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56 The preceding two chapters summarized past trends and future prospects for many of the variables likely to influence transportation energy use and travel demand over the coming decades. The review included opportunities and challenges for conventional and alternative fuels and vehicle technologies; trends and uncertainties in population, economic growth, and land use; and policy options and debates relating to energy, climate, and transportation funding. Drawing from that material, in this chapter a series of plausible future trans- portation energy scenarios are developed that serve to help identify potential impacts on state DOTs in subsequent stages of the analysis, in turn motivating the consideration of policy approaches and strategies to assist DOTs in preparing for an uncertain energy future. The first section in this chapter outlines the structure and approach to developing the future scenarios. The next three sections then develop individual components of the scenarios, which span the areas of energy use and vehicle technologies, travel behavior, and applicable federal policy frameworks. 5.1 Structure and Approach to Developing Scenarios This first section begins with a discussion of the underlying logic and general structure for the scenarios. It then enumer- ates several objectives that the scenarios should meet in order to support an effective application of the principles of robust decision making and outlines the approach to developing and employing the scenarios in more detail. 5.1.1 Scenario Elements As indicated earlier, the scenarios encompass three broad categories of future outcomes. These are the mix and prices of fuels and vehicle technologies, travel patterns for goods movement and personal travel, and federal policies relating to energy, climate, and transportation funding. The categories are further broken down into discrete elements of interestâ such as the price of oil or growth in truck freightâthat will be helpful for identifying specific impacts for state DOTs in later stages of analysis. The following paragraphs outline the logic for including the three categories of outcomes within the scenarios and introduce the specific elements included in each category. Energy use and technology elements. Evolving energy use patterns and technologies in surface transportation consti- tute the core subject matter for this project and thus represent the central organizing theme for the future scenarios. While certain energy elements included in the scenarios, such as the price of oil, could affect state DOTs directly, other elements, such as changes in the energy cost of travel, would be more likely to affect state DOTs indirectly through their influence on future travel behavior. Collectively, though, the included ele- ments are intended to sample the range of potential changes in transportation energy sources and vehicle technologies in the coming decades. The specific elements, and the logic for their inclusion, are as follows. â¢ Price of oil. Oil is a significant input into the construction and maintenance of roads, both to power machinery and for the production of certain materials such as asphalt. Any major change in oil prices could therefore exert consider- able influence on the costs faced by state DOTs. Addition- ally, to the extent that petroleum remains the dominant source of transportation fuels in future years, changes in oil prices would influence the marginal energy cost of travel, in turn potentially affecting trends in passenger travel and goods movement. â¢ Conventional vehicle fuel economy. State DOTs rely heav- ily on federal and state fuel taxes on gasoline and diesel to help fund highway expansion and maintenance activi- ties. Assuming that states and the federal government leave current fuel-tax rates unchanged, any significant increase in average fuel economy for conventional vehicles C H A P T E R 5 Plausible Future Transportation Energy Scenarios
57 would translate to a severe reduction in available revenue. Changes in fuel economy, in concert with changes to the price of oil, could also affect the marginal energy cost of travel, in turn influencing future travel choices. â¢ Energy mix. Fuel use in the transportation sector is currently dominated by petroleum-based products, most notably gaso- line and diesel. While many experts anticipate that petroleum will remain the dominant transportation fuel for decades to come, it is also possibleâperhaps due to unexpected tech- nology breakthroughs or active government policiesâthat one or more alternative fuels could emerge as a viable com- petitor to gasoline and diesel over the next 30 to 50 years. Discussion of this scenario element takes into consideration a range of plausible outcomes for the fuels that could achieve major market share by 2050. Given the aforementioned reli- ance of state DOTs on gasoline and diesel taxes, any major shift toward alternative fuels could negatively affect trans- portation revenue. Additionally, depending on the alterna- tive fuels and vehicle technologies in question, such a shift could affect the cost of vehicles and the energy cost of travel, in turn stimulating changes in travel behavior. Finally, the mix of transportation fuels in use could either support or hinder the ability of state DOTs to address goals related to climate change and air quality. â¢ Vehicle cost premium. Many of the vehicle technologies required to make use of alternative fuels entail a consider- able price premium. This is due in part to limited production to date but also, in many cases, reflects the need for further technology advances. Discussion of this element takes into consideration the degree to which the cost of new vehicles might change in the future depending on the emergence, or lack thereof, of the various alternative fuels and vehicle tech- nologies. This could in turn influence ownership choices and aggregate travel behavior. â¢ Energy cost of travel. Many commentators have expressed concern that growing demand for oil among the worldâs rapidly emerging nations could lead to higher oil prices, in turn making vehicle travel more expensive. On the other hand, certain alternative fuelsâmost notably electricity, natural gas, and hydrogenâcurrently offer the promise of much lower energy costs for vehicle travel. Changes in the energy cost of travel, either positive or negative, could affect future travel behavior along with the costs required for state DOTs to operate their own vehicle fleets. Travel elements. While certain of the energy elements just described could affect state DOTs directly, the indirect effects of energy and vehicle costs on passenger travel and goods movement could prove to be equally consequential. As described in the previous chapter, changes in aggregate travel behavior may also hinge on shifts in population, the economy, land use, and energy, climate, and transportation funding policies. The future scenarios include three elements to describe aggregate travel outcomes: 1. Growth in passenger vehicle travel. For this element, the plausible range of growth in aggregate passenger vehicle travel through 2050 is examined. The most obvious con- cerns for state DOTs are exacerbated traffic congestion and greater demand for new capacity, though safety outcomes could be adversely affected by greater vehicle travel as well. 2. Growth in transit demand. The current mode share for transit remains rather low at the national level, and most state DOTs have relatively little involvement in planning, constructing, or operating transit services. One can envision plausible futures, however, in which the demand for tran- sit and other non-automotive modes could increase con- siderably. This might be stimulated, for example, by much higher energy costs, by increasing inequality in income distributions, by prolonged economic stagnation, by a shift toward much denser land use, or by more concerted efforts to reduce greenhouse gas emissions from the transporta- tion sector. For this element, plausible future shifts in the mode share for transit, which would also tend to correlate with changes in other non-automotive modes such as walk- ing and biking, are considered. Such shifts might motivate states to assign a more significant role for DOTs in the plan- ning and provision of transit service or in the development of more integrated transportation and land use plans in order to support a broader array of mobility options. 3. Growth in truck demand. Goods movement has grown much more rapidly than passenger travel over the past few decades, and the same holds for trucking more specifically. The focus of the discussion for this element is on plausible future rates of growth in truck travel, which many expect to accelerate again as the economy recovers and strength- ens. Continued expansion of trucking could pose several challenges to state DOTs, including increased traffic conges- tion, more rapid deterioration of road surfaces, and greater demands for transportation revenue to support road net- work improvements related to goods movement. Federal policy elements. Future federal policies govern- ing energy, climate, and transportation funding could have a strong effect on the adoption, or lack thereof, of alternative fuels and advanced vehicle technologies, as well as on aggre- gate travel demand and mode choice. They could also affect state DOTs in a more direct manner. A decision to devolve greater funding responsibility to states and local governments, for example, could exacerbate the revenue shortfalls that DOTs might face as a result of declining state fuel-tax receipts. Additionally, federal legislation could expand or constrain the policy choices available to states. If the federal govern- ment were to implement a nationwide carbon cap-and-trade
