• Congestion is back, for trucks as well as cars
• Addressing diversion from toll roads and bridges
• Study analyzes NEPA permitting delays
• The electric vehicle debacle
• Federal automated vehicle outlook
• The evolution of Bestpass
• News Notes

Congestion Is Back, for Trucks as Well as Cars

Two reports have crossed my screen in recent months, both quantifying U.S. traffic congestion. The first, from several months ago, is the “2023 Urban Mobility Report” from the Texas A&M Transportation Institute (TTI). The second is the American Transportation Research Institute’s “Cost of Congestion to the Trucking Industry, 2024 Update.” Because of the delays in the availability of detailed congestion data, both of these 2024 reports cover U.S. congestion in 2022. The message of both studies is that traffic congestion is back, but not quite to the level of 2019.

The TTI report covers 494 U.S. urban areas, far more than in some of its earlier editions. The most detailed data are from 101 “intensively studied urban areas.” From the entire data set, the average annual delay per auto commuter was 54 hours in 2022, equaling the pre-pandemic delay from 2019. Most of the other 2022 data elements from this largest set of urban areas were 5-8% lower in 2022 than in 2019. Also, in this larger set, total travel volume (billions of miles traveled) was 5% lower in 2022 than in 2019. The only large increase was in urban truck congestion cost, which was 16% higher in 2022 than in 2019.

Turning to the 101 larger urban areas, in 2019 only five of them had less than 30 hours of delay per commuter, but in 2020 that number increased to 73; by 2022 only five urban areas had that little delay, the same as in 2019. In a table tracking key parameters for every year since 1982, the only figure that reached a new high in 2022 was the total cost of congestion, at $224 billion compared with $217 billion in 2019.

The American Transportation Research Institute (ATRI) report on trucking congestion is not solely focused on urban areas, although that is where the most severe truck congestion occurs. It relies on a very large truck GPS database that records truck miles and speed, among other parameters from more than a million commercial trucks. Truck vehicle miles of travel (VMT) are obtained from the Federal Highway Administration’s (FHWA) Highway Statistics tables that can be segmented by state, region, and metro area. To calculate truck congestion cost, ATRI draws on data on the operational cost per hour of Class 7 and Class 8 tractor-trailer combination trucks, which are the focus of this study. ATRI updates those costs every year.

The findings on truck delays and congestion costs are somewhat different than TTI’s overall findings. For example, annual average truck speed in “bottleneck” locations was on a downward trend from 2016 through 2019. Not surprisingly, with far fewer vehicles on the roads in 2020, average truck speed increased. As personal travel began to return, truck speeds declined slightly in 2021 but increased again in 2022. So trucks were going faster in 2022 than in 2019, unlike cars.

But that’s not the end of the story. Truck VMT increased significantly in 2022 as they were operating in less congested conditions. But due to the rising cost of fuel and labor, their cost of congestion continued to increase, making their overall cost of congestion reach a new high in 2022, even though their hours of congested travel declined. Table 1 in the report shows that trucks’ cost of congestion in 2022 was 15% greater than in 2021, at nearly $109 billion.

The states with the highest truck congestion costs in 2022 were Texas, followed by California, Florida, New York, and Georgia. And the states with the largest percentage increases in truck congestion cost were Hawaii (up 92%), followed by Vermont, Minnesota, Kentucky, and Alaska. An indication that post-pandemic economic recovery is somewhat uneven is that 25 states had decreases in truck congestion in 2022 compared with 2021. The largest decreases were in Louisiana (almost 13% less), with smaller decreases in New Mexico, Maryland, California, and Ohio.

Needless to say, very large metro areas still had large percentage increases in truck congestion cost in 2022, with New York leading the pack at 21.6% increase and by far the highest cost ($6.7 billion), followed by Miami, Chicago, Philadelphia, and Dallas.

For auto commuters, the highest delay (person-hours) in 2022 was once again in Los Angeles, followed by San Francisco/Oakland, New York/Newark, Washington, D.C., and Atlanta. Almost the same ranking appears for annual congestion cost per commuter: Los Angeles, San Francisco, New York, Atlanta, and San Diego, with Washington this time in 6th place.

We can see that for both commuters and truckers, the cost of congestion was higher in 2022 than in 2021. But for commuters in large metro areas, the extent of congestion was greater in 2022 than in 2021, while the opposite was true for truckers. I suspect that when we get the comparable data for 2023, both the extent of congestion and its cost will increase for both commuters and trucking.

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Addressing Diversion from Toll Roads and Bridges
By Baruch Feigenbaum

The number of vehicles that avoid toll roads by diverting to non-toll roads has long been a knotty topic. Several studies have attempted to address the question, but due to the large number of variable factors, there was no consensus. Recently, Robert Bain and Deny Sullivan of CSRB Group released a study titled “The Traffic Impact of Road Pricing“, in which they combined both a literature review and their own research to determine a true diversion rate.

The authors examine the increased interest in tolling due to greater regulatory permission, a need for more highway funding, accelerated project construction, blended funding, and advances in technology. Bain and Sullivan studied fixed-rate toll systems only. They did not analyze priced managed lanes or highways using dynamic pricing.

In the United States, the authors cite several other studies in their literature reviews. The first is Nichols and Belfield’s study of the Midtown and Downtown Tunnels in Hampton Roads, Virginia as well as the State Route 520 bridge in Washington state. In Virginia, after tolling began, traffic decreased 8% on the Midtown tunnels and 20% on the Downtown Tunnel. In Washington state, traffic declined by 30%. Breaking down the traffic volumes by day of week and time of day, the studies found that diversion was a bigger problem during off-peak hours than peak periods. A separate meta analysis of nine tolled facilities in North America shows that facilities had 10-36% less traffic after tolling.

A Minnesota Department of Transportation (DOT) study that relied on modeling examined different types of roadways. Urban Interstates were found to have a 15% diversion rate, rural Interstates 20%, urban freeways 20%, and rural freeways 25%. Frontage roads increase diversion by 5%; competing roads within 10 miles increase diversion by 10%.

Bain and Sullivan combined these studies with those in their database for a total sample size of 83 tolled highways. They used research reports, academic papers, media reports, toll operator data, and transportation department websites. Many were not true academic research papers, as they did not undergo double-blind peer reviews, but they do provide useful information. The U.S. had by far the most toll highways with Portugal, Australia, the U.K., and Canada rounding out the top five. There were 35 road and 20 bridge projects, the two most common types of tolled infrastructure.

Using all those papers, Bain and Sullivan calculated the median diversion impact of tolling as -25%. In other words, for every four people who used the infrastructure before tolling, only three used it after tolling. But the spread was 4% to -85%, indicating local conditions are paramount. Further, there were no clear patterns among urban or rural roads.

The one exception is toll bridges with no realistic alternatives. They had a lower diversion rate— -15% —than other highways. Given the lack of alternatives, drivers may have no other option than a boat.

While the Bain study has the largest sample size, its results did not differ from the other studies that found a diversion rate of 20-25%.

Using the results, Bain created a predictive model to explain which toll roads will have the highest diversion rates. The model examines alternative routes and alternative modes and uses a decision tree (chose one of several options in multiple steps) instead of a mathematical model. The study found that 84% of impacts lie within the range, which would be similar to having an r-squared value of 0.8, if this were a mathematical model.

Overall, the paper presents the best model so far for toll diversions. The model captures most of the diversion and the predictive model is helpful in explaining what types of roadways will have higher diversion rates. But I’m most interested in how we can reduce toll road diversions. We need to address problems including traffic congestion, high costs, user behavior, and status-quo thinking. 

