:15 cents per gallon higher in the 1990+24% case, 37 cents per gallon higher in the 1990+9% case and 68 cents higher in the 1990-3% case. These increases are larger than those projected for gasoline because of the higher carbon content of distillate fuel.

Higher fuel prices do not result in as much change in travel and efficiency for freight trucks and rail as they do for light-duty vehicles. Because of the slow turnover in the stock of freight trucks and rail and the high power requirements of the engines used to move freight, fuel savings are limited. The main source of reductions in distillate fuel use is the response to overall lower econornic activity and demand for goods by 2010 in the carbon reduction cases, leading to lower freight travel for both trucks and rail. Lower demand for goods in the 1990+24%, 1990+9% and 1990-3% cases results in levels of freight truck travel that are 1.3 percent, 2.4 percent and 4.9 percent lower, respectively, in 2010 than projected in the reference case. Declines in coal consumption and production also lead to further cuts in rail travel as described below.

The potential for improvement in fuel economy for freight trucks is also limited. In the reference case, the fuel efficiency of new freight trucks is projected to increase by only 0.6 percent per year between 1996 and 2010. Even with higher distillate fuel prices in the 19903% case, the efficiency for new freight trucks improves at an annual rate of only 0.8 percent. As a result of the lower demand for goods and slower turnover in the stock of freight trucks projected in the 1990+9% case relative to the reference case, there is almost no difference in the projected average stock efficiencies for the two cases in 2010 (Figure 63).

The number of advanced technologies available for freight trucks is relatively small. Those with the greatest potential are advanced aerodynamics, the turbocompound diesel engine, and the LE-55 heat engine, with expected marginal fuel efficiency improvements of approximately 25. 10, and 17 percent, respectively (Table 13). In all the carbon reduction cases, the advanced aerodynamics technology is projected to achieve the greatest efficiency improvements and highest penetration rates for both medium- and heavyduty trucks. The turbo-compound diesel engine and the LE-55 heat engine do not penetrate the market until after 2010, except in the high technology sensitivity cases. In percentage terms, the projections for rail and ship freight travel in 2010 show the sharpest reductions relative to the reference case in the carbon reduction cases. Rail freight travel is 9 percent, 23 percent, and 32 percent lower in 2010 in the 1990+24%, 1990+9%, and 1990-3% cases than in the reference case. Since more than 40 percent of rail travel is for coal transportation, the lower rail travel in the carbon reduction cases is primarily due to the projected reductions in coal production of 20 percent, 52 percent, and 71 percent in the 1990+24%, 1990+9%, and 1990-3% cases relative to the reference case. Domestic freight travel by ship is projected to be 3 percent, 6 percent, and 10 percent lower in the three cases than in the reference case. Domestic shipping is not expected to be affected as adversely by the decline in coal production as is rail traffic; however, with lower demand for goods and industrial production

Table 13. Projected Penetration of Selected Technologies for Freight Trucks, 2010 (Percent of New Sales)

Technology

Medium Trucks Improved Tires and Lubricants

Electronic Engine Controls Advanced

Drag Reduction..... Turbo Compound Diesel. LE-55 Heat Engine

Heavy Trucks

Improved Tires

and Lubricants

Electronic
Engine Controls

1990+9% High

Advanced

Drag Reduction.

Source: Office of Integrated Analysis and Forecasting, National Energy Mod. eling System runs KYBASE.D080398A, FD09ABV.D0803988, and HITECH09. D080698A,

in the carbon reduction cases, domestic shipping is also projected to be lower.

Like freight truck and rail travel, shipping is affected more by the impacts of carbon prices on travel and shipping requirements than by the direct impacts of higher fuel costs. High-carbon residual fuel has the largest projected price increases of all the transportation fuels, with increments of 19 cents per gallon in the 1990+24% case, 46 cents in the 1990+9% case, and 84 cents-almost 100 percent-in the 1990-3% case relative to the prices projected for 2010 in the reference case.