58 program, for instance, then there would be little utility for a state to mount a similar program in parallel. Conversely, if the federal government relaxed current restrictions on tolling Interstate highways, states might look to increased tolling as a replacement for declining fuel taxes. It is for these latter two reasonsâthe potential to directly affect state DOTs and the potential to expand or constrain state policy optionsâthat the scenarios encompass future federal energy, climate, and transportation policies. Two elements are considered: federal energy and climate policy and federal transportation funding and investment policy. â¢ Federal energy and climate policy. Because a major share of greenhouse gas emissions comes from the production and consumption of power and fuel, energy and climate policies are implicitly linked. Discussion of this element takes into consideration plausible shifts in the relative prioritization of federal energy and climate policy goalsâfor example, emphasizing the reduction of greenhouse gas emissions ver- sus seeking to maintain lower energy costs from the end- user perspectiveâand the adoption of alternate policies to reflect such shifts. â¢ Federal transportation funding and investment policy. With fuel taxes increasingly undermined by inflation and improved fuel economy, leading in turn to growing funding shortfalls at all levels of government, federal transportation funding policy appears to be at a crossroads. Discussion of this element encapsulates alternate future directions for fed- eral policy in this arena, entertaining such options as contin- ued devolution, greater reliance on general revenue, and a reinvigorated emphasis on funding transportation through user fees. 5.1.2 Objectives and Approach to Developing Scenarios As briefly discussed in Chapter 1, the methodological approach for this study can be described as a qualitative appli- cation of the principles of RDM. The goal is to assist state DOTs, and potentially state legislatures, in identifying effective policies to address an uncertain energy future. The principal audience for this work thus includes elected officials and other senior decision makers along with more technically oriented policy analysts and interested stakeholders. Taken together, the methodological approach and intended audience suggest several important objectives that the scenarios should meet to ensure that the analysis and results will be as helpful as possible. In this section, the most critical objectives are identified, and how the scenarios have been constructed to meet these objectives is described. Developing realistic scenarios. Developing realistic sce- narios is of course critical from the perspective of support- ing a sound analysis that produces helpful findings for state DOTs. It should also help ensure that this study as a whole will be viewed as credible by the intended audience of state decision makers, making it more likely that the findings will be used to inform future planning efforts. To achieve the aim of realistic scenarios, the research team sought to identify and incorpo- rate the results of rigorous and well-established forecasting effortsâsuch as the future oil price forecasts of EIA (2013)â in constructing base-case outcomes for each of the elements included. In cases where such forecasts were not available, the team extrapolated current trends, taking into account any rel- evant regulations or legislation, such as the recent increases to CAFE standards, to establish base-case outcomes. For each of the futures, underlying trends that might contribute to such an outcome are also described. Exploring a broad range of plausible scenarios. The moti- vation for employing RDM in this study is that it is simply not possible to forecast many of the outcomes of interest with any degree of reliability when considering a planning time frame that extends over multiple decades. As such, the analy- sis includes not just a set of realistic base-case estimates, as described previously, but a much broader range of plausible futures. This helps to ensure that long-range strategic plans will perform well regardless of how the future unfolds. For some of the elements included in the scenarios, commonly con- sulted forecasts such as those produced by EIA (2013) include base or reference estimates along with high and low projec- tions. Where appropriate, high and low projections are used to broaden the range of plausible futures considered. More com- monly, however, the approach to identifying a broader range of plausible futures in this study involves considering how trends or shifts in some of the underlying variables examined in the previous two chaptersâfuel sources and vehicle technologies; population, the economy, and land use; and energy, climate, and transportation funding policiesâcould lead to potentially significant deviations from realistic base-case outcomes. Capturing variation among states within the scenarios. Most of the forecasts used to calibrate future outcomes for certain scenario elements have been developed to reflect the nation as a whole. This study, however, is intended to inform state-level planning, and for some of the elements there could be considerable variation from one state to the next. Consider, for example, the question of population growth. While popu- lation is not one of the elements included in the scenarios, it is an influential variable that will affect certain elements such as growth in vehicle travel. Barring some sort of catastrophic event, such as pandemic influenza or a nuclear war, most demographers expect the nationâs population to continue to grow in the coming decades. At a more disaggregate level, how- ever, it is certainly possible that one or more states might lose some share of their population, potentially as a result of ongo- ing structural shifts in the economy or even due to changing
59 federal energy and climate policies, and federal transpor- tation funding policiesâeach of which involves multiple plausible futures. As presented subsequently, two of the ele- ments include two plausible futures, seven of them include three plausible futures, and one includes six plausible futures. Multiplying these together (i.e., 22 Ã 37 Ã 6) yields 52,488 dis- tinct combinations. In focusing on perhaps five or 10 of these combinations, many more plausible futures would need to be discarded. And some of the discarded possibilities might involve specific combinations of elementsâ outcomes that cre- ate distinct impacts for state DOTs and thus are important to include in the analysis. To avoid this possibility, the approach taken in this study was to leave the potential outcomes for the different elements of interest in disaggregate form. That is, rather than seeking to combine potential values for different elements, based on their expected degree of correlation, into integrated future scenarios with composite narratives, the potential futures for each ele- ment are presented in stand-alone form. This reflects a recogni- tion that, while certain combinations might appear more likely than others, the vast majority of the possible combinations of outcomes for the various elements still fall within the realm of possibility. As described at greater length in the next chapter, the alter- nate futures for the different scenario elements were employed at a later stage of the analysis to identify possible impacts on state DOTs. Based on insights gleaned through interviews with state DOT staff, the team considered how the different plausible futures for each of the scenario elements couldâeither in iso- lation or in combination with other element outcomesâaffect the roles, mandates, funding, or operations of state DOTs. This allowed the team to reason with a relatively constrained set of futuresâthe union of the different plausible outcomes for each of the nine scenario elementsâwhile still allowing for the potential complexities and subtle nuances of certain elements interacting with one another. 5.2 Scenarios for Fuel and Vehicle Technology Elements This section presents plausible futures for scenario elements related to fuels and vehicle technologies in the 2040 to 2060 time frame, including the price of oil, changes in fuel economy for conventional vehicles, the mix of alternate fuels in use, the cost of vehicles, and the energy cost of travel. 5.2.1 Price of Oil For its Annual Energy Outlook (AEO) series, the EIA develops long-range forecasts for the price of crude oil along with many other energy-related measures. These include a reference-case projection (loosely interpreted as the most climate patterns. Accordingly, the range of plausible futures for some of the elements included in the analysis is even broader at the state level than it would be if viewed in terms of national averages. Developing illustrative scenarios. As already discussed, this study involves a qualitative application of RDM principles. The implication, in the context of developing future scenarios, is that the values used to represent plausible outcomes for the various scenario elements do not need to be highly precise. They will not, for example, serve as inputs into a mathemati- cal model, where precision would be much more important. Rather, they are simply meant to give a sense of the range of plausible outcomes for a given element based on the degree of uncertainty surrounding the underlying variables that will influence that element. This, in turn, makes it possible to bet- ter understand the types of impacts that state DOTs might face in the future. Consider, for example, growth in passenger vehicle travel. In terms of understanding potential impacts, it would make little difference whether travel were to increase by 50% or 75% over the next 30 to 50 years; it can be reasonably assumed that either of these would lead to much worse traffic congestion, in turn affecting state DOTs. Constraining the number of scenarios. In a typical quanti- tative application of RDM, researchers might execute hundreds or even thousands of model runs to examine the expected effects of different policy options for different combinations of assumptions about future states of the world (Lempert, Popper, and Bankes 2003). This study, in contrast, pursues a qualitative application of RDM principles. The number of alternate futures considered must therefore be constrained in order to keep the analysis manageable. When dealing with multiple elements of interest (e.g., price of oil, market share for different fuels, growth in trucking, future federal funding policy), one strategy for developing a relative small set of future scenarios is to combine plausible outcomes for different elements that appear to be logically consistent with one another in order to construct a small set of perhaps five to 10 integrated scenarios, each of which can be explained with a coherent narrative. For example, lower future oil prices might be linked to higher future rates of automotive and truck travel, while higher future oil prices might be linked to a greater shift to transit and rail freight. The development of such integrated scenarios is an important element of scenario-based planning. From an analytic perspective, the main problem with cre- ating just a small set of integrated future scenarios that incor- porate multiple elements of interest is that certain plausible combinations must inevitably be omitted. To illustrate this point, the futures developed in this study include a total of 10 separate elementsâoil price, conventional vehicle fuel economy, future mix of fuels, vehicle premium cost, energy cost of travel, passenger vehicle travel, transit use, trucking,
