Skip to Content
U.S. Department of Energy Energy Efficiency and Renewable Energy

Testimony of David K. Garman

Assistant Secretary, Energy Efficiency and Renewable Energy
U.S. Department of Energy
Before the House Subcommittee on Energy; Science Committee
U.S. Energy Security: Options to Decrease Petroleum Use in the Transportation Sector


November 1, 2001


Mr. Chairman, thank you for inviting me to discuss one of our nation's most critical energy issues—our growing dependence on oil, and its related energy security implications. In keeping with the invitation, I will focus my remarks on options to decrease petroleum use in the transportation sector.

We often think of energy being consumed in three end-use sectors: buildings, industrial, and transportation. Of the three, transportation consumes 27 percent of our total energy and exhibits the least variation in energy sources and uses. The most striking feature of the transportation sector is its nearly complete dependence on petroleum as an energy source. Our transportation sector is 95 percent dependent on petroleum, and it consumes 67 percent of all the petroleum used in our nation.

The situation we face today is in some ways more acute than it was during the so-called "oil crises" of the 1970s. In 1975, we had net imports of 5.8 million barrels per day, or 36 percent of our needs. During the first seven months of 2001, net imports averaged 10.9 million barrels per day, or 55 percent of our demand.

Over the past 18 years the nation's oil use for transportation has grown at an average annual rate of about 2 percent, with fuel use by heavy and light trucks both growing at a rate greater than 4 percent in the last decade. Present consumption for highway vehicles is about 10 million barrels per day. Last year, oil imports increased our balance of payments deficit by $109 billion.

Our future dependence on imports is expected to grow because of our higher consumption, and a decline in domestic production. Today, the U.S. uses 26 percent of the world's oil but it produces only 12 percent of the total global supply and has only 2 percent of the world's petroleum reserves (at current prices).

There is no single strategy that will free us from this dependency in the near term. Clearly:

  • We must increase vehicle efficiency through the development and introduction of new technology.
  • We must promote domestic oil and gas production.
  • We should diversify our energy sources.
  • We should enhance the security and efficiency of our fuel delivery infrastructure.

The first chart illustrates our decline in domestic oil production relative to the increased demand needed to fuel the growing numbers of automobiles, light trucks, and heavy trucks. The growth in numbers of light truck passenger vehicles--which includes vans, pickups, and sport utility vehicles--is dramatically apparent in this chart.

My second chart is another view of domestic oil production measured against projected transportation oil use, with some policy actions superimposed to illustrate the challenge of closing the gap. New oil production from the Arctic National Wildlife Refuge (ANWR) would certainly make a difference... but it clearly does not close the gap. Research and development (R&D) that incrementally improves the efficiency of vehicles helps as well, but "business as usual" is also insufficient to close the gap.

Clearly, we face a serious challenge, and "business as usual" approaches are not enough.

The Partnership for a New Generation of Vehicles: Some Lessons Learned

The current approach is perhaps best embodied in the program known as the "Partnership for a New Generation of Vehicles," or PNGV. One of the goals of the PNGV program was to develop, by 2004, a production-prototype family sedan with three times the fuel efficiency of a comparable 1994 model without sacrificing affordability and marketability. Unfortunately, the program will not reach this goal.

Begun in 1993, the PNGV program linked the resources of seven federal agencies with those of the auto industry and academia to conduct cooperative R&D on a portfolio of technologies with the potential to dramatically increase fuel economy in passenger vehicles. Among the agencies participating in PNGV, the Department of Energy (DOE) contributes the majority (86 percent in FY 2001) of the funding that is directly relevant to the PNGV goals in accordance with the plans developed by the PNGV government-industry technical teams.

The PNGV program has delivered some technologies that can be seen in the market today. Some of these results include:

  • New composite and thermoplastic materials - General Motors (GM) is using composites to produce the truck bed for its 2001 Silverado, saving 50 pounds over earlier models equipped with steel truck beds. DaimlerChrysler incorporated a recyclable thermoplastic hardtop in its 2001 Jeep Wrangler.

  • Increased application of lightweight aluminum for automobile construction - Ford is including 412 pounds of aluminum in the Lincoln LS, saving 188 pounds relative to conventional construction. GM is utilizing hydroformed aluminum door, deck and hood panels to reduce the weight of Cadillac, Oldsmobile and Chevrolet vehicles. DaimlerChrysler experimented with an aluminum-intensive vehicle and introduced the Prowler in model year 1998. These weight savings are accomplished without compromising safety.

  • New manufacturing techniques - GM Saturn vehicles are using axle shafts produced with a process controller developed with DOE support. The resulting shaft is lighter and requires less energy to produce. Ford has installed and is evaluating a similar controller.

