Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

Acknowledgments

This report to Congress was prepared by the U.S. Department of Transportation 

(DOT) Center for Climate Change and Environmental Forecasting, supported by 

a consultant team led by Cambridge Systematics, Inc. 

Development of the report was guided by the executive level steering committee 

and the staff level core team of the DOT Center for Climate Change and 

Environmental Forecasting. Contributing authors and editors from the Center 

includes: Julie Abraham, Jan Brecht-Clark, Richard Corley, John Davies, Brigid 

Decoursey, M.J. Fiocco, Aimee Fisher, Mohan Gupta, Carol Hammel-Smith, Tina 

Hodges, Michael Johnsen, Mark Johnson, Robert Kafalenos, Linda Lawson, Kelly 

Leone, April Marchese, Katherine Mattice, Lourdes Maurice, Chris McMahon, 

Wendy Messenger, Camille Mittelholtz, Alexandra Newcomer, Beth Osborne, 

Robert Ritter, Arthur Rypinski, Michael Savonis, Tim Schmidt, Helen Serassio, 

A.J. Singletary, JoAnna Smith, Robert Smith, Alan Strasser, Kathryn Thomson, 

Robert Tuccillo, Diane Turchetta, and David Valenstein. Tina Hodges of the 

Federal Transit Administration (FTA) served as the project manager for the 

Center and as a primary author and editor. M.J. Fiocco of the Research and 

Innovative Technology Administration (RITA) served as the contracting officer’s 

technical representative. 

The Cambridge Systematics contract manager was Joanne Potter. The primary 

report authors from the consultant team were Christopher Porter, Joanne Potter, 

and Robert Hyman of Cambridge Systematics; and Rick Baker and Richard 

Billings of Eastern Research Group, Inc. (ERG). Additional contributing authors 

included Lance Grenzeback, David Jackson, Gill Hicks, Nathan Higgins, Tracy 

Clymer, and William Cowart of Cambridge Systematics; Beverly Sauer, Amy 

Stillings, Sarah Cashman, Ian Todreas, Alan Stanard, Scott Fincher, Michael 

Sabisch, and Sam Milton of ERG; James Winebrake and James Corbett of Energy 

and Environmental Research Associates, LLC; Dr. Ian Waitz of the Massachusetts 

Institute of Technology; Dr. Christopher Frey of North Carolina State University; 

Cindy Burbank of Parsons Brinckerhoff; and James Shrouds.

Additional staff of the U.S. DOT Administrations as well as the U.S. Department 

of Energy and the U.S. Environmental Protection Agency also provided input. 

The team is grateful for the assistance of staff from the Electric Power Research 

Institute’s Transportation and Environment Programs, who provided valuable 

input into the material on electricity generation and electric vehicle efficiency; 

and for Tom Reinhart of Southwest Research Institute, who provided valuable 

input into the material on heavy-duty trucks.

Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

About the Center for Climate 

Change and Environmental 

Forecasting

The U.S Department of Transportation (DOT) Center for Climate Change and 

Environmental Forecasting is the focal point in DOT of technical expertise on 

transportation and climate change. Through strategic research, policy analysis, 

partnerships, and outreach, the Center creates comprehensive and multimodal 

approaches to reduce transportation-related greenhouse gases and to mitigate 

the effects of global climate change on the transportation network. The Center 

was formally authorized as the Office of Climate Change and Environment in the 

Energy Independence and Security Act of 2007.

Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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Table of Contents

Executive Summary.................................................................................................... 1

Introduction ........................................................................................................ 1

Greenhouse Gas Emissions and Global Climate Change ................................ 2

U.S. Transportation Greenhouse Gas Emissions.............................................. 2

Strategies to Reduce Transportation Greenhouse Gas Emissions................... 3

Federal Policy Options to Achieve Key Strategies ........................................... 8

Conclusion......................................................................................................... 10

1.0 Introduction.....................................................................................................1-1

2.0 Climate Change, Greenhouse Gas Emissions, and Transportation .........2-1

2.1 Climate Change and Greenhouse Gases ...............................................2-1

2.2 Transportation Greenhouse Gas Emissions..........................................2-3

2.3 Life-Cycle Transportation Greenhouse Gas Emissions...................... 2-22

2.4 Projected Growth of Transportation Greenhouse Gas Emissions..... 2-26

3.0 Greenhouse Gas Reduction Strategies and Impacts ..................................3-1

3.1 Strategies..................................................................................................3-1

3.2 Analysis Methods and Uncertainties.....................................................3-2

3.3 Strategy: Introduce Low-Carbon Fuels ................................................3-5

3.4 Strategy: Increase Vehicle Fuel Efficiency............................................3-8

3.5 Strategy: Improve Transportation System Efficiency........................ 3-12

3.6 Strategy: Reduce Carbon-Intensive Travel Activity.......................... 3-17

3.7 Strategy: Price Carbon ......................................................................... 3-21

3.8 Key Interactions .................................................................................... 3-22

3.9 Co-benefits............................................................................................. 3-25

3.10 Infrastructure Finance........................................................................... 3-28

3.11 Summary of Findings ........................................................................... 3-31

4.0 Cross-Cutting Strategies ................................................................................4-1

4.1 Transportation Planning and Investment.............................................4-1

4.2 Price Carbon.......................................................................................... 4-12

5.0 Policy Options.................................................................................................5-1

6.0 Conclusion.......................................................................................................6-1

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List of Tables

Table 2.1 U.S. Transportation Sector Greenhouse Gas Emissions, 2006............2-8

Table 2.2 Life-Cycle GHG Estimates for Various Transportation Modes........ 2-25

Table 2.3 GHG Emission Projections By Mode (mmt CO2e) 2007 to 2030 ....... 2-28

Table 3.1 Potential Petroleum Savings in 2030 .................................................. 3-26

Table 3.2 Relative Life-Cycle Emissions of Alternative Fuels (Percent 

Change versus Conventional Gasoline)............................................. 3-28

Table 3.3 Findings by Strategy: Carbon Pricing and Low-Carbon Fuels........ 3-33

Table 3.4 Findings by Strategy: Vehicle Fuel Efficiency .................................. 3-34

Table 3.5 Findings by Strategy: System Efficiency ........................................... 3-35

Table 3.6 Findings by Strategy: Reduce Carbon-Intensive Travel Activity.... 3-36

Table 4.1 Cap and Trade/Carbon Tax Price Impacts........................................ 4-18

Table 5.1 Crosswalk between GHG Reduction Strategies and Categories 

of Policy Options....................................................................................5-2

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List of Figures

Figure 2.1 U.S. Transportation Greenhouse Gas Emissions by Gas, CO2e 

2006........................................................................................................2-5

Figure 2.2 U.S. Greenhouse Gas Emissions by End Use Economic Sector, 

million metric tons CO2 equivalent 2006............................................2-6

Figure 2.3 U.S. Greenhouse Gas Emissions by Transportation Mode 2006.......2-7

Figure 2.4 Vehicle Miles Traveled by Light Duty Vehicles 1975 to 2008 ......... 2-10

Figure 2.5 Sales-Weighted Fuel Economy of Light Duty Vehicles................... 2-10

Figure 2.6 Sales of New Passenger Cars and Light Duty Trucks ..................... 2-11

Figure 2.7 GHG Emissions from U.S. Freight Sources ...................................... 2-12

Figure 2.8 Trends in Passenger Activity and Fuel Efficiency for Aircraft ....... 2-13

Figure 2.9 Rail Trends: a) Greenhouse Gas Emissions, and b) Revenue 

Freight Ton-Miles and Fuel Efficiency 1990 to 2006 ........................ 2-15

Figure 2.10 Marine Trends: a) Greenhouse Gas Emissions, and b) TonMiles of Freight 1990 to 2006 ............................................................. 2-16

Figure 2.11 GHG Emissions per Passenger-Mile Traveled (PMT) by 

Passenger Transportation Mode 2006............................................... 2-19

Figure 2.12 GHG Emissions per Freight Ton-Mile by Freight 

Transportation Mode 2006 ................................................................ 2-20

Figure 2.13 HFC Emissions from Mobile Air Conditioners and 

Refrigerated Transport ...................................................................... 2-22

Figure 2.14 Direct GHG Emissions Plus Fuel and Vehicle Cycle GHG 

Emissions ............................................................................................ 2-24

Figure 2.15 Historic and Projected Transportation GHG Emissions (mmt 

CO2e) 1990 to 2030.............................................................................. 2-27

Figure 3.1 Projected Future GHG Benefits of Light-Duty Vehicle/Fuel 

Technologies Compared to Baseline Conventional Gasoline 

Vehicle...................................................................................................3-9

Figure 4.1 Impacts of Cap and Trade on GHG Emissions by Sector................ 4-21

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Executive Summary

INTRODUCTION

This study evaluates potentially viable strategies to reduce transportation 

greenhouse gas (GHG) emissions. The study was mandated by the Energy 

Independence and Security Act (P.L. 110-140, December 2007). The Act directed 

the U.S. Department of Transportation (DOT), in coordination with the U.S. 

Environmental Protection Agency (EPA) and consultation with the U.S. Global 

Change Research Program (USGCRP), to conduct a study of the impact of the 

Nation’s transportation system on climate change and strategies to mitigate the 

effects of climate change by reducing GHG emissions from transportation. This

study also examines the potential impact of these strategies on air quality, 

petroleum savings, transportation goals, costs, and other factors. Each GHG 

reduction strategy may have various positive impacts (including co-benefits) or 

negative impacts on these factors. Potential tradeoffs and interdependencies 

when reducing GHG emissions will need to be considered in order to develop 

balanced solutions.

This study does not take a position as to which strategy, or collection of 

strategies, should be adopted to accomplish the Nation’s clean energy and GHG 

reduction goals. Rather, the study attempts to objectively examine numerous 

proposed strategies and assess their potential to reduce transportation GHG 

emissions. The assessments are based on published scientific literature, current 

policy studies, and best professional estimates. Each strategy is assessed relative 

to projections of future transportation GHG emissions based on U.S. Energy 

Information Administration Annual Energy Outlook (AEO) estimates.

The study is presented in two parts: Volumes 1 and 2. Volume 1: Synthesis 

Report provides an overview of the study’s findings and discusses policy options 

that Congress may wish to consider to reduce transportation GHG emissions. 

Volume 2: Technical Report provides the technical details of the assessment. 
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GREENHOUSE GAS EMISSIONS AND GLOBAL 

CLIMATE CHANGE1

The Intergovernmental Panel on Climate Change (IPCC) estimates that in the 

absence of additional climate policies to reduce GHG emissions, baseline global 

GHG emissions from human sources will increase between 25 percent and 

90 percent between 2000 and 2030, with CO2 emissions from energy use growing 

between 40 and 110 percent over the same period. The IPCC projects that global 

temperatures will rise between 2°F to 11.5°F by 2100, and global sea level will 

rise between 7 to 23 inches. More recent estimates that include the effects of 

polar ice sheet melting suggest a possible 3 to 4 foot sea level rise. According to 

the Intergovernmental Panel, global GHG emissions must be reduced to 50 to 

85 percent below year 2000 levels by 2050 to limit warming to 2.0°C to 2.4°C 

(3.6°F to 4.3°F). To reach this target, GHG emissions from all sectors must be 

reduced through a multi-generational effort.

U.S. TRANSPORTATION GREENHOUSE GAS 

EMISSIONS2

The primary greenhouse gases produced by the transportation sector are carbon 

dioxide (CO2), methane (CH4), nitrous oxide (N2O), and hydrofluorocarbons 

(HFC).3

Transportation GHG emissions account for 29 percent of total U.S. GHG 

emissions, and over 5 percent of global GHG emissions.

 Carbon dioxide, a product of fossil fuel combustion, accounts for 95 

percent of transportation GHG emissions in the United States.

4 Except otherwise 

noted, the estimates in this report account for “tailpipe” emissions from burning 

fossil fuels to power vehicles and do not account for greenhouse gases emitted 

through other transportation lifecycle processes, such as the manufacture of 

vehicles, the extraction and refining of fuels, and the construction and 

maintenance of transportation infrastructure.5

 

1 Vol. 1, Sec. 2.1. The citation for all figures in this subsection is Vol. 1, Sec 2.1.

 Including these processes, U.S. 

2 Vol. 1, Sec. 2.2. 

3 This report focuses only on emissions of greenhouse gases themselves, rather than 

emissions of chemicals that interact with other chemicals in the atmosphere to create 

GHGs.

4 Vol. 1, Sec 2.2. The citation for all figures in this subsection is Vol. 1, Sec 2.2. Base data 

is from U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 

2006.

5 Life cycle emissions are discussed in Vol 1, Sec. 2.3.
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transportation lifecycle greenhouse gases are estimated to account for about 8 

percent of global GHG emissions. 

Transportation GHG emissions have been growing steadily in recent decades. From 

1990 to 2006 alone, transportation GHG emissions increased 27 percent, accounting 

for almost one-half of the increase in total U.S. GHG emissions for the period. 

In 2006, emissions from on-road vehicles accounted for 79 percent of 

transportation GHG emissions. Emissions from light-duty vehicles, which 

include passenger cars and light duty trucks (e.g., sport utility vehicles, pickup 

trucks, and minivans) accounted for 59 percent of emissions. Emissions from 

freight trucks accounted for 19 percent, and emissions from commercial aircraft 

(domestic and international) for 12 percent. Emissions from all other modes 

accounted for less than 10 percent of total emissions. 

STRATEGIES TO REDUCE TRANSPORTATION 

GREENHOUSE GAS EMISSIONS

The study evaluated four groups of strategies to reduce transportation GHG 

emissions:

• Introduce low-carbon fuels;

• Increase vehicle fuel economy; 

• Improve transportation system efficiency; and

• Reduce carbon-intensive travel activity. 

The study also evaluated two cross-cutting strategies:

• Align transportation planning and investments to achieve GHG reduction 

objectives; and

• Price carbon. 

Introduce Low-Carbon Fuels6

Petroleum-based fuels presently account for 97 percent of U.S. transportation 

energy use. Low-carbon fuel strategies include the development and 

introduction of alternative fuels that have lower carbon content and generate 

fewer transportation GHG emissions. The alternative fuels evaluated in this 

report include ethanol, biodiesel, natural gas, liquefied petroleum gas, synthetic 

fuels, hydrogen, and electricity. Alternative fuels strategies have primarily been 

investigated and quantified for the light-duty vehicle (LDV) sector, although 

some advances could potentially be applied to other sectors as well. 

 

6 Vol. 2, Sec. 2.
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• Renewable fuels such as ethanol and biodiesel offer potential for GHG 

emission reduction. The GHG emissions benefits of biofuels depend on a 

variety of factors, including the feedstock, production method, carbon 

intensity of energy used in production, prior land use, and the evaluation 

timeframe. Advanced biofuels from cellulosic sources will likely offer much 

steeper GHG reductions than first generation biofuels, though more research 

and development is needed, and commercialization has not yet occurred at 

high volumes. Existing vehicles can operate with low blends of ethanol and 

biodiesel, but vehicle modifications are needed for higher blends. Adequate 

distribution of infrastructure is also a key factor. A detailed analysis of 

renewable fuels is not provided in this report due to rulemaking in this area

and readers are directed to http://www.epa.gov/OMS/renewablefuels/ for 

more information. 

• In the long-term (25 years or more), if technical successes in fuel cell 

development and low-carbon hydrogen production, distribution, and onboard storage can be achieved, hydrogen fuel cell vehicles could reduce pervehicle GHG emissions by 80 percent or more. Aggressive deployment could 

reduce total transportation emissions by 18-to-22 percent in 2050 if a 60 

percent LDV market penetration could be achieved, which is the optimal end 

discussed in the literature.7

• If significant advances were to occur in battery technology and the use of

low-carbon energy sources for electricity generation, electricity (through 

battery-electric vehicles) could also substantially reduce transportation GHG 

emissions by 80 percent or more per vehicle in the long term. Aggressive 

deployment could reduce total transportation emissions by 26-to-30 percent 

in 2050 if a 56 percent LDV market penetration could be achieved, which is 

the optimal end discussed in the literature.

Increase Vehicle Fuel Economy8

Vehicle and fuel efficiency strategies include developing and bringing to market 

advanced engine and transmission designs, lighter-weight materials, improved 

vehicle aerodynamics, and reduced rolling resistance, which would result in 

lower fuel use and reduced transportation GHG emissions. Many of these 

technological improvements (such as hybrid-electric powertrains, truck 

aerodynamic improvements, and more efficient gasoline engines) are welldeveloped and could be further incorporated into new vehicles in the near 

future. In the long-term, propulsion systems relying on more efficient power 

conversion and low- or zero-carbon fuels (such as hydrogen fuel cells or plug-in 

 

7 National Research Council (NRC) (2008). Transitions to Alternative Transportation 

Technologies – A Focus on Hydrogen. 

8 Vol. 2, Sec. 3.
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hybrids) may be developed. Many of these strategies have the potential to 

provide net cost savings as fuel cost savings over the life of the vehicle outweigh 

the higher cost of the technology. The speed of market penetration of new 

technologies is limited by the turnover time of the fleet. Passenger cars and light 

trucks last about 16 years on average before retirement, compared to 20 years or 

more for trucks, up to 40 years for locomotives and marine vessels, and about 30 

years for aircraft. 

• Increased fuel economy in light-duty vehicles could reduce total 

transportation GHG emissions significantly. On a per vehicle basis, 

compared to a conventional vehicle, GHG reductions are 8-to-30 percent for 

advanced gasoline vehicles; about 16 percent for diesel vehicles; 26-to-54 

percent for hybrid electrics; and 46-to-75 percent for plug-in hybrid electrics.

• Retrofits can be used to expedite improvements. Heavy-duty trucks 

retrofitted to use aerodynamic fairings, trailer side skirts, low-rolling 

resistance tires, aluminum wheels, and planar boat tails can reduce per truck 

GHG emissions by 10-to-15 percent. For new trucks, combined powertrain 

and resistance reduction technologies are estimated to reduce per vehicle 

emissions by 10 to 30 percent in 2030.

• Significant fuel economy improvements could also be realized in the rail, and 

marine sectors—perhaps 20 percent per vehicle for rail and marine and 1.4-

2.3% annual improvement for aircraft during 2015-2035—through more 

efficient engines and resistance reduction technologies. However, total gains 

are somewhat limited due to the relatively smaller contributions of these 

sectors. 

Improve Transportation System Efficiency9

System efficiency strategies reduce the energy use and GHG emissions of travel 

by optimizing the design, construction, operation, and use of transportation 

networks.

• Lowering speed limits on national highways would generate moderate and

immediate benefits, reducing total transportation GHG emissions by up to 

2 percent depending upon enforcement and compliance.

• Strategies such as traffic management and bottleneck relief—including

targeted capacity increases at points where demand exceeds capacity—have 

the potential to modestly reduce GHG emissions by decreasing fuel 

consumption associated with congestion and stop-and-go traffic (congestion 

wastes nearly 3 billion gallons of fuel each year10

 

9 Vol. 2, Sec. 4.

). These strategies can also 

10 See “What Does Congestion Cost Us?” in 2009 Urban Mobility Report, published by the 

Texas Transportation Institute.
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provide significant cost savings to travelers and businesses. However, the 

initial GHG benefits of these measures may be partly or fully offset by 

additional travel resulting from improved travel conditions, known as 

“induced demand.” Because of the uncertainty presently associated with 

these potentially offsetting effects, the GHG impact of these strategies is not 

quantified in this report. The DOT is designing research to gain a better 

understanding of the role of induced demand in offsetting GHG 

improvements from congestion reduction strategies.

• Direct routing and more efficient takeoff and landing profiles could 

potentially increase air traffic operational efficiency by 2.5 to 6 percent 

through 2035. However, these benefits could be offset by induced demand 

effects which were not quantified for aviation.

Reduce Carbon-Intensive Travel Activity11

These strategies would reduce on-road vehicle-miles traveled by reducing the 

need for travel, increasing vehicle occupancies, and shifting travel to more 

energy-efficient options that generate fewer GHG emissions. The collective 

impact of these strategies on total U.S. transportation GHG emissions could 

range from 5-to-17 percent in 2030, or 6-to-21 percent in 2050.

• Transportation pricing strategies, such as a fee per vehicle-mile of travel 

(VMT) of about 5 cents per mile, an increase in the motor fuel tax of about 

$1.00 per gallon, or pay-as-you-drive insurance—if applied widely—could 

reduce transportation GHG emissions by 3 percent or more within 5-to10 years. Lower fee or tax levels would result in proportionately lower GHG 

reductions.

• Significant expansion of urban transit services, in conjunction with land use 

changes and pedestrian and bicycle improvements, could generate moderate 

reductions of 2 to 5 percent of transportation GHG by 2030. The benefits 

would grow over time as urban patterns evolve, increasing to 3-to-10 percent 

in 2050. These strategies can also increase mobility, lower household 

transportation costs, strengthen local economies, and provide health benefits 

by increasing physical activity. 

• Studies based on limited European experience suggest that “eco-driving”

strategies to teach efficient driving and vehicle maintenance practices could 

potentially reduce emissions by as much as 1-to-4 percent. However, this 

would require comprehensive driver training as well as in-vehicle 

instrumentation. As such, the European findings may not be replicable in the 

United States.

 

11Vol. 2, Sec. 5.
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Transportation Planning and Investment12

Transportation planning and investment decisions can integrate transportation 

and land use planning to reduce travel distances, fund low carbon alternatives, 

and improve the operating efficiency of the multimodal transportation network . 

Coordinating transportation and land-use decisions and investments enhances 

the effectiveness of both, and increases the efficiency of federal transportation 

spending. In most communities, jobs, homes, and other destinations are located 

far away from one another, often necessitating a separate car ride for every 

errand and long delivery routes for goods. Strategies that support mixed-use 

development, mixed-income communities, and multiple transportation options

can enable travelers to lower trip lengths, reduce trip frequencies, and select 

more carbon efficient means of travel. These changes in behavior would lower 

household transportation costs and reduce dependence on foreign oil, while also

reducing greenhouse gas emissions. Mixed-use development combined with an 

increased transit market share may also improve access to jobs and opportunities 

for those that rely on public transportation.

Planning and investment that increases the share of transportation utilizing low 

carbon alternatives can reduce GHGs. Examples include public transportation, 

pedestrian facilities for biking and walking, and lower carbon freight options, 

including rail or marine.

System efficiency strategies also have potential for GHG reduction and can be 

instituted through transportation planning processes. These strategies include

signal timing, real-time traveler information, more effecive incident

management, freeway ramp meeting, and other intelligent transportation 

systems applications.

There are a range of options for the Federal government to work with State and 

local governments to incorporate climate change considerations into 

transportation planning and investment decisions. 

Price Carbon13

Increasing the cost of carbon economy-wide, through a cap and trade system or 

carbon tax, provides an economic incentive to consumers and businesses to 

reduce CO2 emissions. Policies to price carbon emissions affect all four strategy 

groups by encouraging use of low carbon fuels and energy efficient vehicles, 

spurring efficiency improvements in transportation systems, and reducing travel 

demand. A cap and trade system consistent with recent proposals could 

potentially reduce transportation GHG by about 4 percent in 2030, relative to the 

baseline, and more in future years.

 

12Vol. 1, Sec 4.

13Vol. 1, Sec. 4.
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The intent of pricing carbon is to shift activities to lower carbon alternatives. The

availability of alternatives to carbon-intensive travel are crucial to the ability of 

pricing strategies to reduce carbon emissions in the transportation sector without 

harming quality of life or the economy. These alternatives include purchasing 

more fuel efficient vehicles, using lower carbon fuels, taking public 

transportation or intercity rail, telecommuting, carpooling, and compact 

development that reduces the need to travel long distances. Without 

alternatives, consumers are faced with higher costs or reduced quality of life.

FEDERAL POLICY OPTIONS TO ACHIEVE KEY 

STRATEGIES14

Individually and in combination, many of the strategies discussed could 

significantly reduce transportation greenhouse gases emissions. As Congress 

considers policy options to pursue, it should be noted that the U.S. Department 

of Transportation has already committed to pursuing sustainability and livability 

in transportation programs and making these issues central elements of the 

surface reauthorization legislation. These elements are critical to achieving a

reduction in the GHG emissions of the transportation sector, more transportation 

choices, and lowering household costs for transportation; while retaining the 

unique characteristics of our neighborhoods, communities, and regions. 

A variety of the strategies discussed in this report are already reflected in DOT’s 

work as it continues to focus on ways to reduce growth in VMT, integrate land 

use, transportation planning, and investment; and implement system efficiencies 

necessary to reduce GHG emissions from transportation. In addition, DOT is

working on reducing aviation greenhouse gases including developing more 

efficient aircraft and engine technologies, adopting more energy efficient 

operational procedures, and advancing the use of renewable fuels. 

Building on this work and on the findings of this report, several categories of 

policy options can be applied to implement the strategies analyzed in this report. 

Each strategy—vehicle efficiency, low carbon fuels, system efficiency, and 

reducing carbon intensive travel activity—would require government policies for 

implementation and to achieve GHG reductions beyond the business-as-usual 

scenario. This report does not provide recommendations. Instead, it analyzes 

the potential of each strategy and the policy options for implementing them. 

Five broad categories of prospective policy action at the federal level are 

identified below that could implement the strategies analyzed in this report. The 

approaches discussed below may be pursued individually or jointly, and in 

many cases would have synergistic or reinforcing effects when implemented 

together. 

 

14Vol. 1, Sec. 5.
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Efficiency standards 

New standards for fuels and vehicles can achieve significant reductions in carbon 

emissions from transportation by decreasing the amount of carbon consumed per 

mile of travel. There is strong evidence that, on average, regulations can achieve 

fuel consumption and emission reductions while delivering net cost savings to 

consumers over the life of the vehicle. Equally important, standards would help 

stimulate research and development. By way of example, the National Highway 

Transportation Safety Administration (NHTSA) and the United States 

Environmental Protection Agency (EPA) are working in concert to develop a 

consistent, harmonized national program that will deliver substantial 

improvements in fuel economy and reductions in GHG emissions for new cars 

and light-duty trucks.

Transportation planning and investment allocation policies

Federal transportation planning and investment programs can support 

integrated transportation and land use planning, provide alternatives to carbon 

intensive travel, and improve the efficiency of the system—all of which will 

reduce greenhouse gas emissions. There are three main ways in which the 

federal government can influence GHG reduction through transportation 

planning and infrastructure investment: technical assistance, federal 

transportation planning regulations, and aligning incentives for the tens of 

billions of dollars of federal transportation investment provided each year.

The U.S. DOT and other federal agencies can provide technical assistance to help 

transportation agencies conduct GHG inventories and analysis, improve data 

collection and modeling techniques, and consider GHG emissions in scenario 

planning, visioning, and integrated transportation and land use planning. 

There are a range of options for incorporating climate change considerations. 

Options range from including GHG emissions as a planning factor, to requiring 

states and MPOs to develop strategies for reducing transportation GHGs, to 

establishing mandatory GHG reduction targets. Each option will have differing 

levels of impact on GHG emissions and require different levels of effort. 

Finally, federal transportation funding programs can provide incentives for GHG 

reduction. Funding incentives could take the form of competitive pools of 

funding that encourage projects and programs to reduce GHGs. Another option 

is to align federal funding for transportation infrastructure with performancebased criteria, including climate change objectives that reward effective GHG 

emission reductions plans and programs.

Market-based incentives

Several market signals specific to the transportation sector could be used to 

encourage consumers and businesses to more quickly adopt less carbonintensive vehicles and technologies. By increasing demand for low-carbon 

technologies, these market signals would spur more rapid private sector research 
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and development. Consideration could be given to continuing and expanding 

Federal incentives such as those in the Energy Independence and Security Act of 

2007. 

At the consumer level, rebates and “feebates” could encourage the purchase of 

high-efficiency and noncarbon-based vehicles. When appropriate, increased 

motor fuel taxes, variable road pricing, or VMT fees could provide incentives to 

travelers to reduce trip lengths and shift to less carbon-intensive modes. Tax 

incentives or low-interest loans for energy-efficient retrofits and new vehicles in 

heavy-duty, rail, air, and marine sectors, could encourage cross-sector efficiency 

improvements. Further analysis is needed on options for encouraging fuel 

efficiency in the rail, marine and aviation sectors, and the potential impacts of 

these actions.

Research and development 

A strong Federal program of interdisciplinary research and technology 

deployment can advance the effectiveness of the transportation sector in 

addressing climate change. This research could include both basic and applied 

research on fuels and vehicles; development of decision support data and tools; 

research on relationships between climate change and transportation, including 

risk and adaptation analysis; development of information technologies to 

support system efficiency; policy research on the interactions among GHG 

reduction strategies, economic impacts, and institutional issues; and research on 

equity implications, such as mitigating or avoiding any negative equity impacts 

from transportation GHG reduction strategies. 

Economy-wide price signal

The implementation of carbon pricing—assuming a sufficiently strong price is 

established—would result in reductions in fuel consumption and an ongoing 

shift to non-carbon-based fuels and technologies across all sectors. Over the 

long-term, a cap and trade policy should reinforce technological advances and 

promote efficiencies in transportation. In order to achieve steep reductions in the 

transportation sector, complementary policies in addition to a cap and trade 

system may be required. 

CONCLUSION

The ingenuity of transportation planners and engineers has produced a vast 

network of transportation infrastructure and services to support the mobility and 

economic vitality of the Nation. However, our historic approach to 

transportation and land use has created an energy-intensive system dependent 

on carbon-based fuels and automoibles. 
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Our national talents and resources must now focus on shaping a transportation 

system that that serves the Nation’s near and long-term goals, including meeting 

the climate change challenge. 

The analysis provided by this report to Congress evaluates the greenhouse gas 

emission reduction potential of numerous strategies, as well as the co-benefits, 

costs, and implementation considerations linked to these strategies.

The U.S. Department of Transportation is committed to reducing the impact of 

the Nation’s transportation system on climate change and is already taking 

action. The Department’s livability initiative, along with the Sustainable 

Communities Partnership with the EPA and HUD, supports low carbon 

transportation options, such as public transportation, walking and biking. The 

partnership also promotes mixed-use development that enables residents to 

easily access goods and services. As shown by this study, all of these actions can 

reduce greenhouse gas emissions. The Department’s high-speed rail initiative 

will also provide a low carbon travel alternative. Furthermore, in April 2010, the 

Department and EPA announced the final rulemaking for a national greenhouse 

gas and fuel economy program for cars and light-duty trucks. The DOT also 

received new statutory authority under the Energy Independence and Security 

Act of 2007 to create a fuel efficiency program for medium and heavy duty

vehicles and work trucks, which will result in new regulations. In aviation, DOT 

has put energy and environmental concerns at the core of NextGen—the

initiative to modernize the U.S. air traffic system. Likewise, the Maritime 

Administration is focused on the potential of new technologies to reduce harmful 

emissions from marine diesel engines through cooperative efforts with the EPA

and maritime industry.

Yet there is more to be done. The DOT looks forward to working with Congress 

on transportation policies that will reduce greenhouse gas emissions, facilitate

economic vitality, and enhance our quality of life.

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1.0 Introduction

Transportation is a significant contributor to national greenhouse gas emissions, 

and can be part of the Nation’s solution to the climate change challenge. The 

Energy Independence and Security Act (December 2007) called upon the U.S. 

Department of Transportation (DOT), in coordination with the U.S. 

Environmental Protection Agency (EPA) and in consultation with the U.S. Global 

Change Research Program (USGCRP), to conduct a study of the impact of the 

Nation’s transportation system on climate change and strategies to mitigate the 

effects by reducing greenhouse gas emissions. The study also considers fuel 

savings and air pollution reduction from these measures.15

This report responds to that directive. Volume 1: Synthesis Report provides an 

overview of transportation’s contribution to greenhouse gas emissions (GHG), 

analyzes the effectiveness of various strategies available to reduce transportation 

sector GHGs, discusses the role of DOT planning and funding programs for 

strategic action on climate change, and concludes with five policy options that 

Congress may wish to consider. Following this introduction:

• Section 2—Climate Change, Greenhouse Gas Emissions, and 

Transportation: Summarizes the effects of transportation emissions on 

climate change and relative levels of emissions from each transportation 

mode: cars and trucks, buses, rail, aviation, marine, and pipelines. 

• Section 3—GHG Reduction Strategies: Discusses the full range of strategies 

that transportation can employ to directly reduce greenhouse gas emissions 

from mobile sources across all modes. These strategies are: 

– Introduce low-carbon fuels;

– Increase vehicle fuel efficiency;

 

15P.L. 110-140 states “(c) Transportation System’s Impact on Climate Change and Fuel 

Efficiency – (1) Study. The Office of Climate Change and Environment, in coordination 

with the Environmental Protection Agency and in consultation with the United States 

Global Change Research Program, shall conduct a study to examine the impact of the 

Nation’s transportation system on climate change and the fuel efficiency savings and 

clean air impacts of major transportation projects, to identify solutions to reduce air 

pollution and transportation-related energy use and mitigate the effects of climate 

change, and to examine the potential fuel savings that could result from changes in the 

current transportation system and through the use of intelligent transportation systems 

that help businesses and consumers to plan their travel and avoid delays, including 

Web-based real-time transit information systems, congestion information systems, 

carpool information systems, parking information systems, freight route management 

systems, and traffic management systems.”
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– Improve transportation system efficiency; and 

– Reduce carbon-intensive travel activity.

The legislative mandate for the report focused on transportation system 

efficiency and travel activity strategies. As such, the Department made a strong 

effort to thoroughly cover these areas. The Department also took a holistic 

approach, including consideration of vehicle technology and alternative fuels 

strategies. This broad approach better addresses the topic of transportation and 

climate change, given the important contribution of technology, the interactions 

between strategies, and the recognition that Federal actions—such as pricing—

will often spur both technological and behavioral changes. Even so, due to fuel 

economy and renewable fuel standard rulemakings, potential transportation 

greenhouse gas reduction and cost-effectiveness estimates are not presented for 

some vehicle and fuel technology strategies. 

• Section 4—Cross-cutting Policies: Discusses policies that involve all four 

strategies above. 

– Federal transportation planning requirements and funding mechanisms can 

play a role in shaping sustainable transportation programs that provide 

mobility, while reducing greenhouse gas emissions. These cross-cutting 

policies influence both system efficiency and travel activity.

– Carbon pricing through a cap and trade system, carbon tax, or a higher

motor fuels tax would provide incentives to consumers and businesses to 

pursue all four strategies above; and 

• Section 5—Policy Options: Discusses five key Federal policy options that can 

reduce greenhouse gas emissions from transportation.

Further detail on this analysis is provided in Volume 2: Technical Report. Volume 

2 contains detailed technical discussions of the four strategy groups that can 

contribute to reducing the carbon footprint of the transportation sector. All 

transportation sub-sectors are considered in this report, including on-road 

vehicles, rail, aviation, and marine. Each set of strategies is evaluated based on a 

set of factors including magnitude of GHG reduction; timing of impacts, cost, cobenefits (such as fuel savings and air quality) implications for other DOT goals;

impacts on infrastructure financing; and feasibility and implementation 

considerations. The benefits of the strategies in this report are based on limited 

data and good faith assumptions. Numerical estimates contain substantial 

uncertainties, as described in the methodology section. Each GHG reduction 

strategy may have various positive (co-benefits) or negative impacts on other 

factors as well. Potential tradeoffs and interdependencies when reducing GHG 

emissions will need to be considered when developing balanced solutions.

Readers interested in the technical basis for the summary materials and policy 

recommendations contained in Volume 1 are directed to Volume 2 for additional 

background information.
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2.0 Climate Change, Greenhouse 

Gas Emissions, and 

Transportation

2.1 CLIMATE CHANGE AND GREENHOUSE GASES

Greenhouse gases (GHG) trap heat in the earth’s atmosphere. Common 

greenhouse gases include carbon dioxide (CO2), methane (CH4), nitrous oxide

(N2O), ozone, water vapor, and chlorofluorocarbons. Many of these are naturally 

occuring and necessary to maintain an atmospheric temperature that supports 

human life. 

GHGs are produced by both natural and human activities, and can be removed 

from the atmosphere through natural processes. However, human-produced 

GHGs have significantly exceeded natural absorption rates since the industrial 

revolution. CO2 is the predominant GHG from human sources, with a majority 

resulting from the combustion of fossil fuel. Once released, CO2 and other 

greenhouse gases take many years to leave the atmosphere. Atmospheric 

lifetimes are estimated to be 50-200 years for CO2, 9-15 years for CH4, and 120 

years for N2O.16 The combination of long atmospheric lifetimes, increasing GHG 

output and deforestation have resulted in the increased atmospheric 

concentration of these gases. Since the beginning of the industrial revolution, 

atmospheric concentrations of CO2 have increased by 36 percent, CH4

concentrations have more than doubled, and N2O concentrations have risen by 

approximately 18 percent.17 Human activities over the past 70 years have also 

produced synthetic chemicals that are powerful greenhouse gases with 

atmospheric lifetimes ranging from years to millennia.18

GHG emissions are projected to continue to rise. The Intergovernmental Panel 

on Climate Change (IPCC) estimates that in the absence of additional climate 

policies to reduce GHG emissions, baseline global GHG emissions will increase 

 These substances 

include hydroflurocarbons (HFCs), chlorofluorocarbons (CFCs) and sulfur 

hexafluoride (SF6). 

 

16 Intergovernmental Panel on Climate Change (IPCC) (1996) Second Assessment Report.

17 Intergovernmental Panel on Climate Change (IPCC) (2007) Fourth Assessment Report, 

Climate Change 2007: Synthesis Report. Valencia, Spain.

18 Intergovernmental Panel on Climate Change (IPCC) (1996) Second Assessment Report.
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anywhere from 25 to 90 percent between the years 2000 and 2030, with CO2

emissions from energy use growing between 40 and 110 percent over the same 

period. 

According to the Intergovernmental Panel, “Warming of the climate system is 

unequivocal, as is now evident from observations of increases in global average 

air and ocean temperatures, widespread melting of snow and ice, and rising 

global average sea level.”19 The panel projects that global temperatures will rise 

2-to-11.5°F by 2100, and global sea level will rise 7-to-23 inches (the range of 

results represents uncertainty in both future anthropogenic emissions and 

climate modeling). More recent research, including the effects of polar ice sheet 

melting, suggest that sea levels could rise 3-to-4 feet by the end of this century.20

Changes in global temperature, and associated changes in weather patterns, have 

a broad impact on ecosystems, food production, coastlines, human settlements, 

health, and water supply. In North America, the impact of climate change is felt 

as drought in areas of the West, because of the reduced mountain snowpack; 

deteriorating forest health from the increased spread of pests, diseases, and 

forest fires; changes in agricultural productivity; an increase in the frequency and 

severity of heat waves, which create adverse health issues for people and 

animals; and an increase in the risk of flooding in coastal communities.

 

The IPCC’s report also describes the anticipated consequences of climate change 

along the range of potential temperature increases, showing severe impacts 

above 2°C (3.6°F). According to the IPCC, global GHGs must be reduced to 50-

to-85 percent below year 2000 levels by 2050 to keep warming to 2.0-to-2.4°C 

(3.6-to-4.3°F). 

21 

According to USGCRP, widespread climate-related impacts are occurring now 

and are expected to increase. However, the extent of climate change, and its 

impacts, depends on the choices made today to mitigate human-caused 

emissions of GHGs.22

Climate change also impacts transportation systems. Rising sea levels and more 

intense storms can cause increased flooding of coastal transportation facilities 

such as roads, rail lines, airports, and ports. A DOT study of the central U.S.

 

19 IPCC Synthesis, 2007 (cited).

20 USGCRP, 2009 (cited).

21 Intergovernmental Panel on Climate Change (IPCC) (2007). Climate Change 2007: 

Impacts, Adaptation, and Vulnerability. Contribution of Working Group II to the Third 

Assessment Report of the Intergovernmental Panel on Climate Change [Parry, Martin L., 

Canziani, Osvaldo F., Palutikof, Jean P., van der Linden, Paul J., and Hanson, Clair E. 

(eds.)]. Cambridge University Press, Cambridge, United Kingdom.

22 U.S. Global Change Research Program (2009). Global Climate Change Impacts in the 

United States. Thomas R. Karl, Jerry M. Melillo, and Thomas C. Peterson, (eds.). 

Cambridge University Press, p.12. 
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Gulf Coast area found that 27 percent of major roads in the region are vulnerable 

to a four-foot sea level rise, and almost one-half the rail miles in the region could 

be impacted by an 18 foot storm surge.23 Changes in the frequency and intensity 

of extreme weather events can disrupt aviation operations. Increases in extreme 

temperature and precipitation events may also necessitate changes in structural 

design. In the Arctic where many transportation facilities are built on permafrost 

foundations, thawing permafrost is already damaging roads and airports. 

Melting sea ice in Arctic summers may eventually open a Northwest Passage sea 

lane, changing sea shipping routes across the globe while dramatically altering 

Arctic ecological systems.24

This report to Congress focuses on mitigation strategies to reduce transportation 

GHGs. Other ongoing DOT projects focus on measures to adapt transportation 

infrastructure to accommodate the effects of climate change, including a major 

study of the central Gulf Coast region. 

 

2.2 TRANSPORTATION GREENHOUSE GAS EMISSIONS

GHGs are produced from multiple sectors of the economy, including industrial 

sources, electric power plants, residences, and agriculture; as well as the different 

transportation modes. Unlike criteria air pollutants, the main GHGs are global in 

nature. They do not create toxic “hot spots,” but rather are well-mixed in the 

atmosphere in the long-run. Thus, the impacts of one ton of carbon dioxide 

emissions are the same no matter where it is emitted, or by what sector of the 

economy. In that sense, the relative effect of transportation emissions on the 

global climate can be approximated by their relative magnitude compared to all 

other global emissions. 

The primary GHGs produced by the transportation sector are carbon dioxide, 

methane, nitrous oxide, and hydrofluorocarbons (HFC).25

 

23 U.S. Climate Change Science Program (CCSP) (2008). Impacts of Climate Change and 

Variability on Transportation Systems and Infrastructure: Gulf Coast Study, Phase I. A 

Report by the U.S. Climate Change Science Program and Subcommittee on Global 

Change Research [Savonis, M.J., V.R. Burkett, and J.R. Potter (eds.)]. United States 

Department of Transportation, Washington, D.C..

 Carbon dioxide, a 

product of fossil fuel combustion, accounts for 95 percent of transportation GHG 

24Transportation Research Board (TRB) (2008). Potential Impacts of Climate Change on U.S. 

Transportation. Transportation Research Board Special Report 290, Committee on 

Climate Change and U.S. Transportation, Transportation Research Board, Division on 

Earth and Life Sciences, National Research Council, Washington, D.C.

25These gases do not have equal global warming potential (GWP), a measure of relative 

radiative forcing compared to CO2. Therefore, unless otherwise noted, figures are 

presented in CO2 equivalents, or CO2e. That is, figures for non-CO2 GHGs are 

converted into the amount of CO2 that would cause the same degree of warming. 
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emissions in the United States, as illustrated in Figure 2.1. Hydrofluorocarbons, 

which are used in automobile, truck, and rail air conditioning and refrigeration 

systems, account for another three percent of U.S. transportation emissions. 

Nitrous oxide and methane, which are both emitted as byproducts of 

combustion, account for the remainder of the U.S. transportation GHG emissions

inventory.26

CO2, CH4, N2O and HFCs are all well-mixed in the atmosphere and long-lived, 

lasting from years to many decades. While these gases account for a majority of 

observed global warming effects, human activities produce short-lived and 

spatially variable emissions that may also have a significant warming effect.

Two substances closely associated with the transportation sector are tropospheric 

ozone and black carbon. Because of their short atmospheric lifetime -- which 

ranges from weeks to months -- and uncertainties about their global warming 

potential, tropospheric ozone and black carbon are currently not included in 

official emissions estimates.

Tropospheric ozone is estimated to have the third-largest increase in radiative 

forcing since the pre-industrial era, behind CO2 and CH4.27 It is produced when 

precursors such as nitrogen oxide (NOx), carbon monoxide (CO) and nonmethane volatile organic compounds (NMVOCs) react with sunlight in the 

atmosphere. Motor vehicle exhaust accounts for a majority of U.S. NOx and CO 

emissions, and is also the largest source of NMVOCs.28 Black carbon is an 

aerosol that causes warming by both absorbing solar radiation in the atmosphere 

and by reducing the reflectivity of snow and ice. The net impact of these two 

warming effects is estimated to be slightly lower than that of ozone, albeit with a 

higher degree of uncertainty.29 Black carbon is emitted from incomplete 

combustion processes, especially the burning of diesel fuel. On-road sources are 

estimated to account for about half of U.S. black carbon emissions.30

 

26 This does not include fugitive emissions of CH4 from natural gas pipelines, which EPA 

associates with the energy sector rather than the transportation sector in its annual 

GHG inventory. A discussion of fugitive emissions is provided later in this section. 

Unlike CO2 

emissions, ozone precursors and black carbon can be restricted by emissions 

controls. Both have been significantly reduced by earlier control technologies 

and are expected to be further reduced by EPA regulations. Given the short 

27 U.S. EPA, (2009) Inventory of U.S. Greenhouse Gas Emissions and Sinks, 1990-2007.

28 US EPA (2009)

29 Intergovernmental Panel on Climate Change (IPCC) (2007) Changes in Atmospheric 

Constituents and Radiative Forcing.

30Unger, N., Shindell, D.T., Wang, J.S., 2009. Climate forcing by the on-road 

transportation and power generation sectors. Atmos. Environ., 43, 3077-3085.
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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lifespan of black carbon and ozone precursors, reducing their respective 

emissions would reduce warming within weeks to months.31

Figure 2.1 U.S. Transportation Greenhouse Gas Emissions by Gas, CO2e

2006

 

CO2

95.1%

N2O

1.5%

CH4

0.1%

HFCs

3.3%

Source: U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006.

Transportation emissions account for 29 percent of U.S. GHG emissions, and 

over 5 percent of global GHG emissions.32

 

31Unger, N., Shindell, D.T., Wang, J.S., 2009. Climate forcing by the on-road 

transportation and power generation sectors. Atmos. Environ., 43, 3077-3085.

 Except when noted, the estimates in 

this report account for “tailpipe” emissions from burning fossil fuels to power 

vehicles and not greenhouse gases emitted through other transportation lifecycle 

processes, such as the manufacture of vehicles, the extraction and refining of 

Shindell, D., Lamarque, J.F., Unger, N., Koch, D., Faluvegi, G., Bauer, S., Teich, H., 

2008. Climate forcing and air quality change due to regional emissions reductions by

economic sector. Atmos. Chem. Phys. 8, 7101–7113.

32 The estimates presented here also include fuels sold in the U.S. to aircraft and ships 

traveling overseas, also known as international bunker fuels. These estimates are also 

added to the U.S. total for all sectors. See Table 2.1, U.S. EPA Inventory of U.S. 

Greenhouse Gas Emissions and Sinks: 1990 to 2006.
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fuels, and the construction and maintenance of transportation infrastructure. 

Collectively, emissions from these processes, many of which occur overseas,

increase the U.S. transportation share of global GHGs to about 7 to 8 percent.33

Figure 2.2 U.S. Greenhouse Gas Emissions by End Use Economic Sector, 

million metric tons CO2 equivalent

2006

 

Most of the domestically produced emissions are included in the industry sector 

shown in Figure 2.2. However, providing a transportation life-cycle estimate 

provides a broader perspective on the actual impact of transportation on GHGs. 

A full discussion of transportation life-cycle emissions can be found in 

Section 2.3.

Residential, 345, 

5%

Transportation, 

2,098, 29%

Agriculture, 534, 

7%

Industry, 1,372, 

19%

Electric Power 

Industry, 2,378, 

34%

Commercial, 

395, 6%

Source: U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006.

When compared with transportation emissions from all countries in the world,

and total world emissions, GHG emissions from the U.S. transportation sector 

are put into a global context. International Energy Agency (IEA) data for 2006 

show that while the U.S. accounts for 5 percent of the world population, it 

accounts for 21 percent of global CO2 emissions, with the U.S. transportation 

 

33 This is based on the conclusion, as discussed in Section 2.3, that lifecycle emissions may 

be on the order of 50 percent greater than direct transportation emissions alone.
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sector accounting for 33 percent of global transportation CO2 emissions. Overall, 

direct emissions from the U.S. transportation sector represent about 7 percent of 

global CO2 emissions.34

As shown in Figure 2.3 and Table 2.1, direct emissions from light-duty vehicles, 

which include passenger cars and light duty trucks (e.g., sport utility vehicles, 

pickup trucks, and minivans) accounted for 59 percent of U.S. transportation 

GHG emissions in 2006. Emissions from freight trucks accounted for 19 percent 

of emissions. Commercial aircraft (domestic and international) accounted for 

12 percent. All other modes accounted for less than 10 percent of total emissions. 

Overall, on-road vehicles accounted for 79 percent of emissions. 

 GHG emission reduction solutions developed for the 

U.S. transportation sector could have a significant, direct impact on global GHG 

emissions. Furthermore, these solutions could also be applied globally to reduce 

transportation emissions in other countries as well.

Figure 2.3 U.S. Greenhouse Gas Emissions by Transportation Mode

2006

Lubricants

0.5%

Pipelines

1.5%

Aircraft - Domestic

8.2%

Marine - International

2.7%

Marine - Domestic

2.3%

Aircraft - International

3.4%

Rail

2.8%

Motorcycles

0.1% Buses

0.6%

Light Duty Vehicles 

(Passenger Cars, 

SUVs, and Pickups)

58.7%

Freight Trucks

19.2%

Source: U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006, pages 

3-9, 3-30, 3-31.

 

34When including bunkers 2000 EDGAR data show 6.48 percent, 2000 IEA data show 7.89

percent, 2006 IEA data show 6.95 percent. When not including bunkers 2000 EDGAR 

data show 6.19 percent, 2000 IEA data show 7.27 percent, and 2006 IEA data show 6.46

percent.
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Table 2.1 U.S. Transportation Sector Greenhouse Gas Emissions, 2006

Million Metric Tons CO2 Equivalent Change from 1990 to 2006

Transportation Sources 1990 2006 Absolute Percent

On-Road Vehicles 1231.9 1653.9 422.0 34.3%

Light-Duty Vehicles 993.1 1235.0 241.9 24.4%

Passenger 

Cars

656.9 678.4 21.5 3.3%

Light-Duty 

Trucks

336.2 556.6 220.4 65.6%

Motorcycles 1.8 1.9 0.1 6.3%

Buses 8.5 12.5 4.0 46.7%

Medium and HeavyDuty Trucks228.6 404.6 176.0 77.0%

Aircraft 228.1 244.3 16.2 7.1%

Aircraft (Excluding

International Bunkers)

181.9 172.4 -9.5 -5.2%

Commercial Aircraft—

Domestic

138.1 143.6 5.5 4.0%

General Aviation—

Domestic

9.5 13.8 4.3 45.5%

Military Aircraft—

Domestic

34.3 15.0 -19.3 -56.3%

Aircraft Bunkers 46.2 71.9 25.7 55.6%

Marine 115.6 104.2 -11.4 -9.9%

Marine (Excluding 

Bunkers)

47.0 47.7 0.7 1.5%

Recreational Boats 14.2 17.5 3.3 23.1%

Ships—Domestic 32.8 30.2 -2.6 -7.9%

Ships—Bunkers 68.6 56.5 -12.1 -17.7%

Rail 38.5 57.9 19.4 50.5%

Pipelines 36.1 32.4 -3.7 -10.3%

Lubricants 11.9 9.9 -2.0 -16.8%

Total (Including 

International Bunkers)

1662.1 2102.6 440.5 26.5%

Total (Excluding

International Bunkers)

1547.3 1974.3 427.0 27.6%

Total U.S.—All Sources 

(Including Int’l Bunkers)

6263.1 7182.5 919.4 14.7%

Total U.S.—All Sources 

(Excluding Int’l Bunkers)

6148.3 7054.2 905.9 14.7%

Source: U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006.

Note: Does not include emissions from ethanol combustion.

Direct emissions only; does not include other fuel, vehicle, or infrastructure lifecycle emissions.
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Table 2.1 shows U.S. GHG emissions from transportation sources in 1990 and 

2006. U.S. emissions are displayed with and without bunker fuels, which are 

fuels used for international transport activity by air or water, and are reported 

based on the location of fuel sales. Fuel sold in the U.S. to ships or aircraft that 

are bound for international destinations is counted in U.S. bunker fuel totals, but 

not included in national totals submitted under the United Nations Framework 

Convention on Climate Change. 

GHG emissions from the U.S. transportation sector have been growing steadily—

from 1990 to 2006, transportation GHG emissions increased 27 percent. The 

growth in U.S. transportation GHG emissions accounted for almost one-half (47 

percent) of the increase in total U.S. GHG emissions for the period. Emission 

trends vary by transportation mode. Medium and heavy-duty truck GHG 

emissions increased 77 percent from 1990 to 2006, while light duty vehicles 

increased 24 percent; and aircraft 7 percent. On-road vehicles accounted for 96 

percent of the increase in transportation emissions during that period; 55 percent 

from light-duty vehicles, 40 percent from medium and heavy-duty trucks, and 

one percent from other modes.

Light-Duty Vehicles

Between 1990 to 2006, an increase in vehicle-miles traveled (VMT) and a 

stagnation of fuel economy across the U.S. vehicle fleet, caused light-duty vehicle 

GHG emissions to grow by 24 percent.

VMT increased 39.4 percent between 1990 and 2006, as shown in Figure 2.4, 

which is over twice the U.S. population growth rate during that period. 

Average fuel economy among new vehicles sold showed a very slight decline 

from 1990 to 2004, and a very slight increase thereafter, as shown in Figure 2.5. 

The decline in new vehicle fuel economy prior to 2004 reflected the increasing 

market share of light duty trucks, which grew from about one-fifth of new 

vehicle sales in the 1970s to slightly over one-half by 2004, as shown in 

Figure 2.6. 

Trends in transportation GHGs can generally be seen as a race between fuel 

economy and VMT. If VMT growth outpaces improvements in fuel economy, 

emissions will grow. If fuel economy improvements outpace VMT growth, 

emissions will decline.

Recent trends indicate that light duty vehicle emissions are leveling off as VMT 

growth slows and fuel economy improves. Growth in passenger vehicle VMT

slowed from an annual rate of 2.6 percent from 1990 to 2004 to an average annual 

rate of 0.6 percent from 2004 to 2007. In 2008, VMT on all streets and roads in the 

United States decreased for the first time since 1980, likely due to a combination 

of high fuel prices and a weakening economy. In addition, average new vehicle 

fuel economy improved from 2005 to 2007 as the market share of passenger cars 

increased compared to light-duty trucks; also a response to higher fuel prices and 
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a weakening economy. As discussed in Section 2.4, light duty vehicle GHGs are 

projected to almost plateau as anticipated VMT growth modestly outpaces new 

fuel economy and low-carbon fuel standards. 

Figure 2.4 Vehicle Miles Traveled by Light Duty Vehicles

1975 to 2008

U.S. Vehicle Miles Traveled (in Millions)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Source: Bureau of Transportation Statistics. National Transportation Statistics.

Figure 2.5 Sales-Weighted Fuel Economy of Light Duty Vehicles

0

5

10

15

20

25

30

1975197719791981198319851987198919911993199519971999200120032005

2007

Fuel Efficiency (Miles per Gallon)

Source: U.S. EPA (2007). Light-Duty Automotive Technology and Fuel Economy Trends: 1975 Through 

2007. 
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Figure 2.6 Sales of New Passenger Cars and Light Duty Trucks

0

2

4

6

8

10

12

1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007

Passenger Cars Light Trucks

Number of Vehicles Sold (Millions)

Source: U.S. EPA (2007). Light-Duty Automotive Technology and Fuel Economy Trends: 1975 Through 

2007. 

Medium and Heavy Duty Vehicles

Since 1990, GHG emissions from medium and heavy-duty trucks have increased 

77 percent, growing at three times the rate of emissions from light-duty vehicles. 

This is the product of decreasing fuel efficiency—as measured per ton-mile 

carried—and steadily increasing demand for freight trucking. Between 1990 and

2005, CO2 emissions per ton-mile carried increased almost 13 percent, while

actual ton-miles carried increased 58 percent.35 These changes were driven by an 

expansion of freight trucking after economic deregulation of the trucking 

industry in the 1980s; widespread adoption of just-in-time manufacturing and 

retailing practices by business shippers and receivers, increasing highway 

congestion; and structural changes in the economy that produce higher-value, 

lower-weight, and more time-sensitive shipments better served by trucking. 

GHG emissions from freight trucks have increased at a greater rate than all other 

freight sources, as shown in Figure 2.7. 

 

35 U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006.
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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Figure 2.7 GHG Emissions from U.S. Freight Sources

0

50

100

150

200

250

300

350

400

450

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Trucks Freight Rail

Ships and Boats (Domestic) Pipelines

Commercial Aviation

MMT CO2e

Source: U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006.

MMT CO2e = million metric tons carbon dioxide equivalent

Aircraft

Although airline passenger miles traveled increased 69 percent between 1990 and 

2006 (Figure 2.8), airline GHG emissions increased only 4 percent over the same 

period. This is primarily because passenger loads increased substantially, to 

nearly 80 percent. Additionally, the energy efficiency of new engines increased 

by about one percent annually and the energy efficiency of the fleet as a whole 

improved, due to the accelerated retirement of older aircraft following the 

terrorist attacks of September 2001. Eighty-six percent of aircraft emissions are 

allocated to passenger travel and 14 percent to air cargo.36

Because their emissions take place in the upper atmosphere, aircraft have unique 

effects on climate change beyond the direct effect of the greenhouse gases 

emitted. The two primary complexities are due to the generation of nitrogen 

oxides (NOx) and water vapor by jet engine combustion. In the upper 

atmosphere, NOx has two opposing effects: it leads to the production of ozone, 

 

36Since individual aircraft carry both passengers and air cargo (in the belly) 

simultaneously, emissions are allocated in EPA’s emissions inventory using data on the 

weight of freight shipped and total number of enplaned passengers. (U.S. EPA, 2008, 

cited).
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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but at the same time it increases the rate of destruction of methane (CH4).37 

These effects are quite substantial: ozone production is estimated to be almost as

significant as CO2 emissions in terms of warming potential from aircraft 

emissions.38 In addition, the injection of water vapor into the very dry and very 

cold upper atmosphere may lead to contrail formation, which can have a 

warming effect by trapping infrared radiation from the ground. It also may lead 

to increased cirrus cloud formation, which may lead to net warming. Not all of 

these dynamics are well understood, or well quantified, leading to greater 

uncertainty when estimating the impact of air travel on global warming.39

Figure 2.8 Trends in Passenger Activity and Fuel Efficiency for Aircraft

0

100000

200000

300000

400000

500000

600000

700000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

0

10

20

30

40

50

60

Passenger-miles (millions) - Domestic Commercial Aircraft

Fuel Efficiency - Domestic Commercial Aircraft

Passenger-Miles (in Millions) Fuel Efficiency (Seat-Miles per Gallon)

Source: Bureau of Transportation Statistics. National Transportation Statistics.

 

37 U.S. EPA (2006). Greenhouse Gas Emissions from the U.S. Transportation Sector, 1990 to 

2003.

38 Brasseur, G.P. (ed.) (2008). A Report on the Way Forward Based on the Review of Research 

Gaps and Priorities. Environmental Working Group of the U.S. NextGen Joint Planning 

and Development Office, Aviation Climate Change Research Initiative, Federal 

Aviation Administration, Washington D.C.

39 Brasseur, G.P. (ed.), 2008 (cited).
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Rail

GHG emissions from rail primarily originate from the combustion of diesel fuel 

by locomotives, but 8 percent are also attributed to electrically powered trains.40 

Freight sources of rail emissions include: line-haul trains, which travel long 

distances on intercity routes; and switchyard locomotives, which move around 

rail yards to assemble rail cars into trains. Passenger sources of rail emissions 

include urban transit, commuter and inter-city rail. As shown in Figure 2.9a, 

GHG emissions from freight rail have steadily increased from 1990 to 2006, while 

emissions from passenger rail have increased slightly over the same period. 

Increasing freight rail activity, shown in Figure 2.9b, has led to increased freight 

rail emissions. However, simultaneous increases in fuel efficiency (also shown in 

Figure 2.9b) have counteracted this trend to slow the growth of rail GHG. 

Results of a Federal Railroad Administration (FRA) study indicate that railroads 

now handle 50 percent more ton-miles of freight than in 1990—using 21.5 percent 

less fuel per ton-mile.41

 

40 The EPA inventory reports 4.9 million metric tons CO2e from electricity for the total 

U.S. transportation sector in 2006. The electricity currently used in transportation is 

almost entirely for electrically powered trains.

41 U.S. Department of Transportation, Federal Railroad Administration. Comparative

Evaluation of Rail and Truck Fuel Efficiency on Competitive Corridors. November 2009.
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Figure 2.9 Rail Trends: a) Greenhouse Gas Emissions, and b) Revenue 

Freight Ton-Miles and Fuel Efficiency

1990 to 2006

0

10

20

30

40

50

60

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Passenger Rail Freight Rail

Greenhouse Gas Emissions (MMT CO2e) 2.9a

Source: U.S. EPA (2008). Inventory of Greenhouse Gas Emissions and Sinks: 1990 to 2006.

0.0000

0.0005

0.0010

0.0015

0.0020

0.0025

0.0030

0.0035

0.0

0.5

1.0

1.5

2.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Revenue freight ton-miles (millions) Fuel Usage (gallons per ton-mile)

Revenue Freight Ton-Miles (in Millions) 2.9b Fuel Usage (Gallons per Ton-Mile)

Sources: Bureau of Transportation Statistics. National Transportation Statistics (Freight Activity and Fuel 

Efficiency).

Marine

Figure 2.10a depicts greenhouse gas emissions from the broad range of marine 

activities: recreational craft, inland waterway, marine coastal, and international 

shipping. Greenhouse gas emissions from marine sources appear rather volatile 

in some years in Figure 2.10a. This fluctuation is most likely due to issues with 

data collection and interpretation, including the challenge of separating the 

domestic and international components of fuel consumption estimates. These 

issues may also reflect the nature of ship refueling strategies, which take 

advantage of price differences among countries to buy fuel at the least expensive 

port. As shown in Figure 2.10b, domestic waterborne freight tonnage decreased 

from 1990 to 2006, while international waterborne imports and exports increased 

significantly as the Nation’s international trade grew. Because of the complex 

nature of some routing, such as multiple stops to exchange cargo and routing 
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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through the Panama Canal, a clear relationship between tonnage and GHGs 

emitted is difficult to discern. 

Figure 2.10 Marine Trends: a) Greenhouse Gas Emissions, and b) Ton-Miles 

of Freight

1990 to 2006

0

20

40

60

80

100

120

140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Marine – Domestic Marine-Total (including international bunkers)

Greenhouse Gas Emissions (MMT CO2e) 2.10a

Source: U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006.

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Foreign Domestic 

Millions of Short Tons 2.10b

Source: Bureau of Transportation Statistics. National Transportation Statistics.

Pipelines

The Pipeline and Hazardous Materials Safety Administration (PHMSA) is the 

primary regulatory agency responsible for the construction, safe operation and 

oversight of our Nation’s natural gas and hazardous liquid pipelines.

Pipelines are classified as part of the transportation system because they are used 

to transport large amounts of natural gas and petroleum products in the United 

States. Pipelines are typically powered by pumps, motors, engines, and 

compressors that run on either natural gas or electricity. GHGs are produced by 
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pipelines from either the combustion processes for these fuels, or leaks—referred 

to as fugitive emissions—from natural gas pipelines. 

From 1990 to 2006, GHG emissions associated with powering pipelines have 

decreased by 10.3 percent—despite a 5.6 percent increase in ton-miles 

transported by pipeline. However, pipeline GHG estimates only reflect CO2

emissions from the burning of natural gas to power pipelines and do not include 

electricity, which is also a major power source for pipelines.42

During this same time period, GHG fugitive emissions have lowered by 18.4 

percent. This is likely due to improvements in management practices and 

technologies that help prevent leakages from pipelines and compressor 

stations.

 Decreasing 

emissions could represent a shift to electricity to power pipelines, increases in 

pumping efficiency, or some combination of the two; specific data are not 

available to provide further detail. 

43

Transportation GHGs by Freight and Passenger Travel

Another way to understand transportation GHG emissions is to examine the split 

between passenger and freight transport. In 2006, passenger transportation 

generated 73 percent of transportation GHG emissions, while freight 

transportation accounted for 27 percent. At the same time freight transportation 

GHG emissions have grown more quickly than passenger emissions, and 

accounted for more than 40 percent of the increase in transportation GHG 

emissions over 1990 to 2006. The sources of passenger transportation GHG 

emissions include: passenger cars, light trucks, buses, and motorcycles; most 

aircraft emissions; and a small portion of rail and marine emissions. The sources 

of freight transportation GHG emissions are: medium- and heavy-duty trucks;

pipelines; a large majority of rail and marine operations; and a small portion of 

air travel.

Passenger transportation GHG emissions can be viewed in terms of GHG 

emission per passenger-mile traveled (PMT), which takes into account the 

different number of passengers carried by each mode. The rates for each of the 

passenger modes are charted in Figure 2.11. Buses, which include transit, 

intercity and school buses, produce the least GHG emissions per PMT. They are

 

42 U.S. EPA, 2008 (cited).

43 Methane (CH4) is released from natural gas pipelines as fugitive emissions due to leaks 

during the transmission, storage, and distribution process. These fugitive emissions are 

typically accounted for in the energy sector rather than the transportation sector and 

are not shown in Table 2.1. Their inclusion would increase pipeline GHG emissions 

from 32.4 mmt CO2e to 95.4 mmt CO2e, increasing pipelines’ share of U.S. 

transportation GHGs from 1.5 to 4.4 percent. Source: U.S. EPA, 2008 (cited).
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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followed by motorcycles, passenger rail (which includes transit, commuter, and 

intercity rail), commercial aviation, passenger cars, and light duty trucks. 

Buses have the lowest emissions per PMT because of their high occupancy rate–

an average of about 21 people per bus, when including all types of bus service.44 

Transit buses have a lower occupancy rate—about 9 to 10 people per bus 

averaged across the U.S.45 However, transit buses only account for 15 percent of 

all bus passenger-miles traveled.46 Intercity passenger rail averages about 20 

passengers per car, while rail transit averages 23, and commuter rail averages 

31.47 Light-duty vehicles average 1.6 persons per vehicle.48 Commercial airliners 

are very energy intensive per vehicle-mile traveled, but have slightly lower GHG 

emissions per passenger-mile traveled than light-duty vehicle, due to the high 

number of passengers per plane. Aircraft and inter-city rail may involve 

additional auto or transit travel from the airport/station to the final destination; 

the emissions from this leg of the trip are not included here.

 

44 U.S. Department of Transportation, Bureau of Transportation Statistics. National 

Transportation Statistics, http://www.bts.gov/publications/

national_transportation_statistics/. Tables 1-32 and 1-37.

45 U.S. Department of Transportation, Federal Transit Administration. 2007 National 

Transit Database.

46 Davis, S.C., S.W. Diegel, and R.G. Boundy (2008). Transportation Energy Data Book. Oak 

Ridge National Laboratory, Oak Ridge TN (Table 2.12); U.S. Department of 

Transportation, Bureau of Transportation Statistics. National Transportation Statistics, 

http://www.bts.gov/publications/national_transportation_statistics/. Table 1-37.

47 Davis, S.C., S.W. Diegel, and R.G. Boundy, 2008 (cited).

48 U.S. Department of Transportation, Bureau of Transportation Statistics. 2001 National 

Household Transportation Survey.
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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Figure 2.11 GHG Emissions per Passenger-Mile Traveled (PMT) by Passenger 

Transportation Mode

2006

0

50

100

150

200

250

300

350

Light-duty 

Trucks

Passenger 

Cars

Aircraft –

Domestic

Passenger Rail Motorcycles Buses

g CO2e/PMT

Source: U.S. EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006; Bureau of 

Transportation Statistics. Bureau of Transportation Statistics, National Transportation Statistics; 

and U.S. Department of Energy, Transportation Energy Data Book.

Freight modes have very different GHG profiles, as shown in Figure 2.12. On a 

ton-mile basis, freight rail is the lowest emission mode, followed by pipelines 

and marine transport. These three freight modes specialize in carrying bulk or 

containerized goods in large quantities, at relatively slow speeds, and achieve 

significant economies of scale. Trucking generates significantly higher GHG 

emissions per ton-mile, reflecting the energy inefficiencies of relatively small 

vehicles traveling at higher speeds, as well as the lighter weight of its cargo. 

Aircraft, which primarily carry high-value, time-sensitive cargo, have by far the 

highest GHG emissions per ton of freight.49 However, because of the different 

mix of traffic that the modes carry, a head-to-head comparison between modes—

based purely on tonnage—may not present a complete picture. A more 

appropriate comparison would be to consider the energy consumption of the 

different modes moving similar traffic within specific corridors. For instance, a 

FRA study compared rail and truck fuel efficiency by focusing on corridorspecific competitive services that each mode provides. Overall, the study found 

that rail achieved 1.4 to 9 times more ton-miles per gallon than competing 

truckload service. An update to this study finds that rail-fuel improvements 

have outpaced truck-fuel improvements over the study period.50

 

49 Including freight carried in the belly of passenger aircraft.

50 U.S. Department of Transportation, Federal Railroad Administration, 2009 (cited).
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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Figure 2.12 GHG Emissions per Freight Ton-Mile by Freight Transportation 

Mode

2006 

0

50

100

150

200

250

300

350

400

Trucking Freight Rail Ships and Other 

Boats – Domestic

Pipelines Commercial Aircraft –

Domestic

g CO2e/Ton-Mile

1,500

Source: U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006; and 

Bureau of Transportation Statistics. National Transportation Statistics.

Transportation, Housing, and Environmental Policy Coordination 

and Impact on Vehicle Miles Traveled (VMT)

Transportation and land use are interdependent. Decisions on the locations and 

densities of housing, retail, offices, and commercial properties impact travel 

patterns to these destinations. Similarly, the geographic placement of roads, 

public transportation, airports, and rail lines influences where homes and 

businesses are built. Areas of lower density tend to have higher levels of 

automobile use per capita.51 Lack of coordination in location decisions has 

resulted in more frequent and longer trips, and thus higher GHG emissions.

Over the past several decades, housing densities have decreased and the amount 

of developed land in the country has grown faster than population.52

 

51 See for instance, Peter Newman and Jeffrey Kenworthy (2006) “Urban Design to 

Reduce Automobile Dependence”, Opolis: An International Journal of Suburban and 

Metropolitan Studies: Vol. 2: No. 1, Article 3.

In many 

communities, development has largely been automobile-oriented, such that a car 

or truck is used by residents for the majority of their travel.

http://repositories.cdlib.org/cssd/opolis/vol2/iss1/art3

52 National Academy of Sciences, Transportation Research Board Special Report 298: Driving 

and the Built Environment, 2009.
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Coordinated planning allows communities to understand the synergies and 

advantages to planning investments in transportation, housing, and other 

community amenities together. Coordinated planning processes involve a range 

of decision-makers, including local land use planning officials, private investors, 

developers, State departments of transportation, Federal agencies, air quality 

planning and air quality officials, and community groups. Coordinated planning 

informs the ultimate decisions that are made, and can affect the long-term impact 

of transportation on climate change. However, it is important to note that these 

decisions are made at the local level, many factors are considered, and the 

Federal government may have limited influence on some of these decisions. 

Regardless, the Federal government can do more to coordinate Federal housing, 

transportation and environmental programs and policies. Furthermore, the 

Federal government can offer technical assistance to local governments to 

enhance their capacity for more environmentally sustainable investments. Such 

Federal activities could guide local investment decisions and reduce GHG 

emissions by enabling more carbon-efficient choices.

Refrigerant GHGs from Mobile Air Conditioners and Refrigerated 

Transport

In 2006, HFC emissions from mobile air conditioners and refrigerated transport 

vehicles/containers accounted for 69.5 mmt CO2e, or 3.5 percent of total 

transportation GHG emissions. It should be noted that these emissions are 

included in the estimates for the modes discussed above, but are presented here 

separately to highlight the special characteristics of the gases and the unique 

factors that influence the levels of their release.

HFCs were introduced in the early 1990s as a new refrigerant for mobile air 

conditioners and refrigerated freight transport units to replace 

chlorofluorocarbons (CFC) and hydrochlorofluorocarbons (HCFC). CFC and 

HCFC were banned under the Montreal Protocol due to their ability to deplete 

the ozone layer. All of these refrigerants are very potent greenhouse gases with a 

high global warming potential (GWP). GWP is a measure used to convert all 

greenhouse gases into equivalent units based on their ability to trap radiation.53

HFCs are released into the atmosphere through leaks in mobile air conditioners 

or refrigerated transport units during operation. Leaks also occur while 

HFC-134a, the most commonly used HFC refrigerant today, has a GWP of 1,300, 

indicating that 1 kilogram of HFC-134a has the same warming potential over a 

100-year period as 1 kilogram of CO2. 

 

53 The GWP of a greenhouse gas is defined as the ratio of the time-integrated radiative 

forcing from the release of 1 kilogram (kg) of the gas (or other substance) relative to 

that of 1 kg of CO2. The GWP of CO2 is always defined as 1, because it is the reference 

gas that all others are compared to. GWPs provide a mechanism for converting all 

greenhouse gas emissions to an “equivalent” amount of CO2. 
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servicing these units, or during their retirement; at which time the HFCs can be 

recycled. Efforts to prevent these leaks, such as strengthening the requirement 

and training of technicians to use recovery equipment, and not vent refrigerant 

during equipment service, have reduced emissions. Investigating new 

refrigerants with lower GWP values could decrease the global warming effect of 

future releases of current refrigerants.

Figure 2.13 shows the steady increase in HFC emissions from 1990 to 2006 

associated with the gradual introduction of HFCs to replace CFCs and HCFCs as 

common refrigerants. HFC emissions plateau after 2005, possibly due to better 

leak prevention and completion of the HFC phase-in. 

Figure 2.13 HFC Emissions from Mobile Air Conditioners and Refrigerated 

Transport

0

10

20

30

40

50

60

70

80

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

MMT CO2e

Source: U.S. EPA (2008). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 to 2006.

2.3 LIFE-CYCLE TRANSPORTATION GREENHOUSE GAS 

EMISSIONS

A primary source of transportation greenhouse gases is the combustion of fuel or 

other energy sources to power vehicles, also known as “tailpipe” emissions. 

However, transportation depends on an array of other processes that also 

produce additional GHG emissions. These include the production and 

distribution of fuel, the manufacture of vehicles, and the construction and 

maintenance of transportation infrastructure. These supporting processes—

known as the fuel, vehicle manufacture, and infrastructure cycles—generally are 

not included in U.S. transportation sector GHG estimates. Many of these 

processes are included in U.S. industrial sector estimates, and some occur 

overseas, and are therefore excluded from estimates of U.S. transportation sector 

GHG emissions. However, these processes are important elements of the 
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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transportation life cycle, increasing GHG emissions by up to 50 percent more 

than operating emissions alone.

GHGs from these three supporting processes appear to be of comparable 

magnitude, with fuel cycle emissions likely having the largest contribution. Fuel 

cycle processes include the extraction, shipment, refining and distribution of fuel, 

and GHGs from these activities vary by fuel type.54 Gasoline fuel cycle processes 

are the most GHG intensive of any conventional transportation fuel, with fuel 

cycle processes producing GHGs that are roughly 24 to 31 percent beyond the 

combustion emissions of the fuel itself. Diesel fuel cycle emissions are roughly 

15 to 25 percent beyond direct diesel combustion emissions, while jet fuel is 17 to 

24 percent beyond combustion emissions.55

Vehicle manufacture cycle emissions include raw material production, vehicle 

construction and shipment. GREET and LEM provide estimates of GHGs from 

these processes for on-road vehicles; additional estimates are provided by 

Chester (2008). With these estimates expressed relative to combustion emissions, 

the manufacture-cycle GHGs represent an additional 14 to 19 percent beyond 

gasoline combustion emissions; manufacturing of freight trucks is 6 to 17 percent 

beyond combustion diesel combustion emissions; and aircraft up to 6 percent. 

As shown in Figure 2.14, the EPA estimates that greenhouse gas emissions for 

light-duty vehicles are 38 to 50 percent higher than operating emissions alone

when fuel cycle and vehicle cycle emissions are also included. For dieselpowered freight trucks, emissions are 21 to 45 percent greater when including 

fuel cycle and vehicle cycle emissions. 

 

54 Estimates have been developed for Argonne National Laboratory’s GREET model, as 

well as for the Life-Cycle Emissions Model (LEM) developed by Mark Delucci at the 

University of California at Irvine. 

55 U.S. Environmental Protection Agency (2006). Greenhouse Gas Emissions from the U.S. 

Transportation Sector: 1990-2003.
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Figure 2.14 Direct GHG Emissions Plus Fuel and Vehicle Cycle GHG 

Emissions

0 20 40 60 80 100 120 140

 

 

Extraction +5 to 9%

Manufacturing

+12 to 15%

Fuel Shipment +1 to 2%

Refining +18 to 19%

Distribution +1%

Vehicle 

Transport

+2 to 3%

Fuel Cycle 

+24 to 31%

Vehicle Cycle 

+14 to 19%

Fuel Cycle 

+15 to 25%

Vehicle Cycle 

+6 to 20%

Lifecycle GHG Emissions (Direct Emissions = 100)

Light-Duty 

Vehicles -

Gasoline

Heavy Duty 

Vehicles -

Diesel 

Extraction +4 to 8%

Fuel Shipment +1 to 2%

Refining +9 to 13%

Distribution +1%

Manufacturing

+4 to 17%

Vehicle 

Transport

+2 to 3%

Note: Upstream emissions presented in 

this figure are the mid-point of estimates 

developed based on an analysis of the 

GREET model and the Lifecycle 

Emissions Model (LEM).

Source: U.S. EPA (2006). Greenhouse Gas Emissions from the U.S. Transportation Sector, 1990-2003

(EPA 420-R-06-003).

Including infrastructure cycle emissions in estimates would further increase 

these figures. However, there is limited evidence on vehicle infrastructure cycle 

emissions, although research in this area has accelerated. The only published 

estimates incorporating infrastructure cycle emissions, as well as fuel and vehicle 

cycle emissions, are provided by Chester, as shown in Table 2.2 (for selected 

transportation modes). These results suggest that all together, fuel, vehicle and 

infrastructure cycle emissions increase emissions by one-half beyond operating 

emissions alone for light-duty vehicles and buses; double the emissions for rail 

transit; and increase aircraft emissions around a quarter.56 For light-duty 

vehicles, the contribution of infrastructure construction, operations and 

maintenance is of roughly the same magnitude as each of the contributions of 

vehicle manufacturing and fuel production. For rail-transit modes, the relative 

contribution of infrastructure varies depending upon various factors, such as the 

amount of tunneling and the elevated right of way used in the system.57

 

56 Chester, Mikhail Vin (2008). Life-cycle Environmental Inventory of Passenger 

Transportation Modes in the United States. Institute of Transportation Studies, University 

of California, Berkeley.

57 See Chester (2008), Figures 4 and 11.
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Table 2.2 Life-Cycle GHG Estimates for Various Transportation Modes

Vehicle Type

Operational 

emissions,

g CO2e/ PMT

Fuel, Vehicle, and 

Infrastructure 

Cycle emissions,

g CO2e/PMT

Total 

emissions,

g CO2e/ PMT

Percent Increase 

over Operational 

Emissions Alone

On-Road Vehicles

Sedan 230 150 380 65%

SUV 270 180 450 67%

Pickup 420 200 620 48%

Bus (Off-Peak Times) 470 210 680 45%

Bus (Peak Times) 59 26 85 44%

Rail Transit Systems

Bay Area Rapid Transit 

(BART)

64 76 140 119%

Caltrain 74 86 160 116%

San Francisco Municipal 

Transit Agency (Muni)

69 101 170 146%

Massachusetts Bay 

Transit Authority 

(MBTA)—Green Line

120 110 230 92%

Aircraft

Embraer 145 230 60 290 26%

Boeing 737 170 40 210 24%

Boeing 747 150 50 200 33%

Source: Chester, Mikhail Vin (2008). Life-Cycle Environmental Inventory of Passenger Transportation 

Modes in the United States. Institute of Transportation Studies, University of California, Berkeley.

Notes: Calculations are based on average occupancies. The researchers analyzed particular rail systems 

as the rail life cycle emissions vary greatly by system.
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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2.4 PROJECTED GROWTH OF TRANSPORTATION 

GREENHOUSE GAS EMISSIONS

Based on the Energy Information Administration’s (EIA) Annual Energy 

Outlook (AEO), projections show little growth in GHG emissions from 

transportation in the coming decades—with total GHG emissions growing only 

0.7 percent between 2007 and 2030, as shown in Figure 2.15.58 CO2 emissions 

alone from transportation are expected to grow 1.8 percent, slower than the 3.5 

percent growth projected for the economy as a whole.59

According to these projections, the modes show very different rates of growth in 

emissions, as shown in Table 2.3. Despite a 42 percent increase in VMT over the 

period, light-duty vehicle GHG emissions are projected to decline nearly 12 

percent, in response to expected increases in fuel economy from corporate 

average fuel economy (CAFE) regulations, advanced technologies, and 

alternative fuels.

 

60

These projections are subject to a number of uncertainties: economic growth, 

population growth, future fuel prices, and expected changes in the future mix of 

vehicles and fuels. The AEO projections are particularly sensitive to the assumed 

rate of growth in VMT, because on-road vehicles account for more than threequarters of transportation GHG emissions. Higher or lower VMT projections 

will significantly change the projections of total GHG emissions from 

 Freight trucks, on the other hand, show a projected 20 percent 

increase in emissions, even though freight truck VMT grows at a similar rate to 

light-duty vehicles. Domestic aviation also shows significant projected growth, 

with emissions climbing 27 percent. As a result, domestic aviation’s share of 

total transportation emissions is expected to grow from 9 percent to more than 11 

percent over this period. Although the share of emissions from light-duty 

vehicles is projected to decrease, they would still account for nearly one-half of 

transportation CO2 emissions. 

 

58 Based on EIA AEO 2009 April Update, Reference case. CO2 numbers were taken 

directly from AEO for all modes. CH4, N20, and HFCs were calculated using scaling 

factors developed from reported shares for each gas from the U.S. Inventory of 

Greenhouse Gas Emissions and Sinks 1990-2006 (U.S. EPA, 2008), as well as trends in CH4

and N20 emissions. HFC emissions were assumed to remain a constant share of modal 

emissions.

59 Energy Information Administration. Annual Energy Outlook 2009 April Update, as 

cited.

60 In the AEO 2009 reference case, ethanol GHG emissions are assumed to be net zero in

the transportation sector (direct emissions are offset by the growing of the feedstock).

The emissions of ethanol production and harvesting are included in the industrial 

sector.
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transportation. This AEO projection assumes an average annual growth in VMT 

of 1.5 percent.

The AEO projections take into account existing government legislation and 

regulations, but do not consider additional government policies, such as 

subsequent increases in fuel economy standards. The projections shown here are 

based on the AEO reference case from the April 2009 update, which includes the 

anticipated effects of the American Recovery and Reinvestment Act (ARRA), and 

the fuel economy and renewable standards included in the Energy Independence 

and Security Act (EISA) of 2007. 

With the new standard of 35.5 mpg for new vehicles by 2016, light-duty GHG 

emissions would be approximately 4 percent lower in 2020, and 3 percent lower 

in 2030, than the projections provided in this report. 

Figure 2.15 Historic and Projected Transportation GHG Emissions 

(mmt CO2e)

1990 to 2030

0

500

1,000

1,500

2,000

2,500

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029

MMT CO2e

Source: Historical emissions (1990 to 2006) from U.S. EPA (2008): U.S. Inventory of Greenhouse Gas 

Emissions and Sinks 1990 to 2006. Projected emissions (2007 to 2030) from Cambridge 

Systematics analysis of Energy Information Administration, 2009: Annual Energy Outlook 2009 

Updated April Release.
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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Table 2.3 GHG Emission Projections By Mode (mmt CO2e)

2007 to 2030

2007 2030

Percent Change 

2007-2030

2007 Share 

by Mode

2030 Share 

by Mode

Light-Duty Vehicles 1,221.4 1,080.9 -11.5% 56.7% 49.8%

Commercial Light Trucks 43.4 41.6 -4.3% 2.0% 1.9%

Bus Transportation 20.2 20.6 2.0% 0.9% 0.9%

Freight Trucks 374.9 449.7 20.0% 17.4% 20.7%

Rail, Passenger 6.6 8.2 24.7% 0.3% 0.4%

Rail, Freight 48.8 55.4 13.5% 2.3% 2.6%

Shipping, Domestic 28.3 32.7 15.7% 1.3% 1.5%

Shipping, International 78.0 79.9 2.5% 3.6% 3.7%

Recreational Boats 19.7 21.2 7.8% 0.9% 1.0%

Air 194.1 246.6 27.1% 9.0% 11.4%

Military Use 50.3 55.2 9.8% 2.3% 2.5%

Lubricants 5.2 5.6 7.5% 0.2% 0.3%

Pipeline Fuel 31.8 37.4 17.6% 1.5% 1.7%

Other 33.0 36.3 10.0% 1.5% 1.7%

Total Transportation 2,155.5 2,171.3 0.7%

Source: Historical emissions (1990 to 2006) from U.S. EPA (2008): U.S. Inventory of Greenhouse Gas 

Emissions and Sinks: 1990 to 2006. Projected emissions (2007 to 2030) from Cambridge 

Systematics analysis of Energy Information Administration, 2009: Annual Energy Outlook 2009 

Updated April Release.
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3.0 Greenhouse Gas Reduction 

Strategies and Impacts

3.1 STRATEGIES

Transportation greenhouse gas (GHG) emissions from fuel combustion and 

vehicle air conditioning systems account for 29 percent of total U.S. GHG 

emissions. In light of the aggressive national GHG reduction goals currently 

under discussion, which seek to reduce U.S. GHG emissions by as much as 80 

percent from 2005 levels by 2050, the transportation sector could play a large 

role. The technical report for this study examines dozens of proposed strategies,

and assesses their potential to reduce transportation GHG emissions. These

assessments are based on published scientific literature, current policy studies, 

and best professional estimates. This section presents an overview and 

comparative summary of the technical report findings.

The strategies to reduce transportation GHG emissions discussed in the technical 

report are organized into four major groups. They include strategies to: 

• Introduce low-carbon fuels Petroleum-based fuels account for 97 percent of 

U.S. transportation energy use.61

• Increase vehicle fuel efficiency. The objective of this group of strategies is to 

reduce GHG emissions by using less fuel per mile traveled. Fuel efficiency 

improvements include advanced engine and transmission designs, lighterweight materials, improved aerodynamics, and reduced rolling resistance. 

 The objective of this group of strategies is to 

develop and introduce alternative fuels that have lower carbon content and 

therefore generate fewer transportation GHG emissions. These alternative 

fuels include ethanol, biodiesel, natural gas, liquefied petroleum gas, lowcarbon synthetic fuels (such as biomass-to-liquids), hydrogen, and electricity. 

• Improve transportation system efficiency. These strategies seek to improve 

the operation of the transportation system through reduced vehicle travel 

time, improved traffic flow, decreased idling, and other efficiency of 

operations; improvements that can also result in lower energy use and GHG 

emissions. The strategies range from truck-idle reduction, to reducing 

congestion through Intelligent Transportation Systems (ITS) and other 

innovative forms of traffic management, to air traffic control systems that

route aircraft more efficiently and reduce delays. Efficiency can also be 

 

61 U.S. Department of Energy, Annual Energy Outlook 2009.
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improved by shifting travel to more efficient modes, where such shifts are 

practical in terms of price and convenience—such as passenger vehicle to 

bus, or truck to rail, 

• Reduce carbon-intensive travel activity. The objective of this group of 

strategies is to influence travelers’ activity patterns to shift travel to more 

efficient modes, increase vehicle occupancy, eliminate the need for some 

trips, or take other actions that reduce energy use and GHG emissions 

associated with personal travel.

The discussion begins with an overall comparison of the benefits and other 

impacts of these groups of strategies; noting the magnitude of reductions, as well 

as key issues related to cost-effectiveness, timing of benefits, and cobenefits. Key 

interactions among strategies and implications for infrastructure finance, are also 

discussed. This section concludes with a table detailing the benefits and impacts 

of each strategy.

Efforts that cut across these four strategy groups are addressed in Section 4. 

These are:

• Pricing carbon. Discusses pricing carbon through a cap and trade system, 

carbon tax, or increased motor fuels tax. The objective of this group of 

strategies is to reflect the broader costs of climate change by increasing the 

cost of emitting CO2 and thereby influencing consumers and businesses to 

reduce CO2 emissions. Policies that would price carbon emissions affect all 

four strategy groups: by increasing the cost of emitting greenhouse gases, 

they encourage the lowest cost combinations of the use of low carbon fuels, 

the purchase of energy efficient vehicles, the adoption of efficiency 

improvements in transportation systems, and the reduction of travel 

demand. 

• Transportation planning. Discusses transportation planning and investment 

efforts that offer cross-cutting system efficiency and travel activity strategies. 

Transportation planning and investment decisions can improve the operating 

efficiency of the multi-modal transportation network, and integrate 

transportation and land use planning to reduce travel distances.

Pricing carbon is also summarized in this section for comparison with the GHG

reduction benefits of other strategy groups. The GHG benefits of transportation 

planning and investment efforts could not be quantified and therefore are not 

discussed in this section.

3.2 ANALYSIS METHODS AND UNCERTAINTIES

Basis for Estimates

Estimates of GHG reductions as well as cost-effectiveness of the various 

strategies discussed here are based on material presented in Volume 2 of this 
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report (or Volume 1, Section 4 for carbon pricing strategies). The analysis is 

based on a comprehensive review of the existing literature on the impacts of 

individual strategies. In some cases, additional original analysis was performed 

to develop estimates using a common set of assumptions and the most recently 

available data. The GHG reduction estimates for combinations of strategies were 

based on an assessment of what strategies could reasonably be implemented in 

combination with each other. 

The benefits of strategies are presented for a “snapshot” 2030 analysis year, both 

in absolute terms (million metric tons of carbon dioxide equivalents, or mmt 

CO2e), as well as in relative terms (percent reduction in total transportation GHG 

emissions compared to 2030 baseline projections). Total baseline transportation 

GHG emissions in 2030 are projected to be 2,171 mmt CO2e, based on adjusted 

projections from the Department of Energy’s Annual Energy Outlook (AEO) 

April 2009 release.62

For those strategies that would primarily have a long-term affect, 2050 impacts 

also are presented. Since the AEO does not include projections beyond 2030, the 

same baseline was used for 2050 as for 2030 (2,171 mmt) when calculating 

potential emission reductions.

 The AEO forecasts nearly level transportation GHG 

emissions over the next two decades, with emissions only 0.7 percent higher in 

2030 than in 2007, as fuel efficiency increases offset increases in total travel. 

63

Sources of Uncertainty

This baseline would underestimate the potential 

emission reductions from these long-term strategies if in reality business as usual 

emissions would have been higher.

Assessing the benefits of any particular strategy, or set of strategies, is a 

complicated and often controversial task that is best done at the time a strategy 

or set of strategies is being considered as a path forward. It is also critical to 

include in such an analysis the best, most current data and reliable assumptions. 

While the analysis presented in this report represents the most comprehensive 

assessment possible, given the existing scientific knowledge, there are many 

 

62 Minor adjustments to the AEO forecast were made to account for greenhouse gas 

emissions other than CO2, as discussed in Appendix A. The AEO forecast does not 

account for additional increases in fuel economy targets beyond those established in 

the EISA, as are in the process of implementation by the Obama Administration in 

2009.

63 It is generally agreed that cumulative GHG emissions reductions over a future time 

period (for example, 2010 through 2050) are the most important measure of a strategy’s 

success, rather than emissions in any particular year. Since cumulative emission 

benefits are not available for all the strategies in this report, however, common 

“snapshot” years are presented instead. The year 2030 is viewed as a reasonable 

“average” representation for the 2010-2050 period for strategies whose benefits increase 

over time (such as land use change or phase-in of new vehicle technologies). 
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inherent uncertainties. For example, some of the vehicle efficiency and lowcarbon fuel technologies that could yield the greatest long-term benefits are still 

unproven. There is also no guarantee that these technologies can be advanced on 

a large scale to the point of feasibility and cost-competitiveness. Future fuel costs 

(as well as the relative difference in costs between fuels) will have a large impact 

on the cost-effectiveness of particular fuel-saving and alternative-fuel strategies, 

thereby affecting their ability to penetrate the market. For example, during 

periods of high petroleum prices, alternative fuels may be cheaper than gasoline,

and vice versa. Therefore, both the magnitude and timing of these strategies 

should be considered uncertain. 

In addition to technological uncertainty, many of the strategies from all 

categories may face significant political and/or institutional barriers. For 

example, some of these strategies may require greater up-front vehicle purchase 

costs (even if yielding net lifetime cost savings); significant public-sector 

investment; and may create negative impacts on some populations (even if 

yielding net social benefits). Carefully-crafted policies should seek to minimize 

any negative impacts of these strategies, and maximize the social benefits that are 

achieved beyond GHG reductions. Policy options for implementing GHG 

reduction strategies are discussed in Volume 1, Section 5.0 of this report.

For many strategies there is limited empirical evidence available to base findings. 

Often, only one or two studies have examined the GHG benefits of a particular 

strategy. A number of strategies had aspects that could not be evaluated due to 

this lack of empirical evidence. Even where multiple studies exist, they 

sometimes indicate a potentially wide range of benefits, reflecting uncertainty 

regarding the benefits or costs of these strategies. Professional judgment was 

applied in selecting the most comprehensive and reliable assessments to draw 

from for each strategy. In Volume 2, the level of confidence in the estimates, and 

any particularly important sources of uncertainty, are discussed for each strategy 

assessed.

Finally, there is uncertainty regarding consumer response to changes in travel 

conditions. Strategies that smooth traffic flow by reducing stop and go 

congestion may reduce emissions, but the improved travel conditions can also 

lead to increased travel, offsetting emissions benefits. While this concept, called

induced demand, is widely acknowledged in the transportation profession, 

estimates of its magnitude are a source of uncertainty and debate. A range of 

plausible estimates from the literature could significantly impact induced 

demand and GHG calculations for many strategies. This study cites analysis that 

incorporates the impact of induced demand for strategies that would improve 

travel conditions–highway operations and management, public transportation, 

and commute travel reduction—with the exception of aviation, rail, and marine 

operations, where insufficient data was available.

For most strategies, a range of potential benefits is shown, reflecting some of the 

uncertainties inherent in the assessment. The ability to achieve even the lower 

end of the range, however, is by no means guaranteed. Therefore, the results 
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presented here should be viewed as a general representation of the benefits that 

could potentially be achieved through each strategy, or group of strategies. The 

results also assume that advances in key technologies can be realized, and a 

favorable political and economic environment exists for the implementation of 

GHG reduction measures.

3.3 STRATEGY: INTRODUCE LOW-CARBON FUELS

This group of strategies introduces alternative fuels with lower carbon content 

per unit of energy than the current petroleum-based fuels powering the vast 

majority of today’s transportation system. Examples of low-carbon fuels include 

ethanol, biodiesel, natural gas, hydrogen, and electricity. Fuel choices will 

depend on vehicle technology, since many fuels require some degree of 

powertrain modification, while others—such as electricity—require completely 

different powertrains. The current dominance of petroleum-based fuels reflects 

the advantages of liquid fuels for transportation, with their high energy densities 

allowing for extended vehicle range on limited storage. Gasoline and diesel in 

particular benefit from their firmly established production and distribution 

infrastructures, resulting in price advantages, and creating significant barriers to 

entry for most alternatives. Nonetheless, promising technologies that can 

provide low carbon fuel alternatives exist and are continuing to be developed.

The life-cycle greenhouse gas impacts of a fuel—not just emissions from the 

vehicle itself—must be considered when evaluating alternative fuel options. A 

life-cycle analysis takes into account the GHGs associated with all stages of the 

extraction (or feedstock production), processing, distribution, and dispensing of 

the fuel.

Natural gas can provide about a 15 percent GHG reduction relative to light-duty 

gasoline vehicles, roughly equivalent to diesel vehicle benefits. However, it 

requires more significant vehicle modification and distribution infrastructure,

and its use is likely to be limited primarily to fleet vehicles utilizing central 

refueling and maintenance. Furthermore, its use as a transportation fuel would 

compete with use in other sectors, such as electricity generation and home 

energy, where it provides more cost-effective GHG reductions.64

Renewable fuels such as ethanol and biodiesel offer potential for GHG emission 

reduction. Renewable fuels are defined by the EPA as fuels produced from 

waste, plant or animal products, rather than fossil fuels. The GHG emissions 

benefits of renewable fuels depend on a variety of factors, including the 

feedstock, production method, carbon intensity of energy used in production, 

prior land use, and evaluation timeframe. Advanced biofuels from cellulosic 

sources will likely offer much steeper GHG reductions than first generation 

 

 

64 Vol. 2 Sec. 3.4.
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biofuels, though more research and development is needed. Cellulosic ethanol is 

produced from the structural material that comprises much of the mass of plants. 

Greater deployment of flex-fuel vehicles, which can run on either conventional or 

renewable fuel, and vehicles designed specifically to run on biofuels, would be 

needed to increase the market penetration of renewable fuels beyond 10 percent 

of light duty transportation fuel. Most vehicles on the road today can only

operate on up to a 10 percent ethanol blend. Flex-fuel vehicles are slightly less 

efficient than vehicles designed to run on a single fuel. Ethanol has a lower 

energy content per gallon than gasoline, requiring slightly higher volumes of 

fuel. Adequate production capacity, land availability and distribution 

infrastructure are also key factors for renewable fuels. 

Significant work is currently underway in the area of evaluating the effectiveness 

and cost of various renewable fuels in reducing GHG emissions. For example, 

the EPA published an analysis of life-cycle emissions from renewable fuels in 

conjunction with its revised renewable fuel standard. As such, this report to 

Congress does not include detailed analysis of biofuels. Readers are instead 

referred to EPA’s renewable fuels website: 

http://www.epa.gov/otaq/fuels/renewablefuels/index.htm. 

In the long-term (i.e., 25 years or more, with a projection year of 2050), hydrogen 

offers significant potential for GHG reductions, because hydrogen fuel cells are 

substantially more efficient than today’s internal combustion engines. The GHG 

benefits of hydrogen depend strongly upon the method adopted for hydrogen 

production, but reductions per vehicle of about 50 percent in 2030 and 80 percent

in 2050 could be realized with projected reductions in the GHG intensity of 

hydrogen production. However, hydrogen will only be a viable alternative if 

current technological barriers to fuel cells can be overcome. Furthermore, major 

investments in new production and distribution infrastructure will also be 

required to realize hydrogen’s potential. Assuming these barriers can be 

surmounted, aggressive deployment could potentially lead to a 22 percent 

reduction in total transportation GHG emissions in 2050, if a 60 percent light 

duty vehicle market penetration could be achieved, which is the high end 

discussed in current literature. Production from renewable resources, or with 

carbon capture and storage (if this technology can be developed), will result in 

much greater benefits than production from non-renewable sources without 

carbon capture.65

Electricity shows similarly strong potential for GHG reductions, due to the 

inherent efficiency of electric motors. Electricity has the advantage of not 

requiring an entirely new production and distribution infrastructure. In 

addition, the cost of electricity for powering a vehicle is lower than that of 

 

65Vol. 2 Sec. 3.8.
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gasoline on a per mile basis. While vehicles using electricity generated from the 

current U.S. average generation mix can reduce GHG emissions by about 33 

percent, compared to today’s gasoline-powered vehicles, the GHG benefits of 

electricity will depend strongly upon the source of electricity generation.66 Coalfired electric plants may provide only modest benefits, or even increase net GHG 

emissions, unless successful carbon sequestration technologies are developed. 

Assuming increasingly lower GHG-intensity electricity generation, per-vehicle 

benefits could be as high as 78 to 87 percent in 2050, providing a total reduction 

in transportation emissions of 26 to 30 percent. Again, this assumes a 56 percent 

LDV market penetration by this time, which is the high end discussed in the 

literature. Considerable research and development on battery technology, 

notably to reduce costs and weight, is still required to bring electric vehicles to 

the point of being cost-effective and accepted by consumers.67

Cost-effectiveness is highly uncertain for most fuel options, and will depend 

upon advances in technology for the particular fuel and vehicle combination, as 

well as fuel prices. The costs for different fuels will fluctuate significantly 

depending upon supply and demand factors in other sectors, as well as the

transportation sector, making it especially difficult to predict the market 

competitiveness of alternative fuels. 

From a Federal policy perspective, several categories of policy options could be 

pursued in order to encourage adoption of low carbon fuels. Options include:

fuel standards; market incentives, such as pricing and tax policies; and additional 

funding for research and development. 

Other policy interventions may be helpful as well. For example, incentives for the 

production of flexible fuel vehicles can help overcome the dilemmas of fuel 

suppliers not introducing new low-carbon fuels until a sufficient number of 

vehicles can use them, and vehicle manufacturers not introducing alternative fuelready vehicles until a fuel supply is available.

For fuels entailing completely new production, distribution and vehicle 

platforms (e.g., hydrogen fuel cells), optimal modes or restricted markets can be 

identified to test comprehensive deployment on a small scale. Federal

coordination and regulation may help ensure that both the fuel and vehicle 

sectors are focused on mutually supportive objectives.

 

66 The 33 percent reduction may not be typical for in-use electric vehicles. It will depend 

upon the timing of when charging occurs, e.g., for peak vs. off-peak electricity demand 

periods, and furthermore vary by region of the country (depending upon the local 

generation mix).

67Vol. 2 Sec. 3.9.
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3.4 STRATEGY: INCREASE VEHICLE FUEL EFFICIENCY68

Strategies to increase fuel efficiency are intended to reduce fuel consumption per 

unit of travel by on-road vehicles, locomotives, aircraft, and marine vessels. 

Although some retrofit options are available, energy efficiency improvements are 

inherently a medium- to long-range strategy, as they apply primarily to new 

vehicles and are dependent upon the rate of fleet turnover for the full affect on 

reducing transportation GHG emissions. Examples that are market-ready, and 

could be further incorporated in new vehicles in the near future, include:

efficiency improvements to internal combustion engines; hybrid-electric 

powertrains and other efficiency improvements, such as weight reduction; and 

aerodynamic improvements that reduce drag. Many of these technologies are 

cost-effective, leading to net savings over the life of the vehicle, or even in a 

much shorter period, from reduced fuel consumption. In the longer term, 

entirely new propulsion systems relying on more efficient power conversion, and 

low- or zero-carbon fuels (such as hydrogen fuel cells), may be developed. 

Some improvements to energy efficiency already are incorporated into baseline 

GHG projections, reflecting existing regulations and anticipated technological

trends. For example, the efficiency of new cars and light trucks is projected in 

the AEO reference case to increase by 40 percent by 2030, as a result of expected 

impacts of CAFE standards through 2020, and then continue to increase beyond 

that time due to the effects of increasing fuel prices. Other sectors are not 

currently regulated for efficiency, but nonetheless are expected to show 

improvements (18 percent for aircraft, 14 percent for freight trucks, and 2 percent 

for rail and domestic shipping), as a result of technological advancements and 

market adoption.69

Improvements beyond this baseline show strong potential for further GHG 

reductions, with the largest potential in the light-duty vehicle sector. Estimates 

suggest that there is considerable potential for improvement beyond what will be 

achieved by the CAFE standards established under the 2007 EISA.

Potential GHG reduction benefits per vehicle (compared to the AEO baseline 

projection for conventional gasoline vehicles) in 2030 and beyond range from 8 to 

30 percent for advanced conventional gasoline vehicles; 0 to 16 percent for diesel 

vehicles; 26 to 54 percent for hybrid-electric vehicles (HEVs); 46 to 70 percent for 

plug-in hybrid electric vehicles (PHEVs); 40 to 84 percent for hydrogen fuel cell 

vehicles; and 68 to 87 percent for battery-electric vehicles as shown in 

 

68 Vol. 2 Chapter 3

69 The truck, air, rail, and marine efficiency measures are based on energy use per tonmile (freight movement) and seat-mile (aircraft), and therefore may be affected by 

utilization (load) factors as well as inherent vehicle efficiency. Source: AEO 2009 

Reference case, April 2009 release.
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Figure 3.1.70

Figure 3.1 Projected Future GHG Benefits of Light-Duty Vehicle/Fuel 

Technologies Compared to Baseline Conventional Gasoline 

Vehicle

 Key fuel technologies that rely on new vehicle technology 

(hydrogen fuel cell and battery-electric) are also presented in Figure 3.1 for 

comparison. 

0

10

20

30

40

50

60

70

80

90

100

Battery

electric

Hydrogen fuel

cell

Plug-in hybrid

electric

Hybrid

electric

Advanced

conventional

gasoline

Diesel

Percent Reduction in Life-Cycle GHG versus Conventional Gasoline 

Source: Eastern Research Group, Inc. analysis as presented in Vol. 2, Sec. 2.8 and 2.9 (hydrogen fuel cell 

and battery electric) and Vol. 2, Sec. 3.2 (other vehicle types). The ranges shown represent GHG 

reductions for 2030 and beyond, with the low end of the battery electric and hydrogen fuel cell 

ranges reflecting 2030 impacts and the high end reflecting additional advances through 2050.

The estimates for plug-in hybrid and battery electric vehicles depend on 

reductions in the GHG emissions intensity of U.S. electricity production. The 

estimates were calculated using GHG emission intensity modeled by the Electric 

Power Research Institute (EPRI).71

 

70 Vol. 2 Sec. 3.2.

 The input is 379 to 606 g/kWhr in 2030, and 

240 to 421 g/kWhr in 2050. This compares to a 618 g/kWh national average 

today and would require increased use of low carbon electricity production 

technologies such as wind, solar, nuclear, and hydro-electric power. However, 

even under a very high GHG intensity scenario relying on coal generation using 

71 Electric Power Research Institute (EPRI). Environmental Assessment of Plug-In Hybrid 

Electric Vehicles. Volume 1: Nationwide Greenhouse Gas Emissions. Report no. 1015325. 

2007.
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older technology (1,014 g/kWhr), at a low battery efficiency of 0.4 kWhr/mile, 

PHEVs operating in a charge depleting mode would still result in 12 percent 

lower GHG emissions than corresponding conventional gasoline vehicle 

operation, on a per mile basis. However, under these extreme circumstances, 

PHEV operation will not provide benefits relative to an HEV baseline.72

Retrofits can be used to speed improvements. Retrofits of heavy-duty trucks to 

use aerodynamic fairings, trailer-side skirts, low-rolling resistance tires, 

aluminum wheels, and planar boat tails reduce per truck GHG emissions by 10 

to 15 percent. For new trucks, combined powertrain and resistance reduction 

technologies are estimated to reduce per vehicle emissions by 10 to 30 percent in 

2030. 

Aircraft advances, including open-rotor engines or blended-wing designs, could 

potentially reduce GHG emissions by 10 to 40 percent per aircraft from baseline 

conditions, as these technologies are phased in over the next 20 to 30 years.73

Significant improvements in the efficiency of rail and marine vehicles are also 

possible—potentially 20 percent or more with an effective suite of advanced 

technologies. However, these sectors’ contributions to total transportation 

emissions are relatively small, and the total GHG reductions that may be 

achieved are somewhat less than for other sectors.74

The emission reductions associated with vehicle improvements will start slowly, 

but increase over time as new technology is phased in. Fleet turnover varies by 

type of vehicle, occurring more quickly in the light-duty sector (where most 

vehicles are replaced within 15 years), than for trucks, railcars, and marine 

vessels (for which vehicle lifetimes typically range from 20 to 40 years); and 

about 30 years for aircraft. Despite the long lifetimes of these vehicles, newer 

vehicles tend to be used more than older vehicles (especially in the trucking 

sector), and therefore GHG reduction benefits will occur somewhat more 

quickly. Some near-term reductions may also be obtained through retrofits of 

trucks, railcars and marine vessels. 

Technologies to improve vehicle fuel efficiency generally have the effect of 

increasing the initial purchase price of the vehicle, or requiring up-front capital 

investment in retrofits. However, these technologies also yield cost-savings over 

time due to reductions in fuel consumption. Many—including most advanced 

gasoline vehicle technologies, truck efficiency improvements, and rail and 

marine technologies--yield net cost-savings over the life of the vehicle and can 

cover the initial investment within a much shorter timeframe. Others, such as 

diesel, hybrid-electric, and plug-in hybrid electric vehicles, have somewhat more 

 

72 Vol. 2 Sec 3.2.

73 Vol. 2 Sec. 3.7.

74 Vol. 2, Sec. 3.5 and 3.6.
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uncertain lifetime cost-effects. In general, fuel efficiency technologies will 

become more cost-effective as the price of fuel increases. Other important factors 

influencing cost-effectiveness include the relative costs of different fuels and 

future battery costs for plug-in hybrid-electrics.75

A range of Federal policy initiatives can influence the rate of technology 

advancement and the adoption of high-efficiency technologies. Vehicle- and 

fuel-related policies should be considered simultaneously to maximize the 

effectiveness of these policies and ensure that unnecessary overlap or 

redundancy among policies does not occur.

Broadly, these approaches can be categorized as:

• GHG efficiency and fuel economy standards for new vehicles, such as the 

NHTSA and EPA harmonized National Program; 

• Partnerships with industry to develop standards and demonstrate new 

technologies;

• Subsidies or tax credits for efficient vehicles or retrofits; either for new 

vehicles or for existing vehicles, as annual payments through the registration 

process;

• Updating tax rate on inefficient vehicles (i.e. Energy Tax Act of 1978 or “gas 

guzzler tax”), levied either on new vehicles, or as annual fees on existing 

vehicles; and subsidies for scrapping the most inefficient vehicles

(http://www.epa.gov/fueleconomy/guzzler/); 

• Fuel taxes, VMT fees, or “cap and trade,” through their effect on fuel prices

and operating costs; and

• Research and development subsidies.

The effectiveness and desirability of such programs will depend, in part, on 

whether or not there are market failures that cause firms to fail to develop 

efficient vehicles, or that would deter users of such vehicles from purchasing 

more efficient vehicles. In the case of light duty vehicles, for instance, it has been 

argued that consumers, for various reasons, do not fully consider future fuel 

costs in their purchases of new vehicles.76

 

75 Vol. 2, Sec. 3.

 In any case, private purchasers of new 

vehicles would not normally consider any external public social costs of climate 

change or petroleum imports. While market failure arguments are less 

compelling for manufacturers and purchasers of expensive commercial 

transportation equipment—such as airliners, locomotives, and ships—higher 

76 Greene, D. L., J. German and M. A. Delucchi (2009). “Fuel Economy; The Case for 

Market Failure.” In Reducing Climate Impacts in the Transportation Sector, D. Sperling and 

J. S. Cannon, eds, Springer.
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capital costs (as well as the investment required to develop new technology) can 

still provide a barrier to adoption of new technology; given the risk created by 

uncertainty over future fuel prices.

Many of the most promising technologies for increasing efficiency still face 

significant technological hurdles (such as fuel cells with its concomitant 

hydrogen infrastructure challenges), or substantial cost and performance 

disadvantages (such as electric batteries). Federal funding for research and 

development for vehicles of all modes could help overcome these hurdles. More 

stringent vehicle efficiency regulations would encourage private-sector 

investment in research and development, as would substantial and sustained 

increases in fuel or carbon prices. Vehicle efficiency regulations would have the 

greatest impact in the light-duty vehicle sector, where fuel costs are a relatively 

small factor in consumers’ vehicle purchase decisions. Other technology-neutral 

incentives, such as “feebates” that increase or decrease a vehicle’s purchase 

cost—depending upon its relative energy efficiency—could serve as an 

alternative or supplement to efficiency regulations. Finally, the Federal

government could potentially adopt standards for technologies that are proven 

to be cost-effective (e.g., for heavy-duty vehicles), or work with international 

organizations, such as the United Nations’ International Civil Aviation 

Organization and International Maritime Organization, to adopt standards for 

marine vessels and aircraft.

3.5 STRATEGY: IMPROVE TRANSPORTATION SYSTEM 

EFFICIENCY 

Strategies to improve transportation system efficiency seek to optimize the use of 

the transportation network by improving transportation operations and reducing 

energy use and GHG emissions associated with a given unit of passenger or 

freight travel (e.g., person-miles, vehicle-miles, or ton-miles). The collective 

impact of these strategies is relatively modest compared to vehicle and fuel 

technology strategies—approximately a 3 to 6 percent reduction relative to 

baseline 2030 transportation emissions.77

System efficiency strategies rely largely on the planning, design, operations, and 

management of transportation systems–-factors within the control of national, 

state, and local transportation agencies. Efficiency strategies, such as intelligent 

traffic management, can lower GHG emissions by reducing fuel consumption 

 Unlike vehicle and fuel technology 

strategies, however, many of these strategies also have significant co-benefits in 

the form of time-savings to travelers and reduced costs to shippers. 

Furthermore, they may represent important GHG reduction strategies on a local 

basis (e.g., in highly congested areas).

 

77 Vol. 2 Sec. 4.1.
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associated with congestion (estimated at nearly 3 billion gallons per year78

There are several sources of uncertainty in calculating the GHG benefits of 

system efficiency strategies, and especially those that reduce congestion. Most 

significantly, the benefits of both highway and air improvements may be offset 

by induced travel demand resulting from lower travel times and costs (see 

sidebar on p. 3-21). Second, the total GHG reduction benefits will decrease over 

time if vehicle fuel efficiency increases beyond projected baseline levels, or the 

carbon content of fuels decreases. Thirdly, construction projects result in 

additional greenhouse gas emissions from the operation of related equipment 

and traffic delays during the construction process, but these effects have not been 

rigorously quantified and are not included in existing GHG estimates for these 

strategies. Because of these uncertainties, numerical estimates are not included 

for highway operations and investment strategies.

). 

Operational efficiencies such as idle reduction, delay reduction, and more 

efficient routing and scheduling can also achieve benefits in the truck, rail, 

aviation, and marine sectors. 

Highway traffic management strategies and real time traveler information, 

including signal timing, freeway ramp metering, faster clearance of incidents, 

and variable message signs, have modest potential for reducing GHG emissions;

even if induced travel demand from these projects is considered, and presuming 

that these projects do not result in substantial GHG emissions from project 

construction. Outside analysis suggests that widespread deployment of these 

intelligent traffic management strategies could produce modest GHG benefits by 

reducing inefficient vehicle operations.79

 

78 See “What Does Congestion Cost Us?” in 2009 Urban Mobility Report, published by the 

Texas Transportation Institute.

79 By way of example, the Moving Cooler analysis used FHWA’s Highway Economic 

Requirements System (HERS) model and its embedded assumptions regarding induced 

demand to estimate the impacts of traffic management strategies. This analysis 

suggested that these strategies could reduce total transportation GHG emissions by as 

Footnote continued

Characterization of GHG Reductions Used in this Report:

In this report, when referring to individual strategy effects, “modest” refers 

to reductions in CO2e emissions of less than 0.5 percent of total 

transportation emissions, or 12 mmt in 2030; “moderate” to reductions in 

the range of 0.5 to 2.5 percent of total transportation emissions, or 12 to 

60 mmt in 2030; and “significant” to reductions of greater than 2.5 percent 

of transportation emissions or 60 mmt in 2030.
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While their GHG benefits may be modest, highway traffic management and 

traveler information strategies have significant co-benefits, especially in the form 

of time-savings to travelers, as well as the economic benefit of cost-savings for 

shippers. Traffic management strategies such as signal coordination and 

incident management are proven, have relatively modest costs, and could be 

more broadly deployed within the next 5 to 10 years—yielding early GHG 

reductions that may be significant at a local scale. 

Highway bottleneck relief strategies involve increasing capacity at 

“bottlenecks” (specific points on the transportation network where demand 

exceeds capacity), through such measures as added lanes, interchange

improvements, and intersection reconfigurations. Outside analysis from the 

Moving Cooler study shows modest GHG reductions from bottleneck relief 

strategies in 2030, but modest increases in GHG emissions by 2050, because of 

induced demand. 80

A Federal policy to reduce speed limits (for example, from 70 to 60 mph or from 

65 to 55 mph) on national highways would generate substantial immediate 

benefits, reducing total transportation GHG emissions by 1.1 to 1.8 percent; in 

addition to having significant safety benefits. However, achieving these benefits 

would require strong enforcement, and by reducing travel speeds this strategy 

would increase travel times, and could increase costs to shippers. Stronger 

Federal funding incentives and disincentives, coupled with Federal oversight, 

would be required to achieve more effective enforcement if this strategy is 

pursued. This strategy is quite cost-effective, with enforcement costs of about 

$10/tonne GHG reduced. 81

 

much as 0.6 percent in 2030 (see Vol. 2, Sec. 4.2.1). The Moving Cooler estimates also 

showed net GHG reductions in 2050. 

80 The Moving Cooler study analyzed the impact of bottleneck relief construction projects 

at the top 200 bottlenecks in the United States. It found that bottleneck relief strategies 

would achieve a net reduction in GHGs of 4 mmt CO2e under maximum deployment 

in 2030 and a net increase in GHGs of 10 mmt CO2e under maximum deployment in 

2050. That corresponds to a 0.3% decrease in US on road GHGs in 2030 and a 0.7% 

increase in US on road GHGs in 2050. These estimates do not include construction 

emissions (see Vol. 2, Sec. 4.2.3). The bottleneck relief estimates also assume that the 

projects would be fully financed by increased fuel taxes, which somewhat mitigates the 

induced travel demand resulting from congestion relief. 

81 Vol. 2 Sec. 4.2.4.
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Induced Travel Demand

Induced travel demand can be defined as any increase in travel resulting from 

improved travel conditions. The induced VMT generally results from longer trips, 

as well as additional trips and shifts of travelers from other modes. Over the longer 

term, improved travel conditions can also impact land use, further impacting trip 

lengths and modal shifts. It is an important consideration for system efficiency and 

travel activity strategies, affecting the impacts on travel and corresponding GHG 

benefits of most of these strategies.

In particular, bottleneck relief, traffic management, and traveler information 

strategies lead to additional travel by reducing congestion and travel times; this 

additional travel reduces and, in the long run, potentially eliminates the 

effectiveness of these measures in reducing GHG emissions. To a lesser extent, 

travel behavior strategies that reduce on-road trips also result in induced demand, 

since the initial reduction of highway travel times will draw some additional traffic 

back onto these facilities. Induced demand is related to the basic economic concept 

of elasticity, meaning that a decrease in cost (such as travel time) results in an 

increase in consumption. Sources referenced in this report applied short- and longterm elasticities to estimate induced demand effects, and used adjusted travel 

volumes to calculate fuel consumption and GHG emissions. Strategies that reduce 

VMT by making highway travel more expensive – such as mileage-based fees, 

congestion-based tolls, or increased gas taxes – are assumed to result in no induced 

demand, since the increase in monetary costs suppresses the demand for additional 

travel. Use of “congestion pricing” in connection with bottleneck relief strategies 

may limit offsets from induced demand. 

While the concept of induced demand is widely acknowledged in the transportation 

profession, estimates of its magnitude are a source of uncertainty and debate. A 

range of plausible estimates from the literature would significantly impact induced 

demand and GHG calculations for many strategies. U.S. DOT is designing research 

to provide a better understanding of the role of induced demand in offsetting GHG 

improvements from congestion reduction strategies. 

This study used the same induced demand assumptions as those recently used in 

the Federal Highway Administration’s (FHWA) Highway Economic Requirements 

System (HERS) model. The version of HERS used for the 2008 U.S. DOT Conditions 

and Performance Report uses an elasticity of VMT with respect to total travel cost of 

-0.4 for the short run and -0.8 for the long run. To compare an elasticity for fuel 

prices to an elasticity for total travel costs, one would need to multiply the fuel price 

elasticity by a factor of three to ten, since fuel cost represents only about a tenth to a 

third of total operating costs. Small and Van Dender (2007) estimate an elasticity of 

VMT with respect to fuel prices of between -0.02 and -0.03 for the short-run and of 

an elasticity between -0.11 and -0.15 for the long-run. For short- to medium-run 

responses of VMT to changes in fuel prices, Ewing et al. (2008) estimated an 

elasticity of -0.17. The question of how strongly VMT responds to changes in travel 

costs is far from settled, with ongoing research continuing to produce new estimates. 

Additional details on the calculations performed by the sources cited in this study 

can be found in Section 4.1.4 and 4.2 of Volume 2 and Appendix A.
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Traveler information provides up-to-date information to travelers on traffic 

conditions, incidents, and expected delays; the availability of public 

transportation and other travel alternatives; weather conditions; road 

construction; and special events. While valuable in improving the timing and 

routing of travel choices, it provides only modest GHG benefits; at least in the 

current form of real-time road traffic information. Traveler information can be 

deployed with modest resources. Additional benefits may be realized in the 

future through new strategies, such as real-time rideshare matching and transit 

information. However, reliable information does not yet exist on the travel and 

GHG impacts of these emerging strategies.

Truck idle reduction provides only modest GHG benefits—up to 0.2 percent of 

total transportation GHG--but could be implemented relatively quickly and 

provides net cost savings to vehicle operators (with a short payback period of 

two to three years). It also reduces local air pollutants. Truck idle reduction 

could be implemented through the adoption of a uniform national anti-idling 

law, in combination with financial incentives for the purchase of idle reduction 

technology.82

For the rail and marine sectors, efficiencies can be achieved through rail 

chokepoint relief to reduce congestion, as well as revised operational practices,

such as locomotive idle reduction in rail yards and shore-side power use for 

ships. The EPA’s 2008 rulemaking includes requirements to reduce emissions 

from idling locomotives by requiring technology that reduces the amount of time 

a locomotive spends idling and applying tighter emission standards to new

locomotives. These efficiency improvements provide modest benefits in GHG 

reductions from operations and may also encourage the shifting of freight from 

trucks to the more efficient rail and marine modes. The potential for freight 

mode shifting is limited by many factors, including haul distance (most 

efficiency benefits are lost for shipments less than 500 to 1,000 miles), handling 

costs at terminals, and the demand for speed and reliability in the shipment of 

high value or time sensitive freight. The collective potential reduction of 

transportation GHG emissions from rail and marine operations appears to be less 

than 0.5 percent of all transportation GHG emissions, with most of the potential 

in the rail sector. While some rail and marine operating strategies can be 

implemented at a modest cost, nationwide elimination of key rail chokepoints 

requires substantial private and public investment.

 

83 Improvements to 

intermodal operations, such as reducing chokepoints where freight is transferred 

between marine, rail, and highway modes, can also reduce emissions.84

 

82 Vol. 2 Sec. 4.3.1.

83 Vol. 2 Sec. 4.4.

84 Vol. 2 Sec. 4.4.
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Improvements to aviation efficiency, such as more direct routing and more 

efficient takeoff and landing profiles, show the potential to increase air traffic 

operational efficiency by 2.5 to 6 percent by 2035. Many of these improvements 

already are being implemented through the FAA’s NextGen program. Other 

operational improvements at airports (e.g., single-engine taxi, electric gate 

power) show very modest potential GHG benefits, although they may have 

significant co-benefits in the form of reductions in local air pollution and airline 

cost savings. Aviation efficiency improvements that reduce the cost of air travel

could potentially result in offsetting increases in GHG emissions as more people 

travel, but this effect has not been reliably quantified and is not included in the 

estimates presented here.85

Transportation infrastructure construction is a significant contributor to GHG 

emissions. These emissions are discussed under life-cycle emissions in 

Section 2.3, since only tailpipe emissions are included as transportation 

emissions in the U.S. GHG inventory for accounting reasons. Perhaps the most 

significant and currently available strategy to reduce GHG emissions from 

construction is the use of fly ash in cement, which uses a recycled material to 

reduce the amount of cement needed by up to 50 percent (cement production 

produces large amounts of GHGs). Already in use in a few places, this strategy 

could be implemented much more widely as State DOTs become more 

comfortable with the technology. Greater widespread use of warm- and coldmix asphalt also has the potential to reduce GHGs generated to produce and 

laydown these asphalt materials, but further research and demonstration under a 

variety of conditions in the U.S. is needed. Together these strategies have the 

potential to reduce GHG emissions by roughly 0.8 percent, relative to the 

transportation sector baseline in 2030.86

3.6 STRATEGY: REDUCE CARBON-INTENSIVE TRAVEL 

ACTIVITY 

Strategies to reduce carbon-intensive travel activity seek to influence travelers’

patterns in order to shift travel to more efficient modes, increase vehicle 

occupancy, reduce the need for travel, or otherwise take actions that reduce 

energy use and GHG emissions associated with personal travel. The collective 

impact of these strategies on transportation GHG emissions could range from 5 

to as high as 17 percent in 2030; or 6 to 21 percent in 2050.87

 

85 Vol. 2 Sec. 4.5.

 The greatest near86 Vol. 2 Sec. 4.6.

87 Vol. 2 Sec. 5.1. Some of the benefit estimates for a number of travel activity strategies, 

including transit, nonmotorized improvements, land use, and commuter strategies, 

incorporate “induced demand” effects. As some travelers shift to other modes or reduce 

Footnote continued
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term benefits could come from pricing strategies such as “pay-as-you-drive”

insurance, as well as “eco-driving” training and in-vehicle equipment to 

encourage more efficient driving techniques. In the long-term, substantial 

benefits may be realized from changes to land use and transportation 

infrastructure (such as transit and nonmotorized investment) to reduce trip 

distances and support greater utilization of more efficient travel modes. By 

providing travel alternatives and enabling shorter trips, these strategies can 

increase access to jobs and other economic opportunities.

Pricing strategies have significant potential to reduce GHG emissions within a 

short timeframe, as consumers respond directly to price signals and adjust their 

travel patterns accordingly. Comprehensive pricing strategies that affect all 

travel—such as higher motor fuel taxes, VMT fees, or pay-as-you-drive 

insurance—could reduce GHG emissions by 0.7 to 3.1 percent within 5 to 10 

years. This is based upon an estimated pricing implementation of an additional 

2 to 5 cents per mile, which is roughly equivalent to a $0.40 to $1.00/gallon gas 

tax.88

Nearly two-thirds of VMT occurs in urban areas. Expansion of urban transit has 

the potential to generate modest to moderate reductions in GHG emissions.

