is compounded if we make just a few large bets,
particularly at such an early stage of electric vehicle
deployment. A more inclusive approach would maximize the
chances of success for our public investments overall even if
this means that individual communities would receive lower
levels of total funding on a case-by-case basis.
The most efficient solution is to provide the Department of
Energy's existing programs with significant funding increases
to support a comprehensive national program. Key elements
should include transportation electrification efforts already
started through Recovery Act funding and the Clean Cities
program.
Let me close by noting the alliance support for a
particularly important provision in our view included in the
bill that would better align our Federal efforts across many
agencies with our national goals for electric vehicles.
Establishing an interagency electric drive working group would
bring needed coordination to Federal programs and we further
would recommend that the administration move as quickly as
possible to follow this recommendation included in the
legislation and to designate a single point that would serve as
the lead office or lead official to direct the activities of
the working group.
We in the auto industry look forward to working with this
committee and with the bill's sponsors to address the
infrastructure and consumer acceptance issues that will be so
important to the ultimate success of electric drive vehicles
and their contributions to our national goals.
Thank you.
[The prepared statement of Ms. Clay follows:]
Prepared Statement of Kathryn Clay, Ph.D., Director of Research,
Alliance of Automobile Manufacturers
Chairman Bingaman, Ranking Member Murkowski, and Members of the
Committee, good morning, my name is Kathryn Clay and I am the Director
of Research for the Alliance of Automobile Manufacturers. The Alliance
is a trade association made up of eleven car and light truck
manufacturers including BMW Group, Chrysler LLC, Ford Motor Company,
General Motors, Jaguar/Land Rover, Mazda, Mercedes-Benz USA, Mitsubishi
Motors, Porsche, Toyota, and Volkswagen Group. On behalf of the member
companies of the Alliance, I would like to thank you for giving me the
opportunity to speak with you about the industry views of S. 3495, the
Promoting Electric Vehicles Act of 2010 sponsored by Senators Dorgan
and Merkley. We commend the sponsors for their leadership on the issue
of electric drive vehicle deployment. The Alliance looks forward to
working with the Bill's sponsors, and the members of this Committee, to
address important concerns we have with the legislation in its current
form.
Automakers share the goals of reducing greenhouse gas emissions
(GHG) and enhancing energy security. We continue to support a national
approach for an economy-wide GHG emissions reduction program that will
result in GHG emissions reductions from all sectors at the lowest cost
with the least amount of negative economic impact.
At the same time, we recognize our responsibility as automakers to
reduce emissions from our sector, and to reduce our dependence on
foreign oil. We have demonstrated our commitment to this principle
through our support of the One National Program to impose GHG emissions
standards and increase fuel economy standards for light-duty vehicles
for the years 2012 through 2016. This landmark agreement accelerates by
four years the pace set in the Energy Independence and Security Act of
2007, which required a 40 percent increase in fuel economy standards by
2020. As a result, we will reduce our nation's oil consumption by 1.8
billion barrels and lower GHG emissions by approximately 950 million
metric tons. Moreover, automaker CEOs recently stood with the President
in support of a process for new standards from 2017 through 2025.
Meeting the diverse and challenging requirements of the
transportation sector will only be possible through a portfolio of
advanced powertrain technologies. Continued improvements to the
efficiency of the internal combustion engine will play a significant
role. But in the coming decades, the vehicle fleet will be much more
technologically diverse, with growing proportions of flex fuel, clean
diesel and electric drive vehicles on our nation's roadways.
However, achieving the ambitious target of an economy-wide 83
percent reduction of GHG emissions by 2050 will require electric drive
vehicles to play a critical role, with hybrid, battery electric, plug-
in hybrid and fuel cell vehicles offering unique benefits in different
vehicle segments. For this reason, we believe the legislation should
allow manufacturers, fuel providers, and communities the flexibility to
invest in multiple electric drive pathways, including fuel cell
electric vehicle and related hydrogen infrastructure. In addition, we
must recognize that future successes of electric drive vehicles will be
enhanced by growth in today's hybrid electric vehicles, by establishing
technical expertise and manufacturing capacity for batteries, motor and
other key electronic components, and driving down their costs through
production scale.
In order for electric drive vehicles to contribute meaningfully to
our transportation future, long term and consistent federal policies
are needed to transition from a low volume niche market to sustainable
high volumes. Achieving widespread acceptance of these technologies
requires focused efforts to align regulatory efforts; develop a
supporting infrastructure; provide research and development; and
provide incentives for consumer adoption and remove other market
barriers. Unfortunately, S. 3495 falls short of establishing the
necessary elements for a comprehensive and sustainable approach. The
Alliance submitted numerous comments to improve on the Bill that were
not adopted. As a result, the Alliance is not able to support the Bill
as written.
As an industry, we have significant concerns about an approach that
would limit investments to a handful of communities, particularly at
such an early stage of electric vehicle deployment. This creates a
small number of communities that would ``win'' and receive significant
federal dollars while the rest of country loses out. Attempts to
prejudge the market bring tremendous risks, and the problem is
compounded by making just a few large bets. We need a long term
``building block'' approach that will lead to a sustainable future for
electrification--not a program that pits one community against another
or one state against another in a limited competition for federal
funding.
Opening up the grant program to a larger number of communities,
with wide regional representation, would avoid limiting automakers'
potential customer base for these vehicles and maximize the chances of
success for our public investments overall--even if this means that
individual communities would receive lower levels of total funding.
Automakers need consistent regulatory policies to move us toward
our collective goal to expand penetration of electric vehicles on U.S.
roads. One issue especially critical to this discussion is how upstream
emissions will be treated in future policies and rulemakings. Until the
U.S. enacts a comprehensive climate program that significantly alters
how we produce electricity, electric vehicles will be only marginally
better from a total greenhouse gas perspective than conventional
internal combustion engines, and less beneficial than hybrids given the
mix of fuels used to generate our current (and near term) supply of
electricity.
As a result, basing policy on including upstream emissions creates
a huge disincentive for producing electric vehicles versus other less
costly (and less game-changing) technologies. This approach would also
be unfair in that it would treat plug-in vehicles differently than
other end-uses of electricity, making vehicle manufacturers uniquely
responsible for upstream emissions--emissions over which automakers
have no control. This precedential policy would create an unlevel
playing field among the regulated community and create additional
barriers that will be counter-productive to market penetration of
electric vehicles; a direct deterrent to the very goals that the
legislation is trying to avoid and overcome.
We believe that any strengthening of consumer incentives should be
integrated into the existing program which currently provides up to
$7,500 per vehicle and is based key on performance parameters related
to battery size captured in existing law. This federal incentive
promotes all types of plug-in electric vehicles equitably across all
potential consumer segments. A single federal incentive program will
avoid confusion and promote greater certainty with customers
irrespective of where they live. Examples of strengthening the existing
incentive include making it available to consumers at the point of
sale, along with increasing the amount and number of vehicles to which
it applies.
Another measure lacking in the bill is ongoing funding for U.S.
facilities for the production of critical electric drive components
such as electric motors, electric drive transmissions, and advance
battery components. Almost all of these critical components continue to
be manufactured overseas and imported into the U.S. trading our
dependency from foreign petroleum to critical electric drive
components. We need legislation that focuses on long term investment in
the U.S. to adequately compete with developing countries for the
production of these components.
The Bill would also ban landfill disposal of advanced technology
batteries, which is not justified at this time. Provisions for the safe
recycling and eventual disposal of advanced technology batteries need
to be developed based on the best science. We propose that, in place of
a ban, the recycling study required by the bill should be expanded to
address recommendations for appropriate disposal of these batteries.
A key way to move forward on infrastructure planning and consumer
outreach is to build on the success of the existing Department of
Energy programs. This work to expand electric vehicle infrastructure,
particularly through the transportation electrification efforts started
through Recovery Act funding and the electric drive vehicle activities
under the Clean Cities program, should receive significant funding
increases to support an expanded, sustained effort to enhance our
national readiness for electric drive vehicles.
For any technology to be successful it must be consumer driven, and
a national program that helps the consumer with the most pressing need,
residential charging, offers the best opportunity for sustainable
growth and deployment of electric drive vehicles. Business models must
be developed that will allow the private sector to deploy charging
infrastructure in the full range of residential situations including
high rise buildings, garden apartments, and town houses. A range of
innovative solutions to address the challenges facing both residential
and workplace charging should be funded and we believe the most
efficient solution is to provide the Department of Energy's existing
programs with significant funding increases to support a comprehensive,
national program.
S. 3495 would establish an Interagency Electric Drive Working Group
to align federal programs with our national goals for electric drive
vehicles. The Alliance supports this position, and believes that a
strengthened interagency process would provide greater coordination of
federal expenditures related to electric drive technologies and of
regulatory efforts across the federal government. We further recommend
that the Administration designate a lead official with the
responsibility, and budget authority, needed to direct the activities
of the working group. The Bill would also establish an Electric Fuel
Task Force, which the Alliance believes would enable the private sector
to engage collaboratively with the administration to address the
challenges to large scale deployment of plug-in electric drive
vehicles.
Automakers are committed to advancing electric mobility. Our member
companies have already announced plans to launch plug-in hybrid,
extended range hybrid, battery electric, and fuel-cell vehicles in the
coming model years, and are hard at work developing the next generation
of electric-drive vehicles that will follow. We look forward to working
with the Committee, Senator Dorgan, and Senator Merkley to address the
infrastructure and consumer acceptance issues that will be so important
to the ultimate success of these vehicles, and their contribution to
our national goals.
The Chairman. Thank you very much.
Mr. Brian Wynne with the Electric Drive Transportation
Association. Thank you for being here.
STATEMENT OF BRIAN P. WYNNE, PRESIDENT, ELECTRIC DRIVE
TRANSPORTATION ASSOCIATION
Mr. Wynne. Thank you, Mr. Chairman, Senator Murkowski,
members of the committee. I am Brian Wynne, the President of
the Electric Drive Transportation Association. I am pleased to
be here today to discuss S. 3495 and want to express our
appreciation for the committee's ongoing support for electric
drive and recognition of its role in a cleaner, more secure
transportation future.
The Electric Drive Transportation Association, founded in
1989, is the cross-industry trade association promoting the
advancement of electric drive technology and electrified
transportation. EDTA members include leading and emerging
vehicle, battery, and component manufacturers, as well as
electricity providers, smart grid and infrastructure
developers, and others. Collectively, we are building the
advanced vehicles, green jobs, sustainable transportation
options and energy independence that comprise the electric
drive future.
This committee has historically led the way on electric
drive, most recently with the 2007 energy bill which
established important programs and incentives to provide
investments in electric drive, many of which were funded in the
2009 Recovery Act.
Industry is rapidly moving forward with plug-in electric
drive vehicles and component production, creating the green
jobs that are the foundation of a thriving 21st century
economy. Plug-in electric drive vehicles are available today
and multiple models of cars and trucks are entering the market
in the next 2 years, including the GM Volt, the Nissan Leaf,
the Mitsubishi i-MiEV, Toyota's plug-in Prius, the Smith
battery electric, Ford Transit Connect plug-in hybrid trucks,
Coda, Tesla, and THINK, all bringing battery electric sedans to
the market--and others.
In nearly every State, collaborative efforts between
utilities, electricity infrastructure providers, governments,
and automakers are already underway, developing vehicle and
infrastructure plans.
As set out in our action plan, EDTA supports a
comprehensive push toward electric drive, including a national
initiative to promote plug-in electric drive vehicles. We
believe that regional deployment efforts are important as part
of such a national effort.
S. 3495 would establish a 5-year, $100 million national
program to advance nationwide adoption of electric drive
vehicles and also authorizes a $4 billion investment in 5 to 15
deployment communities that would receive up to $5 million
each. Both the national and localized deployment programs
include important elements for advancing plug-in deployment,
including stakeholder involvement, technical assistance, grid
integration planning, and work force training.
However, we believe that a greater emphasis on the national
effort and a larger group of deployment communities will be
more effective in building the national fleet than
concentrating Federal resources in such a limited number of
communities.
Collaborative, localized deployment efforts are already
underway with others planned. Plug-in vehicles are already in
the national market and vehicle makers are moving forward with
efforts to build national markets in the next 2 to 3 years. We
would like to see the national electric drive effort support
all of these efforts as they need it.
Additional items that we support in plug-in electric drive
legislation that I would like to highlight in this statement
include, first, an emphasis on private in addition to public
recharging infrastructure. Industry studies confirm that at
least initially most charging of plug-in vehicles will be done
at primary residences overnight. The next greatest opportunity
for charging is at the workplace during the day. We believe
that meeting these recharging needs should be an explicit
priority for national and localized deployment efforts. We
support directing additional research and technical assistance
toward facilitating residential and workplace charging.
Second, we support incentives for expanded investment in
U.S. vehicle and component manufacturing which will help to
bring the vehicle cost down while building U.S. competitiveness
in global markets.
Third, we support the bill's program to integrate plug-in
electric drive in Federal fleets with funds for purchasing
vehicles, as well as transparency and accountability for their
use. We would also like to see a comprehensive approach that
recognizes all of the electric drive technologies, including
fuel cells and hybrids.
Finally, we strongly support the bill's emphasis on
consumer education and work force training which are also very
important to a national effort to build a diverse national
fleet of electric drive vehicles.
We appreciate Senator Dorgan's history of leadership on all
electric drive and his effort to achieve the right balance
between national and more localized efforts. As the bill moves
forward through this committee, we would like to work with the
chairman and Senator Dorgan to ensure that finite Federal
resources are apportioned in the most effective way to ensure
the achievement of the goal that we share, a diverse national
fleet of electric drive vehicles.
I thank you for the opportunity and look forward to your
questions.
[The prepared statement of Mr. Wynne follows:]
Prepared Statement of Brian P. Wynne, President, Electric Drive
Transportation Association
Good morning, Chairman Bingaman, Senator Murkowski, members of the
committee. I am Brian Wynne, President of the Electric Drive
Transportation Association. I am pleased to be here today to discuss S.
3495 and want to express our appreciation for this Committee's ongoing
support for electric drive and recognition of its role in a cleaner,
more secure transportation future.
The Electric Drive Transportation Association (EDTA), founded in
1989, is the cross-industry trade association promoting the advancement
of electric drive technology and electrified transportation. EDTA
members include leading and emerging vehicle, battery and component
manufacturers, as well as electricity providers, smart grid and
infrastructure developers, and others advancing diverse technologies
that will displace oil with electricity in transportation.
Collectively, we are building the advanced vehicles, green jobs,
sustainable transportation options and energy independence that
comprise the electric drive future.
Looking beyond the price of gas, the cost of oil dependence is
increasingly unsustainable. The dollars spent on imported oil, the
chronic--and acute--environmental impacts, as well as the economic and
security challenges created by a transportation sector almost entirely
dependent on a single fuel. These are all costs that we have been
paying, and ignoring, for too long.
We are here today because, as a nation, we have recognized the cost
is too high. We need to embrace other options for the transportation
sector. EDTA believes that a comprehensive effort to move away from oil
dependence must include a national fleet of electric drive vehicles--
that is battery electric, hybrid, plug-in hybrid and fuel cells--in
cars, trucks, low speed and non-road vehicles.
With the leadership of this Committee, the Energy Independence and
Security of 2007 established important programs and incentives to
promote investments in electric drive, many of which were funded in the
2009 Recovery Act. The Administration has also declared an ambitious
goal for plug-in vehicles--1 million on the road by 2015.
Industry is rapidly moving forward with plug-in electric drive
vehicle and component production, creating the green jobs that are the
foundation of a thriving 21st century economy. Plug-in electric drive
vehicles are available today and multiple models of cars and trucks are
entering the market in the next two years, including the Volt from GM,
the Nissan Leaf, the Mitsubishi i-MiEV, Toyota's plug-in Prius, the
Smith battery electric and Ford Transit Connect plug-in hybrid trucks
and Coda's and Tesla's battery electric sedans.
In nearly every state, collaborative efforts of utilities,
governments and auto makers are already underway, developing vehicle
and infrastructure plans.
Based on the industry's work, with the support of key federal
policies, we are standing on the cusp of transformational market entry
of plug-in vehicles. And the choices made here can make the difference
in how quickly we achieve our goals. Building on what we have achieved,
what we have learned and what is required to realize the goal of an
electric drive future; EDTA has identified in our Action Plan the key
``next step'' actions for policymakers to achieve our shared goal of a
diverse national fleet of electric drive.
Moving forward, areas of critical emphasis for federal policy
accelerating electric drive include: reducing market hurdles to address
cost and infrastructure concerns; expanding U.S. manufacturing capacity
for advanced vehicles and components; establishing coherent regulatory
policies for vehicles and infrastructure; accelerating technology
breakthroughs and promoting public and private outreach and education.
EDTA supports a comprehensive push toward electric drive including
a national initiative to promote plug-in electric drive vehicles. We
believe that regional deployment efforts are important, as a part of
such a national effort.
S.3495 would establish a 5 year, $100 million national program to
advance nationwide adoption of electric drive vehicle and also
authorizes a $4 billion investment in 5 to 15 ``deployment
communities'' that would receive up to $500 million each. Both the
national and localized deployment programs include important elements
for advancing plug-in deployment, including stakeholder involvement,
technical assistance, grid integration planning and workforce training.
However, we believe that a greater emphasis on the national effort
and a larger group of deployment communities will be more effective in
building the national fleet than concentrating federal resources in
such a limited number of communities.
Collaborative localized deployment efforts are already underway,
with others planned. Plug-in vehicles are in the national market and
automakers are moving forward with efforts to build national markets in
the next 2 to 3 years. For instance, GM has already made plans for
expanded national distribution in 2011.We would like to see the
national electric drive effort support all of these efforts in real
time.
We appreciate Senator Dorgan's history of leadership on all
electric drive and his effort to achieve the right balance between the
national and more localized efforts. As the bill moves through this
Committee, we would like to work with the Chairman and Senator Dorgan
to ensure that finite federal resources are apportioned in the most
effective way to ensure the achievement of the goal we share: a diverse
national fleet of electric drive vehicles.
Inside the national and deployment programs, we would like to work
with you to ensure specific emphasis on private, in addition to public,
recharging infrastructure. Diverse vehicle configurations (battery
electric and plug-in hybrids with varying ranges) and diverse consumer
needs will require flexible private and public recharging options.
Industry studies confirm, however, that most charging of plug-in
vehicles will be done at primary residences over night. The next
greatest opportunity for charging is at the workplace during the day.
We believe that meeting these recharging needs should be an explicit
priority for national and localized deployment efforts. We support
directing additional research and technical assistance toward
facilitating residential and workplace charging.
We also support expanded investment in U.S. vehicle and component
manufacturing, which will help to bring vehicle costs down while
building U.S. competitiveness in global markets.
Title I of S. 3495 also promotes the adoption of plug-in electric
drive in federal fleets with funds for purchasing vehicles as well as
transparency and accountability for their use, which EDTA strongly
supports. We would also like to see a comprehensive approach that
recognizes all of the electric drive technologies, including fuel cells
and hybrids, which will provide flexibility for meeting fleet needs
while reducing oil consumption and helping to build markets for
advanced vehicles, components and infrastructure.
Consumer education and workforce training are also very important
to a national effort to build a diverse national fleet of electric
drive vehicles and we support their inclusion in national and community
deployment programs.
The following are comments on selected provisions of the bill:
Definitions
In Section 3 definitions, the definition of charging infrastructure
excludes property that is ``a building or the structural components of
a building.'' While this is the current definition language in the
federal tax credit for investment in alternative fuel refueling
property, it is an exclusion that inhibits investment in electric
recharging. Particularly in residential applications, recharging
infrastructure will often be integrated into a building's structure.
The exclusion should not be applied to electricity recharging
infrastructure in the definition included here. We are also working to
revise the tax credit language to reflect the scope of electric
recharging.
Title II
In Title II, S. 3495 authorizes $1.5 billion for advanced energy
storage and other electric drive research and development, including
secondary use application development and demonstration. We strongly
support the expanded support for plug-in electric drive technologies
and infrastructure, including grid integration advances.
In the context of a comprehensive energy bill, we would also
support a broader reauthorization of DOE`s Vehicle technology programs,
along the lines of Senator Stabenow's bill, S. 2843, that would advance
electric drive research, development and deployment across platforms
and configurations.
Title III
Title III establishes a utility planning process for plug-in
electric drive vehicles under the Public Utility Regulatory Policies
Act. As fuel and power providers, utilities need to identify demand and
energy management and smart grid integration strategies. Protocols for
the interaction of utilities and charging infrastructure entities will
also need to be identified. The key is establishing the right balance
between national standards for charging technologies and flexibility in
business models. Our members are currently reviewing the Section 301
federal regulatory directives to ensure that these are achieved.
Regarding the bill's provisions prohibiting disposal of advanced
batteries used in plug-in electric drive in landfills, we believe that
this is more appropriately a study to identify specific environmental
risks and the best options for safe recycling and ultimate disposal
before an outright ban is imposed on all advanced batteries. In the
interim, promoting secondary uses of automotive batteries and advanced
materials will ensure that these batteries remain in use beyond their
automotive life and their valuable components are recovered
EDTA has called for the establishment of coordinated efforts
between government agencies and between agencies and the multiple
public and private stakeholders advancing electric drive. We support S.
3495's establishment of a Technical Advisory Committee and Inter-agency
Task Force to ensure that initiatives and investments that comprise the
national effort are compounding efforts, advancing the overall goal of
electrification.
This is a critical moment for the industry and for advancing a
transformative energy policy that displaces oil with electricity--in
the near and long term. EDTA supports and is pleased to work with the
Committee as you identify the best ways to achieve a national fleet of
electric drive vehicles.
The Chairman. Thank you very much.
Next is Mr. David Friedman. He is Research Director with
the Clean Vehicles Program of the Union of Concerned
Scientists. So please go right ahead.
STATEMENT OF DAVID FRIEDMAN, RESEARCH DIRECTOR AND SENIOR
ENGINEER, UNION OF CONCERNED SCIENTISTS, OVIEDO, FL
Mr. Friedman. Thank you, Mr. Chairman and members of the
committee. As you mentioned, I am a research director and also
a senior engineer with the Union of Concerned Scientists.
First, let me start off by saying that by 2050 we can
effectively end the use of oil and other petroleum products to
fuel the vehicles that run on the Nation's highways. We cannot
end our oil addiction overnight, and it will take significant
investment, but we do not really have any other choice. The oil
disaster in the Gulf is only the most recent reminder of the
cost of our oil dependence. Oil prices spiked 5 times in the
last 40 years, and each time our economy suffered either a
recession or a significant drop in growth. Our dependence on
oil also harms our health and our economy through everything
from local gasoline leaks to poor regional air quality and
global climate change.
Electric drive vehicles must be part of a path that
effectively ends our addiction to oil by at least 2050. But
these technologies are not a silver bullet. The problem of our
oil dependence is too big and too complex to be addressed by
anything but a mix of vehicle technologies, low-carbon fuels,
and better travel choices for consumers.
Effectively ending our oil addiction for highway vehicles
by 2050 does mean that nearly every car and truck on the road
must run on renewable electricity, hydrogen, or sustainable,
low-carbon biofuels by the middle of this century. All of these
technologies have suffered from our lack of a comprehensive,
long-term policy. The result has been a mix of approaches over
the past 40 years that has shifted from synthetic fuels to
methanol to batteries to corn ethanol to fuel cells to
cellulosic ethanol and now back to batteries. This cycle
strands investments and fundamentally fails to deliver energy
independence. Breaking this cycle will require both a
comprehensive set of energy and climate policies that put a
price on carbon and establish national requirements to
effectively end America's oil addiction by 2050 and sufficient
funding for research, development, and large-scale deployment
of electric drive technologies.
The Electric Vehicle Deployment Act is a significant down
payment on this second step. Senator Dorgan and your
cosponsors, Senator Alexander and Merkley, are to be commended
for a bill that provides many of the resources needed to move
these vehicles into the deployment fast lane.
By increasing funding available for research, vehicles and
infrastructure, and by making tax credits more accessible, the
act will help address many of the technology and market hurdles
that still need to be overcome, including the high cost of
first generation plug-in hybrid and battery electric vehicles.
Further, the bill's focus on a limited number of deployment
areas helps ensure that taxpayer dollars will be used more
efficiently. It simply makes more sense to spend money in an
area that will serve tens of thousands instead of tens or
hundreds of vehicles.
Now, the potential impact of this bill will be further
improved with some modifications and integration into a
comprehensive national policy. The bill should be modified to
provide an even playing field for all electric drive
technologies, including expanding the coverage of the
deployment community funds to include fuel cell electric
vehicles and infrastructure in phase one and making vehicle and
infrastructure tax credits more compatible between fuel cells
and battery electric vehicles.
The Senate bill clearly leaves the door open to support for
fuel cell vehicles in phase two, but by then, State efforts on
hydrogen risk atrophy while international efforts begin to
accelerate. If the United States is to compete with Japan,
Germany, and South Korea, which all have announced efforts to
significantly ramp up fuel cell production, and if we are to
ensure that electric drive vehicles are available in parts of
the economy not well suited to batteries, we should not make a
similar mistake now that was made 5 years ago when we failed to
increase support for batteries and recharging infrastructure
when hydrogen had all the buzz.
The Senate bill should also be modified to further limit
the number of deployment communities at least in the first few
years. The 15 deployment communities in the Senate bill risk
cutting the funds for one individual community in half. A
smaller number to start also reduces the number of mistakes
that would be repeated in parallel by so many different
deployment efforts.
Finally, the Senate and House electrification bills should
be merged into a comprehensive national policy. Putting a cap
on carbon will not only change the way we use energy, it also
will provide revenue that we can return to consumers to invest
in electric drive vehicles and infrastructure. This provides an
alternative to the annual appropriations cycle which risks
significant funding uncertainty especially with the current
focus on deficits.
