Alternative Transportation Fuels and Vehicles:
Energy, Environment, and Development Issues II

Contents This Section

Ethanol

Consumption
Cost
Infrastructure
Performance
Safety
Other Issues

Methanol

Consumption
Cost
Infrastructure
Performance
Safety

Fuel Cells
Electricity

Consumption
Cost
Infrastructure
Performance
Safety

Fuel Cell and Hybrid Vehicles
Hydrogen
Coal-Derived Liquid Fuels
Conclusions
Congressional Action 

Ethanol 66

Ethanol, or ethyl alcohol, is an alcohol made by fermenting and distilling simple sugars.67 Ethyl alcohol is in alcoholic beverages, and it is denatured (made unfit for human consumption) when used for fuel or industrial purposes. Although the broadest current use of fuel ethanol in the United States is as an additive in gasoline, in purer forms it can also be used as an alternative to gasoline. It is produced and consumed mostly in the Midwest, where com-the main feedstock for ethanol production-is produced. When used as an alternative fuel, ethanol is usually blended with gasoline at a ratio of 85% ethanol to make E85. As with methanol, there are many benefits but also drawbacks associated with its use.

Consumption. Ethanol is the most commonly used alternative fuel, although most of this is blended at the 10% level with 90% gasoline to make E10, or "gasohol." Including its use in gasohol, annual ethanol consumption is approximately 1.4 billion gallons per year, or 0.89 billion GEG. This corresponds to approximately 1% of annual gasoline consumption. However, E10 is not recognized by EP Act as an alternative fuel because its widespread use does not significantly diminish gasoline consumption. Consumption of E85-which is recognized by EP Act-is relatively low. Only about 2.5 million GEG of E85 were consumed in 1999, although consumption has steadily increased since 1992. 68

As of  1999, there were approximately 22,000 E85 vehicles being fueled primarily by ethanol in use in the United States.69 This number has been growing, but is still negligible against the total number of conventional vehicles on the road. However, many E85 vehicles can be fueled with E85, gasoline, or any mixture of the two. There are many more of these flexible fuel vehicles (FFV) than dedicated ethanol vehicles. Some popular production vehicles, including the Ford Ranger and Ford Taurus now have E85/gasoline flexible fuel capability standard. Other vehicles with the option of FFV capability include the Dodge Caravan, Chevrolet S-10 pickup, and Mazda B3000 pickup.70 In 1998, approximately 216,000 of these vehicles were sold,71 and approximately 290,000 in 1999.72 In 1998, the federal government operated approximately 4,300 ethanol FFVs. It is expected that the vast majority of FFVs will be fueled with gasoline. However, it is possible that the greater availability of these FFVs will spur the market for ethanol fuel.

Cost. One of the key drawbacks to the use of ethanol is its cost. Per gallon, E85 prices ranged from approximately $0.90 73 to $1.44 74 between January and May 2000. In terms of GEG, ethanol costs ranged between $1.30 and $2.00.75 When blended with gasoline, ethanol benefits from an exemption to the motor fuels excise tax.76 This benefit makes ethanol competitive with gasoline as a blending agent. In fact, when used to make E10, the exemption is a nominal 54 cents per gallon of pure ethanol. However, for neat fuels, the exemption is much less-only a nominal 6.4 cents per gallon of pure ethanol for E85.

While fuel costs are higher for E85, there is little, if any, incremental vehicle cost.77 Further, ownership and maintenance costs tend to be equal for ethanol and gasoline vehicles.

Infrastructure. Most of the current infrastructure for the delivery of ethanol is in the form of tanker trucks used to deliver ethanol to terminals for blending with gasoline. However, there were 95 E85 refueling sites nationally as of November 16, 2000, mostly in the Midwest, where ethanol is produced.78 Since there is experience in storing and delivering ethanol, and since the fueling systems are similar to gasoline, the refueling infrastructure could expand to meet increased demand if the delivery costs were reduced.

Performance. Because of its lower energy content, the key performance drawback of ethanol is lower fuel economy. Fuel economy is reduced by approximately 29%, resulting in reduced range. However, this reduction in range can be mitigated somewhat by increasing fuel tank size (with the associated drawbacks of a larger tank). Another problem with ethanol is that in cold weather, an ethanol- powered vehicle may be difficult to start. For this reason, most ethanol that is used in purer forms is E85. The 15% gasoline allows for easier ignition under cold-start conditions. There are few other technical concerns over the performance of ethanol because of the relatively few modifications necessary to operate a vehicle on ethanol.