Under the scenario of investing in transit sufficiently enough to nearly double 

the average annual ridership growth rate (from the current 2.4 percent to 4.6 

percent), expanded urban transit could reduce GHG emissions from 0.2 to 

 Pay-as-you-drive would actually reduce costs for a majority of travelers, 

although it would also increase it for some. Strategies focused on specific 

markets, such as inter-city tolls or cordon pricing, would have more limited 

benefits consistent with the size of the market affected. Widespread congestion 

pricing, in which higher prices are charged for traveling in periods of high 

demand, would not only reduce VMT but also result in more efficient traffic 

operations. The Federal government could encourage pricing strategies through 

a number of mechanisms, such as: requiring states to allow pay-as-you-drive 

insurance; implementing a nationwide VMT fee; providing funding incentives or 

disincentives for states or metropolitan agencies to implement pricing 

mechanisms; allowing expanded tolling on Federal-Aid highways; or increasing 

the Federal motor fuel tax. In order for pricing to yield net benefits to the 

traveling public, and not produce unacceptable equity impacts, revenues from 

road pricing would need to be reinvested in services that benefit effected

travelers (such as critical transportation asset State of repair, transit, land use 

planning, and other strategies that improve accessibility) or returned to 

taxpayers. 

 

their travel, roadway congestion will be reduced, thereby potentially allowing or 

encouraging other people to drive more. This effect has been estimated to reduce GHG 

benefits of these strategies by a modest amount (about 14 percent) as discussed in 

Appendix A.

88 Vol. 2 Sec. 5.2.
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0.9 percent of transportation GHG by 2030, or 0.4 to 1.5 percent in 2050.89 

Benefits would increase over the long-term as transit service, connectivity and 

reliability increase. While transit expansion is costly—over $1,000 per ton when 

considering transit capital investment and operations costs—it can result in 

significant co-benefits to travelers in the form of improved mobility, especially 

for low-income travelers. Transit expansion would also result in cost savings for 

personal vehicle ownership and operation, with net savings of up to $900 per ton 

when these costs are included.90 Inter-city transit, including high-speed rail and 

bus, also has the potential for GHG reduction—up to 0.2 percent of 

transportation emissions in 2030.91

Non-motorized improvements, including construction of pedestrian and bicycle 

transportation networks through dedicated rights-of-way, as well as 

enhancements to existing rights-of-way that safely provide for bicycle and 

pedestrian traffic, have modest potential for GHG reductions. These measures

would reduce GHGs by 0.2 to 0.6 percent by 2030, at moderate investment costs 

(less than $200 per ton), or a net savings when reduced vehicle operating costs 

are considered. While their GHG benefits may be modest, these strategies also 

provide significant cobenefits in the form of improved livability as well as

mobility for travelers who do not drive.92

Land use changes -- such as density, diversity of land uses, neighborhood 

design, street connectivity, destination accessibility, distance to activity centers, 

and proximity to transit -- reduce trip lengths and support travel by transit, 

walking, and bicycling. This report to Congress analyzed the literature to 

develop a range of potential GHG reductions from land use strategies. Three 

studies were particularly instructive: Growing Cooler, authored by academic and 

industry researchers and published in 2008 by the Urban Land Institute; Moving 

Cooler, authored by Cambridge Systematics and published by the Urban Land 

Institute in 2009; and Transportation Research Board Special Report 298: Driving and 

the Built Environment, published by the National Academy of Sciences in 2009. 

All three studies, conducted independently and using different assumptions and 

analysis methods, found GHG reductions from land use strategies of the same

order of magnitude. Taking the middle section of the study ranges and adjusting 

 These improvements, especially those 

for pedestrian mobility, are closely linked to land use changes discussed in the 

next section that describe how our residential housing, transportation, and other 

infrastructure choices are linked.

 

89 This scenario would involve a capital investment of approximately $71 billion over the 

2006 – 2026 period, compared to $42 billion to accommodate current levels of ridership 

growth; see Vol. 2 Sec. 5.3.1.

90 Vol. 2 Sec. 5.3.1.

91 Vol. 2 Sec. 5.3.2.

92 Vol. 2 Sec. 5.3.3.
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them to the same baseline as that used in this report to Congress, yields a 

reduction of U.S. transportation GHG emissions of 1 to 4 percent in 2030 and 3 to 

8 percent in 2050.93 The Moving Cooler study assumptions, which fall in the 

middle of the range, rely on 43 to 90 percent of new urban development 

occurring in areas of roughly greater than five residential units per acre, which 

accommodates single family and multifamily homes.94

Commuter/worksite trip reduction programs have modest potential for GHG 

reductions—0.2 to 0.6 percent of all transportation sector emissions in 2030. The 

most effective actions from a policy perspective are trip reduction requirements 

combined with supporting activities such as regional rideshare and vanpool 

programs and financial incentives for the use of alternative modes. Federal

funding for aggressive public outreach programs to encourage employers to 

offer travel alternatives could be effective even in the absence of mandates. 

Telework and other alternative work schedules can further reduce GHG from 

work travel by up to 0.5 percent, although telework is likely to spread largely 

through private initiative and the role of the public sector in encouraging 

adoption of alternative work schedules appears limited.

 It does not assume 

changes in rural development. GHG reductions from land use change increase

over the long term, as land use patterns evolve over long periods of time due to 

the resilience of the existing housing stock and transportation infrastructure. 

Transit, nonmotorized improvements, and pricing would be most effective over 

the long term if they are implemented in combination with more compact and 

better integrated land use patterns that reduce overall trip lengths and make 

alternative modes viable as a means of travel for many trips. Land use changes 

can often be implemented with very little public investment cost, with the 

primary direct costs including knowledge sharing, outreach, and planning 

activities. Additional infrastructure investments, or other costs such as 

brownfields cleanup, may be needed in some locations, but on the whole more 

compact land use patterns have been demonstrated to provide long-term cost 

savings through reduced roadway and other infrastructure requirements. While 

land use planning is conducted at the local level, the Federal government could 

encourage changes to land use patterns by funding State and regional planning 

activities to coordinate local policies; building State and local capacity to 

understand, model, and assess sustainable development principles within project 

planning; and by providing incentives and/or disincentives through 

transportation funding mechanisms.

95

Most public information campaigns exhibit modest GHG reduction potential—

in the range of 0.1 to 0.2 percent of transportation GHG emissions, although most 

 

 

93 Vol. 2 Sec. 5.4.

94 For visuals of different density levels, please see Vol. 2 Sec. 5.4. 

95 Vol. 2 Sec. 5.5.
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can be implemented quickly. Campaigns based on mass marketing have 

demonstrated little ability to influence travel behavior. Individualized 

marketing, in which people are provided with customized information on travel 

alternatives, shows somewhat greater promise in areas where good alternative 

services are available. Educational efforts to encourage eco-driving and proper 

vehicle maintenance have shown some short-term benefit, but the impacts tend 

to diminish over time. More comprehensive and sustained efforts to promote 

eco-driving, including requiring instruction as part of driver education and 

providing in-vehicle feedback technology, could reduce transportation GHG 

emissions by up to 1 to 4 percent, although findings on eco-driving benefits are 

based on limited European experience that may not be replicable in the United 

States.96

3.7 STRATEGY: PRICE CARBON

Pricing carbon through a cap and trade system, carbon tax or increased motor 

fuels tax would affect vehicle fuel efficiency, encourage use of low-carbon fuels, 

and encourage more energy-efficient travel patterns. 

Either a cap and trade system or a carbon tax approach would create a consistent 

set of prices across all sectors to encourage actions to reduce GHG emissions. 

Within the transportation sector, these actions would increase the cost of carbonfueled transportation and would therefore create incentives for developing and 

purchasing more efficient vehicles and alternative fuels, as well as reducing 

travel and/or shifting to more efficient modes. An increase in the Federal motor 

fuels tax produces the same effects for transportation modes that use gasoline 

and diesel fuels. The longer-term impact on fuel consumption and GHG 

emissions would be greater than the immediate impact, as transportation system 

users, fuel providers, and vehicle manufacturers have time to respond with 

changes to vehicles, fuels, and basic activity patterns.

Analysis by the Energy Information Administration (EIA) of the cap and trade

system in H.R. 2454, the American Clean Energy and Security Act (ACES)97

found reductions in transportation GHG emissions from ACES of about 4 

percent in 2030 relative to baseline emissions, or 85 million metric tons CO2e.98

 

96 Vol. 2 Sec. 5.6.

 

This reduction results from a gasoline price increase of about 37 cents per gallon 

97 Passed the House of Representatives in June 2009 but a companion Senate bill has not 

passed as of this writing.

98 U.S. Department of Energy, Energy Information Administration (2009). Energy Market 

and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009. 

http://www.eia.doe.gov/oiaf/servicerpt/hr2454/index.html. Figures cited here are 

for the basic case.
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in 2030, corresponding to a $65 per tonne allowance price.99 A carbon tax 

instituted at a comparable level to the permit price of a cap and trade system 

would have similar impacts. Increasing the Federal motor fuels tax would also 

have a similar impact, but would only raise prices on gasoline and diesel, rather 

than applying to all fuels based on carbon content.100

Costs to the broader economy of cap and trade proposals are estimated on the 

order of less than one percent of U.S. gross domestic product (GDP) in 2030 and 

two percent of GDP in 2050. Both a carbon tax and a cap and trade system could 

be made more socially equitable by, in the case of a carbon tax, giving rebates to 

low income households, and in the cap and trade system, compensating low 

income households using a portion of the revenue from the auction of 

allowances.

 This section does not 

examine the impact of carbon pricing on aviation or maritime industries.

101

3.8 KEY INTERACTIONS

Many of these strategies interact to produce different outcomes in total GHG 

reductions. The benefits of each strategy (or group of strategies) are not additive, 

and in fact may be reduced depending on other strategies that are implemented. 

On the other hand, some strategies are complementary and their effectiveness is 

likely to be enhanced if implemented in combination with each other. As 

examples:

• The effect of market mechanisms and vehicle efficiency standards would be 

somewhat overlapping. An increase in the cost of carbon should provide 

incentives for the development and purchase of more efficient vehicles as 

well as for reducing travel. The GHG reductions from vehicle efficiency 

improvements would therefore be the maximum of those caused by the fuel 

price increase or those set by regulatory standards—not the sum of the 

impacts if either were applied individually. With higher CAFE standards 

already in place, the most cost-effective fuel efficiency technologies would 

already be adopted, meaning that the additional benefits of modestly higher 

fuel prices under a cap and trade system are small. A recent U.S. DOE 

analysis of proposed cap and trade legislation found that additional fuel 

efficiency improvements would be very modest—about 1.2 percent for light-

 

99 The modeling performed by EIA finds that gasoline prices change under a policy 

scenario not only because of the direct impact of the allowance requirement, but also 

because of general equilibrium effects, such as a lower demand for fuels leading to 

slightly lower world crude oil prices.

100 Vol. 1 Sec. 4.1.

101 Vol. 1 Sec. 4.1.
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duty vehicles in 2030 .102

• Some vehicle and fuel strategies are interrelated. Only a few fuels—notably, 

biodiesel and ethanol at blends of 10 to 15 percent or less—can be used 

directly in today’s vehicles without modification. Most low-carbon fuels 

such as higher ethanol blends or natural gas, require at least minor 

modifications to vehicle design. Some, notably electricity and hydrogen, 

benefit from or require the development of entirely new vehicle propulsion 

technologies.

 On the other hand, if higher fuel prices are 

sustained over time (either because of market forces, or because of dramatic 

fuel or carbon tax increases) the additional benefit of technology standards 

would be lessened. Furthermore, economy-wide pricing would have impacts 

on other modes (albeit quite modest, at fuel price levels predicted under cap 

and trade proposals—see Section 4.1) that are not affected by energy 

efficiency regulations. An increase in the price of fuel or carbon would also 

have the effect of shifting vehicle purchases between segments of the lightduty vehicle market, i.e., from light trucks to cars, as was seen when gas 

prices spiked in 2008 and sales of SUVs dropped while demand for fuel 

efficient cars rose. CAFE standards may or may not have this effect. 

Separate standards for light trucks and cars could decrease purchase shifts. 

However, some manufacturers significantly discount fuel efficient models in 

order shift more of their sales to these models and meet CAFE standards. 

103

• As vehicle efficiency increases and/or fuel carbon content decreases, the 

absolute GHG reduction benefits of system efficiency and travel activity 

strategies (such as signal coordination, pricing, land use, and transit) will 

decrease proportionately. Furthermore, some vehicle technologies will 

reduce the benefits from system efficiency strategies aimed at addressing 

congestion or idling, as GHG emissions associated with congestion or idling 

are minimized through the use of fuel cell, electric, and hybrid electric-

 Furthermore, the total benefits cited for fuel efficiency and 

low-carbon fuel strategies are not additive. To determine the total benefits 

from these strategies, it would be necessary to construct scenarios of future 

market penetration for different vehicle and fuel technology combinations. 

From a policy perspective, the Federal government can play an important 

role in ensuring that research and development activities, regulations, and 

infrastructure deployment are coordinated to promote a complementary set 

of vehicle and fuel technologies. 

 

102 U.S. Department of Energy, Energy Information Administration (2008). “Energy 

Market and Economic Impacts of S. 2191, the Lieberman-Warner Climate Security Act 

of 2007.” 

103 In addition, diesel vehicles – treated as a vehicle technology strategy in this report –

could easily be considered a fuel strategy; and plug-in hybrid vehicles, also treated in 

vehicle technology, also make use of electricity as a fuel source and share many of the 

same characteristics as battery-electric vehicles.
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drivetrains. For example, hybrid-electric vehicles typically achieve fuel 

economy on urban driving cycles that is close to or exceeds fuel economy on 

highway cycles. System efficiency is still a valuable goal for other reasons, 

however, including improving mobility, reducing congestion and delay, and 

reducing shippers’ costs.

• Transit, nonmotorized improvements, land use, and pricing strategies are 

most effective when applied in combination. For example, TCRP Report 128: 

Effects of Transit-Oriented Development (TOD) on Housing, Parking, and Travel, 

surveyed 17 housing projects that combined compact land use with transit 

access and found that these projects averaged 44 percent fewer vehicle trips 

per weekday than that estimated by the Institute for Transportation 

Engineers (ITE) manual for a typical housing development.104 The Moving 

Cooler study also found that transit and nonmotorized improvements were 

more effective in areas of higher population density.105

• Research combined with pricing signals and or technology forcing 

regulations can reinforce one another. Federal research investments may be 

successful in developing new alternative fuels and fuel efficiency 

technologies, but without a market, these new technologies will not be 

introduced. For instance, the Partnership for a New Generation of Vehicles, 

begun in 1993 as a partnership between the Federal government and Detroit 

automakers, produced 60 to 80 mpg diesel hybrid prototypes, however, these 

new vehicles were never put into production. This illustrates the need not 

just for research but for incentives and long-term carbon price signals to spur 

mass production of low-carbon vehicles. Similarly, markets may exist for 

low-carbon vehicles but auto manufacturers may be reluctant to invest 

heavily in technology development because of the large investments needed 

and the high risks for product failures.

 It further might be 

expected that strategies that encourage the use of alternative modes (such as 

road pricing) would have a greater impact when applied in conditions when 

better alternatives exist (as would be found with increased transit investment 

and more compact land use patterns), although evidence on the interactive 

effects among all of these factors in combination is limited.

• Some pricing strategies may be redundant with each other, although higher 

prices through multiple mechanisms would of course have greater GHG 

reduction benefits, and some measures can be complementary. Among 

 

104 G.B. Arrington and Robert Cervero. Transit Cooperative Research Program (TCRP Report 

128: Effects of TOD on Housing, Parking and Travel. Transportation Research Board: 

Washington, DC, 2008.

105 Cambridge Systematics, Inc. (2009). Moving Cooler: An Analysis of Transportation 

Strategies for Reducing Greenhouse Gas Emissions. Urban Land Institute: Washington, 

D.C.
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transportation-specific pricing mechanisms, raising the existing gas tax to 

levels higher than what cap and trade would cause entails almost no 

administrative costs and provides an incentive to purchase more efficient 

vehicles, but is politically unpopular. Other pricing mechanisms, such as a 

VMT fee or pay-as-you-drive (PAYD) insurance, would not encourage 

vehicle efficiency gains unless the VMT fees were differentiated by GHG 

emission rates or weights of different vehicles. PAYD insurance has the 

advantage of providing the majority of consumers with net cost savings. The 

technology for implementing either a VMT fee or PAYD insurance also could 

support congestion pricing, which would have the additional benefit of 

improving system efficiency and reducing travel times. 

3.9 COBENEFITS

Strategies also can be compared according to their cobenefits. All of the 

strategies will result in lowered consumption of petroleum, and as such may 

have national security benefits to the extent that U.S. dependence on petroleum 

imports is reduced. Land use, transit, and nonmotorized strategies also will 

reduce household expenditures on fuel and on vehicle operating and ownership 

costs by reducing demand for carbon-intensive travel. Vehicle efficiency and 

system efficiency strategies will reduce household expenditures on fuel through 

more fuel efficient travel. Table 3.2 shows the estimated savings resulting from 

the system efficiency and travel activity strategies analyzed in this report. These 

can be compared with projected fuel use in 2030 for all transportation sources of 

16.8 million barrels per day oil equivalent, or the equivalent of about 288 billion 

gallons of gasoline annually.106

 

106 AEO Reference case, April 2009 release, Table 7, and assuming 47 gallons of gasoline 

per barrel of oil equivalent.

 As with the greenhouse gas reduction benefits, 

fuel savings for the individual strategies or strategy families cannot be added 

together.
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Table 3.1 Potential Petroleum Savings in 2030107

Strategy Family

Petroleum Savings (billions of gallons of 

gasoline and diesel)

Low High

Price Carbon 6.3 10.4

Improve Transportation 

System Efficiency

On-road 4.6 8.0

Air, Rail, Marine 1.8 5.1

Reduce Carbon-Intensive Travel Activity 12.1 40.3

Source: Cambridge Systematics analysis.

Note: Vehicle efficiency and low carbon fuels strategies are not included here because of ongoing 

rulemakings.

NHTSA, in its preliminary rulemaking for revised CAFE standards as required 

by the Energy Independence and Security Act, reviews literature on the 

economic costs of dependence on foreign oil, and therefore the benefit of fuel 

savings resulting from increased CAFE standards. NHTSA estimates the benefits 

related to oil supply disruptions and monopsony costs (higher prices for 

petroleum products resulting from the effect of U.S. oil import demand on the 

world oil price) to range from about $0.108 to $0.539 per gallon saved, with a best 

estimate of $0.298 per gallon. These estimates do not include reduced outlays for 

military operations, as NHTSA concludes that fuel efficiency standards will not 

materially affect these costs.108

As vehicle fuel efficiency and low-carbon fuel strategies are implemented, 

transportation continues to fulfill the same function (moving people and goods) 

with little impact on mobility or accessibility. In contrast, most system efficiency 

strategies have significant mobility cobenefits, especially travel time savings and 

 

107 This table is based on rough estimates of fuel savings for individual strategies. For all 

strategies except low-carbon fuels, these estimates were derived by back-calculating 

fuel savings based on the GHG reductions from the strategy, considering the carbon 

content of gasoline, diesel, and/or jet fuel as appropriate for the strategy. Conversion 

factors of 9.16, 10.56, and 9.95 kg CO2e per gallon were used respectively for gasoline, 

diesel, and jet fuel reflecting the carbon content of the fuel (8.81, 10.15 ,and 9.57 

kg/gallon) inflated by 4 percent to account for non-CO2 GHG emissions. The gasoline 

conversion factor was used for strategies affecting light-duty vehicle travel, the diesel 

factor for strategies affecting heavy-duty, rail, and marine travel, and the jet fuel factor 

for strategies affecting aviation. For strategies affecting all highway travel, factors were 

weighted 69 percent gasoline and 31 percent diesel, based on the fraction of these 

vehicles used in on-road vehicles as estimated from FHWA’s Highway Statistics. .

108 National Highway and Traffic Safety Administration (2009). Corporate Average Fuel 

Economy for MY 2012-2016 Passenger Cars and Light Trucks: Preliminary Regulatory Impact 

Analysis. Figures are in 2007 U.S. dollars.
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resulting economic benefits from reduced congestion and travel times, whether 

by highway, transit, air, or rail. The primary exception is speed limit reduction,

which reduces mobility and may increase shipping costs by increasing travel 

times. Land use and transit strategies reduce household transportation expenses 

and have mobility benefits for those who do not drive because of advanced age, 

young age, disability, or income. Finally, public health benefits can result from 

land use, nonmotorized, and transit strategies that encourage walking and 

biking.

For fuels strategies, the environmental and social impacts of biofuels production 

could be negative for those production pathways that require considerable 

amounts of land and compete with food supplies. Also, to the extent that fuels 

are produced domestically rather than from international sources, national 

security benefits may be achieved due to the reduced threat of energy supply 

disruption.

Travel activity strategies may have significant cobenefits or disbenefits. The 

most significant benefits result from improved mobility from improvements to 

alternative modes, including transit, ridesharing, and nonmotorized travel, as 

well as more compact land use patterns that support these alternatives. There 

can also be opposition to increased densities at the local level. The most 

significant disbenefits include mobility and equity impacts to lower-income 

populations from pricing strategies that increase the cost of carbon-intensive 

travel beyond their willingness or ability to pay without compensating increases 

in availability of less carbon-intensive, more affordable travel ammentities or 

other compensation mechanism. Pricing also faces substantial barriers in the 

form of public opposition and concerns over equity impacts, which may be 

addressed through redistribution of revenue and/or investment in alternative 

modes. 

Many strategies reduce air pollution, but the reductions would vary depending 

upon the specific strategy. Wind and weather patterns also complicate the 

impacts. Reductions in total vehicle activity would reduce air pollutant 

emissions. More efficient vehicle operations (reduced idling, congestion, etc.) 

would further reduce air pollutant emissions beyond the levels from vehicle 

activity reduction, though NOx emissions would likely increase with speeds 

above 40-45 mph. Heavy-duty and off-road vehicles tend to have less strict 

emission controls than light-duty vehicles, however, so some strategies that 

reduce GHG emissions through switching travel or goods movement to more 

efficient modes (transit, freight rail, marine) may not reduce emissions of all 

pollutants, and may even increase some emissions (although Federal standards 

for heavy-duty vehicles and locomotives are leading to substantial 

improvements in these sectors). In some cases, localized benefits may be far 

more significant than the total quantity of pollutants reduced in a region.

Vehicle fuel efficiency strategies may reduce air pollutant emissions by reducing 

the amount of fuel burned. However, emission standards would be the primary 

factor influencing emissions levels. Some technologies (such as hybrid-electric 
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powertrains) may make it easier to meet advanced emissions standards. The 

impacts of low-carbon fuel strategies on vehicle-based emissions may again be 

limited by standards, although some types of fuels may decrease or increase 

particular types of pollutants. Low-carbon fuels may also have significant 

emissions (or provide reductions) associated with their manufacture and 

transport. Table 3.3 shows life-cycle emissions for various alternative fuels 

compared to gasoline or diesel, considering current vehicle emissions control and 

air pollution control technology. 

Table 3.2 Relative Life-Cycle Emissions of Alternative Fuels (Percent 

Change versus Conventional Gasoline)

Pollutant

Conventional 

Gasoline 

Emissions (g/mi) CNG LPG

Gaseous

Hydrogenb

Battery 

Electric 

Vehiclec

VOC 0.316 -45% -35% -92% -91%

CO 3.817 0% 0% -98% -98%

NOx 0.379 -20% -14% -59% -11%

PM10 0.083 -9% -47% 23% 416%

PM2.5 0.036 -20% -38% 36% 220%

Source: GREET Model Version 1.8b, with default assumptions for current vehicle technologies. Relative emissions 

will vary depending upon vehicle emission controls as well as fuel extraction and production methods. 

Relative emissions may change in future years as these various technologies evolve in different ways.

a Compared with diesel.

b Assuming distributed natural gas reforming.

c Assuming current grid-average electricity generation mix. Future scenarios will differ considerably depending upon grid 

mix and when vehicles are charged.

Emissions impacts from vehicles that are powered by electricity (including 

battery-electric vehicles, plug-in hybrid electric vehicles or PHEVs, and 

hydrogen fuel cell vehicles) cannot be compared on an apples-to-apples basis 

with emissions from internal combustion engine vehicles, as emissions will occur 

at different locations (away from the vehicle) and therefore have different air 

quality and health impacts. Battery-electric and hydrogen fuel-cell vehicles will 

result in zero emissions from the vehicle itself (as will PHEVs operating in allelectric mode), although total emissions from powerplants will increase slightly. 

Furthermore, using grid-average emissions for battery-electric vehicles may be 

inappropriate as emissions will depend upon when vehicles are charged (and 

will vary by region of the country). 

3.10 INFRASTRUCTURE FINANCE

The Federal Highway Trust Fund was established in 1957 as a dedicated, userfunded source of revenue to fund the Interstate Highway System as well as other 
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Federal transportation programs. It is the primary source of revenue for most 

Federal surface transportation programs including the Federal-aid Highway 

Program and the Federal Transit Program. The Highway Trust Fund is funded 

primarily through taxes on motor fuels, as well as through excise taxes on truck

tires, retail sales of heavy-duty vehicles and trailers, and other motor vehiclerelated items. Fuel tax receipts made up 88 percent of Trust Fund revenue in FY 

2008.109 Gasoline is taxed at a rate of 18.4 cents per gallon and diesel at a rate of 

24.4 cents per gallon. Taxes on alternative fuels, including liquefied petroleum 

gas and compressed and liquefied natural gas, are set equal to gasoline taxes on 

an energy-equivalent basis.110 The vast majority of these taxes are deposited in 

the Highway Account, with 2.86 cents per gallon (15.5%) directed to the Mass 

Transit Account and 0.1 cents to the Leaking Underground Storage Tank Trust 

Fund. Net receipts in FY 2007 were $34.3 billion to the Highway Account and 

$5.0 billion to the Mass Transit Account.111

In 2009, the Highway Trust Fund was projected to go into a negative balance, 

with cumulative outlays exceeding cumulative income, and a cash shortfall was 

averted by means of a $7 billion cash transfer from the General Fund.

 States also fund highway and other 

transportation programs through motor fuel taxes, although tax rates vary by 

state.

112 This was 

in addition to a previous cash shortfall in 2008 which was averted through a 

transfer in that year of $8 billion from the General Fund.113

Because fuel taxes are collected by the gallon, funding challenges may be 

compounded in the future since most of the on-road vehicle strategies analyzed 

in this report reduce total motor vehicle fuel use, and therefore (unless the tax 

were modified to be a sales-based tax) would reduce total Federal Highway 

Trust Fund revenues (as well as State fuel tax revenues) in rough proportion to 

fuel savings (and related GHG reductions). For example, if advanced light-duty 

gasoline vehicles were to achieve a 20 percent efficiency improvement by 2030 

and reach a market penetration of 60 percent, Highway Trust Fund revenues 

 This situation 

indicates a lack of revenue raised from users of the transportation system

compared to current levels of Federal expenditure. Therefore, the GHG 

reduction strategies described in this report that would entail Federal funding 

may require reprioritization of current expenditures or additional taxation in 

order to implement. 

 

109 U.S. DOT, Office of the Inspector General (2009). “Highway Trust Fund Solvency.” 

Testimony to Senator Judd Gregg, June 24, 2009.

110 Federal Highway Administration (2008). Highway Statistics 2007, Table FE-21B.

111Federal Highway Administration (2008). Highway Statistics 2007, Table FE-10.

112 The Legislative Services Group, Transportation Weekly, Volume 10, Issue 34, August 3, 

2009.

113U.S. DOT, 2009 (cited).
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would decline by 8 percent, or about $3.1 billion compared to FY 2007 receipts.114

The revenue effects of alternative fuels will depend upon taxation policy. Since 

2006, Federal policy has been to tax alternative fuels on an energy-equivalent 

basis to gasoline.

 

Strategies focused on heavy-duty vehicles would have a somewhat greater 

impact than those focused on light-duty vehicles because of the higher tax rate 

on diesel fuel. A shift from gasoline to diesel light-duty vehicles would have a 

smaller revenue impact; while less total fuel is consumed, the tax rate on diesel 

fuel is higher.

115

Pricing measures, such as a cap and trade system, carbon tax, VMT fee, or 

congestion pricing, would provide a new or alternative revenue source, which 

could potentially be directed to transportation infrastructure finance. (The 

revenue impacts of a cap and trade system would depend upon the extent to 

which allowances are auctioned vs. given away.) While transportation-specific 

pricing revenues are likely to be redirected towards transportation system 

investment, it is less certain that a portion of revenues from economy-wide

measures such as cap and trade allowances or carbon taxes would be redirected 

towards transportation. Finally, pricing measures that reduce the wear and tear 

on existing road networks could also have fiscal implications to the extent they 

lower the total cost of maintaining or improving system performance even if 

investments in alternatives to carbon-intensive travel are increased.

 This means that policies focused solely on increasing the use 

of lower-carbon fuels should not have a significant revenue impact on the 

Highway Trust Fund. On the other hand, current tax policies may have 

implications for general fund revenue; for example, ethanol receives a substantial 

tax credit which reduces general fund revenues, but a tariff is levied on imported 

ethanol which could potentially generate revenue. The long-term finance 

implications of a shift to hydrogen or electricity will depend on tax policy for 

these fuels; current Federal policy does not tax these fuels for transportation 

purposes, and therefore any shift to these fuels would result in lost revenues to 

the Highway Trust Fund under the current finance structure.

 

 

114 Gasoline tax receipts accounted for about $25.5 billion of trust fund revenue in FY 

2007, or about two-thirds of total receipts, so 20 percent * 60 percent * 2/3 = an 8 

percent reduction or $3.1 billion. This calculation assumes that trust fund revenues 

remain constant through 2030, which is consistent with AEO Reference case 

projections of relatively constant fuel consumption (with increases in VMT offsetting 

increases in fuel efficiency). 

115 Ethanol users actually pay slightly more per gallon of gasoline equivalent even though 

ethanol is taxed less on a volumetric basis (Vol. 2 Sec. 2.2).
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3.11 SUMMARY OF FINDINGS

Tables 3.5—3.8 present a consolidated overview of GHG reduction strategies, 

summarizing a wide range of specific information. The table includes the 

following information for most strategies:

• Key Deployment Assumptions—Key assumptions about the strategy that 

affect the magnitude of results.

• Effectiveness:

− Percent GHG Reduction—Percent reduction in GHG emissions from 

baseline, for:

° Transportation Sector—Reduction as a percentage of total 

transportation sector baseline emissions (based on Annual Energy 

Outlook March 2009 Reference case) in 2030 (2,171 million metric tons 

carbon dioxide equivalent, or mmt CO2e).

° Relevant Subsector(s)—Relevant transportation subsector(s)—lightduty vehicle (LDV), heavy-duty vehicle (HDV), and on-road vehicles, 

rail, marine, and aircraft—that strategy affects and percentage 

reductions for this subsector.

− Absolute GHG Reduction—Absolute reduction in year 2030 or 2050, 

expressed in million metric tons CO2e; range of values (lower/upper) 

indicated when findings differ. Values for 2050 are shown only if 

significantly different than for 2030. “N/A” signifies that values may be 

significantly different in 2050 than 2030, but were not modeled in this 

timeframe.

− Timing of Benefits—If the strategy is implemented today, this is a 

projection of how long it would take to achieve the reductions noted.

Three ranges: i) Short—most benefits can be achieved within five years; 

(ii) Mid—most benefits achieved within 5 to 20 years; (iii) Long—most 

benefits not achieved for at least 20 years. 

• Cost Effectiveness—Expressed in $/metric ton CO2e; range of values 

(lower/upper) indicated when findings differ. The cost-effectiveness 

estimates should be read with caution because they reflect monetary costs 

only. They do not reflect other very significant benefits or disbenefits to 

consumers such as travel time impacts, utility of foregone trips, health 

benefits, air quality impacts, and increased or decreased accessibility or 

mobility. Taxes, fees, and rebates are not included in cost-effectiveness 

calculations, since they are regarded as a transfer payment (from the private 

sector to the public sector). However, the imposition of taxes, fees, and 

rebates may create welfare changes that are difficult to monetize but 

nonetheless represent a real cost or benefit to consumers. The two types of 

cost effectiveness cited are:
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− Direct Implementation Costs—this accounts only for costs required to 

implement the strategy, such as the cost to transit agencies to provide 

increased public transportation services or the cost to State highway 

departments to time traffic signals. It includes infrastructure construction 

costs, capital costs, ongoing maintenance and operations costs, program 

administrative costs, etc. It does not include any monetary savings such 

as decreased fuel or vehicle operating costs.

− Net Included Costs—this includes direct implementation costs (such as 

the increased cost of high technology vehicles over conventional vehicles 

or the cost of telecommuting equipment) as well as monetary savings 

such as savings from reduced fuel use and reduced vehicle operating 

costs. Costs included may vary by source (see Appendix A).

Both direct implementation costs and net included costs are provided for system 

efficiency and travel activity strategies because for these strategies, the costs are 

primarily borne by the public sector and the savings primarily accrue to 

individuals. Only net included costs are provided for vehicle and fuel strategies 

because both costs and savings typically accrue to the same entity—the vehicle 

owner.

With some exceptions, costs in this report are expressed in present-year real 

dollars (as cited in the data source or reference) without any inflation or 

discounting. In a few cases, when cost estimates were particularly old (e.g., prior 

to year 2000), the consumer price index was applied to inflate values to current 

year dollars. When calculating cost effectiveness, future-year operating cost 

savings for on-road vehicles (but not for off-road vehicles) were discounted 

using a discount rate of seven percent. The cost-effectiveness estimates 

computed from the Moving Cooler study data are also based on discounting 

future vehicle operating cost savings at a rate of seven percent. Costeffectiveness estimates from other studies cited in this report that included future

cost savings may have used other discounting assumptions.
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Table 3.3 Findings by Strategy: Carbon Pricing and Low-Carbon Fuels

Strategy

Key Deployment 

Assumptions

Effectiveness Cost Effectiveness 

($/tonne

CO2e)

Percent GHG Reduction Absolute GHG 

Reduction (mmt 

CO2e/year)

Transportation 

Sector Relevant Subsector(s)

2030 2050 Subsector 2030 2050 2030 2050

Timing 

of 

Benefits

Net 

Included 

Costs

Economy-Wide Market-Based Strategies

Cap-andTrade / 

Carbon Tax

Allowance price or tax of 

$30 to $50/ton CO2e in 

2030

2.6-8.5% n/a All 2.6-8.5% n/a 53-174 n/a ShortLongn/a

Motor Fuel 

Taxes

Equivalent to ~$0.20 to 

$2.40/gal

2.4-23% n/a On-road 

vehicles

3.2-32% n/a 50-500 n/a ShortLong

n/a

Low-Carbon Fuels

Ethanol Not analyzed

Biodiesel Not analyzed

Natural gas 2.5-5% of total U.S. 

natural gas use diverted 

to transportation; 15% 

GHG reduction per 

vehicle

0.3-0.6% LDV 0.6-1.2% 7-13 Short ($130)-

($50)

Liquefied 

petroleum 

gas (LPG)

Two times current consumption rates

0.01% LDV 0.02-

0.03%

0.2-0.3 Short n/a

Synthetic 

fuels

Not analyzed MidLong

Hydrogen 2030—18% LDV market 

penetration, 40-55% GHG 

reduction per vehicle

2050—60% LDV market 

penetration, 79-84% GHG 

reduction per vehicle

2.4-3.4% 18-22% LDV 4.8-6.8% 36-44% 52-74 390-470 Long ($194)-

$275

Electricity 2030—5% LDV market 

penetration, 68-80% GHG 

reduction per vehicle

2050—56% LDV market 

penetration, 78-87% GHG 

reduction per vehicle

2.2-2.5% 26-30% LDV 4.3-5.1% 53-59% 47-55 570-640 Long ($90)-$343

Aviation 

Fuels

Not analyzed
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Table 3.4 Findings by Strategy: Vehicle Fuel Efficiency

Only per vehicle GHG reductions are provided for vehicle efficiency strategies. Percent GHG reduction for the 

transportation sector as a whole from each strategy will be much less than the per vehicle reductions since each 

vehicle type comprises only a portion of the total transportation sector, market penetration will almost certainly be 

less than 100 percent, and fleet turnover time will delay realization of benefits.

Strategy

Per Vehicle GHG Reduction Compared to 

Conventional Vehicle, 2030

On-Road Light-Duty Vehicles

Advanced Conventional Gasoline Vehicles 8—30%

Diesel Vehicles 16%

Hybrid Electric Vehicles 26—54%

Plug-In Hybrid Electric Vehicles 46—75%

On-Road Heavy-Duty Vehicles

Retrofits of heavy-duty trucks to use aerodynamic fairings, trailer 

side skirts, low-rolling resistance tires, aluminum wheels, and 

planar boat tails

10—15%

Powertrain and Resistance Reduction for New Trucks 10—30%

Transit hybrid electric buses 10—50%

Rail

Power System Modifications 

• Common rail injection systems

• Genset engines

• Hybrid yard engines

• Hybrid line-haul operations

Train Efficiency Improvements

• Light weight railcars, aerodynamics, wheel to rail lubrication

• Improving load configuration for intermodal trains

5—15%

35—50%

35—57%

10—15%

4-10% individually

up to 27%

Marine

Improvements to Ship Design and Propulsion Systems 4—15% for ship design

Up to 20% for diesel electric for vessels that 

change speed or load frequently (cruise ships, 

harbor tugs, and ferries) 

Aircraft

Engine technology and airframe improvements 1.4-2.3%*

Vehicle Air Conditioning Systems Reduction in Mobile Air Conditioner GHGs

Can-Ban (Ban on do-it-yourself air conditioner servicing) 66% (California study)

Alternative Refrigerant Chemicals 91.3 to 99.9% depending on refrigerant type 

and mechanical efficiency

*

Fleet-wide annual aircraft efficiency improvement during 2015-2035 relative to 2015 as the base year.
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Table 3.5 Findings by Strategy: System Efficiency

Strategy Name

Key Deployment 

Assumptions

Effectiveness

Cost Effectiveness 

Percent Reduction in 2030 ($/tonne CO2e) Absolute GHG Reduction in 2030 (mmt CO2e/year)

Timing 

of 

Transportation SectorRelevant Subsector(s)Reduction for Subsector

Benefits

Direct 

Implemen

-tation 

Costs 

Only

Net 

Included 

Costsa

System Efficiency

Highway Operations and Management

Traffic 

Management

Deployment of full range of 

traffic management strategies 

on freeways and arterials at rate 

of 700 to 1,400 miles/year

n/a On-road 

vehicles

n/a n/a Short-Mid $40->$2,000 ($120)-

>$2,000

Real-Time 

Traveler 

Information

Deployment of highway traffic 

information at same rate as 

traffic management

n/a On-road 

vehicles

n/a n/a Short-Mid $160->$600 0->$500

Highway 

Bottleneck Relief

Improve top 100 to 200 

bottlenecks by 2030

n/a On-road 

vehicles

n/a n/a Mid-Long n/a n/a

Reduced Speed 

Limits

55 mph national speed limit 1.2-2.0% On-road 

vehicles

1.7-2.7% 27-43 Short $10 ($320)

Truck Operations and Management

Truck Idling 

Reduction

26-100% of sleeper cabs with onboard idle reduction technology

0.1-0.3% HDV 0.4-1.2% 2-6 Short-Mid $20 ($420)-

($480)

Truck Size and 

Weight Limits

Allow heavy/long trucks for 

drayage and noninterstate natural resources hauls

0.03% HDV <0.1% 0.6 Short $0 ($1,200)

Urban Consolidation Centers

Large/high density urban areas 0.01% HDV <0.1% 0.2-0.3 Mid $30-60 ($300)

Freight Rail and Marine Operations

Freight Modal 

Diversion

Rail infrastructure improvements-up to 6% avoided 

diversion of rail traffic to truck

0.0-0.2% HDV + rail 0.0-0.8% 0.2-5 Mid $80-200 n/a

Rail and Intermodal Terminal 

Operations

Not analyzed

Ports and Marine 

Operations

Land and marine-side operational improvements at 

container ports

0.01-

0.02%

n/a 0.2-0.4 Short-Mid n/a n/a

Air Traffic Operations

Air Traffic 

Operations

Air traffic management in U.S. 

airspace 

0.3-0.7% Domestic 

Aircraft

2.5-6% 

(cum. thru

2035)

8.9-25.2 Mid n/a <$0

Infrastructure Construction and Maintenance

Construction 

Materials

Fly-ash cement and warm-mix 

asphalt used in highway 

construction throughout U.S.

0.7-0.8% n/a n/a 15-18 Short $0-$770 $0-$770

Other Transportation Agency 

Activities

Alternative fuel DOT fleet vehicles, LEED-certified DOT 

buildings

0.1% n/a n/a 2-3 Mid n/a n/a

a “Net included costs” typically includes implementation costs and vehicle operating cost savings, but not travel time costs/savings or other 

non-monetary costs and benefits. 
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Table 3.6 Findings by Strategy: Reduce Carbon-Intensive Travel Activity

Strategy Name

Effectiveness

Cost Effectiveness 

Percent Reduction in 2030 ($/tonne CO2e) Absolute GHG Reduction in 2030 (mmt CO2e/year)

Key Deployment Assumptions

Transportation SectorRelevant Subsector(s)Reduction for Subsector

Timing 

of 

Benefits

Direct 

Implem

entation 

Costs 

Only

Net 

Included 

Costsa

Travel Activity

Pricing

VMT Fees VMT fee of 2 to 5 cents per mile 0.8-2.3% On-road 

vehicles

1.1-3.1% 17-50 Short $20-$280 ($650)-

($910)

Intercity Tolls Toll of 2 to 5 cents per mile on 

rural Interstate highways

0.1% On-road 

vehicles

0.1-0.2% 1-3 Short $500-$800 $50-($630)

Pay-as-You-Drive 

Insurance

Require states to permit PAYD 

insurance (low)/Require 

companies to offer (high)

1.1-3.5% LDV 1.4-4.7% 23-75 Short $30-$90 ($960)

Congestion 

Pricing

Maintain level of service D on all 

roads (average fee of 65 cents/

mile applied to 29 percent of 

urban and 7 percent of rural 

VMT)

0.4-1.6% On-road 

vehicles

0.6-2.2% 19-43 Short $300-$500 ($440)-

($570)

Cordon Pricing Cordon charge on all U.S. metro 

area CBDs (average fee of 65 

cents/mile)

0.1% On-road 

vehicles

0.1-0.2% 2-3 Short $500-$700 ($530)-

($640)

Alternative Modes

Transit Expansion, 

Promotion, and 

Service 

Improvements

2.4-4.6% annual increase in 

service; increased load factors

0.3-0.8% 

(2030) 

0.4-1.5% 

(2050)

LDV 0.6-1.7% 

(2030) 

0.8-3.0% 

(2050)

6-18 

(2030) 

9-32 

(2050)

Mid $1,200-

$3,000

($900)-

$1,000

Intercity 

Passenger Bus and 

Rail

Intercity rail 20 percent higher 

ridership/service increase than 

baseline; 11 new HSR corridors; 

Intercity bus 3 percent annual 

increase

0.0-0.3% LDV 0.1-0.6% 1-6 Mid $400-

$1,400

($600)-

$1,000

Non-motorized 

Transportation

Comprehensive urban pedestrian 

and bicycle improvements 

implemented 2010 to 2025

0.2-0.6% LDV 0.4-1.1% 4-12 Mid $80-$210 ($600)-

($700)

Land Use and Parking

Land Use 60-90% of new urban growth in 

compact, walkable neighborhoods 

(4,000+ persons/sq mi or 5+ gross 

units/acre)

1.2-3.9% 

(2030) 

2.5-7.7% 

(2050)

LDV 2.5-7.8% 

(2030) 

5.0-16% 

(2050)

27-84 

(2030) 

56-170 

(2050)

Long $10 ($700)-

($800)

Parking 

Management

All downtown workers pay for 

parking ($5/day average for those 

not already paying)

0.2% LDV 0.3% 3-4 Mid n/a n/a

Commute Travel Reduction

Demand 

Management/

Widespread employer outreach 

and alternative mode support

0.1-0.6% LDV 0.2-1.1% 6-14 Short $30-$180 ($1,000)
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Strategy Name

Effectiveness

Cost Effectiveness 

Percent Reduction in 2030 ($/tonne CO2e) Absolute GHG Reduction in 2030 (mmt CO2e/year)

Key Deployment Assumptions

Transportation SectorRelevant Subsector(s)Reduction for Subsector

Timing 

of 

Benefits

Direct 

Implem

entation 

Costs 

Only

Net 

Included 

Costsa

Travel Activity

Commuter 

Measures

Commute Travel Reduction (continued)

Teleworking Doubling of current levels 0.5-0.6% LDV 0.9-1.2% 10-13 Short $1,200-

$2,300

$180

Compressed Work 

Weeks

Minimum—75% of government 

employees; Maximum—double 

current private participation

0.1-0.3% LDV 0.3-0.6% 3-7 Short n/a n/a

Flexible Work 

Schedules

Not analyzed

Ridematching, 

Carpool, and 

Vanpool

Extensive rideshare outreach and 

support

0.0-0.2% LDV 0.1-0.5% 1-5 Short $80 n/a

Public Information Campaigns

Marketing 

Campaigns

Mass marketing in 50 largest 

urban areas; Individualized 

marketing reaching 10 percent of 

population

0.3-0.4% LDV 0.5-0.8% 6-8 Short $90-$270 n/a

Information on 

Vehicle Purchase

Expansion of SmartWay and other 

information campaigns

0.1-0.2% On-road 

vehicles

0.2-0.5% 2-5 Short-Mid n/a n/a

Driver Education/

Eco-Driving

Minimum—Reach 10% of 

population; Maximum—Full 

penetration

0.8-4.3% On-road 

vehicles

1.1-5.9% 18-94 Short-Mid n/a $0-($230)

a “Net included costs” typically includes implementation costs and vehicle operating cost savings, but not travel time costs/savings or other 

non-monetary costs and benefits.

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4.0 Cross-Cutting Strategies

Two general strategies that cut across other strategy groups are addressed in this 

section. These are:

• Transportation planning and investment efforts, which can improve the 

operating efficiency of the multimodal transportation network and integrate 

transportation and land use planning to reduce travel distances; and

• Pricing carbon through a cap and trade system, carbon tax or increased 

motor fuels tax (which would affect vehicle fuel efficiency), encourage use of 

low-carbon fuels, and encourage more energy-efficient travel patterns.

4.1 TRANSPORTATION PLANNING AND INVESTMENT

The level of GHG emissions from transportation depends on the carbon content 

of the fuels, the fuel efficiency of the vehicles, the efficiency of the transportation 

system, and the level of travel activity. These latter two factors—the efficiency of 

the system and the level of travel activity—can be directly influenced through 

decisions that are made by Federal, State, regional, and local governments 

regarding the planning, funding, design, construction, and operations of the 

Nation’s transportation systems. 

Coordinating transportation and land-use decisions and investments enhances 

the effectiveness of both and increases the efficiency of Federal transportation 

spending. In most communities, jobs, homes, and other destinations are located 

far away from one another, necessitating a separate car ride for every errand and 

long delivery routes for goods. Strategies that support mixed-use development, 

mixed-income communities, and multiple transportation options help to reduce 

traffic congestion, lower transportation costs, improve access to jobs and 

opportunities, and reduce dependence on foreign oil, in addition to reducing 

greenhouse gas emissions. Prioritizing through planning low carbon alternatives 

such as public transportation, pedestrian facilities for biking, and walking, and 

lower carbon freight options such as rail or marine, can reduce GHGs, especially 

when deployed with synergistic policies such as land use. Similarly, prioritizing 

strategies such as signal timing, real-time traveler information, faster clearance of 

incidents, congestion pricing, freeway ramp meeting, and other intelligent 

transportation systems can reduce the pressure for new capacity while modestly 

reducing GHG emissions.

The Federal government is an important partner with State and local 

governments in shaping the Nation’s surface transportation infrastructure. The 
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Federal government currently provides $52 billion116

Before discussing in more detail integrating climate change considerations into a 

transportation planning process, it is important to place this integration into the 

broader context of the current planning process. Planning is the informationbased policy framework by which communities prepare and follow a reasoned 

course of action to achieving a desirable future vision. Plans represent blueprints 

for communities to follow, enabling them to evolve in an optimal way and 

influencing urban and rural development, economic prosperity, environmental 

quality, and social equity. Planning is a cooperative process, bringing together a 

wide range of perspectives from different people, organizations, and stakeholder 

groups to pursue common ground on a variety of issues. As such, it must 

consider a wide range of forces—such as mobility, health, economic growth, 

environmental sustainability, and land use—in determining a community’s ideal 

vision and identifying the priority projects, programs, and strategies for 

achieving that vision. The transportation system, and its GHG impact, is one 

element among many societal concerns. 

in funding for surface 

transportation annually, and Federal statute and regulations establish 

requirements for States and metropolitan planning organizations (MPOs) to 

undertake planning to determine how to use these resources. The Federal

government also influences the efficiency of the Nation’s air transportation 

system by operating the air traffic control system and providing assistance to 

improve the capacity and safety of airports, and provides funding for 

investments in rail and marine modes as well. Federal leadership on GHG

mitigation and climate change planning can help convey the importance of GHG 

reduction to State and local transportation agencies. Furthermore, Federal

coordination of housing, transportation, and environmental policies is key. A 

lack of coordination between these policies has contributed to the growth in 

vehicle miles traveled and GHG emissions. 

Planning includes comprehensive consideration and choice of preferred action 

from a range of possible strategies. Successful planning depends upon an 

information-driven evaluation process that encompasses diverse viewpoints, the 

collaborative participation of relevant agencies and organizations, and open, 

timely, and meaningful public involvement. Without broad and meaningful 

participation, there is a risk of making poor decisions, or decisions that have 

unintended negative consequences. On the other hand, having broad 

participation makes it possible for all parties to work together in partnership to 

make a lasting contribution to an area’s quality of life. The public includes 

anyone who resides, has an interest in, or does business in a given area 

potentially affected by the decisions, as well as regional and national 

representatives. Federal, State, and local agencies with an interest in the region 

 

116 Not including additional 2009 transportation funding from the American Recovery 

and Reinvestment Act of 2009.
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play a particularly important role in the achieving the vision. Many of those 

agencies have statutory responsibilities that impact planning decisions. 

Coordination and cooperation among all interested parties and relevant agencies 

is necessary to achieve the vision. This is particularly important as State and 

local transportation planners do not often have control over land use decisions, 

but can serve as conveners of stakeholder groups and work closely with land use 

planning authorities. Similarly, by providing funding and requiring a planning 

process, the Federal government is an important stakeholder, but much decisionmaking power appropriately resides at State and local levels.

While planning is an open and collaborative process, it also is disciplined by the 

need to abide by important fiscal and environmental constraints. These 

constraints limit the extent of projects and strategies that may be recommended 

in plans, forcing communities to make difficult tradeoffs. In the end, a plan 

represents the community’s preferred actions, limited to those that are 

achievable within reasonable constraints.

Federal statute requires that States and MPOs engage in a transportation 

planning process and develop a plan that “include[s] both long-range and shortrange program strategies/actions that lead to the development of an integrated 

intermodal transportation system which facilitates the efficient movement of 

people and goods.” They must also develop a short-range program of 

transportation improvements, based on the long-range transportation plan, 

designed to achieve the area’s goals using spending, regulating, operating, 

management, and financial tools. Transportation agencies confront a wide range 

of tradeoff decisions within and between modes, policy objectives, performance 

goals, geographic regions, and market segments when developing these plans 

and programs. Therefore, any decision on GHG reduction activities, including 

where to invest limited resources, needs to be balanced with its impact on other 

goals and priorities.

There are three main ways in which the Federal government can influence GHG 

reduction through transportation infrastructure planning and investment: 

technical assistance, regulations, and incentives. When considering each of these 

avenues, the Federal government can learn from the experiences of States and 

MPOs on incorporating climate change considerations into their transportation 

planning processes. As documented in a recent study,117

 

117 ICF International (2008). Integrating Climate Change into the Transportation Planning 

Process. Prepared for Federal Highway Administration.

these experiences vary 

widely. Climate change can appear in the vision, goals, policies, strategies, 

trends, challenges, and performance measures of long-range transportation 

plans. Some plans merely recognize that climate change is an issue that relates to 

transportation and begin to point out the relevance of existing plans and 

strategies to climate change. Other plans make climate change more central to 
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their goals and policies. Some include innovative analyses of the GHG impacts 

of various alternatives that could serve as models for other areas.118

There are a range of options for the Federal government to work with State and 

local governments to address climate change. The range of options include

providing technical assistance, including climate change as a planning factor, 

providing funding incentives, requiring states and MPOs to develop strategies 

for reducing transportation GHGs, establishing mandatory GHG reduction 

targets, and aligning Federal funding distribution with performance measures. 

Each option will have differing levels of impact on GHG emissions and on the 

level of effort required. 

 

Technical Assistance 

The DOT provides technical assistance to States and metropolitan areas to 

support transportation planning and could provide increased technical 

assistance on climate change issues. Technical assistance also can be provided to 

other public and private sector entities responsible for transportation 

infrastructure and services, such as port authorities, airports, and railroads. 

Recent DOT technical assistance on climate change issues includes workshops 

around the country with State DOTs and MPOs, release of a report on integrating 

climate change considerations into the transportation planning process, 

assistance on transit-oriented development planning, and analysis of State 

climate action plans. The DOT will continue to provide such assistance.

Technical assistance can be provided on a variety of topics, such as:

• Procedures for developing greenhouse gas inventories and analyzing and 

evaluating the benefits of alternative plans and projects with respect to GHG 

emissions (EPA’s MOVES model provides an example);

• Data collection and model techniques critical to GHG emissions analysis. 

Examples include supporting the development of robust GHG sketchplanning tools, supporting the broader application of integrated 

transportation and land use models, and restoring or expanding funding for 

critical data collection efforts such as the Vehicle Inventory and Use 

Survey;119

• Scenario planning, visioning and integrated transportation and land use 

planning. Examples include guidelines and best practices for planning 

processes, implementation practices such as model ordinances, assistance 

with zoning code updates, and assistance with updating roadway design 

standards to accommodate multimodal travel.

and 

 

118 ICF International, 2008 (cited).

119 The Vehicle Inventory and Use Survey served as the primary source of information on 

energy-related characteristics of the nation’s vehicle fleet from 1963 through 2002.
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A recent Federal Highway Administration study found that quantification of 

GHG emissions is one of the most challenging aspects of integrating climate 

change into transportation planning for States and MPOs. There is room for 

improvement across the board in inventory techniques and techniques for 

estimating the impact of policies and strategies.120

Technical assistance can be accommodated within the existing legislative and 

regulatory process. Simply improving planning and analysis capabilities, 

however, is no guarantee that GHG reduction strategies will be implemented. In 

addition, technical assistance would be of limited value to local agencies if they 

do not have the resources to implement or make use of improved methods. The 

benefits of technical assistance would be increased if it is accompanied by 

funding to support the use of specific planning or analytical methods.

 Technical assistance also can 

provide States, MPOs, and other planning entities with greater ability to work 

with stakeholders and the public to select the most effective and cost-effective 

GHG reduction strategies. 

Regulations

Federal regulations that direct State and metropolitan transportation planning 

can influence GHG reductions through a number of avenues. Changing these 

regulations may require legislative authorization, followed by a DOT rulemaking 

process to revise the existing regulations. Other actions to change planning 

could be done under current law. In addition, regulations can be established 

(through legislative authorization) that expand the scope of Federal influence in 

transportation planning to other modes or geographic scales. 

GHG Consideration

The most direct approach would be to establish explicit requirements to consider 

GHG within the statewide and/or metropolitan planning process.121

Perhaps the mildest form of additional regulation would be to require 

consideration of greenhouse gas emissions as a transportation planning factor, 

without including any specific requirements as to how GHG should be 

addressed. While climate change and GHG reduction already can be considered 

under the energy and environment planning factor, creating a stand-alone 

provision would reinforce the importance of this issue within the planning 

 The current 

Federal transportation planning statutes and regulations include a number of 

requirements that generally align with climate change mitigation, such as requiring 

that plans “protect and enhance the environment [and] promote energy 

conservation” and that plans discuss “potential environmental mitigation activities.” 

 

120 ICF International, 2008 (cited).

121 Highway and transit transportation planning requirements are found in 23 USC 134, 

23 USC 135, 49 USC 5303, and 49 USC 5304, as well as 23 CFR 450.
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process. More importantly, many states and MPOs currently use planning 

factors to define their State or regional transportation goals—general statements 

of purpose that reflect a long-term desired end to a specific transportation need 

or issue. A goal is typically very qualitative in nature, and is often only used to 

communicate broader investment strategies to the public. However, when used 

as part of a performance-based planning framework, goals are the key first step 

in identifying potential solutions that address specific transportation needs, and 

indicate a general direction for transportation investment. This becomes the 

foundation for establishing performance measures which provide a mechanism 

to “test” solutions and provide a quantitative means to describe the impact of a 

project (or group of projects). Some States and MPOs are moving towards 

performance-based planning (also an emphasis area in reauthorization) and 

could use a GHG planning factor to support project and/or systems-level 

evaluation of GHG reduction to demonstrate consideration of the factor.

More prescriptive actions would include a requirement to consider GHG 

mitigation measures in plan development, or a requirement to develop GHG 

inventories and forecasts for plan alternatives. This action would require DOTs 

and MPOs to develop 1) a baseline inventory of existing GHG emissions from 

transportation sources in their State or region, and 2) GHG forecasts associated 

with each alternative evaluated in the long-range transportation plan. For some 

MPOs the requirement could be relatively straightforward, as the MPO already 

prepares baseline and plan alternative model runs using its regional travel 

demand model, and a first-level GHG analysis could be added without much 

effort. However, data and modeling improvements might be needed in many 

metropolitan areas to develop better GHG estimates from strategies such as 

traffic operations, transit, nonmotorized, land use design, and freight intermodal 

improvements, which many of today’s models are not designed to analyze. The 

requirements would have more significant implications for State DOTs, which 

typically do not develop a full network model with a comprehensive set of 

statewide projects to analyze plan alternatives. The inclusion of nonhighway 

modes in the inventory requirement also would add another level of data 

collection and analysis that does not currently exist at either level.

Such requirements would ensure that planning agencies consider the GHG 

impacts of their actions. Inventory and forecast requirements would ensure that 

information is introduced to inform decision-making. As with technical 

assistance, however, these requirements would not guarantee that GHGreducing strategies can be implemented. The acceptability of such requirements 

to transportation planning agencies would likely decline in relationship to their 

specificity. A statewide requirement to develop an inventory and forecast would 

require the development of new technical capabilities and planning activities by 

State DOTs. Resource requirements also would depend upon the type of 

analysis required. A VMT-based inventory is relatively simple, but a more 

detailed and precise inventory that captures factors such as vehicle operating 

conditions is not supported by current tools. 
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Because of the global nature of climate change, GHG emissions impacts and 

reduction strategies are more effectively evaluated and addressed at a regional or 

systems level than at the transportation project level. A voluntary regional-level 

analysis of transportation-related GHG emissions and reduction strategies 

analysis may be appropriate at the planning stage. Some States already have 

requirements to conduct GHG analysis for projects subject to State 

environmental review requirements. Where such requirements are in place, or 

where voluntary regional analyses are conducted, National Environmental 

Policy Act (NEPA) documents could summarize information regarding regionallevel analysis of transportation related GHG emissions and reduction strategies 

from transportation plans and associated studies. The Council on Environmental 

Quality is developing guidance on consideration of climate change in NEPA 

documents. Any DOT guidance on NEPA would need to be consistent with 

Council on Environmental Quality guidance. 

Integrated Land Use and Scenario Planning

Better integrating transportation and land use planning is a major strategy 

governments can undertake to improve access to housing, jobs, and other 

destinations while reducing travel distances, and consequently GHG emissions. 

Transportation and land use are interdependent. Decisions on the locations and 

densities of housing, retail, offices, and commercial properties impact travel 

patterns to these destinations. Similarly, the geographic placement of roads, 

public transportation, airports, and rail lines influences where homes and 

businesses are built. However, transportation planning and land use planning 

often occur separately, frequently resulting in longer travel distances and higher 

GHG emissions. By determining where and what type of transportation 

infrastructure is built, and thus the travel options available, State and 

metropolitan transportation planning greatly influences travel patterns, land use, 

energy consumption, and, as a result, GHG emissions. Integrated transportation 

and land use planning practices that promote clustered or higher density, mixed 

use development, and colocation of services near transit can reduce emissions by 

shortening driving distances. Similarly, infill, connected street networks, traffic 

calming, sidewalks, bike lanes, and walking paths can provide alternatives to 

carbon intensive travel.

Scenario planning or visioning efforts attempt to achieve a regional consensus on 

desired future land use and transportation patterns, often focusing on longer 

timeframe (30 to 50 years) than the standard 20-year transportation planning 

horizon. MPOs and/or DOTs could be required to develop forecasts of GHGs 

under different transportation and land use scenarios, and to undertake a 

planning process with this broader focus. An example is California’s Senate Bill 

(SB) 375, adopted in September 2008, which requires regional transportation 

plans to include sustainable communities strategies as part of the plan to achieve 

emission reduction targets. Federal policy would define clearly established 

linkages between the long-range vision and the existing long-range 

transportation plan. 
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This approach would encourage MPOs and State DOTs to be more visionary in 

their planning process, to look at a wider range of alternatives including land use 

patterns, and to include a broader range of nontraditional planning partners. 

Many metropolitan areas already are moving towards this type of approach. The 

willingness of many transportation agencies to adopt such an approach is likely 

to be low at least in the near-term, as most statutory authority for land use 

regulation lies at the local level and many agencies are not yet comfortable with 

the concept of being involved in local land use planning, even on a voluntary 

basis. Furthermore, strategies developed at a statewide or regional level are 

unlikely to be effectively implemented through local action if the region’s 

various stakeholders are not willing participants. Local opposition known as 

“not in my back yard” often works against denser, more travel efficient 

development. Another barrier is fiscal zoning, where it is in the interest of 

municipalities to accommodate the most lucrative land uses, which have 

historically been considered low-density or auto-dependent. In this regard, 

showing examples of vibrant, mixed-used developments with substantial tax

revenue can be of use. An alternative to a requirement for integrated planning 

would be to provide technical assistance and funding incentives for this type of 

planning.

GHG Reduction Targets

With appropriate congressional direction, the Federal government could either 

require State DOTs or MPOs to set their own GHG reduction targets (through the 

transportation planning process), or could set a national GHG reduction target 

(which could be uniform or apportioned to States and/or MPOs in different 

ways). State and regional transportation plans would be compared against these 

targets. The emissions targets would not identify the specific GHG reduction 

strategies to be implemented, but instead leave these to local planning agencies 

to determine. The question of how to enforce compliance with the targets would 

need to be addressed, including whether noncompliance would result in 

agencies being ineligible for certain highway funding incentives or larger 

impacts on broader highway funding. 

State and regionally determined targets, if not mandatory, would likely be more 

acceptable to State and regional planners than national targets since States and 

regions would have the flexibility to set a target that they felt was achievable. 

On the other hand, they might lead to less aggressive targets being set than if the 

Federal government were to set targets nationwide. They also might lead to 

concerns about fairness if regions with more aggressive targets feel that they are 

shouldering a greater share of the GHG mitigation burden. Mandatory targets 

would be likely to encounter significant resistance from transportation agencies. 

A highly prescriptive process could lead to significant additional resource 

requirements to demonstrate future compliance with targets, and is not 

recommended by DOT. 
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Furthermore, care must be taken to recognize what is realistically achievable 

through planning actions. Transportation planners would not likely have 

influence over vehicle efficiency and fuel strategies and have limited control over 

even some nontechnology strategies such as land use planning.

Expanded Modal and Geographic Scope of Planning

Intermodal infrastructure planning can improve intermodal connections to make 

passenger and freight travel more seamless, allowing the utilization of the most 

efficient combination of modes for any particular trip. Planning and investment 

decisions can also shift travel to more efficient modes, higher occupancies, or 

higher freight tons/mile. Finally, planning can induce more efficient modal 

operations. One step in this direction is the recently passed Passenger Rail 

Investment and Improvement Act of 2008 (PRIIA), which established a 

requirement for a National Rail Plan which would consider GHG benefits as one 

of several criteria for prioritization. PRIIA also requires State rail plans, which 

are to be coordinated with the existing transportation planning process for 

highway and transit investments. The Federal Aviation Administration’s 

NextGen program is another effort that could be useful in planning for other 

modes. NextGen seeks to develop environmental protection that allows 

sustained aviation growth. Finally, better incorporation of port operations in 

transportation planning processes could support more efficient ground 

operations, reduce truck traffic and emissions, and enable greater use of shortsea shipping. Efforts by the Maritime Administration (MARAD) and the Federal

interagency group, Committee on the Marine Transportation System, are 

coordinating port infrastructure projects and leading national efforts to reduce 

congestion on the Nation’s highways and rails by promoting the use of 

waterways and ports. Short-sea shipping already has been examined by regional 

interests such as the Port Authorities of New York and New Jersey and the Port 

Authority of Albany as well as by the International Mobility and Trade Corridor 

(IMTC) Project in the Pacific Northwest.

A new Federal planning program, implemented by DOT, could be created that is 

focused on multimodal, cost-effective, large-scale transportation strategies that 

improve mobility and reduce GHG from interstate travel. The goal of a national 

program would be to examine the synergies and tradeoffs among different 

interstate travel modes (including both passenger and freight transport), as well 

as identify policies and investments to leverage improvements to various modes 

that would reduce GHG. Such a program would focus on both passenger and 

freight transport, examining the National Highway System, intercity and freight 

rail, intercity bus service, air, ports, and intermodal terminals, and domestic 

waterways, and would coordinate with the existing statewide and metropolitan 

planning process.

Alternatively, a new planning structure and process could be established for 

megaregions or multistate geography. Megaregion or multistate planning efforts 

would encompass issues such as transportation and land use, low-carbon fuel 
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strategies, multistate pricing policies, long distance freight movement, 

coordinated GHG reduction strategies, and coordination of large multijurisdictional projects. Planning at a megaregion or national-level may allow for 

some issues to be addressed more effectively than could be done for smaller 

geographic areas in isolation. However, the range of strategies that might be 

most effectively implemented at a megaregion level is limited (for example, 

major intercity transportation investments). 

The development of planning structures at new scales is likely to encounter 

resistance from existing planning entities if they perceive an erosion of their 

authority, although multiregion planning has been embraced in some parts of the

country (such as the East Coast’s I-95 Corridor Coalition). Planning resource 

requirements would increase due to the establishment of new planning 

structures and the need for greater coordination among multiple entities.

Funding Incentives

Through the Federal-aid Highway Program and transit funding programs, the 

DOT provides funding to states and local governments to implement surface 

transportation programs and projects. Congress can change the structure of 

Federal transportation spending to prioritize GHG reductions, by directing 

funding towards specific types of planning activities or projects, or by 

establishing performance-based funding criteria to reward GHG emission 

reductions. Funding also can be targeted at GHG reduction activities in other 

modes of transport, including the rail, marine, and/or aviation systems. While 

future spending at any level could be better targeted toward strategies that 

prioritize carbon-efficient transportation projects, the Highway Trust Fund does 

not currently have enough resources to maintain current spending levels, let 

alone additional programs for low-carbon infrastructure. The DOT’s Conditions 

and Performance Report finds that present highway and transit investment levels 

are insufficient to maintain the current conditions and performance of the 

system.122

Funding for GHG Planning Activities

 This, combined with deficits projected in the Highway Trust Fund, 

and competing goals for transportation spending, complicates the objective of 

aligning funding incentives with climate change goals.

Federal funding can be directed specifically towards planning for GHG reduction, 

including data collection, tool development, process refinement, strategy 

development, and analysis of GHG reduction strategies. The State or metropolitan 

planning agency would determine, through its planning process, which strategies 

should be implemented, considering the full range of benefits and impacts of each 

 

122 U.S. Department of Transportation. Conditions & Performance: 2008 Status of the 

Nation’s Highways, Bridges, and Transit. 
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strategy. Funding could be targeted at those activities identified elsewhere in this 

report as having the greatest potential for GHG reductions.

This strategy would closely support technical assistance activities such as the 

application of improved planning tools and methods. It also would support any 

regulatory actions that require certain types of planning or analysis. It provides 

flexibility to State and metropolitan agencies in terms of what GHG reduction 

measures to actually implement, but does not guarantee that any specific 

measures will be undertaken. 

Funding for GHG Reduction Strategies

Federal funding also could be directed at specific types of transportation projects 

that have been demonstrated to reduce GHG emissions. For example, the 

Congestion Mitigation and Air Quality Improvement Program (CMAQ) could be 

expanded or revised, or a new program created, to also provide funds to all 

states and MPOs to support projects that reduce transportation GHG. Funding 

also could be directed at other modes not normally funded through the statewide 

and metropolitan planning process. CMAQ already is used to fund a variety of 

nontraditional projects—such as intermodal rail freight projects and passenger 

ferries—and consideration of GHG impacts could be another selection criteria for 

such projects.

This type of approach would provide greater certainty that GHG reducing 

projects would be implemented, although the magnitude of such reductions 

would depend upon the types of projects funded and their level of use by 

consumers. While targeted funding can encourage specific activities, it can 

reduce flexibility to State and metropolitan agencies to meet locally defined goals 

and objectives. It also leaves fewer funds available to meet other needs, such as 

maintaining the condition and performance of the existing transportation system.

Performance-Based Funding

Performance-based approaches could range from a modest amount of funding to 

reward certain projects to completely changing how Federal funding is directed. 

The goal would be to reward activities resulting in the most cost-effective GHG 

reductions or areas achieving the greatest GHG reductions. A programmatic 

approach could, for example, take the form of a highway/transit formula factor 

that is based on transportation GHG per capita or is based on achieved 

reductions in transportation GHG per capita over time. In a performance-based 

funding approach, GHG is likely to be one of a number of performance 

measures, which may also include factors such as accessibility, safety, economic 

development, air quality, and livability. Resource decisions could be required to 

achieve certain performance targets in several areas.

A programmatic performance-based approach would allow each funding 

recipient the flexibility to choose the strategies that are most effective in widely 

varying circumstances. This approach could potentially be revenue-neutral 

overall for the Federal government, if there was enough revenue to achieve 
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acceptable levels of performance in all categories, although it would cause shifts 

in funding among states and MPOs and transit operators. It may be difficult to 

achieve political support from individual states and regions that stand to lose 

funding if they cannot meet performance objectives. In addition, insuring 

sufficient funds are available to maintain the condition and performance of the 

transportation system in all regions may be a consideration. Furthermore,

whether applied to individual projects or to overall programs, minimum 

requirements for technical analysis and oversight would be needed in order to 

verify that projected GHG reductions are actually likely to be achieved. This 

would add to the planning resource requirements of states and MPOs and the 

oversight responsibilities of DOT.

In each of the mechanisms discussed above, the Federal government should 

ensure that Federal agencies are working together to align funding policies and 

incentives and coordinate their programs. For instance, DOT, EPA, and HUD 

have established a Sustainable Communities Partnership. In addition, as 

transportation planning and funding decisions are made at all three levels of 

government—Federal, State, and local—Federal agencies must work in 

partnership with State and local governments, respecting the unique roles of 

each. Any Federal policies that are developed would need to keep in mind the 

needs of smaller MPOs, which often have fewer resources available for planning 

and therefore may find it more challenging to develop reliable, analysis-based 

performance measures for specific projects and programs.

4.2 PRICE CARBON

Mechanisms to price carbon emissions include:

• An increase in the Federal motor fuels tax to discourage carbon emissions.

• A cap and trade system, in which a limited number of GHG emissions 

allowances are traded in the market to cap overall emissions across all 

economic sectors; 

• A carbon tax in proportion to the carbon content, or carbon dioxideequivalent emissions, of the fuel.

There are three economic rationales for applying price signals: 

• Carbon dioxide and other greenhouse gases can be considered an externality, 

and their full social costs (i.e., climate change-related damages) should be 

considered in business and consumer decisions; and

• Price signals harness market forces to identify and implement the most 

efficient and lowest costs mechanisms for reducing greenhouse gas 

emissions; and

• Economy-wide price signals help to solve the complex problem of 

incorporating life cycle emissions into a regulatory regime by including 
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upstream emissions impacts arising from, for example, ethanol manufacture 

into the cost and price of the fuel.

In addition, revenue collected by pricing carbon can be invested in actions that 

further reduce carbon emissions.

Either a cap and trade system or a carbon tax approach would create a consistent 

set of prices across all sectors to encourage actions to reduce GHG emissions. 

Within the transportation sector, these actions would increase the cost of carbonfueled transportation and would therefore create incentives for developing and 

purchasing more efficient vehicles and alternative fuels, as well as reducing 

travel and/or shifting to more efficient modes. An increase in the Federal motor 

fuels tax produces the same effects for transportation modes that use gasoline 

and diesel fuels. A motor fuels tax would not, of course, produce economy-wide 

emission reductions, nor would it necessarily produce relative prices for 

electricity and alternative fuels that accurately reflect their impact on emissions.

Increasing transportation fuel prices, from any source, has both immediate and 

longer-term effects. At sufficiently high levels, the immediate effect would be to 

reduce travel or freight shipments; to motivate more efficient operating practices; 

and to promote switching to less costly, and presumably more emissionsefficient, transportation modes. 

The longer-term impact on fuel consumption and GHG emissions would be 

greater than the immediate impact, as transportation system users, fuel 

providers, and vehicle manufacturers can respond by manufacturing and 

purchasing more efficient vehicles, increasing the use of fuels with lower carbon 

content, and making more fundamental adjustments to activity patterns to 

reduce energy consumed in travel.

Further, the establishment at the Federal level of a cap and trade system, carbon 

tax, or increased motor fuel tax would create the expectation of long-term, 

sustained price increases—as compared to the unpredictable short-term price 

fluctuations seen in recent years. Achieving a policy environment with greater 

certainty in long term price trends will encourage long-run technological 

innovation and greater investment in more energy-efficient and reduced 

emissions vehicles and capital equipment in the transportation sector. A 

discussion of how travelers respond to both short and long-term price increases 

is included in Appendix A of this report. This section does not examine in detail 

the impact of carbon pricing on aviation or maritime industries.

Motor Fuel Tax

Increasing the Federal motor fuels tax would have a similar impact as a carbon 

tax (discussed below), but would only raise prices on motor fuels, rather than 

applying to all fuels based on carbon content. As with a cap and trade system or 

a carbon tax, a motor fuels tax would internalize the negative externality of 

environmental damage caused by burning fossil fuels and would provide a price 

signal to reduce fossil fuel consumption.
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One study estimated that an increase in the Federal fuel tax of approximately 20 

cents per gallon would reduce transportation GHGs by 2.3 percent in 2030—with 

about three quarters of the effect coming from improvements in fuel efficiency 

and one-quarter from reduced VMT.123

However, these higher prices would impose burdens on lower-income 

consumers and some businesses, and therefore would need to be implemented in 

concert with policies to address equity concerns. To give a sense of scale, fuel 

use per light duty vehicle averages 578 gallons per year.

 Levels equivalent to motor fuel costs in 

Western Europe, or an increase in the fuel tax of about $2.40 per gallon, could 

reduce transportation GHGs by 23 percent in 2030. 

124

Since an increase in the Federal motor fuels tax would only apply to the 

transportation sector, it could be adjusted to a higher level at which it would be 

likely to have a more substantial impact in the near term. Instituted primarily as 

a GHG reduction policy, this would entail imposing higher costs on the 

transportation sector than other sectors. However, unlike a cap and trade system 

or carbon tax, revenue raised through a motor fuel tax would have a strong 

precedent for being dedicated to transportation investments, as is currently the 

case with the existing 18.4 cent Federal motor fuels tax for gasoline and 24.4 cent 

tax for diesel. 

 This would decrease 

as vehicle efficiency improves.

An increase in the motor fuel tax could be scaled to generate sufficient revenue to

cover shortfalls in the Highway Trust Fund and the gap between current 

transportation investment levels and the levels that the DOT Conditions and 

Performance Report estimates are necessary to maintain the conditions and 

performance of highways, bridges, and transit. Furthermore, it would maintain 

the “user-pay” principle of funding transportation investments from charging 

transportation users, rather than relying on general fund transfers to cover 

revenue shortfalls, which has been a recent trend with the general fund bailout of 

the trust fund in 2008 and 2009. Reinvesting the revenue in transportation 

infrastructure could yield mobility and congestion reduction benefits. Funding 

could be reinvested in strategies to further reduce GHG emissions from 

transportation, such as investments in alternative modes and system efficiency 

strategies. The motor fuels tax has the advantage of low administrative and 

compliance costs.

 

123 Cambridge Systematics, 2009 (cited). The calculation was performed using a 1 cent 

per mile fee for the lower scenario, which equates to about 20 cents per gallon at the 

current average fuel efficiency of about 20 mpg for light-duty vehicles; and 12 cents 

per mile for the higher scenario, or about $2.40 per gallon. The calculations assume an 

elasticity of VMT with respect to operating costs of -0.45, as described in Appendix A.

124 Federal Highway Administration, Highway Statistics 2006.
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The treatment of alternative fuels under an expanded motor fuel tax regime is a 

key policy variable, particularly as renewable fuels penetration in the 

transportation sector has been mandated to increase substantially under the 

expansion of the renewable fuels standard by the Energy Independence and 

Security Act of 2007. Some alternative transportation fuels (such as ethanol and 

biodiesel) are eligible for a $0.45 per gallon excise tax credit. This credit is set to 

expire at the end of 2010. If alternative transportation fuels are exempted or 

continue to benefit from large tax credits, and there is no provision (such as 

exists currently in the renewable fuels standard) for limiting use of high life-cycle 

emissions alternative fuels, then some of the emissions benefits of the tax would 

be offset by increased life-cycle emissions from alternative fuels. 

An increase in the Federal motor fuel tax is not proposed by the current 

Administration, given the economic recession. It has, however, been discussed 

by other policy actors in conjunction with the debate over the next authorization 

of surface transportation legislation. It is conceivable that the Federal motor fuel 

tax rate could be increased as a revenue generating mechanism to fill current and 

projected shortfalls in the Highway Trust Fund. Two recent Commissions, the 

National Surface Transportation Policy and Revenue Study Commission and the 

National Surface Transportation Infrastructure Financing Commission, 

recommended increased motor fuel taxes in the short term, by 10 cents per 

gallon, and with further adjustments for inflation. The Federal motor fuel tax 

rate was last increased in 1993 (prior to that time it was increased in 1990, 1986, 

1983, 1961, and 1959).125

Cap and Trade

 Since that time, the motor fuels tax has lost much of its 

purchasing power due to inflation and other increases in materials and 

construction costs. A majority of State governments have continued to raise their 

motor fuel tax rates, with 32 of 50 increasing the rate since 1993; others have 

raised taxes from other sources (e.g., motor vehicle registration fees or excise 

taxes) to increase transportation revenue.

A cap and trade system provides, in principle, environmental certainty over the 

amount of emissions while at the same time using market forces to determine the 

most economically efficient actions to reduce emissions. The type of cap and 

trade system under consideration in Congress would require electric power 

generators, petroleum importers and refiners, and other large emitters of GHGs 

to hold allowances for each ton of their emissions. Allowances can be distributed 

initially through a government auction, free of charge, or a combination of the 

two. Entities that can reduce their emissions relatively cheaply will need to 

acquire and submit fewer allowances than entities that cannot reduce their 

 

125 Federal Highway Administration, Highway History.

http://www.fhwa.dot.gov/infrastructure/gastax.cfm. 
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emissions as cheaply. Entities can buy and sell allowances. In this way, the 

market system encourages the most cost-effective emissions reductions.

Entities that are upstream from the cap (e.g., coal mining companies), experience 

the cap and trade system as falling/rising prices for the products they sell. 

Entities that are downstream from the cap (in this case, airlines, railroads, and 

consumers) experience the cap in the form of higher energy and fuel prices.

Transportation GHG Reductions from Cap and Trade Limited in Near 

Term

In the transportation sector, the impact of a cap and trade system would be felt in 

the form of increases in fuel prices in the short term, rising over time as the cap 

tightens.126 Fuel importers and refiners would be required to hold allowances for 

each ton of carbon dioxide equivalent that was contained in the fuel they sold. 

The EPA’s modeling analysis of the cap and trade system proposed in the 

American Clean Energy and Security Act of 2009 estimated allowance prices of 

$13 per metric ton carbon dioxide equivalent in 2015, $16 in 2020, $27 in 2030, 

and $70 in 2050 in the core policy scenario. 127

 

126 Due to lack of available analysis there is little indication of the full impacts of a cap 

and trade system or tax on aviation or maritime industries.

The estimates are based on a 

system that would cover 85 percent of total U.S. GHG emissions, impose a cap 

starting in 2012 at 3 percent below 2005 covered emissions, and then 

127 U.S. Environmental Protection Agency (2009). EPA Analysis of American Clean Energy 

and Security Act of 2009, H.R. 2454 in the 111th Congress. June 23, 2009, p3, p12, 

http://www.epa.gov/climatechange/economics/economicanalyses.html.

EPA models key uncertainties in different scenarios. Uncertainties covered in the 

scenarios include the degree to which new nuclear power is feasible, the availability of 

international offset projects, the amount of GHG emissions reductions achieved by the 

energy efficiency provisions in the bill, the impact of output based rebates to energy 

intensive and trade exposed industries. Across all scenarios modeled, the allowance 

price ranges from $13 to $24 per ton CO2e in 2015 and from $16 to $30 per ton CO2e in 

2020, with the availability of international offsets having the largest impact.

This analysis falls within the range of previous EPA analyses as well as other entities’

analyses on previous bills. Allowance prices are somewhat lower due to effects of 

Energy Independence and Security Act of 2007. For comparisons between modeling 

conducted by EPA, the Department of Energy, Massachusetts Institute of Technology, 

Clean Air Task Force, American Council for Capital Formation and the National 

Association of Manufacturers, see: Pew Center on Global Climate Change, 

“Innovative Policy Solutions to Global Climate Change: Insights from Modeling 

Analyses of the Lieberman-Warner Climate Security Act (S.2191),” May 2008. 

The allowance prices shown reflect allowing domestic and international carbon 

offsets. Not allowing offsets would increase the allowance prices.
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gradually reduce emissions to 17 percent below 2005 levels by 2020, and 83 

percent below 2005 levels by 2050. 

An allowance price of $15 per ton translates into an increase in the price of 

gasoline of $0.13 per gallon, based on its carbon content.128

 

128 The price impacts shown are only due to the combustion of fuel. Since upstream and 

refining emissions will be included under cap and trade, the cost of these emissions will 

be reflected in the price seen by the consumer to some degree. The estimate also does 

not include general equilibrium effects, e.g., the dynamic effects on fuel prices from 

lowered demand for fuel as a result of the carbon price. 

 An allowance price of 

$30 implies an increase in gasoline prices of $0.26 per gallon. Price increases of 

other transportation fuels would rise similarly in proportion to their carbon 

content, as shown in Table 4.1. 
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Table 4.1 Cap and Trade/Carbon Tax Price Impacts

Gasoline Diesel Jet Fuel

Carbon Content kg CO2/gallon 8.81 10.15 9.57

Allowance Price or Carbon Tax per 

ton CO2

Gasoline $ per 

gallon

Diesel $ per 

gallon

Jet fuel $ per 

gallon

$10 $0.09 $0.10 $0.10

$15 $0.13 $0.15 $0.14

$20 $0.18 $0.20 $0.19

$30 $0.26 $0.30 $0.29

$40 $0.35 $0.41 $0.38

$50 $0.44 $0.51 $0.48

Source: Carbon content from U.S. EPA (2007). Inventory of Greenhouse Gas Emissions and Sinks: 1990 

to 2005, Annex 2.1.

$/gallon = kg CO2/gallon * 1 metric ton/1000 kg * allowance price or carbon tax.

Note: The price impacts shown are only due to the combustion of fuel. Since 

upstream and refining emissions will be included under cap and trade, the cost 

of these emissions will be reflected in the price seen by the consumer to some 

degree. The estimate also does not include general equilibrium effects, e.g., the 

dynamic effects on fuel prices from lowered demand for fuel as a result of the 

carbon price. These price increases are low in comparison to the gas price 

increase of $2 per gallon experienced between 2004 and 2008,129

According to a U.S. Department of Energy analysis of gas price increases over 

the last 10 years, gas demand was relatively inelastic, at -0.02 for prices over 

$2.50 per gallon.

which 

contributed to some leveling off of GHG emissions from the transportation sector 

but not steep declines. 

130 This means a 100 percent increase in gas price is associated 

with a 2 percent reduction in gas consumption. Long run elasticities are 

greater,131

 

129 U.S. Department of Energy, Energy Information Administration (2009). Monthly 

Energy Review, Table 9.4 Motor Gasoline Retail Prices, U.S. City Average, May 2009, 

http://tonto.eia.doe.gov/merquery/mer_data.asp?table=T09.04

as consumers have time to purchase more fuel efficient vehicles and 

move residences closer to work and other destinations. Researchers Small and 

130 U.S. Department of Energy, Energy Information Administration (2008). “Short-Term 

Energy Outlook Supplement: Motor Gasoline Consumption 2008: A Historical 

Perspective and Short-Term Projections.”

131 Graham, D.J. and S. Glaister (2002). “The Demand for Automobile Fuel: A Survey of 

Elasticities.” Journal of Transport Economics and Policy 36(1):1-26, January 2002. 
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Van Dender find short and long run elasticities of gasoline consumption with 

respect to price of -0.04 and -0.24, respectively.132

The modest increase in near-term fuel prices caused by a cap and trade system is 

not expected to spur large reductions in transportation GHG emissions. Under 

EPA’s modeling conducted for draft cap and trade legislation, the electricity 

sector provides the vast majority of GHG reductions in the early years.

Transportation and energy-intensive manufacturing see more emissions 

reductions in later years as the cap tightens and allowance prices rise.133

Analysis by the Energy Information Administration (EIA) of the cap and trade

system in H.R. 2454, the American Clean Energy and Security Act (ACESA)134

found reductions in transportation GHG emissions from ACESA of about 4 

percent in 2030 relative to baseline emissions, or 85 million metric tons CO2e.135 

This reduction results from a gasoline price increase of about 37 cents per gallon 

in 2030, corresponding to a $65 per tonne allowance price.136

This reduction results in part from a decrease in light duty and truck VMT of 

about 2 to 2.5 percent. Light duty vehicle fuel efficiency is only 0.3% higher in 

 These estimates are 

for the basic case analyzed by EIA. Across the main cap and trade cases EIA 

analyzed, the transportation-related CO2 emission reductions range from 2.6 to 

8.5 percent (53 to 174 million metric tons).

 

132 Small, K., and K. Van Dender (2007). “Long Run Trends in Transport Demand, Fuel Price 

Elasticities and Implications of the Oil Outlook for Transport Policy,” Discussion Paper

No.2007-16. Small and Van Dender find that fuel price elasticities are a function of the 

share of gasoline expenditures in personal income, so that rising incomes tend to 

reduce price elasticities, while higher price levels tend to increase price elasticity. In 

the context of a cap and trade system, whether fuel prices become more or less elastic 

over time will depend on whether fuel prices (including allowance costs) rise more 

rapidly or slowly than per capita income. More information on price elasticities in 

this report is found in Appendix A.

133 U.S. Environmental Protection Agency (2009). EPA Analysis of American Clean Energy 

and Security Act of 2009, H.R. 2454 in the 111th Congress. June 23, 2009.

http://www.epa.gov/climatechange/economics/economicanalyses.html. 

134 Passed the House of Representatives in June 2009. A companion Senate bill has not 

passed as of this writing.

135 U.S. Department of Energy, Energy Information Administration (2009). Energy Market 

and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009. 

http://www.eia.doe.gov/oiaf/servicerpt/hr2454/index.html. Figures cited here are 

for the basic case.

136 The modeling performed by EIA finds that gasoline prices change under a policy 

scenario not only because of the direct impact of the allowance requirement, but also 

because of general equilibrium effects, such as a lower demand for fuels leading to 

slightly lower world crude oil prices.
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the basic policy case than in the reference case. According to EIA, since all cases 

include the 35-mile-per-gallon CAFE standard enacted in the Energy 

Independence and Security Act of 2007, many of the most cost-effective vehicle 

efficiency options are adopted in all cases, including the Reference Case. EIA 

projects energy use by freight rail to decline 18 percent due to reduced volumes 

of coal shipments, because of the shift away from coal-fired power plants.137

The EIA analysis did not include results for 2050, but these would be greater as 

allowance prices would increase over time, and responses to earlier price 

increases also are fully phased in.

 The 

EIA analysis does not analyze the additional ACESA provisions aimed at

stimulating further advances in vehicle fuel efficiency and a more rapid 

penetration of vehicles that rely at least partially on electricity. If these 

additional provisions are successful, larger reductions in transportation sector 

emissions would be expected.

The EIA analysis showed that between 80 and 88 percent of the energy-related

CO2 reductions in 2030 would come from the electricity generation sector of the 

economy, largely from reductions in coal usage. Figure 4.1 below shows 

estimated GHG emissions by sector.

 

137 U.S. Department of Energy, Energy Information Administration (2009). Energy 

Market and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 

2009. http://www.eia.doe.gov/oiaf/servicerpt/hr2454/index.html. 
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Figure 4.1 Impacts of Cap and Trade on GHG Emissions by Sector

Source: U.S. Department of Energy, Energy Information Administration (2009). Energy Market and 

Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009. 

http://www.eia.doe.gov/oiaf/servicerpt/hr2454/index.html.

Note: The estimates for industrial, commercial, residential, and transportation do not include emissions 

from electricity as electricity emissions are counted under electric power. 

In the long run, as rising allowance prices increase petroleum prices and cost 

effective solutions in other sectors have been exhausted, the impacts on the 

transportation sector are likely to increase. Depending on the availability of 

international offsets or lower-cost emission reductions in other sectors, it may be 

difficult if not impossible to achieve significant GHG reductions without GHG 

emission cuts in the transportation sector, since as Section 2.0 shows, the sector 

accounts for 29 percent138

 

138 Including bunker fuels, or 28 percent not including bunker fuels.

of U.S. GHG emissions. 
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Costs and Cost-Effectiveness

A cap and trade system encourages cost-effective emission reductions through 

the market mechanism. Those who can improve emissions for less than the price 

will do so, whereas those who cannot will purchase allowances. Collectively, 

emitters will therefore invest in those mitigation actions which are the most cost 

effective. The marginal cost of GHG abatement is equal to the allowance price. 

Costs to the broader economy are estimated at less than one percent of U.S. gross 

domestic product (GDP) in 2030, according to EIA.139 Average annual household 

consumption is estimated to decline in a range of $80 to $111 per household per 

year relative to the no policy case for the duration of the policy, according to 

EPA.140 This represents 0.1 to 0.2 percent of household consumption. The costs 

include the effects of higher energy prices, price changes for other goods and 

services, impacts on wages, and returns to capital. Cost estimates also reflect the 

value of emissions allowances returned lump sum to households, which offsets 

much of the cap and trade program’s effect on household consumption. A policy 

that failed to return revenues from the program to consumers would lead to 

larger losses in consumption.141

There are numerous other important factors that affect costs, such as the 

possibility of banking allowances, buying offsets from international carbon 

markets, “safety valves” to limit the price at which carbon is traded, minimum or 

“reserve” prices, and the reservation of some freely allocated allowances for new 

entrants. EPA estimates that if offsets were not allowed and emission reductions 

were achieved entirely through reductions in domestic covered emissions, 

permit prices would be 89 percent higher relative to the core policy scenario.

 

142

As for costs to the transportation sector specifically, an allowance price of $17 per 

ton CO2e would increase motor gasoline costs for the U.S. transportation sector 

by $21 billion per year at current consumption levels.

 

How the auction is designed and executed can also have a cost impact.

143

 

139 U.S. Department of Energy, Energy Information Administration (2009). 

 However, carbon based 

fuel consumption levels would decrease with increased use of low carbon fuels, 

Energy Market 

and Economic Impacts of H.R. 2454, the American Clean Energy and Security Act of 2009. 

http://www.eia.doe.gov/oiaf/servicerpt/hr2454/index.html. 

140 U.S. Environmental Protection Agency (2009). EPA Analysis of American Clean Energy 

and Security Act of 2009, H.R. 2454 in the 111th Congress, June 23, 2009, p.4, 

http://www.epa.gov/climatechange/economics/economicanalyses.html.

141 U.S. Environmental Protection Agency, 2009 (cited).

142 U.S. Environmental Protection Agency, 2009 (cited), p.3.

143 Calculated from 2008 motor gasoline annual consumption level of 137.8 billion gallons 

reported by the Energy Information Administration.
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efficient vehicles, improved system efficiency, and travel alternatives brought on 

by a cap and trade system or complementary policies.

Complementary Policies under Cap and Trade

A cap and trade system should, in theory, minimize the economic cost of a given 

level of emission reductions, and render additional strategies redundant. Under 

a cap and trade system, those sectors with the most cost effective emission 

reduction strategies available will reduce emissions and sell allowances to other 

sectors that are not able to reduce emissions as cost effectively. In theory, if it is 

more costly to reduce emissions from transportation than from electric power 

generators for instance, then it is economically efficient for most emission 

reductions to come initially from the other sectors while deferring significant 

transportation reductions until some time in the future. The environmental 

benefits of reducing directly emitted, long-lived GHGs such as carbon dioxide do 

not depend on where or how reductions occur. 

However, if there are market failures that reduce the reaction to higher prices, 

then pursuing additional measures can lower implementation costs by 

compensating for market failures. There is evidence that some aspects of 

transportation, as well as other sectors, may exhibit market failures. For 

instance, consumers tend to undervalue fuel savings in vehicle purchase 

decisions.144 That leads to the conclusion that a cap and trade system can serve 

as the central policy to guide cost-effective GHG reductions, while 

complementary policies (additional policies that work with the main cap and 

trade policy) also may be pursued where they can be demonstrated to lower 

implementation costs by compensating for market failures when they exist.145

A recent McKinsey report finds several strategies that could reduce GHGs while 

saving substantial sums of money.146

 

144 Greene, D. L., J. German, and M. A. Delucchi (2009). “Fuel Economy: The Case for 

Market Failure.” In Reducing Climate Impacts in the Transportation Sector, D. Sperling 

and J. S. Cannon, eds, Springer.

 These actions include insulating buildings 

and purchasing more efficient household appliances and vehicles that would 

save consumers more in reduced energy costs than it would cost them in up 

front costs. The National Highway Traffic Safety Administration (NHTSA) 

estimates that its recent model year 2011 fuel economy standard will reduce 

greenhouse gas emissions at a net savings of $1.5 billion over the time period 

145 There may be additional value in reducing emissions from a particular source or 

category of sources: for instance, reducing petroleum consumption may produce 

economic or national security benefits over and above the benefits of reducing the 

associated greenhouse gas emissions.

146 McKinsey & Company (2007). Reducing U.S. Greenhouse Gas Emissions: How Much at 

What Cost?
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2011 to 2030 as consumer fuel cost savings outweigh increased costs of vehicle 

technology.147

Models of cap and trade systems that include raising efficiency standards 

estimate lower allowance prices and consumer energy bills. These models also 

show that the availability of low-carbon technologies is critical to minimizing 

costs of GHG reductions.

 If consumers undervalue energy efficiency, a carbon price signal 

alone will not elicit all cost effective emission reductions. Efficiency standards 

can compensate for market failures in consumers undervaluing energy savings. 

However, outside of the consumer sector, the evidence for market failure in 

commercial transportation operations such as trucking, aviation, maritime, or 

railroads is less compelling.

148

The Government Accountability Office (GAO) surveyed a panel of 18 noted 

economists with expertise in climate change policies and found that 14 out of 18 

believed that in addition to a cap and trade or carbon tax mechanism to establish 

a price for carbon, complementary policies such as investment in research or 

energy efficiency standards should be pursued.

As such, public investment in research and 

development can spur new energy technologies that reduce costs. This is 

particularly important to the extent that even with a price signal, private 

companies are hesitant to risk investing in uncertain, long term technologies or 

basic research. 

149

 

147 National Highway Traffic Safety Administration (2009). Average Fuel Economy 

Standards, Passenger Cars and Light Trucks, Model Year 2011, Final Rule. April 2009.

 However, the GAO report 

also emphasized the view of several panelists that energy efficiency standards 

can be economically inefficient and that vehicle fuel efficiency standards would 

be unnecessary in the presence of a robust mitigation policy to place a price on 

carbon. By not pursuing complementary policies for the transportation sector in 

addition to a cap and trade system, the sector may miss opportunities for 

investing earlier in low carbon technologies and mobility options, leading to 

higher costs in the future when allowance prices are high and these options are 

not available. As one expert put it, “Harnessing market forces is a very useful 

but probably insufficient strategy for mitigating transportation’s GHG emissions. 

Even a carbon cap and trade system, as beneficial as it would be, would be 

hindered by the tendency of households to undervalue fuel economy. It would 

be unlikely to bring about an appropriate level of investment in long-term 

148 Pew Center on Global Climate Change (2008). “Innovative Policy Solutions to Global 

Climate Change: Insights from Modeling Analyses of the Lieberman-Warner Climate 

Security Act (S.2191)” 

149 U.S. Government Accountability Office, 2008 (cited).
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transportation energy technologies and would not guide important investments 

in transportation infrastructure and the built environment.”150

However, complementary policies would need to be carefully chosen and 

designed to avoid overlap or increasing rather than decreasing implementation 

costs. In order to reduce total compliance costs, a complementary measure 

would need to be designed to compensate for a market failure that prevents 

higher allowance prices from inducing efficiency improvements. Also, the 

stringency or scale of the complementary policy would need to be set to generate 

net benefits at allowance prices equal to or lower than those generated by the cap 

and trade program.

Complementary measures could lower implementation costs but would not reduce 

national emissions levels

Because the national cap controls the total quantity of emissions, additional 

reductions in one sector caused by a complimentary policy permit increased 

emissions in another sector. The benefit of the complementary policy then is 

economic—lowering implementation costs—rather than environmental. 

Implications for alternative fuels

A cap and trade program also would have distinctive effects on alternative fuels, 

with implications for complementary policies in this area. Synthetic fuels 

derived from coal or natural gas without carbon sequestration will become even 

more expensive than they are currently. Biofuels that depend on conventional 

fuel for process heat, and for petroleum-based transport for feedstocks or the fuel 

itself, will see some incremental cost increase. 

In addition, biofuels may face increased competition for feedstocks under a cap 

and trade program. The grower of a ‘fast rotation woody crop’ suitable for 

conversion into cellulosic ethanol, for instance, could leave this crop standing 

and sell the sequestered carbon as an offset. Or, he could harvest the crop, and 

sell the crop into the electric power sector as biomass fuel to replace coal. Or, he 

could sell the crop to be processed into ethanol. Under cap and trade, market 

forces will move the crop to the ‘best’ use for achieving emission reductions. 

Alternative uses for biomass as energy or sequestration crops under cap and 

trade may tend to raise the value of land and water, which will further affect 

biofuel economics.

Distribution of revenues could further affect transportation and consumers

Since the price elasticity of demand for fossil fuels is low, while the volume of 

fossil fuels is large, a cap and trade system that significantly constrains emissions 

could potentially raise large revenues. Allowances are valuable. If all, or a 

 

150 D. L. Greene and A. Schafer (2003). Reducing Greenhouse Gas Emissions from U.S. 

Transportation. Pew Center on Global Climate Change.
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portion, of allowances are auctioned or sold at some approximation of their 

market value, then a constraining cap and trade system would actually generate 

large revenues.

The distribution of these revenues is a matter of intense political debate with 

groups arguing for revenues to be used for different purposes, including 

compensating consumers facing rising energy prices, funding energy research 

and development, investing in low carbon infrastructure, funding maintenance 

of existing infrastructure, helping energy intensive industries transition, and 

reducing fiscal deficits. 

The transportation sector could be further affected if any revenues were 

reinvested in transportation to further reduce transportation emissions or 

compensate consumers facing higher fuel prices. For instance, Congress has 

considered investing cap and trade revenues in research on energy efficient 

vehicles, development of low carbon fuels, and investment in public 

transportation.

An analysis of equity is included in a recent Massachusetts Institute of 

Technology (MIT) study of alternative greenhouse gas control proposals.151

Research also has addressed other ways of offsetting the economic impacts of 

higher energy prices on low and moderate income households that would be 

associated with cap and trade or with a carbon tax. For example, income tax 

rebates or employment tax rebates have been suggested. One article proposes a 

payroll tax rebate for Social Security and Medicare taxes as an offset to carbon 

taxes.

 The 

study found that carbon pricing impacts lower income groups more so than 

higher income groups. Assuming a carbon price of $15 per ton CO2e, the 

increase in energy prices as a percentage of income ranged from 3.7 percent of 

income for the lowest income decile to only 0.8 percent of income for the highest 

income decile. The analysis also estimated the impacts of a “lump sum” rebate of 

all carbon revenues to all households, as the means to address equity issues. 

Rebating all revenues as a common lump sum would result in a 5.6 percent 

income gain for the lowest 10 percent of households to a 0.6 percent gain for the 

highest 10 percent of households. Thus, a full rebate in equal amounts to all 

households, of the proceeds of carbon pricing can eliminate the equity impacts 

on the lowest income groups. A similar effect would be expected at any level of 

price increase.

152

 

151 Metcalf, G.E., et al (2008). Analysis of U.S. Greenhouse Gas Proposals. MIT Joint Program 

on Science and Policy of Global Change, Report no. 160.

The Moving Cooler study examined the equity implications of 

transportation pricing systems such as a VMT fee. The study found that pricing 

152 Metcalf, G.E. (2007). “A Green Employment Tax Swap: Using a Carbon Tax TO 

Finance Payroll Tax Relief.” Brookings Institution and World Resources Institute 

Policy Brief.
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created inequities for lower income groups, but that these inequities could be 

addressed through reinvestment in highways, transit, system operations, 

commuter and ridesharing programs, and other transportation programs to 

improve mobility.153

One of the interesting side-effects of either a cap and trade system or a carbon tax 

is that rail freight traffic is expected to decline fairly substantially, due to the 

reduction in coal use as power plants shift to less carbon-intensive fuels.154

Carbon Tax

 

While negatively affecting railroad revenue, this also should have the effect of 

reducing congestion and the need for investment on the rail system in corridors 

with large volumes of coal shipments, and potentially make it more feasible to 

shift some other freight from truck to rail. While reduced demand for coal 

would reduce rail traffic in some corridors, other corridors might see increases 

due to biofuels shipments by rail.

A carbon tax instituted at a comparable level to the permit price of a cap and 

trade system would have similar GHG reduction impacts, since a cap-and trade 

program looks like a carbon tax to energy consumers. The tax would need to rise 

over time and be adjusted to ensure the desired level of GHG reductions. Much 

of the discussion above regarding the impact of a cap and trade system on 

transportation also applies to the impact of a carbon tax on transportation. 

Under both, most reductions would come initially from the electricity generating 

sector, with more substantial reductions in transportation not occurring until the 

out years, when prices are higher. Market failures discussed above would 

similarly diminish the strength of the price signal.

Cap and trade and carbon tax policies have many similarities. Both strategies 

have been proposed as an alternative to a “command and control” approach in 

which the government would mandate how much individual entities could emit 

or what technologies they should use. Both are inherently market-based in that 

they send short and long term price signals that influence the decisions of 

consumers and businesses. Both correct a market failure, put a price on carbon, 

and take advantage of market efficiencies. Both policies impose a compliance 

obligation on a limited number of firms, can generate revenue, and may require

special provisions to minimize impacts on low income consumers and industries 

dependent on fossil fuels. Both a carbon tax and a cap and trade system could be 

made more socially equitable by, in the case of a carbon tax, giving rebates to low 

 

153 Cambridge Systematics, Inc. (2009). Moving Cooler: An Analysis of Transportation 

Strategies for Reducing Greenhouse Gas Emissions. Urban Land Institute: Washington, 

D.C.

154 U.S. Department of Energy, Energy Information Administration (2008). Energy Market 

and Economic Impacts of S. 2191, the Lieberman-Warner Climate Security Act of 2007. 

http://www.eia.doe.gov/oiaf/service_rpts.htm.
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income households, and in the cap and trade system, compensating low income 

households using a portion of the revenue from the auction of allowances.155

There are, however, key differences. A carbon tax offers more certainty 

regarding energy prices while a cap and trade system offers more certainty 

regarding overall GHG levels.

 

Finally, the market signal inherent to both can encourage greater change in 

behavior when alternatives to carbon intensive travel are available. When low 

carbon travel options are not available, the price poses a larger burden.

156 Many economists argue that a carbon tax 

would be more economically efficient because it would provide more economic 

certainty over prices than would a cap and trade system, as allowance prices 

would fluctuate. More certainty over prices provides industry with better 

information to guide investment decisions such as efficiency improvements and 

equipment upgrades. In addition, a carbon tax would allow more flexibility in 

emissions levels each year.157 This can lower costs by, for instance, allowing 

more emissions in a year where a cold winter increased energy usage for heating. 

Total reductions are what is important rather than ensuring certain levels each 

year. A cap and trade system also can provide some flexibility in emission levels 

from year to year if it includes provisions that allow firms to borrow or bank 

emissions from year to year. Some contend that a carbon tax may provide 

implementation advantages such as greater transparency, a reduced 

administrative burden, and ease of modification.158

The effect of a carbon tax on alternative fuels is broadly similar to the impact of a 

cap and trade program, though the exact treatment of carbon sequestration 

under a carbon tax regime would influence the conditions under which biomass 

resources do or do not flow into biofuels.

 

A carbon tax has not been proposed by the current Administration or 

congressional leadership, although it has been advocated by some members of 

Congress. 

 

155 Pew Center on Global Climate Change (2009). “Climate Policy Memo: Cap and Trade 

v Taxes.” March 2009.

156 Pew Center on Global Climate Change, 2009 (cited).

157 Congressional Budget Office (2008). “Policy Options for Reducing CO2 Emissions.”

158 Congressional Research Service (2009). “Carbon Tax and Greenhouse Gas Control: 

Options and Considerations for Congress.” February 23, 2009.
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5.0 Policy Options

The results of this analysis demonstrate that the transportation sector has a 

significant opportunity to contribute to national reductions in GHG emissions. 

GHG emissions from transportation can be reduced through four basic 

strategies: improving fuel efficiency; expanding the use of low-carbon fuels; 

improving the efficiency of the transportation system; and reducing the volume 

of travel that relies on carbon-based fuels. 

Each strategy would require government policies in order to implement it and 

achieve GHG reductions beyond the business-as-usual scenario. This report 

does not provide recommendations, instead, it analyzes the potential of each 

strategy and the policy options for implementing the strategy. 

In implementing these strategies, there are five broad categories of prospective 

policy action at the Federal level. They are:

1) Efficiency standards—options include fuel economy standards, low carbon 

fuel standards, and GHG emissions standards.

2) Transportation planning and investment—options include Federal technical 

assistance in integrating transportation and land use planning, and ensuring 

integration of climate change considerations into transportation planning and 

funding programs in order to prioritize GHG reducing strategies.

3) Market-based incentives—options include tax credits, feebates, subsidies, 

and vehicle miles traveled fees.

4) Research and development—options include research on advanced vehicle 

and fuel technology and research to develop data, tools, and decisionsupport to inform transportation planning and investment processes.

5) Economy-wide price signal—options include a cap and trade system or a 

carbon tax to establish a carbon price.

These approaches may be pursued jointly, and may have synergistic or 

reinforcing effects when implemented together (See section 3.9 - Key Interactions 

for more information). Implementing multiple actions can reinforce the level 

and pace of success in attaining steep GHG reduction goals. Integrated actions 

may be necessary to assure that, together, the steps taken to achieve GHG 

reductions also advance economic and societal goals. Approaches must also be 

evaluated carefully to ensure that there are no costly overlaps. 

Table 5.1 shows which of the four strategies analyzed in the report these 

categories of prospective policy action support.
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Table 5.1 Crosswalk between GHG Reduction Strategies and Categories of 

Policy Options

Introduce low 

carbon fuels

Increase vehicle 

fuel efficiency

Improve 

transportation 

system 

efficiency

Reduce carbon 

intensive travel 

activity

Efficiency 

standards

x x

Transportation 

planning and 

funding 

programs

x x

Market 

incentives 

x x x x

Research and 

development

x x x x

Economy-wide 

carbon price

x x x x

The policy options in the first category, economy-wide market pricing of carbon, 

would affect all sectors—electricity generation, industrial, commercial, and 

residential, as well as transportation. The policy options discussed in the other 

four categories are specific to the transportation sector, although the general 

categories apply to other sectors as well. For instance, the corollary to vehicle 

efficiency standards in transportation is household appliance efficiency 

standards in residential. An example of market incentives in the commercial 

sector would be tax credits for energy efficient windows. An example of the 

research and development category in electricity generation includes research 

into advanced solar technology. Government planning and funding programs 

also form a category of policy options in other sectors—for example, energy 

transmission line planning. The range of policy options specific to transportation 

within these broad categories are summarized below, after a discussion of 

general considerations.

 

Considerations

Some of the considerations that may be helpful in evaluating transportation 

policies in relation to GHG reductions include:

• Design GHG reduction policies that work in concert with other critical 

Federal priorities, including economic growth, mobility, and environmental 

sustainability, consistent with the DOT mission.

• Promote multimodal approaches to meet the Nation’s growing 

transportation needs and environmental challenges.
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• Promote more efficient use of existing transportation infrastructure through 

price signals that make travelers aware of externalities created by their 

transportation choices, including GHG emissions and others.

• Ensure focus on and progress in achieving GHG reduction goals through 

performance measurement, accountability, and transparency, consistent with 

the Administration’s governing approach.

• Build on the lessons learned from State and regional initiatives, and promote 

innovation at the State, regional, and national levels. 

• Pursue a coordinated portfolio approach to GHG reductions that taps the 

potential of multiple strategy groups. It is unlikely that any single strategy 

can achieve the steep GHG reductions being discussed.

• Collaborate with Federal partners to implement effective cross-disciplinary 

policies and programs since actions to reduce GHG emissions in the 

transportation sector will affect energy, environmental, and economic 

policies and programs. 

• Promote options that are feasible in terms of technology, timely 

implementation, and cost effectiveness.

• Invest in research to develop breakthrough technologies and planning 

approaches to lower mitigation costs.

Efficiency Standards 

Mechanism • CAFE Rulemaking, National Program

• Climate and energy legislation

Key Options • Fuel economy standards

• GHG emissions standards

• Low carbon fuel standards

DOT Role • NHTSA lead on establishing CAFE standards, in 

consultation with Federal partners

• NHTSA and EPA joint rulemaking on National Program 

for harmonized vehicle fuel economy and GHG 

emission standards

• Administration of fuel economy standards

• Consultation with EPA/DOE on alternative fuels

Magnitude and Timing of Transportation 

GHG Reduction

• Modest to moderate in short-term, potentially very high 

in mid- to long-term

Since the 1970s, The DOT’s National Highway Traffic Safety Administration 

(NHTSA) has promulgated fuel economy standards for light-duty vehicles. In 

early 2009, NHTSA set new fuel economy standards for the 2011 model year that 

will achieve an industry-wide combined fleet average fuel economy of 27.3 miles 
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per gallon. That rule, for the first time, incorporated an analysis of GHG impacts 

associated with the new standards. Earlier this year, the Obama Administration 

directed NHTSA to conduct additional analysis of potential CAFE standards for 

future years, incorporating the most recent findings from ongoing analyses and 

studies. In addition, in May 2009, NHTSA and EPA issued a Notice of Intent 

stating their plans to work together closely to develop consistent, harmonized 

fuel economy and GHG emission standards for model years 2012 to 2016 under 

their respective statutory authorities. The NHTSA and EPA issued the proposed 

joint rule in September 2009 and the final rule in April 2010. Also, the National 

Academy of Sciences currently is conducting a study on fuel economy standards 

for work truck, medium, and heavy duty vehicles that NHTSA will rely upon to 

set future standards for these types of vehicles. Finally, in response to the new 

renewable fuel standard passed by Congress in December 2007, EPA conducted 

a life-cycle analysis of GHG emissions from biofuels. Each of these efforts 

contributes to the research literature and informs the development of this policy 

option. 

Vehicle Standards

As reported in the technical findings of this report, more efficient vehicle 

technology shows strong potential to reduce GHG emissions across all 

transportation modes, assuming progress in ongoing research, development, and 

deployment. Strong standards for fuel efficiency can help achieve GHG 

reductions in the near- to mid-term, as the vehicle fleet turns over, by decreasing 

the amount of carbon consumed per mile of travel. Equally important, these 

standards would help stimulate the research and development that will be 

required for future progress. Because light-duty vehicles account for 60 percent 

of U.S. transportation GHG emissions and evidence shows consumers do not 

fully incorporate fuel savings into purchase decisions, fuel economy regulations 

for light duty vehicles can have a large impact on U.S. emission levels.

The Energy Independence and Security Act of 2007 (EISA) requires a fleet 

average light-duty vehicle fuel economy of at least 35 miles per gallon by 2020 

for light-duty vehicles.159

 

159 The EISA mandated that the model year 2011-2020 CAFE standards be set sufficiently 

high to ensure that the industry-wide average of all new passenger cars and light 

trucks, combined, is not less than 35 miles per gallon by MY 2020.

 The NHTSA issued a one-year rule that sets fuel 

economy standards for Model Year (MY) 2011 at an industry-wide, combined 

fleet average of 27.3 miles per gallon. In April 2010, NHTSA and EPA issued a 

joint rule to establish CAFE standards and vehicle GHG emissions for passenger 

cars, light-duty trucks, and medium-duty passenger vehicles built in model years 

2012 through 2016. The intention is to have a coordinated program, or National 

Program, that can achieve substantial improvements in fuel economy and 

reductions of GHG emissions from the light-duty vehicle part of the 
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transportation sector, based on technology that will be commercially available 

and which can be incorporated at a reasonable cost. In addition to NHTSA’s 

fuel economy standards under the Energy Policy and Conservation Act (EPCA), 

EPA proposed the first ever Federal emissions standards for GHGs using its 

authority under the Clean Air Act (CAA). The intent of the National Program is 

to allow auto manufacturers to build a single light-duty national fleet which 

satisfies requirements under both programs and which provides significant 

reductions in both light-duty vehicle oil consumption and GHG emissions.160

In addition to regulating light-duty vehicles, Congress has considered and 

required DOT to study and issue standards for work truck, medium, and heavyduty vehicles whose emissions have grown at three times the rate of light duty 

vehicles since 1990, and now account for 20 percent of U.S. transportation 

GHGs.

 

Taken together, the NHTSA and EPA standards are expected to result in an 

industry-wide, combined fleet average of an estimated 35.5 miles per gallon by 

MY 2016. Consideration can be given to further increasing standards through 

subsequent legislation and regulation addressing longer-term efficiency targets 

beyond 2016 and 2020. 

161

It should be noted that NHTSA is pursuing other measures that support fuel 

efficiency. In response to EISA, NHTSA published a March 2010 final rule on a 

rating and labeling system for replacement tires that rates tire rolling resistance 

and efficiency—another strategy designed to improve fuel efficiency of vehicles. 

Other initiatives underway by NHTSA include a vehicle rating program for 

consumers (final rule scheduled for December 2011) and development of a 

consumer education program on fuel savings and alternative fuel vehicles, 

scheduled to roll out in December 2011.

 The NHTSA will take action based on findings of a study in progress 

by the National Academy of Sciences and subsequent study by DOT. 

Finally, standards may also be considered for rail, air, and marine modes, 

although such standards would likely be more difficult to apply. An alternative 

to fuel economy standards would be to require the use of certain technologies 

that have been proven feasible and cost-effective in reducing fuel consumption 

(such as drag reduction on trucks or trains).

Fuel Standards

A low-carbon fuel standard focuses on carbon levels rather than on fuel 

economy, and allows fuel suppliers to determine how to cost-effectively meet the 

carbon standard through combinations of fuel strategies. This technologyneutral approach rewards the lowest carbon results without choosing winners 

 

160 http://www.whitehouse.gov/the_press_office/Remarks-by-the-President-onnational-fuel-efficiency-standards/.

161 See Vol. 1, Sec. 2.0.
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and losers among technologies used in the reduction of carbon intensity in 

transportation. By providing certainty over future demand for low-carbon fuels, 

it also encourages vehicle manufacturers to design vehicles that support the use 

of such fuels (such as bio-fuel or flex-fuel vehicles capable of running on both 

gasoline and ethanol).

There are several issues to consider when contemplating a low-carbon fuel 

standard:

• Overlap. A low-carbon fuel standard would overlap with the existing 

volumetric renewable fuel standard, which mandates that 36 billion gallons 

of renewable fuel be in use in the U.S. by 2022. This could lead to increased 

compliance costs incurred by regulatory agencies and producers. 

• Cost. Fossil fuel producers must acquire a certain amount of a low-carbon 

fuel in order to earn the right to sell a high-carbon fuel (i.e., gasoline). The 

extra cost (if any) of the low-carbon fuel is thus added to the cost of the highcarbon fuel. If low-carbon fuel supplies are insufficient, prices of both lowcarbon and high-carbon fuels would rise until: 1) additional low-carbon fuel 

supplies are forthcoming; or 2) consumption of high-carbon fuels is 

suppressed.

• Qualifying low-carbon fuels. Establishing a low-carbon fuel standard 

would require the Federal government to quantify the life-cycle greenhouse 

gas emissions from different types of fuels. Particularly challenging is 

estimating indirect emissions from land-use change induced by producing 

additional quantities of crops for biofuels. This also is a challenge for the 

existing renewable fuel standard, as it requires fuels to have emissions a 

certain percentage below that of conventional fuels in order to qualify.

• Coverage. Congress must decide if only on-road gasoline and diesel are 

covered or also jet, marine, or other fuels. The broader the scope of the rule, 

the more opportunity for substituting low-carbon fuels and the lower the cost 

per gallon in cross-subsidy for a given volume of low-carbon fuels. Congress 

also must decide if electricity qualifies as a low-carbon fuel. Even electricity 

generated from fossil fuels might qualify as a low-carbon fuel if the efficiency 

of generation, transmissions, storage, and conversion to power to move the 

electric vehicle produced emissions lower than the life-cycle emissions from 

fuel production and combustion in a gasoline-powered internal combustion 

engine. 

• International effects. Imposing a low-carbon fuel standard in the U.S. alone 

could lead to companies “shuffling” production and sales in ways that do not 
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reduce emissions.162

Transportation Planning and Investment

 For example, low-carbon fuels could be sent to the U.S.

with higher-carbon fuels going to other countries without such requirements.

Mechanism • Surface Transportation Authorization bill

Key Options • Federal technical assistance in integrating 

transportation and land use planning 

• Range of options for ensuring integration of climate 

change considerations into transportation planning and 

funding programs 

• Speed limit reductions

• Operational improvements and pricing

• Investments in public transportation and pedestrian 

facilities

DOT Role • Development of Authorization legislation proposals

• Technical support to Congress

Magnitude and Timing of Transportation 

GHG Reduction

• Modest in the short-term, moderate in the mid-term and 

ongoing

GHG Considerations in Planning and Investment Processes

The Federal government invests billions of dollars annually in support of 

transportation infrastructure. How these massive investments are directed in the 

coming decade will shape the future of the Nation’s transportation system and 

will have profound and lasting impacts on the sector’s level of GHG emissions. 

As discussed in Section 4, the planning process inherently must incorporate a 

wide range of considerations—including mobility and accessibility objectives, 

safety, economic development, resource constraints, environmental 

sustainability, and land use—to shape a community’s ideal long-range vision 

and identify the priority projects, programs, and strategies for achieving that 

vision. The GHG impact of transportation programs is a key element that can be 

addressed in this process, and indeed is more effectively addressed as part of a 

system-level planning process than at an individual project level.

The DOT is proactively engaged with States and MPOs to develop best practices 

in incorporating climate change into their planning processes. This support to 

 

162 Sperling, D. and S. Yeh. ”Transforming the Oil Industry into the Energy Industry.” 

Access, Spring 2009.
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State and regional agencies includes provision of guidance and technical 

support, review and input of State climate action plans, and sponsorship of peer 

exchanges to assist agencies in developing effective planning practices under 

existing regulations. The DOT will continue to provide leadership to promote 

the incorporation of climate change considerations in planning and investment 

decisions.

To ensure that investments are aligned with GHG reduction objectives as well as 

other transportation goals, funding criteria and performance measures could be 

set that promote and fund passenger infrastructure and service expansion based 

on mode-neutral GHG reduction performance measures. Such investments 

might include congestion relief, urban transit, intercity bus and rail, intermodal 

passenger facilities, and nonmotorized facilities. Similarly, funding criteria and 

performance measures could be applied to freight infrastructure and service 

expansion, including investment in rail, intermodal facilities, and port access and 

operational improvements that would achieve GHG reductions. 

The ability for States and regions to achieve effective and sustainable GHG 

reductions is grounded in the long-range planning and investment process. 

Within Federal guidelines, States and MPOs develop long-range plans (at least 

20 years) that address mobility and environmental objectives, and prioritize nearterm investments within financial constraints. The scope of considerations 

addressed in the transportation planning process has continuously expanded as 

communities and transportation professionals recognize the important 

interactions among transportation decisions, land use planning, environmental 

sustainability, conservation planning, public health, and economic development. 

The current surface transportation authorization bill, SAFETEA-LU, requires 

State DOTs and MPOs to consult with resource agencies and make use of 

available conservation maps and ecological data as transportation plans are 

developed. Federal transportation and resource agencies are working 

collaboratively to promote integrated planning processes that support effective 

long-range planning processes that meet multiple environmental and 

transportation objectives. Eco-Logical, which was issued in 2007 as a joint policy 

report of the DOT and several Federal resource agencies, outlined principles to 

achieve an improved integrated planning approach. The current partnership of 

DOT, HUD, and EPA is addressing housing and development, environmental, 

and transportation objectives through integrated planning.

A range of strategies to ensure climate change considerations are integrated into 

transportation planning processes are under debate, as discussed in this report’s 

section on the planning process. Options range from including climate change as 

a planning factor, to requiring States and MPOs to develop strategies for 

reducing transportation GHGs, to establishing mandatory GHG reduction 

targets. Each option will have differing levels of impact on GHG emissions and 

on level of effort required. Federal transportation funding programs can provide 

incentives for GHG reduction. Another option is to align Federal funding for 
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transportation infrastructure with performance-based criteria, including climate 

change objectives.

States and regions have varying capacity to address climate change in their 

planning process, and the availability of appropriate data and model outputs is 

insufficient to support robust analysis. Therefore, Federal action would be 

helpful to support for the research, technical support, and capacity development 

that transportation and planning agencies need to conduct planning. Federal

programs can be created to develop and provide improved data, tools, and 

technical assistance for GHG planning and analysis. Demonstration projects at 

megaregion, regional, State, or local levels can build knowledge and capacity of 

effective GHG reduction strategies.

Operations Investments to Improve System Efficiency

If properly directed, investments in infrastructure and system operations can 

improve the efficiency of the transportation network, thereby improving the 

quality of passenger travel and goods movement. This improved efficiency also 

would help reduce congestion and travel delay, resulting in some GHG 

reduction for those segments of the system. System efficiency investments can 

achieve GHG benefits through reducing speeds to optimal energy-efficiency 

levels and enhancing efficiency through operational improvements.

Operational Improvements

GHG emissions can be reduced by improving the efficiency of the transportation 

system. System efficiency strategies also have substantial cobenefits that support 

other DOT goals, particularly in congestion management, air quality, and 

streamlining goods movement. These strategies vary significantly in cost and 

ease of implementation. Examples identified in this report include:

• Funding of integrated corridor management/advanced traffic management 

to keep traffic flowing at optimal speeds; and

• Support for research, evaluation, deployment and infrastructure 

development for advanced vehicle and information technology (e.g., 

advanced traveler information systems, vehicle-infrastructure integration 

programs).

System efficiency strategies can be evaluated based on their efficacy in 

addressing GHG emissions, along with other criteria that are currently applied 

(such as mobility, safety, and air quality). Ensuring integration of climate change 

considerations in transportation planning and funding would enable increased 

support to be directed to climate-friendly system improvements and technology 

applications. In order to do so, further research and guidance on GHG analysis 

methods would be required, particularly on the issue of induced travel (i.e., 

additional travel taken in response to improved travel conditions). 

Two policy approaches under discussion are the expansion of the current CMAQ 

program or creation of a new program directed specifically to projects that meet 
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GHG reduction performance criteria. These options—which could address 

several strategies (e.g., system efficiency, travel behavior, climate-focused 

planning)—merit consideration during development of legislative proposals for 

authorization.

The key legislation mechanism for this policy option is the surface transportation 

authorization bill. 

Speed Limit Reductions

Setting lower speed limits could have an immediate and significant impact on 

GHG reductions as well as yield substantial safety and air quality co-benefits. 

National reduction in highway travel speeds could stimulate research in 

alternatives for cost-effective high-speed freight and passenger transport for 

long-distance travel.

However, there are both political and practical hurdles to implementing this 

strategy. Public resistance is likely to be high, and an aggressive education 

program and strong political leadership would be required to gain broad 

support. Delay costs could be incurred in goods movement and passenger 

travel. Motor carriers also may be reluctant to accept lower speed limits if the 

speed limits significantly reduce driver productivity, although they would also 

benefit from reduced fuel costs (as evidenced by the fact that many long-haul 

trucks already are governed to keep highway speed down and improve fuel 

efficiency). In addition, this strategy would require enhanced enforcement and 

could impose considerable costs on States to pay for increased traffic monitoring 

and enforcement. 

Programs to Reduce the Demand for Carbon-Intensive Travel

These policies reduce the demand for carbon-intensive travel by facilitating the 

use of alternative modes such as public transportation, carpooling, walking, 

biking, and by reducing the need for long trips by integrating land use and 

transportation planning. These strategies—implemented through a combination 

of pricing, funding, and policy incentives—can have modest near-term impacts 

in reducing GHGs. Over the longer-term (to 2050 and beyond), shifts in land use 

that promote more compact development, combined with significant 

investments in transit and rail capacity, have the potential to achieve significant 

and cost-effective GHG reductions. Examples of strategies to reduce travel 

activity are:

• Federal regulations, technical assistance, and funding to support integrated 

transportation and land use planning;

• Investment in low carbon modes such as public transportation, walking, and 

biking;

• Federal guidance and support to local and regional governments in 

promoting worksite trip reduction through tax credits and incentives to 
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employers and workers, as well as trip reduction programs for communitywide travel to nonwork destinations (e.g., universities, schools, special 

events). Example strategies include telework, compressed work week, transit 

benefits, and rideshare support;

• Federal guidance for highway design and reconstruction that require 

accommodation of pedestrians and bicycles and application of contextsensitive design principles in all projects;

• Support for pricing initiatives (e.g., congestion pricing, State VMT fees, 

parking fees); and

• Promotion of eco-driving, which aims to change individuals’ driving 

behavior and techniques to reduce fuel usage and GHG emissions without 

changing the number or length of trips. 

