A Wedge Analysis of the U*S*
   Transportation Sector
United States
Environmental Protection
Agency

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                      A Wedge Analysis of the U*S*
                            Transportation Sector
                                       Simon Mui
                                       Jeff Alson
                                      Benjamin Ellies
                                       David Ganss
                               Transportation and Climate Division
                              Office of Transportation and Air Quality
                              U.S. Environmental Protection Agency
v>EPA
United States                                       EPA420-R-07-007
Environmental Protection                                . ., „„.,
Agency                                          April 2007

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                    A Wedge Analysis of the U.S. Transportation Sector
Abstract
       The concept of stabilization wedges is introduced and applied to the U.S. transportation
sector in order to assess the potential of approaches that could reduce both greenhouse gas
emissions (GHGs) and petroleum consumption. Three general approaches are assessed using a
wedge analysis, including (1) improvements in vehicle technology, (2)  switching to lower-GHG
fuels, and (3) utilization of travel demand management (TDM). A broad range of assumptions
are considered for each of these approaches, reflecting the wide range of estimates regarding
alternative transportation fuels, improvements in vehicle technology, and  potential reductions in
TDM. A wedge analysis is used to help frame the issues involved and to compare the numerous
transportation approaches using a common metric - namely a wedge count.

       It is shown that approximately nine U.S. transportation sector wedges, each representing
5,000 MMT CO26 of cumulative reductions between now and 2050, would be enough to flatten
emissions in the sector. Just over four wedges could flatten emissions from the passenger vehicle
category. A wedge  analysis was performed on a wide range of scenarios involving just passenger
vehicles. Fuel switching alone could yield up to 2.3 wedges. Vehicle technologies, when
combined with fuels, could account for up to 3 wedges given a 30% market share by 2050. TDM
alone could account for up to 1.4 wedges given a 15% reduction in travel  growth by 2050. By
contrast, a system approach combining the three  approaches can result in  4 to 9 wedges.

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                    A Wedge Analysis of the U.S. Transportation Sector
Executive Summary
       Recently, there has been increasing interest in the potential of vehicle technology, fuels,
and travel demand management (TDM) to reduce GHG emissions and petroleum consumption in
the transportation sector. However, comparative analysis of these three approaches can be
particularly challenging due to the different time horizons for each approach, the large number of
options available, and the interactions between approaches. Much of the literature has focused on
specific studies of individual vehicles, fuels, or TDM options. The study attempts to provide an
integrative analysis of system approaches that combine all three - technology, fuels, and TDM.

       To help develop a more convenient, common metric for evaluating the numerous
approaches available in the transportation sector, this study builds off the "stabilization wedge"
concept first developed by Rob Socolow and Stephen Pacala at Princeton University.l A wedge
analysis method is applied to more clearly frame the problem, by (1) breaking down emissions
from the transport sector into more convenient wedges and (2) comparing the impact of the three
approaches. Comparisons are also made showing the impacts from applying each approach
independently  of each other versus a system approach that combines all three. A simple metric,
the "wedge count," is used to make comparisons of the numerous approaches.
The authors conclude that:

>     The stabilization wedge framework can be effectively scaled for different analysis levels.
       In this study, one wedge for the U.S. transportation sector (USTS) is defined as an
       approach that is capable of reducing 5,000 MMT CO2e of cumulative emissions between
       now and 2050. These are called USTS wedges.
       Approximately nine USTS wedges would be enough to flatten emissions in the U.S.
       transportation sector over the analysis period (2007-2050). Out of these nine wedges,
       roughly half would be enough to flatten emissions from passenger vehicles, two wedges
       to flatten those from freight trucks, one wedge for aviation emissions, and another one
       and a half wedges to flatten emissions from marine, rail, and non-transportation mobile
       sources.
       The wedge approach provides a metric to make evaluations based on cumulative emission
       reductions over longer timeframes, rather than incremental reductions for a specific year.
       From a climate perspective, it is cumulative emission reductions that are of primary
       significance.
 Stephen Pacala and Robert Socolow (2004), Science, 305, 968.

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                    A Wedge Analysis of the U.S. Transportation Sector
       By themselves, individual approaches incorporating vehicle technologies, fuels, or
       transportation demand management (TDM) approaches could moderately reduce, but not
       flatten, emissions from now until 2050. Most of the system approaches analyzed, by
       contrast, could yield more than the 4 to 5 wedges needed to flatten passenger vehicle
       emissions. The most transformative scenarios analyzed could nearly flatten the entire
       U.S. transportation sector emissions, despite the passenger vehicle category representing
       only half of the sector's emissions.
       Near-term vehicle technologies can have as much of an impact in terms of GHG
       reductions as future, longer-term technologies largely because of timing. To achieve the
       most wedges however, longer-term technologies are needed. This is largely because
       longer-term technologies allow for additional emission reductions in the later period
       when the potential of near-term technologies have already been fully utilized.
>      Nearly all the approaches discussed have significant ancillary benefits associated with the
       wedges. The approaches that reduce GHG emissions also necessarily reduce petroleum
       use. For example, achieving five wedges could result in 7 to 8 million barrels of
       petroleum saved in 2050. Additional examples of ancillary benefits include reduced
       congestion from TDM approaches and the synergies between the electricity sector and
       transportation sector when using alternative fuels such as electricity.
       The wide range in the number of wedges shown reflect an attempt to bracket the potential
       GHG reductions for each scenario using both optimistic and conservative assumptions
       regarding individual vehicle technologies, fuels, and TDM approaches.

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                      A Wedge Analysis of the U.S. Transportation Sector
Introduction
       In 2004, Pacala and Socolow introduced the idea of a "stabilization wedge" as a heuristic
tool to evaluate different greenhouse gas (GHG) emission scenarios.2 Under this framework, the
emissions gap, or difference, between the business-as-usual case and one that stabilizes
concentration can be sliced into "stabilization wedges," as shown in Figure 1. A stabilization
wedge was defined as a reduction activity that over the next 50 years could cumulatively reduce
25 billion tons of carbon emissions (or about 92,000 million metric tons of CC^) on a global
level. It was estimated that seven of these global-scale wedges - added up - would allow global
emissions to be flattened (or kept at today's level) over the next 50 years.3 Fifteen potential
strategies were presented that could potentially reduce GHG emissions by one wedge. Examples
of these strategies range from making advancements in power generation, increasing end-user
efficiency and conservation, to making improvements in agricultural and forestry practices. The
original wedge analysis focused on global emissions and  scenarios. In the following study, the
wedge analysis approach is scaled  down and applied to the U.S. transportation sector.4

Figure 1: A global-scale stabilization triangle and the individual wedges (in green). Reproduced from Pacala,
Socolow, Science (2004), 305, 968 with labels in red added. A business as usual emissions trajectory could result in
atmospheric concentration levels 850 ppm CO2 or greater. Removing the emissions embodied by the stabilization
triangle would be analogous to emission pathways stabilizing below  550 ppm.
                          B
                      >850
                                               o*
             v&
                    .2 10-
                    
                    0
                    5  4
                    1  2-1
                    Ło
    Continued
fossil fuel emissions
ppm
ppm
                       2000   2010   2020   2030   2040   2050   2060
                                           Year
 Ibid. One wedge, under Socolow's definition, represents 25 billion metric tons C-equivalent over 50 years (or 91.6
billion metric tons of CO2e).
3 The business-as-usual pathway likely would lead to a tripling of carbon concentrations in the atmosphere
compared to pre-industrial levels (280 ppm). The flat path, by contrast, would likely lead to stabilization less than
twice pre-industrial levels (<560 ppm) as long as emissions were reduced more substantially after fifty years. R.
Socolow and S. Pacala (2006), "A Plan to Keep Carbon in Check," Scientific American, September 2006, 50-57.
4 While the focus is on approaches for the U.S. transportation sector, the wedge analysis can be scaled to approaches
focused on any level or economic sector.