One option would be to focus on reducing congestion, but that might not always be cost-effective, especially on urban freeways with limited right-of-way.  While they weren’t in the study, I have encountered congestion on the New Jersey, Massachusetts, and Pennsylvania Turnpikes in urban areas. On rural tollways, adding new lanes will reduce congestion.

For the trips that are taken on roads without significant congestion, we could reduce the diversion problem by using carrots or sticks. I recommend carrots.

Why not sticks? The study shows that one factor impacting diversion is the lack of parallel routes. The stick approach would be to pull new non-tolled highways out of regional transportation improvement plans and long-range transportation plans or to tear-down existing roads, similar to what USDOT has tried to do with some urban freeways. Technically, this would end diversion, but even if it survives court challenges and potential riots, it has a few problems. It would harm economic development. That method would imperil emergency services. And it would make congestion so bad that drivers might choose to stay home or move to a different region.

A carrot-based approach would be to create a win-win for roadway operators and drivers alike. One approach would provide a frequent traveler discount or reward, the way that many airlines already do. The provider might lower a driver’s tolls, if she used the roadway five or more times per week. New drivers could be incentivized to try the toll road by paying a lower toll rate for the first 30 days. The provider might work with employers to see if their office could begin flexible scheduling or telework. Either would decrease the cost of using the toll road. Finally, the provider might add additional exits or motor services to make the toll road more convenient.

Toll diversion is not anywhere close to the biggest problem toll providers face, but it is still a problem. It is not easy to solve, and a small number of drivers will always take another route to avoid tolls. But where we can, we should encourage new toll paying customers to use the toll road by making the experience better and not worse.

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Study Analyzes NEPA Permitting Delays

The process that major infrastructure projects must go through to obtain federal permission to build is increasingly costly and time-consuming, as I’ve previously discussed in this newsletter and analyzed in a 2024 policy study. A recent empirical study sheds some light on what factors affect project approval under the legal framework that has evolved since the enactment of the National Environmental Policy Act (NEPA) in 1970. The paper is “A Hazard Analysis of Federal Permitting Under the National Environmental Policy Act of 1970,” by Michael Bennon, Daniel De La Hormaza, and R. Richard Geddes, published in the Journal of Regulatory Economics.

The authors relied on data from the Council on Environmental Quality (CEQ) regarding 1,269 Environmental Impact Statements (EISs). A key variable was the duration from the Notice of Intent to file to the eventual Record of Decision (ROD). They used a statistical technique called a Cox proportional hazard model to estimate the impact of a number of factors on the duration of the permitting process.

One of the interesting findings was that projects proposed as privately financed public-private partnerships (P3s) completed the EIS process faster than others. The authors speculate that the typical team proposing such projects may have a better understanding of the process, enabling a faster review than would otherwise be possible. They also speculate that faster permitting for energy projects may be due to the volume of such projects, leading to analysts’ greater familiarity with their impacts.

The authors also compared project permitting durations for projects located in states with restrictive environmental laws. Those projects did take longer to reach the ROD, but this was not due to the state restrictions, per se. They hypothesize that opposition groups may be stronger in those states, leading to more public opposition and threats of litigation.

Another finding concerned projects that were designated for inclusion in the federal permitting “dashboard.” These projects had longer durations, which seems contrary to the intent of the dashboard, but the authors speculate that projects designated for the dashboard are likely to be larger and more complex, leading to a longer permitting process. Higher EIS page counts have longer durations in getting to a final EIS, but they also have a longer duration between the final EIS and the ROD.

One other interesting finding concerns permitting of projects connected with a federal economic stimulus program such as the American Recovery and Reinvestment Act. They hypothesize that because elected leaders and administrators desire quick impact from stimulus projects, they tend to focus on “shovel-ready” projects that have already completed the NEPA process. But they point out that “This may lead to the allocation of stimulus funds to projects with lower expected returns on investment.”

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The Electric Vehicle Debacle

The last six months have been dismal for those hoping for a U.S. electric vehicle (EV) future. Here is a small sample of news articles from this period.

• “Auto Industry’s Retreat from EVs Hastens,” Mike Colias and Christopher Otts, The Wall Street Journal, Aug. 23, 2024
• “Electric Vehicle Sales Are Stumbling: Here’s Why,” Joshua Gallu, Bloomberg, Sept. 29, 2024
• “Low Used-EV Prices Pinch Dealers, Owners,” Sean McLain, The Wall Street Journal, Oct. 14, 2024
• “Dream of Cheap U.S. Electric Car Fades,” Tim Higgins, The Wall Street Journal, Nov. 18, 2024
• “Things Get Worse for EV Startups,” Amrith Ramkumar and Shane Shifflett, The Wall Street Journal, Dec. 2, 2024.

The last of these articles includes graphs showing the shrinking cash balances among EV startups and the dismal share prices of those (such as Fisker, Lucid, and Rivian) that are publicly traded. The declining sales of electric vehicles have led to setbacks for plans to build huge EV battery plants, not only here but also in EV-friendly Europe. Volvo has put on hold plans to build a large plant to make batteries for its electric trucks. And the very ambitious startup Swedish EV battery company Northvolt filed for bankruptcy soon after.

Those failures were warning signs to our federal and state governments that large-scale subsidies to build battery plants would not be a wise move. Several state governments have provided state aid for EV battery plants, but the most enormous subsidies have come from the federal government. The latest was announced in November with great fanfare by the Biden Department of Energy: a $6.6 billion loan to nearly-bankrupt Rivian for an EV factory in Georgia. If built, it would have the capacity to produce 400,000 SUVs and crossovers per year. Rivian has lost about $4 billion on the 37,396 vehicles it sold in the first nine months of 2024, and it has $1.25 billion in debt. The Department of Energy recently finalized an even larger $9.6 billion loan for a Ford EV battery plant in Tennessee. Ford has also been losing tons of money on its poorly selling EVs.

It turns out that the $6.6 billion loan to Rivian is “conditional” on the company meeting certain technical, legal, environmental, and financial conditions. A Wall Street Journal editorial (Dec. 26) explained that these conditions include pro-union policies that Rivian has been resisting at its vehicle factory in Illinois. But Ford recently agreed to a neutrality agreement with the United Auto Workers for its Tennessee EV battery plant.

I can’t imagine any private investor making such loans and expecting them to be repaid. And in the federal government’s nearly insolvent condition, giving away tens of billions of dollars is the last thing it should be doing. Fortunately, with a new administration and new Congress, these policies can be changed.

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Federal AV Policy Review and Outlook
By Marc Scribner

There will be many fundamental policy differences between the outgoing Biden administration and incoming Trump 47 administration. One area to watch is automated vehicle (AV) policy. The Biden administration departed from the AV enthusiasm of the previous Trump and Obama administrations. The new Trump administration is expected to pick up where the first Trump administration left off on AV policy. On balance, the Trump administration is likely to be friendlier to AV technology development and deployment than the Biden administration. But the scrambled populist politics of our time introduce some sizeable uncertainty.

While most of its actions did not actively undermine AV technology development and deployment, the Biden administration was content to mostly do nothing on AVs. The Biden administration’s stance on AVs was modulated by its close ties to organized labor. Fearing competition from robots, unions have emerged as the primary opponents of advanced automation technologies in the transportation sector. The official Teamsters union position, for instance, is a national ban on driverless commercial vehicles. Given this political environment, inaction on federal AV policy may have been the best attainable outcome from the self-described “most pro-union, pro-worker President in history.”