Approximately 15 to 17 percent of the drop in total fuel consumption in 2010 in the carbon reduction cases is attributed to aircraft, 6 to 7 percent to freight trucks, 4 to 6 percent to rail engines, and 1 percent to marine engines. The relative energy consumption shares for the major transportation modes and fuels do not vary significantly across the cases (Table 14).

availability. In 2010, alternative-fuel vehicle sales as a percent of light-duty vehicle sales are projected t increase to 11.98 percent in the 1990+24% case, 12.07 per cent in the 1990+9% case, and 12.10 percent in the 1990 3% case from 11.91 percent in the reference case. The projected market shares for alternative-fuel vehicles an? higher in the carbon reduction cases primarily because higher fuel prices would encourage consumers to tal advantage of the higher fuel efficiencies and lower cost of driving projected for some alternative-fuel vehicle relative to gasoline vehicles. In addition, as the fuel ef ciency of alternative-fuel vehicles improves, their dr ing range will increase.

Although alternative-fuel vehicle sales increase in per centage terms relative to the reference case in 2010, the actual number of alternative-fuel vehicles sold i expected to be smaller in the carbon reduction cases as result of projected declines in light-duty vehicle sale overall. In the reference case alternative-fuel vehick sales are projected to be approximately 1.79 million vehicles in 2010, whereas sales range between 1.58 and 1.75 million vehicles in the 1990+24%, 1990-9% 1990+9%, and 1990-3% cases. Similar results are prjected for alternative-fuel consumption as a percentage of total transportation fuel use in 2010. Although the projected cost of driving per mile is lower for some alternative-fuel vehicles than for gasoline vehicles in some of the carbon reduction cases, it would still be more costly to drive an alternative-fuel vehicle than a gasoline vehicle. The purchase prices for most alternative-fuel vehicles still would be higher than those for conventional gasoline-powered vehicles, and addi tional driving costs would be incurred as the result of lower vehicle range and limited availability of fuel. Also, with higher projected fuel prices, vehicle-miles traveled are expected to be reduced for all vehicles, including those that use alternative fuels. Finally, the higher eff ciencies of alternative-fuel vehicles would lower their total fuel consumption.

Sensitivity Cases

To examine the effects of technology improvements on energy use and prices, two sensitivity cases were analyzed for the transportation sector. The 1990+9% low technology sensitivity case was designed to hold aver age new vehicle fuel efficiencies at their 1998 levels throughout the forecast period. The implication is that stock turnover and travel reductions would have to compensate for the lack of fuel efficiency improvements in order to meet the carbon reduction targets. The 1990+9% high technology sensitivity case was designed to illustrate the effects of advanced fuel-saving technolo gies on transportation fuel efficiency, fuel consumption. and carbon emissions. This sensitivity case generally assumes that the costs of new technologies will be reduced, the marginal fuel efficiency benefits will be

Mass Transit and Carpooling

An issue for the transportation sector is whether the ratification of the Kyoto Protocol by the United States will lead to increased use of mass transit and carpooling. Automo bile transportation is a major contributor to air pollution and greenhouse emissions, and a cutback in this area would be desirable. U.S. transportation patterns make this unlikely, however, in spite of the fact that the carbon reduction cases in this analysis project higher gasoline prices and lower levels of vehicle-miles traveled.

The United States consumes far more energy per capita for transportation than any other developed country. with U.S. passenger travel dominated by the automobile. In 1990, about 86 percent of passenger-miles were accounted for by automobiles, and mass transit accounted for less than 4 percent. The U.S. mass transit system includes buses, light rail, commuter rall, trolleys, subways, and an array of services such as van pools, subsidized taxis, dial-a-ride services, and shared minibus and van rides. Most cities of over 20,000 population have bus systems, and buses on established routes with set schedules account for over half of all public transit passenger trips. About 70 percent of all public transit trips in 1990, however, were in the 10 clues with rapid rail systems; 41 percent were in New York City and its suburbs. More recent statistics show that, as of 1995, mass transit accounted for only 0.8 percent of total fuel consumption in the transportation sector.

One reason for the low usage of mass transit in the United States and the concentration of use in major cities is urban development that has decreased the importance of his. toric central business districts (CBDs). Peak trips in general, and work trips in particular, have become diffuse in both origin and destination and thus not easily served by mass transit. In 1980 only 9 percent of the workers in urban areas and only 3 percent of workers living outside the central city were employed in the CBDs. (In Europe, where population densities are much higher, access to the workplace is much easier.) Other factors that work against mass transit in the United States are a past history of low gasoline prices, rising Income levels, increasing numbers of women in the workforce with needs to drop off and pick up children at child care facilities, a move toward less standardization of work hours, and premiums placed on personal independence and time saved by driving rather than making use of mass transit. The same factors affect the use of carpooling.