60 than expected population growth; a shift to much denser land-use patterns with significant reductions in vehicle travel; and the introduction of aggressive carbon pricing or much higher road-use fees, either of which should reduce the demand for driving and petroleum consumption. â¢ Oil prices rise slowly but steadily. This future represents an extrapolation of EIAâs reference case, with oil prices rising to $155 per barrel by 2040 and then ranging between $150 and $170 per barrel in the 2040 to 2060 time frame. This results in gasoline prices of about $4.25 to $5 per gallon. Under this potential outcome, despite any efforts to reduce demand and expand supply, growth in global demand for petroleum would continue to outpace growth in supply. â¢ Oil prices increase significantly. This final future extends EIAâs high oil price projection, with the cost per barrel of imported crude in 2011 dollars rising to almost $230 by 2040 and then costing between $225 and $250 per barrel in the 2040 to 2060 time frame. The retail price for a gallon of gasoline, in turn, would be in the range of $5.75 to $7.00 between 2040 and 2060. Factors that might lead to such an outcomeâby restricting oil supplies or by enhancing growth in demandâinclude continued political instability in some of the worldâs leading oil producers, policy choices that restrict exploitation of remaining reserves, higher than expected technology costs for extracting unconventional oil resources (e.g., shale oil or Arctic drilling), a suspension of current policies calling for greater vehicle fuel economy, a failure to develop cost-competitive alternative fuels and vehicle technologies, significant population growth or eco- nomic expansion, a continuation of the past trend toward lower-density land-use patterns resulting in greater overall vehicle travel, and a shift toward reduced reliance on fuel taxes and other user fees to fund highways, resulting in lower costs for vehicle travel and in turn greater demand. Table 5.1 summarizes the plausible oil price futures con- sidered, including both the cost per barrel of imported crude and the resulting effect on gasoline prices (including the current level of fuel taxation). 5.2.2 Conventional Light-Duty Vehicle Fuel Economy Vehicle fuel economy is governed by CAFE standards, which specify a minimum average fuel economy rating for the vehicles sold by major auto manufacturers in the United States each year. First instituted in the 1970s following the Arab oil embargo and ensuing price shocks, the standards were increased at an aggressive pace through the early 1980s and then allowed to stagnate over the next two decades. Over the past few years, however, amid increasing concerns related to climate change and more volatile oil prices, the probable trajectory for oil prices barring major changes from past trends) along with a high oil price and a low oil price pro- jection. The most recent EIA forecasts (EIA 2013), which proj- ect prices out to 2040 in 2011 dollars, serve as a helpful point of departure for developing plausible oil price futures for the 2040 to 2060 time frame. For the reference case, EIA estimates that imported crude oil prices will rise slowly but steadily, climbing from a little over $90 per barrel in 2012 to around $155 per barrel by 2040, translating in turn to $4.32 per gallon of gasoline in 2040. (This assumes inclusion of current rates of taxation on motor fuels.) In the low oil price scenario, the price of crude oil quickly falls to about $65 per barrel over the next few years and then gradually increases thereafter, reaching just over $70 per barrel by 2040, with a corresponding price for gasoline of $2.64 per gallon. Finally, in the high price sce- nario, imported crude prices rise rather quickly and steadily, reaching almost $230 per barrel by 2040, with gasoline prices increasing to $5.86 per gallon as a result. Starting with EIAâs reference, low, and high oil price fore- casts through 2040, plausible oil price futures for the 2040 to 2060 time frame are now considered. Note that for each of EIAâs scenarios, oil prices are risingâeither modestly or more rapidlyâleading up to 2040. Additionally, petroleum is a finite resource, which should tend to put upward pressure on prices over time. Accordingly, the scenarios developed for the 2040 to 2060 time frame, which are presented as ranges (e.g., $150 to $170 per barrel), are structured with the assumption that prices will most likely continue to rise past 2040. In developing these futures, comment is also made on how alternate outcomes for certain influential variables discussed in Chapters 3 and 4âfor example, the emergence of compet- ing fuel and vehicle technologies, shifts in land use patterns, or changes in energy policiesâcould contribute to the differ- ent oil price futures. â¢ Oil prices decline modestly. Building on EIAâs low oil price projection, in this future oil prices fall to about $65 per barrel over the next few years, climb back to $70 per barrel by 2040, and then vary in the range of $70 to $80 per barrel in 2011 dollars in the 2040 to 2060 time frame. Gasoline, assuming current rates of taxation, retails for around $2.50 to $3 per gallon between 2040 and 260. Future develop- ments that could lead to this resultâby expanding petro- leum supplies or by reducing the demand for gasoline and dieselâinclude greater oil production, possibly result- ing from continuing technological advances reducing the cost of exploiting remaining resources; the develop- ment and broad adoption of more fuel-efficient conven- tional vehicles that require much less petroleum per mile of travel; the emergence of competitively priced alternative fuels and vehicle technologies that undercut petroleum demand; prolonged stagnation in the economy or lower
61 the most advanced technologies envisioned, including engine efficiency improvements, streamlined aerodynam- ics, lighter-weight materials, and much broader applica- tion of hybrid technology. This level of improvement is broadly consistent with optimistic 2050 projections for conventional vehicles discussed in Appendix A. 5.2.3 Mix of Fuels in the Light-Duty Vehicle Fleet Cars and trucks have been powered almost exclusively by petroleum over the past century, and many of the experts and sources consulted during the course of this study suggest that petroleum is likely to remain dominant for the foreseeable future. There is already an extensive network of gasoline and diesel refueling stations in place, recent advances in extrac- tion technologies for unconventional sources such as tight oil have led to a resurgence in U.S. petroleum production, and the increasingly stringent CAFE standards through 2025 will enable future vehicles to travel much farther on a gallon of gasoline or diesel. These factors will make it more difficult for alternative fuels to compete effectively with petroleum. Yet society is also now witnessing the emergence of several promising alternative fuels and compatible vehicle technolo- gies. With significant subsidies for corn-based ethanol in past decades, the use of biofuels has experienced a slow but steady rise, and the nationâs aggressive RFS regulations call for contin- ued growth in the biofuels industry in the coming years. Natu- ral gas is already well established in certain fleet markets, but the recent drop in natural gas prices resulting from horizontal drilling and hydraulic fracturing technology could set the stage for broader adoption among the general population. Mean- while, the first battery electric and plug-in hybrid-electric vehi- cles are now entering the market; though still facing cost and performance limitations, the much lower energy costs associ- ated with electric vehicles offer potential promise for future market penetration. Finally, many of the large automakers have now announced their intent to initiate early commercialization efforts for hydrogen vehicles in the 2014 to 2016 time frame. Though petroleum appears likely to remain dominant over the near termâin EIAâs most recent AEO (EIA 2013), for federal government has set forth a series of increasingly strin- gent CAFE standards for the coming years, which now cover medium- and heavy-duty vehicles in addition to the light- duty fleet and have been harmonized with EPA and California greenhouse gas emission standards. Most recently, the Obama administration increased CAFE standards for the light-duty fleet to an average of 54.5 miles per gallon by 2025, corre- sponding to an approximate doubling of current standards for passenger vehicles. The CAFE rules for 2017 to 2025 were structured in two phases, with a comprehensive mid-term evaluation to review the current state of technical progress and economic conditions prior to finalizing the standards for 2022 to 2025 (EPA and NHTSA 2012). Depending on the outcome, it is conceivable that the most demanding improve- ments scheduled for the latter years could be delayed, though it seems unlikely that they would be permanently cancelled. Thus, the currently scheduled standards for 2025 are consid- ered as an appropriate lower bound for fuel economy improve- ments through the 2040 to 2060 time frame, along with an additional future in which standards are raised even further after 2025. The two scenarios are framed in terms of aver- age fuel economy gains in relation to pre-2012 vehicle fuel economy standards. â¢ Average fuel economy doubles. In this future, CAFE stan- dards would progress, as planned, to an average of 54.5 mpg by 2025, but would not be subject to continued increases thereafter (just as standards remained largely static through the late 1980s, 1990s, and early 2000s). In the ensuing decades, older vehicles would gradually be replaced with newer mod- els meeting the 2025 target such that nearly the entire on- road fleet would be averaging around an EPA rating of 54.5 mpg by the 2040 to 2060 time frame. This would double the current average fuel economy for new passenger vehi- cles, and would more than double the current fuel economy for the on-road fleet of light-duty vehicles. â¢ Average fuel economy quadruples. In this second sce- nario, federal decision makers choose to implement even more-stringent fuel economy standards after 2025, with the target eventually increasing to over 100 mpg. To meet such standards, auto manufacturers would likely deploy Oil Price Futures Imported Crude (2011 $/Barrel) Retail Gasoline (2011 $/Gallon with Taxes) EIA 2040 2040â2060 EIA 2040 2040â2060 Prices decline modestly $71 $70 to $80 $2.64 $2.50 to $3.00 Prices rise slowly but steadily $155 $150 to $170 $4.32 $4.25 to $5.00 Prices rise significantly $228 $225 to $250 $5.86 $5.75 to $7.00 Source: Data in the âEIA 2040â columns from Annual Energy Outlook 2013 (EIA 2013). Table 5.1. Plausible oil price futures.