While PGNV-derived hybrid-electric technologies are not yet in the market, they are expected soon. DaimlerChrysler, Ford and GM have announced that hybrid electric drive options will be available in popular market segments during the 2003-2004 time frame: Dodge Durango (2003), Ford Escape (2003), Chevrolet Silverado (2004) and Ford Explorer (perhaps in 2005). In general, these configurations are expected to deliver equal or better performance while also improving fuel economy by between 15 and 35 percent. In some situations, the fuel economy gain will be even greater.

For example, the Ford Escape hybrid will offer the performance of a standard V-6, while achieving nearly double the fuel economy of a conventional Escape in city driving. Each of these hybrids will incorporate technologies that were developed or enhanced through DOE's program. In contrast to the hybrids being offered in low volumes by Toyota and Honda, we are told that each of these U.S.-built hybrids will be available as options in popular, high volume market segments, and will be built on the same assembly lines as conventional models.

These are important results, but we will clearly have to significantly accelerate the pace of getting these and more dramatic technologies into the marketplace if we expect to make a substantial impact on our petroleum dependency.

Earlier this year Secretary Abraham expressed his concerns about the orientation and goals of this program. He questioned the wisdom of pursuing production prototypes of passenger sedans when most new vehicle sales in this country are in the light truck category, including minivans, SUVs and pickups. And, as we have seen, the PNGV program will not meet a key goal. We maintain that it is not enough to validate new technology. The advances of this program must find their way into the market, and they must deliver clearly demonstrable benefits to society.

The Secretary's observations earlier this year are consistent with the findings of the National Research Council's (NRC) annual review of the PNGV program, published this past August. The NRC found that a redefinition of the "PNGV charter and goals" is needed to "better reflect societal needs and the ability of a cooperative, precompetitive R&D program to address these needs successfully."

Our experience with PNGV has taught us other lessons as well:

  • The "industry partnership" approach is a good approach. DOE and its predecessor agencies have been involved in supporting advanced automotive fuel economy research for over three decades. In the past, R&D were conducted through contracts with individual industry partners. PNGV pulled together ongoing advanced transportation programs under its partnership umbrella, providing valuable alignment and focus to the R&D. PNGV differed significantly from earlier efforts with a greater reliance on technical teams comprised of scientists and engineers from government, industry and the laboratories to establish technical targets and develop detailed research roadmaps.

  • Contrary to the criticism often leveled that government doesn't know when to stop funding a technology that lacks promise, the PNGV partners have been successful in "deselecting" technologies, thanks in part to the approach to cost sharing. Stirling engines, gas turbines, ultracapacitors (for energy storage), and flywheels are all among the technologies that have been "deselected" for PGNV vehicles.

  • Research to develop technologies eventually judged "less promising" for automotive application should not be considered a failure, since research results can lead to the consideration of these technologies for use in other applications. For example, ultracapacitors from our automotive efforts have now been selected as appropriate for heavy bus applications and may be utilized in power electronics; gas turbine developers are employing technology advanced for use in transportation for stationary power source applications instead.

  • The R&D planned and guided by our PNGV partners has had some difficulty responding to new technology opportunities due to the inflexibility of the budgetary cycle, in which initial planning and actual execution may be separated by as much as 3 years. And generally, only $500,000 or 10 percent of appropriated R&D funds, whichever is lower, may be redirected without congressional approval. When such approval is sought, it takes at least 6 months and is never assured. The PNGV experience suggests value in considering multi-year funding for major R&D efforts, and providing more flexibility in the appropriation language.

  • The multi-agency funding of projects was approached primarily through capitalizing on existing, ongoing research, with the expectation of research redirection and budget augmentation. Redirection of research did not occur to the extent expected, and Congress did not provide augmentation of agencies' budgets. In retrospect, a modest (5 percent) central budget would have been valuable to apply to "gap filler" research that could respond to new developments until more traditional funding sources could be tapped.

The PNGV program is near the end of its 10-year charter, and as we would with any program coming to the end of its charter, we are assessing whether it represents the best approach to reducing our petroleum dependence.

The Need for a More Aggressive Approach toward Hydrogen and Fuel Cells

Secretary Abraham, at a recent DOE leadership meeting, asked us to take a bolder approach to our work. He directed us to focus our efforts on programs that "revolutionize how we approach conservation and energy efficiency." He challenged us to "leapfrog the status quo and prepare for a future that, under any scenario, requires a revolution in how we find, produce and deliver energy."

We need to do this, according to Secretary Abraham, " ...not simply because many of our resources are depletable—not simply because we are increasingly dependent on energy from areas of the world that are periodically unstable—(and) not simply because questions surrounding climate change force us to confront policies that focus on a carbon-free society."

"Success in this mission," according to Secretary Abraham, "could well be one of the greatest contributions to our energy and national security for generations to come." He further asked us to seek "potentially abundant new sources of energy with dramatic environmental benefits."