We must also establish a national oil savings plan that
requires savings of at least 7 million barrels of oil per day
by 2030 and that requires the effective elimination of oil use
by 2050. We will not end our oil addiction if we continue the
cycle of passing new, but limited energy bills every few years.
Finally, we must establish a robust renewable electricity
standard to ensure that plug-in vehicles will not only cut oil
use but will also dramatically lower emissions. As you have
heard, without a more renewable grid and renewable hydrogen,
electric drive vehicles will not deliver reductions in heat-
trapping gases compared to a conventional hybrid.
Now, vehicle standards must count those emissions. The
whole purpose of vehicle standards is to reduce the carbon
emissions associated with vehicles. That is not the right place
to incentivize these advanced technologies, but this bill does
provide the exact type of incentives we need to move that
technology forward.
Thank you.
[The prepared statement of Mr. Friedman follows:]
Prepared Statement of David Friedman, Research Director and Senior
Engineer, Union of Concerned Scientists, Oviedo, FL
Mr. Chairman and Members of the Committee, I appreciate the
opportunity to testify before you today. I am a research director and
senior engineer with the Union of Concerned Scientists (UCS). UCS is a
leading science-based nonprofit that has been working for a healthy
environment and a safer world for over 40 years.
By 2050 we can effectively end the use of oil and other petroleum
products to fuel the cars, trucks, and buses that drive on the nation's
highways. We cannot end our addiction to oil overnight and it will take
significant investment on the part of industry, consumers and
government, but we don't really have any other choice. The disaster in
Gulf of Mexico is only the most recent reminder of the cost of our oil
dependence on our economy. Oil prices spiked 5 times in last 40 years
and each time our economy suffered either a recession or a significant
drop in growth. Oil was not always the sole cause, but it was always a
significant contributor, including in the case of our most recent
economic turmoil. In 2008 we were facing record high oil prices and the
resulting expense of sending more than one billion dollars a day to
other countries just to buy oil and other petroleum products. Our
dependence on products made from oil also harms our health and our
economy through everything from local gasoline leaks to poor regional
air quality and global climate change. The stress on our nation will
only grow worse as the world economy recovers and demand for petroleum
products accelerates, along with rising oil prices.
Electric drive vehicles, such as plug-in hybrids, battery electric
vehicles, and fuel cell electric vehicles must be part of a path that
effectively ends our addiction to oil by at least 2050. But these
technologies are not silver bullets. The problem of our oil dependence
and its associated impacts are too big and too complex to be addressed
by anything but a mix of vehicle technologies, low-carbon fuels, and
better travel choices for consumers.
If we look only at vehicles and fuels, effectively ending oil
addiction for highway vehicles by 2050 means that nearly every car and
truck on the road must run on renewable electricity, hydrogen, or
sustainable, low-carbon biofuels. That in turn means that, by 2040, at
the latest, nearly every new light duty car or truck and most heavy
duty trucks sold must run on electricity, hydrogen, or biofuels. Figure
1* shows one example of a similar roadmap from the International Energy
Agency. In this case, worldwide progress is about 10 years behind where
the United States could be if we take a leadership role. Figure 2 shows
an example of a technology portfolio from recent work by the National
Academy of Sciences. In this case, gasoline use is dramatically reduced
and ultimately eliminated by 2050 through the combination of improved
vehicle efficiency from conventional technology and hybrids, aggressive
adoption of biofuels, and vehicle electrification. While it will take
many decades to address our oil addiction and our changing climate,
policies must be put in place today if a future without oil is to
become a reality.
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* Figures 1 and 2 have been retained in committee files.
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All of these technologies have suffered from our lack of a
comprehensive, long term set of policy solutions. The result has been a
mix of policy approaches over the past forty years that has shifted
from synthetic fuels to methanol to batteries to corn ethanol to
hydrogen fuel cells to cellulosic biofuels and now back to batteries.
This cycle of shifting policy prescriptions must be broken. The rise in
financial and policy support for one technology typically comes with a
fall for the others, stranding investments and making it difficult for
industry and venture capitalists to make long term investments of their
own. Breaking this cycle will require at least two major steps:
1. A comprehensive set of energy and climate policies that
put a price on carbon and establish national requirements to
effectively end America's oil addiction and cut the emissions
of heat trapping gases by at least 80 percent by 2050.
2. Sufficient funding for research, development, and large-
scale deployment of technologies that require little or no
petroleum and are responsible for little or no heat-trapping
emissions.
The Electric Vehicle Deployment Act of 2010 is a significant down
payment on the second step. This bill builds on tax credits, grants and
other resources provided under the American Recovery and Reinvestment
act to support plug-in hybrid vehicles and battery electric vehicles.
Senators Dorgan, Alexander and Merkley are to be commended for working
with the Electrification Coalition on a bill that provides many of the
resources needed to move these vehicles into the deployment fast lane:
By increasing the funding available for research, vehicles
and infrastructure, the Electric Vehicle Deployment Act of 2010
will help address many of the technology and market hurdles
that still need to be overcome. Upcoming plug-in hybrid and
battery electric vehicles will cost $15,000 to $20,000 more
than comparable cars, with home recharging costing $1,000 to
$2,000 per household. While these vehicles will be able to save
their owners as much as $8,000 over the vehicle life by
purchasing electricity at a cost equivalent to less than $1 per
gallon (compared to today's nearly $3 per gallon for gasoline),
consumers will still face a significant cost gap that will make
them less likely to try the new technology. The upfront costs
can come down, but only with added research and with increased
production volumes, both of which will be more limited without
this bill. Increasing the amount of money available and making
tax credits refundable or transferable opens the door to more
resources to increase those production volumes.
By directing efforts to support training of service and
safety personnel, and changing local codes, standards and
zoning requirements, the bill will help remove non-financial
barriers. Further, the bill's focus on a limited number of
deployment areas helps ensure that taxpayer dollars will be
used more efficiently. If the deployment of electric vehicles--
even plug-in hybrids that require less support--is more spread
out, more infrastructure will be needed, more people will need
to be trained in service and safety, and more state and local
codes, standards, and zoning requirements will need to be
changed. All of these needs require money, and it simply makes
more sense to spend that money in an area that will serve tens
of thousands instead of tens or hundreds of vehicles.
By opening the door to longer term national technology
deployment goals, the bill will help provide increased
certainty to industry, investors, utilities, fuel providers,
and local, state and regional policymakers.
To give us a better chance of getting on a path that can
effectively end our oil addiction and cut heat-trapping gas emissions
80% by 2050, some changes can be made to the Electric Vehicle
Deployment Act of 2010 and it's House companion, the Electric Drive
Vehicle Deployment Act of 2010. These bills must also be integrated
into a comprehensive national climate and energy policy that puts a
price on carbon. The needed steps should include:
Expanding vehicle and infrastructure support for fuel cell
electric vehicles in Phase 1 of the program. Fuel cells do have
some existing support, thanks in large part to leadership from
Senator Dorgan, and the Senate bill clearly leaves the door
open to additional support for these vehicles in Phase 2, but
without additional support for deployment by then state efforts
on hydrogen risk atrophy while international efforts begin to
accelerate. An industry survey by the California Fuel Cell
Partnership points to plans to deploy nearly 3,500 fuel cell
vehicles, mainly in southern California. The vehicle levels are
expected to rise to about 25,000 between 2015 and 2017. But at
the same time, tax credits for fuel cell cars were cut in half
this year and, along with hydrogen infrastructure tax credits,
they expire by 2014, just as efforts are ramping up. Meanwhile,
Japan, Germany, and South Korea have all announced efforts to
significantly ramp up fuel cell vehicle production in the
coming years.\1\ If we are to compete across the spectrum of
electric drive vehicles that will be needed,\2\ the Senate bill
should be modified to provide an even playing field for all
electric drive technologies including:
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\1\ Japan is targeting about 2 million fuel cell vehicles by 2025.
Given that their market is about 1/3rd of ours, that would be
equivalent to about 6 million fuel cell vehicles by 2025 in the US.
Hyundai-Kia report plans to reach 100,000 fuel cell vehicles in 2020,
the sales equivalent of about 1 million fuel cell vehicles in the US.
Reports also indicate Germany is targeting around 600,000 fuel cell
vehicles by 2020, or the U.S. equivalent of about 2 million vehicles.
\2\ Without dramatic breakthroughs, battery electric vehicles will
be best suited to smaller vehicles and vehicles that primarily drive
for relatively short distances in stop and go traffic. Plug-in hybrids
dramatically expand the applicable range, but also benefit most from
more urban driving and will continue to require petroleum until
breakthroughs are achieved in biofuels. Fuel cell electric vehicles are
well suited to filling in the gaps left by today's batteries, though
progress is still needed to bring down costs and develop
infrastructure.
1. Expanding the coverage of the deployment community funds
to include fuel cell electric vehicles and the necessary
hydrogen infrastructure in Phase 1. Delaying support for
hydrogen and fuel cell electric vehicles will guarantee that
they will always be the ``technology of the future.'' Had we
expanded funding for plug-in vehicles five years ago when
hydrogen had the buzz, we would be must better prepared for
upcoming deployment. We should not make the same mistake now
that the media attention is focused on batteries.
2. Eliminating the cut in the fuel cell vehicle tax credit
and shifting it from an expiration date of 2014 to a per-
manufacturer cap of 300,000 vehicles as provided for plug-in
vehicles.
3. Shifting the expiration date for hydrogen infrastructure
tax credits to at least 2017 to coincide with the charging
infrastructure tax credits.
4. Adopting the refundable and transferable provisions
included for plug-in vehicles.
Further limiting the number of deployment communities, at
least for the first few years. As with the House companion, the
Senate bill can help the set aside financial resources be used
more effectively by limiting the total number of deployment
communities. By allowing for up to 15 deployment communities,
the Senate bill risks cutting the available funds for an
individual community in half and losing some of the advantages
of the bill's cluster approach. Further, starting with a
smaller number of communities allows more learning, reducing
the number of mistakes that would be repeated in parallel by so
many different deployment attempts.
Integrating the Senate and House electrification bills into
a comprehensive national climate and energy policy that
includes a price on carbon, creates a national oil savings
plan, and provides strong incentives to deploy renewable
electricity above current projections, including a robust
national renewable electricity standard.
1. Financing the electrification of transportation will
require significant resources and tying much of that financing
to the annual appropriations cycle risks significant funding
uncertainty, especially with the current focus on deficits.
Industry will be less likely to partner with communities if the
funding needed for even larger scale deployment is left in
doubt. Putting a cap on carbon will not only spur investments
in cleaner technology and changes in the way we use energy, but
it will provide revenues that we can invest in clean energy
jobs. Covering the transportation sector can generate $20-$40
billion each year that can be returned to consumers to help
them purchase electric drive vehicles and home recharging or
refueling infrastructure, among other investments in
transportation.
2. If our ultimate goal is to end our oil addiction, we
cannot continue the cycle of passing a new energy bill every
few years. To provide certainty to industry and to empower
agencies across the federal government, the Senate should
establish a national oil savings plan that requires savings of
at least 7 million barrels per day by 2030 and that requires
the effective elimination of oil use by 2050. This plan should
provide the President with sufficient authority to achieve
these goals.
3. The success of electric drive is inherently tied to moving
our grid to renewable electricity. Recent analysis from the
Argonne National Laboratory shows that, with today's
electricity mix, plug-in hybrid and battery electric vehicles
do not deliver reductions in heat-trapping gases compared to a
conventional hybrid.\3\ Because these vehicles do provide
reductions compared to today's cars, their expansion in the
next decade or two will yield carbon benefits. But, if the grid
is not significantly cleaner by 2030, when conventional hybrids
will need to be ubiquitous, plug-in vehicles won't deliver
carbon benefits. A strong cap on carbon and a robust renewable
electricity standard can help ensure that plug-in vehicles will
not only cut oil use but also help to dramatically lower
emissions. Further, the expansion of renewable electricity can
go hand in hand with the creation of a supply of renewable
hydrogen for fuel cell electric vehicles. Hydrogen can be used
to buffer intermittent renewables to both lower the cost of
clean electricity and expand the fuel mix.
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\3\ Elgowainy, et. al., ``Well-to-Wheels Analysis of Energy Use and
Greenhouse Gas Emissions of Plug-In Hybrid Electric Vehicles,'' AND/
ESD/10-1, June 2010.
The U.S. needs to move away from a piecemeal approach to
transportation, energy, and environmental policy and instead adopt a
comprehensive set of policies that will tap into both the near term and
long term solutions that are available now or on the drawing boards.
This will require a longer term perspective and a combination of
consistent, significant, and sustained policies. Yes, we do need to
rethink our transportation system, but in doing so, we will not only
dramatically lower global warming pollution, we will save consumers
billions, create new jobs in America and ultimately cut our addiction
to oil. The Electric Vehicle Deployment Act of 2010 is an important
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part of this comprehensive set of policies.
The Chairman. Thank you very much.
The final witness is Mr. Alan Crane with the National
Research Council. Go right ahead.
STATEMENT OF ALAN T. CRANE, SENIOR PROGRAM OFFICER, NATIONAL
RESEARCH COUNCIL
Mr. Crane. Thank you, Mr. Chairman, members of the
committee. My name is Alan Crane and I was the study director
for the report on plug-in hybrids that Senator Dorgan
mentioned, also its predecessor report on hydrogen and fuel
cells. These studies were intended to estimate the maximum
practical rate at which alternative vehicle technologies could
grow in the marketplace, the resources that would be required
to make that possible, and the oil consumption and greenhouse
gas reductions that might result.
I would respectfully request that the plug-in report be
included in the record for the meeting. Thank you.
The Chairman. We will include that.
Mr. Crane. I should note that this report did not consider
fuel cell vehicles. It was limited to hybrids. It did not
consider full electric vehicles, just the plug-in hybrids.
We also examined biofuels and advanced fuel efficiency of
conventional vehicles to compare the benefits of different
approaches. None of these technologies, as has been mentioned,
is likely to solve the problem all by itself, but collectively,
as Dr. Friedman mentioned, they have the potential for
eliminating oil use in the light-duty fleet by 2050.
In the interest of conserving time, I would like to turn to
the findings and conclusions at the end of my testimony, and I
will elaborate on them slightly.
To begin with, battery vehicles, whether they are hybrids
or full electric, certainly have the potential to become very
important, even a major component of the light-duty fleet, but
that is not at all certain. There are several factors that may
seriously limit the growth unless large subsidies are
continued.
For instance, battery costs are still high. You mentioned
you think that our costs are higher than most. Actually the
current costs are right in the middle of all the estimates we
have seen once they are adjusted to the same basis. There is a
lot of uncertainty as to how far and how fast battery costs
will come down. We are probably on the high side, but still
lower than several other estimates in the literature.
Durability is also a major question. The range on the
vehicle drops as the batteries degrade, which is usually about
2 percent per year. If you have to replace the battery pack,
that is going to be very expensive.
Fuel savings are modest relative to the cost increment. A
hybrid electric vehicle can do almost as well as a low-mileage
plug-in hybrid, a 10-miler, say. As has been mentioned, the
carbon savings are even smaller.
Then a question that we could not really get into but was
looming over everything was on the number of people who are
able to plug in their vehicle and willing to take the time to
do it.
With that as a lead-in, our conclusion No. 1, the lithium-
ion battery technology has been developing rapidly. The costs
are still high, and we did not see the likelihood of dramatic
cost reductions unless there are some real breakthroughs in
technology. Many of the projections that show a rapid drop
depend upon manufacturing economies of scale. We noticed that
lithium-ion batteries are already made in huge quantities in
very efficient factories. The vehicles are not going to be
radically different from that. So we suspect that technology
will be a more important factor than economies of scale.
The cost to a vehicle manufacturer we thought for right now
would be--for instance, for the Volt, would be $14,000 to
$18,000, somewhere in that range. That is more than a
conventional non-hybrid vehicle. Most of that would be in the
battery pack, and a 10-mile plug-in would be somewhere around
$6,000, again about half of that for the battery pack. These
are big numbers and they have to make you wonder whether people
will find them worthwhile.
In addition, some homes will require upgrade of their
power, particularly in the garage. We did not include that in
our estimates of the cost transition.
We think that plug-in--the 40 miles of Volt types could
become cost effective by 2040 or thereabouts. The shorter-mile
ones would get there a lot sooner, but they will not save all
that much fuel.
We have also mentioned the rate at which we assumed that
the plug-ins could achieve penetration into the market. We said
40 million by 2030 was about the maximum. That is far faster
than any other major technology has penetrated. So we do not
think that is conservatively low. We think it is pretty
optimistic.
The factors that would interfere with that, the high cost
of the battery, the modest gasoline savings, the limited
availability of places to plug in, and other attractive
opportunities for consumers are likely to keep this lower.
Then the plug-ins--you need tens of millions of them out
there. That is true of just about any new technology in order
to have a real impact on the fleet. We have upwards of 300
million vehicles in the fleet. It needs to be a high fraction
of them to make a real impact on oil use. But certainly by
2050, we can start making a big difference.
Then the carbon savings, again, will depend upon how much
we can decarbonize the fleet--decarbonize the generating mix we
have in this country. I would add nuclear power to what Dr.
Friedman mentioned.
Finally, we cannot emphasize too much that we need to keep
our options open. This has been said before. There are a lot of
options for the future for cutting oil use. This is a major
one, but there are others. Keep pushing on all of them.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Crane follows:]
Prepared Statement of Alan T. Crane, Senior Program Officer, National
Research Council
Good morning, Mr. Chairman and members of the Committee. My name is
Alan Crane. I was the study director for the National Research Council
report Transitions to Alternative Transportation Technologies--Plug-in
Hybrid Electric Vehicles and its predecessor report Transitions to
Alternative Transportation Technologies--a Focus on Hydrogen. The
National Research Council is the operating arm of the National Academy
of Sciences, National Academy of Engineering, and the Institute of
Medicine of the National Academies. The National Academy of Sciences
was chartered by Congress in 1863 to advise the government on matters
of science and technology.
These two studies were requested by the U.S. Department of Energy
to estimate the maximum practical rate at which alternative vehicle
technologies could grow in the marketplace, the resources that would be
required to make that possible, and the oil consumption and greenhouse
gas emissions reductions that would result. Today I shall talk mainly
about the Plug-in report which was released in final form recently. I
would like to respectfully request that this report be included in the
record.* Plug-in hybrid electric vehicles (PHEVs) and hydrogen fuel
cell vehicles (HFCVs) have many similarities, and I shall provide some
comparisons. I should note that the report did not consider full
electric vehicles.
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* Report has been retained in committee files and can be found at
http://www.nap.edu/catalog/12826.htm.
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The committee that conducted these studies also examined biofuels
and advanced fuel efficiency of conventional vehicles to compare the
benefits of different approaches. One of the most important conclusions
of the committee in both reports is that a balanced portfolio of R&D
options is critically important for the long-term future. None of these
technologies by itself is likely to solve our oil problem, but
collectively they have the potential to essentially eliminate oil use
in the light duty vehicle fleet by 2050. However, achieving this
objective will require a broad, well-funded R&D program and a long-term
commitment to deployment by the federal government and industry.
PHEVs and HFCVs differ from the biofuels and advanced efficiency
options in that they probably will be too expensive, at least at first,
to simply be mandated by standards. Government subsidies will be
required to push them into the mass market.
PHEVs can get an earlier start than HFCVs because batteries are
more nearly ready for mass production than fuel cells, and fewer
infrastructure changes are required. The committee estimated that the
maximum practical penetration rate for PHEVs would result in 4 million
on the road in a fleet of about 275 million light duty vehicles in
2020, growing to 40 million on the road in 2030. This would require a
rate of growth about twice that of conventional hybrid electric
vehicles over the past 10 years.
Batteries are by far the costliest component of PHEVs, and the rate
at which costs can be reduced is uncertain. All proposed PHEVs will use
lithium-ion (Li-ion) batteries, similar to the technology now used in
laptop computers, power tools, and other small devices. Several Li-ion
chemistries are under development with the objective of optimizing
performance for automotive propulsion. None yet meet all essential
goals for cost, battery life, and weight. Cost is expected to be the
most difficult goal.
The incremental manufacturing cost of a PHEV with a 10 mile range
on its batteries alone (PHEV-10) over an equivalent conventional
vehicle (non-hybrid) would be about $6000 now. A PHEV-40 (40 mile
range) would cost about $16,000 more. These current costs are based on
batteries ordered several years ago for installation in vehicles built
in 2010 and 2011. Battery costs will decline significantly, but some of
the other costs required for PHEVs (e.g. power electronics and electric
motors) probably less so. Total incremental costs for PHEV-10s are
expected to decline to less than $4000 and for PHEV-40s to about
$10,000 by 2030.
Dramatic cost reductions are not very likely without breakthroughs
in battery technology. Lithium-ion batteries are already manufactured
in great quantities, and those designed for vehicle applications are
not greatly different from those for laptops. Thus cost reductions from
manufacturing economies of scale will be limited. While the committee's
estimates of future costs are higher than some (but not all) others,
that may be because the committee assumed that durability and safety
goals had to be met before cost goals. Today's lithium-ion batteries
typically last three to four years, but at least 10 years will be
required for a truly viable commercial PHEV. Batteries with shorter
lifetimes would be less expensive, but would require replacement.
DOE's R&D program is focused appropriately on cost reduction and
performance improvement and on looking for breakthroughs. At this
point, however, it is not clear what sorts of breakthroughs might
become commercially viable. Furthermore, even if they occur within the
next decade, they are unlikely to have much impact before 2030, because
it takes many years to get large numbers of vehicles incorporating new
technology on the road.
In addition to costs, the necessity of charging the batteries
essentially every day to deliver their promised fuel savings may be a
constraint on PHEV growth. It is not clear how many people have a safe
source of power, preferably in a garage, and the willingness to plug it
in regularly.
If PHEVs meet the maximum practical penetration rate, the savings
in oil and carbon emissions will be significant. PHEV-40s could cut
gasoline use by 55 percent by 2050, and PHEV-10s by 40 percent,
relative to a reference case with no PHEVs or increased efforts on
other technologies. However, much of this improvement could also be
gained from improved efficiency of conventional vehicles and hybrid
electric vehicles (HEVs). The high efficiency scenario analyzed by the
committee, with a high fraction of HEVs, also showed a reduction of 40
percent in gasoline use. A PHEV-10 is expected to save 19 percent of
the gasoline that an equivalent HEV would use, while a PHEV-40 would
save 55 percent. In comparison, HFCVs directly reduce gasoline use
because the hydrogen will be produced from natural gas or other non-oil
sources.
PHEVs show less improvement in GHG emissions than in gasoline
consumption because of the additional emissions from electricity
generation. If carbon emissions from the electric sector are limited,
the reductions would be greater, potentially almost following the rate
of reductions in gasoline use.
The PHEV projection considered only the impact of a given number of
PHEVs regardless of cost. PHEVs will be expensive relative to
conventional vehicles, but they are cheaper to operate (driving costs
per mile are less than for conventional vehicles), and eventually
vehicle costs may decline sufficiently to achieve life-cycle cost
competitiveness. A transition period with substantial policy
intervention and/or financial assistance for buyers from government and
possibly manufacturers will be necessary until the higher costs of
PHEVs are balanced by their fuel savings.
Transition costs will depend on how fast vehicle costs decline. At
the rate considered to be optimistic by the committee, subsidies of
over $400 billion could be required for PHEV-40s. However, if DOE's
ambitious goals for battery cost and durability are met by 2020 only
$24 billion would be required. Higher oil prices also would lower
transition costs. PHEV-10s would achieve competitiveness sooner than
PHEV-40s, but the oil savings would also be less. This analysis was
based on battery packs that would be required for mid-size cars which
are likely to be smaller than the average that will be used in the
entire fleet.
Because of uncertainties in battery pack costs at this point in the
initial commercialization of PHEVs, the committee feels that it is
important that the cost issues be reevaluated in 3 or 4 years after
industry has some commercial experience with the technology.
Following are the major conclusions of the committee. These are
explained more thoroughly in the summary of the report.
1. Lithium-ion battery technology has been developing
rapidly, especially at the cell level, but costs are still
high, and the potential for dramatic reductions appears
limited.
2. Costs to a vehicle manufacturer for a PHEV-40 built in
2010 are likely to be about $14,000 to $18,000 more than an
equivalent conventional vehicle, including a $10,000 to $14,000
battery pack. The incremental cost of a PHEV-10 would be about
$5,500 to $6,300, including a $2,500 to $3,300 battery pack.
3. PHEV-40s are unlikely to achieve cost-effectiveness before
2040 at gasoline prices below $4.00 per gallon, but PHEV-10s
may get there before 2030.
4. At the Maximum Practical rate, as many as 40 million PHEVs
could be on the road by 2030, but various factors (e.g., high
costs of batteries, modest gasoline savings, limited
availability of places to plug in, competition from other
vehicles, and consumer resistance to plugging in virtually
every day) are likely to keep the number lower.
5. PHEVs will have little impact on oil consumption before
2030 because there will not be enough of them in the fleet.
More substantial reductions could be achieved by 2050. PHEV-10s
will reduce oil consumption only slightly more than can be
achieved by HEVs.
6. PHEV-10s will emit less carbon dioxide than nonhybrid
vehicles, but save little relative to HEVs after accounting for
emissions at the generating stations that supply the electric
power.
7. No major problems are likely to be encountered for several
decades in supplying the power to charge PHEVs, as long as most
vehicles are charged at night.
8. A portfolio approach to research, development,
demonstration, and, perhaps, market transition support is
essential.
