The desire to pursue the technologies of tomorrow and achieve our energy independence is not a free lunch. The investment in future technologies like vehicle electrification go well beyond the engine bay to include sourcing and developing raw materials, complex vehicle integration and development, infrastructure support on a national level and increased costs for consumers forced to the cutting edge of what is still a boutique technology.

...Above all, to spur broad innovation public policies and incentive plans must be technology neutral. Government should set the goals—even aggressive goals—that inspire the freedom to innovate, and then get out of the way. State and federal public officials should resist the temptation to pick winners and losers, to let politics and fads enter the debate, or to engage in centralized planning in a highly complex industry. Market acceptance is also critical to defining the best technology or portfolio of technologies necessary to reach the targets set by government.

Current fuel economy policy clearly demonstrates this fact. Our policy leaders continue to pursue prescriptive technology policies in the hopes of solving all of our energy and emissions problems. Washington, DC’s current focus is electric vehicles (EVs) and electric technology. Monetary incentives are being used to alter consumer and manufacturer decisions. The federal government is pushing their fleet-procurement decisions almost completely to EVs and hybrids irrespective of costs. The Environmental Protection Agency (EPA) continues to employ outdated mileage formulas (55 city 45 highway) that do not accurately represent consumers driving habits and dramatically tilts manufacturers into producing electric-vehicle solutions. Through the examples above, it is clear that Washington is not seeking a technology neutral solution. In short, government is stifling innovation by using its considerable powers to push one technology ahead of other viable technologies, leading to distortions in both research and markets.

—“The Case for Technology Neutral Public Policy in Fuel Economy Debate”

The white paper outlines six reasons justifying technology neutral policies:

1. Performance-based regulations in the automotive sector historically have been successful. Mineta specifically points to the success of the significant reductions in pollutant emissions from passenger cars during the past three decades in response to ever-stricter limits set by state and federal regulators.

2. From a “well-to-wheel” perspective, high efficient gasoline and diesel engines are nearly as energy efficient as any technology available. Mineta cited a 2008 well-to-wheel comparison of different vehicle technologies by the MIT Electric Vehicle Team that ranked electric vehicles, diesel and turbocharged gasoline engine vehicles within a 10–15% performance band.

   Positing that with the the current and projected electricity generation mix in the US, EVs shift the efficiency losses and environmental effects from the vehicle to the electric grid, Mineta said that the next generation of ICEs has the potential to improve by about 40% for both efficiency and emissions thanks to technologies such as direct injection, variable valve actuation, turbocharging, low friction components, and high gear ratio transmissions, which are all currently available but have not yet been fully deployed in the United States.

3. The quickest and most cost-effective way to achieve our energy usage goals is through faster adoption of fuel-efficient downsized gasoline and diesel engines.

   Impact of different sales mix on new car average fuel economy. Click to enlarge.

   ...high efficiency ICE vehicles could achieve a remarkably higher effect on the environment than other competing technologies. The average additional cost for a high efficiency ICE is about $2,000, against $8,000 for an electric vehicle. Achieving a 10 percent penetration of electric vehicles would cost about $9 billion (not considering significant additional infrastructure investments) and boost the fuel economy of new cars sold from 29 to 30 mpg (increase of 1 MPG). The same $9 billion investment would support four times as many vehicles and achieve 40 percent penetration of high efficiency ICEs, which in turn would raise the fuel economy from 29 to 33 mpg (increase of 4 MPG). The same investment in efficient ICEs has a four times greater effect than an investment in electric vehicles.

   Additionally, if only high efficiency ICEs were sold, the average fuel economy would increase from 29 to 38 mpg, a 30 percent increase, according to 5 cycle standards. By substituting all current vehicles with high efficiency ICEs, we would be able to reduce our gasoline consumption by 31 billion gallons per year, which corresponds to a 42 percent cut in imported oil. As a bonus, this investment would come primarily from the automakers themselves and not become an additional burden on the US government or tax payer.

4. Consumers are showing an overwhelming preference for fuel-efficient internal combustion engines in the marketplace. Sales trends reflect this preference across many vehicle segments, including pickups. In the white paper, Mineta suggests that the rapid adoption of downsized high efficiency engines in a relatively short period of time shows that even the most performance-oriented demographics are taking notice of opportunities for fuel economy gains without having to compromise on vehicle size, safety, or driving range.

5. Advanced diesel technology can help achieve petroleum and emissions reductions with widespread adoption in the near and medium term.

   From June 2010 to June 2011, some car manufacturers offered clean diesel as well as hybrid powertrains on the same model. Both powertrains provide comparable fuel savings, yet customers chose diesel much more often than hybrid. Clean diesel was preferred to hybrids in about 39 percent of cases, while a hybrid option was selected in only 5 percent of cases. Consumer preference for diesel versus hybrids can be attributed to the “fun-to-drive” nature and lower purchase price of diesels.

   Diesel/hybrid US take-rates, June 2010-June 2011. Data: Polk. Click to enlarge.

6. There must be a reduced burden on American taxpayers. While electric vehicles are an important part of the energy future, Mineta says, they come at considerable expense, including that of infrastructure.

   Given the current economy and job market it is increasingly difficult to justify subsidizing a $41,000 vehicle with a $7,500 rebate when its benefits do not fall on those in the lowest income brackets—those most in need.

   ...Along the same lines, we need to be realistic about what Americans are likely to be driving in 10 years. JD Power conducted a study in 2010 that determined the make-up of the American fleet by the year 2020. They determined that only 3.9 million hybrids and 1.3 million electric vehicles would be in use in the next 10 years. The vast majority of the American fleet...will continue to be powered by internal combustion engines. Given that reality, notwithstanding all our incentives to promote alternative energy vehicles, why are we not providing as much support for improving and promoting existing technologies?

Heavily focusing on specific technologies creates the perception of a potential “silver bullet”, Mineta argued.

An objective foundation of technology neutrality simply gives us the best chance for success. By supporting extended technological innovation, our leaders will mobilize an experienced industry to effectively and affordably deliver fuel efficient vehicles that meet the varying needs of the American driver today and for years to come.

—“The Case for Technology Neutral Public Policy in Fuel Economy Debate”

Resources

• The Case for Technology Neutral Public Policy in Fuel Economy Debate: Allowing Performance To Determine Solutions