As a consequence of the Secretary's challenge and the recommendations in the President's National Energy Plan, we intend to be more aggressive in the pursuit of revolutionary, transforming technologies. We view technology portfolio investments similar to the manner in which an investor would view a stock portfolio. The portfolio as a whole can be conservative, with lower risks and modest returns. Or it can be aggressive, with higher risk and potentially higher rewards.

The higher-risk, higher-reward strategy we have in mind leads to the use of fuel cells powered by domestically derived hydrogen. While fuel cell technology is promising, there are significant technological barriers that must be overcome, not the least of which involve the cost and durability of fuel cells. For example, a light duty passenger vehicle powered by a fuel cell is currently projected to cost between five and six times more than a comparable internal combustion engine-powered vehicle. In addition, there are challenges involved in producing, moving, storing and dispensing hydrogen in an affordable manner.

The Department of Energy's Hydrogen Program already supports research and development in the areas of hydrogen production, storage and utilization. Cooperative research includes the development of off-board production of low-cost hydrogen through steam-methane reforming of natural gas at refueling stations. This approach offers opportunities to produce hydrogen for fuel cell vehicles that can be cost competitive on a cents/mile basis with conventional gasoline vehicles. With increasing amounts of natural gas being consumed to generate electric power, production levels and infrastructure must be considered before adopting vehicle fuel strategies that depend on natural gas. However, advanced concepts can reduce hydrogen production costs even further. With continued improvements in renewable power systems, hydrogen could be produced without significant carbon emissions and would further reduce our reliance on fossil fuels.

Recently, advances in the development of low-weight high-pressure (5,000 psi) storage tanks have reduced the projected weight of hydrogen vehicles. Breakthroughs in the development of transitional metal hydride storage systems offer reduced size and pressure storage options for hydrogen that will be important in supporting the introduction of fuel cell vehicles. Continued progress over the next decade should lead to economically competitive refueling station networks and the deployment of hydrogen fuel cell fleet vehicles and buses.

We believe the technical challenges we face represent a significant but acceptable risk, given the potential rewards of a hydrogen fuel cell transportation system. But because our research is cost-shared with industry partners and funded in part with dollars appropriated by Congress, DOE alone cannot undertake this shift. We will need your help, and the cooperation and participation of our industry partners.

We will work to streamline and refocus our joint automotive R&D efforts to provide greater emphasis on those long-term technologies that offer major societal benefits. While we will boost our efforts related to fuel cells and hydrogen, we will also maintain some of our efforts in combustion and emission control, power electronics, advanced batteries, carbon-based materials, and advanced fuels. However, relatively mature technologies, such as those related to spark ignited engines or natural gas engines, will receive less federal emphasis; we expect that our private sector partners will assume the major burden of further development of the most promising of these mature technologies.

We understand that our private sector partners would welcome the increased flexibility that a restructuring of the PGNV program could provide, seeing opportunities to better align their efforts with market sectors where the best business cases for advanced technologies can be made. Discussions are ongoing between industry and the Administration to identify specific details of a restructured, refocused program.

We will be reshuffling our technology portfolio to be more aggressive, reorienting it to deliver a hydrogen/fuel cell future. But we cannot afford to wait, nor should we wait, for the hydrogen/fuel cell solution. As new technologies related to advanced internal combustion engines, exhaust aftertreatment, hybrid vehicle systems, advanced petroleum based fuels, alternative fuels, and weight-reducing materials are demonstrated, we will work with industry to facilitate their migration to the market, ultimately reducing our dependence on imported petroleum.

Biofuels

We will also continue development of domestic biofuels as an alternative to imported petroleum.

Biofuels, including ethanol and biodiesel, have been part of DOE's portfolio since the origin of the Department. The Energy Security Act of 1978 created the Alcohol Fuels Office that supported ethanol R&D, as well as a program to financially support the development of an ethanol industry. Today, that industry utilizes approximately 600 million bushels of corn each year to produce over 1.8 billion gallons of ethanol. A record number of new corn-to-ethanol plants are scheduled to begin production in 2001, contributing to the industry's ability to respond to growing market demand for clean burning octane enhancers and oxygenates. Importantly, these new facilities will provide much-needed economic stimulus to rural communities faced with record low commodity prices and shrinking export markets.

This administration is continuing the support of ethanol at the national level. Today, ethanol can be used in gasoline blends at 10 percent ethanol - 90 percent gasoline (E10) since no barrier exists in terms of vehicle availability; all gasoline-fueled cars are warranted for E10. The President's National Energy Plan recommends an extension of the ethanol excise tax exemption. The report further acknowledges that ethanol is the most widely used biofuel.

Corn (and other grain) starch to ethanol is a technology that has greatly improved in efficiency over the years and is approaching a relatively high level of maturity. Extraordinary growth in the near term is expected due to the decline in MTBE use. To sustain significant growth in ethanol production, we will need to look beyond starch as the sole feedstock.

