Energy: Can We Get More? Can We Use Less

1. Energy: Can We Get More? Can We Use Less Amy Myers Jaffe Wallace S. Wilson Fellow for Energy Studies James A. Baker III Institute for Public Policy Houston MegaRegions September 24, 2009

2. Top 5 U.S. Renewable Energy Purchasers

3. Privately owned registered cars and trucks in the United States has risen from 138 million vehicles in 1975 to 247 million vehicles in 2005. • US road petroleum consumption represents 33% of all global use, compared to 5% for China and 17% for all of Europe. • Low fuel prices in the US have contributed to urban sprawl and a high average number of miles driven rate. In the US, an average individual may spend up to 2 hours a day in stop and go traffic to travel 30 miles to work. Sources of CO2 (2000-2005)

4. Climate and Energy Security Policy Will Focus Heavily on Promoting or Regulating Automobile Efficiency and Other Policies Related to Reducing Fuel Use • Most forecasts indicate that future growth in global oil demand will come almost entirely in the transportation sector • The US Department of Energy predicts that the transport sector will generate almost half of the 40% rise in US carbon emissions projected for 2025. Road transportation emissions constitute 75% of transportation emissions globally and in the OECD. • European demand has been flat due to effective policies. Studies show that fuel taxes are more effective than congestion taxes, biofuels mandates, or consumer incentive rebates for purchasing fuel efficient cars. • U.S. is now trying to fashion an effective policy: Thoughtful changes in land use planning and sustainable energy policies are needed in major US cities • If every American would drive about 45 miles less per vehicle per week, by living closer to work, telecommuting, commuting by carpool or by using public transportation, the US could shave 20% off its demand for imported oil and related GHG emissions • The extent to which China and India, in particular, also adopt similar policies is very important to future trends in energy and climate security

5. In general, policy makers have a range of tools to affect demand Objectives Examples Potential Issues Vehicles increase mpg 1 Rebound – consumers drive efficient vehicles further Fuel and vehicle efficiency Driving reduce miles driven 2 Congestion charge, transit lanes, road tolls, telecommuting Reduce Taxation on gasoline or reduced duty on cleaner fuels: Taxation on carbon of imported fuels Taxation reduce miles driven 3 Trade Relations Problems Fuels lower CO2 per gallon 4 Biodiversity Fuel vs. Food Replace Biofuel content in fuel mix Carbon Markets 5 Emissions trading scheme, carbon neutral products and services CO2 leakage problems; verification issues; market design problems Offset

6. New U.S. Efficiency Standards will Reduce U.S. Oil Demand • Fuel efficiency improvements have significant benefit, but are offset by growth in vehicle stocks and miles driven (income and “rebound” effects) • High prices are revealing a demand response as recent miles driven data are slightly lower • Similar arguments hold in all countries, with potential for efficiency improvement varied across countries • Policy is multi-pronged in its approach • A technological breakthrough, such as with plug-in hybrid vehicles, could push demand lower farther into the future. Once these alternatives are adopted, the market is forever changed • Biofuels can induce even further reductions in demand

7. Congestion in US cities is worsening at an alarming rateSource: Texas A&M 2007 Urban Mobility Report

8. Urban Congestion is a Major Contributor to GHG Emissions and Energy WasteSource: US Bureau of Transportation Statistics

9. Greenhouse gas emission targets will be hard to meet without changing our commuting habitsSource: APTA

10. Adjusting commuting habits are the single largest thing individuals can do to lower their personal carbon footprintSource: APTA