Assessment of Fuel Economy Technologies for Medium and Heavy ...
Assessment of Fuel Economy Technologies for Medium and Heavy ... Assessment of Fuel Economy Technologies for Medium and Heavy ...
This paper relies on findings from the literature on these issues but also includes new, sketchlevel analysis to translate literature findings (which may only indirectly address the issue) into results that directly address the issues being investigated. The key findings of this paper regarding indirect costs are as follows: Vehicle-miles traveled (VMT) and the rebound effect – The ―rebound effect‖ refers to an increase in VMT that may occur as a result of lower shipping costs caused by lower fuel costs. The additional fuel consumption would partially offset the fuel savings of more efficient trucks. Fuel economy regulations that achieve consumption reductions on the order of 4,500 million gallons (17.6 percent of current fuel use) would reduce national Class 8 fuel consumption from 25,500 million gallons annually to 21,000 million gallons. This level of fuel efficiency gain would result in an average Class 8 per-mile operating cost reduction of $0.08 (considering increased vehicle costs amortized over the life of the vehicle as well as decreased fuel costs), which could lead to an increase in truck demand and a decrease in rail demand. Using a range of assumptions regarding the elasticity of truck travel with respect to price, the increase in truck demand due to the decrease in truck operating costs would increase fuel consumption by 500 to 1,400 million gallons, diminishing the fuel consumption reduction to 3,100 to 4,000 million gallons, or a rebound of 11 to 31 percent of the initial 4,500 million gallon reduction. The decrease in rail demand, due to the diversion of rail demand to truck, produces an additional fuel consumption reduction of 70 to 110 million gallons, counteracting the truck rebound effect by 1 to 2 percent of initial 4,500 million-gallon reduction. The net rebound effect of the truck fuel consumption increase and the rail fuel consumption decrease is therefore about 9 to 30 percent—meaning that the actual reduction in fuel use would be about 3,200 to 4,100 million gallons (a 13 to 16 percent reduction in total truck fuel consumption). For larger fuel economy improvements (on the order of 39 percent), the rebound effect would be smaller on a percentage basis – in the range of 5 to 16 percent – for a net reduction in fuel use in the range of 32 to 37 percent. This is because the technologies used to achieve the higher fuel efficiency standard would be somewhat less cost-effective, raising the initial capital cost of the vehicle and leading to a lower per-mile operating cost savings compared to the most cost-effective technologies used to achieve the 17.6 percent reduction. Vehicle class shifting – The potential for vehicle purchasers to shift to different classes of vehicles will depend upon the specific nature of the fuel economy regulations. However, hypothetical regulatory scenarios suggest that significant class-shifting is unlikely to occur in most conceivable situations. This is particularly true for long-haul trucks, which account for nearly three-quarters of total truck fuel consumption. Transportation service and performance effects – Analysis in the concurrent paper developed by ERG suggests that fuel economy regulations would have no appreciable effect on vehicle performance. Therefore, impacts on transportation service (e.g., delivery times, reliability) will be minimal or non-existent. Congestion impacts – Analysis in the concurrent paper developed by ERG suggests that fuel economy regulations would have no appreciable effect on vehicle performance and therefore
no effect on congestion as a result of degraded performance. However, increased truck traffic as a result of the rebound effect could increase congestion. The effect is likely to be minimal on most roads, but could be significant at times and locations where the roadway is near capacity and where truck traffic represents a significant fraction of total traffic. An estimate using marginal per-mile congestion costs from the literature suggests that the increase in truck traffic volumes described above for the rebound effect could result in an increased congestion cost (to all road users) in the range of $0.3 to $1.4 billion nationwide. Safety impacts – Analysis in the concurrent paper developed by ERG suggests that fuel economy regulations would have no appreciable effect on vehicle performance and therefore no effect on safety as a result of degraded performance. Increased truck traffic volumes from the rebound effect could be expected to cause an increase in the range of 80 to 360 fatalities per year and about 1,600 to 7,700 injuries per year nationally. An alternative estimate using marginal safety costs from the literature suggests that the increased truck VMT could result in an increased safety cost (to all road users) of in the range of $0.09 to $0.4 billion nationwide. Key findings regarding alternative approaches to reduce truck fuel consumption are as follows: Fuel tax – To achieve reductions in fuel consumption of the same order of magnitude as assumed in the analysis of the rebound effect (20 to 40 percent) is estimated to require an increase in the fuel tax on the order of $1 to $2 per gallon, which would lead to a combination of both reductions in truck VMT and increases in vehicle fuel efficiency. However, elasticities of fuel consumption with respect to fuel price are not well-documented for freight trucks so this estimate should be considered particularly uncertainty. Congestion pricing – No analysis has specifically examined the impacts of a comprehensive congestion pricing system on truck fuel consumption. Estimates for all vehicles have found modest impacts, on the order of a 0.5 to 1.1 percent reduction in total fuel consumption if congestion pricing were widely applied in the U.S., although this is based on data extrapolated from only two simulation studies. This is the result of a variety of effects, including a reduction