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                      A Wedge Analysis of the U.S.  Transportation Sector


Stabilization Wedges for the U.S. Transportation Sector
       A method is presented to define emission wedges for the U.S. transportation sector
(USTS). The USTS alone represents approximately 10% of all energy-related greenhouse gas
emissions worldwide and over a third of all transportation emissions worldwide.5 Over the next
50 years, the GHG emissions from the USTS could be poised to grow another 80% above current
levels due to increases in the number of vehicles and their activity.6 Absent a shift in this
trajectory, the USTS is poised to add nearly 200,000 MMT CC^e to the atmosphere over the next
50 years. This additional flow into the atmosphere could approximately translate to a rise of 12
ppm in global atmospheric concentrations.7 Note that a path that flattens emissions over the next
fifty years at today's levels,  followed by additional reductions after 50 years, is analogous to
stabilizing concentrations below twice that of pre-industrial levels (i.e. 560 ppm CC>2 versus 280
ppm).8'9

       Figure 2 illustrates the triangle necessary to flatten emissions from the U.S. transportation
sector from now until 2050 (i.e. a 43 year time span). The cumulative emissions embodied by the
upper triangle are approximately 45,000 MMT CC^e. The figure also shows how the triangle can
be sliced into smaller, more  manageable wedges. If this triangle is sliced into USTS wedges of
5,000 MMT CO2e each, then nine USTS wedges would  need to be avoided to flatten the sector's
emissions.10 For perspective on the relative size of each USTS wedge, the amount of carbon
dioxide in one wedge — or 5,000 MMT CC^e — is roughly equivalent to removing four years
worth of U.S. personal vehicle GHG emissions over the next 43 years. We use this USTS wedge
of 5,000 MMT CO2e as a "carbon metric" to compare the potential of numerous approaches to
reduce GHG emissions.
5 For 2005, we estimate that the direct emissions attributable to the U.S. transportation sector was about 2,000 MMT
CO2e, not including non-transportation mobile source emissions, such as from construction and agricultural
equipment. If these emissions, as well as the fuel cycle emissions, are included then the USTS represented nearly
2,750 MMT CO2e in 2005. Total global GHG emissions in 2004 were 27,044 MMT CO2e, based on the U.S. DOE
(2004), International Energy Annual, Energy Information Administration. These USTS emissions were compared
against the World Business Council for Sustainable Development (WBCSD)'s Sustainable Mobility reference case
for global transportation emissions, adjusting for sources not included in the WBSCD value but included in our
estimates. L. Fulton and G. Eads, (2004), IEA/SMP Model Documentation and Reference Case Projection, WBCSD.
6 U.S. DOE (2006), Annual Energy Outlook, Energy Information Administration. This estimate assumes that the
forecasts to 2030 continue at the same 1.3% annual growth to 2056.
7 This estimate assumes that 200,000 million metric tons will be added over the next 50 years, with half the quantity
being sequestered by oceans and forests. Emissions of 8,000 MMT CO2e translates to about a 1 ppm (one part per
million) increase in atmospheric CO2e concentrations (not including natural sequestration by ocean and forests).
8 A doubling of pre-industrial levels, 280 ppm CO2, means 560 ppm. However, many models consider 450, 550,
650, and 750 ppm scenarios, a convention we adopt here. Including all GHGs, the current CO2-equivalent
concentration is  approximately 430 ppm. The approximate range of temperature increase associated with a doubling
in emissions is estimated to be between 1.5  to 4.5°C, with the upper range increasing in recent years. Lower
concentrations (e.g. 450 ppm) are associated with lower probabilities of reaching higher temperatures. HM Treasury
(2006), Stern Review on the Economics of Climate Change,  United Kingdom.
9 The global GHG emission pathways were  presented in T. Wigley, R. Richels, and J. Edmonds (1996), Nature, 379,
240-243 and in the IPCC Special Report on Emissions Scenarios, (2000). Nebojsa Nakicenovic and Rob Swart
(Eds.), Cambridge University Press, UK. pp 570.
10 Each of these wedges would be approximately equivalent to reducing 5 MMT CO2e in the first year and an
additional 5 MMT of reductions thereafter,  growing to 220 MMT in year 2050.

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                      A Wedge Analysis of the U.S.  Transportation Sector
       Since approximately nine USTS wedges would keep the sector's emissions flat and on a
pathway analogous to a 550 ppm CC>2 trajectory, obtaining additional wedges would allow USTS
emissions to follow a trajectory consistent with lower concentrations.11 The potential of the
USTS to reduce more emissions than represented by this flattening is assessed by considering a
number of scenarios involving advanced vehicle technology, low GHG fuels, and TDM
approaches for the passenger vehicles category.
Figure 2: The U.S. Transportation Sector's (USTS) GHG emissions with nine USTS wedges that would flatten
emissions (upper triangle). Additional wedges are also shown that would lead to levels below simply flattening
emissions. The projections include emissions associated with the fuel cycle.
          5000
       o>
      O  4000
      O
 Wedges to
"Stabilization
  Triangle"
                                                                           Additional
                                                                            Wedges
       A "wedge count" is shown in Figure 3 for the each of the sources in the U.S.
transportation sector, displaying the number of wedges needed to flatten each source. For
example, over four (4.3) wedges would be needed to keep passenger vehicle  emissions flat.12
  GHG emissions act globally, so from a climate perspective, only the cumulative amount of GHG emissions
matter. Thus, to keep overall global emissions constant, developed nations would need to reduce more if developing
nations emit more. This is particularly true if it is assumed that developing nations need some room for emissions
growth as they modernize. As Pacala and Socolow (2006) state, "To freeze emissions at the current level, if one
category of emissions goes up, another must come down... And if today's poor countries are to emit more, today's
richer countries must emit less."
12 The wedge count to just flatten emissions from each transportation source is as follows: 4.3 wedges for passenger
vehicles, 2.1 for freight trucks and buses, 1.0 for airplanes, and 1.3 for non-road, locomotive, marine, and pipeline
sources of GHGs. Thus, the total number of wedges is 8.7 for the transportation sector.