Available statistics support the contention that the lower levels of vehicle-miles traveled associated with the carbon reduction cases do not necessarily imply increased use of mass transit. According to the American Public Transit Association, all forms of mass transit in terms of passenger-miles decline during periods of high fuel prices. Transit rail passenger-miles, which include light and heavy rail travel, declined by nearly 10 percent from 1973 to 1974 and by 5 percent from 1979 to 1981, even though real gasoline prices concurrently rose by 28 percent during both periods. Similar trends occurred in commuter rall, which experienced declines of almost 8. percent from 1980 to 1982. Between 1979 and 1982, transit bus passenger-miles declined by 7 percent and intercity bus travel by 1 percent, while real gasoline prices increased by 15 percent. A counter example is the period from 1973 to 1974, when transit bus use rose by 11 percent, and intercity bus passenger-miles increased by 5 percent. That period was unique, however, because gasoline was often either unavailable or required waits of up to several hours in gas station lines.

Carpooling trends, according to the U.S. Census Bureau, have declined from approximately 20 percent of the workforce in 1980 to just over 13 percent in 1990.* The National Personal Transportation Survey has reported similar trends in vehicle occupancy rates, which indicate that from 1977 through 1990, vehicle occupancy rates have declined in commuting to and from work, from 1.30 to 1.14 person-miles per vehicle mlle.' These occupancy rates correspond to about one-third of total vehicle-miles traveled.

Because travelers do not take into account such externali. des as reducing greenhouse gas emissions when making their transportation decisions, and past gasoline price increases do not seem to have had an impact, it is unlikely that mass transit and carpooling will increase in the United States without policy intervention factors such as higher gasoline taxes and urban and transportation planning that facilitates access to workplaces. There are differ ing opinions as to the role these factors could play in shaping travel patterns. If history, geography, income. and demographics are the primary determinants of travel patterns, policy may play only a minor role in changing energy use; but if instruments of public policy are primary travel determinants, then there is a large potential for policy to reduce energy use" and alter mass transit and carpooling patterns.

PP. 5-6.

Higher projected carbon prices in the low technology sensitivity case lead to higher prices for all transportation fuels. In 2010, average fuel prices in the transportation sector are projected to be 14 percent higher in the 1990+9% low technology case than in the 1990+9% case. Gasoline prices are projected to be about 19 cents per gallon higher, jet fuel prices 21 cents per gallon higher, distillate fuel prices 22 cents per gallon higher, and residual fuel prices 26 cents per gallon higher.

Both fuel efficiency and travel are lower in the low technology case than in the 1990+9% case. Higher fuel prices would affect travel both directly and through their secondary impacts on the general levels of macroeconomic activity, disposable income, and freight movement. Of all travel modes, vehicle-miles traveled by light-duty vehicles are the most responsive to the higher fuel prices in the 1990+9% low technology case, with a 5.1-percent reduction from the projected level in the 1990+9% case in 2010. Air travel is reduced by a similar percentage, 5.5 percent, whereas smaller reductions are projected for freight, rail, and domestic shipping travel (0.8 percent, 3.1 percent, and 0.9 percent, respectively). Total projected fuel consumption in 2010 is higher in the low technology case than in the 1990+9% case, because fuel efficiency does not improve as rapidly.

With lower carbon prices and lower fuel prices in the 1990+9% high technology sensitivity case, more travel is expected than in the 1990+9% case. Despite the higher travel projection, however, more rapid improvements in new vehicle and stock fuel efficiencies result in lower fuel consumption in the high technology case, with higher fuel efficiencies outweighing the projected increases in vehicle-miles traveled that result from lower projected fuel prices. Average transportation fuel prices in 2010 are 9.6 percent lower in the 1990+9% high technology sensitivity case than in the 1990+9% case. Gasoline prices are projected to be 14 cents per gallon lower in 2010, jet fuel prices 13 cents per gallon lower, distillate fuel prices 14 cents per gallon lower, and residual fuel prices 16 cents per gallon lower.