The most significant AV policy action by the Biden administration was the National Highway Traffic Safety Administration’s (NHTSA) Standing General Order (SGO) on mandatory crash reporting, which was issued in 2021 and revised in 2023. Under the SGO, poorly defined reporting parameters coupled with aggressive compliance requirements led AV companies, out of an abundance of caution, to submit a lot of incident data that have little bearing on safety. In July 2024, NHTSA announced it would propose a rule to reform and codify the SGO’s incident reporting requirements by the end of the year, although this has since been delayed until at least May 2025.

Aside from the SGO, the most notable action on AVs taken by the Biden administration was the finalization of a rule that revised occupant protection safety standards to account for future vehicles that lack manual driving controls. The Biden NHTSA deserves praise for promulgating this rule in March 2022, although not too much credit because this rule was fully baked and ready for publication at the end of the Trump administration in Jan. 2021.

Much less praiseworthy was the Federal Motor Carrier Safety Administration’s last-minute decision on Dec. 27 to deny an exemption petition submitted by two AV truck developers, in which the companies proposed to use special cab-mounted hazard lights in lieu of placing warning triangles outside a disabled truck on the side of the road. The placement of warning devices around stopped commercial vehicles is a legacy federal requirement with which it is impossible to comply if there is no driver in the vehicle. The supposed basis for denial was insufficient information submitted in the exemption application, but it should not have taken 23 months to review a 15-page document for the claimed basic deficiencies.

But AV policy under the Biden administration didn’t end completely on a sour note. Just before Christmas, NHTSA announced it was releasing its long-promised proposed AV STEP voluntary national framework. The goal of AV STEP is to leverage existing authorities to give AV developers greater latitude to produce and deploy their vehicle technologies in exchange for submitting more information to regulators. However, the final decision on what—if anything—comes from the AV STEP proposal will be made by the incoming Trump administration.

The new Trump administration’s likely emphasis will be on the geopolitical strategic importance of advancing AV technology in the United States—which is to say, “winning the AV race with China.” This means enthusiasm for AV policymaking is likely to return to federal agencies and could bode well for the industry.

However, there is concern that China hawks may disrupt supply chains and limit international market access. The Commerce Department’s Bureau of Industry and Security in September proposed restrictions on transactions involving Chinese or Russian firms that affect AVs. The current Biden proposal preserves AV developer access to most global markets and limits damage to supply chains, but a final rule that is less cautious could do serious damage. The Trump administration should understand that needlessly aggressive trade restrictions on AV technologies could undermine their goal of strategic global AV dominance.

To advance continued U.S. leadership in AV innovation, the Trump administration should focus on modernizing NHTSA’s federal motor vehicle safety standards (FMVSS) so AVs can be incorporated into the national auto safety regulatory ecosystem. This would have the effect of preempting many state regulations and preventing an unworkable compliance patchwork. It would also obviate the need for Congress to act because the primary justification for congressional AV action over the past decade has been to increase the statutory cap on and duration of temporary FMVSS exemptions. But if NHTSA promulgates revisions to FMVSS and thereby allows AVs to self-certify to FMVSS just like other vehicles, there is no need for temporary exemptions.

The Trump administration has a golden opportunity to reinvigorate AV policy in the United States. To do so, it must stay focused on systematically identifying and addressing safety regulatory barriers and gaps. But the Trump administration may face challenges from within related to trade, national security, and even labor that could undermine its AV policy goals.

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The Evolution of Bestpass

Unless you are part of the U.S. trucking industry, you’ve probably never heard of Bestpass. I’ve been a fan for many years, when I learned that it offers service to the over-the-road trucking industry, including weigh-station bypass services and management of their company toll accounts. Bestpass was launched in 2001 by people from the Trucking Association of New York. It came to my attention when I learned that, among its toll management services, it assisted subscribing truck fleets in taking advantages of refunds from certain state highway user charges for those using the New York State Thruway and the Massachusetts Turnpike. I’ve gotten to know Bestpass people at various transportation conferences such as those of the International Bridge, Tunnel & Turnpike Association.

Over the past decade, Bestpass has acquired several other companies that serve the trucking industry. In 2023 it acquired Fleetworthy, self-described as a fleet compliance, safety, and risk management solutions provider. Fleetworthy came with a platform called CPSuite, which as part of Bestpass provides what CEO Tom Fogarty told FleetOwner serves as “a single pane of glass for fleet executives to be able to view what’s working and what’s not in their overall operation.” As a result, Bestpass was rebranded as Fleetworthy.

But that was not all. Last year Fleetworthy acquired Drivewyze, a firm with a long track record in dealing with weigh station bypass (and possessing the largest share of that market). The two companies had already agreed on a partnership in 2023, but this progressed to a merger in 2024. Fogarty told FleetOwner that this merger simplifies many things that are not trucking companies’ mission. “Their core mission is safety and keeping the fleets operating on the roads, but being able to do that in a much simpler way is something they strive for.”

Recently Fleetworthy announced an agreement with data provider Geotab, to interface with that company’s telematics ecosystem. Bestpass customers can use the MyGeotab interface to match Geotab vehicle data and GPS locations with charges reported by Bestpass.

Long-term readers of this newsletter may guess why I’m especially interested in these developments. Sooner or later the United States will need to shift from per-gallon fuel taxes to per-mile charges. Keeping track of who owes what as this transition takes place will be complicated. It strikes me that for the long-haul trucking industry, service providers such as Fleetworthy will be well-positioned to play a key role in this future.

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News Notes

Maryland Extends I-95 Express Toll Lanes
Last month the Maryland DOT opened a 6.5-mile extension of the ETLs on I-95, extending them to MD 152. Current plans call for further northward extensions to MD 24 by the end of 2027. The lanes charge fixed toll rates for peak, off-peak, and night, with rates also based on the number of axles (up to six or more). The lowest rates are for E-ZPass customers, with somewhat higher rates for Pay-by Plate and Video Toll customers.

New Zealand Planning $5.8 Billion Tollway P3
According to Infralogic (Dec. 6), New Zealand’s relatively new National Party-led coalition government “has rolled out the red carpet to private infrastructure investors.” The project currently entering procurement is the $5.8 billion Northland Expressway, to be built in three sections heading north from Auckland. Expressions of interest from potential public-private partnership (P3) consortiums are being sought, with a request for proposals (RFP) likely to be released in second-quarter 2025. Up to five consortia appear to be organizing to submit proposals once the RFP is issued.

Thailand Plans $1.4 Billion P3 Expressway
The Thai cabinet in December OK’d a plan to use a long-term P3 to finance, develop, and operate the $1.4 billion M9 Motorway linking Bangkok with Nonthaburi. The government plans a 30-year P3 concession for the project. The current schedule calls for developing procurement documents for a tender to be launched near the end of 2025, with the P3 deal reaching financial close in the second half of 2026.

Washington State Developing Port Tollway
To improve access to the Seattle/Tacoma seaports, Washington state DOT is under way on the SR 167 Completion Project. The plan calls for extending SR 167 westward to the Port of Tacoma by means of a four-lane tollway. The new tollway will facilitate access to the port by trucks (which currently congest local streets). It will also provide faster, uncongested trips for motorists, including those who use the express toll lanes on the existing SR 167. The new corridor appears to be a combination of truck tollway and express toll lanes for motorists. The second of four phases is now under construction, with last phase to be completed by 2030.

Supreme Court Considering Challenge to California Emissions Mandate
A legal challenge to California’s permission to exceed federal vehicle emission regulations was rejected by the D.C. Circuit Court, which ruled that the plaintiffs lacked standing. Last month the U.S. Supreme Court agreed to hear an appeal of that ruling. If the case is sent back to the circuit court, it will have to analyze whether, under existing law, California can use its long-standing permission to impose tougher regulations on tailpipe smog precursors to also regulate CO2 emissions (which have no impact on smog).

