Asilomar 2015 Summary Highlights
We have imagination. We’ve made big changes in the past and can make them again.
- We have new vehicle technology choices before us and a rapidly changing demographic context that demands efficiently moving people around the planet.
- We have to turn things around… to meet “80 in ‘50” [80% reduction in greenhouse gas (GHG) emissions below 1990 levels by 2050].
Transformational change is possible.
- We have to start thinking about the smartest way – what policy drivers will work – to make a difference.
- From 2015 Management Briefing Seminars: The auto industry will change more in the next 10 years than in the last 100 years.
- Data – for safety, traffic congestion, route planning – is likely to be the No. 1 game changer.
- New players in autonomous and connected vehicles are disrupting this industry, and they have a lot of capital.
- This movement has the opportunity to change everything – if the policy world gets engaged thoughtfully.
- To avoid politicization, we need to identify common ground and develop a structure that can accommodate the views.
Innovators are developing disruptive technolgies; innovation drives change.
- “You can’t solve exponential problems with linear solutions.”
—Banny Banerjee, director and founder, Stanford ChangeLabs
- Structure for our dynamic times: experiment, iterate, evolve, adapt.
- Auto industry spends $100 billion globally. Third-largest investment behind health care and consumer electronics.
Autonomous vehicles are a game-changer, and will happen – regardless of our actions.
- Ideally, driver remains “in flow” and in control while technology is supporting.
- Biggest fear: Zero-occupancy vehicles
- What options do we have to actually guide it in a way that benefits society and reduces GHG and criteria pollutants? Requires collaboration, working together with multiple players, and that’s a challenge.
Sharing – the “Collaborative Economy” – is the future.
- Makes use of excess capacity. With most five-passenger cars only occupied by one person, 80% of seats on road are empty.
Innovative communications and smartphone capabilities serve as platforms to enable ride-sharing services. The next step is to aggregate demand, to make full-car trips.
How ridesharing can help electrify fleet? Faster fleet turnover with higher range vehicles creates new economic levers.
- Lyft drivers become very aware of financial implications of their driving. They think about incremental costs of trips, fuel costs.
- As fewer drivers do more driving, it creates opportunity to cycle out fleet, get them into EVs, and work with policy makers to leverage that channel.
Big Data presents exciting possibilities – and limitations.
- Connectivity is the catalyst for e-mobility. Big Data is enabler.
- Good governance, technology, and oversight will be needed.
- Challenge with data today is increased privatization. There are big sensitivities and legal concerns over sharing data. As people see value, more will be shared, but can’t open data to everyone. Also, sharing needs to be anonymous.
- OEMs’ biggest concerns are safety – to ensure no link between the infotainment systems and the safety systems. It’s complicated by more interfaces and potential for attack; cars can be hacked. Other concerns are liability, when holding customer data or information on competitors.
- Consumers have responsibility, too, to review terms before downloading an app.
- There’s a lot of data that researchers can’t access at all. Other data that is accessible isn’t collected and updated frequently. It’s difficult to understand how people are behaving, when data is years old.
- What data to keep and what to toss? There’s a vast quantity of operational data; need a sensible strategy to keep extracts from data and build capability to mine and use. Also, how long do you want to hold onto?
There’s not a lot of incentive for innovation in the oil industry.
- In the last 100 years, use of oil for transportation has only dropped from 100% to 97%. Plus, there’s growth ahead in Asia, Africa. But there’s no BAU.
- A BAU mobility future implies infeasible oil demand. If we achieve efficiency but do nothing about substitution, oil use will double or triple by 2050.
- In one scenario, diesel and gasoline retain the cost edge over alternative fuels out to 2030. Least-cost route is biofuels, followed by fossil-derived hydrogen, and this drives one company’s investments. But uncertainties complicate the investment case.
- Obviously, we need to transform technology and continue progress beyond 2025. But technology, alone, will not save us.
Significant uncertainty remains.
Technology forecasts are usually conservative. Credible reports assess the “knowns” and the “known unknowns” but not the “unknown unknowns.”
- Current innovations, e.g. 48V hybrids, weight reduction, and engines that exceed the 2025 standards, not anticipated when the vehicle GHG rule was adopted.
- On freight, similar uncertainties exist. People think: Ships will be bigger, more efficient, cleaner. But there are a lot of inefficiencies in current system.
We need a forward-looking, systems-based, integrated approach to policy.
- Look beyond 2025, so policy goals can align and drive us toward a healthy planet.
- Wise policymakers will take some risks. We should not be afraid of failures, or of trying new things, even though “some rats may die.” Transformation means, by definition, we will fail at some things.