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                     A Wedge Analysis of the U.S. Transportation Sector
The growth in emissions from commercial trucks, freight trucks, and buses would compose
another two wedges, while aviation would add another wedge. Emissions from rail, marine
vessels, and non-transportation mobile sources (e.g. construction equipment, off road vehicles)
would compose another 1.3 wedges.


Figure 3: U.S. transportation sector GHGs by emission categories. The wedge count on the right shows the number
of 5,000 MMT CO2e wedges needed to flatten emissions from each category. Flattening emissions from passenger
vehicles would require the most wedges (4.3) out of the approximately 9 wedges.
        5000
                                                       Wedge Count
                                                                 Misc,
                                                             Nonroads
                                                             Rail, Marine
                                                                     i
                                                              Aviation
                                                             Freight Trucks
                                                               & Buses
                                                              Passenger
                                                                Vehicles
          J
V
n?
         NQ
 &
n?
                       >*    ^
                                                                          Total: 8.7

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                     A Wedge Analysis of the U.S. Transportation Sector


Vehicle Technology, Fuel, and TDM Approaches
       Generally, three parameters determine the amount of GHG emissions from transportation
sources: the choice of fuel, the vehicle activity level, and the energy efficiency of the vehicle.13
For the passenger vehicle category, emissions (E) can be described as the product of the carbon
content of the fuel (C), vehicle activity in vehicle miles traveled (A), and fuel consumption (F) -
conveniently described as the EFAC equation:

            „  „  .   .           (Gallons\(miles traveled^ mass C \   „    .   „
           E = Emissions,-,, =  	  	  	  = F x A x C
                        (Carbon)            J^    Vehide     I gallon )
                         Fuel Consumption  Activity     Carbon Content


       Consideration of the EFAC equation suggests that approaches that reduce emissions are
ones that would, by definition, need to either lower the amount of fuel consumed, the carbon
content of the fuel, or the vehicle's activity (or vehicle miles traveled, VMT). Thus, we evaluate
various scenarios involving each of the following approaches:

    •   Adopting advanced vehicle technology
    •   Switching to low-GHG fuels
    •   Utilizing travel demand management (TDM).

A number of what-if scenarios are considered that involve each of the above approaches.
Comparisons between each what-if scenario are made based on an assessment of the number of
wedges that could be obtained, or a wedge count. An evaluation is also performed of scenarios
involving "system approaches" that utilize all three approaches - namely vehicle technology,
fuels, and TDM.14

       Several factors make a wedge comparison particularly useful in assessing these three
disparate approaches. First, comparing combinations of approaches  involving all three
approaches can be particularly challenging due to interactions and feedback mechanisms
between vehicle  technologies, fuels, and travel demand.15 The analysis provides an integrated
method by which to more clearly compare the numerous vehicle technologies, fuels, and travel
demand management (TDM) approaches, both independently of each other and in combination.
Second, the wedge approach also provides a metric to make evaluations based on cumulative
13 This mathematical expression can be considered a variant of the conceptual IP AT equation, debated in the 1970s
in works by Paul R. Ehrlich, John Holdren, and Barry Commoner. See Marian R. Chertow (2001), "The IP AT
Equation and Its Variants: Changing Views of Technology and Environmental Impact," Journal of Industrial
Ecology, 4 (4), 13-29.
14 Note that this concept of a system approach is not in reference to the "systems approach" commonly used in the
management science and operations research literature.
15 Note that combined effects cannot be simply added since they follow a multiplicative relationship. For example, a
30% reduction in each of these variables (C, A, and F) would not lead to a 90% overall reduction, but rather Enew =
0.7 x 0.7 x 0.7 = 0.34 (or a 66% overall reduction).

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                    A Wedge Analysis of the U.S. Transportation Sector


emission reductions over a longer timeframe rather than the more commonly used metrics:
percent GHG reduction or absolute GHG reductions for a specific analysis year. From a climate
perspective, it is cumulative emission reductions over longer time frames that are of primary
significance. Discussions  of reductions have tended to focus almost exclusively on incremental
rather than cumulative emission reductions. Issues of timing and staging of the approaches can
also be considered using the wedge analysis (e.g. the impact of near-term versus long-term
technologies). Finally, the wedge analysis can be scaled to fit any analysis level of interest,
including a specific emissions category, economic sector, or national and global levels.

       There are many advanced automotive technologies that can lower vehicle GHG
emissions and petroleum consumption. These can include (1) ongoing improvements in
conventional areas such as aerodynamics, tires, lightweight materials, accessories, gasoline
engines, and mechanical transmissions, (2) expanded use of powertrains already commercialized
such as electric hybrids and diesels, and (3) the future introduction of even newer powertrains
such as ethanol-optimized vehicles, plug-in hybrids, and fuel cells. Likewise, there is a wide
variety of transportation fuels that could provide large GHG and oil benefits based on production
processes that involve renewable feedstock or carbon capture and sequestration. These
alternative fuels (or energy carriers) include such examples as biofuels, electricity, and hydrogen
among others.

       Transportation or travel demand management (TDM) includes a large suite of options
that seek to use transportation system resources more efficiently and effectively. Several  diverse
examples include  increasing the number of regional transit-oriented options, improving land use
planning to make  cities more accommodating to pedestrians, employing market-based
congestion pricing, or even adopting pay-as-you drive automobile insurance.16

       A system approach involves considering more optimum synergies among two or three of
the approaches. As an example, Figure 4 provides an illustrative example of the benefits from
using a system approach that combines both advanced vehicle technology and low GHG fuels.
While vehicle technology alone can achieve significant petroleum and GHG reductions, a system
approach combining both technology and low GHG fuels can achieve significantly greater
petroleum and GHG reductions. The amount of displaced petroleum occurs largely in proportion
to the amount of alternative fuel used. By contrast,  a wide range of GHG reductions is possible
when switching to an alternative fuel, with the range depending on the sources or feedstock used
process the fuels.  For example, a vehicles running  on ethanol  (e.g. E85) would achieve much
higher GHG reductions if the ethanol were derived from cellulosic feedstock versus corn.
Similarly, while electric vehicles  displace nearly all petroleum usage (there may still be some
usage during electricity generation), the GHG reductions largely depend on whether the
electricity used is  derived from coal or from renewable sources.
16 These approaches are also known more generally as transportation demand management.