This concludes my statement. Thank you for the opportunity to
testify. I would be happy to address any questions the Committee might
have.
The Chairman. Thank you and thank you all for your
excellent testimony.
Let me start with a few questions. Mr. Smith, let me start
with you. You, I think, indicated that your FedEx fleet of
vehicles is about 85,000, and I think someone had mentioned
that the Federal Government--I believe maybe Mr. Sandalow
mentioned that the Federal Government purchases about 60,000
vehicles a year.
In your effort as a large fleet operator and owner, what
are you doing at FedEx with regard to transitioning to electric
vehicles that you believe the Federal Government ought to be
doing?
Mr. Smith. Senator, we several years ago, along with the
Eaton Corporation and the National Resource Defense Fund,
developed the first walk-in pick-up and delivery hybrid truck.
We now have about 400 of them. We will have about 400 of them
at the end of the year.
The problem with that vehicle is that its capital
acquisition costs are significantly over a conventionally
powered diesel truck, and you have to get up to about $4.50/
$5.00 a gallon in diesel cost to get an ROI. Now, there are
some exceptions where you have to have low emission-vehicles to
meet regulatory standards like California. So we will be
putting the hybrid trucks out there.
The reason they are so high in expense are, one, the
battery cost, but in addition, the hybrid obviously has two
power plants. It has the conventional power plant and it has an
electric power plant. So for pick-up and delivery operations, I
suspect that in most cases--now, perhaps not in Montana or
upstate Maine where you have long distances between stops, but
in most urban environments, the all-electric plug-in has a
greater potential than the other technologies. As I mentioned,
we have about 15 all-electrics in Europe made by Modec, and we
have got about a half a dozen. We have taken delivery on
prototypes that are a JV by Modec and Navistar built in
Illinois and powered by A123 battery systems.
The things that are in this legislation will move the
production costs of the lithium batteries significantly down
the cost performance curve. The operating costs of the all-
electric is so compelling compared to the diesel powered. It is
about 20 percent per mile of what the diesel powered vehicle
is. So it is strictly a matter of getting to scale production
and hopefully having some of these technical breakthroughs on
the battery technologies.
In talks with people overseas and here and at ARPA Energy
with some of the programs they have got going over there, I
think the potential for increased price performance on the
batteries is pretty significant in the next few years. So we
respectfully disagree with the information that was put in the
Research Council's report.
The Chairman. Let me ask one other question. Dr. Clay, let
me ask you. You, I think, in your testimony talk about the need
for funding for production of components of electric vehicles.
We put in law this section 136 in the 2007 energy bill, and it
is intended to provide help to component suppliers. Why is that
not adequate to meet the need for component suppliers for
electric vehicles, just like it does other vehicles?
Ms. Clay. Thank you, Mr. Chairman. In fact, yes, the
alliance does support the provision that is in your legislation
that passed out of committee that would extend and replenish
that section 136 program. Our feeling is that would be
sufficient and would meet the points that were made in our
written testimony.
The reason we included them in our written testimony was
because this was introduced as standalone legislation, we felt
that that was a very important component of meeting the overall
need to produce electric vehicles, anticipating that this
legislation might be folded into a larger energy package that
would have your provision in the underlying text would be
sufficient.
The Chairman. Thank you very much.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
In the focus on electrification, I think just about all of
you at one point in time have discussed the need to reduce our
emissions, and yet we recognize that we are in a Nation where--
I was trying to get he exact figure here in terms of how much
of our electricity is produced today in this country by coal,
by fossil fuels, and a recognition that in certain parts of the
country, we moved to electrification where our source for
electricity is coal. Have we really reduced the level of
emissions? Dr. Clay, you mentioned it. Mr. Crane, you mentioned
the push to decarbonizes the fleet, and I think it is an
important part of the discussion.
Mr. Smith, I would ask you. Within your nationwide fleet, I
think you mentioned California was one State, one area, where
you are focusing. But in your decision as to where you are
deploying your electric fleet vehicles, do you look to the
electricity source as part of your business judgment decisions,
or is that factored in at all?
Mr. Smith. No, it is not factored in. But I would point
out, Senator, our studies would indicate that plug-in electric
vehicles, even if powered by coal power plants that have not
been modified to clean up the emissions on a so-called well-to-
wheel basis produce significantly less CO2 emissions
than conventionally powered vehicles. Now, if the power source
is hydro, geothermal, nuclear, solar, wind, so much the better.
But there is a net benefit even with coal-powered plants.
Senator Murkowski. Let me ask--and I mentioned in my
opening statement the point about the technology-neutral
perspective. Again, I think most of you have discussed some
aspect of that.
This legislation is set to authorize about $6 billion for
the electric vehicle technologies. Recognizing that you are
going to be seeing a--I mean, that is a substantial increase in
funding. How do you believe that this will affect or impact the
development of other technologies, whether they are--some of
you mentioned, I think, the hydrogen, certainly natural gas,
the advanced internal combustion. Is this a situation where by
directing funding in this area, we lose the push in other
areas? Or as Senator Dorgan has said, we need to make sure that
we are doing it all, that we support the hydrogen vehicles,
that we push evenly. I am throwing this out to all of you. Mr.
Friedman and then Mr. Wynne.
Mr. Wynne. Senator, I would be delighted to answer that
question. I think it is really an excellent one.
One of the reasons why ETA changed its name several years
back was because of the fact that we are really pushing a
technology here. It is not just vehicle-centric. This is
technology-centric. So anything that we can do to advance the
component manufacturing--for example, there are many components
that are shared in the electric drive train. So we think of
electric drive--fuel cells are just a different way to create
the electricity. They do so on board utilizing hydrogen as a
carrier. It is important to understand the way those dots
connect over time, that this is not really an either/or
situation.
Having said that, we have made massive advances with
battery technology and energy storage has always been the game
here. We all know that electric motors are better than
combustion engines. They are much more efficient, and
increasingly because we have hybridized with faster
microprocessor speeds and software, we can get more than one
drive train to work better, to work together, and optimize the
energy use in that vehicle. You have the opportunity to apply a
technology over multiple applications. Electrification of the
fleet I think gets us to where we want to go over time.
The last point simply is that because hybrid technology is
very flexible, you can utilize it with other biofuels, et
cetera, and even natural gas.
Senator Murkowski. Mr. Friedman, you wanted to jump in.
Mr. Friedman. Yes, thank you Senator. I think both yourself
and Senator Dorgan are right. We do have to, A, incentivize all
of these technologies and ensure that there are resources out
there for all of them. I think with a relatively small change
to Senator Dorgan's bill, we could add hydrogen fuel cell
vehicles and infrastructure into the mix early on. But this
really has to be thought of as a down payment. We need a
national investment to get ourselves off of oil and to
eliminate carbon emissions. I think your argument before about
the concern over near-term emissions really reinforces our need
for a strong, renewable electric standard and to put a cap on
carbon.
In the near term, I am not very concerned. As Chairman
Smith mentioned, in the near term, the emissions will be better
than conventional vehicles. But by 2030, there should be a
hybrid car in every single garage, and that needs to be the new
status quo. So we are going to need clean electricity in order
to get there.
We did a study, a Climate 2030 Blueprint, that said that we
could nearly decarbonize our electricity sector by about 70
percent by 2030 through a combination of cap and trade and
complementary policies. With that full sweep, we could actually
save households on the order of $900 a year by that, and that
is money that can be reinvested in a lot of these technologies
to electrify our future and to green our electric grid.
The Chairman. Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you.
Let me first deal with this hydrogen fuel cell issue.
Because I chair the subcommittee on appropriations that funds
all these things, let me just say to you we have a well
established hydrogen fuel cell technologies program that
received $174 million last year. I and Senator Domenici on this
committee were strong supporters. I am a strong supporter of
hydrogen fuel cells. I have no problem if somebody wants to add
something here with respect to hydrogen fuel cells, but I do
not want anybody to suggest we are not doing anything on that
front. I added back all hydrogen fuel cell funding last year
and will again this year. We want to promote all alternative
transportation technologies, and hydrogen fuel cells are
important. But I don't think the technology will be available
for rapid near-term deployment. The technology that is ready
for rapid near-term deployment is electric vehicles. So I do
not want to talk about that anymore. We have strong support for
hydrogen fuel cell vehicles.
But let me ask Mr. Smith. Some people say--and as you know
politically it is increasingly said--Government is the problem
not the solution. Why do you not get out of the way,
Government? So let us assume that you are out there running
FedEx and you decide--you know what? We do not need Government.
If I want an electric vehicle, I will go try and persuade
somebody to build one. If I need a battery that goes enough
miles for my fleet, I will try to persuade somebody to build
one. Is that a satisfactory approach, or is this the kind of
larger, game-changing thing that needs direction, needs policy
choices that only the Government can really make, along with
the support of the private sector?
Mr. Smith. I think the Government needs to be involved,
Senator, for two very important reasons.
The first, as I mentioned in my remarks, this is an
enormous national security problem. I mean, we have two
shooting wars going on, and there is no question that at least
in part they were precipitated by our dependence on imported
foreign petroleum, great cost in money to the country, but far
more importantly, over 5,000 of our youngsters' lives were lost
in these situations.
So other than nuclear proliferation and weapons of mass
destruction getting in the hands of terrorists, it is our
biggest single national security issue. As was mentioned in
testimony, five times since the first Arab oil embargo, the
country has been thrown into recession because of precipitous
run-ups in fuel prices. In 2008 in the summer, a barrel of oil
went up to $147 a barrel. It literally was the match that lit
off the financial meltdown. So that is reason No. 1.
The second reason is that the Government many times in the
past has funded a technology that had great potential societal
benefit but where the private sector simply could not put the
funds in because the return on investment was too uncertain or
the horizon was too far out or the funds required were too
great. Two of them come to mind.
One of them, which we are utilizing right now in front of
us, is the Internet. I mean, that was funded by the Defense
Advanced Research Projects Agency as a distributed
communications system in the event of a nuclear war. Who could
have imagined what could have come from that?
But my other favorite example is aviation. I mean, today we
take it for granted that you can put 100 tons of cargo on one
of our triple 7s and fly it nonstop from Hong Kong to
Indianapolis or Memphis, which we do every day. Just go back in
the early part of the 20th century and look at the airplanes
that were being flown and think about someone looking at those
fabric-covered Jennies and DH-4s and things like that and fast
forward to a triple 7 airplane.
The Government funded the R&D in the aviation business by
paying for air mail contracts, and finally in the middle part
of the 1930s, the Douglas Aircraft Company finally made an
airplane, the DC-3, C-47 in military terminology, that could
make money with a passenger payload and some air express on it.
But absent the Government moving toward that, it is very
unlikely that aviation would have reached that in the near
term.
So given the national security issues and a market that is
not a free market, the prices in the oil market are set by a
cartel, OPEC, which if they did what they do in the United
States, it would be found to be illegal.
So national security issues, and the role of the Government
in funding promising R&D where there is a general consensus
that if we really get this right, like commercial aviation or
battery technology. So I think it is very appropriate for the
Government to be involved in this.
Senator Dorgan. Mr. Chairman, might I ask one additional
question?
The Chairman. Sure.
Senator Dorgan. Let me just say that the aviation
technology has, in very large part, come from Federal
investment into military airplanes. It migrates to the
commercial sector from all of the major manufacturers.
Mr. Crane, the battery costs that you used in your study,
which was not very positive toward electrification, seemed very
high. Nissan has announced pricing now for their electric Leaf,
all-electric Leaf, $32,780 before the tax credit. So the Leaf
is now going to be priced at $32,780 and has a 2-kilowatt-hour
battery which, according to the estimates you used, would have
cost $42,000, which is more than the price of the entire car,
by far. So does that imply or suggest somehow that the battery
estimates you have produced is off the mark?
Mr. Crane. We did not look at the Leaf or what Nissan was
doing, and I do not know their pricing policy. They are quoting
prices not costs, and the two are not necessarily closely
coupled.
I just saw the Smart 2 is bring out an electric vehicle
later this year which will have a range of 82 miles, I think.
That is a tiny, little, bouncy thing you see around town. The
lease they are asking is like $599. That is up on the luxury
car level. Yet it is a relatively small battery. Again, I do
not know what their pricing policy is, but that is not a real
auspicious omen for electric vehicle costs.
So we may be wrong. I do not know. I think we had reasons
for coming up with what we did, though.
Mr. Friedman. Senator Dorgan, a quick addition. One of the
new things in that report is a calculation of the costs if the
Department of Energy goals are met, which I think is more in
line with what some of what Nissan is talking about. The report
shows that if that happens, the costs go down dramatically. If
I am right, I think it shows that they could become cost
effective or break even by about 2025, much earlier, if those
technology goals are met. So there is clearly the potential for
much lower costs as the technology research progresses.
The Chairman. Senator Corker.
Senator Corker. Thank you, Mr. Chairman, and thank you for
your testimony and I certainly welcome Mr. Smith who is a major
employer in our State and someone who has I know worked with
Senator Dorgan and many others to advance energy in this
country.
I am going through the financial reg right now and it is
amazing to me the things that get added onto a bill in the name
of financial regulation. It is an amazing thing that occurs,
and I have noticed, in listening to all the panelists, that in
lieu of maybe focusing on just plug-in electric only, that
maybe many of the panelists feel like that other things should
benefit from this, other types of technologies. My guess is by
the time a bill gets to the floor and parochial issues take
place, this bill may end up looking very different than it
might coming out this committee. I know it is going to be
linked up at some point with a credit bill. I know this is not
in the jurisdiction of this committee.
But I wondered, Mr. Smith, if you might add some cautionary
advice, if you will, to the committee as it relates to this and
its narrow focus. I know there have been comments made about
picking winners and losers. I know you are as much a free
market person as there is in this country. Senator Dorgan I
think will use your comments in other venues down the road, I
might add, about Government involvement that might involve
other aspects of Government involvement.
But do you want to make some editorial comments regarding
how narrow this should be and what we should protect against as
this bill moves to the floor?
Mr. Smith. Senator, good to see you. It is a very important
point that you make.
I go back to the comments I made about the formation of the
Energy Security Leadership Council. That group came together
because the CEOs and the retired generals and the admirals felt
that we should focus on one particular problem, the dependence
of the United States on imported petroleum from hostile parts
and unstable parts of the world. So the recommendations that we
came up with were very focused and very narrow, and as I
mentioned, I think were a big part of the 2007 Energy
Independence Security Act, as I recall it.
In this particular case, the Electrification Coalition,
which grew out of the ESLC, is focused on one thing and one
thing only, and that is to incent the scale production of
electric vehicles to reduce the petroleum inputs in our economy
and thereby reduce our dependence on foreign petroleum. I think
once you start making it a Christmas tree, you really reduce
the potential advantages of moving this technology which is not
theoretical. I venture to say everybody in this room has a
communications device, a BlackBerry, an iPhone, a Droid or
whatever the case may be that is powered by this exact
technology.
I am reminded of a favorite story by Dr. Hans Selye who was
a Nobel laureate, and he used to tell the story about himself
when he was a young researcher, how irritated he would get that
his Petri dishes would be gunked up with this green stuff when
he was not just pristine about it, and of course, what he was
looking at was penicillin. But he just could not make the
conceptual leap that that stuff in his Petri dishes was
something that was very beneficial. A few years later, Dr.
Fleming did introduce penicillin to the world and it
revolutionized medicine.
So I think the incredible focus on battery technology by
many different entities around the world, China, Korea, Japan,
the United States, makes it a much more likely technology to
get behind and move forward like aviation in the example I did.
So I feel very strongly the pure R&D on fuel cells and
those sort of things should be funded in a pure R&D manner. But
the electrification bill should be toward electrifying light-
duty transportation. Period.
Senator Corker. So the vision, especially coming from where
I come from, of baseload nuclear energy in the evenings when it
is not being utilized as much charging electric batteries is
just a vision that excites me. It excites you. It excites
Senator Alexander. It excites many of us that want to see that
happen.
At the same time, you know, in years past in my previous
life, I invested in technologies where you are trying to change
human behavior. That is very difficult. I wondered if you might
share thoughts. You know, you look at hybrid electric, and you
are really not having to change a human being's behavior
because they know they have the ability to use gasoline or
fossil fuel to charge the battery. In this particular case,
though, it is a big difference. I mean, the fact is you have
got that umbilical cord if you are all tied to the plug-in.
Do you have any comments there about concerns changing
human behavior as it relates to electric vehicles only and
moving away from hybrids which seem to me to be picking up a
lot of steam? I guess me, not being one to want to pick winners
and losers, I have some degree of concern regarding us picking
the sole winner in this legislation.
Mr. Smith. Senator, I think there will be a mix of hybrids
and plug-in electrics, but the hybrids that will be popular in
the years to come--I would hazard a guess that they will be
much more like the Chevy Volt which has a primary electric
power plant and a small reciprocating engine to perform the
function of a generator. So if you need to drive your car, as
the Secretary did, to work 5 miles a day but occasionally go on
a 250-mile trip, that kind of technology would be probably what
you would want to have. But if you have two cars or another
vehicle that satisfies your daily urban requirements, my guess
is that the plug-in electric would be there. So I do not think
they are mutually exclusive.
Then if the prize is achieved that is in this legislation
and you get a 500 mile an hour battery, then you do not need
the generator, the belt and suspenders approach, of the hybrid.
I would say this much. The Electrification Coalition--we
have done quite a bit of research on how people think about
this technology today, and I was very shocked that the
receptivity of the public for electric plug-ins and hybrids is
enormous now and possibly because of every day you turn on the
TV and see what is unfolding in the Gulf and Afghanistan or
what have you. But I really think a combination of those
technologies will be the issue. It will not be just one or the
other.
The Chairman. Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman. It has been an
excellent panel.
Let me give you my assessment of this and start with you,
Mr. Smith. You have been doing some very important work in this
area. Here is how I come at it.
I mean, 70 percent of fuel is used in the transportation
sector. So this is the ball game. To me, instead of going out
and picking these winners and losers, which is what we have
been talking about today, you ought to target a variety of
different types of electric vehicles for the same reason Willie
Sutton targeted the banks. I mean, that is where the money is.
That is where the action is.
I very much support your agenda, Mr. Smith, and what you
are talking about. To try to drive down the cost for you and
everybody else in this space, I have proposed expanding the
Energy Department's existing program in this area, loans and
grants, to help vehicle manufacturers in a variety of areas. We
would include trucks, buses, street cars, and even motorcycles.
Does this not make sense from two standpoints? One, it gets the
Government out of the business of picking winners and losers in
this space, which to me makes sense, but it also is going to
expand the capacity of vehicle manufacturers in this case which
ought to drive down your costs and the costs for everybody
else. Is that a correct assessment?
Mr. Smith. Senator, first of all, I am familiar to some
degree with your work on promoting the infrastructure tax
credit on the buses and things of that nature, and I commend
you for it. I think that is very important and we support your
efforts.
The whole key in this thing gets down to a single point in
my opinion, and that is driving the price performance of the
batteries up. Period. The charging stations, the permitting,
the things of that nature, they are all important, but they
pale in comparison to that one point. So anything that moves
toward scale production is what needs to happen here.
That is why the Electrification Coalition supports these
deployment centers because we believe that is the fastest way
to get economies of scale and get these adoption rates up where
they are not just a niche in one city or another or a small
group of people, but where you have a very large adoption rate
in the deployment communities similar to the Race to the Top in
the school system where you apply for it and you compete for
it. We think that is the fastest way to get there.
But whatever moves scale production and price performance
of battery technology forward, including some of your
initiatives, we support.
Senator Wyden. Thank you, and I very much support what you
are saying in terms of the deployment, infrastructure as well.
This is all about getting to scale production, and it seems to
me we have just got to get more players into this. I mean, the
Union of Concerned Scientists just released a new report on
fuel economy for trucks, which concluded that medium- and
heavy-duty trucks make up only 4 percent of the motor vehicles
on U.S. highways. So that is going to be very important, but
let us get the biggest number of players into this in order to
get that scale of production that you in my view correctly
argue for.
Let me ask a question of you, Mr. Wynne, and you, Mr.
Friedman. In addition to this question of expanding the pool of
areas that the Federal Government really targets, different
vehicles in addition to trucks, buses, street cars,
motorcycles, in addition to the deployment stations, I think we
have got a tremendous opportunity in terms of incentives for
energy storage. As you know, I have introduced a major piece of
legislation to create a tax credit for energy storage systems
connected to the grid as well as buildings and factories and
homes. Senator Dorgan is a sponsor of this. Senator Murkowski
is a cosponsor.
Now, this is a Finance Committee issue as well. I serve on
the Finance Committee, as does Senator Bingaman. We want to
provide tax credits for smart grid enabled charging equipment
for electric vehicles. If you would, Mr. Wynne and Mr.
Friedman, I would like to have your position on this
legislation because we are very interested in working with you.
I put storage right up there with what Mr. Smith has talked
about in terms of deployment arrangements, scale of production
issues, and storage is going to create a pretty good market as
well. I mean, I envision storage, when you look at energy, a
lot of people buying low and selling high, which is about as
good as it gets in the American economy. So your positions on
the storage legislation, Mr. Wynne and Mr. Friedman.
Mr. Wynne. Senator, we commend you for that legislation. I
think your pointing to what is particularly beneficial about
electrifying transportation, which is that we have, as has been
already pointed out, an enormous supply of fuel that is not
being utilized properly.
Just to come back to the point about the grid, you know,
the grid increasingly is going to benefit from renewable
technologies, and energy storage, particularly for intermittent
renewables such as wind and solar, becomes exceedingly
important. So utilities, if they look far enough down the
road--and of course, utilities invest on a very, very long
timeline--are viewing electric transportation as energy storage
on four wheels, which is extremely important. Closer in, you
have major utilities, who understand that we are heading into a
climate-constrained environment, beginning to invest in
centralized storage. They can utilize the same large format
lithium-ion batteries in order to create that centralized
storage. That can help us get down to scale and get down the
cost curve a lot faster.
It is not a very large leap from there to utility companies
understanding I am going to sell the fuel here. Why not own the
battery? Why not lease the battery to the customer and then
utilize that battery in secondary applications for stationary
storage and amortize its cost over a much longer lifetime? That
will get us down the cost curve even faster.
Other kinds of business arrangements like that I think are
very, very exciting. I think your bill will certainly promote
that and we thank you for that.
Senator Wyden. I am over my time. Can Mr. Friedman just
respond, Mr. Chairman?
The Chairman. Mr. Friedman.
Mr. Friedman. Thank you very much.
I think you are absolutely right that storage is an
incredibly important issue, and we do need more support in that
direction with bills like yours, as well as actually in the
electrification bill. There is money and research provided to
look at what happens to car batteries at the end of their life.
There is still significant value in those batteries. They may
not be applicable for vehicles anymore, but those could
actually be turned into the very storage technologies you are
talking about. Hydrogen and batteries could be well adapted to
intermittent renewables to lower their costs and to expand
their use. We do have to be careful noting, when we attach
vehicles to the grid, it will put a little bit more wear on
that battery. So we need to plan for that and keep the
technology moving.
Finally, on your first point about the portfolio
technologies, I want to thank you for your past support.
Senator Dorgan, I definitely want to right a wrong. I mean,
you have been an incredible leader on hydrogen for decades, and
that is incredibly appreciated. You helped us deliver
significant increased fuel economy standards in 2007. So my
comments about moving to the deployment side of hydrogen in no
way reflect negatively on your heroic leadership in the past.
Senator Wyden. Thank you, Mr. Chairman.
The Chairman. Thank you very much. I think this has been
great testimony and a very useful hearing.
Senator Dorgan, since you are the main sponsor on the bill
we have been talking about here, why do you not make any
closing comments you would like to make? Then we will conclude
the hearing.
Senator Dorgan. I will do that ever so briefly.
Thank you, Mr. Friedman, but heroic leadership really
overstates almost anything that happens in the Congress by
anybody, I might say.
[Laughter.]
Senator Dorgan. Let me again come back to the question of
picking winners and losers because I think it is so important.
We hear it all the time and is usually an excuse for doing
nothing. Just do not pick. God forbid that we should have a
plan in America for where we want to be and what we want to do
in the future. I mean, we can let happen whatever happens and
be satisfied with it, which is the notion of some.
I was sitting here thinking about these things. We built an
interstate highway to connect America, which was a really
important thing to do. If you are in western North Dakota,
there is a town called Sentinel Butte, a wonderful little
town--it is out by the Bad Lands. It has 80 people, and about
30 miles away is Beach, North Dakota, which has about 1,200
people. Between, we have a four-lane highway, Interstate 94,
connecting Sentinel Butte to Beach. I mean, price that out for
a moment. What did it cost to build a highway connecting a city
with 80 people and another one with 1,200 people? But that is
not the reason it was built. It was built to connect New York
to Seattle, and it happens to connect these two little towns in
North Dakota.
So the question is what is our grand design here? What do
we want to achieve for the country? It comes back to the point
we have made incessantly here. We are unbelievably vulnerable
and dependent on foreign oil, and it does not take a rocket
scientist to know that if 25 percent of all the oil we suck out
of the earth every day has to come to our country and we only
produce 10 percent of the world's oil, and we have 3 percent of
the known reserves in the world, that none of that adds up very
well. So how do we make a change and how do we move in a
different direction?
As you said, Mr. Smith, if ultimately we do not have better
batteries, then all this is just talk. It is not going to
happen. But I am a big supporter of ARPA-E, for example. I
mean, I am a big believer. You invest in the new science and
research and technology, and you open up a vista of
opportunities. I am absolutely convinced that our future is
going to be vastly different than our past because we are going
to make significant investments and yield dramatic dividends
from those investments.