There are key environmental advantages to ethanol, as well as some drawbacks. Ethanol-powered vehicles tend to have 30 to 50 percent less ozone-forming emissions than similar gasoline-powered vehicles, including significant reductions in carbon monoxide emissions.79 In addition, ethanol tends to have a much lower content of toxic compounds such as benzene and toluene, leading to lower emissions of most toxic compounds. However, as with methanol, ethanol-powered vehicles tend to emit more formaldehyde and acetaldehyde,80 although these emissions can be largely controlled through the use of catalytic converters.81

Another key environmental advantage with ethanol is its relatively low life-cycle greenhouse gas emissions.82 Ethanol-powered vehicles tend to emit lower levels of greenhouse gases than gasoline vehicles. Also, the growth process of the ethanol feedstock results in uptake of carbon dioxide, further reducing net greenhouse gas emissions. Conversely, when the raw materials and practices used to produce the feedstock and the fuel are taken into account, emissions for both fuels are increased. According to a study by Argonne National Laboratory, the use of E85 results in a 14% to 19% reduction in life-cycle greenhouse gas emissions, and with advances in technology, this reduction could be as high as 70% to 90% by 2010.83 However, other studies cite lower efficiency in the ethanol production process, leading to smaller reductions in greenhouse gas emissions.84

Safety. Fuel ethanol tends to be safer than gasoline. At normal temperatures, E85 is less flammable than gasoline, and tends to dissipate more quickly. While an ethanol flame is less visible than a gasoline flame, it is still easily visible in daylight.85

Other Issues. The most significant issue surrounding ethanol is the exemption from the motor fuels excise tax. Since a few producers control a majority of ethanol production capacity in the United States, the exemption has been called "corporate welfare" by its opponents. Proponents of the exemption argue that it helps support farmers (through increased demand for their product), and helps compensate for added economic value from benefits to the environment, and to energy security because ethanol is produced from domestic crops.86 Outside of the tax debate, concern have been raised over using crops for fuel because the effects on soil, water, and the food supply have not been fully assessed.

Methanol

Methanol, the simplest alcohol, is also called "wood alcohol."87 It is usually derived from natural gas, but can also be derived from coal or biomass. As a fuel, methanol is most often used as a blend with gasoline called M85 (85% methanol, 15% gasoline), although the fuel can also be used in an almost pure (neat) form called M100. In addition to general transportation, Indianapolis-type race cars use methanol exclusively. As a motor fuel it has many benefits, but also many drawbacks.

Consumption. Because of its drawbacks, methanol consumption is relatively low. In 1999, I.I million GEG of M85 were consumed, along with 0.45 million GEG of M100.88 This corresponds to roughly I/I 000th of 1% of the approximately 125 billion gallons of gasoline demand. methanol consumption peaked in 1996 and has decreased since.

Consistent with the low consumption of the fuel, there are also very few methanol-powered vehicles operating in the United States. Consistent with the decline in methanol consumption, after a peak in 1996, the number of M85 and M100 vehicles has declined. There were approximately 19,000 M85 vehicles (both dedicated and dual-fuel) and approximately 200 M100 vehicles in 1998. The federal government operated 543 light-duty dual-fuel M85 vehicles in 1998, and zero M100 vehicles.89 The major automobile manufacturers did not sell methanol-powered production cars in model year 2000.90

Cost. A notable concern with methanol is its cost. Per GEG, methanol tends to be more expensive than gasoline. As of January 1, 2000, the price for methanol was between $0.95 and $ 1.20 per gallon.91 However, due to the lower energy content of methanol, the fuel costs roughly $1.73 to $2.10 per GEG.92 In the future, the California Energy Commission predicts that as production facilities are introduced, M85 price will decline to $1.27 per GEG by the year 2010, as compared to gasoline at $1.48 per gallon.93

In addition to the fuel cost, incremental vehicle cost is higher with the use of methanol. The incremental cost for the purchase of a methanol-fueled vehicle (or the conversion of an existing gasoline-fueled vehicle) can range from $500 to $2,000, though some of this incremental cost currently may be defrayed by purchase incentives. The most notable part of the incremental cost is replacing parts (such as certain seals) that may be corroded by alcohol.