The actions and strategies under this category have modest to moderate impacts 

on GHG reductions, but transit, carpooling, bicycle, pedestrian, and other 

ridesharing programs also serve to enhance access to jobs and opportunities, 

particularly for low-income groups. Expanding traditional programs in this 

category and implementing new initiatives can address equity issues that would 

be created by actions that increase the costs of travel. Policy actions that increase 

costs—such as economy-wide or other pricing measures—must be offset with 

policy actions that provide desirable travel choices for low-income and autodependent users.

Legislation also could mandate that States authorize or require companies to 

offer Pay-as-You-Drive (PAYD) insurance. This would make insurance costs 

more transparent and provide an incentive for drivers to limit unnecessary 

travel. Pay-as-You-Drive would have a modest to moderate additional impact 

on GHG reductions in the mid-term.

Market-based Incentives 

Mechanism • Surface Transportation Authorization

• Climate or energy legislation

Key Options • Tax credits, feebates, subsidies, vehicle miles traveled 

fees

DOT Role • Development of Authorization legislation proposals

• Technical support to Congress

Magnitude and Timing of Transportation 

GHG Reduction

• Moderate, depending on pricing level, in the mid-term; 

potentially very strong in long-term
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The use of sector-specific market signals—including both incentives (such as 

rebates and tax deductions) and pricing mechanisms (such as taxes and fees)—

can encourage consumers to more quickly adopt less carbon-intensive vehicles, 

technologies, and travel behaviors. By altering consumer demand, these market 

signals can spur more rapid private sector research and development of 

advanced technologies and decrease demand for more carbon intensive 

approaches to mobility. 

Fuel Incentives

At the national level, the Energy Independence and Security Act of 2007 (EISA) 

requires a certain volume of renewable fuels (e.g., cellulosic ethanol, biomassbased diesel), with increasing volumes from 2006 through 2022. Along with 

these requirements, the law provides credits for producing additional renewable 

fuel. EISA sets production benchmarks of 36 billion gallons of renewable fuel by 

2022, of which 21 billion gallons must be advanced biofuel. The bill (in 

Section 712) authorizes the use of grants and government-backed loans to assist 

manufacturers in converting plants to encourage domestic production and sales 

of efficient hybrid and advanced diesel vehicles, as well as components of those 

vehicles. The bill also extends the Flexible Fuel Vehicle Credit Program 

(Section 109), allowing manufacturers to take fuel economy credit for dual-fueled 

(i.e., flex-fuel) vehicles for their corporate average fuel economy (the credit 

phases out in 2019).

National targets and incentives for manufacturers such as these can be supported 

by market signals at the consumer level that would encourage purchase of highefficiency and non-carbon-based vehicles, as well as retrofits of existing vehicles 

with technologies that improve fuel efficiency.

Rebates, Fees, Tax Incentives

A series of incentives and disincentives can be implemented to promote the rapid 

market penetration of low-GHG emission vehicles. These price signals would 

encourage consumers to purchase new technologies, thereby creating a stronger 

market demand that spurs production. The success of tax incentives for hybrid 

vehicles provides a good example of this approach. Tax credits and feebates can 

target individual households to encourage the purchase of low-carbon vehicles. 

Feebates impose a fee on purchasers of inefficient vehicles and provide a rebate 

to purchasers of high efficiency vehicles. Similarly, tax incentives can be 

implemented to encourage businesses to invest in new technology vehicles. 

Fee structures that provide disincentives for the purchase of high-carbon 

vehicles—such as graduated registration fees that increase based on carbonintensity and fees on the purchase of high-carbon vehicles—also provide pricing 

signals that reward GHG-reducing consumer behavior. 

To be most effective, the design of these consumer incentives/disincentives 

should be technology-neutral, based on GHG emission-level metrics that are not 
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prescriptive regarding the specific type of fuel or vehicle employed to achieve 

those targets. 

Implementation of other technologies—such as anti-idling and drag reduction 

technologies for freight vehicles—could be similarly encouraged through rebates, 

retrofit programs, and tax incentives. As an example, the Energy Improvement 

and Extension Act (EIEA) excludes certain idling reduction devices and 

advanced insulation from the Federal excise tax.163

Several legislative mechanisms can be used to implement these incentives and to 

encourage existing successful programs. These include language in the surface 

transportation bill and in climate and energy legislation. 

Programs such as 

SmartWaySM, aimed at encouraging the freight industry and truckers to adopt 

efficient technologies, have been effective and can be continued. Retrofits in the 

heavy-duty and other sectors can achieve some immediate efficiency gains, 

helping to overcome the problem of slow fleet turnover in these sectors that 

lengthens the time needed to realize the full benefits of new energy-efficient 

vehicles.

Motor Fuel Tax Increase/VMT Fee

Sector-specific pricing measures also can play a significant role in reducing the 

carbon-intensity and volume/frequency of travel. In particular, increased motor 

fuel taxes or VMT taxes would provide incentives to travelers to reduce trip 

lengths/frequencies and shift to less carbon-intensive modes. However, 

significant price increases would be required to make a significant impact on 

travel, and such increases are likely to be met with considerable public 

opposition. Strong Federal leadership and bipartisan support would be required 

to achieve a meaningful fuel tax increase.

Increased fees on travel also create important equity concerns that must be 

addressed. As the cost to consumers of travel is raised, the burden would be 

placed disproportionately on lower-income groups, and on some residents of 

rural areas. A mechanism for compensating transfers or equivalent investments

to expand travel options that improve access to for these groups may be 

required.

 

163 Energy Improvement and Extension Act of 2008 (PL 110-343), Section 206.
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Research and Development

Mechanism • Climate or energy legislation

• Surface Transportation Authorization bill

Key Options • Research on advanced vehicle and fuel technology

• Development of data, tools, and decision-support to 

inform transportation planning and investment processes

• Policy-oriented research to analyze interactions between 

GHG reduction policies, costs, benefits, implementation 

considerations, and equity aspects

DOT Role • Development of Authorization legislation proposals

• Technical support to Congress

• Partnerships with U.S. Climate Change Technology 

Program and U.S. Global Change Research Program

• Research partnership with DOE and EPA

Magnitude of Transportation GHG 

Reduction

• High in the long-term

A strong Federal program of interdisciplinary research and technology 

deployment can advance the effectiveness of the transportation sector in 

addressing climate change. These areas are:

• Basic and applied research in non-carbon-based fuels and advanced highefficiency vehicles across all modes;

• Advanced research to identify “break-through” technologies that could alter 

the course of vehicle technology; 

• Research to develop data, tools and decision-support to inform 

transportation planning and investment processes in developing GHG 

reduction strategies, including tools to support regional and local modeling, 

long-range scenario planning and program development;

• Climate research that advances understanding of the relationships between 

transportation GHG emissions, climate changes, and climate risk analysis 

and adaptation strategies at the regional level; 

• Research and deployment of information technologies to support system 

efficiency and maximize operational and travel behavior strategies; 

• Policy-oriented research to conduct detailed analysis on the interactions 

between GHG reducing transportation policies, the costs of policy measures, 

and implementation considerations; and
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• Research on the equity implications of transportation GHG reduction policies 

and technologies, and on ways to mitigate or avoid any negative equity 

impacts.

Technology research can be supported through an ongoing program that funds 

technology-neutral advanced research and development programs for all modes. 

The program should be designed to address both near-term improvements—

those that can be reasonably achieved and implemented within the next 10-to-15 

years—and technologies that can be expected to achieve break-through 

advancements in the longer run. Support for technology research should focus 

on outcomes rather than on selecting winners and losers. As noted in a recent 

MIT report, Federal policies should be designed to “Push development and 

deployment of appropriate technologies—and generate market pull for those 

technologies—through policies that reinforce each other through synergies. 

Incentives should be for outcomes, and not be focused on particular technologies 

that put other vehicles with low fuel use and emissions at a competitive 

disadvantage.”164

In addition, a specific focus on technology deployment is required. This would 

include identification of barriers to implementation that may be addressed 

through Federal capital investments in infrastructure, technical support and 

funding incentives for State and regional agencies, and public-private investment 

strategies.

Past Federal support of public-private partnerships for vehicle and fuels research 

has been very effective. The Partnership for a New Generation of Vehicles, 

though later suspended, was successful in producing diesel hybrid prototypes; 

however, these innovations never reached the marketplace. A commitment to 

serious and sustained investment in research and development, combined with 

market pulls such as carbon pricing, would support industry in long-term 

development and deployment of promising technologies. Further, these 

investments support creation of a retooled manufacturing sector that can meet 

the needs of the future while being a major driver in the Nation’s economic 

recovery.

The Energy Independence and Security Act of 2007 establishes seven bioenergy 

research centers and provides grants for the research and production of 

advanced biofuels. Overseen by the Department of Energy, research grants 

totaling $500 million are authorized for FY 2008 to 2015. In addition, funds are 

authorized for competitive, university-based, research awards. 

Several appropriate legislative mechanisms can be considered to achieve this 

research agenda. Support of joint research programs that engage both Federal

 

164 Bandivadekar et al. (2008). On the Road in 2035: Reducing Transportation’s Petroleum 

Consumption and GHG Emissions. Laboratory for Energy and the Environment, Report 

No. LFEE 2008-05 RP, Massachusetts Institute of Technology.
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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and industry research programs—such as DOE’s FreedomCAR and Fuel 

Partnership—can be continued. Upcoming climate and energy legislation could 

include funding of a substantial joint research program to accelerate advanced 

research efforts. This basic research would set the stage for private investments 

in technologies with strong market potential.

The need for extensive climate research—including a dual focus on both 

mitigation and adaptation—is an ongoing national priority. For transportation 

as well as other sectors, a strong component of this research should be focused 

on the information needs of national, State, and local planners and system 

managers. Federal interagency research partnerships—most notably the U.S. 

Climate Change Technology Program and U.S. Global Change Research 

Program—include active participation and direction from DOT and other 

program agencies. This close collaboration helps ensure that Federal research is 

conducted that addresses the specific data and technical needs of transportation 

decision-makers.

Economy-Wide Price Signal

Mechanism • Climate or energy legislation

Key Options • Cap and trade

• Carbon tax

DOT Role • Technical support to Congress

Magnitude and Timing of Transportation 

GHG Reduction

• Modest in near-term, moderate in mid-term, potentially 

strong in long-term 

An economy-wide price signal could be established through a cap and trade 

system or a carbon tax. Cap and trade legislation is the primary policy option 

currently under discussion. Information on carbon taxes is found in Section 4. 

Legislation to establish a cap and trade program would support all strategies by 

creating a price signal for carbon that incorporates the negative externalities of 

carbon-based fuel use. An increased price for carbon would provide incentives 

for consumers and businesses to minimize carbon-based fuel consumption. This 

would help drive the development of cost-effective responses (e.g., technology 

development, travel behavior changes) that would reduce GHG emissions. The 

implementation of carbon pricing—assuming a sufficiently strong price is 

established—would result in reductions in fuel consumption and an ongoing 

shift to non-carbon-based fuels and technologies across all sectors. 

In the near-term, however, the direct impact of an economy-wide cap and trade 

pricing scheme on the transportation sector is expected to be limited compared 

with the impact on other sectors, especially the electricity generation sector. By 

definition, pricing approaches for carbon stimulate reductions in those sectors for 

which the most cost-effective alternatives can be identified. If the cost of carbon 

fuels to transportation is insufficiently high, significant transportation responses 

would be delayed until prices further rise. Further, market deficiencies can be 
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expected because drivers tend to undervalue fuel prices in their purchase 

decisions.165

While some argue that a cap and trade system should be allowed to function on 

its own to encourage the most cost-effective strategies economy-wide, others 

hold that complementary transportation strategies should be concurrently 

pursued. In the face of a potential delay in transportation sector response to 

economy-wide signals, a multi-policy approach has several advantages. 

Implementation of strategies targeted directly to the transportation sector can 

stimulate technology development that would support transportation efficiencies 

over time. This early investment would be more cost-effective than deferred 

technology research in coming decades, and would better position U.S. 

producers to compete in the global economy. Further, complementary strategies 

can help counter the market failures anticipated by consumers’ response to 

increased fuel costs.

 Whereas cap and trade prices would likely be low initially and 

increase over time, a high cost impact is needed to make research, development, 

and adoption of new technology worthwhile to the private sector.

Congress is considering proposals to achieve economy-wide carbon pricing. Of 

particular importance to the transportation sector in the design of a cap and trade 

program is the use of auction revenues. A portion of auction revenues or of the 

revenues from a broad carbon tax could be allocated to transportation in two 

areas: 1) multimodal infrastructure and system development that supports 

additional GHG reductions and provides benefits to all groups to remedy the 

equity issues created by higher energy prices; and 2) research to develop 

advanced transportation technologies and fuels. In addition, recognizing that 

any economy-wide market-based measures would have impacts on low-income 

populations, any carbon-pricing program could include provisions to address 

equity disparities through individual tax credits, carbon-efficient travel 

subsidies, lump-sum rebates to low-income households, and public transit 

initiatives. 

 

165 Greene, D. L., J. German and M. A. Delucchi (2009). “Fuel Economy; The Case for 

Market Failure.” In Reducing Climate Impacts in the Transportation Sector, D. Sperling 

and J. S. Cannon, eds, Springer.

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6.0 Conclusion

The ingenuity of transportation planners and engineers has produced a vast 

network of transportation infrastructure and services to support the mobility and 

economic vitally of the Nation. However, our historic approach to transportation 

and land use development has created an energy-intensive system dependent on 

carbon-based fuels and individual vehicles. 

Our national talents and resources must now focus on shaping a transportation 

system that that serves the Nation’s goals, including meeting the climate change 

challenge. This will require aligning funding programs and incentives so that 

national investments are targeted to achieve GHG reductions, while continuing 

to meet mobility and accessibility objectives for both passenger and freight travel 

across all modes. We must also spur the development and deployment of low 

carbon vehicle and fuel technologies with supportive policies to harness the 

power of American ingenuity and market forces.

Confronting climate change is a top priority for the Obama Administration. The 

U.S. Department of Transportation is committed to action that will reduce 

greenhouse gas emissions, diminish our dependence on foreign oil, create clean 

energy jobs, build livable communities, and protect us all from dangerous 

climate change.

The DOT is already taking action through the Department’s livability initiative 

and the Sustainable Communities Partnership with EPA and HUD. The 

initiative supports low carbon transportation options such as public 

transportation, walking, and biking; promotes development of housing in close 

proximity to transit; and promotes mixed-use development that enables 

residents to easily access goods and services. These actions improve quality of 

life, lower household transportation budgets, and as shown by this study, reduce 

greenhouse gas emissions. The Department’s high speed rail initiative will also 

provide a low carbon travel alternative.

Further, in April 2010, the Department and EPA announced national greenhouse 

gas and fuel economy program for cars and light-duty trucks. Analysis indicates 

cumulative industry greenhouse gas reductions of approximately 900 million 

metric tons CO2e and fuel savings of approximately 1.8 billion barrels of oil. The 

DOT is also implementing new statutory authority to issue fuel economy 

standards for medium- and heavy-duty trucks. In aviation, DOT has put energy 

and environmental concerns at the heart of the effort to modernize the U.S. air 

traffic system, called NextGen. Likewise, the Maritime Administration is focused 

on the potential of new technologies to reduce the harmful emissions from 

marine diesel engines through cooperative efforts with the EPA and the maritime 

industry.
Transportation's Role in Reducing U.S. Greenhouse Gas Emissions: Volume 1

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Yet there is more to be done. As indicated in this report, a full range of strategies 

can be brought to bear to reduce transportation’s greenhouse gas emissions: 

improving fuel efficiency; expanding the use of low-carbon fuels; improving the 

efficiency of the transportation system; and reducing the volume of travel that 

relies on carbon-based fuels. These strategies can be implemented through a 

range of policy options—an economy-wide carbon price, efficiency standards, 

market-based incentives, transportation planning and investment, and research 

and development. The DOT looks forward to working with Congress on 

transportation policy that reduces greenhouse gas emissions, provides for 

economic vitality, and enhances our quality of life.

Printed on paper containing recycled post consumer waster paper.

Transportation’s Role in Reducing U.S. Greenhous Gas Emissions: Volume 2

Acknowledgments

This Report to Congress was prepared by the U.S. Department of 

Transportation (DOT) Center for Climate Change and Environmental 

Forecasting, supported by a consultant team led by Cambridge Systematics, 

Inc. 

Development of the report was guided by the executive level steering 

committee and the staff level core team of the DOT Center for Climate 

Change and Environmental Forecasting. Contributing authors and editors

from the Center includes: Julie Abraham, Jan Brecht-Clark, Richard Corley, 

John Davies, Brigid Decoursey, M.J. Fiocco, Aimee Fisher, Mohan Gupta, 

Carol Hammel-Smith, Tina Hodges, Michael Johnsen, Mark Johnson, Robert 

Kafalenos, Linda Lawson, Kelly Leone, April Marchese, Katherine Mattice, 

Lourdes Maurice, Chris McMahon, Wendy Messenger, Camille Mittelholtz, 

Alexandra Newcomer, Beth Osborne, Robert Ritter, Arthur Rypinski, 

Michael Savonis, Tim Schmidt, Helen Serassio, A.J. Singletary, JoAnna 

Smith, Robert Smith, Alan Strasser, Kathryn Thomson, Robert Tuccillo, 

Diane Turchetta, and David Valenstein. Tina Hodges of the Federal Transit 

Administration (FTA) served as the project manager for the Center and as a 

primary author and editor. M.J. Fiocco of the Research and Innovative 

Technology Administration (RITA) served as the contracting officer’s 

technical representative. 

The Cambridge Systematics contract manager was Joanne Potter. The 

primary report authors from the consultant team were Christopher Porter, 

Joanne Potter, and Robert Hyman of Cambridge Systematics; and Rick 

Baker and Richard Billings of Eastern Research Group, Inc. (ERG). 

Additional contributing authors included Lance Grenzeback, David Jackson, 

Gill Hicks, Nathan Higgins, Tracy Clymer, and William Cowart of 

Cambridge Systematics; Beverly Sauer, Amy Stillings, Sarah Cashman, Ian 

Todreas, Alan Stanard, Scott Fincher, Michael Sabisch, and Sam Milton of 

ERG; James Winebrake and James Corbett of Energy and Environmental 

Research Associates, LLC; Dr. Ian Waitz of the Massachusetts Institute of 

Technology; Dr. Christopher Frey of North Carolina State University; Cindy 

Burbank of Parsons Brinckerhoff; and James Shrouds.

Additional staff of the U.S. DOT Administrations as well as the U.S. 

Department of Energy and the U.S. Environmental Protection Agency also 

provided input. The team is grateful for the assistance of staff of the Electric 

Power Research Institute’s Transportation and Environment Programs, who 

provided valuable input into the material on electricity generation and 

electric vehicle efficiency; and for Tom Reinhart of Southwest Research 

Institute, who provided valuable input into the material on heavy-duty 

trucks.
Transportation’s Role in Reducing U.S. Greenhous Gas Emissions: Volume 2

About the Center for Climate 

Change and Environmental 

Forecasting

The U.S Department of Transportation (DOT) Center for Climate Change 

and Environmental Forecasting is the focal point in the DOT of technical 

expertise on transportation and climate change. Through strategic 

research, policy analysis, partnerships, and outreach, the Center creates 

comprehensive and multimodal approaches to reduce transportationrelated greenhouse gases and to mitigate the effects of global climate 

change on the transportation network. The Center was formally 

authorized as the Office of Climate Change and Environment in the 

Energy Independence and Security Act of 2007.
Transportation’s Role in Reducing U.S. Greenhous Gas Emissions: Volume 2

Table of Contents

1.0 Introduction

2.0 Low-Carbon Fuels

3.0 Vehicle Fuel Efficiency

4.0 System Efficiency

5.0 Strategies to Reduce Carbon Intensive Travel Activity

Appendix A: Methodological Issues
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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1.0 Introduction

Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions is a report to Congress 

from the U.S. Department of Transportation (DOT) on the potential of transportation 

strategies to contribute to greenhouse gas reductions. Transportation has a significant 

impact on national greenhouse gas emissions, and transportation can be part of the 

nation’s solution to the climate change challenge. The Energy Independence and Security 

Act (December 2007) called upon DOT, in consultation with the U.S. Environmental 

Protection Agency (EPA) and the U.S. Global Change Research Program (USGCRP), to 

conduct a study of the impact of the Nation’s transportation system on climate change 

and strategies to mitigate the effects by reducing greenhouse gas emissions from 

transportation. The study is also to consider fuel savings and air pollution reduction from 

these measures. This report responds to that directive.

Volume 1: Synthesis Report provides an overview of transportation’s contribution to 

greenhouse gas emissions (GHG), analyzes the effectiveness of various strategies available 

to reduce GHGs from the transportation sector, discusses the role of DOT planning and 

funding programs in providing a framework for strategic action on climate change, and 

concludes with five policy actions that Congress may wish to consider. Volume 2: 

Technical Report provides the technical basis for the summary material and 

recommendations in Volume 1.

This volume, Volume 2, contains detailed technical discussions of the four groups of 

strategies that can contribute to reducing the carbon footprint of the transportation sector.

Each group of strategies is evaluated based on a set of factors including magnitude of 

GHG reduction, timing of impacts, cost, cobenefits (including fuel savings and air 

quality), implications for other DOT goals, impacts on infrastructure financing, and 

feasibility and implementation considerations.

Following this introduction:

• Section 2.0 – Low Carbon Fuels discusses the potential of alternative fuels to reduce 

the carbon content of fuels. This review includes information on ethanol, biodiesel, 

natural gas, liquefied petroleum gas, synthetic fuels, alternative aviation fuels, 

hydrogen, and electricity.

• Section 3.0 – Vehicle Fuel Efficiency investigates potential technological advances 

that can lower GHG emissions through improved efficiency of on-road vehicles 

(including light and heavy-duty vehicles), as well as other modes of transportation, 

namely air, rail, and commercial marine. The evaluation considers technologies that 

are currently available or close to commercialization, as well as more advanced 

strategies that may not be available for a decade or more.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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• Section 4.0 – System Efficiency discusses a diverse set of strategies focused on ways 

to optimize the use of the transportation network by improving the efficiency of 

transportation operations. System efficiency strategies discussed in this report 

include: Highway operations and management strategies, truck operations and 

management strategies, improvements to the efficiency of rail and marine freight 

systems, aviation operations practices, and improvements in materials and methods 

that reduce GHG emissions generated during the construction and maintenance of 

transportation infrastructure.

• Section 5.0 – Strategies to Carbon-Intensive Travel Activity discusses strategies to 

reduce greenhouse gas emissions by influencing travelers’ activity patterns in order to 

reduce total travel, shift travel to more efficient modes, or take other actions that

reduce energy use and GHG emissions associated with personal travel. Travel 

behavior strategies discussed in this section include: Pricing, improvements to transit 

and nonmotorized modes, land use and parking management strategies, commuter/

worksite trip reduction programs, and other public information programs.

The reader is directed to Volume 1 for an overview of transportation and climate change 

in the U.S., and a discussion of the policy options that Congress may want to consider to 

promote greenhouse gas reductions from this sector, based on the technical analysis 

presented in this volume.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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2.0 Low-Carbon Fuels

Table of Contents

List of Tables.....................................................................................................................................2-3

List of Figures....................................................................................................................................2-4

2.1 Summary 2-5

Overview of Low-Carbon Fuel Options....................................................................................2-5

Life-Cycle Analyses.....................................................................................................................2-9

Summary of Impacts .................................................................................................................2-10

Policy Implications....................................................................................................................2-14

Summary Evaluation ................................................................................................................2-16

Cobenefits and Implications for Other Transportation Goals and Objectives .....................2-19

Effects on Infrastructure Funding............................................................................................2-21

2.2 Ethanol ...................................................................................................................................2-22

Overview....................................................................................................................................2-22

2.3 Biodiesel ...................................................................................................................................2-26

Overview....................................................................................................................................2-26

2.4 Compressed Natural Gas (CNG) and Liquefied Natural Gas (LNG)................................. 2-28

Overview....................................................................................................................................2-28

Magnitude and Timing of GHG Reductions...........................................................................2-30

Cost-Effectiveness .....................................................................................................................2-32

Cobenefits ..................................................................................................................................2-33

Feasibility...................................................................................................................................2-34

2.5 Liquefied Petroleum Gas (LPG).............................................................................................. 2-37

Overview....................................................................................................................................2-37

Magnitude and Timing of GHG Reductions...........................................................................2-38

Cost-Effectiveness .....................................................................................................................2-39

Cobenefits ..................................................................................................................................2-40
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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Feasibility...................................................................................................................................2-41

2.6 Synthetic Fuels.......................................................................................................................... 2-42

Fischer-Tropsch (FT) Fuels .......................................................................................................2-42

Biobutanol..................................................................................................................................2-43

Biomass-to-Liquids (BTL).........................................................................................................2-43

Coal-to-Liquids (CTL)...............................................................................................................2-44

Hydrogenation-Derived Renewable Diesel (HDRD) .............................................................2-45

2.7 Alternative Aviation Fuel ........................................................................................................ 2-46

2.8 Hydrogen ..................................................................................................................................2-48

Overview....................................................................................................................................2-48

Magnitude and Timing of GHG Reductions...........................................................................2-51

Cost-Effectiveness .....................................................................................................................2-55

Feasibility...................................................................................................................................2-60

2.9 Electricity ...................................................................................................................................2-65

Overview....................................................................................................................................2-65

Magnitude and Timing of Reductions.....................................................................................2-67

Cobenefits ..................................................................................................................................2-73

Feasibility...................................................................................................................................2-75

2.10 References................................................................................................................................2-77
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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List of Tables

Table 2.1 Potential Alternative Fuel Applications by Mode....................................................2-6

Table 2.2 Low-Carbon Fuel Strategies Summary Evaluation................................................ 2-18

Table 2.3 Relative Life-Cycle Emissions of Alternative Fuels (Percent Change versus 

Conventional Gasoline)........................................................................................... 2-20

Table 2.4 LDV Penetration and GHG Reductions Utilizing Five Percent of Natural Gas 

Supply....................................................................................................................... 2-32

Table 2.5 CNG per Vehicle Cost and Cost-Effectiveness Ranges by Time Period............... 2-33

Table 2.6 Emissions for Natural Gas (CNG) versus Conventional Gasoline ...................... 2-34

Table 2.7 Life-Cycle Emissions for Liquid Petroleum Gas vs. Conventional Gasoline....... 2-41

Table 2.8 Conventional Vehicle and HFCV Fuel Efficiencies by Time Period (GasolineEquivalent MPG)...................................................................................................... 2-53

Table 2.9 Maximum Potential HFCV Penetration and Benefits by Time Period................. 2-55

Table 2.10 Projected Delivered Cost of Hydrogen ($/GGEa).................................................. 2-56

Table 2.11 HFCV per Vehicle Cost and Cost-Effectiveness Ranges by Time Period............. 2-59

Table 2.12 Life-Cycle Atmospheric Emissions from HFCVs Compared to Baseline Gasoline 

Vehicles (Range of Distributed Natural Gas Reforming to Central Nuclear Plant 

Emissions)................................................................................................................. 2-60

Table 2.13 Percent BEV GHG Reduction Range by Time Period............................................ 2-69

Table 2.14 Maximum BEV Fuel Savings & Emission Reduction Potential (National Fleet). 2-70

Table 2.15 BEV per Vehicle Cost and Cost-Effectiveness Range 2030.................................... 2-72

Table 2.16 Emissions from Battery Electric Vehicle (National Average Grid Emissions) 

Conventional Gasoline ............................................................................................ 2-74
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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List of Figures

Figure 2.1 Life-Cycle of a Transportation Fuel..........................................................................2-9

Figure 2.2 Gasoline and Hydrogen Vehicle Fuel Economy....................................................2-49

Figure 2.3 Life-Cycle GHG Emissions for Gaseous Hydrogen Fuel Cell versus Gasoline 

Vehicle.......................................................................................................................2-52

Figure 2.4 Life-Cycle GHG Emissions for Liquid Hydrogen Fuel Cell versus Gasoline 

Vehicle.......................................................................................................................2-52

Figure 2.5 Battery Cost as a Function of Vehicle Range..........................................................2-71
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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 2.1 Summary

Overview of Low-Carbon Fuel Options

Fuels used for transportation in the United States are almost entirely derived from liquid 

fossil fuel. Petroleum-based fuels make up about 97 percent of transportation energy use, 

and refined petroleum products such as gasoline, jet fuel, and diesel make up more than 90 

percent of this consumption. In particular, petroleum-based gasoline represents about 60 

percent of all energy consumption in the transportation sector, followed by distillates 

(diesel) at 22 percent, and jet fuel at 11 percent (U.S. DOE, 2009a). An additional three 

percent is used in for the form of residual fuel oil, mostly for marine applications.

The current dominance of petroleum-based fuels reflects the inherent advantages of liquid 

fuels for transportation, with their high energy densities allowing for extended vehicle 

range on limited storage. Gasoline and diesel in particular also benefit from their firmly 

established production and distribution infrastructures, resulting in price advantages and 

creating significant barriers to entry for most alternatives.

Nevertheless, there are many alternative liquid and nonliquid fuels in various stages of 

development that can be used to reduce the GHG emissions associated with conventional 

petroleum-based fuels. The following provides a brief overview of the alternative fuels 

that could be used to replace conventional gasoline, diesel, and marine distillate in the 

transportation sector. The potential use of each fuel by mode is summarized in Table 2.1.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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Table 2.1 Potential Alternative Fuel Applications by Mode

On-Road Rail Marine Aviation

Ethanol

Biodiesel

Hydrogen

Electricity

LPG

Synthetic Fuels

Natural Gas

Alternative Aviation Fuels n/a n/a n/a

= Little experience or potential; = Some experience and potential; = Significant experience and potential.

• Ethanol (Section 2.2) – There are many renewable feedstocks that can be used to 

produce ethanol. Blends of gasoline with up to 10 percent ethanol are commonly 

utilized by existing gasoline vehicles, while blends between 10 percent (E10) and 85 

percent (E85) ethanol require flex-fuel vehicles (FFV). Flex-fuel systems can operate on 

fuel blends from 0 to 85 percent ethanol, and are available for a number of light-duty 

vehicles. Heavy-duty transit buses designed to operate exclusively on E94 with 6 

percent additives have been demonstrated in Europe but currently are not available in 

the United States.

• Biodiesel (Section 2.3) – Biodiesel is an alternative fuel that can be produced from 

renewable feedstock or waste oils and greases. There also is some long-term potential 

for algae as a biodiesel feedstock. Blends with up to 20 percent biodiesel content with 

the remainder conventional diesel (B20) can be used in most diesel on-road vehicles 

without modification, although higher percentage blends may be used with minor 

changes to fittings and other vehicle components. Biodiesel also has the potential for 

use in rail and marine applications, but has not been extensively tested in railroad 

engines or larger marine vessels.

• Natural Gas (Section 2.4) – For on-road vehicles, liquefied natural gas (LNG) is 

primarily an option for medium- and heavy-duty trucks and transit buses, while 

compressed natural gas (CNG) has been used in both light and heavy applications. 

Light-duty natural gas vehicles are commonly converted from conventional gasoline 

vehicles, and may be capable of operating on either fuel (bifuel configuration), or 
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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dedicated to natural gas use. LNG can potentially be used in rail applications and 

marine engines.

• Liquefied Petroleum Gas (Section 2.5) – Also known as propane, liquefied petroleum 

gas (LPG) can be used in light-duty vehicles as well as medium- and heavy-duty trucks 

and buses. LPG vehicles may be found in dedicated as well as bifuel configurations, 

and is the most prevalent alternative fuel in use in the United States today. LPG has 

been used in marine applications to replace smaller gasoline-powered vessels.

• Synthetic Fuels (Section 2.6) – Synthetic Fischer-Tropsch (FT) diesel can be derived 

from natural gas, coal, and biomass. FT diesel can be substituted directly for 

conventional (petroleum-derived) diesel in on-road vehicles, locomotives, and marine 

vessels without modification to the vehicle engine or fueling infrastructure. Other 

synthetic fuels (such as biobutanol, biogasoline, and FT diesel from biomass) can be 

produced by conversion of cellulosic biomass via biochemical and thermochemical 

processes into alcohols and hydrocarbon equivalent replacement fuels.

• Alternative Aviation Fuels (Section 2.7) – Aircraft engines require fuels with specific 

characteristics due to the range of operating conditions and safety requirements, 

limiting alternative aviation fuel options for commercial air passenger and freight 

transport. Most aviation fuel research has focused on two general classes of alternative 

fuels, biofuels and synthetic fuels. Synthetic jet fuels are derived through use of the 

Fischer-Tropsch process. Alternatively, jet fuel can be created from the hydrotreating 

of animal fats, plant oils, and algae.

• Hydrogen (Section 2.8) – Hydrogen can be burned directly in an internal combustion 

engine, although most researchers focus on its use in fuel cells. Hydrogen fuel cells 

utilize an electrochemical process to create an electric current that can be used to 

power a vehicle. Fuel cell applications have focused on light-duty vehicles, although 

niche applications include forklifts, airport tugs, and auxiliary power for certain heavyduty vehicles. Locomotives equipped with hydrogen fuel cells also are being 

developed.

• Electricity (Section 2.9) – For on-road vehicles, electricity can be used to power lightduty vehicles and certain medium- and heavy-duty truck applications. Plug-in hybrid 

electric vehicles also utilize electricity stored on-board in combination with fuel 

combustion. Electricity-powered transport also is used for various rail transit options, 

including trolleys, subways, light rail, and some commuter and intercity rail 

applications. Magnetic levitation (maglev) trains also utilize electricity.

In addition, an alternative fuel that is gaining some traction in heavy duty vehicles is 

dimethyl ether (DME), which is a substitute for diesel fuel (with a low pressure fuel 

system) and is produced from wood waste. Much work currently is underway in the areas 

of evaluating the effectiveness and costs of various alternative fuels in reducing 

greenhouse gas emissions. For instance, in May 2009 the U.S. Environmental Protection 

Agency (EPA) published a draft analysis of life-cycle emissions from renewable fuels (U.S. 
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EPA, 2009a) in conjunction with its Notice of Proposed Rulemaking (NPRM) for a revised 

renewable fuel standard (U.S. EPA, 2009b) and will incorporate information gathered 

during a public comment period into this analysis. This Report to Congress provides 

information from analyses available at the time of writing (through June 2009). As EPA’s 

renewable fuel standard rulemaking was ongoing at the time of writing, this report to 

Congress does not include analysis of biofuels, at EPA’s request. Readers are instead 

referred to EPA’s renewable fuels website, which includes draft life cycle analysis of the 

greenhouse gas impacts of renewable fuels: http://www.epa.gov/OMS/renewablefuels/. 

Renewable Fuels

Some low-carbon fuels are also renewable fuels, and therefore may be desirable from a 

standpoint of energy security and sustainability as well as reducing greenhouse gas 

emissions. Renewable fuels are defined by the EPA as fuels produced from plant or 

animal products or waste, rather than from fossil fuels (U.S. EPA, 2009b). Ethanol and 

biodiesel are examples of renewable fuels, and certain synthetic fuels that utilize biological 

feedstock may also be considered renewable. In addition, electricity generation and 

hydrogen reformation can potentially be accomplished using renewable sources. 

The 2005 Energy Policy Act established a Renewable Fuel Standard (RFS1) mandating 

targeted levels of renewable fuel use in the United States. The 2007 Energy Independence 

and Security Act (EISA) expanded upon the renewable fuel targets established under 

RFS1. In May 2009, the EPA issued a Notice of Proposed Rulemaking to implement the 

mandated changes to RFS1 (U.S. EPA, 2009b). In addition to conventional biofuels such as 

corn-based ethanol, the revised RFS (RFS2) establishes three new categories for renewable 

fuels: advanced biofuel, biomass-based diesel, and cellulosic biofuel. The life-cycle 

reduction targets for each fuel type are expressed in terms of the following percentage 

reductions in GHG emissions relative to conventional petroleum fuels:1

• Conventional – 20 percent;

• Biomass-based diesel – 50 percent;

• Advanced – 50 percent; and

• Cellulosic – 60 percent.

The RFS2 also mandates new specific volume standards for these fuels, requiring 16 billion 

gallons of cellulosic biofuel, 21 billion gallons of advanced biofuel, and 36 billion gallons of 

total renewable fuel be produced in 2022 (volume requirements for biomass-based diesel 

are to be determined by EPA through a future rulemaking, but will total at least 1 billion 

gallons by 2012). In addition, the RFS2 alters the criteria of renewable fuel feedstock,

requiring crops used in renewable fuel be produced on land cleared or cultivated before 

 

1 EPA has the authority to adjust the life-cycle thresholds downward by up to 10 percent for each 

fuel category.
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the enactment of the EISA, with this criteria applicable to both domestic and foreign 

producers of renewable fuels. 

Life-Cycle Analyses

The life-cycle greenhouse gas impacts of a fuel – not just emissions from the vehicle itself –

must be considered when evaluating low-carbon fuel options. The GHG emissions 

resulting from vehicle operation (i.e., “tailpipe” emissions) are only a part of the total lifecycle emissions associated with transportation fuel use. As depicted in Figure 2.1, a lifecycle analysis takes into account the GHGs associated with the extraction, processing, 

distribution, and dispensing of the fuels (Winebrake et al., 2001).

Figure 2.1 Life-Cycle of a Transportation Fuel 

Feedstock-Related Stages:

Feedstock recovery, 

transportation, storage, 

distribution of feedstock 

Fuel-Related Stages: 

Fuel processing, 

transportation, storage, 

distribution of fuel 

Vehicle Operation: 

Refueling and 

operation 

Upstream Downstream

Note: “Upstream” also is known as “well-to-pump” and “downstream” as “pump-to-wheel,” with 

the full cycle known as “well-to-wheel.” Vehicle operation includes tailpipe emissions from 

combustion of the fuel in the vehicle’s engine, as well as any emissions associated with 

refueling the vehicle.

The analysis contained in this report considers “well-to-wheel” emissions, which includes 

all three stages shown in Figure 2.1. Fuel combustion is responsible for about 80 percent of 

the life-cycle GHG emissions for petroleum fuels, while the processes from feedstock 

extraction through fuel delivery (well-to-pump) account for about 20 percent. Some GHG 

emissions also are associated with vehicle manufacture and disposal; these would add 

about 10 percent to the emissions total but are not included in this analysis, which focuses 

only on fuels.2

 

2 Certain advanced technology vehicles require higher energy intensity materials, entailing a slight 

increase in manufacturing emissions (increasing from about 26 g GHG per mile traveled for 

conventional vehicles to about 30g per mile for fuel cells and battery electrics – Heywood et al., 

2008).
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The proportion of GHG use associated with vehicle operation versus fuels production and 

transport can vary significantly by the type of fuel. For example, hydrogen fuel cells and 

electric vehicles have no operating emissions since there is no fuel combustion in the 

vehicle. 

Summary of Impacts

Ethanol benefits vary substantially depending upon the feedstock used to produce the fuel

and the production pathway. For instance, using low carbon energy sources to process 

the feedstock into fuel produces lower greenhouse gas emissions than high carbon energy 

sources. Cellulosic ethanol, such as ethanol from switchgrass, shows much greater GHG 

benefits than first generation biofuels. Cellulosic ethanol is produced from the structural 

material that comprises much of the mass of plants. As EPA’s renewable fuel standard 

rulemaking was ongoing at the time of writing, this report to Congress does not include 

analysis of biofuels, at EPA’s request. Readers are instead referred to EPA’s renewable 

fuels website, which includes draft life cycle analysis of the greenhouse gas impacts of 

renewable fuels: http://www.epa.gov/OMS/renewablefuels/. 

Biodiesel provides the potential for GHG reductions in heavy-duty vehicles, and a blend 

with conventional diesel of up to 20 percent biodiesel (B20) is compatible with existing 

engines and infrastructure. Biodiesel can be used in light and heavy duty road vehicles 

and marine vessels, although further research is required on material compatibility issues 

for rail applications. For more information, readers are referred to EPA’s renewable fuels 

website, which includes draft life cycle analysis of the greenhouse gas impacts of 

renewable fuels: http://www.epa.gov/OMS/renewablefuels/. 

Natural gas is a clean-burning fossil fuel that has a well-established pipeline system for 

distribution and provides moderate life-cycle GHG reductions relative to light-duty 

gasoline vehicles (about 15 percent compared to gasoline vehicles, roughly equivalent to 

diesel vehicle benefits). A GHG reduction of 7 to 13 mmt per year (0.3 to 0.6 percent of 

transportation emissions in 2030) is estimated assuming a 3 to 6 percent LDV market share 

for compressed natural gas (CNG) in 2030. The relatively low potential benefit is not 

constrained so much by natural gas supplies as by the ability to move natural gas away 

from other end uses such as electricity production and residential heating. Natural gas 

would not provide significant GHG benefits in heavy-duty vehicles (HDV) or the off-road 

sector, since it would primarily displace diesel fuel rather than gasoline.

CNG vehicles have a proven performance and safety record, although range penalties can 

be significant. CNG also is one of the few alternative fuels available that offers potentially 

lower fuel costs relative to conventional fuels, with the break-even point estimated to be 

about $2.50 per gallon of gasoline (pretax). Preferred applications for CNG vehicles are 

fleets with high mileage and centralized refueling. Primary barriers to implementation 

include the limited number of CNG vehicle offerings, limited refueling infrastructure, and 
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incremental vehicle costs. Incremental vehicle costs at full production volumes are 

estimated at $3,000, although current conversion of conventional vehicles is much higher. 

Considering fuel cost savings, CNG vehicles are estimated to result in a net cost savings of 

-$130 per tonne, based on AEO fuel cost projections. Due to the high global warming 

potential of methane – the primary component of natural gas – it is important to minimize 

leaks during distribution, storage, and dispensing, which could offset GHG reductions for 

use.

Along with electricity and hydrogen, natural gas is “fungible,” with multiple end use 

options. In addition to transportation and home heating, natural gas has a substantial role 

in the energy sector producing electricity. To the extent that multiple end use options are 

available, replacing coal power with natural gas offers substantially greater GHG 

reduction potential (about 50 percent) than its use in transportation (about 15 percent). 

Increased demand for natural gas resulting from carbon limits placed on electrical 

generating units may limit CNG and LNG availability for transport, although a detailed 

analysis of such impacts is beyond the scope of this assessment.

Liquefied petroleum gas (LPG), also referred to as propane, is commonly used in fleet 

vehicles in the United States, and benefits from a relatively well-established fueling 

infrastructure. Potential GHG reductions are about 17 percent relative to conventional 

gasoline vehicles. LPG is produced as a byproduct of petroleum and natural gas 

processing, and as such, the ability to expand LPG supplies is highly constrained, with 

little potential for significant expansion in the transportation sector. While a limited 

number of original equipment manufacturer (OEM) engines are available for heavy-duty 

vehicles, LDV owners must have their vehicles converted for LPG use at this time. 

Moderate cobenefits associated with LPG use relative to gasoline are expected. Barriers to 

expanded use of LPG include higher incremental fuel costs, expensive retrofits, and 

significant limitations on LPG production and sales volumes for vehicle use; GHG 

reduction potential is estimated to be less than 0.5 mmt CO2e annually.

Many of the synthetic fuel options available may actually increase life-cycle GHG 

emissions, although biomass feedstock should result in substantial reductions. Synthetic 

fuels lend themselves to easy adoption, however, requiring little to no modification of 

vehicles and infrastructure. Most of these fuels also promise significant reductions in 

other pollutants relative to conventional fuels.

Alternative aviation fuels can be used without significant modification in aircraft. While 

point of use GHG emissions may be reduced slightly (two to four percent) for synthetic jet 

fuels, life-cycle emissions can increase substantially depending upon the feedstock used in 

the process. In order for biomass jet fuels to meet stringent commercial aviation fuel 

standards, these fuels need to be refined with a hydrotreating process. The costs for this 

additional processing and feedstock prices will determine the cost competitiveness of these 

fuels. Synthetic jet fuels have been estimated to cost about $75 to $80 per barrel of oil 

equivalent. Along with battery electric vehicles, hydrogen fuel cell vehicles (HFCV) offer 

the greatest long-term GHG reduction potential, but only if the hydrogen is produced by 

low carbon pathways, such as electrolysis using renewables, coal with carbon 
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sequestration, biomass reforming, or nuclear power sources. Net GHG and other 

emissions vary substantially depending on hydrogen production pathways, as well as 

hydrogen delivery and storage approaches and may even increase emissions relative to 

conventional vehicles under worst case conditions; because HFCVs are more than twice as 

efficient as gasoline internal combustion vehicles, however, the overall well-to-wheels 

GHG emissions can be significantly lower than other options. For example, estimates 

suggest the potential for a 51 percent reduction per vehicle in 2030 and 80 percent in 2050, 

assuming that increasingly cleaner sources of energy are utilized for hydrogen production. 

Although market penetration estimates and production pathways are highly uncertain, 

illustrative GHG reductions are estimated at 52 to 74 mmt CO2e annually in the medium 

term (2.3 to 3.2 percent of transportation emissions in 2030) assuming 18 percent 

penetration of the light-duty vehicle market and production through natural gas 

reformation, and 390 to 470 mmt CO2e annually in the long term (18 to 22 percent of 

transportation emissions in 2050) assuming 60 percent market penetration and advanced, 

low carbon production pathways by this time.

While the vehicles themselves have the potential to provide excellent performance, 

substantial uncertainties exist regarding their long-term fuel storage capacity, fuel cell 

stack life, and commercialized cost. At high production volumes incremental HFCV costs 

could be between $1,500 and $5,000 compared to conventional vehicles, although nearterm costs are estimated to be $10,000 or more (see Section 2.8). Cost for fuel cell vehicles 

have dropped significantly between 2002 and 2008 and future year hydrogen fuel costs 

could even be lower than gasoline, on a cents per-mile traveled basis. However, 

development of a widespread, cost-effective fuel production and distribution 

infrastructure will be challenging, most likely requiring the development of entirely new 

centralized production facilities and dedicated pipelines for transport. No other vehicle 

technology/fuel combination evaluated in this study must overcome such significant 

barriers in vehicle technology, fuel production, and distribution simultaneously. 

Accordingly, the transition costs associated with widescale deployment of hydrogen 

within the transportation sector may be higher than most other options.

The government costs for both vehicle and infrastructure have been estimated to be 

roughly $1 to $6 billion per year, or $55 billion over 15 years to enable HFCVs to be 

competitive in the 2023 timeframe (Greene et al., 2008; NRC, 2008). Regardless of cost, 

there remains controversy over the likelihood of overcoming the challenges to widespread 

deployment of HFCVs, including hydrogen production, delivery, storage, and fuel cell 

performance. Even under aggressive development and deployment scenarios, HFCVs are 

unlikely to have a significant impact on GHG emissions for the next decade in the United 

States, and other technologies are expected to be more prevalent during that period 

(Meyer and Winebrake, 2009). National policies to restrict GHG emissions and encourage 

the development of fuel-cell vehicles and hydrogen production and infrastructure will be 

necessary to achieve significant market penetration, even in the long term.

Electricity is available for use as a transportation fuel, but the associated vehicle 

technology has not advanced enough for battery electric vehicles (BEV) to become 

commercially competitive at this time. The GHG benefits of these vehicles are strongly 
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based on the type of electricity grid generation used to charge them, but scenarios 

assuming a move to increasingly cleaner electricity generation sources suggest a potential 

for up to a 68 to 80 percent GHG reduction per vehicle in 2030, or 78 to 87 percent in 2050. 

Although market penetration estimates also are highly uncertain for BEVs, illustrative 

market penetration scenarios would result in anywhere from 47 to 55 mmt CO2e annually

in the medium term (2.2 to 2.5 percent of transportation emissions in 2030), and between 

570 and 640 mmt CO2e annually in the long term (26 to 30 percent of emissions in 2050),

assuming favorable consumer acceptance. These estimates assume a maximum BEV 

market penetration of approximately 5 percent of the light-duty vehicle stock in 2030 and 

56 percent in 2050, with the emissions range reflecting the uncertainty associated with the 

source mix used for battery charging.

Advancements in battery technology, especially with regards to cost, could make BEVs 

viable in the medium to long term, and a shift in grid generation to a greater proportion of 

renewable sources could allow BEVs to significantly reduce GHG emissions from the 

transportation sector. Plug-in hybrid electric vehicle (PHEV) technology (see Section 3.2.4) 

may serve as a step on the path to significant BEV market share in the long term, 

facilitating battery and other vehicle developments for enhanced BEV performance. 

Consumer response will likely decisively impact the future of BEVs, with limited 

operation range (less than 200 miles between charges) providing a significant constraint on 

acceptability. While even in the long-term BEVs are estimated to be substantially more 

expensive than conventional vehicles (between $6,000 and $10,000 depending upon the 

range of the vehicle), low nighttime charge rates would result in operation costs per mile 

that are about 75 percent lower than for a gasoline vehicle, potentially yielding a net 

savings over the life of the vehicle.

The Rebound Effect

Benefits from technology strategies may be somewhat offset due to the “rebound effect.” 

This effect can be characterized as the extent to which any fuel cost savings (and 

corresponding GHG reductions) from alternative fuels are offset by increased travel, 

because travel is made cheaper per-mile due to reduced fuel costs. (Conversely, a fuel that 

is more expensive per-mile could have the effect of reducing VMT and therefore providing 

further GHG benefits.) The National Highway and Traffic Safety Administration 

(NHTSA), used a 10 percent rebound effect in its analysis of fuel savings and other benefits 

from higher CAFE standards for MY 2012-2016 vehicles. Recognizing the uncertainty 

surrounding the 10 percent estimate, the agency analyzed the sensitivity of its benefits 

estimates to a range of values for the rebound effect from 5 percent to 15 percent (NHTSA, 

2009). (For more detail on the rebound effect, see Appendix A.) 

The impact of the rebound effect is fairly straightforward to demonstrate in the case of 

strategies that improve the efficiency of existing gasoline or diesel vehicles, as 

demonstrated in Section 3.0. For alternative fuel strategies, it is more complicated to 

estimate as the effects will depend upon the relative cost per mile of the different fuels 

compared to gasoline. Some of the fuel strategies evaluated in this report will increase the 
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cost per mile, while others are likely to decrease it. (It is the cost per mile, and not any upfront capital cost or savings, which affects consumer behavior with respect to VMT.) 

Therefore, it is difficult to make blanket characterizations of how the rebound effect might 

affect the GHG benefits estimated in this section.

Policy Implications

Low-carbon fuels suffer from the “chicken-and-egg” dilemma – consumers are not likely to 

buy alternative fuel vehicles in the absence of an extensive distribution network, nor will 

manufacturers have the incentive to develop or offer such vehicles in mass if consumers 

are not demanding the fuel. Low-carbon fuel policies will have to address this dilemma to 

increase the use of these fuels. Policies should address the various barriers faced: 

encouraging the purchase of flex fuel or other alternative fuel vehicles, expanding 

distribution networks for low-carbon fuels, and research and development to advance 

these fuels (and vehicles that can use them) into a commercially viable product.

A carbon fuel standard mandates that fuel suppliers meet, on average, minimum 

percentage requirements for reductions in greenhouse gas emissions compared to 

conventional fuels (e.g., gasoline, diesel). A carbon fuel standard allows fuel suppliers to 

determine how to most cost-effectively meet the standard through any combination of fuel 

strategies. This fuel-neutral approach rewards lowest carbon results without choosing 

winners and losers in the development of improved fuels and technologies. By providing 

certainty over future demand for low-carbon fuels, it also encourages vehicle 

manufacturers to design vehicles that support the use of such fuels (such as bi-fuel or flexfuel vehicles capable of running on both gasoline and ethanol). 

California’s low-carbon fuel standard provides one model for this approach. In January 

2007, Governor Schwarzenegger called for the establishment of a Low-Carbon Fuel 

Standard (LCFS) by Executive Order (CEC, 2009). In response, the California Air 

Resources Board (CARB) adopted a resolution to implement the new standard on April 23, 

2009 (CARB, 2009a). The CARB standard will reduce GHG emissions from the 

transportation sector by about 16 mmt in 2020 by lowering the carbon content of 

transportation fuels used in California. This reduction by 2020 represents a 10 percent 

reduction of the total GHG emission from the statewide mix of transportation fuel. The 

LCFS will contribute to the State’s efforts of reducing GHG emissions to 1990 levels by 

2020 (CARB, 2009b). Eleven Northeast and Mid-Atlantic states intend to establish a 

regional LCFS initiative as well (Connecticut Department of Environmental Protection et 

al., 2008).

The LCFS is imposed on transportation fuel providers in the State, establishes performance 

standards that fuel providers must meet each year beginning in 2011, and uses market 

mechanisms to spur the steady introduction of lower carbon fuels. The carbon intensity of 

a fuel, expressed in terms of grams of CO2 equivalent per megajoule, is established by 
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determining the sum of GHG emissions associated with the production, transportation, 

and consumption of a fuel. The carbon intensity of all fuels is tracked through a system of 

“credits” and “deficits.” Credits are generated from fuels with lower carbon intensity than 

the standard. Deficits result from the use of fuels with higher carbon intensity than the 

standard. The regulation is performance-based and provides flexibility for fuel providers 

to comply with the standard through different approaches:

1. Supply a mix of fuels above and below the standard that, on average, equal the 

required carbon intensity;

2. Supply only fuels that have lower carbon intensity than the standard (blend low 

carbon ethanol in gasoline, or renewable diesel fuel in diesel fuel);

3. Purchase credits generated by other fuel providers to offset any accumulated deficits 

from their own production; or

4. Bank excess credits generated in a previous year and use those credits when needed.

An alternative approach to a carbon fuel standard is provided by EPA’s Renewable Fuel 

Standard, which establishes target percentages of certain types of defined renewable fuels, 

along with life-cycle GHG reduction criteria for each fuel type. This approach has the 

advantage of encouraging the advancement of promising fuel technologies and providing 

certainty for fuel producers and vehicle manufacturers regarding a market for particular 

fuels. 

Tax credits or differential fuel tax rates can be used to encourage consumers to purchase 

vehicles that are capable of utilizing low-carbon fuels. Tax credits already are offered for 

ethanol to encourage its use, currently at about 47 cents per gallon. A complication for 

low-carbon fuel policies is the need to take into account the full fuel-cycle GHG 

implications of different fuel strategies. Some strategies are likely to have significantly 

better performance from a life-cycle perspective than others, due to the relative energy 

intensiveness of different forms of agricultural production or other processes needed in the 

fuel production process. Incentives and tax rates based on the life-cycle GHG released from 

the fuel provide a level playing field for all fuels and encourage the use of those fuels with 

the greatest GHG reductions.

Support also may be needed, whether regulatory or via incentives, to encourage the 

development of alternative fuel distribution networks. One strategy is to begin to invest in 

such networks in limited geographic areas in order to demonstrate feasibility and consumer 

acceptance of the fuel. For example, initiatives have been undertaken in California and in 

the Northeast United States to develop a hydrogen refueling infrastructure. Partnerships 

with public and private vehicle fleet operators to use vehicles that can make use of these 

fuels can help to create initial demand for the fuel and begin to recover investment costs 

before there is widespread consumer demand.

For fuels that appear to be at or near viability, requirements or incentives could be placed on 

vehicle manufacturers to design vehicles to support the fuel. For example, today’s gasoline 
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vehicles can be designed to use ethanol blends at up to 85 percent at only modest additional 

cost. Introducing such vehicles today would allow for faster adoption of the fuel in the 

future, if production constraints can be overcome.

A general GHG performance standard for vehicles is another potential option as an 

alternative (or in addition to) a low-carbon or renewable fuel standard. This approach 

directly measures GHG emissions per mile from vehicles rather than measuring GHG 

emissions by a fuel efficiency or fuel carbon content proxy. A GHG emissions standard 

would allow fuel producers and vehicle manufacturers to develop the most cost-effective 

combinations of vehicle and fuel technology to reduce GHG emissions. GHG performance 

standards for vehicles have been proposed in California, along with a low-carbon fuel 

standard. To be effective, a GHG performance standard must reflect the life-cycle emissions 

associated with the fuel, not just the emissions produced by the vehicle in operation. 

Ultimately, significant additional research and development is needed to make many of 

these low-carbon fuels commercially viable. Additional funding could be provided to 

advance research to make new feedstocks commercially viable, such as cellulosic ethanoland algae-based biodiesel. Major advances are needed for hydrogen fuel cell technology as 

well as for battery technology in order to make these fuel sources practical for consumers as 

well as cost-competitive with current fuels and vehicles. The U.S. government already is 

funding research on renewable fuel sources, for example, through the Department of 

Energy’s FreedomCAR and Vehicle Technologies Program (U.S. DOE, 2006).

It is clearly desirable to avoid contradictory or overlapping policies. However, multiple 

policy levers may still be needed to assist vehicle and fuel producers in focusing research, 

development, and production resources on complementary technologies and to provide 

consistent incentives to consumers. Whenever possible the government should strive to set 

“technology-neutral” policies that allow markets to select the most cost/effective GHG 

reduction technologies, while recognizing that in practice this may be difficult, especially 

with respect to fuel technologies. In particular, the level of coordination required between 

vehicle manufacturers, fuel and feedstock producers, and providers of distribution 

infrastructure suggest that multiple policy levers may be necessary, sometimes focusing on 

particular technologies. 

Summary Evaluation

Table 2.2 summarizes the strategies discussed in this section and presents an assessment of 

each strategy’s effectiveness, cost-effectiveness, and cobenefits, as well as a summary of 

key Federal policy initiatives that would be needed to implement the strategy beyond 

current levels. A similar summary is provided in Section 3 for other vehicle technologies, 

including advanced internal combustion engines, hybrids, and plug-in hybrids.

The factors presented in the table are rated according to the following metrics:
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• GHG Reduction Effectiveness – Low = < 0.5% of transportation GHG emissions in 

2030 (12 mmt CO2e; Moderate = 0.5 to 2.5% (12 to 60 mmt CO2e); High = > 2.5% (60 

mmt CO2e).

• Costs (net included cost per tonne) – Cost-effectiveness measured as net included cost 

per tonne of CO2e reduced. A positive number represents increased costs, while a 

negative number represents a net savings. High Cost = > $200 per tonne CO2e 

reduced; Moderate Cost = $20 to $200 CO2e reduced; Low Cost = < $20/tonne CO2e 

reduced; Net Savings = < $0/tonne CO2e reduced.3

• Cobenefits – Plus (+) = significant positive cobenefits; Minus (-) = significant negative 

cobenefits; Plus/minus (+/-) = both significant positive and negative cobenefits; Zero 

(0) = modest or negligible cobenefits. Cobenefits may include air pollutant emission 

reductions, consumer benefits, or other factors. The cobenefits rating does not include 

gasoline savings or related national security benefits, since all strategies analyzed in 

this report will reduce gasoline consumption. 

 “Net included cost” includes both 

fuel production and distribution costs and vehicle costs, and is calculated as the cost 

increment relative to the cost of conventional fuels and vehicles (gasoline for light-duty 

vehicles, diesel for heavy-duty vehicles), net of taxes. See Appendix A for details on 

the calculation of costs.

Cost-effectiveness includes direct implementation costs as well as costs or savings 

associated with fuel use changes incurred by vehicle owners/operators.

 
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Table 2.2 Low-Carbon Fuel Strategies

Summary Evaluation

Strategy

GHG 

Reduction 

Effectiveness 

(2030)

Net 

Included 

Cost per 

Tonne Cobenefits Key Federal Policy Options

2.2 Ethanol

E85 Flex-fuel Vehicles 

(Cellulosic Ethanol)

n/a n/a n/a Research and development support for costeffective cellulosic ethanol production.

Assistance with fuel distribution 

infrastructure expansion.

2.3 Biodiesel

B20 in On-road 

Heavy-Duty Vehicles

n/a n/a n/a Research and development support for costeffective production of advanced feedstocks 

such as algae.

2.4 Natural Gas

CNG in Dedicated 

Light-Duty Vehicles

Low to 

Moderate

0.3-0.6%

Net 

Savings

+ Determine most cost-effective dispatch of 

natural gas across alternative end uses.

Assistance with fueling station expansion

Incentives for purchase of dedicated, OEM 

CNG vehicles for fleets.

2.5 Liquefied Petroleum Gas (LPG)

LPG in Dedicated 

Light and HeavyDuty Vehicles

Low

<0.1%

Not 

calculated

+ Incentives for niche applications such as fleet 

vehicles.

2.6 Synthetic Fuels

FT fuels, biobutanol, 

biomass and coal to 

liquids, HDRD

Uncertain/ 

varies

Uncertain/ 

varies

+ Research assistance to determine viability of 

CCS with certain production pathways.

2.7 Alternative Aviation Fuels

Synthetic and 

biomass-derived

Uncertain/ 

varies

Uncertain/ 

varies

+ Support for additional research and 

development.

Demonstration programs / partnerships

Policies and incentives to support 

commercialization and deployment of fuels.

2.8 Hydrogen

Hydrogen Fuel Cell 

Light-Duty Vehicles

High

2.3-3.2% (2030)

18-22% (2050)

Net 

Savings to 

Moderate 

Cost

+/- Continued research and development 

support for HFCV efficiency, stack life, onboard storage, and hydrogen production 

pathway options.

Continued demonstration project support

In the longer term, extensive support for 

delivery infrastructure development.

2.9 Electricity

Battery Electric LightDuty VehiclesHigh

2.2-2.5% (2030)

26-30% (2050)

Net 

Savings

+/- Continued research and development 

support for BEV battery efficiency and 

durability.

In the longer term, extensive public charging 

station network development.

Policies to support low-GHG electricity grid
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Cobenefits and Implications for Other Transportation Goals and 

Objectives

The following provides a brief evaluation of fuel strategies in general terms with respect to 

the five goals identified in the U.S. DOT’s Strategic Plan, as well as against additional 

planning factors cited in the Safe, Accountable, Flexible, Efficient Transportation Equity 

Act: A Legacy for Users (SAFETEA-LU) of 2005. More detailed information on cobenefits 

and feasibility-related issues, particularly emissions and safety impacts, is provided in the 

respective section for each fuel.

• Safety – Several of the fuel strategies evaluated in this section have different safety 

considerations relative to conventional fuels, and require additional safety 

enhancements associated with fueling infrastructure, emergency responder 

requirements, as well as the vehicles themselves. Fuels with unique safety 

considerations include ethanol, natural gas, and hydrogen. Other strategies such as 

biodiesel and certain synthetic fuels are not expected to present significant safety 

concerns compared to gasoline and diesel.

• Reduced Congestion/Increased Mobility – The fuel strategies investigated in this 

section may result in different operating costs per unit of travel. To the extent that 

total miles traveled varies as a result, mobility may be impacted. Beyond that, these 

options are not expected to change the number of vehicles in operation or the overall 

mobility of the associated transportation system.

• Global Connectivity – The fuel strategies evaluated here are not expected to impact 

network operations or global connectivity.

• Environmental Stewardship – Many alternative fuels also reduce other air pollutants, 

including volatile organic compounds (VOC), oxides of nitrogen (NOx), particulate 

matter (PM), carbon monoxide (CO), sulfur dioxide (SOx), and air toxics. However, 

these reductions will vary by fuel as well as the operating characteristics of an engine. 

In some cases increased emissions are expected relative to conventional fuels. The 

location of emissions (i.e., proximity to population) will also affect their relative health 

impacts. Strategies involving electric batteries should consider additional waste 

disposal/recycling requirements. Table 2.3 compares the emission reductions of the 

alternative fuels discussed in this section compared to conventional gasoline or diesel, 

given current fuel production and engine technologies.

• Security – With the exception of certain synthetic fuels, which may increase oil or 

natural gas imports, all of the fuel options discussed in this section result in decreased 

fossil fuel use, which in turn reduces reliance on foreign oil. As such, these strategies 

support economic and national security. 

• Economic Vitality – Many of the fuel strategies discussed in this section will increase 

vehicle ownership costs, due to increased fuel costs per mile and/or increased vehicle 
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costs; however, others may reduce net ownership costs. The relative costs and benefits 

will vary for each option depending on incremental vehicle costs and fuel prices. 

Increased domestic fuel production will provide additional employment opportunities. 

Finally, many of these options will require increased vehicle manufacturing capacity to 

meet increased demand, which also will increase employment opportunities.

• Efficient System Management and Operation – Certain fuel options may affect the 

management and operation of the transportation system. To the extent that access to 

alternative fuels may be limited, system operation may be constrained to certain 

regions or refueling locations. Such concerns will be most prevalent during transition 

periods, before full build out of new infrastructure capacity.

• System Preservation – The fuel options are assumed to have negligible impact on 

preservation of the existing infrastructure.

Table 2.3 Relative Life-Cycle Emissions of Alternative Fuels (Percent 

Change versus Conventional Gasoline)

Pollutant

Conventional 

Gasoline 

Emissions (g/mi) CNG LPG

Gaseous 

Hydrogenb

Battery 

Electric 

Vehiclec

VOC 0.316 -45% -35% -92% -91%

CO 3.817 0% 0% -98% -98%

NOx 0.379 -20% -14% -59% -11%

PM10 0.083 -9% -47% 23% 416%

PM2.5 0.036 -20% -38% 36% 220%

SOx 0.126 +11% -14% N/A 494%

Source: GREET Model Version 1.8b, with default assumptions for current vehicle technologies. Relative 

emissions will vary depending upon vehicle emission controls as well as fuel extraction and 

production methods. Relative emissions may change in future years as these various technologies 

evolve in different ways.

b Assuming distributed natural gas reforming, the current primary production pathway; these values do not 

represent future technologies or other production pathways or feedstocks. Refer to Section 2.8 for detailed 

hydrogen production pathways.

c Assuming current grid-average electricity generation mix. Future scenarios will differ considerably 

depending upon grid mix and when vehicles are charged. See Section 3.2.4 for a detailed analysis of 

electricity dispatch impacts.
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Effects on Infrastructure Funding

The revenue effects of alternative fuels will depend upon taxation policy. Since 2006, 

Federal policy has been to tax alternative fuels on an energy-equivalent basis to gasoline 

(FHWA, 2008).4

 

4 Ethanol users actually pay slightly more per gallon of gasoline equivalent even though ethanol is 

taxed less on a volumetric basis (Vol. 2 Sec. 2.2).

 This means that policies focused solely on increasing the use of lowercarbon fuels should not have a significant revenue impact on the Highway Trust Fund. 

On the other hand, current tax policies may have implications for general fund revenue; 

for example, ethanol receives a substantial tax credit which reduces general fund revenues, 

but a tariff is levied on imported ethanol which could potentially generate revenue. The 

long-term finance implications of a shift to hydrogen or electricity will depend on tax 

policy for these fuels; current Federal policy does not tax these fuels for transportation 

purposes, and therefore any shift to these fuels will result in lost revenues to the Highway 

Trust Fund under the current finance structure.
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 2.2 Ethanol

Overview

Ethanol is a biodegradable liquid fuel that is made from the fermented sugars of 

renewable feedstock, typically corn in the U.S. Ethanol is the most widely used alternative 

fuel and is commonly blended with conventional gasoline to help reduce carbon monoxide 

(CO) and reduce engine knocking in light-duty vehicles.

Ethanol can be derived from starch- and sugar-based feedstock or from cellulosic 

feedstock. Ethanol is almost always blended with conventional gasoline in varying 

amounts. The two commonly available blends are E10 and E85. E10 is composed of 10 

percent ethanol and 90 percent gasoline (commonly known as gasohol), while E85 is 85 

percent ethanol and 15 percent gasoline. Ethanol concentrations above 85 percent are not 

used in order to avoid cold-starting problems. E10 is sold in fueling stations located in all 

50 states and accounts for about one-third of all gasoline consumed in the United States. 

E10 is required for sale statewide in Missouri and Minnesota, and will be required in 

Florida beginning in 2010. Montana and Oregon also will adopt E10 mandates contingent 

upon local production volumes (AFDC, 2009a). All but a few states also offer E85, with 

over 1,906 fueling stations across the United States as of June 2009 (U.S. DOE, 2009b). 

High concentration fuel blends (more than 10 percent) require flex-fuel vehicles (FFV) 

which can run on conventional gasoline or any ethanol blend volume up to 85 percent.5

The combustion of a gallon of pure ethanol produces about two-thirds as much energy as a 

gallon of gasoline, so more gallons of fuel are required to travel the same distance when 

using ethanol blends as a transportation fuel. Depending on the availability of fuel and 

the size of the vehicle fuel tank, this lower energy density may create a disincentive for 

consumers towards the purchase of E85.

Most FFVs are light-duty vehicles (about 80 percent), automatically adjusting their 

combustion process to account for the amount of ethanol in the fuel. There are over six 

 

5 The U.S. Department of Energy is funding the National Renewable Energy Laboratory (NREL) 

and Oak Ridge National Laboratory (ORNL), among others, to conduct a series of studies on the 

effects of intermediate ethanol blends on vehicles and other engines. The first report from this 

work (West et al., 2008) investigated the effect of E15 and E20, which found that fuel economy 

losses correlated with energy density of the fuels and that regulated tailpipe emissions remained 

largely unaffected. In April 2009, the U.S. Environmental Protection Agency issued a request for 

comments on an ethanol industry petition asking the Agency to permit an increase in the amount 

of ethanol in gasoline to 15 percent.
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million FFVs on the roads in the United States today, and sales continue to be strong with 

870,000 new FFVs sold in 2007 compared to 15.1 million new car and truck sales total (U.S. 

DOE, 2009a). However, only a small fraction of these vehicles use E85 predominantly6

FFVs suffer a slight fuel economy penalty relative to vehicles optimized to operate on a 

particular fuel. Ethanol’s higher octane level compared to gasoline would allow for 

increased compression ratios on a vehicle designed to operate solely on E85, providing for 

about a 10 percent improvement in fuel economy compared to comparable gasoline 

engines, and even more relative to FFVs (Greene and Schafer, 2003). This analysis assumes 

utilization of FFV rather than optimized E85 technology due to the former’s advantages 

with respect to consumer acceptance and convenience.

due 

to a number of obstacles such as limited E85 distribution and infrastructure, lack of owner 

awareness of their vehicle’s E85 capability, and the lower energy density, which makes it 

difficult for consumers to know the price point at which E85 becomes more cost-effective 

than gasoline. FFVs are available for purchase from every major automotive manufacturer 

at no incremental cost to the consumer compared to dedicated gasoline models (AFDC, 

2009A). If incremental manufacturing costs were passed along to the consumer, price 

increases for FFVs would be approximately $150 per vehicle (Greene, 2007).

The vast majority of domestically produced ethanol used by FFVs is derived from starchand sugar-based feedstock such as corn, sugar cane, sugar beets, grain sorghum, and 

potatoes, with more than 90 percent of current production from corn. Large-scale ethanol 

production from these feedstocks is economical using biochemical conversion technologies 

to extract and ferment sugar or to break down starches into simple sugars for 

fermentation. Because of impacts on land use and food supplies, there are limits to the use 

of corn and other crops to produce ethanol for transportation. The Government 

Accountability Office (GAO, 2007) estimated that sustainable production of ethanol from 

corn is capped at 15 billion gallons per year due to water constraints for irrigation.7

In the long run, cellulosic feedstocks have the greatest potential for increasing fuel ethanol 

production. Cellulosic ethanol is derived from cellulose and hemicellulose that forms the 

structure of plant stalks, leaves, and woody material. Feedstock include agricultural 

residues, forestry residues, and fast-growing grasses (such as switchgrass and 

miscanthus), or trees (like poplar and willow). Compared to starch- and sugar-based 

feedstock, cellulosic feedstocks have many advantages: they are abundant, can be grown 

on marginally productive land not suitable for other crops, and do not divert crops from 

food use. However, there are limitations on the amount of crop residue that can be 

removed from land while still preventing land erosion and sustaining soil organic carbon. 

 

Additional corn ethanol production may be possible with increased yields from fields and 

improved conversion efficiencies.

 

6 Roughly 300,000 in 2006.

7 The growth and production of one gasoline equivalent gallon of corn-based requires roughly 2,700 

gallons of water (NGA, no date).
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It also is more difficult to chemically convert cellulosic feedstock into sugars. The U.S. 

DOE and other government and industry groups are actively supporting research to 

develop economically viable processes to convert cellulosic materials into ethanol.

The technology for starch- and sugar-based ethanol production is well-established, 

although improvements in efficiency and yields continue to be made.8

One cellulosic commercial plant is operating in Georgia, and several more are under 

construction. The DOE currently is providing about $500 million to support several smallscale cellulosic biorefinery projects to demonstrate use of a range of cellulosic feedstock 

such as corn stover and other agriculture residues (e.g., wheat straw, rice straw), wood 

wastes, municipal solid wastes and energy crops such as switchgrass (U.S. DOE, 2007a, 

2008a).

 Ethanol can be 

produced at dry mills or wet mills. Dry mills are optimized for ethanol production, while 

wet mills are designed primarily to produce corn sweeteners but generate ethanol as a 

coproduct. Both types of plants produce animal feed and other coproducts as well. 

Between 2000 and 2007, the number of ethanol production facilities in the United States 

more than doubled, and production capacity tripled, with most of the growth from drymill plants. In 2008, the ethanol industry included 172 operating plants with a production 

capacity of 10.6 billion gallons, with an additional 23 plants with 1.7 billion gallons of 

capacity idled (Urbanchuk, 2009).

For corn-based ethanol, the majority of feedstock production is in the Midwest, which also 

is where most ethanol plants are located. In 2005, 98 percent of corn ethanol feedstock was 

shipped to production plants by truck (USDA, 2007). Thus far, the established 

infrastructure for food crop distribution has been able to accommodate the transport of 

starch- and sugar-based ethanol feedstock to production facilities. While most ethanol 

feedstock resources and ethanol plants are in the Midwest, transportation fuel 

consumption is highest along the East and West Coasts. Ethanol is generally blended at 

the local wholesale terminal for use as E10 or E85, with high concentrations of ethanol 

shipped from the point of production (National Commission on Energy Policy, 2009). In 

2005, rail accounted for 60 percent of ethanol shipments and truck for 30 percent (USDA, 

2007).

 

8 Brazil, the world’s second-largest ethanol producer behind the United States and the largest 

consumer of ethanol for transportation, uses sugar cane as a feedstock. While sugar cane has 

significantly higher production yields than corn or cellulose, it is not expected to become a major 

source for domestic ethanol production in the United States since there are limited areas where 

sugar cane can be grown, and its primary use is for food purposes.
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Tax and tariff policy also can affect 

the market price of ethanol. The 

Food, Conservation, and Energy 

Security Act of 2008 reduced a 

previous ethanol credit from 51 to 45 

cents per gallon of ethanol blended, 

which became effective January 1, 

2009 (U.S. DOE, 2009a). Additionally, 

some producers may qualify for the 

Small Agri-Biodiesel Producer Tax 

Credit, which provides a credit of 10 

cents per gallon to a producer for the 

first 15 million gallons produced each 

year (IRS, 2009). 

The latest Farm Bill included a new 

cellulosic ethanol producer’s tax 

credit of $1.01 per gallon through 

2012. The United States also has an 

import tariff of 2.5 percent on foreign 

ethanol as well as a secondary tariff of 

54 cents per gallon of ethanol 

imported from non-Caribbean Basin 

countries, which is in effect through 

2010 (U.S. DOE, 2009a); this may 

provide a disincentive to the use of 

less expensive sugar cane ethanol 

imported from Brazil.

Biodiesel from Algaea

Algae has long-term potential as a biodiesel feedstock that can 

be produced on marginal land or in brackish water not 

suitable for production of other crops. Although an earlier 

NREL project on algal biofuels that began in 1978 was 

discontinued in 1996 to focus on ethanol, there has recently 

been a revival of interest in algae as a biodiesel feedstock due 

to the many positive characteristics of algae as a feedstock. 

Growing algae requires land, sunlight, water, carbon dioxide, 

and macro- and micro-nutrients. CO2 waste streams from 

other industrial processes or fossil fuel combustion emissions 

could be used as feed for algae, serving a beneficial purpose 

while reducing emission releases. Other benefits of algae 

production include use of a renewable feedstock that does not 

impact current U.S. food resources, and ability to use land or 

water resources that would otherwise be non-productive 

(e.g., desert land, saline water, waste water).

Since algae is renewable on a continuous basis (i.e., no 

harvesting/planting cycle), the potential for algal oil 

production is sizable compared to other renewable crops on a 

per-acre basis, estimated to provide between 30 and 100 times 

more biomass per acre than conventional agricultural 

feedstocks (NGA, no date). However, there are significant 

challenges to overcome. Three main areas identified for 

research include (1) selection and breeding of algae strains for 

continuous high-level oil production, (2) cultivation facility 

design and operation (including efficient harvesting and oil 

extraction technologies and finding uses for remaining algae 

components) and (3) cost-effective fuel production from 

extracted oil.

aThis section draws heavily from Pienkos (2007)
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 2.3 Biodiesel

Overview

Biodiesel is a nontoxic and biodegradable liquid fuel that is made from renewable 

feedstock such as new and used vegetable oils and animal fats. Biodiesel’s properties are 

similar to petroleum diesel, but it is generally cleaner burning with notably lower PM and 

SOx emissions (Radich, 2004). Given the very small number of light-duty diesel vehicles in 

operation in the United States, the following analysis assumes biodiesel use in mediumand heavy-duty vehicles, although similar benefits would accrue in light-duty applications 

as well.

Biodiesel can be blended with petroleum diesel in any percentage, with B20 (20 percent 

biodiesel and 80 percent petroleum diesel) commonly discussed in the literature. 

However, although some engine manufacturers have approved the use of biodiesel blends 

of 20 percent or higher, most manufacturers have not officially approved the use of blend 

levels above B5 (National Biodiesel Board, 2009). Use of higher biodiesel concentrations, 

especially above B20, may require minor vehicle modifications (e.g., for fuel system seals) 

as biodiesel is a stronger solvent than gasoline (Congressional Research Service, 2005). For 

this reason blends of B20 and lower are the most common focus in biodiesel research and 

testing. As of June 2004, 628 refueling stations offered B20 or higher blends of biodiesel for 

sale in the United States (U.S. DOE, 2009b).

Some marine applications also are using biodiesel. In 2006, the National Oceanic and 

Atmospheric Administration (NOAA) implemented the Green Ship Initiative, which 

converted all research vessels in the Great Lakes region to B100 biodiesel derived from soy. 

The conversion included propulsion and auxiliary diesel engines for generating electricity. 

NOAA documented higher lubricity and cleaner injectors with the use of biodiesel 

compared with marine distillate.

The majority of current U.S. biodiesel production (90 percent) comes from soybean oil, 

although many other feedstock can be used, including other plant oils such as canola, 

cottonseed, peanut oil, and rapeseed oil; waste vegetable oils (yellow grease); and animal 

fat (beef tallow, pork lard). Like corn for ethanol, biodiesel demand for these feedstock 

competes with food use. Algae also has long-term potential as a biodiesel feedstock, 

although algae production processes are still in the research and development phase (see 

sidebar on page 2-45).

The production process for biodiesel is straightforward with relatively low start up costs 

(NGA, no date). The ease of start up, along with increasing demand, has resulted in rapid 

growth in the U.S. biodiesel industry in recent years, with production tripling from 2004 to 
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2005, tripling again from 2005 to 2006, and doubling from 2006 to 2007 to 491 million 

gallons (predominantly from soy).9

The increase in biodiesel production also has been promoted by targeted government 

initiatives, including a $1 per gallon fuel blender subsidy for virgin-oil biodiesel (e.g., soy 

oil), and 50 cents per gallon for waste-derived biodiesel (e.g., “yellow greases”). An 

additional agricultural subsidy from the USDA’s Commodity Credit Corporation program 

provides soybean feedstock production credits of about $1.46 per gallon. B20 also has 

been designated as an alternative fuel available for fleet credits under EPAct (Lutsey, 2008, 

pages 73-74). Future demand for biodiesel also may be driven by EPA’s RFS targets, and 

certain states have mandated biodiesel purchasing quotas for their public fleets (NGA, no 

date).

 U.S. biodiesel currently is produced at 148 plants, with 

production capacities ranging from one million to 25 million gallons per year (AFDC, 

2009a). As of June 2009, there were 628 biodiesel refueling stations in the United States 

(U.S. DOE, 2009b).

 
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 2.4 Compressed Natural Gas (CNG) and Liquefied 

Natural Gas (LNG)

Overview

Natural gas is a mixture of 

hydrocarbons, primarily methane, 

but also contains ethane and 

propane and small amounts of 

other gases, including hydrogen 

sulfide and water vapor. Natural 

gas is primarily produced from gas 

wells and as a byproduct of crude 

oil production. Supplemental 

sources provide much smaller 

amounts of natural gas, including 

synthetic gas, biogas recovered 

from landfills and other resources 

(see sidebar on page 2-53), and coalderived gas.

In order to be contained in a small 

enough volume to be useful for 

transportation, natural gas must be 

compressed (CNG) or liquefied 

(LNG). Compressed natural gas is 

typically stored at up to 3,600 

pounds per square inch onboard 

vehicles, while liquefied natural gas 

must be purified and condensed 

into liquid by cooling to -260°F. 

Liquefied natural gas use is almost 

exclusively in heavy-duty vehicles (U.S. DOE, 2009h) while CNG is utilized in both lightand heavy-duty applications.

CNG has been commercialized to a more significant degree than LNG, with 781 CNG 

fueling stations nationwide compared to only 36 LNG stations as of June 2009 (U.S. DOE, 

2009b). There were approximately 114,000 CNG vehicles operating in the United States in 

2007, about two-thirds of which were LDVs, and about 3,000 LNG vehicles, essentially all 

of which were HDVs (U.S. DOE, 2007c). CNG vehicles are found in dedicated (natural gas 

only), and bifuel (natural gas or conventional fuel mode) configurations. The majority of 

CNG LDVs in operation have been converted to CNG use by certified technicians. Only 

one original equipment manufacturer (OEM) CNG LDV was available in 2008, the Honda 

Civic GX (Yacobucci, 2008).

Natural Gas

Benefits: Low - Moderate: 

• 15% reduction per vehicle 

• 2.5-5% potential market penetration (LDV) in 2030

Net Included Costs: Net Savings: -$130 per tonne

Confidence in Estimates: Low

• Very low existing market penetration; potential market 

saturation unknown but likely to be limited by 

competition for supply with other sectors

Key Cobenefits and Impacts: Positive

• Potentially lower life-cycle emissions

• Increased energy security due to primarily domestic 

production

Feasibility: Moderate

• Currently limited by high incremental vehicle costs and 

limited refueling infrastructure

Key Policy Options:

• Determine most cost-effective dispatch of natural gas 

across alternative end uses

• Assistance with fueling station expansion

• Incentives for purchase of dedicated CNG vehicles for 

fleets
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In 2006, approximately 43,000 

medium- and heavy-duty CNG 

and LNG vehicles were in 

operation across the country. 

OEM natural gas engines are more 

common in the medium- and 

heavy-duty market, with four 

models available for purchase in 

2008 for various applications, 

including refuse haulers, buses, 

and line-haul trucks. Five certified 

retrofit kits also were available for 

these vehicle types as well 

(NGVAmerica, 2009). The 

transportation sector currently 

consumes about 25 billion cubic 

feet of natural gas per year, or 

about 0.1 percent of total national 

consumption of 23 trillion cubic 

feet.10

For rail transport, LNG is more 

applicable for long-haul railroad 

operations because the fuel 

density is five times greater than 

CNG, reducing the space 

requirement and the required 

frequency of refueling. LNG can 

be stored in a separate tender car 

that is constructed as a double 

walled stainless shell similar in 

design to a thermos bottle, and 

can keep the LNG adequately cold 

for up to 14 days before gas venting is needed. During operation a heat exchanger 

converts the LNG back to a gaseous state which is piped to the engine. Dual LNG/diesel 

engines have been developed and used by Burlington Northern Santa Fe (BNSF) for more 

than a decade, using diesel fuel as an ignition source for LNG combustion, as well as a 

backup fuel if there is a failure in the LNG fuel supply. It is possible that LNG may be 

released from storage tanks if pressure exceeds the tank’s design strength. Little data 

available on LNG venting currently is available, though the practice is not required as long 

as the tank pressure is maintained at a safe level by keeping the fuel at or below -160 C. 

 

10AEO 2009, Table 13.

Biogas

Anaerobic digestion of organic matter produces a mixture of 

gases consisting primarily of methane and CO2 called biogas, 

also known as landfill or digester gas. Sources include sewage 

sludge, agricultural and industrial wastes, animal by-products, 

and municipal solid wastes (AFDC, xxxx). Biogas typically has 

somewhat lower methane content compared to natural gas, 

which typically is more than 70 percent methane. The 

remaining content of natural gas is other hydrocarbons, while 

biogas contains 20 to 50 percent CO2. Biogas must be treated to 

increase the proportion of methane and decrease the CO2 

content and other contaminants (Persson et al, 2006).

After purification, the gas must be transported. Although the 

purified gas can be distributed using the conventional natural 

gas infrastructure, further technology development and testing 

is needed before biogas distribution via the natural gas 

pipeline grid may become common practice.

Purified biogas can substitute for conventional CNG or LNG as 

a vehicle fuel. An estimated 12,000 vehicles worldwide, mostly 

in Europe, are fueled with upgraded biogas. Conversion of 

landfill gas to transportation fuel has the added benefit of 

reducing landfill methane emissions.

Research and development projects are underway to reduce 

costs of producing and purifying biogas as well as to evaluate 

the performance of vehicles using biogas. However, even 

allowing for cost-effective recovery, processing, and delivery 

strategies, the ultimate amount of biogas available for 

transportation use is quite limited. Assuming all of the 

methane from landfills, wastewater treatment facilities, and 

composting could be recovered for transportation use, this 

would translate to only about 2 percent of current gasoline

consumption in the U.S. (based on the 2007 EPA Sources and 

Sinks value of 158.9 Tg CO2e emissions, equating to ~ 3 billion 

gge/yr).
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CNG powered rail engines require more frequent fueling and therefore are more 

appropriate for switch engine applications, limited to rail yard and short-haul operations.

In marine applications, LNG tanker ships have been using boil-off gas as a fuel source 

since 1964, with a long and positive experience using the gas to run the vessel’s steam 

turbines, as well as in diesel power plants. Since 1982, at least 18 natural gas powered 

ships, mainly ferries, have been built worldwide that use CNG, LNG or duel CNG/diesel 

fuel. Most of these vessels use a dual diesel/CNG fuel configuration with excellent 

maintenance histories. Since 2000, Norwegian shipping lines have been developing 

increasingly larger vessels that use LNG, including six LNG ferries and four LNG offshore 

vessels engaged in regular coastal or short sea shipping services. Several large European 

ship builders currently are designing even larger LNG powered vessels.

Magnitude and Timing of GHG Reductions

Life-Cycle Emissions

The GREET model estimates a 12 percent reduction in life-cycle GHG emissions associated 

with bifuel CNG use in LDVs, and 15 percent for dedicated CNG vehicles, the latter being 

roughly comparable to diesel vehicle benefits relative to conventional gasoline vehicles. A 

1999 Argonne National Laboratory (ANL) report estimated long-term GHG reductions for 

CNG (with projected production improvements and modest improvements in vehicle fuel 

economy) between 21 and 26 percent. A study conducted by the Federal Transit 

Administration (Clark et al., 2007) estimated that life-cycle GHG emissions for CNG transit 

buses were approximately equal to those of a comparable diesel bus using ultralow sulfur 

fuel. Based on these estimates, CNG is evaluated in this section as a potential alternative 

to gasoline LDVs rather than for heavy-duty diesel applications, since replacing diesel 

HDVs with CNG HDVs may not result in GHG reductions.11

The 1999 ANL report also estimated that, compared to gasoline used in LDVs, methane 

emissions typically increased by a factor of four for CNG vehicles. Natural gas is largely 

comprised of methane, which is 25 times more potent as a GHG than CO2. A substantial 

portion of the GHGs emitted from the life cycle of natural gas fuels are fugitive emissions 

of methane that escape during transport, storage, or dispensing of the natural gas. 

However, net GHG reductions are still projected for natural gas vehicles by the GREET 

model, which includes estimates of fugitive methane emissions as well as CO2. 

Nevertheless, methane’s high global warming potential merits special precautions to 

minimize fugitive losses during all portions of the production and use cycle.

 

11Although not evaluated explicitly in this assessment, LNG (and CNG) may provide an 

incremental GHG reduction benefit for niche applications in certain gasoline HDV trucks.
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Market Penetration

The future market potential for CNG vehicles is highly uncertain. The AEO Reference case 

only projects a modest increase in the number of CNG LDVs over time, with about 144,000 

vehicles (substantially less than one percent of the total vehicle stock) capable of operating 

on natural gas in 2030.12 On a Btu basis, CNG’s contribution to total LDV fuel 

consumption is even smaller, less than 0.1 percent in both the near and long term.13

CNG vehicles are a proven technology, which could be produced and utilized in 

substantially greater numbers assuming incremental vehicle costs and refueling 

infrastructure issues could be adequately addressed. However, the extent to which 

existing natural gas supplies could be cost-effectively diverted from their primary uses 

(roughly evenly split between residential/commercial, industrial, and electricity 

production; NGA, no date), is uncertain. Such a determination would require 

macroeconomic modeling regarding energy resources at the national and possibly 

international level.

However, as a conservative point of reference it is assumed that between 2.5 and 5 percent 

of current natural gas consumption (0.6 to 1.1 trillion cubic feet per year in 2010)14

Net Impacts

could be 

diverted, or production expanded, for LDV use by 2030 at a minimal cost increase to the 

consumer. This amount of gas corresponds to up to 7.9 billion gge per year, or roughly 3 

percent of light-duty vehicle gasoline use in 2010. Assuming CNG vehicle fuel economy 

values equal to conventional gasoline vehicles, this level of consumption corresponds to 

approximately 10 to 19 million CNG vehicles on the road in 2030. This is substantially less 

than the number of hybrid-electric vehicles (HEV) assumed to be on the road by this time 

under the AEO Reference case, and should be technically feasible.

Applying the GREET GHG reduction estimates for dedicated CNG vehicles, this scenario 

translates to a reduction of approximately 7 to 13 mmt CO2e in 2030 (Table 2.4). As noted, 

this scenario is highly speculative, and could be significantly higher or lower depending 

upon available gas supply, vehicle costs, and infrastructure development status.

 

12AEO 2009, Supplemental Table 58.

13AEO 2009, Supplemental Table 47.

14AEO 2009, Table 14.
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Table 2.4 LDV Penetration and GHG Reductions Utilizing Five Percent 

of Natural Gas Supply

Year

Incremental # CNG LDVs 

(Millions)

Gasoline Saved 

(Mgal/Year)

GHG Reduction 

(mmt CO2e/yr)

2030 9.5-19.0 4.0-7.9 7-13

Cost-Effectiveness

The market price of CNG compares quite favorably with that of gasoline in general. The 

AEO Reference case estimates retail national average CNG prices at $1.76 per gge in 2010, 

compared to $2.14 for gasoline, including taxes.15 After taxes and credits, the near-term 

incremental cost of CNG is estimated to be 33 cents per gallon in 2010.16

A substantial cost savings for CNG is expected to develop in the long run, with CNG 

prices rising only 16 percent between 2010 and 2030, while gasoline prices are projected to 

increase by almost 80 percent over this same period.

 Under these 

assumptions, CNG obtains a savings relative to gasoline (pretax/credit) when retail gas 

prices climb above $2.46 per gallon.

17 Accordingly, a $1.07 per gallon 

savings is estimated for CNG relative to gasoline in 2030. Note this assessment assumes 

that CNG fueling station costs are fully recovered in the fuel sales price.18

 

15See AEO Tables 12 and 13. Cost differentials are volatile, with falling gasoline prices eroding the 

cost advantage of CNG substantially relative to 2008 fuel prices. The Clean Cities reports also 

track the price of CNG over the past few years (U.S. DOE 2009g, p. 14). CNG prices tends to track 

with gasoline and have similar seasonal spikes, in part because some of the supply comes from 

crude oil refining, and in part, because natural gas experiences peak demand in the summer 

similar to gasoline. Similar trends are expected for LNG as liquefaction costs are fairly constant 

over the year, although a much smaller market exists and less price data has been collected for 

LNG relative to CNG.

16Assuming 18.3 cents per gge federal tax, no state tax, and a 50 cent per gge excise tax credit for 

CNG.

17AEO Tables 12 and 13.

18Fueling station costs are roughly $500,000 per California Energy Commission (2006). The above 

CNG prices assume the use of “fast-fill” retail stations. If fueling is performed using home 

refueling units, an additional cost savings of about 15 cents per gge could be obtained. 

(http://www.eia.doe.gov/oiaf/archive/aeo08/gas.html) Home refueling requires an additional 

(Footnote continued on next page...)
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Incremental costs for CNG LDVs range from approximately $3,000 to $6,000 for original 

equipment manufacturer (OEM) vehicles (NGA, no date), to approximately $15,000 for 

conversion of an existing gasoline vehicle (NGVA, 2009). Much of the costs to the vehicle 

owner may be defrayed through tax credits, however. This analysis assumes the use of 

dedicated OEM vehicles in the medium to long term. In this timeframe, OEM vehicle costs 

would likely decrease under higher production volume scenarios (NGA, no date). 

Accordingly, the lower value of $3,000 is assumed for the 2030 assessment.

Table 2.5 summarizes the incremental costs, savings, and emission reduction benefits 

associated with CNG use as an alternative to gasoline LDVs in 2030, with an estimated 

cost-effectiveness of -$132/tonne. One estimate was identified in the literature regarding 

potential cost-effectiveness of CNG vehicles in the medium term (McKinsey, 2009, page 

100), at approximately -$50/tonne. These negative cost per tonne values are likely the 

result of large fuel savings assumed in these analyses.

Table 2.5 CNG per Vehicle Cost and Cost-Effectiveness Ranges by Time 

Period

Year

Incremental 

Vehicle 

Cost MPGGEa

Lifetime 

Gasoline 

Saved 

(Gallons)

Discounted 

Fuel 

Savingsb

Net 

Discounted 

Cost/Savings

Average GHG 

Reduction 

(Tonnes/Year)

Dollars/

Tonne –

Calculated

2030 $3,000 28 6,500 $4,460 -$1,460 0.7 -$132 to -$50

a Equal to AEO 2030 conventional gasoline vehicle.

b Using pretax AEO gasoline and CNG gge price projections for 2030 (long-term) of $3.43 and $2.36, 

respectively.

Cobenefits

Natural gas, as either LNG or CNG, is clean-burning and emits somewhat lower levels of 

particulate matter and ozone precursors compared to gasoline or diesel light-duty 

vehicles. The GREET model estimates life-cycle reductions for dedicated CNG LDVs 

relative to conventional gasoline vehicles, as shown in Table 2.6. The differentials may 

vary, however, depending upon the gasoline vehicle emissions control technology.

 

$4,500 for the necessary slow-fill equipment (CRS, 2008). This analysis assumes exclusive use of 

fast-fill retail stations.
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Table 2.6 Emissions for Natural Gas (CNG) versus 

Conventional Gasoline

Pollutant Percent Change versus Light-Duty Gasoline

VOC -45%

CO 0%

NOx -20%

PM10 -9%

PM2.5 -20%

SOx +11%

In addition, about 90 percent of all natural gas consumed in the United States is 

domestically produced, thereby improving energy security relative to current petroleumbased fuels.

Feasibility

As discussed above, CNG LDVs have relatively high incremental vehicle costs and limited 

fueling infrastructure. In addition, CNG LDVs also have significantly decreased 

operational range compared to comparable gasoline vehicles, due to the lower energy 

density of natural gas, even when under pressure. For example, the dedicated CNG 

Honda Civic can only accommodate a 7.2 gge storage tank, limiting its operating range to 

170 miles (Honda, 2009). Operating range can be extended, especially when converting 

light trucks and SUVs, by increasing tank capacity, but at the cost of lost storage and 

hauling capacity (NGVAmerica, 2009).

CNG LDVs have excellent safety records on the whole. CNG tanks are made to withstand 

very high pressures and temperatures to minimize safety problems. The odorant ethyl 

mercaptan also is added to natural gas to aid in leak detection for CNG, although odorants 

are not added to LNG. In addition, engine maintenance requirements appear to decline in 

natural gas engines relative to conventional engines, due to the very clean burning 

properties of the fuel, which may in turn result in extended engine life.

Despite the acceptance of LNG as a transportation fuel, there are a few safety concerns 

associated with its use. Some of the potential dangers include cryogenic burns, lung 

damage, and asphyxiation. LNG also can vaporize to the gaseous phase leading to 

extremely high pressure buildup; hence, pressure release valves are used to prevent 
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rupturing of tanks and piping systems (Battelle, 2002). Therefore fleet technicians and 

maintenance personnel must be trained in the use of cryogenic fuel systems. However, 

between 1980 and 2002 only four vehicle-related LNG accidents were reported in the 

United States, none involving fatalities (Foss, 2003).

With respect to infrastructure requirements, natural gas is widely used as a fuel 

throughout the United States, accounting for approximately one-quarter of total energy 

consumption, but only one-tenth of one percent is used for transportation. Despite the 

small amount used for transportation, the infrastructure is largely in place to distribute 

CNG much more widely throughout the United States for vehicle use. Natural gas is 

transported by 300,000 miles of transmission pipeline throughout the 48 contiguous states 

with an additional 1.9 million miles of pipeline available for use within utility service 

areas. There also are hundreds of storage facilities, and over 50 points for importing and 

exporting natural gas. “fast-fill” CNG fueling stations are found in all but four states, 

although many of the 775 locations are restricted access for private fleet use. These 

stations require significant equipment purchases, including large compressors and 

dispensing equipment to allow for fueling in a matter of minutes.

Given the increase in CNG LDV market penetration evaluated above, a large increase in 

the number of CNG fueling stations would be required. Assuming the same average 

number of vehicles could be served by a CNG station as are served at conventional 

gasoline stations today (roughly 1,900 vehicles per station in the U.S.; Kushner, 2009), this 

equates to an additional 10,000 CNG stations, requiring sizable investment. In addition, 

this number is likely to be even higher in order to provide the necessary geographic 

coverage for nationwide support of 19 million CNG vehicles.

CNG vehicles also may be fueled in private residences or garages using a “slow-fill”

process. CNG home fueling appliances are available that can be installed outside or in a

garage to fuel a CNG vehicle overnight. With approximately 55 percent of households 

having natural gas hookups (U.S. DOE, 2009f), this option can help facilitate CNG vehicle 

market penetration until public refueling infrastructure expansion can take place. Cost is a 

potential barrier, however.

LNG is less accessible than CNG as there are fewer fueling stations in place, and only a 

few large-scale liquefaction facilities in operation. Liquefaction can occur either on or off 

fueling station property. However, liquefaction would either have to be performed at each 

fueling station or many more large scale liquefaction facilities would need to be built so 

that LNG could be transported directly to the station by tanker truck.

Some limited expansion of LNG availability may be facilitated by the increase in LNG 

import capacity in the United States over the last few years. As of 2007, four LNG import 

terminals were operating in the United States, located in Massachusetts, Maryland, 

Georgia, and Louisiana, with three additional terminals under development in Texas. The 

design capacity of these facilities ranges from 725 to 2,600 million cubic feet of gas per day 

(U.S. DOE, 2007b). However, these facilities are intended for regasification for gas pipeline 

distribution, and LNG would have to be diverted by tanker truck for transportation use. 
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Given the limited economical range of tanker truck deliveries, LNG import impacts would 

likely be limited to areas near these terminals.

One other potential benefit of expanding CNG usage in the short run is that it could 

facilitate hydrogen use in the future. Natural gas itself is the number one source of 

commercial hydrogen used in the United States, so natural gas distribution lines could be 

used to bring natural gas to fueling stations where it could in turn be converted to 

hydrogen. This could be an early step to help create demand for a hydrogen fuel economy

and is being done at a number of the roughly 60 hydrogen fueling stations across the 

country.

While these projections do not anticipate natural gas vehicles becoming a large component 

of the overall fleet mix, the potential exists for increases in the short run, primarily among 

fleet vehicles with centralized fueling and high fuel costs. As discussed above, the price of 

natural gas is most often comparable to or lower than gasoline; the distribution pipeline is 

in place; vehicles may be fueled overnight at home; natural gas is produced almost 

exclusively domestically; and hundreds of fueling stations already exist.

Along with electricity and hydrogen, natural gas is “fungible,” with multiple end use 

options. In addition to transportation and home heating, natural gas has a substantial role 

in the energy sector producing electricity. In fact, electricity generated using natural gas 

averages 1.18 pound CO2 per kilowatt-hour (kWhr), compared to an average value of 2.14 

pound per kWhr for coal fired units.19

 

19Combustion emissions (rather than life cycle), from eGRID2006V2_1_plant.xls.

 Thus, to the extent that multiple end use options 

are available, replacing coal power with natural gas offers substantially greater GHG 

reduction potential (about 50 percent) than its use in transportation (about 15 percent). In 

fact, increased demand for natural gas resulting from carbon limits placed on electrical 

generating units may limit CNG and LNG availability for transport greatly, although a 

detailed analysis of such impacts is beyond the scope of this assessment.
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 2.5 Liquefied Petroleum Gas (LPG)

Overview

Liquefied petroleum gas (LPG), also 

known as propane, can be used to 

replace gasoline and diesel. LPG is the 

fourth most common vehicle fuel, 

behind gasoline, diesel, and natural 

gas,20 although less than two percent of 

U.S. consumption of LPG is used for 

transportation.21

Domestic LPG sources are divided fairly 

evenly between byproducts of crude-oil 

refining and byproducts of natural gas 

processing. Domestic LPG demand is not high enough to justify importing oil specifically 

for the purpose of creating LPG, meaning the supply of LPG is relatively constant 

throughout the year. Recently, researchers at MIT have demonstrated the ability to make 

“biopropane,” which is LPG made from corn or sugarcane, and have created a startup 

company that is attempting to scale up the production process of LPG from corn and 

sugarcane (

 LPG vehicles are found 

in both light- and heavy-duty 

applications, such as service trucks and 

buses. Like CNG vehicles, LPG vehicles 

can be designed for dedicated alternative 

fuel use, or for bifuel configurations 

which allow for operation on gasoline as 

well.

Bourzac, 2007). In the end however, this production method will likely only be 

viable as a niche option to produce LPG given the competition for corn feedstock for 

ethanol production and food and because sugarcane is not a viable large scale feedstock in 

the United States.

In 2006, there were approximately 94,000 light-duty LPG vehicles in operation in the 

United States, and about 70,000 medium- and heavy-duty LPG vehicles (U.S. DOE, 2007b). 

The vast majority of LD LPG vehicles were converted from gasoline cars and trucks, and 

no light-duty OEM models currently are available for purchase. Several OEM LPG 

 

20AEO 2009, Supplemental Tables 47 and 67.

21AEO 2009, Table 2.

Liquefied Petroleum Gas

Benefits: Low: 

• 17% reduction per vehicle 

• Minimal market share

Net Included Costs: Not calculated

Confidence in Estimates: High

• Limited by fuel supply and inherently higher costs

Key Cobenefits and Impacts: Positive

• Potentially lower life-cycle emissions

Feasibility: High

• Existing distribution infrastructure

Key Policy Options:

• Consider incentives for niche applications such as 

fleet vehicles
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engines are available for heavy-duty vehicle use, including delivery trucks, school and 

shuttle buses, and recycling trucks (Propane Council, 2009).

LPG stations can be found throughout the country. There were over 2,200 LPG fueling 

stations nationwide, as of June 2009, making it the most widely available alternative fuel in 

the United States today (U.S. DOE, 2009b).

In marine applications LPG-powered vessels have been used as a replacement for 

relatively small (from 5 to 60 horsepower) gasoline-powered vessels. Due to the lower 

energy content of LPG, there is a 10 to 15 percent power loss at high-speed especially 

under load; therefore, it is not an effective alternative fuel for freight movement. Similarly, 

LPG is not an option for rail modes.

Magnitude and Timing of GHG Reductions

Life-Cycle Emissions

Unlike natural gas, propane does not have a significant direct global warming potential 

when released into the atmosphere, although it does have indirect impacts.22

Market Penetration

 A report by 

Argonne National Laboratory (ANL, 1999) combined emissions data from three primary 

studies to determine the effects of LPG on LDV emissions. These results were used in the 

GREET model for a comparison with LDVs running on gasoline. The analysis found that 

LPG reduced GHG emissions by 21 to 24 percent (including a methane emissions increase 

of 10 percent). The cited GHG reductions are for LPG produced from natural gas. For the 

current industry average LPG supply (60 percent produced from natural gas, 40 percent 

from crude oil), GREET 1.8b estimates GHG reductions of 17 percent for LPG vehicles 

compared to gasoline vehicles. As with natural gas vehicles, GHG levels associated with 

LPG are roughly comparable to those from diesel vehicles; therefore, use of LPG in heavyduty vehicles is not analyzed as a GHG reduction strategy.

The EIA’s short-term outlook for LPG production predicts fairly constant levels over the 

next few years. U.S. natural gas liquids production (of which over 95 percent is LPG) is 

 

22 Indirect global warming potential (GWP) occurs through the affect on terrestrial radiation 

absorption by influencing the formation and destruction of tropospheric and stratospheric ozone, 

or by affecting the absorptive characteristics of the atmosphere. Propane is estimated to have an 

indirect GWP of 3.3 (IPCC, no date). To the extent that LPG vehicle use leads to fugitive propane 

emissions associated with additional production, storage and/or distribution, some amount of 

GHG enhancement may be expected. However, the life cycle approach adopted for this analysis 

only includes direct GWPs.
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predicted at approximately 25 billion gge from 2008 through 2010.23

Even at these production volumes, however, the potential for LPG to significantly 

penetrate the transportation market appears limited. First, the price of LPG is typically 

higher on a gge basis than conventional gasoline, as discussed below. In addition, LPG 

and gasoline prices are related, since a large portion of LPG is produced from crude-oil 

refining. Most importantly, the total production capacity for LPG is highly limited 

because it is a byproduct of crude-oil refining and natural gas processing. This means that 

allocating more LPG for the transportation sector would necessitate cutting the amount of 

LPG used in the residential, commercial, and/or petrochemical sector, where alternative 

supply options may be tightly constrained. While the infrastructure to store and distribute 

LPG seems to be adequate to allow for expanded use in transportation, the LPG supply 

cap will ultimately be limiting.

 EIA projects longterm production decreasing in future years, from about 23.9 to 22.1 billion gge per year 

between 2015 and 2030 (U.S. DOE, 2009a).

Net Impacts

These facts, combined with the relatively high incremental cost of converting vehicles to 

LPG use, have inhibited the market penetration potential of LPG in the transportation 

sector for years despite the incipient commercial infrastructure in place. The AEO 

Reference case even projects a declining LPG LDV stock over time, falling from 

approximately 85,000 in 2008 to about 14,000 in 2030 (Supplemental Table 58). The 

Reference case also assumes very modest increase in medium- and heavy-duty LPG 

vehicles during this time, from about 66,000 units in 2008 to 75,000 units in 2030 

(Supplemental Table 67). The corresponding 2030 fuel consumption levels for 2030 are six 

million gge for LDVs and 112 million dge for medium- and heavy-duty vehicles in 2030.24

Cost-Effectiveness

 

At these LPG consumption levels GHG emission reductions equate to 230,000 metric tons 

per year. However, given the limited potential for increased LPG market share, 

quantitative estimates of GHG reduction potential beyond the AEO baseline, and 

associated costs and cost-effectiveness, are not presented for LPG LDVs.

The market price of LPG is often higher than gasoline on a gge basis. According to the 

AEO Reference Case, retail LPG prices are estimated to be $2.51 per gge in 2010, and $4.11 

in 2030 (Table 12). Netting out taxes (which average 26.3 cents per gallon for LPG and 38.7 

 

23From 1.80 million barrels of LPG per day at 4.45 million BTUs per barrel.

24Supplemental Tables 47 and 67, respectively, and assuming 84,300 Btu/gallon of LPG.
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cents per gallon for gasoline), the cost differential between the LPG and diesel comes to 50 

cents per gge in 2010, and 41 cents per gge in 2030.

The negligible variance in fuel cost increase is to be expected, as the LPG market price 

tracks very closely with oil and gasoline since much of it is produced as a byproduct of 

crude-oil refining and it competes with crude-oil-based fuels in the market. The price 

volatility of the two fuels is comparable, except that LPG also is susceptible to a wintertime 

price peak. The supply of LPG is relatively constant as it is tied to crude oil and natural 

gas production. As a result, when wintertime demand increases due to its use as a heating 

source, there is no way to increase supply, so prices typically spike, as shown in the figure.

Incremental costs for light-duty OEM LPG vehicles ranged from $1,000 to $2,000, when 

last produced in the early 2000s (Yacobucci, 2005). Light-duty vehicle conversions are 

significantly more expensive, ranging from $4,000 to $12,000 (AFDC, 2009a). Much of the 

costs to the vehicle owner may be defrayed through extensive tax credits, however.

Cobenefits

The GREET model estimates reduced emissions for LDV LPG use, for all criteria 

pollutants, with the largest reductions found for VOC and PM. CO reductions are 

negligible compared to gasoline, however (Table 2.7).
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Table 2.7 Life-Cycle Emissions for Liquid Petroleum Gas versus 

Conventional Gasoline

Pollutant Change in Emissions versus Gasoline

VOC -35%

CO 0%

NOx -14%

PM10 -47%

PM2.5 -38%

SOx -14%

Feasibility

LPG is generally regarded as an exceptionally safe transportation fuel. LPG has the lowest 

flammability range of all alternative fuels, and LPG tanks are 20 times more puncture 

resistant than gasoline tanks. Additionally, an odorant, ethyl mercaptan, is typically 

added to quickly identify tank leaks (AFDC, 2009a). For marine vessel applications, there 

is a safety concern because LPG is denser than air, and it tends to accumulate in ship hulls 

in concentrations that could be explosive. There is a similar concern for LPG vehicles in 

enclosed spaces, which may require additional ventilation systems to avoid pooling of 

vapors.

While there is a range penalty associated with dedicated LPG vehicles due to the fuel’s 

lower energy density compared to gasoline (~20 percent), increasing tank volumes can be 

used to offset this limitation to some degree. Vehicle performance is similar to comparable 

conventional vehicles, while maintenance costs and engine life may be improved due to 

LPG’s clean burning properties (AFDC, 2009a).

Because LPG already is used extensively around the country for numerous purposes, the 

infrastructure for bulk production, storage, and distribution already is in place. 

Infrastructure costs related to expanding LPG’s use as a transportation fuel would thus 

primarily be related to expanding the distribution network by converting existing gas 

stations and building new LPG stations. The conversion from a gas station to an LPG 

station is straightforward, only requiring the installation of a tank, pump, and metering 

equipment.
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 2.6 Synthetic Fuels

There are a number of synthetic fuels in various stages of research and development with 

potential for use in the transportation sector. Synthetic fuels typically utilize fossil fuels 

such as coal or natural gas as their feedstock, although biomass sources such as vegetable 

oils and fats also may be used. Depending on engine type and application, these fuels may 

be substituted directly for conventional fuels with little to no modification to existing 

engines or fueling infrastructure. Synthetic jet fuel can be used directly or blended with 

conventional jet fuel in existing aircraft engines without modification. Synthetic fuels also 

contain almost no sulfur species or aromatics. Therefore, sulfur emissions from 

combustion are essentially zero, VOC emissions extremely low, and particulate matter can 

be reduced 50 to 90 percent. In most cases, however, substantial uncertainty remains 

regarding the cost and production potential for these fuels.

The following provides a brief overview of several of the more promising synthetic fuels 

under evaluation today.

Fischer-Tropsch (FT) Fuels

The Fischer-Tropsch (FT) process converts gaseous hydrocarbons into liquid fuel. The gas 

sources used include natural gas and gasified coal or biomass, each described briefly in the 

following sections. Use of the FT process to convert natural gas into liquid fuels has been 

done on a commercial scale for decades in South Africa, and more recently in Europe and 

Thailand. Most major oil companies have announced plans to investigate gas-to-liquid 

production of diesel. In the United States, more than 400,000 gallons of natural gasderived liquid fuels, including diesel and jet fuel, have been produced by Syntroleum at a 

demonstration plant. DOE supports research and demonstration projects for GTL 

production and use in vehicles through its Vehicle Technologies Program, which includes 

the National Renewable Energy Laboratory’s work on nonpetroleum-based fuel use in 

vehicles (U.S. DOE, 2009d).

While natural gas and coal are still fossil fuels, use of these fuels to produce FT diesel may 

have some advantages over conventional diesel. However, current production methods 

using conventional fossil fuel feedstock appear to increase life-cycle GHG emissions 

relative to conventional diesel. For example, one DOE evaluation found that coal-based 

feedstocks more than doubled GHG emissions per mile for an SUV relative to 

conventional diesel. Natural gas feedstocks had less impact, but still increased emissions 

by roughly 20 to 60 percent depending upon the source of gas. 

Regardless of the feedstock used, Fischer-Tropsch diesel can be substituted directly for 

conventional (petroleum-derived) diesel to fuel diesel-powered vehicles without 
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modification to the vehicle engine, distribution infrastructure, and fueling infrastructure. 

FT fuels also are considered ultralow sulfur.

Biobutanol

Butanol derived from biomass feedstock is referred to as biobutanol. Like ethanol, butanol 

is suitable for blending with gasoline. The energy content of butanol is higher than 

ethanol but lower than gasoline. EPA considers gasoline blends with up to 11.5 percent 

butanol to be operationally similar to pure gasoline (AFDC, 2009a). Testing of higher 

concentrations of biobutanol in current vehicles has been limited, so it is uncertain what 

upper limit of biobutanol blend can be used without requiring vehicle modifications. 

Although butanol is generally being considered as a gasoline blend component, a 

preliminary study by Argonne National Laboratory (cited at the Green Car Congress web 

site) has shown that use of butanol as a blending agent in diesel fuel reduces emissions of 

particulate matter without significantly increasing NOx.

Biobutanol also does not cause corrosion and water contamination problems as does 

ethanol, so biobutanol could likely use existing gasoline infrastructure for distribution. 

Biobutanol would not require new or modified pipelines, blending facilities, storage tanks, 

or retail dispensing pumps. In addition, relatively minor modifications are required to 

adapt existing ethanol facilities to produce butanol.

Processes to produce butanol by fermentation of biomass have existed for many years, but 

these processes have been more expensive than production of petrochemicals. However, 

there are several efforts currently underway to produce biobutanol more efficiently and 

economically. Nevertheless, the long-term production potential and costs for biobutanol 

remain highly uncertain at this early stage of development (Lammers, 2008). Furthermore, 

production of biobutanol results in significant volumes of acetone as a byproduct, and it is 

not clear what would be done with this acetone if biobutanol were produced on a large 

scale (Smith, 2009).

Biomass-to-Liquids (BTL)

Most BTL processes today are either a) gas-to-liquid processes, in which biomass is first 

converted into a gas, then to a liquid, or b) pyrolysis processes in which biomass is 

decomposed in the absence of oxygen to produce a liquid oil. In the gas-to-liquid process, 

biomass is heated with insufficient oxygen for complete combustion, producing synthesis 

gas (syngas) composed of carbon monoxide and hydrogen. There are a variety of 

commercial processes that can be used to convert syngas into useful products, including 
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fuels and chemicals, or syngas can be burned to produce electricity. Currently, there are 

no commercial biomass gas-to-liquids producers in the United States.

Pyrolysis, also known as thermochemical conversion, produces oil that can be burned like 

fuel oil or refined into fuels and chemicals. Production of energy and chemicals from 

pyrolysis oil is being done at several commercial facilities, and high-quality hydrocarbon 

fuels have been produced from pyrolysis oil in demonstration projects, but not on a 

commercial scale.

BTL technology is relatively immature, with research focusing on improving process 

efficiency and economics. DOE is working to produce biosyngas suitable for commercial 

fuel applications.

In addition to compatibility with existing vehicles and fuel infrastructure, other benefits of 

BTL fuels include use of renewable feedstock, carbon-neutral combustion emissions 

(return to the atmosphere of carbon dioxide removed from the atmosphere during biomass 

growth), similar or better vehicle performance compared to conventional fuels, and 

reduced exhaust emissions of regulated substances. 

Coal-to-Liquids (CTL)

As its name implies, CTL technology involves converting coal into liquid fuel, via the FT 

process (the dominant CTL process) or direct liquefaction. Commercial CTL fuel 

production already is occurring, and research is underway to improve production 

efficiency and economics and develop FT CTL projects on a commercial scale. In the 

Bergius hydrogenation process, a direct liquefaction process, coal is reacted with hydrogen 

to produce liquids that can then be refined into synthetic fuels.

Both CTL and gas-to-liquid FT diesel processes increase greenhouse gas emissions relative 

to conventional diesel, but carbon sequestration technologies may be used for mitigation in 

the future if these technologies are successfully developed. A recent report from the DOE 

National Energy Technology Laboratory (NETL) concluded that CTL with carbon capture 

and sequestration (CCS) could result in 5 to 12 percent lower life-cycle GHG emissions 

compared to conventional diesel. The synthetic fuel is economically competitive with 

petro-diesel when crude oil prices rise above $86 per barrel. Adding eight percent biomass 

to the CTL process (with CCS) results in a fuel with 20 percent lower life-cycle GHG 

emissions, and is economically competitive with conventional diesel at oil prices at or 

above $93/barrel (Green Car Congress, 2009). However, CCS technologies require 

additional development and demonstration before this option is considered a viable GHG 

reduction strategy.
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Hydrogenation-Derived Renewable Diesel (HDRD)

Fats or vegetable oils that have been processed in a refinery and used alone or blended 

with petroleum are known as HDRD, sometimes called a “second-generation biodiesel.” It 

is expected that HDRD, like FT diesel, can substitute directly for conventional diesel 

without requiring modifications to engines or infrastructure. However, further testing is 

needed.

Although HDRD research is well advanced and close to full commercialization, HDRD is 

not yet widely available. A number of companies have commercial trials underway, 

although long-term costs and production potential remain uncertain. Gasoline can be 

produced by a similar process, but this process is less developed.

Because the HDRD process uses existing oil refinery capacity, extensive new production 

facilities are not required. Other benefits include use of renewable resources, carbonneutral combustion emissions, anticipated compatibility with existing vehicle engines and 

fuel infrastructure, fuel properties that suggest similar or better vehicle performance 

compared to conventional diesel, and ultralow sulfur content.
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 2.7 Alternative Aviation Fuel

The fuel burned in turbo-fan and turbo-prop aircraft engines is unique in that it is 

kerosene-based fuel.25

Studies of alternative aviation fuels have been implemented by a large number of 

government agencies such as the U.S. DOT’s Volpe National Transportation Systems 

Center, the Federal Aviation Administration, U.S. Department of Defense (DOD), and the 

National Aeronautics and Space Administration (Esler, 2007), as well as the Canadian 

National Research Council’s Institute for Aerospace Research, and the European 

Commission’s Sustainable Way for Alternative Fuel and Energy in Aviation (SWAFEA) 

program within the Directorate General for Energy and Transportation. Information 

concerning alternative aviation fuels is shared with diverse stakeholders through 

programs such as the Commercial Aviation Alternative Fuels Initiative (CAAFI) and the 

International Civil Aviation Organizations (ICAO) that seek environmentally sustainable 

aviation fuels options that are economically viable.

 And unlike other transportation modes that can operate on a range 

of fuels, aircraft engines require fuels with highly specific characteristics, making 

alternative aviation fuel options for commercial air passenger and freight transport more 

challenging. Extensive studies are required to evaluate fuel performance, potential safety 

concerns, international fuel availably, and changes to existing infrastructure 

(aircraft/engine designs as well as fuel distribution systems). Changes to aviation fuels 

require industry and user consensus achieved through the standard setting bodies: ASTM 

International in United States and DefStan in the United Kingdom.

Most aviation fuel research has focused on four general classes of alternative fuels which 

include cryogenic fuels (such as liquid hydrogen, methane, LPG, butane, or other 

petroleum gases), alcohol fuels (for example, ethanol, and methanol), biofuels, and 

synthetic fuels (Daggett et al., 2006).

Cryogenic and alcohol fuels currently are not viable as replacements for conventional 

kerosene-based jet fuels as they have low-energy density, requiring more fuel to provide 

the same performance as conventional jet fuel. A much larger wing would be required for 

fuel storage, and aircraft engines would have to provide significantly more thrust to 

compensate for the greater weight of the modified aircraft and associated fuel.

Synthetic jet fuels are derived through use of the Fischer-Tropsch (FT) process described 

previously. In 2009, ASTM International approved a new specification for commercial use 

of a 50 percent blend of synthetic jet fuel made from any feedstock including coal, gas or 

 

25While piston propeller aircraft consume aviation gasoline, kerosene-based jet fuel use is 

approximately 100 times greater than aviation gasoline. As such, only alternatives to kerosenebased fuel are considered herein. (http://www.eia.doe.gov/emeu/states/sep_fuel/html/

fuel_av_jf.html).
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biomass. Synthetic jet fuel from coal made by SASOL at the Secunda plant in South Africa 

is being sold for jet aviation applications. Synthetic fuel represents the only currently 

approved “drop-in” alternative fuel for the commercial aviation industry, in that it can be 

applied directly to aviation applications without changes to existing aircraft engine or 

frame design or the existing aviation fuel distribution system (Hileman et al., 2008).

Synthetic fuels are attractive as they have low concentrations of sulfur and aromatics and a 

slightly higher hydrogen to carbon ratio. Use of these fuels in aviation application provide 

significant reductions in sulfur and hydrocarbon emissions (Brown et al., 2008). Emissions 

of particulate matter are reduced 50 to 90 percent while combustion CO2 emissions can 

drop by two to four percent (Blackwell, 2007; Chevron, 2006). As noted earlier, however, 

when life-cycle emissions are taken into consideration CO2 can increase significantly 

depending upon the feedstock used in the process.

Alternatively, jet fuel can be created from animal fats, plant oils, sugars, and cellulose; 

these products are often referred to as hydroprocessed renewable jet (HRJ) fuels and have 

nearly the same weight, volume, and energy characteristics as petroleum-derived jet fuel. 

HRJ fuels are seen as attractive for a variety of reasons, one of which being that when lifecycle emissions are taken into consideration they can have a positive effect on greenhouse 

gas emissions because all of the carbon in the finished fuel originated in the atmosphere as 

CO2 which has been absorbed by plants that were turned into oils or fed to animals and 

converted into fats (Syntroleum, 2009; Green Car Congress, 2007).

The U.S. Department of Defense’s Defense Advanced Research Projects Agency (DARPA) 

in conjunction with the Energy and Environmental Research Center’s National Alternative 

Fuels Center at the University of North Dakota are investigating a variety of affordable 

alternatives to petroleum-based JP-8, include biofuels derived from agricultural (e.g., soy, 

palm, canola, and coconut oil, and inedible oils such as jatropha and camelina and animal 

fats) and aquacultural (i.e., algae) feedstock materials that are noncompetitive with food 

sources. The goal of the BioFuels – Alternative Feedstocks study is to reduce the military’s 

reliance on nonrenewable and imported sources of oil. DARPA is evaluating the 

technological feasibility of developing fuels from these alternative feedstocks, as well as 

the anticipated cost of these fuels (U.S. DOD, 2009). Similar studies currently are being 

implemented in the private sector by aircraft and engine manufacture such as Boeing, 

General Electric, and Rolls-Royce as well as many of the major airlines.

In order for bio HRJ fuels to meet stringent commercial aviation fuel standards, these fuels 

need to be refined in a hydrotreatment process similar to that used for Hydrogenation–

Derived Renewable Diesel (HDRD). The higher costs for processing put HRJ fuels at a 

higher price than HDRD. As jet fuel prices increase in the future HRJ fuels may be a 

competitive option relative to existing petroleum products. Alternatively, cost impacts can 

be reduced by blending biojet fuel with conventional jet fuel. In 2009, ASTM International 

approved specification for 50 percent blend of FT fuel. Specification approval for 50 

percent hydrotreated renewable jet fuel is expected in 2010.
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 2.8 Hydrogen

Overview

Hydrogen gas can be used in two 

important ways within America’s 

transportation sector. First, it can be 

burned directly in a hydrogen internal 

combustion engine (HICE) to power a 

vehicle; and second, it can be combined 

chemically with oxygen from the air 

within a fuel cell to create an electric 

current which can be used to power a 

hydrogen fuel cell vehicle (HFCV). 

HICEs can be used in a conventional 

configuration or in hybrid configurations 

(similar to today’s gasoline-electric 

hybrids). A small number of vehicles 

have also been built that can switch 

between hydrogen and gasoline, and can 

operate on gasoline as the need arises 

due to the lack of a hydrogen fueling 

infrastructure.

Hydrogen fuel cells show potential for 

transformative efficiency gains; vehicles 

have been shown to operate with 

on-road efficiencies of 40 to 70 percent, 

i.e., 40 to 70 percent of the energy 

contained in the fuel is put to useful 

work (U.S. EPA, 2007; NREL, 2009b). 

This is substantially higher than the 25 to 

30 percent efficiency of most internal 

combustion engines in use today. 

Figure 2.2 provides recent test results 

showing the potential efficiency advantage of HFCVs compared to conventional gasoline 

internal combustion engine (“Ref ICE”) as well as various HICE configurations 

(conventional, split, and series hybrid). The focus of this report is on HFCVs.

Hydrogen Fuel Cell Vehicles

2030 Benefits: Moderate-High: 

• 40-55% reduction per vehicle 

• 18% potential market penetration (LDV) is high 

estimate from literature

2050 Benefits: High: 

• 79-84% reduction per vehicle 

• 60% potential market penetration (LDV) is high 

estimate from literature

Net Included Costs: Net Savings to Moderate Cost: -

$160 to +$70 per tonne

• Some studies show much higher costs – range of -

$200 to +$800 from literature

Confidence in Estimates: Low

• Development of both vehicle technology and fuel 

production/distribution infrastructure are highly 

uncertain

Key Cobenefits and Impacts: Mixed/Uncertain

• Current modeling shows decreases in some 

pollutants but increases in PM; will depend upon 

fuel source

Feasibility: Low-Moderate

• New distribution infrastructure required

Key Policy Options:

• R&D on fuel cell technology, hydrogen storage 

technology, and hydrogen production technology 

(including non-fossil energy sources)

 
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Figure 2.2 Gasoline and Hydrogen Vehicle Fuel Economy

Gasoline-Equivalent

 

Fuel Economy (mpg)

Ref.