So I start down this road understanding that we have
already made dramatic changes and improvements in battery
technology and I think will in the future as well. This is just
a start.
Mr. Chairman, I wanted to say two things quickly.
One, I think the testimony is really excellent today. This
legislation is not written in stone. I mean, it needs to be
changed here and there and modified reflecting the interests of
people who have suggested good improvements.
Also, I want to thank you for holding the hearing because,
as we move down the road, hopefully with the energy bill that
we wrote a year ago, I think after 10 or 12 weeks of markup,
hopefully we will get to have that on the floor of the Senate.
Perhaps we could consider adding some provisions from this
authorization bill as well. This hearing I think is central to
that. So I thank you, Mr. Chairman, for your leadership as
well.
The Chairman. Thank you for introducing the bill and your
leadership on this over a long period of time.
Thank you all for testifying.
That is the end of our hearing.
[Whereupon, at 11:59 a.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Responses of David B. Sandalow to Questions From Senator Bingaman
Question 1. I understand the appeal of a limited number of
communities initially in order to develop good data on consumer needs
and the issues that must be addressed for wider deployment. At the same
time, if the private sector is going to make substantial investments in
these technologies they'll need some certainty of widespread deployment
in the near future. How do we address these seemingly competing
concerns?
Answer. The Administration looks forward to working with Congress
to consider the efficacy and efficiency of these and other measures in
the context of comprehensive energy and climate legislation to protect
our nation from the serious economic and strategic risks associated
with our reliance on oil, to create jobs, and to cut down on the carbon
pollution that contributes to the destabilizing effects of climate
change.
Auto companies continue to make their own decisions and plans
regarding electric vehicle rollouts. Companies that have announced
their plans are focusing initially on certain regions that best suit
their individual needs.
Starting with a smaller number of cities in a targeted deployment
program may help accelerate future efforts to ramp up technology
adoption across the country. By focusing resources, the Department can
work with communities to build a robust team of local leaders that can
communicate and help transfer best practices and lessons learned to
other cities for faster deployment in other cities nationwide. Success
in a limited number of initial communities will then provide confidence
for manufacturers to broaden vehicle deployment to other parts of the
country.
Question 2. Mr. Crane's testimony refers to the Department's
``ambitious'' goals for battery life and cost. Can you give us any
insight on how research is progressing in these areas? Do you believe
the goals are likely to be met in the target time frames?
Answer. Over the past three years, estimates for plug-in hybrid
electric vehicle (PHEV) battery life have improved from 1,000 deep
cycles to more than 2,500, and the estimate of full system cost has
decreased from more than $1,200/kWh to between $700 and $950/kWh, based
on useable capacity of the battery. Recent cost models developed by
Tiax, LLC and Argonne National Laboratory estimate that a Li-ion
battery cost of $300/kWh (the Department of Energy's FY 2014 target) is
within reach.\1\ DOE anticipates that part of the needed cost reduction
will be achieved through high volume production supported by Recovery
Act funding, as well as design improvements from experience. Two
independent sources have estimated that increasing PHEV battery
production from 10,000 to 100,000 batteries per year will result in a
30-40 percent cost reduction.\2\ The remaining cost reduction will be
achieved through the use of higher energy materials, under development
though DOE's research programs, which will lead to smaller, lighter--
and therefore less expensive--systems.
---------------------------------------------------------------------------
\1\ B. Barnett et al, TIAX, PHEV Battery Cost Assessment, DOE
Annual Merit Review, May 19, 2009, http://www1.eere.energy.gov/
vehiclesandfuels/pdfs/merit_review_2009/energy_storage/
es_02_barnett.pdf; P. Nelson et al, ANL, Factors Determining the
Manufacturing Costs of Lithium-Ion Batteries for PHEVs, 24th
International Electric Vehicle Symposium (EVS-24), Norway, May 2009;
Santini et al, ANL, Comparing Four Battery Cost Models, 2001-2009,
Plug-In 2009
\2\ N. Gioia, Ford, Key Issues and Solutions for Mass
Electrification of Transportation, IEEE Vehicle Power and Propulsion
Conference, Dearborn, MI, September 7-11, 2009, http://www.vppc09.org/
P. Nelson et al, ANL, Factors Determining the Manufacturing Costs of
Lithium-Ion Batteries for PHEVs, 24th International Electric Vehicle
Symposium (EVS-24), Norway, May 2009;
---------------------------------------------------------------------------
Responses of David B. Sandalow to Questions From Senator Murkowski
FEDERAL SUPPORT
Question 1. Please provide a summary of the types of federal
support (including spending levels) that were available to electric
vehicles in FY2009 and FY2010.
Answer. The table below shows the Department's fiscal year 2009 and
2010 funds focused specifically on electric vehicles.
In addition, the Advanced Technology Vehicles Manufacturing Loan
Program (ATVM) provides loans to automobile and automobile part
manufacturers for the cost of reequipping, expanding, or establishing
manufacturing facilities in the United States to produce advanced
technology vehicles or qualified components, and for associated
engineering integration costs. This program received $7.5 billion in
appropriations in FY 2009 to support up to $25 billion in ATVM loans.
To date, $8.4 billion in direct loans have been made to four
manufacturers, three of which have been exclusively focused on plug-in
electric and hybrid electric vehicles.
ATVM
Question 2. To the greatest extent possible, please provide a
summary of loans received to date by the Advanced Technology
Manufacturing Program and the level of funding that remain available
for additional loans.
Answer. The Advanced Technology Vehicle Manufacturing Loan program
has made four loans to vehicle manufacturers so far totaling $8.4
billion. $4.2 billion of the credit subsidy remains for future loans
awarded under the Advanced Technology Vehicle Manufacturing Loan
Program.
DEPARTMENT STAFFING
Question 3. A significant amount of work could be required to
implement and administer the programs and plans required by S. 3495.
Please provide an estimate of the number of employees the Department of
Energy would need to hire to fulfill the various sections of this
legislation.
Answer. The Administration looks forward to working with Congress
to consider the efficacy and efficiency of these and other measures in
the context of comprehensive energy and climate legislation to protect
our nation from the serious economic and strategic risks associated
with our reliance on oil, to create jobs, and to cut down on the carbon
pollution that contributes to the destabilizing effects of climate
change.
The Department of Energy recognizes the wide range of activities
and significant reporting requirements included in this bill and
estimates that an additional 10 to 20 full time employees, including
contract specialists, are needed to plan and implement these provisions
by the deadlines specified in the legislation.
BUDGETING
Question 4. If enacted, would any of the programs within this bill
(S. 3495) be priorities for the Administration and the Department of
Energy?
Answer. The Administration looks forward to working with Congress
to consider these and other measures in the context of comprehensive
energy and climate legislation to protect our nation from the serious
economic and strategic risks associated with our reliance on oil, to
create jobs, and to cut down on the carbon pollution that contributes
to the destabilizing effects of climate change.
The Department believes that the programs outlined in this bill
would accelerate the market introduction of electric drive vehicles,
which can significantly reduce our nation's dependence on petroleum and
reduce greenhouse gas emissions.
LOAN GUARANTEES
Question 5. Section 302 would authorize $50 million for loan
guarantees for advanced battery purchases. As credit subsidy, what
amount of loan guarantees would that funding cover, if appropriated?
Answer. The credit subsidy cost will depend on the terms and
conditions and other project specific characteristics of these loans.
This program has not yet been funded, nor are regulations in place
outlining standard procedures.
R&D PROGRAM
Question 6. Section 201 would establish a robust research and
design program for electric vehicles at the Department of Energy. Are
there any new authorities in this section that the Department does not
currently have?
Answer. The Administration looks forward to working with Congress
to consider these and other measures in the context of comprehensive
energy and climate legislation to protect our nation from the serious
economic and strategic risks associated with our reliance on oil, to
create jobs, and to cut down on the carbon pollution that contributes
to the destabilizing effects of climate change.
Section 201 contains no new authorities for the Department of
Energy (DOE). Nonetheless, although it includes a number of activities
currently funded through DOE's Vehicle Technologies Program, there are
several for which DOE has not previously prioritized resources. For
example, R&D activities related to ``the benchmarking and assessment of
open software systems using nationally established evaluation
criteria'' (section 201(a)(2)(B)) and ``identify[ing] possible uses of
a vehicle battery after the useful life of the battery in a vehicle has
been exhausted'' (with demonstration projects and grants for the same)
(section 201(b) and (c)) have not been emphasized previously.
TAX CREDITS VS. GRANTS
Question 7. S. 3495 contains a tremendous amount of grant funding,
and it is my understanding that tax provisions could be added to it
during floor debate. Do you believe that one of those forms of support
is more appropriate or more relevant for the advancement of electric
vehicles? Is it important to maintain a mix between tax credits and
federal grants?
Answer. The Department of Energy supports incentives to support
initial market introduction and subsequent market penetration of
advanced technology vehicles. Tax credits haven proven effective in
encouraging consumers and private-sector fleets to choose advanced
vehicles, and they also can encourage additional private-sector
investment in the technology. Federal grants to promote technology
deployment have been effective for tax-exempt entities, such as State,
local, and tribal governments. Federal grants also encourage private-
sector entities--both those with minimal tax burdens as well as large
and small companies that seek to offset the initial cost of vehicle
and/or infrastructure purchases.
PACE OF DEPLOYMENT
Question 8. Hybrid vehicles debuted a decade ago, are popular with
consumers, and currently account for about three percent of the light
duty vehicle market. Is it reasonable to expect that this legislation--
or any other legislation--will initiate a tipping point to allow
electric vehicles to deploy at a much faster rate?
Answer. Legislation that facilitates electric vehicle (EV)
deployment in significant volumes can increase production rates of
components unique to EVs, such as batteries, power electronics, and
specialized electric drive components. Relatively modest increases in
production volumes can result in significant cost reductions and help
overcome the current price disadvantage these vehicles have today.
Given the national priorities of ending dependence on petroleum and
reducing greenhouse gas emissions, as well as fuel cost volatility,
such legislation could be an important step in deploying electric drive
vehicles at a much faster rate. The Administration looks forward to
working with Congress to consider the efficacy and efficiency of these
and other measures in the context of comprehensive energy and climate
legislation to protect our nation from the serious economic and
strategic risks associated with our reliance on oil, to create jobs,
and to cut down on the carbon pollution that contributes to the
destabilizing effects of climate change.
COST SHARE
Question 9. S.3495 requires at least a 20 percent non-federal cost
share.
a. Do you agree with this level of cost sharing?
b. Do you believe the Secretary should have authority to
reduce the cost share below 20 percent, or eliminate it
completely? If so, please provide an example of when that
authority may prove necessary and appropriate.
c. Could a higher cost share (greater than 20 percent) help
ensure that only the most financially sound communities are
selected, and thereby lead to an even greater deployment of
electric vehicles and infrastructure once federal funds have
ended?
Answer. Cost-sharing is an important mechanism for leveraging
federal funds and ensuring that the government's partners focus on
topics relevant to the market. The costshare requirements set forth in
Section 988 of the Energy Policy Act of 2005 (minimum of 20 percent
cost share for R&D projects and minimum of 50 percent cost share for
demonstration and commercialization projects) have proven effective in
meeting these objectives. Providing the Secretary the authority to make
decisions regarding cost share on a case-by-case basis allows the
flexibility to ensure program objectives are met (for example, adequate
participation among State, local, and tribal governments and geographic
diversity of applicants). Section 988 of the Energy Policy Act of 2005
provides the Secretary this decision-making authority.
CHARGING UNITS
Question 10. The Administration recently announced it would use
stimulus funds to pay for up to 4,400 charging units, worth up to
$2,000 each, for the Chevy Volt. Why was just one vehicle chosen? Will
any others receive similar support?
Answer. The provision of 4,400 residential charging units to
support deployment of the Chevrolet Volt Extended Range Electric
Vehicle (EREV) is part of Coulomb Technologies' ``ChargePoint America''
program, one of eight cost-shared projects competitively-selected for
award under the Department's Transportation Electrification effort,
funded by the Recovery Act.
In addition to the Chevy Volt, the Coulomb project will provide
infrastructure to support electric drive vehicles from Ford and smart
USA and cover nine major metropolitan areas. Another Transportation
Electrification grant, awarded to ECOtality North America for ``The EV
Project,'' will provide free charging units to purchasers of the Nissan
Leaf electric vehicle and the Chevy Volt extended range electric
vehicle in seven metropolitan areas. In total, the eight Transportation
Electrification awards will result in the coordinated deployment of
nearly 7,000 electric-drive vehicles and over 16,000 Level 2 charging
units in residential, commercial, and public locations.
CHARGING STATIONS
Question 11. How many charging stations do you believe will need to
be installed for every electric vehicle put on the road?
Answer. A variety of factors will determine the optimal number of
charging stations per electric vehicle, including the vehicle type
(light-duty, medium-duty, or heavyduty), powertrain configuration
(electric vehicle, plug-in hybrid electric vehicle, or extended-range
electric vehicle), charger capability (standard Level 2 charging, or
Level 3 ``fast'' charging), and charger location (residential,
commercial, or public). The Department of Energy (DOE) believes that
initially, Level 2 residential chargers (one per vehicle) will be the
most important to the light-duty fleet, as the majority of these
electric drive vehicles will likely charge during overnight hours where
the vehicles are domiciled.
Through the electric drive vehicle demonstration and deployment
projects funded through the Recovery Act's Transportation
Electrification program, DOE will collect and analyze a comprehensive
data set regarding electric drive vehicle usage patterns and charging
infrastructure use for a variety of vehicle applications. This data
will provide valuable information about the appropriate mix of charging
infrastructure to support the large-scale deployment of all types of
electric drive vehicle technologies.
Ultimately, the required number of publicly-available charging
points will be a fraction of the number of electric drive vehicles on
the road. It is anticipated that these public charging points will
supplement residential charging.
CHARGING TIMES
Question 12. Right now, most gas-powered vehicles can be fueled in
less than 10 minutes, and then drive for hundreds of miles. A drawback
for electric vehicles is that they take hours to fully recharge. Even
quick charging, which reduces battery life, takes at least 20 minutes.
Can you discuss any changes to charging times that you see over the
next several years?
Answer. Without a scientific breakthrough, significant reductions
in electric vehicle charging times in the next several years are
unlikely, given current operational constraints for both battery
technologies and charger capabilities. However, the Department of
Energy anticipates upcoming electric drive vehicles and charging
infrastructure will be sufficient to meet the requirements of the
majority of vehicle owners. According to the 2009 National Household
Travel Survey, American drivers average 41.4 miles of daily driving. A
quarter of drivers travel more than 50 miles per day (75th percentile =
48.8 miles driven per day). One in ten drivers exceed 85 miles
travelling per day (90th percentile =85.3 miles driven per day)--less
than the driving range of all upcoming highway-capable electric
vehicles. Additionally, the market introduction of plug-in hybrid
vehicles and extendedrange electric vehicles will not have a range
limitation. For example, the Chevy Volt has a 40-mile all-electric
range but also has a gasoline-powered rangeextender that provides a
total vehicle range of up to 350 miles, allowing consumers to operate
their vehicles in all-electric mode during the majority of their trips,
while enabling much longer travel distances when required.
1990S VS. TODAY
Question 13. In your book ``Freedom from Oil,'' you note that
General Motors' EV-1 had a range of 80 to 140 miles and was popular
with consumers. That's about what we expect of electric vehicles today,
and yet, General Motors ultimately pulled the plug on the EV-1 program
due to what you describe as ``inadequate'' overall buyer interest. I
understand that the EV-1 was leased, and the Volt and Leaf will be
commercially produced, but can you explain what else has changed to
make the deployment of electric vehicles a sure thing today? How have
the failures of the 1990s been resolved?
Answer. Better battery technology is the key difference between
today's electric drive vehicles and the electric vehicles (EVs) of the
1990s. Initially, the EV-1 used lead-acid batteries with limited energy
density, which resulted in a two-passenger vehicle, relatively short
battery life, and a long recharging time. In contrast, today's lithium-
ion battery technology allows the Leaf, Volt, and other EVs to
accommodate 4-or 5-passengers with a warranty on battery life and much
faster charging times.
BUILDING CODES
Question 14. The new International Green Construction Code from the
International Code Council has provisions addressing vehicle charging,
as does the National Electrical Code. Does Section 103(b) of S.3495
anticipate that the Secretary of Energy could adopt private sector
model codes that provide for the efficient and safe charging of
electric vehicles, rather than having DOE develop its own code?
Answer. The Department of Energy (DOE) does not author or adopt
model code to address vehicle charging infrastructure; rather, it plays
a supporting role in the development and adoption of model vehicle-and
infrastructure-related codes and standards. DOE has extensive
experience working with code development organizations and standards
development organizations, including the International Code Council and
others, to facilitate consensus around the development and adoption of
these codes. DOE also has experience in training code officials and
sharing best practices for the implementation of codes and standards
for vehicles and infrastructure that have been adopted by local
authorities having jurisdiction (AHJs). DOE supports the adoption of
private sector model codes for safe electric vehicle charging and would
work with code development organizations to modify existing codes if
and where appropriate.
TECHNOLOGY NEUTRALITY
Question 15. As introduced, S. 3495 would authorize nearly $6
billion for electric vehicle technologies. How could this substantial
increase in funding affect the development of other technologies, such
as natural gas, hydrogen, or more efficient ICE vehicles, which receive
far less funding each year?
Answer. The Administration looks forward to working with Congress
to consider these and other measures in the context of comprehensive
energy and climate legislation to protect our nation from the serious
economic and strategic risks associated with our reliance on oil, to
create jobs, and to cut down on the carbon pollution that contributes
to the destabilizing effects of climate change.
The Department of Energy continues to pursue a portfolio of
advanced transportation technologies that can reduce petroleum
consumption and mitigate greenhouse gas emissions, and electric drive
technologies are a critical component of that portfolio. Several
electric drive vehicle configurations, notably hybrids and plug-in
hybrids, will still require highly-efficient, low-emissions internal
combustion engine technology. Advanced combustion engines can
significantly increase vehicle fuel economy and are an important part
of a hybrid electric system. Continued development is essential to
further increase the fuel efficiency of hybrid electric vehicles.
Similarly, alternative fuel options such as biofuels will continue as
important options for internal combustion engine operation and
complement the emissions reductions possible through vehicle
electrification.
Hydrogen fuel cell vehicles share electric drive component
technologies, so advancements in electric drive systems also support
and advance the development of fuel cell vehicles.
Question 16. By promoting one technology so greatly, could we
inadvertently decentivizes the development of cheaper ways to reduce
fuel consumption and greenhouse gas emissions, such as advanced
internal combustion engines that achieve significant increases in fuel
economy?
Answer. The Department of Energy continues to pursue a portfolio of
advanced transportation technologies that can reduce petroleum
consumption and mitigate greenhouse gas emissions, and electric drive
technologies are a critical component of that portfolio. Electric drive
vehicles include hybrids and plug-in hybrids that use biofuel and
renewable electricity, full electric vehicles recharged with renewable
electricity, and fuel cell vehicles that use renewable hydrogen. Other
advanced technologies such as vehicle lightweighting and combustion
engines can significantly increase vehicle fuel economy and are an
important part of a hybrid electric system. Continued development is
essential to further increasing the fuel efficiency of hybrid electric
vehicles.
Question 17. By promoting one technology much more than others, do
we risk freezing the industry's investments in fuel cell and other
alternative technology vehicles?
Answer. No. Although the Department of Energy places some emphasis
on electric drive technologies, we do not feel that we risk freezing
industry investments in fuel cells or other advanced vehicle
technologies. Working together with industry partners, the Department
continues to pursue a portfolio of near-and long-term advanced
transportation technologies that can reduce petroleum consumption and
mitigate greenhouse gas emissions, and electric drive technologies are
a critical component of that portfolio. Electric drive vehicles include
hybrids and plug-in hybrids that use biofuel and renewable electricity,
full electric vehicles recharged with renewable electricity, and fuel
cell vehicles that use renewable hydrogen. These variations of electric
drives share component technologies, so advancements in plug-in hybrid
power electronics, for example, also support and advance the
development of fuel cell vehicles. Similarly, advanced technologies
such as vehicle lightweighting and advanced combustion engines can
significantly increase vehicle fuel economy and are an important part
of a hybrid electric system. Continued development is essential to
further increasing the fuel efficiency of hybrid electric vehicles.
UTILITY PLANNING
Question 18. Section 301 requires each electric utility to prepare
``a plan to support the use of plug-in electric vehicles'' within two
years.
What sort of resource burden would that planning process
impose on utilities that do not receive a waiver?
How much would a typical planning process cost, and how
could that affect rates if cost recovery is allowed?
Would it make more sense to require only utilities in areas
that are expected to have a significant near-term increase in
PHEVs, such as the communities selected for the targeted
deployment program, to undertake this planning?
Answer. The Administration looks forward to working with Congress
to consider the efficacy and efficiency of these and other measures in
the context of comprehensive energy and climate legislation to protect
our nation from the serious economic and strategic risks associated
with our reliance on oil, to create jobs, and to cut down on the carbon
pollution that contributes to the destabilizing effects of climate
change. The utility planning activity required in Section 301 is a
useful mechanism for gauging the preparedness of the electrical grid to
accommodate a national objective that amounts to a revolutionary
movement in our transportation sector. It will enable utilities to make
a rational assessment of how they, as critical partners in this
transformation, will need to react in the coming years.
The resource burden for such a planning process as well as the cost
will be highly variable, as will the effects on electricity rates. The
cost of developing such plans will be dependent on the in-house
resources of each utility, how each utility and its respective
regulatory agency (Public Utility Commission, City Council, Co-op
Board, etc.) perceives the requirement, their own impression of the
state of their infrastructure, and the likelihood of PHEV penetration
in their territory. In many cases, the bulk of the work required to
develop the plan may be conducted by the respective engineering and
business operations personnel at the utility, reducing the cost to
produce the work. The effect of producing the plan on electricity rates
will be determined primarily by the regulatory body.
It may be more cost efficient in the near-term to limit the
applicability of the planning requirement initially to those utilities
selected for the targeted deployment program. However, the greatest
value of the planning requirement (i.e. the ability to assess
preparedness for PHEVs on a national level) is preserved by not
limiting the requirement to a few select areas.
TARGETED DEPLOYMENT PROGRAM
Question 19. A targeted deployment program could help deploy
vehicles and infrastructure within communities, but it would do little
to assist with long-distance driving. What do you think can and should
be done to facilitate intercity road trips in electric vehicles?
Answer. The Department of Energy (DOE) anticipates the majority of
trips in electric vehicles (EVs) over the next several years will be
short, local trips well within the vehicle's range capability. Initial
deployment of charging infrastructure will occur in cities and
metropolitan areas with high concentrations of consumers whose needs
will be met by such vehicles. DOE expects that to facilitate longer
intercity trips, Level 3 ``fast'' charging infrastructure will be
deployed along routes connecting cities, establishing a network of EV
corridors between electric transportation hubs.
Several of the projects funded under the Transportation
Electrification Recovery Act program target the deployment of charging
infrastructure to demonstrate the viability of this hub/corridor
system. These projects will place Level 3 ``fast'' chargers along
corridors connecting Portland, Oregon and Seattle, Washington; Phoenix
and Tucson, Arizona; and Chattanooga, Knoxville, and Nashville,
Tennessee. Additionally, the availability of plug-in hybrid electric
and extended range EVs will accommodate the needs of consumers who
require longer travel distances prior to the full, nationwide
deployment of EV charging infrastructure.
TARGETED DEPLOYMENT PROGRAM
Question 20. As drafted, I am concerned that communities in my home
state of Alaska would have a difficult time being selected for
participation in the targeted deployment program. This is driven in
part by the current lack of electric vehicle manufacturing, retailing,
and infrastructure development in Alaska, and also by the fact that
some manufacturers have already selected initial retail markets for
their electric vehicles.
S.3495 requires communities to be selected for the targeted
deployment program within one year of enactment of this Act.
Let's assume this bill is enacted in September of 2010. In how
many cities will electric vehicles be available for retail sale
in one year after that date (hypothetically September 2011)?
How many electric vehicles do you expect to be commercially
produced and available for sale in the United States next year?
Two years from now? Five years from now?
Chevrolet has chosen Washington, D.C., Michigan, and
California as its initial retail markets for the Volt. Nissan
has reportedly chosen Seattle, Oregon, Tennessee, Phoenix,
Tucson, and San Diego as part of the EV Project. Given that
electric vehicles will be in limited commercial production for
at least several more years, won't these cities and states have
a significant advantage over others for selection to
participate in the targeted deployment program?
How could a state like Alaska overcome Section 106's
requirements for community deployment plans to include
``documentation'' of 1) ``plug-in electric drive vehicle
manufacturers and retailers'' and 2) ``third-party providers of
residential, private, and publicly available charging
infrastructure or services''?
Answer. Most major auto manufacturers have publicly announced plans
to sell vehicles with some type of electric-drive powertrain in the
next several years. However, only a few manufacturers have named
specific cities for their vehicle roll outs, and it is not clear which
other cities will join those already named. Based on public
announcements and according to the Department of Energy's (DOE)
analysis of potential market introduction and penetration scenarios, we
estimate that within a year, the U.S. market for electric and plug-in
hybrid electric vehicles will be between 25,000 and 85,000 vehicles.
Within two years, DOE anticipates the market for these vehicles will be
between 60,000 and 300,000 vehicles.
Within five years, DOE expects between 200,000 and 1 million
electric and plugin hybrid electric vehicle sales annually. These
estimates represent the range of the most likely electric-drive vehicle
market penetration scenarios, based on DOE analysis taking into account
projected consumer demand as well as the ability of automobile
manufacturers to scale up vehicle production.
