4. ENERGY EFFICIENCY

and Renewable Energy by 11%, while the DOE’s Advanced Manufacturing Office saw increased funding of 18%, and the Building Technologies and Vehicle Technologies Offices each saw 10% increases.

In 2013, the president set a target for energy productivity (the inverse of energy intensity) to double between 2010 and 2030. This target was later supported by a strategic roadmap released by the DOE in 2015. The current administration has not agreed to any targets as it has a policy agenda to reduce regulatory burden (which includes energy efficiency standards/regulations).

Transport sector

Energy consumption in the transport sector

In 2017, the transport sector consumed 625 Mtoe, 41% of TFC in the country. Total transport energy demand increased steadily until 2007, when it peaked at 629 Mtoe. After the financial crisis in 2008, demand fell, but has picked up again in recent years (Figure 4.5). Between 2012 and 2017, transport energy demand increased by 9%, and is on a trajectory towards record high levels.

Figure 4.5 TFC in transport by source, 1973-2017

IEA (2019). All rights reserved.

Transport energy demand is increasing again, after a post-financial crisis decline. The sector is dominated by oil fuel, although biofuels have increased rapidly in the last decade.

*Not visible on this scale. EV charging done at home is registered as residential consumption. Note: The transport sector demand excludes international aviation and navigation.

Source: IEA (2019), World Energy Balances 2019, www.iea.org/statistics/.

Oil products dominate with 91% of total transport energy consumption in 2017. However, biofuels have nearly tripled in a decade, and accounted for 6% of consumed energy in 2017, mostly from ethanol used in road transport (see further in Chapter 5, “Renewable Energy”). The rest is mainly natural gas used in pipeline transport and a minor share of electricity in rail transport and electric road transport (electric vehicle [EV] charging done at home is registered as residential consumption).

Road transportation consumes most of total transport energy demand. In 2017, road transportation accounted for 85% of total domestic transport demand. Domestic aviation

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is also an important transport mode in a large country such as the United States, and accounts for 9% of total domestic transport demand. The rest is energy consumed in pipelines, domestic navigation and railways.

The fuel intensity of passenger cars has been relatively stable in the United States, with a slight reduction in the last few decades. However, as the passenger load factor (number of passengers per vehicle) has dropped, the overall energy intensity for passenger cars has increased (Figure 4.6). Between 2000 and 2016, the energy use per passenger kilometre (pkm) increased by 9%. For freight trucks, the trend is even stronger. Energy use for transporting one tonne of goods one kilometre – a tonne kilometre (tkm) – grew by 37%. However, the energy intensities have been more stable in recent years.

Figure 4.6 Energy intensity in road transport by mode, 2000-16

IEA (2019). All rights reserved.

Road transport accounts for 85% of total domestic transport demand; energy intensity for both passenger cars and freight trucks has increased since 2000, though flattened recently.

Note: MJ = megajoule.

Source: IEA (2018), Energy Efficiency Indicators 2018, www.iea.org/statistics/.

Energy efficiency policies in the transport sector

The United States has had Corporate Average Fuel Economy (CAFE) standards in place since the Energy Policy and Conservation Act (EPCA) of 1975 to mitigate oil consumption growth.

Since 2009, the administration harmonised CAFE standards – administered by the National Highway Traffic Safety Administration (NHTSA) – with vehicle emissions standards, established by the EPA. At the time, the agencies laid out standards for two periods, 2012-16 and 2017-25 (NHTSA, 2018). The standards are supposed to achieve fuel economy levels of 48.7 miles per gallon (mpg) to 49.7 mpg for model year 2025 vehicles (EPA, 2012). Given the integration of the North American automobile market, these standards were also harmonised with those in Canada.

As part of the rule making, the EPA and NHTSA agreed to perform a midterm evaluation of the standards for 2022-25. In 2016 the EPA expedited its review and issued a finding that held that the standards were appropriate (EPA, 2016). However, in 2017 the administration reopened the review, in conjunction with the NHTSA, and in August 2018

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announced a new proposal, the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks. The SAFE rule proposes to revise the standards on both economic and safety grounds, with the preferred option to freeze 2021 standards at around 37 mpg for passenger cars and 31.3 mpg for light-duty trucks, through 2026 (Federal Register, 2018). The rule is expected to be finalised in 2019.

