Although alternative fuels haven't dislodged or even challenged petroleum fuels (with the unique exception of Brazilian ethanol), they've indirectly played a pivotal role in improving petroleum fuels and engines—as stalking horses. The role of methanol in spurring the reformulation of gasoline and diesel fuels, mentioned earlier, is just one example. In a broader sense, the threat of alternative fuels played a central role in the radical reduction of vehicle emissions in the 1990s.
Consider that no significant new tailpipe emission standards were adopted in the United States from 1970 until 1990. Aggressive new standards were established by the 1970 Clean Air Act Amendments, but the automakers fought the standards for a decade until they were fully implemented in the early 1980s. It wasn't until 1990 that another round of aggressive new emission reduction rules was adopted.
The new standards in the 1990 federal Clean Air Act and California's 1990 low-emission vehicle (LEV) program came about principally thanks to alternative fuels. Until that time, the business-oriented administrations of presidents Ronald Reagan and George H. W. Bush had been reluctant to sign into law regulations that might unduly harm the auto industry. The auto industry consistently resisted, beginning in the 1960s, the imposition of aggressive emission standards, and the oil industry argued that it wasn't up to the challenge of making cleaner fuels. What turned the debate around were studies showing that natural gas and methanol were cleaner burning than gasoline. These studies, along with others showing that the cost of owning and operating methanol and compressed natural gas (CNG) vehicles wasn't much more than the cost for gasoline vehicles, illuminated a plausible path. The auto industry no longer had the excuse that the standards were unattainable, and the oil industry faced new competition with its profitable gasoline business. California and the federal government adopted the new aggressive standards.
The California LEV standards were particularly aggressive. The staff report for California's proposed 1990 rules stated that CNG and methanol would be needed for vehicles to comply. But the automakers, being large entrenched companies preferring to stick with what they know, poured resources into reducing emissions from gasoline vehicles to avoid having to deal with new fuels. Lo and behold, they made dramatic progress. In fact, progress was so rapid that California put in place even more aggressive standards later in the decade, and the automakers met even these with gasoline!
An analogous story played out at the same time in the late 1980s with trucks and buses, again directly motivated by alternative fuels. Diesel engines were also shown to be cleaner burning with methanol and natural gas. If manufacturers believed it was too difficult or expensive to clean up their diesel engines, they now had the option to switch to natural gas or methanol. This liberated policymakers for the first time to radically tighten standards on diesel engines—and that's just what they did. Again, the technology improvements were dramatic. As standards continue to be tightened, not a single vehicle manufacturer has found it necessary to resort to alternative fuels.
While alternative fuels have time and again failed to replace petroleum, they've indirectly stimulated vast changes and far-reaching innovations.
They've freed regulators to adopt aggressive energy and environmental policies and to ignore cries of economic disaster and lost jobs. Methanol and CNG provided the rationale to clean up gasoline and diesel fuel and to tighten vehicle emissions. Likewise, the unveiling of an attractive electric vehicle prototype by a GM contractor in 199011 liberated the California Air Resources Board to proceed with its zero-emission vehicle mandate.
Let's take a closer look at the first stalking horses, methanol and natural gas, before turning to consider the current major contenders in the quest to replace petroleum.
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