ICE

Conv.

HICE

Split Hybrid 

HICE

Series 

Hybrid 

HICE

Fuel Cell 

HEV

0

10

20

30

40

50

60

70

Source: U.S. DOE, 2008d.

Hydrogen fuel cells may be adopted in both light- and heavy-duty applications. Most 

auto manufacturers are actively researching HFCV transportation technologies and testing 

prototype passenger vehicles, and several North American cities also are testing fuel cellpowered transit buses. The AEO Reference case estimates approximately 300 HFCVs are 

on the road in the United States as of 2009 (Table 58). In addition, there were 

approximately 60 hydrogen fueling stations in the United States in June 2009 (U.S. DOE, 

2009b).

Locomotives equipped with fuel cells also are being developed. In 2002, a 3.6 tonne, 17 

kW hydrogen fuel cell-powered mining locomotive was demonstrated in Val-d’Or, 

Quebec, (Sandia National Laboratories, 2002) while in 2007 a demonstration “hydrail”

went into service in Kaohsiung, Taiwan (East Japan Railway Company, 2006). Currently, 

BNSF is working with Vehicle Projects LLC to develop a fuel cell-powered yard 

locomotive (BNSF, 2008).

Fuel cell applications for the marine sector have been studied for many years, initially by 

the military and researchers involved in submarine activities. Most of these applications 

focus on auxiliary power units that generate electricity to meet vessel electrical needs; for 

example, in the 1980s the U.S. Navy installed a 30 kW fuel cell powered system on the 

Deep Quest submarine vehicle.
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Recently fuel cells also have been considered for propulsion of passenger ferries and 

tourist boats. This includes the European Union-funded ZEMship, a 100 passenger boat 

which started operation in the summer of 2008 in Hamburg, Germany. This vessel is 

equipped with two 50kW fuel cells that provide energy for propulsion. In addition, 

hydrogen hybrid harbor tugs also are being designed for use in European harbors.

While hydrogen is one of the most abundant elements on Earth, almost all hydrogen is 

combined with other elements, forming such materials as water and fossil fuels. Several 

basic processes can be used for production of hydrogen. Hydrogen can be produced at 

central plants from natural gas via steam reforming, from electrolysis of water using solar 

energy via photovoltaics, from nuclear energy via thermochemical cracking of water or 

electrolysis, or from gasification of coal with carbon dioxide sequestration or biomass 

gasification. At refueling stations, hydrogen can be produced by steam reforming of 

natural gas, electrolysis of water using grid or renewable electricity, or from steam 

reforming of bioderived liquids, ethanol, or methanol.

At this time fossil fuels are the primary source of hydrogen production with 

approximately 99 percent of current consumption by industrial processes at chemical and 

refining facilities (EIA, 2008). DOE describes these industrial operations as limited in scale 

and not capable of providing the technology advances and carbon management required 

for the widespread use of hydrogen as a transportation fuel (U.S. DOE and U.S. DOT, 

2006).

Providing a hydrogen fuel production and distribution network to support HFCVs 

presents several challenges, as discussed in more detail under “feasibility.” Large 

investments are required to establish hydrogen production facilities and a convenient 

hydrogen distribution system to serve the general public (U.S. EPA, 2007).

Hydrogen can be stored and transported in either liquid or gaseous form. Liquid 

hydrogen must be cooled to a temperature of -423°F (-253°C) and stored in insulated tanks 

while gaseous hydrogen is compressed and stored in high-pressure tanks at up to 10,000 

pounds per square inch (psi). Research also is being conducted into materials-based 

storage, i.e., binding hydrogen atoms or molecules tightly in a compound or other storage 

material. This may allow storage of larger quantities in smaller volumes at low pressure 

and near room temperature (U.S. DOE, 2008c).

DOE, NREL, and their partners are working to overcome the challenges of incorporating 

hydrogen into the U.S. energy system through research in the following areas (U.S. DOE, 

2009e):

• Hydrogen production technologies that minimize environmental impacts and are costcompetitive with conventional fuels;

• Cost-effective distribution of hydrogen;
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• Space- and weight-efficient onboard storage of hydrogen aimed at enabling a vehicle 

driving range of 300 miles or more;

• Reducing fuel cell cost and size, including improvements to performance and 

durability; and

• Scaling up from lab-scale technologies to viable commercial-scale operations.

Even allowing for substantial technological advancements toward DOE goals, however, 

there is a general consensus that a broad scale deployment of fuel cell vehicles in the 

United States is more than a decade away (NRC, 2008).

Magnitude and Timing of GHG Reductions

Life-Cycle Emissions

Hydrogen FCVs offer dramatic emission reduction potential at the point of use, emitting 

only water vapor. However, similar to electricity, hydrogen is an energy carrier that can 

be produced from various feedstock. Therefore total life-cycle emissions must be 

considered, including the hydrogen feedstock and production pathway when assessing 

GHG impacts.

A study for Argonne National Laboratory (Wang, 2002) analyzed GHG emissions for 10 

hydrogen production and distribution pathways selected to represent the most common 

production methods as well as some that are likely to be pursued in the future. Pathways 

evaluated included gaseous and liquid hydrogen produced at central plants and at 

refueling stations from natural gas reforming, electrolysis of water using solar energy, 

electrolysis of water using grid electricity, and electrolysis of water using electricity 

produced from renewable sources.

The Argonne study found that hydrogen use reduces GHG emissions for all fuel pathways 

except when the fuel is produced by electrolysis from typical grid electricity. It is 

important to note that gaseous hydrogen reduces GHGs more than liquid hydrogen, 

except when the liquefaction is accomplished using fully renewable sources of energy. 

Also, while electrolysis options using the current U.S. grid mix were estimated to actually 

increase GHG emissions relative to gasoline vehicles, carbon capture and sequestration 

(CCS) technologies could be adopted in the long run to make these production options 

viable, although feasibility and cost for CCS have yet to be demonstrated (Newell, 2005). 

In a 2007 study the California Energy Commission (CEC) examined GHG emissions from 

various hydrogen pathways, coming to the same general conclusions as the Argonne 

study.

This analysis utilizes the latest HFCV GHG performance estimates from the 2009 DOE 

Hydrogen Program in order to generate inputs for the GREET model. GREET is then used 

to project life-cycle HFCV GHG reductions relative to conventional gasoline LDVs for 

different time periods. Figures 2.3 and 2.4 illustrate the GREET estimates for both gaseous 
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and liquid hydrogen production options for a variety of pathways, assuming the baseline 

gasoline and HCV efficiencies shown in Table 2.8.

Figure 2.3 Life-Cycle GHG Emissions for Gaseous Hydrogen Fuel Cell 

versus Gasoline Vehicle

 

 

Percent Change Relative to Conv Gas LDV

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Central GH2, 

Natural Gas

Central GH2, 

Nuclear 

TCWC

Central GH2, 

Electrolysis 

(Nuclear) Central GH2, 

Coal without 

C Capture

Central 

GH2, Coal 

with 

C Capture

Central 

GH2, 

Biomass 

(Herb)

Distribution 

GH2, 

Natural Gas Distribution 

GH2, 

Electrolysis 

(Grid)

2010, 55 mpgge (DOE H2 Program) 2020, 65 mpgge (DOE H2 Program)

Figure 2.4 Life-Cycle GHG Emissions for Liquid Hydrogen Fuel Cell versus 

Gasoline Vehicle

 

 

Percent Change Relative to Conv Gas LDV

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

Central LH2, 

Natural Gas

Central LH2, 

Nuclear 

TCWC

Central LH2, 

Electrolysis 

(Nuclear) Central LH2, 

Coal without 

C Capture

Central 

LH2, Coal 

with 

C Capture

Central 

LH2, 

Biomass 

(Herb)

Distribution 

LH2, 

Natural Gas Distribution 

LH2, 

Electrolysis 

(Grid)

2010, 55 mpgge (DOE H2 Program) 2020, 65 mpgge (DOE H2 Program)
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Table 2.8 Conventional Vehicle and HFCV Fuel Efficiencies by Time 

Period (Gasoline-Equivalent MPG)

Vehicle Technology 2010 2020

Conventional Gasoline (AEO)a 22 27

HFCV (DOE) 55 b 65 c

a Average of in-use estimates for cars and light trucks for new vehicle sales (Table 61).

b GREET assumption that HFCV mpg is 230 percent of gge in the near–term scenario. 

c DOE Hydrogen Program 2009.

Several conclusions can be drawn from these figures. First, the efficiency advances in both 

conventional vehicles and HFCVs tend to minimize the relative differences between the 

different technologies across time periods. The figures also show that reliance upon gridaverage electricity for electrolysis is highly inefficient, generating substantial increases in 

GHG emissions relative to conventional gasoline vehicles. However, utilizing nuclear (or 

equivalently, renewable such as wind or solar) energy for electrolysis can almost eliminate 

GHG emissions.26 Biomass feedstock and centralized coal with CCS (for gaseous 

hydrogen) display potential reductions almost as large. However, each of these options is 

either limited in availability (e.g., nuclear and renewable electricity) or as yet unproven 

(e.g., coal with CCS – which is also a concern for PHEVs and BEVs). Finally, if liquid 

hydrogen is used, liquefaction technologies performed to facilitate transportation and/or 

increase vehicle storage and range, entails substantial efficiency and GHG penalties for the 

nonrenewable (and nonnuclear) pathways. Nevertheless, hydrogen production using 

currently available centralized or distributed natural gas reforming still offer sizeable 

GHG reduction potentials. The life-cycle approach adopted for this analysis only includes 

direct GWPs; hydrogen also has some indirect GWP.

27

Market Penetration

While the per-vehicle GHG reduction potential of FCVs can be sizable depending upon the 

production pathway, obtaining significant GHG reductions for the transportation sector as 

a whole will entail deployment of millions of FCVs across the country. The 2009 AEO

 

26Emissions associated with power plant construction and maintenance are not included in the 

GREET estimates.

27Hydrogen gas is believed to have an indirect GWP of 5.8, contributing to increased ozone levels 

and methane enhancement in the troposphere (IPCC, no date). To the extent that HFCV use leads 

to fugitive hydrogen emissions associated with production, storage and/or distribution, some 

amount of GHG enhancement may be expected.
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Reference case projects that only about 93,000 light-duty HFCVs will be on the road by 

2030, consuming 29.7 million gge per year of hydrogen.28 On the other hand, a report for 

the National Research Council (NRC) has estimated that the maximum practicable number 

of hydrogen FCVs that could be on the road by 2020 would be approximately two million, 

or 0.7 percent of the on-road light-duty fleet, growing to 60 million (18 percent) by 2035 

and 200 million (60 percent) by 2050 (NRC, 2008). These values represent the high end of 

market penetration estimates found in the literature and are used to estimate upper bound 

GHG reduction potentials.29

A 2008 Energy Information Administration study concluded that it is highly unlikely that 

hydrogen FCVs will have significant impacts on light duty vehicle energy use and GHG

emissions by 2030 (EIA, 2008).

Oak Ridge National Laboratory (ORNL) also conducted an analysis on HFCV deployment 

scenarios to estimate the impact of various policies, oil prices, and technology 

advancements (Greene et al., 2008). Their main 2025 scenarios ranged from 2 million to 10 

million HFCVs deployed. The study reported that there was no consensus on the 

penetration rate, but that the scenarios were “inclusive of industry expectations.” In order

to achieve these levels of HFCVs, policy actions are required to offset the higher costs in 

the short term until economies of scale are realized.

Net Impacts

In order to determine the magnitude of the potential GHG reductions, the hydrogen 

production pathway must be identified. EIA does not provide production assumptions in 

AEO 2009, but both NRC (2008) and Greene et al. (2008) assume that distributed natural 

gas reformation will fuel HFCVs through 2025. There also will be niche areas where 

excess liquid hydrogen from industrial plants will be delivered to refueling stations. 

However, the volume will be limited and is not anticipated to increase given the energy 

intensiveness and costs of trucking over longer distances. By 2025, NRC (2008) and Greene 

et al. (2008) suggest that coal gasification with carbon capture and storage (CCS) will 

become economically viable. NRC also includes biomass gasification as a hydrogen 

pathway in this timeframe. However, modeling by Greene et al. (2008) projects that this

pathway will become economically viable a few years later, unless the additional GHGs 

reductions from biomass gasification are somehow valued (e.g., through carbon credits).

 

28AEO 2009 Supplemental Tables 58 and 47.

29The NRC report was based on a scenario recently developed by DOE through 2025 and extended 

by the NRC committee to 2050. However, the Council noted that these estimates were based on a 

“rapid and widespread deployment,” and that this is an “optimistic estimate of what might be 

possible—not a forecast of what is likely or probable.” Achieving this scenario, the Council notes, 

would be challenging and would require “significant continued technical progress, consumer 

acceptance, and policies to achieve market penetration of HFCVs during the early transition 

period.”
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For this assessment distributed natural gas reformation for gaseous hydrogen production is 

assumed for the medium-term case (with a 40 to 55 percent GHG reduction), while a generic 

“advanced pathway” case with a 79 to 84 percent GHG reduction is assumed for the long 

term.30

Table 2.9 Maximum Potential HFCV Penetration and Benefits by Time 

Period

 Impacts in terms of gasoline saved and GHG reductions are shown in Table 2.9.

Incremental 

Market 

Penetration 

Incremental 

Number of 

HFCVs 

Gasoline Saved –

Mgal/Yearb

GHG Reduction 

(mmt CO2e /yr)

(Percent)a (Millions) Minimum Maximum Minimum Maximum

Medium-Term (2030) 18% 60 9,100 13,000 52 74

Long-Term (2050) 60% 200 43,200 52,800 388 474

a Incremental to AEO Reference Case – maximum value found in literature.

b # vehicles x AEO base gal/mi x 11,500 mi/yr (LDV avg.) x fuel consumption improvement.

Cost-Effectiveness

The cost-effectiveness of HFCVs depends upon both the cost of hydrogen and the 

incremental cost of vehicle, including the fuel cell and storage components.

Hydrogen Cost

The price of hydrogen transportation fuel is a function of many factors, including the cost 

of the feedstock, the maturity, and efficiency of the production technology and distribution 

costs. It is generally accepted that the price of hydrogen fuel will be higher than petroleum 

fuel on a gge basis in the earliest years of vehicle deployment. However, hydrogen fuel 

costs will ultimately need to be roughly equivalent to gasoline costs on a per mile traveled 

basis in order to obtain consumer acceptance without subsidies. Therefore DOE is 

targeting the cost of hydrogen in 2015 between $2 and $3 per gge as delivered to the pump 

 

30In the range of eighty percent is broadly representative of several centralized gaseous hydrogen 

production pathways including nuclear/renewable electrolysis, coal with CCS, and biomass, as 

shown in Figure 2.3.
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for all the production pathways, in order to make it cost-competitive with gasoline on a 

cents per mile traveled basis.31

There is tremendous uncertainty related to the costs of hydrogen, and DOE presents much 

of their data in terms of progress toward meeting predefined cost targets. Table 2.10 is 

taken from the DOE Hydrogen Program’s FY 2008 Annual Progress Report which indicates 

the advancement toward the cost goals (Dillich et al., 2008) and an independent panel’s 

estimate for hydrogen costs from natural gas (NREL, 2006). The table also includes EIA’s 

more recent projected prices for gasoline, which projects that retail gasoline will be $3.35 

and $3.60 per gallon in the same timeframes as DOE’s projections. If DOE’s hydrogen cost 

projections hold true, this would mean that hydrogen fuel is actually less expensive than 

gasoline on a miles traveled basis (excluding incremental HFCV costs). NRC (2008) 

estimates that hydrogen will become cost-competitive in 2017 at $5.60 per kg (assuming 

$2.80 per gallon for gasoline).

Table 2.10 Projected Delivered Cost of Hydrogen ($/GGEa)

Production Pathway 2014 2016-2020

Onsite electrolysis $3.70 $3.00

Centralized electrolysis $4.80 $3.00

Nuclear – electrochemical and thermochemical $5.00 $4.50

Coal gasification with carbon capture and storage (CCS)b N/A $3.00

Centralized biomass gasification $3.30 $2.10

Distributed natural gas $3.50 $2.75

Gasoline $3.35 $3.60

Sources: Dillich et al., 2008; AEO March 2009; NREL, 2006.

a Does not account for efficiency of the fuel cell (i.e., twice as many miles traveled with hydrogen on 

a gge basis).

b There is still uncertainty surrounding the feasibility of carbon sequestration strategies.

 

31One kg of hydrogen is roughly equal to one gge. DOE’s cost targets are based on a gasoline price 

of $1.26 in 2015 multiplied by the energy efficiency ratio of HFCVs, which is 2.40 relative to a 

gasoline ICE and 1.66 when compared to a gasoline hybrid electric car (U.S. DOE, 2005). So a 

kilogram of hydrogen, which is roughly equivalent to a gallon of gasoline, is cost competitive with 

gasoline when it is $2 to $3 kilogram.
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As discussed earlier, the least-cost hydrogen production pathway in the short term is 

generally believed to be reforming of natural gas at distributed locations. An independent 

review panel projected a hydrogen cost range of $2.75 to $3.50 per delivered gge, assuming 

economies of scale are reached with the deployment of 500 new 1,500 kg-sized stations per 

year, utilized at 70 percent capacity (NREL, 2006). For the cost-effectiveness values 

reported later in this section, a delivered hydrogen price of $3.50 to $7.00 is assumed for 

the short term. In the long term, prices of $2.10 to $4.50 are assumed.

Fuel Cell Cost

The raw materials required for catalysts (e.g., platinum) dominate the cost of fuel cells, 

though recent technology advances are reducing total system costs. Based on its current 

research and development estimates, DOE estimated that for high-volume production 

(more than 500,000 units per year), an 80 kW (107 hp) automotive fuel cell stack would cost 

approximately $73/kW (U.S. DOE, 2008e). Compared with a cost of approximately 

$54/kW for an equivalent internal combustion engine, the scenario estimates an 

incremental FCV cost of $1,520 for an 80 kW drivetrain (U.S. DOE, 2008e; NRC, 2008). 

DOE has set a goal to reduce costs to $30/kW for the fuel cell component (e.g., fuel cell 

stack and balance of the plant) of the vehicle system.

Developing onboard hydrogen storage to achieve a 300-mile driving range has been one of 

the greatest technical challenges for HFCVs. NRC (2008) reports that the current cost is 

$15 per kW for a 5,000 psi compressed hydrogen system, which is most likely 

representative of short- to mid-term technology. The NRC study utilized a short- to midterm hydrogen storage cost of $10 per kWh in their model. Other storage solutions, such 

as solid and chemical hydrides storage solutions, are being explored, but Bandivadekar et 

al. (2008) reports that none seem likely to offer the combination of cost, simplicity, 

efficiency, and energy density, without a technology breakthrough. According to these 

assessments, substantial advances will be required to meet DOE’s long-term target cost for 

onboard storage of $2 per kWh. However, this low cost target is not essential to sizable 

market penetration by 2040 (Greene et al., 2008).

FCV costs, while likely to remain high relative to conventional vehicles for some time, 

dropped significantly between 2002 and 2008 (U.S. DOE, 2008e) and are expected to 

further decrease as market penetration progresses. Current incremental costs for lightduty hydrogen fuel cells are estimated to be approximately 10 times that of a conventional 

gasoline engine (Yacobucci, 2005), or about $25,000.32

 

32Typical gasoline engine costs are reported between $2,000 and $3,000 (Yacobucci, 2007).

 The following cost assessment 

assumes that current fuel cell stack life estimates of 2,000 hours are extended to the DOE 

target of 5,000 hours, and therefore fuel cell replacement will not be required during this 

period. In addition, these estimates do not account for any potential maintenance savings, 

which could be substantial with FCVs due to the greatly reduced number of moving parts. 
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Bandivadekar et al (2008) calculates an incremental FCV cost of $5,300 in 2035, which is 

assumed for this assessment.

FCV costs are likely to remain high relative to conventional vehicles for some time, but 

their costs are expected to decrease as market penetration progresses. Incremental costs 

for light-duty hydrogen fuel cells have been estimated to be approximately 10 times that of 

a conventional gasoline engine (Yacobucci, 2005), or about $25,000.33

Another important consideration for FCVs to be competitive is long-term durability, so 

while costs are being reduced, fuel cell life cannot be compromised. DOE’s target is 5,000 

hours, which is equivalent to 150,000 miles on a conventional vehicle. Although 

laboratory testing has achieved 7,300 hours on a small scale, independent road testing of 

140 FCVs has achieved a 2,000 hour life thus far, at which point there is a 10 percent 

degradation of fuel cell performance (Wipke et al., 2009).

 However, costs have 

been decreasing rapidly as fuel cell developers and component suppliers have lowered the 

amount of platinum required and increase power density. A more than 70 percent 

reduction in fuel cell costs was reported between 2002 and 2008 (U.S. DOE, 2008e). A 

recent independent study of DOE’s cost analysis methodology determined that a range of 

$60/kW to $80/kW is a valid estimate of the potential manufactured cost for an 80 kW fuel 

cell system, based on 2008 technology extrapolated to a volume of 500,000 systems per 

year (NREL, 2009c). In general, cost estimates do not account for any potential 

maintenance savings, which could be substantial with FCVs due to the greatly reduced 

number of moving parts. Bandivadekar et al. (2008) calculates an incremental FCV cost of 

$5,300 in 2035, which is assumed for this assessment, although it is acknowledged that 

higher volume production would lower the increment.

If mass-produced, HICE vehicles could serve as a lower cost technology (compared to fuel 

cell vehicles) to introduce the public to hydrogen, while expanding the demand for 

hydrogen and its refueling infrastructure systems. The capital cost of a HICE vehicle is 

expected to be just 25 percent that of a hydrogen fuel cell vehicle (CEPA, 2005).

HFCV Costs and Cost-Effectiveness Ranges

Calculating the cost-effectiveness of HFCVs in reducing GHG emissions is complicated 

given the number of assumptions needed for such an analysis. Table 2.11 summarizes the 

per vehicle incremental costs, fuel cost/savings, net present value of total cost/savings, 

average GHG reductions, and associated cost-effectiveness ranges for HFCVs for the 

timeframes of interest. Key to the calculated cost-effectiveness ranges are that the 

projected cost reductions in both the cost of an HFCV and hydrogen production/delivery 

are achieved. As discussed later, there is a significant learning curve to reach economies of 

scale, which will require investment in infrastructure and fuel cell development in the 

 

33Typical gasoline engine costs are reported between $2,000 and $3,000 (Yacobucci, 2007).
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short to mid-term. The general consensus is that, at least in the near term, HFCVs will not 

be cost-effective.

Table 2.11 HFCV per Vehicle Cost and Cost-Effectiveness Ranges by 

Time Period

Incremental Fuel Savings/ NPV Cost/

Average 

GHG 

Reduction Dollars/Tonne

Vehicle 

Dollars Cost NPVa Savings Tonnes/Year Calculated Literature

2020 $10,000 -$3,500 to $4,400 $6,500 to $14,400 2.7 $151 to $333 N/A

2030 to 

2050

$1,500 to 

$5,300

-$11,900 to -$8,300 -$10,300 to -$3,000 3.3 -$199 to -$57 -$194 to $275

a Using pretax price projections for 2010 (near-term) and 2030 (long-term) – $3.00 to $7.00 and $2.10 to $4.50

relative to AEO projections for gasoline of $1.75 and $3.43, respectively.

To put the results of Table 2.11 in context, other cost-effectiveness values found in the 

literature are reported here. For example, Bandivadekar et al. (2008) estimates a costeffectiveness between $132 and $163 per tonne CO2e in 2035, assuming a gasoline price of 

$2.50 per gallon. However, net cost savings are projected at $5 per gallon in this same 

study, resulting in cost-effectiveness estimates between -$161 and -$194 per tonne. Keith 

and Farrell (2003) calculated a cost-effectiveness value of $275 per tonne CO2e for longterm HFCVs. However, that study also estimates that the cost-effectiveness could improve 

by a factor of 10 with successful development and application of CCS technologies 

associated with electricity production. Lastly, Fulton (2004) estimated the costeffectiveness in the range of $200 to $800 per tonne CO2e in 2030 with the caveat that this 

calculation will depend on the price of producing hydrogen through low-carbon 

pathways.

Cobenefits

HFCVs emit no pollutants at the point of service, with life-cycle emissions resulting 

exclusively from fuel production and transport. Atmospheric emissions from HFCVs are 

vastly different depending on the production pathway and feedstock. Table 2.12 shows 

GREET model estimates of life-cycle emissions for gaseous and liquid hydrogen 

production for two selected pathways: distributed natural gas reforming and centralized 

nuclear plant production. The life-cycle analysis modeling estimates the emissions of 

VOC, CO, and NOx to be less compared to conventional gasoline vehicles. Although PM10

increases for gaseous H2, the amount of these pollutants generated is still very small. 
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These estimates represent current technology for both conventional gasoline vehicles and 

hydrogen natural gas reformation and are not necessarily representative of relative 

emissions from future technologies. Nuclear production is included in the table to show a 

likely high and low range of emissions based on different production pathways. 

Table 2.12 Life-Cycle Atmospheric Emissions from HFCVs Compared to 

Baseline Gasoline Vehicles (Range of Distributed Natural Gas 

Reforming to Central Nuclear Plant Emissions)

Gaseous H2 Liquid H2 

Pollutant

Difference from 

Baseline (g/mile)

Percent 

Change

Difference from 

Baseline (g/mile)

Percent 

Change

VOC -0.29 to -0.31 -92% to -98% -0.27 to -0.31 -86% to -99%

CO -3.75 to -3.80 -98% to -100% -3.71 to -3.81 -97% to -100%

NOx -0.22 to -0.31 -59% to -81% -0.03 to -0.34 -3%to -90%

PM10 0.02 to 0.015 23% to 18% 0.27 to -0.046 327% to -56%

PM2.5 0.02 to0.008 36% to -22% 0.09 to -0.024 221% to -67%

Feasibility

Hydrogen has an excellent industrial safety record, but the public is unfamiliar with 

hydrogen, and safety perceptions must be proactively addressed. As was done for CNG in 

the past, hydrogen will require the adoption of national fueling codes and standards, 

along with the education of the public and emergency personnel. For example, hydrogen 

is a colorless and odorless gas, so fueling stations will need to be equipped with leak 

detection devices. DOE is working with organizations to identify the current gaps in the 

standards development process; facilitate the creation and adoption of model building 

codes and equipment standards for hydrogen systems; and provide technical resources to 

harmonize the development of international standards (U.S. DOE, 2008d). Hydrogen also 

has a very broad flammability range, and its flame is invisible, so special training will be 

required for emergency responders (CRS, 2007).

Both durability and performance also must be improved before fuel cells can become 

acceptable from a consumer standpoint. For example, failures such as platinum 
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dissolution into the carbon electrodes or sulfur and CO poisoning of the fuel cells can 

shorten the life of FCVs.34

Another obstacle is the ability to store a sufficient quantity of hydrogen for adequate (i.e., 

300-mile) driving range. The current on-road driving range (corrected for EPA drive cycle) 

for a FCV test program ranged between 190 and 250 miles (NREL, 2009b). High-pressure 

hydrogen storage tanks appear to be the most effective solution for onboard hydrogen 

storage until a more suitable hydrogen storage material is identified.

 Current fuel cell stack life from on-road vehicle testing is 

approximately 2,000 hours at which point fuel cell performance is only 90 percent of the 

original performance (NRC, 2008), which is significantly lower than the 5,000-hour 

lifespan needed to enter the light-duty vehicle market (Wipke et al., 2007).

In addition, the amount of time required to refuel hydrogen vehicles currently is higher 

than the time required for conventional gasoline refueling on a gge basis. A recent NREL 

study of 3,700 refueling events showed an average of about 0.8 kg/min was achieved for 

350 bar (~5,000 psi) tanks, while only 0.6 kg/min was achieve for 700 bar (~ 10,000 psi) 

tanks (Wipke et al., 2009).

35

In addition to vehicle-related challenges, a critical component to the development of 

HFCVs will be the development of a widespread hydrogen production and distribution 

infrastructure. NRC (2008) estimated the government cost for hydrogen 

vehicle/infrastructure development at $55 billion between 2008 and 2023 to achieve the 

two million HFCV penetration target by 2020 and 5.6 billion by 2023. Greene et al., (2008) 

estimated $10 billion in Federal investment is needed to achieve two million HFCVs on the 

road. There are significant challenges in the development of either a centralized 

infrastructure (in which hydrogen is reformed at central production facilities and 

distributed to refueling facilities) or a decentralized infrastructure (in which hydrogen is 

produced at numerous small-scale facilities located at the point of sale). The options and 

challenges are discussed in more detail in the sidebar on page 2-87.

 Assuming the average consumer requires a 5 kg fill, waiting 

six to eight minutes to refuel is not acceptable so refueling rates must be improved. Also, 

the fill rates for hydrogen are nonlinear and slow down as the tank fills. Refueling rates 

will likely continue to improve as onboard storage systems evolve to provide longer 

driving ranges.

Finally, reporting requirements currently exist for production, transport, and dispensing of 

hydrogen, and will need to be modified or minimized in order to avoid unacceptable 

administrative burdens associated with large scale use within the transportation sector 

(NGA, no date).

 

34Both sulfur and CO are commonly present in hydrogen gas.

35An FCV’s increased fuel economy roughly doubles their range compared to conventional gasoline 

vehicles, so small capacity fuel tanks (on a gge basis) do not severely limit operational range.
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A 2008 Energy Information Administration study of the potential for hydrogen to reduce 

petroleum consumption and carbon emissions summarizes the challenges in developing a 

hydrogen-based transportation system:

Widespread use of hydrogen fuel cells in LDVs will require significant R&D 

breakthroughs, including: (1) the development and widespread deployment of 

economical hydrogen production technologies or processes; (2) the development and 

production of economical, high-density, on board hydrogen storage that can be drawn on 

quickly as needed76; (3) the widespread development and deployment of an economical 

hydrogen transportation, distribution, and dispensing network; and (4) the development 

and large-scale deployment of economical PEM fuel cells and their seamless integration 

into LDV motors. Moreover, in addition to the economic and technological challenges, 

public safety concerns about hydrogen in LDVs must be addressed at the consumer, 

State, and Federal levels, as they have been for compressed natural gas (CNG) vehicles

(EIA, 2008).
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Development of a Hydrogen Infrastructure

Development of a hydrogen production and distribution infrastructure is a critical challenge in 

the transition to widespread use of hydrogen as a transportation fuel. There are several options 

for producing hydrogen for FCVs. One option is to generate the hydrogen at a central 

production facility, such as a plant which performs natural gas steam reforming, then transport 

the hydrogen to a distribution network for transfer to refueling facilities. This requires 

development of a new fuel distribution network. Delivery and dispensing of hydrogen could 

cost as much as its production and consume significant energy, thereby negating much of the 

GHG reduction potential (Jones, 2008).

In Jones’ aggressive FCV deployment scenario, it was assumed that initially excess hydrogen 

from current industry production would be trucked to a few select stations, or stations would 

house small natural-gas reformers. As consumption and geographic coverage increases, 

increased production volumes would be accomplished via large appliance-type hydrogen 

production units fueled with natural gas or renewable liquid fuels such as ethanol. In the later 

transition stage, production would be accomplished at large central production plants using 

primary feedstock such as natural gas, coal with CO2 sequestered, and biomass.

Two delivery technologies are feasible for hydrogen produced at centralized locations—

pipelines and tanker truck (U.S. DOE and U.S. DOT, 2006). The existing hydrogen pipeline 

system is only one-third of 1 percent of the natural gas network length (EIA, 2008). Therefore in 

the short term, long-distance transport of hydrogen via tanker truck is the most likely delivery 

option. Most hydrogen will need to be transported in liquid form due to the increase in energy 

density compared to gas. There are currently seven liquid hydrogen plants in the U.S. supplying 

760 million gge per day (EIA, 2008).

In the short-term distributed natural gas and on-site electrolysis are advantageous for the 

transition to hydrogen FCVs because they avoid the need for a new delivery infrastructure. Both 

small reformers and water electrolysis systems can be built in a modular fashion (i.e., sized for 

demand) for placement at existing gasoline stations (Jones, 2008). The components at the 

hydrogen fueling stations would be similar regardless of whether hydrogen is produced on site 

or at a centralized location. These facilities will require hydrogen storage, compression, and fast 

delivery systems.

DOE also envisions a transitional approach relying on a distributed fueling infrastructure in 

high population density areas, such as Southern California and New York City, with expansion 

to Boston and Washington, D.C. in future years. This distributed approach is less capital 

intensive, depending on steam reformation of natural gas as the primary source of hydrogen 

through the mid-term (GAO, 2008). However, for hydrogen to become a widespread 

transportation fuel, economics will require its production at centralized facilities delivered via a 

pipeline infrastructure (GAO, 2008).
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Development of a Hydrogen Infrastructure (continued)

Reliance on natural gas pipelines may be another way to transport centrally produced hydrogen 

during the initial stages of hydrogen infrastructure development. However, hydrogen’s lower 

energy density would require higher pressure pumps and compressors, and hydrogen also 

causes metal embrittlement in conventional natural gas pipes. In addition, seasonal natural gas 

demand will limit the available capacity for natural gas pipelines to transport hydrogen, 

requiring the construction of new pipelines key in sustaining year-round delivery. Historic cost 

data for construction of hydrogen pipelines indicates $1.2 million per transmission mile and $0.3 

million per distribution mile, with cost projections in 2017 to be $0.5 million per transmission 

mile, and similar costs for the distribution lines (EIA, 2008). In order to construct transmission 

and distribution pipelines of equal length to those of natural gas (295,000 miles of transmission 

pipeline and 1.9 million miles of distribution lines, per EIA, 2008), the estimated cost is $480 

billion to $920 billion depending on construction costs. (It is not clear to what extent, if any, that

these cost estimates include right-of-way acquisition.) EIA also reports that costs for developing 

a hydrogen pipeline will depend on where the pipelines are sited, rights-of-way, operating 

pressures, and how applicable environmental and safety issues are addressed.

EIA (2008) also reports a great amount of uncertainty regarding how a centralized hydrogen 

transmission and distribution systems might evolve. Many experts have stated that large-scale 

penetration of hydrogen powered fuel cell vehicles is unlikely without significant long-term 

government policies and support due to the economic costs associated with fuel cells as well as 

hydrogen production, storage, and distribution.

Since all current hydrogen refueling stations are essentially first generation prototypes, current 

costs for their construction are high (CEC, 2006). Lipman and Weinert (2006) estimate that 

hydrogen fueling stations will cost between $500,000 to over $5 million for stations that produce 

and/or dispense between 30 and 1,000 kg of hydrogen per day. For small demand levels, mobile 

hydrogen units could be possible at a cost of $250,000. Operation and maintenance costs for 

hydrogen stations are also likely to be as high as or higher than comparable natural gas stations 

(CEC, 2001). However, it should be noted that many of these refueling stations also make 

 
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 2.9 Electricity

Overview

Many of the alternative fuels discussed 

in this section are limited by production 

potential or infrastructure constraints. In 

contrast, electricity is widely available in 

a form that can be used by large numbers 

of vehicles, and instead is primarily 

limited by the quantity of electric 

vehicles on the road. There are a number 

of vehicle types that use electricity as a 

power source. Battery Electric vehicles 

(BEV) and plug-in (grid-connected) 

hybrid electric vehicles (PHEV) store 

energy in batteries that are charged from 

electric outlets. BEVs rely solely on 

electricity, while PHEVs also rely on 

hybrid electric power trains for a portion 

of their operating time to generate their 

own power from an internal combustion 

engine or fuel cell. BEVs produce no 

tailpipe emissions, although there are 

emissions associated with the extraction, 

processing, and combustion of the fuels 

used to generate the electricity at power 

plants. The emissions from the 

generation of electricity are dependent 

on the mix of power sources for the area 

where the vehicles are charged. This 

section focuses on BEVs and their 

associated power source emissions. 

PHEVs and associated automotive 

battery technologies (relevant to BEVs as 

well) are discussed in greater detail in 

Section 3.2.4.

The primary focus for continued BEV development is the battery. Battery characteristics 

affect the range, cargo space, power, cost, and weight of a BEV. These characteristics must 

meet consumer demands for these vehicles to achieve significant market penetration. 

Batteries must be recharged, often on a daily basis, and this process takes much longer 

than refueling a similar conventional vehicle, up to 10 hours depending on the battery 

capacity, state of depletion, and recharging method (reference), although advanced 

Electric Vehicles

2030 Benefits: Moderate: 

• 68-80% reduction per vehicle 

• 5% market penetration is high estimate from 

literature

2050 Benefits: High: 

• 78-87% reduction per vehicle 

• 56% market penetration is high estimate from 

literature

Net Included Costs: Net Savings: -$20 to -$110 per 

tonne

Confidence in Estimates: Low

• Market penetration depends upon advancement of 

battery/electricity storage technology

• Emissions benefits depend upon future electricity 

production mix

• BEV efficiency also uncertain

Key Cobenefits and Impacts: Mostly Positive

• Pollutant emissions will depend upon fuel source, 

but tailpipe emissions will be eliminated

Feasibility: Moderate

• Modest infrastructure requirements; primary 

barrier is energy storage technology

Key Policy Options:

• Research and development support for BEV 

battery efficiency and durability

• Investment in public charging infrastructure

• Investment in nonfossil electricity generation
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charging techniques can reduce this time significantly (Burke et al., 2007). Electric 

passenger cars are becoming more attractive with the advancement of new battery 

technologies that have higher power and energy density than previous prototypes (i.e., 

greater possible acceleration and more range with less battery mass). Currently, nickelmetal hydride (NiMH) batteries and lithium-ion (Li-ion) batteries are the best options for 

BEVs and PHEVs. NiMH dominates the current market, although Li-ion batteries may 

gain market share over time, as discussed in Section 3.2.4.

With the advent of California’s Zero Emission Vehicle (ZEV) mandate, an initial attempt 

was made to develop BEVs for mass market purchases. However, less than 5,000 BEVs 

were produced across a handful of makes and models before the ZEV requirements were 

relaxed. For reasons that are still subject to debate, vehicle production was not sustained 

in the absence of mandates, ceasing by 2003 in the United States. Today, BEVs are not 

available except in niche markets such as neighborhood electric vehicles, with a maximum 

speed of 25 mph. (Burke et al., 2007)

Current BEV designs are primarily for LDVs, with estimated ranges typically between 50 

and 200 miles between charges (Burke et al., 2007). Like hybrid vehicles, BEVs can 

recapture some energy by regenerative braking, which can extend operating range to some 

extent. With additional developments in battery technology BEV range is expected to 

increase. Beyond a certain point, however, BEV range eventually reaches a point of 

diminishing returns, as increased battery weight decreases overall vehicle efficiency. 

Increased battery capacity also increases vehicle costs dramatically. For example, doubling 

BEV range from 200 to 400 miles might result in battery size and cost increases of 130 

percent to compensate for the associated weight increase (Kromer and Heywood, 2007). 

Considering these factors, one recent study concluded that an upper bound of about 200 

miles between charges was a reasonable limit on commercial BEV range for mainstream 

LDVs in the long run (Bandivadekar et al., 2008), although unforeseen technological 

advances could change this conclusion.

The electrical energy used to charge a BEV battery can be generated by any source, 

including renewable, nuclear, natural gas, coal, and petroleum. As such, the resulting 

GHG emissions per mile associated with BEV operation can vary drastically from region to 

region and by time of day and year. (See Section 3.2.4 for a discussion of life-cycle GHG 

emissions associated with battery charging for PHEV operation.) Some BEV designs 

employ on-board chargers, which allow the battery to be charged directly from a standard

120 V wall outlet. Other designs require the purchase of an off-board charging unit.

While the power source for BEVs is readily available, there is a need to develop a publicly 

accessible charging infrastructure allowing BEVs to be charged away from users’ homes. 

Public access recharging could substantially extend a BEV’s daily range, depending upon 

trip lengths and available charge time. As of June 2009 there were 451 charging stations in 

the United States, with almost all of these located in California (U.S. DOE, 2009b).

BEVs also will be available for a limited portion of the heavy-duty vehicle segment in the 

near future. One opportunity lies with short-haul drayage trucks that move cargo 
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containers within a contained area. These trucks can easily be brought back to their 

charging station as the battery becomes depleted. Also, time spent idling waiting to load 

and unload would not require energy consumption (Port of Los Angeles, 2008). 

Electrification of other HDVs such as school buses also is feasible. Because school buses 

move along a preplanned route and return to their storage yards and park twice per day, 

concerns over range could be managed. Buses could be charged both during the day and 

overnight for their morning and afternoon trips. These vehicles are likely to use lead-acid 

batteries for the near future. This battery technology is much older than NiMH and Li-ion 

systems and is fully demonstrated. Batteries of this type are much less expensive than 

those that would be found in light-duty BEVs and their increased weight is less of a 

concern for the heavy-duty market. However, BEV use is not considered feasible for most 

heavy-duty applications, given range requirements (for long-haul trucks), and the limited 

ability for many applications to charge overnight (Muster, 2000).

Electricity-powered transport also is used for various urban transit options, including 

trolleys, subways, and light rail. It also is used for intercity rail, although currently only 

the Northeast Corridor in the United States (between Boston and Washington, D.C.) is 

electrified. Intercity rail electrification could be used for both passenger and freight trains. 

Magnetic levitation (maglev) trains utilize electrically powered magnet systems to float the 

train above the track without the use of wheels. The first commercial maglev trains ran in 

the 1980s in Birmingham, U.K., providing a low-speed shuttle service between the airport 

and the railway station. The experimental Japanese maglev train JR-Maglev MLX01 broke 

the world speed record for ground transportation in 2003, reaching a speed of 361 mph. 

An 18-mile Maglev system opened in 2004 connecting the Shanghai city center with the 

city’s airport. Currently, a maglev system is being considered to link Los Angeles and Las 

Vegas and to replace drayage trucks that operate at the ports of Los Angeles and Long 

Beach. However, maglev trains require the construction of special purpose tracks which 

are incompatible with existing rail infrastructure.

Magnitude and Timing of Reductions

Life-Cycle Emissions

Because electric vehicles do not burn fuel at the point of service, they do not emit 

pollutants at the tailpipe. However, the life-cycle emissions for producing and delivering 

electricity can be significant, particularly GHGs for electricity generated from combustion 

of fossil fuels such as coal. In 2008, about 48 percent of U.S. electricity was generated from 

coal, followed by 21 percent from natural gas. Methods of generating electricity with little 

to no GHG emissions include nuclear power (19 percent of 2008 generation), and 
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renewable sources such as hydropower, geothermal, wind, solar, and other biomassderived sources (9 percent).36

Net GHG reductions, as well as fuel cost savings, are largely a function of BEV efficiency, 

typically expressed in kWh/mi rather than mpg. PHEV batteries range from roughly 0.2 

to 0.4 kWhr/mi, with a medium- to long-term average of 0.26 kWhr/mi (see Section 3.2.4). 

For low-drag vehicles it is assumed that BEV battery efficiency in kWhr/mi will not vary 

significantly for ranges between 100 and 200 miles, with increased weight penalties largely 

offset by larger battery capacities and the more effective use of regenerative braking that is 

permitted. For example, Kromer and Heywood (2007) estimate only a mild increase in 

kWh/mi when moving from a 100- to 200-mile BEV range (0.22 to 0.24). However, high 

drag vehicles such as traditional SUV designs are likely to incur a substantial efficiency 

penalty in order to obtain a 200-mile operating range. For example, Bandivadekar et al., 

2008, p. 300 estimates such an advanced, extended range BEV to have an efficiency level of 

up to 1.38 kWh/mi, for light trucks.

Due to the dramatic efficiency penalties and corresponding increases in battery size and 

cost associated with longer range, vehicle design is likely to have a great impact on the 

future BEV market. In order for BEVs to obtain reasonable ranges (upwards of 200 miles) 

at competitive costs, the BEV market will likely remain focused on advanced, low-drag 

designs. Accordingly, this analysis assumes the same efficiency value for BEVs as for 

PHEVs in the long run, at 0.26 kWhr/mi, for 100 to 200 miles of operating range. The 

extent to which these vehicles penetrate the market may be largely determined by 

consumer willingness to alter their traditional purchasing decisions in favor of such 

advanced designs and body styles. 

BEV emissions are entirely dependent upon the mix of electricity sources employed and 

the efficiency of electricity transmission, charging, and end use. Using the current national 

electricity grid mix assumed in the GREET model, and assuming 0.4 kWh/mi, current 

BEVs are estimated to provide a 33 percent decrease in life-cycle GHG emissions per VMT 

compared to conventional gasoline vehicles. Fuel-specific life-cycle emission estimates 

include a six percent increase in GHGs (relative to conventional gasoline LDVs) for coalfired utilities, a 45 percent decrease for natural gas, and a 99 percent reduction for nuclear 

generation. 

Although overall electricity generation is projected to increase by 24 percent from 2008 to 

2030, the fuel mix distribution is not projected to shift significantly under baseline 

projections (U.S. DOE, 2009a). The largest increase is predicted in renewables, growing 

from 9 to 14 percent of total generation, while coal, natural gas, and nuclear lose one to 

two percent each. The future electricity generation mix may be affected, however, by 

potential climate change policy actions at the Federal and/or multistate level, such as the 

adoption of a national cap-and-trade system, which would likely reduce the contribution 

 

36AEO 2009, Table 8.
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of carbon-intensive fuel sources, especially coal. EPRI (2007) provides one forecast of 

overall improvements in electricity sector GHG intensity, as discussed in more detail in 

Section 3.2.4.37

Table 2.13 Percent BEV GHG Reduction Range by Time Period

 Challenges related to lowering electricity grid emissions over time are 

discussed in numerous studies (e.g., EPRI 2009). The range of potential GHG reductions 

presented in Table 2.13 are derived from EPRI modeling data for PHEV penetration 

scenarios, and are identical with that assumed for PHEV operation in electric (CD) mode. 

Additional uncertainty is associated with this range compared to the PHEV evaluation, 

however, as BEV charging will result in significantly higher per-vehicle electricity demand 

than PHEV charging, which will in turn impact electrical dispatch differently.

Timeframe

GHG Reduction Compared to 

Baseline Conventional Gasoline Vehicle

Minimum Maximum

2030 68% 80%

2050 78% 87%

Market Penetration and Net Impacts

The AEO Reference case estimates that about 24,000 BEVs will be on the road in the United 

States in 2010. This represents about 0.01 percent of the total light-duty vehicle market. 

The Reference case forecast actually projects a decline in the number of BEVs in service by 

2030, to under 5,000.38

The review of the literature found very few market share projections for LDV BEVs.

 This is likely due to the assumption that advancements in PHEV or 

HEV technology will supplant demand for these vehicles. The actual balance of drivetrain 

electrification among HEVs, PHEVs, and BEVs will depend on how the respective 

technologies develop, as well as consumer preferences.

39

 

37The range of GHG intensity estimates from EPRI is 379-606 g/kWhr in the medium term and 240 

– 421 g/kWhr in the long term.

 

McKinsey estimated that up to nine percent of new vehicle sales could possibly be BEVs in 

2030 (or approximately five percent of the total LDV fleet, assuming rapid expansion of 

this technology in the near future; McKinsey, 2009). Yang et al. (2009) estimated a very 

38AEO 2009, Tables 47 and 58.

39No significant BEV penetration is assumed for the HDV market, although niche applications are possible as 

noted above.
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aggressive long-term BEV stock level at 84 percent by 2050. This analysis assumes that the 

potential BEV market is no larger than the PHEV market in the long run, and is set at 56 

percent. The gasoline fuel savings and GHG reduction potential associated with these 

levels of BEV market penetration are presented in Table 2.14. The range of possible GHG 

reductions corresponds to the range of GHG intensities assumed for future year BEV 

charging.

Given the very limited and speculative nature of future BEV market share projections, 

these estimates should be considered highly uncertain, even more so than the projections 

for PHEVs.

Table 2.14 Maximum BEV Fuel Savings and Emission Reduction 

Potential (National Fleet)

Year

Incremental #BEVs Fuel Saved GHG Reduction (mmt CO2e/yr)

(Millions) (Mgal/Year) Minimum Maximum

2030 15 6,000 47 55

2050 161 65,000 572 643

Cost-Effectiveness

While BEV designs offer substantial cost reductions associated with certain vehicle 

components such as powertrains (estimated to be up to $4,000 per vehicle; Fulton and 

Pierpaola, 2008), battery purchase and replacement costs are even more significant. Nearterm incremental BEV costs are extremely high, up to $50,000 per vehicle (Fulton and 

Pierpaola, 2008). Figure 2.5 illustrates the relationship between BEV range and future 

technology battery costs, assuming the same cost targets per kWhr as for PHEVs ($250 

medium-term, $200 long-term).40

 

40Current Li-ion batteries in mass production for personal computer applications have achieved the 

$250/kWhr target. (Burke et al., 2007).
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Figure 2.5 Battery Cost as a Function of Vehicle Range

Source: Burke et al., 2007.

Considering cost savings from other components, a light-duty passenger BEV built with 

future technology could cost about $6,000 more than conventional LDVs, assuming a 100-

mile range (Burke et al., 2007). Using similar cost and efficiency assumptions, Kromer 

(2007) estimates an incremental cost of $10,200 for a BEV with a 200-mile range. These 

estimates assume roughly $250/kWh battery costs, consistent with the assumptions in this 

report for 2030 PHEV costs.

The typical total cost for installation of an off-board charger for residential vehicle 

charging is approximately $880 (U.S. DOE, 2008b). While residential infrastructure 

installation for BEV charging is fairly straightforward, public access charging facilities are 

more complicated and expensive due to the regulations, codes, and practices that must be 

followed. The estimated cost for a 10-space commercial recharging facility would be 

approximately $18,500 (reference). This cost includes labor, material, signage, and 

permits.41

Fuel costs tend to be lower for BEVs than for conventional vehicles on a per mile basis, 

partially offsetting incremental vehicle costs. However, a range of different factors impact 

 

 

41Off-board charger costs are excluded from the medium and long-term cost-effectiveness 

assessments, assuming most BEVs would have on-board chargers by that time. Public charging 

station costs were also excluded from the cost assessment, given the lack of information on their 

potential utilization compared to home recharging. 
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overall costs and cost-effectiveness for BEVs. First, electricity costs vary across the United 

States depending on location, type of generation, and time of use. The average cost of 

residential electricity in 2010 is estimated at 9.8 cents per kWh, projected to increase to 11.8 

cents per kWh by 2030.

42 A charging price of 10 cents per kWh is used for this analysis 

(Kammen). The additional electricity demand from charging of BEVs in the near term is 

not expected to have a significant impact on overall electricity use or prices.43

Assuming 10 cents per kWh, and a 0.26 kWh/mi efficiency, BEV operation costs would be 

approximately 2 cents per mile, compared to a conventional gasoline LDV in 2010 at about 

8 cents per mile (or 12.2 cents per mile in 2030 pretax, using AEO Reference case 

assumptions). The resulting cost differentials are used to develop the estimated cost and 

cost-effectiveness estimates for BEVs, as shown in 2.15. Due to the extremely high 

incremental costs associated with current BEVs, a near-term scenario is not considered. 

This analysis also assumes that battery replacement will not be required over the useful 

life of the BEV.

 Details 

regarding potential impacts of increased charging demand on electricity generation in the 

medium to long term are discussed in Section 3.2.4.

Table 2.15 BEV per Vehicle Cost and Cost-Effectiveness Range

2030

Range Incremental kWh/

Lifetime 

Gallons

Discounted 

Fuel

Net 

Discounted

Avg. GHG 

Reduction Dollars/Tonne

(Mile) Vehicle Cost mi Saved Savingsa Cost/Savings (Tonnes/Year) Calculated Literature

100 $6,000 0.26 6,500 $11,300 -$3,500 3.1-3.7 -$90 to -

$106 $100 to 

$343 200 $10,200 0.26 6,500 $11,300 -$1,100 3.1-3.7 -$19 to -

$22

a Using pretax AEO price projections for gasoline and typical electricity estimate – $3.43 and 10 cents/kWh, 

respectively.

The above cost-effectiveness assessment is not consistent with the values found in the 

literature. Estimates from Bandivadekar et al. (which utilize the same incremental vehicle 

cost ranges, but higher gasoline costs and lower BEV efficiency assumptions), estimated 

 

42AEO Table 8.

43For example, an increase of 10,000 BEVs in California would only result in an increase of roughly 

0.06 percent of the state’s total power demand (CARB, 2003).
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dollar per tonne values between $329 and $343.44

Cobenefits

 While McKinsey (2009) estimates 

somewhat more favorable cost-effectiveness values for BEVs, their estimates remain over 

$100 per tonne as well. Using lower battery efficiency numbers (0.4 representative of 

battery technology from recent years), and a pretax gasoline cost of $2 per gallon (again 

more representative of recent conditions and other studies), cost-effectiveness estimates for 

the BEV200 scenario rise to $130 to $180 per tonne. Adopting GHG intensity values from 

GREET for grid-average electricity would increase the dollar per tonne estimates even 

further.

BEVs provide an opportunity to significantly lessen the U.S. dependence on petroleum, as 

well as the potential for reduced air pollution attributed to mobile sources in urban areas. 

For every 28 miles traveled by a light-duty BEV in 2030, one gallon of gasoline would be 

conserved. Along with FCVs, the broad penetration of BEVs into the LDV market offers 

the largest potential for reduced gasoline consumption of any LDV strategy evaluated in 

this section. 

Electricity generation using the current grid average may generate increases in some 

pollutants, including PM and SOx (Table 2.16). However, because BEVs do not create 

point-of-use emissions, their use can still reduce urban air pollution for all pollutants. 

Furthermore, reductions in pollutants are likely to realized in the future, as discussed in 

Section 3.2.4 in relation to PHEVs. Given the complexity of declining emissions caps and 

the variability in dispatch scenarios over time, the GREET model does not provide 

adequate accuracy for estimating criteria and other pollutant impacts resulting from future 

vehicle charging demands. Assuming the same number of vehicles as for the PHEV 

analysis, however, the emission impacts of BEVs charging under the same conditions 

represented could be larger than those of PHEVs, given a BEV’s greater electric range 

compared to PHEVs. This table shows nationwide decreases in VOC, NOx, and SOx of 0.6, 

1.7, and 0.6 percent, respectively, but small increases in PM10 and mercury (0.2 and 0.4 

percent, respectively), for a representative PHEV scenario. 

 

44Derived from Heywood et al (2008), Tables 11 and 12.
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Table 2.16 Emissions from Battery Electric Vehicle (National Average 

Grid Emissions) versus Conventional Gasoline

Pollutant Change in Emissions versus Gasoline

VOC -91%

CO -98%

NOx -11%

PM10 416%

PM2.5 220%

SOx 494%

a The use of national average grid emissions may not be appropriate to model the emissions impacts of electric 

vehicle charging demands. See Section 3.2.4 for an assessment of the nationwide changes in pollutants from 

a representative PHEV charging scenario; results for a BEV scenario will show similar or greater impacts.

BEVs would incur similar benefits to PHEVs with respect to grid management benefits 

associated with smart charging (see Section 3.2.4). BEVs also operate very quietly and can 

reduce noise pollution, and the charging infrastructure cannot create fuel spills as can 

many other alternative fuels. Many vehicle owners also may value the refueling 

convenience associated with home recharging, as well as the energy security benefits of 

reduced oil use (Burke et al., 2007).

Additionally, BEVs can have excellent acceleration, as well as fewer maintenance 

requirements than conventional vehicles as they have relatively simple powertrains 

(Kromer and Heywood, 2007). Another possible cobenefit of widespread use of BEV and 

PHEV charging systems would come from the use of smart chargers. These chargers 

could be remotely signaled to alter charge rates to perform load frequency control for the 

grid power system. This could result in more efficient grid electric generation if 

widespread use was achieved.

Some of the technology advancement from BEV research can facilitate the advancement of 

HEV and PHEV technology as well, and vice versa. Even if, as described above, BEV 

technology does not become widespread, research in this field is not lost as it can benefit 

other types of electric power platforms, especially with regards to battery technology.
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Feasibility

Electricity is widely available, and electric vehicles can be charged at home or at public 

charging stations using inductive or conductive systems. Inductive charging systems use 

“paddles” inserted into the vehicle charging port to transfer power through the generation 

of a magnetic field. Conductive charging, the method used by most on-board chargers, 

uses a connector for direct electrical connection in the vehicle’s internal charge port. The 

most practical option for BEV recharging is residential, where the BEV is plugged in 

overnight to recharge. This recharge method can utilize a standard 120 V AC outlet. 

However, since this type of residential outlet can only provide a relatively small amount of 

power, long charging times are required, possibly overnight. As an alternative, users can 

have a dedicated residential recharge station installed utilizing household 240 V power to 

allow for faster charging times.

The current operating zone for BEVs is highly limited due to the very small number of 

public access recharging stations. In order to circumvent the classic chicken and egg 

dilemma between vehicles and fueling networks, a California startup, Better Place, 

currently is implementing an aggressive installation scenario for thousands of public 

access recharging in certain vehicle operating “islands” in Denmark, Hawaii, and San 

Francisco. BEV purchases are offered through the company at deep discounts, with 

electricity purchases made through complex software management systems at designated 

public access locations. The company also intends to offer participants access to battery 

swap locations along intercity thoroughfares in order to extend operating zones beyond 

the core islands (BetterPlace, 2009). The ultimate success of such a “leap-frogging”

approach may hinge on consumer acceptance of restricted charging and battery swap 

locations.

In addition to limited vehicle availability and public charging access, few mechanics have 

experience servicing BEVs, and most work must be done by a specialist or dealer. For this 

reason, most BEV leases include free dealer maintenance over the period of the contract. 

In the absence of quantum “leap-frogging” of the kind described above, BEV battery 

energy density and cost issues must be addressed to effectively extend vehicle range. The 

most common types of batteries used in BEVs, as well as HEVs and PHEVs, are NiMH and 

Li-ion. Currently, NiMH batteries dominate the automotive battery market, although 

Li-ion batteries have the potential to make substantial in-roads over time. Recent testing 

indicates that both Li-ion and NiMH systems are likely to attain the U.S. Advanced Battery 

Consortium goal of a 10-year battery life.45

 

45> 1,000 cycles at 80 percent depth of discharge (Burke et al., 2007).

 Section 3.2.4 provides additional details 

regarding both battery technologies.
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There also are operational obstacles that go beyond battery capacity and installation of the 

charging infrastructure. As noted above, charge duration can require several hours. There 

are designs for fast chargers available, but battery life could be negatively impacted by 

increased charge rates. In addition, battery life also is generally determined by the total 

number of charge cycles. A single charge per day would allow batteries designed in the 

near term to last nearly the life of the vehicle. Charging multiple times per day could 

necessitate the early replacement of the battery near the middle of the vehicle’s life at 

significant cost. 

For centrally garaged fleet vehicles, and for private vehicles on short- and mediumdistance commuting trips, the above performance limitations might not greatly affect the 

suitability of BEVs. The feasibility of BEVs for long-distance travel remains a challenge 

with current technology, although battery swap locations may ameliorate this difficulty to

some extent.

With the continuing advancement in battery and vehicle technology, BEVs are capable of 

achieving speed performance comparable to or better than conventional vehicles. One 

manufacturer, Tesla Motors, currently is testing electric cars that are capable of 125 mph 

with better acceleration than conventional vehicles (Tesla Motors, 2009).
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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U.S. Department of Energy (DOE) (2005). “DOE Hydrogen Program Record #5013: 

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Round of Small-Scale Biorefinery Projects for Up to $114 Million in Federal Funding.” 

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U.S. Department of Energy (DOE) (2009e). “Hydrogen Research and Development.” 

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Development Issues. Congressional Research Service Report for Congress, January 7, 2005.

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Issues. Congressional Research Service Report RL30484.

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Annual Meeting of the Transportation Research Board, January 2009.
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3.0 Vehicle Fuel Efficiency

Table of Contents

List of Tables....................................................................................................................................3-3

List of Figures...................................................................................................................................3-4

3.1 Summary.....................................................................................................................................3-5

Summary of Impacts.....................................................................................................................3-6

Policy Implications......................................................................................................................3-11

Summary Evaluation..................................................................................................................3-15

Cobenefits and Implications for Other Key Transportation Goals and Objectives................3-18

Effects on Infrastructure Funding..............................................................................................3-19

3.2 On-Road Light-Duty Vehicles................................................................................................3-20

Trends in Light-Duty Vehicle Use and Efficiency....................................................................3-21

Methodological Issues ................................................................................................................3-24

Advanced Conventional Gasoline Vehicles..............................................................................3-24

Enhanced Diesel Vehicles...........................................................................................................3-35

Hybrid Electric Vehicles .............................................................................................................3-40

Plug-in Hybrid Electric Vehicles................................................................................................3-44

3.3 On-Road Heavy-Duty Vehicles: Trucks...............................................................................3-56

Resistance and Weight Reduction Strategies............................................................................3-61

Heavy-Duty Engine/Powertrain Measures and Integrated Strategies ..................................3-72

3.4 Transit Buses ............................................................................................................................3-83

3.5 Railroad Technologies.............................................................................................................3-87

Power System Modifications......................................................................................................3-88

Other Rail Fuel Economy Strategies..........................................................................................3-93

3.6 Marine Vessel Technologies...................................................................................................3-96

Improvements in Ship Design ...................................................................................................3-97

Propulsion System Improvements ..........................................................................................3-101

Enhanced Propeller Design......................................................................................................3-104

Future Technologies .................................................................................................................3-106
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3.7 Aircraft Technologies ............................................................................................................3-109

Advanced Engine Technologies ..............................................................................................3-110

Advanced Airframe/Wing Design..........................................................................................3-112

3.8 Vehicle Air Conditioning System Measures ......................................................................3-116

Overview ...................................................................................................................................3-116

3.9 References...............................................................................................................................3-125
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List of Tables

Table 3.1A: Vehicle Fuel Efficiency Options Summary Evaluation ....................................3-16

Table 3.1B: Vehicle Fuel Efficiency Options Summary Evaluation (continued)................3-17

Table 3.2A: Estimated Time Lag for Major Market Share Penetration for Selected 

Technologies.........................................................................................................3-23

Table 3.2B: Advanced Gasoline Vehicle Technologies Packaged for Analysis.......................3-30

Table 3.2C: Advanced Gasoline Fuel Economy and Consumption Improvement Potential....

...............................................................................................................................3-31

Table 3.2D: Comparison of Advanced Gasoline Technology Package with Costs and 

Benefits from 2011 NHTSA CAFE Rulemaking.................................................3-33

Table 3.2E: Advanced Diesel Vehicle Technologies Packaged for Analysis...........................3-37

Table 3.2F: Diesel Fuel Economy and Consumption Improvement Potential....................3-37

Table 3.2G : Pollutant Emissions, Diesel versus Conventional Gasoline Vehicle ...............3-38

Table 3.2H: HEV Fuel Economy and Consumption Improvement Potential......................3-42

Table 3.2I: Percent GHG Reduction Range by AER and Time Period ...................................3-48

Table 3.2J: Projected Incremental PHEV Costs by AER and Time Period.............................3-50

Table 3.3A: Aerodynamic and Resistance Reduction Technologies Packaged for Near-Term 

Analysis.................................................................................................................3-66

Table 3.3B: Aerodynamic and Resistance Reduction Technologies Fuel Economy and 

Consumption Improvement Potential................................................................3-67

Table 3.3C: Incremental Costs of Resistance Reduction Strategies ......................................3-68

Table 3.3D: Range of HDV Fuel Economy Improvements for Resistance and Powertrain 

Technologies.........................................................................................................3-77

Table 3.3E: Powertrain and Resistance Reduction Technology Package for Medium- to LongTerm Analysis.......................................................................................................3-78

Table 3.3F: Powertrain and Resistance Reduction Technology Package Fuel Economy and 

Consumption Improvement Potential................................................................3-79

Table 3.3G: Incremental Costs of HDV Resistance and Powertrain Technologies (Dollars per 

Vehicle) .................................................................................................................3-80

Table 3.4: Class I Railroad Fuel Usage ....................................................................................3-88
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List of Figures

Figure 3.1: Projected per Vehicle GHG Reductions of Light-Duty Vehicle/Fuel Technologies 

Compared to Baseline Conventional Gasoline Vehicle...............................................3-7

Figure 3.2: Fuel Economy Trends..................................................................................................3-22

Figure 3.3: Classification of Hybrid Vehicles by Onboard Electrical Power..............................3-45

Figure 3.4: Percent of VMT on Electricity versus All-Electric Range (AER) ..............................3-46

Figure 3.5: GHG Emissions versus AER for Different PHEV Fuel Sources ...............................3-49

Figure 3.6: Class 8 Truck Energy Audit ........................................................................................3-58

Figure 3.7: Class 6 Truck Energy Audit ........................................................................................3-59

Figure 3.8: Aerodynamic versus "Classic" Cab Profile ................................................................3-62

Figure 3.9: Range of Typical CO2 Efficiencies for Various Cargo Carriers, g CO2/tonne-km.3-97

Figure 3.10: Counter-Rotating Propellers....................................................................................3-104

Figure 3.11: Nozzles Enclosing Propeller to Reduce Friction Losses........................................3-104

Figure 3.12: Flettner Rotors..........................................................................................................3-106

Figure 3.13: Solar Wings...............................................................................................................3-106

Figure 3.14: Multilayer Panels on Tail Fins.................................................................................3-112

Figure 3.15:Winglet......................................................................................................................3-112

Figure 3.16: Spiroid Wing Tip......................................................................................................3-113

Figure 3.17: Blended Wing ...........................................................................................................3-113
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 3.1 Summary

This section investigates technological advances that could lower GHG emissions from 

transportation through improved efficiency of on-road vehicles (including light- and 

heavy-duty vehicles), as well as of other transportation modes, including aircraft, rail

locomotives, cars, and commercial marine vessels.

1

Improved vehicle fuel efficiency can be achieved through advanced engine and 

transmission designs, use of light-weight materials, improved aerodynamics, and reduced 

rolling resistance, among other means. Refrigerants are also discussed in this section, as 

hydrofluorocarbons (HFC) used in vehicle air conditioning (A/C) systems such as R134a 

are powerful greenhouse gases, and HFC emissions also can be reduced through 

improved A/C system design or the use of alternative refrigerants.

The evaluation considers technologies 

that currently are available or close to commercialization, as well as more advanced 

strategies that may not be available for a decade or more.

2

• Light-duty on-road vehicles (passenger cars, light trucks, and sport-utility vehicles), 

including advanced conventional gasoline technologies, replacement of gasoline with 

diesel vehicles, hybrid, and plug-in hybrid electric vehicles (Section 3.2);

 Vehicle technology 

strategies are discussed in this section for the following types of vehicles:

• Heavy-duty on-road vehicles (heavy trucks) primarily involved in freight movement, 

including resistance and weight reduction strategies, as well as engine and powertrain 

improvement options (Section 3.3);

• Transit buses, including powertrain hybridization and alternative fuels (Section 3.4);

• Railroads, including yard and line-haul locomotives and trains (Section 3.5);

• Marine vessels in commercial use (Section 3.6); and

• Aircraft (Section 3.7).

Section 3.8 discusses strategies for reducing GHG emissions associated with air 

conditioning systems, including the use of alternate refrigerants and engine load 

reduction.

Certain advanced vehicle technologies are coupled with alternative fuel strategies that 

may depend on modified infrastructure, such as biofuel networks, fuel cell vehicles which 

rely on hydrogen, and pure electric vehicles which require a source of electricity to charge 

 

1 In this section, the term “vehicles” collectively refers to aircraft, marine vessels, and rail 

locomotives and cars, as well as to on-road vehicles (cars and trucks).

2 R134a has a global warming potential of 1,300 (U.S. EPA, 2009a).
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their batteries. These strategies are discussed in Section 2.0, in the context of their 

associated fuel requirements.

Much work currently is underway in the area of evaluating the effectiveness and costs of 

various vehicle technologies in reducing fuel consumption and greenhouse gas emissions. 

The National Academy of Sciences is undertaking a study on light-duty vehicle 

technologies that will be available at the end of 2009 and a study on heavy-duty

technologies that will be available in 2010. The National Highway Traffic Safety 

Administration (NHTSA) is conducting state-of-the-art vehicle simulations as part of its 

analysis for the notice of proposed rulemaking for the 2012-2016 Corporate Average Fuel 

Economy (CAFE) standard (NHTSA, 2008a). NHTSA is also working on a study of 

medium- and heavy-duty vehicle and work truck fuel efficiency. This Report to Congress 

provides information from studies available at the time of writing (generally through June 

2009, although some studies released as late as September 2009 are referenced). This 

section of the Report to Congress attempts to provide useful information to Congress 

regarding the potential of vehicle efficiency strategies to reduce greenhouse gas emissions 

in the near, medium, and long terms by citing ranges of effectiveness and costs from the 

literature, evaluating technologies against a common baseline, and discussing key 

considerations. Key uncertainties and differences between analyses are noted.

Assessing the benefits of any particular strategy or set of strategies is a complicated and 

often controversial task that is best done at the time a strategy or set of strategies is being 

considered as a path forward. It is also critical to include in such an analysis the best, 

most current data and reliable assumptions.

Summary of Impacts

Vehicle fuel efficiency strategies have the potential to generate significant emission 

reductions, especially in the medium to long term as the vehicle fleet turns over and new 

technology is phased in.3 The greatest potential exists in the light-duty sector, since it is 

responsible for the greatest amount of GHG emissions and also experiences relatively 

quick fleet turnover compared to other sectors – with the vast majority of the vehicle fleet 

turning over within 15 years, compared to 20 years or more for trucks and up to 40 years 

for locomotives, marine vessels, and aircraft. However, each of these strategies is

expected to penetrate the market to some degree on its own without further government 

incentives or mandates. Therefore for a given market penetration level, the incremental 

emission reductions obtainable from these strategies will be diminished somewhat over 

time when compared against a baseline forecast, as opposed to current conditions.

4

 

3 In this report, “near-term” refers to the 2010-2015 timeframe, “medium-term” to 2030, and “longterm” to 2050.

Some 

4 All comparisons in this section (and throughout this report) are made with respect to the U.S. 

Department of Energy (DOE) Annual Energy Outlook (AEO) Reference case forecast through 

(Footnote continued on next page...)
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short-term gains also are possible through retrofits to existing heavy-duty and off-road 

vehicles.

Figure 3.1 Projected per Vehicle GHG Reductions of Light-Duty 

Vehicle/Fuel Technologies Compared to Baseline Conventional Gasoline 

Vehicle

0

1 0

2 0

3 0

4 0

5 0

6 0

7 0

8 0

9 0

100

Battery

electric

H yd ro g e n

fuel cell

Plug-in

h yb rid

electric

H yb rid

electric

Ad va n ce d

co n ve n tio n a l

gasoline

Diesel

Percent Reduction in Life-Cycle GHG versus Conventional Gasoline 

Source: Eastern Research Group, Inc. analysis as presented in Vol. 2, Sec. 2.8 and 2.9 (hydrogen fuel cell and 

battery electric) and Vol. 2, Sec. 3.2 (other vehicle types). The ranges shown represent GHG reductions for 2030 and 

beyond, with the low end of the battery electric and hydrogen fuel cell ranges reflecting 2030 impacts and the high end 

reflecting additional advances through 2050.

Advanced conventional gasoline vehicle strategies range from minor changes to current 

engine characteristics to complete modification in the way fuel is burned. Most of these 

strategies, including component electrification and advanced engine controls, already are 

demonstrated and are beginning to penetrate the market. These strategies are estimated 

to provide a reduction in fuel consumption of 8 to 30 percent per vehicle in the medium to 

long term. These vehicles will have very similar performance and maintenance 

requirements compared to conventional vehicles. Costs will be somewhat higher (up to 

 

2030 (April 2009 release). With respect to vehicle technology, the AEO forecast accounts for the 

goal established under the 2007 Energy Independence and Security Act (EISA) to obtain a new 

vehicle average fuel economy of 35 mpg by 2020. The forecast does not include specific CAFE 

updates, nor changes to the standards proposed by the Obama Administration in 2009 to be 

consistent with proposed greenhouse gas emission reduction requirements in California. The 

AEO Reference case also includes some penetration of hybrid-electric vehicles into the market 

(10 percent of the vehicle stock). The AEO also assumes efficiency improvements to other modes, 

to varying degrees, as a result of technology improvements driven by market forces.
Transportations Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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$1,000 per vehicle), but should be more than paid back in fuel savings over the life of the 

vehicle.

5

Replacing conventional gasoline vehicles with comparable diesel vehicles can provide 

substantial per-vehicle reductions in GHG emissions, about 16 percent, due to inherent 

efficiencies in the diesel engine cycle. Light-duty diesel vehicles, while common in 

Europe, are almost absent from the U.S. market, and would require ramping up of 

production and marketing in order to make substantial inroads in the light-duty fleet. 

However, diesel vehicles will face a difficult challenge obtaining market share, having to 

compete with advanced conventional gasoline vehicles whose future fuel efficiency levels 

may approach those of diesels, and at lower overall costs. Light-duty diesels are up to 

$2,000 higher in price than gasoline vehicles due to required engine differences and 

pollutant controls; they may or may not provide a lifetime cost savings, depending upon 

their relative efficiency compared to gasoline vehicles and the relative price difference of 

the fuels.

Hybrid electric vehicles (HEV) can reduce fuel consumption and GHG emissions per 

vehicle between 26 and 54 percent compared to conventional gasoline vehicles. Although 

comprising less than 2 percent of the current fleet, HEV market shares are rising rapidly, 

with numerous models existing or planned for launch by various manufacturers. HEVs 

have a cost premium of roughly $4,500 per vehicle in the near term, although these costs 

are expected to fall somewhat in the future, to about $3,000 per unit; fuel cost savings 

could potentially lead to a net savings over the vehicle’s lifetime as production costs come 

down. The incremental benefits of HEVs are diminished somewhat as advanced gasoline 

vehicle market shares increase, and HEV cost-effectiveness relative to these vehicles is not 

nearly as favorable as compared with conventional (current technology) gasoline vehicles.

Plug-in hybrid electric vehicles (PHEV) are estimated to reduce GHG emissions by 46 to 

70 percent per vehicle in the medium term and 49 to 75 percent in the long term, assuming 

a move towards increasingly less GHG-intensive sources of electricity generation. PHEV 

battery technology and cost concerns must still be addressed in order to obtain significant 

market share in the future. PHEV battery costs currently are prohibitively high (about 

$16,000 per vehicle), although projections for future year batteries suggest a cost 

increment of $3,000 to $8,000 in the medium to long term (depending upon the vehicle’s 

all-electric range), which would yield net cost savings over the life of the vehicle due to 

fuel savings. GHG reductions and cost-effectiveness for PHEVs are very sensitive to the 

fuel used to generate the electricity used to charge the battery. In the absence of 

substantial improvements in electricity GHG intensity, the potential GHG reductions for 

PHEVs become more comparable to HEVs, yet costs are greater, so cost-effectiveness is 

lower than for HEVs.

 

5 All of the cost-effectiveness estimates presented in this section are sensitive to the projected cost 

of fuel in the analysis year. Cost assumptions are from the AEO 2009 Reference case for 2030 and 

include: gasoline and diesel – $3.43 (pre-tax); railroad diesel $3.67; jet fuel $3.33; marine bunker 

fuels $2.82. See Appendix A for a more detailed discussion of cost calculations.
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On-road heavy-duty vehicle strategies can provide significant GHG reductions as well, 

beyond efficiency improvements already considered in baseline projections. Unlike most 

vehicle strategies evaluated here, retrofits of heavy-duty trucks (including aerodynamic 

fairings, trailer side skirts, and low-rolling resistance tires, among others), particularly 

long-haul freight trucks, can provide significant reductions in the near term. Most of these 

technologies currently are available. Significant additional reductions in the medium to

long term are possible for engine and powertrain modifications that require time to 

penetrate the fleet. Examples of emerging powertrain technologies include 

turbocompounding, bottoming cycle, and hybridization. Some of these technologies are 

proven and are beginning to penetrate the market (such as hybridization), while others 

(such as bottoming cycle) require further research and demonstration. Per vehicle costs 

can be sizeable, at least $10,000 for aggressive tractor and trailer retrofits, to over $20,000 

per unit for a full suite of retrofit, engine, and powertrain improvements using 

conventional technologies, or over $60,000 using advanced technologies on large (Class 8) 

trucks. Most of these improvements yield net cost savings over the lifetime of the vehicle

due to fuel savings, assuming baseline AEO fuel price projections.

Bus strategies, including hybridization and fuel cells, offer substantial reductions on a per 

vehicle basis. However, the entire bus sector, including transit buses, school buses, and 

intercity buses, is responsible for less than 1 percent of total on-road GHG emissions in the 

U.S (about 20 mmt CO2e). As such, no strategy offers more than modest reduction GHG 

potential, with benefits and costs only addressed qualitatively in this section. While 

technology options are generally available, capital costs currently are high due to low 

production volumes and other factors, although initial costs will be at least partially 

recouped over time through operating cost savings.

GHG reductions are possible through the use of genset and hybrid locomotives in rail 

yards (35 to 60 percent per locomotive), as well as through improvements to line-haul 

locomotives and train sets, including more efficient line-haul locomotives (10 to 20 percent

improvement), lightweight cars, aerodynamic improvements, wheel-to-rail lubrication 

technologies, and drive system operation (22 to 31 percent combined improvement per 

train). All of these technologies are commercialized and available for immediate use, 

although some must be phased in over time as fleet turnover occurs. While incurring 

higher up-front capital costs, most of these strategies have the potential to pay for 

themselves in less than 10 years through fuel cost savings.

Improvements to marine vessel design can reduce fuel consumption and GHG emissions 

by 2 to 35 percent per vessel. Changes to propulsion systems (such as diesel-electric or 

hybrid systems) can have a similar impact for vessels that vary their operations frequently 

such as harbor vessel, cruise ships and vessels involved in short sea shipments. Changes 

in propeller design can improve efficiency by 4 to 15 percent while solar photovoltaic 

technologies can provide a fuel savings and GHG reduction of 5 to 7 percent. In the 

longer term, application of devices that utilize wind power to supplement vessel energy 

supply may provide fuel savings between 5 and 30 percent for long-distance vessels. All 

of these technologies are commercially available, although solar photovoltaics are still 

expensive and wind power remains in the demonstration stages. While some 

technologies (such as propeller designs and solar panels) can be retrofit on existing vessels 
Transportations Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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and realize short-term benefits, most must be phased in with new vessels. The rate at 

which benefits are realized will be limited by the slow turnover rate of the commercial 

marine fleet, where vessels may remain in service for 30 to 40 years or more. All are 

expected to lead to net cost savings of the life of the vessel.

Use of new aircraft engine technologies such as improved current engine design, geared 

jet, and open rotor engines can provide an improvement in fuel consumption and

reduction in GHG emissions (10 to 15 percent, with potentially up to 30 percent for openrotor, compared to current aircraft). In the medium to long term, reductions of 20 to 

30 percent may be possible on larger aircraft through the use of the blended wing body 

design. With the exception of improvements to the current engine design, which are 

commercially available, these other aircraft options may be available in the near future (5

to 10 years). On a fleet-wide basis, both aircraft engine and airframe technology 

improvements could potentially increase fuel consumption efficiency by 1.4-2.3% annually 

between 2015–2035 relative to 2015 as the base year.

Vehicle air conditioning (A/C) system measures offer modest to moderate GHG 

reduction potential. Adoption of a “can-ban” eliminating the practice of do-it-yourself 

servicing, or a deposit program for small refrigerant cans, could be implemented in the 

near term, These systems have been demonstrated in various test studies, but are not yet 

commercially available. A/C system loads also can be reduced (lowering GHG emissions 

by reducing main engine loads) through the adoption of reflective glazing (to lower cabin 

temperatures), and adoption of other A/C system modifications. Per unit costs for 

alternative refrigerant systems are expected to be relatively low at full production (less 

than $100 per vehicle), although the costs incurred for professional servicing under a canban can be several hundred dollars over the life of the vehicle; the cost-effectiveness of 

alternative refrigerants is estimated to be in the range of $40 to $90 per tonne CO2e.

The Rebound Effect

Benefits from technology strategies may be somewhat offset due to the “rebound effect.” 

This effect can be characterized as the extent to which fuel savings (and corresponding 

GHG reductions) from vehicle fuel efficiency improvements are offset by increased travel, 

because travel is made cheaper per-mile due to reduced fuel costs. The National Highway 

and Traffic Safety Administration used a 10 percent rebound effect in its analysis of fuel 

savings and other benefits from higher CAFE standards for MY 2012–2016 vehicles. 

Recognizing the uncertainty surrounding the 10 percent estimate, the agency analyzed the 

sensitivity of its benefits estimates to a range of values for the rebound effect from 5 

percent to 15 percent. (NHTSA, 2009). (For more detail on the rebound effect, see 

Appendix A.)

The impact of the rebound effect is fairly straightforward to demonstrate in the case of 

strategies that improve the efficiency of existing gasoline or diesel vehicles. For example, 

if advanced gasoline technology improved fuel efficiency by 20 percent, a 15 percent

rebound effect would reduce the overall fuel savings and GHG reduction benefits by 

3 percent (15 percent of 20 percent), to 17 percent. For efficiency improvements that 

involve the use of different fuels (such as switching from gasoline to diesel or PHEVs that 
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run partially on electricity), the effect is more complicated as it will depend upon the 

relative cost per mile of the different fuels compared to gasoline.

The estimates cited by NHTSA and commonly found in the literature apply only to 

personal travel using light-duty vehicles. A rebound effect could theoretically be present 

for other passenger modes (including personal travel by bus, rail, and air) as well as for 

goods movement, if the total cost of travel or goods movement is reduced. However, 

these effects, while not extensively studied, are likely to be small. Nonfuel costs (e.g., 

labor) make up a more significant proportion of overall costs, and for goods, shipping 

costs usually make up a relatively small proportion of a product’s overall costs. 

Furthermore, since all costs (including vehicle capital costs as well as fuel costs) would be 

passed on to the traveler or consumer—not just the per-mile costs—any increase in vehicle 

costs due to advanced technologies would offset reductions in fuel costs from the traveler 

or consumer’s viewpoint.

Policy Implications

On-Road Vehicles

Policies to promote on-road vehicle technology strategies will need to overcome several 

hurdles. Consumers tend to “undervalue” fuel economy improvements—i.e., they value 

fuel savings over only part of the lifetime of the vehicle when making vehicle purchase 

decisions, limiting the amount of increased initial cost that manufacturers can pass on to 

consumers. NHTSA assumes that consumers value five years worth of fuel savings (the 

current average term of consumer loans to finance new vehicles) (NHTSA, 2008b). Other 

studies have shown shorter periods, with Greene (2007) concluding that consumers have a 

willingness to pay for only about two years of fuel savings. In contrast, about half of the 

light-duty vehicles sold in 2012 are expected to remain in service for 14 years or more.

In the absence of strong consumer interest in fuel economy, technology has been put 

towards increasing horsepower rather than efficiency. Uncertainty in future fuel prices 

also limits interest in potential advanced technologies. The vehicle fleet turns over 

relatively slowly, and retrofits are practical only for some heavy-duty vehicle 

technologies. Evidence suggests that even heavy-duty vehicle operators require a 

payback period of four years or less for fuel-saving improvements—meaning that many 

enhancements with net lifetime cost benefits may not be retrofit or introduced with new 

vehicles. Finally, some heavy-duty vehicle design strategies require coordination between 

tractor and trailer manufacturers.

Fuel economy standards have been the main policy mechanism used in the United States 

to improve the vehicle efficiency of light-duty vehicles. Fuel economy standards and 

greenhouse gas emission standards have the advantage of overcoming consumers’ short 

payback period and undervaluing of fuel economy. The first corporate average fuel 

economy (CAFE) standards were passed in 1975 in the wake of the Arab oil embargo; it is 

estimated that light trucks and passenger cars would have emitted an additional 11 billion 

metric tons of CO2 into the atmosphere between 1975 and 2005 had the CAFE standards 
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not been enacted (NHTSA, 2009a). Recently, there has been new activity in establishing 

fuel economy or emission standards. The 2007 Energy Independence and Security Act 

(EISA) required a 40 percent increase in fuel economy, to 35 miles per gallon (mpg) by 

2020 for all light-duty vehicles; required the establishment of new fuel economy standards 

for both medium- and heavy-duty commercial vehicles; and made other changes to allow 

NHTSA to establish light-duty vehicle standards to minimize adverse safety impacts. In 

early 2009, NHTSA set new fuel economy standards for the 2011 model year that will 

achieve an industry-wide combined fleet average fuel economy of 27.3 miles per gallon

(NHTSA, 2009b). That rule, for the first time, incorporated an analysis of GHG impacts

associated with the new standards.

In 2009, NHTSA and the United States Environmental Protection Agency (EPA) worked in 

concert to develop a consistent, harmonized National Program to deliver substantial 

further improvements in fuel economy and reductions in GHG emissions for new cars and 

light-duty trucks. On May 22, 2009, these agencies issued a notice of intent to conduct a 

joint rulemaking to establish aggressive new CAFE standards and vehicle GHG emissions 

standards for passenger cars, light-duty trucks, and medium-duty passenger vehicles built 

in model years 2012 through 2016. In addition, on September 28, 2009, NHTSA and EPA 

announced in the Federal Register the Proposed Rulemaking To Establish Light-Duty 

Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy 

Standards (See 74 FR 49454). NHTSA also prepared an environmental impact statement to 

analyze and disclose the potential environmental impacts of the proposed model years 

2012 through 2016 Corporate Average Fuel Economy standards (See 74 FR 48894). The 

proposed standards would increase light-duty vehicle fuel efficiency by an average of 

5 percent each year between 2012 and 2016 and require new vehicles to meet an average of 

35.5 mpg by 2016 (White House, 2009), effectively equivalent to the requirement of 250 

grams of CO2 per mile that the State of California had proposed in this same timeframe. 

The Agencies’ announced intention is to achieve these results through the use of

technology that will be commercially available and can be incorporated at a reasonable 

cost. In addition to the NHTSA’s proposed fuel economy standards, EPA expects to 

propose the first ever Federal emissions standards for greenhouse gases using its 

authority under the Clean Air Act (CAA). The intent of the National Program is to allow 

auto manufacturers to build a single light-duty national fleet which satisfies requirements 

under both programs. Moreover, the National Academy of Sciences is currently 

conducting a study on fuel economy standards for work truck, medium and heavy duty 

vehicles that NHTSA will rely upon to set future standards for these types of vehicles.

In addition to raising standards for fuel economy, future mileage testing procedures for 

fuel economy standards could be modified to account for aspects of vehicle operation that 

currently are not included in testing, such as power steering and air conditioner operation. 

This would give manufacturers an incentive to increase efficiency of these components as 

well. Standards also could address HFC emissions used in air conditioners and 

refrigeration equipment, through best management practices or other regulations to 

reduce leaks and require proper recycling and disposal of HFCs during maintenance.

Beyond fuel economy or emission standards, a variety of other policy options can be 

considered to encourage consumers to purchase more fuel-efficient vehicles. Fuel 
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economy fees and rebates (“fee-bates”) provide financial incentives to purchase more fuelefficient vehicles. An analysis for the U.S. Department of Energy (DOE) found that a

feebate equivalent to a $107 rebate for each additional mile per gallon fuel economy above 

26 mpg (or fee of $107 for each mpg below 26 mpg) results in a higher level of fleet fuel 

economy than a $3 per gallon fuel price and equivalent cumulative fuel savings in 2020, 

but does not achieve fuel savings as great as CAFE levels of 40/30 mpg for cars and light 

trucks (EEA, 2008). Fuel or carbon taxes also encourage this behavior by raising the price 

of fuel. Tax incentives, such as those already offered for hybrid vehicles can be used to 

promote particular technologies or be based on fuel consumption. Certain hybrid-electric 

vehicles currently are eligible for tax credits of up to $3,000 per vehicle, offered through 

the end of 2010 by the Internal Revenue Service (IRS); and the Energy Policy Act of 2005 

included tax credits of up to $12,000 for hybrid heavy-duty vehicles, based on the fuel 

efficiency and weight of a particular vehicle.

Consumer education strategies, such as labeling, regarding the relative efficiency of 

vehicles and tires (or other vehicle components) can be used as a strategy to help 

consumers to integrate fuel economy into their purchasing decisions. Existing education 

programs include EPAs Green Vehicle Guide, first launched in 2001 to give consumers 

information about the environmental performance of different vehicles using a rating 

system; the DOEs web site, www.fueleconomy.gov, a similar initiative; and SmartWay, a 

voluntary collaboration between EPA and the freight industry to reduce greenhouse gases 

and air pollution by conferring a special designation to vehicles that perform well. 

Section 5.5.2 provides details on these programs. Finally, to address the slow rate of fleet 

turnover, vehicle scrappage programs can be used to remove old, less efficient vehicles 

from the roads. Such programs were first applied in California in the 1990s to remove 

polluting vehicles from the road. In June 2009 the Federal “Cash for Clunkers” bill was 

signed into law establishing the Car Allowance Rebate System (CARS), which provides a 

$3,500 to $4,500 rebate for trade-in of a used car or truck for a new vehicle with a 

minimum fuel economy improvement compared to the used vehicle (the program also 

allows for trade-in of older model trucks that are not rated for fuel economy).

The heavy-duty vehicle fleet offers opportunities for funding or financing retrofits with 

grants and low-cost loans (such as are available through EPA’s SmartWay program, or 

have been offered through California’s Carl Moyers program to reduce air pollutant 

emissions). Some attempts have been made to mandate improvements to the heavy-duty

vehicle fleet beyond Federal regulations; the Clean Air Action Plan for the Ports of Los 

Angeles and Long Beach includes a Clean Trucks Program that bars pre-1989 trucks from 

entering the ports and imposes fees on newer vehicles that do not meet the port’s 

standards, and the California Air Resource Board is considering measures that would 

require SmartWay-type retrofits on all heavy-duty vehicles (MJ Bradley, 2009). For transit 

vehicles, public funding can be directed at purchasing hybrid vehicles and alternative 

fuels.

Finally, government funding could accelerate the pace of research and development into 

advanced automotive technologies. This could make new technologies more cost-effective 

and feasible and increase the options available for the future vehicle fleet. In addition, 

government partnerships (such as EPA’s recent partnership with UPS to introduce hybrid 
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delivery trucks) can be used to introduce new heavy-duty vehicle technology, or to 

achieve coordination regarding new design standards among tractor and trailer 

manufacturers.

Air, Rail, and Marine

Unlike the on-road sector, there are no regulations that define fuel efficiency standards for 

railroads, marine vessels, and aircraft. Improvements in efficiency have been primarily 

driven by economic considerations; locomotives, vessels, and aircraft that have better fuel 

efficiency tend to have an advantage in the marketplace over competitors with poorer fuel 

efficiency. Fuel currently represents the largest operating cost for U.S. airlines, which 

increases their incentive to reduce fuel consumption. As fuel prices increase, business cost 

savings will probably continue to enable the introduction of new technologies.

Although there are EPA emission standards for criteria pollutants for non road categories 

and associated fuels, there are no standards that specifically regulate GHG emissions for 

railroads, marine vessels, and aircraft. Within each subsector there are voluntary 

programs; both governmental and nongovernmental programs have been implemented to 

encourage improvements in fuel efficiency and reductions in GHG emissions. For 

example, the Association of American Railroads created a research division, the 

Transportation Technology Center, to encourage the use of clean, safe, and efficient 

technologies by railroads. Recently, the International Maritime Organization (IMO) 

completed a comprehensive assessment of marine vessel GHG emissions and potential 

control options. Similarly, the Committee on Aviation Environmental Protection (CAEP) 

of the International Civil Aviation Organization (ICAO) has set international standards for 

new engines and has targeted an improvement in fuel efficiency of 20 percent by 2020. 

Currently, ICAO members are developing a global framework to address international 

aviation greenhouse gas emissions.

In developing new policies that encourage the introduction of new air, rail, and marine 

technologies it will be necessary to address barriers that include:

• Long vehicle lifespan, such that fleet turnover is relatively slow.

• The high capital cost of aircraft, locomotives, rail cars, and marine vessels, which

encourages owners to maintain older technologies for as long as possible.

• The high capital cost associated with commercialization of new technologies. This is 

most apparent for aircraft manufacturers, where development costs often require 

billions of dollars of investment, and limit how frequently new aircraft designs can be 

introduced.

• Cost uncertainty associated with technologies (particularly for technologies that have 

very tight profit margins) as well as with actual fuel savings and emission reductions.

• Infrastructure issues associated with the vehicle, which may restrict application for 

some of the technologies investigated in this study. For example, blended wing 
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aircraft will need specially constructed terminals for boarding passengers and loading 

freight.

Federal policy and funding could potentially accelerate the introduction of new rail, 

marine, and aviation technologies at a faster rate than current voluntary and market-based 

approaches. Funding of research and development activities could advance and facilitate 

some of the technologies that appear to be viable but have not been made commercial. 

Existing State programs in California and Texas help subsidize rail and marine 

technologies; while these programs have been undertaken with the goal of reducing air 

pollution emissions, some of the technologies they have encouraged are reducing 

greenhouse gas emissions as well. In particular, most of the railroad gensets and hybrid 

engines are located in these two States. Implementation of a Federal program could help 

facilitate the distribution of these technologies throughout the United States.

Federal low-interest loan programs and tax incentives also have been adopted for 

purchase of various energy efficiency components and could be expanded to help defer 

capital costs for other types of equipment. For example, the EPA’s SmartWay program 

offers a variety of financing programs for the purchase or lease of idle reduction 

technologies, and the Energy Improvement and Extension Act of 2008 eliminated the 

12 percent excise tax on idle reduction devices for new trucks (see Section 4.4.1). 

Adoption of energy-efficient technologies also may be encouraged through voluntary 

programs such as the U.S. EPA’s SmartWay Program. This program serves as a 

clearinghouse for information on environmentally beneficial practices in the freight 

industry, and offers public relations “branding” for those companies with notable 

environmental performance.

Summary Evaluation

Table 3.1A summarizes the strategies discussed in this section and presents estimates from 

the literature of per vehicle GHG reductions compared to conventional vehicles as well as 

a summary of key Federal policy initiatives that could be used to implement the strategy 

beyond current levels.
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Table 3.1A Vehicle Fuel Efficiency Options 

Summary Evaluation

Strategy

Per Vehicle GHG 

Reduction Compared to 

Conventional Vehicle Key Federal Policy Options

3.2 On-Road Light-Duty Vehicle Strategies

Advanced Conventional Gasoline 

Vehicles

8 – 30% Financial or regulatory incentives for improved fuel 

efficiency (beyond current CAFE requirements)

Diesel Vehicles 16% Financial or regulatory incentives for improved 

fuel/GHG efficiency 

Hybrid Electric Vehicles 26 – 54% Financial or regulatory incentives for improved fuel 

efficiency (beyond current CAFE requirements)

Plug-In Hybrid Electric Vehicles 46 – 75% Funding for additional research on battery 

efficiency, performance, and cost

Tax credits for early introduction/adoption

Public recharging infrastructure and favorable 

utility rates for nighttime charging

3.3 On-RoadHeavy-Duty Vehicle Strategies

Retrofits of heavy-duty trucks to 

use aerodynamic fairings, trailer 

side skirts, low-rolling resistance 

tires, aluminum wheels, and planar 

boat tails

Powertrain and Resistance 

Reduction for New Trucks

10 – 15%

10 – 30%

Financial incentives for purchase of retrofits

Financial or regulatory incentives for improved fuel 

efficiency

Requirements for proven technologies

Demonstration programs/partnerships

3.4 Transit Bus Strategies

Assorted vehicle/

fuel options

10 – 50% for hybrid 

electric buses

Financial support for transit agency purchase of 

advanced vehicles

3.5 Rail

Power System Modifications 

• Common rail injection systems

• Genseit engines

• Hybrid yard engines

• Hybrid line-haul operations

Train Efficiency Improvements

• Light weight railcars, 

aerodynamics, wheel to rail 

lubrication

• Improving load configuration 

for intermodal trains

5 – 15%

35 – 50%

35 – 57%

10 - 15%

4-10% individually

up to 27%

Financial incentives for purchase of retrofits

Requirements for proven technologies

Demonstration programs/partnerships

Long-term price incentives for increased fuel 

efficiency
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Table 3.1B Vehicle Fuel Efficiency Options 

Summary Evaluation (continued)

Strategy

Per Vehicle GHG 

Reduction Compared to 

Conventional Vehicle Key Federal Policy Options

3.6 Marine

Improvements to Ship Design and 

Propulsion Systems

4 – 15% for ship design

Up to 20% for diesel 

electric for vessels that 

change speed or load 

frequently (cruise ships, 

harbor tugs, and ferries) 

Work with international marine organizations 

to adopt technology standards and market 

and nonmarket incentives for fuel efficiency 

improvements

Work with domestic operators (ports, ferry) to 

purchase efficient technology

R&D for advanced technologies

3.7 Aviation

Advanced Engine Technologies 

Advanced Air Frame/Wing 

Design

Aircraft fleet-wide advanced 

engine and airframe technologies

10 – 15%

1.6 – 10%

Annual reduction of 1.4–

2.3 during 2015-2035 

relative to year 2015 as 

the base year

R&D for advanced technologies

Demonstration program/partnerships

Financial or regulatory incentives to accelerate 

new technologies

3.8 Vehicle Air Conditioning System Strategies

Reduction of mobile air 

conditioner emissions

Can Deposit/Can-Ban Banning “do-it-yourself” 

refrigerant refills in 

California was estimated

to reduce that State’s 

mobile air conditioner 

emissions by 66%

Regulatory action to require deposit or ban 

do-it-yourself refrigerants

Alternative Refrigerant Systems 

and A/C System Management

Changing refrigerant 

types could reduce 

mobile air conditioning 

emissions by 91.3 to 

99.9% depending on 

refrigerant type and 

mechanical efficiency

Federal action to phase out existing 

refrigerants

Support for industry/government 

partnerships to develop new systems 

standards

Modify vehicle certification test procedures to 

reflect improvements in accessory efficiency
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Cobenefits and Implications for Other Key Transportation Goals and 

Objectives

Vehicle technologies can be evaluated against five goals identified in the U.S. DOT’s 

Strategic Plan, as well as against additional planning factors cited in the Safe, Accountable, 

Flexible, And Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) of 2005.

• Safety – Most of the strategies discussed in this section are not expected to impact 

vehicle safety, although strategies that result in substantially smaller or lighter vehicles 

may adversely affect safety. Improved vehicle maintenance options such as regular 

tire inflation should result in minor safety improvements. Issues related to alternative 

fuel safety are discussed separately in Section 2.0.

• Reduced Congestion/Increased Mobility – The technology strategies investigated 

here may result in some rebound effect due to reduced operating costs per unit of 

travel. The rebound effect represents a benefit to consumers, who are able to travel 

more due to reduced fuel costs; however, this benefit is estimated to represent only a 

small fraction of the total benefits from alternative fuel economy standards (NHTSA, 

2008b). Weight reduction strategies for heavy-duty vehicles may allow for increased 

payloads for some fraction of freight movement, thereby reducing the total number of 

trucks on the road. Use of larger, more efficient locomotives and vessels will reduce 

the amount of railroad and marine vessel traffic while handling more cargo. Beyond 

that, these options are not expected to change the number of vehicles in operation or 

the overall mobility of the associated transportation system.

• Global Connectivity – The technology strategies evaluated here are not expected to 

impact network operations or global connectivity.

• Environmental Stewardship – Technological improvements in vehicle efficiency are 

likely to reduce air pollutant emissions as well. However, the proportionality with 

GHG reductions will differ among pollutants, and some measures may even result 

increased emissions (e.g., NOx associated with higher compression engines). Also, the 

location of emission reductions will vary; strategies that reduce emissions in densely 

populated areas (e.g., roads, rail yards, and airports in population centers) will have a 

greater benefit to public health than those that reduce emissions in rural areas or over 

the ocean. Most light-duty vehicle strategies are unlikely to result in significant air 

pollution benefits because these vehicles currently are regulated to a fleetwide 

average, although HEVs may have an easier time meeting stringent emission 

standards than non-HEV gasoline or diesel vehicles (true for heavy-duty on-road and 

rail vehicles as well), and PHEVs will not produce any emissions when operating on 

all-electric mode. Heavy-duty vehicle resistance reduction strategies may reduce 

emissions as a result of reduced engine loads. On-road, rail, and marine vessel 

strategies involving electric batteries may require additional attention to waste 

disposal and recycling to avoid the improper disposal of toxic materials. In addition, 

alternative materials and manufacturing techniques may have unintended GHG 

impacts and should be subject to life-cycle analyses.
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• Security – Advanced vehicle technologies utilizing conventional fuels may benefit 

national security by reducing dependence upon foreign oil. The reduction in oil use 

will be in direct proportion to GHG reductions for each strategy. 

• Livability – Most of these strategies are not expected to significantly impact livability. 

A few may increase or decrease noise from vehicles.

• Economic Vitality – There may be employment benefits associated with these new 

technologies, particularly if demand for these technologies increases employment 

opportunities in the U.S.

• Efficient System Management and Operation – These technologies do not affect the 

management and operation of the transportation system.

• System Preservation – Most of the vehicle technologies are assumed to have negligible 

impact on preservation of the existing infrastructure. However, use of larger ships 

and locomotives could have negative impacts on port cargo handling equipment, rail 

lines, and yard cargo handling equipment by increasing wear and tear on equipment 

and rail infrastructure; and larger trucking payloads could impact road wear rates 

through increased loads per axle. Use of single-wide tires on heavy-duty trucks also 

may affect highway pavement maintenance requirements, although recent design 

advances may minimize its impact.

Effects on Infrastructure Funding

Improvements in on-road vehicle fuel efficiency will lead to proportionate reductions in 

motor fuel sales and therefore reduced revenue for transportation programs, under the 

current finance structure. The Federal Highway Trust Fund was established in 1957 as a 

dedicated, user-funded source of revenue for the United States highway system and is the 

source of revenue for the Federal-aid Highway Program. Net receipts in FY 2007 were 

$34.3 million to the Highway Account and $5.0 million to the Mass Transit Account 

(FHWA, 2008). 

The on-road vehicle fuel efficiency strategies analyzed in this report will reduce total 

Federal Highway Trust Fund revenues in rough proportion to fuel savings and GHG

reductions. So, for example, if advanced light-duty gasoline vehicles were to achieve a 

20 percent efficiency improvement by 2030 and reach a market penetration of 60 percent, 

Highway Trust Fund revenues would decline by 8 percent, or about $3.1 billion compared 

to FY 2007 receipts.

6

 

6 Gasoline tax receipts accounted for about $25.5 billion of trust fund revenue in FY 2007, or about 

two-thirds of total receipts, so 20 percent * 60 percent * 2/3 = an 8 percent reduction or 

$3.1 billion. This calculation assumes that trust fund revenues remain constant through 2030, 

Strategies focused on heavy-duty vehicles will have a somewhat 

(Footnote continued on next page...)
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greater proportional impact than those focused on light-duty vehicles because of the 

higher tax rate on diesel fuel (24.4 vs. 18.4 cents per gallon). A shift from gasoline to diesel 

light-duty vehicles would have a smaller revenue impact, since while less total fuel is 

consumed, the tax rate on diesel fuel is higher.

This analysis describes potential impacts to Federal transportation revenues under the 

current finance scenario. Funding shortfalls could be mitigated or avoided in the future 

through shifts in tax structures or through alternative infrastructure funding mechanisms.

 3.2 On-Road Light-Duty Vehicles

Light-duty vehicles (LDV) include passenger cars, light trucks, minivans, and sport-utility 

vehicles (SUV).7

Strategies for improving the efficiency and reducing GHG emissions from light-duty 

vehicles discussed in this section include:

 These vehicles are primarily used for personal transportation, although 

some are placed in service for commercial purposes. Light-duty vehicles are the single 

largest GHG-emitting subset of the transportation sector, accounting for over half of U.S. 

transportation greenhouse gas emissions—57 percent, or 1,232 mmt CO2e in 2006. Future 

efficiency improvements established under the 2007 EISA are expected to reduce their 

contribution somewhat, to 1,081 mmt CO2e or 50 percent of all transportation emissions in 

2030. However, light-duty vehicles still represent the single-largest opportunity for 

reducing GHG emissions from the transportation sector.

• Advanced conventional gasoline vehicles, which utilize improvements to the gasoline 

internal combustion (IC) engine along with drivetrain and other vehicle attributes 

(such as wind resistance and weight) to improve fuel efficiency;

• Enhanced diesel vehicles that can meet stringent new emissions standards while 

providing the efficiency and GHG benefits of diesel engines;

• Hybrid-electric vehicles (HEV) that combine the internal combustion (IC) engine of a 

standard vehicle with the motor and battery technology of an electric vehicle; and

• Plug-in hybrid electric vehicles (PHEVs), which are similar to HEVs but have more 

batteries and can plug into the local power grid, beginning each trip on battery power.

Fuel-cell and battery electric vehicles also offer the potential for significant long-term 

gains in light-duty vehicles energy efficiency. These technologies rely on fundamentally 

 

which is consistent with AEO Reference case projections of relatively constant fuel consumption 

(with increases in VMT offsetting increases in fuel efficiency).

7 Trucks and larger vans are classified as light-duty if they have a gross vehicle weight rating (i.e., 

total load carrying capacity) of less than 8,500 pounds.
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different fuel sources (hydrogen and electricity) and therefore are discussed in Section 2.0, 

Low-Carbon Fuels.

This report focuses on the potential GHG benefits of each of these vehicle technology 

strategies if pursued individually. The benefit estimates rely on estimates of both pervehicle GHG reductions, and the potential market penetration of a given vehicle type. As 

such, the GHG benefits of individual vehicle technology strategies cannot be combined to 

give total benefits. It is possible in the future that one particular technology path could be 

taken, or that multiple technologies could be used in different applications, depending 

upon where they are most advantageous. While beyond the scope of this report, estimates 

of total GHG benefits achievable from the light-duty vehicle sector could be developed 

through the analysis of alternative market penetration scenarios that combine different 

technology types. Nevertheless, the information presented in this report is helpful in 

assessing which vehicle technology options may provide the greatest benefits, as well as 

the costs or cost savings that might be realized from each technology.

Trends in Light-Duty Vehicle Use and Efficiency

The total miles traveled by LDVs has increased quite steadily over the past 35 years, more 

than doubling since 1970. During this time, both the total number of vehicles and the 

average miles traveled per vehicle have increased considerably, as has the share of 

heavier, lower fuel efficiency SUVs and light trucks, which now constituting about half of

all new vehicle sales in the United States (AEO Table 57).8

While LDV fuel economy has remained relatively flat since the mid 1980s, the automotive 

industry has continually improved the efficiency of the vehicles themselves. However, 

these advances have been used to enhance vehicle performance and utility, and to permit 

weight increases, rather than in the service of increasing miles per gallon ratings. In fact, 

 All of these factors have 

contributed to the steady growth in GHG emissions from LDVs. Other factors have 

tended to diminish LDV emissions during this time, however. For example, the adoption 

of the CAFE standards in the 1970s significantly constrained GHG reductions over time. 

According to the 2008 EPA Fuel Economy Trends report, “Since 1975, the fuel economy of 

the combined car and light truck fleet has moved through several phases: 1) a rapid 

increase from 1975 to the early 1980s, 2) a slow increase to the fuel economy peak of 

22.0 mpg in 1987, 3) a gradual decline from the peak to 19.3 mpg in 2004, and

4) consecutive annual increases beginning in 2005, growing to 20.8 mpg in 2008” (U.S. 

EPA, 2008a). Figure 3.2 displays these trends since 1975.

 

8 The sales fraction of light trucks and SUVs has been roughly constant since 2002 (U.S. EPA 2008), 

and is assumed to remain at these levels into future years for the purposes of this analysis. 

Heywood et al point out that even with sizable swings in these sales fractions (between 30 and 

70 percent), the resulting impact on fleet wide GHG emissions varies only by about 2 percent 

through 2035 (Heywood et al., 2008).
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it has been estimated that if the technology advances that took place between 1981 and 

2003 had been applied exclusively to fuel economy, fleet average mpg would have 

increased by 33 percent during this period (Bandivadekar et al., 2008). However, 

beginning in 2005 this trend has changed somewhat, with technology improvements also 

being used to improve vehicle fuel economy as well as performance (U.S. EPA, 2008a). 

The recent CAFE revisions will result in further reductions. For example, the adoption of 

the 2011 CAFE standards will increase the fleet average fuel economy by 7.9 percent to 

27.3 mpg, at a relatively low cost of about $91 per vehicle (NHTSA, 2009b).

Figure 3.2 Fuel Economy Trends

 

Adjusted MPG

30

25

20

15

10

1970 1975 1980 1985 1990 1995 2000 2005 2010

Model Year

Cars

Both

Trucks

Source: U.S. EPA (2008a).

Most of the GHG reduction strategies under consideration for LDVs are only available 

through new vehicle manufacture and purchase, rather than through retrofit. In addition, 

the LDV fleet has a lengthy turnover time, with passenger cars and light trucks lasting 

about 16 years on average before retirement (ORNL 2008, Tables 3-10 and 3-11). As such, 

new technology strategies can take a substantial amount of time before they enter the 

market in adequate numbers to generate notable impacts. Considering manufacturer 

product planning and design cycles, one assessment estimates that “if the decision to 

completely redesign vehicles were made today, it would take about 10 years to fully 

implement it in new vehicles.” (Greene and Schafer, 2003). Bandivadekar et al. consider 

even longer timelines to be necessary, depending upon the technology and fuel in 

question, as summarized in Table 3.2A.
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Table 3.2A Estimated Time Lag for Major Market Share Penetration for 

Selected Technologies

Implementation

Gasoline Direct 

Injection

High-Speed 

Diesel with

Particulate Trap, Gasoline Engine/Battery-Motor 

Fuel Cell Hybrid 

with On-Board

Hydrogen

Stage Turbocharged NOx Catalyst Hybrid Plug-in Hybrid a Storage

Market Competitive 

Vehicle

~2-3 years ~ 3 years ~ 3 years ~ 8-10 years ~12-15 years

Penetration Across New 

Vehicle Production

~10 years ~15 years ~15 years ~15 years ~20-25 years

Major Fleet Penetration ~10 years ~10-15 years ~10-15 years ~15 years ~20 years

Total Time Required ~20 years ~25 years ~25-30 years ~30-35 years ~50 years

Source: Bandivadekar et al., (2008), adapted from Schafer et al., 2006.

a The time lag for PHEVs with different electric mode ranges could be significantly different. For example, lower 

electric range PHEVs with smaller batteries (and therefore lower incremental costs) might enter the market more 

quickly than those with larger batteries, if consumer acceptance generates adequate demand.

For many technology and fuel options considered in this report, most or all of the 

incremental vehicle costs may be recovered through subsequent fuel savings. However, 

the payback period may be lengthy (e.g., over 10 years for some of these measures) (U.S. 

EPA, 2005). As LDVs are often resold multiple times over their useful life, a vehicle 

purchaser may not obtain payback during their limited ownership period.9

 Accordingly, 

additional incentives may be required to promote market penetration of these 

technologies, even if the net present value of the technology option is positive over its 

lifetime.10

The GHG reduction technologies being evaluated for the LDV market fall into three broad 

categories: hybrid power systems, fuel cells, and other advanced design features. 

Technologies from one category can have corresponding technologies in another category 

that, by their nature, have increased benefit potential when employed together. As noted 

above, fuel cell technologies are discussed separately in Section 2.0.

 

9 According to industry estimates, payback periods of more than 3 to 4 years are not adequate in 

themselves to drive the market for new technologies (U.S. EPA, 2005).

10This conclusion depends on the extent to which vehicle resale prices incorporate the value of 

future fuel savings (U.S. EPA, 2005).
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Methodological Issues

The LDV analyses presented below are based on findings from the relevant literature 

regarding the effectiveness and costs of the various efficiency improvement options. The 

studies consulted frequently featured different assumptions and calculation methods, 

including the type of vehicle(s) evaluated (e.g., compact, mid-sized, trucks), driving 

patters (urban versus highway), and the technology package of the vehicle to which the 

technology is compared. In addition, assumptions regarding vehicle miles traveled, retail 

price markups, the treatment of fuel taxes and subsidies, acceptable payback periods and 

discount rates vary between studies as well, all of which can have substantial impacts on 

cost and cost-effectiveness estimates. Finally, the elements of the “technology packages”

evaluated in these studies were often different as well. As such, direct comparison of the 

findings from these studies is difficult, and their subsequent use in this analysis must be 

viewed as providing generalized estimates, rather than precise assessments of the 

different technology costs and benefits.

Advanced Conventional Gasoline Vehicles

Overview

Engine and powertrain advancements can increase the efficiency of converting fuel energy 

to vehicle movement. These technologies range from minor changes to current engine 

characteristics to complete modification in the way fuel is burned. These technologies are 

not available for retrofit, and will penetrate the marketplace only through the purchase of 

new vehicles. Many of these technologies will be adopted to meet upcoming CAFE 

requirements. These strategies also may be adopted on an accelerated schedule and/or at 

a higher market penetration level in order to extend their benefits beyond the regulatory 

base case scenario.

Some of the technologies discussed below can be applied to gasoline or diesel engines, 

while others apply only to gasoline systems. Many improvements intended for gasoline 

engines attempt to make them operate more like their more efficient diesel counterparts 

by reducing throttling losses or increasing compression ratios. In effect, these 

technologies attempt to capture diesel-cycle efficiencies without the increased pollutant 

formation.

Technologies that vary air intake and exhaust valve timing, compression ratio, and engine 

displacement all allow engines to operate more efficiently over a wider range of 

conditions. Variable valve timing and variable displacement are technologies currently 

available on a wide range of vehicles, but are still being advanced in ways that can 

provide substantial fuel consumption benefits. Variable valve timing is particularly 

common, being found on approximately half of all new vehicles, while variable 

displacement is less common, being limited to larger six to eight cylinder engines with 

larger pumping losses. (Bandivadekar et al., 2008). On the other hand, variable 
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compression ratio technology is not expected to enter the market in a substantial way for 

at least five years, and will likely have lower penetration due to its greater complexity. As 

a group, these technologies hold promise primarily for gasoline engine improvements, but 

could benefit diesel engines as well.

Other potential improvements in engine operation include changes to gasoline 

combustion systems. Gasoline direct injection (GDI) allows more precise control over incylinder combustion by injecting finer droplets of gasoline into the cylinder instead of the 

intake, as is the case with conventional fuel injection. This technology also allows for 

higher compression ratios to be used, which result in greater engine efficiency. GDI has 

the additional benefit of increased torque output. A long-term goal of GDI research is the 

development of lean (or stratified) 

burning gasoline engines which would 

provide further increases in efficiency, 

although increased NOx emissions 

would need to be offset by further 

improvements in exhaust treatment 

technologies.

Another combustion improvement 

option is Homogeneous Charge 

Compression Ignition (HCCI). Instead 

of a spark plug causing fuel ignition as 

in a standard gasoline engine, the 

HCCI combustion method uses the 

heat of compression to cause ignition 

in a fashion similar to a diesel engine. 

HCCI requires high rates of Exhaust 

Gas Recirculation (EGR), a technology 

currently employed in both gasoline and diesel engines. A high rate of EGR allows for 

higher engine efficiency by eliminating the throttling losses experienced in a gasoline 

engine at low engine loads. This technology can achieve efficiency gains similar to those 

of lean-burn GDI engines, without the increased exhaust pollutant formation. One 

drawback is that HCCI combustion can only take place over a limited range of operating 

conditions and an enhanced electronic control system must manage the engine across 

different combustion modes.

Two transmission technologies are being developed to increase powertrain efficiencies. 

One new technology that is commercially available is the continuously variable 

transmission (CVT). Instead of discrete gears, this type of transmission changes its gear 

ratio in a seamless fashion to eliminate shifting and allow the engine to stay in the most 

efficient operating condition possible. Internal power losses in this type of system 

partially negate its benefits, however. Another transmission technology currently 

entering the market is the dual-clutch transmission (DCT). This type of transmission 

offers automated control of discrete gears as in an automatic transmission, but eliminates 

much of the hydraulic loss associated with an automatic. It operates by having two 

Advanced Conventional Gasoline Vehicles

Per-Vehicle GHG Reductions: 8-30% e 

Net Included Costs: Net Savings: -$180 to -$30 per 

tonne

Confidence in Estimates: Moderate

• Primary benefits uncertainty is market penetration

• Cost-effectiveness will depend on fuel prices

Key Cobenefits and Impacts: Insignificant

Feasibility: High

• Many technologies proven

Key Policy Options:

• Financial and/or regulatory incentives for 

improved fuel efficiency
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separate power flow paths, each with a clutch, that alternate with each shift. Shifts can 

take place more quickly as one clutch can be released as the other is engaging.

Another option being investigated for LDVs involves higher voltage DC systems. In 

conventional vehicles, mechanical power is taken from the engine to run accessory 

functions such as power steering, oil pumps, and water pumps. These accessories tend to 

be overdriven at higher engine speeds. Improvements can be made allowing engine 

accessories to run off of electrical power using a higher voltage system, running them only 

when needed and at their most efficient speeds. Adopting a higher voltage electrical 

system also would enhance the ability to offer automatic start/stop operation similar to 

that of a hybrid vehicle. By having more battery power available, a vehicle’s engine could 

be shut down during braking and idling to save fuel, then instantly restart when the 

driver is ready to accelerate.

In an internal combustion engine fuel energy is transformed into rotational power and 

heat that enters the vehicle’s cooling system and exits with the engine exhaust. Nearly 

70 percent of the fuel energy that enters a conventional engine is lost as waste heat, but 

research is underway to find means of recapturing this lost energy. A leading option in 

this area is a thermoelectric generator which can create electrical power flow in the 

presence of a temperature difference. If efficient enough, a thermoelectric device in the 

exhaust stream of an engine could allow the elimination of the alternator and its 

associated mechanical power consumption. This technology could be employed with 

hybrid vehicles or with conventional vehicles that have electrically powered accessories.

In addition to vehicle powertrain and engine improvements, other strategies such as 

reduced vehicle weight, lower rolling resistance tires, improved aerodynamics, and 

improved lubricants also can reduce energy consumption. These technologies generally 

improve the state of conventional technology gradually and offer relatively small fuel 

efficiency benefits with each succeeding model year, instead of providing a step change 

upon market penetration as expected with many of the technologies listed above.

Vehicle weight reduction strategies include material substitution, vehicle redesign, and 

market shifts to smaller and lighter vehicles. Weight reduction offers particular promise 

as a GHG reduction strategy, due to positive synergies with other LDV design 

considerations. For example, reductions in weight allow for secondary downsizing of 

components that no longer need to be as large in order to perform their functions. It is 

estimated that secondary reductions can total 50 percent of the primary reduction

(Bandivadekar et al., 2008).

Material substitution in LDVs has been taking place over the last 20 years, primarily 

through the increased use of aluminum and high strength steel (HSS), used to replace 

mild steel and iron. In addition, the use of various materials such as plastic, magnesium, 

and carbon- and glass- reinforced composites may become more widespread in the future 

to further reduce vehicle weight.

It also is possible to reduce vehicle weight by changing the design of vehicles. An 

example of this type of change was the movement from body-on-frame cars to unibody 

construction which reduces weight without requiring higher-cost materials. Designs that 
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provide increased actual or perceived interior volume, while decreasing outside 

dimensions, also can result in weight reduction. The final method, shifting market 

demand to smaller vehicles, depends largely on changes to consumer demands.

Even after considering the adoption of weight reduction strategies to date, average vehicle 

weight in the United States has been increasing at a rate of about 1 percent per year since 

the early 1980s (Bandivadekar et al., 2008). This is due in large part to the recent increase 

in SUV sales; however, many individual models have increased in size and weight with 

each redesign cycle. Adding features for comfort, utility, and safety generally increases 

the weight of vehicles, so efforts to decrease weight must overcome these upward trends.

Magnitude and Timing of Emission Reductions

The GHG reduction obtained by replacing a conventional gasoline LDV with an advanced 

gasoline LDV depends upon the fuel economy difference between the conventional and 

the advanced vehicle, and the miles traveled per year. However, the fuel economy of the 

baseline vehicle fleet is dynamic, improving over time in response to market forces such as 

higher fuel prices, as well as to mandates such as the revised CAFE standards. For 

example, the 2009 AEO projects that in-use vehicle efficiency for LDVs will increase from 

21.8 miles per gallon (mpg) in 2010 to 28.2 mpg in 2030.11

Individual Technology Benefits

 In order to evaluate the benefit 

of replacing conventional gasoline vehicles with advanced technology packages, 

comparisons are made relative to the baseline (AEO forecast) future year fleet average fuel 

economy.

While some of the technology options discussed in this section are readily available to the 

consumer, others are just entering the marketplace, while still others are in an early 

development phase. In general, multiple options are expected to penetrate the market in 

varying degrees over time, depending upon regulatory mandates, fuel prices, and 

consumer preferences. The AEO Reference case includes a highly detailed breakout of 63 

technologies, many of which involve efficiency improvements, providing yearly market 

penetration levels reflecting revised CAFE impacts through 2030.12

The following analysis provides a brief discussion of some of the more significant 

efficiency improvement options and their estimated market penetration potential. 

This provides a 

baseline for which additional improvements can be compared against.

 

11As discussed in Appendix A, this forecast accounts for targets for corporate average fuel economy 

(CAFE) standards established in 2008 under the 2007 Energy Independence and Security Act, but 

not for revised standards considered in 2009 by the Obama Administration.

12See AEO 2009, Supplemental Table 68. Many of these options involve the same technology 

implemented in varying degrees of intensity—for example, Engine Friction Reduction I-IV.
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Aggregate CO2 reduction potential is then calculated for the entire package of technologies 

assumed in the AEO Reference case.

Continuous variable valve timing (3-6 percent fuel consumption reduction potential), 

variable valve lift (4–10 percent fuel consumption reduction potential), and variable 

displacement (3–6 percent fuel consumption reduction potential) technologies currently 

are available. According to AEO estimates, variable valve timing is projected to reach its 

maximum market penetration of about 70 percent within the next five years. Variable 

valve lift presents greater cost and integration challenges compared to variable timing, as 

production tolerances must be closely controlled in order to maintain air/fuel ratio at low 

valve lift. AEO estimates that variable valve lift will achieve peak penetration of about 

40 percent in 2014 and actually decline somewhat thereafter, as it is supplanted by other, 

mutually exclusive advances. Variable displacement is generally only effective for larger 

engines over 3.5 liters and it may not ever achieve substantial market penetration.

Variable compression ratio technology is limited by cost/complexity and possible effects 

on driveability. Additionally, these engines require a significant design change, and also 

can cause an emissions disbenefit due to increase in crevice volumes preventing complete

combustion, and the inability to maintain ideal cylinder head geometry over the entire 

compression range (Shaik et al., 2007). Variable compression ratio is still in its infancy, 

and has yet to come to market. In three to five years, this advancement may begin to 

make headway with a fuel consumption reduction potential of 2–6 percent. However, the 

AEO Reference case projects only 4 percent market penetration by 2030 (EPA, 2008b; EPA, 

2005; NESCCAF, 2004).

With respect to combustion technologies, GDI already is available in a few vehicles 

(Pontiac Solstice GXP, Volkswagen GTI), and is expected to provide fuel consumption 

reductions between 2 and 3 percent using stoichiometric combustion, and up to 8 percent

for lean-burn combustion (EPA, 2008b; NESCCAF, 2004). AEO market penetration 

estimates for GDI options increase appreciably in about five years, reaching almost 

30 percent of the fleet in 2030. HCCI is not yet available in the marketplace, but as the 

technology fully matures it could provide a 4 to 7 percent fuel consumption reduction 

(NESCCAF, 2004). HCCI is not expected to reach noteworthy volume production for at 

least 5 to 10 years, (EPA, 2008b) and is not included in the AEO Reference case.

With respect to transmission technologies, DCT is just being introduced into the LDV 

market. DCT could provide fuel consumption reductions between 7 and 13 percent, 

although the AEO Reference case only assumes 11.5 percent penetration in 2030. CVT

currently is available in a small fraction of the market, and provides a 4 to 8 percent fuel 

consumption reduction. AEO projections estimate 20 percent CVT market penetration 

within five years, and a maximum penetration of 25 percent.

Higher voltage DC systems are still in developmental stages, but they are expected to 

eventually provide a fuel reduction benefit of 3 to 6 percent (EPA, 2008b). AEO 

projections estimate approximately 15 percent penetration within five years, and over 

40 percent by 2030. Similarly, thermoelectric generators are in the design phase as well. 

They are expected to eventually provide a fuel consumption reduction of anywhere from 
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1 to 14 percent (U.S. DOE, 2007), although they are not expected to appear in the market 

for a number of years, and are not included in the AEO Reference case.

Vehicle technology improvements such as lower weight, reduced drag, and reduced tire 

friction are estimated to have the ability to reduce fuel consumption by 6 to 9 percent in 

the near term, and by a total of 10 to 13 percent in the long term (NRC, 2008). AEO 

projections estimate close to 100 percent penetration of some form of these technologies by 

2030. It is estimated that a vehicle weight reduction of 10 percent can result in a 3.3 to 

8 percent reduction in fuel consumption for a light-duty vehicle (NHTSA, 2009b;

Bandivadekar et al., 2008). The benefit is greatest for the least efficient and heaviest 

vehicles.

While many of the technologies discussed here are not expected achieve 100 percent

market penetration, most are expected to be commercially viable in the near term. A 

recent study performed for EPA estimated most technology options discussed above will 

attain technical “production readiness” (if not market penetration), within five years, with 

HCCI requiring up to 10 years (U.S. EPA, 2008b). Generally speaking, advanced 

combustion engine design features, along with hybrids, are expected to incrementally gain 

market penetration without incentive programs or other market interventions.

It also is important to note that the fuel economy benefits of these different measures are 

not purely additive, and integrated packages of these technologies will produce somewhat 

lower improvements than the sum of the individual measures.

Combined Per-Vehicle Benefits

Various estimates have been developed regarding the fuel consumption and CO2

reduction potential of different technology packages. Studies conducted by the National 

Academy of Sciences and the Northeast States Center for a Clean Air Future estimated 

CO2 reduction potentials from 24 to 30 percent for large SUVs, and 17 to 29 percent for 

midsized cars (U.S. EPA, 2005). A more recent assessment conducted for EPA estimated 

fuel consumption and CO2 reduction potentials between 22 and 30 percent for selected 

packages, depending on vehicle class. These packages also were estimated to have 

roughly similar performance levels compared with conventional gasoline vehicles (U.S. 

