Navigant Research Blog

On Clean Transportation Policy, Less Is Not More

Dave Hurst — January 9, 2012

Political developments in the last couple of months of 2011 highlighted the quagmire into which U.S. energy policy has sunk.  In November the Obama Administration postponed a decision on a 1,700 mile pipeline to deliver tar sands oil from Canada to refineries in Texas called the Keystone XL until 2013 (the GOP-led Congress subsequently moved this timetable up to February of this year, to ensure the decision comes before the general election).  Shortly after that both Enbridge and TransCanada floated alternatives and partial solutions designed to reduce the bottlenecks that the Keystone XL pipeline was supposed to solve.  At almost the same time in Danville, NY, the Department of Environmental Conservation held public hearings on permitting hydraulic fracturing for natural gas in New York. 

While each of these events had their own specific issues and implications, all could have an impact on motorists.  The Keystone XL pipeline was designed specifically to add pipeline capacity to utilize excess oil refining capacity in Texas.  While this will not have an impact in the short-term, by 2015 the current pipelines will be at capacity and fuel costs will increase.  The administration’s move to delay approval of this pipeline is seen as either an environmental win or short-sighted instance of kicking the can down the road, depending on which side of the issue you sit on.

Although New York’s fracking debate is a state-specific issue, this is more a representation of the issues facing the natural gas vehicle industry.  Between the push-back on hydraulic fracturing and the now all-but-defunct NATGAS Act, it seems clear that while politicians often express support for natural gas vehicles, that support is largely hollow.  While the NGV market may not need political support to survive, what’s more disturbing is the lack of national guidance at the federal level on new oil and gas extraction technologies, which means that the effort to monitor and improve fracking safety will likely be left to states and local governments.  This may in fact be the single greatest negative threat to the NGV market in the coming years.

Meanwhile, a bill has been introduced in Congress to end the Advanced Technology Vehicle Manufacturing Loan (ATVM) program.  This will inevitably be linked to the loans offered to Solyndra, the solar cell manufacturer that collapsed last fall.

All of these developments demonstrate that when it comes to clean transportation, U.S. policy is a mess.  The ATVM loans and the postponement of Keystone XL both have the potential to change the way Americans drive, through technology and higher petroleum costs.  This, in combination with increasing availability of public transit, is the strategy that the Obama Administration appears to have fallen into – a sound, long-term, high-cost strategy that clearly isn’t supported on either side of the aisle.  Meanwhile, the market for NGVs struggles toward viability.

The one-word answer to the question of U.S. policy on clean transportation would be simply “Less” – less oil, less technology, less alternative fuels.  Unfortunately, “less” is not a strategy, and neither the Obama administration nor Congress seems willing or able to come up with one.

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