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that would use 27 percent less energy than the current technology. A major steel industry initiative involves near-netshape casting. The development of this technique would significantly reduce the energy required to produce finished steel products. In the pulp and paper industry, development and demonstration of black-liquor gasification technologies could lead to a large increase in electricity production at pulp mills.

The Industries of the Future program also has incorporated several existing cross-cutting programs, including Motor Challenge, Steam Challenge, and Compressed Air Challenge, which provide technical expertise and information on how to use specific energy sources more efficiently. The programs are coordinated with several other efforts, including Industrial Assessment Centers and the National Industrial Competitiveness through Energy, Environment, and Economics (NICE3) program. There is also an Inventions and Innovations program that provides grants to individuals and small companies to develop novel methods to improve energy efficiency or environmental performance.

The goal of the Industries of the Future program is to achieve annual carbon reductions of 29 million metric tons by 2010. While this goal cannot be evaluated directly, it would seem to imply that energy consumption would be about 2 quadrillion Btu less than otherwise (neglecting any reductions from process emissions). The AEO99 forecast for industrial energy consumption in 2010 is 39.4 quadrillion Btu." If Industrial energy intensity had stayed constant at its 1997 level, energy consumption would have been 6 quadrillion Btu higher in 2010 than was projected. Thus, it appears feasible that the Industries of the Future programs could make a significant contribution to future emissions reductions.

Industrial Combined Heat and Power

The Advanced Turbine System program is expected to result in a 15-percent increase in turbine efficiency. With other developments in the cogeneration area, DOE states that its program goal is to result in systems that are 15 percent more energy efficient and 80 percent cleaner than conventional power stations, while also reducing electricity costs by 10 percent. DOE and EPA are also jointly supporting the CHP Challenge program, with the goal of eliminating barriers to dissemination of CHP technology and adding 50 gigawatts of additional CHP capacity by 2010.

In terms of the AEO99 projections, the CHP Challenge goal appears to be quite ambitious. For example, over the 1997-2010 period, projected CHP additions total 5 gigawatts in the reference case. While it is reasonable to expect the CHP Challenge and research programs to have some impact, it seems unlikely that the rate of additions implied by the goal could be achieved. Achieving the technical increase in turbine efficiency looks more likely.

Other Programs

The proposed budget for EPA's industry programs is $54 million, an increase of $33 million from 1999. The EPA is a participant in the CHP Challenge program, with a particular emphasis on modifying environmental regulations that unnecessarily impede expansion of CHP. EPA also participates in Climate Wise, which is a voluntary program to encourage businesses to increase energy efficiency and reduce greenhouse gas emissions. EPA estimates that companies participating in the program will realize annual savings of $240 million by 2000.75 As with any other

12-Report to Congress on Federal Climate Expenditures," p. 18.

"Energy Information Administration, Annual Energy Outlook 1999, DOE/EIA-0383(99) (Washington, DC, December 1998). p. 113. 14Energy Information Administration, Annual Energy Outlook 1999, DOE/EIA-0383 (99) (Washington, DC, December 1998). p. 126. US Environmental Protection Agency. Climate Wise Progress Report, EPA 231-R-98-015 (Washington, DC, October 1998). p. 4.

voluntary deployment program, it is not clear to what extent the projected savings can be attributed to the Climate Wise program.

EPA's goal for its industry programs is to reduce annual carbon emissions by 37.9 million metric tons by 2000.76 The average projected industrial energy price was $4.67 per million Btu in the AEO99 reference case. Energy expenditure savings of $240 million would imply reduced energy consumption of about 51 trillion Btu. Unless there are substantial contributions from other programs, this change in energy consumption would not yield the carbon reduction goal. Alternatively, it is not clear what starting point for the reductions was used.

The proposed budget for industry programs in the U.S. Department of Agriculture, which were not funded in 1999, is $10 million. The programs are focused on reducing greenhouse gas emissions through improved agriculture and forestry techniques and assessing the impacts of climate change on agriculture.

