new white house policy and breaking dependence on oil

This week, the President gave a major speech on breaking our dependence on imported oil,
linked to the release of a new energy policy to back it up:

http://www.whitehouse.gov/sites/default/files/blueprint_secure_energy_future.pdf

OF COURSE, when I give my reactions to this, it is DOUBLY and TRIPLY true that I am just giving personal
and tentative (if deeply grounded) impressions -- not the views of anyone else, nor anything I would want to be held to.
Preliminary impressions.

First, to review... I really like to focus a lot of energy on the question:

"How could we ZERO OUT all OECD DEPENDENCE on fossil oil in 25-30 years, at the lowest possible overall cost (or maximum profit)
to OECD?" Engineers commonly like very well-defined mathematical questions..
The question is not how to zero out the USE of fossil oil, but how to zero out the DEPENDENCE ... to set up so that our economy can continue to grow even if a sudden zeroing out of fossil oil should occur. And it's not so much a matter of imports, as policies like "drain America first" have their
limits a lot sooner than 25-30 years in the future. In any case, it's interesting to ASK the question, as seriously as we can, even when we realize we will
have other things to factor in when it comes to real policy.

Some accounts of the President's speech said: (1) this really was a solid focus on the issue of breaking
our dependence on oil, with new directions doing as much as one could imagine doing; and (2) but it wasn't much, because
there really isn't much one COULD do -- aside, perhaps, from what's already been done.

Re (1): that's not what this really was. Pages 15-24 out of 44 pages were the parts on independence form oil; the rest was mainly general energy policy.

Re(2): a mixed bag. (Though in the real world, getting "30% of reality" is a high score, to be fully supported, respected and appreciated...
when that's all it is.)

I had really strong mixed emotions a week or two ago, when CNN presented a new picture...
"Gee, oil really is heading back to $1490/barrel or so, that really was pretty obvious and predictable a couple of years ago,
wasn't it? And now economic recovery is teetering. Will we start to slide down the right slope, slowly building momentum as it seemed
just recently... or... well... the oil price rise is beginning to look just enough to send us slightly teetering in the other direction, and maybe building up momentum the wrong way." Indeed. Most of a trillion dollars per year in coming import bills is not just a second order perturbation to the economic
situation. I was glad to hear people starting to wake up on this...

But then: "But of course, there really isn't much we could do about this. And the President will do his very best, and it won't be much.
The answer is electric type cars (like plugins) but that will take 30 years, and in the meantime..."

Pain, pain, pain. Sure, it would take 20-25 years to reasonably get to ZERO dependence on fossil oil, but
we could move very quickly in that direction much sooner than that, if we had the will and the clarity of mind to do so,
and that in turn would have large immediate effects on futures markets, on tight balances between supply and demand, and on
the direction of world oil prices in the next few years. The Financial Times reported today that the Saudis are
already having troubles trying to keep up with what Libya has turned down, and to keep world oil prices low
enough to avoid really huge world economic problems.

Pages 14-24 really don't capture what could be done with a maximally vigorous policy, but there are some good parts.

What I like most is on page 22, the commitment to try to continue the "existing $7,500 tax credit" as an easy upfront rebate, like
what worked so well in finding takers in the cash for clunkers program. Incentives for "pluggable electric vehicles"
(PEV -- new IEEE jargon, to include PHEVs, EVs and FCEVs) are one of the really important and economically rational vehicles for
policy here - a key part of the answer to the question I started with, if you accept that question.

In fact, it would be really great if Congress could somehow pass a kind of semi-permanent entitlement like that, for PEVs
which qualify for tax incentives. In an ideal world... I would love to see that filled in with the same qualification rules and
sunset rule I proposed in the vehicle tax credit section of the oil bill written for Specter (posted at www.werbos.com/oil.htm).
If I were a Senator, I would vote for a clean measure to do that, period. It would be great.

My only concern about that idea is politics. I may be wrong... but I don't think that that formulation has the best chance of
making it through the House this year. The tax incentive version my not be quite so compelling to many people as the
semi-permanent rebate by entitlement, but it's almost as good, and it's a whole lot closer to having some hope for it.
There are a lot of folks who believe that tax breaks and tax reductions are more acceptable than new line items in the federal budget.
What's more, I haven't seen the 2012 budget discussion which this paragraph refers to. I wouldn't be surprised if it's like
the Electrification Coalition thing or Reid's last Pickens bill, which would be a one time limited appropriation creating far too little
predictability for auto companies thinking of investing in this area. And reopens the issue year by year, unlike the better situation that
oil company tax breaks have. (Better for THEM.) Still, I suppose there could be some consumer value in saying "one time sale ends on ..."