EPA, 2008b). The AEO Reference case assumes a 22 percent CO2 reduction potential for 

passenger cars and a 24 percent reduction for light trucks and SUVs occurring between 

2008 and 2030.

For advanced conventional light-duty vehicles, the technology packages found in 

literature frequently do not contain the same group of technologies. Therefore, a group of 

improvements for advanced gasoline vehicles was chosen for evaluation. These 

technologies represent those identified most often in the literature evaluating advanced 

gasoline LDV systems. In the long term, they represent almost all of the foreseeable 

improvement in fuel economy available to conventional gasoline engines. In the medium 

and long term, these technologies include the maximum foreseeable accessory 
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electrification, short of full hybridization.13

Table 3.2B Advanced Gasoline Vehicle Technologies Packaged for 

Analysis

The technologies included in the package 

analysis for advanced gasoline vehicles are shown in Table 3.2B.

Advanced Design Feature

Near-Term • GDI

• Turbo (cylinder deactivation – trucks)

• Cam phasing

• Electric power steering

• Improved alternator

• AMT or CVT

• 10% reduction in rolling resistance

• 8-10% reduction in aerodynamic drag

Mid-/Long-Term • All of above plus:

• Throttleless – full valve control

• 42V Start/Stop

• 25% weight reduction from materials

The above combinations of technologies are estimated to provide an 18 to 25 percent

reduction in fuel consumption over the AEO Reference case in the near term, and an 8 to 

30 percent reduction in the medium to long term, as shown in Table 3.2C (NESCCAF, 

2004; Greene et al., 2004; Fulton and Cazzola, 2008; Pischinger et al., 2006). The low end of 

the fuel consumption reduction range decreases with time, largely as a result of more of 

these technologies penetrating the baseline fleet, while high-end estimates assume steadier 

technological advances over this period. These estimates can be compared with those 

developed by NHTSA in its analysis in support of the establishment of 2011 CAFE 

standards (NHTSA, 2009b). NHTSA estimated efficiency benefits of 12 to 24 percent for 

passenger cars and 12 to 21 percent for light trucks from a combination of advanced 

gasoline vehicle technologies, which overlaps the benefits estimates used in this analysis. 

The NHTSA findings are discussed in more detail below under “costs.”

 

13HCCI engines are not included here because the literature suggests that, in order to achieve 

reductions more significant than those given, HCCI combustion may require a different type of 

fuel than conventional gasoline or diesel.
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Table 3.2C Advanced Gasoline Fuel Economy and Consumption 

Improvement Potential

Conventional Vehicle Scenario MPG

Fuel Consumption 

Reduction Range

MPG (AEO Base) Minimum Maximum Minimum Maximum

2010 21.9 26.7 29.3 18% 25%

2030+ 28.2 30.8 40.4 8% 30%

Costs

Incremental vehicle and operating costs are obviously important determinants in a vehicle 

owner’s purchasing criteria. Other less tangible factors also are important in the 

consumer’s decision-making process, such as the value associated with demonstrating a 

commitment to the environment, which make it more difficult to estimate vehicle 

purchase decisions and perceived payback (Turrentine and Kurani, 2006). Nevertheless, 

the cost analysis presented below and in other sections only considers directly quantifiable 

cost factors such as incremental capital and fuel.

Implementation of variable intake and exhaust valve timing, compression ratio, and 

engine displacement is expected to cost up to $1,500 per vehicle if all technologies are 

implemented. GDI and HCCI, may have an implementation cost of anywhere from $200 

to $600 per vehicle (NESCCAF, 2004). Transmission technologies such as DCT and CVT 

are expected to add between $140 and $350 to the cost of a new vehicle (U.S. EPA, 2005).

Costs associated with higher voltage DC systems and thermoelectric generations are

strongly dependent on the type of implementation. These systems could range in cost 

from $70-$280 for simple electrification of any or all engine accessories, to over $1,500 for 

full electrification, including start/stop capability (NESCCAF, 2005; U.S. EPA, 2005).

Thermoelectrics are still in the design phase and future cost estimates are not readily 

available.

The cost of nonpowertrain advancements are likely to be added more gradually to the cost 

of vehicles over years. The costs of vehicle weight reduction are strongly dependent on 

the materials and manufacturing methods used. According to literature, HSS and 

aluminum are the lowest cost weight reduction options, estimated from a slight savings 

up to $1.76 per pound of weight reduction. Carbon- or glass-reinforced plastics costs vary 

widely depending on manufacturing methods, and are estimated to be between $1 and 

$6.2 per pound of reduction (Bandivadekar et al., 2008).

EPA has estimated the incremental vehicle cost associated with adoption technology 

packages including most of the above options, but excluding the more long-term 

technologies of HCCI and thermoelectric, at about $1,500 per vehicle. This estimate 

assumes full economies of scale and therefore does not account for transition costs 

associated with ramping up production. In addition, EPA used a retail markup factor of 
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26 percent, which is considered low by industry standards. Therefore this analysis 

adjusted the EPA estimate to reflect a retail markup factor of 70 percent, which 

corresponds closely to the 75 percent factor applied by NREL (U.S. EPA, 2005; Markel 

et al., 2006). The final adjusted incremental vehicle cost is therefore estimated to be $2,000.

Cost estimates of the above technology packages were found in the literature, and the 

AEO Reference case also provides average LDV costs by year. Incremental technology 

cost increases for advanced LDVs were taken from the literature, and the net increase 

above the AEO average vehicle price was subtracted for the near- and medium-term 

evaluations, providing the incremental cost of the technology packages relative to the 

AEO base case.14

For the advanced conventional gasoline package, vehicles in the near, mid, and long terms 

offer a net savings over the entire range of costs and benefits. This is due to fuel savings 

and to the possibility that engine downsizing could reduce estimated vehicle costs (as 

presented in the literature in some cases). The cost per tonne of CO2 reduction calculated 

using the above methodology and assumptions is negative, meaning that there would be a 

net savings over a vehicle’s life, as well as CO2 reductions. In the near term, however, the 

cost per tonne range extends into both negative and positive values. The costeffectiveness values reported in the literature include both negative and positive values as 

well, from -$175 to +$161 per tonne. (Bandivadekar et al., 2008; Lutsey, 2009; CARB, 2004;

Fulton and Cazzola, 2008). In general, the literature cost per tonne values were higher 

than those calculated in this analysis. Although detailed cost assumptions and calculation 

methods were not specified in all of the sources reviewed, the higher end costeffectiveness values were likely based on lower assumed gasoline prices than the current 

AEO projections. Fuel price assumptions are a driving factor in cost-effectiveness 

determination, and in turn, dollar per tonne estimates should be considered quite 

uncertain due to fuel price volatility alone. Nevertheless, there is general agreement that 

advanced technologies available for conventional gasoline vehicles will be cost-effective 

options for reducing GHG emissions in the long term.

The emission reduction and cost estimates from NHTSA’s final rulemaking for the 2011 

CAFE standards are presented in Table 3.2D. The CAFE analysis performed a highly 

detailed, bottom-up assessment of the costs and benefits associated with a large number of 

possible technologies that could be applied to the LDV market in the near term. The 

analysis also evaluated the potential interactions among the different technologies and the 

development “path” that might be followed, considering the order in which individual 

technologies might be added to increasingly complex packages (NHTSA, 2009b). These 

packages do not directly correlate with the gasoline package presented in this report, 

however, as they included different groupings of technologies. While the NHTSA 

 

14Lifetime per vehicle costs and benefits were calculated for advanced LDVs replacing conventional 

gasoline LDVs for the different time frames. Pre-tax fuel prices obtained from AEO projections 

were utilized to estimate fuel savings over the life of the advanced vehicle. The specific 

assumptions regarding mileage accumulation rates, useful life, and assumed discount rate are 

discussed in Appendix A.
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approach was very detailed in how the benefits were combined, a simplified 

approximation can be made assuming sequential multiplicative application of the 

estimated benefits for each individual technology. The individual technologies used in 

the advanced gasoline package for this report are compared with the NHTSA estimates in 

Table 3.2G. Benefits are combined multiplicatively, while costs are simply additive. The 

resulting net reductions and costs for the technologies in a representative near term 

gasoline LDV package are shown, along with the relevant values calculated in the analysis 

for this report.

Table 3.2D Comparison of Advanced Gasoline Technology Package 

with Costs and Benefits from 2011 NHTSA CAFE 

Rulemaking

NHTSA CAFE

2011 Analysis

Passenger Cars Light Trucks

Cost per Vehicle ($)

percent CO2

Reduction Cost per Vehicle ($)

percent CO2

Reduction

Low High Low High Low High Low High

Gasoline direct 

injection

$293 $558 1.9 2.9 $293 $744 1.9 2.9

Turbo/downsize $822 $1,223 2.1 5.2 $822 $1,229 2.1 5.2

Cam phasing $61 $122 2 3 $61 $122 2 3

Electric power 

steering

$105 $120 1 2 $105 $120 1 2

Alternator $84 $84 0.2 0.9 $84 $84 0.2 0.9

Dual-clutch 

transmission

$68 $218 2.7 7.5 -$97 $218 2.7 4.1

Rolling resistance 

reduction

$6 $9 1 2 $6 $9 1 2

Drag reduction $60 $116 2 3 $60 $116 2 3

Total1 $ 1,499 $ 2,450 12.2% 23.8% $ 1,334 $ 2,642 12.2% 20.9%

1 – Totals are additive for costs and multiplicative for percent reductions.

Analysis for Section 3.2.1 – Average Light-Duty Vehicle

Low High

Cost - $ 60 $2,399

Percent CO2 Reduction 18% 25%

It can be seen that the overall range of CO2 emission reduction for both approaches is 

relatively consistent. The literature review did find a larger cost range than that found by 

adding the cost estimates from the CAFE report. While the upper ends of the cost ranges 

are similar for both approaches, the lower end is significantly different. The primary 

cause of this difference is that the literature cited in this report found that, in some cases, 

engine and powertrain downsizing could lead to cost savings that would pay for the 
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addition of the turbocharger and other components, while the findings of the CAFE 

analysis did not show that to be the case.

Cobenefits

In many cases advanced gasoline LDVs may have lower criteria and toxic emissions than 

comparable conventional gasoline LDVs, resulting from lower fuel consumption and 

better engine load management, potentially smaller engines, and other factors. However, 

variation across the different available models makes it difficult to quantify criteria 

pollutant reductions for advanced gasoline LDVs as a whole, and engines will generally 

be designed to meet pollution control standards.

Some of the technologies in question offer cobenefits to vehicle owners/operators. 

Transmission technologies such as DCT and CVT offer the added advantage of reduced 

shift time or the elimination of shifting all together. Possible cobenefits of higher voltage 

DC systems and thermoelectric generation technologies include faster engine warm-up 

from increased control of the water pump, and increased power output at high RPM from 

not overpowering vehicle accessories.

Most of the improvements discussed here will not impact vehicle safety, with the possible 

exception of weight reduction strategies, which may require expenditures for additional 

safety features.

Feasibility

The level of market penetration attainable by these technologies will depend largely on 

regulatory drivers such as CAFE and possibly other GHG reduction mandates, as well as 

fuel prices and consumer preferences. Regulatory and other policy issues regarding LDV 

fleet efficiency improvements are discussed in Section 3.1, while fuel price impacts are 

evaluated under cost-effectiveness above. The following discussion focuses on technical 

barriers, cost, and other constraints associated with advanced technology deployment.

In order to realize the full benefit from GDI technology, the engine can be calibrated to run 

lean (i.e., with an excess of oxygen in the cylinder). Under such conditions, NOx

formation is increased, which would require an enhanced and more costly form of aftertreatment. Costs of GDI technology also prevent widespread implementation in the near 

term. HCCI technology, meanwhile, is not yet mature enough to operate seamlessly over 

the wide range of conditions encountered while in use. In addition, the benefits of HCCI 

cannot be realized with a cold engine, with the associated efficiency improvements limited 

to hot operating modes.

In addition to cost, a significant barrier to the further market penetration of CVT 

technology is that its transmission efficiencies are typically lower than conventional 

automatic or manual transmissions, due to the lower efficiency of the ratio adjustment 

mechanism. While this inefficiency is offset by the increased engine efficiency, the 
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ultimate balance of these losses and gains will decide the future of CVT technology. The 

primary barrier to DCT adoption is cost and complexity.

A transition to 42V electrical systems would mark a significant change from the existing 

12V standard. Until 42V systems are fully developed, it is possible that a 12V starter 

motor would still be required for cold temperature starts. Maintaining both voltages 

during the 12V to 42V transition would increase vehicle weight and cost.

Current thermoelectric generation devices are only 5 to 10 percent efficient and LDVs do 

not generate enough waste heat to permit eliminating vehicle alternators without further 

improvements in efficiency. In addition, the usefulness of waste heat capture is likely to 

be limited in cold weather environments.

A final uncertainty lies in how these technologies are deployed within the vehicle system 

design. Some of the options can be used to improve vehicle performance or efficiency. As 

such, manufacturers may elect to employ some of these strategies to provide additional 

power output rather than improved fuel economy. The ultimate utilization of these 

options will therefore be influenced by government policy as well as by consumer 

preferences, which historically lean toward high performance in times of relatively low 

fuel prices, and fuel economy in the face of higher fuel costs.

Enhanced Diesel Vehicles

Overview

Diesel engines operate more efficiently 

than gasoline engines for comparable 

vehicle packages. This higher 

efficiency is primarily due to the higher 

compression ratios that compression 

ignition (i.e., diesel) engines allow. 

Additionally, diesel engines do not 

regulate their power output with a 

throttle, which results in energy loss as 

air is brought into the engine. 

Accounting for diesel fuel’s higher 

energy and carbon content per gallon, 

and its slightly lower energy intensity 

requirements for refining, a diesel 

LDV’s overall life-cycle GHG 

emissions are approximately 16 to 

21 percent lower than a comparable 

gasoline LDVs’ emissions (EPA, 2005).

While diesel vehicles dominate the medium- and heavy-duty vehicle market, they 

comprised less than 2 percent of the LDV stock in the United States in 2008, with over 

Enhanced Diesel Vehicles

Per-Vehicle GHG Reductions: 0-16% 

Confidence in Estimates: Low

• Highly uncertain market penetration

• Cost-effectiveness will depend on fuel prices and 

relative efficiency of gasoline versus diesel

Key Cobenefits and Impacts: Insignificant

Feasibility: High

• Primary barrier is ability to meet emission 

standards, but current standards can be met at a 

cost

Key Policy Options:

• Financial and/or regulatory incentives for 

improved fuel efficiency
Transportations Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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85 percent of these vehicles in the light-truck category.

15

Accordingly, utilizing diesel engines instead of their gasoline counterparts in the same 

application should result in reduced fuel consumption and GHG emissions. 

Unfortunately, current diesel engines produce higher NOx and PM emissions than do 

today’s advanced gasoline engines, and generally cannot meet the stringent Tier 2 and

California LDV emission standards without advanced treatment technologies. While such 

advanced pollutant control options exist, they are frequently costly and may reduce 

engine efficiency along with emissions. The analysis in this section assumes that such 

pollution control technologies advance so that diesel is a widely viable alternative for 

light-duty vehicles. Some of the emission control technologies have minor impacts on fuel 

efficiency, but not to the extent that the GHG benefits of diesel are greatly reduced.

 Because of their higher engine 

weight and power output, they offer the greatest benefit to larger vehicles. Thirteen diesel 

passenger car and light-truck models currently are offered for sale in the United States

(Diesel Technology Forum, 2009), although numerous models are available in Europe and 

elsewhere around the world. In fact, diesel vehicles represented over 50 percent of new 

European purchases in 2007 (Dieselnet.com, 2008), as a result of higher gasoline prices, 

favorable taxation policies, and less stringent NOx and PM emissions standards. 

However, late model European diesel vehicles would have to achieve a 45 to 65 percent

reduction in NOx emissions in order to meet current United States Tier 2 emission 

standards (NHTSA, 2009b).

Diesel vehicles also can benefit from many of the same technologies described in 

Section 3.2 to improve the efficiency of gasoline vehicles, particularly weight reduction, 

aerodynamics, transmissions, and electrical systems.

Magnitude and Timing of GHG Reductions

Benefit per Vehicle

For the near term, the analysis focuses on benefits that are possible with substitution of 

gasoline vehicles with diesel vehicles using today’s technology. In the medium and long 

term, the analysis assumes substitution with advanced diesel engine and vehicle 

technologies (including many of those adopted for gasoline vehicles) that represent the 

most efficient foreseeable options. Table 3.2H lists the technologies included in the 

analysis of diesel vehicles. Many of the vehicle technologies are described in detail in 

Section 3.2.1.

 

15AEO 2009, Supplemental Table 58.
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Table 3.2E Advanced Diesel Vehicle Technologies Packaged for Analysis

Diesel Vehicle Feature

Near-Term Modern (current-term) diesel combustion with the following:

• Improved alternator

• AMT or CVT

• ~10% reduction in rolling resistance

• ~10% reduction in aero drag

Mid-/Long-Term All of above plus:

• Start/stop

• 25% weight reduction from materials

• Improved combustion

The fuel economy and consumption improvements for the diesel package of technologies 

relative to the AEO Reference case are presented in Table 3.2I (Fulton and Cazzola, 2008;

NHTSA, 2009b). The near-term efficiency estimates are taken from the 2011 CAFE Final 

Rule, and incorporate a detailed evaluation of the fuel economy penalties associated with 

various NOx control strategies and engine sizes.16 The medium-/long-term high-end 

estimate is taken from Bandivadekar et al., (2008), based on the relative energy 

consumption benefit of a 2035 diesel with a 2035 conventional gasoline vehicle.

17

Table 3.2F Diesel Fuel Economy and Consumption Improvement 

Potential

 The low 

end estimate reflects the possibility that advanced gasoline vehicles will effectively “close 

the gap” with diesel vehicles by adopting numerous efficiency improvements such as 

turbocharging, as discussed in the previous section (Fulton and Cazzola, 2008).

Conventional Vehicle Scenario MPGGE

Fuel Consumption 

Reduction Rangeb

MPGGEa (AEO Base) Minimum Maximum Minimum Maximum

2010 21.8 27.6 31.2 21% 29%

2030+ 28.2 28.2 33.2 0% 16%

a MPGGE = Miles per gallon gasoline equivalent.

b Physical gallon basis.

 

16The range provided in the CAFE Final Rule of 19 to 26 percent is adjusted to reflect the 

improvement per gasoline gallon equivalent.

17Estimates for passenger vehicles and light trucks are weighted to estimate composite fleet benefit.
Transportations Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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Cost-Effectiveness

A diesel vehicle that meets current emissions standards will cost more than a comparable 

gasoline vehicle. While PM and NOx control technologies add to the cost of their 

powertrains, diesel engines also have greater material costs because they must be stronger 

in order to withstand higher combustion and fuel injection pressures. The 2011 CAFE 

final rule provided a range of incremental diesel vehicle costs for the near term, from 

$1,567 to $5,617, depending upon engine size and technology package. Cost ranges for 

near-term diesel vehicles versus current conventional vehicles as found in the literature 

range from $1,900 to $3,400 (Bandivadekar et al., 2008; Fulton and Cazzola, 2008). 

Cobenefits

Current light-duty diesel vehicles are generally comparable in terms of performance 

compared to conventional gasoline vehicles. In fact, diesels are known for relatively low 

maintenance costs, as well as their improved towing capacity for larger trucks.

Given the fuel neutral nature of EPA’s Tier 2 emission standards, these vehicles must meet 

the same low NOx and PM tailpipe standards as gasoline engines. In addition, diesel fuel 

has negligible evaporative emissions, thereby lowering VOC emissions substantially 

compared to gasoline. The GREET model estimates life-cycle reductions in criteria 

pollutant emissions for light-duty diesels relative to gasoline vehicles as shown in 

Table 3.2M, assuming current emissions control technology. While certain tailpipe 

emissions such as NOx and PM would tend to be equal to or higher than those from 

gasoline vehicles, upstream emission reductions incurred during diesel production result 

in reductions across all pollutants.

Table 3.2G Pollutant Emissions, Diesel versus Conventional 

Gasoline Vehicle

Pollutant Percent Change versus Gasoline

VOC -62%

CO -85%

NOx -16%

PM10 -22%

PM2.5 -17%

SOx -30%
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Feasibility

One often-cited barrier to widespread acceptance of light-duty diesels in the United States

is their reputation as loud, inconvenient to fuel, slow, and malodorous. These attitudes 

are changing with time, as noise, odor, and performance problems have largely been 

eliminated, and diesel is now being marketed as an environmentally friendly (in terms of 

GHG reduction) alternative to conventional vehicles. The increased cost of the diesel 

engine also is a deterrent, and extended periods like those of late in which diesel fuel is 

priced higher than gasoline exacerbate cost concerns.

Motorists also have expressed reservations regarding access to diesel fuel. In one survey 

46 percent of motorists were concerned about fuel availability, and only 35 percent felt 

that fuel availability was adequate (Greene et al., 2004). Similar concerns may be held 

regarding the limited number of diesel makes and models currently offered for sale in the 

U.S. Nevertheless, diesel fuel currently is offered for sale at over 100,000 locations in the 

U.S., so concerns about access may be more related to perception than actual availability.18

Other barriers to diesel market expansion concern the advanced emissions reduction 

technologies used to meet current LDV emission standards. In addition to the incremental 

costs, widespread use of selective catalytic reduction (SCR) after treatment requires the 

addition of a small on-board reluctant tank, in addition to operator education regarding 

reductant handling and regular replacement. Tank refilling intervals for LDVs are 

expected to be about as frequent as oil changes (U.S. DOE, 2009a). Some infrastructure 

development also will be required for reductant distribution and storage. In addition, in 

order to meet emissions requirements, vehicles may be designed to be inoperable when 

the reductant runs out. As such, reliability concerns could limit the acceptance of this 

technology. There also are concerns over the longevity of new components for SCR as 

well as exhaust gas recirculation (EGR) coolers and diesel particulate filter (DPF) units.

Increased demand for diesel fuel itself poses its own concerns. There may be a limit to 

increasing the proportion of diesel versus gasoline that is refined from a fixed amount of 

crude oil. As that limit is neared, differences in gasoline and diesel fuel prices would be 

expected to change, limiting the market share increase of diesel fuel (Leister, 2008). In 

addition, substantial investment may be needed to expand current diesel refining capacity 

to accommodate production increases.

 

18NGA, 2008.
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Hybrid Electric Vehicles

Overview

Hybrid Electric Vehicles (HEV) combine 

the internal combustion (IC) engine of a 

standard vehicle with the motor and 

battery technology of an electric vehicle. 

This combination offers reduced fuel 

consumption and GHG emissions when 

compared to conventional vehicles, with 

no appreciable reduction in range or 

power. The two primary benefits of 

drivetrain hybridization include 

recouping energy that would otherwise 

be wasted during braking, and allowing 

the engine to spend more of its running 

time at its most efficient operating point. 

Various HEV configurations utilize one 

or both of these efficiency improvement strategies. Essentially all hybrid systems also 

shut down their IC engines at idle to further save fuel. Light-duty HEVs have 

significantly better fuel economy than conventional gasoline engines, with passenger cars 

typically ranging from 30 to 50 mpg, while retaining comparable vehicle range and overall 

performance.

Gasoline HEVs have been commercially available in the United States for several years, 

including the Toyota Prius and the Ford Escape hybrid models. The estimated number of 

passenger HEVs in the United States in 2008 was 970,000, while HEV light trucks were 

estimated at 280,000, corresponding to approximately 0.5 percent of the 2008 U.S. LDV 

fleet.19

All hybrid vehicle designs rely on dedicated batteries as a storage medium for additional 

power delivery beyond that of the IC engine. Typically, hybrid drivetrain configurations 

are classified in three types, according to the way that power flows through them: series, 

parallel, and power-split. A series hybrid uses an IC engine to directly power an electric 

generator which, in turn, powers one or more electric motors to drive the vehicle. This 

type of system has the advantage of allowing the engine to run continuously at its most 

 HEV options are expected to be offered for an increasing number of LDV models 

in the United States over the next few years, including pickups and SUVs, although the 

benefit of hybridization for heavier trucks with significant towing requirements will likely 

be less than that of lighter vehicles (Bandivadekar et al., 2008). Certain HEVs currently 

also are eligible for tax credits of up to $3,000 per vehicle, offered through the end of 2010 

by the Internal Revenue Service (IRS, 2009).

 

19AEO 2009, Table 58.

Hybrid Electric Vehicles

Per Vehicle GHG Reduction: 26-54% 

Confidence in Estimates: Moderate

• Cost-effectiveness and market penetration will 

depend on fuel prices

Feasibility: High

• Proven, in-use technology

Key Policy Options:

• Financial or regulatory incentives for improved 

fuel efficiency
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efficient operating point, but suffers losses due to inefficiencies in the generator and 

motor(s). Battery packs are generally larger for series hybrids than other configurations, 

resulting in relatively higher costs, although they are most effective in slow speed, stopand-go driving conditions. Accordingly, series configurations are most common in heavyduty applications (Friedman, 2003).

In a parallel hybrid, power can flow directly to the wheels from the generator, engine, or 

both as needed. The Honda Civic hybrid utilizes a parallel configuration. This type of 

design requires the engine to run over a wider and less efficient operating range, but 

reduces generation losses by having a direct link from engine to the wheels. Parallel 

hybrid vehicles operate more efficiently at highway speeds than series configurations, 

although low-speed, urban type operation is not as efficient (Friedman, 2003).

A series/parallel, or “power-split” design attempts to capture the benefits of both of the 

above systems by allowing the motor and generator both to directly drive the wheels, but 

decoupling them so the engine can operate more efficiently as in a series hybrid. The 

Toyota Prius utilizes this type of system. Costs are generally higher for power-split 

designs compared to parallel configurations due to the larger battery pack and increased 

complexity of the system (Friedman, 2003). While current hybrid vehicles primarily 

utilize either parallel or power-split designs, it is likely that the power-split design will 

become more common over time for conventional HEVs.

Diesel powered HEVs may provide additional fuel economy improvements and GHG 

emission reductions over and above gasoline HEVs. Diesel engines themselves are 

inherently more efficient than comparable gasoline engines, as discussed in Section 3.4. In 

addition, the higher NOx and PM emission rates associated with the diesel cycle may be 

controlled more easily in a hybrid configuration, which minimizes transient engine 

operation (i.e., rapid changes in engine RPM and load) (EPA, 2005). However, at this 

time, there are no diesel HEV models offered for sale in the United States, although a 

limited number are available in the European market. Diesel hybrid configurations 

currently are being demonstrated for the heavy-duty market, as discussed in Section 3.3.2.

The following analysis evaluates the fuel economy benefits of gasoline hybrids, although 

it should be noted that diesel hybrids may provide about 5 percent additional fuel 

economy improvement (Bandivadekar et al., 2008).

As discussed in Section 3.3.1, advanced conventional gasoline technology packages are 

expected to involve electrification of some vehicle components and functions, such as an 

integrated starter/generator, which allows for turning the engine off at idle, or possibly 

offering a limited amount of regenerative braking. Such packages are sometimes referred 

to as “mild” hybrids, as opposed to “full” hybrids which are capable of full electrical 

operation under certain engine loads and speeds (Friedman, 2003). This section focuses 

on full hybrid vehicles, and their benefits and costs are assessed relative to comparable 

fleet average baseline gasoline vehicles for the given time period under evaluation.
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Magnitude and Timing of GHG Reductions

Per-Vehicle Benefits

Additional advances are assumed for HEV fuel economy over time, associated with 

further battery and other technology improvements. The AEO Reference case assumes 

HEV fuel economy improvement will increase from 31.2 mpg in 2010 to 38.6 in 2030. 

Independent studies estimate current HEV mpg reductions between 17 and 60 percent, 

and future year HEV fuel economy levels between 26 and 54 percent in the medium to 

long term (Jones, 2008; Lutsey, 2008; McKinsey, 2009; Bandivadekar et al., 2008; IPCC,

2007; Fulton and Cazzola, 2008). The percentage reduction ranges were applied to AEO 

base fuel economy estimates to obtain possible mpg ranges for HEVs. These figures are 

summarized in Table 3.2N. Although broader in range, the 2010 range is fully inclusive of 

the CAFE NPRM estimates of 25 to 40 percent for HEVs relative to a 2008 conventional 

vehicle(NHTSA, 2008b).

20

Table 3.2H HEV Fuel Economy and Consumption Improvement 

Potential

Conventional Vehicle Scenario MPG

Fuel Consumption 

Reduction Range

MPG (AEO Base) Minimum Maximum Minimum Maximum

2010 21.8 26.2 53.9 17% 60%

2030+ 28.2 38.3 60.8 26% 54%

Cost-Effectiveness

Gasoline HEVs currently carry a cost premium over comparable conventional vehicles. 

Findings from the literature suggest incremental costs between $3,700 and $5,700 in the 

near term, consistent with the CAFE NPRM estimates across two-mode and power-split 

HEVs21

This evaluation indicates that HEVs offer the largest potential GHG reductions on a pervehicle basis short of plug-in HEVs (see Section 3.6), and appear to be generally cost-

(NHTSA, 2008b). Incremental costs are expected to fall somewhat in the medium 

to long term to $2,300 and $4,100 per LDV due to further advances in battery technology, 

and possibly further economies of scale and technological learning (Bandivadekar et al., 

2008; Lutsey, 2008; McKinsey, 2009; IPCC, 2007; Fulton and Cazzola, 2008).

 

20Range across two-mode and power-split hybrids.

21Comparable diesel HEV premiums are estimated to be somewhat higher in an EPA analysis, 

between $4,100 and $5,900 in the near term (EPA, 2005).
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effective replacements for conventional gasoline LDVs, now and into the future. 

However, it is instructive to consider the cost-effectiveness of HEVs from the perspective 

of advanced gasoline vehicle systems, above and beyond those assumed for the AEO 

Reference case baseline vehicle. For example, one evaluation estimated the incremental 

cost of full hybrids relative to “maximum ICE improvements” to be 22 percent, but the 

associated fuel consumption benefit was estimated to be only 5 percent beyond the 

maximum ICE level (McKinsey, 2009, page 97). As such, additional investments in 

moving from advanced gasoline vehicles (see Section 3.3) to HEVs will suffer from 

diminishing returns as the potential for incremental GHG reductions decreases.

Cobenefits

HEVs generally have lower criteria and toxic emissions than comparable conventional 

gasoline LDVs, resulting from lower fuel consumption and engine-on time, better engine 

load management, and generally smaller engines, among other factors. HEVs may meet 

more stringent emission standards than those currently required of conventional LDVs, 

particularly, California’s most stringent Partial Zero Emission Vehicle (PZEV) standard

(JDPower, 2009). Variation across the different available models make it difficult to 

quantify criteria pollutant reductions for HEVs as a whole, however.

HEV brake maintenance costs for HEVs with regenerative braking are expected to be 

lower than conventional vehicles, about $400 to $500 over the vehicle life (EPA, 2005). The 

longer range of LDV HEVs results in decreased refueling times. Otherwise, performance 

characteristics of HEVs are generally similar to that of conventional gasoline vehicles.

Feasibility

HEVs are now penetrating the LDV market, with the number of models increasing each 

year. Although initial concerns regarding battery life were expressed, current nickelmetal hydride (NiMH) batteries and other hybrid system components are commonly 

covered by 8-year/100,000 mile warranties, and 90 percent of HEV battery packs are 

anticipated to survive 14 years (EPA, 2005).

The overriding issue facing HEVs today focuses on their cost, primarily battery costs. The 

literature on the subject assumes advancements will likely continue to be made in terms of 

cost, size, weight, charge capacity, and longevity. Current HEVs use NiMH batteries, 

although research is being performed regarding lithium ion (Li-ion) batteries because of 

their greater charge density (which can provide greater vehicle range per unit weight), 

and lower cost potential. Li-ion batteries currently are expected to enter production in 

some HEVs over the next two years, although they are not yet as stable as current NiMH 

batteries, with some Li-ion systems involved in recalls in the consumer electronics market. 

If overcharged or overheated, these batteries have been known to catch fire in the past 

(Kromer and Heywood, 2007). However, several researchers have concluded that the 

remaining technical difficulties associated with Li-ion performance are likely to be solved 
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Plug-in Hybrid Electric Vehicles

Per Vehicle GHG Reductions: 

• 46–70% in 2030

• 49–75% in 2050

Confidence in Estimates: Moderate

• Range of benefits reflects different all-electric 

ranges and electricity generation mix

Key Cobenefits and Impacts: Positive

• Zero vehicle emissions in all-electric mode

Feasibility: Moderate/High

• Battery technology still needs development

Key Policy Options:

• R&D support for battery technology (durability, 

weight, cost)

• Tax credits for early introduction/adoption

• Public recharging infrastructure and favorable 

utility rates for nighttime charging

in the near term, clearing the way for wide scale deployment in HEVs, as well as PHEVs 

and BEVs (Bandivadekar et al., 2008).

Plug-in Hybrid Electric Vehicles

Overview

Plug-in Hybrid Electric Vehicles (PHEV) 

are a recent development in 

hybridization for LDVs.22 PHEVs 

contain a drivetrain that includes both 

an electric motor, as well as an internal 

combustion engine (ICE) or fuel cell.23

PHEVs can be classified according to the mode in which they operate. A fully charged 

PHEV can be said to operate in charge-depleting (CD) mode until it reaches a certain level 

of battery depletion, which is usually between 75–80 percent. After this point, the vehicle 

switches to a charge-sustaining (CS) mode. In addition, PHEVs can be further classified 

based on its CD mode, as either range-extended (where the PHEV operates as an electric 

vehicle up until its CS threshold is reached) or blended (where the vehicle uses its ICE to 

supplement power demand as needed during CD mode) (Shiau et al., 2009). Blended 

Similar to conventional HEVs, the 

drivetrain can be arranged in series, 

parallel, or split series/parallel 

configurations. In contrast to HEVs, 

these vehicles also can plug into the 

local power grid, beginning each trip on 

battery power. The distance that a 

PHEV can travel solely on electric power 

is designated as its all electric range, or 

AER. A PHEV with an AER of 20 miles 

is referred to as a PHEV20. AER values 

found in the literature range from 10 to 

60 miles, with 20 to 40 miles being the 

most common values assumed for 

commercial adoption of PHEVs.

 

22Lighter HDV applications may be good candidates for PHEV systems as well, (EPRI, 2007a) 

although little research or analysis has been performed for these vehicles. Many heavier HDV 

applications such as long-haul Class 8b trucks may not lend themselves to PHEV technology as 

easily, given their power demands and fueling constraints. As such heavy-duty PHEV potential 

is uncertain and is not considered in this analysis.

23Only ICE PHEV systems are considered for this evaluation. Section 3.8 for a detailed discussion 

of fuel cell technology.
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mode operation is similar to that of HEVs, although in this case most vehicle energy 

requirements are met by the electric battery while the ICE just provides intermittent 

power boosts for high load events. Blended mode PHEV designs allow smaller, more 

cost-effective battery designs while providing most of the benefits of range-extended 

vehicles (Elgowainy et al., 2009).

There is in fact a continuum between conventional LDVs which rely solely on IC engines 

for power, and fully battery electric vehicles (BEVs – see Section 2.9) which only utilize 

battery power. Figure 3.3 illustrates how engine and battery size tradeoffs are 

qualitatively associated with different vehicle categorizations. In the figure PHEVs are 

classified as “range extenders” which permit a certain amount of all electrical operation. 

Most of the literature on the topic defines the low end of range extension to be 10 miles for 

PHEVs, or alternatively, defines a PHEV battery capacity to be five kW or greater.

Figure 3.3 Classification of Hybrid Vehicles by Onboard Electrical Power

 

Source: UCS 2003.

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Fraction of Driving Power (in Percent)

Battery 

Electric Mild Hybrid Full Hybrid Range Extender

Clear 

Classification: 

Range Extender

Vehicle 

Classification 

Very Unclear

Clear 

Classification: 

Conventional

Engine Size

Conventional Hybrid

Battery or Motor Size

Vehicle Classification by Driving Power Alone

A PHEV’s impact on both fuel usage and GHG emissions also depends on the fraction of 

travel occurring in the CD mode. Those LDVs that travel relatively short distances each 

day may operate in the CD mode most or all of the time, while LDVs that regularly travel 

greater distances on a daily basis will operate a good portion of their time in CS mode, 

thereby diminishing the relative benefits of the PHEV system compared to standard 

HEVs. Figure 3.4 shows the estimated national average “Utility Factor” for LDVs as a 

function of AER. As seen in the figure, PHEVs with an AER of 30 miles are estimated to 
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operate in CD mode approximately 50 percent of the time (i.e., gasoline consumption is 

reduced by 50 percent).24

Figure 3.4 Percent of VMT on Electricity versus All-Electric Range (AER)

 

Percent VMT on Electricity (Utility Factor)

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

0 10 20 30 40 50 60 70 80 90 100

Source: Elgowainy et al., 2009.

Currently, the PHEV industry is still in its infancy, with fewer than 250 light-duty PHEVs 

deployed in the United States as of the end of 2008 (U.S. DOE, 2008). Original equipment 

manufacturer (OEM) PHEVs are not commercially available at this time, but several 

manufacturers are pursuing their development. Although none of the major 

manufacturers have committed to make available a mass-market PHEV prior to 2010, 

several have prototypes in the testing phase, including Toyota, GM, Ford, and Chrysler. 

Still, it is unlikely that a competitive mass-market vehicle will reach the market sooner 

than 2015 (Bandivadekar et al., 2008). Nonetheless, PHEV aftermarket kits are available 

now at a considerable cost for consumers who wish to modify an existing HEV to permit 

plug-in electrical power.

Magnitude and Timing of GHG Reductions

Per-Vehicle Benefits

Determining the GHG reduction potential of PHEVs is more complex than for most other 

technology/fuel strategies. Emission reductions vary depending upon AER, assumed 

 

24This analysis assumes that PHEVs will only be charged once a day. To the extent that public 

charging stations and other access points allow for multiple charges per day, the effective utility 

factor for a given AER could rise significantly.
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utility factor, and electricity source, as well as standard considerations such as ICE and 

electric efficiency. AER values of 10 and 60 were selected for this analysis, to illustrate the 

full range of possible benefits associated with this technology. Using the utility factor 

estimates shown in Figure 3.4, PHEV10 vehicles are estimated to operate in CD mode 

23 percent of their mileage, and PHEV60 vehicles are estimated to operate in this mode for 

75 percent of their mileage.

GHG emissions resulting from charging will vary depending on the mix of electricity 

sources utilized, which in turn vary by time of day, season, region of the country, and 

time period of evaluation. While most PHEV analyses assume vehicle charging occurs in 

the evening or at night, utilizing baseload power, variation in GHG emissions were 

evaluated for different electricity production scenarios, utilizing estimates from EPRI 

(2007a). The EPRI study conducted sophisticated modeling of a range of different GHGintensity mixes as well as PHEV penetration scenarios, estimating the likely emissions 

associated with PHEV demand at the margin. Most PHEV analyses found in the literature 

assume system average emissions associated with electricity production. However, the 

EPRI analysis found that, due to even small incremental changes in dispatch as well as 

capacity retirements and expansions, the GHG intensity of the marginal electricity used 

for PHEV charging can vary substantially.

While this analysis does not attempt to replicate the precision of the EPRI study, the range 

of GHG intensity estimates from EPRI is used to provide a sense of the uncertainty 

associated with PHEV charging emissions for different time periods:

25

• Medium-term GHG intensity range – 379-606 g/kWhr; and

• Long-term GHG intensity range – 240-421 g/kWhr.

These GHG intensity ranges for electricity generation must be combined with PHEV 

battery efficiency values in order to estimate the GHG emissions associated with vehicle 

charging requirements. Battery efficiency estimates for the CD operation mode as 

reported in the literature range from 0.19 to 0.43 kWh/mile.

26

 

25The GHG intensity range for the medium term analysis is based on the minimum and maximum 

g/kWhr values reported for the EPRI analysis across the low/medium/high CO2-intensity and 

PHEV dispatch scenarios, for the time period between 2020 and 2030. The GHG intensity range 

for the long term case reflects the EPRI ranges between 2040 and 2050 (EPRI, personal 

communication 2009). Note that even under the highest GHG intensity scenario relying on old 

technology coal generation, PHEVs operating in CD mode still result in lower GHG emissions 

than corresponding conventional gasoline vehicle operation, on a per mile basis. For example, 

assuming a very low battery efficiency of 0.4 kWhr/mi (perhaps for a large SUV), and a GHG 

intensity of 1,041/kWh (“Old Coal” scenario), CD mode operation provides a 12 percent decrease 

in GHG emissions relative to a current gasoline vehicle. Under these extreme circumstances, 

however, CD mode operation will not provide benefits relative to an HEV baseline.

 These estimates cover a 

wide range of assumptions regarding vehicle size and driving conditions, but are largely 

26EPRI (2007a), Vyas et al. (2007), Samaras (2009), Kammen (2008), Shiau et al (2009). CD values 

from Elgowainy et al were not considered as these were for blended mode operation.
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independent of AER.27

The PHEV efficiency estimate is then combined with assumed CS mode operating 

efficiencies (assumed to provide a 40 percent fuel consumption improvement relative to 

base case conventional LDVs in 2030, consistent with future year HEV estimates) in order 

to estimate fuel savings and emission reductions for all operation modes. The estimates 

account for the relative miles traveled in CD and CS modes, considering the utility factors 

associated with PHEV10 and PHEV60 scenarios. The GHG reduction percentages relative 

to conventional vehicles are based on GREET outputs for CS (HEV) modes, and EPRI 

estimates for the range of electricity generation intensities (EPRI, 2007a). Table 3.2R

summarizes the estimated GHG reductions for PHEV10s and PHEV60s.

 An average future year efficiency value of 0.255 kWhr/mi is used 

in this analysis, following EPRI (2007a).

28

Table 3.2I Percent GHG Reduction Range by AER and Time Period

Results for 

PHEV40s, which may be considered a “most likely” future technology, would fall in 

between these ranges.

Timeframe

CS Mode 

(HEVAverage)

CD Mode

(All AER)

PHEV10 

(All Modes)

PHEV60 

(All Modes)

Minimum Maximum Minimum Maximum Minimum Maximum

2030 40% 68% 80% 46% 49% 61% 70%

2050 40% 78% 87% 49% 51% 68% 75%

As seen in Table 3.2P, future year PHEVs offer substantial GHG reduction opportunities 

beyond conventional vehicles, as well as HEVs. This conclusion is dependent upon a 

continual decrease in the GHG intensity associated with electricity production over time, 

as modeled by EPRI (2007a). Under these assumptions, the greater the miles traveled in 

CD mode, the greater the GHG reduction.

In the absence of substantial improvements in electricity GHG intensity, the potential 

GHG reductions for PHEVs become more comparable to HEVs. Figure 3.5 demonstrates 

this general finding for a number of different PHEV fuel scenarios (gasoline, diesel, 

biomass, fuel cell, etc.) and AERs. As such, under higher GHG intensity conditions,

 

27While the increased battery mass associated with higher AER values tends to decrease vehicle 

efficiency, this effect is countered by improved electric drive system performance (EPRI, 2007a).

28Reductions are relative to a fleet average conventional gasoline vehicle (GREET basis). Note that 

any advances in HEV efficiency over time are assumed to be approximately equal to 

corresponding advances in conventional vehicle efficiency over time. Therefore the percentage 

GHG reduction benefits provided by HEVs compared to conventional vehicles are assumed to be 

constant across time periods.
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extending PHEV range provides little if any GHG reduction benefit beyond that already 

obtained by the base HEV.29

Figure 3.5 GHG Emissions versus AER for Different PHEV Fuel Sources

 

 

0 10 20 30 40

0

100

200

300

400

500

600

700

GHG Emissions (g/mi)

PHEV FC Biomass

PHEV SI Com E85

PHEV SI Biomass E85

PHEV FC SMR

PHEV FC Electrolysis

PHEV SI Gasoline

PHEV CI Diesel

ICEV SI Gasoline

All Electric Range (mi)

Source: Elgowainy et al., 2009.

SI = spark ignition; CI = compression ignition; FC = fuel cell; SMR = steam methane reforming.

Cost-Effectiveness

The incremental cost for PHEVs varies substantially depending upon AER, due to 

increased battery capacity requirements. The vast majority of the incremental vehicle 

costs associated with PHEVs (above HEVs) result from battery requirements. Current 

PHEV battery costs are prohibitively high, estimated at about $1,300/kWh,30

 

29The exception is the distributed electrolysis scenario for hydrogen fuel cell vehicles, which results 

in a net increase in GHG emissions (Section 3.8) because of the grid electricity assumptions for 

electrolysis. Those scenarios that utilize renewable pathways for liquid fuel or hydrogen 

production (for example, SI and FC biomass) result in the trend being reversed, as biofuel or 

biomass-derived hydrogen use generates lower GHG emissions per-mile than grid electricity.

or about 

$16,000 for a PHEV20 (assuming a 12.7 kWh capacity). However, advances in battery 

technology as well as cost reductions associated with OEM economies of scale are 

expected to bring down battery costs substantially. Vyas et al. (2007) estimate costs falling 

to approximately $500/kWh in the near future, while the DOE has adopted a goal of 

30Kammen et al. (2008), page 8, assuming retrofit of a current HEV.
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$250/kWh (Vyas et al., 2007). The U.S. Advanced Battery Consortium has adopted a longterm goal of $200/kWh (Samaras, 2009). The $250 and $200 values are adopted in this 

analysis for medium- and long-term battery costs, respectively.

Table 3.2T presents expected battery energy needs and associated incremental costs for a 

variety of PHEV AER levels, relative to a conventional gasoline vehicle. While the 

PHEV10 and 60 entries are intended to bracket the cost analysis, the PHEV40 value may 

provide a more realistic point of reference for the future PHEV market. Note these 

estimates assume a $2,100 incremental cost associated with an HEV technology package 

(for CS mode operation), in addition to the incremental PHEV battery costs.

31

Table 3.2J Projected Incremental PHEV Costs by AER and Time Period

AER Range (mi)

Battery Energy 

Requirement (kWh)a

Incremental Vehicle Cost

(Medium-Term)

Incremental Vehicle Cost

(Long-Term)

PHEV10 4 $3,100 $2,900

PHEV40 16 $6,100 $5,300

PHEV60 24 $8,100 $6,900

a Average values derived from Kalhammer et al., 2009.

The future year estimates in Table 3.2S for PHEV10 and PHEV60 vehicles are used for 

estimating PHEV cost-effectiveness below.

The effect of future electricity prices also must be taken into account for the purposes of 

estimating the cost-effectiveness of PHEVs relative to conventional vehicles and HEVs. 

National average residential electricity rates are estimated to be 10 cents per kWh 

(Kammen et al., 2008), although peak rates can be substantially higher.32

The PHEV cost-effectiveness values found in the literature for the medium term vary over 

an extremely wide range, from as low as -$149/tonne for a PHEV30 light truck at $5.00 per 

gallon gasoline (Bandivadekar et al., 2008), to $588/tonne for a PHEV50 with $4.00 per 

Combined with 

the future efficiency of CD mode operation (0.26 kWh/mile), such low electricity rates 

lead to particularly low operation costs, on the order of 2 cents per mile, about one-fifth of

conventional gasoline vehicle operating costs. Thus, while PHEVs entail a substantial 

incremental vehicle cost, fuel cost savings will offset at least some of this increase.

 

31$2,100 is net of projected HEV battery costs, estimated assuming $600/kWh x 1.5 kWh (Kammen 

et al., 2008).

32Most PHEVs and BEVs are expected to recharge overnight, during off-peak rates. See Section 

3.D.9 for a more detailed discussion of battery charging practices, as well as electricity and BEV 

costs and benefits in general.
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gallon gasoline (Samaras et al., 2009). The one long-term estimate found in the literature 

ranged from $40 to $150/tonne (Fulton and Cazzola, 2008).

The cost-effectiveness ranges in this analysis are roughly consistent with those found in 

Bandivadekar at $5.00 per gallon for gasoline, although decidedly lower than most other 

estimates. However, employing current retrofit battery prices of $1,000 per kWh and 

gasoline prices at $2.00 per gallon pre-tax (values more typical of many of the literature 

studies), the current estimates become more consistent with the literature, between $62 

and $477 per tonne. This illustrates that PHEV cost-effectiveness values are highly 

dependent on both gasoline prices and battery costs. According to Kammen et al., the 

adoption of PHEVs in the marketplace will depend primarily upon technological and 

economic advances in battery technology, because fuel savings cannot compensate for 

current PHEV capital costs at low gasoline prices. For a PHEV purchase to be economical 

to the consumer, one of two things must happen: either battery prices must reach levels of 

approximately $500/kWh, or gas prices in the United States must exceed $5 per gallon for 

sustained periods.

33

There also is a general consensus that today’s PHEVs using current grid-average 

electricity are only marginally more effective at reducing GHGs compared to HEVs, and 

significant GHG intensity improvements (like those assumed for the medium and long

term) will be needed to make these incremental improvements substantial. Therefore, in 

the near term the primary value of PHEVs relative to conventional vehicles and HEVs 

arises from the PHEV’s potential for reducing gasoline consumption (Kammen et al.,

2006). In addition, lower AER PHEVs are generally more cost-effective at this time due to 

the reduction in battery size, weight, and cost.

 Further, a $250/kWh mass production battery cost will be required 

for drivers who travel up to 65 mi between charges (Kammen et al., 2008).

Finally, it is instructive to compare the cost-effectiveness of PHEVs directly with HEVs, in 

order to assess the incremental value of the additional PHEV cost from the perspective of 

GHG reductions. PHEVs are not cost-effective relative to HEVs given current battery 

costs. By setting the CS operation mode equal in efficiency to a baseline conventional 

gasoline vehicle, however, the proportion of PHEV cost-effectiveness benefit in the future 

due to standard HEV operation can be assessed. Removing the 40 percent benefit 

assumed for CS mode operation, as well as the $2,100 incremental HEV package cost, the 

resulting PHEV cost-effectiveness values are actually slightly better than those for HEVs. 

This finding indicates that, assuming advanced high-efficiency, low-cost batteries, PHEVs 

will have somewhat improved cost-effectiveness relative to HEVs, and substantially 

improved estimates relative to conventional vehicles.

 

33PHEV cost-effectiveness is not particularly sensitive to electricity prices; even a 50 percent 

increase in electricity charges to $0.15 per kWhr increases PHEV60 estimates by only about $20 

per tonne.
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Cobenefits

Although PHEVs may not offer dramatic benefits with respect to life-cycle GHG emissions 

relative to HEVs, they do provide an opportunity to significantly lessen the U.S. 

dependence on petroleum, as well as the potential for reduced air pollution attributed to 

mobile sources in urban areas (Kammen et al., 2008). Based on the assumed utility factors, 

we assume a PHEV10 will reduce gasoline consumption by 23 percent, and a PHEV60 by 

75 percent for a national average vehicle. The broad penetration of PHEVs into the LDV 

market offers by far the largest potential for reduced gasoline consumption of any LDV 

strategy evaluated in this section; only BEVs and fuel cell vehicles (Section 2.8 and 

2.9) have the potential for greater reductions in LDV gasoline consumption.

In addition to the substantial fuel savings and associated energy security benefits 

associated with PHEV use, sizable reductions in other pollutants may be realized. 

However, PHEVs (and BEVs) present unique air quality considerations due to the split 

location of emissions between stationary source power plants and mobile on-road 

vehicles. On-road vehicles are subject to manufacturer emission certification 

requirements, although actual end-use emissions can vary in both their grams per-mile 

emission rates, as well as their total mass emissions, depending upon driver behavior, 

maintenance levels, and total miles traveled. On the other hand, electric power plants are 

subject to firm emissions caps, enforced by stringent monitoring requirements. In 

addition, these emission caps are independent of electricity demand, so if demand 

increases, emission intensity must decrease in order to meet the specified emission 

limits.34

Because PHEVs can operate for limited ranges without creating create point-of-use 

emissions and powerplants are often located in rural areas, their use can reduce air quality 

problems in densely populated areas. On all-electric mode PHEVs also operate very 

quietly and can reduce noise pollution. Another possible cobenefit of widespread use of 

PHEV charging systems would come from the use of smart chargers. These chargers 

could be remotely signaled to alter charge rates to perform load frequency control for the 

grid power system. This could result in more efficient grid electric generation if 

widespread use was achieved.

The specific caps on NOx, SOx, and mercury emissions decrease over time, which 

will further reduce their associated emission rates per kWh.

35

 

34Reliance on electricity generation for charging PHEVs and BEVs also changes the spatial 

distribution of emissions, which can in turn have significant (usually favorable) impacts on ozone 

formation and pollutant deposition patterns. See EPRI (2007b) for a detailed analysis of national 

air quality impacts, as well as water impacts, associated with different vehicle charging scenarios.

 Finally, some of the battery technology advancement 

35Off-peak charging of large numbers of PHEVs using smart charges that communicate directly 

with the grid will permit improved voltage and frequency regulation as well as some improved 

management of “spinning reserves” at the system level. Fine tuning of PHEV charging times and 

intensities is particularly helpful for the integration of renewable into the power grid, given the 

variability of wind and solar power inputs (EPRI, 2009).
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from PHEV research can facilitate the advancement of HEV and BEV technology as well, 

and vice versa.

Feasibility

The development of battery technology for use in PHEVs presents a significant challenge, 

and is generally considered the dominant factor in determining the future penetration of 

PHEVs into the overall fleet. PHEVs can be manufactured with today’s technology, but 

current performance with respect to energy density, battery lifetime, and cost is not 

adequate to allow PHEVs to compete effectively with other transportation options at this 

time (U.S. DOE, 2006a). The development of a charging infrastructure also is a potential 

barrier.

Battery Technology

The most common type of battery currently used in HEVs are nickel-metal hydride 

(NiMH), although Lithium-Ion (Li-ion) are expected to gain market share over the long

run. The disadvantages of NiMH batteries are that they are heavier and bulkier than Liion batteries. Advances in battery science, along with economies of scale, have brought 

the costs of Li-ion to levels below that of NiMH (in terms of cost per energy storage 

capacity), and can be expected to enable cost improvements into the future. Nevertheless, 

it is likely that this type of battery will continue to be expensive for some time.

In addition, Li-ion batteries have had the potential to overheat and cause a pressure 

buildup in the past, resulting in battery failure and, in some extreme cases, fire. 

Development of more stable cathode materials and electrolytes is likely to resolve this 

concern in the future (Bandivadekar et al., 2008). As such, Li-ion batteries have the 

potential to erode market share and perhaps eventually phase out NiMH batteries in most 

hybrids in the long run.

When compared to HEVs, PHEVs require a larger battery capacity, which in turn results 

in higher cost and weight, and reduced vehicle utility or passenger space. PHEV battery 

packs are projected to contain from 5 to 20 or more kWh of electrical power, and weigh

300 kg or more (Kalhammer et al., 2009).

36

Another important concern for future PHEV battery development is the need for both 

deep discharge and daily charging, with both activities having a detrimental effect on 

battery life. While existing HEV batteries typically discharge only about 5 percent before 

recharging, future PHEV needs will include daily deep discharges of up to 90 percent as 

well as the frequent shallow charge/discharge cycles of a standard HEV. While battery 

life for recent technology Li-ion batteries was not acceptable for market use, recent 

advances may permit these batteries to last 10 to 15 years, given adequate temperature 

control and State of charge management (Kalhammer et al., 2009).

 

36Assuming 70 Wh/kg and 20 kWh capacity.
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PHEV Charging and Electrical Generation

Most PHEVs will not require changes to residential electrical systems, with PHEVs 

expected to have both 120-volt and 240-volt AC charging capabilities. It is expected that 

suburban vehicle owners, who have garages available for charging PHEVs in their homes, 

will be more likely to adopt this technology than urban owners, who may not have 

overnight plug access available. For those operators without access to an outlet for 

overnight charging, the typical total cost for installation of a 120V AC, single phase, 20A 

circuit for residential vehicle charging is estimated between $500 and $1,000, while the 

cost for installing a 240V AC, single phase, 40A circuit are substantially higher (Samaras,

2009). Outlet installation can also be cumbersome due to permitting and inspection 

requirements.

The time necessary to recharge a PHEV20 from 20 percent to a full 100 percent charge 

utilizing a standard 120-volt outlet ranges from 4 to 8 hours for battery pack sizes ranging 

from 5.1 to 9.3 kWh, although the time to charge to approximately 80 percent of capacity 

can be substantially shorter (Hadley and Tsvetkova, 2008).

37

While the power source for charging PHEVs at most residences is readily available, there 

is a need to develop some level of publicly accessible charging infrastructure to allow 

PHEVs to be charged away from users’ homes. Public access recharging could 

substantially extend a PHEV’s effective AER, depending upon trip lengths and available 

charge time (although the impact of multiple daily charge cycles would need to be clearly 

demonstrated with respect to battery durability and life-cycle costs). While residential 

infrastructure installation for PHEVs is fairly straightforward, public access charging 

facilities are necessarily more expensive. The estimated cost for a 10-space commercial 

recharging facility would be approximately $18,500 (U.S. DOE, 2008). This cost includes 

labor, material, signage, and permits. Some utilities such as Southern California Edison 

are currently preparing public access charging plans.

PHEVs with particularly 

large battery capacities (e.g., SUVs and large trucks and/or vehicles with higher AERs) 

may require charging through 240-volt outlets, which allow for faster charging, in order to 

obtain acceptable charge times (Elgowainy et al., 2009). There are designs for fast chargers 

available, but battery life is negatively impacted by increased charge rates. In addition, 

battery life also is generally determined by the total number of charge cycles. Charging 

twice per day is more likely to necessitate the replacement of the battery near the middle 

of the vehicle’s life, at significant cost (Kromer and Heywood, 2007).

While PHEVs will increase total electrical power demand they may not require increases 

in generation capacity, at least in the near term, since PHEVs will most commonly be 

charged during off-peak hours and total vehicle numbers will likely be small (EPRI, 

 

37Near-term battery technologies may require additional time for cooling after use before recharge 

commences (EPRI, 2007a).
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2007a).

38

 

38Although unlikely, if multiple PHEVs simultaneously utilized high-voltage fast charging were 

serviced by the same transformer (typically serving about five customers), then transformer life 

could be shortened significantly (e.g., by a factor of 10 or more). Reliance on smart-charging 

strategies will minimize such risk in the future, even at high PHEV market penetration levels 

(EPRI, 2009).

 As noted above, very substantial PHEV penetration levels could be 

accommodated without significantly expanding electric capacity. In the long term, 

however, substantial penetration of PHEVs into the LDV fleet could impact both base load 

and peak-period electric generation requirements, which without market intervention 

could be partially met by coal fired units, minimizing some of the GHG reduction 

potential of PHEVs. In this case both “smart metering” and charge control will likely be 

required at the utility level to encourage off-peak charging by consumers in order for 

overall system efficiency to be maximized, at least during periods of peak demand (U.S. 

DOE, 2006a). Reliance on such controls and utility incentives for off-peak charging will 

help minimize the need for new capacity deployment in the long term.
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Heavy-Duty Trucks

Per Vehicle GHG Reduction:

• Retrofit to use low resistance rolling tires, planar 

boat tails, front fiarings, trailer side skirts, and 

aluminum wheels: 10 to 15%

Confidence in Estimates: High

• Many technologies proven

Key Cobenefits and Impacts: Positive

• NOx and PM reductions anticipated from reduced 

fuel consumption and engine loads

Feasibility: Moderate

• Operational and maintenance issues may limit 

potential for some technologies

Key Policy Options:

• Financial incentives for purchase of retrofits

• Financial or regulatory incentives for improved 

fuel efficiency

• Incentives for trailer owners

• Requirements for proven technologies

• Demonstration programs/partnerships

 3.3 On-Road Heavy-Duty Vehicles: Trucks

Heavy-duty vehicles (HDV)39

According to EIA estimates, 9.5 million 

HDVs traveled 231 billion miles in 2008, or 

about 10 percent of all miles traveled on–

road.

cover a wide

range of sizes and applications, ranging 

from Class 3 small trucks and panel vans 

used primarily for urban deliveries and 

light commercial hauling, to Class 8 

tractor-trailer rigs up to 80,000 lbs used for 

commercial freight transport. Other HDV 

categories include delivery trucks, transit 

and school buses, and a variety of 

vocational applications such as refuse 

haulers and utility vehicles. Unlike LDVs, 

HDVs currently are not subject to fuel 

efficiency standards, although standards 

development currently is underway as 

mandated by EISA.

40 In this same year HDVs consumed 

the equivalent of 2.4 million barrels of oil 

per day, about 21 percent of petroleum 

utilized for on-road transportation.41 

During the period from 1996 through 2006, 

HDV registrations have increased by an 

annual average of 2.3 percent, miles traveled by 2.0 percent, and fuel consumption by 

2.6 percent (ORNL, 2008, Tables 5-1 and 5-2). On a Btu basis, the vast majority of HDV 

fuel consumption is attributable to diesel (95 percent), with gasoline contributing less than 

5 percent.

42

 

39Trucks greater than 10,000 lbs. and less than 26,000 lbs. in gross vehicle weight are often referred 

to as medium-duty vehicles. For convenience, this analysis refers to both medium and heavyduty vehicles as HDVs.

 Accordingly, the following analysis focuses exclusively on diesel powered

HDVs.

40AEO 2009, Supplemental Table 67.

41AEO 2009, Table 7.

42AEO 2009, Supplemental Table 67. The implementation of new heavy-duty diesel emission 

standards in 2007 and 2010 is increasing new truck costs by many thousands of dollars. As such, 

some increase in gasoline engine use can be expected in the medium-duty vehicle market. 

However, given the diesel engine’s inherent advantages in durability and maintenance, a 

(Footnote continued on next page...)
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HDV operators are subject to different economic influences and constraints than LDV 

owners. Profitability margins within the trucking industry are low and operating costs 

due to fuel are relatively high (about 33 percent of costs per mile in 2006) (21st Century 

Truck Partnership, 2009). Accordingly, market forces will encourage some development 

and adoption of fuel efficiency improvements for U.S. trucks. In addition, voluntary 

initiatives such as EPA’s SmartWay Transport Partnership have helped promote the 

adoption of energy efficiency improvements among many of the largest freight carriers in 

the United States. Adoption of SmartWay certified vehicles and trailers is estimated to 

result in a 10 to 20 percent reduction in fuel use per truck compared to conventional 

truck/trailer combinations (U.S. EPA, 2007b). In spite of these factors, HDVs have only 

witnessed modest gains in fuel efficiency over the past several decades, improving by 

about 0.5 percent per year for single unit (straight) trucks, and 0.2 percent per year for the 

larger combination (tractor/trailer) trucks between 1970 and 2006 (ORNL, 2008, Tables 5.1 

and 5.2). As such, substantial opportunities for further efficiency improvements remain.

Energy consumption and therefore fuel use by HDVs varies substantially depending on 

vehicle size and weight. As a general rule Class 8 tractor-trailer rigs tend to travel more 

miles per year (about 46,000 on average) and have lower fuel efficiency (about 5.7 mpg) 

than lighter vehicles. For comparison, HDVs less than 26,000 pounds gross vehicle weight 

average about 13,000 miles per year with a fuel efficiency average of 8.0 mpg. This 

disparity leads to a disproportionate impact for Class 8 trucks, which comprise about 

41 percent of HDV registrations but are responsible for about 78 percent of total HDV fuel 

consumption (ORNL, 2008, Table 5-4). As such, identifying opportunities for reduced fuel 

consumption among Class 8 HDVs is a primary focus of this section.

Unlike LDVs, the most appropriate way to measure the efficiency of HDVs is usually in 

terms of fuel use per unit of work performed (e.g. ton-miles hauled or horsepower-hours 

per gallon). Although a simple miles per gallon metric is utilized here for consistency 

with other sections, it provides a somewhat crude and imprecise measure of efficiency for 

these sources.

A vehicle’s operation-cycle (e.g., frequency of starts and stops, acceleration requirements, 

average speed, percent of time at idle) also has a direct impact on fuel consumption and

GHG emissions. The frequent acceleration and braking events commonly encountered in 

urban operations result in very poor fuel efficiency. For example, full-sized transit buses 

operating under central business district conditions average only 3.2 mpg (21st Century 

Truck Partnership, 2009). Operation at very high speeds and extended idle time also 

decrease fuel efficiency for freight trucks.

Energy audits for two key HDV categories—a Class 8 truck and a typical medium-duty 

truck—are presented in Figures 3.6 and 3.7. These figures help identify the primary 

energy requirements for conventional diesel HDV operation as well as opportunities for 

reducing fuel consumption. The target energy consumption levels represent the goals for 

the 21st Century Truck Partnership, a partnership between the Federal government and 

 

dramatic shift to gasoline engines is not anticipated for the medium duty vehicle market 

(Reinhart, 2009).
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the U.S. trucking industry intended to promote research and development for efficiency 

and other improvements. The specific performance targets were established considering 

emerging technologies not yet widely adopted in the fleet, and represent “long-term 

stretch goals for which technology breakthroughs will be required” (21st Century Truck 

Partnership, 2009). As indicated in the figures, engine losses are substantial for all diesel 

engines, with roughly 60 percent of fuel energy being converted to waste heat rather than 

usable work.43

Figure 3.6 Class 8 Truck Energy Audit

 

Rolling Resistance

Base = 51 kWh

Target = 30.6 kWh Drivetrain

Base = 9 kWh

Target = 6.3 kWh

Auxiliary Loads

Base = 15 kWh

Target = 7.5 kWh

Engine Losses

Base = 240 kWh

Target = 143 kWh

Engine Efficiency

Base = 40%

Target = 44%

Total Energy Used per Hour

(65 mph, fully loaded, level road for one hour)

Base = 400 kWh (6.6 mpg) Target = 255.5 kWh (10.3 mpg)

Aerodynamic Losses

Base = 85 kWh

Target = 68 kWh

Woodrooffe & Associates

 Source: 21st Century Truck Partnership.

 

43Due to the fundamental limits of physics, no engine can operate at a thermal efficiency of 

100 percent. The most efficient stationary diesel engines operate at approximately 50 percent 

efficiency, which can be considered a practical limit for the diesel combustion cycle. However, a 

modern diesel engine is significantly more efficient than a corresponding gasoline engine which 

operates at approximately 25 percent efficiency (reference).
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Figure 3.7 Class 6 Truck Energy Audit

 

Drivetrain Losses

Base = 3.0 kWh

Target = 1.9 kWh

Auxiliary Loads

Base = 7.5 kWh

Target = 3.8 kWh

Aerodynamic 

Losses

Base = 85 kWh

Target = 68 kWh

Friction Braking

Base = Tbd kWh

Target = Tbd kWh

Empty Vehicle

Base = 5,450 kg

Target = 3,360 kg

Rolling 

Resistance Losses

Base = 9.7 kWh

Target = 6.7 kWh

Engine Losses

Base = 71.8 kWh

Target = 64.6 kWh

Hybrid Powertrain

Generator Losses*

Energy Storage System

Motor/Controller Losses*

* Individual Losses for 

Hybrid System to be 

Determined. Total Benefit 

on Fuel Efficiency 

Estimated to be 30-50%.

 

Medium Truck Total Energy and Fuel Economy

Base = 107.7 kWh, 10.0 mpg

Target = 55.2 kWh, 24.0 mpg

Source: 21st Century Truck Partnership.

Other energy use requirements depend upon vehicle weight and operation cycle. About 

one third of the energy requirements for operating fully loaded Class 8 trucks at highway 

speed come from aerodynamic drag and tire rolling resistance. In contrast, transit buses 

operating at slower urban speeds encounter negligible aerodynamic drag (less than 

1 percent) and rolling resistance levels only about half that of the Class 8 truck example 

(about 5 percent). On the other hand, transit buses incur substantial losses for auxiliary 

loads (e.g., for HVAC and lighting, at about 25 percent) and to a lesser extent, braking 

(about 6 percent). Non-engine losses are more evenly distributed for the Class 6 delivery 

truck example, with aerodynamic drag, rolling resistance, and auxiliary loads all 

contributing nontrivial energy requirements (over 5 percent each).

Different GHG reduction strategies are appropriate for addressing the different types of 

energy loss. Technologies currently being explored for the HDV market fall into five 

categories: engine power systems and transmissions, drag reduction (including 

aerodynamic and rolling resistance), weight reduction, accessory and “hotel” loads, and 

idle reduction. (Idle reduction strategies are considered a system efficiency improvement 

and are discussed in Chapter 6.) In addition, technologies from one category can have 

synergistic effects (both positive and negative) when employed together, and possible 

interactions are discussed as appropriate.

Due in part to their relatively high unit costs, some of the GHG reduction strategies under 

consideration for HDVs such as hybridization are only available through new vehicle 

manufacture and purchase, although certain aerodynamic improvements, low-rolling 

resistance tires, and auxiliary power strategies are possible through retrofit. However, 

HDVs have a slower turnover time compared to LDVs, with a typical HDV lifetime of 
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close to 30 years (ORNL, 2008, Table 3.12). Therefore substantial penetration of new OEM 

technologies can take several years after commercialization.

On the other hand, OEM strategies should have a disproportionately large impact on fuel 

consumption since older vehicles travel significantly less on average than new vehicles. A 

10-year-old truck travels only about 40 percent of the distance annually of a new truck, 

and a 20-year-old truck less than 20 percent.

44

In addition to advancements related to vehicle efficiency, diesel HDVs are in the process 

of adopting control technologies in order to meet increasingly stringent NOx and PM 

emission standards. The latest EPA heavy diesel standards require 90 percent reductions

in PM in 2007 and 90 percent NOx reductions by 2010 relative to prior emission standards

(U.S. EPA, 2006). The technologies used to meet these standards, such as particulate filters 

and NOx absorbers, have their own energy requirements, and add weight to the vehicles. 

As such, these technologies may reduce fuel efficiency in some cases by about one percent

for particulate filters, and roughly five percent for NOx control using exhaust gas 

recirculation, and other recent strategies (U.S. DOE, 2009b; Greszler, 2008). Newer 

emission control technologies may increase fuel efficiency to the extent that they allow the 

diesel engine to operate more efficiently.

 The effectiveness of different efficiency 

strategies also will vary with vehicle age due to the fact that vehicles may change 

operators and duty-cycles after a number of years. For example, Class 8 trucks commonly 

spend the first four to six years of their life in long-haul service, which entails higher 

speed operation (and greater mileage accumulation) than other service types (Lutsey,

2008). After this time, these trucks are often moved into lower mileage, urban/short-haul 

applications. These different service types and operation modes obtain substantially 

different benefits from different efficiency technologies. For example, aerodynamic and 

rolling resistance strategies obtain their maximum benefit at highway speeds, while 

hybrid technologies are best suited for lower speed urban drive cycles.

The following sections discuss resistance reduction strategies, weight reduction, engine 

improvements (including hybrid power systems), and strategies to reduce vehicle 

accessory loads. (Alternative fuel and fuel cell strategies are discussed in tandem with 

their associated fuel type in Section 2.0.) The baseline emission estimates used below are 

based on the AEO Reference case for 2030, which estimates fleet average fuel efficiency on 

an annual basis. Annual incremental emission reductions and total costs for each 

technology option are based on a variety of projections found in the literature. The costeffectiveness of packages of multiple technology strategies (e.g., hybrid electric vehicles 

with advanced aerodynamics) are discussed separately at the end of the HDV section.

 

44Based on mileage accumulation data from EPA’s MOBILE6 emission factor model.
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Resistance and Weight Reduction Strategies

Overview

The total drag on a moving tractor-trailer is the sum of the air resistance acting on it and 

the mechanical friction in the wheel bearings and tires. Technologies that aim to reduce 

drag will make the tractor-trailer more efficient either aerodynamically or mechanically. 

Drag reduction measures are of particular interest with respect to GHG reductions, as 

many of these options can be introduced to the fleet relatively quickly through retrofit, as 

opposed to most other vehicle and powertrain options, which must be implemented 

through redesign of new vehicles.

Aerodynamic drag is particularly sensitive to vehicle speed, with power requirements 

increasing with the square of velocity. Rolling resistance also increases directly with 

speed and mass (Vyas et al., 2002). Aerodynamic improvements will have the greatest 

impact for those vehicles traveling at highway speeds (60+ mph). When heavy-duty 

trucks are traveling at these speeds, approximately 65 percent of the engine power 

produced is used to overcome aerodynamic drag (Vissier, 2005). In addition, about 

70 percent of fuel use by Class 8 HDVs is estimated to occur on trips greater than 100 

miles, which occur primarily at highway speeds. By contrast, the majority of fuel use for 

smaller delivery trucks (as well as vocational trucks and transit buses) is attributable to 

trips of less than 100 miles, typically occurring at lower urban speeds (21st Century Truck 

Partnership, 2009). Accordingly, aerodynamic improvement options are evaluated here 

only for Class 8 freight trucks, although some benefits also are possible for smaller, urbanbased trucks as well.

The aerodynamic drag of tractor-trailer rigs has dropped significantly since the 1980s, 

improving fuel efficiency by about 15 percent per truck (Schubert and Kromer, 2008). 

Some of the currently available truck/tractor drag reduction options include a cab top 

deflector, sloping hood, and cab side flares, as shown in Figure 3.8. These design 

concepts already are widely implemented for line-haul trucks. In fact, implementation on 

Class 7 and 8 cabs and hoods already have achieved a high level of market penetration 

(about 70 percent by 2006).45

 

45At 70 percent market share, according to AEO 2009 – Table aeo2009.d120908a.

 However, there is potential to further increase the 

aerodynamic efficiency of current Class 8 HDVs by making additional changes to the 

shape of these vehicles, from the front bumper of the truck to the back of the trailer.
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Figure 3.8 Aerodynamic versus "Classic" Cab Profile

 

Aerodynamic styled truck with low profile 

front, aerodynamic bumper, full-height 

roof fairing, hidden exhaust stacks, and 

fuel tank side fairings.

Typical classic styled truck with long nose, 

flat bumper, low-roof, and exposed air 

cleaners, exhaust stacks, and fuel tanks.

Source: Schubert and Kromer, 2008.

Aerodynamic drag reduction options such as closing or covering the gap between the 

tractor and trailer, a lower front bumper air dam, underside air baffles, and wheel well 

covers are available as retrofit technologies and have not yet achieved significant market 

penetration (projected at 1 percent in 2009).46

Side mirrors are another source of turbulence and drag and can be modified as well. 

Electronic vision systems offer a more advanced alternative, replacing large protruding 

side mirrors with small cameras that can be integrated into the shape of the cab in order to 

minimize further air resistance. These systems are not commercially available at this time, 

although penetration is possible in the near term if safety regulations were modified to 

allow downsizing or replacement of mirrors (Lovins et al., 2005).

 These options take the airflow smoothing 

concept further by attempting to reduce turbulence under the truck, at the uneven 

surfaces near the wheels, and in the gap between the truck and trailer.

There also is potential for airflow improvements from changes to trailer geometry as well. 

Employing curvature to the leading and trailing edges of trailers can reduce turbulence 

and drag. These measures are just beginning to penetrate the fleet, estimated at 2 percent

in 2008.47

 

46AEO 2009 – Table aeo2009.d120908a.

47AEO 2009 – Table aeo2009.d120908a.
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The cross-flow vortex trap device (CVTD) is a series of vertical surfaces extending 

forward from the trailer in the gap area, designed to trap vortices that form in the airflow 

from one side of the gap to the other. CVTD technology is mutually exclusive with the 

gap covers mentioned above. There also are many concepts that attempt to reduce the 

drag caused by the flow separation and turbulence at the rear of the trailer. Passive 

designs include the vortex strake device (VSD), undercarriage flow device (UFD), and 

planar boat tail plates. Pneumatic flow control systems operate similarly to the VSD, 

except that they use air forced from near the edges of the trailer instead of raised strakes. 

This air flow can be generated by a diesel-powered compressor installed in the trailer 

similar to current refrigeration units, bleeding pressurized air from the truck’s forced 

induction system, or a chain drive to the trailer’s wheels. These systems may be 

optimized to react dynamically for the purposes of enhancing braking or stability by 

varying the aerodynamic forces on the trailer. Additional blowing can be implemented to 

provide lift at the trailer, thereby reducing rolling resistance (Vyas et al., 2002). Pneumatic 

flow control systems have been demonstrated in pilot testing, but are not anticipated to 

penetrate the market commercially for the next few years (U.S. DOE, 2009b).

Additional possibilities for GHG reduction can result from changes to tires and their 

interaction with the road surface. Auto tire inflation systems help minimize energy 

losses to due to the increased rolling resistance of underinflated tires by continually 

monitoring and adjusting the air pressure in each tire using onboard compressed air. 

These devices have the benefit of increasing tire life as well as decreasing truck 

turnaround and maintenance time, since tires do not need to be checked by hand. In 

addition, such systems reduce the chances of a blowout. These systems should be 

retrofitable on most or all trucks, and are now commercially available although current 

market penetration is assumed to be minimal (U.S. EPA, 2004a).

Low-rolling resistance tires exhibit reduced drag due to the use of new construction 

materials such as silica and synthetic elastomers (Frey and Kuo, 2007). This type of tire 

can be retrofitted on most existing trucks and trailers, and have achieved approximately 

4 percent market penetration as of 2008.48 As an alternative for new Class 8 trucks, singlewide-based tires can be used to replace wheel and tire pairs on each axle on trucks and 

trailers. This type of wheel and tire offers reduced weight, rolling resistance and 

aerodynamic drag over the dual wheel and tire combinations used today. This technology 

matches well with auto tire inflation systems due to the increased need to monitor tire 

pressure to reduce the chance of a blowout. Single wides also provide weight reduction 

benefits, reducing vehicle weight between 800 and 1,000 lbs, which in turn reduces fuel 

consumption (U.S. EPA, 2004b).

49

Weight reduction strategies also offer promise for reducing fuel consumption. Recent 

tests estimate a potential fuel consumption improvement of approximately 0.6 percent per 

Single-wide tires currently are commercially available.

 

48AEO 2009 – Table aeo2009.d120908a.

49Weight reduction may permit additional freight to be hauled on a given truck. In this case fuel 

reduction benefits can be measured on a gallon per payload ton-mile rather than a mpg basis.
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1,000 pounds of weight reduction for fully loaded combination trucks on a highway drive 

cycle (NESCCAF/ICCT, 2009). Both mechanical drag on the truck and the energy 

required to accelerate it to highway speeds are dependent on weight. In some cases, total 

vehicle weight is the limiting factor as to how much cargo a truck can carry, so a reduction 

in the weight of the truck itself would allow more cargo to be carried in each trip. 

Increased cargo capacity can thereby reduce the number of total trips required to move a 

given amount of freight, with an associated reduction in fuel consumption per ton-mile 

hauled. In this instance the fuel consumption improvement increases to 2.2 percent per 

1,000 pounds of weight reduction, on a ton-mile per gallon basis (NESCCAF/ICCT, 2009).

Weight reduction can be accomplished by substituting conventional materials with lighter 

ones. The primary candidate for material replacement is steel. Aluminum, plastics, 

composites, or high-strength steel alloys can be used in place of steel in both the truck 

and trailer to achieve weight reduction. Replacing steel wheels and axle hubs with 

aluminum can reduce truck weight by over 500 pounds (U.S. EPA, 2004c), while steel-shell 

brake drums can reduce weight by an additional 100 pounds. Moreover, redesigned 

sleeper cabs can reduce weight by several hundred pounds. Trailers can be designed to 

reduce weight not only in the wheels, brakes, and axles, but in the container structure as 

well. Aluminum roof posts, side, posts, and floor joists could save about 1,000 pounds

overall to the weight of a trailer. Aluminum construction offers relatively near-term 

benefits because the technology currently is available. It is estimated that aluminum 

substitution could remove about 3,000 pounds from a heavy-duty truck in the short term

(U.S. EPA, 2004c). In the long term, use of composite materials has the potential to 

increase benefits to a 9,000-pound reduction as research progresses and these materials 

become available at a lower cost (Vyas et al., 2002). Trailers used in trailer on flat car 

(TOFC) service (i.e., carried on rail cars) and containers on truck chassis have additional 

strength requirements that limit weight reduction strategies

Magnitude and Timing of GHG Reductions

Individual Technology Benefits

Aerodynamic and rolling resistance improvements are considered in isolation as well as in 

combination packages, with individual measures summarized below. Benefits are 

considered for Class 8 (predominantly long-haul) trucks. Aerodynamic options are listed 

below that are most often considered for adoption in the literature in the near to medium 

term.50

• Basic Cab Improvements – Cab top deflector, sloping hood, cab side flares. These 

options are common on new truck models and already have obtained substantial 

market penetration. Additional application is possible through retrofit of older units. 

Per unit miles per gallon improvements range from 1.0 to 2.0 percent (TIAX, 2008).

 

50Certain devices such as VSDs may offer additional benefits, but may provide diminishing returns 

if implemented with other strategies.
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• Enhanced Cab Improvements – Gap reduction between tractor and trailer, improved 

bumper, underside air baffles, fuel tank fairings, and wheel well covers. These 

technologies currently are available for retrofit. Per unit mpg improvements are 

estimated at approximately 2.4 percent (Vyas et al., 2002).

• Basic Trailer Improvements – Rounding of front and back edge curvatures. These 

options currently are available for purchase with new trailers, with a per unit mpg

improvement estimated at about 1.3 percent (Vyas et al., 2002).

• Additional Trailer Improvements – Front fairings and side skirts may be retrofitted

onto existing van trailers, and currently are available. Per unit mpg benefits are 

estimated between 1.0 and 2.0 percent for front fairings, and between 4.2 and 

7.8 percent for side skirts (CARB, 2008a).

• Planar Boattail Plates – Devices to reduce aft-end trailer drag, currently under 

development and demonstration. Potentially available for retrofit, but most suitable to 

conventional van trailers due to configuration constraints. Per unit mpg 

improvements are estimated between 2.8 and 4.0 percent (TIAX, 2008; Frey and Kuo, 

2007).

• Vehicle Load Profile Improvements – This option involves covering flatbed freight 

with tarpaulins and keeping load profiles low in order to smooth airflow. 

Improvements can be made immediately at very low costs, resulting in per unit mpg 

improvements of about 2.5 percent (Frey and Kuo, 2007). This strategy is limited by 

the relatively small fraction of fleet using flatbeds. In addition, implementation of this 

strategy relies upon the cooperation of the vehicle operator, who may have no 

incentive to expend the required time and effort. 

Technologies that reduce energy consumed to overcome rolling resistance generally offer 

smaller improvements compared to aerodynamic technologies. Low-rolling resistance 

tires can result in between 2.7 and 4.8 percent reduction in mpg for each truck (Vyas et al., 

2002; Frey and Kuo, 2007). Single wide tires are estimated to provide a full 6 percent fuel 

consumption improvement, with an additional 4.0 percent estimated with future 

technology improvements (NESCCAF/ICCT, 2009).

For weight reduction strategies, EPA estimates that a 3,000-pound reduction in truck 

weight increases its fuel efficiency by 1.8 percent (U.S. EPA, 2004c). This estimate is 

consistent with the 0.6 percent improvement per thousand pounds of weight reduction 

noted above (NESCCAF/ICCT, 2009). It is estimated that pursuing weight reduction for 

heavy-duty trucks could improve mpg between 5 and 10 percent (Vyas et al., 2002). A 

related strategy involves replacing conventional wheels with aluminum wheels, estimated 

to improve fuel efficiency by 2.0 percent as a result of the associated weight reduction 

(TIAX, 2008). Reduction strategies will reduce both mechanical friction and the energy 

required to accelerate the truck from a stop. In fact, weight reduction strategies should be 

even more effective for urban operations due to the increased number of starts and stops, 

relative to highway driving. As such, weight reduction can reduce GHG emissions from 

all trucks in the fleet, from short-distance delivery trucks to long-haul trucks that travel 

primarily over the highway.
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Combined Per-vehicle Benefits

Estimates have been developed for the per vehicle fuel consumption and GHG reduction 

potential from broad adoption of several of the above technologies on a Class 8 truck, 

ranging from 12 to 20 percent (Muster, 2000; 21st Century Truck Program, 2009; Frey and 

Kuo, 2007; Vyas et al., 2002; Lovins et al., 2005).51

Table 3.3A Aerodynamic and Resistance Reduction Technologies

Packaged for Near-Term Analysis

Certain aerodynamic and resistance 

reduction strategies are available for retrofit under a near-term scenario, similar to the 

options considered by California CARB for its recent HDV rulemaking (CARB, 2008a). 

These strategies may be implemented relatively quickly, since they do not rely on OEM 

implementation and fleet turnover in order to obtain significant market penetration. The 

package of strategies considered for the near-term benefit evaluation is described below in 

Table 3.3A. Additional aerodynamic and resistance reduction strategies are considered in 

tandem with powertrain measures for the medium to long term in the following section.

Technology

Near-term • Low-rolling resistance (single-wide) tires

• Planar boat tails

• Front fairings

• Trailer side skirts

• Fuel tank skirts

• Aluminum wheels

As applied to a fleet average Class 8b diesel truck in 2010, the above combinations of 

technologies are estimated to provide a 10 to 15 percent reduction in fuel consumption 

over the AEO Reference case for highway operation in the near term, as shown in 

Table 3.3B (Frey and Kuo, 2007; TIAX, 2008; CARB, 2008a; Vyas et al., 2002; 

NESCCAF/ICCT, 2009). Unlike LDVs, the most appropriate way to measure the 

efficiency of HDVs is usually in terms of fuel use per unit of work performed – e.g. tonmiles hauled or horsepower-hours per gallon. Although a simple miles per gallon metric 

is utilized here for consistency with other sections, it provides a somewhat crude and 

imprecise measure of efficiency for these sources.

 

51Analysis accounts for mutually exclusive options such as low rolling resistance and single-wide 

tires.
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Table 3.3B Aerodynamic and Resistance Reduction Technologies Fuel 

Efficiency and Consumption Improvement Potential

Conventional Class 8b Scenario MPG

Fuel Consumption 

Reduction Range

MPG (AEO 2010) Minimum Maximum Minimum Maximum

Near-term 6.34 7.00 7.45 10% 15%

Many of the above strategies also are applicable to smaller HDVs and/or lower operating 

speeds, but at a reduced level of effectiveness. For example, one study estimates a 

1.0 percent fuel efficiency improvement for Class 8 trucks with basic aerodynamic cab 

treatments at low speeds typical of urban operation, compared to 2.0 percent at highway 

speeds. Similarly, this same study estimated that straight trucks in the Class 3–6 range 

would obtain a 1.4 percent fuel efficiency improvement for low-rolling resistance tires, 

compared to 2.9 percent for this measure when applied to Class 8 tractor-trailers (Schubert 

and Kromer, 2008). Nevertheless, strategies such as low-rolling resistance tires, front 

fairings, and aluminum wheels may still provide effective GHG reductions for smaller 

trucks. On the other hand, certain strategies tailored to high-speed long-haul operations 

are generally not applicable to smaller HDV categories, including trailer side skirts and 

boat tails.

Costs

The incremental costs associated with resistance reduction strategies are relatively low 

compared to the base price of HDVs (commonly more than $100,000 for Class 8 tractor 

rigs, and an additional $20,000 or more for trailers).52

 

52Primarily Kenworth models.

 Cost estimate ranges are provided 

in Table 3.3E by truck class group (Frey and Kuo, 2007; Schubert and Kromer, 2008; Vyas 

et al., 2002; CARB, 2008a; NESCCAF/ICCT, 2009). Unit costs for trailer treatments have 

been multiplied by 2.5 to reflect the fact that there are approximately 2.5 trailers for each 

tractor in service today (Schubert and Kromer, 2008).
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Table 3.3C Incremental Costs of Resistance Reduction Strategies

Strategy

Per Unit Incremental Cost

Class 3 to 7 Class 8a and 8b

Basic cab aero $750 $750

Enhanced cab aero $800 $1,500

Trailer edge curvatures N/A $1,250

Front fairings $2,000 to $2,500a $2,000 to $2,500a

Side skirts N/A $2,500 to $6,500a

Boat tails N/A $1,250a to $5,600a

Advanced trailers (UFD) N/A $2,500b

Advanced trailers (CVTD) N/A $500b

Electronic vision systems N/A $1,000b

Single-wide tires and aluminum wheels53 $1,680a $3,920a

Automatic tire inflation systems N/A $500 to $900

Sources: Vyas et al., 2002; Lovins et al., 2005; Schubert and Kromer, 2008; Frey and Kuo, 2007; 

NESCCAF/ICCT, 2009.

a Without side skirts.

b Includes installation and taxes.

c Includes lifetime replacement costs.

N/A – estimates not available or not applicable.

The one value found in the literature which focused exclusively on similar retrofit 

strategies found a cost effectiveness of -$60/tonne (CARB, 2008a).

54

Cobenefits

In addition to fuel savings and associated GHG reductions, various other benefits are 

anticipated with the adoption of rolling resistance technologies. Notably, the reduced 

power requirements associated with these strategies can lower NOx and other emissions 

substantially. A detailed study evaluating potential retrofit impacts on Class 8 trucks in 

California estimated NOx reductions roughly comparable to GHG reductions for such 

 

53Adoption of single wide tires has a wider cost range depending on circumstances. When 

purchasing a new truck or trailer, single-wide wheels and tires may be less expensive than 

traditional duals (U.S. EPA, 2004b).

54Based on an annualized cost of $400 million per year and a nationwide GHG reduction of 6.7 mmt 

in 2020.
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measures on a percentage basis, ranging from 1.2 times the fuel efficiency benefit for longhaul operations, to 0.58 times the fuel efficiency benefit for short-haul duty-cycles

(Schubert and Kromer, 2008). The sensitivity of PM emissions to duty-cycle makes benefit 

estimates for this pollutant highly uncertain.

EPA has provided States with air quality guidance to quantify the co-benefits of improved

tire and aerodynamic technologies.55

The decreased engine loads associated with these options also may permit some degree of 

engine downsizing, which could in turn provide additional fuel consumption benefits. 

One recent study estimated a 3.0 to 4.0 percent fuel consumption benefit associated with a 

20 percent reduction in engine power for Class 8 combination trucks operating on the 

highway (NESCCAF/ICCT, 2009). However, it is uncertain to what extent consumers 

would be willing to accept the degradation in acceleration and hill climbing performance 

associated with reduced power. Therefore the potential equipment cost reduction, fuel 

savings, and emission reductions associated with such downsizing are uncertain and are 

not included in the above analysis.

Rolling resistance strategies may provide other types 

of benefits as well. For example, automatic tire inflation systems are estimated to extend 

tire life by 8 percent or more, while saving time and labor associated with pressure gauge 

checks (U.S. EPA, 2004b). These systems also may improve overall safety by lowering the 

frequency of blowouts and roadcalls (Lovins et al., 2005). Conversely, single-wide tires 

may lead to increased maintenance requirements due to greater pavement rutting and 

deformation.

Finally, decreased vehicle and trailer weight will improve absolute fuel efficiency for 

volume-limited payloads, and will allow for increased freight (and reduced fuel 

consumption per ton-mile hauled) for weight-limited payloads, thereby reducing costs to 

shippers.

Feasibility

All of the technologies discussed in this section have undergone some amount of 

demonstration and many are commercially available. In addition, most resistance 

strategies are only beginning to be deployed and have significant market penetration 

potential remaining. Accordingly, the primary barriers to long-term adoption of these 

technologies are economic, logistical, and informational.

Long equipment life, and the desire to reduce time lost to maintenance, have the effect of 

slowing the market penetration of new technologies in the HDV sector. Some of the 

aerodynamic design improvements listed above, such as underbody baffles and trailer 

side skirts, may make some maintenance work more difficult or expensive and reduce 

vehicle ground clearance, which could limit the utility of trucks and trailers. 

 

55 See http://www.epa.gov/OMSWWW/Stateresources/transconf/policy/420b07004.pdf
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Strategies such as closing the truck/trailer gap and boat tail plates may, depending on 

their design, increase the time required to hitch and unhitch trailers and load/unload 

cargo. Damage to gap reduction features is common during tight maneuvering, where the 

angle between the tractor and trailer can become extreme. In addition, placement during 

installation must carefully consider the location of the fifth wheel and kingpin. Trailer 

side skirts also present certain operational concerns, including reduced ground clearance 

(possibly resulting in skirt damage), and ice/weight accumulation in cold climates. 

Additionally, some of the above technologies will increase vehicle weight, which can in 

some cases limit the total cargo that can be carried.

Another primary barrier to the widespread use of rolling resistance technologies is cost, 

even though payback periods for many of these measures are less than four years.56

With regard to single-wide tires, there also is concern over decreased redundancy in the 

case of a flat tire or blowout, although this risk may be exaggerated.

 The 

majority of trucks are in small fleets (one to five trucks) or held by owner-operators. Profit 

margins in the trucking industry tend to be small, and operators typically only makes 

improvements to vehicles and systems when the costs and benefits are clear and 

previously demonstrated in real-world operations. This is a barrier (for example) to 

automatic tire inflation systems—manual tire pressure checks are relatively easy to 

perform, so individual or small fleet owners may not consider the payback for an 

automated system to be worth the cost. The early adopters of such technologies are likely 

to be the top-of-the-line truckload carriers that have very sophisticated maintenance 

management systems, but these carriers are relatively few and operate a relatively small 

percentage of total tractors.

57

In addition, reduced resistance will necessarily entail increased braking loads with likely 

increases in brake maintenance, unless vehicle speeds themselves are lowered. Cab 

modifications also may be limited to some extent by additional underhood requirements, 

such as the need for new EGR and enhanced cooling equipment in order to meet late 

model emission standards (21st Century Truck Partnership, 2009).

 There also could be 

resistance to adopting this technology because of parts commonality within fleets and the 

desire to maintain a single set of wheel and tire types. In the period before these tires 

achieve a large market penetration, there also could be perceived difficulty in easily 

finding replacements when away from urban centers. This is a particular concern among 

smaller fleets without recourse to effective network support. Some low-rolling resistance 

tires require higher pressure and increased monitoring (Vyas et al., 2002), although this 

concern could be minimized with the adoption of automatic tire inflation systems. 

Finally, vehicles that frequently travel off-road or operate on low friction surfaces may 

require higher traction tires for safety reasons (NESCCAF/ICCT, 2009).

 

56There is evidence that trucking companies base their purchasing decisions on low amortization 

periods of about two to three years (NESCCAF/ICCT, 2009; Greene and Schafer, 2003).

57On a conventional wheel, a blow out frequently overloads the matching double, causing it to 

blow out as well (Lovins et al., 2005).
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There are a few other potential safety concerns for resistance strategies. For example, 

while electronic visions systems are just entering the market in Class 8b trucks, these 

systems are being deployed as a supplement to standard side mirrors, not as a 

replacement, which would require changes in safety regulations (Kenworth, 2001). 

Accordingly further demonstration and testing will be required to ensure these systems 

provide adequate safety and performance in the absence of side mirrors. Also, as noted 

above, certain measures may result in unacceptably low air flow and component cooling if 

implemented together, such as trailer side skirts and undercarriage baffles.

Adopting aerodynamic retrofits or purchasing cabs with enhanced profiles may also be 

reduced due to traditional buyer preferences. The “classic” cab profile shown in Figure 3.8

is still favored by many buyers, particularly owner-operators, in spite of their 

demonstrably lower efficiency (NESCCAF/ICCT, 2009).

Trailer strategies are likely to be particularly difficult to implement due to ownership and 

operation practices. First, long-haul tractors and trailers are commonly owned by 

different entities, with carriers controlling the tractors and shippers or other third parties 

controlling the trailers. For this reason coordinated implementation of full system 

packages may be difficult. In addition, since there are approximately 2.5 trailers for every 

tractor in the U.S., retrofitting trailers will necessarily be less cost-effective than tractor 

retrofits, for similar efficiency improvements (Schubert and Kromer, 2008). As such, 

fleetwide cost estimates are adjusted for the anticipated lower utilization of trailers 

compared to tractors.

The primary barriers to implementation of weight reduction technologies are cost and 

difficulty of retrofits. Unlike some aerodynamic improvements, weight savings must take 

place at the design stage. The notable exception would be retrofits of aluminum wheels, 

as discussed above. In terms of aluminum substitution materials in the truck and trailer 

structures, it also is common for owners to perceive lighter weight materials as not being 

as durable (U.S. EPA, 2004c).

One potential Federal policy approach to promote adoption of these strategies is to 

undertake demonstration projects and information dissemination for advanced truck, 

trailer, and engine designs, with coordination between large long-haul freight carriers and 

vehicle OEMs. To help overcome financial barriers, low-interest loans may be provided 

for smaller carriers (e.g., owner-operators) to encourage retrofitting of older trucks with 

significant remaining life (such as has been done through EPA’s SmartWay financing 

programs). California and Texas also have implemented financial incentives to encourage 

retrofitting of older heavy-duty vehicles with improved emissions control technology – a 

model that could potentially be applied to fuel-saving technologies as well. The Federal

government also may play a role in helping to coordinate design improvements between 

tractor and trailer manufacturers and operators in order to obtain maximum benefits from 

“system” integration. The Federal government could potentially promulgate 

requirements to adopt certain technologies that have been determined to be feasible and 

cost-effective. This approach has been taken to control emissions of criteria pollutants and 

precursors from stationary sources of pollution regulated under the Clean Air Act.
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Finally, fuel prices—whether affected through policies or market forces—will play an 

important role in affecting truck purchasers’ decisions regarding fuel efficiency savings, as 

well as manufacturers’ decisions to invest in more efficient technology. The expectation of 

sustained higher fuel prices would likely encourage more manufacturers and operators to 

adopt fuel efficiency improvements.

Heavy-Duty Engine/Powertrain Measures and Integrated Strategies

Overview

Current heavy-duty diesel engines operate at approximately 40 percent thermal efficiency

under optimal operating conditions. Taken with auxiliary loads and drivetrain losses, 

66 percent of fuel energy is not converted to motive power (ORNL, 2000). Technologies 

can be implemented to reduce this energy loss and make heavy-duty trucks more efficient.

There are four primary ways in which heavy-duty powertrains can be modified to reduce 

GHG emissions:

1. In-cylinder/combustion improvements;

2. Accessory load reduction;

3. Frictional loss reduction; 

4. Hybridization strategies; and

5. NOx aftertreatment strategies.

The first three of these technologies will reduce the waste heat lost from drivetrain 

components. HDV hybridization strategies share many characteristics with LDV hybrids, 

described in the previous section. Unless otherwise noted, the specific technologies under 

consideration for HDVs are just now entering the marketplace, or are expected to become 

available in the next few years (U.S. DOE, 2009b). In-cylinder and combustion 

improvements modify the way that air and fuel are brought into the engine and how the 

fuel is burned to convert its chemical energy to mechanical power. Accessory load 

reduction decreases the power needs for pumps, air compressors, electrical power 

generation, cooling fans, and air conditioning. Frictional losses generate waste heat in the 

engine and transmission, decreasing the power that could otherwise be used to drive the 

wheels. Hybridization approaches utilize two power delivery sources and recover 

braking energy to improve overall efficiency. NOx aftertreatment strategies reduce the 

amount of energy dedicated to lowering NOx emissions through control efficiency 

improvements, thereby reducing fuel consumption. 

Today’s diesel engines typically use turbochargers to compress the intake air, leading to 

greater efficiency and power output. Technologies aimed to improve turbocharger 

operation can improve efficiency, drivability, and emissions. One modification that recently 

entered the market is the variable geometry turbo (VGT). This type of turbo involves 

moveable surfaces in the exhaust turbine that allows control over the speed of the 

compressor. With the use of exhaust gas recirculation (EGR), the VGT has become 

universal. Ironically, the VGT system is generally used to reduce the efficiency of the 
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turbocharger. In order to flow an adequate amount of EGR in a high pressure loop EGR 

system, the pressure in the exhaust manifold must be higher than the pressure in the intake 

manifold. This situation is referred to as running a negative ∆p. If an efficient conventional 

turbocharger is used, the intake manifold pressure is often higher than the exhaust (positive 

∆p). The VGT is adjusted to maintain a negative ∆p to the extent required to provide the 

correct EGR flow.

Two-stage turbocharging, which utilizes a high pressure and a low-pressure turbo, also can 

increase engine efficiency over a wide range of operating conditions. These two units can be 

connected in series, or flow can be directed to only one unit depending on how the engine is 

operating. A two-stage turbocharger system requires the use of an EGR pump, a 

backpressure device, or a turbocompound system to flow EGR in an engine that uses high 

pressure loop EGR. Both VGT and two stage turbo charging reduce lag effects during 

transient operation, allow increased power output, and reduce NOx emissions when used in 

concert with control technologies such as exhaust gas recirculation. 

Improved materials and designs may eventually permit higher cylinder pressures and 

therefore improved fuel efficiency, without a durability penalty. Higher pressures also 

provide higher power density. Such improvements are constrained by NOx formation, 

however. While high-compression ratios and combustion temperatures lead to high 

thermal efficiency, durability concerns, and emissions regulations force a tradeoff by 

limiting compression-related forces and allowable NOx emissions. Technologies to 

increase engine efficiency must pursue the benefits of high combustion temperatures 

without the associated increases in engine-out NOx when possible. Exhaust 

aftertreatments are employed to bring final emissions down to allowable levels, although 

these devices are generally not as cost-effective as in-cylinder design changes. This is a 

field of continued study, and it is expected that as diesel NOx aftertreatment becomes 

more effective, cylinder pressures will be increased in search of efficiency gains and 

increased power density.

Improved fuel injectors also are the focus of research to improve engine efficiency. 

Recently, manufacturers have begun moving to common rail systems whereby all injectors 

are fed fuel from a single reservoir at extremely high pressure. Higher pressures generally 

allow more effective mixing of air and fuel, leading to reduced PM emissions and greater 

efficiency. These designs also allow flexibility with multiple injection strategies whereby 

fuel is injected at more than one point during cylinder compression and expansion. This 

approach can allow fuel to burn longer into the compression stroke without reaching as 

high a flame temperature, thereby reducing NOx formation. There are a variety of 

multiple injection strategies being pursued.

In addition to combustion improvement strategies, reducing engine accessory loads can 

improve the operating efficiency of HDVs. Accessory loads require around 4 percent of 

engine power output from a truck traveling at 65 mph (ORNL, 2000). The air conditioner 

compressor, alternator, air compressor, cooling fan, and water pump are generally 

connected directly to the engine by means of gears or a belt, so these devices are driven at 

a speed directly proportional to the speed of the engine. Because accessories need to 

function acceptably at all engine speeds, they are typically driven faster than necessary at 

high engine speeds. Decoupling accessories from engine speed can reduce power 
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requirements while allowing for better performance over the engine’s operating range. 

The primary way to decouple accessories from engine speed is by electrification, driving 

each accessory with an electric motor that can run at the accessory’s optimum speed. By 

using this method, only smaller engine loads associated with electrical generation are 

required, resulting in reduced fuel consumption. Another option is to clutch accessories, 

so that they only operate when needed. This is normally done with the cooling fan and air 

conditioning compressor, but the idea can also be applied to the alternator and air 

compressor as well.

Even assuming significant improvements in combustion efficiency and accessory loads, 

large amounts of energy will continue to be in the form of heat energy in the exhaust 

stream. Conventional turbochargers are designed to operate using some of this otherwisewasted energy. There are three other emerging technologies that can allow even more of 

this energy to be used for the necessary functions of the truck. Thermoelectric generators

can use the temperature gradient between the exhaust and ambient air to generate 

electricity. These devices also are described in the LDV section, but are anticipated to be 

promising for heavy-duty long-haul trucks because these trucks operate under fairly high 

load the majority of the time and subsequently produce a relatively continuous supply of 

high-energy exhaust.58

Another option to recoup exhaust energy is turbocompounding. Turbocompounding 

uses an exhaust turbine for shaft power, either as a stand alone system or in addition to 

powering the intake compressor. The output shaft can be connected to an electric 

generator or to a transmission connected to the engine’s crankshaft. Excess turbine power 

can then be used to either assist the engine shaft output or to reduce the alternator’s 

electrical generation load, either partially or completely.

 These systems are still in development and are not yet 

commercially viable.

A third option, a bottoming cycle, consists of a heat engine that uses waste heat from the 

primary diesel engine to produce additional work. There are many concepts available for 

use in a bottoming cycle, including refrigerant-based cycles and steam turbines. The great 

advantage of a bottoming cycle is that it uses “free” energy—energy that is going to be lost 

by the primary engine. The great disadvantage of a bottoming cycle is that its efficiency is 

limited by the poor quality (i.e., relatively low temperature) of most waste heat from the 

engine. In addition, the amount of waste heat available also varies greatly with the 

engine’s operating condition. Bottoming cycles have been used for many years in 

stationary power plants, but so far they have not found application in vehicles because of 

cost, weight, packaging, reliability, and performance issues (NESCCAF/ICCT, 2009).

Friction reduction can contribute to overall truck fuel efficiency. Design changes to the 

bearings, seals, and mating surfaces in engines, transmissions, and differentials can reduce 

energy requirements. Additionally, designing these devices to take advantage of lower 

viscosity lubricants can reduce energy lost to pumping fluids through the engine and 

 

58 Diesel exhaust temperatures are reduced by lean operation, the presence of EGR, and 

turbocharger use, all of which will tend to reduce the effectiveness of thermoelectrics.
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transmission. The use of lower viscosity lubricants typically requires the use of higher 

cost synthetic oils. However, manufacturers have limited control over the lubricants used 

by customers.

Both OEM electric and hydraulic hybrid configurations currently are under development 

for heavy-duty trucks. While the application for heavy-duty electric hybrids differs 

somewhat from light-duty vehicles, the technology is similar and is discussed in the lightduty section above. Heavy-duty hydraulic hybrids, in contrast, combine hydraulic pumps 

with an internal combustion engine and store energy in a hydraulic accumulator instead 

of a battery. During vehicle acceleration, pressurized gas in the accumulator channels 

fluid through a hydraulic motor, which in turn supplies power to the driveshaft. Fluid 

used in this manner is collected in a reservoir, which is later pumped back to the 

accumulator when the vehicle brakes, using the energy of the vehicle’s forward motion to 

effectively recharge the system. Currently, retrofit options for electric and hydraulic 

technology on existing trucks is not considered feasible (ATA, 2006).

Hydraulic hybrid vehicles are capable of braking energy transfer at a relatively high rate, 

but are limited by the amount of energy they can store. Because of this, hydraulic hybrids 

are well suited to stop-and-go applications on relatively heavy vehicles such as refuse 

haulers or large parcel delivery vehicles. On the other hand, while electric hybrid 

batteries also can store more energy than hydraulic systems, they cannot charge or 

discharge as rapidly as their hydraulic counterparts, so they are more appropriate for 

applications with smaller instantaneous power requirements, such as LDVs (ATA, 2006). 

A tax credit of up to $18,000 is available for the purchase of qualified heavy-duty HEVs 

with a gross vehicle weight rating of more than 8,500 pounds (AFDC, 2009).

Advanced integrated aerodynamic designs are also under development, with a focus on 

line-haul combination truck applications. These improvements include utilization of teardrop shaped trailers, underbody treatments, wheel skirts or hubcaps, integrated gap 

treatments, and other assorted measures. They require coordinated redesign of the tractor 

and trailer as a unified system, and cannot be applied through simple retrofit.

Finally, certain theoretical advances were identified in the literature that have the potential 

for dramatically improving engine efficiency as well as lowering pollutant emissions, such 

as the Sturman Digital Engine combustion cycle (NESCCAF/ICCT, 2009). Due to lack of 

test data and cost estimates, however, such options are not evaluated in this report.

Engine and powertrain strategies also can be combined with resistance reduction strategies 

for maximum potential benefits. This section evaluates the potential GHG reductions and 

costs associated with advanced integrated packages in the medium to long term.

Magnitude and Timing of GHG Reductions

Individual Technology Benefits

Systems that enhance turbocharger operation, such as multistage turbos, have recently 

entered the market, and can reduce fuel consumption by approximately 2 percent

(NESCCAF/ICCT, 2009). Design changes that can allow increased cylinder pressure are 
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estimated to improve fuel efficiency by 3.6 percent (Frey and Kuo, 2007). Continued 

optimization of fuel injection systems and combustion is estimated to allow up to a 

5 percent improvement in fuel efficiency (U.S. DOE, 2009b). Many of the above technologies 

will enter the market in the short term.

Recuperation of exhaust heat energy via mechanical turbocompounding is estimated to 

allow fuel consumption to be reduced by approximately 2 to 3 percent, while bottoming 

cycle benefits have potential reductions between 8 and 10 percent (NESCCAF/ICCT, 

2009).59

Lower viscosity lubricants and engine materials that reduce engine frictional losses could 

reduce fuel consumption by one to two percent (U.S. DOE, 2009b; Greszler, 2008). 

Transmission fluids and materials that reduce transmission heat losses could provide 

similar fuel consumption reductions to engine friction reduction. While the engine and 

waste-heat technologies listed above are not likely to be retrofitable, low-viscosity 

lubricants could quickly enter the fleet during routine oil changes, although extra costs 

could present a barrier for vehicle owners.

 When thermoelectrics become efficient and durable enough to be used in heavyduty applications (estimated to be in the medium to long term), research has shown that 

their use could reduce fuel consumption by 6.5 percent. Accessory electrification could 

reduce fuel consumption by 2 percent (Frey and Kuo, 2007). It is estimated that using 

electric turbocompounding for electric generation could reduce fuel consumption by 

3 percent to 5 percent, including the benefits of accessory electrification (NESCCAF/ICCT, 

2009; Hopmann, 2004). Mechanical turbocompounding systems currently are just 

entering the market, with no electrical systems planned as yet (Reinhart, 2009).

While interest in development of heavy-duty hybrid technology has intensified in recent 

years due to increased fuel costs, development has lagged behind light-duty hybrid 

technology. Heavy-duty market penetration is perhaps 8–10 years behind the currentlevel in the light-duty marketplace, with heavy-duty hybrids in the early demonstration 

phase. However, heavy-duty prototype vehicles currently are in development in a wide 

variety of market sectors, including delivery trucks, refuse trucks, utility service trucks, 

and transit buses. A high-profile example of this type of development is EPA’s ongoing 

partnership with UPS in developing a hydraulic hybrid parcel delivery truck.

Early heavy-duty hydraulic hybrid vehicles show a gain of 30–50 percent in fuel efficiency

over standard diesel heavy-duty vehicles for short-haul, stop-and-go applications (ATA, 

2006). Because long-haul trucks are estimated to realize only a 3–9 percent fuel efficiency

improvement using this technology, and because of the relatively high incremental cost in 

the near term, it is unlikely that heavy-duty hybrid technology will penetrate the longhaul fleet in large numbers in the near term. However, several manufacturers have 

announced production plans for hybrid electric offerings over the next few years 

(NESCCAF/ICCT, 2009).

 

59 Turbocompounding, bottoming cycles, and thermoelectrics are mutually exclusive strategies.
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Integrated aerodynamic measures are mutually exclusive with the retrofit package items 

discussed in the previous section, and are estimated to provide about a 14 percent fuel 

consumption reduction in the medium to long term (NESCCAF/ICCT, 2009).

Strategies that lower engine out NOx more efficiently can reduce fuel consumption as well. 

For example, improvements in exhaust gas recirculation cooling could reduce fuel 

consumption by about one percent, although this strategy cannot be effectively coupled 

with the thermal and air handling management approaches noted above, because exhaust 

temperatures are lowered, reducing the effectiveness of these approaches 

(NESCCAF/ICCT, 2009).

The minimum and maximum fuel efficiency improvements found in the literature for the 

different resistance and powertrain technologies are presented in Table 3.3G below by 

truck class category. These values reflect the benefits only for those vehicles considered 

likely candidates for these technologies, and do not reflect fleet average impacts. 

Adjustments for anticipated market penetration are provided in Table 3.3J below.

Table 3.3D Range of HDV Fuel Efficiency Improvements for Resistance 

and Powertrain Technologies

Class 4-7 Class 8

Technology Minimum Maximum Minimum Maximum

Basic cab aero 2.3% 2.3% 1.0% 2.0%

Enhanced cab aero 3.6% 3.6% 2.3% 2.3%

Trailer edge curvatures - - 1.2% 1.2%

Advanced integrated aero 14.1% 14.1%

Low-rolling resistance tires and aluminum wheels 1.9% 2.3% 3.0% 10.6%

Auxiliary electrification - - 2.0% 2.0%

Lubricants and bearings - - 1.0% 2.0%

Peak cylinder pressure - - 3.6% 3.6%

Improved injection/combustion 7.2% 7.2% 5.4% 5.4%

Turbocomponding (mechanical) - - 2.4% 2.9%

Bottoming cycle - - 8.0% 10.0%

Hybridization 30% 50% 3.0% 9.0%

Weight reduction 0.6% 1.2% 0.6% 1.8%

Boat tails - - 2.8% 4.0%

Load profile improvement - - 2.5% 2.5%

Front fairings 4.9% 4.9% 1.0% 2.0%

Side skirts - - 4.2% 7.5%
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Combined Per-Vehicle Benefits

Benefits associated with selected resistance reduction strategies available for retrofit were 

presented in the previous section for the near-term scenario. Additional resistance 

strategies as well as powertrain approaches introduced through the purchase of new 

vehicles are considered here. A broad package of resistance reduction and powertrain 

strategies identified in the literature are listed in Table 3.3H for the medium- to long-term

scenario. The appropriate truck classes also are specified for each measure.60

Table 3.3E Powertrain and Resistance Reduction Technology Package 

for Medium- to Long-Term Analysis

 Engine 

measure naming conventions follow those from EIA (U.S. DOE, 2009b). An attempt also 

has been made to remove measures that are mutually exclusive or redundant. In addition, 

hybrid and other advanced measures are evaluated separately below.

Technology/Truck Class

Resistance 

Strategies

• Basic aerodynamic improvements – cab/hood (all classes), trailer gap (Class 8)

• Enhanced cab—wheel wells, underside baffles, bumper (all classes)

• Trailer edge curvatures (Class-8)

• Advanced integrated aero (Class-8)a

• Low-rolling resistance tires and aluminum wheels (all classes)

• Planar boat tails (Class 8)

• Front fairings (all classes)

• Trailer side skirts (Class 8)

• Load profile improvement (Class 8 – flatbeds only)

• Weight reduction (all Classes)

Powertrain 

Strategies

• Lower friction, improved injectors and combustion (all classes)

• Improved lubricants and bearings (all classes)

• Increased peak cylinder pressure (Class 8)

• Improved injectors and combustion (all classes)

• Turbocompounding (Class 8)

• Bottoming cycle (Class 8)

• Auxiliary electrification (all classes)b

a Mutually exclusive with other aero treatments.

b Part of base hybrid packages—benefits and costs netted out for hybrid analysis..

For this assessment, individual benefit estimates for each measure were applied 

successively in multiplicative fashion to calculate the net improvement in fuel 

 

60For example, trailer treatments would not be applicable to most Class 4-7 (straight) trucks.
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consumption and GHG emissions relative to a conventional vehicle (at 7.30 mpg in 2030 

from AEO).61

Estimates from the literature for the per vehicle fuel consumption and GHG reduction 

potential from broad adoption of several of the above technologies on a Class 8 line-haul 

box truck range from 24 to 40 percent, excluding the most aggressive technologies such as 

hybrids and bottoming cycles.

 Additional evaluation and modeling would be required to more accurately 

assess the net impact of these strategies taken together, considering positive and negative 

interactions among the different measures.

62

Table 3.3I summarizes the fuel efficiency and consumption improvement potential for the 

package of measures specified in Table 3.3H, for the medium-/long-term scenario. These 

estimates are applicable to Class 8 box trucks operating on a line haul cycle. Hybrid, 

bottoming cycle and advanced integrated aerodynamic options are included in a separate 

“maximum technology” package, due to their significantly higher incremental costs and 

uncertain market penetration potential. 

A very similar range of benefit estimates were developed 

for this analysis, between 22 and 33 percent for the adoption of similar Class 8 box truck 

measures, relative to a conventional diesel truck in 2010. Benefits for nonbox trucks and 

for trucks traveling at slower speeds are anticipated to be lower, as the ranges of 

applicable resistance measures is smaller and their effectiveness is decreased.

Table 3.3F Powertrain and Resistance Reduction Technology Package

Fuel Efficiency and Consumption Improvement Potential

Conventional 

Class 8b 

Scenario 

MPG

Fuel Consumption 

Reduction Range

Medium-/LongTerm (2030-2050) MPG (AEO 2030) Minimum Maximum Minimum Maximum

“Conventional”

Package 7.3 8.1 9.5 10% 23%

Maximum 

Technology 

Package 7.3 8.8 10.5 17% 30%

Costs

Incremental costs for powertrain strategies are generally low relative to vehicle costs, with 

the exception of “maximum technology” options. Cost estimate ranges above 

 

61For example a multiplicative interaction between measure A with a 2.0 percent fuel consumption 

benefit and measure B with a 3.0 percent benefit would come to 4.9 percent (0.98 x 0.97) rather 

than 5.0 percent (for a purely additive interaction).

62Survey of the literature as reported in Lutsey (2008).
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conventional diesel HDVs are provided truck class group in Table 3.3L (Frey and Kuo, 

2007; Schubert and Kromer, 2008; Vyas et al., 2002; CARB, 2008a; NESCCAF/ICCT, 2009). 

Unit costs for trailer treatments are multiplied by 2.5 to account for the ratio of trailers to 

tractors.

Table 3.3G Incremental Costs of HDV Resistance and Powertrain 

Technologies (Dollars per Vehicle)

Class 4-7 Class 8

Technology Minimum Maximum Minimum Maximum

Basic cab aero 750 750 750 750

Enhanced cab aero 800 800 1,500 1,500

Trailer edge curvatures - - 1,250 1,250

Advanced integrated aerodynamics - - 24,500 24,500

Low-rolling resistance tires & aluminum

wheels 1,680 1,680 3,920 3,920

Auxiliary electrification 1,000 1,000 1,000 1,000

Lubricants and bearings 500 500 500 500

Peak cylinder pressure - - 1,000 1,000

Improved injection/combustion 2,000 2,000 1,500 1,500

Turbocompounding (mechanical) - - 2,650 2,650

Bottoming cycle - - 15,100 15,100

Hybridization 20,500 26,000 20,500 26,000

Weight reduction 1,000 2,000 1,000 2,000

Boat tails - - 1,250 5,600

Load profile improvement - - 0a 0a

Front fairings 2,000 2,500 2,000 2,500

a Does not include operator labor.

Cobenefits

As noted, many of the engine system improvements described above raise combustion 

temperatures and therefore engine-out NOx emissions. The increase in NOx formation is 

generally more of a limiting factor to increases in engine efficiency than PM emissions. 

Selective catalytic reduction (SCR) technologies being adopted to meet the upcoming 2010 

NOx standards can be designed to lessen the energy requirements associated with exhaust 

gas recirculation (EGR) systems by permitting greater engine-out NOx levels, in turn 

reducing fuel consumption (Greszler, 2008).

Certain powertrain improvements also can improve engine driveability by increasing 

available torque at a wide range of engine speeds. Improved fuel injection also can result 

in reduced formation of NOx and PM, although reductions in tailpipe PM may be 

negligible due to the great effectiveness of DPFs in 2007 and later diesels.
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Apart from the primary benefits of increased fuel efficiency and reduced GHG emissions, 

widespread market penetration of HD hybrids is likely to result in marked reduction in 

both PM and NOx emissions resulting from reduced diesel fuel consumption. Initial test 

results for hybrid electric buses, for example, have shown NOx reduction of 50 to 

60 percent, with corresponding PM reduction of greater than 90 percent, relative to pre2007 diesel engines (ATA, 2006). For 2010 diesel engines, where tailpipe emissions will be 

just a few percent of uncontrolled levels, the benefit will be much less significant.

Feasibility

The engine and powertrain improvements discussed in this section typically need to be 

designed into a new vehicle, and therefore are not feasible for retrofit on existing vehicles 

(unless an entirely new engine is retrofit to a vehicle). As such, policy needs will be 

somewhat different than for resistance reduction strategies, many of which can be retrofit. 

One approach is to establish efficiency standards, as currently is being evaluated pursuant 

to the EISA of 2007. Given that market economics likely play a larger role in vehicle 

purchase decisions for heavy-duty vehicles relative to light-duty vehicles, due to the high 

contribution of fuel costs to total operating costs, the adoption of standards may have 

relatively less impact. On the other hand, as noted in the previous section, there is 

evidence that trucking companies base their purchasing decisions on low amortization 

periods of about three years, meaning that even cost-effective strategies will not 

necessarily be implemented through market forces alone.

Financial incentives such as tax credits or low-interest loans also may play a role in 

helping to overcome initial capital costs. Such incentives are beginning to emerge at the 

Federal and State levels to promote the introduction of heavy-duty hybrid technology into 

the fleet. For example, the Energy Policy Act of 2005 includes tax credits of up to $12,000 

based on the fuel efficiency and weight of a particular vehicle. Finally, demonstration 

projects and information dissemination, as performed under EPA’s SmartWay program, 

may play a role in helping to inform truck owners about the benefits of new technology 

and encourage purchase of more efficient vehicles. Partnerships with larger fleet 

operators, for example, may be valuable in bringing a particular technology to scale and 

reducing costs such that smaller operators also will be willing and able to adopt it.

Many of these strategies face technical hurdles as well. The turbocompounding and fuel 

injection developments noted above are expected to be developed further and increase 

their market penetration in the future. They are limited primarily by cost and the 

development time needed to ensure that they maximize efficiency and pollutant 

reduction. Bottoming cycle systems face tremendous engineering hurdles involving 

freeze prevention, vibration, and numerous other factors before they can be considered a 

viable option for the on-road market. For example, due to the poor transient response of 

the bottoming cycle, this system may have to be coupled with hybrids to achieve 

acceptable performance (NESCCAF/ICCT, 2009). Thermoelectrics face cost and durability 

issues. Additionally, these devices are not yet efficient enough to provide significant 

electric generation.
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Low-viscosity engine and transmission fluids exist that can reduce parasitic driveline 

losses. Limitations to these fluids include convincing operators to pay for the higher costs 

as part of their maintenance cycle, and uncertainty regarding long-term effects on 

component durability (Killian, 2008).

In the case of improvements to fuel injectors, intakes, and turbocharger design, fuel 

consumption and emissions can often be reduced together. There is a limit to the 

improvements that allow these two characteristics to move in the same direction, 

however, and it is estimated that engines could achieve 15-20 percent higher fuel 

efficiency using today’s technology if there were no NOx requirements. Accordingly, fuel 

efficiency also could be significantly improved with a breakthrough in NOx

aftertreatments which could allow engines to operate at their most efficient levels without 

regard for engine-out NOx levels (Greszler, 2006).

As mentioned previously, heavy-duty hybrid market penetration is several years behind 

the current level in the light-duty marketplace. Many issues exist that present challenges 

before heavy-duty hybrids can gain a foothold in the market. For example, electrical 

components such as air-conditioning and steering pumps only exist as expensive 

prototypes in heavy-duty vehicles—there are no widely available systems yet that can 

sustain regular heavy-duty duty-cycles. In addition, optimized engines, more advanced 

combustion schemes, and lighter weight materials are necessary for heavy-duty hybrid 

technology to reach maturity (ATA, 2006). Finally, battery replacement costs have not 

been included in the above analysis, and may be substantial, assumed by one source to be 

required approximately every six years (NESCCAF/ICCT, 2009).

Advanced integrated aerodynamic improvements will require a redesign of the tractortrailer system in order to minimize overall drag. This strategy is particularly challenging, 

given the lack of incentive on the part of trailer owners, who would not normally see a 

monetary benefit associated with their (quite sizable) investment.
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 3.4 Transit Buses

Buses, including transit buses, school buses, and 

intercity buses, occupy a small but important niche in 

the U.S. heavy-duty vehicle sector. Of the different 

types of buses, the best data is available on transit 

buses, and the greatest development of alternative fuel 

or advanced technology powertrains has taken place in 

this subsector. As of 2006, there were roughly 1,500 

transit authorities operating fleets of heavy-duty 

transit buses. These agencies were responsible for over 

80,000 vehicles that traveled over 20 billion passengermiles, mostly in stop-and-go urban traffic settings. In 

that same year, these buses consumed more than 525 

million gallons of diesel fuel, the fuel for nearly 

80 percent of the transit buses on the road (APTA, 

2008).

In spite of their visibility, buses actually contribute less than 1 percent of total on-road GHG 

emissions in the United States.

63

For a range of reasons, a growing number of transit agencies are turning to nonfossil diesel 

fuels to power some or all of the vehicles in their fleets. Between 1996 and 2007, the use of 

Compressed and Liquefied Natural Gas (CNG and LNG) grew by a factor of 50 in these fleets; 

today 15 percent of transit buses use one of these fuel types. Electric or hybrid-electric buses 

now comprise 2 percent of the total buses in America, increasing 23 times in that same period 

and making hybrids the third most popular technology used by buses today. Finally, 

gasoline, propane and “other” sources, consisting of biodiesel, hydrogen, and various blends 

remain popular in some fleets, but these fuels are collectively used in less than 3 percent of 

transit buses in America. Over this period, diesel’s share of transit bus fuel dropped 

substantially (by over 15 percent), and transit buses are now consuming slightly less diesel 

fuel than they were in 1996, despite a steady growth in U.S. passenger miles taken by transit 

buses.

 For this reason a full assessment of the costs, benefits, and 

feasibility of advanced bus technologies is not provided here, although a discussion of the 

emerging technology options is presented below. In addition, some of the strategies 

applicable to heavy-duty trucks (Section 3.4) also can be applied to buses, leveraging 

development resources, increasing market volumes, and reducing unit costs. Furthermore, 

transit buses are often technology leaders. Predictable service patterns, centralized fueling 

and maintenance, and available 80 percent Federal capital cost subsidy all make transit 

buses attractive platforms to introduce new technologies. For example, hybrid 

powertrains, natural gas fuel, and fuel cell powertrains have all been pioneered in transit 

buses.

 

6313.1 mmt CO2e for transit buses in 2007, compared to 1,568 mmt for all on-road transportation 

(U.S. EPA 2009).

Transit Buses

Per Vehicle GHG Reduction: varies by 

technology, 10 – 50% for hybrid electric 

buses

Key Cobenefits and Impacts: Positive

Feasibility: High

• Some proven technologies

Key Policy Options:

• Financial and policy support for 

transit agency purchase of efficient/ 

advanced vehicles, energy-saving 

 
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Fossil Diesel

Despite the growth of alternative fuels and technologies, diesel is still the dominant fuel 

for the transit bus sector. Because of the high-energy density of diesel fuel and the 

thermodynamics of compression-ignition engines, diesel-powered vehicles tend to have 

good fuel efficiency. However, they emit have historically emitted relatively high 

amounts of certain types of air pollutants, including NOx and particulate matter. 

