NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

The Dynamic Market for Alternative Fuels

Alex Schroeder

Midwestern Summit for Transportation Fueling Choice Racine, Wisconsin

May 29, 2013 NREL/PR-5400-59329

2

National Renewable Energy Laboratory

Only national laboratory dedicated solely to energy efficiency and renewable energy

• Leading clean-energy innovation for 35 years

• About 1,700 employees with world-class facilities

• Campus is a living model of sustainable energy

• Owned by the Department of Energy

• Operated by the Alliance for Sustainable Energy

3

The Dynamic Market for Alternative Fuels

Synopsis • Market Overview • Market Trends • Technology Deployment Opportunities

Key Points • Market Forces and Policies are Increasing Opportunities for Alternative

Fuels • Technology Advancements are Enabling New Solutions and

Fundamentally Changing the Dialog • There is No One Size Fits All, Catch All, Silver Bullet to Do it All

Market Overview

5

Newly Accessed Oil Supplies are Changing the Conversation

….kind of Reduced Dependence on Foreign Oil Decreasing Consumption Possibility of Being Net Exporter

Market Growth Being Driven by Other Countries Refining Capacity is Limited

New York Times (3/22/12)

6

We are Still Dependent on a Single Fuel

Annual U.S. Fuel Consumption All Transportation ~93% comes from petroleum 4.9 Billion Barrels of Oil Annually Light Duty Market 3.1 Billion Barrels of Oil Annually 63% of total petroleum use Heavy Duty Market 1.1 Billion Barrels of Oil Annually 22% of total petroleum use

natural gas 39%

coal 30%

petroleum 5%

conventional hydro

8%

renewable 6%

nuclear 10%

other 2%

Electric Generation Capacity (2011)

petroleum 93%

7%

Transportation Fuels Portfolio (2011)

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Alternative Fuel Consumption Does not Correlate with Vehicle Availability

Liquefied Petroleum Gas (LPG)

27%

Compressed Natural Gas

(CNG) 46%

Liquefied Natural

Gas (LNG)

6%

85% Ethanol (E85)[1]

20%

Electric [2] 1%

Estimated Consumption of Alternative Fuel by AFVs in the U.S. (2010)

Liquefied Petroleum Gas (LPG)

15%

Compressed Natural Gas

(CNG) 12%

Liquefied Natural Gas

(LNG) 1%

85% Ethanol (E85) 66%

Electric 6%

Estimated Alternative Fueled Vehicles in Use (2010)

www.afdc.energy.gov/afdc/data/

http://www.afdc.energy.gov/afdc/data/index.htmlwww.afdc.energy.gov/

8

Different Vehicle Classes Have Different Needs

12,950

11,702

9,877

3,434

3,392

2,029

1,896

1,423

898

531

453

33

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

Gallons per Year

Average Annual Fuel Use by Vehicle Type

www.afdc.energy.gov/data/

http://www.afdc.energy.gov/data/www.afdc.energy.gov/

Trends and Technologies

10

People are Driving Less, but Spending More to Do So

Average Annual Vehicle Miles Traveled

Average Per Capita Annual Energy Expenditures

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

Transportation

Residential

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Annu

al M

iles D

riven

Source: U.S. Energy Information Administration and U.S. DOE Alternative Fuels Data Center

http://www.afdc.energy.gov/data/www.afdc.energy.gov/data/

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The Market for Alternatives Tends to Follow Petroleum Markets, but at Different Rates

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

Cost

per

GG

E

U.S. Average Retail Fuel Prices

Propane

E85

B99/B100

B20

Gasoline

Diesel

CNG

www.afdc.energy.gov/data/

http://www.afdc.energy.gov/data/www.afdc.energy.gov/

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National Policies are Shaping the Market

CAFE Standards Renewable Fuel Standard II

0

10

20

30

40

50

60

Mile

s Per

Gal

lon

Passenger Cars

Light-Duty Trucks

0

5

10

15

20

25

30

35

40

Billi

on G

allo

ns

Other Advanced Fuels

Biomass-based Diesel

Cellulosic

Conventional (starch ethanol)

www.afdc.energy.gov/afdc/data/

http://www.afdc.energy.gov/afdc/data/www.afdc.energy.gov/afdc/data/

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Vehicle Manufacturers are Responding

0

20

40

60

80

100

120

140

160

180

200

# of

Mod

els O

ffere

d

AFV/HEV/Diesel Light Duty Model Offerings by Fuel Type, 1991-2013

Hydrogen

Methanol (M85)

Propane (Dedicated and Bi-Fuel)

Hybrid

Electric Vehicle*

Diesel

CNG (Dedicated and Bi-Fuel)