Infrastructure. Another barrier to the wide use of methanol as a motor fuel is the lack of fueling infrastructure. As ofNovemberl6,2000, there were only 41 M85 refueling sites, mostly in California. 94 This lack of infrastructure makes it difficult for the methanol vehicle market to expand. However, existing gasoline tanks and pumping equipment could be readily converted to store and deliver methanol, and vehicle users would experience little difference between a methanol pump and a gasoline pump.

Because methanol can be produced from natural gas and petroleum, a raw material shortage would be unlikely if methanol consumption increased. However, in terms of delivery to stations, most methanol is transported by tanker truck from the methanol plant. 95 This delivery method tends to be less flexible and more costly compared to the existing gasoline infrastructure, which relies primarily on pipeline .delivery. methanol cannot travel through pipelines due to its physical properties.

Performance. One of the key benefits of methanol vehicles is improved environmental performance over gasoline vehicles. M85 vehicles tend to emit 30% to 50% less ozone-forming compounds. And while formaldehyde emissions tend to be higher with methanol than gasoline, all M85 vehicles will be able to meet new emissions standards for formaldehyde. 96

A key performance drawback with methanol vehicles is a reduction in vehicle range. Since it requires 1.77 gallons of methanol to equal the energy in one gallon of gasoline, range per gallon is decreased by approximately 40%. By increasing the size of the fuel tank, the loss of range can be significantly improved or even eliminated. However, a larger fuel tank would decrease fuel economy and cargo space.

Safety. On the whole, methanol fuel is safer than gasoline. Since methanol vapor is only slightly heavier than air, vapors disperse quickly compared to gasoline. Furthermore, methanol vapors must be more concentrated than gasoline to ignite, and methanol fires release less heat. Since methanol bums with a light blue flame, one key drawback is that in bright daylight it may be difficult to see a methanol fire, although it may be possible to add colorants to the fuel. 97

Fuel Cells. Methanol has been touted as the most likely step from gasoline to hydrogen in fuel cell vehicles because the fueling infrastructure is similar to gasoline, while the fuel is much cleaner. 98 Fuel cells are a type of power source that generates electricity from hydrogen (or a hydrogen-bearing compound) without combustion.

The chemical process is highly efficient and drastically reduces vehicle emissions. 99 For more information on fuel cells, see CRS Report 30484, Advanced Vehicle Technologies: Energy, Environment, and Development Issues.

Another potential advantage of methanol is that it can be derived from biomass waste products. Research is ongoing, and there have been a few, small-scale demonstration projects at landfills.

Electricity 100

An electric vehicle (EV) is powered by an electric motor, as opposed to an internal combustion engine. Energy is supplied to the motor by a set of rechargeable batteries. When the vehicle is not being used, these batteries are recharged. Because no fuel is burned, there are no emissions from the vehicle, making it a zero emissions vehicle (ZEV). However, there are emissions from electricity production associated with electric vehicles. When the entire fuel cycle is considered, the emissions from EVs are still extremely low relative to gasoline vehicles. However, there are key cost and performance drawbacks associated with these vehicles.

Consumption. Approximately 1.5 million GEG of electric fuel were consumed in the United States in 1999 by approximately 6,400 electric vehicles.101,102 Most of these vehicles are located in California, and several models are available exclusively in that state. One of the most popular EVs is the General Motors EV1. Others include the Dodge Caravan, Ford Ranger, Nissan Altra (fleet only), Solectria Force, and Toyota RAV4.103 The federal government operated approximately 150 electric vehicles in 1998.104

Cost. Electric fuel is considerably less expensive than using gasoline, about 2.5 to 3.3 cents per mile, as opposed to 4 to 6 cents per mile for a gasoline vehicle.105 Despite the fuel cost advantages, a major drawback with EVs is the incremental vehicle purchase cost, which can be as much as $20,000. Most of this cost is related to the batteries, which are very expensive to produce.106

