Winning the Game: restoring competitive- ness and eliminating oil dependence National competitiveness and national security at risk Why should the U.S. care? Japan, European Union, China will eat Detroit’s jobs for lunch Energy insecurity, price volatility, and climate concerns Save net US$70 billion/y by 2025, create 1 million net jobs How do we win? 1. Efficient end-use can save half the oil at US$12 a barrel 2. Biofuels substitute for another fourth 3. Saved gas can displace the rest, preferably via hydrogen
A profitable U.S. transition beyond oil within 20 years
Globally, the U.S., China, India and Asia drive 58% of incremental demand for oil 25-Year Growth in Oil Demand: 44 Mbbl/d (1.9% p.a) 2001 to 2025: From 77 to 121 Mbbl/d U.S. 8.7 China 7.8 India 3.2 ROW 8.2 Asia 5.8 Brazil & FSO 5.2 Industrial 5.2 58% Source: World Energy Outlook, IEA, 2004.
India dependence on imported crude oil will grow from 75% to 88%, raising security concerns Source: World Energy Outlook, IEA, 2004.
Transport fuel will be primary driver for future demand for oil Source: World Energy Outlook, IEA, 2004. *: Defense, Railways, Shipping, Tractors etc.
India’s auto growth is driven by increased affluence and urbanization Double digit growth in near term 8% CAGR for next 10 years Two wheelers GDP growth of 8% yoy Strong rural demand driven by agriculture sector Demographics- Youth power Double digit growth in near term 6-8% CAGR for next 10 years Cars/MUV More disposable income; smaller families Rationalization of tariffs, presence of global players Easy financing 6-8% growth in short term Road freight competing with railways LCV/HCV Urbanization- growth in towns and cities Infrastructure debottleneck- Golden Quadrilateral Safety- Ban on overloading
Number of vehicles on road will quadruple by 2025
Unlike the US, heavy vehicles and motorcycles account for most of the growth in oil demand
India to become the second largest auto market by 2035 Young demographics Ageing car population High Economic growth Price sensitive Technology savvy Small and medium cars are the norm (hatchbacks) Two-wheelers market (7:1) Strong domestic industry Govt. focus on developing public transport Ease of bank financing Technology transfer and strong supplier industry Cross subsidization of domestic fuels (problem of adulteration) Aspire to be globally competitive Customers Collaborators CompetitionContext Regulation
CARS: save 69% at 57¢/gal BLDGS/IND: big, cheap savings; often lower capex Integrating low mass & drag with advanced propulsion saves ~2/3 of demand very cheaply TRUCKS: save 65% @ 25¢/gal TWO-WHEELERS: save 20% Technology is improving faster for efficient end-use than for energy supply
Where does a car’s gasoline go? 6% accelerates the car, <1% moves the driver 2/3 to 3/4 of the fuel use is weight-related Each unit of energy saved at the wheels saves ~7–8 units of gasoline in the tank (or ~3–4 with a hybrid) So first make the car much lighter!
Baseline Vehicle (2004 Audi AllRoad 2.7T) 51% Mass Reduction * Reduced Power From Better integration, Aero, Tires, Powertrain HybridizationGallons Per Year used by Lightweight Hybrid Vehicle Critical insight: light weight before aerodynamics and powertrain creates 68% of a typical SUV’s fuel savings 956 461 105 111 279 Issues: crashworthiness and manufacturing cost US gallons per year
Three technology paths: aluminum, light steels, carbon composites (the strongest & lightest) ◊Opportunity: Advanced Materials Lightweight Steel Alloys ›Ultra-Light Steel Auto Body (ULSAB): –Mass savings of 25% over the benchmark at no cost penalty –80% improvement in torsional rigidity –52% improvement in bending rigidity –58% improvement in first body mode –Meets all mandated crash requirements Aluminum Titanium Alloys: 40% lighter, 3–4x cost Carbon Composites: 50% lighter, absorbs 6–12x crash energy per lb. vs. steel; cost and manufacturing speed improving Advanced materials could integrate into existing processes ›BMW applying carbon composites to roofs and hoods 60% of the high-performance steel materials in automotive use today were not available 10 years ago Source: Fiberforge, Winning the Oil Endgame