A complicating factor for the federal government in implementing the SAFE rule will be a Clean Air Act waiver that California was granted in 2013, allowing the state to set emissions standards more stringent than those established by the federal government. California’s current standard is aligned with the existing federal standards, but freezing the federal standards at 2021 levels under the SAFE rule would create a discrepancy between the federal and California standards (US Department of Transportation and EPA, 2018). Moreover, 13 other states also follow California’s standards, together accounting for over 40% of the automobile market. As such, automakers could encounter uneven standards across states.

Following its finalisation, the new rule is expected to face lawsuits from environmental groups and states. Moreover, California plans to launch a legal defence of its waiver, which the SAFE plan proposes to revoke. Ultimately, the final outcome will likely be decided by the courts.

The administration in 2011 also put in place the first-ever fuel efficiency and greenhouse gas (GHG) emissions standards for heavy-duty vehicles. The standards applied to model years 2014-18 (Phase 1) and vary by type of vehicle and, based on a vehicle’s specifications, require between 6% and 23% emissions reduction relative to a 2010 baseline. Phase 2 standards were finalised in 2016 and apply to model years 2021-27, and include targets of 16-25% carbon dioxide reductions compared with Phase 1 (ICCT, 2016).

Electric vehicles

Policy support is a key driver of EV uptake in the United States, which also improve fuel efficiency of the vehicle fleet. In 2017, EVs, including pure battery EVs and plug-in hybrid EVs, accounted for 1.2% of new car sales in the United States. In 2017, the total number of EVs in the US vehicle fleet was 762 060.

Beyond vehicle standards, federal financial incentives also attempt to boost the uptake of EVs, which will have the added effect of boosting energy efficiency. The main policy tool offered by the federal government is a tax credit for purchases of EVs that meet specified emissions standards. As part of the Emergency Economic Stabilization Act of 2008, Congress authorised tax credits of USD 2 500 to USD 7 500 for each new EV purchased (depending on vehicle size and battery capacity), though imposed a manufacturer-based limit on the credit, so it applies to the first 200 000 vehicles sold by a given company (DOE, 2018a). GM and Tesla reached this limit at the end of 2018, so purchases of their cars can no longer claim the full USD 7 500 credit.

The United States also offers tax credits for EV charging stations, and the DOE supports R&D with USD 690 million in 2018 across the Vehicle Technologies, Bioenergy Technologies and Hydrogen and Fuel Cell Technologies Offices. It also provides loans under its Advanced Technology Vehicles Manufacturing programme (with USD 16 billion of remaining authority) to automakers and component makers for constructing or

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retooling manufacturing plants to produce advanced batteries or other components, or EVs. The DOE also offers up to USD 4.5 billion in loan guarantees for innovative renewable energy and efficient energy projects, including EV charging infrastructure. Lastly, the German automaker Volkswagen (under a recently created unit, Electrify America), is also pursuing a sizeable buildout of EV charging stations throughout the United States as part of its USD 2 billion settlement with the EPA and California Air Resources Board over the company’s diesel emissions scandal (beyond investments planned by private companies in anticipation of growing demand).

California is leading market deployment. In 2016 and 2017, the governor of California issued executive orders to target 1.5 million zero-emission vehicles (ZEVs) on the road by 2025 and 5 million ZEVs by 2030 (CARB, 2018a). The targets are complemented by the state’s clean vehicle rebates system and ZEV programme, which requires car manufacturers to sell a certain share of EVs or to buy credits from other companies with higher EV sales (CARB, 2018b). Following California’s lead, nine other states (Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Vermont) have also adopted ZEV programmes (EIA, 2016). In addition to ZEV targets, California’s governor in 2018 also announced a USD 2.5 billion initiative to build 200 hydrogen fuelling stations and 250 000 EV charging stations in the state by 2025 (Green Car Congress, 2018).

Figure 4.7 Growth and projections for EV sales, 2010-50

Million vehicles

IEA (2019). All rights reserved.

The Energy Information Administration (EIA) projects increasing EV sales, but EVs are expected to account for just 23% of the vehicle fleet by 2050.

Source: EIA (2019), Annual Energy Outlook 2019, www.eia.gov/outlooks/aeo/.

Over the last decade, minimum fuel economy standards have stabilised the transportation sector‘s energy consumption, after two decades of strong demand growth, and yielded incentives for the automotive industry to develop more efficient internal combustion engines or EVs using batteries and fuel cells. However, in light of the recently proposed relaxation of CAFE rules, if the United States were to experience continued growth in automobile ownership – especially stronger consumer preferences for larger sport-utility vehicles – along with an uptick in vehicle miles travelled, the United States may see a reversal of energy efficiency gains in transportation, even in a context of growing EV demand.

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