General Motor’s Hummer brand, popular back when gasoline cost a little over a dollar a gallon, is well on its way to becoming a historic anecdote now that gas prices top $4 a gallon in many places. Yet, the myth persists that American drivers-and U.S. automakers-will never change. If the U.S. is going to be successful in its climate change policy, that kind of anti-economic thinking needs to follow the Hummer into the dustbin.
In the near future, the United States will likely commit-just as some individual states already have-to a long-term goal of reducing greenhouse gas emissions by 60 to 80 percent. Many assessments of this significant challenge begin with the observation that transportation currently accounts for 33 percent of total CO2 from fossil fuel combustion, the “largest share from any end-use economic sector,” and end with the conclusion that meeting greenhouse gas emission reduction targets means eliminating the personal automobile as a mode of transport. But before jumping to that conclusion, it is worth examining more closely how much transportation contributes to greenhouse gas emissions and what forces are already at work reducing transportation emissions.
Personal transportation is unduly targeted for emission reductions at the onset as an accident of how we account for greenhouse gas emissions. We’re frequently told that the transportation sector is the largest contributor of greenhouse gas emissions in the United States, but this is a misleadingly statement. The U.S. Environmental Protection Agency (EPA) inventories emissions in six main categories-electricity generation, transportation, industry, agriculture, commercial and residential. When inventoried in those categories, electricity generation is the largest source of greenhouse gas emissions (34 percent in 2006), followed by transportation (28 percent), industry, agriculture, commercial, through to the smallest sector, residential (5 percent). Electrical power is an industrial product “consumed” by the other economic sectors, however, so the next step EPA reports is a calculation of emissions with electricity generation allocated among the five smaller sectors. After these emissions are distributed, “industry” accounts for the largest share of greenhouse gas emissions (29 percent in 2006), followed by transportation (28 percent), commercial, residential and agriculture (8 percent).
This simple example shows how the categories in which emissions are reported in has a large influence over how each economic sector is perceived. Distributing emissions from the electrical power industry dramatically changes the respective contribution of the other sectors, with the exception of transportation, where a nearly insignificant amount of rail transportation contributes a small amount of electricity to the mix. Transportation is “consumed” by the other sectors, just as electricity is, but the accounting method just lumps together passenger cars, light-duty trucks, sport utility vehicles, commercial trucks, domestic aviation, military aircraft, commercial and recreational boats and emissions from all other modes of motorized transport.
Even with commercial, personal and other kinds of transportation included in one sector, it still doesn’t add up to the “largest share” of total U.S. greenhouse gas emissions. Rather, it is the largest share of carbon dioxide (CO2)-the dominant greenhouse gas-from fossil fuel combustion-the main source of anthropogenic CO2. Weighted for global warming potential over a 100-year time horizon, EPA reports that CO2 from fossil fuel combustion accounted for approximately 80 percent of U.S. greenhouse gas emissions in 2006. The other 20 percent, including CO2 from industrial processes, methane from livestock and landfills, nitrous oxide from agriculture, and some chemical solvents and propellants, should not be overlooked in greenhouse gas reduction strategies-in fact, these categories provide some of the quickest and least expensive opportunities for emission reductions. Household vehicle use currently is responsible for a much smaller portion of U.S. greenhouse gas emissions, 16-18 percent, than is commonly believed.
What is vastly more important than the relative amount of greenhouse gas emissions from this sector, however, is the utility provided by passenger cars and light-duty trucks and the opportunities that lie ahead for reducing the greenhouse gas intensity of personal motorized transport while maximizing utility. Recent data show that is exactly what has occurred in recent years, even without greenhouse gas emission reduction schemes in place. Since 1990, fossil fuel consumption in the U.S. has grown at an average rate of 1 percent per year, lower than the average annual population growth rate (1.1 percent), electricity consumption (1.9 percent) and GDP (3.0 percent).
CO2 emissions from personal automobiles are widely viewed as a function of three factors: carbon content of fuels, fuel economy (often expressed in miles per gallon, but passenger miles per gallon is another important measure), and vehicle use (typically expressed as vehicle miles traveled or VMT). Since 1990, the average fuel economy has increased slightly while the power and capacity of vehicles has increased to a large degree. Fuel carbon content has remained relatively unchanged.
Changes in vehicle characteristics (e.g. hybrid fuel-electric engines) and the types of fuels used (e.g. ethanol and biodiesel) increasingly require full life-cycle analyses-including emissions from production and disposal processes (in the case of batteries)-to make meaningful comparisons to fossil fuel carbon contents possible. A related affect of the growing market share of these alternative vehicle types is that the transportation sector may become more similar to the industrial sector, in which energy-intensive production processes are increasingly “off-shored” under the pressure of domestic environmental regulations.
Life-cycle analysis of mass transportation, particularly rail transit, is likewise revealing. When greenhouse gas emissions associated with the underlying infrastructure required for rail transit are included in the lifetime operating emissions, new rail systems are unlikely to compare favorably to the average passenger car.
Of the three factors contributing to vehicle greenhouse gas emissions, vehicle miles traveled (VMT) is the most complicated and controversial in many respects. Strictly speaking, VMT for the U.S. vehicle fleet-unlike the volume of gasoline sold or the number of car registrations-isn’t measured, but estimated from traffic counts, sample odometer readings, household surveys and other references. Of these three factors, VMT has arguably the closest relationship to the actual utility (mobility) derived from vehicle use and the most distant relationship to greenhouse gas emissions. VMT estimates derived from travel demand models are a very poor basis for estimating greenhouse gas emissions, though they are frequently used for this purpose by regional planning agencies. Greenhouse gas emission estimates derived this way fail to capture excess fuel consumed as a result of congestion, among many other factors.
A final perception that makes personal automobiles disproportionately maligned as a source of greenhouse gas emissions is the idea that demand for this mode of transportation is somehow out of control, and that consumers are indifferent to price signals, including the price of gasoline. In one recent analysis, for example, analysts noted that “a $10/ton CO2 permit price would have a large impact on coal prices, creating a relatively strong incentive for coal-dependent electric utilities to consider shifts in their generation portfolio. In the transport sector, by contrast, the same carbon price would translate into a 10-cent per gallon increase in gasoline prices.” In the short-run, automobile drivers would be expected to absorb the carbon-adjusted cost of gasoline without significantly changing their behavior.
Consumer behavior is not completely unaccountable, however, as the considerable response to fuel prices and other economic signals in the past couple of years has proven. The popularity of light-duty trucks and sport utility vehicles has waned, and average new vehicle fuel economy improved in 2005 and 2006 as a result. Growth in VMT among passenger vehicles, at 2.7 percent per year for the period from 1990 to 2004, dropped to an average annual growth rate of 0.8 percent from 2004 to 2006. As gas prices spiked this year, the U.S. Department of Transportation reports that Americans traveled 40.5 billion fewer miles from November 2007 through May 2008 than they drove during the same period a year ago. Additionally, nationwide, hybrid vehicle registrations increased 38 percent in 2007.
Policymakers should not despair if, as expected, reducing CO2 emissions from the transportation sector is more expensive in the short-term than reducing greenhouse gas emissions in other sectors of the economy. Personal transportation is responsible for a relatively small share of U.S. greenhouse gas emissions and provides a value which consumers rightly place in high priority – mobility. In the long-term, consumer preferences will undoubtedly change as efficient and cost-effective new vehicle technologies become widely available.