Infrastructure. There are very few electric recharging sites in the United States. Currently, there are 507 recharging sites, mostly in California.107 With the extensive nature of the electricity infrastructure in the United States, there are few technical barriers to expanding EV recharging sites. However, with existing technology, cost is a major factor because only a few vehicles can access a single charger in one day, as opposed to a gasoline pump which can serve a new vehicle every few minutes. While faster, "quick-charge" stations are being studied, none are currently in use.108

Performance. The environmental performance of EVs is very good. When the entire fuel cycle is considered, electric vehicles produce low overall levels of toxic and ozone-forming pollutants.109 Depending on the fuel mix for local electric power generation, overall emissions can be decreased by 90% or more as compared to gasoline vehicles.110

A major performance drawback of EVs is their relatively short range. On a full charge, an electric vehicle can travel between 50 and 130 miles, as opposed to a range of 300 to 400 miles with a conventional vehicle.111 Another drawback is that fueling an electric vehicle takes between 3 and 8 hours, as opposed to a few minutes for a conventional vehicle.112

Safety. Few additional safety issues are associated with electric vehicles. Because no chemicals are transferred during fueling, there is no risk of spillage or inhalation, and with existing recharging systems, electric shocks are unlikely. In the event of an accident, there is no combustible fuel so there is no danger of fire or explosion. However, because of the acid contained in some types of batteries, there could be concern over acid leaks if batteries were to rupture in a collision.

Fuel Cell and Hybrid Vehicles.

While battery-powered electric vehicles tend to be very expensive, and have many other drawbacks, there is growing interest in fuel cell and hybrid electric vehicles. Research into batteries, electric drivetrains, and lightweight materials will play a key role in the development of EVs, as well as both hybrid and fuel cell vehicle technology. For a more detailed discussion of fuel cell and hybrid technologies, see CRS Report 30484, Advanced Vehicle Technologies: Energy, Environment, and Development Issues.

Fuel Cell Vehicles. Unlike a conventional vehicle, a fuel cell vehicle uses chemical reaction (as opposed to combustion) to produce electricity to power an electric motor. Unlike a battery-powered EV, fuel cell vehicles have a fuel tank, eliminating the long recharging time. These systems can be very efficient, although the technology is far from commercialization.

Hybrid Electric Vehicles. A hybrid electric vehicle combines an electric motor with a gasoline or diesel engine. This combination leads to very high fuel efficiency and low emissions while avoiding some of the problems associated with pure electric vehicles. Most hybrids operate solely on conventional fuel, with the engine providing power to the wheels and to an electric generator simultaneously. Therefore, hybrids can be fueled as quickly and conveniently as conventional vehicles, while achieving even longer ranges.

Two hybrid production vehicles are currently available, the Honda Insight and the Toyota Prius, and the three major American car companies plan to introduce hybrid vehicles in the next few years.113 Although hybrid electric vehicles are not considered AFVs (because they utilize conventional fuel), their environmental performance has led to legislation to promote their commercialization.114

Hydrogen

Due to its presence in water, hydrogen is the most common element on the planet, although it does not appear in pure form in any significant quantity.115 The hydrogen in water can be separated from oxygen through a process called hydrolysis.116 Other key hydrogen sources are fossil fuels and other hydrocarbons. Hydrogen fuel is of interest because it can be used in a zero-emission fuel cell. Because fuel can be continuously supplied, fuel cell-powered electric vehicles do not face some of the range and fueling limitations as battery-powered electric vehicles.

Currently, no production vehicles are powered by pure hydrogen, although all of the major domestic and foreign automobile manufacturers are researching hydrogen fuel cells, and plan to introduce production vehicles by 2004. However, it is likely that the first commercially available fuel cell vehicles will be operated on a liquid fuel such as gasoline or methanol, because these fuels are much easier to deliver and are more readily available at present (see above section on methanol).

Key concerns about hydrogen include its extreme flammability and the potential cost of the fuel. Furthermore, while hydrogen fuel could be generated using electricity from solar cells to electrolyze water, thus making the fuel cycle emission- free, the most likely source for hydrogen in the near term is natural gas. Although not emission-free, the use of natural gas as a feedstock for hydrogen would still lead to much lower overall emissions compared to petroleum.