But then comes "rewarding communities" on the same page, which sounds like the big section of the Electrification Coalition proposal.
I worry about that all paying for favored municipalities to buy lots of Nissans to give away to friends, and -- worse -- spending lots
of money on Japanese standard "chademo" fast recharge stations which are a wasteful white elephant with no good future. I suppose Congress could
simply OK this and amend it with rules: (1) no giving away of cars; (2) no chademo stations -- all recharge stations must conform to levels 1, 2 or 3 of the
US electrical code, unless they provide ultrafast (10 minute) pulsed recharge. Under those restrictions, it could be very helpful.
I would be surprised if GM did not like this change (even though they may not be up yet on the new pulsed options).

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THE BIGGEST HOLE in my view is ... basically... seeming somewhat clueless on the potential for alternate liquid fuels,
ESPECIALLY IN THE NEXT FEW YEARS WHEN THINGS ARE URGENT AND WE AREN'T SO ELECTRIC YET.

It is a curious situation when folks like the White House and Congressman Waxman lecture IEEE folks that we should
appreciate more how Electricity Is the Way. Actually, maybe it's good that we get into a kind of honesty situation sometimes.
(IEEE does run lots of peer reviews, after all.) PEVs are ONE of the two key pillars of our best, clearest chance of getting to zero oil dependency
at a net profit. The other is alternate liquid fuels -- largely but not exclusively nonfood biofuels.
To have a quick impact, we should be doing BOTH things.

It seems that a lot of folks STILL don't understand that fuel flexibility and alternate liquid fuels are not really ALTERNATIVES to maximum
rational use of electricity, at the vehicle or policy level. That's really sad. Even under the president's new plan,
we are missing huge opportunities to move a whole lot faster on the alternative liquid fuels. Some are low cost, medium impact..
which is a lot bigger than than the very limited biomass benefits I see in this blueprint.

For example... I see no reason why the US government should not give ABSOLUTE preference in procurement to certified GEM-flexible vehicles (whether conventional or plug-in, which is a different matter) over all other vehicles, STARTING NOW.

And it wouldn't cost much to set up a certification program, where all manufacturers are required to put very bright, clear
decals over the refueling port on the car, making it clear which category of flexibility the car is warranted for.

And, as I noted before, replacing RFS with properly tuned LCFS could help a huge amount, even if the difference seems "just technical."

Beyond that... the talk by Arun Majumdar at the ITIF briefing at Rayburn a few weeeks ago makes me feel better about
the ARPA-E budget vehicle... blender pumps could be good, but why not have GEM-flexible blender pumps,
and why not use tax incentives to let industry install as many as they choose to. (I am not sure what it means that the Administration will help install the pumps.) Lots of crucial R&D opportunities beyond the scope of this blueprint, and I'm not sure of when they will be followed on or how...

It's really important to understand with biofuels that the cost and availability of the technology depends a lot on what the technology MAKES.
Flexibility in the cars makes it possible to use biofuels which are easier to make -- which helps with cost, with moving fast, and with
efficiency and sustainability.

Have some comments about the graph on page 21, but ...

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Yesterday, I stressed that FUEL FLEXIBILITY (alternate liquid fuels) and plug-in hybrid cars
are two key, COMPLEMENTARY technologies that would let the world be independent from fossil oil
in 25 years or so, at a net profit. I talked about the key near-term actions we could take at low cost or no cost
to accelerate fuel flexibility and alternate liquid fuels much faster than what this week's White House energy
blueprint discusses.

But what about the plug-in cars?

On another list, someone said that plug-in cars would cause a huge increase in world electricity demand,
creating a massive new challenge there.

NOT SO!

World electricity supply is an important challenge already (as folks in Japan can feel in their very flesh this week!),
but massive dpeloyment of PHEVs would not do much to change that challenge.

Here is why...
x wrote:

As for the ~500 GW demand, please refer to this graph from my 2009 paper with data taken from EIA data sources for 2007 - 4 years old data.


There have been major serious economic studies of these questions which came to different conclusions.
I cite a number of them (including URLS) in a book chapter I had published last year or so,
Technological Solutions for Energy Security and Sustainability.
But as I said, there is also the study by Duke power.

It's important to discuss some explicit arithmetic to keep this straight.

If one tries to estimate the need for additional electricity in kwh by assuming that the electricity must contain the same BTU as the gasoline,
one will overestimate the requirement for kwh many, many times over.

Most of the gasoline used in cars today is used in conventional cars. Largely because of regenerative braking and because
of the gasoline engine operating mainly at nominal power (when operating at all), efficient heavy hybrids already cut the need for
gasoline in half. Even so, the little gasoline engine in such hybrids is only 30% efficient; in all-electric mode,
in a plug-in hybrid, you really get 90% efficiency from the BTU to torque, versus 30%. Thus PHEVs in all-electric mode
only need 1/6 as many BTUs of electricity per mile as the corresponding conventional car would need of BTUs of gasoline.

