Where energy policy is concerned, transportation is a tough nut to crack.
Energy end use falls into three broad categories: Industry, buildings, and transportation. Ontario consumption is roughly equal in each. So far, Guelph’s Community Energy Initiative (CEI) has focused on buildings. Industry already gets a lot of love from Conservation and Demand Management (or Demand-Side Management, if you’re talking about natural gas rather than electricity). Plenty of CDM/DSM incentive dollars are available to industrial enterprises, since energy consumption is concentrated and a single efficiency project can go a long way. Industry has gotten some CEI attention as it can be both a supplier and customer of a thermal energy utility, and again big demand is concentrated in a relatively small space.
Transportation has been largely left out in the cold. This is because any incentive program will be difficult to formulate for a specific target population, and will struggle to produce a fast payback.
Transportation is, by definition, mobile. Vehicles plying the streets of Guelph are either based here, or they come here from somewhere else. A program aimed at reducing transportation energy use may be aimed at the home base for a vehicle, or alternatively at the destination. It’s difficult for a municipality to justify a program that will primarily affect vehicles that drive here from elsewhere (fuel trucks, say), nor does it make sense to target vehicles that are based here but spend a good chunk of their life outside of the City limits (because they commute to Kitchener-Waterloo or the GTA, for example). Ideally a program would pick out the vehicles that are based in Guelph and rarely leave Guelph, but that’s a tall order.
Another challenge is how to devise a program to reduce energy use for transportation with reasonably quick results. You can stimulate active transportation by providing bike lanes, and Guelph is doing this (recently winning a silver award for being one of Ontario’s most bike-friendly cities). You can also plan urban development so that people don’t need to drive so much to clear their to-do lists, and Guelph is doing this as well. However, these are programs that pay off only in the medium to long term. Transportation energy usage stubbornly resists the quick-win improvement.
It is tempting to score a short-term victory by stimulating uptake of a particular energy-efficient technology. However, picking technology winners is something that governments have rarely done well, whether this is for a particular player in a given industry, or for an entire sector. As an example of the former, the Obama administration got burned by a US$536 million loan guarantee to the solar company Solyndra, which went bankrupt in 2011. As for the latter, if you’d surveyed the market for alternative vehicle drive systems fifteen years ago, you might well have bet on fuel cells. A survey of today’s urban streets would yield exactly zero examples of such vehicles.
If you get into the game before the market has pronounced judgement, it’s a great way to lose your shirt. If you wait too long, the incentive will not change the outcome from what would have happened anyway. Timing is key.
These days, a number of alternative fuel technologies are showing broad market acceptance. For small vehicles, electric drive systems are becoming ever more prevalent, starting with hybrid electric vehicles (HEVs) like the Toyota Prius, then moving on to plug-in hybrid electric vehicles (PHEVs) like the Chevy Volt, and then true electric vehicles (EVs) like the Nissan Leaf and my own personal dream car, the now-out-of-production Tesla Roadster (I know, I’m dreaming in technicolour if I think I’ll ever afford such a ride on a municipal employee’s salary). For larger vehicles, Compressed Natural Gas (CNG) shows a lot of promise.
HEVs and PHEVs offer energy efficiency improvements over traditional internal combustion vehicles, but they both still have gasoline engines. Money spent on gasoline fuel leaves the community, never to return. EVs, however, run exclusively on electricity, which can be generated locally, injecting cash back into the community rather than bleeding it away to faraway refiners and producers. This makes EVs the most attractive target out of the three for an incentive program.
Two key barriers to EV adoption are range anxiety and cost literacy. Although the “fuel” for EVs is everywhere that society is found, the chargers – Electric Vehicle Supply Equipment (EVSE), to use the industry jargon – are far from ubiquitous. Prospective owners worry that they might get stuck somewhere en route with a dead battery. A program to provide more EVSEs, either at home base or typical destinations (malls, say, or employee parking), can alleviate this so-called range anxiety.
Cost literacy is another barrier. Car shoppers look at sticker price, but that has nothing to do with their ability to pay. When costs are expressed as a monthly payment, they can actually be compared to a household budget. However, with EVs, this cost is only part of the story. The base cost is higher, but the operating cost is peanuts. I attended a seminar at the Waterloo Institute for Sustainable Energy, where I learned that when cost is expressed as total monthly figure – fuel included – EVs win hands down against comparable internal combustion vehicles. An incentive program could be geared at simply clarifying this fact for car purchasers.
For larger vehicles, electric drive is still seems iffy, Edmonton’s choice to test electric buses notwithstanding. For this category, Compressed Natural Gas (CNG) is attractive. After a false start in the 1990s, this technology appears ready for prime time. It’s still a fossil fuel, true. However, a CNG vehicle produces 20% less greenhouse gases than a comparable diesel or normal gasoline vehicle, and virtually zero NOx, SOx, and particulates. It also has a significant cost advantage – CNG would be the equivalent of $0.45/L gasoline. Even with gas prices as low as they currently are (by recent, not historical standards), that offers a competitive return on the cost to convert existing vehicles, or the incremental cost to choose a new CNG vehicle over the gas/diesel model.
With all that said, HEVs, PHEVs, EVs, and CNG vehicles don’t hold a candle to the revolutionary possibilities of another emerging transportation technology. More on that in my next post.