E85

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As are “Fuel Providers”…

-

5

10

15

20

25

Thou

sand

Sta

tions

U.S. Alternative Fueling Station Count

Electric*PropaneMethanol (M85)LNGHydrogenBiodiesel**CNGE85

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The Wall of Opportunity for Ethanol Renewed Discussions around Biofuels Market and Renewable Fuel Standard • Blend wall is approaching • E10 to E15 • Discussions around mid-level or

optimal blends (i.e. E30) • Deploying cellulosic ethanol

into the market

Modeled minimum selling prices for cellulosic ethanol during the past 12 years

16

The Marketshare of PEVs is Growing

0

1

2

3

4

5

6

7

8

9

10

Thou

sand

Veh

icle

s So

ld

PEV Monthly Sales by Make and Model, 2010-2013 Toyota RAV4

Toyota Prius Plug-inTesla Model S

Smart for Two EV

Smart ED

Prius PHV

Nissan LEAF

Mitsubishi i-MiEV

Honda Fit EV

Honda Accord

Ford Fusion Energi

Ford FocusElectricFord C-MAXEnergiChevrolet Volt

BMW Active E

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And Battery Costs are Falling

Source: DOE Vehicle Technologies Office Presentation on 5/14/13

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Natural Gas Vehicles are Doubling Down on Green

$(40,000.00)

$(20,000.00)

$-

$20,000.00

$40,000.00

$60,000.00

$80,000.00

$100,000.00

$120,000.00

1 2 3 4 5 6 7 8

Year

Fuel Savings

Incremental Cost

Total Cumulative

$(7,000.00)

$(5,000.00)

$(3,000.00)

$(1,000.00)

$1,000.00

$3,000.00

$5,000.00

1 2 3 4 5 6 7 8 9 10

Year

Fuel Savings

Tax Credit

Incremental Cost

Total Cumulative

Savings for a typical CNG refuse truck over 8 years

Savings for a typical CNG Honda Civic

over 10 years

Assumptions: $1.50/gal initial price differential; 7500 gpy; 3% annual increase in CNG price; 5%

annual increase in diesel price.

Assumptions: Same as with refuse truck, except 12000 miles/year at EPA tested MPG.

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Multi-State Natural Gas Vehicle MOU Multi-State Memorandum of

Understanding

16 Governors agreed to aggregate state vehicle procurement in a Joint RFP; utilize local distribution networks Engage local government in procurement to the extent practicable

OEM NGV should have comparable performance and price to a gasoline vehicle

Encourage private investment in NGV infrastructure

Reach out to fellow Governors to encourage participation

Vehicle orders are currently being filled for 1st year effort

20

Business Models are and Should Continue to Evolve

Traditional Leasing

All-In Leasing (Vehicle + Fuel + Maintenance)

Integrated Framework (Buildings + Vehicles)

Others?

21

Finance Can Help Answer the Age Old Question – What Do I Do With My Old Ford Taurus?

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$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000

Ford Taurus

Ford Fusion

Honda Civic

Volkswagen Jetta TDI

Ford Fusion Hybrid

Toyota Prius

Ford C-Max***

Chevy Volt***

Honda Civic Natural Gas

Nissan Leaf***

Repl

ace

High

Effic

ienc

yRi

ght-

Size

Dies

elHy

brid

Righ

t-Si

zeHy

brid

Righ

t-Si

zePH

EVPH

EVN

atur

alG

asRi

ght-

Size

BEV

8-Year Net Savings from Petroleum Reduction by Replacing a 2001 Ford Taurus For Illustrative Purposes Only

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Clean Cities – Supporting Local Solutions

0100200300400500600700800900

Mill

ion

GG

Es

Clean Cities Annual Petroleum Savings

Clean Cities Mission To advance the energy, economic, and environmental security of the U.S. by supporting local decisions to reduce petroleum use in transportation. Nearly 100 coalitions throughout the United States Coalitions are made up of local and national stakeholders. - 13,000 stakeholders nationwide (public and private)

Clean Cities has saved nearly 4.5 billion gallons of petroleum since 1993.

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Questions?

The Dynamic Market for Alternative FuelsNational Renewable Energy LaboratoryThe Dynamic Market for Alternative FuelsMarket OverviewNewly Accessed Oil Supplies are Changing the ConversationWe are Still Dependent on a Single FuelAlternative Fuel Consumption Does not Correlate with Vehicle AvailabilityDifferent Vehicle Classes Have Different NeedsTrends and TechnologiesPeople are Driving Less, but Spending More to Do So The Market for Alternatives Tends to Follow Petroleum Markets, but at Different RatesNational Policies are Shaping the MarketVehicle Manufacturers are RespondingAs are “Fuel Providers”…The Wall of Opportunity for EthanolThe Marketshare of PEVs is GrowingAnd Battery Costs are FallingNatural Gas Vehicles are Doubling Down on GreenMulti-State Natural Gas Vehicle MOUBusiness Models are and Should Continue to EvolveFinance Can Help Answer the Age Old Question – What Do I Do With My Old Ford Taurus? Clean Cities – Supporting Local SolutionsQuestions?