A diesel hybrid has the same Well- to-Wheels Efficiency as a FCV 88 58 38 50 30 16 *1 *2 Source: Toyota Motor Corporation, 2003; US EPA efficiency labels and US fuel systems
Heavy trucks: save 25% free, 65% @ 25¢/gallon Better aero & tires, better engines etc., less weight 6.2 to 11.8 mpg with 60% IRR by improving aero drag, tires, engines, mass, driveline, acces. loads & APU; then ~16 mpg via operational improve-ments; being built 2005 PACCAR high-eff. concept truck Colani/Spitzer tanker (Europe), reportedly 11.25 mpg Big haulers’ margins double from 3% to 6–7%…so create demand pull — currently underway, led by major customers Two recent concept trucks
Basic physics: Overcoming aerodynamic resistance consumes the majority of truck fuel on a typical highway ◊Aerodynamics = ~2/3 of tractive load on highway ◊To lead: Need to pay attention to COMBINATION of (tractor + trailer) E TR = Inertia + Rolling resistance + Air resistance * Approximate values Source: Technology Roadmap for the 21st Century Truck Program (DOE 2000)
* Assuming driver utilizes engine at 95% of max efficiency due to driving habits (it’s probably much less in reality) Source: Technology Roadmap for the 21 st Century Truck Program (DOE 2000), RMI analysis Where a long-haul Class 8 truck’s diesel fuel goes Focus: End of Chain [Fuel] [Engine] [Drivetrain] [Tractive Loads] 0.02 1.000.07 0.930.56 0.02 0.03 0.300.19 0.11 0.05 0.06 ~38% efficient today: Engine & drivetrain Represents >100 years’ R&D: Engine efficiency is more difficult to improve further than is end-use efficiency End-use: Consider what would happen if we halved aerodynamic drag and mass Total Primary Energy Idling Losses Used in Hauling Engine Losses Driver Losses* Auxiliary Loads Drivetrain Losses Reaches the Wheels Aero- Dynamic Drag Rolling Resistance Moves the Platform Hauls the Freight
0.01 0.470.460.28 0.01 0.020.14 0.09 0.06 0.02 0.04 Cut aerodynamic drag and rolling resistance by 50% Focus on fuel end-use: Reducing air drag & roll-ing resistance by 50%, and idling by 80%, saves ~50% of fuel—without engine improvements Eliminate >50% of fuel use No change in engine & drivetrain: same 38% efficiency 0.01 * Assume no change in driver behavior from previous slide Source: Technology Roadmap for the 21 st Century Truck Program (DOE 2000), RMI analysis Total Primary Energy Idling Losses Used in Hauling Engine Losses Driver Losses* Auxiliary Loads Drivetrain Losses Reaches the Wheels Aero- Dynamic Drag Rolling Resistance Moves the Platform Hauls the Freight
Efficient vehicles can save 1.4 mbpd by 2025 Million Barrels Per Day Million Vehicles
Cellulosic ethanol is on the horizon ProcessDescriptionPilot plants FermentationConventional ethanol from sugars (corn, sugarcane) are marginally energy positive. 100-110 gal/ton 2% of U.S. gasoline demand currently comes from ethanol made this way from 7% of corn Acid hydrolysisStrong acids are used to break down cellulose into sugars. Dilute and concentrated acid processes exist; dilute process requires high temperature and pressure. 70-80 gal/ton Commercial plants in operation. Used mainly in niche markets for waste disposal. Thermal gasificationHigh temperatures convert biomass into synthesis gas of carbon oxides and hydrogen. In the presence of a catalyst, these gases are converted to ethanol. 70=>140 gal/ton Arkansas and Colorado Enzymatic reductionEnzymes turn woody biomass into sugars. Novozymes recently announced a 30-fold reduction in enzyme cost. 90=>120 gal/ton Ontario sugar cellulose
Jatropha has potential to rival Palm Oil as biodiesel feedstock High yield, 7.5 tonnes seed/hectare = 2.5 tonnes oil converts to 2,750 l biodiesel Drought tolerant, perennial, grows on marginal lands Multiple products (oil, seed cake)
Market acceleration needed to win the game Pubic Private Consortium to for RD&D advanced composite material manufacturing Feebates to drive innovation in industry based on customer demand Technology collaboration and making India as global manufacturing hub for small fuel efficient cars Rationalization of fuel subsidies to assure quality fuel