62 ufacturers begin to develop and market a broader array of natural-gas models, eventually reducing the premium cur- rently associated with this type of vehicle. The market for natural gas as a transportation fuel steadily expands, first gaining market share within medium- and heavy-duty vehicle fleets but eventually within the passenger vehicle fleet as well. Natural gas ultimately accounts for over 50% of all vehicle miles of travel within the light-duty fleet. â¢ Significant shift to electric vehicles. Significant battery technology breakthroughs are achieved, leading to more affordable plug-in hybrid and battery electric vehicles and allowing for greater driving range in all-electric mode. Because of the inherent energy cost advantages of electric power in comparison to petroleum, a significant shift to electric vehicles unfolds rapidly in the passenger vehicle market along with certain medium- and heavy-duty vehicle markets. Electricity, via some combination of PHEVs and BEVs, eventually accounts for more than 75% of light-duty vehicle miles of travel. â¢ Significant shift to hydrogen vehicles. Under this scenario, manufacturers fail to achieve envisioned breakthroughs in battery technology, but rapid advances in hydrogen fuel cells, onboard hydrogen storage capacity, and hydrogen production methods do occur. As a result, hydrogen rather than electricity begins to displace petroleum, eventually powering over 75% of light-duty vehicle miles. â¢ Mix of fuels and vehicle technologies. In this final sce- nario, several fuel and vehicle technologies become cost- competitive with petroleum, but none emerge as a clearly superior alternative. Thus natural gas, biofuels, electric vehicles, and hydrogen fuel-cell vehicles all gain market share within various market segments, collectively displacing over 75% of current petroleum use. No individual alterna- tive, however, achieves greater than 25% market share. Table 5.2 summarizes market share for different fuels and vehicle technologies within the light-duty fleet under these six alternate futures. example, the reference-case forecast assumes that almost 90% of all light-duty vehicle miles in 2040 will still be powered by gasoline or diesel (inclusive of conventional non-plug-in hybrids, which ultimately derive all of their power from gaso- line or diesel)âit is plausible that one or more alternatives could gain significant market share by the 2040 to 2060 time frame. This is likely to require, however, some combination of technical breakthroughsâwhich are inherently difficult to predictâand government policies aimed at promoting lower- carbon fuels. Given the uncertainties, this study entertains a scenario in which petroleum remains dominant, along with several other plausible futures in which one or more alterna- tive fuel sources emerge to displace petroleum. For each sce- nario in which alternative fuels displace a significant share of petroleum, it is assumed that promising advances in the fuel and vehicle technologies along with supportive government policies in turn spur private investment in any needed fuel distribution infrastructure to enable broader adoption. â¢ Petroleum remains dominant. In this scenario, oil remains moderately priced and the cheaper per-mile energy cost of driving resulting from higher CAFE standards acts to undercut the competition from alternative fuels. Techno- logical breakthroughs that would enable other fuels and vehicle technologies to out-perform petroleum fail to emerge. Petroleum therefore remains the dominant fuel within the light-duty fleet, powering over 90% of vehicle miles of travel. â¢ Moderate shift to biofuels. Spurred in part by the nationâs aggressive RFS and comparable policies enacted at state levels, biofuel production rises steadily for several decades, eventually accounting for over 30% of all mileage by the light-duty fleet. Limits on arable land and competition with food production, however, ultimately act to constrain further expansion of biofuels. Petroleum dominates the remainder of the light-duty vehicle fuels market. â¢ Significant shift to natural gas. With the prospect of less- expensive, domestically produced natural gas, vehicle man- Fuel Mix Scenarios Percent of Light-Duty Vehicle Miles Powered By: Petroleum Biofuel Nat. Gas Electricity Hydrogen Current status ~94% ~6% ~0 ~0 ~0 Petroleum dominates ~90% ~10% ~0 ~0 ~0 Shift to biofuels ~70% ~30% ~0 ~0 ~0 Shift to natural gas ~45% ~5% ~50% ~0 ~0 Shift to electric ~20% ~5% ~0 ~75% ~0 Shift to hydrogen ~20% ~5% ~0 ~0 ~75% Mix of competing fuels ~20% ~5% ~25% ~25% ~25% Table 5.2. Plausible futures for fuel mix within the light-duty fleet.
