What Should the US Energy Strategy Be? Consider Autos


The world is in the middle of a protracted energy transition. We know that dependency on oil must be lessened, but beyond that, it is not clear where we will end up. We must first decide among goals. Consider the two most-discussed goals:

  • reducing dependency on foreign oil, and
  • combating global warming by reducing CO2 emissions.

In what follows, I consider how each of these goals plays out as it applies to US auto choices.

Reduce Dependency on Foreign Oil

According to the US Energy Information Administration, the US imported 61% of the crude oil it used in 2011. That is down slightly from 63% in 2007, but is still very high. Important sources of the crude included the Middle East, Nigeria and Venezuela, not exactly politically stable regions/countries. So if the aim is to reduce this dependency via auto choices, we should opt for electric and natural gas powered vehicles. Since the vast majority of US cars will remain gasoline-powered, the Federal government should get out in front of the states with increased MPG mandates.

Reduce CO2 Emissions

If reducing CO2 emissions to reduce global warming is the goal, car selection is a bit more complex. Let’s start with the fuels. As mentioned in a recent piece, the CO2 coefficients (tonnes CO2 emissions per unit of energy – terajoules) for gasoline and natural gas are 18.9 and 15.3, respectively. Getting that number for electricity is a bit more complex. Why?

Let’s start with emission data and work through to what it means for auto choice. We focus on gasoline, natural gas, and electric cars. According to the IEA the emission coefficients for gasoline and natural gas are 18.9 and 15.3, respectively. These coefficients measure the tons of CO2 emissions per unit of energy (terajoules) generated.

Getting the coefficient for electricity is not is straightforward because it has to be made using other fuels. For example, electricity made using nuclear energy has no CO2 emissions. The fuels used to make electricity globally are presented in Table 1 alone with the emission coefficients of each fuel. From the percent share of each fuels and its coefficient, we can calculate the average coefficient for electricity as 17.1.

Table 1. – Emission Coefficients for Electricity

Source: IEA, author’s calculations

However, as I have documented in a previous piece, there is a 62% energy loss when electricity is made. That means the emission coefficient jumps by 62%. On top of that, there is an electricity loss of 19% in charging and using auto batteries[1]. That means that altogether, emission coefficient of electricity increases by 181% to 31.

Consider next the relative efficiencies of gasoline, natural gas and electric engines. The data on engines of each type are given for miles per gallon and equivalents (MPGe) in Table 2. As can be seen, the electric engine is far more efficient than gasoline or natural gas engines. These differences can be used as the final adjustment in the emission coefficients. More specifically, the Adjusted Emission Coefficient for electricity is reduced by (42/73) = 57.5%.

Table 2. – CO2 Emission Coefficients for Vehicles

Source: IEA, author’s calculations

So putting things altogether, it appears that the natural gas vehicle has the lowest emissions followed by the electric-powered vehicle. Note that for the gasoline and natural gas vehicles, the emissions are the result of fuel combustion while the cars are being driven. In contrast, the electricity emissions occur when the electricity is being generated. There are no emissions when the electricity is being used.

Storage Issues

Autos use relatively inexpensive metal tanks to store natural gas and gasoline. Electricity storage is a very different matter. Hoped-for advances in battery technology have not occurred. In an earlier piece I reported that the battery used on the Rolls-Royce 102EX weighs 1,400 pounds and under ‘favorable conditions’, the car will travel 125 miles before needing a recharge that takes eight hours.” And even the smaller batteries used on popular hybrids cost $10,000 and have useful lives of ten years or less. Part of battery costs are covered by generous tax credits not justified on emission reduction grounds.

The US is hardly unique in providing generous credits for electric vehicles. I quote from a recent article on a new French subsidy: “France’s government plans to save the fortunes of the flagging French auto industry by persuading it to produce cars that cannot be sold on commercial terms in any known market by increasing the subsidy on every electric car produced from €5000 to €7000 and on hybrids from €2000 to €4000.”


We are in the middle of a global energy transition. Where it will lead is not clear. If all electricity was generated from nuclear, wind and solar, things would be different – no emissions. But as indicated in Table 1, almost half of all electricity is produced by burning coal. And this won’t change soon. In fact, with the Fukushima disaster, nuclear production of electricity will probably fall. History tells us there is much money to be made and lost as this transition continues.

[1] Battery and battery charger efficiency are assumed to total 81% (roughly 90% each) based in part on estimates from published studies (Chae et. al., 2011; Gautam et. al., 2011).


The content above was saved on the old Morss Global Finance website, just in case anyone was looking for it (with the help of archive.org):
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