Although cities that have been announced as part of manufacturers'
existing vehicle introduction plans would seem to have an advantage,
the targeted deployment program requires significant commitment from
the cities in order to participate. A city committed to taking the
necessary steps to facilitate electric drive vehicle introduction will
attract vehicle manufacturer participation. In fact, even though
specific rollout cities have been included in public announcements, we
understand auto manufacturer intent is to sell vehicles nationwide. If
states such as Alaska express interest in electric vehicle deployment,
we expect that the manufacturers will want to meet that need and the
market demand.
RAW MATERIALS
Question 21. I've often expressed concern that if we do not develop
our own resources, we risk trading our dependence on foreign oil for a
similarly devastating dependence on foreign materials. Do you share
that concern? As the United States government looks at ways to promote
electric vehicles, how would you recommend addressing it?
Answer. The Department of Energy (DOE) does not expect electric
vehicle (EV) promotion and commercialization will lead to a devastating
dependence on foreign materials. Currently, the United States consumes
378 million gallons of gasoline per day\3\, equivalent to a weight of
about 1 billion kilograms (kg) per day. Although some resources EVs use
are considered valuable, they cannot be consumed at the same magnitude
as petroleum.
---------------------------------------------------------------------------
\3\ ``Petroleum Basic Statistics'', U.S. Energy Information
Administration, http://www.eia.doe.gov/basics/quickoil.html
---------------------------------------------------------------------------
Lithium is one material critical for energy-dense batteries used in
EVs. One kg of lithium is required to make a battery that would propel
a vehicle 25 miles. One gallon (or 2.8 kg) of gasoline can also be used
to propel a vehicle 25 miles. However, the battery can be recharged
another 3,000 to 5,000 more times to travel that same 25 miles, and
once the battery has reached the end of its life, the lithium can be
recovered to produce a new battery for use once again.
Today, the major sources of lithium are salt brines in South
America (in Chile, Argentina, Bolivia), but there are also U.S. brine
sources, and there are rock sources throughout the world, including in
United States, Europe, China, and Australia. Current International
Energy Agency estimates show no serious lithium supply problem until
more than 50 percent of the world's vehicle fleet is electrified. (Per
IEA Blue Scenario for Carbon Reduction).
Rare earth materials such as Neodymium, which is used in magnets
for EV motors, also could be seen as limiting EV introduction. The
Government Accountability Office has recognized that the future
availability of some rare earth elements, including Neodymium, is
largely controlled by Chinese suppliers\4\. DOE has also recognized
this issue and is developing its first-ever strategic plan concerning
rare earth metals\5\. Depending on production and market demands, it is
possible that a market shortage of these materials could exist in the
2012-2015 timeframe. However, similar to batteries, each EV would
require only a limited amount of these materials to be effective for
the life of the vehicle, and there are potential U.S. resources for
rare earth materials as well. Furthermore, induction motors can be made
that do not use any permanent magnets or rare earth materials.
Currently the Tesla Roadster and Nissan Leaf EV use this type of motor
design.
---------------------------------------------------------------------------
\4\ ``Rare Earth Materials in the Defense Supply Chain'', U.S.
Government Accountability Office, GAO-10-617R
\5\ ``DOE Announces RFI on Rare Earth Metals'', May 6, 2010, http:/
/www.energy.gov/news/8945.htm
---------------------------------------------------------------------------
LOCAL LEVEL GRID IMPROVEMENTS
Question 22. During the committee's electric vehicle hearing on the
22nd, a Senate-wide alert went out asking officers to conserve energy
from noon to 7 pm. According to the alert, ``Our local utility
provider, PEPCO, is asking its customers to conserve electricity due to
intense heat and humidity. This peak demand event may lead to possible
power disruption in the DC area if electrical demand exceeds
transmission capacity.''
a. Can you describe the impact this sort of alert would have
on consumers' ability to re-charge their vehicles during
daytime hours?
Answer. Electric plug-in vehicles will increase the load on the
grid whether they are charged on-peak or off-peak. However, power
companies have a variety of tools at their disposal to reduce demand
during peak periods. Tools include options such as (1) time-varying
rates (e.g., critical peak pricing) which are designed to encourage
consumers to switch their electricity use from on-to off-peak periods
and (2) load management programs (e.g., air conditioner cycling) and
devices (e.g., smart thermostats) which are designed to curtail power
consumption during peak periods. Power companies will be interested in
using these tools to manage re-charging schedules for plug-in vehicles.
Options include: (1) offering special time varying rates for charging
stations or owners of plug-in vehicles to encourage them to charge
during off-peak periods and (2) offering load management devices to
charging stations and owners of plug-in vehicles to reduce electricity
charging during peak periods.
b. Can you describe the local level grid improvements that
would need to be undertaken in order to ensure that sufficient
transmission capacity exists to handle regular power demand and
any additional demand from electric vehicles?
Answer. The type of grid improvements that will be needed in the
future to accommodate plug-in vehicles depends on the number and
concentration of vehicles and the charging patterns of consumers. For
example, it is possible that little to no improvements will be needed
until millions of vehicles are on the road, or until thousands of
vehicles are concentrated in certain electric distribution service
areas. Even in these cases, if owners charge their vehicles at night or
during other off peak periods exclusively, analysis indicates that
existing transmission and distribution facilities may be sufficient to
handle the load if and until there are tens or hundreds of millions of
vehicles.
However, integration with the grid would be enhanced, and the
potential impacts on the electric system reduced, if grid
infrastructure improvements were made alongside the development of the
markets for plug-in vehicles. For example, vehicles can take many hours
to charge at typical residential outlet voltages (e.g., 120v).
Equipping charging stations with higher voltage plugs (e.g., 220v) can
reduce charging times and make it easier for consumers to ``refill
their tanks.'' Other useful electric distribution upgrades include
smart systems that enable grid operators to be aware of where and when
vehicles are charging so that steps can be taken to reduce demand
during peak periods. Also, deployment of advanced metering
infrastructure can make it easier for power companies to apply time-
varying rates that encourage owners of plug-in vehicles to charge
during offpeak periods. In the longer term, smart distribution systems,
equipped with real time controls and automated operations that can
safely accommodate two-way flow of power, could make use of the storage
capacity embodied in the battery packs on-board electric vehicles to
use to meet electric system needs for local voltage and other
requirements.
Response of David B. Sandalow to Question From Senator Dorgan
Question 1. Will DOE please submit their analysis of the National
Research Council's Plug-in Hybrid Electric Vehicles Study for the
record?
Answer. The Department's analysis of the National Academy of
Sciences' Plug-in Hybrid Electric Vehicles (PHEV) Study is provided
below.
SUMMARY
The National Academy of Sciences' (NAS) report significantly
overestimates both the current and future cost of battery technology.
Unfortunately, this error results in a concurrent underestimation of
market penetration and realized benefits cited in the report. There is
referenced data (partial list below), as well as a wealth of anecdotal
and intuitive examples, indicating that the NAS's assumed cost is
inaccurate. The NAS was informed of this inaccuracy but chose to go to
print without revision.
The NAS overestimated the current cost of lithium-ion
batteries, overstating the cost of PHEV-10 batteries, and
significantly overstating the cost of PHEV-40 batteries for
high volume production.
Future cost reductions will be greater than those projected
in the NAS study. Specifically, NAS assumes a 43 percent cost
reduction by 2030 from a current estimated cost of $1750/kWh,
whereas DOE estimates that a >60 percent cost reduction is
likely from a current estimated cost of $800/kWh.
Current Battery Costs
The NAS estimates of the current cost of PHEV-10 batteries ($1650/
kWh usable) and PHEV-40 batteries ($1750/kWh usable) are unreasonably
high.
Typically, $/kWh cost is lower for higher energy batteries,
such as for the PHEV-40. As the report states, additional
energy can be added with relatively small cost increment by
making electrodes thicker. A PHEV-40 battery, with four times
the energy of a PHEV-10 battery, is estimated to cost roughly
twice as much as a PHEV-10 (Kalhammer, 2009). Thus, a PHEV-40
battery will have a much lower $/kWh cost than a PHEV-10
battery.
Press reports describe the expected cost of the Chevy Volt
PHEV-40 battery at approximately $8,000. This is equivalent to
$1,000/kWh of useable energy, much lower than the NAS estimates
of $1750/kWh of useable energy.
Industrial developers of PHEV-10 batteries, under existing
R&D contracts with U.S. Advanced Battery Consortium (USABC),
are required to develop battery cost estimates, using
standardized USABC cost models. These developers have estimated
costs of $800-$1000 per usable kWh for PHEV-10 batteries at a
production level of 100,000/year.
A number of May 2010 media reports have indicated the Nissan
Leaf battery as costing as little as $375/kWh. Although this
cost is lower than current DOE estimates, the figure does
correlate with announced Leaf pricing of $32,780 and an
announced battery size of 24kWhr.
Future Cost Reduction Potential
Commercial 18650-size lithium-ion cells (used primarily in battery
packs for laptop computers) currently cost $200-$250/kWh (Barnett,
2009). The cost of the battery pack ranges from $400/kWh to $700/kWh
based on nameplate capacity.
High volume production of these small lithium ion battery
cells is a key enabler for achieving these low costs.
These batteries use cobalt oxide cathode material, which is
more expensive than the materials proposed for PHEV batteries.
They also have small Ah capacity per cell, and thus are more
expensive than larger-capacity PHEV cells would be at
comparable production levels.
Independent analysis conducted by TIAX, LLC (Barnett, 2009)
indicated a future battery manufacturing cost of $364-$581/kWh
useable energy for a PHEV-20 battery pack for the four leading
battery chemistries being developed today.
Cost Reductions due to Manufacturing Efficiency Gains and Design
Optimization
The NAS report estimates that the cost of PHEV batteries can
be reduced by 25 percent during 2010-2015 with ``increased
production and learning by doing''.
--A major automotive OEM has estimated that PHEV battery costs
could drop 20-40 percent immediately with volume
manufacturing of 75,000-100,000/year (Gioia, 2009).
Multiple projects are underway to establish this level of
battery manufacturing (battery manufacturing awards funded
under the American Recovery and Reinvestment Act).
--In addition, battery costs are estimated to reduce ?3 percent/
year with technology improvements (Gioia, 2009).
--Using the OEM estimates given above (a 30 percent reduction due
to volume manufacturing, and 3 percent/year technology
improvement), costs would be expected to reduce by 40
percent during the same period.
Lithium-ion battery costs are projected to be $600/kWh
useable for PHEV-10, and $300-400/kWh for PHEV-40, based on
battery manufacturing cost studies conducted by Argonne
National Laboratory (Nelson, 2009; Santini, 2009)
REFERENCES
B. Barnett et al, TIAX, PHEV Batttery Cost Assessment, DOE
Annual Merit Review, May 19, 2009, http://www1.eere.energy.gov/
vehiclesandfuels/pdfs/merit_review_2009/energy_st orage/
es_02_barnett.pdf
P. Nelson et al, ANL, Factors Determining the Manufacturing
Costs of Lithium-Ion Batteries for PHEVs, 24th International
Electric Vehicle Symposium (EVS-24), Stavanger, Norway, May
2009
Santini et al, ANL, Comparing Four Battery Cost Models, 2001-
2009, Plug-In 2009
N. Gioia, Ford, Key Issues and Solutions for Mass
Electrification of Transportation, IEEE Vehicle Power and
Propulsion Conference, Dearborn, MI, September 7-11, 2009,
http://www.vppc09.org/
F. Kalhammer, EPRI, 24th International Electric Vehicle
Symposium (EVS-24), Stavanger, Norway, May 2009
Nissan media reports: http://www.thetruthaboutcars.com/
nissan-leaf-batterypacks-break-the-400kwh-barrier/
Responses of David B. Sandalow to Questions From Senator Cantwell
Question 1. The Promoting Electric Vehicles Act (S. 3495) contains
numerous provisions designed to provide grants to stakeholders, for
purposes of scaling up electric vehicle and infrastructure deployment.
I support this general effort. However, we are currently facing very
tight fiscal times, and in addition to grants, there are other means of
providing Federal financing to help deploy these technologies at scale,
in a manner that may prove even more cost-effective to taxpayers. In
particular, how does DOE intend to use programs already at its
disposal--such as the loan guarantee program--to help scale-up EV
infrastructure deployment? This seems like something DOE could start
moving on today, rather than waiting for future appropriations and
legislation.
Answer. The Advanced Technology Vehicles Manufacturing (ATVM) Loan
Program provides direct loans to support the development of advanced
technology vehicles and associated components. The ATVM Loan Program
has closed loans totaling $8.4 billion with four advanced technology
vehicle manufacturers. The program received a total of $7.5 billion in
appropriated funds for the cost of ATVM loans. We expect to complete
the investment of the funds by the end of FY 2010.
Section 1703 of Title XVII of the Energy Policy Act of 2005 (EPAct)
identifies ten discrete categories of projects that are eligible for
federal loan guarantees, including production facilities for fuel
efficient vehicles, including hybrid and advanced diesel vehicles. The
FY 2011 budget request includes $500 million to support between $3--5
billion in loans for renewable energy and end-use energy efficiency
projects.
Question 2. Are there any barriers to doing so (perhaps barriers
against projects that span multiple sites, as a result of OMB's
existing rules)?
Answer. The Advance Technology Vehicle Manufacturing (ATVM) Loan
Program and the Title XVII Loan Guarantee Program support development
of advanced technology vehicles. The Advanced Technology Vehicles
Manufacturing (ATVM) Loan Program provides direct loans to support the
development of advanced technology vehicles and associated components.
In addition, Section 1703 of Title XVII of the Energy Policy Act of
2005 (EPAct) identifies ten discrete categories of projects that are
eligible for federal loan guarantees, including production facilities
for fuel efficient vehicles, including hybrid and advanced diesel
vehicles.
Question 3. If there are any bureaucratic barriers, or a perceived
lack of existing statutory authority that prevents DOE from using
either the loan guarantee program or advanced technology vehicles
manufacturing program (ATVM, created under Section 136 of the Energy
Independence & Security Act of 2007) to help finance EV infrastructure
deployment, would you provide relevant legislative language to the
Committee to provide this explicit authority?
Answer. The Advance Technology Vehicle Manufacturing (ATVM) Loan
Program and the Title XVII Loan Guarantee Program support development
of advanced technology vehicles. The Advanced Technology Vehicles
Manufacturing (ATVM) Loan Program provides direct loans to support the
development of advanced technology vehicles and associated components.
In addition, Section 1703 of Title XVII of the Energy Policy Act of
2005 (EPAct) identifies ten discrete categories of projects that are
eligible for federal loan guarantees, including production facilities
for fuel efficient vehicles, including hybrid and advanced diesel
vehicles.
Question 4. Accelerating the deployment of electric vehicles
requires a number of moving pieces of policy to come together at once,
and Sen. Dorgan's legislation is an admirable effort in this regard.
One of the components of particular interest to me is our nation's
evolving smart grid policy. As you are aware, members of this Committee
and I had a critical role in crafting Title 13 of the Energy
Independence and Security Act of 2007, which laid down the parameters
for DOE's smart grid investment grant and regional demonstration
programs, which are currently underway. Meanwhile, the standards-
setting process is also currently unfolding at NIST, with FERC expected
to soon take them up. What is DOE doing to ensure standard and
cybersecure communications protocols for EV's and the combination of
public and private infrastructure expected to provide charging services
for consumers?
Answer. Two DOE program offices, the Offices of Electricity
Delivery and Energy Reliability (OE) and Energy Efficiency and
Renewable Energy (EE), are concerned with EV charging infrastructure,
and are coordinating in the effort managed by the National Institute of
Standards and Technology (NIST) on the development of communication
protocols for EVs. EE, through its Vehicle Technologies Program,
focuses on the vehicle itself and the methods for provisioning it with
energy, and OE focuses on the vehicle-to-grid interface and the
attendant reliability, security and market aspects of EVs. Development
of communications protocols for EVs is taking place within Priority
Action Plan 11 (PAP 11), by a working group named ``Interoperability
Standards to Support Plugin Electric Vehicles''. DOE and its national
lab partners are participating directly in the working group, as are
the critical standards organizations, namely SAE International (Society
of Automotive Engineers) and IEC (International Electrotechnical
Commission). Standards on the informational aspects of the vehicle-to-
grid interface are expected to be ready for consideration under the 39
FERC rulemaking process established under EISA 2007 early in calendar
year 2011.
Question 5. There are certain analogies that exist with respect to
telecom and EV infrastructure deployment policies. That is, consumers
can expect to drive their EV's outside their home utility's service
territory, just as when ``roaming'' on a cell/wireless network. In your
view, are utilities equipped to deal with the associated data-
management and billing challenges, given the current state of the
electric grid and its communications capabilities? What role should
consumers have in choosing the kind of EV-related charging services
they would like to purchase?
Answer. At existing capacities and current configurations, the
electric grid and telecommunications infrastructures are not currently
able to provide analogous services to EV owners as those that are
currently available to users of cell/wireless networks. However, such
services do not appear to require the invention of new technologies.
What is needed is investment in existing technologies and equipment and
the development of new designs and systems integration efforts that can
detect charging and re-charging, and bill owners of plug in vehicles,
enabling them to ``re-charge'' while roaming among electric utility
service territories. These new designs need to include smart grid
technologies, tools, and techniques, including advanced sensors and
controls, distribution automation systems, and advanced metering
infrastructure.
With regard to data management and billing systems, electric
vehicles do not resemble any other electric appliance so it is not
surprising that existing data management and billing systems are not
able to readily handle this type of application. However, it would not
be a major technical hurdle to develop data management and billing
systems to accommodate large number of electric vehicle roaming and
recharging in multiple electric service territories. What is needed is
a level of demand that encourages power companies or other entities to
invest in the development and deployment of such systems.
Consumers will likely play a major role in the type of charging
services they receive. Electric vehicle markets and consumer acceptance
have never been tested on a large scale. Manufacturers have interest
and incentive in conducting extensive market research to determine
consumer likes and dislikes, not only about the vehicle themselves but
about the other equipment involved in owning and operating vehicles. In
addition, no one knows how this market will develop. It is possible for
there to be a competitive market in the provision of charging services
to consumers. If this turns out to be the case, then competitive
advantage will require providers to involve and cater to the needs and
desires of consumers for charging services.
Question 6. One of the potential advantages of EV deployment--
depending on a number of other regulatory variables--is the ability to
leverage them for distributed storage, in manner that could assist in
evening out supply/demand on the grid, enhancing the economics of
intermittent generation and load shifting. I am aware that DOE is
currently working on an energy storage roadmap.
To what extent will the roadmap provide us with guidance on the
economic and efficient integration of EVs with the existing power grid?
Answer. The Department is developing a comprehensive energy storage
strategy by mapping system operational needs of stability control,
frequency regulation, ramping control, and bulk energy management to
the relevant and appropriate storage technology characteristics. In
finalizing this strategy for energy storage, and in conjunction with
other Departmental planning activities for grid storage, the Department
is focused on providing an integrated perspective on both
mobileplatform storage technologies and the stationary grid energy
system.
The value of any energy storage technology derives from the
operational needs of the system, and this value will be best realized
when the functional characteristics of the storage technology are
matched to the characteristics of these operational needs. This pairing
of technology characteristics to system requirements becomes more
complicated for instances such as EV batteries where the primary
function is something other than grid storage. Dual use is a clear
possibility, but the tradeoffs between primary vehicle requirements,
secondary grid management requirements, and storage technology
characteristics must be well understood and carefully considered from
scientific, technical and economic perspectives so that the most
effective and economically beneficial uses of the storage devices are
enabled.
DOE is currently investing $110 million in RD&D specifically
focused on mobile platform applications, which is complemented by
additional funding for storage activities ranging from basic science to
commercial scale demonstrations. This is coordinated through an on-
going agency-wide energy storage working group, which ensures that
challenges ranging from basic science to technology application are
well understood across the Department.
Question 7. S.3495 provides loan guarantee support for the
aggregate purchase of batteries, solely for stationary applications. In
your view, is there a reason why this provision should be limited to
stationary applications, rather than more inclusive of mobile
applications that may emerge as the smart grid and vehicle technologies
continue to evolve?
Answer. Battery purchases for mobile applications are currently
incentivized indirectly through the tax credits offered for the
purchase of electric vehicles and plug-in hybrid vehicles. While the
provision in this legislation is limited to stationary applications,
the batteries are nonetheless designed for vehicle applications. Thus,
this provision provides a separate mechanism to help achieve economies
of scale and therefore supports the overall objectives of the bill.
Question 8. Researchers at MIT have found that the acceptance of
Alternative Fuel Vehicles (AFV) by the public is not a simple process,
and takes time. Even the Prius, which is doing well today, had a
relatively slow start--and that is powered by gasoline! Acceptance of
new technologies isn't just about building awareness, but about
building enough knowledge, familiarity, and comfort among the carbuying
public that people put an AFV into their ``consideration net''--the set
of makes, models, etc. they actually consider when selecting their next
vehicle.
One of the most robust findings in the literature on adoption of
innovations is that most people are ``imitators''--that is, they won't
consider something novel until they see enough of their friends,
colleagues, and others in their social networks doing it as well. Early
adopters are helpful to get the ball rolling, but often not sufficient.
Innovation adoption is enhanced when the innovation is highly visible,
when its costs and benefits are easily evaluated, when it is easy to
try the innovation at low cost, and when adoption is readily reversible
(in case it turns out you don't like it after all).
Compared to, say, consumer electronics like the iPod, automobiles
rank poorly on all these dimensions. They are quite visible--but only
after there are some already deployed so that people can see them
driving down the roads in their neighborhoods or on their commutes. The
costs (purchase price, typically higher than for conventional vehicles)
are readily available, but the benefits (lower cost of fuel, quiet,
better acceleration) are experienced only over time and are much less
salient; the environment benefits are diffused and not personally
experienced by the owner. Trial is not easy--test drives take effort
and provide only limited experience, and no experience at all about the
long-term reliability of the vehicle. And adoption is not readily
reversible--automobiles are the second most expensive purchase most
people ever make, and once you drive it off the lot it loses a lot of
value.
As DOE designs, recommends, and implements specific policies to
encourage the deployment of electric vehicles, are you taking all of
these hurdles into account? If so, how do the policies you propose
address these hurdles? Please be specific.
Answer. The Department of Energy (DOE) agrees that the development
and adoption of innovative technologies is extremely challenging.
However, equally challenging is the imperative to reduce petroleum
dependence and greenhouse gas emissions. DOE does not discount lessons
to be learned regarding consumer acceptance of new technologies but
believes consumers are also concerned about the high cost and
volatility of fuel prices, the transfer of wealth caused by petroleum
use, and the impact of vehicles on the environment.
DOE is working to address the challenges of electric drive vehicle
deployment through a number of important education, training, and
communications activities. The Transportation Electrification activity
funded by the Recovery Act will result in the deployment of more than
7,000 electric vehicles and provide education to a broad array of
audiences. Communities where vehicles are deployed will have a high
density of vehicles and charging stations, making them a fairly common
sight to local citizens. In addition, related Transportation
Electrification educational programs target undergraduate and secondary
students, teachers, technicians, emergency responders, and the general
public. Public and student workshops will raise familiarity and comfort
levels with the new technology, technician training will ensure that
early adopters have a positive experience with their electric vehicles,
and emergency responder training will help assure the response
community as well as the local public that not only are the vehicles
safe, but they also can be handled safely in an accident response
situation.
In addition to the Recovery Act-funded Transportation
Electrification efforts, DOE's Clean Cities Program facilitates local
partnerships and provides consumers with accurate, relevant technical
information on advanced transportation. The 87 Clean Cities coalitions
nationwide work with more than 6,500 stakeholders to deploy alternative
fuel and advanced technology vehicles, including electric vehicles, and
comprise a network for sharing best practices and lessons learned. DOE
provides coalitions with a vast set of information resources and
technical assistance, and the coalitions provide local early adopters--
from fleets to consumers--with a set of trusted local experts to turn
to for advice.
DOE offers other publicly available information resources,
including the Alternative Fuel and Advanced Technology Vehicle Data
Center (AFDC) and fueleconomy.gov. Each has information, including cost
calculators, to help consumers learn and make decisions about choosing
alternative and fuel efficient vehicles.
Responses of David B. Sandalow to Questions From Senator Landrieu
Question 1. Can you please discuss the various technologies that
exist to replace petroleumfueled vehicles? I know this hearing's focus
is on electric vehicles, but I would like you to include natural gas
vehicles and any other viable technologies in your answer.
Answer. The Department of Energy's (DOE) petroleum reduction
efforts in the transportation sector include a broad portfolio of
alternative fuels and advanced vehicle technologies. Efforts to improve
vehicle efficiency and fuel economy include new technologies such as
hybrids and plug-in hybrids, advanced engine combustion designs and
clean diesel applications, as well as creating lighter weight vehicles
through advanced materials design. In addition, outreach and education
efforts focus on reducing unnecessary wasteful idling for trucks and
buses and encourage smarter driving practices for consumers.
Technologies and efforts related to alternative fuels include a
variety of nonpetroleum based fueling options. In addition to
electricity, vehicles are available today that can be powered by
natural gas, propane, ethanol, biodiesel, and hydrogen. DOE supports
activities to accelerate the commercialization and deployment of these
alternative fuel vehicles and related infrastructure.
Question 2. Can you please compare these technologies for their
carbon intensity, average cost to consumer and timeline for commercial
activity?