Coal-Derived Liquid Fuels

Although EP Act recognizes coal-derived fuels as alternative fuels, these fuels have seen little commercial success. This is largely due to their high production costs and poor environmental performance.117 However, research to reduce costs and improve environmental performance is ongoing, mostly through support of the Department of Energy.118 A potential advantage of coal-derived fuels is that the feedstock is an abundant domestic resource.

Conclusions

Alternative fuels have reached varying levels of commercial success, although currently none are able to compete with conventional fuels. LPG and natural gas fuels and vehicles have been successfully commercialized, and are widely used in both private and public fleets. Ethanol is a common additive in gasoline, but is used sparsely as an alternative fuel. Other fuels, such as methanol and electricity have had less commercial success, but may play a key role in the future of transportation. The degree to which various alternative fuels have been used has been a result of economic factors, as well as government tax policies and regulatory mandates. Further, the performance characteristics of the fuels have also played a major role. In general, there potential energy security benefits to alternative fuels, as most alternative fuels can be derived from domestic sources. Further possible benefits include lower emissions of toxic pollutants, ozone-forming pollutants, and greenhouse gases. However, performance and cost are key barriers to consumer acceptance. Without considerable advances in alternative fuel and vehicle technology, or significant petroleum price increases, it is unlikely that any fuel or fuels will replace petroleum-based fuels in the near future.

Congressional Action

Several bills in the 106^th Congress addressed alternative fuels issues. However, these bills saw little action, and only one was approved by the committee of jurisdiction (See Appendixes I and 2 for a list of these bills). Language from that bill, S. 935, was inserted into the Agricultural Risk Protection Act of 2000, which was signed on June 22, 2000.119 Specifically, Title III of the law authorizes $49 million over five years for research on biomass-based chemicals, including ethanol, and establishes a Biomass Research and Development Board to coordinate research between DOE, the U.S. Department of Agriculture, and other federal agencies. There are several reasons why alternative fuels bills have not gotten much congressional attention. A key concern is whether it is wise to favor one fuel over another, especially when few alternative fuels are able to compete with petroleum. Furthermore, there are concerns over the costs of various incentives. Proponents argue that expanding alternative fuel tax credits and other incentives would promote improved air quality and energy security. Opponents argue that alternative fuel programs could lead to "corporate welfare" and that there are less expensive ways to reduce pollution and cut fuel consumption, such as efficiency improvements and conservation. For example, an increase in fuel economy of one mile per gallon across all passenger vehicles in the United States would cut petroleum consumption more than all alternative fuels and replacement fuels 120 combined. 121

Congress may continue to consider these issues in its oversight of EP Act and the Clean Air Act, and through legislation to improve air quality and energy security, and to promote domestic agricultural production.

Footnotes

66 For more information on ethanol fuel, see CRS Report RL30369, Fuel Ethanol: Background and Public Policy Issues.

67 Its chemical formula is C₂H₅OH.

68 EIA, Alternatives to Traditional. Table 10.

69 EIA, Alternatives to Traditional. Table I.

70 National Alternative Fuels Hotline, Model Year 2000

71 EIA, Alternatives to Traditional. Table 14.

72 EIA, Alternatives to Traditional. Table 19.

73 GAO, Limited Progress. Appendix 1.

74 Clean Cities Program. Alternative Fuel.

75 Based on 1.41 gallons of ethanol per GEG.

76 26 U.S.C. 40.

77 Because ethanol is more corrosive than gasoline, some components (e.g. seals) must be replaced.

78 AFDC, Refueling Sites.

79 California Energy Commission, Ethanol Powered Vehicles. [ http://www.energy.ca.gov/afvs/ethanol/ethanolhistory.html .] Updated November 3, 1998.

80 Formaldehyde and acetaldehyde are toxic compounds that, in air, can irritate tissues and mucous membranes in humans, and are characterized by EPA as possible carcinogens.

81 California Energy Commission, Ethanol Powered.

82 Although most greenhouse gases are not regulated pollutants, environmentalists are concerned that the accumulation of these gases (such as carbon dioxide) in the atmosphere will lead to global warming.

83 M. Wang, C. Saricks, and D. Santini, Effects of Fuel Ethanol on Fuel-Cycle Energy and Greenhouse Gas Emissions, January 1999. Argonne National Laboratory.