- TBD: What is the role of regulation in the sharing economy and how it will be accepted?
- We need “all of the above” strategy with vehicles, fuels, and behavior to achieve system-wide efficiencies.
- Post-2025, could a regulatory program, and perhaps credits, be open to wider participation involving a broader group of players, such as rideshare, autonomous vehicles, etc.? Clean Air Act provides EPA with discretion, and we should open our minds to all of these ideas.
- Maybe, rather than focusing on getting to a 10% biofuel blend in gasoline, we should focus on getting it into the freight sector. Should prioritize what fuels are best for which use. Maybe we can electrify light-duty, and use biofuels in airplanes and trucks.
Policies need to raise all boats.
- Keep thinking about how these policies affect all people, at all socio-economic levels.
- We won’t be successful without thinking through math, science, market mechanisms, economic incentive for business, and effects on the little person.
- Scale – needs to be considered in all these contexts.
We need a pricing strategy—a fee/tax, cap-and-trade, or allowances, etc.-to decarbonize at an acceptable cost.
- Regulation drives vehicle + fuel + infrastructure solutions to compete on cost and carbon.
- As standards tighten, pricing of vehicles has to reflect carbon price. See firms doing internal accounting car by car.
Given political infeasibility of VMT tax, a more palatable approach may be an indexed energy tax or user fee for highway system.
- Combined, the current highway funding crisis plus improved fuel economy will mean less $ for highways.
- The idea is to tax all energy used for highway system. Index it to fuel economy of all vehicles on road. As fuel economy doubles, tax doubles, but amount per mile stays same.
- Think of this as similar to electric utility decoupling, which ensured utility still got revenue even while consumer bills went down due to efficiency improvements.
California continues to be an important leader, a laboratory, and an incubator of new ideas.
- California’s challenges are everyone’s challenges. Most of the freight imported to U.S. comes through California’s ports, and it is the center of agriculture.
- It has assets and insights to support national policymaking: overabundance of talent, resources, and willingness to spend; receptive citizens; Jerry Brown.
Time matters: We’ve come a long way, but we’ve only just begun, and we have no time to waste. Don’t get discouraged because transformation takes a long time.
While smog and soot standards have been in place for 40 years, light-duty vehicle GHG standards have only been in place for 5 years.
- NRC LDV fuel economy committee report released June 2015 found EPA and NHTSA conducted thorough and high caliber analysis in developing 2016-2025 CAFE and GHG standards. Recommends: continued analysis of some technologies where findings and underlying assumptions of the agencies and NAS panel differed; continued evaluation of costs and consumer response; gathering real-world data instead of relying on certification data.
OEMs are responding and are meeting future standards today with gasoline powertrains across all segments; innovative, but not disruptive, technologies.
- 25 truck configurations meet 2020 or later
- 26 SUV configurations meet 2020 or later
- 63 car configurations meet 2020 or later
- Automaker data shows 700% increase in number of models achieving 30+ mpg and 40+ mpg 2006-2015. “Take rate” of more efficient vehicles is still lower, and not enough to meet 2025 standards.
EPA’s annual Fuel Economy Trends report, forthcoming MY 2015 data to be released this fall, shows manufacturers are adopting technologies.
- Rapid penetration rates in GDI, turbo, stop-start, cylinder deactivation, and CVT and 8+ speed transmissions. Consistent with expectations of 5% electrification.
- 10% of 2015 MY vehicles could meet out-year 2020+ stands. Wide range of powertrain technologies and different classes and sizes (pickups, SUVs and cars).
- Vehicle technology costs are converging on what regulators projected. The closer we get to compliance, the narrower the range of cost becomes, and it’s based on real data not estimates.
On trucks, everyone expects there will be a standard, and industry and government are working together. Sadly, this collaboration doesn’t exist in some other sectors.
- The proposed Phase 2 standards will set the same global high-water mark for freight that the LDV standards did in 2012.
- Rulemaking as proposed is in a “sweet spot” with available technologies and packaging. There’s still room for improvement.
- Phase 2 is not about technology-forcing. But California is considering strategies such as ZEV requirements where technology exists.
- Also, people who need to be at the table, like independent owner-operators, are not. Labor disputes also present serious challenges.
Sales of EVs and hybrids are “not terrible.” Hybrids have been out for only a decade.
- Projections show low market penetration for a decade, 15-20 years, and then, with scale economies, learning by doing, lower costs, and less resistance of population, sales will begin to grow.