63 these vehicle types, but this is not a certainty. On the other hand, if premiums remain much higher than $10,000, then it would become very difficult for the vehicle type in ques- tion to achieve significant market share. Although electric and hydrogen vehicles promise significant savings in per- mile energy costs, it would be impossible for all but the highest-mileage drivers to recoup such a high initial pre- mium through fuel savings. Therefore, $10,000 is viewed as an upper bound for the premium price that could be associated with any commercially successful vehicle type. 5.2.5 Energy Cost of Driving Depending on which alternative fuels emerge as competi- tive in the coming decades, as well as how changes in oil prices compare with increased fuel economy, the energy cost of driv- ing on a per-mile basis could drop, remain stable, or rise in comparison with the average cost of driving a conventionally fueled vehicle today. â¢ Energy cost of driving declines by at least a half. Depend- ing on technology breakthroughs and changes in the cost of underlying energy feedstocks, a significant decline in the energy cost of driving is theoretically possible for any of the fuel types considered in this study, including petroleum. It seems most likely, however, for electric vehicles, for natural gas (with its recent drop in price), and perhaps for hydro- gen. Consider an example with electric vehicles to illustrate the potential for substantial savings. The fuel economy for Nissan Leaf is rated at about 3 miles per kWh (fueleconomy. gov, undated). With the cost of residential electricity in the United States averaging 11.8 cents per kWh as of 2012 (EIA 2012), the energy cost of driving a Leaf is a little less than 4 cents per mile. By way of contrast, if one assumes that gas- oline costs, say, $3 per gallon (net of taxes), then the energy cost of driving a conventionally fueled vehicle that achieves the recent CAFE standard of 27.5 mpg would be just under 11 cents per mile, almost three times higher than the cost of driving a Leaf. Future conventional vehicles will of course have higher fuel economy, but fuel economy for alternative- fuel vehicles is likely to improve over time as well. â¢ Energy cost of driving remains at current levels. Such an outcome would be most likely with petroleum (with any future increase in the cost of oil being offset by improved fuel economy), with biofuels, or perhaps with hydrogen. In theory it might also occur with electric or natural gas vehicles, but only if their prices rise well beyond what is currently forecast. â¢ Energy cost of driving increases by a third. Given the significant increase in CAFE standards scheduled through 2025, the prospects for driving to become more costly on a per-mile basis appear somewhat remote. It is plausible, 5.2.4 Vehicle Premium Cost The current retail cost of conventional vehicles spans a con- siderable rangeâfrom perhaps $10,000 to hundreds of thou- sands of dollarsâdepending on size, speed, power, luxury amenities, and the like. Rather than focusing on such varia- tions, here the concern is with the degree to which the price of an average vehicle (such as an affordable mid-size sedan or pickup truck) might rise in future years as a result of the inclusion of advanced technology to meet higher fuel econ- omy standards or to support alternative fuels. Two potential futures are outlined that are intended to bracket the plausible range: that the cost of new vehicles in 2040 to 2060 is similar, in real terms, to todayâs prices, and that the cost of new vehi- cles increases by about $10,000 over todayâs costs. The logic for these two futures is as follows. â¢ New vehicle costs remain the same. This scenario would be most probable if the future light-duty vehicle fleet were powered mainly by a combination of petroleum and bio- fuels. The additional cost to configure a vehicle to run on higher blends of biofuels is just a few hundred dollars, and this is not expected to increase in future decades. Auto manufacturers will, however, need to install more advanced efficiency-oriented technology on conventional vehicles in order to achieve higher CAFE standards by 2025, and this is expected to increase vehicle costs. EPA and NHTSA (2012) have estimated, for example, that a vehicle able to meet the 2025 standards of 54.5 mpg will cost around $2,000 more than an otherwise comparable vehicle designed to meet the 2016 standards of 37.5 mpg. But if one assumes that CAFE standards are not subject to further increases following 2025, then it seems plausible that the cost of the technology required to meet the 2025 standards could slowly decline over time with increased production and manufacturing experience such that the cost of new vehicles in the 2040 to 2060 time frame is similar, in real terms, to todayâs costs. â¢ New vehicle costs increase by $10,000. At the other end of the spectrum, the premium associated with certain alternative-fuel vehiclesâespecially electric vehicles and hydrogen fuel-cell vehiclesâcould be considerable. Battery electric and plug-in hybrid vehicles have just entered the market and currently entail price premiums, depending on specific configuration details, well in excess of $10,000. They also face performance constraints in comparison to conven- tional petroleum-fueled vehicles, including long recharge times and significant range constraints for battery electrics. Hydrogen fuel-cell vehicles have yet to reach the market, but it is certainly reasonable to assume that the initial premium will be greater than $10,000. Over time, it is hoped that fur- ther technical advancements along with higher production volumes will help reduce the premiums associated with
64 rate of about 1.2%. This provides a helpful anchoring point for the future scenarios for passenger vehicle travel. A plau- sible future in which passenger vehicle travel could increase even more rapidly, though still at less than historical rates, is also considered, as well as is a case in which passenger vehicle travel declines slightly. While the latter case may be improb- able for the nation as a whole, it could occur in certain states due to plausible shifts in migration patterns. â¢ Passenger vehicle travel declines by 10%. While many expect total VMT in the United States to rise in the coming years, such a trend may not hold in all states. Already the country has witnessed major migratory shiftsâfrom the rust-belt states to the Sunbelt states, for exampleârelated to structural changes in the economy. It is certainly possible that these trends could continue in future decades, potentially leading to absolute declines in population and economic activity in some states. As another possibility, acceleration in the effects of climate changeâworsening heat waves and drought con- ditions in the Southwest, for instanceâcould make certain regions of the country much less desirable as a place to live, triggering a potential reversal in recent migration patterns. Given that this study is intended to inform state-level long- range planning, it therefore seems prudent to allow for the possibility of declining passenger vehicle travel within the futures considered, even if such an outcome only occurs in a few states. Thus, a future is included in which pas- senger vehicle travel in a state declines by 10% by the 2040 to 2060 time frame, which would correspond to an annual rate along the lines of negative 0.25%. â¢ Passenger vehicle travel increases by 60%. For the mid- range scenario, EIAâs most recent reference-case projection for total VMT growth in the light-duty vehicle fleet, with its implied annual growth rate of 1.2%, is used to begin, and then that same rate is extrapolated out to the 2040 to 2060 time frame. This would result in an increase of about 60% over the next 40 years. As discussed in Chap- ter 4, it is expected that the U.S. population as a whole will grow at an annual rate of slightly less than 1% in the coming decades. A growth rate of 1.2% in vehicle travel therefore implies that the rate of per-capita vehicle travel will continue to expand. This might be explained by rising incomes (which generally correlate with increased vehicle ownership and travel) or by the possibility that the energy cost of travel could decline in future years. Still, an annual growth rate of 1.2% marks a significant reduction from trends over the past 40 years, implying that the rate of growth in per-capita travel would at least slow to some degree. This slowing could reflect the outcome of efforts to improve alternative modes of travel, to foster denser land-use patterns, or to rely more heavily on user fees for funding transportation. though, that the rapid growth in world petroleum demand could outpace increased supply, in turn leading to a rise in oil prices that outgains improvements in vehicle fuel econ- omy. Assuming that other alternative fuels fail to achieve significant market penetration, the energy cost of driving a conventional vehicle would slowly increase. If driving con- ventional vehicles were to become much more expensive than at present, however, it would be more likely that alter- native fuels would emerge as a cost-competitive alternative to petroleum. 5.3 Scenarios for Travel Elements The focus now shifts to the development of plausible sce- narios for future trends in personal travel and goods move- ment. Specifically, this section considers potential changes in passenger vehicle travel, transit mode share, and freight trucking. 5.3.1 Total Passenger Vehicle Travel Based on BTS data (2012a), total vehicle miles of travel for light-duty vehicles (i.e., passenger cars, pickup trucks, sport utility vehicles, and minivans) and motorcycles in the United States increased from about 1.04 trillion in 1970 to about 2.96 trillion in 2010, representing a cumulative gain of 184% and an average annual growth rate of 2.65%. It seems unlikely, however, that such rapid growth will continue over the com- ing years. Many of the trends that spurred such rapid VMT growth in previous decadesâincreased automotive owner- ship, dramatic expansion of the road network, a growing share of two-worker households, greater automobility among older adults, and the likeâhave either slowed or reached their natu- ral saturation points. At the same time, some younger adults now appear to be waiting longer to get a license and begin driving, possibly due to a generational shift in attitudes about mobility or to improved telecommunications technologies and the rise of social networking. Indeed, total VMT in the United States actually peaked in 2007 and declined for several years, though it began to rise again in 2010 (BTS 2012a). Dur- ing the brief period of decline, the nation also faced spiking fuel prices followed by a steep and prolonged recessionâ factors that correlate with reduced VMT as well. It is too early to discern whether this decline in VMT repre- sents just a brief aberration related to economic conditions or instead heralds a major shift in long-term automobility trends. Many expect that growth in population and the economy will contribute to continued increases in VMT in the coming decades, although the rate of growth may be lower. The most recent reference-case projections from EIA (2013) assume, for example, that total mileage within the light-duty fleet will con- tinue to rise through 2040, albeit at a much-reduced annual