Committee Chair Not Supportive of Federal MBUF
Politico reported (Dec. 16) that Rep. Sam Graves (R-MO), incoming chair of the House Transportation & Infrastructure Committee, is not supportive of replacing federal motor fuels taxes with mileage-based user fees (MBUFs). He suggested that a better way to ensure that the growing population of electric vehicles (EVs) pay their way would be a tax of some kind on EV drivers. He told Politico that he plans to discuss this subject with House Budget Committee chair Jodey Arrington (R-TX). The federal Highway Trust Fund increasingly generates far less than the amount of federal highway and transit spending, and getting EV users to pay their share would help address this problem.

Schneider Battery Electric Trucks Top Six Million Miles
A December news release from trucking company Schneider announced that its fleet of 100 Freightliner eCascadia battery-electric vehicles (BEVs) has surpassed six million “zero emission miles.” The release added that this is a reduction of 20 million pounds of CO2 emissions—which sounds like a lot, but the usual unit of measurement is tons, which amounts to only 20,000 tons of CO2. Truck producer Daimler says the eCascadia has a range of 250 miles and can be recharged up to 80% of capacity in 90 minutes, which is a lot more time than refueling a diesel rig.

Louisiana Mississippi River Crossing Location: Decision This Year
Joe Donahue, Secretary of the Louisiana Department of Transportation and Development, announced that the final site for the planned $2 billion toll bridge across the Mississippi River will be announced in 2025. After several years of study and gathering public input, the alternatives have been narrowed down to three. The bridge is needed to address serious congestion on I-10 in the vicinity of Baton Rouge, the state capital. The plan calls for the new bridge to be south of Baton Rouge, with connections to I-10 via a new southern loop on both sides of the river. Current plans assume toll finance and a long-term P3 procurement model, similar to what is in use for the replacement of the I-10 bridge across Louisiana’s Calcasieu River.

San Francisco P3 Bus Yard Decision This Spring
Infralogic reported last month that the planned 30-year P3 project to modernize the San Francisco Municipal Transportation Agency’s (SFMTA) bus yard needs two important votes this spring: one by the SFMTA board and the other by the San Francisco Board of Examiners. SFMTA has a provisional agreement with a Plenary-led consortium for a 30-year availability-payment design-build-finance-operate-maintain P3 concession. Construction cost is estimated at $560 million and the annual availability payments are to be $42.2 million per year.

Arizona Plans Another Stretch of New I-11
Thanks to a $26 million federal grant, Arizona DOT plans to upgrade 4.5 miles of US 93 to prepare it for becoming part of the long-planned I-11 between Phoenix and Las Vegas. Over the last several years, ADOT has spent nearly $500 million on upgrades to US 93, which is planned to be the primary component of I-11 in Arizona. Nevada DOT has built about 45 miles of I-11 southeast of Las Vegas since 2018.

Pennsylvania Turnpike Revamps Tolling Policy
In addition to shifting the Pennsylvania Turnpike to all-electronic tolling as of this month, the agency has implemented two changes in its toll rates. All toll charges will now reflect consistent per-mile charges across the system; this is a step toward eventually charging per mile traveled on all American highways. Second, truck tolls will no longer be based on gross weight; instead they will be based on axle-weight, which more accurately reflects the extent of pavement damage from heavy vehicles. Kudos to the turnpike for these sensible changes.

Mixed Results on Bridge Condition
There’s good news and bad news in the Better Roads Bridge Inventory, compiled by Equipment World from FHWA data. Between 2020 and 2024, the number of bridges in “good” condition declined from 278,000 to 274,000, a decline of 1.3%. On the other hand, the number in only “fair” condition increased by 3.8%, from 293,000 to 305,000. The worst category—bridges in “poor” condition—were down 0.9% and account for only 6.72% of all bridges. So it would appear that the increase in fair-condition bridges came largely from more good bridges declining to fair condition. The states with the lowest percentage of poor-condition bridges are Nevada, Arizona, Texas, Delaware, and Georgia. On the other end of the scale, state with the highest extent of poor-condition bridges, in order, are Iowa (19.6% poor), West Virginia, South Dakota, Maine, and Rhode Island. States with the highest percentage of bridges in good condition are Georgia, Arizona, Ohio, Florida, and Nevada. And those with the lowest percentage in good condition are Utah, Rhode Island, Maine, Massachusetts, and West Virginia.

Tesla EV Plug Now Standardized
SAE International as of last month was finishing work on an open EV charger standard, J3400, based on the Tesla EV charging connector. Simultaneously, FHWA said it was finalizing a new standard for federally funded EV chargers, based on Tesla’s charging plug. Over the past year and a half, nearly every automaker and charger manufacturer adopted Tesla’s charging standard.

Trucking Industry Loses Rhode Island Truck Tolling Case
Last month a federal appeals court rejected the trucking industry’s case that Rhode Island’s trucks-only toll charges were unconstitutional. Although the court found that daily toll caps are unconstitutional, the overall tolling system, in which the toll revenue is dedicated to bridge improvements, was found to pass muster.

Highway Tolling Discussed Again in Michigan
An article by MLive (Dec. 11) reported on year-end discussions among Michigan legislators and transportation groups about how to pay for upgrading the state’s aging highways. Alternatives discussed included increasing state fuel taxes or vehicle registration fees, using toll revenue to pay for rebuilding/modernizing the state’s Interstate highways and freeways, or replacing fuel taxes with per-mile charges. A major tolling study by HNTB and CDM Smith in 2022 found that modest toll rates could finance the reconstruction and modernization of 545 route-miles of limited access highways, enabling $18.5 billion to be financed based on the toll revenue. (For details, see the lead article in the Feb. 2023 issue of this newsletter.)

MARTA Seeks to Enforce Bus-Only Lanes
Georgia’s MARTA transit agency will soon be opening its first dedicated-lanes bus rapid transit system, a 5-mile round trip route between downtown and Summerhill. MARTA has asked the state legislature for automated traffic cameras so that it can ticket drivers who move into the bus lanes. Since adding lanes to a highway is very costly, “bus-only” makes sense only where the bus person-throughput (per lane per hour) is more than what the lane would handle in mixed-flow traffic. A wiser plan would be for “bus toll lanes” that charge motorists variable pricing to keep the traffic moving smoothly to enable fast and reliable bus service. (See “Enhanced Transit and Managed Arterials: A Win-Win Combination,” Reason Foundation, Oct. 2016.)

Trump Misunderstands Panama Canal Tolls
President-elect Trump mis-spoke when he claimed that “the fees being charged by Panama are ridiculous [and] highly unfair.” In fact, as the Wall Street Journal pointed out in an editorial on Dec. 26, “Every vessel, regardless of its flag, pays the same rate according to tonnage and type. . . . About 75% of the total price is a toll [to pay for capital costs] and 25% is for services like tugboat or locomotive escorts.” The Panama Canal is a business and is far better run than highly subsidized U.S. inland waterways.

Riverside County’s Express Toll Lanes Credit Upgraded
Fitch Ratings last month announced that it has increased the rating on Riverside County Transportation Commission’s SR 91 express toll lanes from BBB+ to A. The upgrade reflects traffic and revenue levels exceeding Fitch’s base case. Until recently, the only express toll lanes with a rating of A or above was the world’s first ETL project, on SR 91 in neighboring Orange County. Most other express toll lane projects financed by their toll revenues have Fitch ratings of BBB or BBB-.