- NRC 2013 analysis, “Transitions to Alternative Vehicles and Fuels” shows we need to keep subsidizing alternatives for quite some time. The net benefit is negative through 2020. But the total NPV is significant in 2050 b/c of these values: GHG mitigation, uncounted energy, petroleum reduction, consumer’s surplus, and subsidies.
- To develop EV markets, we need supportive policy and infrastructure. The market diffusion process generally takes 15 years at least, and multiple generations of vehicles.
- We have a long way to go. We’re on the right path. Current pace isn’t fast enough. We need to get to ZEVs wherever possible – not just light-duty ZEVs but also in the freight and goods movement sectors, where it makes sense.
- It’s hard to change things fast. And the faster we try, the more mistakes we make.
- We’re investing now. It may seem like not much is happening, but we are, in fact, enabling the post-2025 transition.
Consumers remain the wildcard.
- Most consumers say they want environmental choices, but don’t always act on environmental choices. In 2013 Strategic Vision survey of 300,000 new car buyers on customer priorities and preferences, fuel economy ranked 4th (32% strongly agree) behind vehicle handling (42%), ride comfort (41%), and quiet interior (34%).
Gas prices impact behavior.
- Hybrid sales dropped from high of 3.5% and 4% of retail market when gasoline prices peaked in 2013-14. Are now around 2.5% of market.
- Truck sales are up with low gas prices, indicating 55 mpg by 2025 in question.
One of the biggest barriers to transformation is resistance to change; people stuck in status quo. Counter-argument: if people see attractive choice, they’ll adopt change.
- The Pope’s involvement, drought in California exacerbated by climate change; when people see the threat, they’ll demand action from policy leaders.
- In terms of public support, we may be reaching a tipping point.
Travel behavior is the wobbly leg of the three-legged stool.
- We don’t know as much about travel behavior as we do vehicle technology; about people’s choices and needs for travel. We don’t talk about wealth. We have to understand this before we can shape policy.
- The technical, cultural, institutional challenges related to travel demand seem more daunting.
- Most research targeting VMT reduction focuses on bikes, transit, or the built environment, and not on resulting carbon reductions. So there is a gap in the causal chain from strategy to resulting carbon emission reduction.
- Of 60-70 VMT reduction strategies examined, some are short term, others long term, and many are complementary, i.e. high density and transit. So to achieve goals, you need the whole package of 60-70 strategies. There are no top two or three.
- If our goals are to improve quality of life and minimize emissions, then economic development, which is over-weighted, becomes a red herring. We have a right to unlimited access to mobility, but not to unlimited mobility.
Millenials are different.
- Driving and owning a car is less important; they are more likely to have delayed getting their driver’s license.
- They walk the talk, use social media, are more likely to have used Uber or Lyft, and incorporate use of smartphones in their daily travel and work activities.
- Young people are traveling internationally at much higher rate than previous generations. So they may not own cars, but they’re flying around the world.
- Also, we’re not even talking about the post-millennials, the “selfie generation” those folks will be 52 years old in 2050.
Trends indicate VMT will increase because:
This generation of seniors, the “Silver Tsunami,” differs from previous generations.
- 70% of population growth between now and 2030 will be in 65+ population.
- Boomers grew up driving and continue to drive; 84% of 65+ held a driver’s license in 2010 compared to less than 50% in 1970s. More trips, more VMT.
- When they lose their ability to drive? Will they rely on inefficient and costly government assistance, dial-a-ride, etc. or will innovators play a role?
- Low-density cities in the Southeast are the fastest-growing regions in the country, they tend to have county rules banning high-density development, and they have higher VMT per capita.
In air travel, ‘big is better’ and it presents challenges.
Emissions from aircraft overwhelm savings potential from other modes.
- o Boston’s Hubway Bicycle Program saved 350 tons CO2 2011-2014 but new flight from Boston to Beijing emitted 58,530 tons CO2 2014-2015.
In the past year U.S. aircraft emitted:
- 29% of all global aircraft GHG emissions
- 11% U.S. transportation sector GHG emissions
- 3% of total U.S. GHG emissions
- 0.5% of total global GHG emissions
- The FAA’s guiding statute directs airports to continue to grow to meet demand, rather than consider alternatives.
- Airports fund airline incentive programs.
- Local governments and businesses demand and justify airport growth as necessary for local economic development.
- Open skies, joint ventures, new carriers from Persian Gulf are opening new routes and incentivizing more international flying.
Long haul is efficient on a seat-mile basis for the airline, but high emission.
- One international roundtrip flight emits 1-3 tons of CO2/person, depending on aircraft efficiency, flight distance, and chosen—or changed—air traffic route.