Consequently, Federal regulations have increased emission standards for heavy-duty 

vehicles and required the use of ultra low-sulfur diesel, both of which increase the capital 

and operating cost of a transit bus somewhat (Clark et al, 2007). Since 2004, U.S. EPA’s 

National Clean Diesel Campaign has been seeking to improve the environmental 

performance of diesel engines in many sectors through both regulatory and voluntary 

measures, and as a result, diesel engines are cleaner than ever (U.S. EPA, 2009b).

Compressed and Liquefied Natural Gas

While natural gas generally combusts more cleanly than diesel and gasoline, there are no 

clear greenhouse gas-reduction benefits from CNG or LNG buses (Clark et al, 2007) as 

total GHG emissions are about the same on a per-mile basis as for diesel buses. This is 

especially true if CNG is mishandled and leaks occur, since CNG is composed of 85-

99 percent methane (IEA, 2002) a potent greenhouse gas. CNG has historically been costcompetitive compared to diesel fuel, but transit buses using CNG require an expensive 

fueling infrastructure consisting of high-pressure storage, compressors, and dispensers. 

The median costs of modifying CNG/LNG-ready bus depots and building refueling 

stations have been found to be around $875,000 and $2 million respectively (in 2007 

dollars). However, once a fueling infrastructure is established, the operating costs of a 

CNG/LNG fleet can be lower than for other technologies, due to lower overall fuel and 

maintenance costs (Clark et al, 2007). However, CNG and LNG have lower energy 

content than diesel fuels, reducing the total driving range compared to diesel. There were 

6,600 CNG and 1,000 LNG transit buses operating in the United States as of January 2005

(CCAP, no date).

Electric and Hybrid-Electric Systems

Electric and hybrid-electric vehicles are steadily growing in popularity across transit bus 

fleets. Pure electric vehicles, powered by on-board batteries, are quiet and do not directly 

emit pollutants into the atmosphere, characteristics that make them highly desirable in 

communities where a premium is placed on local air quality. Hybrid diesel-electric and 

gasoline-electric vehicles are powered in combination by an internal combustion engine 

and an electric motor. These buses can obtain 10 to 50 percent better fuel efficiency than 

their conventional diesel counterparts, with similar reductions in GHG emissions (IEA,

2002; Greene and Schafer, 2003; CCAP, no date). Actual in-service fuel efficiency

improvements depend strongly on the duty cycle of the bus; hybrids are most 

advantageous when used on routes with more stop-start cycles, hills, and time where the 

bus is at rest (such as in traffic or at passenger stops). While hybrid diesel-electric systems 

are gaining in popularity, vehicles using this technology are still relatively expensive 
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compared to most other alternatives, with a total unit cost of over $500,000 for a full-size 

heavy-duty hybrid transit bus, approximately $200,000 more than a conventional diesel 

bus of similar design. Operating costs of hybrid-electric buses also tend to be higher than 

other alternatives currently, due to the added expense of battery maintenance and 

replacement (Clark et al., 2007). Battery technology is advancing rapidly, however, which 

will likely drive down both the capital and operating costs of hybrid-electric buses while 

increasing their performance and durability. One study reported cost-effectiveness values 

for GHG reduction from hybrid transit buses at less than $140/tonne CO2e (McKinsey, 

2009). There were estimated to be approximately 1,100 hybrid buses in operation in the 

United States in 2006 (CCAP, no date).

Fuel Cells

Like batteries, fuel cells convert chemicals directly into electricity, the key difference being 

that a fuel cell will continue operating as long as it is supplied with fuel and air (to 

provide hydrogen and oxygen, respectively), while batteries will operate (on one charge) 

only as long as it takes to consume their self-contained reactants. Also like batteries, fuel 

cells are efficient, quiet and have no moving parts. Typically fuel cells are “hybridized” by 

combining them with batteries. Compared to buses powered by batteries only, vehicles 

equipped with fuel cells have longer driving range.

Fuel cell systems can be powered directly by hydrogen, which is the approach being 

pursued by most fuel cell bus developers today. Hydrogen can obtained from a central 

fueling source, or alternatively by using a reformer on the bus to separate hydrogen from 

a variety of fuels including natural gas, alcohol, or gasoline, although on-board reforming 

is not currently favored. Heat and water are the only direct emissions from a hydrogenpowered fuel cell, although the energy consumption and emissions from generating the 

hydrogen off-board the bus must be considered when comparing the merits of different 

fuel options. Hydrogen fuel cells, while viewed by many as the propulsion system of the 

future, will not likely penetrate into vehicle fleets in the numbers and time horizon called 

for in the Energy Policy Act of 2005 (U.S. DOE, 2009b). While the basic technology 

behind hydrogen fuel cells is well understood, many technological, institutional, and cost 

barriers are hindering widespread adoption of hydrogen fuel cells in transit (see 

Section 2.8 for a discussion of similar barriers to use in light-duty vehicles). On the other 

hand, the unique characteristics of transit vehicles (such as their once- or twice-daily starts 

in many cities) may make some fuel cell technologies viable in buses that would not be 

viable in automobiles. Because fuel cells have not yet become commercially viable, buses 

employing fuel cell technology are still heavily subsidized (IEA, 2002).

Biofuels

The use of biofuels in bus transit is growing, especially in municipalities that require that a 

percentage of diesel come from biomass sources (Biodiesel Magazine, 2008). Because the 

primary difference between buses operating with fossil diesel and biodiesel is simply the 

fuel used, there is little difference in capital or infrastructure costs. However, fuel costs 

can be higher for buses using B20, since the cost of B20 has historically been greater than 
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that of conventional diesel (Clark et al., 2007). B20 also has slightly less stored energy 

compared to conventional diesel fuel, meaning that operating range is slightly reduced for 

a given tank size.

Other Transit Bus Technologies

Several other options comprise the balance of fuels used by transit authorities in the U.S.

For example, propane has gaining been popularity in some areas because it can be less 

expensive per mile than diesel fuel, although capital costs related to converting buses to 

run on propane can be upwards of $5,000 (McCann, 2008), and the overall supply of 

propane is limited (since it is a byproduct of other petroleum product production) and its 

price tends to closely track gasoline with the exception of some seasonal fluctuations (see 

Section 2.5). Despite the recent interest in ethanol as a transportation fuel, it has not 

penetrated the U.S. transit bus sector to date.

Various agencies and departments within the U.S. government are actively promoting the 

development of advanced transit bus technologies. The FTA supports a grant program 

that assists transit authorities as they seek to improve the environmental performance of 

their fleets. DOE supports research and development into advanced transportation 

technologies through its Advanced Technology Vehicles Manufacturing Loan and Clean 

Cities programs. EPA manages several programs aimed to advance the development and 

penetration of advanced transit technologies, such as the above mentioned National Clean 

Diesel Campaign. Finally, the U.S. Department of Agriculture has been active in 

providing guidance related to the use of biofuels in their Alternative Fuels and Fleet 

Efficiency program (USDA, 2009).
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 3.5 Railroad Technologies

Currently, there are approximately 

23,000 locomotives operating in the 

United States (U.S. DOT, 2009;

Weatherford, 2008), including line-haul 

locomotives that move freight over long 

distances, and yard or switcher engines 

that operate at or near a rail yard. Yard 

engines are involved in disassembling 

and combining freight cars into trains 

and are equipped with engines between 

1,000 and 2,300 horsepower, consuming 

approximately 50,000 gallons of diesel 

fuel per year (CARB, 2008b). Yard 

locomotives with horsepower ratings 

less than 1,000 are referred to as

“industrial locomotives” or “critters”

and are expressly exempt from EPA 

locomotive emissions standards (EPA,

1997). Line-haul locomotives tend to be 

larger than yard locomotives and over 

time, are increasing in size to be able to 

carry more freight efficiently 

(Weatherford, 2008; Shurgart, 2007). 

Today’s line-haul locomotives have an 

average horsepower rating of 3,600 

(Weatherford, 2008), with the largest 

engines having a horsepower ratings greater than 6,000 (Stodolsky, 2002). A line-haul 

locomotive consumes between 250,000 and 500,000 gallons of diesel fuel per year (CARB,

2008b). Most rail fuel consumption and emissions—over 90 percent for Class I railroads 

that carry most of the freight in the United States—are associated with the operation of 

line-haul locomotives (Table 3.5A). The Class I railroads consume approximately 4 billion 

gallons of diesel fuel per year to move 1.8 trillion ton-miles of cargo.64

 

64Class I railroads, which currently include the seven largest railroads in the U.S., account for 

67 percent of the industry’s mileage and 93 percent of its freight revenue. They concentrate 

largely (but not exclusively) on long-haul, high-density intercity traffic lanes. Class II and III are 

smaller, regional and local railroads. In addition, switching and terminal (S&T) railroads 

primarily provide switching and/or terminal services (AAR, 2009).

Railroad Technologies

Per Vehicle GHG Reduction:

• Common rail injection systems: 5–15%

• Genset engines: 35–50%

• Hybrid yard engines: 35–57%

• Hybrid line-haul operations: 10–15%

• Light weight railcars, aerodynamics, wheel to rail 

lubrication: 4–10% individually

• Improving load configuration for intermodal 

trains: up to 27%

Confidence in Estimates: Moderate

• Benefits of some technologies not welldocumented

Key Cobenefits and Impacts: Positive

• Some technologies can significantly reduce 

pollutant emissions in populated areas

Feasibility: Moderate

• Mostly limited by railroad operator interest in/ 

acceptance of new technologies

Key Policy Options:

• Financial incentives for purchase of retrofits

 

 
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Table 3.4 Class I Railroad Fuel Usage

Railroad Activity Total Diesel Fuel Used in 2007 (Million Gallons)

Line-Haul Operations 3,710

Yard Switching 311

Total 4,022

Source: U.S. DOT (2009).

Rail represents one of the most efficient methods of cargo transport, requiring on average 

less energy and emitting fewer pollutants per ton of cargo moved than most other modes 

of surface transportation (Kruse et al., 2009; VTPI, 2008). Locomotives have become about 

16 percent more efficient over the last decade, and currently emit approximately 24 g 

CO2e/ton-mile (Stodolsky, 2002; SmartWay, 2009). Nevertheless, additional 

improvements can be made. DOE initiated a program in 2002 to improve rail fuel 

efficiency by 25 percent by 2010 and 50 percent by 2020 (relative to the 2002 base year), on 

a gallons per revenue ton-mile basis (Stodolsky, 2002). Greenhouse gas emissions also 

may be reduced by shifting freight from less-efficient trucks to rail; mode shift strategies 

are discussed in Chapter 5 of this report.

The primary means of railroad energy use and GHG emissions through vehicle 

technologies is through enhanced, more efficient power systems (Section 3.5.1). Other 

strategies also can be implemented to reduce weight, improve aerodynamics, and reduce 

rolling resistance (Section 3.5.2).

Power System Modifications

Overview

The primary technology-based methods for reducing emissions from locomotives involve 

modifications of the power system. These may include optimization of existing diesel 

systems, as well as the use of diesel-electric gensets and hybrid powertrains.

With regard to enhancements to existing diesel technologies, locomotive engines 

equipped with common rail fueling systems have the ability to control and optimize fuel 

injection which provides smoother, quieter running engines with better performance and 

greater combustion efficiency. Conventional diesel engines inject pressurized fuel into 

each cylinder at a rate dependent on the rotational speed of the engine. Common rail 

injection systems allow for a more controlled fuel injection rate across all engine speeds by 

storing fuel at high pressures along a common rail connected to each cylinder (MTU,

2008). High injection pressures generate very fine atomization of the fuel yielding more 

efficient combustion. Furthermore, common rail systems control the point in the engine 
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cycle that fuel is injected into the cylinder and the duration of the injection (WSU, 2004). 

The largest common rail locomotive engine currently available has a maximum 

horsepower of 4,000, appropriate for use in yard and line-haul operations.

Genset yard locomotives use multiple smaller (~700 horsepower) diesel engines in 

conjunction with an electric generator and propulsion motors. Older locomotives can be 

retrofit with genset engines, which are newer and more efficient than larger conventional 

yard engines, and are certified to EPA Tier III emission standards. A genset’s improved 

efficiency is due in part to the use of electronic engine controls to better match engine 

operations with locomotive activities. Electronic engine controls also reduce wheel 

slippage, which enhances traction. Additional fuel savings result from idle reduction 

technologies that shut off the engine when not needed. Currently, there are 

approximately 200 genset locomotives operating in the United States. In 2007, the Class I 

railway companies reported operating 1,298 yard locomotives. Since many of the Class II 

and III operators primarily use switch engines, the actual population of yard and switch 

engines is probably much larger.

Existing yard engines also may be retrofit with hybrid systems for efficiency 

improvements. These engines are equipped with small (~125–300 hp), highly efficient 

diesel engines similar to those found in gensets. These engines provide power to banks of 

long-life, recyclable batteries which run electric motors to turn the wheels. The engines 

operate only when the batteries need to be recharged (Frey and Kuo, 2007). Additional 

research is needed to evaluate battery maintenance and disposal. Hybrids are particularly 

suitable for yard activities as the weight of the batteries (approximately 25–50 tons) 

enhance traction (RailPower, 2006). Conventional yard locomotives operate in a “stop-go”

manner at a variety of engine loads. This type of activity is inefficient as diesel engines 

have an optimal operating load, outside of which fuel consumption and emissions 

increase. ‘Stop-go’ operations also increase engine maintenance activities due to increased 

wear and tear on engine components. Operating in a “stop-go” manner is not an issue for 

hybrids, as their diesel engines only operate at a constant, optimal load when battery 

recharging is needed (CARB, 2006). As of 2006, 54 hybrids were in operation and 13 were 

on order (TrainWeb, 2006); these do not include a recent order by Union Pacific.

Additional improvements continue to be made in locomotive (and marine) diesel engine 

design, including use of advanced turbo charging over a wider range of operating 

conditions; application of turbo compounding which uses heat from engine exhaust to 

increase power and reduce fuel consumption; and the use of intercooling systems that 

increase the density of the intake air, which in turn increases the amount of air and fuel 

entering the cylinder, allowing for more efficient combustion (Bowman, 2004). Turbo 

charging is fairly common for newly manufactured engines, while turbo compounding 

and intercooling are relatively new (Stodolsky, 2002), but it is anticipated that new engine 

designs will regularly include these technologies over the next 10 to 15 years.

Electrification of railroad activities is another potential strategy involving railroad vehicle 

technology. Since electrification also represents a completely different fuel source, it is 

discussed in Section 2.9 under low-carbon fuel strategies.
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Magnitude and Timing of GHG Reduction

Common rail injection systems are estimated to provide fuel and GHG emission reductions 

between 5 and 15 percent (CEC, 2008; Union Pacific, 2007). Genset engines can reduce fuel 

consumption and GHG emissions by 35 to 50 percent (NRE, 2008; Donnelly, 2004), and 

hybrid yard engine can reduce consumption by 35 to 57 percent (Railpower, 2006). In 

standard yard service, a single hybrid yard locomotive can reduce GHG emissions by 267 

tons per year on average, with greater reductions where heavy-duty switching is carried out 

continuously (Railpower, 2006). For the most part, hybrid locomotives are primarily used 

for yard activities, though General Electric (GE) has recently developed a 4,400 horsepower 

hybrid for line-haul operations providing a 10 to 15 percent reduction in fuel usage and 

GHG emissions (General Electric, 2009). This equates to 189,000 fewer gallons of lifetime 

fuel consumption per locomotive compared to conventional diesel engines (GE, 2005; GE,

2006).

Market penetration potential is limited by the typical life of a railroad locomotive (often 30 

to 40 years, with major overhauls every 600,000 to 1,000,000 miles (Stodolsky, 2002). On 

average only 900 new locomotives are manufactured every year (U.S. DOT, 2008; AAR, 

2008; Stodolsky, 2002). With approximately 24,000 locomotives currently in operation, it 

would take at least 25 years for the current fleet to be replaced, without incentives for 

accelerated replacement. The unusually long fleet turnover time is of particular concern 

for these strategies, since most of the technologies are only appropriate for newly 

constructed engines rather than retrofit applications.

Estimates of potential fuel savings and emission reductions for line-haul operations are 

provided in Table 3.5D. These estimates assume that identified technologies currently are 

used in a limited capacity, but will achieve full market penetration by 2050. The list of 

technologies presented in the table is not additive; however, the options listed could 

essentially be implemented independent of each other, and therefore a maximum 

combined impact was estimated as the multiplicative percent impact of all strategies (e.g., 

10 percent reduction for lightweight cars, then 10 percent of the remainder for 

aerodynamics). This results in a combined estimate of an 18 to 24 percent fuel savings, or 

10.1 to 13.6 mmt CO2e in 2050. Impacts for 2030 were estimated by assuming 50 percent 

market penetration of lightweight cars by that time, and 100 percent market penetration of 

aerodynamic improvements and wheel/rail lubrication systems.

Table 3.5D Projected Impact of Other Rail Fuel Economy Strategies

Technology

Anticipated 

Fuel Savings

Anticipated Annual 

Reduction in Fuel Use 

(Million Gallons)

Anticipated Reduction 

in GHGs

(Million Tons)

Lightweight Cars 5 – 10% 264 – 528 3.0 – 6.0

Aerodynamic Improvements > 10% 487 5.5

Wheel/Rail Lubrication Systems 4 – 6% 195 – 292 2.2 – 3.3

Combined Impact (2050) 18 – 24% 10.1 – 13.6
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Combined Impact (2030) 15 – 19% 8.7 – 10.8

Uncertainty in this evaluation largely results from the limited number of applications to 

date. As such there is little data about how these options will perform under a wide range 

of operating conditions.

Cost-Effectiveness

The purchase cost of a new locomotive is typically between $1 and $2 million (CARB, 

2008b; Railpower, 2006). Older locomotives can be converted to a genset or hybrid 

configuration at approximately 60 percent of the cost of a new conventional locomotive, 

and they typically last 20 years before they need to be reconverted. These conversions 

costs are approximately $600,000 to $1.2 million and are more expensive then an engine 

replacement using a conventional diesel engine (Railpower, 2006). As noted earlier, the 

Class I railroads currently are purchasing gensets and hybrids with financial support from 

States such as California and Texas.

New locomotive power system technologies are seen to be very cost-effective given the 

current and projected diesel fuel costs. For example, yard locomotives consume 

approximately 84,000 gallons of fuel per year (U.S. EPA, 2007c, 2009d) which equated to 

$308,000 per year at a price of $3.67 per gallon (per AEO forecasts for 2030). Assuming a 

40 percent reduction in fuel consumption using gensets or hybrid engines (Railpower, 2006;

NRE, 2008), a simple assessment of the payback period for a converted yard locomotive 

would be between five and 10 years, not taking into account discount rates.

The fuel savings associated with diesel locomotive engines with a common rail 

configuration are less dramatic than the yard engine options, although costs also are 

lower, leading to a similar payback period. Detroit Diesel manufactures common rail 

engines with a rating of 1,600 to 3,750 hp at a cost ranging $300,000 to $500,000 (Mangum,

2009). A typical line-haul locomotive uses 150,000 gallons of fuel per year (EPA, 1997) at a 

cost of $551,000 (at an assumed $3.67/gallon). A 10 percent reduction in fuel provides a 

cost savings of $55,000 per year, which would equate to a payback period between five 

and nine years.

Cobenefits

These strategies, particularly genset and hybrid locomotives, can result in significant 

reductions in air pollutant emissions, since engines can be run at an optimal speed and 

emission controls optimized for this speed. Potential public health benefits are greatest 

for applications at rail yards, which are often located in more densely populated urban 

areas, whereas most line-haul operation takes place in rural areas. In fact, incentive 

programs have been implemented in California and Texas, where genset and hybrid yard 
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locomotives especially are viewed as a cost-effective means of reducing pollutant 

emissions (particularly NOx and PM).

Feasibility

All of the locomotive engine technologies presented here are commercially available, 

though the hybrid line-haul locomotive is relatively new, with the first models being 

available in 2010 (GE, 2005; King, 2007). Despite long-term net cost savings to the railroad 

operator, capital costs represent a primary barrier to adoption of locomotive engine 

improvements. Hybrid engines are particularly expensive and market penetration for has 

been largely limited to States such as California and Texas that have programs that help 

subsidize their implementation through incentive programs. Gensets and common rail 

systems are less expensive options. Another limiting factor to penetration of these 

technologies is the slow rate at which the locomotive fleet turns over. Retrofitting existing 

locomotives with new engines, while less costly than replacing a locomotive, is still an 

expensive option. Older locomotives are typically passed down from Class 1 railroads to 

financially strapped short line operators, extending the life of old equipment in shorter 

distance operation.

The technologies discussed in this section may be encouraged through existing regulatory 

programs or through financial incentives to help overcome initial capital cost barriers and 

shorten payback periods. Implementing financial incentives may be more effective at the 

national level, to ensure that new locomotives and engines are provided to areas of the 

country that have the most rail traffic and that older, less efficient locomotives are taken 

out of service. There is some concern that the older locomotives that new genset and 

hybrid engines replace in California and Texas are not decommissioned, but are shifted to 

other States, exacerbating their air quality problems. Meanwhile, other States, regional air 

quality groups, and local governments are finding it difficult to encourage railroad 

companies to bring the new locomotives to their areas without providing similar funding 

initiatives.

Technologies also may be introduced through regulatory mechanisms. The EPA has 

established emission standards for NOx, HC, CO, PM, and smoke for newly manufactured 

and remanufactured diesel-powered locomotives and locomotive engines. Three separate 

sets of emission standards have been adopted, with applicability of the standards 

dependent on the date a locomotive is first manufactured or when remanufactured (EPA,

1997). Though these standards have been developed relative to available engine and 

control technologies, similar standards could potentially be promulgated that encourage 

the use of more efficient engines that emit less greenhouse gases. The ability to do so may 

depend upon future interpretation of the Clean Air Act or other Federal legislation 

providing EPA with the authority to regulate greenhouse gases.

Finally, because rail freight operators operate in a competitive marketplace, they tend to 

have natural (cost saving) incentives to find ways to reduce fuel in the face of high prices, 

without government intervention. The future price of fuel—whether affected by market 
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forces or government regulation—is likely to have a significant bearing on the adoption of 

more efficient rail vehicle technology.

Other Rail Fuel Efficiency Strategies

Overview

A number of non-engine-based rail efficiency improvement strategies currently are being 

implemented to varying degrees. For example, aluminum cars and wheel-to-rail 

lubrication systems have been commercially available for several years. There also has 

been some effort to improve the aerodynamics of freight trains, ranging from covering 

empty cars to shielding.

Aluminum cars were initially pioneered in the railroad industry in the late 1950s. 

Aluminum is highly durable and considered appropriate for a wide variety of railroad 

applications. For instance, aluminum offers excellent resistance to corrosion from highsulfur coal. Furthermore, cars designed with aluminum extrusions require fewer 

structural components and can be as much as a third lighter than comparable steel cars 

(Rail Age, 1994). Use of such lightweight materials allows for cars with larger carrying 

capacity, which in turn allows for more freight to be moved per gallon of fuel (Frey and 

Kuo, 2007).

Freight trains use a considerable amount of energy to overcome air friction, due to the 

aerodynamically unfavorable profile of freight trains, unshielded space between cars, and 

lack of covers on empty cars (Lai, 2007 and Stodolsky, 2002). For example, a locomotive 

pulling open empty cars consumes more energy than when pulling full freight cars with a 

better aerodynamic profile. Intermodal trains also tend to have poor aerodynamic 

characteristics. Both the capacity and the aerodynamics of intermodal freight can be 

improved by using double-stacked cars (Lai, 2007). However, this approach may require 

infrastructure changes to ensure sufficient clearance in tunnels and bridges.

In addition to covering empty cars and modifying how intermodal cars are loaded, 

aerodynamics can be improved by reducing open areas that catch the wind as the cars are 

moved. For example, the bogie area of freight cars and area between cars are typically 

uncovered. In order to minimize drag, these areas may be covered with smooth and 

streamlined surfaces (IUR, 2008).

Energy also is expended by locomotives to overcome wheel-to-rail friction. Reductions in 

wheel-to-rail resistance can be made via improved lubrication (Stodolsky, 2002). 

Lubrication systems, such as top-of-rail systems, reduce wheel and rail wear as well as 

fuel consumption. Newly developed computer controlled systems limit the amount of 

lubricant applied to reduce excessive applications that lengthen required braking 

distances (IUR, 2008).
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Magnitude and Timing of GHG Reduction

Light weight high-capacity railcars have been introduced by Canadian Pacific Railway, 

demonstrating a reduction of energy use by 10 percent for coal shipments and by 

5 percent for grain shipments (NESCAUM, 2006). Improving the loading configuration 

for intermodal trains can reduce fuel consumption by as much as 27 percent, or up to 

1 gallon/mile per train, although the potential for loading configuration efficiencies also is 

dependent upon shipper loading practices, including partially loaded boxes and emptybox backhauls. Other aerodynamic improvements can reduce fuel consumption up to 

10 percent (Lai, 2007 and Stodolsky, 2002). Based on available field studies and 

manufacturer data, wheel-to-rail lubrication systems can reduce fuel consumption and 

GHG emissions between 4 and 10 percent (U.S. DOE, 2006b).

Industry-wide annual railcar production ranges from 17,000 to a peak of nearly 76,000, 

while aluminum car production ranges from 4,000 to 13,000 (Freight Car America, 2008; 

Wagner, 2008). Currently, there are approximately 1.3 million freight cars in use in the 

U.S (U.S. DOT, 2008). At the current rate that aluminum cars are being introduced it will 

take approximately 100 years to replace the existing population of cars, although this 

could potentially be accelerated through policy or market incentives. Some aerodynamic 

improvements, as well as lubrication systems, can be implemented on existing cars, 

yielding shorter-term GHG reductions.

Cost-Effectiveness

With the exception of lightweight cars, the technologies noted in this section have 

relatively low capital cost (Wagner, 2007). However, aluminum cars are not only lighter 

requiring less fuel to move, but can be constructed with higher carrying capacity that 

increases the amount of revenue cargo transported, such that the pay back period for new 

cars is approximately two years. Also, aluminum rail cars have high salvage value when 

their hulks are scrapped (Mangum, 2009).

Cost associated with the purchase of air shields, wheel-to-rail lubrication systems, and 

drive optimization software are often paid back within a couple of years, or more quickly 

as diesel prices escalate. It is estimated that using new computer controlled wheel-to-rail 

systems could save the industry between $500 million and $1.4 billion in fuel costs, 

increase productivity by allowing for increased speed and train length, and reduce 

maintenance activities by 25 percent (Mangum, 2009).

Cobenefits

Pollutant emissions should be reduced roughly in proportion to fuel savings and GHG 

reductions for these strategies. As noted under cost-effectiveness, aluminum cars can 

increase the amount of revenue cargo transported.
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Feasibility

There are few barriers to implementation of these technologies, as they require little or no 

change in infrastructure and are not restricted by current railroad regulations. Their use 

may be encouraged through voluntary programs such as the EPA’s SmartWay Program, 

which serves as a clearinghouse for information on environmentally beneficial practices, 

and offers public relations “branding” for those companies with notable environmental 

performance. Low-interest loan programs or tax incentives could potentially help 

overcome concerns about capital investment costs. Higher fuel prices will provide 

additional incentive for railroad operators to voluntarily implement these technologies.
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 3.6 Marine Vessel Technologies

Globalization of the economy has lead to 

increasing marine vessel traffic. For 

example, in 1970, 2.5 billion metric tons 

of freight were shipped by sea while in 

2006, that value increased to 7.4 billion 

metric tons (IMO, 2008). Marine traffic 

includes shipment of raw materials, 

intermediate and final products around 

the world; 90 percent of global trade is 

carried by marine vessels (IMO, 2008). 

Marine vessels represent one of the most 

efficient methods of freight transport, as 

shown in figure 3.9, and furthermore, are 

the only option for transoceanic 

shipping, for all but the lightest and 

highest value goods. 

Shipping activities can be split into 

international and domestic traffic. The 

international component includes 

approximately 100,000 vessels; about half 

of this fleet is involved in cargo 

shipments, including container ships, 

tankers, auto carriers, and general cargo 

vessels (IMO, 2008; Fairplay, 2009). Most 

of the international cargo fleet is 

equipped with large engines similar to 

land-based utility power generating equipment (EPA, 2003). These vessels operate in 

international, Federal, and coastal State waters, frequenting U.S. deep water ports 

operating along both coasts and the Gulf of Mexico. Vessels involved in domestic traffic 

include tugs, bulkers, ferries, offshore support vessels, and harbor craft that operate 

mostly in coastal and inland waterways. These vessels are equipped with smaller engines 

approximately the size of a large locomotive (EPA, 2007c).

Different policy channels will be appropriate for the international and domestic fleets. 

Since ocean-going vessels operating in international and sovereign waters around the 

world are flagged by many other countries, improvements would need to be encouraged 

through international agencies such as the United Nations’ International Maritime 

Organization. International banking organizations also can play an important role in 

expediting the introduction of new technologies. For example, capital financing of vessels 

favors conventional vessel designs over innovative or “experimental” designs, which may 

apply to vessels equipped with the first applications of new environmental technologies

(Corbett, 2009; Kuznik, 2008). The United States can require certain attributes on 

Marine Vessel Technologies

Per Vessel GHG Reduction:

• 4–15% for ship design

• Up to 20% for diesel electric for vessels that 

change speed or load frequently (cruise ships, 

harbor tugs, and ferries)

Confidence in Estimates: Low

• Considerable range of estimates; benefits of some 

technologies not well-documented

Key Cobenefits and Impacts: Positive

• Some technologies can significantly reduce 

emissions near populated areas

Feasibility: Moderate

• Mostly limited by vessel operator interest in/ 

acceptance of new technologies and low fleet 

turnover rates

Key Policy Options:

• Work with international marine organizations to 

adopt technology standards and market and nonmarket incentives for fuel efficiency improvements

• Work with domestic operators (ports, ferry) to 

purchase efficient technology

• R&D for advanced technologies
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international ships entering U.S. waters, but such requirements can inhibit commerce and 

place U.S. ports at a disadvantage with Canadian and Mexican competitors.

Figure 3.9 Range of Typical CO2 Efficiencies for Various Cargo Carriers, g 

CO2/tonne-km

 

 

Source: Buhaug et al 2008.

Crude

LNG

General Cargo

Reefer

Chemical

Bulk

Container

LPG

Product

RoRo/Vehicle

Rail

Road

0 50 100 150 200 250

Technology changes to the domestic fleet can be encouraged through existing Federal

regulations for vessels subject to the Jones Act, U.S. EPA emission and fuel standards, and 

U.S. Coast Guard rules and regulations. Alternatively, programs such as the U.S. EPA’s 

SmartWay program can be used to encourage voluntary changes to vessel fleets that 

provide for more efficient freight movement with less emissions (U.S. EPA, 2009d).

Improvements discussed in this report to increase the energy efficiency and reduce GHG 

emissions from commercial marine vessels include the following:

• Improvements to ship design to reduce hull drag;

• Propulsion system improvements such as diesel-electric hybrid systems;

• Improved propeller designs; and

• Advanced energy technologies such as solar and wind power.

Combined GHG Benefits of Marine Vessel Technologies

Consistent with the scope of this report, benefits are estimated only for the domestic 

marine fleet and for the portion of international shipping traffic attributed in the AEO’s 
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inventory to the U.S. According to the United Nations Framework Convention on 

Climate Change (UNFCCC) reporting guidelines, national totals of GHG emissions should 

reflect only domestic transport, including the domestic leg of shipments bound for foreign 

markets (i.e., operations within 200 miles of the coastline); international aviation and 

marine bunker fuel emissions from fuel sold to ships or aircraft engaged in international 

transport should be excluded from national totals (UNFCCC, 2006). However, 

differentiating domestic and international fuel consumption is often difficult, resulting in 

significant year-to-year variations in the official estimates.

The combined GHG benefits that could be anticipated from marine vessel improvements 

are estimated as follows. The range of ship design benefits (1-17.9 mmt CO2e) is added to 

the range of propulsion system benefits (3.1-7.4 mmt CO2e). While there may be some 

overlap between these categories, most of the ship design benefits will be realized for 

long-distance ships while propulsion benefits will primarily be realized for ships 

operating near-shore. Some additional benefits could be realized through wind and solar 

power, but these technologies are still speculative (particularly wind). The combined 

benefit is estimated to be 4.1 to 25.3 mmt CO2e in 2050, with about two-thirds of these 

benefits realized in 2030 depending upon fleet turnover and phase-in of other 

technologies.

Improvements in Ship Design

Overview

In general larger ships provide efficiencies of scale and are capable of transporting more 

cargo per gallon of fuel than smaller vessels. This scaling effect has led to an increase in 

vessel size of about 4 percent per year for newly constructed vessels, with an increase in 

installed power at rates about 10 percent per year. This is more than twice the rate of 

growth in seaborne trade and is driven largely by growth in containerized shipping 

delivering intermodal cargoes to onroad and railway freight shippers (Corbett, 2007). The 

net growth in fuel use and GHGs is nearly proportional to the growth in cargo volumes. 

One of the reasons that fuel use trends are not increasing in direct proportion to increased 

installed power is that new vessels take advantage of improved hull designs and other 

technologies. These changes in hull design include application of ducktails and 

interceptor planes which extend the stern of the vessel and enhance propeller efficiency 

(Wartsila, 2008; Kanerva, 2006; Jaap, 2005).

Vessel efficiency declines when marine plants and animals accumulate on a ship’s 

underwater hull causing fouling. Advances in vessels coatings, such as self-polishing 

resin systems based on hydrolysable acrylate polymers, inhibit fouling, and provide a 

smoother surface (Royal Caribbean International, 2008; Kiil, 2001). Similarly, vessel 

efficiency also can be improved by injecting small amounts of air in the turbulent 

boundary layer underneath the ship (Wartsila, 2008; Okada, 2008; Technology Demark, 

2007; Katsui, 2003). As a result, drag is reduced through the movement of the air bubbles 

and the formation of a thin film of air along the vessel’s hull. This technology has been 
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tested and optimized in a towing tank and currently is being piloted on a 250-foot 

multipurpose vessel (Technology Denmark, 2007).

In general, the vessel design technologies discussed in this section are commercially 

available. While hull designs can only be introduced on new vessels, interceptor planes, 

ducktails, and air injectors can be added as retrofits, though these changes can be made 

more cost-effectively during new vessel construction. Their application has been limited 

by the cost for retrofits; for example, interceptor plates with ducktails can cost millions of 

dollars to install (IMO, 2009).

Magnitude and Timing of GHG Reduction

Use of larger containerships, tankers, and bulk carriers allows for more efficient 

movement of cargo. Generally a 10 percent increase in ship volume can improve fuel 

efficiency by 4 to 5 percent in terms of gallons of fuel needed per ton-mile transported 

(Wartsila, 2008). However, this can vary depending upon the vessel type and operation.

Reducing vessel displacement by increasing the hull width by only 0.25 meters allows for 

a reduction of 3,000 tons of ballast, reducing propulsion energy requirements by 

8.5 percent (Wartsila, 2008). Use of interceptor or trim planes can improve fuel 

consumption by 1 to 4 percent, or up to 10 percent if the interceptor or trim plane is used 

in conjunction with a ducktail (Wartsila, 2008; Hansen, 2008; Jaap, 2005). Air lubrication 

systems can improve fuel efficiency from 3.5 percent for ferry operations to 15 percent for 

large tankers (Wartsila, 2008; Technology Demark, 2007; Frey and Kuo, 2007; Katsui,

2003).

Given that the lifespan of large commercial vessels is over 35 years, fleet turnover is slow, 

roughly 2 percent of the fleet per year (EPA, 2002). Accordingly it will take nearly half a 

century to incorporate current new hull designs into the global fleet.

Estimates of potential fuel savings and emission reductions are provided in Table 3.6A. 

Information on the efficiency benefits of different technologies is quite limited and can 

vary significantly depending upon the characteristics of the specific vessel being modified 

(i.e., long-haul operations such as tankers and containerships, versus vessels whose 

operations can change frequently such as cruise ships and tugs). As a result, a 

considerable variation in the range of potential benefits is shown in Table 3.6A. These 

estimates assume that identified technologies currently are used in a very limited capacity 

or not at all, but will achieve full market penetration by 2050 if programs to encourage the 

application of these technologies are put in place in the near future. Combined benefits 

could potentially range from 1.0 to 18 mmt CO2e. With a 25- to 40-year turnover cycle 

typical for marine vessels, benefits in 2030 could be in the range of half to three-quarters of 

the 2050 benefits, or up to 12 mmt CO2e assuming a two-thirds turnover. 2030 benefits 

could potentially be higher if policies and/or market forces lead to accelerated fleet 

replacement.
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Table 3.6A Projected Impact for Ship Design Technology Strategies

Strategy Ship Types

Anticipated Fuel 

Savings (Percent)

Anticipated Annual 

Reduction in Fuel Use 

(Million Gallons)

Anticipated CO2

Reduction 

(Million Tons)

Enhanced Ship Design Tankers/Bulkers 2 – 35 % 21 – 364 0.23 – 4.11

Container 42 – 741 0.48 – 8.37

Roroa 9 – 163 0.11 – 1.84

Passenger 8 – 135 0.09 – 1.52

Offshort Support 

Vessels 10 – 180 0.12 – 2.03

Interceptor Planes Roro 4% 19 0.21

Ferry 15 0.17

Ducktails Container 7% 148 1.67

Roro 33 0.37

Ferry 27 0.30

Bubble (Air) Lubrication Tankers/Bulkers 10 – 15% 104 – 156 1.17 – 1.76

Container 212 – 318 2.39 – 3.59

Combined (2050) All Categories 2 – 35% 1.0 – 17.9

Combined (2030) 2 – 24% 0.7 – 12.0

Note: Assuming vessel split obtained from Corbett, Firestone, and Wang (2007) and projected fuel usage 

based on 2009 AEO data.

a Roll-on/roll-off, or ships or ferries designed to carry wheeled cargo

Cost-Effectiveness

The capital cost associated with interceptor planes and ducktails can be a significant 

barrier to implementation, particularly if the modifications are made to existing vessels 

rather than applied to vessels that are under construction (Mangum, 2009). The cost 

associated for installing bubble lubrication systems run from $0.5 to 1.0 million per vessel 

(Mangum, 2009). The anticipated fuel savings for these modifications often justify the 

modification costs.

Cobenefits

Minor environmental cobenefits are expected from these strategies, as pollutant emissions 

should be reduced roughly in proportion to fuel consumption. These benefits will be 

most significant for domestic vessels operating in near-shore waters, where emissions will 

result in the greatest population exposure.
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Feasibility

The marine vessel technologies presented in this section are all viable and commercially 

available. Two of the limiting factors to implementation of these technologies are the high 

cost associated with these changes and the slow fleet turnover rate. Policies that provide 

incentives for the retrofit of these technologies, or facilitate a more rapid fleet turnover, 

will accelerate the environmental and economic benefits.

Given the international nature of marine shipping, improvements to the global fleet may 

need to be encouraged through international agencies and organizations which are 

involved in regulating vessel operations, fuel usage, and setting vessel construction 

standards. International insurance and banking agencies also may be recruited to ensure 

that financing policies facilitate the application of reduced GHG environmental 

technologies.

Propulsion System Improvements

Overview

Many of the engine improvement technologies discussed in the locomotive section of this 

report, such as common rail configuration, advanced turbo charging, and turbo 

compounding, have been applied to newly constructed vessels or during engine retrofit 

programs over the past decade. For example, Wärtsilä, the leading manufacturer of large 

marine engines, began marketing a range of slow-, medium-, and high-speed common rail 

engines in 2001. By 2008, Wärtsilä received orders for over 700 common rail engines.

Typically diesel engines provide power directly to a vessel’s propellers. For such vessels,

fuel consumption and emissions tend to be higher when the engines are not operating at 

their optimum speed and load rating. In a diesel-electric configuration, however, a series 

of diesel generators are run at an optimized level, providing power to an electric motor 

which in turn drives the vessel’s propellers. Similar engine configurations have been used 

in naval submarines, but it was not until the mid 1990s that this technology was applied to 

cruise ships (Moretti, 2002; Kanerva, 2006; PJK, 2006). For example the largest cruise ship 

currently in operation is the Royal Caribbean’s Freedom of the Seas, which is equipped with 

6 Wärtsilä 46 V12 diesel engines that use a common rail fuel injection system (Royal 

Caribbean, 2009). Each of these engines is rated at 12.6 megawatts, providing a total 

output of over 100,000 horsepower (Wartsila, 2009).

The advantages in using diesel-electric systems apply to vessels that operate over a wide

range of loads such as cruise ships, tugs, and roll-on/roll-off ferries. For vessels that 

primarily operate at a constant and optimal load such as containerships and tankers, total 

plant efficiencies with traditional diesel propulsion may be higher than with diesel-electric 

systems, such that there is little fuel advantage to using this configuration for these longdistance vessels.

Hybrid systems also are being developed that are very similar to diesel-electric systems in 

that they operate smaller, more efficient diesel engines to power a generator which in turn 
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generates electricity for charging batteries or during periods of high demand, for the 

propulsion motors. Hybrid technology has been considered for smaller marine vessels 

such as harbor tugs and ferries which operating under a wide range of transient loading 

(Foss, 2008; New York City Government, 2008; Workboat, 2008). Additional information 

is needed to evaluate whether hybrid technologies provide significantly different benefits 

(i.e., better propulsion plant efficiencies) to marine vessels than diesel electric configured 

vessels or traditional marine diesel system designs.

Nuclear powered commercial marine vessels could reduce greenhouse gas emissions, but 

the commercial application of this technology is complicated. Currently, there are 150 

nuclear powered vessels operating globally; this vessel population is composed primarily 

of military vessels (e.g., submarines and aircraft carriers) or government agency icebreakers. Attempts have been made in the past to development nuclear merchant ships, 

but these projects have failed for technical, economic, or political reasons. For example, 

the U.S.-built NS Savannah and the German-built Otto Hahn were decommissioned 

because they were too expensive to operate, partly due to safety concerns and insurance 

issues involving the use of nuclear power in civilian ports (Schmitt, 2009). The Japanese 

Mutsu was dogged by technical and political problems (World Nuclear Association, 2008). 

Current concerns regarding national security (e.g., piracy and terrorism), complex 

maintenance issues (e.g., refueling, preventive and scheduled maintenance activities), and 

longer-term issues concerning disposal of spent rods and decommissioning of vessel 

reactors, make this technological option more complicated to implement then other 

technologies presented in this study. For these reasons, this report evaluates

implementation only of nonnuclear technologies.

Magnitude and Timing of GHG Reduction

The fuel savings for diesel/electric systems in vessels that frequently change speed or 

load, such as cruise ships, harbor tugs, and roll-on/roll-off ferries, can be as much as 

20 percent, although depending upon operations, actual fuel savings may be less 

(Wartsila, 2008). Where applications are appropriate for hybrid engines, fuel and emission 

reductions can be as much as 35 percent (Wartsila, 2008). For marine propulsion 

application, common rail engines provide a fuel improvement around 1 percent. Wärtsilä 

has combined the common rail technology with enhancements to turbo charging to 

providing addition improvement in efficiency of 2 percent (Wilk, 2008).

Early introduction of diesel/electric and hybrid technologies is possible as each option can 

be applied as a retrofit, though hybrid options are easier to apply on newly constructed 

vessels. For the purposes of this analysis it is assumed that cruise ships have a 

diesel/electric configuration and therefore additional penetration of this technology to 

these vessels is not significant.

Costs

According to the literature cited above, fuel costs savings over the life of the vessel 

typically outweigh increased, upfront technology costs for these engine technologies. The 

most effective use of the propulsion technologies discussed in this report are with vessels 
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whose operations vary frequently, such as roll-on/roll-off vessels, harbor ferries, offshore 

support vessels, and assist tugs. The cost of including diesel/electric configured engine 

systems into new vessel construction increases the cost of a vessel by approximately 

15 percent (Mangum, 2009). There are cases where older cruise ships have been modified 

to use these systems, but information concerning the retrofit cost is not readily available. 

Regarding hybrid marine vessel technologies, the limited applications of this technology 

make it challenging to accurately assess the incremental cost of this option. Estimates of 

the increased cost of hybrid systems vary from 30 percent (Mangum, 2009) to 85 percent.

Cobenefits

These strategies can result in significant reductions in air pollutant emissions, since 

engines can be run at an optimal speed and emission controls optimized for this speed. 

Potential public health benefits are greatest for applications in near-shore activities such as 

ports, ferries, and inland waterways, which are often located in more densely populated 

urban areas, whereas most line-haul operation takes place in rural areas. These also are 

the applications in which fuel savings tend to be greatest. In fact, incentive programs 

have been implemented in California and Texas, where genset and hybrid marine vessels 

are eligible for financial incentives if they meet cost-effectiveness criteria for NOx pollutant 

emission reductions.

Feasibility

The diesel/electric engine configuration is a technology that has been successfully applied 

to a variety of marine applications. In contrast, marine electric hybrid technology is 

relatively new and operating constraints are not fully understood at this time. Since the 

diesel/electric option is appropriate for vessels involved in international travel such as 

cruise ships and roll-on/roll-off vessels, it would be necessary to work with international 

organizations to encourage the application of these technologies in these situations.

For both the diesel/electric and hybrid configurations, a barrier to implementation is the 

initial capital cost, whether applied to new ship construction or as a retrofit. Other 

potential barriers include service requirements, operating and maintenance differences, 

mechanical crew staffing requirements, and space constraints. Increased fuel costs over 

time should provide greater incentives for the introduction of these technologies.

State and Federal tax incentives could play a significant role in encouraging use of these 

engines. For example, California and Texas offer incentives to replace or re-engine smaller 

vessels such as harbor tugs with newer, more efficient engines that emit less pollutants. 

While these programs target criteria pollutants and precursors rather than greenhouse 

gases, to the extent that emission reduction technologies are more efficient, GHG benefits 

also will be realized. Similar programs could be offered on a nationwide basis.
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Enhanced Propeller Design

Overview

Conventional fixed-pitch propellers are most efficient at one rotational speed and load 

condition, with the propeller utilizing the maximum amount of power from the engine.

At any other rotational speed or operating load, a 

fixed-pitch propeller is either “over-pitched” or 

“under-pitched,” which leads to a reduction in fuel 

efficiency and an increase in emissions. Controllablepitch propellers have been designed to optimize 

efficiency for any speed and load condition. As with 

diesel/electric configurations, the fuel and emission 

benefits associated with controllable-pitch propellers 

are most apparent for vessels that frequently change 

speed or load such as harbor vessels, cruise ships, 

ferries, and roll-on/roll-off vessels.

Counter-rotating propellers include a pair of 

propellers positioned along the same axis as the 

standard propeller, as shown in Figure 3.10 (Ämmälä,

2006). Counter-rotating propellers can be configured 

as independent propellers or can be coupled together, but have independent drive shafts 

that rotate in opposite directions. In this configuration the rear propeller recovers 

rotational energy from the front propeller, which is used to generate power for the 

vessel’s electrical system (Frey and Kuo, 2007).

To obtain the maximum thrust for propulsion, a 

propeller must quickly move large volumes of 

water. Friction losses occur at the tip of each blade 

as water escapes from the high pressure to the lowpressure side of the blade, reducing the effectiveness 

of the propeller. Large nozzles that enclose the 

propeller (as shown in Figure 3.11) reduce friction 

loses by restricting water flow to the propeller tips.

At the entrance of the nozzle the diameter is greater 

than at the trailing throat. This design forces the 

water to accelerate from the front of the nozzle to 

the rear, increasing the speed of the water as it 

reaches the propeller, and allowing the propeller to 

move more water and create more thrust for the 

same input power and torque (Rice, 2009).

Another approach to reducing friction loss at the tips of propeller blades involves the 

application of tip winglets (Lumin, 2005; Technical University of Denmark, 2006;

European Commission, 2002). This approach is similar to the wing tip devices used for 

aviation that prevent vortex formation. This technology was initially used in recreational 

Figure 3.10 Counter-Rotating 

Propellers

Figure 3.11 Nozzles Enclosing 

Propeller to Reduce Friction Losses
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vessels, but has evolved into applications appropriate for larger commercial marine 

vessels (Technical University of Denmark, 2006) and has been evaluated by the European 

Commission’s BRITE technology program (European Commission, 2002) for larger vessel 

applications.

The benefits of improved propeller design are maximized when coupled with control 

systems that optimize engine performance based on vessel speed, propeller torque, and 

propeller thrust.

Magnitude and Timing of GHG Reduction

Counter-rotating propellers improve fuel efficiency and reduce GHG emissions by 10 to 

15 percent (IMO, 2009; Ämmälä, 2006; Wartsila, 2008). Add on devices such as propeller 

nozzles can improve fuel efficiency by up to 5 percent (Rice, 2009; Hansen, 2008) while 

propeller winglets can improve propeller efficiency up to 4 percent (Technical University 

of Denmark, 2006; Lumin, 2005). Because some of these devices address the same drag 

forces, combinations of these technologies will not necessarily provide an additive 

reduction in fuel use. These technologies can be retrofit to existing ships, though some 

configurations of controlled-pitch and counter-rotating propellers are easier to implement 

for newly constructed vessels. Adding propeller nozzles and using propellers with 

winglets can be implemented at any time. Because propeller technologies are relatively 

easy to implement, it is unclear to what extent these technologies are being used in today’s 

fleet, particularly with regard to the domestic U.S. fleet; therefore, quantitative estimates 

of potential additional GHG reductions are not shown. Counter-rotating propellers are a 

relatively new technology and it is likely that their use is not as extensive as controlledpitch propellers, nozzles, or winglets.

Cost-Effectiveness

All of the propeller technologies discussed in this section are cost-effective for most vessel 

operations due to reduced fuel consumption rates. Some of the lower cost options such as 

use of propeller nozzles and winglets are particularly attractive to domestic tug and tow 

boat operations, providing a pay back period less than two years (Ship Propulsion 

Solutions, 2009). While counter-rotating propeller and controlled-pitch propellers are 

higher cost options, they also are associated with larger fuel reductions.

Cobenefits

Significant cobenefits are not expected from these strategies, although criteria pollutant 

emissions may be reduced in proportion to fuel use.

Feasibility

Many of these propeller technologies are relatively inexpensive to implement and 

therefore require little assistance from policy-makers to encourage their use. These 

technologies may be promoted through voluntary programs such as the EPA’s SmartWay 
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Program, which serves as a clearinghouse for information on environmentally beneficial 

practices, and offers public relations “branding” for those companies with notable 

environmental performance. Increased fuel costs over time should provide greater 

incentives for the introduction of these technologies.

Future Technologies

Overview

In addition to conventional propulsion system improvements, fuel consumption for larger 

vessels can be reduced by using wind and solar power. Windpower options include 

wing-shaped sails made from composite materials (i.e., wing sails) (Cousteau Society,

2003), large kites attached to the bow of the ship (SkySail, 2008), and rotary sails (actually 

wind turbines) (Enercon, 2009). These have been tested on cargo ships and tankers up to 

160 meters in length (SkySail, 2008; Hansen, 2008; USCG, 2009). Currently, wind powered 

options are being studied by the Technical University of Berlin for different sail types, 

vessel types, operating speeds and routes.

Flettner rotors (Figure 3.12) are large vertical devices that use the wind to spin rotors to 

generate electricity, which is either stored in batteries or used directly for propulsion 

(MarineBuzz.com, 2008). Enercon, a 

German wind technology company, has 

recently launched a large vessel equipped 

with Flettner rotors, which will be put into 

service in 2009 (Enercon, 2009).

Solar panels capable of generating several 

kilowatts of electricity have been used for 

years on large vessels to provide power for 

the crew’s living quarters. Photovoltaic 

technologies are now being scaled up in 

pilot studies commissioned by major 

shipping companies as a way to reduce 

fuel consumption and GHG emissions 

associated with propulsion systems. For 

example, 328 solar panels, each capable of 

generating 40 kilowatts of electricity, were 

recently placed on top of a 60,000 tonne car 

carrier used by Toyota Motor Corp (NYK 

Line, 2009; Okada, 2008). Hybrid 

solar/wind systems that use aluminum 

sails covered with photovoltaic panels 

have been applied to small ferry 

operations in Sidney, Australia since 2000 and currently are being considered by San 

Francisco’s Alcatraz Ferry Service and San Diego’s Harbor Ferry Service (SolarSailor,

2008). In October 2008, China’s COSCO marine transport company commissioned work 

Figure 3.12 Flettner Rotors

Figure 3.13 Solar Wings
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to retrofit solar wings to a tanker ship and a bulk carrier (Figure 3.13) to evaluate the 

potential fuel savings associated with these technologies (Macdonald-Smith, 2008;

Transportation and Logistics News, 2008; SolarSailor, 2008).

Magnitude and Timing of GHG Reduction

Solar powered systems, such as that used by Toyota, can provide energy for the demand 

for electricity to provide lighting for navigation purposes and for quarters, other 

navigational devices such as radar, weather tracking systems and smaller cargo handling 

equipment. Such systems have been shown by Toyota and Solar Sailor to reduce energy 

demand by 5 to 7 percent (NYK Line, 2009; Solarsailor, 2008). Use of wind power has 

proven to be even more significant, providing a fuel savings and GHG emissions 

reduction of 20 to 40 percent (reference). Both of these technologies are particularly 

applicable for larger vessels with extensive surface areas that are involved in long-distance 

trade.

Cost-Effectiveness

There is limited cost data available for these emerging technologies. Many are in their 

early stages of development and the costs associated with demonstration projects are 

considerably higher than anticipated future costs when these systems are fully 

commercialized. At this time, photovoltaic options are relatively expensive, due primarily 

to the cost of photovoltaic panels, which currently are not cost-competitive for electricity 

generation in most applications. The system used in the Toyota auto carrier cost $1.4 

million to develop and install (NYK Line, 2009).

Cobenefits

Minor environmental cobenefits may be realized from these strategies, as pollutant 

emissions should be reduced roughly in proportion to fuel consumption. Solar power 

may reduce emissions in ports even while the ship is not in transit, which may benefit air 

quality near the port. Wind power will provide benefits on the open ocean, and therefore 

the air quality benefits for human population exposure are not likely to be significant.

Feasibility

Though wind and solar powered systems have been in existence for a while (particularly, 

vessels equipped with sails) their application on large modern vessels should be 

considered innovative, requiring additional research and development before 

commercialization can occur. Investments associated with solar and windpower 

technologies are particularly attractive as many of these options can be applied as retrofits 

to existing vessels. At this time, the most significant barrier to implementation is the high 

capital costs. International R&D initiatives may be needed to reduce capital cost for these 

technology options, especially windpower. Reductions in solar photovoltaic technology 

costs are likely to be driven by forces in the broader electricity generation sector, rather 
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than marine-specific initiatives. Increased fuel costs over time should provide greater 

incentives for the introduction of these technologies.
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 3.7 Aircraft Technologies

Internationally there are approximately 

20,000 commercial aircraft in operation,

of which 12 percent are involved in 

cargo operations (U.S. DOT, 2008;

SmartWay, 2009) and the remainder in 

primarily passenger operations. 

(Passenger aircraft also often carry 

cargo.) In the U.S., the commercial air 

carrier fleet accounts for 7,000 aircraft of 

which 1,300 (19 percent) are dedicated to 

freight shipments (U.S. DOT, 2009;

SmartWay, 2009). With this large fleet 

involved in diverse freight and 

passenger activities, there are a variety 

of factors that the introduction of new 

technologies. Some factors include 

stringent safety standards, aircraft 

performace demands, extremely high 

costs of transitioning to newer 

generation aircraft fleets, and tradeoffs 

among environmental performance 

properties such that reducing one 

environmental impact may increase 

another.

Incentives are important because costs 

for developing new large commercial aircraft can be restrictively burdensome (ADL,

2000). For example, Airbus spent $15 billion to develop the new A380 aircraft which 

currently is selling for approximately $330 million, at which price Airbus will need to sell 

420 aircraft to break even (Babka, 2006). Given the expense of large commercial aircraft 

there are economic drivers to keep a given model in service for as long as profitable (ADL,

2000). For example, the Boeing 747 was initially constructed in 1970 and while there have 

been significant improvements in performance with each subsequent version of the B747, 

several of the earliest models are still operating (SmartWay, 2009), such that the average 

age of the Boeing B747 fleet is approximately 25 years (U.S. DOT, 2009). This means that 

technology turnover may operate on a longer timeframe than fleet turnover, further 

slowing the introduction of new technology.

Contrasting the economics of aircraft manufacture, aircraft fuel consumption typically 

represents 20 to 30 percent of an airline’s direct operating costs (ICAO, 2006). Given the 

significance of aviation fuel costs, the industry has historically been aggressive in 

pursuing improvements to aircraft engine and airframe design that result in a reduction in 

fuel consumption and emissions. Commercial aircraft sold today are about 70 percent

more fuel efficient per passenger-mile traveled than 40 years ago (ADI, 2007; ICAO, 2006,

Aircraft Technologies

Per Aircraft GHG Reduction:

• Advanced engine technologies: 10 – 30%

• Conventional airframe / wing retrofit: 1.6 – 10%

• Blended wing body design: 20 – 40%

Fleet-wide GHG Reduction:

• Annual reduction of 1.4%-2.3% during 2015-2035 

with 2015 as the base year.

Confidence in Estimates: Moderate

• Some technologies demonstrated; feasibility of 

others not yet determined

Key Cobenefits and Impacts: Unknown

Feasibility: Moderate

• Requires long-term commitment and considerable 

investment for some technologies

• Blended wing design requires airport 

infrastructure changes

Key Policy Options:

• R&D for advanced technologies

• Demonstration programs / partnerships

• Financial or regulatory incentives to accelerate new 

technologies
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2008; ADL, 2000). According to the ICAO, an additional 20 percent improvement in fuel 

efficiency is targeted by 2020 (ICAO, 2008).

Engine efficiency improvements reduce fuel consumption and also pollutant emissions. 

Without advances in low NOx combustor technology, however, NOx emissions also may 

increase as engines are made more efficient (Jamin, 2004; Morris, 2009; ADL, 2000), 

providing a small offsetting GHG disbenefit.

Aircraft efficiency improvements are discussed in two categories: 1) engines, and

2) airframe and wing design. Some airframe and wing technologies are available for 

retrofit, but in general, the most significant advances to aircraft efficiency will come with 

the introduction of new aircraft and engine designs.

Advanced Engine Technologies

Overview

Jet engine design has continued to evolve since the introduction of jet engines for 

commercial applications in the 1950s. Engine efficiency improvements currently are being 

made by increasing fan bypass ratios, increasing compressor pressure ratios and 

combustor temperatures, and improved component efficiency (ADI, 2007). This is 

possible through the application of improved design methods using advanced numerical 

simulations, and use of high temperature materials and new light weight engine 

components constructed of powdered metal alloys and carbon fiber composites. These 

new materials allow for improved engine designs, reducing fuel consumption, and are 

often more durable, reducing maintenance requirements (GE, 2008).

General Electric recently developed a new line of GEnx jet engines employing new 

designs and materials that reduce both GHG and criteria pollutant emissions. Currently, 

these engines are an option for Boeing’s new 787 Dreamliner, a mid-sized wide-body jet 

(Boeing, 2004) and Boeing’s new 747-8 aircraft (Boeing, 2006). These improvements in 

current engine design are anticipated to continue through the Leading Edge Aviation 

Propulsion (LEAP) 56 program development program (CFM, 2007). Pratt & Whitney has 

developed a high-bypass geared jet engine (PW1000 G) which currently is being tested for 

smaller regional jet applications, but also is applicable for larger aircraft such as Boeing’s 

747- SP and Airbus’ A340-600 (Pratt & Whitney, 2008). This geared jet engine allows the 

engine fan to operate at a slower, more optimal speed while the low-pressure compressor 

and turbine operate at their optimized higher speed (ADL, 2000).

Several companies such as GE, Rolls Royce, and Pratt & Whitney are working on an open 

rotor engine where propeller blades are geared to the turbine and mounted outside the 

casing. Such designs can be lighter and provide higher efficiency. However, there are 

several factors that may limit the application of open rotor engines. For example, they are 

too large to be mounted under-wing (of current aircraft), typically are most appropriate 

for lower cruise speeds, and tend to be louder than shrouded fan configurations.
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There also is a significant secondary benefit to improving jet engine efficiency. As less 

fuel is needed, the total weight of the aircraft is reduced which further reduces fuel 

consumption and emissions.

Magnitude and Timing of GHG Reduction

GE’s GEnx engine design reduces fuel consumption between 10 and 15 percent relative to 

the engine that it is designed to replace, and further improvements of 10 percent are 

targeted under the LEAP 56 program. Pratt & Whitney’s PW1000 G projects similar fuel 

savings as the GEnx engine (Pratt & Whitney, 2008). Open rotor engines have been shown 

to reduce fuel consumption by 10 to 30 percent (Morris, 2009; ICAO, 2008; Flight 

International, 2007a, 2007b; JHA, 2008; SBAC, 2008).

Cost-Effectiveness

Economics is probably the most important factor encouraging adoption of more fuel 

efficient aircraft engines. Fuel prices have been volatile in recent years; the price of jet fuel 

increased significantly since January 2002 when it was approximately 75 cents per gallon 

to $3.83 in the fall of 2008, but then fell to $1.89 per gallon in June 2009. The new GEnx 

engine is anticipated to reduce annual fuel costs by over a million dollars per year per 

aircraft, based on AEO fuel price forecasts of $3.33 per gallon.

Cobenefits

Cobenefits of these strategies may be realized through reduced air pollution in the vicinity 

of airports, especially with new engines that also are designed to minimize criteria 

pollutants. For example, GE’s GEnx engine design produces fewer emissions than the 

maximum allowed by 2008 international standards (94 percent fewer hydrocarbon 

emissions and 57 percent nitrogen emissions), while consuming at least 15 percent less 

fuel than the engines they replace (e.g., CF6-80C2 ) (ICAO, 2008; GE, 2009; Gates, 2006). 

On the other hand, some efficiency improvement technologies, notably high thrust 

engines that operate at higher temperatures, can potentially increase NOx emissions. In 

addition, as noted, open-rotor engines are noisier than current engines, which may create 

impacts on residential areas near airports.

Feasibility

The engine technologies presented here are all viable, but at different levels of 

commercialization. For example, the GEnex engines are commercially available, while 

testing of the geared turbofan was initiated in the summer of 2008. In 2009, GE and NASA 

began wind tunnel tests on the open rotor engine design.

Fuel prices can be a driver for adopting the engine technologies discussed in this section, 

but this is offset by the high capital cost of the aircraft which acts as a factor to extend the 

active life of the aircraft (and engines) as long as possible. The slow rate at which the 

aircraft fleet turns over, particularly the larger aircraft (20 to 30 years), is an issue at this 
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time when declining air traffic has reduced demand for new aircraft, leading to excess 

capacity. Policies that encourage replacing older, less fuel efficient engines with new 

engines could accelerate the environmental and economic benefits associated with these 

technologies; however, the specific design or potential impact of such policies has not 

been investigated.

Advanced Airframe/Wing Design

Overview

The airframe is responsible for approximately 

50 percent of an aircraft’s gross weight. Use of 

advanced lighter and stronger materials in the 

structural components of the airframe, such as 

aluminum or titanium alloy and composite 

materials, can reduce airframe weight leading 

to reduced fuel use (Barzega, 2008; ADL, 2000;

IPCC, 1999). Such materials are being used 

increasingly for aviation. For example, 

composites will make up approximately 

50 percent of the airframe structure of the 

Boeing 787 Dreamliner, a sharp increase from 

the 9 percent figure for the Boeing 777 (Boeing,

2009). The International Civil Aviation 

Organization (ICAO) estimates that adoption 

of these materials can reduce an aircraft’s 

structural weight by 15 percent.

A large portion of the energy used by an 

aircraft is to overcome aerodynamic drag,

including skin friction and induced drag. As 

such, drag reduction can significantly improve 

the fuel efficiency of airplanes and reduce 

emissions. Efforts to reduce “skin friction”

drag include the use of an adhesive-backed 

film with micro-grooves placed on the exterior 

surfaces of the wings and the fuselage. However, the lifetime of the micro-groove film is 

only two to three years, after which it needs to be reapplied. The fact that the film needs 

to be maintained frequently may limit the viability of this technology as the effectiveness 

and fuel savings are relatively small and the ongoing maintenance costs are unknown.

Skin friction drag also can be reduced by maximizing laminar flow. Designing the wing 

with favorable pressure gradients and mechanisms to protect the wing surface from 

accumulating matter such as insect carcasses can enhance laminar flow. Alternatively, 

systems have been studied utilizing multilayer panels on the wing surface that allow air to 

be sucked through pores on the outer layer and vented away from the wing (Barzega, 

Figure 3.14 Multilayer Panels on Tail 

Fins

Figure 3.15 Winglet
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2008; Reneaux, 2004; ADL, 2000; IPCC, 1999). These designs were demonstrated by 

Airbus on the tail fin of the A-320 aircraft in 1998 (Barzega, 2008; AeroStrategy, 2005; 

Schmitt, 2000), shown in Figure 3.14. However, there is considerable concern over the 

viability of this technology because of the additional weight, complexity and cost of the 

internal systems and challenges of avoiding fouling of the surfaces (Waitz, 2009).

Vortices are formed at the tips of the wings as high air pressure migrates toward lower air 

pressure areas. These vortices reduce fuel efficiency by producing induced drag. Induced 

drag can be reduced by modifying the wing tips. For example, a winglet is a 

commercially available device mounted at the tip of the wing (see Figure 3.15) to provide 

a smooth, perpendicular surface that can favorably alter vortex formation (Morris, 2009;

USAF, 2007; ADL, 2000). An alternative design, shown in Figure 3.16, employs a spiroid 

tip which is a loop formed at the end the wing to reduce drag. Spiroid tips have been 

applied to Gulfstream II aircraft (Ostrower, 2008). Wing tip devices may not be 

appropriate for all aircraft as it may require an increase in structural weight to support the 

wing tip offsetting the fuel savings 

associated with the reduction in drag. This

was the case for the Airbus A-320, which at 

one point included winglets that were later 

removed because they did not provide the 

expected reduction in fuel consumption 

(Kingsley-Jones, 2006). Winglet devices 

that are better integrated into the wing 

design may be more beneficial. Spiroid 

winglets may offer more benefit but 

additional study is required to validate 

this technology.

Some of these technologies such as drag 

reducing films and multi layer panels are 

only now being demonstrated and need 

further development before they are 

commercially viable. There are no issues 

regarding the airworthiness of wing tip 

technologies, compared with other drag 

reduction technologies which require 

additional research.

In addition to these existing technologies, Boeing, Airbus and NASA, along with several 

university research programs, are developing a blended wing body (BWB) design (see 

Figure 3.17). This approach will significantly improve fuel efficiency as the whole aircraft 

contributes to the generation of lift, not just the wings as in the current designs. This 

design has been successfully demonstrated on smaller aircraft designs. Additional 

research is needed to scale up the design to larger aircraft. This BWB approach may 

reduce fuel consumption and greenhouse gas emissions by 20 to 40 percent while also 

reducing noise below current stage 4 standards (Morris, 2009; Warwick, 2007; ADL, 2000;

NASA, 1997). BWB aircraft are most attractive for larger applications, e.g., 250-1,000 

Figure 3.16 Spiroid Wing Tip

Figure 3.17 Blended Wing
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passengers with a range of over 7,000 miles (IPCC, 1999; NASA, 1997), but smaller 

variations of the aircraft also are possible. Initially these aircraft will probably provide 

services to large and distant urban centers that are associated with dense air traffic, such 

as between New York and London or Los Angeles and Tokyo. Because of the unusual 

shape of these aircraft, changes in infrastructure will be required to accommodate these 

aircraft (ADL, 2000).

Magnitude and Timing of GHG Reduction

The application of drag-reducing surface films is anticipated to decrease fuel usage by up 

to 1.6 percent, while multilayer panels used to reduce surface friction across the wing are 

expected to reduce fuel consumption and emissions between 6 to 10 percent. Use of wing 

tip devices can reduce fuel use by 1.7 to 2 percent for blended winglets (Morris, 2009, 

Reneaux, 2004) and up to 10 percent for spiroid winglets applied to smaller aircraft 

(Ostrower, 2008). Additional testing is being implemented for larger aircraft to quantify 

fuel consumption improvements associated with spiroid winglets.

Cost-Effectiveness

As mentioned earlier, the high cost of fuel is anticipated to drive the development and 

application of these technologies, as they will reduce operating costs, although the costeffectiveness of each technology may vary. For example, wing tip retrofit kits cost 

approximately $1 million to install, which would require less than six years to break even 

based on a fuel cost of $3.33 per gallon. The payback period for other technologies that 

have yet to be commercialized is uncertain, as cost data are not readily available. Blended 

wing bodies are anticipated to entail a considerable price premium of $30 to $60 million 

per aircraft, including development costs.

Cobenefits

Since these devices primarily improve efficiency at high speeds (i.e., high-altitude 

operation), any benefits in terms of pollutant reduction are not expected to be significant.

Feasibility

Wing tip devices are commercially available and require little assistance from the policymakers to promote their use. Accelerated adoption of wing tip devices may be 

encouraged through voluntary programs such as the EPA’s SmartWay Program. Grooved 

adhesives and multi layer panels are likely to be less viable than other technologies 

presented in this section, due either to short lifetime (adhesives) or uncertain benefits 

(panels).

Tests of wing design changes that reduce friction through laminar flow have been 

encouraging, but at this time these designs have yet to be incorporated into commercially 

available aircraft. Similarly, BWB aircraft have performed well in model tests 
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implemented by NASA, but significant further development is required before this 

aircraft design is ready for commercialization.

With regard to the BWB aircraft, the large capital investments required to develop the 

aircraft design and retool manufacturing operations to be able to construct the aircraft is a 

significant factor for the introduction of this new aircraft. Additionally, airports where 

these aircraft visit will need to modify passenger and cargo loading infrastructure to 

service these unusually shaped aircraft (ADL, 2000). Policies and/or incentives may be 

required (such as agreements to modify airports to accommodate new aircraft designs) in 

order to minimize financial risk for the manufacturers.

Fleet-wide Aircraft Technology Improvement

On a fleet-wide basis, both aircraft engine and airframe technology improvements could 

potentially increase efficiency by 1.4-2.3% annually between 2015–2035 relative to 2015 as 

the base year, according to goals outlined in the National Aeronautics Research and 

Development Plan developed by the National Science and Technology Council (NSTC 

2007). 

New Tehcnology Initiative for Civil Aviation

FAA Continuous Lower Energy, Emissions and Noise (CLEEN) Program

In 2009, FAA initiated the CLEEN program to mature and demonstrate engine and 

airframe technologies by 2015 that will reduce fuel consumption, GHG emissions and 

noise of current aircraft. CLEEN incorporates a 1:1 cost share with industry and is 

targeting technologies for use on civil subsonic jet aircraft that could reduce fuel burn by 

33%, NOx emissions by 60% (relative to CAEP 6 standards) and noise by 32 EPNdB 

cumulative (relative to Stage 4 standards). CLEEN also strives to advance alternative fuel 

development and qualification for aviation use. The FAA is coordinating technology 

development efforts under CLEEN with stakeholders in NASA and the Air Force 

Research Laboratory. Contracts will be awarded in early 2010. 
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 3.8 Vehicle Air Conditioning System Measures

Overview

Mobile air conditioning (MAC) systems 

contribute to GHG emissions in two 

ways. First, the use of air conditioning 

increases engine loads and, accordingly, 

exhaust CO2 emissions. MAC 

compressor engine loads can be greater 

than the power required to move a 

typical sedan at 35 mph (Farrington and 

Rugh, 2000). In addition, the current 

automotive refrigerant, HFC-134a, is a 

greenhouse gas with a GWP of 1,300 

when released into the atmosphere.65

Refrigerant emissions are unique in that, 

in large part, they are not dependent on 

how much a vehicle is driven or how 

efficient it is. Due to the sheer number 

of units, refrigerant emissions from LDV 

MAC systems are estimated to account for 80 percent of refrigerant emissions from all 

transportation modes, with the remaining 20 percent split between HDVs (4 percent), 

refrigerated railcars (7 percent), and refrigerated commercial marine containers 

(9 percent).

 It 

is estimated that about 20 percent of the 

automotive refrigerant in use is released 

into the atmosphere annually (U.S. EPA, 

2007d). Releases are caused by vehicle 

system leaks, leaks during servicing, and 

releases during recycling and disposal at 

vehicle end of life (EOL). It is estimated 

that 60 percent of MAC refrigerant 

releases are at EOL and servicing, while 

40 percent are from in-use system leaks

(Bateman, 2005).

66

 

65One hundred-year potential (UNFCCC, 1995).

In addition, of new LDVs sold in the U.S., 99 percent are equipped with air 

66U.S. EPA (2009), Table 2-15.

Vehicle Air Conditioning Systems

GHG Reduction Potential:

• Mobile air conditioning systems account for 3.5% 

of U.S. transportation GHG emissions (U.S. EPA, 

2009d).

• Banning “do-it-yourself” refrigerant refills in 

California was estimated to reduce that State’s 

mobile air conditioner emissions by 66%. (CARB, 

no date).

• Changing refrigerant types could reduce mobile 

air conditioning emissions by 91.3 to 99.9% 

depending on refrigerant type and mechanical 

efficiency (U.S. EPA, 2007b). 

Key Cobenefits and Impacts: Negative

• Can ban could affect low-income do-it-yourselfers; 

change in standards would require industry 

retooling

Feasibility: Moderate

• Precedent established

Key Policy Options:

• Federal action to phase out existing refrigerants

• Support for industry/government partnerships to 

develop new systems standards

• Modify vehicle certification test procedures to 

reflect improvements in accessory efficiency
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conditioning, and, as a result, nearly all in-use LDVs are estimated to have a MAC system

(Atkinson, 2007). For these reasons the following section focuses on LDV refrigerant 

control and reduction options, although some of these strategies will have applicability for 

other modes.

Legislation controls the safety characteristics of refrigerants, certification of service 

professionals, and service and EOL refrigerant recapture. Currently, professional service 

stations must use certified personnel, attempt to recover all refrigerant for recycling, and 

must initiate leak repairs. These requirements do not apply if the vehicle owner performs 

the work, however. Additional control initiatives are promoted by programs such as the 

Improved Mobile Air Conditioning (IMAC), which is designed to address all aspects of 

lifetime MAC performance. IMAC participants include the U.S. EPA, vehicle 

manufacturers and suppliers, and air conditioning component manufacturers. Their 

findings are guiding EPA in future MAC-related rulemaking, and manufacturers in the 

technologies they pursue (U.S. EPA, 2007d).

There are three approaches to reducing GHG emissions associated with MAC system 

operation:

1. Reduce the leakage of the refrigerant to the atmosphere;

2. Reduce the GWP of the refrigerant itself; and

3. Reduce the engine load (and concomitant CO2 emissions) associated with running the 

air conditioning system.

One way to reduce refrigerant leaks is to simply reduce the amount of refrigerant in the 

system itself. Increases in MAC system efficiencies over time have resulted in a decrease 

in average charge volumes. Currently, the average vehicle charge size for a light-duty 

vehicle is 22.3 ounces (SAE, 2008). Reducing charge size limits the releases that can take 

place from in-use, service, and EOL leakage. Nevertheless, new air conditioning systems 

will continue to leak a small amount of refrigerant. The many connections among system 

components and slow seepage through hoses mean that some leakage is inevitable, 

estimated to be approximately 8–18 grams/year for current LDVs (Sciance, 2005). This 

leakage rate represents between 1 and 3 percent of a typical new vehicle system charge, so 

such losses are not likely to be noticed and repaired by vehicle operators.

System designs for new vehicles are continuously being improved to reduce the leakage 

rates of crimps, fittings, hoses, compressors, and other MAC system components, with 

many of these improvements based on IMAC findings and guidelines. As MAC systems 

age, leaks become more severe, but a certain amount of refrigerant can be leaked before 

degradation in performance is noticed. For this reason, it may be beneficial to implement 

a method of monitoring MAC system leakage. Monitoring could include a professional 

system check, for example during a vehicle’s regular Inspection and Maintenance (I/M) or 

safety test. On-board diagnostic-type equipment also could be added to vehicles to 

monitor system leaks in order to alert the driver to a leak in a manner similar to the check 

engine light on today’s vehicles. Both of these methods may offer long-term benefits, but 

are likely to require additional regulations and incurred costs.
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Another significant source of refrigerant leakage is MAC system servicing. Service leaks 

occur as a result of the procedures followed before, during, and after repairs. As MAC 

systems age, refrigerant quantity decreases and system performance degrades, prompting 

the operator to initiate a repair, either following a do-it-yourself (DIY) procedure, or going 

to a service facility. Based on refrigerant sales figures, DIY servicing accounts for about 

31 percent of the refrigerant consumed each year, including new-vehicle factory fills (SAE, 

2008).

DIY methods typically only involve the addition of new refrigerant and do not involve an 

investigation or repair of leaks, and therefore result in greater releases of refrigerant 

compared to professional servicing. Additionally, DIY servicing often relies on a single, 

often inaccurate, pressure measurement to determine system charge levels, which can 

result in significant over or undercharging. While undercharging can cause compressor 

damage from oil starvation, overcharging can result in the system’s relief valve releasing 

excess refrigerant into the atmosphere. Once the system is charged, the refrigerant 

remaining in the fill can, known as the heel, is often released directly into the atmosphere. 

DIY recharges typically utilize 12-ounce cans which are estimated to have a wide ranging 

heel size depending on the procedure followed, ranging from 1.4 to 75 percent of the can’s 

original contents (SAE, 2008). CARB estimates that on average, 22 percent of DIY can 

contents are lost as heel from DIY servicing (CARB, 2008c). The difficulty handling 

refrigerant without significant leakage and accurately filling the system is part of the 

reason why the EPA requires a Section 609 certification for professional repair shops (U.S. 

EPA 2009d).

For the above reasons, the reduction of DIY MAC servicing leaks is receiving attention 

from regulatory bodies such as the California Air Resources Board as part of their AB-32 

initiatives. The most aggressive method of reduction would be to ban DIY refrigerant 

refill cans, although there could still be a small DIY market by allowing parts stores to 

rent or sell professional grade servicing equipment. A less extreme control method would 

focus on reducing can heel releases. By offering only improved self-sealing containers

and implementing a refill can deposit program, DIY servicers would be encouraged to 

return fill cans to have the heel quantity recycled or reused. (Refill cans with self sealing 

valves currently are available but cost around twice as much as nonsealing containers, and 

therefore comprise a small percentage of sales; CARB, 2008d). There also is the possibility 

of levying an environmental fee to the sale of DIY refrigerant cans in order to reduce their 

use and decrease wastefulness.

Service stations are required to investigate sources of leakage from MAC systems before 

recharging. When a leak is found, the system is typically evacuated, opened for repair, 

and then recharged. The evacuation is not complete, however, and some refrigerant is still 

released when the system is opened. Typical service recovery operations are believed to 

remove about 80 percent of remaining system refrigerant, with used refrigerant recovered 

for recycling. During recharge, overcharging is possible depending on the quality of the 

vacuum drawn, as there is no way of knowing how much refrigerant is left in the system. 

Service stations generally use 30-pound cans which will have approximately a 2 percent

heel at the time of disposal (SAE, 2008).
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Refrigerant release also takes place at vehicle EOL. When a vehicle is scrapped, all 

refrigerant will eventually be released into the atmosphere unless an attempt is made to 

recover it. While recovery is required in the U.S., compliance is not 100 percent and 

recovery methods do not remove all of the remaining refrigerant. EOL refrigerant 

recovery is less than 50 percent of the factory charge according to many estimates. 

Recovery challenges at vehicle EOL are similar to those encountered during servicing, 

except that conditions after scrappage make recovery more difficult and less effective. 

Vehicles are almost always outside where cooler ambient conditions limit drawdown 

efficiency, and in many cases the engine cannot be run to facilitate refrigerant recovery. 

Additionally, salvage and recycling operations are time-sensitive and extended efforts to 

recover refrigerant could have a negative effect on scrap operation profitability (U.S. EPA, 

2007d).

Both professional servicing and EOL recovery can utilize similar improvements to 

minimize refrigerant leakage. Changes such as heating the accumulator and increasing 

vacuum pressures can raise recovery levels substantially. These efforts, along with 

performing a second drawdown to the system, will increase refrigerant recovery but also 

will require additional time and equipment. In addition to more robust recovery 

processes, accurate charging can help reduce refrigerant losses and waste. Charging 

based on the mass of refrigerant added is the proper method, but is limited in accuracy by 

the quality of the preceding recovery.

Alternative refrigerants exist that have a lower GWP than HFC-134a. Of the refrigerants 

that could be substituted for HFC-134a within the next five years, HFC-1234yf is one of 

the leading candidates. HFC-1234yf has a GWP of 4 and can operate in systems similar to 

current designs, with the potential for direct replacement of HFC-134a in existing systems

(Yau, 2008). A second refrigerant under evaluation is HFC-152a, with a GWP of 124. This 

refrigerant is more toxic than either HFC-134a or HFC-1234yf, and is unlikely to be used in 

existing MAC systems, as protection from leakage into the passenger compartment would 

be required. The third refrigerant commonly considered is R-744, which consists of CO2. 

This refrigerant is primarily being considered in Europe where R-134a will by phased out 

starting in 2011. However, CO2 is less efficient than other refrigerants and its use would 

require a significant redesign of MAC components (Andersen, 2008). It also is unlikely 

that CO2 would be able to provide acceptable levels of cooling in hot or humid 

environments, and the lower efficiency of these systems means their associated fuel use 

would be much greater than systems using the other alternatives.

MAC systems are sized to have the capacity to keep the vehicle comfortable on a hot and 

sunny day. Reducing vehicle cabin temperatures will in turn reduce MAC system 

capacity requirements and energy demand. Solar reflective window glazing can reflect 

most infrared (IR) light, and still allow acceptable light transmission for visibility. 

Similarly, solar reflective paint can be used on the vehicle’s body in order to minimize the 

amount of heat absorbed from light, especially in the IR spectrum. Technologies to make 

darker colors (especially black) significantly more reflective do not yet exist, however

(CARB, 2009).
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Also, the addition of a secondary loop can make MAC systems more efficient. While 

conventional, or primary loop, MAC systems use refrigerant to directly chill the in-cabin 

heat exchanger, secondary loop systems employ a second fluid to chill the vehicle’s 

interior. This secondary fluid would likely be a water/antifreeze solution. There are three 

primary benefits to a secondary loop system. In the case of a system with a toxic 

refrigerant, secondary loop systems isolate passengers from the refrigerant, for example in 

the event of a rapid leak resulting from a collision. Additionally, these systems can be 

used to reduce power requirements by allowing the compressor to run primarily during 

deceleration or at efficient engine operating conditions. The antifreeze itself also could be 

used as a thermal sink to maintain low temperatures in the time between these operational 

modes. Another benefit is that these systems allow a reduction in the size of the primary 

refrigerant circuit and, as a result, a reduction in the required size of the refrigerant 

charge. It is estimated that the charge size can be reduced by about 50 percent for typical 

vehicles. Designs and prototypes for these systems exist, but the increased cost and 

complexity has kept them out of the market so far (U.S. EPA, 2007d).

Even without a secondary loop, changes can be made to component designs and 

compressor cycling to reduce engine loads. Improved compressor cycling and control, 

similar to that proposed for secondary loop systems, also could be employed to take 

advantage of efficiency gains possible during vehicle deceleration. It also is possible to 

allow the system to run at higher temperatures while in defrost mode. These changes, 

coupled with more efficient heat exchangers, would allow MAC systems to operate with 

reduced energy requirements. Such enhancements also would help hybrid vehicles 

maintain their efficiency advantages over conventional vehicles during MAC system 

operation: the continuous compressor load dramatically reduces the amount of engine-off 

time that hybrids can utilize, so reducing MAC power requirements can help hybrid 

vehicles operate even more efficiently.

Magnitude and Timing of GHG Reductions

EPA estimates that in 2007, mobile air conditioner (MAC) emissions accounted for 3.5 

percent of total transportation greenhouse gas emissions (U.S. EPA, 2009d). Because the 

Calilfornia Air Resources Board (CARB) has begun evaluating possible methods of 

reducing “do-it-yourself” (DIY) MAC servicing in California, much of the available data 

concerning DIY methods come from that State. DIY refrigerant emissions in California 

represent about 0.39 percent of GHG emissions from the California transportation sector. 

It is estimated that a ban of DIY refill cans would reduce refrigerant emissions by 

66 percent of this amount (CARB, 2008e). As an alternative to a can ban, adopting a 

deposit program to recycle can heels is estimated to reduce DIY emissions by about 

31 percent. The effect of environmental fees would be dependent on the amount of the 

fee, with an upper limit near that of the can ban. Because CARB anticipates that the above 

reductions could be achieved in two years, methods of DIY reductions are considered 

near-term options (CARB, no date).

The impact of a change in MAC refrigerant type depends primarily on the GWP of the 

refrigerant and the mechanical efficiency of the system. HFC-1234yf would reduce CO2-
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equivalent leakage emissions by 99.7 percent when HFC-134a is completely phased out. 

HFC-152 would reduce CO2 equivalent leakage emissions by 91.3 percent at full phaseout, 

and R-744 would reduce equivalent leakage emissions by 99.9 percent. Currently, a 

phaseout of HFC-134a is planned in the EU. This phaseout does not specify a replacement 

refrigerant, but rather that no new vehicle may be sold after 2011 containing refrigerant 

with a GWP over 150 (U.S. EPA, 2007d).

Little specific data exist comparing the engine load requirements of the alternative 

refrigerants. The available data suggest that HFC-1234yf would increase required engine 

load by 2.3 to 6 percent over HFC-134a. R-744, however, would increase engine load by 

70 percent to 100 percent over HFC-134a (Atkinson, 2008). The move to alternative 

refrigerants represents a long-term option for GHG reduction in the case of HFC-152a and 

R-744, as inuse vehicles are not likely to be retrofitted with this refrigerant. HFC-1234yf 

may be used with current vehicles with little to no modification, making it possible that 

GHG benefits for this refrigerant could be realized in the short term, if research shows that 

direct substitution into current R-134a systems is feasible.

In addition, according to a 2004 report, it was estimated that mechanical loads from LDV 

MAC system use increases fleetwide gasoline consumption by 7 billion gallons per year

(U.S. EPA, 2009d), or approximately 5 percent of total LDV consumption in 2010. 

Reduction of vehicle cooling loads can reduce these emissions. Solar reflective glazings 

and paints can reduce MAC fuel use by up to 30 percent (Rugh et al., 2006). If new 

vehicles adopted secondary loop systems, a reduction in fuel use also could be realized. It 

is estimated that a small car operating with a secondary loop system with HFC-152a 

refrigerant would have 21 percent lower MAC-related fuel usage than a similar vehicle 

with a conventional MAC system. The implementation of improved compressor cycling 

and control, coupled with more efficient compressors and heat exchangers, also could 

result in fuel consumption reductions of up to 30 percent.

67

Cost-Effectiveness

 It is expected that these 

technologies could enter the market in the next few years but would likely only affect new 

vehicles sold, resulting in these reductions only being realized in the medium term (U.S. 

EPA, 2007e).

Cost estimates for DIY MAC service restrictions are taken from California ARB estimates. 

The increased cost of a DIY “can ban” comes primarily from the increased cost of 

professional vehicle servicing. It is estimated that the cost increase, borne primarily by 

consumers that had previously performed DIY service on their own vehicles, would be 

$135 per tonne CO2e. Implementing a deposit program also would create additional costs 

for the consumer. It is estimated that this type of program to reduce heel emissions would 

cost between $9 and $19 per tonne CO2e, largely paid for by consumers in the form of 

more costly containers and shipping logistics. The cost-effectiveness of adding an 

 

67Personal communication with Dr. Stephen Andersen, U.S. EPA.
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environmental fee is highly dependent upon the fee level and whether the fees collected 

are applied to other GHG mitigation strategies. High fee levels could obtain reductions at 

similar cost-effectiveness to a can ban, but the cost-effectiveness of lower fees would 

depend strongly on the cost-effectiveness of the mitigation strategy to which the fees 

would be applied (CARB, 2008c).

Alternative refrigerant cost estimates are not frequently cited in the literature. Based on 

current estimates, refrigerant costs for HFC-1234yf will likely be the highest of the three 

alternatives discussed above, but the complete systems for this refrigerant will be very 

similar or interchangeable with current designs, so the system costs will likely be the 

lowest. HFC-1234yf systems may cost around $40 more per vehicle than current systems. 

HFC-152a will have greater system costs than HFC-1234yf due to toxicity mitigation, 

resulting in an estimated cost of around $50 more per vehicle. R-744 will have the highest 

costs due to requiring larger components that are much different than those in current use, 

resulting in systems that could cost $200 more than current systems.68

Secondary loop systems will add cost and complexity to vehicles. While specific cost 

estimates were not found in the literature, estimates imply that the cost increase would be 

low enough to easily be paid back by fuel savings in climates where air conditioning is 

used often (U.S. EPA, 2007d). Further cost and benefit analysis for secondary loop 

systems and other methods of reducing MAC system load are not performed due to lack 

of sufficient cost data in the literature.

 R-744 systems may 

be more feasible in heavy-duty applications where the physical size requirements and 

system cost can be more easily managed.

Cobenefits

To the extent that engine loads are reduced, reductions in exhaust criteria pollutants may 

result. It is estimated that MAC compressor use can increase emissions of NOx and carbon 

monoxide by 70 to 80 percent, and increase hydrocarbon emissions by 30 percent

(Farrington and Rugh, 2007). In addition, as system integrity and leak prevention become 

higher priorities, overall reliability increases, resulting in lower maintenance 

requirements. After the change from CFC-12 to HFC-134a, reliability increased due to the 

attention given to connections and leakage. The IMAC program is likely to result in 

similar improvements.

Feasibility

Of the methods identified to reduce MAC system leakage from DIY servicing, a can ban 

has the most significant barriers to implementation. Such a ban would completely 

eliminate the small can refrigerant business. However, the economic impact would be 

 

68Andersen (2008); Personal communication with Dr. Stephen Andersen, U.S. EPA.
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offset to some degree by an increase in the demand for professional MAC service. This 

type of legislation is meeting resistance in California because it may disproportionately 

target low-income citizens as these individuals make up a significant percentage of the 

DIY market. In addition, there would be an overall loss of utility as some people would 

choose to go without air conditioning. A refill deposit program would have fewer 

barriers to implementation, although it would likely be somewhat less effective. In this 

case, refrigerant suppliers would need to expand their delivery logistics to include the 

reclamation of used containers from retail outlets that receive their products.

Environmental fees on DIY small cans would have primarily legislative barriers to 

implementation (CARB, 2008c). California has chosen a refill can deposit program in 

which cans must be self sealing, and an $11 deposit is added to the purchase price of the 

can and refunded when the container is returned intact. According to CARB, this strategy 

has the most favorable cost/benefit ratio and avoids the issue of unfairly targeting lowerincome motorists. In addition, strategies that target servicing and EOL emissions also can 

impact reductions substantially in the near term, unlike those measures involving MAC 

system modifications which require time for new vehicles to penetrate the fleet.

The feasibility of alternative refrigerants is based on their safety, efficiency, and cost 

characteristics. While HFC-1234yf has a low GWP and its associated system is efficient, it 

does have a high material cost and is flammable. HFC-152a also is flammable, and it is 

more toxic than HFC-1234yf and HFC-134a. Currently, many States prohibit toxic or 

flammable refrigerants. However, renewed interest in these refrigerants is prompting a 

review of these requirements. The automotive community is working on designs to 

minimize the risks of toxicity and flammability, and the literature suggests a consensus 

that these problems can be overcome. R-744, or CO2, can be toxic to passengers in the case 

of a sudden system depressurization, and requires significant and expensive changes to 

the designs of MAC systems. This is because these systems will not use gas-to-liquid 

phase change as is typically the case in conventional refrigeration cycles. Because of this, 

R-744 systems are not as effective in warm climates and they are not as efficient, resulting 

in higher fuel consumption for cooling (Andersen, 2008). Finally, as discussed above, the 

CO2 emissions associated with MAC-related engine loads are comparable to, or even more 

significant than, the actual refrigerant impacts. As such, evaluations of alternative 

refrigerant options must include a careful evaluation of differential engine load impacts 

before settling on a preferred strategy.

The move to an alternative refrigerant could take place in a manner similar to the change 

from R-12 to HFC-134a that occurred in the early 1990s. It is estimated that the conversion 

to HFC-134a cost automotive manufacturers and the service industry $8.5 billion, while 

the next change to a new refrigerant could cost over $40 billion. It is important that this 

conversion is performed at least at the national-level, and possibly at the internationallevel in order to keep costs to industry reasonable. According to the literature, the choice 

of refrigerant does not appear to be driven by cost. Each refrigerant’s advantages and 

disadvantages are significant enough to outweigh cost differences among them. The EU 

set a date for HFC-134a phase out before there was agreement on which refrigerant would 

be the best alternative. While the EU assumes that a new refrigerant will have any 

remaining technical issues resolved by this time, determining the preferred refrigerant in 
Transportations Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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advance may facilitate integration of refrigerant production, MAC system manufacturing, 

and system servicing requirements, even if it requires a longer timeframe.

Adoption of alternative refrigerant systems has additional uncertainties that could have 

significant impacts on net GHG reduction potential. For instance, different refrigerant 

systems may have different baseline leak rates, possibly due to different system pressures 

and/or charge capacities. In addition, given the sensitivity of GHG emissions to ACinduced engine load (estimated to be between 2.5 and 7.5 percent of total vehicle energy 

consumption; IPCC, 2007 page 339), changes in compressor sizing and engine load from 

adoption of alternate systems could prove important as well.

Solar reflective paints and glazings are being developed and tested for longevity, 

appearance, and IR efficiency. Cost is another limit to feasibility. Secondary loop systems 

also encounter barriers because of their increased cost, weight, and complexity, but as 

small vehicle efficiency gains become more important, these barriers may become less 

significant. In addition, an industry-wide changeover to a toxic refrigerant could 

encourage the move to secondary loop systems for safety reasons, although they can make 

systems using any refrigerant more efficient.
Transportations Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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4.0 System Efficiency

Table of Contents

4.0 System Efficiency......................................................................................................................4-1

List of Tables....................................................................................................................................4-3

List of Figures...................................................................................................................................4-4

4.1 Summary ....................................................................................................................................4-5

Summary of Impacts........................................................................................................................4-7

Policy Implications........................................................................................................................4-10

Summary Evaluation......................................................................................................................4-11

Cobenefits and Implications for Other Key Transportation Goals and Objectives ...........................4-13

Induced Demand............................................................................................................................4-15

4.2 Highway Operations and Management ...............................................................................4-18

Traffic Management ......................................................................................................................4-18

Real-Time Traveler Information.....................................................................................................4-25

Bottleneck Relief...........................................................................................................................4-32

Reduced Speed Limits ...................................................................................................................4-36

4.3 Truck Operations and Management.....................................................................................4-41

Truck Idling Reduction ..................................................................................................................4-41

Increased Truck Size and Weight Limits........................................................................................4-45

Urban Consolidation Centers .........................................................................................................4-49

4.4 Freight Rail and Marine Operations.....................................................................................4-53

Rail Modal Diversion.....................................................................................................................4-54

Marine Modal Diversion................................................................................................................4-61

Rail and Intermodal Terminal Operations.......................................................................................4-64

Ports and Marine Operations..........................................................................................................4-68

4.5 Aviation Operations..................................................................................................................4-74

Description ....................................................................................................................................4-74

Magnitude and Timing of Greenhouse Gas Reductions ..................................................................4-77

Cost-Effectiveness.........................................................................................................................4-80

Feasibility......................................................................................................................................4-82
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4.6 Infrastructure Construction and Maintenance ....................................................................4-83

Construction Materials...................................................................................................................4-83

Other Transportation Agency Activities .........................................................................................4-86

4.7 References .................................................................................................................................4-90
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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List of Tables

Table 4.1: Combined System Efficiency Strategy Benefits (2030)................................................4-10

Table 4.2: System Efficiency Strategies Summary Evaluation .......................................................4-12

Table 4.3: Total Benefits from Improving the Nation’s Worst Traffic Bottlenecks (223 Locations)

.........................................................................................................................................4-35

Table 4.4: Emission Factors (grams per TEU-mile), Modeled East Coast Shipping Alternatives ...

.........................................................................................................................................4-60

Table 4.5: Airport Greenhouse Gas Emissions Inventories .........................................................4-79

Table 4.6: Aviation Operations Efficiency Improvements...........................................................4-80
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List of Figures

Figure 4.1: Example MPG/Speed Relationship for Light-Duty Gasoline Vehicles...................4-19

Figure 4.2: Parking Information System in Freiburg, Germany .................................................4-28

Figure 3.3: Emissions Benefits of Idle Reduction Technologies..................................................4-44

Figure 4.4: Long-Combination Vehicles .......................................................................................4-46

Figure 4.5: Range of Typical CO2 Efficiencies for Various Cargo Carriers, g CO2/tonne-km 4-62
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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 4.1 Summary

System efficiency encompasses a diverse set of strategies that are focused on ways to 

optimize the use of the transportation network by improving the efficiency of 

transportation operations. These strategies seek to improve the operation of the 

transportation system through reduced vehicle travel time, improved traffic flow, 

decreased idling, and other efficiency of operations—improvements that can also result in 

lower energy use and GHG emissions. System efficiency strategies discussed in this 

report include:

• Highway operations and management strategies, including Intelligent Transportation 

Systems (ITS) and other strategies that reduce congestion or otherwise keep vehicles 

moving at their most energy-efficient speeds (Section 4.2);

• Truck operations and management strategies that reduce the emissions per unit of 

goods moved by truck (Section 4.3);

• Improvements to the efficiency of rail and marine freight systems, including ports 

and intermodal terminals, that reduce energy use per unit of goods moved by these 

modes or shift freight movements from truck to those more efficient modes

(Section 4.4);

• Aviation operations practices, both at airports and en-route, that reduce fuel use and 

GHG emissions from aircraft (Section 4.5); and

• Improvements in materials and methods that reduce GHG emissions generated during 

the construction and maintenance of transportation infrastructure (Section 4.6).

These strategies are described in detail in the sidebar on p. 4-2. Various strategies that 

improve vehicle utilization (see sidebar on p. 4-12) may also be considered forms of 

improving system efficiency. For example, roadway operational improvements such as 

signal priority for transit vehicles can help buses travel faster and avoid congestion, 

making transit operations more efficient and encouraging travelers to shift to transit. 

Ridesharing and vanpooling programs can encourage more efficient utilization of vehicles 

and road space. Strategies that improve efficiency by affecting travelers’ behavior and 

increasing vehicle occupancies are discussed in Section 5.0, Reduce Carbon Intensive 

Travel Activity.
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System Efficiency Strategies

Highway Operations and Management

• Traffic Management – Technologies and practices to reduce congestion and smooth traffic flow 

through improved traffic operations and management, such as signal coordination, faster clearance 

of incidents, and freeway ramp metering.

• Real-Time Traveler Information – Provision of up-to-date information to travelers and truckers on 

traffic conditions, incidents, and expected delays; the availability of public transportation and other 

travel alternatives; weather conditions; road construction; and special events.

• Bottleneck Relief – Increased capacity at “bottlenecks” (specific points on the transportation 

network where demand exceeds capacity), such as interchanges, intersections, and lane drops.

• Reduced Speed Limits – Reduced speed limits on high speed facilities, including the InterState

system, other limited access highways, and possibly high speed rural major arterials, to no more 

than 55 or 60 mph.

Truck Operations and Management

• Truck Idle Reduction – Education, laws, and/or incentives to introduce technology (such as 

electrical hook-ups at truck stops or on-board auxiliary power supplies) to reduce long-duration 

idling of heavy vehicles.

• Truck Size and Weight Limits – Changes to Federal law to allow vehicles exceeding 80,000 pounds to 

operate on InterState highways; and/or to allow longer (53’) trailers or double or triple trailers in all 

States.

• Urban Consolidation Centers – Freight facilities where deliveries (retail, office, or residential) can be 

consolidated for subsequent delivery into the urban area in an appropriate vehicle with a high level 

of load utilization.

Freight Rail, Marine, and Aviation Operations

• Rail and Marine Modal Diversion – Infrastructure improvements to encourage shippers to shift 

freight traffic to modes that are more energy- and carbon-efficient (generally from trucking to rail or 

marine), through reductions in the time and cost of shipping or increased reliability by these modes; 

financial incentives or disincentives that encourage different shipping patterns; and other policy and 

regulatory actions.

• Rail and Intermodal Terminal Operations – Reducing or eliminating chokepoints in the rail 

intermodal system to eliminate existing rail traffic friction, increase rail throughput potential, 

decrease variability in travel time, and decrease overall travel time; thus reducing emissions 

associated with vehicle delay and low-speed operations.

• Ports and Marine Operations – Land-side and marine-side strategies to increase the energy 

efficiency of operations at ports and reduce GHG emissions, such as reducing truck idling and VMT 

within the terminal, rail service to inland distribution centers, and shore-side power for ships.

• Aviation Operations – Operational procedures to reduce delays and GHG emissions from aircraft, 

such as improvements in airport efficiency, direct routing of flights, reduced separation, and 

continuous descents.

Infrastructure Construction and Maintenance

• Construction Materials – Use of less energy-intensive construction materials by State and local 

highway departments and other transportation agencies, such as recycled material in cement and 

asphalt that is prepared at a lower temperature.

• Other Transportation Agency Activities – Other transportation agency operating practices to reduce 

GHG emissions, such as alternative fuel fleet and construction vehicles, energy efficient buildings, 

and work zone management to reduce traffic congestion.
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Summary of Impacts

Highway operations and management strategies include traffic management (signal 

coordination, ramp metering, faster clearance of incidents), real-time traveler information, 

and highway bottleneck relief. These strategies have an emission reduction effect by 

reducing congestion and smoothing traffic flow, thus reducing inefficient vehicle operation. 

However, the improved conditions they create also result in some amount of additional travel 

and thus additional emissions through a phenomenon known as induced demand (see section 

4.1.4 and Appendix A). Whether the emission-increasing effect of induced demand 

outweighs the emission reducing effect of congestion reduction and traffic smoothing 

depends on the amount of induced demand and on the particulars of the strategy. 

Quantifying the magnitude of induced travel demand and the impact of this extra traffic on 

travel speeds and traffic flow is particularly challenging, and further research is needed.

1

 An 

additional source of uncertainty relates to the vehicle technology or fuels used by future 

vehicles, which could further reduce any benefits from congestion reductions strategies.2

 

Because of these uncertainties, numerical estimates are not included for highway operations 

and management strategies in Volume 1 of this report, though outside estimates are included 

here in Volume 2 both in this summary section (directly below) and in the more detailed 

Section 4.2. The estimates presented in this section are taken from outside studies and should 

be considered illustrative. Despite these uncertainties, it is worth noting that congestion relief 

strategies yield significant cobenefits by reducing the time travelers spend on the road due to 

congestion and delay. Traffic management strategies are technologies and practices to 

reduce congestion and smooth traffic flow through improved traffic operations and 

management, such as signal coordination, faster clearance of incidents, and freeway ramp 

metering. Outside studies have incorporated simplified assumptions regarding induced 

demand to estimate the GHG impacts of highway operations and management strategies. 

Analysis for the Moving Cooler study (Cambridge Systematics, 2009) suggests that widespread 

deployment of traffic management strategies would reduce transportation GHG emissions by

a modest3

 1 U.S. DOT is designing research to provide a better understanding of the role of induced demand 

in offsetting GHG improvements from congestion reduction strategies.

amount, 0.5 percent or less in 2030. The study found that in 2050, there would still 

be net emission reductions.

2 If vehicle technology evolves to rely heavily on electric-drivetrain technology (such as hybrids, batteryelectrics, or fuel-cell vehicles), the energy and GHG benefits of congestion reduction will be greatly 

reduced or disappear altogether. Because the efficiency of these vehicles typically is not reduced at 

lower speeds, their emission levels stay relatively constant even under congested conditions. In 

addition, for any highway operations strategy, future improvements in fuel efficiency or reductions in 

the carbon content of fuels beyond the baseline assumed in this report will lead to lower absolute 

benefits from any of these strategies.

3 In this report, when referring to individual strategy effects, “modest” refers to reductions in CO2e 

emissions of less than 0.5 percent of total transportation emissions, or 12 mmt in 2030; “moderate”

to reductions in the range of 0.5 to 2.5 percent of total transportation emissions, or 12 to 60 mmt in 

(Footnote continued on next page...)
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Bottleneck Relief strategies increase capacity at “bottlenecks” (specific points on the 

transportation network where demand exceeds capacity), such as interchanges, 

intersections, and lane drops. The Moving Cooler study examined GHG reduction from 

projects to reduce congestion at the top 200 bottlenecks, suggesting a potential to reduce GHG 

emissions by 0.3 percent in 2030, assuming that these projects were fully financed by increased 

user fees, which would moderately suppress travel demand. However, the analysis also 

indicated that any short- to mid-term gains of bottleneck relief projects would be negated over 

the long term, and that there would be no net benefit over the 2010 to 2050 time period. 

Emissions would in fact be an estimated 0.6% higher in 2050. It is also important to note that 

this analysis did not include estimates of GHG emissions from construction activities or 

additional delay during construction. 

Real-Time Traveler Information strategies provide of up-to-date information to travelers and 

truckers on traffic conditions, incidents, and expected delays; the availability of public 

transportation and other travel alternatives; weather conditions; road construction; and 

special events. Moving Cooler found that these strategies would result in emission reductions 

of 0.2% or less in 2030, with continued emission reductions in 2050. Reducing speed limits

from 70 or 65 mph to 60 or 55 mph could lead to a moderate reduction in transportation GHG 

emissions—between 1.6 to 2.4 percent in 2030, or 30 to 40 mmt CO2e. Achieving these benefits 

assumes adequate enforcement of the reduced speed limits. Reducing speed limits will not 

have induced demand effects and may, in fact, lead to slight decreases in highway travel due 

to longer travel times.

Truck operations and management strategies will provide modest GHG benefits—up to 

6 mmt CO2e, or 0.2 percent of transportation emissions in 2030. Of these strategies, truck 

idle reduction has the greatest potential to reduce GHG emissions, while also reducing 

criteria pollutants and saving vehicle operators money. Increasing truck size and weight 

limits has modest potential to increase the efficiency of truck transport; however 

increasing the loads that can be carried by trucks also could encourage shippers to divert 

goods from rail to truck – thereby increasing GHG emissions. Therefore increases in size 

and weight limits would need to be applied only in very specific markets where trucks 

and rail do not compete. Urban consolidation centers (which consolidate goods for more 

efficient distribution in cities) have been applied experimentally in Europe and Japan but 

not the U.S.; their viability in the U.S. is unproven but overall GHG benefits are likely to 

be small (less than 1 mmt CO2e).

Improvements to rail and marine modes, such as capital investment to relieve 

chokepoints in the network, may have two distinct effects on GHG emissions. The first is 

improving the energy efficiency for freight already moving by these modes. The second is 

encouraging freight to shift from truck to more efficient rail or marine modes. Neither 

effect has been reliably quantified, but the net impact of mode shifting is expected to be 

modest—less than 10 mmt CO2e in 2030, or 0.4 percent of transportation emissions. Mode 

shift impacts could in theory be significant, since it is much more efficient to move a ton of 

goods a mile by rail, ship, or barge than by truck—about three to four times more efficient. 

 

2030; and “significant” to reductions of greater than 2.5 percent of transportation emissions or 

60 mmt in 2030.
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In practice, however, the potential for mode-shifting appears limited. Due to handling 

costs, rail and marine are generally only competitive for long-haul movements (at least 

500 to 1,000 miles), and for relatively low-value goods for which speed and reliability are 

less of a concern. Furthermore, most of the energy efficiency benefits are lost for shorter 

movements due to the need to transfer goods to truck at one or both ends of the journey.

Operational improvements in the aviation sector show moderate potential for GHG 

reductions. Air traffic modernization measures that are underway or planned through the 

Federal Aviation Administration’s NextGen program (for example, allowing airplanes to 

fly on more direct routes) could potentially reduce annual GHG emissions from aircraft by

2.5 to 6 percent through 2035. Additional benefits of up to 10 mmt CO2e annually could 

potentially be achieved by measures to reduce aircraft delay at airports, and 2-3 mmt CO2e 

annually through more efficient or alternative fuel airport equipment and operations. 

Improvements may also make air travel faster and less expensive, representing a benefit to 

travelers. Overall demand for air travel is forecast to increase, offsetting at least some of 

the GHG reduction benefits. The magnitude of this offset has not been estimated.

Transportation infrastructure construction and maintenance practices also show 

potential for modest to moderate reductions in GHG emissions. Perhaps the most 

significant currently available strategy is the use of fly ash or other recycled materials in 

cement, a proven technology that has the potential to reduce GHG by an additional 

15 mmt CO2e annually. Use of warm- and cold-mix asphalt has the potential to reduce 

GHG by about 3 mmt CO2e annually, but research on the application of these technologies 

in the U.S. is still in progress. Other actions by transportation agencies also have the 

potential to contribute modestly to GHG reductions. These include the use of alternative 

fuels in transportation agency vehicles and equipment, reduced idling of construction 

equipment, and increased energy efficiency in transportation agency buildings. These 

actions are estimated to provide benefits of about 2-3 mmt CO2e per year.

Cumulative Benefits

The effects of the individual strategies presented in this report are generally independent 

of each other, and therefore can be added together to provide a rough estimate of 

cumulative savings from these strategies. Benefits are shown (see Table 4.1) separately for 

highway modes and for non-highway modes (air, rail, and marine). Highway strategies 

include trucks and construction practices, as well as general roadway management and 

operations. Combined benefits of all strategies are estimated to range from 2.9 to 

5.7 percent of total transportation emissions in 2030, with the majority of the benefits from 

the highway sectors. Separate benefits estimates for 2050 are not presented, as these

strategies can generally be fully implemented by 2030.
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Table 4.1 Combined System Efficiency Strategy Benefits (2030)

GHG Reduction from 

Baseline, mmt CO2e

Percent of All 

Transportation Emissions

Year Low High Low High

Highway and Truck Strategies 44 78 2.0% 3.6%

Air, Rail, and Marine Strategies 12 37 0.6% 1.7%

All Strategies 63 131 2.9% 6.1%

Policy Implications

The level of implementation of some of these strategies is constrained by funding. 

Highway improvements, in particular, are traditionally funded through the Federal-aid 

process as well as by State and local governments. Broader deployment of traffic 

management and information has few barriers aside from funding availability; these 

strategies can generally be implemented at modest cost compared to traditional capacity 

expansion strategies, and these improvements are generally not controversial. Bottleneck 

relief projects also can be accelerated through funding but are more likely to raise 

community or environmental concerns in some locations. Federal funding also could 

accelerate aviation avionics equipage and rail infrastructure improvements beyond 

current levels of private sector investment; this would require a significantly greater level 

of Federal involvement compared to current practice. Funding for system efficiency 

initiatives could be provided through existing or new programs in the form of broad 

support for the general types of projects that reduce GHG, or awarded on a performance 

basis for specific projects that meet demonstrated levels of GHG reduction costeffectiveness.

Other strategies may require regulatory changes for implementation. Speed limit 

reductions could be implemented through a uniform national speed limit, combined with 

requirements or incentives for strict enforcement by States. Federal implementation of a 

uniform anti-idling law, combined with incentives to defray up-front costs for vehicle 

owners, would encourage adoption of this technology for trucks. Requirements or 

voluntary agreements also could be developed with railroads and port operators to 

implement idling reduction and other GHG reduction practices in rail yards, ports, and 

intermodal terminals.

Research and development activities could advance other strategies that rely on yet 

unproven technologies. Examples of efficiency strategies that require further R&D 

include advancement of warm-mix asphalt and demonstration of the viability of urban 
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consolidation centers. Further improvements to aviation system efficiency require both 

research as well as funding for deployment.

Finally, planning requirements and/or technical assistance can support some strategies. 

For example, State and metropolitan transportation agencies could be required to assess 

the GHG emission impacts of transportation plans or projects and to identify and 

incorporate GHG reduction strategies in their transportation plans, including system 

efficiency improvements. GHG reduction practices also could be required in construction 

and maintenance activities. Ports and airports could be required to conduct GHG 

inventories and/or develop reduction plans. The U.S. DOT could provide technical 

assistance (e.g., inventory and assessment tools, best practices guidance), either to support 

these requirements or as a stand-alone measure to encourage transportation agencies to 

address GHG emissions. Planning and regulatory strategies are discussed in more detail 

in Section 8.0.

Summary Evaluation

Table 4.2 summarizes the strategies discussed in this section and presents an assessment 

of each strategy’s effectiveness, cost-effectiveness, and cobenefits, as well as a summary of 

key Federal policy initiatives that would be needed to implement the strategy beyond 

current levels. The factors presented in the table are rated according to the following 

metrics:

• Effectiveness: Low = < 0.5 percent of transportation GHG emissions in 2030 (12 mmt

CO2e; Moderate = 0.5-2.5 percent (12-60 mmt CO2e); High = > 2.5 percent (60 mmt CO2e).

• Costs: Cost is measured as “net included cost” per metric ton (tonne) of CO2e reduced. A 

positive number represents increased costs, while a negative number represents a net 

savings. High Cost = > $200 per tonne CO2e reduced; Moderate Cost = $20-$200 CO2e 

reduced; Low Cost = < $20/tonne CO2e reduced; Net Savings = < $0/tonne CO2e 

reduced. Costs for system efficiency strategies are presented in two ways:

− Direct costs (implementation costs only) per tonne of CO2e reduced; and

− “Net included costs” (which includes both direct costs and any reported cost 

savings, usually vehicle operating costs). A discussion of how costs are calculated 

and presented in this report is presented in Appendix A.

• Cobenefits: Plus (+) = significant positive cobenefits; minus (–) = significant negative 

cobenefits; plus/minus (+/-) = both significant positive and negative cobenefits; zero (0) = 

modest or negligible cobenefits.
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Table 4.2 System Efficiency Strategies

Summary Evaluation

Strategy

GHG 

Reduction 

(2030)a

Direct Cost 

per Tonne

Net 

Included 

Cost per 

Tonne

Cobenefits Key Federal Policy Options

4.2 Highway Operations and Management

4.2.1 Traffic Management Low

<0.1-0.5%

Moderate –

High

Net 

Savings to 

High

+ Funding for project implementation, 

technical support, and institutional 

coordination

4.2.2 Real-Time Traveler 

Information 

Low

<0.1%

High Low to 

High

+

4.2.3 Bottleneck Relief Low

<0.1-0.3% b

N/A N/A +/- Project funding

4.2.4 Reduced Speed 

Limits

Moderate

1.1-1.8%

Low Net 

Savings

- Federal speed limit policy, funding 

incentives for enforcement

4.3 Truck Operations and Management

4.3.1 Truck Idling 

Reduction

Low

0.1-0.2%

Moderate Net 

Savings

+ Federal anti-idling law

4.3.2 Truck Size and 

Weight Limits

Low

<0.1%

Low Net 

Savings

0 Revise Federal policy re: truck size and 

weight limits

4.3.3 Urban 

Consolidation 

Centers

Low

<0.1%

Moderate Net 

Savings

+ Feasibility studies/demonstration projects

4.4 Freight Rail and Marine Operations

4.4.1 Freight Modal 

Diversion

Low

<0.1-0.2%

High Net 

Savings –

Moderate

0 Funding for rail and intermodal capacity 

improvements

4.4.2 Marine Modal 

Diversion

Low

<0.1%

High High 0 Capital investment in inland waterways

Subsidies for short-sea shipping

4.4.3 Rail and Intermodal 

Terminal 

Operations

Low

<0.1%

Unknown Unknown + Funding for rail and intermodal capacity 

improvements

4.4.4 Ports and Marine 

Operations

Low

<0.1%

Unknown Unknown + Tools to assist in GHG assessment; 

regulations or voluntary partnerships to 

promote GHG reduction practices

4.5 Air Traffic Operations

Combined NAS strategies Moderate

2.5-6%c

Unknown Unknown + Continued funding and institutional 

support for NextGen program

Requirements or incentives for GHG 

reductions

4.6 Infrastructure Construction and Maintenance

4.6.1 Construction 

Materials 

Moderate

0.7%

Unknown Unknown 0 Continue R&D on warm-mix asphalt and 

recycled materials

Construction material requirements

4.6.2 Other 

Transportation 

Agency Activities

Low

0.1%

Unknown Unknown 0 Model practices and assessment tools; 

regulations to reduce GHG in 

construction; funding incentives for GHG 

reduction

Combined Benefits 2.9-6.1%

a The estimated benefits of traffic management, traveler information, and bottleneck relief all reflect 

offsetting effects of induced demand. Increased demand resulting from improved travel 

conditions is not reflected in other strategies where it may be significant, such as aviation 

operations.
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b Does not include emissions from construction activities or from additional delay during 

construction.

c Through 2035. Does not account for induced travel demand, which would reduce emissions 

benefits. 

Cobenefits and Implications for Other Key Transportation Goals and 

Objectives

System efficiency strategies have a number of common cobenefits, implications for DOT 

goals and objectives, and implications for infrastructure finance, as described below. 

Some strategies also have unique cobenefits and impacts that are described in their 

respective subsections. They can be evaluated against the five strategic goals of the U.S. 

DOT (identified in the U.S. DOT’s Strategic Plan), as well as other key objectives 

established for transportation by the Obama Administration:

• Safety – Strategies that reduce congestion may increase safety by reducing the number 

and/or severity of crashes. There is a documented link between speed differentials 

(which result from increased congestion) and greater frequency of crashes (TRB, 1984); 

however, crashes are likely to be less severe under congested conditions because they 

occur at lower speeds. Evidence of the net effect of congestion reduction on the social 

costs of crashes is inconclusive.

• Reduced Congestion/Increased Mobility – Strategies that reduce roadway congestion 

or make travel by other passenger modes quicker will generally improve mobility as 

will better traveler information. Speed limit reductions will decrease mobility by 

increasing travel times. Other modal and intermodal strategies (rail, ports, intermodal 

terminals, aviation) will support the DOT’s objective of “reducing impediments to the 

efficient movement of freight over the transportation network” and meeting new and 

growing demands for freight transportation.

• Global Connectivity – System efficiency strategies focused on ports, border crossings, 

and intermodal terminals (or infrastructure in the vicinity of these facilities) would 

improve global connectivity by enhancing the speed and reliability of connections 

between modes and across national borders. Information technologies also can 

streamline the movement of goods and people across borders.

• Environmental Stewardship – Most efficiency strategies would result in reductions in 

other air pollutants as well as GHG emissions as a result of burning less fuel. These 

pollutants include ozone precursors (volatile organic compounds and oxides of 

nitrogen), particulate matter, carbon monoxide, sulfur dioxide, and air toxics. While 

reductions in air pollutant emissions will often correspond to reductions in energy 

consumption and GHG emissions, impacts will not always be in direct proportion; 

emissions may be higher under acceleration and at particularly low or high speeds. 

Freight modal shifts also can result in different emissions impacts depending upon the 

mode, vehicle technology, and operating conditions. Furthermore, specific strategies 
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may provide air quality benefits disproportionate to total emission reductions if the 

reductions are concentrated in areas of high population exposure. Strategies that 

involve infrastructure construction, especially those pertaining to highway and rail 

bottleneck relief, may have localized environmental and community impacts that are 

either positive or negative.

• Security – System efficiency strategies may benefit national security by reducing 

dependence upon foreign oil. The reduction in oil use will be in direct proportion to 

GHG reductions for each strategy. In addition, strategies that reduce roadway 

congestion would improve the response times for emergency services (police, fire, and 

medical), thereby supporting security. Traveler information technologies will improve 

the ability to respond to emergencies, including disruptions from natural disasters, 

terrorists, and criminal attacks. Some of the technologies used for traffic management, 

such as observation cameras, may benefit security by providing a means of observing 

roadways and providing information for law enforcement officials to aid them in 

responding to crimes.

• Livability – The freight- and aviation-oriented strategies may support livability in 

neighborhoods adjacent to ports, rail yards, airports, and intermodal terminals by 

reducing truck operations on local roadways and by reducing noise and emissions 

from trucks, ships, locomotives, aircraft, and airport equipment. Major capital 

investment projects, such as bottleneck relief or rail infrastructure investment, could 

potentially have negative localized impacts if takings are required. Otherwise, most of 

these strategies are not anticipated to significantly affect livability.

• Economic Vitality – To the extent that these strategies reduce congestion or reduce 

shipping costs, they will generally improve economic vitality by reducing business 

and consumer costs and increasing business productivity. For example, research on 

the trucking industry has shown that shippers and carriers value transit time in the 

range of $25 to $200 per hour, depending on the product being carried. The cost of 

unexpected delay can add another 20 percent to 250 percent (FHWA, 2005).

Effects on Infrastructure Funding

All system efficiency strategies will result in varying demands on infrastructure funding 

sources depending upon their costs. Regulatory strategies such as anti-idling, speed 

limits, and truck size and weight restrictions are inexpensive to implement; enforcement is 

the primary cost. Technology for traffic operations, management, and traveler 

information has modest to moderate costs, while infrastructure construction generally 

entails high capital costs (in the tens to hundreds of millions per project).

Improvements in highway and truck system efficiency will lead to proportionate 

reductions in motor fuel sales, and therefore reduced revenue for transportation programs

under the current finance structure. The Federal Highway Trust Fund was established in 

1957 as a dedicated, user-funded source of revenue for the United States highway system,

and is the source of revenue for the Federal-aid Highway Program. Net receipts in 
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FY 2007 were $34.3 billion to the Highway Account and $5.0 billion to the Mass Transit 

Account (FHWA, 2008f).

The on-road system efficiency strategies analyzed in this report will reduce total Federal

Highway Trust Fund revenues in rough proportion to fuel savings and GHG reductions. 

Under the 2030 combined scenario described above, the net impact on revenues could 

range from about $0.9 to $1.5 billion annually.4

This analysis describes potential impacts to Federal highway revenues under the current 

finance scenario. Funding shortfalls could be mitigated or avoided in the future through 

shifts in tax structures or through alternative infrastructure funding mechanisms.

 Strategies focused on heavy-duty vehicles 

will have a somewhat greater relative impact than those focused on light-duty vehicles 

because of the higher tax rate on diesel fuel (24.4 vs. 18.4 cents per gallon). 

Induced Demand

An important consideration in estimating the greenhouse gas and other benefits of system 

efficiency and travel activity GHG reduction strategies is “induced demand,” where

improvements in travel conditions lead to increases in travel that may offset the GHG 

reduction benefits of the improvements. The magnitude of the induced demand from 

reduced travel times or travel costs is a source of considerable uncertainty and further 

research is needed.5

Induced demand has the potential to affect GHG emissions, fuel savings, and air pollution 

benefits of the following system efficiency strategies in particular:

 While induced demand does offset some of the GHG benefits of 

certain strategies, it also reflects an increase in mobility due to the lower cost of travel and 

in this way reflects a benefit to society. A more detailed discussion of how induced 

demand works is included in Appendix A. Induced demand effects are reflected in most 

of the GHG reduction and cost-effectiveness estimates presented in this report for traffic 

management, traveler information, and bottleneck relief strategies, so the benefits of these 

strategies are lower than they would be without consideration of induced demand. 

Induced demand effects are also reflected in a number of the strategies for reducing 

carbon-intensive travel activity, as discussed in Section 5.0. A related concept, the 

“rebound effect” (increased travel as a result of lower fuel costs due to more fuel-efficient 

vehicles), affects the vehicle fuel efficiency strategies as discussed in Section 3.0.

 

4 Based on a total fuel savings of 4.6 to 7.2 million gallons and a tax rate of 20.3 cents per gallon 

(gasoline at 18.4 cents weighted 69 percent, and diesel at 24.4 cents weighted 31 percent).

5 U.S. DOT is designing research to provide a better understanding of the role of induced demand 

in offsetting GHG improvements from congestion reduction strategies.
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• Traveler information, traffic management, and bottleneck relief – Any improvement 

in highway capacity, reduction in congestion, or reduction in travel times should lead 

to some induced demand. This induced travel generates GHG emissions through 

additional VMT; this additional traffic also reduces the initial improvements in travel 

speed, traffic flow, and energy consumption, further reducing GHG benefits. The 

effects will increase over time as people adapt their travel in response to 

transportation system changes. Collectively, these factors will at least partially and 

perhaps completely offset the initial GHG benefits of these strategies. Estimating the 

net effect of these factors is outside the scope of this report. However, GHG benefits 

will still be realized through strategies that make traffic flow more efficiently (e.g., 

fewer stops and starts or hard accelerations) without decreasing overall travel times. 

Moreover, use of “congestion pricing” in connection with bottleneck relief strategies 

may limit offsets from induced demand.

• Freight–specific strategies (ports and intermodal terminals, marine, rail, truck size,

and weight limits) – Improvements that reduce costs for shippers also should reduce 

costs to consumers, leading to some additional demand for goods. The magnitude of 

the offset will depend upon the relative contribution of transportation costs to the 

overall costs of the good, as well as the extent to which cost reductions are passed 

along to consumers (instead of supporting greater profits). For example, if the 

consumer price elasticity of a good is -1.0, but transportation costs represent only 

5 percent of the good’s total costs, then a 10 percent reduction in the shipper’s travel 

time/cost will result in an 0.5 percent increase in the consumption of the good. 

Reduced transport costs also encourage supply chain managers to move distribution 

centers to distant, cheaper land, which increases truck travel. On the other hand, if 

costs are reduced only for the least GHG-intensive freight modes (rail and marine), 

GHG emissions could be reduced because of the shift from more intensive modes, 

particularly truck.

• Speed limit reductions – This strategy could result in “negative” induced demand 

(i.e., less travel). Since reducing speed limits increases travel times, some travelers 

may choose to forgo trips or make shorter trips because they cannot get somewhere as 

quickly.6

 

6 The effect is likely to be modest for most trips; reducing speed from 65 mph to 55 mph only 

reduces travel time by two minutes for a typical 12-mile trip.

There also may be mode-shifting effects to either more efficient (rail) or less 

efficient (air) modes. The impact will be larger for long distance trucking, for which 

travel time impacts will be greatest and which also have the greatest potential for 

modal diversion.
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Improving System Efficiency by Improving Utilization

System efficiency has many facets, but perhaps the most important element in system efficiency is 

the system’s load factor, sometimes called capacity factor or system utilization. When a transit 

agency dispatches a 50-passenger transit bus on a route, the cost of the bus, the driver, the 

maintenance/repair back-up, and fuel/emissions are all essentially fixed. If there is only one 

passenger, the transit bus is a poor investment from the point-of-view of both economics and the 

environment. On the other hand, if the bus is full or nearly full, there is a reasonable prospect that 

fares can pay the costs of the run, while the emissions savings from removing 40 or 50 cars off the 

road are immense.