in overall demand, shifting of demand to less congested periods, and more free-flowing traffic during peak travel periods. Analysis of cordon pricing in London and Stockholm has found very small impacts on truck fuel consumption, with minimal impacts on truck VMT but some benefits through reduced truck idling. An upper bound can be placed on the potential fuel savings from congestion pricing (or other highway congestion mitigation strategies) by estimating the total nationwide fuel ―wasted‖ by trucks in congestion. This figure is estimated to be no more than 640 million gallons, or about 2 percent of total truck fuel consumption. Intermodal transport – The potential for truck-to-rail mode shifting through investment in rail and intermodal infrastructure and other incentives has not been extensively studied. One study of the Mid-Atlantic region estimated that an investment of $12 billion could reduce fuel consumption by 42 to 114 million gallons annually, at a cost of $110 to $290 per gallon of fuel saved. The findings of one study of the I-81 corridor suggest that an investment of $7.9 billion could reduce fuel consumption by 145 million gallons annually, at a cost of $54 per gallon of fuel saved, while another suggests that an investment of $2.5 billion for the Norfolk Southern ―Crescent Corridor,‖ also paralleling I-81 between New York and the Southeast, could save 170 million gallons annually. - 3 -
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This paper relies on findings from the literature on these issues but also includes new, sketchlevel<br />
analysis to translate literature findings (which may only indirectly address the issue) into<br />
results that directly address the issues being investigated.<br />
The key findings <strong>of</strong> this paper regarding indirect costs are as follows:<br />
Vehicle-miles traveled (VMT) <strong>and</strong> the rebound effect – The ―rebound effect‖ refers to an<br />
increase in VMT that may occur as a result <strong>of</strong> lower shipping costs caused by lower fuel costs.<br />
The additional fuel consumption would partially <strong>of</strong>fset the fuel savings <strong>of</strong> more efficient<br />
trucks. <strong>Fuel</strong> economy regulations that achieve consumption reductions on the order <strong>of</strong> 4,500<br />
million gallons (17.6 percent <strong>of</strong> current fuel use) would reduce national Class 8 fuel<br />
consumption from 25,500 million gallons annually to 21,000 million gallons. This level <strong>of</strong> fuel<br />
efficiency gain would result in an average Class 8 per-mile operating cost reduction <strong>of</strong> $0.08<br />
(considering increased vehicle costs amortized over the life <strong>of</strong> the vehicle as well as decreased<br />
fuel costs), which could lead to an increase in truck dem<strong>and</strong> <strong>and</strong> a decrease in rail dem<strong>and</strong>.<br />
Using a range <strong>of</strong> assumptions regarding the elasticity <strong>of</strong> truck travel with respect to price, the<br />
increase in truck dem<strong>and</strong> due to the decrease in truck operating costs would increase fuel<br />
consumption by 500 to 1,400 million gallons, diminishing the fuel consumption reduction to<br />
3,100 to 4,000 million gallons, or a rebound <strong>of</strong> 11 to 31 percent <strong>of</strong> the initial 4,500 million<br />
gallon reduction. The decrease in rail dem<strong>and</strong>, due to the diversion <strong>of</strong> rail dem<strong>and</strong> to truck,<br />
produces an additional fuel consumption reduction <strong>of</strong> 70 to 110 million gallons, counteracting<br />
the truck rebound effect by 1 to 2 percent <strong>of</strong> initial 4,500 million-gallon reduction. The net<br />
rebound effect <strong>of</strong> the truck fuel consumption increase <strong>and</strong> the rail fuel consumption decrease<br />
is there<strong>for</strong>e about 9 to 30 percent—meaning that the actual reduction in fuel use would be<br />
about 3,200 to 4,100 million gallons (a 13 to 16 percent reduction in total truck fuel<br />
consumption).<br />
For larger fuel economy improvements (on the order <strong>of</strong> 39 percent), the rebound effect would<br />
be smaller on a percentage basis – in the range <strong>of</strong> 5 to 16 percent – <strong>for</strong> a net reduction in fuel<br />
use in the range <strong>of</strong> 32 to 37 percent. This is because the technologies used to achieve the<br />
higher fuel efficiency st<strong>and</strong>ard would be somewhat less cost-effective, raising the initial<br />
capital cost <strong>of</strong> the vehicle <strong>and</strong> leading to a lower per-mile operating cost savings compared to<br />
the most cost-effective technologies used to achieve the 17.6 percent reduction.<br />
Vehicle class shifting – The potential <strong>for</strong> vehicle purchasers to shift to different classes <strong>of</strong><br />
vehicles will depend upon the specific nature <strong>of</strong> the fuel economy regulations. However,<br />
hypothetical regulatory scenarios suggest that significant class-shifting is unlikely to occur in<br />
most conceivable situations. This is particularly true <strong>for</strong> long-haul trucks, which account <strong>for</strong><br />
nearly three-quarters <strong>of</strong> total truck fuel consumption.<br />
Transportation service <strong>and</strong> per<strong>for</strong>mance effects – Analysis in the concurrent paper<br />
developed by ERG suggests that fuel economy regulations would have no appreciable effect<br />
on vehicle per<strong>for</strong>mance. There<strong>for</strong>e, impacts on transportation service (e.g., delivery times,<br />
reliability) will be minimal or non-existent.<br />
Congestion impacts – Analysis in the concurrent paper developed by ERG suggests that fuel<br />
economy regulations would have no appreciable effect on vehicle per<strong>for</strong>mance <strong>and</strong> there<strong>for</strong>e
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