                                                                                      10

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                     A Wedge Analysis of the U.S. Transportation Sector
Figure 4: Illustrative example of GHG reductions and petroleum savings for (1) various technology-only approaches
and (2) combinations of vehicle technologies with alternative fuels. The reductions relative to today's conventional
gasoline vehicle are shown. Note that the size and position of the bubbles are illustrative and assumptions-driven.
A
t


.0 Ijj
"O >
Q^ +d
0 1
x >
O o





N
Technology & Fuels Combined low






Vehicle Technology
Only
Diesel
Hybrid

Currently Available
Technologies: Advanced
Gasoline & Diesels,
Gasoline Hybrids
/
Gasoime Petroleum
GHG
> k
Hydrogen
Fuel Cells
cellulosic
A Electric
Vehicle
low GHG
t\
Optimized
ESS
1
PHEV > (
X coal
y corn
coal
Flex-fuel
vehicle
(E85 corn)


Savings (Energy) — i
Technology, Fuel, and TDM Approaches for Passenger Vehicles
       The potential of technology, fuels, and travel demand approaches to achieve reductions
are considered for the passenger vehicle category (or light-duty vehicles). Passenger vehicles
contribute approximately half of all USTS emissions. The remainder of emissions comes from
such sources as commercial trucks, marine vessels, railroads, airplanes, and other sources like
construction equipment.17 For this wedge analysis, only approaches covering passenger vehicles
are considered.18 If approaches covering other transportation categories are included, even larger
reductions would be possible along with greater flexibility in the options used.
       Vehicle Technology Approaches:

       Technology innovation has been the main driver to reducing emissions in the past, and
will remain a key approach for reducing emissions in the future. We compare the impacts from
increasing the population of advanced internal combustion engine (ICE) vehicles (gasoline and
diesel), hybrid electric vehicles, optimized alternative fuel vehicles, plug-in hybrid electric
  In 2003, the emissions budget of these non passenger vehicle categories (including locomotives, pipelines,
lubricants, mobile AC, and refrigerated transport) represented 716 MMT CO2e emissions. EPA (2006), Greenhouse
Gas Emissions from the U.S. Transportation Sector 1990-2003.
18 The Annual Energy Outlook 2006 reference case scenario was used as a basis for the reference scenario used here
for GHG emissions (with modifications), along with adjustments for non-transportation mobile source emissions
and fuel-cycle emissions.
                                                                                           11

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                     A Wedge Analysis of the U.S. Transportation Sector


vehicles, and fuel cell vehicles.19 Many of these vehicle technologies are described in greater
depth in an EPA study on new powertrain technologies.20

       Table 1 lists the technologies modeled and the fuel efficiency improvements assumed for
each particular vehicle technology. The specific fuel economy improvements shown in Table 1
can vary based on the specific assumptions - the values assumed for this study are shown.21 The
"reduction potential" for each technology, in terms of wedges, is evaluated based on the
following scenario: greater penetration of the particular technology into the fleet, such that the
market share reaches 30% above the baseline share after 15 years.22 For instance, to evaluate the
impact of gasoline hybrid electric vehicles, an increase is modeled to start in 2010, reaching an
additional 30% greater market share by 2030, keeping constant through 2050. This equivalent
treatment of technologies allows for the "stabilization potential" of each technology - in terms of
wedges - to be compared. Note that this study uses the same "what-if' scenarios to assess the
technology potential; it does not model the market potential of the technology.23 However, in
theory an economic model that has detailed representation of the vehicle and fuel markets could
also be used to conduct a wedge analysis based on consumer and manufacturer preferences. An
economics based approach would give more insight into the timeframe in which these
technologies could be accepted into the market and the benefits and costs associated with each
specific wedge.

       The  ranges of GHG reductions shown in Table 1  account for low and high estimates for
fuel-cycle emissions. For technologies using electricity from the grid, such as electric vehicles or
plug-in hybrid  electric vehicles, the upstream impact of GHG emissions from power plants are
considered.  The upper range of upstream emissions is bound by assuming the additional
electricity demand is met by new pulverized coal sources, while the lower range is bound by
assuming low-GHG emission sources that by comparison with coal emit approximately 10% of
the emissions.24 This might represent, for instance, an integrated coal combined cycle (IGCC)
plant with additional carbon capture and sequestration or a utility mix that is heavily weighed
toward wind sources or nuclear  energy.  For the hydrogen fuel cell scenario, the high and low
values encompass a wide range  of assumptions that includes hydrogen generation from solar
energy, natural gas, or coal based energy sources.
19 Optimized alternative fuel vehicles refer to a category that can either run on flex-fueled or dedicated alternative
fueled systems, but with optimization of the combustion process for the alternative fuel.
20 For a description of these technologies, see EPA (2005), Interim Report: New Powertrain Technologies and Their
Projected Costs, Office of Transportation and Air Quality, October 2005, EPA420-R-05-12,
www.epa.gov/otaq/technology. An updated version will be available in the Spring or Summer of 2007.
21 Ibid.
22 A standard S-shaped curve for the market penetration was used.
23 For all vehicle technologies other than pure electrics and fuel cells, the market penetration begins in 2010 and
grows to 30% by 2025 using a standard S-shaped curve. For pure electrics and fuel cells, it was assumed that the
technical hurdles were greater such that the what-if scenario starts 5 years  later in 2015 and reaches 30% by 2030.
24 The upstream carbon factors are based on estimates obtained from the Integrated Planning Model which looks out
to 2030. The lower bound is given by a supercritical pulverized coal plant  while the upper bound is represented by
an IGCC plant with carbon capture and sequestration. Introduction to EPA Modeling Applications Using IPM,
"Chapter 2: Modeling Framework," EPA's Clean Air Markets Division, 2004.
                                                                                          12

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                      A Wedge Analysis of the U.S. Transportation Sector
       Figure 5 displays the potential wedges for each technology assuming the 30% market. As
an example, a gasoline-hybrid electric vehicle is shown under this what-if scenario. In the inset
box, other vehicle technologies and their wedge counts are shown. The wedge count provides a
comparative analysis between the technology and fuel  combinations based on cumulative
emissions. The grey area for each wedge count illustrates the potential wedge range, which is
largely dependent on the fuel cycle emissions. For instance, an optimized vehicle running full-
time on E85 could achieve 1.3 wedges if the feedstock for ethanol is from corn or up to 2.7
wedges if the feedstock is from cellulosic biomass.25 As a reference, the maximum wedge count
a vehicle technology could achieve (i.e. zero fuel-cycle emissions) would be 3.6 wedges. In
general,  the largest reductions are achieved by using both low GHG fuels combined with
advanced vehicle technologies. However, no single technology will likely fulfill the mobility
needs of every driver. Thus we do not consider scenarios involving 100% of any particular
technology.