Denmark Shifts to Per-Kilometer Tolling
The Danish government, as of Jan. 1, 2025, shifted its heavy-vehicle tolling system from the Europe-wide Eurovignette (a multi-country electronic tolling system) to per-kilometer charges. The system charges vehicles weighing 12 tonnes or more, except for buses. Instead of a transponder, trucks will have to sign up with UTA Edenrod’s UTA One system. The Danish toll road system comprises 10,900 km of highways.

New Commentary Suggests NEPA Litigation Reform
In a recent Substack post, R. Richard Geddes and Joshua Rauh review the high cost and time of infrastructure projects getting through the current NEPA process, especially the litigation that often follows the release of the final Environmental Impact Statement (EIS). They offer a menu of changes that could streamline that system.

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There are approximately 66,700 electric (EV) and plug-in hybrid vehicles currently driven in Florida. Using this number, we can estimate that the new fees established by this legislation would equal roughly $9 million or more in revenue per year.

Fees such as that proposed in SB 140 are common across the country—26 states have imposed them already, and the fee levels proposed in SB 140 are about in the middle range compared to other states. States have been motivated to implement such fees mainly due to projections of lost transportation user fee revenue in the form of fuel taxes, which electric and hybrid vehicles do not pay or pay very little of relative to their use of infrastructure.

The Florida Department of Transportation in its EV Infrastructure Master Plan estimates fuel tax revenue losses by 2040 of between 8.4 percent to 30.0 percent, depending on how rapid the growth in adoption of EVs is. Needless to say, there will be no reduction in the need for roads and road maintenance as the mix of vehicles increasingly shifts to electric and the state’s population, economy, and vehicle-miles traveled continue to grow.

It is only fair that owners of electric and plug-in hybrid electric vehicles also pay for the building and maintenance of the roads they use. A new annual fee for these vehicles is an efficient way to do so. And the fee proposed in SB 140 will not discourage the adoption of electric and hybrid vehicles as their $1,650 average savings on gasoline per year is far more than the $135 or $150 annual fee.

Finally, the grant program in SB 138 would use the first five years of revenue from these fees to provide charging infrastructure for electric and plug-in hybrid electric vehicles, providing these drivers a direct user benefit for their user fee. In subsequent years, the fees would help pay for road maintenance in the state. Moreover, the proposed grant program uses a public-private partnership approach where private parties who need charging infrastructure for their workers or visitors share the costs of installing it with users via the state program.

These policies will help Florida achieve the growth in electric and hybrid electric vehicles that so many want to see for environmental reasons by improving electric charging infrastructure while simultaneously creating a system for those vehicles to pay their fair share for the roads they use in the years to come.

The post Testimony: Florida Considers Electric Vehicle Fees to Replace Gas Tax Revenue appeared first on Reason Foundation.

Just last fall, CEO Bill Ford was valiantly promising in a mega-million dollar ad campaign that the company would never, ever turn away from its hybrid pledge because these vehicles were central to the company’s reputation as an “innovator and environmental steward.”

Never mind that at the time Ford was losing $2,000 to $3,000 for every hybrid it sold because consumers won’t pay the entire $6,000 extra that it costs to produce a hybrid over its gas-powered counterpart. Never mind also that in the real world – outside of the Environmental Protection Agency’s tax-payer funded testing sites – hybrids don’t deliver anywhere close to the gas mileage that the agency attributes to them, as auto-writer Richard Burr reported in the Weekly Standard.

Bill Ford had given his word on hybrids and you could take that to the bank (ruptcy court). But hybrids have received such a thrashing in the market lately that even Ford was forced to take-off his green eye-shades and read the red-ink on the wall.

According to Art Spinella, the uber-auto analyst and President of CNW Marketing Research, hybrid sales every month this year have been down compared to the same time last year. Even sales of the Toyota Prius – the darling of the greens – have dropped significantly. The only segment besides taxis where hybrids are still holding steady – taxpayers will be happy to note – is the car fleets maintained by the government.

What’s particularly interesting is that individual consumers are defying all expectations and turning their backs on hybrids at a time when gas prices are soaring. (The average U.S. retail price of gas spiked to a record high of $3.01 last September following hurricane Katrina, and just last week it hit its second highest price ever at nearly $3.00.) Nor is the reason all that mysterious. Spinella’s customer satisfaction surveys show that 62 percent of hybrid owners are dissatisfied with the fuel-economy performance of their cars given what they have paid for them.

This means that when gas prices go up, these people don’t rush out to buy more hybrids. “They buy a Chevy Aveo,” says Spinella. “It delivers the same fuel economy as a Prius, but at half the price.”

Consumer interest might revive if the cost of hybrids goes down substantially – or the cost of fuel goes up and stays up for a long period of time, Spinella believes. Until then, however, the hybrid market is unlikely to come out of the deep freeze, a reality that even Ford had to finally acknowledge.

But despite all these drawbacks, hybrids are at least better for the environment than say—.. a Hummer, right? Nope.

Spinella spent two years on the most comprehensive study to date – dubbed “Dust to Dust” – collecting data on the energy necessary to plan, build, sell, drive and dispose of a car from the initial conception to scrappage. He even included in the study such minutia as plant-to-dealer fuel costs of each vehicle, employee driving distances, and electricity usage per pound of material. All this data was then boiled down to an “energy cost per mile” figure for each car (see here and here).

Comparing this data, the study concludes that overall hybrids cost more in terms of overall energy consumed than comparable non-hybrid vehicles. But even more surprising, smaller hybrids’ energy costs are greater than many large, non-hybrid SUVs.

For instance, the dust-to-dust energy cost of the bunny-sized Honda Civic hybrid is $3.238 per mile. This is quite a bit more than the $1.949 per mile that the elephantine Hummer costs. The energy cots of SUVs such as the Tahoe, Escalade, and Navigator are similarly far less than the Civic hybrid.

As for Ford cars, a Ford Escape hybrid costs $3.2 per mile – about a third more than the regular Escape. But on the whole, ironically enough, the dust-to-dust costs of many of the Ford non-hybrids – Fusion, Milan, Zephyr – are not only lower than comparable Japanese hybrids – Prius, Accord – but also non-hybrids – Seville, Civic.

Spinella’s finding that a Hummer on the whole consumes less energy than a hybrid than even some smaller hybrids and non-hybrids has infuriated environmentalists. And on its face it does seem implausible that a gas-guzzling monster like a Hummer that employs several times more raw material than a little Prius’ could be so much less energy-intensive. But by and large the dust-to-dust energy costs in Spinella’s study correlate with the fanciness of the car – not its size or fuel economy – with the Rolls Royces and Bentleys consuming gobs of energy and Mazda 3s, Saturns and Taurus consuming relatively minuscule amounts.

As for Hummers, Spinella explains, the life of these cars averaged across various models is over 300,000 miles. By contrast, Prius’ life – according to Toyota’s own numbers – is 100,000 miles. Furthermore, Hummer is a far less sophisticated vehicle. Its engine obviously does not have an electric and gas component as a hybrid’s does so it takes much less time and energy to manufacture. What’s more, its main raw ingredient is low-cost steel, not the exotic light-weights that are exceedingly difficult to make – and dispose. But the biggest reason why a Hummer’s energy use is so low is that it shares many components with other vehicles and therefore its design and development energy costs are spread across many cars.

It is not possible to do this with a specialty product like hybrid. All in all, Spinella insists, the energy costs of disposing a Hummer are 60 percent less than an average hybrid’s and its design and development costs are 80 percent less.