Answer. Vehicle carbon intensity is conveyed most usefully on a
lifecycle basis, which considers both direct tailpipe emissions and
indirect emissions for fuel production. In lifecycle terms, a mid-size
conventional gasoline-fueled internal combustion vehicle emits about
475 grams of carbon dioxide-equivalent per mile traveled. In
comparison, a diesel version emits about 5% less; a dedicated natural
gas vehicle emits about 25% less; and a gasoline hybrid version emits
about onethird less. A Plug-in hybrid electric vehicle emits between 33
and 80% fewer emissions depending on its all-electric range, how far it
is driven and renewability of its fuel sources (renewable electricity
and advanced biofuels). Fully electricdrive vehicles (battery-electric
vehicles and fuel cell vehicles) reduce carbon intensity by about 40%
on conventional electricity or hydrogen and 80% on renewable fuels
(renewable electricity and renewable hydrogen).
Cost to the consumer is also usefully conveyed on a lifecycle
basis, which combines upfront vehicle purchase cost with fuel costs
incurred during vehicle use. A mid-size conventional gasoline-fueled
internal combustion vehicle costs approximately 30 cents per mile to
operate, as does a dedicated natural gas vehicle, a hybrid vehicle, and
a plug-in hybrid with a ?10-mile all-electric range. A diesel version
costs slightly more. Currently, the lifecycle costs of fuel cell and
all-electric vehicles are high compared to other alternatives.
Additionally, it is worth noting that fuel costs for fossil fueled
vehicles are subject to great variability while electricity rates are
more stable, so greater uncertainty is associated with the cost to
operate fossil-fueled vehicles.
According to their public announcements, auto companies will begin
to deploy plug-in hybrid electric and battery electric vehicles this
year; fuel cell vehicle deployment is longer-term. In general, costs
are expected to decrease as manufacturers increase production, thanks
to increased familiarity with technologies and economies of scale.
Additionally, laboratory research--which takes 3-5 years to be
transferred to manufacturers and another 3-5 years for commercial
availability--is expected to continue contributing to improved
performance and lower cost of advanced technologies.
Question 3. What can state and local communities be doing now to
prepare themselves for the transition to plug-in electric vehicles?
Answer. One important action for State and local communities is the
formation of partnerships with relevant stakeholders, including
electric utilities, local code officials and emergency responders,
vehicle manufacturers and dealerships, infrastructure developers, and
other local businesses. Forming partnerships is essential because
electric vehicles affect so many different areas of a community, from
the electric grid to parking garages. The Department of Energy's (DOE)
Clean Cities Program provides a foundation, structure, and support for
local stakeholder partnerships to advance the deployment of alternative
fuel vehicles, including plug-in vehicles. Nearly ninety local
coalitions now comprise the Clean Cities network, which enables
communities to share best practices and communicate lessons learned.
DOE supports Clean Cities coalitions with technical assistance and
information resources.
DOE continues to engage stakeholders to better understand how it
can support local community efforts to deploy electric vehicles and
infrastructure. On July 22, we will host an Electric Vehicle Community
Readiness Workshop to hear from experts on key issues, including
permitting, as well as best practices for accelerated deployment.
Question 4. What are other countries doing to promote electric
vehicles in their countries? What international markets, if any, are
thriving?
Answer. Countries around the world are investing heavily in
electric vehicle (EV) and battery technology. For example, as reported
by the AFP, China committed $1.5 billion to EV and battery R&D in its
national research plan.\6\ According to reports, China has also taken
the following steps to promote EVs:
---------------------------------------------------------------------------
\6\ ``China issues stimulus package for auto sector: state media,''
January 14, 2009, AFP.
Through the 2008 Chinese stimulus package municipal
governments and taxi fleets were offered subsidies of up to
$8,800 per EV.\7\
---------------------------------------------------------------------------
\7\ ``China vies to be world leader in electric cars,'' April 1,
2009, New York Times. http://www.nytimes.com/2009/04/02/business/
global/02electric.html
---------------------------------------------------------------------------
The State Council set an EV annual production capacity
target of 500,000 units by 2011.\8\
---------------------------------------------------------------------------
\8\ Id.
---------------------------------------------------------------------------
China's Ministry of Finance announced a pilot program in
five cities to subsidize the purchase of electric and hybrid
cars.\9\ Consumers in those urban areas can receive about
$8,785 off the price of a battery car and about $7,320 off
plug-in hybrids.\10\
---------------------------------------------------------------------------
\9\ ``China to subsidize electric, hybrid car purchases in five
cities,'' June 1, 2010, Xinhua News Agency. http://news.xinhuanet.com/
english2010/china/2010-06/01/c_13327814.htm
\10\ Id.
Bloomberg reports that Germany pledged to spend $705 million on EV
development by 2011, with a goal of putting 1 million EVs on the road
by 2020.\11\ According to the International Energy Agency (IEA),
Denmark set an EV sales target of 200,000 by 2020.\12\ And, according
to reports, the European Commission is focused on ensuring
interoperability across the continent and is currently in the process
of setting standards for charging electric vehicles.\13\
---------------------------------------------------------------------------
\11\ ``Germany pledges $705 million to boost electric cars,''
August 19, 2009, Bloomberg. http://www.bloomberg.com/apps/
news?pid=newsarchive&sid=aoey..OnNzmY
\12\ International Energy Agency, Technology Roadmap: Electric and
Plug-in Hybrid Electric Vehicles. IEA: Paris. 2009. https://
www.iea.org/Papers/2009/EV_PHEV_Roadmap.pdf
\13\ European Commission Enterprise and Industry Directorate-
General, Roadmap on Regulations and Standards for the Electrification
of Cars. 2010. http://ec.europa.eu/enterprise/sectors/automotive/files/
pagesbackground/competitiveness/roadmap-electriccars_en.pdf
---------------------------------------------------------------------------
The IEA reports that Israel has committed to selling between 40,000
and 100,000 EVs by 2012.\14\
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\14\ Supra note 7.
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The IEA reports that many countries are working to implement
strategic goals for deployment of EVs, and several have publicly
announced targets for EV sales. Some examples include:
Canada--500,000 EVs by 2018
China--540,000 EVs by 2015
Denmark--200,000 EVs by 2020
France--2,000,000 EVs by 2020
Germany--1,000,000 EVs by 2020
Israel--40,000 EVs by 2011
Spain--1,000,000 EVs by 2014
Sweden--600,000 EVs by 2020\15\
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\15\ Id.
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Responses of David B. Sandalow to Questions From Senator Sessions
Question 1. If we are looking for the fastest pathway to energy
security, doesn't it make sense to promote all near-term clean vehicle
technology including fuel cells? Wouldn't it be a mistake to pick
winners and losers this early?
Answer. Although the Department of Energy places some emphasis on
electric drive technologies, we do not feel that we risk freezing
industry investments in fuel cells or other advanced vehicle
technologies. Working together with industry partners, the Department
continues to pursue a portfolio of near-and long-term advanced
transportation technologies that can reduce petroleum consumption and
mitigate greenhouse gas emissions, and electric drive technologies are
a critical component of that portfolio. Electric drive vehicles include
hybrids and plug-in hybrids that use biofuel and renewable electricity,
full electric vehicles recharged with renewable electricity, and fuel
cell vehicles that use renewable hydrogen. These variations of electric
drives share component technologies, so advancements in plug-in hybrid
power electronics, for example, also support and advance the
development of fuel cell vehicles. Similarly, advanced technologies
such as vehicle lightweighting and advanced combustion engines can
significantly increase vehicle fuel economy and are an important part
of a hybrid electric system. Continued development is essential to
further increasing the fuel efficiency of hybrid electric vehicles.
Question 2. What will be the impact of plugging in additional
sources to our current electrical grid? Will there need to be
additional power generation? If so, since most of our electricity is
produced from coal, would the CO2 reductions from plug in
vehicles result in an actual reduction of greenhouse gas emissions?
Answer. The U.S. electric power infrastructure is designed to meet
peak demand, plus an additional margin, and is thus underutilized
during much of the 24 hour daily cycle. The idle capacity of the grid
could supply a significant portion of the energy needs of today's
light-duty vehicles without adding generation or transmission if these
vehicles are re-charged during off-peak periods.
______
Responses of Frederick W. Smith to Questions From Senator Murkowski
GRID CAPABILITIES
Question 1. In your written testimony, you mentioned an EPRI study
that ``found that plugging in just one PHEV to charge at 220 volts
overloaded 36 of 53 transformers examined during peak hours and 5 of 53
transformers during off-peak hours.'' It would be wonderful if electric
vehicle owners were able to charge their cars overnight--from, say,
midnight to six a.m.--but it seems unrealistic to expect that to
happen.
a. Can you describe the sort of local-level grid improvements
that will be necessary to handle a significant number of
electric vehicles, and how much those improvements might cost?
Answer. Generally speaking, the distribution system is capable of
handling the load from the charging of electric vehicles (EVs) and
plug-in hybrid electric vehicles (PHEVs). The primary open question is
the extent to which local neighborhood transformers can handle the
additional load from these vehicles. One recent analysis from the
Electric Power Research Institute (EPRI) did find that, in some
communities, smaller transformers serving between five and seven homes
could be easily overloaded by charging PHEVs at 240V (Level II
charging). Specifically, plugging in one PHEV during peak times
overloaded 25kVA transformers in 36 of 53 cases examined. During
offpeak times, the number of 25kVA transformers that were overloaded by
plugging in one PHEV fell to 5 of 53.
In the EPRI analysis, the distribution-system impact of plugging-in
PHEVs varied significantly depending on time of day, size of
transformer, and how many cars were charged simultaneously. In general,
larger transformers were also affected, but not as frequently as
smaller transformers. The 50kVA transformers examined by EPRI were
overloaded by charging one PHEV during peak hours in just 5 of 103
cases examined--though the number increased to 36 instances if three
PHEVs were charged simultaneously.
Routinely overloading transformers is a serious issue that will
result in an acceleration of the rate at which they depreciate.
Therefore, in instances where transformers are too small to support the
load from EVs and PHEVs, they would need to be upgraded. Such upgrades
are routine for utilities, and the costs of these improvements
generally are recoverable by including them in their rate base. It is
primarily a question of planning and organization. Because the need to
upgrade transformers varies widely by system design and location, it is
difficult to provide a national estimate for cost of replacement. Of
course, the rate at which PHEVs and EVs penetrate the market, and the
extent to which these vehicles are charged using smart grid technology,
will also determine the rate at which transformers must be replaced in
some cases.
b. During our committee's hearing, an alert went out asking
Senate offices to conserve power (through dimming lights,
shutting off computers, and otherwise reducing demand) due to
the intense heat and humidity. Do you foresee eventual
restrictions on charging during peak hours, much in the same
way that communities with water shortages sometimes restrict
daytime watering?
Answer. Neither the Electrification Coalition nor I personally
would be comfortable ``restricting'' the ability of consumers to refuel
their vehicles. That said, we clearly acknowledge the benefits of
incentivizing consumers to charge their batteries during utilities'
offpeak operating hours. As you know, demand for electricity is
uniformly lower at night than during the day. Research from a variety
of national laboratories and other institutions has demonstrated that
the need to construct new electric power generation capacity can be
minimized or eliminated for the foreseeable future depending on how
closely vehicle charging patterns adhere to offpeak charging scenarios.
(An additional and critical factor is the extent to which vehicles are
charged using smart grid technology for load management.)
Therefore, while we recognize that vehicle charging may take place
around the clock based on when consumers need to charge, we believe
that it is appropriate to design the system so that drivers have a
strong incentive to charge overnight. This will minimize the effect
that EVs and PHEVs have on peak power demand, which in turn will
minimize the need to construct new power generation capacity and/or to
upgrade local transformers. The primary tool to incentivize offpeak
charging is likely to be time of day pricing for electricity used to
charge EVs and PHEVs. By offering rates for power to charge vehicles
that are substantially lower during the overnight hours than at other
times, we believe that consumers can be incentivized to charge their
vehicles overnight in most cases. This, of course, is one of the
strategies that should be tested in deployment communities.
COST SHARE
Question 2. S. 3495 requires at least a 20 percent non-federal
cost-share, which can be lowered at the discretion of the Secretary of
Energy. Do you believe a higher cost-share (greater than 20 percent)
would help ensure that only the most financially-sound communities--
communities that can continue to promote electric vehicles and
infrastructure once temporary federal funding has ended--are selected?
Answer. We recognize the fiscal appeal of a cost-share,
particularly from the perspective of the federal government. In
general, the 20 percent cost-share contained in S. 3495 ensures that
communities applying for selection as deployment communities have a
stake in making the program successful. We believe that the bill also
provides the Secretary of Energy with important flexibility to balance
selecting fiscally sound communities with selecting the most
appropriate communities.
We believe that the most important factors to consider in choosing
deployment communities are:
1. Ability to demonstrate that the community can successfully
deploy EVs and PHEVs in numbers that represent penetration of
the mainstream automobile market;
2. Commitment from a broad range of stakeholders, including
utilities, utility regulators, state government officials,
local government officials, large local employers,
universities, etc.;
3. Supportive regulatory environment that includes time-of-
day pricing, ability for utilities to invest in necessary IT
and infrastructure upgrades, and ease of permitting/
installation for consumers' home level 2 chargers; and
4. A plan for siting, installing, and networking Level II and
Level III public charging infrastructure.
The U.S. effort to develop an electric vehicle industry is an
undertaking of national importance and is deserving of national
support. Ultimately, this is about the country's economic
competitiveness and energy security. Particularly today--as state and
local governments struggle to deal with the worst impacts of the most
severe economic recession in a generation--it would be a mistake to
over emphasize fiscal position in selecting deployment communities. The
priority must be on those regions that can demonstrate the clearest
path to success, while also ensuring geographic and demographic
diversity.
SPENDING AND OIL PRODUCTION
Question 3. In your written testimony, you discuss the budgetary
constraints we are facing and the increasing difficulty of producing
oil. I certainly agree with your comments about the budget and how
difficult it is to justify any additional deficit spending right now.
But I also believe that we have placed short-sighted limits on where
oil can be produced in America.
In Alaska, there are tens of billions of barrels of oil that can be
produced in onshore and shallow water areas such as the Coastal Plain
of ANWR, NPR-A, and the Beaufort and Chukchi Seas. The production of
those reserves would also yield massive revenues for the federal
government, which could in turn be used to pay for legislation such as
S. 3495. Couldn't we solve both problems--our near-term need for oil
and the ongoing shortfall in revenues--by increasing domestic
production where it can be accomplished in the safest possible manner?
Answer. As you know, in addition to my participation in the
Electrification Coalition, I am the co-Chair of the Energy Security
Leadership Council (ESLC). The Council is a group of prominent business
leaders and retired senior military officers dedicated to reducing U.S.
oil dependence for economic and national security reasons. The Council
has a well-established track record of support for a balanced national
energy strategy--one that includes expanded production of domestic oil
and natural gas.
Over the long-term, the Council believes that reducing the oil
intensity of the U.S. economy is the only way to meaningfully improve
our energy security. This reduction in oil intensity requires limiting
the growth in total oil demand--or, in fact, reducing demand--as the
economy grows. This metric is not based on differentiating between
domestic oil and imported oil. Instead, it focuses simply on increasing
the number of units of GDP that are produced for each barrel of oil
consumed. The U.S. has had success improving our oil intensity in the
past: between 1973 and 1985, it dropped by nearly 40 percent.
Our focus on oil intensity is based on a simple reality: the most
damaging aspect of our reliance on oil is the extreme volatility of oil
prices, particularly given that we use so much oil and that there are
essentially no substitutes available to consumers today. Simply put, as
oil prices rise and fall, consumers' ability to shift driving and
consumption patterns is extremely limited, leaving them fully exposed
to the uncertainty posed by rapidly changing prices. This makes it hard
for businesses and households to save, plan, and invest, thereby
disrupting economic activity. It is important to recognize that this is
true regardless of whether the oil we consume is produced domestically
or not. There is a fungible, global market for oil with a small set of
benchmark prices.
However, an additional and significant component to the economic
cost of U.S. oil dependence is the impact that oil importation is
having on our trade deficit. In 2008, imports of crude oil and
petroleum products accounted for 56 percent of the total U.S. trade
deficit. At $388 billion, the petroleum deficit was larger than our
deficit with any national or regional trade partner. In 2009, a year
marked by reduced oil demand and a lower average global oil price, the
U.S. still ran a deficit of roughly $200 billion in petroleum imports.
In 2010, based on import levels and oil prices to date, our deficit in
oil imports is expected to return to pre-crisis levels of nearly $300
billion. I view this as a substantial threat to the U.S. economy going
forward. Of course, this says nothing of the national security impact
of exporting several hundred billion dollars of national wealth abroad
each year, some to unstable or hostile regimes.
Therefore, the domestic production of oil and gas is--and should
remain--a critical component of any U.S. energy security strategy,
including domestic production in Alaska. The transition to a
transportation sector that is no longer heavily reliant on petroleum
will take decades. While we focus on policies and investments necessary
to facilitate this transition, we should also work to minimize the
share of our oil demand that is met by imports. This will not only work
to improve our trade deficit and strengthen national security, but it
can provide the state, federal, and local governments with much needed
taxes and royalty fees.
TARGETED DEPLOYMENT PROGRAM
Question 4. A targeted deployment program could help deploy
vehicles and infrastructure within communities, but it would do little
to assist with long-distance driving. What do you think can and should
be done to facilitate intercity road trips in electric vehicles?
Answer. First, I would simply point out that different electric-
drive vehicles will face different challenges regarding longer trips.
For example, PHEVs and extended range electric vehicles (E-REVs) like
the Chevy Volt operate on a combination of electricity drawn from the
grid and either electricity or mechanical energy generated onboard from
a gasoline powered engine. These vehicle architectures allow for
essentially unlimited vehicle range subject to the availability of
gasoline, as with any gasoline powered vehicle on the road today.
Pure electric vehicles, however, will have a limited range between
charges, which will impact their ability to travel longer distances in
the absence of any charging infrastructure. The distance that electric
vehicles can travel on a single charge will change over time, but today
ranges from roughly 100 miles for the Nissan Leaf to more than 200
miles for the Tesla Roadster. Electric vehicles announced or on the
road around the world and produced by OEMs like Mitsubishi, Renault,
and BMW can travel distances roughly similar to the Nissan Leaf.
Although vehicles with these ranges will meet most drivers' needs on
most days, many drivers will also want the ability to driver farther
than the vehicle's range on a single charge.
There are several approaches to facilitate long distance travel in
electric vehicles. Fast chargers, which supply direct current at
voltages up to 480 volts, will have the ability to charge a vehicle
battery in several minutes as opposed to the several hours required for
a 220 volt alternating current charge. Because of their expense and
power requirements, the deployment of fast chargers will practically be
limited to commercial facilities, such as fast charge stations akin to
today's gas stations. Deployed in charging stations along intercity
highways, they will facilitate intercity travel for electric vehicles.
Battery swapping also is an option to extend the range of electric
vehicles. Better Place, a provider of electric vehicle networks and
services, has developed a business model in which it will support
electric vehicles designed to include swappable batteries. The
technology is currently being demonstrated in a small fleet of taxis in
Tokyo, Japan. Placing battery swap stations along intercity corridors
would facilitate intercity travel by electric vehicles.
Because of the importance of facilitating intercity travel, and
because of the questions about how to extend the range of electric
vehicles, I believe that it is important that at least one--possibly
more--of the deployment communities selected be a corridor that
connects several mid-sized communities. Such an approach would
facilitate a better understanding of the issues and solutions
surrounding intercity travel for electric vehicles.
TAX CREDITS VS. GRANTS
Question 5. This bill contains a variety of grant funding, and it
is my understanding that tax provisions could be added to it during
floor debate. Do you believe that one of those forms of support is more
appropriate and more relevant to the advancement of electric vehicles?
Is it important to maintain a mix between tax credits and federal
grants?
Answer. Perhaps the most important attributes of vehicle and
infrastructure incentives is that they be transparent, usable, and
immediate. If consumers can easily obtain the information they need
about the applicability and duration of the incentive, they can make
use of it without enduring an overly burdensome process, and they can
capture it quickly, the incentive will have a positive effect. This
kind of incentive provides much needed certainty for both producers and
consumers.
One need only study the history of the wind power industry in the
U.S. to see how and why incentives can fail. First, the wind production
tax credit (PTC) was often in flux, expiring in one year only to return
the next. In years when the PTC was allowed to expire, installation of
new turbines plummeted, interrupting investment in the technology.
Second, the credit was not always usable, because many of the companies
willing to invest in wind turbines were relative young start-ups that
had yet to realize a profit. As such, they had little use for a credit
that could only be taken against taxes on income. In both cases, the
industry developed workarounds, but it took several years and
tremendous coordination among the various stakeholders.
That said, we would argue that both tax credits and grants have a
role to play in supporting electrification in general and a deployment
community approach in particular. However, it is important that each of
these incentives be used where it can have the greatest impact. For
those incentives that should be uniform across the program, such as
incentives for vehicles and charging infrastructure, incentives should
primarily be offered through the tax code, which offers uniformity and
the greatest degree of certainty to the industry. One of the most
important components of the bill is the inclusion of a vehicle
incentive for consumers in the form of a transferable tax credit or
point-of-sale rebate. These policies, or something like them, must be
included in any final bill.
In addition to the incentives for vehicle and infrastructure,
successful deployment communities will have to engage in a wide variety
of other activities to support the rollout of EVs and PHEVs. For
example, communities might want to survey the status of their
electrical distribution system, offer non-monetary incentives to
drivers of EVs and PHEVs, train first-responders how to interact with
EVs and PHEVs safely, and initiate consumer education efforts and
marketing campaigns. Such efforts would best be supported by grants,
because their flexibility allows for each community to meet its own
needs in its own way. We also believe that research regarding electric
drive vehicles and their associated infrastructure and support systems
is best supported by grants.
BATTERY TECHNOLOGY
Question 6. One of the biggest hurdles to the development of
electric vehicles is the cost of their batteries, which adds greatly to
the price of the vehicle itself. Can you share your views on how
quickly batteries will advance over the next decade, and what that will
mean for their cost?
Answer. Battery cost and performance issues are certainly among the
most critical issues that must be addressed for electrification to
succeed. I am, however, optimistic in the progress that can be made in
relatively short order on both fronts.
First, a main contributor to battery cost is the current lack of
production volume, or scale. The highest estimates of current battery
costs are often based on small batch production volumes. Most OEMs and
battery suppliers are currently utilizing a manufacturing process
geared for small pilot programs. However, based on expected demand for
the first EVs and PHEVs to hit markets in late 2010 and 2011, some OEMs
are shifting to larger production volumes that will help drive costs
down rapidly. Data from the Department of Energy suggests a plant that
is capacitized to produce 100,000 battery packs per year will have
battery costs that are 38 percent to 44 percent lower than a 10,000
unit plant.
I would also note that current supply chain structures also contain
some cost inefficiencies. For example, the lithium ion cells for the
Chevy Volt are currently produced by LG Chem in South Korea. They are
then shipped to Michigan and installed into the final battery packs.
The structure and distribution of the lithium ion cell industry
necessitated GMs early approach. However, the company has announced
plans to move cell production facilities to the U.S. in 2012, a step
which will provide significant cost savings.
Based on these and other cost saving measures that are expected in
the next several years, industry observers and analysts are forecasting
meaningful reduction in lithium ion battery costs by 2020. For example,
a recent analysis conducted by TIAX, LLC found future costs between
$212-$568/kWh for a PHEV battery with 6.9 kWh of total energy (roughly
a PHEV-25). The analysis incorporated a range of variables across four
current battery chemistries produced at high volumes--500,000 units per
year.
Another issue related to cost and performance is battery
utilization. In particular, some current PHEV batteries utilize a 50
percent state-of-charge window. That is, a PHEV-40 battery today is
designed to require only 8 kWh of its16 kWh capacity in order to travel
40 miles in pure electric mode. This practice comes at significant
cost, driving current battery prices higher than technical
requirements. In first-generation applications, PHEV manufacturers made
the strategic decision to add extra capacity in order to ensure end-of-
life performance metrics and meet battery warranty requirements.
However, advancements already achieved have reduced the need to over-
specify PHEV batteries and expanded the state-of-charge window, thereby
reducing costs for the next generation of assembled battery packs.
There also is the possibility of breakthrough technologies that will
fundamentally change the cost equation for batteries. My recent meeting
with the Director of ARPA-E was extremely encouraging in that regard.
RAW MATERIALS
Question 7. I've often expressed concern that if we do not develop
our own resources, we risk trading our dependence on foreign oil for a
similarly devastating dependence on foreign minerals. Do you share that
concern? As the United States government looks at ways to promote
electric vehicles, how would you recommend addressing it?
Answer. This is an important question, and it's one that we at the
Coalition take very seriously. We agree that it is critical that the
U.S. does not trade one national security risk for another. In our
analysis, however, that is not going to be the case with
electrification.
Concerns about lithium dependence tend to ignore a key feature of
lithium--its recyclability. Research from Argonne National Laboratory
shows that, when recycling is factored-in, global lithium reserves are
adequate to support even the most bullish GEV deployment scenarios. The
vast majority of material in lithium ion batteries is recyclable.
Today, recycling rates for lithium are relatively low, but that has a
lot to do with the small quantities of lithium found in most consumer
electronics applications. There simply isn't a value proposition for
recycling in such small quantities. But a lot of work is going into
developing business models around recycling lithium from large format
automotive batteries. In fact, battery recycling operations were among
the recipients of ARRA stimulus funds.
Recyclability differentiates lithium from oil. Once an oil or
natural gas molecule is combusted in a vehicle's engine, its energy
potential is gone forever--hence the term, ``non-renewable resource.''
Lithium is not a non-renewable resource. Instead, it is a storage
device. Therefore, dependence on lithium is much different than
dependence on oil. Vehicles do not deplete batteries as we drive; they
deplete the energy stored within them. In other words, batteries are
like the engines in conventional vehicles of today; though their life
span is finite, they last for many years. Coupled with the fuel
diversity of the electric power sector, grid-enabled vehicles insulate
consumers from volatile commodity markets and related phenomena like
oil shocks. So, there is a critically important structural difference.