84 Alan Kovski, "Study Defends Fuel Efficiency of Ethanol, While Another Notes Emissions of Pollutants," The Oil Daily, March 9, 1998. p. 6.

85 Center for Transportation Research, Argonne National Laboratory, Guidebook for Handling, Dispensing, & Storing Fuel Ethanol.

86 For more information, see CRS Report 98-435E, Alcohol Fuels Tax Incentives.

87 Its chemical formula is CH₃OH.

88 EIA, Alternatives to Traditional. Table 10.

89 EIA, Alternatives to Traditional. Table 20.

90 National Alternative Fuels Hotline, Model Year 2000.

91 GAO, Limited Progress. Appendix I.

92 Based on 1.77 gallons of M85 per GEG.

93 California Energy Commission, Methanol Powered Flexible Fuel Vehicles         [ http://www.energy.ca.gov/afvs/m85/methanolhistory.html .] Updated December 14, 1998.

94 AFDC, Refueling Sites.

95 In contrast, gasoline is usually shipped in pipelines from the refinery to a distribution terminal, where tanker trucks transport the fuel to the fueling stations. This distribution network is considerably more cost effective than relying solely on tanker trucks.

96 California Energy Commission, Questions and Answers About M85 and Flexible Fuel Vehicles [ http://www.energy.ca.gov/afvs/m85/methanolq-a.html .], updated December 14, 1998.

97 Environmental Protection Agency, Fact Sheet OMS-8: Methanol Fuels and Fire Safety. August 1994.

98 Vanessa Houlder, "Big push to reduce fuel emission problems," Financial Times. September 21, 2000. p. 5.

99 If pure hydrogen is used, the only emissions would be water vapor.

100 For more information on electric vehicles, hybrid electric vehicles, and fuel cell vehicles, sec CRS Report RL30484, Advanced Vehicle Technologies: Energy, Environment, and Development Issues.

101 EIA, Alternatives to Traditional. Tables I and 10.

102 These vehicles are light- and heavy-duty highway vehicles. Golf carts are another popular application for electric vehicles, and there are many of these in operation in the United States, especially in smaller communities.

103 National Alternative Fuels Hotline, Model Year 2000.

104 EIA, Alternatives to Traditional. Table 20.

105 Because of the vast differences between electric and conventional vehicles, cents per mile are used to discuss fuel cost, as opposed to dollars per GEG. In this case, it was assumed that electricity was 10 cents per kilowatt-hour (kWh), an electric vehicle achieved between 3 and 4 miles per kWh, gasoline cost $1.20 per gallon, and a gasoline vehicle achieved between 20 and 30 miles per gallon. Currently, electricity prices are somewhat lower than 10 cents per kWh, while gasoline prices are above $1.20 per gallon.

106 This is based on suggested retail prices for the EV1 and the Chevrolet Cavalier, a similar gasoline vehicle.

107 AFDC, Refueling Sites.

108 California Energy Commission, Questions & Answers About Electric Vehicles. [ http://www.energy.ca.gov/afvs/ev/q_a.html .] Updated July 30, 1998.

109 The fuel mix plays a key role in the overall fuel-cycle emissions for electric vehicles because power plant emissions can vary greatly depending on the fuel used for generation.

110 California Energy Commission, Questions & Answers About Electric Vehicles.

111 Alternative Fuels Data Center, Model Year 2000.

112 California Energy Commission, Questions & Answers About Electric Vehicles.

113 Gregg Easterbrook, "Hybrid Vigor," The Atlantic Monthly. November 2000. p. 5.

114 Several bills in the 106^th Congress would have provided tax credits for the purchase of hybrids, although none of these bills passed their respective committees. See section below on Congressional Action.

115 The chemical formula for hydrogen gas is H₂.

116 The chemical formula for water is H₂O.

117 In fact, while the fuels themselves may result in lower vehicle emissions, the processes for converting coal to liquid fuel tends to lead to high pollutant emissions.

118 Nicholas P. Chowey, "Coal Conversion Keeps Itself Relevant," Chemical Engineering. September 1998. p. 35.

119 .L. 106-224.

120 Replacement fuels include blending agents such as ethanol in E 10, that are used in gasoline but do not qualify as alternative fuels.

121 Source: CRS analysis of data from the Department of Energy.