Transportation

The CCTI proposal for transportation research, development, and deployment consists of two major programs: additional funding for the Partnership for a New Generation of Vehicles (PNGV) and an Advanced Diesel Technologies program. The proposed budget for transportation programs at DOE and EPA is $377 million, an increase of $86 million over the 1999 budget. In the AEO99 reference case, implicit levels of research and development are included for light-duty vehicles and heavy-duty freight trucks. Fuel economy for new light-duty vehicles in 2010 is projected to be 12 percent higher than the 1999 level, and fuel efficiency for new heavy trucks in 2010 is approximately 7.5 percent above the 1999 level. In comparison with the frozen technology case, transportation energy consumption in the reference case is 1.1 quadrillion Btu (3.2 percent) lower in 2010.77

Partnership for a New Generation of Vehicles

Background

The PNGV program, a consortium of U.S. automakers and government partnerships, has set a fuel efficiency goal of 80 miles per gallon (mpg) for a mid-sized sedan, with no loss of performance or increase in cost78 from a current mid-sized sedan while meeting or exceeding Federal safety and emissions standards. A prototype is expected by 2000 and a production prototype by 2004. Commercial sale of the vehicles would potentially come 1 to 3 years later, making the technology available between 2005 and 2007.

Analytical Approach

For this analysis, the PNGV goals were assumed to be met in the CCTI case by the year 2006 for the three fuel cell vehicle types (gasoline, methanol, and hydrogen) represented in the NEMS model. The incremental vehicle cost above a comparable gasoline vehicle for each EPA size class was assumed to be approximately $2,000, based on an estimate from DOE's Office of Transportation Technologies. Each of the three fuel cell vehicles was also assumed to meet the fuel efficiency goal of three times the fuel efficiency of a similar sized gasoline vehicle.

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76-Report to Congress on Federal Climate Expenditures,” p. 18.

"Energy Information Administration, Annual Energy Outlook 1999, DOE/EIA-0383 (99) (Washington, DC, December 1998). Table F4. 18Including maintenance and operating costs and purchase price.

Energy Information Administration / Analysis of the Climate Change Technology initiative

1

The CCTI research and development initiatives include a proposed funding increase of $24 million for DOE's role in the PNGV program, which was funded at $240 million in 1999, with additional funding at EPA. It is not clear. however, that a 10-percent increase in the PNGV budget will lead to attainment of the PNGV goals. The PNGV Committee has made significant progress in the development of advanced technologies, and its efforts have led to several manufacturer announcements of PNGV production prototypes by 2004; however, the National Research Council (NRC), which reviews the PNGV program goals and achievements each year, has made the following assessments: (1) Unless the PNGV program receives significantly more funding, its goals most may not be met. (2) The goal of a fuel-efficient mid-sized vehicle with costs similar to those of a conventional gasoline vehicle most likely will not be met.31

.79,80

Results and Discussion

In the CCTI case for this analysis, fuel cell vehicle sales are projected to rise significantly, to 274,000 units in 2010 and almost 425,000 units in 2020 (Table 28), representing more than 2.8 percent of all light-duty vehicle sales in 2020. Electric vehicle and diesel-electric hybrid vehicle sales decline slightly relative to the reference case (by about 2.9 percent in 2010 and 1.4 percent in 2020) because of the increased competition from fuel cell vehicle sales.

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Source: Energy Information Administration, National Energy Modeling System runs AE099TRN.D040699A and AE099TRN. D0406990.

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Fuel consumption for light-duty vehicles is projected to be 49 trillion Btu lower in the CCTI case than in the reference case in 2010 and, because of the heavy volume of sales between 2010 and 2020, 196 trillion Btu lower in 2020 (Table 29). However, these fuel savings result in only a 0.15-percent reduction in total transportation fuel consumption in 2010.

National Research Council, Partnership for a New Generation of Vehicles: Fourth Report (Washington, DC: National Academy Press, 1998). The NRC will be reviewing the PNGV program in a fifth report, which will be completed by the end of April 1999.

The National Research Council review of the PNGV program in the Fourth Report states on page 77: "Thus, the hybrid features may not meet the PNGV criteria for equivalent cost of ownership and may ultimately have questionable marketability for this class of passenger vehicles." The NRC also commented on the cost and fuel efficiency performance goal: "Fuel cells still face substantial obstacles to meeting performance and cost goals within the 2000 to 2004 time frame... [a]lthough the 65 mpg falls short of the 80 mpg target....”