The global market is also not as one-dimensional as some critics
suggest. Annual production of lithium totaled about 30,000 tons in
2008. The top producers were Chile, Australia, China, Argentina and the
U.S. Total identified world lithium resources stand at around 13.4
million tons, according to USGS. The two largest reserves holders are
Bolivia and Chile, though Bolivia has yet to produce lithium in
commercial quantities. Still, reserve estimates must be understood in
the context of demand, which has thus far required only the cheapest
and most accessible lithium to be developed. The U.S. Geological Survey
identifies substantial lithium deposits in places as diverse as
Austria, Afghanistan, India, Spain, Sweden, Ireland, and Zaire, but has
not yet classified these deposits. Reserves also do not include the
large quantities of lithium known to exist in oilfield brines in the
western United States and in hectorite clays. Indeed, even the sea
holds large quantities of dissolved lithium.
Finally, it's true that a number of rare earth metals are vital to
GEV production. While China currently produces over 95 percent of rare
earth oxides, it holds about 30 percent of known reserves. The United
States actually holds substantial reserves, but has opted to import
Chinese supplies since the 1990s due to cost. One company, Molycorp,
plans to reopen a significant U.S. mine at Mountain Pass, California.
Still, it's also true that global demand for rare earths is expected to
grow rapidly in coming years--by around 15 percent annually for magnets
and 20 percent for alloys--causing worry of a shortage and Chinese
monopolistic manipulation. Beijing has recently enacted stringent
export tariffs and quotas on unprocessed materials in an effort to
ensure that all value-added processing, especially hard magnet
production for batteries, occurs domestically.
This warrants close monitoring and an ongoing dialogue on trade
with China. But I would argue that the threat of rare earth dependence
pales compared to oil dependence. At the end of the day, manipulation
or disruption of the rare earth market could make vehicle manufacturing
more costly, but it wouldn't instantly disrupt the hundreds of millions
of vehicles on the road at any given point in time the way an oil
disruption can and has.
______
Responses of Kathryn Clay to Questions From Senator Murkowski
ELECTRIC VEHICLES
Question 1. Aside from the Chevy Volt, Nissan Leaf, Ford Focus
Electric, Tesla Model S, the Fisker Karma, and the CODA, can you
describe the types of electric vehicles that may be commercially
produced in the next five to ten years? Can you provide a general
comparison of the range and cost of these vehicles, to the extent that
those details have been made public?
Answer. Automakers have announced plans to launch a range of
electric drive vehicles over the next five to ten years. Electric drive
vehicles include a range of vehicle configurations that vary the
relative amount of motive power derived from a battery or fuel cell and
an electric motor, and a gasoline fuel tank and engine. Idle-stop
configurations, for example, draw power from the battery when the
vehicle is stopped to eliminate idling.
Plug-in hybrid and extended range electric vehicle configurations
allow the vehicle to operate in charge depleting or charge sustaining
mode. Under charge depleting mode, the vehicle runs in all-electric
mode using the electric motor to drive the wheels until the battery is
depleted, and then switches over to receive power from the gasoline
tank and engine. Under charge sustaining mode, the vehicle switches
back and forth between the electric motor and the gasoline engine in a
way that is designed to maximize vehicle efficiency.
The all-electric range of any vehicle is dependent on many factors,
including the battery technology used, the vehicle weight and design,
environmental factors, and driving behavior.
BATTERY BUBBLE
Question 2. According to some recent news reports, the United
States may already be on the verge of producing far more advanced
batteries than electric vehicles. Do you see any evidence of this
happening? What are the likely consequences if too many batteries are
produced? What can we do to ensure there is no supply-demand gap for
batteries?
Answer. It is unlikely that battery manufacturers will produce more
advanced batteries than are required for the electric drive vehicle
market. Contracts between battery manufacturers and automobile makers
will allow battery producers to match their production to demand. It is
possible that there may be excess capacity in battery manufacturing
worldwide compared to the number of electric vehicles entering the
market.
Excess manufacturing capacity could have the effect of depressing
prices for advanced batteries and could affect the profitability of
battery manufacturers. If suppliers of advanced automotive batteries
also supply other end-use markets besides automobiles, this
diversification could help mitigate the risks associated with
attempting to predict future production numbers of electric drive
vehicles.
TARGETED DEPLOYMENT PROGRAM
Question 3. A targeted deployment program could help deploy
vehicles and infrastructure within communities, but it would do little
to assist with long-distance driving. What do you think can and should
be done to facilitate intercity road trips in electric vehicles?
Answer. Developing alternative fuel and charging corridors to link
urban centers could facilitate intercity travel using plug-in electric
vehicles. An example of this approach is underway in a cooperative
effort by the states of California, Washington, and Oregon. In
September 2008, these states signed a Memorandum of Understanding,
agreeing to work together to foster the use of alternative fuel
vehicles by developing the distribution network for alternative fuels
along the I-5 corridor. The memorandum lays out common goals, a work
plan and activities designed to further the development of this
alternative fuels corridor. Similar efforts in other states, with
federal and local government involvement, will be useful to enabling
intercity travel using electric drive and other alternative fuel
vehicles.
COLD WEATHER
Question 4. According to news reports, the BMW Mini-E loses quite a
bit of battery capacity in cold temperatures. Can any of you provide an
update on efforts to overcome the difficulties that some electric
vehicles may encounter in cold climates, particularly in an Arctic
state like Alaska?
Answer. Advanced batteries, such as lithium ion, provide somewhat
shorter vehicle ranges at colder temperatures. The amount of this
effect will vary depending on several factors, including vehicle
design, the specific battery chemistry, and the vehicle systems that
manage, heat, and cool the battery. Different lithium ion batteries
will be affected differently by colder operating temperatures.
``Lithium ion'' does not refer to single battery chemistry but rather
to a family of related chemistries, each with slightly different
attributes including temperature tolerance.
For the current generation of lithium ion battery packs, and
depending on the factors mentioned above, vehicle range may be
diminished by 20 to 50 percent in cold weather driving conditions. Cold
weather tolerance is an area of active research in battery technology
development. Further work is also underway to improve vehicle systems
that maintain battery temperatures to improve performance.
TAX CREDITS VS. GRANTS
Question 5. This bill contains a variety of grant funding, and it
is my understanding that tax provisions could be added to it during
floor debate. Do you believe that one of those forms of support is more
appropriate than any other? Is it important to maintain a mix between
tax credits and federal grants?
Answer. Tax credits and grants are each important to facilitating
the production and consumer acceptance of new technologies. Ideally,
these two policy approaches should be aligned to be mutually
reinforcing. Both types of policy measures should be technology neutral
to the extent possible. For example, tax credits could be provide to
purchasers of any advanced technology vehicle meeting a set performance
standard.
CHARGING STATIONS
Question 6. How many charging stations do you believe will need to
be installed for every electric vehicle put on the road?
Answer. Because electric drive vehicles are only now emerging as a
market, there is virtually no real world consumer data to allow us to
predict with certainty what consumers demands will be in terms of
access to charging infrastructure. Automakers believe that the majority
of vehicle charging will take place in consumer's homes. After home
charging, access to charging at the workplace will be the next most
important factor in consumer acceptance, followed in importance by
publicly available charging stations.
Accordingly, each electric drive vehicle will require, at a
minimum, Level 2 (220/240 volt) charging equipment at the location
where the vehicle is parked overnight. Home charging is the fundamental
need for all plug-in electric drive vehicle owners and facilitating
access to home-based charging should be the first priority in
establishing an electric vehicle charging infrastructure that is best
able to encourage early acceptance of the technology.
While home charging alone will be sufficient for some consumers,
other consumers will also require access to charging at the workplace.
These consumers will need two dedicated Level 2 chargers (one at home
and one at work). Access to publicly available charging would be used
for example, to facilitate inter-city trips, or for days when the
consumer's driving exceeds their normal routine.
CHARGING TIMES
Question 7. Right now, most gas-powered vehicles can be fueled in
less than 10 minutes, and then drive for hundreds of miles. A drawback
for electric vehicles is that they take hours to fully recharge. Even
quick charging, which reduces battery life, can take at least 20
minutes. Can any of you discuss any changes to charging time that you
see over the next several years?
Answer. Automakers anticipate that ``fast'' charging (Level 3, or
480 volt charging) will be used by most electric drive vehicle owners
only occasionally, on infrequent occasions when their driving needs for
a particular day exceed their normal requirements. The lifetime of
today's battery technologies is diminished slightly when charged at
high rates; however, if fast charging is only used occasionally the
overall effect on battery lifetime is unlikely to be significant. It
will be important to educate consumers on the relationship between the
use of high rates of charge and consequences for battery lifetime.
Over the next several years, battery development work will address
the need to increase the amount of energy batteries can store per unit
weight (i.e. energy density), battery lifetime, and the ability of
batteries to receive higher levels of power safely.
PACE OF DEPLOYMENT
Question 8. Hybrid electric vehicles debuted a decade ago, are
popular with consumers, and currently account for about three percent
of the light duty vehicle market. Is it reasonable to expect that
electric vehicles will deploy at a much faster rate?
Answer. Hybrid electric vehicles first entered the U.S. market over
a decade ago, and currently account for about three percent of the
light duty vehicle market. These batteries onboard these
``conventional'' hybrid vehicles do not receive energy from the
electrical grid, but are instead recharged using energy derived from
on-board gasoline tanks. Consequently, these vehicles do not require
consumers to have access to a new charging infrastructure.
Plug-in electric drive vehicles will require new infrastructure to
make these vehicles acceptable to consumers. As discussed in our answer
to question six above, each of these vehicles will require, at a
minimum, access to charging equipment where the vehicle is parked
overnight. The pace of deployment will depend on the strength of
policies to support the establishment of a charging infrastructure.
The pace of deployment of electric drive vehicles will also depend
on regulatory efforts that support our national goals of energy
security and climate change mitigation, and encourage automakers to
invest in these technologies. As noted in our testimony, the issue of
how upstream emissions will be treated in future rulemakings is a
crucial factor affecting automakers decisions about future production
of electric drive vehicles. Until we significantly alter how we produce
electricity, including upstream emissions in the vehicle greenhouse gas
emissions standards means that electric vehicles will rate only
marginally better than conventional internal combustion engines, and
comparatively worse than conventional hybrids.
As a result, including upstream emissions creates a huge
disincentive for producing electric vehicles versus other less costly--
and less game-changing--technologies. This approach would also be
unfair because it would treat plug-in vehicles differently than other
end-uses of electricity, making vehicle manufacturers uniquely
responsible for utility emissions--emissions over which automakers have
no control.
BATTERY TECHNOLOGY
Question 9. One of the biggest hurdles to the development of
electric vehicles is the cost of their batteries, which adds greatly to
the price of the vehicle itself. Can you share your views on how
quickly batteries will advance over the next decade, and what that will
mean for their cost?
Answer. The Department of Energy (DOE) estimates that the typical
cost for advanced automotive lithium ion batteries is $1000 per
kilowatt-hour (kWh) and has set a goal of reducing this cost figure to
$300 per kWh. This figure was developed in part through consultation
with auto industry participants, and the industry believes that this
degree of cost reduction would significantly increase consumer
acceptance of the electric drive vehicles.
TARGETED DEPLOYMENT PROGRAM
Question 10. Section 106 of this legislation would create a
targeted deployment program for five to 15 communities, to be chosen
within one year of enactment. Many manufacturers have already selected
initial retail markets for their electric vehicles; an example is
Chevrolet, which selected Michigan, California, and Washington, DC for
the Volt. Do you believe that the short timeframe of this bill and the
select markets will advantage certain communities and disadvantage
others during the selection process?
Answer. Individual automakers have identified early markets for
their electric drive vehicle models. These companies have chosen
regional markets or cities to focus their first efforts for launching
these vehicles. As automakers learn more about the potential customer
base for these vehicles, and as new markets emerge, each company will
modify their marketing and deployment efforts to emerging
circumstances.
At this early stage of electric vehicle deployment, automakers must
remain highly flexible and responsive to the market. More real world
learning is needed before any entity, public or private, will be able
to identify which areas of the country will have the highest adoption
rates of electric drive vehicles or the greatest needs for charging
infrastructure investment.
TECHNOLOGY NEUTRALITY
Question 11a. As introduced, S. 3495 would authorize nearly $6
billion for electric vehicle technologies. How could this substantial
increase in funding affect the development of other technologies, such
as natural gas, hydrogen, or advanced internal combustion engines,
which receive far less funding each year?
Answer. Our overall goal should be a national policy related to
light duty vehicles that is, on balance, technology neutral. The auto
industry is committed to developing a suite of advance vehicle
technologies, including electric drive (e.g. plug-in hybrid, extended
range electric, battery electric, and fuel cell technologies); clean
diesel; hydrogen internal combustion; flex fuel; and continued
advancements in gasoline internal combustion engines.
It would be impractical to require each individual policy measure
to address the entire suite of advanced vehicle technologies. For
example, individual tax measures or infrastructure programs might
appropriately focus on a specific category of advanced technology
vehicles, depending on the goals the measure seeks to achieve.
The auto industry supports policies that encourage a portfolio
approach to technology development. For example, setting performance
standards rather than technology mandates allows automakers to explore
numerous technology innovations and pathways, and to ultimately provide
the public benefits sought at lower cost to consumers overall.
Maintaining a balance in federal research dollar across all advanced
vehicle technology options should also be a high priority.
Question 11b. By promoting one technology so greatly, could we
inadvertently disincentivize cheaper ways to reduce fuel consumption
and greenhouse gas emissions, as well as longer-term options like fuel
cells?
Answer. Battery electric and fuel cell vehicles offer the most
promise for helping to achieve the ambitious target of an 83 percent
reduction of greenhouse gas emissions by 2050. For this reason, we
believe the legislation should allow manufacturers, fuel providers, and
communities the flexibility to invest in multiple electric drive
pathways. Automakers support the inclusion of fuel cell vehicles and
hydrogen infrastructure for eligibility in federal programs to
accelerate the deployment of electric drive vehicles.
NATIONAL VS. TARGETED DEPLOYMENT PROGRAM
Question 12a. In your written testimony, you stated that, ``Opening
up the grant program to a larger number of communities, with wide
regional representation, would avoid limiting automakers' potential
customer base for these vehicles and maximize the chances of success
for our public investments overall--even if this means that individual
communities would receive lower levels of total funding.'' How many
communities do you believe would be appropriate for a broader
deployment program?
Answer. Rather than selecting an arbitrary number of communities to
be targeted for electric vehicle deployment efforts, automakers believe
that the objectives of the legislation would be best achieved by
building on the success of the existing Department of Energy Clean
Cities program as well as the transportation electrification efforts
started through Recovery Act funding. These existing programs, like the
provisions envisioned in the legislation, support greater electric
vehicle deployment through cost-shared grants, technical support, and
training to local communities.
Question 12b. Given the massive budgetary constraints that Congress
is facing, can you discuss the impacts that could result if this
legislation is enacted, and then just a few communities receive funding
to participate in it?
Answer. As an industry, we have concerns about any approach that
would overly limit investments to a small number of cities,
particularly at such an early stage of electric vehicle deployment.
Attempts to prejudge the market bring tremendous risks, and the problem
is compounded if we are making just a few large bets. Selecting only a
few communities as the focus of federally sponsored electric drive
vehicle deployment efforts would risk limiting automakers' potential
customer base for these vehicles.
Responses of Kathryn Clay to Questions From Senator Cantwell
Question 1. S. 3495 emphasizes the establishment of ``deployment
communities'' that have a concentration of the necessary support
infrastructure for electric vehicles. I understand you think this is
not the best way to seed the market for these vehicles.
Answer. The Senator's statement is correct.
Question 2. The kinds of deployment communities supported in the
bill are in many ways similar to--and building upon--the deployment
plans of the automakers themselves. For example, Chevy Volt has
announced they will deploy in Michigan, California, and Washington DC.
Nissan has chosen Portland, Seattle, Phoenix, San Diego, and Nashville
to roll out its all-electric vehicle the LEAF.
Answer. The Senator's statement is correct.
Question 3. Do you think the companies that are making these
electric vehicles have it wrong? Should they not be taking this
concentrated approach?
Answer. Individual automakers have identified early markets for
their electric drive vehicle models. These companies have chosen
regional markets or cities to focus their first efforts for launching
these vehicles. As automakers learn more about the potential customer
base for these vehicles, and as new markets emerge, each company will
modify their marketing and deployment efforts to emerging
circumstances.
At this early stage of electric vehicle deployment, automakers must
remain highly flexible and responsive to the market. More real world
learning is needed before any entity, public or private, will be able
to identify which areas of the country will have the highest adoption
rates of electric drive vehicles or the greatest needs for charging
infrastructure investment.
Question 4. If we do not adopt this plan based on establishing
deployment communities, how can we support the deployment of electric
vehicles in a way that is simultaneously fiscally responsible and moves
them beyond early adopters?
Answer. Rather than selecting an arbitrary number of communities to
be targeted for electric vehicle deployment efforts, automakers believe
that the objectives of the legislation would be best achieved by
building on the success of the existing Department of Energy Clean
Cities program as well as the transportation electrification efforts
started through Recovery Act funding. These existing programs, like the
provisions envisioned in the legislation, support greater electric
vehicle deployment through cost-shared grants, technical support, and
training to local communities.
______
Responses of Brian P. Wynne to Questions From Senator Murkowski
Battery Bubble
Question 1. According to some recent news reports, the United
States may already be on the verge of producing far more advanced
batteries than electric vehicles. Do you see any evidence of this
happening? What are the likely consequences if too many batteries are
produced? What can we do to ensure that there is no supply-demand gap
for batteries?
Answer. While there have been projections along those lines, there
is also a large body of analysis finding that demand will match, and
potentially outpace supply in the 2017 time frame. For instance, Oliver
Hazimeh, the director and head of Global E-Mobility Practice for PRTM,
a global management consulting firm, is projecting that demand for
lithium-ion batteries will be four times as many lithium-ion batteries
in 2020 (200GWh) as the announced production capacity (50GWh) of the
industry.
That announced supply of batteries (50 Gwh) for 2015 would serve
1.5 million vehicles--including hybrids, plug-in hybrids and battery
electric vehicles in the light medium and heavy duty segment. They can
also be used for non-automotive energy storage applications.
Federal policy is playing, and can continue to play, an important
role in helping to build supply and encourage demand. Continuing
support for research and development will speed reductions in cost and
increases in performance of advanced batteries. Easing access to
capital and establishing tax incentives has already resulted in
increased investment in U. S. manufacturing of advanced batteries,
components and vehicles and this success can be expanded with
consistent federal policies. Federal deployment programs, such as Clean
Cities and State Energy Program funds, as well as the Recovery Act's
Transportation Electrification grants, are putting vehicles and
infrastructure in place around the country. These programs and proposed
regional deployment efforts will help to build markets and to build
consumer acceptance of plug-in electric drive vehicles.
TARGETED DEPLOYMENT PROGRAM
Question 2. A targeted deployment program could help deploy
vehicles and infrastructure within communities, but it would do little
to assist with long-distance driving. What do you think can and should
be done to facilitate intercity road trips in electric vehicles?
Answer. Electric drive vehicles come in multiple configurations--
hybrid, pure battery electric, plug-in hybrid and fuel cell. Each of
these is optimized for different uses. Hybrid trucks, for instance, are
already operating on interstate routes, as the electricity generated on
board does not require additional infrastructure.
With plug-in hybrids, the ability to use electricity and petroleum
fueling infrastructure expands the range of the vehicle and provides
flexibility in advance of ubiquitous local and interstate recharging
locations.
Residential and workplace charging can serve the majority of
charging needs for plug-in hybrids and battery electric vehicles.
Publicly accessible charging stations and charging options in
commercial facilities (garages, shopping malls, etc.) will expand the
electric range of vehicles, as well as expanding the vehicle options of
consumers with varying driving needs.
As the use and range of plug-in electric drive vehicles expands,
infrastructure options will need to evolve as well. Collaborative
efforts between infrastructure and power providers, city and regional
governments and vehicle manufacturers are already underway. For
instance, the EV Project, with the support of Recovery Act funds, is
installing home and non-residential charging options in 13 cities and
building charging corridors. Washington, Oregon, California, and
British Columbia's public agencies and private entities are working
together to build the Interstate 5 West Coast Green Highway, which will
build a framework for electric vehicles and other alternative fuel
vehicles along the entire 1,350 miles of the I-5 corridor.
Efforts such as these will help track and meet the needs of plug-in
electric drivers, establish interstate business models and standardize
technology and billing options for consumers.
Another key policy to facilitate longer intercity trips is to
extend the expiring incentive for installation of alternative fuel
vehicle refueling property and to ensure that it effectively recognizes
the expenses associated with electricity recharging equipment and
installation.
PACE OF DEPLOYMENT
Question 3. Hybrid electric vehicles debuted a decade ago, are
popular with consumers, and currently account for about three percent
of the light duty vehicle market. Is it reasonable to expect that
electric vehicles will deploy at a much faster rate?
Answer. We and many industry analysts do expect plug-in electric
drive to deploy at a faster rate based on the consumer interest in the
vehicles and in oil alternatives, accelerated technology development,
strong policy support and increasing emissions reduction requirements.
A 2009 National Research Council report provided a conservative
forecast of 13 million plug-in hybrids on the roads by 2030 and an
optimistic one of 40 million vehicles. While these estimates were based
on unrealistically high battery costs and unrealistically static
gasoline costs, the range provides a snapshot of the potential of the
industry.
Long term projections are inherently uncertain, but it is clear
that, with continued private sector advances and public support, the
plug-in electric drive market can be accelerated. With growing consumer
acceptance, and next-step policies that advance the technology and
promote investment, the industry can achieve commercial scale
penetration and mainstream acceptance in the near term. These steps are
important to meet the President's goal of 1 million plug-in electric
drive vehicles by 2015.
BATTERY TECHNOLOGY
Question 4. One of the biggest hurdles to the development of
electric vehicles is the cost of their batteries, which adds greatly to
the price of the vehicle itself. Can you share your views on how
quickly batteries will advance over the next decade, and what that will
mean for their cost?
Answer. Battery performance has been increasing rapidly while costs
have been declining. Substantial private and public sector investment
(including the Recovery and the Department of Energy's ongoing research
and development programs) are accelerating both of these trends, while
building domestic capacity in advanced batteries and components--which
will also reinforce downward cost pressures. Two years ago, the
benchmark for battery costs was generally quoted at $1,000kWh with the
DOE benchmark goal set at $300/kWh. Substantial progress has already
been made and that goal appears to be within reach for some
manufacturers. Deutsche Bank estimates the benchmark price at $650 per
kWh with indicators of $450 kWh cost in 2011-2012. A DOE report to be
released this week is expected to project that stimulus funding could
bring down battery costs from $33,000 for a battery with a 100+-mile
range to $16,000 by the end of 2013 and $10,000 by the end of 2015.
COLD WEATHER
Question 5. According to news reports, the BMW Mini-E loses quite a
bit of battery capacity in cold temperatures, which in turn reduces its
range. Can you provide an update on efforts to overcome the
difficulties that some electric vehicles with certain battery
chemistries may encounter in cold climates, particularly in an Arctic
state like Alaska?
Answer. The efficiency of all vehicles is affected by ambient
temperatures. A gasoline engine will get fewer miles to the gallon with
the air conditioner running.
Extreme cold can impact performance of battery electric vehicles,
specifically at start up, but the impact depends on configurations
(battery electric versus plug-in hybrid), battery chemistries and cell-
structures, overall system design and the different manufacturers'
systems for maintaining the right internal temperature for optimal
performance.
Essentially, at start up, cold batteries, which do not generate
initial heat compared to traditional internal combustion engines, are
in a lower state of capacity before ideal operating temperatures are
reached during operation. Range can be affected if extreme temperatures
prevent the system from reaching optimal temperature during operation.
Manufacturers are putting a number of vehicle-and chemistry-
specific options in their cars to maintain optimal operating
temperature. For example, the Nissan Leaf at launch will include an
option for pre-warming the battery to an ideal operating temperature
before the driver resumes operation. Other battery electric vehicle
manufacturers are looking at other pre-warming strategies, such as
small, fuel-burning heaters, to provide the battery with initial heat
from a cold start.
In addition, battery manufacturers, with the National Renewable
Energy Laboratory, are researching new battery chemistries and cell
structures to limit the effects of cold temperatures on battery
operation.
CHARGING STATIONS
Question 6. How many charging stations do you believe will need to
be installed for every electric vehicle put on the road?
Answer. The infrastructure needs will vary by configurations
(battery electric vehicles and plug-in hybrid electric), the size of
the batteries (or electric range) and total range of the vehicles. For
instance, for the Mitsubishi iMiEV, the company is planning for one
home charging option for each vehicle, one workplace Electrical Vehicle
Supply Equipment (EVSE) for every two vehicles and one DC Quickcharger
for every 10 vehicles. For vehicles with a range extender or an
alternative propulsion system, one home recharging option would be the
primary need.
CHARGING TIMES
Question 7. Right now, most gas-powered vehicles can be fueled in
less than 10 minutes, and then driven for hundreds of miles. A drawback
for electric vehicles is that they can take hours to fully recharge.
Even quick charging, which reduces battery life, can take at least 20
minutes. Can you discuss any changes to charging time that you see over
the next several years?
Answer. Deployment of diverse charging stations options, including
home, workplace and publicly accessible or commercial charging stations
will advance the electrification of the transportation sector. Most
consumer vehicles are parked for approximately 80 percent of the day.