65 contrast, transit use should vary inversely with automotive travel, as one often substitutes for the other. Yet the current mode share for transit in the United States is so low that even significant percentage gains in transit use would not necessar- ily preclude ongoing growth in total VMT for the light-duty fleet. Thus, one could see both high percentage gains in transit mode share and high absolute increases in VMT. Looking at the historical record, transit use in the United States declined significantly over the latter half of the 20th century. Total transit use peaked at about 23.5 billion annual trips in 1946 when the size of the U.S. population was around 141 million, translating to 166 transit trips per person each year. As of 2010, the total number of transit trips was around 10.2 billion, while the size of the U.S. population had grown to around 307 million, corresponding to 33 transit trips per per- son per year (APTA 2012, Table 1; U.S. Census Bureau 2000, 2011). In other words, per-capita transit use has declined by nearly 80% over the past 65 years. The trend over the past decade, though, has been generally upward. This is illustrated in Table 5.4, which presents statis- tics on transit mode share from the two most recent National Household Travel Surveys in 2001 and 2009 (Santos et al. 2011) and on total transit use for those same years from the 2012 Public Transportation Fact Book (APTA 2012). Given that transit use, despite recent gains, is still low in historical terms, there would seem to be little apparent utility in developing future scenarios where the transit share drops much further. On the other hand, it is plausible that transit mode shareâowing to some combination of changes in land use, driving prices, and government policyâcould increase considerably. Three plausible futures are formulated â¢ Passenger vehicle travel increases by 80%. Should total light-duty vehicle travel increase by 60% by the 2040 to 2060 time frame, as envisioned in the prior scenario, many state DOTs will face significant increases in traffic congestion and other daunting challenges. From the perspective of identify- ing potential impacts on state DOTs, then, it may not be nec- essary to consider a future in which light-duty vehicle travel grows at an even faster rate. Yet EIAâs most recent AEO also includes a âhigh economic growth scenarioâ in which total passenger vehicle travel increases at an annual rate of 1.5%. Projected out to the 2040 to 2060 time frame, this would result in a cumulative increase of 80%. Beyond significant economic growth, additional factors that could contribute to such an outcome include faster-than-expected popula- tion growth within a state, major reductions in the energy cost of vehicle travel, continued decentralization of land use patterns, and a shift toward greater reliance on general reve- nue sources, as opposed to user fees, to fund transportation, further reducing the cost of driving. Table 5.3 summarizes the three plausible futures outlined for future trends in passenger vehicle travel. 5.3.2 Transit Mode Share Next are examined potential changes in transit use. Because many of the elements that support increased transit useâfor example, denser land-use patterns or higher costs of vehicle travelâcould also stimulate increases in walking or biking, changes in transit are intended to serve as a surrogate for trends in other non-automotive travel modes as well. In Year Transit Mode Share Total Transit Use Share of Person Trips Share of Person Miles Unlinked Passenger Trips Passenger Miles 2001 1.6% 1.2% 9.65 billion 49.07 billion 2009 1.9% 1.5% 10.21 billion 54.01 billion Source: Santos et al. (2011, Tables 9 and 12), APTA (2012, Tables 1 and 3). Table 5.4. Recent growth in transit use. Future EIA Forecast Case Annual Growth Cumulative 40-Year Growth Historical rate for 1970â2010 N/A 2.65% 184% 10% decline N/A -0.25% -10% 60% increase Reference case 1.2% 60% 80% increase High economic growth 1.5% 80% Source: Historical rates from BTS (2012a); EIA forecast cases from Annual Energy Outlook 2013 (EIA 2013). Table 5.3. Plausible futures for light-duty fleet VMT.
66 tionship to driving. These could include zoning for much denser and more integrated land use, investing in rail or bus rapid transit lines with dedicated right-of-ways and grade separation to make transit a faster option for many trips, imposing road use fees that encompass congestion and emissions pricing in addition to base-level mileage fees, and doing away with most forms of subsidized parking. Other elements, such as higher vehicle premiums, increased energy costs for travel, low economic growth, and increasing income disparities, could contribute to this scenario as well. 5.3.3 Freight Trucking As of 2010, according to BTS data (2012a), combination trucks (i.e., tractor-trailer combinations) were responsible for roughly 176 billion VMT, representing just less than 6% of all VMT on the U.S. road network. If one adds in the estimated VMT from smaller single-unit trucks (i.e., two or more axles and six or more wheels, often referred to as light-duty com- mercial trucks), the VMT share for trucking grows to over 9.5%. BTS estimates indicate that the U.S. trucking indus- try moved about 1.32 trillion ton-miles of freight in 2009, slightly less than 31% of the total for all freight modes (BTS 2012b). By way of comparison, rail carried a little less than 37% of all ton-miles, pipelines carried a bit more than 21%, domestic water transportation was responsible for another 11%, and aviation was responsible for less than 1%. Examining the trucking industry over the past several decades, two important trends stand out. First, truck VMT have been growing much more rapidly than passenger VMT. Since 1970, per BTS data (2012a), the average annual growth rate for VMT in the light-duty passenger vehicle fleet has been about 2.65%, as mentioned previously. For combination trucks, in contrast, the growth rate has been about 4.11%, and for combination trucks and smaller single-unit trucks together, the annual growth rate has been about 3.89%. Second, the share of goods movement handled by trucking has also been rising. Based on BTS data (2012b), total ton-miles of freight across all modes increased by about 26% between 1980 and 2009. (It actually increased by an even greater extent through 2007, but then suf- fered declines in 2008 and 2009 as a result of the recession.) Over this same period, trucking ton-miles increased by 110%. Ton-miles by aviation grew at an even faster rate, increasing by 148% since 1980, but aviation carries only a fraction of a percent of all ton-miles (though it carries a much larger share of freight by value). The closest competitor to trucking, rail freight, has also grown at a significant, though slightly lower, rate since 1980, with a cumulative increase of about 70%. The strong growth for rail reflects, in part, increasing volume for intermodal containers carried by rail. In contrast, ton-miles by pipeline have dipped slightly, while ton-miles by domestic water transportation have fallen precipitously. for transit use as a share of all person tripsâone in which it holds constant, one in which it increases by 150%, and one in which it increases by 400%. The latter would bring per-capita transit trips for the nation as a whole back to about the same level as at the end of World War II, a time during which U.S. citizens were being asked to ration gasoline and other scarce resources. This scenario, though promising some social bene- fits, would strain existing transit systems, potentially motivat- ing a more integral role for state DOTs in supporting transit and other non-automotive alternatives. Note that the plausible scenarios are presented in terms of percentage increases for mode share (e.g., transit mode share increases by 150%) as opposed to absolute increases (e.g., transit mode share rises to 5%). This is because current transit use varies considerably from one state to the next. Most rural states, for instance, have very little transit use, while states with large metropolitan areas have much higher rates. To illustrate the effects of the envisioned growth rates, corresponding mode share measures are indicated for the nation as a whole. In considering the effect for any given state, however, the envi- sioned percentage changes should be interpreted in the con- text of the current baseline for transit use within that state. â¢ Transit mode share remains constant. Total transit use increases in this scenario, but only at the same pace as growth in automotive travel. Thus, transit maintains its current mode share. Underlying trends that might support this outcomeâthat is, that might hinder further expan- sion in transit mode shareâinclude lower vehicle premium costs, lower energy costs for vehicle travel, greater reliance on general revenues in place of user fees to fund transporta- tion, a continuation of low-density development patterns, and rising incomes. â¢ Transit mode share increases by 150%. In this future, which would represent a slight acceleration in trends over the past decade, growth in transit use outpaces growth in vehicle travel, with the transit mode share for person trips rising to 5% for the nation as a whole by the 2040 to 2060 time frame. Achieving such a gain would likely require con- certed efforts on the part of policy makers, including plan- ning for denser land use, significant investments in transit capacity and other alternative travel modes, and renewed emphasis on road use fees to charge the full costs of auto- motive travel. Additional developments that might con- tribute to this outcome include significantly higher vehicle premium prices, rising energy costs for vehicle travel, pro- longed economic stagnation, and rising income inequality. â¢ Transit mode share increases by 400%. In this final future, transit use grows quite rapidly over the next 30 to 50 years, accommodating 10% of all trips for the nation as a whole by 2050. Achieving this endpoint would likely involve quite aggressive policies to make transit more attractive in rela-