Put another way, if there is excess capacity, the economic and emissions cost of adding an extra 

passenger is essentially zero. This same phenomenon applies to both freight and passenger 

modes, and (because of high operating costs) is particularly important to aviation. Available data 

suggests that system efficiency for aviation and freight rail is high and has been improving rapidly 

in recent years. For example, according to data from the Bureau of Transportation Statistics (BTS, 

2009), freight rail energy efficiency (measured per ton-mile) improved by an average of 3.4 percent 

annually in the 1980s, and 1.5 percent annually since then—even though locomotive technology 

has changed little. For domestic air travel, energy efficiency per passenger-mile has improved by 

2.9 percent annually since 1990*, due to increased passenger load factors, increased fuel efficiency, 

and improved technologies and operational procedures to reduce fuel burn and emissions. 

Improvements in these privately-operated modes have been driven by economic pressures. 

However, due to saturation in improvement that can be maximally attained, this trend will likely 

continue but at the lower pace. Operational gains estimated through 2035 range between 2.5 and 6 

percent.

System efficiency for passenger rail and personal automobiles, on the other hand, has been low 

and stagnating. Transit energy efficiency per passenger-mile declined in the 1980s and increased 

by only 0.8 percent annually since then; Amtrak efficiency has not changed since 1990. 

Automobile efficiency has increased by only 0.5 percent annually since 1990 (BTS, 2009). Average 

vehicle occupancies have continued to decline (and are only slightly higher than 1.0 for work trips. 

The implication is that there is considerable scope for improvement in the efficiency of surface 

passenger transportation modes, and that improvements could potentially generate large 

increases in transportation services without increases in emissions.

System efficiency strategies that improve freight utilization are considered in various subsections 

of this section. Strategies that improve passenger vehicle utilization, such as transit and 

ridesharing, are discussed in Section 5.0, Reducing Carbon-intensive Travel Activity.

*Calculated from data in Volume 1 Section 2.2.
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 4.2 Highway Operations and Management

Highway operations and management strategies seek to reduce congestion or otherwise 

keep vehicles moving at their most energy-efficient speeds. Strategies discussed in this 

report include traffic management systems to maintain efficient traffic flow; traveler 

information to avoid congested routes and times; bottleneck relief to reduce congestion; 

and speed limit reductions. These strategies also have the potential to result induced 

travel in response to improved travel conditions. Because of the complexities in 

calculating the impact these strategies have on travel demand, travel speeds, and traffic 

flow, the GHG impact of these strategies was not calculated for this report. The estimates 

presented below are taken from outside studies and should be considered illustrative. 

Traffic Management

Description

Fuel consumption by today’s motor 

vehicles varies by speed, as shown in 

Figure 4.1. Fuel use is highest at low 

speeds (under 30 mph), high speeds 

(over 60 mph), and in driving 

conditions with much acceleration 

and deceleration. Conversely, fuel 

consumption is lower—more 

efficient—when vehicles are driven at 

steady and moderate speeds. Traffic 

management strategies are aimed at 

reducing congestion, thus leading to 

more efficient vehicle operation 

(smoother, moderate-speed traffic 

flow) and reduced fuel consumption. 

Most management measures are 

based on an information infrastructure 

(“intelligent transportation systems,”

or ITS) that provides real-time traffic 

information to system operators 

and/or users; however some, such as 

traffic signal optimization, can be done without extensive information systems.

Traffic Management

Benefits: Low: 1-10 mmt CO2e in 2030

• Based on widespread deployment of both proven 

and experimental technologies

• Estimates reflect induced demand effects

Direct Costs: Low to High: $40 to >$2,000 per tonne

Net Included Costs: Net Savings to High: -$120 to >$2,000

per tonne

• Costs vary significantly by strategy

Confidence in Estimates: Moderate

• Benefits may be reduced depending upon pace of 

vehicle technology advancements

• Magnitude of induced demand effects is uncertain

Key Co-Benefits and Impacts: Positive

• Significant travel time savings

Feasibility: Moderate to High

• Primary barrier is funding

Key Policy Options:

• Targeted funding
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Figure 4.1 Example MPG/Speed Relationship for Light-Duty Gasoline 

Vehicles

 

 

Source: http://www.fueleconomy.gov.

Fuel Economy (mpg)

35

30

25

20

15

10

5

0

5 15 25 35 45 55 65 75

Speed (mph)

10 20 30 40 50 60 70

Traffic management strategies include:

• Signal optimization and coordination (retiming signals to reduce intersection delay, 

and coordinating control of traffic signals along a corridor or network);

• Adaptive signal control (use of advanced software that continuously updates signal 

timing based on demand);

• Incident management (identifying incidents more quickly, improving response times, 

and managing incident scenes more effectively);

• Ramp metering (placing a stoplight on freeway on-ramps to “meter” or space out 

traffic during periods of high demand);

• Integrated corridor management (coordination among multiple strategies);

• Active traffic management (emerging strategies to squeeze extra capacity out of the 

system and prevent flow breakdown, such as lane control, speed harmonization, and 

queue warning); and

• Vehicle Infrastructure Integration (providing a communications link between vehicles 

on the road and roadside infrastructure, to provide for safer and more efficient 

operations).
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These strategies are at different stages of development and implementation in the U.S.; 

some are relatively well established techniques that can be readily expanded; others are in 

the early stages of research and development and have yet to be broadly deployed.

Traffic management agencies throughout the U.S. vary in their attention to optimization 

and coordination of traffic signals. According to the 2007 National Traffic Signal Report 

Card, 72 percent of agencies reported strong or outstanding procedures for updating 

signal timing parameters when performing a timing update and 62 percent reported 

conducting a comprehensive review of areawide or corridor signal timings at least every 

three years (NTOC, 2007). On the other hand, the Institute of Transportation Engineers 

estimates that over 75 percent of the 300,000 traffic signals in the U.S. could be improved 

by updating equipment or by simply adjusting and updating the timing plans (ITE, 2009).

Freeway incident management systems are relatively common; they are implemented in a 

majority of major metropolitan areas, although they still cover only the minority of 

freeway mileage. Arterial incident management systems are present in only a minority of 

major metropolitan areas, covering a small fraction of lane-mileage.

7

Integrated Corridor Management (ICM) and Active Traffic Management (ATM) are in 

their infancy in the U.S. The U.S. DOT’s ITS program includes ICM Systems as one of 

nine major initiatives. The DOT is supporting ICM programs in eight locations 

throughout the U.S., working with partnerships among State DOTs, regional agencies 

(MPOs and transit), and local jurisdictions in each area (U.S. DOT, 2009). Active Traffic 

Management has primarily been deployed in European countries. Vehicle Infrastructure 

Integration is still in the research and development phase.

 Ramp metering is 

also implemented in only a minority of metro areas, covering less than one-third of all 

freeway miles in 25 major U.S. cities (TTI, 2007).

The successful implementation of traffic management strategies relies upon the 

cooperation of a number of actors at different levels of government. State DOTs are 

typically responsible for traffic operations on freeways, and in some cases on other arterial 

roadways. Local governments in most States are responsible for signal timing as well as 

other operations on arterial and local roadways. Toll roads may be operated by a quasipublic or private entity. Incident response also requires the cooperation of emergency 

responders and law enforcement.

 

7 As of 2006, 72 of 106 metro areas surveyed operate one or more traffic management centers. 

Sixty-three of 100 areas had some amount of their freeway system under surveillance, covering an 

average of 38 percent of lane miles. Seventy-three areas surveyed had service patrols on 

freeways, covering 46 percent of lane miles. Arterial incident management systems were 

implemented in 38 of 106 metro areas, covering 11 percent of lane miles (Cambridge Systematics, 

Inc., 2008, based on data from U.S. DOT’s ITS Deployment Database).
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Magnitude and Timing of GHG Reductions

Reducing travel delay has the potential to reduce fuel consumption by reducing idling and 

inefficient low-speed and stop-and-go operation.8

Analysis performed for the Moving Cooler study estimated GHG reductions in the year 

2030 – without considering induced demand—on the order of 3–5 mmt CO2e from ramp 

metering, 5-7 mmt from incident management, 0-2 mmt from signal control management, 

<1 mmt from road weather management, up to 6 mmt each from Active Traffic 

Management and Integrated Corridor Management, and about 6 mmt from Vehicle 

Infrastructure Integration. The combined benefits of all of these strategies would 

therefore range from about 24-34 mmt CO2e. The ranges of potential reductions reflects 

different levels of aggressiveness in deployment, beyond current levels. The low end 

assumes deployment of strategies along an additional 200 miles of freeway and 500 miles 

of arterial annually on an ongoing basis, while the high end assumes deployment of 

strategies along 400 miles of freeway and 1,000 miles of arterial annually.

Congestion relief strategies also result in 

some amount of induced travel demand. Induced travel generates GHG emissions 

through additional VMT; this additional traffic also reduces the initial improvements in 

travel speed, traffic flow, and energy consumption. The magnitude of induced demand 

associated with these measures is a source of considerable uncertainty, as is the impact of 

this traffic on travel speed and traffic flow. Relationships between delay reductions and 

fuel savings also are subject to some uncertainty.

9

 Considering 

induced demand, however, significantly reduces the benefits in 2030 – reducing combined 

benefits from all traffic management strategies to in the range of 1 to 10 mmt CO2e.10,11

 

8 Based on work done for FHWA using microscopic traffic simulation, for every hour of vehicle 

delay reduced, 0.620 gallons of fuel are saved by autos and 1.934 gallons are saved by large trucks 

(SAIC, 1993). Additional reductions may be achieved through reduced acceleration and 

deceleration or increasing average operating speeds into the most efficient range of 30 to 60 mph. 

Traffic signal coordination and control strategies have resulted in fuel use (and corresponding 

GHG) reductions in the range of 8 to 15 percent in corridors or areas for which the improvements 

are implemented, not accounting for any changes in traffic volume. Impacts on a regional scale 

are diluted to perhaps 1 to 4 percent (EEA and Cambridge Systematics, Inc., 1999).

9 This represents about 3.7 percent of freeways and 1.6 percent of major arterials in U.S. urban 

areas, based on data from FHWA’s 2006 Highway Statistics.

10The Moving Cooler study (Cambridge Systematics, 2009) examined the GHG impacts and cost

effectiveness of a wide range of strategies directed at reducing VMT and improving 

transportation system efficiency. The study used FHWA’s Highway Economic Requirements 

System (HERS) model to estimate the delay reduction and travel demand effects of bottleneck 

relief strategies, and analysis methods based on HERS model data to estimate the impacts of 

traffic management strategies. HERS accounts for induced demand using elasticities of travel 

demand with respect to general travel costs, which include travel time, fuel costs, maintenance 

costs, and other out-of-pocket expenses. The HERS model uses an elasticity of travel with respect 

to total vehicle operating cost equivalent to -0.4 for the first five years and an additional -0.4 

(Footnote continued on next page...)
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An alternative “bottom-up” approach to estimating GHG benefits from signal 

optimization can be developed based on a signal timing evaluation conducted in Portland, 

Oregon. This study estimated that approximately 50 metric tons of CO2 were saved each 

year per traffic signal retimed in the city, although the study did not account for induced 

demand effects. With approximately 3,300 traffic signals in the State, of which 70 percent 

could benefit from retiming, the potential Statewide CO2 savings would be 115,000 metric 

tons in one year (Peters, McCourt, and Hurtado, 2009). Further extrapolating these results 

to the entire United States, based on ITE’s estimate of 300,000 traffic signals, provides an 

estimated benefit of 11 mmt CO2e annually. This is somewhat higher than the top-down 

nationwide estimate for developed for Moving Cooler, which assumed phased 

implementation over time and a lower benefit per signal and accounted for induced 

demand.

12

Another important consideration is that the future effectiveness of traffic management 

strategies will depend upon vehicle technology. With hybrid and electric-drive vehicles, 

driving cycles have a much lesser impact on fuel consumption and emissions. For 

example, today’s hybrid-electric vehicles have urban fuel economy ratings that typically 

exceed highway fuel economy ratings. All of the benefits estimates cited above assume 

current vehicle technology, albeit with improved fuel economy under the baseline 

assumptions described in Appendix A of this report.

As previously noted, State and local agencies are at varying stages of deploying traffic 

management technologies. Some technologies (such as signal coordination and incident 

management) are well-developed, and further widespread implementation could occur 

within the next 5 to 10 years if financial, institutional, and political barriers are overcome 

 

thereafter, for a total long-run elasticity of -0.8 (see Appendix A). An elasticity of -0.8 means that 

a 1 percent decrease in total travel costs will result in a 0.8 percent increase in VMT.

11The 10 mmt figure reflects an adjustment to the Moving Cooler study results to account for the fact 

that the induced demand effect may have been overstated compared to the estimates for capacity 

expansion and bottleneck relief strategies, which were based on different parameters. The Moving 

Cooler study estimated that 93 to 95 percent of the 2030 benefits of traffic management strategies 

would be offset by induced demand, but only 70 to 80 percent of capacity expansion and 

bottleneck relief strategies. The difference appears to be at least in part due to the fact that 

induced demand parameters for traffic operations strategies were not updated to be consistent 

with the final parameters used for capacity expansion and bottleneck relief strategies. Therefore, 

a range of induced demand effects is shown here, and the range of GHG benefits for the “with 

induced demand” case is adjusted to show a maximum benefit that reflects only a 70 percent 

reduction compared to the “without induced demand” case.

12The Moving Cooler benefits for signal control management are based strictly on type of signal 

control, in increasing order of sophistication: pre-timed/actuated, central control, and real time 

traffic adaptive. Signals are assumed to be upgraded one level, with a coverage rate of up to 2,000 

miles of roadway per year. Delay savings per signal without induced demand are estimated to be 

in the range of 5 to 12 percent, much smaller than the 15 to 40 percent reported in the Portland 

study. These smaller delay savings account for the fact that at high levels of delay (as the entire 

intersection approaches exceeds capacity), improved signal timing will not result in GHG benefits 

because delay is controlled by capacity, rather than signal timing.
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(see “feasibility”). Other strategies, such as Active Traffic Management, are still in the 

development phases and could take 10 to 20 years or more to reach full deployment even 

with aggressive funding and implementation activities. To maintain the benefits of 

operational improvements over time, signal timing must be readjusted regularly as traffic 

conditions change; the Institute of Transportation Engineers suggests reviewing signal 

timing annually (ITE, 2009).

Cost-Effectiveness

Costs of traffic management strategies vary greatly. Costs range from as low as $2,500 to 

$3,100 to retime individual intersections, to on the order of $5 to $10 million for 

establishing an Emergency Response Center or a Transportation Management Center for a 

large metropolitan area, plus $0.5 to $1.5 million annually in operating costs (ITS Unit 

Costs Database, reported in Cambridge Systematics, 2008). If implemented on a 

nationwide basis, ramp metering is estimated to cost between $1.3 and $7.5 billion; signal 

control management between $2.5 and $17 billion; and incident management between $2.2 

and $13 billion, depending upon the extent of the metropolitan highway system covered. 

The costs of deploying Active Traffic Management or Integrated Corridor Management 

nationwide are estimated to range from $11 to $26 billion, again depending upon the 

extent of the highway system covered (Cambridge Systematics, 2009). Costs for traffic 

management strategies will typically be borne by public sector transportation agencies (or 

toll facility operators) and financed through State, regional, and local transportation 

funding sources.

The cost-effectiveness of traffic management strategies depends strongly upon whether 

induced demand effects are considered in estimating the benefits. Without induced 

demand effects, the cost-effectiveness of traffic signal retiming (measured in terms of 

GHG reductions) is estimated to be quite good – about $12 per tonne CO2e reduced 

considering implementation costs only.13

 

13This estimate applies the benefits extrapolated from the previously referenced Portland study, 

and assumes costs of $3,000 per retiming annualized over five years.

 More advanced traffic management strategies 

have varying levels of cost-effectiveness. Ramp metering and incident management 

strategies appear to be among the more cost-effective with estimates in the range of $10-40 

per tonne GHG reduced over the 2010 to 2050 timeframe. Active Traffic Management and 

Integrated Corridor management are somewhat less cost-effective (in the range of $100 

per tonne) as is signal control management (in the range of $200 per tonne) (Cambridge 

Systematics, 2009). Including benefits to travelers in the form of vehicle operating-cost 

savings, cost-effectiveness is estimated to be in the range of -$150-170 per tonne GHG 

reduced over the 2010 to 2050 timeframe, with Active Traffic Management and Integrated 

Corridor management in the range of -$90-140 per tonne and signal control management 

in the range of -$40 to +$50 per tonne. Vehicle Infrastructure Integration is estimated to 

range from $130 to $160 per tonne for implementation costs only, or -$20 to -$40 per tonne 

considering operating cost savings to travelers. These estimates do not include the value 

of time savings.
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Including induced demand effects changes the estimates significantly. Ramp metering 

and incident management have moderate cost-effectiveness, ranging from $40-90 per 

tonne for ramp metering and $40 to $170 per tonne for incident management (considering 

implementation costs only); both strategies show net savings when vehicle operating costs 

savings are included (up to -$120 per tonne for ramp metering and incident management 

and lower deployment levels). All other strategies have direct costs of over $200 per tonne 

(and in a few cases over $2,000 per tonne for road weather management and vehicle 

infrastructure integration and maximum deployment levels), and show a net cost even 

when vehicle operating cost savings are included (Cambridge Systematics, 2009).

Cobenefits

Traffic management strategies can have significant benefits in terms of delay reduction for 

travelers and goods movement. For example, a review of various case studies of presettiming traffic signal coordination suggests that travel-time reductions in the range of 8 to 

25 percent are possible along a particular corridor. Studies of actuated traffic signal 

coordination have found observed or simulated reductions in travel times from 8 percent 

to as high as 41 percent, with delay reductions ranging from 14 to 44 percent compared to 

baseline delay where the improvements have been applied (Cambridge Systematics, no 

date). The Texas Transportation Institute reports that ramp metering in 25 cities reduces 

delay by 29.4 million person hours, or approximately 2.4 percent of freeway delay (TTI 

2007). Incident management practices have been estimated to reduce incident duration by 

39 to 51 percent.14

Improved safety also is likely to be a by-product of some strategies; for example, crashes 

may be reduced if motorists are informed of upcoming congestion or if stop-and-go traffic 

is reduced. Incident management practices that decrease response time can save lives by 

getting victims medical attention more quickly. Active Traffic Management has been 

credited with significant reductions in incidents (up to 50 percent) in European 

applications (FHWA, 2007a).

 Various European countries have experienced a 3 to 7 percent increase 

in peak period throughput and a 3 to 22 percent capacity increase along highway 

corridors in which Active Traffic Management is applied (FHWA, 2007a).

Traffic management strategies also should result in air quality benefits. Traffic actuated 

signalization along corridors in three cities reduced hydrocarbon and carbon monoxide 

emissions by 4 to 12 percent, although oxides of nitrogen increased slightly (by 4 percent) 

in one location. An evaluation of preset ramp metering in Denver found a reduction in 

emissions of 24 percent (Mitretek, 2005). These benefits are based on current vehicle 

technologies and may be reduced in the future, especially if electric-drivetrain vehicles are 

widely adopted. These estimates of air quality benefits also do not include any additional 

emissions resulting from induced demand.

 

14FHWA’s IDAS model provides default values of a 39 percent delay reduction for improved 

incident response/management procedures alone, and 51 percent for combined incident 

detection and response/management procedures.
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Feasibility

Traffic management strategies already are being widely deployed. Funding and 

institutional issues represent the largest barriers to more comprehensive deployment; 

these strategies require redirection of scarce resources as well as effective coordination 

among State, regional, and local agencies. For example, an assessment of the efforts in 

Oakland, California as part of the ICM initiative found that while technical and 

operational challenges are relatively easy to deal with, institutional challenges, involving 

many disparate stakeholders, are the most difficult (LaPlante, 2007). Many traffic signals 

are under the control of smaller local jurisdictions, which may not have the technical 

resources to retime and optimize signals on a regular basis, let alone coordinate signals 

across a corridor or network. One significant action the Federal government could take to 

speed deployment of traffic management strategies is to provide additional funding to 

cover the capital and operating costs of regional traffic management systems. Funding 

and technical support for local jurisdictions (e.g., to support ongoing signal retiming) and 

interjurisdictional coordination efforts also would likely go far in improving traffic 

management practices.

Some strategies also have political barriers. For example, ramp metering has proven 

effective and inexpensive, but is not widely implemented in some areas because of equity

concerns regarding who benefits and who is impacted. These concerns led to a shutdown 

of the Minneapolis–St. Paul ramp metering system in 2001, and its subsequent 

reinstatement (after traffic conditions worsened considerably) with modified metering 

patterns to reduce queuing.

Real-Time Traveler Information

Description

Traveler information strategies 

provide motorists and truckers with 

up-to-date information on traffic 

conditions and incidents, and 

expected delays; the availability of 

public transportation and other travel 

alternatives; weather conditions; road 

construction; and special events. 

GHG reductions result when better 

informed travelers and truckers plan 

trips to avoid congestion by taking 

alternative routes, forego unnecessary 

trips, delay travel, or take alternative 

modes. Traveler information systems 

therefore achieve GHG reductions 

Real-Time Traveler Information

Benefits: Low: <0.5 mmt CO2e (2030)

Direct Costs: Moderate to High: $160 to >$600 per tonne

Net Included Costs: Low to High: $0 to >$500 per tonne

Confidence in Estimates: Low

• Limited evidence on highway traveler information 

benefits; almost no evidence on information for other 

modes

Key Co-Benefits and Impacts: Positive

• Traveler awareness/satisfaction

Feasibility: High

• Public and private sector initiatives in progress

Key Policy Options:

• Targeted funding
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both by improving efficiency (e.g., avoiding congestion) and reducing VMT. In some 

cases, however, better information can have mixed effects. For example, if travelers take a 

longer route to avoid an incident on their usual route, their VMT will increase, potentially 

offsetting the GHG reduction from avoiding travel in congested conditions.

Traveler information can take a variety of forms:

• Road status information systems that provide information on roadway traffic 

conditions and congestion, including travel times and major incidents or delays;

• Information on public transit, including real-time information on expected arrival 

times, travel times, delays, etc., as well as systems to help people plan trips;

• Carpool information systems that provide advance or real-time information regarding 

commuters or other travelers destined to the same area and willing to carpool;

• Multimodal information systems that provide travelers with information on the 

various alternatives they have to get from point A to point B, considering different 

modes of travel;

• Parking guidance and information systems that provide drivers with dynamic 

information on parking within controlled areas and assist in searching for vacant 

parking spaces; and

• Freight route management systems that help carriers make more efficient routing and 

scheduling decisions in order to avoid congestion, reduce freight vehicle mileage, and 

increase load factors (e.g., avoiding empty backhauls).

Traveler information is disseminated through a variety of mechanisms, including Internet

sites, 511 telephone information systems, auto texting and e-mails to mobile devices, invehicle GPS equipment, television public service announcements, radio announcements, 

public information kiosks, and dynamic (changeable) signs.

Highway traveler information has traditionally relied on the same information 

infrastructure that supports intelligent traffic management through monitoring of traffic 

conditions. Various levels of highway traveler information are present in most major U.S. 

metropolitan areas. As of 2006, 63 of 100 surveyed metropolitan areas conducted realtime traffic data collection on freeways, covering 38 percent of lane miles (Cambridge 

Systematics, 2008). As of February 2008, 30 States had established 511 information 

systems.

The private sector is taking a strong role in traveler information services. There is much 

private sector activity underway to provide customized delivery of traveler information to 

individual travelers via handheld and in-vehicle devices. Anonymous location tracking 

using global positioning system (GPS)-enabled mobile phones is providing much more 

comprehensive real-time information than older monitoring technologies such as loop 

detectors, cameras, and probe vehicles. Private providers of real-time information such as 

NavTeq/Traffic.com and Inrix cover many metropolitan areas – INRIX has real-time 
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traffic information available in 126 metropolitan areas as of April 2009 (INRIX, 2009), and 

one can view traffic speeds in over 60 U.S. cities on Google maps.

Real-time traveler information programs for transit systems are in somewhat less 

advanced stages of deployment. Many U.S. rail transit systems provide real-time 

information on train arrivals, but real-time information for buses is less common. The 

technology exists, however, and has been demonstrated through applications such as 

NextBus, which combines GPS data with predictive software to give passengers, either on 

the Internet or at the stop, arrival times for the next few vehicles. NextBus technology has 

been applied in a number of locations, including Arlington, Virginia; Delaware; San 

Francisco; and Toronto.15

Worksite-based carpool matching programs have long been a staple of transportation 

demand management (TDM) initiatives. Only very recently, however, has technology 

evolved to the point of allowing “real-time” formation of carpools, including for nonwork 

and irregularly scheduled trips; we are now witnessing rapid innovations is this area. For 

example, NuRide runs a free, on-line, ridematching service as part of a larger incentivebased program that rewards members for “green trips”; the service had nearly 40,000 

members as of February 2009.

 Transit agencies are increasingly adopting web-based trip 

planners that give travelers detailed information on their alternatives given an origin, 

destination, and start or end time. Private services such as Google and SmarTraveler also 

have ventured into the realm of providing transit information, but to date have been 

limited by the availability of underlying data provided by transit agencies.

16 GoLoco is a Facebook-based ridematching service in 

which travelers split costs. PickupPal, a free on-line ridesharing service based in Ontario 

and launched in early 2008, had 100,000 users in 60 countries around the world as of 

September 2008.17 The service focuses on casual carpooling for special events; users can 

enter their start and end point and be matched with other users with similar itineraries. 

At least nine national on-line ridesharing sites were operating as of February 2009, in 

addition to numerous regional sites.18

Parking guidance systems also are in their infancy in the U.S. One example of parking 

guidance and reservations is the advanced parking system at Baltimore Washington 

International (BWI) Airport. Travelers can reserve a parking space at specific facilities or 

be guided to open floors and stalls by means of ultrasound detection. These techniques 

have been applied somewhat more widely in Europe, where central business districts 

often have information signs indicating parking availability and directing drivers to 

available spots (Figure 4.2).

 

15http://www.nextbus.com.

16http://www.nuride.com.

17Urban Transportation Monitor, September 5, 2008.

18http://www.rideshare-directory.com/.
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Freight route management information is in common use in the private sector. Carriers 

use GPS systems to track truck locations, provide weather and traffic information, and 

identify alternative routes. The state-of-the-art with GPS is to incorporate real-time traffic 

data into the routing algorithms. These are available on consumer GPS, both as original 

equipment manufacturer (OEM) installations on vehicles as well as aftermarket devices. 

In addition, most carriers use routing and dispatching programs that plot and optimize 

truck routes based on pick up and delivery points, refueling stations, etc. UPS and FedEx 

both have in-house proprietary systems that do dynamic routing.

Figure 4.2 Parking Information System in Freiburg, Germany

A few States have explored 511, weather, and traffic congestion information systems for 

truckers, but few have done much that is sufficiently targeted or timely enough to be as 

good or better than motor carriers’ own systems. One exception is the Washington State

DOT’s proactive road condition and weather/emergency closure notification program. 

Additional demonstration projects currently are being funded by some public agencies. 

For example, the Kansas City Cross-Town Improvement Project, funded in part by 

FHWA’s Office of Freight Management and Operations, is designing a system that would 

allow trucks to dynamically change routes due to traffic congestion/incidents. The 

FleetForward test, funded by the I-95 Corridor Coalition, integrated real-time traffic 

information into carrier routing decisions/software. The Pennsylvania DOT and the I-95 

Corridor Coalition currently are looking at the operational benefits of integrating real-time 

parking availability data into motor carrier routing decisions.
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Magnitude and Timing of GHG Reductions

Most of the research quantifying the VMT and potential GHG benefits of traveler 

information systems has examined highway and transit traveler information systems. 

Even so, the evidence on the benefits of these strategies is quite limited as it has generally 

been difficult to measure and quantify specific impacts. The diffuse nature of impacts 

(spread across the transportation network) and the many ways in which travelers may 

acquire and respond to information makes it especially challenging to evaluate the 

impacts of improved information. Furthermore, some traveler responses, such as taking 

longer routes to avoid congestion, may actually increase VMT and GHG.

Available literature suggests that road status information programs may cause an increase 

in VMT that roughly offsets the benefits from reduced delay on the mainline (FHWA, no 

date). However, the literature has been primarily qualitative rather than quantitative, 

with the exception of one simulation study that predicted a statistically insignificant 

(0.1 percent) systemwide reduction in VMT from advanced traveler information system 

strategies and similarly insignificant (0.1 to 0.3 percent) reductions in emissions, compared 

to a 1.5 percent reduction in overall vehicle-hours of delay (Wunderlich, Bunch, and 

Larkin, 1999). On the other hand, another study using a computer simulation model 

concluded that providing motorists in Seattle, Washington, with information about traffic 

incidents and congestion could lead to a 1.8 percent reduction in average vehicle delay 

and a 2 percent reduction in vehicle emissions for morning peak periods, as better 

informed travelers were able to choose the most efficient mode and route to their 

destination (Jensen et al., 2000).

The Moving Cooler study estimated that very modest net GHG reduction benefits would 

accrue from traveler information systems, including 511 systems, a Web site, and 

personalized information. The study assumed a 1 percent delay reduction for the lowest 

level (511 and Web sites only) and 2.5 percent for more aggressive deployment, including 

personalized information, but also accounts for increased GHG over the long run due to 

induced demand effects from reduced delay. The overall magnitude of GHG reductions 

that might be expected from further deployment of traveler information was estimated at 

0.6 to 1.8 mmt CO2e in 2030, or only 0.1 to 0.5 mmt considering induced demand effects

(Cambridge Systematics, 2009).19

The impact of transit traveler information on mode shifting from auto to transit, and 

therefore on reduced VMT and GHG emissions, has not been comprehensively studied. 

Similarly, no reliable evidence yet exists on the potential benefits of real-time carpool and 

 Because these estimates were based on professional 

judgment regarding delay reduction and because no assumptions on diversion were used, 

they are subject to some uncertainty.

 

19The lower scenario assumes 511 and Web site only, and deployment along highway segments 

with peak-period volume-to-capacity ratios greater than 1.05; the more aggressive scenario 

includes personalized information and deployment along all highways with peak period volumeto-capacity ratios greater than 0.95. The induced demand effects include the same adjustment 

described in footnotes 5 and 7 under Section 4.2.1.
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parking information systems, because these systems are in their infancy. NuRide claims 

to have reduced 2.4 million car trips and 26.8 tons of emissions as of February 2009, 

although it is not clear to what extent this includes transit, walk, and bike trips registered 

by members in addition to carpool trips through the site. Studies around the world have 

found that between 8 and 74 percent of the traffic present in some congested business 

districts is due to cruising for parking (Shoup, 2005); while this has not been extrapolated 

to a nationwide basis, parking search VMT is likely to be only a small fraction of total 

personal vehicle travel in the U.S.

The limited evaluation data on freight route management systems has not been able to 

quantify a VMT, fuel savings, or GHG benefit. In an operational test of the FleetForward 

program by the I-95 Corridor Coalition, carriers generally did not believe that the

technology reduced operating costs (of which fuel consumption is one component) and 

the study was unable to identify any impact on congestion (Cambridge Systematics and 

SAIC, 2000).

Real-time traveler information should become increasingly widespread over the next 5 to 

10 years. Almost all States already have developed and implemented Statewide Web sites 

for distributing traveler information, according to the most recently available survey data 

(U.S. DOT, 2007). Many other States and regions are in the process of developing 511 

systems (FHWA, 2008). Within 5 years, most of the top 75 urban areas are expected to 

have detailed traveler information available for at least their freeways, and all States are 

expected to have Statewide 511 systems in place. Deployment of private sector-based 

traveler information systems is in its early stages, but significant penetration of private 

sector traveler information is expected to be achieved in 5 to 7 years. As of 2008, 78 

percent of American adults owned a cellular telephone and 13 percent owned a 

Blackberry, Palm, or other personal digital assistant, and adoption is increasing rapidly 

(Pew Internet and American Life Project, 2008). As web-enabled cell phone and PDA 

technology expands, the ability of travelers to access and utilize real-time information will 

increase significantly.

Cost-Effectiveness

The cost of developing and deploying traveler information strategies varies widely. 

Average costs for developing Statewide and metropolitan 511 traveler information 

systems, for example, have ranged from $133,000 to $1,028,000, with an average cost of 

$416,000. Roadside equipment costs, such as dynamic message signs and highway 

advisor radios constitute significant expenses. Capital costs for dynamic message signs 

range from $47,000 to $117,000 and annual operations and maintenance costs range from 

$2,300 to $6,000 per sign. Capital costs for highway advisory radio range from $15,000 up 

to $35,000, in additional to $600 to $1,000 annual operations and maintenance expenses 

(U.S. DOT, 2007). Although these expenditures are not trivial, there is evidence that the 

benefits of traveler information strategies significantly outweigh the costs when pursuing 

multiple transportation objectives. For example, in California, it is estimated that every 

$1.00 invested in Statewide traveler information strategies will yield $100 in benefits (e.g., 

reduced travel times and vehicle operating costs) over the next 20 years (U.S. DOT, 2007).
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The Moving Cooler study estimated the cost per tonne of GHG reduction from these types 

of traveler information strategies to be in the range of $80 to $170 per tonne including 

direct costs only, or from -$20 to -$110 per tonne (a net savings) considering vehicle 

operating cost savings, but without induced demand effects. Including induced demand 

effects increases the direct cost per tonne to $160 to over $600, and the net included cost 

per tonne to $0 to over $500. These estimates are based on nationwide deployment costs 

in the range of $2 to $12 billion, depending upon the extent of deployment.

The use of cellular telephones and probe vehicles (e.g., taxis, delivery trucks, or buses 

outfitted with monitoring devices) for monitoring travel times has reduced the need for 

costly investment in monitoring infrastructure. Increasingly, private sector companies are 

providing traffic information to operating agencies for a fee, and/or providing traffic 

information for customers at no cost to public agencies.

No reliable evidence yet exists on the potential cost-effectiveness of real-time transit, 

carpool, parking, or freight information systems in reducing GHG emissions. The 

increasing adoption of web-enabled mobile devices, however, is providing a mechanism 

to disseminate information without the need for public-sector capital investment in signs, 

radio, and other infrastructure.

Cobenefits

Traveler information helps travelers adapt to congested conditions by changing routes, 

departure times, modes, or being able to alert others to schedule changes. A review of 

existing literature by FHWA estimated that Highway Advisory Radio can save 0.7 percent 

of nonrecurring vehicle hours of delay, and Variable Message Signs 4.2 percent (FHWA,

no date).

20

Computerized truck routing and dispatching systems have, as previously noted, been

widely adopted by the private sector and generally have been very cost effective for 

carriers as a result of time and fuel savings. Truck highway information systems also have 

been found to be beneficial; in an operational test of the FleetForward program by the I-95 

Corridor Coalition, 75 percent of carriers believed it was a valuable tool to identify 

congestion and 33 percent believed that on-time delivery and/or estimated time of arrival 

improved (Cambridge Systematics and SAIC, 2000).

 Improved safety also is likely to be a by-product of some strategies; for 

example, crashes may be reduced if motorists are informed of upcoming congestion. In 

addition, many States that have deployed 511 phone systems and other traveler 

information systems have begun placing AMBER Alerts and homeland security alerts on 

their systems (511 Deployment Commission, 2004). In some States, traveler information 

systems may be used to facilitate large scale evacuations due to extreme weather events.

 

20Nonrecurring congestion does not occur every day, but results from incidents, bad weather, work 

zones, or special events. FHWA estimates that about half of all congestion is nonrecurring.
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Feasibility

Roadway-based information strategies already are being widely deployed. One key 

barrier to more comprehensive deployment is institutional; widespread deployment and 

use of information infrastructure requires effective coordination among State, regional, 

and local agencies and potentially private entities. As with traffic management, which 

relies on a common information infrastructure, perhaps the most significant action the 

Federal government could take to speed deployment of traveler information strategies is 

to provide additional funding to cover the design, construction, and operation of 

information collection and dissemination systems, as well as to specifically support 

interagency and interjurisdictional coordination efforts.

There is significant potential for the private sector to enter the traveler information 

market. The degree to which the private sector will participate with publicly sponsored 

traveler information systems is not yet known. It also is conceivable that the private sector 

will offer an increasingly comprehensive set of traveler information services, thus 

reducing or even eliminating the need for public sector involvement in some types of 

services.

Greater provision of transit traveler information is limited by fiscal and resource 

constraints at transit agencies with limited operating budgets. Funding to support the 

deployment of the required hardware and software data management systems could help 

overcome this barrier. Carpool matching systems are being tested by the private sector, 

but traveler interest/acceptance remains a significant unknown. The willingness of 

travelers to lose a small amount of travel time and travel with a stranger is likely to 

depend greatly on the price of fuel and therefore the monetary benefits of doing so. 

Parking guidance systems currently are most feasible at large, centrally operated parking 

facilities; concepts are emerging for providing parking information where parking is 

decentralized (such as business districts) but their feasibility is unknown.

Bottleneck Relief

Description

Bottlenecks are specific points on the transportation network where demand exceeds 

capacity, thereby creating traffic delays and leading to wasted fuel and excess GHG 

emissions. Major physical bottlenecks have been the focus of transportation 

improvements—and of travelers’ concerns—for many years. On much of the urban 

highway system, there are specific points that are notorious for causing congestion on a 

daily basis. These locations—which can be a single interchange (usually freeway-tofreeway), a series of closely spaced interchanges, or lane-drops—are focal points for 

congestion in corridors; major bottlenecks tend to dominate congestion in corridors where 

they exist.
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The severity of congestion at a 

bottleneck is related to its physical 

design. Some facilities were originally 

constructed many years ago using 

designs that were appropriate when 

they were built, but are now 

considered antiquated. Others have 

been built to extremely high design 

specifications and are simply 

overwhelmed by traffic.

The costs of reducing bottlenecks vary 

considerably. In many cases, 

bottleneck relief can occur through

relatively low-cost strategies such as: 

hard shoulder running (using a 

shoulder as a through lane during 

peak or emergency periods); 

restriping to increase the number of 

lanes; paved shoulders; or median 

barrier treatments (e.g., cables, Jersey 

barriers). Somewhat higher-cost strategies include auxiliary lanes, especially between two 

closely spaced interchanges; collector-distributor roads; and added lanes. In some cases, 

major reconstruction of interchanges – at high cost – is necessary. Traffic management 

strategies such as ramp metering and active traffic management (lane control, speed 

harmonization, and queue warning), which are considered elsewhere in this report, also 

can be considered to be bottleneck relief strategies. Many major bottleneck fixes include 

“packages” of improvements, which combine major reconstruction, low-cost treatments, 

transit service, and improved operations. Improvements at one location are often done in 

conjunction with other improvements across an entire corridor. Specific bottlenecks may 

be under the jurisdiction of either State or local transportation agencies and subject to 

improvement through the transportation planning and programming process.

Magnitude and Timing of GHG Reductions

Bottlenecks are the source of recurring congestion. Though occurring at specific locations, 

they can influence many miles of highways as queuing occurs because of the traffic flow 

breakdown at the bottleneck points. Therefore, bottleneck relief reduces congestion 

delays and changes drive cycles (both acceleration/deceleration profiles as well as 

average speeds), potentially improving fuel efficiency and reducing GHG emissions.21

 

21Impacts are specific to each site. Based on work done for FHWA using microscopic traffic 

simulation, for every hour of vehicle delay reduced, on average 0.62 gallons of fuel are saved by 

autos and 1.94 gallons are saved by large trucks (SAIC, 1993).

 

However, bottleneck relief strategies also result in some amount of induced travel. This 

Bottleneck Relief

Benefits: Low: 1-6 mmt CO2e in 2030

• Low benefits reflect induced demand effects, but 

assume that all capacity improvements would be 

fully financed by user fees, which would partly 

mitigate these effects

• Estimates do not include GHG emissions from 

construction activities or delay during construction 

Direct Costs: Not available

Net Included Costs: Not available

Confidence in Estimates: Low

• Significant uncertainty over induced demand effects

Key Co-Benefits and Impacts: Positive

• Significant time savings to travelers

Feasibility: Moderate - High

• Established transportation project development 

process. Some projects may encounter 

environmental constraints

Key Policy Options:

• Funding
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additional VMT results in additional fuel consumption and GHG emissions; it also 

reduces the initial travel speed and traffic flow benefits of these strategies. The magnitude 

of the induced demand is subject to considerable uncertainty, as is its impact on delay 

reductions and fuel savings. Bottleneck relief projects also involve GHG emissions from 

construction activities and delay during construction, which further offset any GHG 

reductions, although these effects have also not been rigorously analyzed.

The Moving Cooler study estimated that, not considering induced demand effects or 

construction emissions, improving the top 100 bottleneck locations in the country could 

reduce GHG emissions by 6 mmt CO2e in 2030, while improving the top 200 locations 

could reduce emissions by 14 mmt (Cambridge Systematics, 2009).22 The benefits of 

bottleneck improvements, however, may be substantially reduced through induced 

demand effects, as more travel occurs in response to improved highway conditions (see 

Appendix A). Using assumptions consistent with FHWA’s 2008 Conditions and 

Performance Report (FHWA, 2008d), the Moving Cooler study estimated that the GHG 

benefits of bottleneck relief would be reduced to 1 to 6 mmt CO2e in 2030 if induced 

demand effects were included;

23

Cost-Effectiveness

this analysis assumed (consistent with the Conditions and 

Performance Report methodology and current highway funding practice) that projects 

would be fully financed by increased fuel taxes, which would partly dampen the induced 

demand from lower congestion levels. The study further concluded that as increased 

travel outweighed the efficiency gains in later years, the entire cumulative GHG 

reductions from bottleneck improvements over the 2010 to 2050 period could potentially 

be offset by induced demand (Cambridge Systematics, 2009). 

The costs of individual bottleneck relief projects vary widely, but typically range on the 

order of a few million dollars on the low end, to tens—or even hundreds – of million 

dollars for construction projects such as interchange construction/reconstruction or lane 

additions on short segments. Improving the top 100 bottleneck locations in the country is 

estimated to cost $28.8 billion, or about $280 million per location (AHUA, 2004). Since 

these are the locations where delay is greatest, they also are locations where investment 

costs are likely to be greatest. Not including induced demand effects, the Moving Cooler 

study estimated the cost per tonne of GHG reduction of improving the top 100 bottleneck 

locations in the country to be $90 per tonne GHG, or $130 per tonne for the top 200 

bottlenecks, considering direct costs alone. If vehicle operating-cost savings are taken into 

 

22Bottlenecks were identified based on a study for the American Highway Users Alliance (AHUA, 

2004) and were defined in this study as a “severe traffic chokepoint” at which drivers spend at 

least 700,000 hours per year in congestion. Most of these bottlenecks are single interchanges 

(usually freeway-to-freeway), a series of closely spaced interchanges, or lane drops on freeways.

23 As described in Footnote 12, the travel demand impacts (including induced demand) were 

calculated using FHWA’s HERS model, which estimates demand as a function of total user costs, 

with a short-term elasticity (first five years) of roughly -0.4 and a long-term elasticity of roughly -

0.8. 
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account, cost-effectiveness is estimated to range from -$40 to -$80 per tonne (Cambridge 

Systematics, 2009). Since there was no net benefit from bottleneck relief over the 2010-

2050 period once induced demand was included, cost per tonne could not be calculated in 

this scenario.

Cobenefits

Bottleneck relief will have strong cobenefits in terms of reduced delay (time savings) for 

passenger and freight travelers and reduced vehicle operating costs. These time and cost 

savings for travel are then passed along as benefits to the larger economy. Low-cost 

bottleneck treatments have proven to be highly cost effective, even when travel time 

savings is the only criterion used. For example, three low-cost bottleneck projects in the 

Minneapolis–St. Paul area (ranging from $2.6 to $10.5 million) produced delay reductions 

of 87,000 to over 1 million hours annually, resulting in a benefit/cost ratio of between 3:1 

and 13:1 (FHWA, 2007b). This study did not consider induced demand effects.

With the exception of oxides of nitrogen (NOx), other major categories of automobile 

emissions will be reduced with the reduction in congestion. Also, because crash history is 

generally addressed when major interchanges are redesigned, there will be safety benefits 

as well. All of these benefits accrue over multiple years after improvements are made. 

The American Highway Users Alliance estimated the total benefits in several categories 

from improving the top 223 bottlenecks in the country (Table 4.3). These benefits are 

assumed to accumulate over the course of 20 years after improvements are made, and are 

for all vehicles moving through the bottlenecks’ areas of influence, which was assumed to 

extend for five miles (two and one-half miles in each direction from the bottleneck). 

Again, this study did not consider any offsetting reductions in benefits as a result of 

induced demand.

Table 4.3 Total Benefits from Improving the Nation’s Worst Traffic 

Bottlenecks (223 Locations)

Benefit Type

Reduction Due to 

Improvement

(Over 20 Years of Project Life)

Percentage Change Over 

Five-Mile Segment

Carbon Monoxide (million tons) 27.1 -54%

Volatile Organic Compounds (million 

tons)

2.7 -50%

Carbon Dioxide (million tons) 390 -77%

Total Delay (million hours) 48,100 -77%

Total Fuel Savings (million gallons) 40,011,800 -77%

Total Crashes 449,600 N/A

Source: AHUA, 2004.
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Bottleneck relief projects that involve major reconstruction (such as interchange 

reconfiguration or lane additions) could result in property takings or other community 

and environmental impacts. Any project that receives Federal funding is required to go 

through the environmental review process which may result in actions to reduce or 

mitigate any impacts.

Feasibility

Bottleneck relief projects continue to be implemented throughout the nation. The 

feasibility of any particular project depends upon its costs and other impacts. Because of 

their capital-intensive nature, the ability to undertake major bottleneck relief projects is 

limited by the availability of Federal, State, and local funding for transportation projects; 

the most significant action the Federal government could take to increase the rate at which 

bottlenecks are improved is simply to provide more funding. Major reconstruction 

projects also may encounter local opposition if community and/or environmental impacts 

are significant. Some transportation agencies may have operational, safety, or other 

concerns about applying strategies such as hard-shoulder running or restriping that 

narrows lane widths.

Reduced Speed Limits

Description

This strategy would reduce speed 

limits on high speed facilities to 

maximize fuel efficiency. These 

limits would be implemented on the 

Interstate system, other limited access 

highways, and possibly on high 

speed rural major arterials (in 

general, potentially up to all facilities 

currently posted over 55 mph). 

Automotive fuel efficiency varies 

with vehicle speed, with peak 

efficiencies usually being achieved 

between 30 and 60 miles per hour, 

depending upon vehicle type and 

weight, aerodynamics, tire type, 

engine size, and other factors (GAO,

2008). A representative fuel economy curve for gasoline powered light-duty vehicles is 

shown in Figure 4.1, with maximum efficiency occurring between 50 and 55 mph. Similar 

relationships are seen with other passenger vehicles and heavy-duty diesel vehicles as 

well, although optimal operating speeds vary.

As seen in the figure, conventional vehicles suffer significant degradation in fuel efficiency 

at high speeds, primarily due to rapidly increasing wind resistance and other sources of 

Reduced Speed Limits

Benefits: Moderate: 27-43 mmt CO2e in 2030

Direct Costs: Low: $10 per tonne

Net Included Costs: Net Savings: -$320 per tonne

Confidence in Estimates: Moderate

• Depends upon level of enforcement

Key Co-Benefits and Impacts: Mixed

• Safety benefits; increased travel times

Feasibility: Moderate-high

• Past experience; but widespread resistance and poor 

compliance

Key Policy Options:

• National uniform speed limit; incentives for 

enforcement
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friction. For this reason highway speed limit reductions have been considered as a means 

of reducing fuel consumption across the country. The Emergency Highway Energy 

Conservation Act of 1974 first instituted a nationwide speed limit of 55 mph with the goal 

of reducing total on-road fuel consumption by two percent. However, the law was met 

with widespread resistance and poor overall compliance, and was ultimately repealed in 

1995. Since that time several States have raised their speed limits to pre-1974 levels, while 

others have retained the lower speeds. An analysis of the 1974 speed limit concluded that 

it did result in savings of about two percent of annual gasoline consumption while in 

effect (TRB, 1984).

Speed limit reduction programs are again under consideration, largely in response to 

climate change concerns, as well as rising gasoline and diesel prices. The economic value 

of speed control has been recognized in the heavy-duty truck sector, with the American 

Trucking Association (ATA) reporting that 77 percent of its members have adopted onboard speed limiters restricting operation to 68 mph or less (Lavelle, 2008). In support of 

climate action plans, States, including Arizona, Arkansas, California, Minnesota, New 

Mexico, New York, and Utah also have conducted preliminary evaluations of the potential 

fuel consumption and CO2 benefit associated with lowering average heavy-duty truck 

speeds to 60 or 55 mph, lowering the maximum speed limit for all vehicles, and/or 

through improved enforcement of speed limits.24

The amount of fuel consumption benefits resulting from speed limit reductions will 

depend largely on the effectiveness of enforcement. For example, noncompliance rates on 

New York Interstates following the first national speed limit initiative were found to be 

extremely high, with 83 percent of all vehicles traveling at speeds greater than 55 mph 

(Coile, 2008). Another study also seems to indicate substantial tolerance on the part of law 

enforcement, with only one percent of all speeding citations issued to vehicles traveling 

less than 10 mph over the posted limit (Houston Chronicle, November 24, 2002).

 Recent Congressional inquiries and 

proposed legislation have prompted similar investigations for light-duty passenger 

vehicles as well as heavy-duty vehicles (Coile, 2008).

Speed cameras are an available technology that can prove quite effective. Advanced 

speed enforcement strategies such as Intelligent Speed Adaptation (ISA), which relies on 

on-board determination of site-specific speed limits using GPS technology, may result in 

improved compliance in the future. ISA systems may be implemented in varying degrees, 

from simply notifying the driver of the speed limit violation to fully automatic governance 

of vehicle speed. Even without considering driver acceptance, however, such systems 

may be difficult to deploy in the near future due to high costs. For example, a recent ISA 

pilot program in Sweden instrumented and maintained approximately 5,000 vehicles at a 

cost of $12.7 million, or $2,500 per vehicle (FHWA, 2005b).

 

24 Maximum posted speeds for trucks range from 55 to 75 miles per hour, and are 5 to 15 miles per 

hour lower than the maximum posted speed for cars in some States (FHWA, 2008e, Table 3-8).
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Magnitude and Timing of Greenhouse Gas Reductions

Optimal operating speeds vary depending on a number of factors. An evaluation of 11 

different light-duty gasoline makes and models found their optimal speed ranged from 25 

to 55 mph (GAO, 2008). Accordingly, the benefit of establishing a uniform speed limit will 

vary from vehicle to vehicle. In addition, the fuel consumption benefit also varies 

depending upon the initial baseline speed of the vehicle. For example, using EPA’s 

Physical Emission Rate Estimator (PERE) model, a 2009 Toyota Camry is estimated to 

improve its fuel efficiency by approximately 2.4 mpg when slowing from 60 to 55 mph. A 

larger reduction from 70 to 55 mph will result in a 6.1 mpg improvement (U.S. EPA,

2005a). Heavy-duty diesel vehicles are estimated to obtain a 0.1 mpg improvement 

(approximately 1.5 percent improvement) on average per one mph of speed reduction at 

highway speeds (U.S. EPA, 2004).

Special Report 204: 55: A Decade of Experience, published in 1984 by the Transportation 

Research Board, evaluated the national 55 miles per hour speed limit imposed in 1974 and 

concluded that it resulted in savings of about two percent of annual gasoline consumption 

while in effect (TRB, 1984).

A recent DOE evaluation estimated that a 55 mph speed limit implemented at the national 

level could result in a fuel consumption savings between 175,000 and 275,000 barrels of oil 

per day, or about 27 to 43 mmt CO2e per year, which represents about 1.6 to 2.4 percent of 

on-road vehicle fuel consumption and emissions. For this assessment DOE assumed that 

35 percent of all on-road mileage would be impacted by the reduced speed limit, along 

with a 50 percent compliance rate (GAO, 2008). The non-compliance rate ranged from 

49% to 54% of traffic exceeding 55 mph on all highways marked at 55 mph for the period

1980 to 1983, according to speed data reported by the States to the Federal government

from automated devices embedded in pavements (TRB, 1984). Future compliance rates 

would depend on enforcement and public acceptance.

An International Energy Agency study using a mechanical engineering equation of fuel 

efficiency by speed found that comprehensive enforcement of a 55 mph speed limit could 

generate a reduction of up to 3.2 percent in fuel consumption and thus GHG emissions in 

the U.S. (IEA, 2005), or about 56 mmt CO2e per year.

The benefits will be lower if vehicle fuel efficiency improves beyond the baseline levels 

assumed in this analysis. Changes in vehicle technology also could affect the magnitude 

of benefits from speed limit reductions. For example, hybrids are expected to constitute 

an increasing fraction of the light-duty fleet over time. Fuel consumption in light-duty 

hybrid gasoline vehicles rises disproportionately quickly above 50 mph, compared with 

conventional vehicles. To illustrate, the PERE model predicts a 9.5 mpg improvement in 

fuel economy for hybrid vehicles slowing from 70 to 55 mph, compared to just 6.1 mpg for 

comparable conventional gasoline vehicles. The higher baseline fuel economy makes total 

fuel consumption impacts lower in absolute terms, however. A European study found 

that GHG emissions from modern vehicles tend to show much less dependence on vehicle 

speeds (at least at highway speeds) compared with older vehicles (Carsten et al., 2008).
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Reduced speed limits can be implemented very quickly, limited only by the time required 

for re-signage and public notification, as well as the implementation time required to 

upgrade enforcement levels in order to reach full benefits.

Cost-Effectiveness

The immediate costs associated with implementing speed limit reductions are relatively 

small, including new signage and public outreach and education effort. Ongoing 

enforcement costs will be more significant. Public outreach program costs can vary 

substantially depending upon media selection, frequency, and duration of messaging, and 

other factors. The IEA (2005) study estimated a $3 million cost for a basic national public 

information campaign, assuming no advertising cost for public service announcements; 

paid advertising could increase this cost substantially. Incremental enforcement efforts or 

citation costs above those already in place were estimated in the IEA report at $200,000 per 

additional officer and $26,000 per speed camera. Estimated national costs would be 

approximately $600 million annually for personnel, or $800 million initially for speed 

camera deployment (not including operations and maintenance/replacement costs, which 

were not estimated).

Considering annual enforcement personnel costs alone produces a cost-effectiveness 

estimate of about $11 per tonne CO2e reduced, using IEA’s benefit estimates. However, 

the IEA study concluded that these enforcement costs were effectively canceled out by 

fuel-cost savings. Both fuel-cost savings and enforcement costs would accrue to drivers, 

assuming that enforcement costs were fully recovered through fines. The study did not 

consider increased travel time costs. Cost and GHG reduction data from the Moving 

Cooler study suggest a cost-effectiveness of -$320 per tonne, considering vehicle operating 

cost savings but not travel time costs.

State analyses for climate action plans have produced varying estimates of costeffectiveness, from $-200 to $55 per tonne of CO2 reduced. These proposals included both 

increased enforcement and lowered limits, and several applied only to heavy-duty trucks. 

Some also included vehicle operating cost savings.

Cobenefits

Speed limit reductions would result in fuel savings and other vehicle operating-cost 

savings, but also increased travel time costs. Tradeoffs between fuel-cost savings and 

travel time costs can especially factor into freight transporters’ practices; for example, in 

March 2008 one major trucking firm announced that it was limiting speeds to 62 mph in 

order to reduce fuel consumption (Marketwire, 2008), suggesting that the travel time 

savings above that speed were of less value than the increased fuel costs.

Speed limit reductions also would have safety benefits. A National Academy of Sciences 

analysis estimated that 4,000 traffic fatalities were averted per year as a result of the 

previous national speed limit (TRB, 1984), which translates into $24.4 billion using the U.S. 

EPA, Science Advisory Board $6.1 million “value for a statistical life.”
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Speed reductions may result in reductions of some criteria pollutants and precursors. 

NOx in particular increases significantly at higher speeds and so should see the greatest 

reduction; the EPA’s MOBILE6 emission factor model predicts that NOx emissions are 

about 10 percent lower at 60 mph compared to 65 mph, or 17 percent lower at 55 mph 

versus 65 mph. Maintenance requirements also are expected to decrease for heavy-duty 

diesel trucks as a result of less engine and brake wear (EPA, 2004).

Feasibility

With the exception of the enhanced enforcement options discussed above, barriers to 

speed limit reductions are social and political rather than technical. The previous national 

speed limit initiative met with substantial resistance across the country and was limited in 

its effectiveness by inconsistent enforcement. Enhanced enforcement options that rely on 

speed cameras or GPS also are likely to encounter significant public resistance. This 

strategy would therefore require political leadership and a significant public education 

initiative regarding the climate change benefits of reduced speed limits to achieve 

support.
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 4.3 Truck Operations and Management

Truck operations and management strategies are directed at utilizing and operating 

vehicles more efficiently in order to reduce GHG emissions per ton-mile of freight moved. 

Strategies discussed in this report include:

• Implementing idle reduction technologies and regulations to reduce long-duration 

idling;

• Allowing longer and/or heavier vehicles which use less fuel per ton-mile of goods 

carried; and

• Establishing urban consolidation centers on the fringes of cities to consolidate goods 

into loads that can be distributed by fewer and more efficient vehicles.

One strategy that is not directly addressed in this report is improved efficiency in freight 

logistics patterns, or “green logistics.” Examples include load matching to reduce empty 

backhauls, use of routing and scheduling software to reduce distances traveled, and 

flexible loading and receiving schedules to allow drivers to avoid congestion (EPA, 2002). 

These strategies are primarily under the control of the private sector. However, the U.S. 

EPA has undertaken outreach efforts through its SmartWay program to encourage 

businesses and shipping companies to improve freight logistics to reduce GHG emissions, 

and has developed software to assist companies in calculating the GHG implications of 

their logistics decisions. Pricing measures that increase the cost of carbon emissions will 

encourage private companies to adopt more efficient practices by internalizing the costs of 

the carbon emissions related to goods movement.

Truck Idling Reduction

Description

Truck idling reduction strategies include 

education, laws, technology, and land use 

decisions to reduce long-duration idling of 

heavy vehicles. Heavy vehicle operators 

often leave their engines idling for extended 

periods in order to provide cab heat or air 

conditioning, storage cooling, and electrical 

power while they are stationary. Examples 

of idle reduction technologies include: 

providing electrical hookups at truck 

parking spaces; automatic shut-down/startup systems for engines; heating and airconditioning powered by on-board batteries 

or diesel generators (auxiliary power units 

or APUs); and Statewide anti-idling laws to 

require or encourage adoption of anti-idling 

Truck Idling Reduction

Benefits: Low: 1.3-6.1 mmt CO2e in 2030

• Low estimate – truck stop electrification; high 

estimate – idle reduction equipment on all 

sleeper cabs

Direct Costs: Moderate: $20 to $50 per tonne

Net Included Costs: Net Savings: -$480 to -$180

per tonne

Confidence in Estimates: High

Key Co-Benefits and Impacts: Positive

• Reduced air pollutant emissions; long-term 

cost savings to truck owners

Feasibility: High

• Some initiatives in progress

Key Policy Options:

• Uniform anti-idling law
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technology. Truck-stop electrification is only one component of idle reduction because 

many truckers idle at decentralized locations (rest areas, roadsides, other parking areas) 

which cannot be efficiently electrified.

Idle reduction technologies and laws have been implemented to varying degrees 

throughout the country. Of the nation’s 5,000 truck stops, 136 stops in 34 States were 

electrified as of October 2008 (U.S. DOE, 2008); all or part of 25 States have implemented 

anti-idling laws (ATRI, 2009); and 36 percent of trucks with sleeper cabs currently have 

on-board idle reduction technologies (ATRI, 2006).

Most idle-reducing technologies require equipment on-board the vehicle. So-called 

“single system” electrified parking spaces at truck stops require an attachment for the 

truck window through which all services are delivered, and/or components for the truck 

to connect to the electrical grid. On-board technologies have an upfront cost for vehicle 

owners associated with purchase and installation, but financing and tax relief programs 

are available to help users afford idle reduction technology.

While the carbon benefits of this strategy to the transportation sector as a whole are

relatively small (0.3%), truck idle reduction provides net cost savings to trucking 

companies, with a short payback period of two to three years. Although the fuel savings 

are small compared to the transportation sector as a whole, they are significant to 

individual trucking companies. 

This truck idling section addresses two particular anti-idling strategies: installation of 

heating and cooling systems on sleeper cabs and truck stop electrification. These 

strategies are non-additive, since trucks would typically use only one system or the other 

when parked. Of the two measures, the on-board systems have a much larger impact 

since they have the potential to be used regardless of where a truck is parked, while truck 

stop electrification applies only to the use of electrified parking spaces at the nation’s 5000 

truck stops. As a result, the high-end GHG estimate for idle reduction strategies (6.1 mmt 

in 2030) reflects the maximum deployment assumption for on-board systems. The lowend estimate (1.3 mmt) corresponds with a 100 percent deployment assumption for truck 

stop electrification.25

Magnitude and Timing of Greenhouse Gas Reductions

 

There are about 666,000 combination tractor trailer trucks with sleeper cabs registered in the 

United States, according to the 2002 Vehicle Inventory and Use Survey (VIUS). Sleeper cab 

trucks idle, on average, for about five hours a day while consuming about 1 gallon per hour 

while idling (Perrot et al., 2003). In comparison, an APU consumes about 0.3 gallons per 

hour and a battery the equivalent of 0.05 gallons per hour (BusinessWire, 2008a and 2008b).

 

25 While one would not expect to achieve 100 percent deployment, the calculation provides a useful 

bar. Changing the deployment assumption to less than 100 percent would make a difference of 

less than a tenth of a percent in the transportation sector-wide GHG reduction estimate, since the 

current estimate is 0.1%.
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The Moving Cooler study estimated nationwide GHG reductions of 6.1 mmt in 2030 from 

installation of heating and cooling systems in all sleeper cabs, and between 0.4 and 

1.3 mmt from truck-stop electrification depending upon the extent of deployment

(ranging from 1,500 to all 5,000 truck stops in the U.S.). The heating/cooling system 

benefits cannot be added to the truck-stop electrification benefits since trucks would 

typically only use one or the other (Cambridge Systematics, 2009).

On-board idle reduction technology and truck-stop electrification are market-ready and 

are relatively simple and fast measures to implement. The rate of deployment, however, 

is likely to depend upon the specific incentives provided for implementation. As the 

trucking fleet turns over and on-board technologies are installed on more new vehicles, 

the use of on-board technologies will expand. Some on-board technologies, such as APUs, 

can be installed in trucks currently in operation but are most likely to be installed only in 

class A sleeper trucks that are less than four years old due to capital investment 

requirements (Gereffi and Dubay, 2008). Additional incentives and/or regulations may be 

required to achieve more immediate adoption throughout the vehicle fleet, beyond that 

which would occur through normal fleet turnover.

Cost-Effectiveness

The Moving Cooler study (draft work in progress) estimated an overall cost of $16 to $18 

per tonne GHG reduced for heating and cooling systems in sleeper cabs, and $45 to $52 

per tonne for truck-stop electrification, considering direct costs only. Including fuel and 

operating-cost savings to carriers, the cost-effectiveness is estimated to be -$420 to -$480 

for heating and cooling systems in sleeper cabs, and -$180 to -$210 for truck-stop 

electrification (net cost savings for both technologies).

Both the costs and cost savings for these technologies generally accrue to the truck owner 

(although truck-stop electrification requires an initial investment by the equipment 

vendor or property owner, which is recouped through user fees). The average one-time 

cost of implementing on-board idle reduction technologies is around $6,000 per truck 

(ATRI, 2006). Truck owners’ investment will generally be paid back in two years or less at 

a diesel cost of $4 per gallon, or within three years at $3 per gallon. However, in 

California, where diesel particulate filters are required on APUs, the added cost of the 

filter leads to a slight net loss for truck owners with this technology. The most costeffective approach also will depend upon the amount of idling; trucks must idle at least 20

to 30 hours per week to make on-board equipment cost-effective for truckers (Gaines et 

al., 2009).

For electrified truck parking spaces, there is an additional infrastructure cost for parking 

space construction that varies between $6,000 and $17,000, depending on the type of 

electrification service offered that is born by the property owner. The cost of installation is 

born by the vendor at no cost to the land owner. The truck owner will see no up-front cost 

(for single-system hookups), but will pay an hourly fee of between $2.50 and $3.00 for use 

of the system. Because of the operating-cost savings from this strategy, the truck owner 

would see net savings in the range of approximately $1,000 to $4,000 annually with 

electrified parking spaces (Gaines et al., 2009).
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Cobenefits

As shown in Figure 4.3, most idle reduction technologies will reduce air pollution, at least 

for older trucks, with benefits concentrated in the vicinity of truck stops and other truck 

layover areas. For newer trucks, the magnitude of the emission benefits depends upon the 

APU option – whether it has after-treatment, and whether it is diesel-fueled, battery, or 

thermal. Electrified truck stops and diesel-fired heaters will generally reduce NOx

emissions, although APUs provide no NOx benefits for heating and only modest benefits 

for cooling. Air pollution benefits also will vary depending upon the local electricity 

generation mix. Electrified truck stops in regions that rely heavily on coal may see net 

increases in PM emissions, although these primarily occur in rural areas, leading to low 

population exposure (Gaines et al., 2009).

Figure 3.3 Emissions Benefits of Idle Reduction Technologies

Source: Gaines et al. (2009).

APU = auxiliary power unit; DPF = diesel particulate filter (required on APUs on 2007 and newer 

trucks in California); DFH = diesel-fired heater; EPS = electrified parking space.

Feasibility

Although 300,000 truck parking spots are eligible for electrification, it will not be feasible 

to electrify the vast majority of truck parking spots, which are often dispersed (e.g., 

highway shoulders). As a result, the most significant gains from reduced idling will need 

to result from on-board technologies such as diesel fired heaters and storage cooling air 

conditioning units. From a truck owner’s perspective, the primary barriers to 

implementation of anti-idling technologies include initial startup cost, low fuel prices, and 

information dissemination. The added weight of APUs also may pose a barrier; APUs can 

weigh a few hundred pounds, and therefore would allow truckers to carry incrementally 

less payload considering a given State or Federal weight limit.

A combination of regulatory reforms, price incentives, and outreach programs can help to 

combat these barriers. Some price incentives and education/outreach programs already 

exist; for example, the EPA’s SmartWay program offers a variety of financing programs 

for the purchase or lease of idle reduction technologies approved by SmartWay or 

California Air Resources Board, and the Energy Improvement and Extension Act of 2008 
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eliminated the 12 percent excise tax on idle reduction devices for new trucks as a financial 

incentive to retrofit trucks with such devices.

A uniform national anti-idling law would help to unify the existing patchwork of State

laws and encourage more widespread adoption of idle reduction technology.26

Adoption of idle reduction technology is likely to be faster among large fleet operators 

than among small fleet operators and independent truckers who are less able to afford the 

capital investment required for such equipment. In 2002, 55 percent of heavy trucks with 

sleeper cabs were privately owned (used for internal company business), 27 percent were 

motor carrier owned, and 11 percent were owned as independent truckers 

owner/operator, according to the 2002 VIUS. According to the American Transportation 

Research Institute (ATRI, 2006), only 26 percent of sleeper cab truck owners without antiidling technology are likely or very likely to purchase idle reducing technologies. This 

suggests that additional incentives will be required to achieve near-universal adoption of 

these technologies and realize the GHG benefit estimates cited above.

 It is 

currently a State-by-State decision to exempt APUs from a truck’s total weight; a national 

standard could potentially help promote the technology by eliminating the current 

patchwork of regulations. In addition, EPA has issued State implementation plan 

guidance to encourage States to incorporate truck idle reduction projects into their air 

quality planning.

Increased Truck Size and Weight Limits

Description

Increased truck size and weight limits allow 

truck operators to carry more goods per 

truck, using heavier or longer trucks than are 

currently allowed. This basic improvement 

in productivity per truck translates to fewer 

trucks on the road, reduced fuel 

consumption, and reduced greenhouse gas 

emissions. For example, a 129,000-pound 

longer combination vehicle (LCV) consisting 

of a truck towing two 33-foot trailers can 

carry a payload that is 60 percent higher than 

a conventional five-axle semi while using 

only 31 percent more fuel (derived from data 

in Jack Faucett Associates, 1991).

 

26EPA SmartWay’s Model State Idling Law, EPA420-S-06-001, April, 2006, incorporated broad 

stakeholder input into its recommendations for a uniform approach to idle reduction policy.

Increased Truck Size and Weight Limits

Benefits: Low: 0.6 mmt CO2e in 2030

Direct Costs: Low: minimal direct costs

Net Included Costs: Net savings: -$1,200/tonne

Confidence in Estimates: Moderate

• Contingent upon limiting to markets not 

competitive with rail

Key Co-Benefits and Impacts: Uncertain

• Unclear whether positive or negative safety 

impacts

• Cost savings to shippers

Feasibility: Moderate

• Primary political concern is over safety

Key Policy Options:

• Federal policy change to increase size and 

weight limits
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Federal law establishes a gross vehicle weight (GVW) limit of 80,000 pounds on Interstate 

Highways, subject to the Bridge Formula which may require lower weights depending on 

number and spacing of axles. Under Federal law, States may allow larger and heavier 

loads under special permits for nondivisible commodities or international containers. 

Regarding vehicle lengths and configurations, Federal law requires States to allow singe 

48-foot trailers and twin 28-foot trailers on the National Network. Many States allow 53-

foot single trailers; due to a series of legislation adopted between 1956 and 1991, nearly 

half of the States in the U.S. allow heavy and/or long trucks to drive on their roads with 

GVW up to 164,000 pounds and lengths up to 115 feet. Increased size and weight limits 

have primarily been adopted in States where commodities that would benefit most from 

bulk transport (such as natural resources) are an important part of the economy, and in

areas of lower population density where traffic density and therefore potential safety 

concerns are less significant. Both double and triple-trailer LCVs are permitted in most 

States of the Great Plains and Rocky Mountain West, while doubles also are permitted on 

a few access-controlled highways in Florida, Indiana, Massachusetts, New York, Ohio, 

and Washington (Figure 4.4).

Figure 4.4 Long-Combination Vehicles

State Operations

Source: FHWA (2008).
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However, the GHG reduction potential for heavy trucks or LCVs could be offset by its 

impact on freight mode use. If the trucking industry is permitted to use heavier or longcombination vehicles, the industry is likely to capitalize on its shorter, more direct, more 

reliable, and faster routes between origins and destinations to capture 10 to 15 percent of 

the current rail market (Martland, 2007). Rail is a more fuel efficient mode, so any 

diversion from freight rail to truck would represent a negative GHG benefit.

To preclude the potential diversion from rail to truck, heavy or LCVs would need to be 

allowed with specific restrictions to limit potential competition between truck and rail. In 

general, a shipping container makes the long portion of its intermodal trip on a train and 

is carried to the final destination on a truck. A dray move made by a truck that carries a 

container from an intermodal facility or port to its final destination is not rail competitive. 

In addition, natural resources can only be sourced on-location; a coal mine is the only 

place to collect coal. There are specific natural resource sources that are only accessible by 

truck via State highways and other truck routes.

Recognizing these factors, States could realize GHG emissions reductions in truck 

dominant markets with little risk of rail competition by carefully structuring size and 

weight permits to allow LCV trucks carrying natural resources in trucks that weigh up to 

138,000 pounds on designated non-Interstate truck routes (to preclude long-distance 

travel). In addition, Federal policy already allows overweight containers under special 

permit, which can provide for trucks carrying shipping containers for distances less than 

250 miles and weights up to a gross vehicle weight of 110,000 pounds (to improve port 

and intermodal terminal access).

Magnitude and Timing of Greenhouse Gas Reductions

No comprehensive research has been conducted to evaluate the GHG reductions that might 

be achieved from heavy trucks and LCVs. However, Moving Cooler developed some orderof-magnitude estimates. Allowing trucks traveling on non-Interstate truck routes to carry 

heavy natural resources in longer and heavier trucks (increasing the gross vehicle weight to 

138,000 pounds) would save about 40 million gallons of fuel or 0.4 mmt CO2e.27

The benefits of lifting truck size and weight restrictions would likely accrue in two 

increments. The first benefits would accrue very rapidly as the existing tractor trailer fleet 

that already is able to haul heavy trailers is permitted and allowed to do so. The second 

benefits would accrue over time as the remaining existing tractor trailer fleet—already not 

able to haul heavy trailers—turns over and is permitted; the turnover rate for these trucks 

is approximately 10 years.

 Some 

benefits already may be occurring since virtually every State allows overweight/oversize 

trucks as long as the trucker pays the permit fee; allowing dray trucks to carry heavier 

shipping containers from intermodal terminals and ports is estimated to produce annual 

savings of 24 million gallons of fuel, or 0.2 mmt CO2e (Cambridge Systematics, 2009).

 

27The calculation reflects an 85 percent increase in productivity, and assumes that 25 percent of the 

6.57 billion natural resource ton-miles would be carried by permitted heavy trucks.
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Cost-Effectiveness

While increasing truck size and weight limits would involve only modest administrative 

costs, heavy trucks cause more damage to the nation’s infrastructure than do lighter 

vehicles and would therefore more significantly increase infrastructure maintenance costs. 

However, vehicle owners and shippers would benefit significantly from reduced vehicle 

operating costs, and therefore, fees could be charged to recover the added infrastructure 

costs. The Moving Cooler study estimated the cost-effectiveness of increased size and 

weight permits to be about -$1,200 per tonne CO2e reduced—reflecting a net cost savings

(Cambridge Systematics, 2009).

Estimates of total pavement costs and the State cost responsibility from the Federal

pavement cost responsibility from the Federal Highway Cost Allocation Study (FHWA,

2000) suggest that it would cost $399 million ($0.1875 per new VMT) to cover the 

maintenance costs from allowing dray trucks to carry heavier containers and $432 million 

($0.481 per new VMT) to cover the costs of allowing heavier natural resource vehicles.

Heavier and longer trucks mean fewer trucks and lower vehicle operating costs, due to 

both fuel and labor savings. Allowing heavier natural resource vehicles is estimated to 

Safety Impacts of Heavy and Long Combination Vehicles

While heavy and long-combination trucks have generally been opposed due to safety concerns, the literature 

on this topic is inconclusive. A literature review by the Canada Safety Council (2003) found mixed evidence 

on the safety impacts of long combination vehicles (LCV). Some studies suggest that LCVs tend to crash more 

than single trailer trucks, while others suggest that they tend to crash less often. The picture is muddied by 

the inability of researchers to compare the two modes with “all else being equal.” That is, the truckers who 

drive LCVs are generally more highly skilled than the average tractor trailer driver, they are restricted to the 

safest roads, and can only operate in the safest weather conditions. The risk exposure is different for LCV 

operations than it is for normal truck operations. Analysts have arrived at differing conclusions depending 

upon how they account for these risk factors.

Furthermore, crash severity is a concern as well as crash frequency. A 1999 FHWA report suggests that 

LCV crashes tend to be marginally more severe than normal trucks, with a slightly higher injury rate (31.28 

per million VMT for multiples compared to 28.01 for singles) but no significant difference in fatality rates 

(2.44 per million VMT for multiples compared to 2.43 for single trailers).

The same literature review (Canada Safety Council, 2003) found no research about the safety record of 

heavy vehicles of normal size. They will likely follow a similar pattern of crash rates to LCVs due to 

decreased maneuverability.

To the extent that LCVs and heavy trucks reduce overall truck VMT, they have the potential to reduce crashes 

even if crash rates (on a per-mile basis) are similar. A study by the Transportation Research Board (TRB 2002) 

found that differences in crash involvement rates among different truck types are smaller than the differences 

in vehicle capacity and the vehicles they would replace, so involvement rates per unit of truck services should 

decline. This finding suggests that increased use of heavy trucks and LCVs should have a net safety benefit, 

assuming that regulations are implemented in such a way as to reduce overall truck VMT (as required to 

achieve greenhouse gas reductions). If LCV and heavy truck use were expanded to more urbanized areas 

with higher traffic volumes and congestion levels, however, it is possible that the overall safety impacts could 

be different.
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reduce overall vehicle and driver operating costs by $800 million, accounting for nearly 

twice the permit price (if the price is set to recover infrastructure maintenance costs). 

Allowing heavier containers will reduce overall vehicle and driver operating costs by $174 

million, offsetting only half of the permit cost for heavy container trucks. If truck owners 

are responsible for permitting costs, then shipping heavy containers will increase the cost 

to shippers. However, shippers save $2.2 billion (above and beyond vehicle operating 

costs) by shipping goods in heavier containers. Therefore the increased truck shipping 

cost of $225 million will be covered in full plus the shipper will net nearly $2 billion in 

savings (Cambridge Systematics, 2009).

Cobenefits

Cobenefits include cost savings to shippers (as described above, and which are partially 

offset by increased infrastructure maintenance costs); as well as reductions in fuel 

consumption and emissions, assuming that policies are implemented in such a way as to 

minimize modal diversion from rail. Air pollutant emissions benefits have not been 

comprehensively estimated. Heavy and long-combination trucks have most often been 

opposed due to safety concerns; the existing research on this subject has not produced any 

definitive findings to validate or invalidate these concerns (see sidebar, page 4-43).

Feasibility

Increased truck size and weight limits can be implemented through changes to Federal

policy. Past attempts at increasing these limits, however, have encountered strong 

resistance because of the perception that having longer, heavier vehicles on the road is less 

safe, especially in urban or hilly conditions. Study results are mixed but heavier and 

longer trucks will not gain political footing unless conclusive safety evidence can be 

developed. Safety concerns could potentially be alleviated through the widespread 

implementation of truck-only lanes. It may only be possible to increase size and weight 

limits on certain routes due to engineering issues (most bridges in the U.S. are only rated 

for a maximum 91,000 lb. load). Further implementation of increased size and weight 

limits also could face political resistance both from the rail industry, which will be 

protective of its market share; and from truckers’ unions, who may be interested in 

protecting jobs. It is possible, however, that conflicts with the rail industry can be avoided 

by expanding truck size and weight regulations in noncompetitive markets.

Urban Consolidation Centers

Description

Urban consolidation centers (UCC) are freight facilities where deliveries (retail, office, or 

residential) can be consolidated for subsequent delivery into the urban area in a lowemissions, efficient, appropriately sized vehicle with a high level of load utilization. 

UCCs have two linked objectives: first, to reduce or eliminate the number of large trucks 

operating on urban streets; and second, to avoid the need for vehicles to deliver partial 

loads into urban centers. The center can be developed outside a city center, an airport, or 

another appropriate location with either private or public support. While the UCC 
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concept is new to the U.S., a total of 67 

UCC schemes with evidence of 

detailed research or in-place 

operations have been identified in 

Europe and also in Japan (Woodburn 

et al., 2005).

UCCs are likely better suited to some 

types of goods and vehicle 

movements than others. They are 

unlikely to be suited to perishable and 

highly time-sensitive products (such 

as fresh food) and goods with specific 

distribution and handling 

requirements. In addition, vehicles that already are carrying full loads for a single 

destination will not benefit from a UCC. From the evidence available, UCCs are most 

likely to be successful in situations where urban centers are undergoing growth in retail, 

suffering from delivery truck traffic congestion or quality of life related impacts, or 

conducting major construction projects where a consolidation center could reduce costs 

and organize deliveries (Woodburn et al., 2005).

Urban consolidation centers could result in three primary outcomes that could reduce 

GHG emissions:

• Reduced road freight traffic levels (i.e., reducing goods vehicle movements in the 

urban area through improved consolidation or modal shift);

• Improved efficiency and thus reducing fuel consumption per ton of urban freight 

transportation operations (through improved load factors and the need for fewer 

deliveries); and

• Greater use of environmentally friendly vehicles.

Magnitude and Timing of Greenhouse Gas Reductions

A 2005 University of Westminster study focused on data from 17 urban consolidation 

centers successfully implemented in Europe and Japan. Reductions in urban truck VMT 

from these centers ranged from 30 to 45 percent for the shipments served (Woodburn et

al., 2005).

The Moving Cooler study evaluated a hypothetical scenario of developing consolidation 

centers on the periphery of large urbanized areas in the U.S. (Moving Cooler, draft in 

progress). The focus is on less-than-truckload carriers, which collect freight from various 

shippers and consolidate that freight onto enclosed trailers for linehaul shipment to the 

delivering terminal or to a hub terminal. These carriers represent 8.6 percent of total 

urban truck miles. Using VMT percent reduction estimates from the European examples, 

Urban Consolidation Centers

Benefits: Low: <1 mmt CO2e in 2030

Direct Costs: Moderate: $30 to $60 per tonne

Net Included Costs: Net savings: -$300 per tonne

Confidence in Estimates: Low

Key Co-Benefits and Impacts: Mostly positive

• Reduced truck volume and emissions in urban areas; 

increased local truck traffic around center

Feasibility: Unknown

• Concept unproven in U.S.

Key Policy Options:

• Feasibility studies/demonstration projects
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this analysis found that a GHG reduction in 2030 of 0.2 to 0.3 mmt CO2e could be 

achieved, depending upon the total number of regions where UCCs are applied.

Assuming that the UCC concept was proven viable in the U.S., UCCs could be 

implemented within a few years. The primary requirements are to establish suitable sites 

as well as a revised distribution structure, working with private shippers.

Cost-Effectiveness

The general European consensus is that in the long-term UCCs must be financially 

successful in their own right, and that subsidies are not a viable solution. This means they 

would pay for themselves through reductions in shippers’ operating costs, and therefore 

have zero (or negative) cost per tonne of GHG reduced. However, the European studies 

also recognize that without some initial funding from central or local government to pay 

for research work and pilot studies, UCCs are unlikely to be developed, let alone succeed. 

The Moving Cooler study U.S. assumes development costs of $5 million per 1 million 

population. This results in a net cost-effectiveness of $30 to $60 per tonne CO2 reduced 

over the 2010 to 2050 period, including investment costs only, or savings of about $300 per 

tonne CO2e, including reduced shipping costs (Cambridge Systematics, 2009).

Cobenefits

Consolidation of goods has additional economic and environmental benefits. From an 

economic perspective consolidation can help to increase the volume of goods carried on 

vehicles entering a given urban area, thereby reducing the unit costs of transportation for 

the final delivery stage, as well as reduce the number of deliveries that have to be received 

at a location, thereby reducing the disruption and labor requirements associated with 

receiving multiple deliveries. From an environmental and quality of life perspective, 

consolidation can help to reduce fuel consumption and total truck volumes in urban areas, 

thereby reducing criteria air pollutant emissions, as well as improve quality of life in 

urban areas by removing delivery trucks from city streets.

Reductions in criteria pollutant emissions will depend upon the emissions characteristics 

and VMT of the specific types of vehicles utilized. Quantitative estimates of emissions 

reductions have not been developed. Some negative impacts may be realized in the 

immediate vicinity of the center due to the increased concentration of truck traffic at the 

center. Careful siting will be important to minimize impacts on residential 

neighborhoods.
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Feasibility

UCCs have seen varying levels of success in Europe, and there are a number of unknowns 

regarding costs and the willingness of shipping companies to support development. 

Siting of the centers is likely to be a challenge due to potential neighborhood opposition to 

the concentrated truck traffic. A comprehensive study and successful pilot projects would 

need to be completed in the U.S. in order to demonstrate the potential for GHG reduction 

benefits from this strategy.
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 4.4 Freight Rail and Marine Operations

Improvements to the operating efficiency of rail and marine freight systems, including 

ports and truck-rail intermodal terminals, can reduce energy use per unit of movement by 

these modes. Furthermore, these improvements also can encourage shippers to shift 

freight movements from truck to the more energy-efficient rail and marine modes. The 

effects of rail and marine improvements are discussed separately as follows:

• Rail modal diversion – shifting freight from truck to rail;

• Marine modal diversion – shifting freight from truck or rail to marine vessels;

• Operating efficiency improvements on the rail system and at truck-rail intermodal 

terminals; and

• Operating efficiency improvements at ports and in marine operations.

Modal diversions from truck to rail or marine are not the only potential freight modeshifts with GHG benefits, although they are the ones that have received the most 

attention. There also may be potential for GHG benefits from shifting air cargo to truck. 

Domestic air cargo shipments are quite sensitive to fuel prices and airline equipment 

configuration. Shipments designated “air cargo” for overnight services may move by 

truck, especially between city pairs that are relatively close together. Moreover, the 

increase in fuel prices in 2008 compelled airlines to cut plane capacity and frequency of 

service along lower demand routes. Fewer flights carrying more passengers and their 

baggage left less belly cargo capacity (both weight and volume) for freight, forcing an 

increasing volume of freight to trucks. This shift is more pronounced on domestic routes

than on international routes. Public-sector initiatives could shift cargo from air to truck if 

they affected revenue or cost (e.g., fuel taxation), but the potential GHG benefits of doing 

so have not been estimated.

Pipelines are the safest and most efficient method for transporting large volumes liquid 

and gaseous substances, and may be useful for transporting alternative fuels such as 

ethanol or hydrogen if these fuels come into widespread use. Again, it is not clear that 

policy actions could achieve additional GHG reduction benefits beyond current level of 

commodity transport by pipelines. Moreover, a life-cycle assessment would be needed to 

consider the new construction of alternative networks for pipeline transport versus 

conversion of existing networks. Therefore these strategies are not analyzed further in 

this report.
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Rail Modal Diversion

Description

Greenhouse gas emissions from 

freight transport may be reduced by 

shifting freight traffic to modes that 

are more energy- and carbonefficient – generally from trucking to 

rail or marine. Such shifts may be 

encouraged through infrastructure 

improvements that reduce the time 

and cost of shipping or increase 

reliability by these modes; by 

financial incentives or disincentives 

that encourage different shipping 

patterns; and through other policy 

and regulatory actions.

Examples of strategies to achieve 

modal diversion to rail include:

• System Investment – Investing in 

rail lines, intermodal terminals, and their operations to eliminate chokepoints, reduce 

delays, and improve the speed and reliability of rail freight transport, or to expand the 

reach of the rail network (see sidebar on page 4-50). A study for the American 

Association of Railroads (AAR) projected that the private sector will be unable to 

invest the full amount necessary to relieve capacity constraints in the nation’s rail 

network. As a result, additional public sector investment may be needed if rail is to 

enhance its competitiveness and carry more goods. Many States have rail/economic 

development programs to pay for rehabilitation of rail sidings and upgrade of shortline tracks and bridges to maintain rail connections between major businesses and 

Class I railroads. Additional intermodal terminals or transload facilities (for bulk 

materials) could be established to serve markets where demand has not been sufficient 

to support private-sector investment.

• Diesel Fuel Pricing – Increasing the price differential between truck and rail service 

by increasing the cost of onroad diesel fuel. For long-haul truckload carriers, the cost 

of fuel approaches (and sometimes exceeds) the cost of driver labor. When fuel costs 

rise, truckload carriers, shippers, and third-party logistics providers (who act as agents 

for shippers) will move longer-haul shipments from truck to rail.

• Shipper Incentives – Providing subsidies or incentives (such as new-user discounts) 

for shippers to use rail in markets that are marginally competitive with trucking. This 

particular strategy is little used in today’s economically deregulated freight markets, 

although the Port Authority of New York and New Jersey recently announced that it 

will reduce fees from $52 to $27 per container shipped by ExpressRail to any ocean 

Rail Modal Diversion

Benefits: Low: 0.2-4.7 mmt CO2e in 2030

Direct Costs: High: $370 to $450 per tonne

Net Included Costs: Net Savings to Moderate: -$50 to 

+$70 per tonne

Confidence in Estimates: Low

• No reliable estimates of potential for rail modal 

diversion – estimates are aspirational

Key Co-Benefits and Impacts: Positive

• Safety, congestion, and air quality benefits from 

reduced truck traffic

Feasibility: Moderate

• Most “easy” rail capacity improvements already 

implemented; some investments will be made by 

private sector

Key Policy Options:

• Investment in rail and intermodal infrastructure
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carrier that increases the number of containers it transports over its 2008 levels

(Journal of Commerce On-Line, 2009).

• Logistics Parks – Facilitating development of logistics parks. Logistics parks, 

sometimes dubbed “freight villages,” cluster distribution and assembly facilities 

around a rail terminal to minimize the amount of time and truck travel needed to 

collate goods arriving from global and national suppliers and by train and dispatching 

loads tailored to the needs a specific store by truck. There are a number of examples of 

logistics parks in Europe, and CSX is pursuing this strategy in the Southeastern U.S.

• Container Standardization – Establishing greater standardization of intermodal boxes 

and trailers. While standard box sizes are common for ship and rail modes, trucking 

has used a variety of trailer payload configurations; these reduce the multibox 

capacity of intermodal transportation by rail and ship. Standardization has been 

proposed by the European Commission and holds some promise for long-term 

competitiveness improvements for rail and marine shipping.

Other actions that have been proposed but received little study include local zoning 

policies or “land banks” to preserve land around rail sidings for the exclusive use of railusing businesses; and working with Class I railroads to provide trackage rights for shortline railroad operators to expand the reach of their service and reduce the number of 

separate movements involved in a particular shipment.
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Magnitude and Timing of Greenhouse Gas Reductions

Shifting freight from truck to rail or marine is likely to have GHG reduction benefits, 

although the magnitude of these benefits will vary depending upon factors such as the 

length of the haul and the type of cargo. A review of recent estimates from the U.S. EPA 

SmartWay program, U.S. Maritime Administration, North American Commission for 

Environmental Cooperation, and Australian Network Access suggests that reductions on 

the order of 60 percent per ton-mile are feasible for shifts from trucking (trailers or 

Rail System Chokepoints

Chokepoints can either cause delay to trains or limit a train’s carrying capacity or productivity. Delay 

chokepoints are located at terminals (intermodal facilities, terminals, ports, and gateways, carload 

terminals, fueling stations, and maintenance facilities), bridges (such as those over the Mississippi or Ohio 

Rivers), tunnels (such as the Baltimore tunnels or the Virginia Avenue tunnels in Washington, D.C.), at 

grade crossings, single track segments, and tracks with low capacity signal systems. Productivity 

chokepoints include low overhead bridges that prevent passage of intermodal trains with doublestacked 

containers and track that cannot carry today’s standard 286,000 pound railcar. These capacity constraints 

can cause a significant delay on rail trips and can reduce the total carrying capacity between important 

shipping markets.

Reducing delays at chokepoints can provide GHG reduction benefits by encouraging mode shifts from 

truck to rail. Chokepoints also increase rail GHG emissions by lowering traveling speeds, increasing yard 

idle delay, and increasing passing siding idle delay, and they increase auto and truck GHG emissions by 

increasing at-grade crossing idle delay. Productivity chokepoints increase GHG emissions by reducing 

train carrying capacity (i.e., requiring more trains to carry the same amount of freight).

Similar to highway bottleneck improvements, alleviating chokepoints on the rail network can be 

accomplished with infrastructure investment, operations strategies, or demand side improvements. For 

the rail system, infrastructure investments include installing additional track, adding capacity to 

significant bridges or tunnels, constructing additional crossovers, removing double stack operating 

restrictions by improving clearances throughout the network, and removing at-grade crossings. 

Operations strategies include improving signal systems, central traffic control, and real-time optimization 

software that identifies the most efficient routes. Demand side improvements include increasing 

productivity by increasing the number of trains on a segment, hauling more cars per train, and loading 

railcars more efficiently.

It is unclear how many chokepoints exist on today’s rail network. In 2005, about 1,570 miles (about 

four percent) of the Class I railroad primary mainline track was operating at or above capacity, suggesting 

that there are mainline chokepoints for which signal and track improvements are appropriate fixes (AAR 

2007). There are, however, many chokepoints not captured in a mainline analysis including significant 

bridges, terminals, tunnels, grade crossings, and clearance chokepoints. Due to the unique nature of 

individual rail projects and their potential savings, there are no sources that chronicle rail chokepoints or 

the potential benefits of relieving these chokepoints at a national scale.

Improvements to rail infrastructure are usually funded by the railroad owner. The railroads will pay for 

expansion so long as they receive a return on their investment. Examples of ongoing initiatives include 

Norfolk Southern’s Crescent Corridor and CSXT’s National Gateway projects. However, there is 

increasing interest in public-sector support for rail infrastructure improvements, as evidenced by the 

several State funding programs (e.g., Virginia’s Department of Rail and Public Transportation’s Rail 

Enhancement Fund and Pennsylvania DOT’s Freight Rail Grants programs) and other national programs 

such as FHWA’s Projects of National and Regional Significance. These programs are intended to bring 

about further improvements that would not occur through private initiative alone. In a few places, public 

or quasi-public agencies have taken over railroad ownership, maintenance, and operations 

responsibilities. For example, the Vermont Rail System operates 230 miles of track in the State of 

Vermont.
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containers) to long-haul intermodal rail, with reductions decreasing with shorter 

distances. An international study estimated the efficiency of rail freight to be 14 grams per 

ton-kilometer (g/ton-km) for the entire U.S. railroad system; however, this includes the 

more efficient bulk cargo transport trains. The efficiency for intermodal (container) trains, 

which would carry most of the freight shifted from truck to rail, is in the range of 35 to 

50 g/ton-km. These figures compare with an average truck efficiency in the United States 

of about 150 g/ton-km (Buhaug et al., 2008).

Significant caveats must be considered when comparing nominal GHG reductions per 

ton-mile, however. One factor that must be considered is the distance of the movement. 

The greatest reductions per ton-mile occur for the longest-distance moves. For a given 

door-to-door movement, the truck haul is much more likely to use one vehicle in a direct 

route. For rail, the cargo must be moved by a drayage truck from the shipper to the 

railhead. Terminal equipment, including yard trucks, straddle carriers and other lifting 

devices, then transfer the container or truck trailer to flat cars. Smaller locomotives, know 

as switching engines, move the cars to configure the train. The very efficient rail line haul 

(the long-distance portion) must then be followed by the terminal and drayage activity on 

the destination end. Because the rail network is less dense than the highway network, the 

rail route may be less direct than the highway route. Because of the drayage moves in 

particular, which may range from 50 to over 200 miles, most of the GHG emissions 

advantage of rail disappears at distances less than 400-500 miles, and the maximum 

benefits are only gained at over 1,000 miles.

A second factor to be considered is the potential for shifting particular commodities. Only 

a limited number of commodities are amenable to shipment by both truck and rail. 

Heavy, lower-value commodities such as coal, grain, and iron ore will travel by truck only 

for short distances because of the higher labor and fuel cost of trucks and restrictions on 

weight-carrying capacity of bridges and highway pavements. Most heavy commodities 

move by rail, which is engineered to carry larger, heavier loads and realize economies of 

scale. The costs savings of moving by rail generally offset the slower and sometimes less 

reliable transit times of rail. Lighter, higher-value commodities are generally dependent 

upon trucks’ generally higher speed and reliability (except perhaps for transcontinental 

movements). Thus, only commodities with more moderate weights and values may be 

considered for shipment by both modes.

In addition to the type of commodity, the volume of the commodity being moved must be 

considered. An individual rail car carries the equivalent of many truck loads. If the total 

volume of a commodity moving between a pair of cities is low, or the shipments are 

infrequent, it may not be economical for the shipper or the railroad to switch from truck to 

rail. The final factor is the network. The U.S. rail network has about half the mileage 

today that it had in early 1900s. Many rail lines have been abandoned as uneconomical 

because population and industry have shifted location, and trucking’s more direct and 

timely service has become increasingly important with the rise of “just in time” supply 

chains to avoid warehousing. Reinvestment in abandoned lines would be needed to once 

again expand the reach of the rail system.
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The portion of freight that might be divertible from one mode to a more GHG-efficient one 

will depend on many factors, including network infrastructure, supply chain logistics, 

goods bundling, and technology investment. One aspirational study estimated that if 10 

percent of long-haul, dry-van truck freight (that is, boxed freight, grains, and other bulk 

materials moving over 500 miles) were diverted to intermodal rail, GHG emissions could 

be reduced by 185,000 metric tonnes CO2e annually (U.S. EPA, 1999). The Moving Cooler

study estimated that an aggressive program of rail capacity improvements (reducing 

chokepoints by 20 to 60 percent based on 2025 needs) could reduce emissions by 1.6 to 

4.7 mmt CO2e in 2030 (Cambridge Systematics, 2009). This range of results also reflects 

aspirational goals; the study assumes that 10 percent of rail traffic will be diverted to truck 

in the absence of chokepoint improvements and that between 20 and 60 percent of that 

traffic will be diverted back to rail with chokepoint improvements.28

Actions that do not require major capital investments can achieve GHG reductions 

quickly. These include price effects, operational improvements, incremental additions to 

existing terminals, and new services can produce benefits within months. Infrastructure 

investments require extended time to implement and are dependent on the availability of 

capital funding. The most significant benefits from infrastructure investments typically 

commence within five to 10 years of project inception. At some point, rail capacity limits 

will require additional investment for benefits to continue to grow.

Cost-Effectiveness

The cost-effectiveness of rail modal shifts is likely to vary widely because of the wide 

range of costs involved, different implementation mechanisms, and because of the 

variability and limitations of information on how much modal diversion might occur for a 

given improvement. Cost-effectiveness is highly dependent on the costs for infrastructure 

investment to facilitate intermodal rail service, which in turn varies widely. Capacity 

expansion projects can be capital intensive, and investments for mode-shift may require 

larger projects than incremental expansion of highway networks. Between 2005 and 2007, 

the railroads spent an average of $1.5 billion on capacity expansion per year. The average 

bridge, tunnel, or clearance project costs $200-$300 million per structure, the average 

signalization upgrade costs about $600,000 per mile, and the average mainline track 

upgrade costs about $4.4 million per mile (AAR, 2007).

Costs for an intermodal rail terminal can range from $10 million for a smaller, peri-urban 

top-lift/trailer ramp facility, to an estimated $612 million for the pending Detroit 

Intermodal Freight Terminal project. In the current supply chain paradigm that favors 

goods packaged for retail delivery with minimal warehousing, shippers may incur added 

logistics and handling costs associated with intermodal movements; these costs may offset 

the cost savings associated with greater fuel and labor productivity. Achieving system 

efficiencies based on low GHG targets would require that shippers realize a net cost 

 

28Some consider this to be a conservative estimate of the amount of freight that could be diverted to 

rail.
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savings, perhaps with economic instruments or public subsidies that motivate additional 

mode shifts.

Because of the variety of implementation mechanisms and the uncertainty over mode shift 

impacts there are no fully reliable estimates of cost-effectiveness. However, some rough 

estimates have been developed. Estimates based on implementation costs alone 

developed in the Moving Cooler study range from $370 to $450 per metric tonne of CO2e 

reduced, with a net cost of -$50 to +$70 per tonne once operating cost savings are 

included. Other studies that incorporated operating cost savings have developed 

estimates ranging from $80 to $104 per metric tonne CO2 (EPA 1999, Arkansas GCCW 

2008), to $35 per metric tonne for the Michigan Climate Action Council’s analyses (MCAC,

2009), which incorporated fuel savings directly. The analysis time horizon affects the costeffectiveness estimates since costs are incurred up-front, but benefits are anticipated to 

grow over time; using a 20- or 30-year timeframe rather than the approximate 2020 

timeframe of the State climate action plans usually would increase the estimated costeffectiveness.

Under current practices, the costs of rail and intermodal improvements are borne 

primarily by the private railroads and by port authorities (which are generally financed 

through user fees). To create modal shifts beyond those expected from current levels of 

private investment, public funding or tax or financial incentives would be required. It is 

possible that some of the public capital investment or incentives could be recouped over 

time through user fees, as shippers benefit from the improved conditions.

Cobenefits

Any shipper or business that voluntarily shifts modes is assumed to realize a net benefit 

from reduced shipping costs, which would more than offset the value of any fees paid for 

the service as well as any increases in other logistics costs. The magnitude of the cost 

savings would depend greatly upon the specific improvements made and characteristics 

of the modal alternatives available to a given shipper.

Rail infrastructure improvements are expected to provide air quality benefits. One study 

of truck, rail, and marine alternatives along the East Coast suggests that – for all 

pollutants – rail vehicles emit less pollution per 20-foot equivalent unit (TEU)-mile than 

trucks, with reductions of about 60 percent for VOC and NOx and 40 percent for PM10, as 

shown in Table 4.4.

29

Rail chokepoint relief projects that involve major construction (such as adding trackage or 

reconfiguring rail yards) could result in re-accessing inactive easements, new property 

 However, these estimates do not consider the emissions from truck 

drayage at one or both ends of the journey. The health impacts of these emissions will 

depend upon their potential exposure to human populations.

 

29A TEU, or twenty-foot equivalent unit, is a common defined container unit for shipping cargo. At 

its standard, it is 20-feet long, 8’6”-feet high and 8-feet wide.
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takings, or other community and environmental impacts. Closing at-grade crossings may 

hurt local mobility (unless overpasses are provided) but will improve safety by reducing 

exposure at train crossings.

Table 4.4 Emission Factors (grams per TEU-mile), Modeled East Coast 

Shipping Alternatives

Mode VOC CO NOx PM10 SOx

Truck 0.34 1.64 6.86 0.12 0.22

Rail 0.14 0.39 2.81 0.07 0.03

Ship 0.30 1.37 7.93 0.23 3.91

Source: Corbett et al. 2007.

Feasibility

To date most of the easier rail capacity improvement projects have been built, leaving 

primarily the more difficult and expensive projects. In addition to being expensive, many 

of the remaining critical needs are set in urban environments where there are substantial 

constraints on right-of-way as well as added costs for mitigation of impacts. The railroads 

spent, on average, $1.5 billion annually for capacity expansion between 2005 and 2007. 

Assuming that today’s freight mode shares continue in the future, the Class I railroads 

will need to fund about $4.8 billion in improvements per year just to implement capacity 

improvements and chokepoint relief and keep up with growing freight demand. 

Productivity improvements and increased revenue from higher traffic volumes will 

generate $3.4 billion per year for infrastructure improvement leaving the balance, an 

additional $1.4 billion, to be funded from public or other sources (AAR, 2007).

There are several State and Federal programs that will fund rail improvement to help 

bridge the gap between investment needs and the availability of private capital. The 

Federal-aid highway funding program also allows some flexibility in using funds for 

nonhighway freight transportation projects. However, neither the railroads nor the States 

will fund chokepoint improvement projects unless there is sufficient evidence that there 

will be an appropriate return on the investment. For example, Virginia will generally not 

fund rail projects unless they can measure an appropriately high (public) benefit/cost 

ratio. Resistance to the use of public funds may be overcome, as in Chicago’s CREATE 

project, with extensive analysis showing the public benefits of responsible public 

investment.
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Marine Modal Diversion

Description

Greenhouse gas emissions from freight 

transport also may be reduced by 

shifting freight traffic from trucks or 

trains to ships, in markets where waterborne transport alternatives exist. 

These include short-sea shipping along 

coastal routes, as well as barge moves 

along inland waterways, especially in 

the Mississippi River basin and Great 

Lakes.

“Short-sea” shipping is defined as 

shipping on routes that do not cross 

the ocean. Several such services 

already in existence, including 

private services in niche markets on 

the West Coast (Cambridge 

Systematics, Inc. et al., 2007), and a 

privately run service along the Gulf 

Coast started in 2000 (GAO, 2005). 

The Port Authority of New York and New Jersey and the Port of Albany initiated a 

subsidized service in 2003, but this was discontinued when funding ran out (GAO, 2005). 

Expansion of short-sea shipping has been studied as a congestion reduction strategy.

“Marine highways,” which encompass short-sea shipping routes, are coastal, intracoastal, 

and inland waterways, mostly in the Mississippi River basin, Great Lakes, and along the 

East Coast. The Marine Highway Program (run by the U.S. DOT’s Maritime 

Administration, MARAD) was established in 2007 to designate marine highway corridors, 

make these corridors eligible for support for improvements, and provide assistance in 

coordinating with and obtaining funding from existing sources.

Magnitude and Timing of Greenhouse Gas Reductions

Shifting freight from truck or rail to marine vessels is likely to result in GHG reduction 

benefits under certain circumstances, although the magnitude of these benefits is debated. 

One study comparing inland waterway shipments with rail and truck estimated that 

inland towing can move 576 ton-miles per gallon, a 28 percent improvement over rail 

(413 tonne-miles/gallon) and a 73 percent improvement over truck (155 tonnemiles/gallon) (Kruse et al., 2007). An international study found that the efficiency of 

oceangoing and coastwise shipping, as measured in CO2 per ton-km, is typically in the 

range of 10 to 35 g/tonne-km for general cargo and container ships, compared with 35 to 

50 g/tonne-km for intermodal (container) trains and 150 g/tonne-km for road (Buhaug et 

al., 2008). Modal efficiencies vary substantially by the type of shipment (e.g., bulk versus

container); ranges for a variety of types are shown in Figure 4.5.

Marine Modal Diversion

Benefits: Low: 0.2-0.4 mmt CO2e in 2030

Direct Costs: High: $730 to $1,500 per tonne

Net Included Costs: High: $550 to $1,300 per tonne

• Cost estimates for inland waterway system only –

short-sea shipping not estimated

Confidence in Estimates: Moderate

• Precise estimate uncertain, but magnitude is bounded 

by size of system

Key Co-Benefits and Impacts: Mixed

• Benefits from reduced truck traffic on roadways; may 

be positive or negative local air quality impacts

Feasibility: Low to Moderate

• Short-sea shipping initiatives have met with limited 

success

Key Policy Options:

• Capital investment in inland waterway system

• Subsidies for short-sea shipping
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Figure 4.5 Range of Typical CO2 Efficiencies for Various Cargo Carriers, g 

CO2/tonne-km

 

 

Source: Buhaug et al 2008.

Crude

LNG

General Cargo

Reefer

Chemical

Bulk

Container

LPG

Product

RoRo/Vehicle

Rail

Road

0 50 100 150 200 250

As with rail shipping, GHG emissions resulting from drayage moves to the port, as well as 

terminal operations, must be accounted for. Inland marine routes are generally 

considerably more circuitous than highway or rail routes, and some routes are often further 

constrained by seasonal variation (e.g., inland water level, Great Lakes waterway freezing). 

Furthermore, marine access simply does not exist for some population centers far from 

coasts or rivers. Similar to rail, marine shipping is primarily suited to larger bundles of 

goods and heavier commodities; inland river service has been dominated historically by 

lower-value-per-ton commodities such as agricultural, mineral, and energy cargoes.

Comprehensive estimates of the amount of cargo that could shift from truck or rail to 

marine have not been developed. One study assumed that investment in the waterway 

system would allow water traffic to grow by 33 to 75 percent between 2006 and 2025,

rather than the annual reduction of 0.42 percent that has been seen in recent years.30,31 

These assumptions resulted in a GHG emissions reduction of 0.2 to 0.4 mmt CO2e in 2030 

(Cambridge Systematics, 2009).

32

 

30A 50 percent increase was assumed in the Waterborne Freight Transportation Bottom Line prepared 

for AASHTO (Cambridge Systematics, Inc., 2006).

31Derived from U.S. Army Corps of Engineers (2006).

32 Some consider this to be a conservative estimate of the amount of freight that could be diverted 

to marine.
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Cost-Effectiveness

A private short-sea shipping service along the Gulf Coast has been successful in operating 

without public subsidies. However, for the New York service, the ports had to provide 

subsidies to set shipping rates 10 percent lower than truck rates, with the program funded 

at over $2 million in 2005 (GAO, 2005). A study of short-sea shipping between U.S. and 

Canadian ports in the Pacific Northwest concluded that service to the Ports of Vancouver 

and Seattle would yield only minimal shipping cost savings and therefore require a 

subsidy of at least $1.6 million per year to be viable. However, the study also found that 

service to the Port of Tacoma would generate a 9 percent cost savings and could be viable 

(Cambridge Systematics, Inc. et al., 2007). These cost differentials could change 

depending upon changes in fuel, labor, and other costs.

Overall, the cost-effectiveness of lakewise and inland waterway improvements when 

judged on GHG reduction appears to be poor, with one set of estimates ranging from $730 

to $1,450 per tonne considering investment and operations costs only, or $550 to $1,270 

per tonne considering shipper cost savings (Cambridge Systematics, 2009). This study 

assumed capital investment costs of $3 to $12 billion through 2025, based on the total 

construction backlog for Army Corps of Engineers navigation projects estimated to be $10 

billion in 2003 (Vining, 2003), and annual maintenance costs of five percent of the capital 

costs.

Cobenefits

Any shipper or business that voluntarily shifts modes is assumed to realize a net benefit 

from reduced shipping costs, which would more than offset the value of any fees paid for 

the service as well as any increases in other logistics costs. The magnitude of the cost 

savings would depend greatly upon the specific improvements made and characteristics 

of the modal alternatives available to a given shipper.

Despite the higher energy efficiency of marine goods movement, emissions of air 

pollutants may not necessarily be reduced due to the less stringent air pollution controls 

on marine vessels. One study of truck, rail, and marine alternatives along the East Coast 

suggests that marine vessels emit slightly less VOC per ton equivalent unit (TEU)-mile 

than trucks, but slightly greater NOx and PM and significantly greater levels of sulfur 

dioxide (Corbett et al., 2007). However, recent changes to Annex VI of the International 

Convention for the Prevention of Pollution from Ships (MARPOL 73/78) may result in 

significant improvements for reducing marine emissions of NOx, SOx and PM and will 

likely reverse this situation. Marine vessels also have higher emissions than rail for all 

pollutants (Table 4.4). Another study comparing inland towing with truck and rail modes 

came to different conclusions, estimating that inland marine vessels emitted 13 percent 

less HC and about 35 percent less VOC and NOx than trucks, and also less emissions than 

railroads (Kruse et al., 2007). None of these estimates include emissions from drayage 

activity. Furthermore, they do not consider future changes in emissions levels (such as 

will be achieved through greater regulation of marine vessel emissions), which could 

change the relative impact of each mode.
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Even if emissions levels per tonne are higher from marine vessels, the net health impacts 

of these emissions will be lower if they are concentrated offshore, away from populated 

areas, as opposed to land-based truck and rail traffic concentrated near populated areas.

Feasibility

Public investment may be required in subsidizing services such as short-sea shipping, in 

order to establish services that may not be viable for the private sector. Substantial 

increases in fuel costs could potentially make short-sea shipping more competitive. Shortsea shipping has some unique additional constraints. As for truck-rail movements, costs 

are largely determined by the cost of handling shipments at the interchanges. The 

handling costs at ports are often high – the result of labor agreements as well as lower 

productivity rates in moving small volumes of container or trailers to and from barges 

compared to ocean-going containerships. An additional constraint on short-sea shipping 

is the Jones Act, which restricts water transport of cargo between U.S. ports to U.S.-

flagged carriers. The provisions of the Jones Act protects U.S.-flagged carriers from 

competition by lower-cost foreign carriers (lower cost because the foreign carriers may be 

working under less rigorous labor, safety, and environmental regulations), but those 

provisions also make short-sea shipping more costly and less competitive than domestic 

trucking and rail-freight service.

Rail and Intermodal Terminal Operations

Description

Emissions may be reduced from 

locomotives through reduced idling 

or other operational efficiencies. 

Operating efficiency improvements 

may be realized by relieving 

chokepoints as discussed in the 

previous strategy, as well as by 

implementing revised operating 

procedures and idle reduction 

technologies in rail yards.

The most significant efficiency 

benefits may be from switcher 

locomotives, which spend virtually 

all of their time within a rail yard, 

assembling and disassembling 

trains. Switcher locomotives never 

reach high speeds and can spend up 

to 75 percent of their time idling, 

consuming 27 percent of their fuel 

while idling (Argonne, 2009). Idle

Rail and Intermodal Terminal Operations

Benefits: Low: 1-2 mmt CO2e in 2030

• Includes only switchyard idle reduction and railhighway grade crossing elimination

Direct Costs: Unknown

Net Included Costs: Unknown

• Net savings for locomotive idling reduction

Confidence in Estimates: Low

• Benefits of chokepoint relief, rail operations, and 

port/terminal equipment unknown

Key Co-Benefits and Impacts: Positive

• Air quality benefits from reduced idling and other 

emissions; cost savings to shippers

Feasibility: Moderate

• Some idle reduction initiatives undertaken at a State

level

Key Policy Options:

• Investment in rail and intermodal infrastructure

• Regulations or voluntary partnerships with railroads 

to promote GHG assessment and reduction practices 

(e.g., idle reduction)
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reduction technologies can be applied to locomotives, similar to trucks. Technologies that 

have been developed for locomotives include automatic engine shut down/start up,

which controls the engine start and stop, based on a set time period or ambient 

temperature, and other parameters; a diesel driven heating system, designed to heat the 

coolant and oil to allow for main engine shutdown in cold temperatures; auxiliary power 

units; and electrification to provide the locomotive operator with climate control and 

other needs, eliminating the need to idle the main engine. These technologies are 

generally most effectively applied in combination. EPA’s 2008 locomotive engine rule 

establishes new pollutant standards for locomotives, and requires the use of technologies 

that reduce the amount of time a locomotive spends idling (EPA, 2008).

Some efficiencies also may be achieved through truck operations serving intermodal 

terminals. For example, the Federal Motor Carrier Safety Administration’s Cross-Town 

Improvement Project demonstrated the use of information technologies to facilitate the 

exchange of load data and availability information between railroads, terminal operators 

and trucking companies, and to provide a means for chassis owners and users to 

accurately account for asset use. These strategies can help maximizing the potential for 

linking moves, eliminating bobtail and empty moves, as well as maintaining a balance of 

truck chassis to support cross-town and other container deliveries (Cross-Town 

Improvement Project, 2009). Finally, cargo handling equipment using alternative 

propulsion systems (e.g., hydraulic hybrid vehicles or electric gantry cranes) also may be a 

strategy to reduce GHG emissions from intermodal terminal operations.

Magnitude and Timing of Greenhouse Gas Reductions

Comprehensive estimates of the potential GHG reductions from rail and intermodal 

terminal operating efficiency improvements have not been developed. While fuel savings 

and GHG reductions from reduced locomotive idling can be estimated, other changes to 

operating conditions (such as faster operating speeds) cannot be directly translated to 

increases or decreases in fuel consumption without the use of a detailed rail cost model. 

Estimates of the potential GHG emissions from low-emissions intermodal terminal 

equipment, or from truck operations serving these terminals, also have not been 

developed.

Locomotive engines can use 3 to 11 gallons of fuel per hour, depending upon outside 

temperature (EPA fact sheet EPA-901-F-001), so reductions in idling time will directly 

reduce GHG emissions. In a test in a Chicago rail yard, the installation and use of a 

combined “Diesel Driven Heating System” and a “SmartStart System” on a locomotive 

switchyard engine reduced overall idling times by 80 percent, which would save over 

14,000 gallons of fuel annually for the average locomotive (EPA, 2004). Another case 

study in Vancouver, Washington found similar savings of 14,800 gallons over a year per 

locomotive (Southwest Clean Air Agency, 2005). If a similar reduction in idling and 
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consequent fuel savings could be achieved on all switchyard locomotives, GHG emissions 

could potentially be reduced by up to 680,000 metric tonnes CO2e annually.33

A study examining rail gateway chokepoint improvements in New Orleans estimated that 

the improvements would eliminate 91 hours per week of rail idling (Brown Cunningham 

Gannuch, 2007). This translates into a reduction of 215 metric tonnes of CO2e per year. 

No data have been developed to extrapolate similar estimates to chokepoint 

improvements at a national level.

Rail-highway grade separation projects also should have a GHG benefit by reducing 

vehicle delay. A study in Riverside County, California estimate that 20 proposed grade 

separation projects in the county would eliminate 2,700 daily vehicle hours of delay in 

2030, reducing annual GHG emissions by 544 tonnes (Riverside County Transportation 

Commission, 2008). Assuming that similar benefits per crossing could be achieved 

elsewhere, closing 10 percent of the 225,000 grade crossings in the U.S. would reduce 

GHG emissions by 611,000 tonnes annually.34

Efficiency improvements to rail operations such as switch yard idle reduction can be 

implemented relatively quickly—within a few years—compared to major capital 

investments such as chokepoint relief. Idle reduction technologies can be applied to 

existing locomotives.

The evolution of rail vehicle technology has the potential to affect the future benefits of 

operational strategies. In particular, the use of hybrid-electric locomotives would likely 

reduce the GHG emissions associated with idling and other inefficient movements, 

thereby also reducing the emissions benefits of strategies to reduce these movements. 

(Hybrid-electric locomotives are discussed in more detail in Section 3.0, Energy 

Efficiency.) However, locomotives tend to have a useful life of 40 years or more, so this 

effect will occur slowly as the fleet turns over.

Cost-Effectiveness

Comprehensive cost-effectiveness estimates for the operations benefits of rail 

improvements have not been developed. Idle reduction technologies for locomotives can 

cost as little as $4,000 to $7,000 for electrification or automatic engine shut-down/start-up, 

or up to $35,000 for a diesel-driven heating system; these costs can be offset through fuel 

savings. In a test in a Chicago rail yard, the combined savings from locomotive idle 

reduction technology was estimated to have a payback period of about 2.5 years at $1.00 

per gallon of diesel fuel (EPA, 2004).

 

33This calculation assumes total annual switchyard fuel consumption of 311 million gallons (DOT 

R-1 forms 2009), 27 percent consumed in idling (Argonne), an 80 percent reduction in idling, and 

0.0101 metric tonnes CO2 per gallon of diesel fuel. It does not account for the offsetting fuel use 

from the idle reduction technologies.

34Grade crossing data from FRA (2009).
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Cobenefits

Most rail operations improvements would have air quality benefits. A test of idle 

reduction technology in a Chicago rail yard estimated that savings of 2.4 tons per year of 

NOx and 0.07 tons per year of PM10 could be realized from an average switchyard 

locomotive. A study of the Alameda Corridor Project in Los Angeles, which consolidated 

and eliminated 200 grade-crossings on a rail line serving the Ports of Los Angeles and 

Long Beach, estimated reductions in rail locomotive emissions of 31 percent for ROG, 23 

percent for NOx, and 35 percent for PM10, as a result of higher-speed and more efficient 

locomotive operations compared to the previous rail routes. Additional emissions 

benefits were obtained due to the reduction in vehicle delay at railroad grade crossings 

(Weston Solutions, 2005).

Greater use of hybrid-electric locomotives would likely reduce the air pollution emissions 

associated with idling and other inefficient movements, thereby also reducing the GHG 

emissions benefits of strategies to reduce these movements.

Feasibility

Implementation of rail operations efficiency improvements can be complex from an 

institutional perspective, because of the need to work with multiple interests within a 

private rail operator, and because of general resistance to changing established procedures 

or implementing new technologies. For example, the Vancouver switch yard idle 

reduction project required substantial relationship building with a very large rail 

company and the involvement of local rail yard managers, regional managers, safety 

managers, security managers, maintenance managers, and operations managers – many of 

whom resided in different locations. Unions in particular may be resistant to changes in 

procedures or activities falling outside of established job descriptions. There also are 

challenges with the technology of installations, which will frequently vary from 

locomotive to locomotive (Southwest Clean Air Agency, 2005).

The challenges faced with case-by-case implementation of such improvements suggest 

that a comprehensive Federal approach may be needed if locomotive idling reduction is to 

be implemented on a nationwide basis. In June 2005 the California Air Resources Board 

entered into a voluntary agreement with the State’s two largest railroads, Union Pacific 

and BNSF Railway, to reduce pollution from California rail operations and to study and 

reduce the pollution from 17 identified California rail yards. As part of this agreement, 

the two railroads agreed to phase out all nonessential idling within six months and install 

idle reduction technologies on all California-based locomotives within three years (M.J. 

Bradley & Associates, 2009). This voluntary approach was taken to avoid the threat of 

litigation resulting from a mandatory requirement. To achieve similar actions nationwide, 

the Federal government could potentially either pass anti-idling legislation pertaining to 

rail yard operations, or enter into a similar voluntary agreement. EPA has issued State

implementation plan (SIP) guidance to encourage States to incorporate locomotive idle 

reduction projects into their State air quality planning (EPA, 2004).
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Ports and Marine Operations

Description

Numerous strategies have been 

proposed to increase the energy 

efficiency of operations at ports, 

thereby reducing GHG and criteria 

pollutant emissions. These include 

both land- and marine-side 

operations. Land-side strategies are 

focused on reducing truck idling, 

reducing truck VMT by eliminating 

empty hauls or shifting local 

movements from truck to rail, and 

introducing alternative propulsion 

systems for cargo handling 

equipment. Marine-side strategies 

are focused on reducing diesel 

generator use while at the dock, as 

well as reducing criteria pollutant 

emissions as ships enter or leave the 

terminal.

Specific land-side strategies include:

• Reducing truck idling at terminal gates through the use of appointment systems;

• Charging peak-period fees in conjunction with extending gate hours to encourage 

truck trips during off-peak periods, reducing wait time as well as travel on congested 

roadways near the port (such as the PierPASS system established at the Ports of Los 

Angeles and Long Beach);

• Improving awareness of container location within the yard, via inventory tracking 

systems using Radio Frequency Identification (RFID) or global positioning systems 

(GPS) tags on containers;

• Establishing chassis pools to allow sharing of chassis among competing shipping lines, 

reducing empty backhauls;

• Implementing an Internet container matching service for empty containers known as a 

“Virtual Container Yard,” to return empty containers to the port;

• Implementing cargo handling equipment using alternative propulsion systems (e.g., 

hydraulic hybrid vehicles or electric gantry cranes);

Ports and Marine Operations

Benefits: Low: 0.2-0.3 mmt CO2e in 2030

• Reflects reduced truck operations at container ports 

only

Direct Costs: Unknown

• May vary widely depending upon technology or 

practice

Net Included Costs: Unknown

Confidence in Estimates: Moderate

• Some potential strategies not included in estimate

Key Co-Benefits and Impacts: Positive

• Significant local air quality benefits; some reductions 

in local truck traffic

Feasibility: High

• Initiatives in progress at some ports; number of major 

ports is small

Key Policy Options:

• Tools to assist in GHG assessment; regulations or 

voluntary partnerships to promote GHG reduction 

practices
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• Increase the use of on-dock and near-dock rail to reduce or eliminate trucking within 

the terminal or to nearby yards; and

• Implement short-haul rail service to inland ports.

Marine-side strategies include:

• Vessel speed reduction while approaching or leaving port, such as implemented at the 

Ports of Long Beach and Los Angeles to reduce emissions;

• Shore-side power (“cold-ironing”) to obtain power at the dock from electricity rather 

than from diesel generators on board the ship; and

• Routing optimization techniques to take advantage of varying weather and ocean 

current conditions.

While all of these strategies are applicable to container ports, some—such as more efficient 

cargo handling equipment—also are applicable to ports handling bulk cargo for import or 

export. Marine routing optimization is primarily applicable to open-ocean shipping and 

therefore to international trade. By reducing delays at ports, improved cargo handling 

efficiency may have secondary supply-side and demand-side effects – such as allowing 

ships to operate at lower(more efficient) cruise speeds, and reducing diversion to less 

congested ports that may involve more circuitous routes (Hansen, Smirti, and Zou, 2008).

Magnitude and Timing of Greenhouse Gas Reductions

No national estimates have been developed of the potential GHG reduction of 

implemented these strategies at all major ports in the U.S., and only limited research has 

been conducted using examples at individual container ports. A nationwide estimate is 

complicated by the fact that many ports tend to have relatively unique operating 

environments, which means that some strategies appropriate for one port (such as ondock or near-dock rail) may not be feasible at another, and activity patterns at each port 

(e.g., truck drayage) may differ widely. On the other hand, the number of major ports in 

the U.S. is relatively small, and evaluating a few of the largest ports would identify the 

majority of GHG emission reduction potential from this sector – the 10 largest container 

ports account for nearly 80 percent of the volume of container shipments at all U.S. ports 

(AAPA, 2007).

The Ports of Los Angeles and Long Beach alone handle 43 percent of container freight 

volume (expressed in ton-equivalent units) passing through major ports in the U.S. 

(AAPA, 2007). Operations at these ports have been extensively studied, primarily due to 

local air quality concerns and the desire to reduce air pollutant emissions. Estimates 

prepared for the U.S. EPA indicate that truck drayage activity in and near these ports 

consumes about 57 million gallons of diesel fuel annually, producing 643,000 tonnes of 

CO2 (Tioga Group, 2008). This study estimated that initiatives already implemented, 

including automated gates, extended gate hours, and container information systems,

reduced fuel use by 16.8 percent, which would correspond to a reduction of 108,000 
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tonnes of CO2 annually. Another study conducted for the port operator estimated 

reductions in truck trips, VMT, and pollutant emissions resulting from the 

implementation of a virtual container yard, increased on-dock rail usage, a new near-dock 

rail yard, and local shuttle trains to a hypothetical inland port.35 The strategies were 

estimated to reduce daily truck VMT by 291,000 in 2010 (Cambridge Systematics, Inc.,

2005), which would correspond to an annual reduction of approximately 191,000 tonnes 

CO2e.

36

Work for EPA also has examined drayage initiatives already implemented at the Port of 

Virginia in the Hampton Roads region, the Port of Houston, and the Ports of New York 

and New Jersey. In 2007, these initiatives were estimated to reduce CO2 emissions at all 

three ports by just over 50,000 tonnes annually (Tioga Group, 2008). The potential for 

additional reductions beyond those already achieved was not estimated.

The greatest reductions in truck VMT in this study were from shuttle trains to an 

inland port and increased on-dock rail use. However, there would be some offsetting 

emissions from rail operations, which were not calculated, so this estimate represents an 

upper bound of potential emission reductions. Extrapolating these reductions to all 

container ports, in proportion to the amount of container traffic carried, results in an 

estimate of less than 0.3 mmt CO2e reduced.

The impact of the marine-side speed reduction strategy has been estimated. In 2007, the 

20-nautical mile Green Flag program at the Port of Long Beach eliminated an estimated 

24,000 metric tonnes of CO2e. If all vessels participate at the 40-mile range, the amount of 

emissions reduced is projected to more than double (Starcrest, 2008). The International 

Maritime Organization (IMO, 2000) estimated that the potential for reducing CO2

emissions by effective weather routing is 2 to 4 percent, with additional benefits from 

routing to exploit ocean currents. (Since most of the benefits of ship routing optimization 

would occur in international operations, they are considered outside the scope of this 

study and are not further discussed.)

The potential GHG reduction benefits of other strategies, including alternative propulsion

systems for cargo handling, shore-side power, and cargo handling at bulk cargo ports, has 

not been studied. The GHG benefits of shore-side power will vary by port depending 

upon the local electricity generation mix.