One of the most perverse things about U.S. consumers buying hybrids is that while this might reduce air pollution in their own cities, they increase pollution – and energy consumption – in Japan and other Asian countries where these cars are predominantly manufactured. “In effect, they are exporting pollution and energy consumption,” Spinella says.

But while the environment has dodged Ford’s hybrid foray, Toyota has shown no planetary concerns. It is going full throttle ahead with its plan of putting one million hybrids on the road by the end of the decade. Nor is there much hope that it will back-off in the near future given that it has already sunk $2 billion just in hybrid-related research and development, Spinella points out. Ironically Ford and some of the other car makers’ exit from the hybrid segment means that Toyota will be able to consolidate its domination in it even more.

Thus the only hope of prodding Toyota to get out of the hybrid business would be if its customers jumped off the Prius bandwagon and embraced non-hybrids – even Hummers – instead.

Now here’s a catchy slogan for the next Save the Earth campaign: Have you hugged a Hummer today?

Shikha Dalmia is a senior policy analyst at Reason Foundation. An archive of her work is here and Reason’s environment research and commentary is here.

The post Have You Hugged a Hummer Today? appeared first on Reason Foundation.

In recent years, the use of hydrogen as a fuel for cars has become an increasingly popular idea. Many influential people endorse the idea as an important milestone on the road to U.S. energy independence. Others support it because they see hydrogen as the ultimate clean fuel to help the environment. But can the mass conversion of vehicles to hydrogen power significantly improve the environment? And given the high cost of building the infrastructure necessary to transport and distribute hydrogen, would it be worth it? This study sets out to answer these very questions.

When a vehicle’s engine burns gasoline, carbon dioxide (CO2) is produced in the exhaust gases that then enter the air around the car. Proponents of using hydrogen to power automobiles generally point out that a hydrogen-fueled car produces only water in its exhaust, and no CO2. While this is true, it is an incomplete picture. This study, unlike many others, opens the aperture in which CO2 emissions are measured, to include not only the release caused by vehicles, but the emissions caused by the manufacture, transport and distribution of both hydrogen and gasoline, to foster a more accurate comparison of their relative benefits. Using various hydrogen production methods depicted by 11 case studies, this study measures hydrogen fuel cells and liquid fuel cells against a base case of the modern, internal combustion engine, gasoline-powered vehicle to assess which results in the least CO2 emissions and the relative value of converting vehicles to hydrogen power.

We performed a simulation for each case study based on a 300-mile drive for the candidate vehicle. Results, including raw materials, energy requirements, and atmospheric CO2 production, were calculated based on the resources required to generate the fuel necessary to drive the car 300 miles. To standardize for the various types of power generation infrastructures, we used the state of California as the geographic area for this study. Additionally, hydrogen-powered vehicles require a far heavier weight to achieve the same horsepower performance of gasoline-powered vehicles. We therefore did not normalize for relative vehicle performance; as a result, the fuel cell vehicles used in this study will not perform as well as the gasoline-powered one.

We found that while hydrogen fuel cell cars powered by hydrogen manufactured using hydroelectricity resulted in the least CO2 emissions, this case was rendered impractical due to the limited amount of electricity generated by a hydroelectric source. In California, hydrogen would most likely be manufactured through electrolysis produced via natural gas, which resulted in the highest CO2 emissions. We found the decline in emissions to be barely discernible, leading to the conclusion that the reduction in CO2 emissions gained by using hydrogen-powered vehicles is not significant.

To assess the significance of the impact of converting to hydrogen-powered cars we projected the effect on CO2 emissions if all cars in California had converted to hydrogen in 1981. We found the decline in emissions to be barely discernable and probably not even measurable, leading to the conclusion that the reduction in CO2 emissions gained by using hydrogen-powered vehicles is not significant.

The most compelling reason for the inability of hydrogen-powered vehicles to significantly affect CO2 emissions is that total vehicular emissions pale in comparison to the total CO2 emitted statewide from all hydrocarbon (fossil fuel) combustion. In fact, this study found that if vehicular emissions were entirely eliminated, total emissions statewide would fall by 10 percent or less. This fact, combined with the CO2 emissions generated by hydrogen manufacture and distribution, calls into question the value of converting the present gasoline-powered vehicle into the expensive hydrogen-powered vehicle considered by so many to be the answer to today’s global warming problems.

Our study concludes that converting vehicles to run on hydrogen would have at best a marginal effect on CO2 emissions. In fact, if hydrogen-powered vehicles are made to have the same performance characteristics as gasoline-powered ones, the use of hydrogen may actually increase atmospheric CO2 emissions.

There are far simpler, less expensive, and more effective ways to reduce carbon dioxide emissions. People and businesses already have strong incentives to conserve energy, and competitive electricity markets and real-time pricing of electricity will strengthen those incentives. Gasoline cars are increasingly efficient and targeting gross polluting vehicles on the road today will greatly reduce auto emissions. None of these alternatives requires constructing a hydrogen generation and distribution infrastructure, a massive and expensive undertaking.

The post Fueling America appeared first on Reason Foundation.

Politicians should think seriously about the consequences of this proposal.

Carpool lanes – formally called high occupancy vehicle, or HOV, lanes – were put in place to ease traffic congestion and to improve the efficiency of our freeways. So the first problem with allowing hybrids into HOV lanes is that these additional vehicles will soon use up the carpool lanes’ capacity, making them nearly as congested as the regular lanes.

Proponents, such as Jeff Morales, former director of Caltrans, try to reassure us by noting that over the next 15 years, hybrids will make up, at most, 2% of the vehicle fleet.

But 2% of the 29 million vehicles already on our roads would be 580,000 vehicles. If even half of those hybrids tried to use the HOV lanes at rush hour, the lanes would be swamped. It is predicted by the Bay Area’s Metropolitan Transportation Commission that by 2010, seven of the region’s 18 HOV corridors will be at capacity, and by 2025 nearly all of them will be congested.

It is true that the measure pending before the Legislature would expire in 2008, but by that time driving in the carpool lane will have become an entitlement for the 50,000 to 70,000 hybrid owners in the state. It probably would prove difficult to prevent the law’s extension. The larger the entitled group becomes, the harder it will be to alter the law.

Also, letting in thousands of hybrid cars probably would create an enforcement nightmare for the California Highway Patrol. Today, a Prius is instantly recognizable as a hybrid. But the hybrids due out in 2005, 2006 and 2007 model years will be identical in appearance to ordinary cars; it’s just an engine option, not a different body style. They would be identified as authorized HOV-lane users only by a small decal.

Once drivers of the nonhybrid versions of these same models catch on, many of them will take their chances in the HOV lanes.

And the implications go far beyond congestion in the HOV lanes and law enforcement. In their original incarnation, HOV lanes were intended to be used for express bus service. Adding congestion to the HOV lanes would destroy the attraction of using regional express bus service – a way to move people quickly and more affordably than building rail lines or other forms of mass transit.

Clogging up the HOV lanes also precludes the possibility of turning some of them into high-occupancy/toll lanes, where single-occupant vehicles are allowed to use the carpool lane if they are willing to pay a toll. Higher tolls are charged electronically during rush hours to manage traffic flow, as has been done for years in San Diego and Orange County. Plans are underway in a dozen other metro areas around the nation for similar toll lanes.

These high-occupancy/toll lanes do three very good things.

First, they give all drivers the option of paying for a faster trip when it’s really important to them.

Second, they add only a limited number of cars to the lane, controlled by the size of the toll. That gives express bus service an uncongested guideway – offering a real speed advantage over freeway driving.