What's more -- the game plan a lot of us have been focusing on (e.g. the IEEE white paper on plug-in hybrids)
envisions FUEL-FLEXIBLE PHEV20, roughly -- cars with a 20-mile all-electric range, for which IEEE estimates
the average user would only get half the miles from electricity. If you plug that case in, you see:

1. Total demand for liquid fuel gets reduced by 75% (half because of hybrid efficiency, half because of miles
powered by electricity) -- deep enough that we can live without oil imports; and

2. The required BTU of electricity are now (1/2)*(1/6) of the BTUs we now use of gasoline.
A factor of 12 really changes things.

What's more, it's better than it sounds, because the kwh would mainly come at night, as people plug in at home.
This is the kind of thing Duke Power studied in detail. As one of the largest electric power systems in the US,
Duke really knows its numbers quite well, and can estimate the impacts on the power grid
a whole lot more than the amateurs one learns about from the usual green literature. It is no surprise that
they concluded there would be no additional burden on the grid whatsoever (and even some benefit to the grid, if it's
done right), and little or no need for more generating capacity; only a need to utilize existing capacity more fully.

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You also asked about costs of the cars, which is quite fair, and not trivial. A lot of the important true cost data is closely held
proprietary information. A lot of the numbers batted around in the press are grossly distorted by
partisan advocacy nonsense. But some things are well known.

A few years ago, the Society for Automotive Engineers put out an estimate of what it costs Toyota to make the Prius
high-mpg hybrid, above and beyond the cost of the correspondng conventional car. Once the technology settled down
to some degree (5 years ago?), Toyota was certainly running a serious profit on these cars, and it's clear that SAE was right -- the
incremental cost was no more than $3000. SAE said -- $2000 of that is battery (NiMH) and $1000 power electronics.
http://www.toyota.com/prius-hybrid/
So for $3000 extra, you cut your gasoline use in half. People tell me that that breaks even for the average customer at about
$4 per gallon.

But what about the plug-in hybrids (PHEV) about to hit the market? Those numbers are harder to get. One may speculate:
are the initial price tags biased low (as the Prius hybrid was initially) to "buy experience," or are they biased high
(to get additional profit due to demand exceeding supply, or, more generously, to ration the limited number of vehicles available
the first year)? I lean towards the latter, especially since there is evidence of demand exceeding supply... of one-year waiting lists for people to get
the next vehicle, and so on.

A few months ago, GM put out an analysis saying that the Chevy Volt (a PHEV40, much more all-electric range than the new PHEV15
Prius plug-in) becomes break-even for the customer when gasoline gets to $5 per gallon. The Prius PHEV15 will have an initial cost of about $32,000,
more than $10,000 more than the normal Prius hybrid. (Though there will be that $7,500 tax credit for about a year, if I understand correctly.)
Why so high?

In fact... the Prius PHEV only uses a 6kwh battery. Any of us can buy a 10kwh auto-grade battery from Thunder Sky for $2,000
this year, at retail. It's weird how many people proudly cite (5 year old?) authoritative documents (even a White House document
this week) saying that it costs $1000 per kwh... so why should I believe a lowly store where I just walk in and buy it for $200
per kwh? Well, folks, my wife actually DID walk in and buy a couple, and they do work as advertized. They are sold
in many, many thousands today, and used in rugged, demanding transportation applications ... but they come from China.
I heard about them from folks in Delphi who checked them out and verified them years ago. And they have competitors who are probably just as good or better.
A few years back, I saw data that Japan, China and South Korea pretty much dominate the lithium battery production..
and GM is currently buying batteries from LG of Korea. So yes, if you buy a battery from DOE, it may well cost $1000 per kwh,
but GM is not so stupid. If the US government hobbles GM, we may simply end up buying whole cars from China instead of batteries.
(I mentioned that $21,000 BYD PHEV60. But has China thought of the possibility of exports? Don't laugh too loud.)

IN SUMMARY -- if we can get a PHEV20 for a battery cost of $2,000 -- the same as it cost with the old Prius hybrid,
which was already break even at $4/gallon with less fuel savings than the PHEV20 gets you -- how could it NOT break even at
$4 per gallon?

The obvious answer: the power electronics, the other half of the cost.
http://www.hevt.com/

But there have been really huge, verified breakthroughs in that area just this past year, from NSF-funded basic research,
validated by others. Power electronics is basically a matter of chips used to convert between AC and DC (and voltages).
That was not included in the GM $5 break-even estimate, but I suspect GM will catch up on this relatively soon.
I am certain Toyota was moving fast on this kind of stuff at least a few months ago. It basically cuts the power electronics costs in half,
immediately. The unit costs are mainly the costs of making chips -- a Moore's Law kind of thing.

So the technology is there, and with gas at $4 per gallon it should make the US a profit -- IF we deploy it. But the initial stages
are not so easy, especially when we came close to losing the auto industry altogether in the US a couple of years ago.
There is a real race between things that move us forward and economic things that could kill us altogether.

(The new power electronics also is associated with new motor control, which gets rid of the rare earths problem
with PHEVs. More details forthcoming in a paper on the fourth-generation intelligent power grid,
IEEE Computational Intelligence Magazine, August 2011.)