67 This could in turn lead to a zero growth rate for trucking within those states. The reason that the rate is not assumed to be negative is that a significant share of trucking involves interstate travel. Within this scenario, declines in freight trucking serving destinations within a state are offset by increases in interstate trucking that passes through the state. Other elements that might contribute to such an out- come include higher road-use fees for trucks (e.g., weight- distance truck fees, congestion pricing, and emissions fees), rapidly rising oil prices, a stagnant economy, or aggressive public subsidization of rail investments aimed at enabling a shift in freight ton-miles away from trucking to help reduce traffic congestion and harmful emissions. â¢ Freight trucking VMT increases by 125%. This scenario is based on the EIA reference case for annual VMT growth rate for freight trucks over 10,000 pounds and is broadly consistent with the FHWAâs Freight Analysis Framework forecast for truck ton movements to 2040 (FHWA Office of Operations 2011). The growth rate is 2.1% per year, result- ing in a cumulative increase of 125% by around 2050. Con- sistent with this robust growth rate, the economy expands at a healthy rate, the cost of driving increases modestly at most, and some investment in additional rail capacity is made, although not enough to prevent overall ton-mile mode share gains for trucking. â¢ Freight trucking VMT increases by 200%. The outcome in this case is similar to EIAâs high economic growth fore- cast for annual VMT of freight trucks over 10,000 pounds. With an annual growth rate of 2.9%, truck VMT increases 200% by around 2050. In this future, the economy grows rapidly, per-mile hauling costs remain relatively low due to inexpensive oil or significant fuel economy gains, and there is not a significant shift to greater reliance on user fees to raise highway funds. The system of Class 1 railroads, absent significant expansion, begins to experience severe capacity constraints and is unable to maintain a constant share of growing ton-miles. Mode share for trucks thus increases significantly. Table 5.5 summarizes the growth in trucking VMT over the past 40 years along with the rates of growth considered in the three scenarios developed for this study. Looking forward, many view these two trendsâmore rapid growth for truck travel than for passenger vehicle travel and increasing ton-mile mode share for truckingâas likely to continue. In the most recent AEO from EIA (2013), the reference-case projection shows medium- and heavy-duty truck VMT growing at an annual rate of 2.1%. While sub- stantially lower than historical trucking growth rates, this is still greater than the 1.2% growth rate projected for passenger VMT in the reference case. The prospects for continued growth in mode share for truck freight remain strong as well. While the shares of ton-miles carried by trucks and by rail have both increased significantly in recent decades, the rail network faces increasingly stringent capacity constraints. Between 1960 and 2009, the nationâs Class 1 rail mileage shrank by almost 55%, improving profits for rail companies but also restricting total rail capacity. Over the same period, the U.S. road network, measured in center- line miles, grew by about 14% (BTS 2013a), and total lane miles within the road network have increased by close to 8% since 1980 (BTS 2013b). Based on these trends, trucking now appears to represent the path of least resistance for accommodating fur- ther growth in goods movement; it is comparatively easy to add more trucks to the road network, albeit at the cost of increased traffic congestion and road wear. In contrast, expanding the rail network in a significant way would require considerable private investment. The most recent EIA (2013) projections were used for the development of scenarios for growth in trucking, and it was assumed that trucking is likely to continue to gain in mode share for the reasons just discussed. Included are the annual growth rate of 2.1% modeled within EIAâs reference case and a more rapid annual growth rate of 2.9% based on EIAâs high economic growth scenario. To round out the scenarios, also included is a no-growth future; this is not linked to a specific EIA scenario but rather is intended to reflect the potential for variation in goods movement patterns in different states given uncertain future growth and migration patterns. â¢ No growth in freight trucking. As discussed earlier in rela- tion to the development of scenarios for passenger vehicle travel, one can construct plausible narratives in which certain states might lose population in the coming decades. Future EIA Forecast Case Annual Growth Cumulative 40-Year Growth Historical rate for 1970â2010 N/A 3.89% 360% Zero increase N/A 0.0% 0% 125% increase Reference case 2.1% 125% 200% increase High economic growth 2.9% 200% Source: Historical rates from BTS (2012a), EIA forecast cases from Annual Energy Outlook 2013 (EIA 2013). Table 5.5. Plausible futures for growth in freight trucking VMT.
68 the relative importance of climate mitigation versus energy prices. Those more focused on climate mitigation actively oppose aggressive efforts to expand petroleum production or develop synthetic fuels such as those from coal-to-liquid technology, policies that could put downward pressure on prices but at the possible cost of increased GHG emissions. Those unconcerned with climate change, in contrast, rally against policies to employ pricing as a means of reduc- ing carbon emissions. This results in policy stalemate, the outcome of which is simply to continue with the current mix of energy and climate policies. These include a con- tinuation of current fossil-fuel subsidies along with CAFE standards, RFSs, modest investments in alternative fuels and vehicle propulsion technology research, and modest subsidies for alternative-fuel vehicle purchases. â¢ Aggressive policies focused on low energy cost for end users. In this next future, Congress agrees to aggressively pursue the goal of maintaining low and stable energy costs for end users, even though some of the policies could exac- erbate climate concerns. The adopted mix of policies, some of which are already in place, include increased CAFE stan- dards; renewable fuel standards; public investments to help expand petroleum production, including from unconven- tional sources; and larger investments in synthetic fossil- fuel production technologies. â¢ Aggressive policies focused on climate mitigation. In this final future, perhaps in response to increasing evi- dence of and costs associated with a changing climate and more frequent severe weather events, Congress prioritizes efforts to mitigate climate change. This creates the basis for agreeing to enact pricing policies to help reduce car- bon emissions. It also results in the discontinuation of policies, such as support for expanded drilling on public land, which could undermine climate goals. The emer- gent mix of policies includes higher CAFE standards, low-carbon fuel standards (LCFSs), vehicle feebate pro- grams, and higher gas taxes or carbon fees, with much of the proceeds directed toward clean-energy research and adoption incentives. Table 5.6 summarizes the mix of approaches employed under the three plausible scenarios for future federal energy and climate policy. 5.4.2 Federal Transportation Funding Policies With motor-fuel taxes, the major source of highway rev- enue, losing ground to inflation and improved fuel economy, transportation funding at the federal level (and in many states) is facing severe shortfalls and stands at a crossroads. Three scenarios are considered that trace out distinct trajec- 5.4 Scenarios for Federal Policy Elements This final section presents the development of scenarios for future federal policies involving energy and climate along with policies related to transportation funding. As noted ear- lier, these could influence both energy use and travel patterns, and they might also act to expand or constrain the types of policies that states can pursue. 