And third, they generate toll revenue to help pay for expanding the HOV/toll system.

When I was a boy, my father taught me the importance of always selecting the right tool for the job. Carpool lanes are a tool for managing traffic and making our freeways flow better. There are many ways public policy can encourage less-polluting and more energy-efficient vehicles. But trying to make HOV lanes solve energy and emissions problems is using the wrong tool for the job.

Robert W. Poole, Jr. is Director of Transportation Studies and founder of Reason Foundation.

The post Hybrids in Carpool Lanes: A Nonstarter appeared first on Reason Foundation.

The hydrogen vehicle/fueling infrastructure chicken-and-egg problem is not the first or only time such an issue of complementary technologies has occurred. Take the example of the major transportation revolution of the 20th century – the internal combustion-powered automobile. Why did Henry Ford and his competitors even consider marketing cars, given that there were no filling stations? Yet by the 1930s an extensive retail filling station industry co-evolved with a thriving automobile industry and we (well, most of us) have never looked back. But how did we get there without government subsidies to build gasoline filling stations?

Before the invention of the automobile and its first commercial sales in the early 20th century, the predominant commercial product from crude oil was kerosene, not gasoline. Kerosene provided primarily cooking fuel and lamp fuel. Consumers bought kerosene at their local dry goods store or general store. Oil companies provided wholesale distribution to these stores. Then, in the early 20th century, the automobile began to create a demand for gasoline (which, interestingly, had been perceived as a waste product in the pre-car era). But early automobiles were not very comfortable and not many folks viewed car journeys as a pleasant way to travel, so gasoline demand increased slowly.

Where do you think those “early adopters” could buy gas? You bet – that same dry goods store! The wholesale distribution channel worked for gasoline much as it had for kerosene.

But the car was not a stagnant technology. Automobile entrepreneurs competed to offer consumers a more comfortable ride, and after World War I and with rising incomes in the 1920s, the market for automobiles grew. More people wanted to drive further, and the technology made it both possible and pleasant.

But the technology was not perfect. Breakdowns and required maintenance created profit opportunities for the mechanically talented – they opened service stations (think, for example, of the tragic cuckolded husband in The Great Gatsby). That created an alternative distribution channel for gasoline, a distribution channel that created profits for service station owners while providing convenience for customers – the full-service filling station.

Note that the early service and filling stations were usually independents – they had wholesale contracts with oil producers. Only once automobile ownership and increased vehicle miles traveled hit a critical mass later in the 1920s did the oil companies start operating retail filling stations, complete with attendants in spiffy uniforms. The fully vertically integrated oil company, from exploration and drilling to wholesale to retail filling station, was therefore a fairly late development, following the increased customer demand for automobiles.

What does the internal combustion engine automobile/gasoline filling station experience tell us about the development of hydrogen fueling infrastructure? I would not expect the development to mirror gasoline development, nor should we force it to. But some simple insights apply.

• 1. Fueling is likely to follow “early adopter” hydrogen vehicle consumers. We owe a debt of gratitude to early technology adopters, but they do not do it out of altruism – they like being the first ones on the block to have those newfangled fuel cell vehicles, and they feel good about clean technology. As demand for fuel cell vehicles moves beyond early adopters, the demand for fueling will follow.
• 2. Fueling will be decentralized and local, and will exploit existing distribution channels. Both because of the evolution of demand from early adopters and because of the technology and danger of generating and transporting hydrogen, local inventories of natural gas and/or water to provide fuel make the most sense. Hydrogen’s volatility also makes locking in to a fueling technology by subsidizing it extremely risky. In my opinion, those who have both the economic interest and the space for this to make economic sense are automobile dealers. For example, if Honda and Toyota sell fuel cell vehicles and provide their dealers with a profit opportunity to sell hydrogen fuel, that would help them sell more fuel cell vehicles. The oil companies do not have an existing distribution channel to take advantage of like they did in the kerosene/gasoline markets, so they do not really have a leg up relative to automobile manufacturers.
• 3. Fueling infrastructure will evolve as the vehicles, and the demand for them, do. One major lesson from the gasoline experience is that entrepreneurs who see profit opportunities will cause the evolution of distribution channels, and will do so in ways that benefit consumers.

Forcing hydrogen fueling to replicate the existing gasoline distribution infrastructure by subsidizing the construction of a fueling network is a very static approach to an incredibly, beautifully dynamic co-evolution of technologies and consumer preferences. Such subsidies are also likely to undercut the creativity of entrepreneurs who will seek to find novel and convenient ways to provide hydrogen fueling to consumers who want it, and to profit from it.

Lynne Kiesling is director of economic policy at Reason Foundation and senior lecturer in economics at Northwestern University.

This is part 3 of Reason’s 5-part Let the Hydrogen Economy Evolve series:

Part 1: The Science of Hydrogen Fuel Cells
Part 2: The Economics of Hydrogen: Innovation in Mature and New Technologies
Part 3: Are Hydrogen Fueling Station Subsidies Necessary?
Part 4: Hydrogen-Powered Buildings
Part 5: Can the Government Pick Technology Winners? Can Anyone?

The post Are Hydrogen Fueling Station Subsidies Necessary? appeared first on Reason Foundation.

High natural gas prices are also likely to do two things: induce companies to explore and drill for more natural gas deposits, and induce researchers to work on finding alternative ways to generate hydrogen.

The economics of hydrogen as a fuel derive from the comparison with our existing hydrocarbon fuel framework. Once you take into account the cost of releasing hydrogen from molecules, the use of hydrocarbons to produce hydrogen, the less-than-hoped-for benefits of decreased emissions, the costs of inputs, the much lower energy intensity of hydrogen relative to hydrocarbons, and the costs of transporting hydrocarbons and/or water so they can be processed into hydrogen on-site, it becomes pretty clear that hydrogen is not likely to be ready for economic prime time for a while. Most estimates put commercial fuel cell vehicles at 10-30 years in the future.

Importantly, companies are investing in the research to push that commercial timeframe closer to 10 years. Given those time frames and the risks associated with the research, companies must be investing in anticipation of large future returns.

Of course, this is not the first time in human history that we have experienced an energy transition. From the 18th century move from wood to coal that fueled the industrial revolution to the late-19th century transition from coal toward oil, history abounds with examples of old and new energy technologies evolving simultaneously, created by human striving for better economic and environmental lives.

Take for example the invention of the steam engine during the early industrial revolution. Over six years from 1776 to 1783, James Watt and Matthew Boulton created, built, and marketed the first commercially viable steam engine for uses beyond just pumping water out of mines. However, steam engines did not become the standard power source for industry until the 1840s. Why the 60-year delay in the widespread adoption of a clearly superior technology?

One reason was innovation in the mature power technology – the water wheel. Water wheels had been used for centuries to generate power, but they had some serious shortcomings when compared to steam engines. They were not mobile, the depended on seasonal water levels, and the intensity of their power generation was pretty low. But water wheels had a substantial “installed base”, so there was certainly an issue of switching costs. More importantly, though, water wheel technology kept innovating. Inventors like Victor Poncelet applied their increasing understanding of fluid dynamics to invent curved blades for the wheel, which increased the wheel’s energy generation from a given amount of water and improved its viability as a power source.

Thus early on, the margin between water technology and steam technology was small. Only as steam technology continued to innovate beyond Watt’s and Boulton’s original did it start to replace water wheels. During the 60-year transition, water and steam technologies coexisted and evolved simultaneously, increasing power generation at decreasing cost for decades.