Comparing across the travel modes, light-duty vehicles hold the greatest potential for reducing fuel consumption and carbon emissions with more rapid technology advances (Figure 64). Not only do light-duty vehicles

Figure 64 Projected Reductions From Reference Case Projections of Transportation Sector Fuel Consumption in High and Low Technology Sensitivity Cases, 2010

Source: Office of Integrated Analysis and Forecasting National Erway Modeling System runs KYBASE D080396A, FREEZES DO80798A, PDOSAGE D0803988, and HITECHOS D080898A

consume more fuel in total than the other vehicle types (more than 56 percent of all transportation fuel use in 1996), they also have the greatest potential for advanced technology penetration. In the 1990+9% high technology sensitivity case, light-duty vehicles are projected to account for 65 percent of the reduction in transportation fuel use relative to the 1990+9% case, compared with 20 percent for trucks, 11 percent for aircraft, 4 percent for rail, and I percent for marine.

Fuel-saving technologies for conventional light-duty vehicles in the high technology case are assumed to have approximately 50 percent lower marginal technology costs and 30 percent higher marginal fuel efficiency improvements than those for gasoline vehicles. All conventional technologies achieve lower sales penetration rates in the high technology case than in the 1990+9% case, due to lower fuel prices (Table 11); however, because the marginal fuel efficiencies are also higher than in the 1990+9% case, the total fuel efficiency improvement is larger in the high technology case.

With lower marginal costs and earlier introduction dates in the high technology sensitivity, most new aircraft technologies reach significantly higher penetration rates than in the 1990+9% case with reference technology (Table 12). The penetration rate for ultra-high-bypass

engines is lower in the high technology case, because they are partially displaced by advanced thermodynamic engines. Substantial fuel efficiency improvements result from the penetration of weight-reducing materials, advanced aerodynamics, and advanced thermodynamic engines, which can potentially achieve efficiency improvements of 15 percent, 18 percent, and 20 percent, respectively.

Fuel efficiency for new freight trucks rises by more than 1 mile per gallon by 2010 in the high technology case relative to the 1990+9% case, primarily because of the penetration of the turbo compound diesel, LE-55 heat engine, improved tires and lubricants, and electronic engine controls on heavy-duty trucks (Table 13). Both advanced engine technologies-the turbo compound diesel and LE-55 heat engine-are diesel technologies, which improve fuel economy by 10 percent and 23 percent, respectively.

The high technology case assumes that the U.S. Department of Energy Office of Transportation Technologies program goals for alternative-fuel vehicle cost and performance improvements will be met. Generally these program goals include a reduction of 50 to 66 percent in the marginal price difference between comparable gasoline vehicles and electric or electric hybrid vehicles, and a 75-percent reduction in the difference for fuel cell vehicles. Fuel efficiency improvements are assumed to be 230 to 300 percent greater for electric and electric hybrid vehicles and 250 percent greater for fuel cell vehicles than for gasoline vehicles. These fuel efficiency improvements are also assumed to result in travel ranges that are 57 percent greater for electric hybrid vehicles and 20 percent greater for fuel cell vehicles than the range for similar sized gasoline vehicles. Total alternative-fuel vehicle sales in the 1990+9% high technology case in 2010 are projected to make up almost 19 percent of all light-duty vehicle sales, compared with just over 11 percent in both the reference and 1990+9% cases. The projected shares for different alternative-fuel vehicle types are shown in Table 15.

In order for alternative-fuel vehicles to displace large quantities of gasoline use, they must penetrate the market early enough to replace gasoline vehicles and

then sustain high sales volumes. Displacement of gasoline may be limited, however, because the vast majority of the projected increase in alternative-fuel vehicle sales consists of alcohol flexible-fuel vehicles, which are expected to have only slightly higher fuel efficiencies than gasoline vehicles. They will also use only 15percent blends of E85 and M85 and will more frequently be consuming gasoline than the alternative fuel.

For alternative-fuel vehicles to maintain a larger share of the vehicle market, they will need to have lower costs, higher performance, and earlier availability dates than projected in this analysis. Simultaneously, higher fuel prices will be needed to send market signals to both consumers and vehicle producers. The high technology case indicates both of these points: fuel-saving technology becomes available and is purchased in 2005. but its advantage is quickly offset by reductions in gasoline consumption, which lead to lower gasoline prices. Consequently, as fuel prices begin to decline after 2008, consumers tend to demand higher performance and larger vehicles, and manufacturers respond by designing and producing larger, more profitable models, such as sport utility vehicles.