Table 1: Vehicle technology categories and their assumed fuel economy and GHG emissions relative to a baseline,
conventional gasoline vehicle.
Vehicle Technology

Advanced Gasoline Engine and
Advanced Diesel Engine
Hybrid Electric Vehicle (Gasoline)
Hybrid Electric Vehicle (Diesel)
Optimized E852*
Advanced Optimized E85
Plug-In Hybrid Electric3"
Electric
Fuel Cell31
Vehicle
Fuel Economy
Improvement26
Percent
Reduction in
GHG Emissions
(fuel-cycle)27
vs. Conventional Vehicle
35-40%
40%
70%
-4%
30%
65%
390%
270%
20-26%
29%
35%
38 to 80%
54 to 85%
31 to 62%
31 to 94%
21-92%
25 Note that for vehicles that have a flex-fuel option (such as E85 FFVs or plug-in hybrid electric vehicles) the range
of reductions also depend on user behavior (not considered here). For all combined technology and fuel approaches,
the availability of a fuel infrastructure (outside of conventional petroleum fuels) is also a key variable.
26 The percent improvement is relative to the business as usual conventional vehicle. The on-the-road, average fuel
economy assumed for the base year (2005) for a new conventional vehicle was 20.3 mpg. The business as usual
improvement in fuel economy was assumed to be approximately 0.5% per year.
27 The calculated GHG emissions refer to those associated with the fuel cycle and vehicle use. It does not include the
emissions generated from the manufacturing or scrappage of the vehicle. The range given reflects different
assumptions regarding the fuel cycle emissions.
28 This assumes that the optimized E85 vehicles are optimized to run on E85 and have improved efficiencies beyond
current flex-fueled vehicles. The lower value in well-to-wheels emissions represents if the biofuel were 100% corn-
derived ethanol while the higher value represents if the biofuel were 100% cellulosic derived.
29 An advanced optimized E85 vehicle would include the engine optimization for E85  in conjunction with an
advanced technology package analogous to an advance gasoline engine vehicle
30 The PHEV category assumes a plug-in vehicle capable of obtaining 40 miles in an all-electric mode after charging
the battery. This range from the battery would allow for approximately half of the VMT driven under an all-electric
mode (or blended mode). It is likely that PHEVs will be sold with a 10 mile electric range first and that this range
will be increased as battery technology develops. However, we have considered PHEV40s only for simplicity, given
the longer term nature of the analysis.
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                     A Wedge Analysis of the U.S. Transportation Sector
       Timing also plays a critical role in the number of wedges that can be achieved. For
instance, if optimized E85 vehicles began entering the fleet in 2020 versus 2010, the upper
wedge count would drop from 2.7 wedges to 1.9 wedges. In some cases, currently available
technology that is deployed early can have as significant an impact as future vehicle technologies
that are deployed later, largely due to timing.
Figure 5: The potential emission reductions, in terms of a wedge count, for several vehicle technologies. The wedge
count assumes a 30% greater market share for each technology by 2025. *For electric vehicles and fuel cell vehicles,
the what-if market share reaches 30% five years later by 2030 due to large technical hurdles remaining.
            3000
   CD
CD ,?
O g

!!
= ?
2.1
o>.w
        CD
            2500 -
            2000 -
            1500 -
            1000 -
             500 -
       Example "What-if Scenario:
       Gasoline HEVs, increase in market share in 2010 to 30%
       greater market share by 2025 (1 wedge)
    A wedge count
   for other vehicle   "^
     technologies
(same what-if scenarios)
Currently Available Technology
(Adv. Gasoline, or Adv. Diesels,
or Gasoline HEVs)
Each can 0.8 - 1.0 wedges
achieve: ^^^^^^

Diesel HEVs ^~*>°**i\ Dlesel
13-27 *' Cellulo
Optimized ' ' r,*'' \

Optimized E85
Advanced ICE
Plug-In HEVs
ei |B20) Electric Vehicles*
Fuel Cell Vehicles
1'8~2'9-'^J
1.1-2.2 ,.-,
0.9-2.9 ^,--|
0.6 - 2.8 ,,-'!
                1990
        2000
                                  2010
2020
2030
2040
2050
       Low GHG Fuel Approaches:

       Reducing the carbon intensity of the fuel supply, or fossil fuel-decarbonization, is one of
the most important approaches for reducing both emissions and petroleum consumption. A
number of alternative fuels with potentially lower GHG emissions include biomass-derived fuels
(e.g. ethanol, biodiesel, butanol, methanol), natural gas, hydrogen, and electricity among
31 The GHG reductions were calculated using Argonne National Laboratory's GREET model. The range represents
cases where hydrogen gas is generated at a central facility by using coal or using solar generated electricity. The
current production method of reforming natural gas at a refueling station reduces GHG emissions by 55%. Also see
J. Heywood, M. A. Weiss, A. Shafer, S. A. Bassene, and V.K. Natarajan, (2003), The Performance of Future ICE and
Fuel Cell Powered Vehicles and Their Potential Fleet Impact, Laboratory for Energy and the Environment,
December 2003, Massachusetts Institute of Technology.
                                                                                           14

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                      A Wedge Analysis of the U.S.  Transportation Sector


others.32 The lifecycle emissions of these fuels mainly depend on how these fuels are derived
and the choice of vehicle technology.

       There are a number of shorter and longer term fuel approaches available to reducing
GHG emissions. These approaches can range from incorporating biofuels into the petroleum fuel
pool as a low level blend, all the way to shifting the transportation sector into a hydrogen
economy. Recently, there has been much focus on the potential of plug-in hybrid electric
vehicles, which can be powered by both  gasoline and by electricity from the grid. Shifting
emissions from the vehicle tailpipe to power plants has its advantages in terms of GHGs, but
only if the electricity sources are  less carbon intensive over the entire lifecycle. Note that most of
the low GHG fuels approaches also require some additional vehicle technology to be adopted
(e.g. an electric powertrain). Widespread use of some fuels, such as hydrogen or E85, represent
different degrees of change to the fuel infrastructure.

       In Figure 6, a what-if scenario is  shown for ethanol. Although there are a broad range of
possible low GHG fuels, ethanol  is shown  as only one possibility. The scenario demonstrates the
impact of 60 billion gallons (bgal) of ethanol substitution for gasoline by 2050, with 15 bgal
from corn ethanol and 45 bgal from cellulosic ethanol.33 Note that these scenarios, which only
focus on fuels, do not assume technology improvements beyond the business as usual case.34
Approximately 1.4 wedges can be obtained in the 60  bgal ethanol case shown. A case involving
90 billion gallons of ethanol is also shown  to achieve 2.3 wedges - over half the wedge count
needed to flatten passenger vehicle emissions.35 Figure 6 displays the potential wedges each of
these fuel scenarios could obtain. Using a low-GHG fuels approach, it can be observed that 0.7
to 2.5 wedges result. While these reductions are significant, using ethanol alone would not be
enough to obtain the more than four wedges necessary to flatten just passenger vehicle
emissions.