The vast majority of charging for plug-in electric drive vehicles
initially will be at home, with workplace charging the second most
frequent recharging opportunity. In both of these places, where the
vehicle is commonly parked for several hours at a time, level 1 (120
volt, regular household outlet) or level 2 (240 volt, like a dryer
outlet) will provide timely and convenient recharging for most drivers.
``Quick'' or ``Fast charging'' (480 volts) is most likely to be
employed in public or commercial recharging stations. A fast charge can
take up to 15 minutes for a full charge--depending on the size of the
battery or how ``empty `` it is. However, it is important to note that
a full charge will not always be needed. If the battery is not fully
depleted, or if the driver does not need full range to get to their
home or other destination, then recharge time is even shorter.
Meanwhile, both battery and recharging technologies are advancing
rapidly. Public and private research and investment are yielding
results in reducing charge times while extending battery life.
Recently, GE announced its WattStation public charging unit that will
cut level 2 charging time in half. Last month, another company, JFE
Engineering, announced a ``super fast'' charging system that can
achieve a 50 percent charge in three minutes and 70 percent in 5
minutes.
In addition to technology advances that will reduce charging times,
the industry is also developing diverse business models that will
provide charging outside of dedicated service stations (parking
garages, shopping malls, hotels) allowing consumers to recharge in the
course of other activities.
The technology and the business models are maturing quickly but we
are still at the beginning and expect substantial advances in reducing
recharge time, as well as innovative options for meeting consumers'
diverse recharging needs.
TAX CREDITS VS. GRANTS
Question 8. This bill contains a variety of grant funding, and it
is my understanding that tax provisions could be added to it during
floor debate. Do you believe that one of those forms of support is more
appropriate or more relevant to the advancement of electric vehicles?
Is it important to maintain a mix between tax credits and federal
grants?
Answer. Federal policy support, in both tax incentives and grants
is important in helping electric drive achieve national penetration in
the near and longer term. The technology has the potential to reduce
dependence on oil, cut emissions of pollutants and increase our energy
security. To achieve these large scale goals, we need a comprehensive
plan to achieve a diverse national fleet of electric drive vehicles.
Tax incentives promote investments in vehicles, infrastructure,
manufacturing and research and development. Grant programs also support
investment in the industry and in the collaborative efforts that will
speed deployment of vehicles and infrastructure.
EDTA supports robust federal investment in the grant programs that
advance electric drive research, manufacturing and deployment. We also
support national tax incentives, including such as the plug-in electric
drive vehicles credit and the advanced energy investment credit. We
also support re-establishing incentives for medium and heavy duty
electric drive vehicles and extending the recharging infrastructure tax
credits to ensure that they fully recognize the costs associated with
electric refueling property and installation.
TECHNOLOGY NEUTRALITY
Question 9. As introduced, S. 3495 would authorize nearly $6
billion for electric vehicle technologies.
a. How could this substantial increase in funding affect the
development of other technologies, such as natural gas,
hydrogen, or advanced internal combustion engines, which
receive far less funding each year?
b. By promoting one technology so greatly, could we
inadvertently disincent cheaper ways to reduce fuel consumption
and greenhouse gas emissions, as well as longer-term options
like fuel cells?
Answer. We agree with the findings of the recent National Research
Council that federal policies must also advance longer term as well as
immediate goals, including deployment of fuel cell vehicles and
infrastructure and advances in emerging energy storage options that the
private sector cannot support alone.
Recognizing that resources are finite and that a diverse portfolio
of technologies will be needed in our transportation future, investing
in electric drive today is an essential part of the solution to oil
dependence. We need to build on our successes and take the next steps
with a comprehensive effort to launch this transformational
transportation technology on a national scale.
______
Responses of Alan T. Crane to Questions From Senator Murkowski
PACE OF DEPLOYMENT
Question 1. According a press release accompanying the National
Research Council's report, ``the maximum number of plug-in electric
vehicles that could be on the road by 2030 is 40 million, assuming
rapid technological progress in the field, increased government
support, and consumer acceptance of these vehicles. However, factors
such as high cost, limited availability of places to plug in, and
market competition suggest that 13 million is a more realistic
number.'' What do you think it would take to get 100 million PHEVs on
the road by 2030? Is there any chance of that happening?
Answer. The committee that prepared the PHEV report believes that
getting 100 million PHEVs on the road by 2030 (1/3 of the fleet) would
require unprecedented rates of technology adoption and probably
extraordinary Federal intervention in the market. The committee
estimated the maximum practical penetration rate based on past
experiences with new technologies, including hybrid electric vehicles
(HEVs). Typically a new vehicle technology is introduced in just a few
models, and as costs are reduced and performance improved, it spreads
to other types of vehicles and manufacturers. HEVs were first
introduced in the United States in 1999, and commercialization was
accelerated by government support. After a decade, HEVs accounted for a
few percent of new sales, and cumulative sales were about 1.6 million,
less than 1 percent of the total fleet. HEV growth could have been
faster, but most consumers didn't find the additional cost (even with
government subsidies) justified by the fuel savings.
The NRC penetration rate for PHEVs was much more aggressive than
experienced by HEVs, reaching 8 million in 12 years and 40 million in
20 despite the much higher costs and modest fuel savings of PHEVs
relative to HEVs, and the driver behavior modifications that will be
required. More than half of U.S. car sales from 2020 to 2030 would have
to be PHEVs to reach 100 million. Even if extremely ambitious technical
goals are met, PHEVs are unlikely to be cost-competitive much before
2025. Many drivers will be unable or unwilling to plug their vehicles
regularly or don't have driving patterns that make sense for PHEVs. The
committee concluded that 40 million PHEVs is an upper bound for 2030.
FUEL CELL VEHICLES
Question 2. While the focus of this hearing is a bill to promote
electric vehicles, can you provide the Committee with a general update
on the status of fuel cell vehicles, barriers to their deployment, and
when commercial production may begin in the United States?
Answer. Substantial progress has been made on fuel cell vehicle
technology since the NRC report on the subject was completed in 2008.
As noted in the NRC's recent review of the FreedomCar program,
projected fuel cell system cost at 500,000 units/year has decreased
from about $107/kiloWatt in 2008 to $60-70/kW now, a significant
reduction in 2 years. Progress is on schedule to meet the target of
$30/kW in 2015. In part this decrease is the result of continued
decreases in platinum catalyst loading. Some companies now project that
hydrogen fuel cell vehicles (HFCVs) will need less platinum than in the
catalytic converters of conventional vehicles. On-road durability has
increased significantly from 1250 hours in 2008 to about 2000 hours
now. The 2015 target of 5000 hours appears achievable. In laboratory
tests, some fuel cells have reached 7200 hours.
It is also significant that all major vehicle manufacturers have
recently announced that they can achieve driving ranges of 300 to 400+
miles using compressed gas storage. Toyota and Kia have both
demonstrated ranges in excess of 425 miles and system efficiencies well
above 50%, for example.
Companies in the United States, Europe, and Asia are planning
aggressive commercialization of HFCVs. As presented at the June 3, 2010
meeting of the Hydrogen Technical Advisory Committee (http://
www.hydrogen.energy.gov/advisory_htac.html):
GM plans to introduce HFCVs in 2015 with a very compact 124
kW fuel cell system that meets all commercial cost and
performance objectives;
The ``H2-Mobility'' consortium, a European initiative, plans
to launch HFCVs and the accompanying infrastructure in Germany
by 2015; and
The Japanese government-corporate joint initiative plans to
launch HFCVs in 2015. All the leading automakers and energy
companies in Japan have committed to the Japan Hydrogen & Fuel
Cell Demonstration Project (JHFC) goals.
Despite the impressive progress, fuel cell vehicles face several
daunting barriers. Costs of the fuel cells and on-board storage of
hydrogen must be brought down further through improvements in
technology. The hydrogen infrastructure must be built simultaneously
with the introduction of HFCVs. Meeting these goals will be difficult
but not impossible; R&D is proceeding well, and the Department of
Energy has developed a strategy to deploy hydrogen fueling stations in
a pattern consistent with the growth of hydrogen demand. Initially,
HFCVs will be much too expensive for most buyers, and hydrogen fuel
will be hard to find. Mass production will bring costs down sharply,
but significant, though declining, subsidies will be required to reach
competitiveness and to build the hydrogen infrastructure before there
is much market for it. The committee estimated these subsidies at about
$50 billion total. While that is less than is being spent on other
energy options, it will be critical for industry to have confidence
that the funds will be available for the duration of the transition.
BATTERY TECHNOLOGY
Question 3. In your written testimony, you state that, ``While the
committee's estimates of future costs are higher than some (but not
all) others, that may be because the committee assumed that durability
and safety goals had to be met before cost goals.'' Can you expand on
this statement?
Answer. The costs in the NRC report are based on the battery pack
which includes the battery cells, the casing, and the electronic and
cooling systems that are currently required to assure safety and
durability. The committee was told by auto makers that safety had to be
assured to very high standards in order for them to market PHEVs and
that very high levels of durability were required to meet their
warranty positions. Cheaper batteries undoubtedly can be made, but then
they might have to be replaced several times over the lifetime of the
vehicle, a cost that wouldn't appear at first. The committee assumed
that the electronic monitoring and cooling systems currently needed to
assure safety and durability would be retained in the future. These
contribute significantly to battery pack costs and are based on mature
technology that is not expected to drop greatly in cost. Some
projections assume that these systems will be deleted, but the
committee was unconvinced that that could be done without jeopardizing
durability. The committee did not attempt to predict breakthroughs in
battery cell technology, which might lead to significant reductions in
battery cost and in more marked reductions in the requirement for
electronic monitoring and cooling requirements and thus, further
reductions in cost. Although the report's assumptions in this area may
seem to some to be conservative, the current flurry of automobile
safety and recall issues suggest caution in making bolder technology
projections that could affect safety.
BATTERY TECHNOLOGY
Question 4. One of the biggest hurdles to the development of
electric vehicles is the cost of their batteries, which adds greatly to
the price of the vehicle itself. Can you share your views on how
quickly batteries will advance over the next decade, and what that will
mean for their cost?
Answer. The cost of a battery pack for any specified range for a
particular vehicle is a function of the cell cost and associated
equipment as noted in the previous response. The committee estimated
that a battery pack for a PHEV-40 (40 mile all-electric range) would
cost $10,000 to $14,000 in 2010 and for a PHEV-10 would cost $2,500 to
$3,300. These costs are for cells ordered several years ago for
installation in vehicles manufactured in 2010 and 2011. They are
unlikely to survive 10 years of operation. As noted in the previous
response, the committee expects improving durability to take precedence
over reducing costs. These battery packs are for small to mid-size
cars. Many vehicles, such as mid-size or large SUVs, would require much
larger and more expensive battery packs.
Cost reductions will come from several sources, the most important
of which is the technology of the cell itself. In particular, as the
technology improves, more energy may be usefully extracted from the
cell without compromising durability. The next most important sources
are likely to be improved manufacturing processes and yields. Cost
reductions from increasing scale of manufacture will be small. Unlike
fuel cells, lithium-ion batteries are manufactured by the billions per
year in large and sophisticated facilities. The manufacturing processes
for cells for automobile application are not very different from many
cell lines already being produced.
Cost reductions of three -to four-fold over the next several years,
as projected by some people, are not likely without inherently
unpredictable major battery breakthroughs. The committee estimated that
battery pack costs would decline by about 40 percent by 2020 based on
discussions with representatives of cell manufacturers, automobile
manufacturers, and battery pack assemblers. The committee also observed
that the cost of Ni-metal hydride batteries has declined only slightly
as production ramped up for use in HEVs over the last decade. It is
important to note that the committee's estimates are for full,
unsubsidized battery-pack costs. Companies may sell batteries and
vehicles at or even below costs to gain market share, or governments
may subsidize the costs of building and/or operating manufacturing
facilities. Thus announced costs have to be examined carefully to
determine if they are real or have simply shifted some of the costs to
other payers.
CHARGING TIMES
Question 5. Right now, most gas-powered vehicles can be fueled in
less than 10 minutes, and then drive for hundreds of miles. A drawback
for electric vehicles is that they take hours to fully recharge. Even
quick charging, which reduces battery life, can take at least 20
minutes. Can you discuss any changes to charging time that you see over
the next several years?
Answer. Rapid charging will be important for all-electric vehicles
but less so for plug-in hybrids. We assumed that most PHEVs would be
plugged in at home overnight. Even a large SUV with a 40 mile battery
pack can be charged in less than 4 hours on a 220 volt line. Therefore
we did not study the effect of rapid charging rate on battery
durability. However, I might note that, as you say, very rapid charging
may well reduce battery life. It would generate a lot of heat inside
the battery pack (possibly at a rate of over a kilowatt) which must be
removed to maintain safe temperatures. Vehicle manufacturers may
incorporate charging limiters in their battery packs until they are
sure that any accelerated deterioration is minor. Rapid charging also
might place heavy burdens on the infrastructure to supply the
electricity if electric vehicles become common for long distance
travel; a busy turnpike charging station could easily see demand at the
multi-megawatt level. These and other important issues will be answered
only with considerable experience with battery vehicles on the road.
PORTFOLIO APPROACH
Question 6. In your written testimony, you conclude by noting that
``A portfolio approach to research, development, demonstration, and
perhaps, market transition support is essential.'' Can you expand on
the types of technologies and policies that you believe should be
included in a truly balanced portfolio?
Answer. The PHEV report and other recent NRC studies (America's
Energy Future, FreedomCar) have shown the importance of a portfolio
approach to meeting goals for reducing oil dependency and greenhouse
gas emissions. We simply don't know at this point which options will be
prove most satisfactory, especially in the long term. Focusing on one
or two could easily produce suboptimum results. The portfolio should
include options that will be available in the near and long term.
Important near term technologies include improved efficiency of
internal combustion engine vehicles, hybrid drive trains, low carbon
biofuels, and natural gas as a transition fuel. In the longer term,
electric drive vehicles such as plug-in hybrids, all-electric vehicles,
and fuel cells could yield large reductions in oil use and GHG
emissions. Because of the longer time frames required to develop and
commercialize electric drive train technologies (batteries and fuel
cells), it is important to pursue near term strategies while developing
electric vehicle technologies. The largest reductions are most likely
to be achieved when these approaches are used together.
In the past 20 years, US alternative fuel policy has been
characterized by a ``fuel du jour'' syndrome, which has led to ``boom
and bust'' cycles of support for one technology after another. All long
term options face challenges and uncertainties. Maintaining strong
consistent support for a variety of options is crucial to nurturing
their development.
TECHNOLOGY NEUTRALITY
Question 7a. As introduced, S. 3495 would authorize nearly $6
billion for electric vehicle technologies. How could this substantial
increase in funding affect the development of other technologies, such
as natural gas, hydrogen, or more efficient conventional vehicles,
which receive far less funding each year?
Answer. The committee did not study how emphasis on one technology
would affect development of others. However, I can make some general
observations based on the NRC's recent review of the FreedomCar program
and other reports.
Emphasizing any one technology is likely to starve others of
funding. Even if R&D funding is maintained, money is not the only
factor limiting development. Companies may not be able to hire all the
engineers, designers, researchers, managers, and other skilled labor
they would need to pursue all technologies at the maximum rate.
Therefore, to some extent, picking winners also implies picking losers.
Question 7b. By promoting one technology so greatly, could we
inadvertently disincentivize the development of cheaper ways to reduce
fuel consumption and greenhouse gas emissions, such as advanced
internal combustion engines that achieve significant increases in fuel
economy?
Answer. In the near- and mid-term (i.e. before 2030), advanced fuel
efficiency of conventional vehicles, biofuels, and natural gas are
likely to be more effective in reducing oil consumption and carbon
emissions than either batteries or fuel cells although their ultimate
potential is less. None of these options will be cost-effective while
gasoline prices are at current levels, but it seems logical to extract
as much benefit as possible from the lower hanging fruits. However, the
current CAFE standards are forcing manufacturers to rapidly increase
fuel economy, and ethanol promotional policies are close to maximizing
biofuel production until cellulosic ethanol and other advanced
technologies are ready. Therefore I wouldn't say that the battery
program disincentivizes the nearer-term technologies, but it may for
fuel cells.
Question 7c. By promoting one technology much more than others, do
we risk discouraging the development of fuel cell and other alternative
technology vehicles?
Answer. As I noted in my oral testimony, it is by no means certain
that batteries will become the technology of choice for a large
fraction of the light duty vehicle fleet. A balanced program is vital
at least until we find out whether the costs and other issues
associated with batteries, fuel cells, cellulosic ethanol, and other
technologies will prove acceptable. Furthermore, as discussed in the
fuel cell report and in my response to question 2 above,
commercializing HFCVs will require steadfast government support to
assure industry that their investments won't get the rug pulled out
from under them. Fuel cells need several more years of R&D before the
much more costly commercialization phase could start, but companies may
be concerned that government support for a second major initiative will
not be there when they need it. That could discourage private
investment in the R&D that is still needed.
Thank you for this opportunity to expand on my testimony. I would
be happy to supply copies of related NRC reports:
Review of the Research Program of the FreedomCAR and Fuel
Partnership: Third Report (2010);
America's Energy Future: Technology and Transformation
(2009);
Assessment of Technologies for Improving Light-Duty Vehicle
Fuel Economy.
Responses of Alan T. Crane to Questions From Senator Sessions
Question 1. Since ``cost reductions are not very likely without
breakthrough in battery technology,'' how do you expect to get 40
million of these cars on the road by 2030 when the technology is not
there to make it plausible?
Answer. The committee projects that battery costs will decline by
over 40 percent by 2030. This is a significant improvement, but it is
unlikely to be enough by itself that 40 million PHEVs will be on the
road by 2030. Therefore, unless unpredictable breakthroughs
dramatically lower the cost, substantial subsides will be necessary to
achieve high penetration rates.
Question 2. If ``policy intervention and/or financial assistance
for buyers from government'' is needed, how much will these processes
cost the tax payers?
Answer. Subsidies could be from the government in the form of
assistance to battery and vehicle manufacturers, or to buyers of the
vehicles. In the early years, subsidies might also come from
manufacturers selling at below normal markup or even below cost in
order to promote sales and gain market share. The committee did not
investigate how the subsidies might be supplied. It merely calculated
the total that would be necessary. For PHEV-40s, over $400 billion
would be required before break-even is reached under the committee's
optimistic technology projection. However, if DOE's goals are reached
by 2020, the total drops to $24 billion\1\.
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\1\ The committee did not expect that the DOE goals could be met
without real breakthroughs in battery technology, which are inherently
unpredictable. Even if they do occur, commercialization will require
years of testing and refinement, and more years to set up mass
manufacturing facilities and reach significant penetration into the
fleet.
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Question 3. Under current conditions, how much would it cost to
produce a plug-in hybrid car that is practical for public use?
Answer. The Chevrolet Volt (PHEV-40), which will be introduced in a
few months, will be practical for public use. The main problem is the
cost. GM has announced that the Volt will list at $41,000. With all
available options, the list price is $44,600. This is price, not cost,
and may include some manufacturer subsidies for the batteries and
vehicles, but not the tax credit for the buyer. Starting prices for the
equivalent Chevrolet Cruze will range from $16,275 to $21,975, so the
price increment for the Volt is on the order of $20,000. The committee
estimated the current incremental cost, relative to an equivalent non-
hybrid vehicle, at $14,000 to $18,000 for a PHEV-40, which is
reasonably consistent with the price increment for the Volt. The
committee's estimate for the PHEV-10 cost increment was $5,300 to
$6,300.
Question 4. In your opinion, does the federal government need to
provide subsidies in order to produce and market the 700,000 plug-in
hybrid cars called for in the legislation? If so, what form of subsidy
would be used? If it is financial assistance, what would the amount of
the subsidy be?
Answer a. Yes. In order to reach beyond the early adopters and
electric vehicle enthusiasts (and 700,000 is very likely well beyond
these niche markets), PHEVs must offer a significant gasoline saving to
offset their higher price. At current gasoline prices, unless
subsidized few if any of the first generation of PHEVs will provide net
benefits over their lifetimes to their owners. Manufacturers may
provide some subsidies for early production vehicles, but are unlikely
to be willing to continue as production rises. Most of the
subsidization will have to be from the government, which has the
additional incentives of reducing oil consumption and greenhouse gas
emissions. Encouraging battery development and PHEV production is
likely to drive down costs, and eventually the government's investment
may prove worthwhile.
Answer b. As noted above, this study did not examine the policies
necessary to ensure the penetration of PHEVs into the market, just the
magnitude of the effort required.
Answer c. The committee's optimistic penetration projection reaches
700,000 PHEVs in 2017. If all are PHEV-40s, they would cost about $11
billion more than equivalent conventional vehicles\2\. Assuming the
batteries last for 100,000 miles, a PHEV-40 might save about $4000 in
fuel costs\3\. Therefore the net incremental cost of 700,000 PHEV-40s
would be about $8 billion. At $7,500/vehicle, the Federal tax credit
would amount to $5.25 billion. If the DOE goals for battery costs are
met, the required subsidy would be much lower.
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\2\ The committee's optimistic cost increment in 2015 is $11,200.
Using that as an average for vehicles produced between 2010 and 2017,
and including a markup of 40% for retail prices, the total additional
cost for 700,000 PHEV-40s comes to $11 billion.
\3\ EPA's mileage estimates for the Cruze are not yet available (it
will be introduced with the Volt as a 2011 model), but GM says a high
efficiency version will be available that gets 40 mpg on the highway.
Assuming a city/highway average of 36 mpg, this vehicle would use about
2780 gallons in 100,000 miles. PHEV-40s are projected to drive 45% on
gasoline and 55% on electricity, so in 100,000 miles it would use about
1250 gallons, saving 1530 gallons. At an average of $3.30/gallon, this
saves $5050. At 200 Wh/mile, electricity consumption would be 11,000
kWh, which at 10.4 cents would cost $1140, so the net fuel savings
would be $3910. The fleet of 700,000 would save $2.7 billion in fuel
over their lifetimes. No discount rate has been applied to reflect the
present value of future savings at the time the vehicle is purchased.
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Question 5. Calculating total cost, including subsidy along with
fuel savings, compare the life cycle cost of a plug-in vehicle to a
conventional gas/diesel car.
Answer. The committee's analysis did not directly perform this
analysis, but we do have some additional information that was not in
the report and has not been subject to National Academy review. The
results, of course, depend heavily on assumptions, but for the capital
and fuel costs in the NRC PHEV report:
Even with optimistic technology development, the PHEV-40 is
more expensive than a conventional gasoline vehicle through
2030;
With a subsidy of $7500, the PHEV-40 could become
competitive by 2017;
If DOE's goals are met by 2020, the PHEV-40 becomes
competitive in 2020 without subsidy and 2013 with the $7500 tax
credit;
The PHEV-10 could become competitive in about 2025 without
subsidies and in 2010 with the $7500 subsidy;
Under the committee's probable technology development, the
PHEV-40 never becomes competitive even with the subsidy. The
PHEV-10 is competitive in 2010 with the subsidy, but does not
reach competitiveness by 2030 without it.
These comparisons are shown in the attached figures. It should also
be noted that subsidies do not alter the underlying costs. They just
assign them to different payers.
______
[Responses to the following questions were not received at
the time the hearing went to press:]
Questions for David Friedman From Senator Murkowski
BATTERY BUBBLE
Question 1. According to some recent news reports, the United
States may already be on the verge of producing far more advanced
batteries than electric vehicles. Do you see any evidence of this
happening? What are the likely consequences if too many batteries are
produced? What can we do to ensure that there is no supply-demand gap
for batteries?
TARGETED DEPLOYMENT PROGRAM
Question 2. If $500 million is awarded to each community selected
for the program established by Section 106 of this bill, what sort of
impact will that funding have? How many electric vehicles and charging
stations should we expect to be deployed?
TARGETED DEPLOYMENT PROGRAM
Question 3. A targeted deployment program could help deploy
vehicles and infrastructure within communities, but it would do little
to assist with long-distance driving. What do you think can and should
be done to facilitate intercity road trips in electric vehicles?
PACE OF DEPLOYMENT
Question 4. Hybrid electric vehicles debuted a decade ago, are
popular with consumers, and currently account for about three percent
of the light duty vehicle market. Is it reasonable to expect that
electric vehicles will deploy at a much faster rate?
BATTERY TECHNOLOGY
Question 5. One of the biggest hurdles to the development of
electric vehicles is the cost of their batteries, which adds greatly to
the price of the vehicle itself. Can you share your views on how
quickly batteries will advance over the next decade, and what that will
mean for their cost?
COLD WEATHER
Question 6. According to news reports, the BMW Mini-E loses quite a
bit of battery capacity in cold temperatures, which in turn reduces its
range. Can you provide an update on efforts to overcome the
difficulties that some electric vehicles with certain battery
chemistries may encounter in cold climates, particularly in an Arctic
state like Alaska?
TAX CREDITS VS. GRANTS
Question 7. This bill contains a variety of grant funding, and it
is my understanding that tax provisions could be added to it during
floor debate. Do you believe that one of those forms of support is more
appropriate and more relevant to the advancement of electric vehicles?
Is it important to maintain a mix between tax credits and federal
grants?
CHARGING STATIONS
Question 8. How many charging stations do you believe will need to
be installed for every electric vehicle put on the road?
CHARGING TIMES
Question 9. Right now, most gas-powered vehicles can be fueled in
less than 10 minutes, and then drive for hundreds of miles. A drawback
for electric vehicles is that they take hours to fully recharge. Even
quick charging, which can reduce battery life, can take 20 minutes. Can
you discuss any changes to charging time that you see over the next
several years?