Plugging Hybrids

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The environmental benefits of renewable biofuels would be even greater if they were used to fuel plug-in hybrid electric vehicles (PHEVs). Like more conventional gasoline-electric hybrids, these cars and trucks combine internal-combustion engines with electric motors to maximize fuel efficiency, but PHEVs have larger batteries that can be recharged by plugging them into an electrical outlet. These vehicles can run on electricity alone for relatively short trips; on longertrips.the combustion engine kicks in when _

the batteries no longer have sufficient juice. The combination can drastically reduce gasoline consumption: whereas conventional sedans today have a fuel economy of about 30 miles per gallon (mpg) and nonplug-in hybrids such as the Toyota Prius average about 50 mpg, PHEVs could get an equivalent of 80 to 160 mpg. Oil use drops still further if the combustion engines in PHEVs run on biofuel blends such as E85, which is a mixture of 15 percent gasoline and 85 percent ethanol.

If the entire U.S. vehicle fleet were replaced overnight with PHEVs, the nation's oil consumption would decrease by 70 percent or more, completely eliminating the need for petroleum imports. The switch would have equally profound implications for protecting the earth's fragile climate, not to mention the elimination of smog. Because most of the energy for cars would come from the electric grid instead of from fuel tanks, the environmental impacts would be concentrated in a few thousand power plants instead of in hundreds of millions of vehicles. This shift would focus the challenge of climate protection squarely on the task of reducing the greenhouse gas emissions from electricity generation.

PHEVs could also be the salvation of the ailing American auto industry. Instead of continuing to lose market share to foreign companies, U.S. automakers could become competitive again by retooling their factories to produce PHEVs that are significantly more fuel-efficient than the nonplug-in hybrids now sold by Japanese companies. Utilities would also benefit from the transition because most owners of PHEVs would recharge their cars at night, when power is cheapest, thus helping to smooth the sharp peaks and valleys in demand for electricity. In California, for example, the replacement of 20 million conventional cars with PHEVs would increase nighttime electricity demand to nearly the same level as daytime demand, making far better use of the grid and the many power plantsthat remain idle at night. In addition, electric vehicles not in use during the day could supply electricity to local distribution networks at times when the grid was under strain. The potential benefitstothe electricity industry are so compelling that utilities may wish to encourage PHEV sales by offering lower electricity rates for recharging vehicle batteries.

Most important, PHEVs are not exotic vehicles of the distant future. DaimlerChrysler has already introduced a PHEV prototype, a plug-in hybrid version of the MercedesBenz Sprinter Van that has 40 percent lower gasoline consumption than the conventionally powered model. And PHEVs promise to become even more efficient as new technologies improve the energy density of batteries, allowing the vehicles to travel farther on electricity alone.

no greenhouse gases to the atmosphere. Oil giant Royal Dutch/Shell is currently investigating the technology.

The Need for R&D

each of these renewable sources is now at or near a tipping point, the crucial stage when investment and innovation, as well as market access, could enable these attractive but generally marginal providers to become major contributors to regional and global energy supplies. At the same time, aggressive policies designed to open markets for renewables are taking hold at city, state and federal levels around the world. Governments have adopted these policies for a wide variety of reasons: to promote market diversity or energy security, to bolster industries and jobs, and to protect the environment on both the local and global scales. In the U.S. more than 20 states have adopted standards setting a minimum for the fraction of electricity that must be supplied with renewable sources. Germany plans to generate 20 percent of its electricity from renewables by 2020, and Sweden intends to give up fossil fuels entirely.

Even President George W. Bush said, in his now famous State of the Union address this past January, that the U.S. is "addicted to oil." And although Bush did not make the link to global warming, nearly all scientists agree that humanity's addiction to fossil fuels is disrupting the earth's climate. The time for action is now, and at last the tools exist to alter energy production and consumption in ways that simultaneously benefit the economy and the environment. Over the past 25 years, however, the public and private funding of research and development in the energy sector has withered. Between 1980 and 2005 the fraction of all U.S. R&D spending devoted to energy declined from 10 to 2 percent. Annual public R&D funding for energy sank from $8 billion to $3 billion (in 2002 dollars); private R&D plummeted from $4 billion to $1 billion [see box on next page].

To put these declines in perspective, consider that in the early 1980s energy companies were investing more in R&D than were drug companies, whereas today investment by energy firms is an order of magnitude lower. Total private R&D funding for the entire energy sector is less than that of a single large biotech company. (Amgen, for example, had R&D expenses of $2.3 billion in 2005.) And as R&D spending dwindles, so does innovation. For instance, as R&D funding for photovoltaics and wind power has slipped over the past quarter of a century, the number of successful patent applications in these fields has fallen accordingly. The lack of attention to long-term research and planning has significantly weakened our nation's ability to respond to the challenges of climate change and disruptions in energy supplies.

R&D IS KEY

Spending on research and development in the U.S. energy sector has fallen steadily since its peak in 1980. Studies of patent activity suggest that the drop in funding has slowed the development of renewable energy technologies. For example, the number of successful patent applications in photovoltaics and wind power has plummeted as R&D spending in these fields has declined.

U.S. R&D SPENDING IN THE ENERGY SECTOR

Public funds Private funds

1975

1985

1995

2005

1975

1985

1995

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