Table 29. Light-Duty Vehicle Fuel Consumption by Fuel Type, 1997-2020

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Source: Energy Information Administration, National Energy Modeling System runs AEO99TRN.D040699A and AE099TRN. D040699D.

Carbon emissions in the CCTI PNGV case are 0.9 million metric tons lower than the reference case projection in 2010. but in 2020, as sales volumes accumulate in the vehicle stock, they are 3.9 million metric tons lower (Table 30). Even in 2020, however, the carbon emissions reductions amount to only 0.56 percent of the total transportation carbon emissions projected in the reference case.

Table 30. Transportation Sector Carbon Emissions by Fuel Type, 1997-2020

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Source: Energy Information Administration, National Energy Modeling System runs AEO99TRN.D040699A and AE099TRN. D040699D.

Advanced Diesel Technologies for Light and Heavy Trucks

Background

The CCTI research and development initiatives include a proposal to provide funding for government and industry partnerships to develop advanced diesel cycle engine technologies for pickup trucks, vans, and sport utility vehicles and engine and vehicle technologies to improve the fuel efficiency of new heavy trucks. In 1998, diesel-powered

light-duty vehicles captured only 0.01 percent of total U.S. light-duty vehicle sales, significantly below their highest shares of 6.1 percent of auto sales in 1981 and 5.0 percent of light truck sales in 1982.

In 1997, Volkswagen began offering a Jetta sedan with a turbocharged direct injection diesel engine (44.95 mpg) in US. markets. Although the new diesel engine provided a 60-percent increase in fuel economy over the conventional gasoline Jetta (27.85 mpg), it was soon withdrawn from the market due to lack of sales. Volkswagen is now working on a new direct injection diesel automobile (the Lupo) with a fuel efficiency goal of 78 mpg. For model years 1998 and 1999 Volkswagen is again offering the turbo direct injection engine in the Jetta and the Beetle, with the intention of eventually offering it in the Passat. Preliminary sales of turbo direct injection technology have been slow, according to a few Volkswagen dealers in the Washington metropolitan area.

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Heavy trucks are an integral part of U.S. commerce and economic growth. In 1995, total expenditures for highway freight transportation (local and intercity trucks) were over $348 billion, accounting for 79 percent of the Nation's freight bill and approximately 4.8 percent of gross domestic product. On average, a heavy truck travels 37.600 to 86,500 miles each year. Heavy trucks account for 79 percent of freight truck fuel usage, and freight truck travel represented 16 percent of all fuel use in the transportation sector in 1997.

The stated goal of the CCT1 proposal for light trucks is a 35-percent improvement in fuel efficiency above conventional gasoline vehicles by 2002 while meeting strict emissions standards. For heavy trucks the goal is to achieve a fuel efficiency of 12 mpg by 2004 for new diesel trucks while still meeting prevailing emissions standards.

Light Trucks

Analytical Approach

For this analysis, the NEMS transportation module was used to model the CCTI research and development initiative. The following assumption was made in modeling the CCTI analysis case: the date of commercial availability for turbo diesel fuel injection technology was advanced to 2002 from 2005, with no change in vehicle prices. The expected sale price for turbo direct injection vehicles is approximately $1,200 higher than that for conventional gasoline vehicles. With large sales volumes approaching 25,000 units per year, the incremental cost could decline to about $800.

Results and Discussion

The results for the CCTI analysis case show that diesel vehicle sales amount to less than 2 percent of total light truck sales in 2010 (Table 31). Consequently, projected light-duty vehicle fuel consumption in the CCTI case is 25 trillion Btu lower than the reference case level in 2010—a reduction of less than 0.15 percent (Table 32). The corresponding reduction in projected carbon emissions from transportation energy use in the CCTI case relative to the reference case is only about 0.1 million metric tons in 2005 and 0.4 million metric tons in 2010-representing just 0.06 percent of total projected carbon emissions for the transportation sector in the reference case (Table 33).

P. 21.

Energy Resources R&D Portfolio, Draft-2 (2/6/99).

BUS. Department of Energy Office of Transportation Technologies, Program Analysis Methodology (Washington, DC, January 15, 1999). For a more detailed description of the transportation module, see Chapter 2, page 30.

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