The Biomass R&D Act of 2000 has become an extremely important instrument in shaping the future direction of biofuels R&D at DOE's Office of Energy Efficiency and Renewable Energy (EERE). It is also leading to much closer coordination among programs at the Department of Agriculture and DOE. The Act emanated from bills sponsored by Senator Richard Lugar of Indiana and Representative Mark Udall of Colorado. One of the tenets of the Act is that a much greater research effort is needed to overcome "recalcitrant" biomass. In particular, it directed that the R&D programs on biomass conversion should be heavily pursued through the development of more efficient methods of pretreatment and enzyme development (sometimes referred to as the sugars platform), the improved ability to ferment these multiple sugars to ethanol and other industrial chemicals (sometimes referred to as the yeast platform), and the production of multiple products from these sugars as one approach to a "biorefinery of the future."

The EERE R&D program in ethanol has been aligned to support the provisions of the Act. Major partnerships have been developed with two of the leading enzyme manufacturers in the world. One of these companies recently announced that it has reduced the cost of production by a factor of two, well on its way to the goal of having a ten-fold reduction in costs of enzymes used for the production of ethanol.

A commercial, biomass-to-ethanol technology could play a major role in reducing our reliance on imported oil. Ethanol can be used as an octane enhancer and oxygenate blended with gasoline, or with diesel fuel as E-diesel. Beyond that, given investment in required infrastructure, it can supply the growing number of ethanol flexible-fueled vehicles on the market today, and could be a source of hydrogen for advanced vehicle platforms of the future.

Since biomass feedstocks include agricultural residues, municipal solid wastes, wood products, industry wastes, and energy crops, every State in the union has a biomass to ethanol potential.

In addition to supplying needed product diversity for agricultural crops, biomass-to-ethanol technology could help address other environmental problems. For instance, biomass from hazardous fuels reduction in forests could be collected and used to produce ethanol, while lessening the fuel loading problems that have led to catastrophic wildland forest fires. Air quality problems associated with the burning of rice and other straws could be lessened through the utilization of these materials to produce ethanol, biomass power, and other industrial chemicals. Volumes of municipal solid waste could be greatly reduced by utilizing the organic fraction to produce ethanol, steam, and electricity.

I must add an important caveat, however, that limits our ability to pursue an aggressive, coordinated biofuels program. The result of yesterday's House-Senate Energy and Water Development Appropriations FY 2002 Conference Report was to earmark roughly 42 percent of our biomass/biofuels funding level. Frankly, a cohesive, results-oriented program is difficult to achieve with this level of earmarking.

Alternative Fuel Vehicles

We also believe that alternative fuel vehicles can make an important contribution to helping our transportation sector decrease its reliance on petroleum. Over the next several years, we will continue our deployment efforts, with a particular focus on niche markets where alternative fuel vehicles can be most competitive. The Department's Clean Cities program now has over 80 participants and 4,000 stakeholders who have voluntarily committed to the increased use of alternative fuel vehicles. In addition to public information programs, tools, and training, this past year the Clean Cities program issued grants of over $4 million for 50 projects in 35 states, focused on innovative approaches to deploy alternative fuel vehicles and infrastructure. This Federal investment leveraged over $40 million in other private and public cost-share.

Over several years, our demonstration and deployment work has evolved from small-scale information programs and fleet demonstrations to sophisticated web-based information dissemination and targeted demonstration and deployment projects that facilitate niche market development. For example, the purchase by the U.S. Postal Service (USPS) of electric vehicles (EVs) is an excellent match between the clean, efficient electric technology and the short-route delivery requirements of the USPS. I understand the Postal Service is planning to order a second round of 500 EVs under its contract. We continue to work with the USPS to evaluate the benefits of using EVs.

21st Century Truck Program

The growth of petroleum use in the heavy truck sector led to the creation of a new program in 2000, the 21st Century Truck program. Like PNGV, this is designed as a partnership between the government and leading heavy vehicle and engine manufacturers to develop advanced technologies to double the fuel economy of long-haul trucks and triple the fuel economy of busses and other vehicles-while also reducing emissions and improving safety. This program is too new to show much in the way of results. Moreover, some industry partners feel the goals are unrealistic and do not represent a true consensus. Therefore, we will reevaluate this program as well.

Conclusion

We must, as a nation, move more aggressively to increase and diversify domestic energy supplies and radically increase vehicle fuel economy through technological advances, while maintaining vehicle safety, affordability and performance.

Secretary Abraham has challenged the Department to "leapfrog the status quo," and to reach toward revolutionary, transformational technologies. Our ultimate goal is to achieve emission-free, carbon-free, safe and affordable personal transportation. We will reshuffle our technology portfolio toward that eventual goal. This will entail more risk, but will invite greater reward.