Prospects of Alternative Fuels for Future Onroad Transportation

The potential risks to the U.S. economy associated with a lack of transportation fuel diversity, high dependence on imports, fluctuating oil prices, and environmental concerns have been recognized for decades and have encouraged policymakers, industries and consumers to diversify energy resources utilized for transportation as well as increasing vehicle fuel efficiency. The use of biofuels in transportation has expanded rapidly, driven by federal and state incentives and requirements such as Renewable Fuel Standard (RFS2). However, expansion is slowing as there have been challenges in developing cost-effective means of producing advanced biofuels such as cellulosic ethanol. Alternative Fuel Vehicles (AFVs) that use fuels such as biofuels, natural gas, hydrogen, or electricity, generally with higher fuel economy than traditional fossil-fuel vehicles, have been suggested as a low-carbon alternative to further reduce the dependence on fossil-fuel-based transportation. Among these AFVs are battery electric vehicles (BEV), fuel cell vehicles (FCEV), hybrid (HEV), and compressed natural gas vehicles (GasV). While there have been considerable advances in AFV technologies, they require further advancement to lower costs sufficiently to capture a significant share of the vehicle market that currently continues to be dominated by conventional fossil fuel technologies. In this study, we use a version of the Applied Dynamic Analysis of the Global Economy (ADAGE) computable general equilibrium model with a highly disaggregated transportation sector to examine the market potential of AFVs for on-road transportation of both passengers and freight under different oil price pathways and their influence on the U.S. economy, energy markets, food prices, and the environment.