       Current trends in the U.S. toward increased use  of biofuels, however,  should be
considered in the context of longer-term  transitions from conventional petroleum supplies toward
unconventional sources. As the most accessible, cheapest supplies of conventional petroleum
32 Fischer-Tropsch fuel cycle emissions, which include coal to liquids processed through indirect liquefaction, would
be higher than conventional gasoline and diesel fuel cycles if carbon capture and sequestration is not used. R.H.
Williams, E.D. Larson, and H. Jin (2006) discusses the possibility of biomass and coal co-firing to reduce GHG
emissions in "F-T Liquids Production from Coal and Coal + Biomass with CO2 Capture and Alternative Storage
Options: Aquifer CO2 Storage vs CO2-Enahnced Oil Recovery," Draft article, presented at the Energy and
Environmental Security Initiative, University of Colorado at Boulder, January 19, 2006.
33 In the scenarios that were evaluated, corn ethanol was assumed to supply all ethanol in the early years and slowly
supplemented by cellulosic ethanol over the 2007-2050 timeframe. By 2050, it was assumed that approximately
90% of the ethanol was cellulosic based. Under these assumptions, corn ethanol did not exceed 15 billion gallons in
any single year. Most estimates for domestic corn ethanol production and usage vary.  See for instance National Corn
Growers Association (November 2006), "How much ethanol can come from corn?" and the U.S. DOE (2007),
Annual Energy Outlook, Energy Information Administration.
34 For the 60 and 90 billion gallon ethanol cases, a 15% and 30% penetration of non-optimized E85 vehicles was
assumed respectively to enter the fleet by 2025. In addition to the E85 use, a 10% ethanol blend in gasoline was also
assumed. The assumptions regarding the fleet penetration were the same as used in the vehicle technology section.
35 An upper estimate of 116 billion gallons of ethanol a year in 2030 was calculated based on USD A/DOE (2005)
Biomass as Feedstock for a Bioenergy and Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual
Supply, April 2005. http://www.osti.gov/bridge.


                                                                                            15

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                     A Wedge Analysis of the U.S. Transportation Sector
resources are utilized, alternative sources are being developed and utilized as transportation
fuels. In addition to renewable sources for fuels, unconventional fuel sources such as extra heavy
oil, tar sands, deep water and artic  sources, oil shale, gas-to-liquids and coal-to-liquids are being
increasingly utilized.36 Many of these fuels, with higher fuel-cycle emissions of GHGs, could
represent a re-carbonization of fuels rather than a de-carbonization of fuels, offsetting the current
trend toward lower GHG fuels.37
Figure 6: Potential reductions in wedges using a low GHG fuel approach involving ethanol (assuming business as
usual vehicle technology improvements).
       3000
if
o Ł
       2500
       2000
 Q § 1500
=3 I
   o
       1000
        500
                             Example "What-if' Scenario:
                             60 billion gallons of ethanol by 2050 (1.4 wedges)
                      (shown above)-



"What-lf Fuel Use by 2050:
60 billion gallons of ethanol
(1 5 corn ethanol, 45 cellulosic)*
90 billion gallons of ethanol
(1 5 corn ethanol, 75 cellulosic)
Wedge Count
1.4^---i

^
           1990
                     2000
2010
2020
2030
2040
2050
    * Assumed 10% ethanol blend in gasoline with 15% and 30% penetration of non-optimized E85 to achieve 60 and 90 bgal respectively
       Travel Demand Management (TDM) Approaches:

       By far the most significant factor to past growth in GHG emissions has been increases in
the number of vehicles on the road and in vehicle usage. While the average fuel efficiency has
remained virtually unchanged over the past twenty years, the number of passenger vehicles in
use has increased by roughly 50% over this time.38 Each vehicle on the road today is also, on
average, being driven more than in the past. Total vehicle travel from passenger vehicles is
projected to grow by another 60% between now and 2030, due to the increasing number of
  Greene D.L., Hopson J.L., and Li J. (2006), Energy Policy, 34, 515-531. Information also from Stuart McGill's
(2005) presentation, "Exxon-Mobil: Taking on the World's Toughest Energy Challenges" Goldman Sachs Global
Energy Conference 2005. January 11, 2005.
37 A. Brandt, A. Farrell (2007), "Scraping the bottom of the barrel," forthcoming in Climatic Change.
38 R. Heavenrich (2006), Light-Duty Automotive Technology and Fuel Economy Trends: 1975 Through 2006, U.S.
EPA, July 2006.
                                                                                           16

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                     A Wedge Analysis of the U.S. Transportation Sector


drivers and the mileage driven by each driver.39 The fuel efficiency of new vehicles, by contrast,
is projected to improve by only 12% on average over this time frame. Options that have
significant, long-term potential for reducing vehicle activity include such approaches as regional
land-use planning, transit-oriented development, shifting travel to more energy-efficient modes,
or increasing vehicle occupancy rates.40 Many of these options also create ancillary benefits
from reduced traffic congestion, urban air pollution, and fuel consumption.

       As an illustrative example, the impact from reducing total vehicle miles traveled (VMT)
incrementally over time is assessed. Although the specific TDM approaches used to achieve this
reduction is not modeled here, there have been a number of studies that have evaluated the
potential of some of these  approaches,  albeit on a regional level.41 Given the long-term nature of
many of the approaches (e.g. land use planning), the impact of a gradual reduction in average
VMT over a 40 year timeframe is considered (2010-2050). Several, plausible what-if scenarios
are shown in Figure 7 whereby total national VMT is reduced by 5%, 10%, and 15% by 2050
versus the 2050 business as usual case. For example, this might occur if average VMT per
vehicle grows at a slower rate from now until 2050.
Figure 7: An example is shown where per-vehicle VMT is incrementally reduced from 2010 to 2050, so by 2050 the
VMT is 5%, 10%, and 15% below the BAU.

                         20
15
                    O
                   !c
                    CD
                   > ^
                    s_ CD
                    CD =
                    CL E
                    ^ ^
                    CD O
                    > W
                    c/>
§ ~10
c
c
2000
              2020
                                                    2040
2060
                                              Year
  U.S. DOE (2007), Annual Energy Outlook. Energy Information Administration. The average miles driven per
driver is projected to increase from 13,000 today to nearly 17,000 by 2030.
40 A shift within a specific mode, such as from SUVs to passenger vehicles, or between two modes (heavy duty
truck to locomotive), could also reduce emissions.
41 See for instance: David L. Greene (1996), Transportation and Energy, Eno Transportation Foundation,
Washington, D.C.; Center for Clean Air Policy (2007), CCAP Transportation Emissions Guidebook Part One:
Land Use, Transit & Travel Demand Management; David L. Greene and Andreas Schafer (2003), Reducing
Greenhouse Gas Emissions from U.S. Transportation, Pew Center on Global Climate Change; EPA (2001), Our
Built and Natural Environments: A Technical Review of the Interactions Between Land Use, Transportation, and
Environmental Quality," January 20011; ICMA (2006), Getting to Smart Growth: 100 Policies for Implementation,
International City/County Management Association.
                                                                                           17

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                    A Wedge Analysis of the U.S. Transportation Sector
       The potential wedge counts from these what-if scenarios are shown in Figure 8. Nearly
one wedge is obtained from a 10% reduction in VMT by 2050. The inset in Figure 8 shows the
two additional VMT scenarios achieving between 0.5 to 1.3 wedges. Achieving sufficient
wedges, as well as a more sustainable transportation system, will likely require that future
growth in vehicle travel is offset to some degree.
Figure 8: Reductions of 5%, 10%, and 15% in average vehicle VMT by 2050 versus the business as usual growth.