We are in the midst of a similar transition from internal combustion to hydrogen engines. The transition will be an incremental evolution because internal combustion engines continue to innovate, as illustrated by the increasing power and commercial viability of hybrid engines. Hybrid technology will continue to evolve as hydrogen technology evolves, and that’s a good thing. Given the science of generating hydrogen, it is not clear that hydrogen vehicles would be any cleaner than hybrid vehicles, as a recent MIT study found.

So it comes as no surprise that during our current transition toward hydrogen, which has been in progress for at least two decades, we have made simultaneous innovations that make hydrocarbon technologies cleaner, more energy efficient, and better able to deliver the same amount of power with less energy use.

This simultaneous evolution of mature and new technologies is one reason why diversity of technologies, a portfolio of technologies approach, will deliver cleaner power in a dynamically efficient manner. The flexibility to include both hydrogen and other fuels, and to have these alternatives innovate and compete against each other over time, will lead to better long-run fuel solutions and a cleaner environment.

Lynne Kiesling is director of economic policy at Reason Foundation and senior lecturer in economics at Northwestern University.

This is part 2 of Reason’s 5-part Let the Hydrogen Economy Evolve series:

Part 1: The Science of Hydrogen Fuel Cells
Part 2: The Economics of Hydrogen: Innovation in Mature and New Technologies
Part 3: Are Hydrogen Fueling Station Subsidies Necessary?
Part 4: Hydrogen-Powered Buildings
Part 5: Can the Government Pick Technology Winners? Can Anyone?

The post The Economics of Hydrogen: Innovation in Mature and New Technologies appeared first on Reason Foundation.

Would that be money well spent? Or would federal hydrogen research subsidies be a waste of taxpayer money? The answers to those questions depend on several variables, almost all of which are beyond the control of the federal government. Because of the risks associated with such research, both economic and political, federal research subsidy efforts should proceed with caution.

And public opinion on these questions should be grounded in a firm understanding of the science of hydrogen fuel cells, and how they really work. Several recent articles have done a good job of summarizing the challenges in moving toward hydrogen as an energy source, including this Gregg Easterbrook article in The New Republic, and this International Energy Agency white paper entitled “Moving to a Hydrogen Economy: Dreams and Realities.” These analyses highlight some important aspects of hydrogen, and of fuel cell technology, to bear in mind.

1. Pure hydrogen does not exist on Earth. Given existing and foreseeable technology, as well as the fact that pure hydrogen does not exist in isolation on Earth, hydrogen on Earth is an energy medium, not an energy source. Because hydrogen on Earth occurs in molecules that also contain either carbon or oxygen, isolating pure hydrogen involves “reforming” existing hydrocarbon molecules.

2. Isolating hydrogen still requires fossil fuels as inputs. Reformation of hydrogen still means using hydrocarbons such as natural gas as a source of hydrogen, because the primary potential sources of hydrogen on Earth are hydrocarbons and water. Both hydrocarbons and water are in scarce supply. Furthermore, this use of hydrocarbons to isolate hydrogen offsets some of the optimistic predictions about the emissions reductions we could expect from using hydrogen fuel cells.

3. Converting either water or hydrocarbons to hydrogen requires the expenditure of energy. Breaking hydrogen free from hydrocarbon molecules requires an expenditure of energy. Furthermore, depending on the process used, the reaction could actually use more energy than the electrolysis process itself actually produces. In other words, to figure out how much energy has actually been created, we have to subtract out the energy expended in getting to the point where we can separate out the hydrogens in the first place.

The most developed form of hydrogen isolation through electrolysis requires electricity to separate the hydrogens from the carbons in the hydrocarbon molecule, and within that reaction the net energy produced is positive. However, the electrolysis reaction also uses a catalyst to increase the energy release in the process. The catalyst typically used in hydrogen electrolysis is platinum. Mining and processing platinum is incredibly energy intensive, using fossil fuels such as coal to drive machinery that makes platinum available for the electrolysis.

Given the existing electrolysis technologies and platinum mining technologies, the platinum catalyst has to continue to work in the fuel cell without being damaged for almost three decades to get positive energy payback from the fuel cell. Put another way, it takes almost thirty years for the energy production of the fuel cell to equal the amount of energy that went into manufacturing the fuel cell and making the fuel available to it for the electrolysis reaction. So in energy terms, to pay for the fuel cell and start getting a net benefit from it, it has to run for at least three decades.

Furthermore, platinum is a very expensive metal, and its expense lengthens the financial payback period of the fuel cell as well as the energy payback period. Research on other catalysts is crucial for making fuel cells commercially viable, and private companies are actively engaged in undertaking such research.

4. Hydrogen is less intense than fossil fuels. For a given input, hydrogen production and fuel cell technologies generate less energy output (measured in BTUs) than traditional hydrocarbons. Recent estimates by the International Energy Agency suggest that replacing all of the transportation fuel currently used in France with hydrogen would require generating four times the electricity, which would in turn require either covering 6% of France’s surface with wind turbines, or 1% of it with photovoltaic solar panels.

Thus replacing fossil fuel systems with hydrogen fuel cell systems will mean an increase in the space required for the production, transport, and use of hydrogen relative to an equivalent amount of potential energy from hydrocarbons. This fact mirrors the energy intensity issue with solar power, in which to generate a given amount of energy, a system of photovoltaic panels would have to cover a much, much larger surface area than generating the same amount of energy using hydrocarbons. Again, though, note that private companies are actively engaged in and investing in research to make hydrogen production, transportation and storage more compact.

5. Handling hydrogen can be dangerous. Remember the Hindenberg. Pure hydrogen is unstable and oxidizes easily, which makes it extremely combustible. Thus long-distance transport of hydrogen, say, to fill hydrogen fueling stations, is potentially dangerous.

Lynne Kiesling is director of economic policy at Reason Foundation and senior lecturer in economics at Northwestern University.

This is part 1 of Reason’s 5-part Let the Hydrogen Economy Evolve series:

Part 1: The Science of Hydrogen Fuel Cells
Part 2: The Economics of Hydrogen: Innovation in Mature and New Technologies
Part 3: Are Hydrogen Fueling Station Subsidies Necessary?
Part 4: Hydrogen-Powered Buildings
Part 5: Can the Government Pick Technology Winners? Can Anyone?

The post The Science of Hydrogen Fuel Cells appeared first on Reason Foundation.

Air quality has been improving in Los Angeles since 1966 in spite of brisk population growth (and much faster growth of the vehicle fleet and vehicle miles traveled). Yet, air quality standards have not yet been met; new proposals to meet Clean Air Act standards include mandated electric vehicle (EV) sales in California. Proponents have suggested that the mandate also serves long-term economic growth objectives for the region.

A survey of the literature reveals substantial evidence that the EV mandate is not costeffective; the air quality goals can be met at substantially lower cost. Resources for the Future, for example, shows that in terms of $/ton of Volatile Organic Compounds (VOC) reduced, reformulated gasoline or emissions-based vehicle registration fees are twenty times as cost-effective as EVs. In addition, there are many reasons to expect that the macroeconomic consequences of the EV mandate will be depressive rather than stimulative.

EVs will be expensive, yet short on what consumers prize most: range and power (witness the recent surge of “utility” vehicle sales). Massive subsidies and/or cost-shifts would be required that would have depressive effects on the California economy (including higher energy costs statewide). Taxpayers and/or utility ratepayers would also have to pay for new refueling infrastructure. In addition, it is not clear that EV maintenance costs will be below that of conventional autos. If consumers avoid EVs for any of these reasons, and keep their old cars longer, air quality gains will be lost.

The post The Case Against Electric Vehicle Mandates in California appeared first on Reason Foundation.