5.4.1 Federal Energy and Climate Policies Much of the current framework for federal energy and cli- mate policy aims to ensure affordable energy supplies, reduce reliance on foreign oil for economic and security reasons, and reduce greenhouse gas emissions for climate mitigation. While a few policiesâmost notably vehicle fuel economy standardsâcan address all of these goals, most instead pose trade-offs among the goals. For example, expanded domestic drilling could help to lower oil prices and reduce the need for imported oil. To the extent that it is effective in reduc- ing prices, however, it could also stimulate increased demand and in turn higher greenhouse gas emissions. With the recent increase in U.S. oil and gas production made possible by improved extraction technologies, forecasts now suggest that the United States could be a net fossil-fuel exporter by 2030 (IEA 2012). This could lead to a reduced policy focus in the coming decades on U.S. energy independence. In contrast, barring unexpected technology breakthroughs in lower- carbon energy sources, the fundamental tension between the goals of maintaining low energy prices for the end user and stemming greenhouse gas emissions is likely to persist. Policy options can also be categorized in terms of approach; possibilities include pricing mechanisms (e.g., charging more for high-carbon fuels to discourage their use), regulatory man- dates (e.g., requiring that fuel producers develop more bio- fuels or that auto manufacturers offer vehicles with greater fuel economy), and voluntary incentives or subsidies (e.g., offer- ing rebates on the purchase of electric vehicles or subsidizing the production of ethanol). While pricing mechanisms can be quite effective, they are also politically contentious. Most U.S. policies to date have therefore emphasized either the regula- tory approach or subsidies and other voluntary incentives. This study considers three potential scenarios for future federal energy and climate policy that differ from one another in their relative prioritization between the goals of low energy costs for end users and climate mitigation and in whether pricing policies are employed to incentivize shifts away from carbon-intensive fuels. â¢ Moderate energy and climate policies. In this future, fed- eral policy makers as a group remain ambivalent regarding
69 direct user feesâperhaps in the form of tolling on federal- aid highways or alternatively through mileage-based user feesâto fund the transportation network. Under this regime, revenues are adequate to support highway main- tenance requirements and needed system expansions. While transit funding receives its share from the HTF, it remains largely reliant on state and local subsidies and thus struggles for enough revenue to maintain and expand operations. â¢ Shift to efficiency-oriented funding mechanisms. This last future might be characterized as the most progressive vision, with increased emphasis on funding mechanisms that stim- ulate much more efficient use of the transportation system. Similar to the prior option, Congress takes steps to shore up federal transportation funding, initially increasing fuel taxes then later shifting to direct mileage-based user fees. Additionally, Congress recognizes that the form of trans- portation funding, beyond revenue implications, can have a profound effect on vehicle purchase and travel decisions. It thus directs the administration to develop a mileage-fee system with sufficient flexibility to allow per-mile fees to vary with such elements as time, location, axle weight, and vehicle emissions class in order to more accurately reflect the costs associated with any given trip. This in turn enables broad application of congestion tolls, weight-distance truck tolls, and emissions fees. These pricing structures encour- age much more efficient use of the system, thus reducing the amount of new capacity needed, and at the same time raise much more revenue than current mechanisms. There is thus ample funding not only for highways but also for transit investments. The latter becomes important given that congestion pricing stimulates at least some degree of mode shift. Table 5.7 summarizes the approaches, characteristics, and likely outcomes associated with the transportation funding policy scenarios just described. tories for future federal transportation funding policies that might unfold in the coming decades. â¢ Declining federal revenue and investment capacity. The first future scenario represents an extension of more recent trends in transportation funding over the past 10 to 20 years. In the context of higher and more volatile oil prices along with growing partisan divisions, Congress does not institute significant motor-fuel tax increases in the coming decades, nor does it augment declining fuel-tax receipts with an alter- nate source of revenue. The size of the federal program thus declines, with a greater share of the transportation funding burden shifting to state and local jurisdictions. Following recent experience, states, counties, and cities find it more fea- sible to augment transportation funding through increased reliance on general revenue sources such as sales taxes, prop- erty taxes, and project impact fees rather than by increasing highway user fees. Increased state and local funding, however, is not sufficient to offset the reduction in federal revenue, leading to reduced aggregate investment capacity. The shift toward greater reliance on general revenue also diminishes the incentive for motorists to use the system efficiently. â¢ Renewed federal commitment to transportation invest- ments. The second scenario represents a reinvigoration of the philosophies that guided transportation funding and investment for most of the twentieth centuryâspecifically, strong reliance on user fees as an equitable and efficient means of funding transportation investments. As the cur- rent recession subsides, members of Congress recognize the critical linkage between the nationâs transportation system and its prosperity and achieve consensus to shore up the federal transportation program and its underlying revenue sources. In the near term, this includes a significant increase in federal taxes on gasoline and diesel, with reve- nues dedicated to the Highway Trust Fund. Over the longer term, as fuel taxes decline with greater fuel economy and a shift to alternative fuels, the nation replaces fuel taxes with Table 5.6. Summary of federal energy and climate policy futures. Scenarios Regulatory Mandates Subsidies Pricing Policies Moderate energy and climate policies Modest increases to CAFE standards and RFSs Moderate research and development (R&D) support, limited vehicle and fuel subsidies None Aggressive policies focused on low energy prices Modest increases to CAFE standards and RFSs More R&D and subsidies for expanded petroleum production and synthetic fuels None Aggressive policies focused on climate mitigation Aggressive increases to CAFE standards and shift from RFSs to LCFSs More R&D and subsidies for low- carbon fuels and vehicle technologies Carbon tax or cap and trade along with vehicle feebate programs
70 EPA and NHTSA. 2012. 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards; Final Rule. Federal Register, 77 (199). FHWA Office of Operations. 2011. Freight Analysis Framework. Freight Management and Operations. http://ops.fhwa.dot.gov/freight/ freight_analysis/faf/index.htm (accessed May 10, 2011). Fueleconomy.gov. Undated. 2012 Nissan Leaf. http://www.fueleconomy. gov/feg/noframes/32154.shtml (accessed December 8, 2011) IEA. 2012. World Energy Outlook 2012. Lempert, R. J., S. W. Popper, and S. C. Bankes. 2003. Shaping the Next One Hundred Years: New Methods for Quantitative Long-Term Policy Analysis. RAND Pardee Center, Santa Monica. Santos, A., N. McGuckin, H. Y. Nakamoto, D. Gray, and S. Liss. 2011. Summary of Travel Trends: 2009 National Household Travel Survey. Federal Highway Administration. U.S. Census Bureau. 2000. Historical National Population Estimates: July 1, 1900 to July 1, 1999. Population Estimates. http://www.census. gov/popest/data/national/totals/pre-1980/tables/popclockest.txt (accessed March 18, 2013). U.S. Census Bureau. 2011. Table 1. Intercensal Estimates of the Resi- dent Population by Sex and Age for the United States: April 1, 2000 to July 1, 2010. US-EST00INT-01. Population Estimates. http:// www.census.gov/popest/data/intercensal/national/nat2010.html (accessed March 18, 2013). References APTA. 2012. 2012 Public Transportation Fact Book. Washington, D.C. BTS. 2012a. Table 1-35: U.S. Vehicle-Miles. National Transportation Statistics. http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/ files/publications/national_transportation_statistics/html/ table_01_35.html (accessed April 11, 2013). BTS. 2012b. Table 1-50: U.S. Ton-Miles of Freight (BTS Special Tabula- tion). National Transportation Statistics. http://www.rita.dot.gov/ bts/sites/rita.dot.gov.bts/files/publications/national_transportation_ statistics/html/table_01_50.html (accessed April 15, 2013). BTS. 2013a. Table 1-1: System Mileage Within the United States. National Transportation Statistics. http://www.rita.dot.gov/bts/sites/rita.dot. gov.bts/files/publications/national_transportation_statistics/html/ table_01_01.html (accessed April 15, 2013). BTS. 2013b. Table 1-6: Estimated U.S. Roadway Lane-Miles by Func- tional System. National Transportation Statistics. http://www.rita. dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_ transportation_statistics/html/table_01_06.html (accessed April 15, 2013). EIA. 2012. Electricity Explained: Factors Affecting Electricity Prices. http://www.eia.gov/energyexplained/index.cfm?page=electricity_ factors_affecting_prices (accessed July 21, 2013). EIA. 2013. Annual Energy Outlook 2013. Table 5.7. Summary of federal energy and climate policy futures. Scenarios Federal Funding Federal Fuel Taxes Expanded Tolling or MBUFs Variable Pricing Policies Declining federal revenue Federal program continues to diminish Not increased significantly Limited Some congestion- priced facilities Renewed federal commitment Federal program expands moderately Increased in the near term Introduced in the 2020 time frame Some congestion- priced facilities Shift to efficiency- oriented funding mechanisms Federal program expands considerably Significantly increased in the near term Introduced in the 2020 time frame Extensive use of congestion tolls, weight-distance truck tolls, and emissions fees