          3000
        CD
2500
     CD
    •°
     o>  E 200°
     tt
     •3  52
    Z  Ť
    Zi  E
          1500
          1000
           500
                  Example "What-if Scenario:
                  By 2050, TDM approaches are able to reduce the total vehicle miles
                  traveled (VMT) by 10% from projected growth (0.9 wedges)
                   (shown above)—>




TDM Approaches
- 5% VMT from 2050 business as usual level
-10% VMT
-15% VMT
Wedge Count
^PJL— — — i
O9______-|

JJ^^\

              1990
              2000
2010
2020
2030
2040
2050
System Approaches: Combining Vehicle Technologies, Fuels, and TDM
       Independently, each approach appears to have the potential to significantly reduce GHG
emissions from the transportation sector, but not enough to flatten emissions. When the
approaches are combined however, there are even greater opportunities and added flexibility to
reduce emissions. If certain technology approaches, such as plug-in hybrid electric vehicles or
hydrogen fuel cells, are paired with low GHG sources of electricity, then the GHG and
petroleum benefits of the technology dramatically improves. In addition, past experience has
shown that  absent measures that address growth in transport activity, much of the reductions
from technology or fuel approaches can be offset. Blending travel demand management
approaches with appropriate technology and fuel approaches would thus yields the largest
potential for emissions reductions.
                                                                                      18

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                    A Wedge Analysis of the U.S. Transportation Sector


       Eight potential system approaches were evaluated for light duty vehicles which combine
advanced vehicle technologies, low GHG fuels, and/or TDM. Figure lOa, b, and c show three
different, what-if scenarios that achieve 5 wedges from the light duty vehicles. Note that this is
more than the 4.3 wedges necessary to flatten passenger vehicle emissions from now to 2050.
The three scenarios vary in focus, with the first scenario (a) considering a large deployment of
hybrid vehicles, the second (b) focusing on widespread use of optimized E85 vehicles and
ethanol, and the last (c) assuming widespread use of electricity and hydrogen as a fuel.

       For each scenario shown in Figure 10, the individual approaches are broken down and
differentiated by color. The inset tables provide further details of this breakdown. In each of the
three scenarios, the sum of the individual approaches adds up to five wedges. A list of additional,
illustrative scenarios that can achieve 4, 5, 6, 7, 8, or 9 wedges are presented in the appendix.
Considering the potential wedges from other transportation categories would expand the wedge
counts.

       Several general observations can be made regarding the wedge counts based on these
examples and those considered in the appendix. First, a wide range of wedges are possible
depending on the type of technologies, fuels, and TDM approaches adopted. Absent any fuel or
TDM approaches, up to 3.5 wedges could be achieved if vehicle technologies already observed
in the marketplace, such as hybrids and advanced engine ICEs (internal combustion engines),
compose the entire market by 2050. To achieve more wedges than this, additional technologies
that utilize low-GHG fuels (e.g. biofuels, electricity, hydrogen) or travel demand reduction
approaches are necessary.

       Second, to obtain 6 or more wedges from the light-duty vehicle category, reliance on all
three approaches would likely be needed. For example, an approach that could achieve 7 wedges
(example 4 in the appendix) would require a  10% reduction in projected VMT growth by 2050 as
well as significant shares of vehicles using either E85 or electricity from low-GHG sources.
Third,  the upper limit for the light-duty vehicle category appears to be about 9 wedges - enough
wedges to flatten the entire transportation sector's GHG emissions. To reach this maximum
wedge count however, aggressive deployment of near-zero emission vehicle technologies and
fuels would need to be employed (e.g. cellulosic ethanol, electricity from nuclear or renewable
sources).

       Expanding the approaches to include  other transportation categories would allow for
greater flexibility and additional wedges to be obtained.42 The scenarios shown here and in the
appendix are only several examples out of a much larger technical "solution space" which
describe all possible combinations. Further development and innovation in vehicle technologies,
low GHG fuels, and travel demand management will likely continue to expand this solution
space.
42 The diversity of transportation categories, ranging from passenger vehicles, heavy-duty freight trucks, to rail,
marine, and aviation, suggests that developing scenarios of approaches ~ customized for each category - would be
more effective in the long-term than focusing on a single, "silver bullet" approach.


                                                                                       19

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                       A Wedge Analysis of the U.S. Transportation Sector
Figure 9: Three examples of system approaches that achieve 5 wedges. Example (a) assumes predominantly hybrid
electric vehicles, including plug-in hybrids, by 2050. Example (b) assumes nearly half the vehicles run on E85,
equivalent to roughly 90 billion gallons of ethanol by 2050. Example (c) assumes technologies that require
electricity (electric vehicles, plug-in hybrids) and hydrogen (fuel cell vehicles) as fuels.

            3000
         CD  2500
         E  2000
     Q  Q  1500
            1000
        O
             500
                      (a) Hybrid Electric Vehicle Focus
               0
                1990
                                    Approach
                             Hybrid Electric Vehicles
                              Plug-In Hybrids
                             + Advanced Gasoline & Diesels
                             + FFVs, Optimized E85 Vehicles,
                             | Ethanol as 10% blend in gasoline
                                                  2050 Snapshot
                                              15% share,
                                               30 bgal
                                                            Wedge Count
                                                             5 wedges
                       2000
2010
2020
2030
2040
2050
    CD
10
u
         E
        LJJ
        O
        X
        o
            3000
            2500
            2000
            1500
       1000
             500
                      (b) Ethanol focus (90 billion gallons by 2050)
8 Approach
Advanced Gasoline and Diesels
+ Hybrid Electric Vehicles
+ Optimized E85 Vehicles;
Ethanol as 10% blend in gasoline
2050 Snapshot
35% share
20% share
45% share
Total
Wedge Count
^0.6_____1
0.4
40 ./
5 wedges
                1990
                       2000
2010
2020
2030
2040
2050
                                                                                                   20

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                     A Wedge Analysis of the U.S. Transportation Sector
          3000
         -2500
          2000
       .Q 1500
     TO ť
     Zi  E
     CO    1000
       X
       O
           500
                  (c) Electricity and Hydrogen Focus
Approach
Pure Electrics and Plug-In HEVs
+ Hydrogen Fuel Cell Vehicles
+ Adv. Gasoline & Diesels;
Conventional Hybrids
+ FFVs, Optimized E85 Vehicles,
Ethanol as 10% blend in gasoline
2050 Snapshot
45% share
25% share
10% share
20% share,
30 bgal
Total
Wedge Count
J^\
O8______^
^-----1
^— -1
5 wedges
              1990
2000
2010
2020
2030
2040
2050
Ancillary Benefits of USTS Wedges
       Nearly all the approaches discussed have significant ancillary benefits associated with
their respective wedges. One of the largest, ancillary benefits is the reduction in petroleum
consumption implied by the scenarios.43 Since most of the GHG emissions from the U.S.
transportation sector are directly due to combustion of carbon-based fossil fuels, the approaches
that remove wedges also reduce large amounts of petroleum consumption. For example, the
scenarios shown in Figure 10 that reduce by 5 wedges imply a reduction of roughly 7 to 8
million barrels per day (mmbd) in 2050.44 For comparison, today's consumption by the entire
transportation sector is approximately 14 mmbd.45 Approaches that reduce GHG emissions in the
transportation sector will necessarily reduce petroleum use. However, the converse is not
necessarily true. As discussed in the fuel approaches section,  simply reducing petroleum
dependence through use of unconventional fuels such as tar sands, oil shale, or coal to liquids
can negate some of the GHG reductions shown here.
43 For a discussion of ancillary benefits (in terms of innovation), see Ashford, Nicholas and George Heaton, Jr.
(1983), Law and Contemporary Problems, 46 (3), 109-157; Porter, M. and C. van der Linde (1995b), Journal of
Economic Perspectives, 9 (4), 97-118.
44 Current gasoline and diesel consumption is roughly 14 mmbd for the entire transportation sector, with light duty
vehicles composing more than 60% of the total. By 2050, the light duty vehicle sector is assumed to consume nearly
14 mmbd under the business as usual growth scenario.
45 U.S. DOE (2007). Annual Energy Outlook, Energy Information Administration.
                                                                                         21

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                     A Wedge Analysis of the U.S. Transportation Sector


       A second ancillary benefit arises from the possible linkages between the utility sector and
transportation sector. If the transportation sector is increasingly electrified, low GHG generation
utilized in the electricity sector can yield additional dividends in the transportation sector. Third,
many of the TDM approaches that reduce travel demand have the additional benefit of reducing
congestion. TDM approaches would be particularly valuable in countering any rebound effects
associated with improving vehicle fuel efficiency.46 While not considered here, many of the
approaches presented here offer may also offer greater opportunities to reduce criteria emissions.
These potential ancillary benefits can also be ascribed to specific wedges.
Conclusion
       For the U.S. transportation sector, system approaches that combine advanced vehicle
technology, lower GHG fuels, and TDM yield the largest potential and flexibility for lowering
both GHG emissions and petroleum use. A number of system approaches exist that can achieve
more than the four or five (4 - 5) wedges needed to flatten passenger vehicle emissions. By
contrast, individual approaches may reduce emissions moderately but may not result in enough
wedges to flatten emissions in the passenger vehicle category.

       Since cumulative emissions are the driver for atmospheric CC>2 concentrations, options in
the transportation sector are better compared on a cumulative emissions basis rather than an
annual reduction basis. A wedge analysis, which compares cumulative emissions, shows that
some of the near-term vehicle technology can have as much impact as some of the longer-term
technologies, largely because of timing. However, to obtain enough wedges to flatten or reduce
below current emission levels, both the long-term options appear necessary in addition to the
near-term ones. Both early deployment and long-term development of vehicle, fuel, or TDM
approaches appear necessary to obtain sufficient wedges.

       Last, if efforts are limited to only passenger vehicles, the task of achieving the nine (9)
wedges - the stabilization triangle for the U.S. transportation sector - will be a very challenging
one. Incorporating a system approach for commercial trucks, marine vessels, railroads, airplanes,
and non-road vehicle sources would yield a larger technical "solution space" that could allow for
greater than nine wedges to be achieved.
46 The rebound effect was not considered here, as no economic assumptions regarding fuel prices was made for
petroleum or any of the alternative fuel. Recent literature suggests that the rebound effect has become smaller,
possibly due to rising household incomes relative to fuel expenses. See for example K.A. Small and K.V. Dender
(2005), "The effect of improved fuel economy on vehicle miles traveled: estimating the rebound effect using U.S.
state date, 1966-2001." Policy & Economics, U.C. Energy Institute. Much of the literature also indicates that travel
time budgets may be the most important factor for limiting individual vehicle miles traveled.
                                                                                         22

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                                         A Wedge Analysis of the U.S. Transportation Sector
Appendix:

Table 1A: Examples of eight different system approaches for passenger vehicles that could achieve up to 4 to 9 wedges. The assumptions used for each what-if
example show the vehicle market share, ethanol volumes, and TDM approach assumed in order to achieve the wedges. *Examples 2a, 2b, and 2c are shown in
Figure 10 of the text.
         Example
          System
       Approaches
                                  Assumptions
                       (2050 snapshot of market share)
Wedge Count
  (low & high
  estimates)
              1)
80% (adv. gas, adv. diesels, and gas hybrids); 20% (optimized E85)
50 bgal of ethanol (15 corn, 35 cellulosic). No TDM approaches assumed.
                                                                                                                      4.0
             2a)*
50% (gasoline and diesel hybrids); 30% (plug-in hybrids); 5% (adv. gas and adv. diesels); 15%
(non-optimized E85 and optimized E85)
30 bgal ethanol (15 corn, 15 cellulosic). No TDM approaches assumed.
                                                                                                                   4.9 to 5.6 ,
             2b)*
35% (adv. gas and adv. diesels); 20% (gasoline and diesel hybrids); 45% (optimized E85)
90 bgal ethanol (15 corn, 75 cellulosic). No TDM approaches assumed.
                                                                                                                      5.0
             2c)*
10% (adv. gas, adv diesels, conventional hybrids); 20% (optimized and adv. optimized E85s); 45%
(plug-in hybrids and electric vehicles); 25% (hydrogen fuel cell vehicles)
30 bgal ethanol (15 corn, 15 cellulosic). No TDM approaches assumed.
                                                                                                                   4.2 to 6.9 /I
             3)
60% (adv. gas and adv. diesel); 40% (optimized and advanced optimized E85)
80 bgal ethanol (15 corn, 65 cellulosic). -15% reduction in VMT from TDM.
             4)
35% (adv. gas, adv. diesel, and gas HEVs); 25% (adv. optimized E85)
40% (plug-in hybrids and electric vehicles)
40 bgal ethanol (15 corn, 25 cellulosic). -10% reduction in VMT from TDM.
                                                                                                                   5.2 to 7.0
             5)
10% (gas HEVs); 60% (optimized E85 and adv. optimized E85); 30% (plug-in hybrids and electric
vehicles)
80 bgal ethanol (15 corn, 65 cellulosic). -15% reduction in VMT from TDM.
                                                                                                                   6.7 to 8.0 /
             6)
30% (advanced optimized E85); 40% (electric vehicles); 30% (hydrogen fuel cell vehicles)
40 bgal ethanol (15 corn, 25 cellulosic). -15% reduction in VMT from TDM.
                                                                                                                   5.2 to 9.0 /!
                                                                                                                                   23

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