Many port operations strategies could be implemented relatively quickly, particularly 

those that do not involve major capital investments; in fact, a number of implementation 

examples already exist. The implementation timeframe, however, will be governed by 

potentially complex institutional issues. The primary motivations for these systems have 

 

35Emissions impacts from implementing extended gate hours were not calculated, because trips 

would not be eliminated or shortened from this strategy, only moved to a different time of day or 

to the weekend. The study also did not estimate emission reductions from reduced truck idling, 

or from reduced congestion on nearby freeways.

36CO2 emissions were not calculated in the original study. This estimate assumes an average dray 

truck fuel efficiency of 4.66 miles per gallon, based on DrayFLEET model output for the Ports of 

Los Angeles and Long Beach (Tioga, 2008), and operations of 300 days per year.
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been local congestion relief and air quality improvements, so the timing will depend on 

the perceived magnitude of these problems at individual ports and the political and 

community pressure to solve these problems. Capital-intensive solutions such as on-dock 

and near-dock rail yards and short-haul rail service to inland ports will take years to 

implement because of funding constraints, environmental approvals, design, and 

negotiations with railroads and shippers.

Cost-Effectiveness

The cost-effectiveness of port-focused strategies in terms of GHG reductions has not been 

estimated, but is likely to vary substantially for the different strategies. Port rail 

improvements appear to be costlier than truck efficiency improvements, at least in terms 

of initial investment, although they also achieve the largest GHG reduction benefits. Costs 

for a rail shuttle system could exceed $200 million, without consideration of mitigation 

costs, such as grade separations. Improved on-dock rail systems in the Ports of Los 

Angeles and Long Beach are estimated to cost nearly $1 billion and a new near-dock yard 

will cost about $200 million.

Less capital intensive strategies like appointment systems, extended gate hours, container 

tracking systems, a Virtual Container Yard, extended gates, and chassis pools may be 

feasible strategies in the short term. The Ports of Los Angeles and Long Beach invested $1.2 

million in the Virtual Container Yard, but to date ocean carriers and truckers have not fully 

embraced the system. Thus, the cost effectiveness of this strategy has not yet been proven.

A 2004 report prepared for the Port of Long Beach concluded that cold ironing (shoreside 

power) is generally cost effective with vessels that spend a lot of time at the Port, and 

therefore have high annual power consumption (ENVIRON, 2004). It would not be 

particularly cost effective, however, to retrofit vessels that visit the port infrequently. The 

cost-effectiveness with respect to GHG reduction was not estimated.

Cobenefits

Significant cobenefits can be achieved from port and marine strategies. These cobenefits 

include reduced congestion on highways serving the ports, improved traffic safety, 

reduced highway traffic noise, and reduced fuel consumption and pollutant emissions. 

These cobenefits are generally in proportion to the reduction in truck traffic and idling 

from each strategy, although strategies that increase rail traffic will offset some of the 

emissions and fuel consumption benefits. Another potential cobenefit is greater reliability 

and speed of shipments, as well as lower shipping costs.

Improved on-dock rail service has a direct impact on the number of truck trips generated 

by the container terminals. In the case of new or improved near-dock rail yards, the 

benefit is in terms of shorter drays compared to service to the off-dock yards. These 

strategies also have safety advantages through the reduction of truck miles of travel on 

congested highways. Short-haul rail service to inland ports can reduce truck trips to local 

warehouses and distribution centers. For the Port of Los Angeles and Long Beach 

analysis, the combined scenarios were estimated to reduce weekday truck traffic on I-710, 
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the primary access route, by 20 percent in 2010 and 27 percent in 2030 (Cambridge 

Systematics, Inc., 2005). The majority of this reduction is a result of extended gate hours, 

which would simply shift truck traffic to the weekend instead of reducing it overall, 

although congestion benefits would still result from the substantial weekday peak-period 

truck trip reductions. The same study estimated net reductions in criteria pollutant 

emissions (VOC, CO, NOx, and PM) of 0.12 tons per day or 4.6 percent in 2010, compared 

to baseline emissions from the truck traffic generated by the port (this accounts for 

offsetting rail and weekend truck trip emissions). The extent to which the benefits of these 

strategies could be extrapolated to implementation at other ports is not clear.

Marine-side strategies also have resulted in reductions in pollutant emissions – the primary 

objective of these strategies. In 2007, the Green Flag program at the Port of Long Beach 

eliminated an estimated 678 tons of NOx, 453 tons of SO2, and 60 tons of diesel PM (Port of 

Long Beach, 2009). Depending on the size of the ship, shore-side power at Southern 

California ports is estimated to reduce NOx by one ton and SOx by more than half a ton each 

day the ship is at berth and plugged in, representing a 90 percent reduction in pollution 

(comparing the pollution from electricity generation versus on-board generators). This 

impact will vary at other ports, depending upon the local electricity generation mix 

(Starcrest, 2008).

Feasibility

The feasibility of appointment systems, extended gate hours, container tracking systems,

and chassis pools has been demonstrated at ports, including Ports of Los Angeles and 

Long Beach, the Port of Virginia, and the Ports of New York and New Jersey. However, 

these may require complex multiparty agreements to implement. Thus, feasibility is most 

dependent on the willingness of the parties to change the status quo and to accept a 

different way of doing business. Some of the specific institutional barriers include:

• Many of these strategies involve new computer and Internet procedures that require 

retraining of personnel to effectively use these new tools. Implementation of Virtual 

Container Yards has been slow because of concerns over integration of shipping line 

computer systems with the VCY software, and because of equipment interchange and 

insurance issues.

• Extended gate hours require warehouses and distribution centers to be open at night 

to accept the containers. Larger importers usually can afford to keep warehouses open 

during off-peak hours, but smaller shippers without this ability often have no choice 

but to use the day gates and pay the extra fee.

• Shipping lines and container terminals control chassis pools at ports, and many 

shipping lines prefer to control their own chassis fleets.

• Longshore unions carefully watch the impact of new technology on labor requirements.

The capacity of on-dock yards and related trackage is one potential constraint to 

increasing on-dock rail usage; another is the fact that not all cargo can be handled ondock. The feasibility of short-haul rail systems to inland ports is actively being 
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investigated by various ports—often for economic development reasons—but is 

hampered by the fact that such systems currently are not cost-competitive with harbor 

truck drayage. Furthermore, the railroads have been slow to embrace short-haul service 

because the trains would take up valuable time slots on the rail corridors, thus adversely 

impacting their more lucrative long-haul services. There also are community concerns 

about grade crossing impacts along the routes to the proposed inland ports. The 

feasibility of these systems will depend on solving many problems at once, including 

identifying a viable market segment, resolving the differential cost structure of trucking 

versus rail, providing adequate track capacity, and mitigating impacts in communities.
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 4.5 Aviation Operations

Description

Aviation operations strategies can 

conserve fuel and reduce CO2 emissions 

from aviation by reducing delays and 

increasing efficiency in airport and 

airspace operational procedures. 

System and operational efficiency 

measures can be applied to each of 

three distinct elements of aviation 

operations: the airport infrastructure, 

carrier and airport operations, and the 

National Airspace System (NAS) 

operations. In addition, some measures 

affect both carrier/airport and NAS 

operations. 

• Airport infrastructure and 

equipment. Examples of airport 

infrastructure improvements 

include new and extended runways 

to reduce delays at congested 

airports (though benefits may be 

offset by increased travel),

improved taxiway design to 

facilitate better flow, and electrified 

gates to reduce aircraft engine use. Equipment includes more efficient or alternativefuel airport ground support equipment (GSE) and ground access vehicles (GAV).

• Carrier/airport operations. During the ground operations, aircraft consume fuel while 

taxiing, maneuvering to and from gates, and idling while waiting to take off or for 

available gates. Airlines and airports can implement strategies to reduce fuel 

consumption and GHG emissions from these operations, including aircraft tugging to 

the runway and single-engine taxiing.

• NAS operations. The set of measures for controlling and managing airspace capacity

are known as air traffic management (ATM) technologies. Ground, terminal and en 

route operations are carried out by pilots operating under the guidance and control of 

airlines and air traffic controllers. Operational efficiencies can be achieved during

ground operations, vertical ascent and descent, and the horizontal en-route trajectory:

− ATM efficiency measures during the ground operations include providing takeoff 

assignments to aircraft to limit the length of taxi queues and surface congestion.

Aviation Operations

Benefits: Low to Moderate: 8.9 to 25.2 mmt CO2e in 

2035

Direct Costs: Unknown

Net Included Costs: Unknown

• Many strategies likely to achieve net cost savings

Confidence in Estimates: Moderate

• Multiple sources in relatively close agreement

• Sources cite ranges due to uncertainty and 

interdependencies among NAS requirements and 

stakeholder objectives.

Key Co-Benefits and Impacts: Positive

• Reduced traveler delay; cost savings for airlines; 

reduced emissions at airports

Feasibility: High

• Initiatives in progress

Key Policy Options:

• Continued funding and institutional support for 

NextGen program and airport investment and 

modernization

• Requirements or incentives for airport GHG 

inventories and reduction practices
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− During the vertical ascent and descent, measures include implementing RNAV 

departures and using an Optimized Profile Descent (OPD) procedure (previously 

known as Continuous Descent Arrival) to optimize the vertical descent of an 

aircraft from high altitude to the airport at a near engine idle (as compared to the 

step-wise standard approach currently in place). Area Navigation (RNAV) and 

Required Navigation Performance (RNP) routes and procedures can allow for 

more efficient use of airspace through repeatable/predictable paths, improved 

climb and descent profiles, shorter ground tracks, and reduced delays.

− During the horizontal en-route trajectory, domestic reduced vertical separation 

minimum (DRVSM) is a recently implemented procedure that provides an 

increased probability that pilots will be cleared to their requested optimal cruise 

altitude that minimizes fuel use. Other systems such as Advanced Technologies & 

Oceanic Procedures (ATOP) and Wide Area Augmentation System (WAAS) 

should support more efficient operations by finding more efficient tracks or 

altitudes over long oceanic routes and providing precise horizontal and vertical 

navigation for landing approaches. ATOP is a satellite-based system that takes 

advantage of cockpit digital communications, rather than the voice 

communications used today. Satellite data link communication significantly 

reduces the manual workload for controllers, improving their ability to handle 

requests from airlines for more efficient routes over the ocean. Automatic 

Dependent Surveillance-Broadcast (ADS-B) uses global positioning system (GPS) 

and communications satellite signals to more accurately identify and broadcast the 

aircraft’s location throughout the flight to safely reduce the separation standards 

between aircraft.

• Carrier/airport and NAS operations. Some ATM technologies address carrier/airport 

as well as NAS operations together. Several systems can improve coordination of 

arrival/departure routes to the airport. Departure flow management systems (DFM) 

coordinate and automate departure releases, and schedule depeaking can adjust 

demand so that the airport operates at or below capacity to reduce congestion. 

Integrated terminal weather systems (ITWS) provide better management of arrivals 

and departures under varying weather conditions, thus reducing delay.

DRVSM was implemented on a nationwide basis in 2005 (and prior to that, reduced 

vertical separation minimum was implemented in some oceanic, foreign and international 

airspace). Many of the other ATM measures listed here currently are being applied as part 

of the NextGen Implementation Plan (FAA, 2009).37

 

37The AEO baseline GHG forecasts used in this report assume some improvements in aircraft 

efficiency, but it is not made explicit to what extent these result from aircraft improvements 

versus system operating improvements. Therefore, it cannot be determined to what extent 

initiatives in progress (such as NextGen) are already reflected in these forecasts.

 Some airports have undertaken 

additional initiatives focused on infrastructure and operations, primarily for the purposes 

of congestion and delay reduction or air quality improvements. Recent and ongoing 

initiatives are described in more detail in the sidebar on page 4-68.
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For many of the ATM technologies in the testing phase, only a small scale trial has been 

implemented in several airports with the highest need (i.e., the most congested). 

Estimates of ATM efficiency will improve as these technologies are demonstrated on a 

larger scale. Although NextGen has a series of midterm goals to increase absorption of 

these technologies by 2018, an aggressive pursuit of these measures could be driven by 

policy mandates or initiatives towards technology adoption. Additional funding also 

would be required to roll out the package of ATM strategies nationwide.

Aviation System Efficiency Improvements in Progress

New and extended runways. New runways and runway extensions provide the most significant capacity 

increases, and also offer efficiency improvements. Since fiscal year 2000, 15 new runways and one runway 

extension have opened at the 35 Operational Evolution Partnership Plan airports, providing these airports 

with the potential to accommodate 1.9 million more annual operations (FAA, 2007).

Optimized Profile Descent procedures. OPDs have been implemented on all three standard, easterly 

arrival routes into Los Angeles International Airport using the Standard Terminal Arrival (STAR). Las 

Vegas and Phoenix have also designed and implemented STAR procedures with OPD, and six other 

airports now have STARs with OPD in various stages of development. OPD flight trials have also been 

conducted in Atlanta and Miami.

Area navigation and required navigation performance. In Atlanta, RNAV/RNP procedures have been 

implemented and have increased productivity by 20-30 percent, leading to as many as 10 additional 

departures per hour. Two RNAV STARs were implemented at Phoenix International Airport in October 2006.

Wide Area Augmentation System. As of March 2009, there are over 1500 WAAS-based LPV (Localizer 

Performance with Vertical Guidance) approaches at nearly 800 airports, and the FAA has a 2009 Flight Plan 

goal to publish at least 500 WAAS approaches.

Automatic dependent surveillance-broadcast. The FAA first rolled out ADS-B in Alaska. In the lower 48, 

United Parcel Service (UPS) voluntarily equipped 107 of its aircraft with ADS-B avionics in order to save 

time, fuel, and carbon emissions on flights to and from its Louisville hub (FAA 2009).

Advanced technologies and oceanic procedures. ATOP is now used at the three en route centers that 

handle oceanic traffic – New York, Oakland, and Anchorage.

Low emissions ground support equipment and access vehicles. A number of airports have implemented 

low-emissions GSE and GAV such as natural gas or electric vehicles, usually to reduce emissions of air 

pollutants in non-attainment areas. Examples include Boston Logan, San Francisco, Dallas-Ft. Worth, and 

Los Angeles international airports. The FAA’s Inherently Low Emissions Airport Vehicle Pilot Program 

(ILEAV) provided grants to support testing and adoption of such equipment at six airports between 2000 

and 2005 (FAA 2006).

Other airport emission reduction measures. The FAA’s Voluntary Airport Low Emissions (VALE) 

program, created in 2004, is program that is designed to allow airports to improve or expand while still 

complying with Clean Air Act requirements; the program provides grants and credits for emissions 

reducing projects (alternative fuel vehicles, gate electrification, etc.), which also are likely to have GHG 

benefits. As of March 2009, the FAA has issued 22 VALE grants to 10 airports that have generated $30 

million worth of investments in clean airport technology.

Source: Compiled from Federal Aviation Administration NextGen documents and personal 

communication with FAA staff, April 2009.
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Magnitude and Timing of Greenhouse Gas Reductions

Aircraft Operations

Aircraft engine CO2 emissions are, for the most part, directly related to fuel burn. Thus, 

operational efficiencies produce the dual benefits of decreasing fuel consumption and 

reducing GHG emissions.38

Reducing delays in the air traffic system is an important contributor to reducing GHG 

emissions. Historically, system operational efficiency has been roughly constant – on the 

edge of exceeding capacity. When this is the case, any disturbance (such as inclement 

weather) can lead to a cascade of delay and fuel inefficiency effects. While the GHG 

reductions from aviation system efficiency improvements are typically modest under 

normal conditions, such improvements can be critical to avoiding larger impacts that 

 According to a 1999 assessment by the Intergovernmental 

Panel on Climate Change, addressing inefficiencies in air traffic management (e.g., 

inefficient routings, suboptimal flight profiles, holding patterns) could reduce overall fuel 

burn by 6-12 percent, considering improvements that were expected to be implemented 

over the next 20-year period (IPCC, 1999). This represents a reduction of 15 to 31 mmt

CO2e if applied to 2030 baseline forecast U.S. emissions from aircraft. In 2009, FAA and 

EURCONTROL completed a joint benchmarking report that identified a fuel inefficiency 

benefit pool of 6-8%. The report emphasized these values represented an upper bound on 

the efficiencies examined as benefit was measured against idealized flight conditions. In 

2008, CANSO surveyed ATM efficiency by world region and found similar benefit pools. 

The CANSO report also identified safety, capacity, weather and noise as factors that may 

prevent ATM from reaching the ideal condition. It concluded that less than half the 

theoretical pool may be recoverable. On a smaller scale a recent study from a United 

Kingdom source estimated that a 10 percent reduction is possible from improved air 

traffic management and operations by 2020 (Sustainable Aviation, 2008). This results in a 

similar reduction of 26 mmt CO2e in 2030. This compares to the potential benefit pool for 

the more congested areas in the US. Regarding specific ATM technologies, “free flight”

technologies for controlling and managing air space capacity are estimated to reduce fuel 

consumption by approximately 6 percent (FAA, 1998). Several studies have been 

conducted on the improvement of fuel burn due to implementing RVSM, with studies 

conducted in Europe and the U.S. finding a benefit ranging from 1.6 to 2.5 percent 

(Malwitz et al., 2009). The ASPIRE Flight Tests have identified gate-to-gate efficiency on 

the order of 4%, with some of benefit attributed to airline practice. This flight test has 

unique characteristics which make extrapolation to the US NAS problematic. However, it 

provides actual benefit by phase of flight that can be compared to the phase of flight 

benefit reported by EUROCONTROL/FAA.

 

38GHG emissions are not proportional to fuel consumption for all strategies. A study conducted at 

London’s Heathrow Airport and Gatwick Airport showed that derated thrust can increase fuel 

use and CO2 emissions during take-off and early climb-out by 12.3 percent, but reduce NOx—

another global warming contributor—by 14.5 percent (King and Waitz, 2005).
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result from weather and other disruptive events. A report by the Joint Economic 

Committee of the U.S. Congress estimated that delayed flights consumed about 740 

million additional gallons of jet fuel (JEC, 2008); this represents nearly 4 percent of all 

domestic aviation fuel use. This benchmark times used in this study represent an upper 

bound by using ideal flight times between source and destination. The delay benefit 

reported overlaps inefficiencies identified in the EUROCONTROL/FAA report. 

Participants in the second working group meeting of the Group on International Aviation 

and Climate Change held in February 2009 concluded that in the range of 0-10 percent 

relative gains in overall efficiency might be achieved from the construction of additional 

runways to increase capacity at congested airports, and 0-2 percent from more efficient 

use and planning of airport capacities (GIACC, 2009). In a study on CO2 emissions 

reduction during the air and ground holding period for Osaka and Narita airports, the 

authors found that engine idling time could be reduced by 10 percent using improved 

airport operations techniques (Shioda and Hashimoto, 2006). Using a 4 percent reduction

in fuel consumption from eliminating delay (from the JEC study) as an “upper bound”

results in an estimated reduction of up to 10 mmt CO2e annually.

None of these estimates account for potential offsetting growth in aircraft operations. 

There is considerable debate as to the magnitude of “unmet demand” for air travel and the 

extent to which operations increases would offset the benefits of operational 

improvements (Freire et al., 2000). At an airport level, increased system efficiency can 

lead to an increase in usable or effective capacity, sometimes resulting in “schedule 

backfill.” This concept is related to induced demand effects, and because many studies 

assume that schedule backfill does not occur, they may overestimate GHG reduction 

strategies (Hansen, Smirti, and Zou, 2008; Williams and Noland, 2006). Regardless of 

how growth is characterized, there is anticipated aviation growth according to FAA 

forecasts. 

These estimates also do not account for the contribution of aircraft to global warming 

through contrail formation at high altitudes. While contrails reflect sunlight that would 

otherwise warm the Earth’s surface, they also absorb heat from the ground instead of 

allowing it to escape; evidence suggests a net warming effect from aviation contrails. 

More efficient routing patterns should reduce contrail formation by reducing flying time, 

but some routing changes that reduce contrail formation can increase fuel use.

Airport Operations

The potential GHG reductions from airport facilities, equipment, and operations have not 

been quantified on a nationwide basis but should be relatively small compared to the 

overall magnitude of GHG emissions from aviation operations. Participants in the GIACC 

working group meeting estimated that reductions in the range of 0-2 percent each could 

be obtained from enhanced terminal support services and from conversion of ground 

support equipment to alternative fuels (GIACC, 2009). Table 4.5, taken from the recent 

Aircraft Cooperative Research Program Report 11 on the preparation of airport GHG 

inventories, places these emissions in perspective with other aviation emission sources. 

The inventories indicate that aircraft are responsible for at least 95 percent of total 

emissions, while ground support equipment and on-site ground access vehicles account 
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for less than 1 percent each of total emissions (if passenger access to and from the airport 

is not included). Airport facilities make up between about 1 and 5 percent of total 

emissions. Aircraft ground operations are not identified separately but should be a small 

fraction of landing and take-off operations, which are about 10 percent of total aircraft 

emissions. If total aviation emissions could be reduced by around 1 percent through 

airport equipment and operations strategies, the savings would be about 2 to 3 mmt CO2

annually.

Table 4.5 Airport Greenhouse Gas Emissions Inventories

City and County

of Denver (2005)

Port of Seattle Aviation

(2006)

Zurich Airport 

(2006)

Contributor

Metric 

Tonnes CO2e Percent Tonnes CO2 Percent

Metric 

Tonnes CO2 Percent

Aircraft 4,569,696 94.9% 4,220,098 98.0% 2,816,907 97.3%

Landing

and Take-Off 348,195 8.1% 255,322 8.8%

Cruise 3,871,903 89.9% 2,561,585 88.5%

GSE 14,051 0.3% 45,438 1.1% 27,229 0.9%

GAV 21,968 0.5% a 13,021 0.4%

Facilities 211,000 4.4% 40,636 0.9% 37,586 1.3%

Total 4,816,715 100% 5,093,988 100% 2,894,743 100%

Source: Kim et al. (2008).

a GAV emissions at the Seattle airport included passenger access by all modes, which totaled 788,000 tonnes 

or 15.5 percent of all emissions. These were removed to be comparable to the Denver and Zurich estimates, 

which only included on-site ground access vehicles and not all passenger access travel.

Efficiency savings through the aviation operations strategies discussed above could be 

largely if not fully realized within 10 to 15 years. Many of the ATM/free flight 

technologies already are partially in place or have been tested in operations, and roll-out 

can continue as funding is available. Some of the more advanced RNAV technologies for 

in-flight routing are still in development but deployment could commence before 2020 

(PARTNER, 2009). Eleven ADS-B ground stations have been installed in Florida and a 

majority of the nationwide system is planned to be fully installed by 2013. Currently, 

complete aircraft equipage is likely to be required only by 2020 in order to make the costs 

to operators more affordable. Programs and incentives to accelerate equipage plans could 

help realize the efficiency benefits sooner. 
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Table 4.6 summarizes available evidence on the fuel savings and GHG reduction benefits 

across all aviation operations strategies, along with the extent of current implementation 

and the potential timeframe for future implementation.

Table 4.6 Aviation Operations Efficiency Improvements

Technology

Percent Reduction in 

Fuel Use and 

Combustion GHGa

Current 

Implementation

Potential Timeframe 

of Future 

Implementation

New/extended runways 0-4%b Ongoing – 15 new 

runways since 2000

Multiyear planning and

implementation 

horizon

Other airport infrastructure 

and aircraft operations – gate 

pushback, single-engine taxi, 

GPU/APU use, etc.

Unknown;

probably < 1%c

Unknown Short- to medium-term 

(0-15 years)

Low-emissions GSE and GAV < 1%d A number of major U.S. 

airports, mostly in 

nonattainment areas

Near-term – depending 

upon fleet turnover or 

accelerated 

replacement

Combined NAS strategies 2.5-6% of all aircraft 

combustion GHG*

To date, FAA has 

authorized more than 

265 RNAV procedures 

at 90 airports and more 

than 145 RNP 

procedures at 45 

airports

Increasing over 2012-

2018 period; potentially 

widespread by 2019-

2025 (see “timing”)

a Does not account for contrail impacts or demand-side effects.

b Assumes 4 percent JEC estimate of total fuel consumed due to delay as upper bound.

c Less than 1 percent would be less than 10 percent of all landing and takeoff operations emissions (which 

include operations below 3,000 feet).

d Total contribution of these factors appears to be about 1.5 percent.

* the upper bound is consistent with FAA (1998), CANSO (2008) & EUROCONTROL/FAA (2009). The lower 

bound reflects observations on interdependencies that may prevent full realization of benefit. The range is 

supported by gate-to-gate efficiency observed in the ASPIRE flight test.

Costs

The net cost-effectiveness of aviation measures in terms of GHG reductions has not been 

estimated. However, certain air traffic management strategies have been estimated to 

produce net benefits because of the resulting fuel savings. RNAV procedures have been 

estimated to produce $8 million in fuel savings annually on the West Coast high-altitude 
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Q route, due to a savings of 20 miles per flight compared to conventional routes. RNAV 

Standard Instrument Departure (SID) procedures implemented in Atlanta and Dallas-Fort 

Worth are estimated to have saved Delta and American Airlines $15-30 million each 

annually per airport (JITI, 2007).

The DRVSM implemented in January 2005 is expected to provide $5.0-$8.8 billion worth of 

fuel savings through 2016, a 6:1 benefit cost ratio (JITI, 2007; FAA, 2009). The total 

operator cost to upgrade to DRVSM on a nationwide basis was approximately $800 

million (FAA, 2004). Estimates for DRVSM compliance for operators on an aircraft-byaircraft basis was $175,000 to $300,000 per airplane, in addition to a month of downtime to 

install new flight instruments and sensors (Pope, 2002).

Costs of implementing these strategies may be borne by various entities. Airport authorities 

will bear the costs of airport infrastructure and equipment. Aircraft operators will incur 

costs such as navigational system upgrades and training to comply with revised procedures. 

The FAA will incur the costs of NAS system improvements. Airlines will yield the direct 

benefits of the strategies, including reduced fuel costs and time delays, but may pass along 

some or all of these cost savings to consumers. 

Cobenefits

In addition to GHG benefits, most strategies that provide for systemwide and operational 

efficiencies in aviation also decrease fuel consumption and pollutant emissions, especially 

NOx. The previously cited studies of RSVM found NOx reductions in the range of 0.7-

1.0 percent (Jelinek et al., 2002; CDM, 2005; Malwitz, 2009). For the thrust derated takeoffs, there is increased CO2 due to increased fuel burn, but decreased NOx, HC, and CO 

that can improve air quality (King and Waitz, 2005). A London study found that derated 

thrust can reduce NOx by 14.5 percent during take-off and climb-out, more than offsetting 

the GHG effect from increased CO2 emissions (King and Waitz, 2005).

Implementing OPD procedures not only reduce average fuel consumption, but also 

translate into lower noise impacts, with quieter flight operations due to reduced number 

of throttle transients and constant altitude flight segments near the ground (Russell, 2009). 

Changing of flight patterns may affect noise levels in different ways in individual 

neighborhoods, but RNAV/RNP approaches can be designed to minimize noise impacts 

on residential areas surrounding airports.

Many of these aviation measures decrease travel times, benefiting consumers while 

reducing airlines’ labor, asset, and maintenance costs. ATM technologies can increase 

capacity, allowing more flights to arrive and depart the airport. To the extent that air 

traffic management can better coordinate arrival and departure schedules, there also will 

be fewer delays at both the ground and air levels. This reduced delay and increased 

reliability has substantial benefits to both consumers and the airlines. According to 

testimony by Senator Charles Schumer, in 2007 alone, the cost of delay to passengers, 

airlines and the U.S. economy amounted to $41 billion (JEC, 2008). The JEC report 

estimates that passengers were delayed by a total of 320 million hours, when accounting 

for padding in airline schedules – almost 20 percent of total domestic flight time in 2007. 

Of these flight delays 94 percent were caused by other flights arriving late, national 
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system delays, or air carrier delays (less than 6 percent were due to security or extreme 

weather). Preliminary benefits analyses indicate that NextGen capacity increases could 

yield economic growth of as much as $175 billion through 2025 (FAA, 2007).

Feasibility

Air transport features a challenging mixture of local, regional, national, and international 

operations, management, and policy. Private operators (airlines) operate in publicly 

managed airspace. Locally controlled airports may seek to reduce emissions in the 

immediate area, but are constrained by competitive pressures and limited jurisdiction. 

National governments also are constrained by concerns about placing their own carriers at 

a competitive disadvantage, suggesting the need for an international framework for 

addressing emissions from air transport (Hansen, Smirti, and Zou, 2008).

Despite these complexities, examples of many operational procedures already have 

proven effective in the U.S. and other countries (see previous sidebar for examples of U.S. 

implementation). For OPDs, the technology has ready been implemented at multiple 

sites, but there is still concern over its impact and potential limitations on airspace 

capacity at certain locations. To move towards more “free flight” technologies, pilots 

would also have to be given training to decide on the most suitable and efficient routes 

and altitudes during their flights. Furthermore, the cost of systems and operations 

improvements will involve significant investment in air traffic management systems, both 

on the ground and for avionics on aircraft. Progress on FAA’s NextGen initiative has 

been challenged by factors, including its complexity, costs to FAA and airlines, technology 

development, and interdependent government/industry implementation issues.(ATW, 

2009).

Airport capacity expansion (runway extension, new runways, or even new airports)

continues to take place, but is often contentious as a result of local concerns regarding 

aircraft noise, as well as other potential environmental impacts of expanding the airport’s 

physical capacity. Airport design standards will likely change as part of NextGen, and 

operations on closely spaced parallel runways may be permitted at separations much 

closer than current standards. This would allow greater design flexibility, opening the 

potential for new runways to be added within existing footprints of airport property and 

allowing better use of existing runway layouts.

Other airport-specific operational practices, such as alternative-fuel GSE and GAV, gate 

power, and single-engine taxiing, have been implemented at some airports with the 

primary goal of reducing air pollutant emissions. Single-engine taxi can create some 

engine operation and maintenance issues, and aircraft tugging may create safety concerns, 

so care must be taken to determine when these procedures are appropriate to implement. 
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 4.6 Infrastructure Construction and Maintenance

The energy used in the construction and maintenance of highway infrastructure, and the 

corresponding GHG emissions, are significant. One recent study estimated that 

infrastructure contributes up to 17 percent of total life-cycle transportation GHG 

emissions, with about two-thirds of these related to road construction (Chester, 2008). 

However, most of these emissions are attributed to other sectors, especially the industrial 

sector (construction and materials production), and therefore are not part of the 

transportation emissions inventory referenced in Section 2.0 of this report. A recent EPA 

study estimated that the highway, street, and bridge construction subsector is responsible 

for 17.6 mmt CO2e annually, representing 13.2 percent of all construction sector emissions. 

Materials production and transport, as well as transportation agency facilities and 

operations, contribute additional GHG emissions.

Techniques are available to reduce the amount of energy consumed and GHG emitted in 

the construction, maintenance, and operations of transportation infrastructure. Some of 

these involve production techniques for materials (such as asphalt and concrete) that are 

most extensively used in highways, but also are used for other modes. Others involve 

reductions in energy use and GHG emissions associated with the construction and 

operating practices of transportation agencies, including highway departments, transit 

agencies, railroads, and port and airport authorities.

Construction Materials

Definition

Greenhouse gas emissions from 

infrastructure construction and 

maintenance activities can be 

reduced through the use of less 

energy-intensive construction 

materials by State and local highway 

departments and other transportation 

agencies. Most roadways, as well as 

airport runways, are built out of 

either concrete (made from Portland 

cement) or asphalt (blacktop). 

Greenhouse gas reduction strategies 

are available for both of these major 

materials:

• The Portland cement production 

process produces a large amount of GHGs due to the large amount of fuel needed to 

Construction Materials

Benefits: Low: 18 mmt CO2e in 2030

Direct Costs: Unknown; probably low for fly-ash concrete

Net Included Costs: Unknown

Confidence in Estimates: High

Key Co-Benefits and Impacts: Positive

• Recycling of material; reduced exposure to air 

pollutants

Feasibility: High

• Initiatives in progress

Key Policy Options:

• Continued research and development on warm-mix 

asphalt

• Construction material requirements/ standards
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heat calcium carbonate from limestone to chemically convert it to calcium oxide used 

in Portland cement. Recycled fly ash, which is a by-product from coal-burning power 

plants, can be used in the place of some of the cement used to form concrete. For 

example, the California Department of Transportation currently uses a 25 percent fly 

ash mixture, which has reduced GHG emissions from cement production by 25 

percent, and it has a future goal of using a 50 percent fly ash mixture. This level is the 

maximum allowed by most State DOTs to ensure that structural integrity is 

maintained. Blended cements also can be made from other cementitious materials

such as slag, although this is not a broad practice due to several factors, including 

availability of slag or fly ash to many cement plants.

• Aggregate, such as crushed rock or gravel, is another ingredient in concrete, and also 

can contribute to GHG emissions through the mining and transportation of these 

materials. Recycling the aggregate from existing roadways that are being 

rehabilitated and reusing it again in the same location also can reduce GHGs.

• Asphalt is produced by combining an asphalt binder (black gooey material made from 

crude oil) with an aggregate (crushed rock or gravel). Hot-mix asphalt is the 

traditional process used that heats the asphalt binder to high temperatures to lower its 

viscosity for proper mixing and paving. A new material, warm-mix asphalt, uses 

chemical additives to lower the temperature needed to achieve the proper viscosity. 

This in turn reduces the amount of fuel used and therefore GHG emissions. Lowering 

the temperature of the asphalt itself also lowers direct GHG emissions from the 

oxidation of the asphalt material. A number of demonstration projects using warmmix asphalt have occurred in States around the country; however, this technology 

does not yet have widespread use.

For other materials used in construction, such as steel and wood products, the use of 

materials with a greater recycled material content, or the use of alternative materials with 

lower life-cycle GHG emissions, may provide GHG benefits. Little information is 

available on specific applications for the transportation sector. EPA’s ReCon tool, 

designed to compare the GHG impacts of material purchasing and manufacturing, offers 

an option to evaluate the benefits of using common materials with various recycled 

contents (EPA, 2005).

Magnitude and Timing of GHG Reduction

Presently, fly ash is substituted for cement in concrete at a rate of 9.8 percent, which 

produces annual savings from the U.S. transportation sector of 3.3 mmt CO2. If the 

substitution rate is increased to 50 percent, it would produce a savings of 18.4 mmt CO2

annually, or 15.1 mmt beyond current levels (NCHRP 25-25 Task 45, draft work in 

progress). Benefits from fly ash usage in concrete can be realized in the very near term in 

the next few years due to the maturity of this technology and implementation practices.

Warm-mix asphalt has only been used to-date in demonstration projects in the U.S. This 

technology has the potential to reduce CO2 emissions from asphalt production by 30-40 

percent compared to hot-mix asphalt. In the future, if warm-mix asphalt technology 
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develops to the point that it can be used in place of hot-mix asphalt on all roadways 

nationwide, the estimated GHG reductions would be 2.9 mmt CO2 annually (NCHRP 25-

25 Task 45, draft work in progress). Benefits from warm-mix asphalt will take longer to 

realize since the warm mix asphalt industry is in its infancy in the U.S. with only a few 

demonstration projects per year.

Costs

It is difficult to quantify costs of fly ash usage, but in general concrete made by replacing 

some Portland cement with fly ash will cost less than concrete made with all Portland 

cement due to the higher cost of Portland cement versus fly ash. However, as the 

percentage of Portland cement substituted with fly ash rises the need for some chemical 

additives offsets these cost savings.

The cost of warm-mix asphalt is somewhat uncertain due to its current small-scale usage. 

However, a recent research project (Anderson et al., 2008) has produced some estimates 

based on fuel savings as well as the increased costs due to the capital costs of additional 

equipment and material costs of chemical additives. Considering the range of costs given 

for each of these, the costs and cost savings are estimated at best cancel each other out to 

keep the cost of warm-mix asphalt the same as hot-mix asphalt. At worst, overall costs 

could increase by around $3-4 per ton of asphalt plus around $100,000 of capital costs per 

asphalt production company. 

Cobenefits

Alternative material production techniques have some cobenefits, in addition to 

reductions in air pollution and fuel consumption associated with less energy-intensive 

technologies. For example, recycling fly ash and aggregate for use in concrete creates a 

use for these materials previously viewed as waste and keeps them out of landfills. 

Warm-mix asphalt can reduce plant emissions by 30–40 percent for SO2, 50 percent for 

VOC, 60-70 percent for NOx, and 20–25 percent for particulates. It also provides some 

benefits for paving (such as the ability to pave in cooler temperatures) and also reduces 

worker exposure to aerosols and hydrocarbons (FHWA, 2008).

Feasibility

Fly ash has been used in concrete since the early 1950s and does not require additional 

research on its performance. However, the use of fly ash in concrete requires careful 

attention to differing characteristics of the concrete and evaluation to ensure that the fly 

ash concrete meets the engineering requirements of individual projects. The availability 

of fly ash or other cementitious materials for concrete blending also may be limited in 

some areas, since these are by-products of other industrial activities.

Additional research and development is needed on warm-mix asphalt to evaluate field 

performance and adapt it to U.S. materials and production practices. However, a recent 

international scan tour to evaluate European practice concluded that with additional 
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research and trials, there are no long-term barriers to the use of warm-mix asphalt in the 

U.S. (FHWA, 2008).

Other Transportation Agency Activities

Definition

Transportation agencies can 

introduce other practices to reduce 

GHG emissions associated with their 

activities. Examples include:

• Construction Activities – The 

U.S. EPA identifies a number of 

construction practices that can 

reduce GHG emissions, including 

increased vehicle fuel efficiency, 

reduced idling, better equipment 

maintenance, driver training, 

properly sized equipment, 

replaced or repowered 

equipment, biofuels for trucks 

and nonroad equipment, and 

alternatives to diesel generators. 

Since construction activities are 

generally contracted out by 

transportation agencies, the 

equipment and practices are not within their direct control, although the agency may 

set contract terms such as idle reduction practices or use of biofuels (U.S. EPA, 2009).

• Fleet Vehicles – Transportation agencies maintain a fleet of several types of vehicles 

and equipment for constructing, maintaining, and operating transportation facilities, 

as well as supporting other agency functions such as planning and design. These 

include on-road vehicles used by transportation agency employees for traveling 

between worksites and offices, and off-road vehicles such as maintenance equipment. 

A number of measures could be taken to reduce GHG emissions from these fleets of 

vehicles and equipment, such as:

− Purchasing vehicles that are more fuel-efficient or that use alternative fuels can 

reduce the GHG emissions from gasoline or diesel combustion;

− Implementing usage policies for these vehicles, such as anti-idling, and properly 

maintaining them; and

− Implementing other measures to reduce vehicle use, such as planting ground cover 

that requires less mowing, and carpooling when using fleet vehicles to transport 

employees.

Other Transportation Agency Activities

Benefits: Low: 2.2 mmt CO2e in 2030

Costs: Unknown

Net Included Costs: Unknown

• Likely to vary widely by strategy

Confidence in Estimates: Moderate

• Poor inventory data, but estimates bounded by size 

of sector

Key Co-Benefits and Impacts: Positive

• Most activities will result in reduced criteria 

pollutant emissions; some will result in net cost 

savings

Feasibility: High

• Public and private sector initiatives in progress

Key Policy Options:

• Model practices and assessment tools; regulations to 

reduce GHG in construction; and/or funding 

incentives for GHG reduction activities
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• Buildings – All transportation agencies have buildings for housing office staff and 

keeping equipment and supplies in a sheltered environment. A number of strategies 

can be implemented to increase the energy efficiency of these buildings, such as 

pursuing LEED certification or the EPA ENERGY STAR label for a building certification, 

or implementing energy efficiency measures separately such as energy efficient heating 

and air conditioning, fluorescent lighting, and energy efficient appliances.

• Traffic Impacts of Work Zones – When work zones are created to perform 

maintenance activities on roadways or to rebuild them a common side-effect is the 

creation of traffic congestion due to lane closures and speed reductions. This traffic 

congestion lowers the fuel efficiency of vehicles and often requires vehicles to idle, 

both of which increase GHG emissions. Strategies to prevent traffic congestion in 

work zones include scheduling activities at night or on weekends, scheduling 

simultaneous activities along a roadway where a bottleneck already is created, traveler 

information, variable speed limits, temporary contraflow lanes, and dynamic lane 

merging. Many of these strategies also are discussed earlier in this section as general 

traffic management and traveler information strategies.

Magnitude and Timing of GHG Reduction

Very limited data is available on the potential nationwide GHG benefits of transportation 

agency practices. A recent EPA report examined the potential for GHG reduction 

practices in the construction sector as a whole. The study noted a general lack of data on 

both total activity and the potential for emission reductions in this sector, but did provide 

some aspirational estimates for three practices: reduced idling, maintenance and driver 

training practices to increase fuel economy of heavy-duty equipment, and replacement of 

diesel with a 20 percent biodiesel blend (B20). The combined estimate was a reduction of 

2.4 mmt CO2e annually in the entire construction sector (U.S. EPA 2009), which, if 

allocated 16 percent to the transportation subsector (in proportion to transportation 

subsector’s contribution to construction emissions), would imply a potential reduction of 

0.37 mmt CO2e annually from transportation construction activities.39

A recent NCHRP study examined the contribution of State DOTs to reducing GHG

emissions (Cambridge Systematics, 2009b). This study estimated that about 19 percent of 

State DOTs’ current vehicle fleet is powered by alternative fuels, saving 0.03 mmt CO2

annually. If 100 percent of State DOT vehicles were alternative fuel vehicles using these 

 

39The EPA study assumed a 10 percent reduction in idling from all off-road diesel equipment, a 3 

percent increase in fuel economy due to improved maintenance and driver training, and a 10 

percent replacement of diesel with biodiesel.
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same fuel technologies, 0.17 mmt CO2 could be saved annually.40

The potential for GHG reduction from transportation agency buildings is not well 

understood due to a lack of data on energy efficiency implementation in buildings. It is 

estimated, however, that if 100 percent of State DOT buildings implemented energy 

efficiency measures contributing to the LEED Silver rating, resulting in a 33 percent 

energy savings in buildings, GHG could be reduced by 1.7 mmt CO2 annually (Cambridge 

Systematics, 2009b).

 Future reductions could 

be greater with the use of less carbon-intensive alternative fuels.

41

The combined GHG reduction estimates from the construction, fleet vehicle, and energy 

efficient building practices described above are about 2.2 mmt CO2e annually in 2030. The 

GHG reduction from work zone management is extremely difficult to quantify because of 

the large variation in the amount of traffic created in work zones and the effectiveness of 

work zone management techniques on this traffic. Comprehensive national estimates 

have not been produced.

The rate at which these benefits could be achieved will depend 

upon the renewal of building stock as well as measures to retrofit existing buildings.

Cost-Effectiveness

The cost-effectiveness of alternative fuels is discussed in detail in Section 5.0. According 

to a 2009 McKinsey and Company report the cost-effectiveness of a “new building 

efficiency package” for commercial buildings is about $13 savings per metric tonne CO2e 

reduced. The McKinsey report also examines retrofitting existing buildings with new 

HVAC, water heaters, lighting, appliances, and building envelopes. The cost-effectiveness 

of these retrofitting measures range from +$60 to -$120 per metric tonne CO2e reduced 

(McKinsey and Company, 2009).

The cost-effectiveness of construction emission reduction practices has not been estimated. 

The cost-effectiveness of work zone management is difficult to quantify due to varying 

benefits depending on the severity of the traffic congestion created by the work zone, and 

no comprehensive estimates have been developed.

Cobenefits

Construction emission reduction practices have primary been implemented in order to 

reduce emissions of criteria pollutants and improve air quality in the vicinity of 

 

40The estimate assumes continuation of the existing mix of alternative fuel vehicles, which includes 

about 70 percent ethanol (E85) vehicles with most of the remainder compressed or liquefied 

natural gas.

41The LEED standard does not specifically require energy efficiency measures, although most 

buildings subject to certification include such measures. Data from Turner and Frankel (2008) 

suggest that LEED certified buildings have about 33 percent lower energy use than uncertified 

buildings.
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construction sites. Practices that reduce GHG emissions are likely to result in 

corresponding reductions in criteria pollutant emissions. The cobenefits of alternative 

fuels are discussed in detail in Section 5.0.

Feasibility

Fuel-efficient and alternative fuel vehicles, energy efficient buildings, and traffic 

management in work zones have all been demonstrated to be feasible by transportation 

agencies around the country. Transportation agencies can require emission reduction 

practices to be implemented by construction contractors, and in a few cases (such as the 

Massachusetts Central Artery/Tunnel project and the Virginia Byways project in North 

Carolina) have done so with the objective of reducing criteria pollutants.

One primary barrier to vehicle and buildings strategies is up-front capital costs, which 

may in many cases be recouped over time through energy and fuel savings. The adoption 

of alternative fuel vehicles also may be inhibited by the need for refueling infrastructure. 

The feasibility of using some alternative fuels (such as biodiesel) in certain types of 

equipment or under particular operating conditions (e.g., cold weather) has not been fully 

demonstrated.

Policy actions by the Federal government to promote GHG reduction practices by 

transportation agencies could potentially include technical assistance (e.g., development 

of GHG inventory and assessment tools, cost-savings information, model contract 

language to require GHG reducing practices by contractors); regulations requiring 

transportation agencies to inventory the GHG emissions from their activities and 

implement GHG reduction practices; and/or funding targeted at specific activities. A 

pending NCHRP project (Project 25-25, Task 58) is developing a tool to estimate life-cycle 

GHG emissions from transportation agency construction, maintenance, and operations 

activities. This tool should provide much better information to assist agencies in 

identifying the most significant sources of GHG emissions and implementing GHG 

reduction practices.
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 4.7 References

511 Deployment Commission (2004). The Value of Deploying 511. http://

www.deploy511.org/docs/511_Value.pdf.

AAPA (2007). North America: Container Port Traffic in TEUs. American Association of Port 

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AAR (2007). National Rail Freight Infrastructure Capacity and Investment Study. Prepared for 

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AHUA (2004). Unclogging America’s Arteries: Effective Relief for Highway Bottlenecks. 

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Anderson, R.M.; G. Baumgardner, R. May, and G. Reinke (2008). Engineering Properties, 

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ATRI (2006). Idle Reduction Technology: Fleet Preferences Survey. Prepared for New York 

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ATRI (2009). Compendium of Idling Regulations. American Transportation Research 

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ATW (2009). “High Risk” NextGen’s planning, leadership questioned. ATW Daily News, 

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BTS (2009). National Transportation Statistics 2009, Tables 4-20 – 4-26. Bureau of 

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Brown Cunningham Gannuch (2007). New Orleans Rail Gateway Infrastructure Feasibility 

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(2008). Updated Study on Greenhouse Gas Emissions from Ships: Phase I Report; International 

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Business Wire (2008a). Navistar’s Fleetrite Auxiliary Power Unit to Help Fleet Truck Fuel 

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Cab Cooling System Powered by OasisTM Group 31 Battery, January 29, 2008.

Cambridge Systematics and SAIC (2000). FleetForward Evaluation: Final Report. Prepared 

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Cambridge Systematics, Inc. (2005). Port Truck Trip Reduction Strategies. Prepared for 

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Cambridge Systematics, Inc. (2009). Moving Cooler: An Analysis of Transportation Strategies 

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work in progress.

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Operation in Canada. Prepared by Ray Barton Associated Ltd. And L.P. Tardiff and 

Associates Ltd.

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Demonstration of a Freight Routing and Emissions Analysis Tool (FREAT). Prepared for 

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Energy and Environmental Associates, Inc. and Cambridge Systematics, Inc. (1999). 

Greenhouse Gas Control Strategies: A Review of “Before-and-After” Studies. Prepared by 

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ENVIRON International Corporation (2004). Cold Ironing Cost Effectiveness Study. 

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blobdload.asp?BlobID=2157

EUROCONTROL/FAA (2009). U.S./Europe Comparison of ATM-related Operational 

Performance. 

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Aviation Administration, Office of Airports.

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office_org/headquarters_offices/ato/publications/oep/partnership/. Accessed May 2, 2009.

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FHWA (1999). Longer Combination Vehicles Involved in Fatal Crashes, 1991 to 1996. Federal

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FHWA (2005a). Traffic Congestion and Reliability: Trends and Advanced Strategies for 

Congestion Mitigation. Prepared by Cambridge Systematics, Inc. and Texas Transportation 

Institute for FHWA. http://ops.fhwa.dot.gov/congestion_report/.

FHWA (2005b). Roadway Human Factors and Behavioral Safety in Europe. Chapter 5 – Speed 

Management. International Technology Exchange Program, FHWA-PL-05-005.

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Program. http://international.fhwa.dot.gov/pubs/pl07012/atm_eu07.pdf

FHWA (2007b). Minnesota DOT 2007 Bottleneck Reduction Process. 

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index.htm.

FHWA (2008f). Highway Statistics 2007, Table FE-10.

FHWA (no date). Screening Analysis Spreadsheet for ITS. http://www.fhwa.dot.gov/

STEAM/scrits.htm.

Freire, D., W. Cowart and R. Nolan (2000). Air Travel Passenger Demand Responses to Free 

Flight Technologies and the Impact on Carbon Emissions. Submission to Transportation 

Research Board. Revised July 31, 2000.

GAO (2008). Energy Efficiency: Potential Fuel Savings Generated by a National Speed Limit 

Would Be Influenced by Many Other Factors. Government Accountability Office, GAO-09-

153R.

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5.0 Strategies to Reduce Carbon 

Intensive Travel Activity

Table of Contents

Table of Contents ............................................................................................................................5-1

List of Tables....................................................................................................................................5-2

List of Figures...................................................................................................................................5-3

5.1 Summary.....................................................................................................................................5-4

Summary of Impacts .................................................................................................................... 5-6

Summary Evaluation.................................................................................................................. 5-10

Cobenefits and Implications for Other Key Transportation Goals and Objectives ............... 5-13

5.2 Pricing ...........................................................................................................5-16

VMT Fees..................................................................................................................................... 5-17

Intercity Tolls .............................................................................................................................. 5-20

Pay-as-You-Drive Insurance...................................................................................................... 5-22

Congestion Pricing ..................................................................................................................... 5-25

Cordon/Area Pricing ................................................................................................................. 5-29

5.3 Transit, Nonmotorized, and Intermodal Travel................................................................... 5-33

Transit Expansion, Promotion, Service Improvements ........................................................... 5-34

Intercity Bus and Rail................................................................................................................. 5-43

Nonmotorized Transport........................................................................................................... 5-49

5.4 Land Use and Parking............................................................................................................. 5-54

Land Use...................................................................................................................................... 5-54

Parking Management................................................................................................................. 5-70

5.5 Commute Travel Reduction ................................................................................................... 5-74

Worksite Trip Reduction Programs .......................................................................................... 5-74

Telework...................................................................................................................................... 5-77

Compressed Work Week ........................................................................................................... 5-81

Flexible Work Schedules ............................................................................................................ 5-84

Ridematching, Carpool, Vanpool.............................................................................................. 5-87

5.6 Public Information Campaigns.............................................................................................. 5-92

Information on Travel Choices .................................................................................................. 5-93

Information on Vehicle Purchase .............................................................................................. 5-96

Driver Education/Eco-Driving.................................................................................................. 5-98

5.7 References............................................................................................................................... 5-102
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List of Tables

Table 5.1: Combined Benefits of Strategies to Reduce Carbon-Intensive Travel Activity .... 5-10

Table 5.2: Overview of Strategies to Reduce Carbon-Intensive Activities ............................. 5-11

Table 5.2: Overview of Strategies to Reduce Carbon-Intensive Activities (continued)......... 5-12

Table 5.3: Benefits and Costs of Network Road Tolling in Puget Sound Region ................. 5-28

Table 5.4: Greenhouse Gas Benefits of Transit Service Improvements Annual mmt CO2e 

Reduced....................................................................................................................... 5-38

Table 5.5: Average Annual Capital Requirement, 2006-2026 Billions of Dollars..................... 5-40

Table 5.6: Comparison of Recent Studies on Land Use and Greenhouse Gas Reduction..... 5-57

Table 5.7: CUTR VMT Forecasts by Census Tract Density (Annual VMT per Capita)......... 5-59

Table 5.8: Key Density Data from TRB Special Report 298...................................................... 5-60
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List of Figures

Figure 5.1: Average CO2 Emission Rates by Mode ............................................................... 5-36

Figure 5.2: Annual GHG Emissions Reduction of Transit Expansion.................................. 5-39

Figure 5.3: Comparison of Emissions (g/mi) from Buses versus Automobiles Displaced 5-41

Figure 5.4: Energy Consumption per Passenger-Mile........................................................... 5-45

Figure 5.5: Household Characteristics & Estimated Annual CO2 Emissions from Travel. 5-56

Figure 5.6: Distribution of U.S. Urban Population................................................5-58

Figure 5.7: Examples of Housing Densities.........................................................5-61

Figure 5.8: Examples of Communities at Different Density Ranges.........................5-64
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 5.1 Summary

Strategies to reduce carbon-intensive travel activity seek to reduce greenhouse gas 

emissions by influencing travelers’ activity patterns in order to shift travel to more 

efficient modes, reduce the need for travel, or otherwise take actions that reduce energy 

use and GHG emissions associated with personal travel.1

• Pricing strategies that increase the cost per mile of driving. Pricing strategies will 

result in a variety of effects including fewer trips, shorter trips, greater use of 

alternative modes, and a shift in travel to periods of lower congestion (Section 5.2);

 These strategies may include 

changes to transportation infrastructure, services, and land use patterns that facilitate or 

encourage less carbon-intensive activity patterns, as well as policy and programmatic 

actions such as financial incentives and disincentives, information, and education. Travel 

activity strategies discussed in this report include:

• Improvements to transit, nonmotorized, and intermodal travel, including urban 

transit, intercity bus and rail, nonmotorized infrastructure, and intermodal facilities 

and information, to encourage mode-shifting and increase the energy efficiency of 

travel per person-mile traveled (Section 5.3);

• Land use and parking management strategies to create more compact development 

patterns that reduce trip lengths and support the use of alternative travel modes 

through walkable and transit-oriented communities (Section 5.4);

• Commuter/worksite trip reduction programs, to encourage alternatives to singleoccupancy vehicle work trips through ridesharing, vanpooling, transit, nonmotorized 

travel, alternative work schedules, and telework (Section 5.5); and

• Other public information programs to educate people about the choices available to 

them regarding travel options, vehicle purchase, driving habits, and other issues, and 

the effects of these choices on costs, environmental impacts, and other factors 

(Section 5.6).

These strategies are described in greater detail in the sidebar on page 5-2.

 

1 Strategies to shift freight to more efficient modes are discussed in Section 4.0, System Efficiency.
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Strategies to Reduce Carbon-Intensive Travel Activity

Pricing

• VMT Fees – Charging drivers per mile of travel.

• Intercity Tolls – Applying tolls to rural InterState and other limited-access highways.

• Pay-as-You-Drive Insurance – Converting a significant portion of the essentially fixed cost of insurance 

to a marginal cost based on mileage.

• Congestion Pricing – Pricing roadway facilities when they are congested in order to reduce traffic on 

those facilities to an improved level of service.

• Cordon/Area Pricing – Applying a fee for vehicles to enter or operate within a selected area, such as a 

central business district.

Transit, Nonmotorized, and Intermodal Travel

• Transit Expansion, Promotion, Service Improvements – Investing in new fixed-guideway urban 

transit, expanding coverage of bus systems, increasing the frequency and/or time coverage of service 

on existing routes, or making other improvements to the quality of service on urban transit systems.

• Intercity Bus and Rail – Bus and rail passenger services (improvements to existing Amtrak services, or 

investment in new high-speed rail corridors) in corridors up to 500 miles between major city pairs.

• Nonmotorized Transport – Capital investments in nonmotorized infrastructure (e.g., bicycle facilities, 

sidewalks), or supporting activities such as design standards, bicycle parking at destinations, or 

education programs, to encourage bicycling, walking, and other forms of nonmotorized transport.

• Passenger Intermodal Improvements – Coordinating infrastructure and services to facilitate transfers 

between modes in order to maximize the efficiency of travel and minimize passengers’ time and costs.

Land Use and Parking

• Land Use – Coordinated regional transportation and land use planning to develop and implement 

growth policies (e.g., zoning for compact, walkable communities), in conjunction with supportive 

infrastructure investment, to reduce vehicle-travel.

• Parking Management – Changes to parking supply, pricing, or other management techniques to create 

disincentives to driving.

Commute Travel Reduction

• Worksite Trip Reduction Programs – Requirements for employers to reduce single-occupancy vehicle 

trips by their employees, or outreach, assistance, and incentive programs to encourage them to do so.

• Telework – The practice of working from a location other than the regular workplace and using 

modern telecommunications and computer technology to bridge the resulting distance.

• Compressed Work Week – A scheduling system whereby a regularly scheduled number of hours are 

worked in a shortened span of time.

• Flexible Work Schedules – Employer-facilitated alternatives to a standard 9:00 a.m. to 5:00 p.m. work 

schedule for commuting employees.

• Ridematching, Carpooling, and Vanpooling – Programs such as ridematching databases, vanpooling 

programs, and other supportive actions to increase vehicle occupancies for work trips.

Public Information Campaigns

• Information on Travel Choices – Mass marketing and individualized marketing campaigns to provide 

people with information on the full range of travel options and impacts of their choices.

• Information on Vehicle Purchase – Information directed at influencing consumers’ purchasing 

decisions by providing complete information on the environmental, cost, and other impacts of their 

purchases.

• Driver Education/Eco-Driving – Education programs directed at increasing vehicle fuel efficiency by 

affecting both driver behavior and vehicle maintenance.
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Summary of Impacts

Pricing strategies are among the travel activity strategies evaluated in this report with the 

greatest potential to reduce GHG emissions. Economists argue that pricing strategies can 

internalize the costs of the externalities associated with travel,2 discourage low-value trips, 

and encourage more efficient use of the transportation network. Comprehensive pricing 

strategies that affect all travel—including VMT fees and pay-as-you-drive insurance—

could potentially each reduce GHG emissions in the short term3

Despite its effectiveness, increasing the price of travel has so far proven unpopular with 

the general public. In general, in order for pricing to yield net benefits to the traveling 

public and not produce unacceptable equity impacts, a large fraction of the revenues must 

be reinvested in transportation services that benefit travelers (such as transit) and/or 

returned to the public (for example, through tax rebates). Potential Federal policies to 

encourage more widespread pricing include: implementing a national VMT fee system to 

replace or supplement the gas tax; easing or eliminating restrictions on congestion pricing 

programs and tolling on Interstate highways; providing funding for congestion pricing 

programs or making Federal funding contingent upon adoption of pricing strategies by 

States or metropolitan agencies; and establishing requirements to ensure that pricing 

revenue is used in a way that addresses equity concerns.

by up to 3 percent of all 

transportation emissions at typical levels of implementation, or about 75 million metric 

tons carbon dioxide-equivalent (mmt CO2e) emissions. If applied together, impacts would 

be greater. Strategies focused on specific markets, such as intercity tolls or cordon pricing, 

will have much smaller benefits consistent with the size of the market affected, and may 

also have some offsetting negative impacts by shifting vehicle-travel to unpriced locations 

rather than reducing it outright. Congestion pricing—in which higher prices are charged 

for traveling in periods of high demand—will not only reduce VMT, but also result in 

more efficient traffic operations. Benefits from comprehensive congestion pricing on all 

roadways could be as high as 1.4 percent of transportation GHG emissions or 35 mmt 

CO2e, but this figure is subject to substantial uncertainty.

Investments in transit also have the potential to generate modest to moderate reductions 

in GHG emissions. Expansion of and improvements to urban transit have the potential to 

reduce transportation GHG by 0.2 to 0.9 percent by 2030, or 5 to 19 mmt CO2e.4

 

2 Externalities can be defined as environmental, congestion, and other impacts that the traveler 

imposes on others but does not directly incur, and therefore does not generally factor into his or 

her decision-making.

 Benefits 

3 In this report, “short-term” refers to benefits realized within five years or less (2015); “mid-term”

refers to benefits realized in about 20 years (2030); and “long-term” refers to benefits realized in 30 

to 40 years (2050).

4 Some of the benefit estimates for a number of travel activity strategies, including transit, 

nonmotorized improvements, land use, and commuter strategies, incorporate “induced demand”

effects. As some travelers shift to other modes or reduce their travel, roadway congestion will be 

(Footnote continued on next page...)
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will increase over time as transit systems expand, up to as much as 32 mmt CO2e in 2050. 

The benefits of transit investment will vary greatly, however, depending upon ridership 

productivity (passengers carried per vehicle), and service expansions that do not carry 

sufficient new ridership could actually result in a net increase in GHG emissions. 

Ridership productivity will depend heavily upon transit-supportive land use patterns and 

pricing policies that support the use of transit. Intercity bus and rail, including Amtrak 

improvements, high-speed rail, and expanded intercity bus service, has modest potential 

for GHG reduction (up to 0.2 percent of transportation emissions, or 6 mmt CO2e in 2030), 

due to the limited travel markets in which use of these modes is likely to be significant. 

Again, benefits will depend upon the level of ridership productivity achieved. By 

themselves, both urban and intercity transit have low cost-effectiveness as GHG reduction 

strategies, with implementation costs of $400 to $3,000 per metric ton (tonne) for urban 

transit and intercity rail. In many cases, however, transit expansion may be justified on the 

basis of other benefits, especially mobility improvements for low-income and other 

limited-mobility travelers. Also, in some cases, personal vehicle operating cost savings can 

exceed the public-sector cost of transit investment. Furthermore, certain types of 

improvements (such as transit priority at traffic signals) could have greater costeffectiveness by improving the quality of service without increasing the amount of service 

provided. The primary Federal need to support transit expansion is additional funding, 

both for capital investment and operations.

Nonmotorized improvements, including pedestrian and bicycle infrastructure, have 

modest potential for GHG reductions (0.2 to 0.6 percent of transportation emissions, or 4 to 

12 mmt CO2e by 2030), but are also relatively inexpensive compared to highway or transit 

investment and therefore have moderate cost-effectiveness based on implementation costs 

($70 to $180 per tonne). Personal vehicle operating cost savings can outweigh publicsector investment costs for these strategies. Some improvements are low-cost, such as 

incorporating bicycle lanes and enhanced pedestrian crossings into new or reconstructed 

roadways; others, such as shared-use paths or retrofitting suburban areas with sidewalks, 

are more costly. Nonmotorized improvements complement transit improvements—they 

support transit use and, as with transit, are much more effective in densely developed 

areas where destinations are close together. Federal initiatives could include additional 

funding targeted for nonmotorized infrastructure and policy directives such as requiring 

the adoption of “complete streets” policies or other supportive policies by State and local 

transportation agencies.

Land use and parking management has moderate to high potential for GHG reductions 

over the mid- to long-term by reducing trip lengths and supporting travel by transit, 

walking, and bicycling. Reductions from aggressive strategies to create more compact, 

walkable communities could range as high as 3.9 percent of transportation emissions or 

84 mmt CO2e by 2030, and potentially double this level by 2050. Land use patterns change 

slowly over time; nevertheless, it is estimated that by 2050 two-thirds of all development 

 

reduced, thereby potentially allowing or encouraging other people to drive more. This effect has 

been estimated to reduce GHG benefits of these strategies by a modest amount (about 14 percent) 

as discussed in Appendix A.
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on the ground will be new or rebuilt, compared with today’s building stock. The direct 

cost of implementing land use strategies (including planning and administration) is 

minimal (less than $10/tonne) and these strategies will result in significant vehicle 

operating cost savings. They also have a variety of other implications related to 

environmental impacts, livability, and housing affordability, which may vary depending 

upon the specific land use policies implemented. Land use represents a particularly 

challenging issue from a Federal policy perspective, due to the traditional sovereignty of 

local governments on this issue and the strong influence of the private sector. Building on 

State and regional agency models, however, the Federal government could potentially 

play a more significant role in encouraging more efficient land use patterns, by providing 

funding incentives and disincentives as well as technical assistance.

Commuter/worksite trip reduction programs appear to have modest potential for GHG 

reductions (0.1 to 0.6 percent of transportation emissions, or 2 to 14 mmt CO2e in 2030). 

Telework and other alternative work schedules can further reduce GHG from work travel 

by up to 0.7 percent (17 mmt CO2e), although telework is likely to spread largely through 

private initiative and the role of the public sector in encouraging adoption of alternative 

work schedules appears limited. Trip reduction programs can generally be implemented 

at modest cost compared to investment in infrastructure or services, with implementation 

costs from $30 to $180 per tonne. Net savings may result from reduced vehicle operating 

costs. The Federal government could play a greater role in commute strategies by 

providing funding for employer outreach programs and other regionally provided TDM 

services, providing tax incentives for businesses offering commute alternatives, and 

potentially by establishing trip reduction requirements.

Public information campaigns to encourage travelers to change behavior exhibit modest 

GHG reduction potential—in the range of 0.3 to 0.4 percent of transportation GHG 

emissions (6 to 8 mmt CO2e). Campaigns based on mass marketing have demonstrated 

little ability to influence travel behavior. Individualized marketing, in which people are 

provided with customized information on travel alternatives, shows somewhat greater 

promise in areas where good alternative services are available, but has not been proven in 

areas with limited alternatives. The impacts of educational efforts to encourage ecodriving and proper vehicle maintenance are potentially much more significant – between 

0.8 and 4.3 percent of transportation emissions or 18 to 94 mmt CO2e. Achieving these 

benefits, however, is dependent upon comprehensive and sustained efforts, including 

requiring instruction as part of driver education and requiring automakers to provide invehicle feedback technology. Furthermore, the only empirical research on eco-driving 

benefits has been conducted outside the United States, primarily in Europe, and it is not 

clear that findings can be translated to United States conditions.

The 2030 emissions benefits (expressed in mmt CO2e) cited for these strategies will be 

lower in absolute terms if vehicle efficiency improves and/or the carbon content of fuel is 

reduced beyond baseline levels assumed in this report. For example, if vehicle efficiency is 

increased by 20 percent compared to baseline projections, the absolute CO2e reduction 

benefits will be 20 percent lower. Similarly, if total travel activity is more or less than 

baseline projections, the absolute GHG reduction benefits will increase or decrease 

proportionately.
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Cumulative Benefits

While the effects of the individual strategies presented in this report cannot simply be 

added together to provide a cumulative savings, it is still desirable to make a rough 

estimate of cumulative benefits from travel activity strategies, in order to compare with 

other types of strategies. To do so, the following strategy benefits were added together, 

considering both the low and high range of benefits cited from the literature:

• Pay-as-you-drive insurance;

• Congestion pricing;

• Urban and intercity transit;

• Non-motorized travel;

• Land use;

• Parking management;

• Commuter/worksite trip reduction;

• Telework and compressed work week;

• Individualized marketing; and

• Eco-driving.

Pay-as-you-drive insurance and congestion pricing are considered as a representative 

subset of pricing measures; it is unlikely that all pricing measures would be implemented 

at once, but a VMT fee instead of PAYD would have similar effects. Ridematching and 

mass marketing were deemed to be largely redundant with commuter/worksite trip 

reduction and were therefore excluded. The benefits of these strategies would not 

necessarily be purely additive; a multiplicative approach would give slightly lower 

combined benefits, but also would not account for any potential synergies among 

strategies.5

Combined benefits are estimated to range from 5 to 17 percent of total transportation 

emissions in 2030, or 6 to 21 percent in 2050, as shown in Table 5.1.

 

5 A multiplicative approach would, for example, first reduce GHG by x percent from one strategy, 

then y percent from the second strategy applied to the new baseline, etc. For example, two

strategies with benefits of 10 percent each would have a combined benefit of (1 – (0.9 * 0.9)) = 

19 percent.
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Table 5.1 Combined Benefits of Strategies to Reduce Carbon-Intensive 

Travel Activity

GHG Reduction from 

Baseline, mmt CO2e

Percent of All 

Transportation Emissions

Year Low High Low High

2030 Combined Benefits 107 366 4.9% 16.9%

2050 Combined Benefits 138 463 6.4% 21.3%

Summary Evaluation

Table 5.2 summarizes the strategies discussed in this section and presents an assessment of 

each strategy’s effectiveness, cost-effectiveness, and cobenefits, as well as a summary of 

key Federal policy initiatives that would be needed to implement the strategy beyond 

current levels. The factors presented in the table are rated according to the following 

metrics:

• Effectiveness: Low = < 0.5 percent of transportation GHG emissions in 2030 (12 mmt 

CO2e; Moderate = 0.5-2.5 percent (12-60 mmt CO2e); High = > 2.5 percent (60 mmt 

CO2e);

• Costs: Cost is measured as “net included cost” per metric ton (tonne) of CO2e reduced. A 

positive number represents increased costs, while a negative number represents a net 

savings. High Cost = > $200 per tonne CO2e reduced; Moderate Cost = $20-$200 CO2e 

reduced; Low Cost = < $20/tonne CO2e reduced; Net Savings = < $0/tonne CO2e 

reduced. Costs for travel activity strategies are presented in two ways:

− Direct costs (implementation costs only) per tonne of CO2e reduced; and

− “Net included costs” (which includes both direct costs and any reported cost 

savings, usually vehicle operating costs). A discussion of how costs are calculated 

and presented in this report is presented in Appendix A.

• Cobenefits: Plus (+) = significant positive cobenefits; minus (–) = significant negative 

cobenefits; plus/minus (+/-) = both significant positive and negative cobenefits; zero (0) = 

modest or negligible cobenefits.
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Table 5.2 Overview of Strategies to Reduce Carbon-Intensive Activities

Strategy

GHG 

Reduction

(2030)

Direct 

Cost per 

Tonne

Net 

Included 

Cost per 

Tonne Cobenefits Key Federal Policy Options

5.1 Pricing

5.1.1 VMT Fees Moderate

0.8-2.3%

Moderate Net 

Savings

– Establishment of national VMT fee, 

or requirements or incentives for 

State-level implementation

R&D to address privacy as well as 

technical issues with monitoring

5.1.2 Intercity Tolls Low

<0.1%

High Net 

Savings -

Moderate

– See VMT fees; plus removal of 

restrictions on tolling Interstate 

highways

5.1.3 Pay-as-YouDrive Insurance ModerateHigh

1.1-3.5%

LowModerateNet 

Savings

+/- Federal requirement that States 

1) allow or 2) require insurers to offer 

mileage-based insurance

Demonstration projects (?)

5.1.4 Congestion 

Pricing

LowModerate

0.4-1.6%

High Net 

Savings

+/- Requirements or incentives for 

metro-level implementation

R&D to address privacy as well as 

technical issues with monitoring 

(same issues as VMT fee)

5.1.5 Cordon/

Area Pricing

0.1% High Net 

Savings

+/- Requirements or incentives for city or 

metro-level implementation

5.3 Transit, Nonmotorized, and Intermodal Travel

5.3.1 Transit 

Expansion, 

Promotion, Service 

Improvements

LowModerate

0.2-0.9%

(2030)

0.4-1.5% 

(2050)

High Net 

Savings –

High

+ Funding for transit investment and 

services

5.3.2 Intercity 

Passenger

Low

0.3%

High Net 

Savings –

High

+ Funding for intercity and high-speed 

rail expansion, intercity bus route 

expansion

National rail plan and policy 

framework to reconcile passenger 

and freight rail needs

5.3.3 Nonmotorized 

Transport

LowModerate

0.2-0.6%

Moderate

– High

Net 

Savings

+ Funding for bike/pedestrian projects

Requirement for States to adopt 

complete streets/design policies for 

alternative mode accommodation
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Table 5.2 Overview of Strategies to Reduce Carbon-Intensive Activities

(continued)

Strategy

GHG 

Reduction

(2030)

Direct 

Cost per 

Tonne

Net 

Included 

Cost per 

Tonne Cobenefits Key Federal Policy Options

5.4 Land Use and Parking

5.4.1 Land Use ModerateHigh

1.2-3.9%

(2030)

2.5-7.7% 

(2050)

Low Net 

Savings

+ Transportation funding incentives to 

support regional and local planning 

for efficient land use

Federal inter-agency policy 

coordination to support efficient 

development patterns and practices

5.4.2 Parking 

Management

Low

0.2%

Unknown Unknown +/-

5.5 Commute Travel Reduction

5.5.1 Worksite Trip 

Reduction Programs

LowModerate

0.1-0.6%

LowModerateNet 

Savings

+ Funding for regional employer 

outreach and commuter support 

programs

Expanded tax incentives for 

alternative commute measures 

(telework, transit subsidies, etc.)

(Federal requirement for States to 

implement employer trip reduction 

ordinances)

5.5.2 Telework Low

0.4%

High Moderate +

5.5.3 Compressed 

Work Week

Low

0.1-0.3%

Low Unknown +

5.5.4 Flexible Work 

Schedules

N/A Low Unknown +

5.5.5 Ridematching, 

Carpool, Vanpool

Low

0.0-0.2%

Moderate Unknown +

5.6 Public Information Campaigns

5.6.1 Information on 

Travel Choices

Low

0.3-0.4%

ModerateHigh

Unknown + Funding for individualized 

marketing programs—additional 

pilots, broader-scale implementation

5.6.2 Vehicle 

Purchasing

Low

0.1-0.2%

Unknown Unknown + Continuation/expansion of outreach 

programs

5.6.3 Eco-Driving ModerateHigh

0.8-4.3%

Unknown Net 

Savings

+ Requirements for auto 

manufacturers to incorporate invehicle fuel efficiency feedback

Requirements for States to teach ecodriving practices in driver training 

and drivers’ manuals

Funding for eco-driving education

Combined Benefits 4.9-17%

(2030)

6.4-21% 

(2050)
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Cobenefits and Implications for Other Key Transportation Goals and 

Objectives

Strategies to reduce carbon-intensive travel activity have a number of common cobenefits, 

implications for DOT goals and objectives, and implications for infrastructure finance, as 

described below. Some strategies also have unique cobenefits and impacts which are 

described in their respective subsections. They can be evaluated against the five strategic 

goals of the U.S. DOT (identified in the U.S. DOT’s Strategic Plan), as well as other key 

objectives established for transportation by the Obama Administration:

• Safety – Most travel activity strategies reduce VMT. By doing so, they should reduce 

the number of crashes and associated costs and human impacts. Alternative modes 

typically carry much smaller crash risks per passenger-mile or vehicle-mile than 

highway travel.

• Reduced Congestion/Increased Mobility – Strategies that improve the availability and 

quality or reduce the cost of travel options, as well as those that provide information 

about options, can provide increased mobility to travelers. In particular, these 

strategies include improved urban and intercity transit services, nonmotorized 

improvements, commute-focused travel options programs, and traveler information. 

Mobility benefits are particularly acute for low-income people for whom an 

automobile may be a financial hardship, as well as for children, seniors, and those with 

disabilities that make driving impossible. Strategies that are implemented through 

requirements or disincentives (such as price increases) represent a constraint on 

mobility and will make some people worse off. Any strategy that reduces VMT during 

peak periods should also reduce congestion; however, this does not necessarily imply 

an increase in mobility, as some people may have been discouraged from traveling due 

to a higher cost or other disincentive.

• Global Connectivity – Strategies implemented in a way that improves passenger 

movement to and through airports, border crossings, and intermodal terminals (or 

infrastructure in the vicinity of these facilities) should improve global connectivity by 

enhancing connections between modes and across national borders.

• Environmental Stewardship – All of the travel activity strategies reduce GHG 

emissions by reducing vehicle travel and its associated energy consumption, without 

changing the mix or source of fuels used. As a result of burning less fuel and reducing 

VMT, most of these strategies should also result in reductions in other air pollutants, 

including ozone precursors (volatile organic compounds and oxides of nitrogen), 

carbon monoxide, particulates, and air toxics. A reasonably close correspondence is 

expected between reductions in air pollutant emissions, VMT, and GHG emissions. 

Strategies that affect congestion and travel speeds, such as those that reduce peakperiod travel, may provide additional benefits by reducing emissions associated with 

congestion. Strategies that involve shifting travel to other modes will have more 

complicated effects because the emissions characteristics of each mode will differ. For 

example, the diesel engines commonly used in buses and rail locomotives may in some 
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cases increase NOx and PM emissions relative to passenger car travel, although they 

will generally reduce VOC and CO emissions. Greater reliance on electricity (e.g., for 

urban or intercity transit) will shift the location of pollutants from urban areas to oftenrural power plants, resulting in net health benefits; the magnitude of pollution 

reductions, however, will depend upon the fuel and technology characteristics of the 

affected powerplants.

• Security – Travel activity strategies may benefit national security by reducing 

dependence upon foreign oil. The reduction in oil use will be in direct proportion to 

GHG reductions for each strategy. Strategies that reduce roadway congestion should 

have security benefits from improved emergency services (police, fire, and medical) 

response time.

• Livability – Land use and nonmotorized strategies will provide more options for 

physical activity through walking and bicycling, not only for transportation but also 

for recreation. These strategies may also improve livability by reducing vehicle travel 

speeds – thus making neighborhood streets safer and reducing traffic noise. Other 

livability effects may be more complex and be viewed as either positive or negative by 

different people. For example, some people may positively value the feel of an urban 

community and its greater opportunities for casual social interaction, while others will 

prefer the privacy and space afforded by low-density development.

• Economic Vitality – To the extent that travel activities strategies reduce congestion, 

they will generally support economic vitality by reducing business and consumer costs 

and increasing business productivity. Congestion and cordon pricing are the two 

travel activity strategies most directly targeted at congestion reductions; others will 

have more indirect effects through reduced VMT during both peak and off-peak 

periods. However, businesses will also incur increased costs from pricing strategies; 

whether these costs outweigh the benefits of reduced congestion will depend upon 

how each strategy is applied. Transit investment may have localized economic 

benefits by encouraging development in communities with transit stations.

Effects on Infrastructure Funding

All of the strategies in this section will result in varying demands on infrastructure 

funding sources depending upon their costs. Some strategies have relatively low publicsector costs, such as those that involve marketing and outreach to promote the use of 

alternative modes, and planning for land use changes. Others will have higher costs in 

proportion to the amount of infrastructure investment and services provided by the public 

sector.

Reductions in vehicle travel will lead to proportionate reductions in motor fuel sales and 

therefore reduced revenue for transportation programs, under the current finance 

structure. The Federal Highway Trust Fund was established in 1957 as a dedicated, userfunded source of revenue for the United States highway system and is the source of 

revenue for the Federal-aid Highway Program. Net receipts in FY 2007 were $34.3 million 

to the Highway Account and $5.0 million to the Mass Transit Account (FHWA, 2008). 
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The strategies analyzed in this report for reducing carbon-intensive travel activity will 

reduce total Federal Highway Trust Fund revenues in rough proportion to fuel savings 

and GHG reductions. Under the 2030 combined scenario described above, the net impact 

on revenues could range from about $2.2 to $7.3 billion annually.6

 

6 Based on a total fuel savings of 11.8 to 39.8 million gallons and a tax rate of 18.4 cents per gallon.

 Funding shortfalls 

could be mitigated or avoided in the future through shifts in tax structures or through 

alternative infrastructure funding mechanisms. In particular, the pricing strategies 

evaluated in this section (including a VMT fee, intercity tolls, or congestion or cordon

pricing) would provide a supplemental funding source to support other infrastructure 

investments and services.
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 5.2 Pricing

Pricing strategies are designed to increase the cost of driving in order to internalize the 

external costs associated with travel (environmental and congestion), discourage lowvalue trips, and encourage more efficient use of the transportation network. Pricing 

strategies will result in a variety of effects including fewer trips, shorter trips, greater use 

of alternative modes, and shifting travel to times when congestion is less. Five pricing 

strategies are discussed in this section:

• VMT fees, which charge a fixed cost per mile driven;

• Intercity tolls, applied specifically to rural InterState and other limited-access highways;

• Pay-as-you-drive insurance, which converts the variable costs associated with 

insurance (i.e., costs such as crash risk that are proportional to distance driven) into a 

per-mile cost paid by the vehicle owner;

• Congestion pricing, in which highway travel under conditions of high demand is 

priced higher to keep travel and therefore congestion at levels of optimum economic 

efficiency; and

• Cordon pricing, which is essentially congestion pricing applied to a particular area 

(usually the region’s central business district) to discourage enough travel to keep 

traffic in the area moving efficiently.

Economy-wide market measures, including a cap-and-trade system or carbon tax (see 

Volume 1, Section 4.0), will also increase the cost of driving, and therefore bear similarities 

to a VMT fee. Unlike a VMT fee, however, the carbon-based costs will also affect drivers’

vehicle purchasing habits since the carbon price rewards lower fuel consumption, not just 

fewer miles driven. Increased motor fuel taxes, which are not discussed separately in this 

report, will have the same effects as a carbon tax of equivalent magnitude. The advantages 

and disadvantages of various pricing mechanisms are discussed in Volume 1, Section 3.0.

Some of the other strategies discussed in this report also encompass pricing measures. For 

example, Parking Management (Section 5.4.2) can include pricing as a management 

strategy. Worksite Trip Reduction Programs (Section 5.5.1) strategies often include 

financial incentives for the use of transit, nonmotorized travel, or ridesharing, or parking 

pricing to discourage driving.

The five transportation-specific pricing measures that follow can be analyzed using 

broadly similar methods. Estimates of VMT reductions generally rely on common 

assumptions regarding elasticities (how much VMT changes with respect to a given 

change in travel cost) and baseline vehicle operating costs. The cost and elasticity 

assumptions used to develop the estimates presented in this report are described in detail 

in Appendix A. In addition, while congestion pricing and cordon pricing will affect total 

VMT, their primary goal is to affect the efficiency of travel by reducing travel in congested 
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locations and time periods. These strategies can provide GHG reductions greater than 

their VMT reduction impacts by also decreasing fuel wasted because of congestion.

VMT Fees

Description

VMT fees have been proposed both as an 

alternative or supplemental revenue 

source to the gas tax, and to reduce VMT 

by making travel more expensive. Fees 

on vehicle miles of travel have been 

suggested by the National Surface 

Transportation Policy and Revenue Study 

Commission and the National Surface 

Transportation Infrastructure Financing 

Commission, and by reports from the 

National Chamber of Commerce, the 

Transportation Research Board, and the 

National Cooperative Highway Research 

Program. VMT fees would most likely 

vary by type of vehicle, to reflect 

principles of highway cost allocation, or 

perhaps to reflect also the different 

emissions characteristics of vehicles.

Two basic approaches are available for 

monitoring VMT as a basis for assessing 

charges:

1. Administrative Reporting – Motor vehicle mileage would be reported through the 

motor vehicle registration and inspection process or on-board odometer readings. This 

approach uses existing technology and could be implemented quickly. While simplest 

from a reporting perspective, enforcement would be required to ensure proper 

reporting and to control odometer tampering.

2. Wireless Reporting – Motor vehicles would link to a receiver located at gas stations, 

where a radio frequency receiver would pick up a transmission from an on-board unit 

that would provide the odometer reading since the last gas station visit. This strategy 

would require additional technology deployment but would reduce or eliminate the 

capability for fraud and also reduce manual labor associated with reporting. Electronic 

fee collection has the additional advantage that it could potentially be used to 

implement congestion pricing as well, if used in conjunction with a global positioning 

system (GPS) unit to assess variable fees based on the time and location of travel.

VMT Fees

Benefits: Moderate: 17-50 mmt CO2e in 2030

• Based on fee of 2 to 5 cents per mile

Direct Costs: Moderate: $60 to $150 per tonne

Net Included Costs: Net Savings: -$600 to -$800 

per tonne

Confidence in Estimates: High

• Price elasticities well-documented

• Primary variable is magnitude of fee

Key Cobenefits and Impacts: Mixed/Negative

• Mobility decreases for most travelers

• Potential equity concerns, depending upon 

how revenues are used

• Transportation revenue source provides 

opportunities for reinvestment

Feasibility: Low

• Fees significant enough to measurably affect 

behavior unlikely to be popular in the current 

political climate

Key Policy Options:

• Adoption of a national VMT fee-based 

highway revenue collection system
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Magnitude and Timing of GHG Reductions

VMT fees could be applied to all VMT on all systems (2.9 trillion VMT in 2006). Assuming 

price elasticities and vehicle operating costs as documented in Appendix A, a toll of 2 cents 

per mile (roughly equivalent to current motor fuel taxes) is estimated to reduce VMT by 

about 1 percent, with a corresponding reduction in GHG emissions from motor vehicle 

travel.7

Very limited empirical evidence is available from a mileage-based fee experiment. A 

study conducted on 130 households in the Minneapolis–St. Paul metropolitan area 

concluded that per-mile pricing would result in a VMT reduction of 4.4 percent for all 

daily travel, or somewhat higher reductions (6.6 percent) during weekday peak periods 

(Cambridge Systematics, 2006). This study was based on a relatively high fee rate—

between 5 and 25 cents per mile, varying for different participants—based on converting 

automobile fixed to variable costs. The study concluded that some households were 

willing to change their behavior even at relatively low fee levels; but that increasing fees 

toward the higher end of the range had little additional impact on travel, since other 

households were unwilling or unable to change their behavior. If the daily reduction were 

applied to all light-duty VMT nationwide (impacts on truck travel were not evaluated in 

this experiment), GHG emissions would be reduced by 51 mmt CO2e in 2030. This finding 

corroborates the elasticity-based estimates provided above.

 A higher toll of 5 cents per mile would reduce VMT by about 2.5 percent. The 

VMT impacts of a 2- to 5-cent fee equate to a reduction of about 30 to 75 billion VMT, or 17 

to 50 mmt CO2e in 2030. These estimates could potentially be lower or higher by at least a 

factor of two, reflecting the range of uncertainty in the literature regarding travelers’

response to price changes.

VMT fees can be implemented in a very short timeframe using mechanical hubodometers; 

implementation of electronic systems would take somewhat longer but still could be done 

within a few years. Some impacts would be realized immediately after implementation. 

The effects will increase somewhat over the first few years of implementation, as travelers 

can make more structural adjustments (such as changing residential or activity locations) 

in response to price signals.

Cost-Effectiveness

Using cost factors from two recent studies (Howard, no date; Kitchen, 2008), the national 

full application of VMT fees is estimated to cost $131 billion through 2050 if based on 

mechanical hubodometers, with a net present value of $61 billion. More effective 

electronic systems are estimated to cost $230 billion through 2050, with a net present value 

of $166 billion. The cost-effectiveness of a VMT tax has been estimated to be 

 

7 Two cents per mile would equal about $0.50 for the average round-trip work trip of 25 miles, or 

about $500 per year per person given the average of about 10,000 VMT per capita. To have a net 

impact on GHG emissions, of course, the VMT fee would either need to supplement the gas tax or 

be significantly greater than the gas tax it replaces.
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approximately $100 per ton for a fee of $0.03 per mile, including only direct 

implementation costs (Cambridge Systematics, 2009); for a range of fees from $0.02 to $0.05 

per mile this would correspond to a cost-effectiveness in the range of $60 to $150 per tonne 

(assuming the same implementation costs regardless of fee level). Higher fees should be 

more cost-effective than lower fees because they will have a greater impact on VMT with 

little or no additional administrative cost. These cost estimates do not include vehicle 

operating cost savings to travelers, welfare losses from decreased mobility, or the fees 

themselves; including vehicle operating costs would yield a net savings of $650 per tonne 

for a one-cent fee or $840 per tonne for a three-cent fee, according to analysis conducted for 

the Moving Cooler study (Cambridge Systematics, 2009).

8

Cobenefits

 The fees are considered to be 

transfers (from individuals to the transportation operator, and which may be returned to 

individuals through transportation investments or tax rebates), and would not represent a 

net social cost.

Reductions in air pollutant emissions and crashes should be roughly proportional to the 

reduction in VMT as a result of the fee. Consumers will experience some welfare losses as 

a result of decreased mobility. To the extent that congestion is reduced, however, some 

peak-period travelers with high values of time (or those riding transit and not paying fees) 

will benefit.

A VMT fee of 1 cent (averaged across vehicle classes) would generate annual gross 

revenues ranging from $30 billion currently to between $46 and $57 billion per year in the 

future, depending on the level of future VMT growth. Even with reduced travel due to 

higher prices, a 5-cent-per-mile VMT fee would generate over $150 billion per year, 

growing annually. Some of these costs would be needed to cover administration of the fee; 

the remainder could be reinvested in infrastructure or returned to taxpayers. The 

additional revenue generated does not represent a net benefit to society; instead, it is a 

transfer that offsets the losses to travelers who are paying higher fees.

Feasibility

VMT fees have not yet been implemented in the U.S. A weight distance tax is 

administered by Oregon for heavy vehicles, and Oregon is also one of the leading States in 

considering the application of VMT fees to all vehicles. A shift to mileage-based pricing 

must overcome considerable political and institutional resistance due in particular to 

concerns over privacy issues, the logistics of implementation, and the appearance of 

implementing a new tax. Monitoring through mechanical hubodometers requires a 

relatively frequent (annual or biennial) inspection which is not currently conducted in all 

 

8 The Moving Cooler study (Cambridge Systematics, 2009) examined the GHG impacts and costeffectiveness of a wide range of strategies directed at reducing VMT and improving transportation 

system efficiency. More information on this study, which is referenced for a number of strategies 

presented in this section, is included in Appendix A.
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parts of the country. For a shift to electronic monitoring, some technical issues, as well as 

the establishment of technologies and procedures to protect the privacy of travelers, still 

are being resolved. Fees have been 

proposed both at the State and national 

level. The Federal government could 

either directly implement a VMT fee 

system, or encourage States to do so 

through transportation funding 

incentives or other means.

Intercity Tolls

Definition

Intercity tolls could be expanded from 

the current toll roads present in some 

States to all or most of the intercity 

highway system. Tolls could be 

collected on rural Interstate segments 

and other limited-access rural highways 

either using toll barriers and cash 

payments, through the use of electronic 

toll collection (where all vehicles would 

be required to have transponders), or 

through mixed systems which combine 

physical toll barriers and electronic toll 

collections. Most existing toll facilities in 

the eastern U.S. now have combined 

systems. As with existing toll facilities, it 

is anticipated that different tolls would be set for different vehicle classes. Several intercity 

toll roads (including in New Jersey, Maine, and Oklahoma) have different time-of-day/

day-of-week prices. Rates could be varied for light-duty versus heavy-duty vehicles based 

on highway cost allocation studies, relative emissions rates, and/or other factors.

Magnitude and Timing of GHG Reductions

Approximately 260 billion VMT occurred on all rural Interstates in 2006, which is 

8.6 percent of total VMT. Intercity tolls would have a similar VMT reduction effect as 

VMT pricing, but only on this much smaller market segment. Using the same response 

assumptions as described under VMT Fees, a toll of 2 to 5 cents per mile is estimated to 

reduce rural Interstate VMT by about 1 percent to 2.5 percent. This equates to a reduction 

of about 2.6 to 6.5 billion VMT, or 1.2 to 3.0 mmt CO2e in 2030. Higher tolls would have 

greater impacts on VMT and GHG emissions. The effects of differentiated tolls by vehicle 

type or other factors were not evaluated.

Intercity Tolls

Benefits: Low: 1-3 mmt CO2e in 2030

• Based on fee of 2 to 5 cents per mile applied 

to rural Interstates

Direct Costs: High: $500 to $800 per tonne

Net Included Costs: Net Savings - Moderate: -

$500 to +$200 per tonne

Confidence in Estimates: Medium-High

• Price elasticities well documented; primary 

variable is magnitude of fee

• Key uncertainty is potential diversion to nonInterstate routes

Key Cobenefits and Impacts: Mixed/Negative

• Mobility decreases for most travelers

• Potential equity concerns, depending upon 

how revenues are used

• Transportation revenue source provides 

opportunities for reinvestment

Feasibility: Low

• Fees significant enough to measurably affect 

behavior unlikely to be popular in the current 

political climate

Key Policy Options:

• Adoption of national tolls on rural Interstate 

highways
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This estimate, however, does not account for any likely diversion effects which could offset 

or even increase GHG emissions. For example, the leading firms in the trucking industry 

maintain sophisticated cost models which they utilize to determine when and when not to 

use toll roads. Assuming that tolls are applied only to the Interstate highway system, 

truckers and other travelers could divert to local roads in order to save money, although 

potentially incurring a longer trip.

Tolls could be collected on Interstate highways within a few years. The primary time 

requirement would be to establish toll collection infrastructure and systems.

Cost-Effectiveness

Existing State toll road authorities collect about $4.3 billion in tolls per year (FHWA, 2006), 

and additional tolls are collected for State toll bridges and tunnels and local toll roads, 

bridges and tunnels. State toll road operations expenses totaled $604 million and 

administrative and miscellaneous expenses $681 million, according to Highway Statistics. 

Although operations expenses included snow removal and other costs besides toll 

collections, the administrative expenses are also partially attributable to collection costs. 

Thus it is not unreasonable to estimate that existing toll collection costs absorb over 

10 percent of toll revenues. The Moving Cooler study estimated the cost-effectiveness of 

intercity tolls to be in the range of $500 to $800 per ton CO2e considering only direct 

implementation costs, with the lower estimate reflecting a higher toll rate. Considering 

vehicle operating cost savings, cost-effectiveness ranges from -$500 to +$200 per tonne.

Cobenefits

Cobenefits would be similar to those realized through a VMT fee, although on a smaller 

scale, in proportion to the amount of traffic affected. This does not account for any 

potential diversion effects to nontolled roadways.

Feasibility

New highways are increasingly being constructed as tolled facilities. However, conversion 

of existing nontolled facilities to tolling has, to date, been rare in the U.S. It is likely that 

conversion of currently free highways to toll highways would face substantial opposition. 

Federal policy would also need to be changed, as current Federal legislation allows only 

limited conversions of existing free Interstates to toll applications, with Federal approval.
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Pay-as-You-Drive Insurance

Description

Pay-as-you-drive insurance (PAYD) is 

the conversion of a significant portion of 

the essentially fixed cost of insurance to 

a marginal cost based on mileage. The 

logic behind PAYD is that crash risk—

which represents a significant portion of 

insurance costs—is directly related to 

distance driven, and therefore, people 

who drive less should have lower 

premiums. Some insurance cost 

elements, such as theft and other risk of 

damage when stationary, would still 

remain fixed. Per-mile charges would 

still be related to crash risk, meaning that 

low-risk drivers or those living in lowrisk areas would pay less per mile. 

Mileage could be tracked either through 

manual reporting of hubodometer 

readings or through electronic 

monitoring, as previously discussed for 

VMT Fees.

Pilot studies of PAYD and mileage-based user fees (which have very similar behavioral 

impacts) have been conducted in Georgia, Minnesota, Oregon, Texas, and Washington 

State. Progressive Insurance and GMAC Insurance both currently offer PAYD insurance 

options in selected States. However, pay-as-you-drive would need to be encouraged or 

mandated in order to achieve broad or universal application.

Magnitude and Timing of GHG Reductions

Anticipated cost-shifting for the measure should result in an average additional marginal 

cost of 4 to 6 cents per mile, which is roughly equivalent to a $1.00 per gallon increase in 

the price of fuel. Such an increase could result in light-duty VMT reductions of about 

3.8 percent, using the same elasticity assumptions as applied to other pricing measures, 

and again acknowledging the uncertainty in these assumptions. One recent study 

estimated that a moderate implementation of PAYD (requiring all States to permit the 

offering of per-mile insurance rates) could reduce GHG emissions by 23 mmt in 2030, 

while an aggressive implementation (requiring that all auto insurance policies have at least 

75 percent of premiums paid for on a mileage basis) could reduce GHG emissions by 

75 mmt (Cambridge Systematics, 2009).

Pay-as-You-Drive Insurance

Benefits: Moderate-High: 23-75 mmt CO2e in 2030

Direct Costs: Low-Moderate: $30-$90 per tonne

Net Included Costs: Net Savings: -$900 per tonne

Confidence in Estimates: Medium- High

• Price elasticities well documented

• Primary variable is adoption of PAYD if 

offered voluntarily

Key Cobenefits and Impacts: Mixed/Mostly Positive

• Lower average insurance premiums

• Mixed equity- many lower-income drivers 

likely to benefit, but some (long-distance 

drivers) will see negative impact

Feasibility: Medium-High

• Some pilot-tests conducted

Key Policy Options:

• Federal legislation requiring States to allow or 

require PAYD insurance premiums

 
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The assumption that simply switching from a fixed to a variable price will have a strong 

impact on drivers’ behavior is uncertain, and is based primarily on responses measured 

among those who might be more interested in achieving insurance cost savings. A 

Minnesota study estimated that only 11 percent of households would participate in a 

voluntary program (Cambridge Systematics, 2006); therefore the overall VMT reductions 

for a voluntary program would be much less.

PAYD systems can be implemented within a few years, as administrative and mileage

tracking systems are established. Once implemented, they can have immediate impacts on 

VMT and GHG emissions. The effects will increase somewhat over the first few years of 

implementation, as travelers can make more structural adjustments (such as changing 

residential or activity locations) in response to price signals.

Cost-Effectiveness

Implementation costs for full nationwide applications of PAYD insurance are estimated to 

be of the same magnitude as implementation costs for VMT fees, since the same mileage 

information would need to be collected. Based on the similar VMT fee cost estimates, 

PAYD would cost $131 billion through 2050 if based on mechanical hubodometers, with a 

net present value of $61 billion. Over 40 years, this cost is $3.3 billion per year. More 

effective electronic systems are estimated to cost $230 billion through 2050, with a net 

present value of $166 billion. Over 40 years, this cost is $5.7 billion per year. These costs 

could potentially be borne by private insurance companies and/or vehicle owners, and 

would be offset by reduced aggregate premiums (see “cobenefits”).

The cost-effectiveness of PAYD on a nationwide basis, considering only direct 

implementation costs, has been estimated to range from a high of $90 to a low of $30 per 

ton GHG reduced, with the lower value corresponding to a more aggressive level of 

implementation as previously described. Considering vehicle operating cost savings, net 

cost-effectiveness is in the range of -$900 per tonne, a net savings (Cambridge Systematics, 

2009).

Cobenefits

By shifting more of the insurance costs onto high-mileage drivers, PAYD may benefit 

lower-income drivers (who tend to be lower-mileage drivers). Interestingly, since a 

minority of high-mileage drivers is responsible for the majority of driving within each risk 

class, Bordoff and Noel (2008) estimate that auto insurance premiums would decrease for 

two-thirds of households under a PAYD system (while increasing for the remaining onethird). PAYD insurance is also expected to result in a reduction in crashes and related 

insurance claims that are disproportionate (1.34 times) to the mileage reduction (FHWA, 

2009). There is also an equity benefit to having those that drive more and therefore are 

likelier to have more crashes pay a higher share of insurance costs.
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Feasibility

At least two private insurers currently offer PAYD insurance options in selected States. 

Current insurance regulations in many States, however, preclude private companies from 

offering mileage-based insurance.

9

Potential government initiatives to support PAYD insurance include:

 The insurance industry has generally opposed PAYD 

pricing because it requires changes in their practices and may reduce long-term profits by 

reducing total premiums (VTPI, 2008c). While some States have taken actions to enable 

PAYD, questions remain about the adoption of necessary enabling legislation across States, 

as well as penetration rates and timing. Consumer acceptance of much more effective 

mandatory programs, as opposed to the current voluntary programs, also has not been 

tested.

• Providing a tax credit for each new mileage-based policy that an insurance company 

writes, at least for the initial stages of the program, to offset the cost of technological 

devices that would measure and transmit mileage data;

• Requiring States to rewrite regulations to permit or encourage private insurers to offer 

per-mile insurance rates; and/or

• Requiring States to require that a certain percentage of premiums in each State (for 

example, 50 or 75 percent) are mileage-based.

 

9 Since regulations were always written with yearly premiums in mind, per-mile premiums are 

sometimes technically illegal even if that was never the intention of the regulators (Bordoff & 

Noel, 2008).
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Congestion Pricing

Description

Congestion pricing is the application of 

pricing to congested facilities in order to 

reduce traffic on those facilities to 

achieve an improved level of service.10

While its most immediate application is 

on roads and bridges that already are 

tolled, congestion pricing also could be implemented on other limited-access facilities by 

adding toll collection. To date it has been studied on at least six other major facilities in the 

U.S. as well as for the Puget Sound region’s highway network. The broader-scale 

application of this strategy beyond existing or proposed toll highway facilities is likely to 

require the universal deployment of electronic toll collection technologies. This will 

require coordination by a State or regional transportation agency (e.g., State DOT or MPO). 

The U.S. DOT is encouraging greater experimentation in this area. In 2007, the 

Department awarded $853 million in funding to five metro areas for Urban Partnership 

Agreements to reduce congestion, which include a significant focus on tolling/pricing 

strategies.

 

Congestion pricing will have somewhat 

lower overall VMT impacts than 

universal pricing measures such as VMT 

fees or pay-as-you-drive, because it will 

be applied only to congested facilities. 

However, this measure will decrease 

congestion and thus will improve fuel 

economy. In the rudimentary form of 

either simple off-peak discounts or more 

involved pricing structures, congestion 

pricing has been implemented on a 

number of tolled facilities in the U.S., 

such as the Dulles Greenway in 

Northern Virginia; New Jersey Turnpike; 

Midpoint and Cape Coral toll bridges in 

Lee County, Florida; and State Road 91 

from Riverside to Los Angeles. 

However, it has not been implemented 

on an areawide basis to-date.

 

10The term “congestion pricing” in this report is used to mean pricing of specific transportation 

facilities or of all facilities within a region. “Cordon” or “area” pricing, discussed as a separate 

strategy, can also be considered a form of congestion pricing, as it applies specifically to a 

congested area (and potentially only to more congested times of day).

Congestion Pricing

Benefits: Low-Moderate: 9-35 mmt CO2e in 2030

Direct Costs: High: $300 to $500 per tonne

Net Included Costs: Net Savings: -$500 per tonne

Confidence in Estimates: Low

• Benefits will be strongly dependent upon 

operation of pricing system, geographic scale 

applied, baseline congestion levels

Key Cobenefits and Impacts: Mixed

• Mobility decreases for some travelers, 

increases for others

• Equity impacts will depend upon how 

revenues are used

• Transportation revenue source provides 

opportunities for reinvestment

Feasibility: Low-Moderate

• Limited applications (e.g., HOT lanes) proven 

feasible

• Areawide fees significant enough to 

measurably affect behavior unlikely to be 

popular in the current political climate

Key Policy Options:

• Requirements or incentives for States or 

metropolitan areas to implement congestion 

pricing systems
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Magnitude and Timing of GHG Reductions

The VMT reduction effects of congestion pricing can be calculated using the same elasticity 

assumptions as for other pricing measures addressed in this study. Further assuming that 

a congestion fee is applied to all freeways and arterials operating at level of service E or 

worse, the proportion of VMT subject to congestion pricing is estimated to be 29 percent in 

urban areas and 7 percent in rural areas across all functional classes of roads.11

It should be noted that this is a very rough approximation. It does not account for any 

increases in off-peak travel if people simply shift the time of their trip rather than forgoing 

it or choosing an alternative mode. Sophisticated regional models are needed to analyze

more sensitively the necessary congestion fees and their impacts, which would vary 

substantially by facility and by time of day.

 Applying 

an average fee of 65 cents per mile, which is the price estimated to be necessary to improve 

level of service to D on these roads, the result is approximately a 20 percent reduction in 

peak period traffic levels or an overall VMT reduction of 3.1 percent. Accounting for fuel 

savings from reduced delay as well, this results in a GHG reduction of 35 mmt CO2e in 

2030. Lesser reductions would be achieved at lower fee levels, or if congestion pricing 

applications are not universal.

Regional simulations using travel demand models have been conducted in a few 

metropolitan areas. A study in the Washington, D.C., region concluded that a 

comprehensive distance-based toll, with tolls varying by time of day, would result in an 

average cost of 3.3 cents per mile and an overall VMT reduction of 7.1 percent. Just 

applying the variable toll to freeways would reduce VMT by 2.1 percent (Harrington, 

Houde, and Safirova, 2007). Another study for the U.S. Department of Energy used travel 

demand models in Minneapolis–St. Paul and Seattle, in conjunction with speed-fuel 

efficiency relationships, to evaluate the combined benefits of travel reductions and 

operating efficiencies from areawide systems of managed lanes.12

 

11“Level of service” is a measure of roadway performance that ranges from A (best) to F (worst). It 

is based on traffic volumes for freeways, and on intersection delay for arterial streets. The 

estimate of future mileage operating at level of service E or worse is based on forecasts of 

congestion by FHWA under various scenarios (U.S. DOT, 2006).

 The results from 

different scenarios ranged from an 0.1 percent impact on fuel consumption and GHG 

emissions to 2.5 percent depending upon the scenario. Extrapolating these results to a 

national level based on projected 2030 congestion levels in different urbanized areas led to 

an overall estimated reduction in national fuel consumption ranging from 0.5 to 

1.1 percent (EEA, 2008), which would correspond to a reduction of 9 to 21 mmt CO2e in 

2030.

12These systems included high-occupancy/toll (HOT) lanes on freeways, in which drivers of singleoccupancy vehicles can use the lane if they pay a fee which depends upon the congestion on the 

nontolled travel lanes. Depending upon the scenario, either existing/planned high-occupancy 

vehicle (HOV) lanes were converted to HOT lanes, or a new HOT lane was constructed alongside 

an existing/planned HOV lane to form two HOT lanes.
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A common problem in the literature, as well as in some applications proposed to date, is to 

assume that congestion pricing could or would be applied only to limited-access facilities. 

Applying congestion pricing only to limited-access facilities could have the impact of 

shifting travel to arterials, where fuel efficiency may be lower, and potentially causing 

travelers to make more circuitous trips. Since properly applied congestion pricing would 

apply higher prices to arterials (because the impacts of each added vehicle on arterials is 

worse than on limited-access facilities), comprehensive congestion pricing applications 

would reduce travel more efficiently than facility-specific applications.

Congestion pricing can be implemented in a relatively short timeframe, perhaps a few 

years to develop the appropriate infrastructure and administrative structure for a 

regionwide application. Benefits will occur as soon as implemented.

Cost-Effectiveness

The costs of implementing systemwide congestion pricing are potentially significant, due 

primarily to the costs of equipping all vehicles with the necessary monitoring equipment. 

Using the same cost factors as cited in Section 5.2.1, VMT Fees, the cost of applying 

congestion pricing to all urban areas is estimated to range up to $1.05 trillion through 2050, 

with a net present value of $445 billion. Because costs are dependent primarily on the 

population affected (since all vehicles will need to be outfitted with monitoring 

equipment) but revenues are highly proportional to the levels of congestion and 

percentage of travel on congested facilities, cost-effectiveness will be higher in more highly 

congested areas. Congestion pricing revenues have been estimated at $10.3 trillion 

through 2050 for aggressive nationwide implementation, and thus costs would represent 

about 10 percent of fees. The cost-effectiveness of congestion pricing applied nationwide 

has been estimated to be in the range of $300 to $500 per tonne GHG reduced, considering 

only direct implementation costs. Including vehicle operating costs, a net savings in the 

range of -$500 per tonne is estimated (Cambridge Systematics, 2009).

With respect to the incidence of costs, public agencies (in particular, the transportation 

system operators) will experience a net benefit as revenue collection far outweighs 

administrative costs. Travelers in congested periods will experience additional costs, 

which may be inequitably distributed as described below. Revenue from congestion 

pricing could be used in any number of ways, including reinvestment in the highway 

system or investment in transit and other travel alternatives, or could be returned to 

consumers through tax rebates.

Cobenefits

Congestion pricing will provide significant cobenefits to many travelers in the form of 

travel time savings. The Puget Sound congestion pricing study predicted that regionwide 

value pricing would reduce delay by 55 percent compared to baseline forecast levels 

(Kitchen, 2008). If dedicated to transportation investments, congestion fees could have 

additional cobenefits in terms of improved roadway levels of service and/or mobility by 

alternative modes.
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Other travelers will experience disbenefits from congestion pricing. The Traffic Choices 

Study for the Puget Sound Regional Council (Kitchen, 2008) provided estimates of the 

incidence of pricing’s impacts. Pricing will benefit higher-income travelers, who are likely 

to place a greater monetary value on saving a given amount of time because of their 

greater ability to pay. It will also benefit those for whom exact arrival time is important 

(e.g., parents picking up kids at day care), as they will benefit from improved reliability

resulting from less congestion. Other travelers, who may be priced off the roads or for 

whom the time savings do not outweigh the value of the fee paid, will experience welfare 

losses (as measured by the economic concept of consumer surplus). The losses in 

consumer surplus of $97.1 billion are the largest impact of congestion pricing, far 

outweighing the $36.6 billion consumers save in travel times (Table 5.3).

Table 5.3 Benefits and Costs of Network Road Tolling in 

Puget Sound Region

Benefits Dollars in Billions Costs Dollars in Billions

Time Savings $36.6 OBU Units $1.5

Reliability Benefits $4.5 Enforcement $0.1

Operating Costs $2.5 System, Data $3.8

Consumer Surplus $-97.1 Other $0.1

Operator Tolls $87.0

Totals $33.6 Totals $5.5

Present Value –

Benefits Minus Costs

$28.2

Source: Kitchen (2008). Values are net present value in billions of 2008 dollars.

Thus, until the tolls themselves are counted as a benefit, the net impacts are negative. 

Therefore to achieve net benefits to the traveling public, the tolls must be reinvested or 

redistributed in a manner which results in net benefits. The study also estimated the 

impacts by user income group. For user groups, the transit users are the only net 

beneficiaries before reinvestment of the revenues, due to their time savings not being offset 

by any cost increases. For those who continue to travel via auto, or for those tolled off, 

total impacts are negative unless the revenues are reinvested in a manner which generates 

more offsetting benefits.

Congestion pricing should also have environmental benefits. The increased cost of travel 

will result in some reduction in VMT, thereby reducing fuel consumption and air pollutant 

emissions; fuel use and emissions should be further reduced due to improved operating 

conditions (higher speeds and smoother traffic flow). While comprehensive estimates of 

air quality benefits have not been developed, one study that examined a comprehensive 

time-of-day toll in the Washington, D.C., region estimated that pollutant emissions would 
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be reduced by 5 to 8 percent regionwide depending upon the pollutant (Harrington, 

Houde, and Safirova, 2007).

Feasibility

From a technical standpoint, congestion pricing is relatively easy to implement on facilities 

that already are tolled. However, there is likely to be general public opposition to paying 

for something that was previously free, as well as opposition specifically regarding equity 

concerns. Implementing pricing on currently nontolled facilities will face numerous 

additional hurdles, including the need for broader-scale deployment of toll collection 

technology; privacy concerns related to data collection and monitoring; and reluctance to 

cede control of transportation infrastructure to private entities (for privately operated 

facilities) or the need to involve existing operators of private toll facilities. If congestion 

pricing is implemented only on a limited basis (e.g., only freeways), diversion of traffic to 

other nontolled facilities is likely to be a significant concern because of the impacts on 

neighborhood and local traffic.

Cordon/Area Pricing

Description

Cordon or area pricing would apply a 

fee for vehicles to enter or drive within a 

selected area, such as a central business 

district (CBD).13

Thus far, implementations of cordon and 

area pricing abroad have reinvested 

funds into transit—thereby achieving 

additional mode shifts and VMT 

reductions beyond what would be 

 The funds could be 

used for mobility improvements or for 

other purposes. Cordon or area pricing 

have been implemented in a few 

European and Asian cities including 

London, Stockholm, and Singapore. 

While no U.S. cities have implemented 

cordon or area pricing, cordon pricing

has been considered in New York City 

(Manhattan) and San Francisco.

 

13“Cordon pricing” would involve charging a fee to vehicles entering an area, while “area pricing”

would involve charging a fee to any vehicle operating within the area, whether or not it crosses 

the boundary of the area.

Cordon/Area Pricing

Benefits: Low: 2-3 mmt CO2e in 2030

Direct Costs: High: $500-$700 per tonne

Net Included Costs: Net Savings: -$600 per tonne

Confidence in Estimates: Low

• Benefits will be strongly dependent upon 

operation of pricing system, geographic scale 

applied, baseline congestion levels

Key Cobenefits and Impacts: Mixed

• Mobility decreases for some travelers, 

increases for others

• Equity impacts will depend upon how 

revenues are used

• Transportation revenue source provides 

opportunities for reinvestment

Feasibility: Low-Moderate

• A few international examples

• Unlikely to be accepted in most U.S. cities

Key Policy Options:

• Requirements or incentives for major cities to 

implement cordon/area pricing systems
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achieved through the pricing alone (although there will be some offsetting increases in 

GHG emissions from the additional transit service). The reduced congestion as a result of 

cordon pricing should also improve fuel economy, achieving further greenhouse gas 

reductions. On the other hand, it may result in more traffic and congestion outside of the 

congestion pricing zone, leading to GHG increases in these areas.

Magnitude and Timing of GHG Reductions

Cordon or area pricing has been found to result in a significant reduction in VMT and 

congestion in the few central city areas to which it has been applied. In London, 

21 percent less traffic entered the central zone in 2006 than in 2002 before the application of 

cordon pricing. This resulted in an estimated reduction in CO2 emissions of 16 percent in 

the pricing zone, of which about half was due to changes in traffic volume and half due to 

changes in speeds (Transport for London, 2007). Stockholm’s pricing scheme was 

estimated to reduce CO2 emissions by 10 to 14 percent in the inner city, or 2 to 3 percent on 

a countywide basis (KT Analytics 2008). A modeling study estimated that an $8 fee 

applied to all traffic entering the Manhattan central business district could reduce traffic in 

this area by 7 percent (NYCEDC and NYCDOT, 2007).

Cordon/area pricing has limited overall effectiveness, however, because it only applies to 

a small amount of total travel. The application of cordon pricing to all CBDs nationwide is 

estimated to affect only 3 percent of urban VMT,14

Furthermore, cordon/area pricing could have the negative impact of shifting travel to 

routes which bypass the selected cordons, thus increasing some trip lengths and travel 

times and reducing any GHG benefits from reduced travel into the CBD. In the long term, 

applying pricing only to CBDs could also impact development patterns. A recent study of 

the Washington, D.C. metropolitan area used an integrated transportation and land use 

model to evaluate the effects of both downtown and beltway cordon pricing, including 

land use as well as travel changes. The study found an overall regional VMT reduction in 

the range of 0.8 to 1.3 percent (Safirova, Houde, and Harrington, 2007). GHG reductions 

(which were not analyzed) are likely to be greater because of the benefits of reduced 

congestion.

reducing GHG emissions by 1.6 to 

3.2 mmt CO2e in 2030 (Cambridge Systematics, 2009). This estimate considers only VMT 

reduction effects and not the GHG benefits of congestion reduction.

Cordon/area pricing can be implemented in the short term (less than five years), with 

immediate impacts. Tolls may need to be continually adjusted after the project is 

implemented, in order to keep congestion to economically efficient levels.

 

14The three percent estimate is based on an estimate of urban VMT in the greater London region 

affected by London’s cordon pricing system (Transport for London, 2007).
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Cost-Effectiveness

Because cordon or area pricing will affect only one tenth as much urban VMT as 

congestion pricing (3 percent versus up to 29 percent), but many vehicles will still need to 

be outfitted with collection technology, cost-effectiveness will be lower than for systemwide congestion pricing. Cordon pricing systems implemented in London and Stockholm 

required an initial investment of $400 to $500 million, or about $35 to $50 million per 

square mile covered. Annual operations and maintenance expenses of the London system 

are about $170 million or roughly 40 percent of annual revenues. For the New York City 

congestion pricing proposal, the “Mayor’s Plan” was projected to incur $224 million in 

capital costs and $229 million in annual operating costs, representing about 35 percent of 

gross operating revenues. Other plans were proposed with lower ratios of costs to 

revenues (Cambridge Systematics, 2008).

The cost-effectiveness of cordon pricing if implemented on a nationwide basis (all 

metropolitan CBDs and major employment and retail centers) is estimated to be in the 

range of $500 to $700 per tonne GHG reduced, including direct implementation costs only. 

Considering vehicle operating costs, a net savings on the order of -$600 per tonne is 

estimated. (Cambridge Systematics, 2009).

Cobenefits

Cordon/area pricing has strong but very localized cobenefits in terms of improved levels 

of service and improved conditions of transportation facilities and vehicles. The 

transportation cobenefits are greater if revenues are dedicated to transportation 

investments such as transit service, to improve mobility options for those who are priced 

off the roadway. Cordon/area pricing has the potential to provide a net benefit to the 

traveling public and to the regional economy, by reducing the costs to businesses and 

individuals associated with congestion. An evaluation of London’s congestion pricing 

scheme found that with the £5 charge the scheme generated £90 million in net welfare 

benefits for a year’s operation (Transport for London, 2007). However, the level of benefit 

that is achieved will depend upon the amount of congestion in the city, as well as whether 

the tolls are optimized to achieve an economically efficient level of congestion. One 

evaluation of Stockholm’s congestion pricing system concluded that the net social benefits 

were negative (Prud’homme and Kopp, 2006) because of lower congestion levels than 

London and non-optimized tolls, although another came to the opposite conclusion that 

Stockholm’s system produced significant positive benefits (Eliasson, 2007). Potential 

savings to businesses from reduced congestion are offset to some amount by the fees 

assessed on service vehicles and goods-moving trucks serving businesses within the 

cordon.

Like other pricing measures, cordon/area pricing will have mixed equity impacts. Some 

travelers will be better off because travel time benefits outweigh the additional costs of 

travel, or because alternative modes have been improved. Others will be worse off, if the 

travel benefits do not outweigh the additional costs of travel. Unlike congestion pricing, 

cordon pricing is likely to be applied primarily to an area with high-quality transit service, 

and is therefore likely to have fewer negative equity impacts. The perception that cordon 
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pricing is “unfair” to low-income drivers has not been a major concern in Singapore, 

London, and Stockholm after implementation; in fact, in both London and Stockholm it 

has been argued that the equity impacts have been positive due to the significant 

improvements in public transportation (K.T. Analytics, 2008).

Cordon/area pricing should also result in improved air quality as a result of reduced VMT 

and congestion, as well as reduced crashes due to lower exposure rates. Evaluation of the 

London system found reductions in NOx emissions of 8 percent and PM10 emissions of 

6 percent in 2003 within the charging zone, as a result of changes in traffic volumes and 

speeds after pricing was implemented in 2002. However, there was a slight increase in 

PM10 emissions on the inner ring road just outside the zone, as a result of increased traffic 

volumes (Transport for London, 2007). Stockholm’s system was estimated to reduce NOx

emissions by 7 percent and particulate emissions by 9 percent in the inner city (K.T. 

Analytics, 2008).

Feasibility

In the U.S., cordon pricing came close to being implemented in New York City, but ran 

into political barriers. In general, it will most likely be opposed by businesses in the 

cordoned area, who fear that customer traffic will decline or employees’ commutes may be 

negatively impacted; as well as by commuters or other visitors to the cordoned area from 

other locations. However, opposition to schemes implemented in London and Stockholm 

has waned as clear benefits have been achieved in terms of reduced traffic congestion, and 

transportation alternatives have improved. A five-year evaluation of the London pricing 

scheme found that retail sales in central London have continued to experience strong 

growth, and other sectors have shown no evidence of reduced economic performance 

compared to comparison areas (Transport for London, 2007). A 2006 referendum in 

Stockholm found majority support for the trial pricing scheme among City of Stockholm 

residents (52 percent in favor versus 46 percent opposed); the scheme was then made 

permanent despite opposition from some of the surrounding municipalities (K.T. 

Analytics, 2008).
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 5.3 Transit, Nonmotorized, and Intermodal Travel

Improvements to transit and nonmotorized modes, including urban transit, intercity bus 

and rail, nonmotorized infrastructure, and intermodal facilities and information, can 

increase the energy efficiency of travel per person-mile traveled. Urban transit 

improvements may include investing in new fixed-guideway transit, expanding coverage 

of bus systems, increasing the frequency and/or time coverage of service on existing 

routes, or making other improvements to the quality of service. Intercity bus and rail

improvements may take the form of expanded or enhanced service on existing bus or rail 

routes, new intercity bus or rail routes, and high-speed rail. Nonmotorized improvements 

may take the form of capital investments in nonmotorized infrastructure (e.g., bicycle 

facilities, sidewalks), or supporting activities such as pedestrian-friendly design standards, 

bicycle parking at destinations, or education programs. Use of nonhighway modes can 

also be increased by making highway modes less attractive, e.g., through pricing, or less 

direct routing compared with transit or nonmotorized routes.

A related strategy not discussed in more detail in this section is passenger intermodal 

system efficiencies. Improvements to intermodal facilities and information help minimize 

travelers’ time, costs, and inconvenience and make it easier to for people to utilize the 

most efficient mode for each segment of a trip. By enabling passengers to switch easily 

between modes, each mode can do what it does best: private vehicles for point to point 

flexible routing, bus and rail for longer-haul service in high-density travel corridors, foot 

or bicycle for short access trips, etc. Examples of specific intermodal improvements might 

include: intermodal transportation centers that provide a central exchange point for 

different modes; integrated fare payment systems; multimodal traveler information 

systems (also discussed in Section 6.0); “first and last mile” programs that focus on ways to 

get people from their origin or destination to line-haul transit stations (e.g., bikes on 

transit, station cars, local flex-route transit); and programs that support alternative mode 

by providing backup travel options when necessary, such as guaranteed ride home 

programs or occasional-use parking passes for employees receiving transit benefits (also 

discussed in Section 5.5, Worksite Trip Reduction). There is little information available on 

the GHG benefits of these strategies. Nevertheless, they play an important complement to 

the strategies discussed elsewhere in this section and report, especially transit 

improvements and worksite trip reduction.
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Transit Expansion, Promotion, Service Improvements

Description

In 2007, Americans took nearly 10 billion 

trips using public transportation, or 

approximately 33 million trips each 

weekday (FTA, 2008). Since 1998, public 

transportation ridership in the U.S. grew 

by 21 percent, faster than highway travel 

at 15.3 percent (according to FHWA’s 

Highway Statistics series) or the U.S. 

population at 11.5 percent (U.S. Census). 

Without transit service, many cities and 

regions would suffer from even more 

severe traffic congestion and degraded 

air quality.

According to data from the 2007 

National Transit Database (FTA, 2008), 

public transportation services are 

available in 456 urbanized areas. In 

every State, some level of public 

transportation is available to support 

rural residents, elderly individuals, 

and/or physically challenged 

individuals. While these services are 

critical mobility providers for these populations, the primary role of transit in reducing 

GHG emissions is tied to influencing behavior of choice riders.

In 2007, the sum of Federal, State, local and other funds for capital and annual operating 

expenses for transit totaled $47.3 billion. Unlike highways where the bulk of funding 

comes from Federal and State sources, most transit funding is local. Federal transit 

funding accounted for 17 percent of the total transit funding in 2007, State sources 

20 percent, and local funds including funds from dedicated taxes 36 percent. Other funds, 

which include fare revenues, subsidy from other sectors of operations, and revenues 

accrued due to purchased transportation, represent 27 percent of the total (Commission 

2007a).

The use of transit could be expanded through the following means:

• Construction of new fixed-guideway transit, including rail transit and busways;

• Expansion of transit service to new areas (i.e., new bus routes); and

• Improvements in service frequencies, reliability, and attractiveness on existing transit 

routes, as well as expanded marketing and promotion of transit services, including 

customization to specific market segments.

Transit Expansion, Promotion, 

Service Improvements

Benefits: Moderate: 6-18 mmt CO2e in 2030

• Assumes broad expansion of transit service at 

current or greater productivity levels (average 

ridership)

• Growing over time: 9-32 mmt in 2050

Direct Costs: High: $1,200 to $3,000 per tonne

Net Included Costs: Net Savings to High: -$900

to +$1,000 per tonne

Confidence in Estimates: Moderate

• Impacts may vary greatly depending upon 

nature and context of transit improvements –

high productivity needed to realize benefits

Key Cobenefits and Impacts: Positive

• Mobility benefits for travelers, especially lowincome

Feasibility: High

• Primary barrier is funding

Key Policy Options:

• Targeted funding
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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Some of these strategies involve adding additional transit services. Others (such as service 

customization and improved schedule reliability) represent enhancements to existing 

services that may be able to attract more riders without increasing fuel consumed. Some 

strategies may even reduce fuel consumption and GHG emissions from transit—such as 

signal preemption, queue-jumper lanes, or other roadway operational improvements to 

reduce run times; or limited-stop services. However, to attract and maintain systemwide 

ridership, improvements may also be needed that nominally increasing GHG per 

passenger-mile on some segments, such as reducing passenger densities on the most 

crowded services in order to maintain operational performance and customer satisfaction; 

and maintaining minimum service levels even during low-utilization periods.

The effectiveness of transit as a GHG reduction strategy may be increased by planning 

transit services in coordination with supportive land use patterns. Dense, mixed-use, and 

pedestrian-friendly development supports transit ridership by allowing more travelers 

directly and conveniently access transit, and by reducing the relative attractiveness of 

automobile versus transit travel. The greatest benefits will be realized through transitsupportive land use patterns at both the origin and destination end of the trip.

Magnitude and Timing of Greenhouse Gas Reductions

Urbanized area transit systems have the potential to reduce fuel consumption and 

greenhouse gas emissions related to surface transportation. The reductions occur through 

both direct emission benefits per passenger-mile of transit versus automobiles, and the 

additional indirect effect on emissions that transit provides through its impact on land use 

patterns.

Emission reductions are a result of the lower than average emissions per passenger-mile 

for transit versus private vehicles. In 2006, based on fuel consumption data from the 

National Transit Database, the average greenhouse gas emissions rate for urbanized area 

transit systems (excluding demand response services) is 0.48 pounds CO2e per passengermile.15

 

15Based on emission factors of 10.15 kilograms CO2 per gallon for diesel fuel and 1.185 pounds CO2

per kilowatt-hour for electricity (EPA 2006).

 With an average on-road fuel economy of 20.3 mpg, a single-occupant vehicle 

releases 0.96 pounds CO2e per passenger-mile; at the average occupancy for all trips of 1.63 

passengers per vehicle (based on the 2001 NHTS), personal vehicle travel releases 0.62 

pounds CO2e per passenger-mile. Transit emissions vary by mode, however, with rail 

emissions lower than bus emissions on the average. As shown in Figure 5.1, FTA 

calculates that bus transit averaged 0.65 pounds CO2e per passenger-mile, compared to 

0.41 for light rail, 0.35 for commuter rail, and 0.24 for heavy rail, calculated at average 

occupancy levels across all systems in the United States (FTA, 2009). These figures reflect 

differences in loading for different systems as well as inherent differences in vehicle 

efficiency and emissions characteristics for electric versus diesel vehicles.
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Figure 5.1 Average CO2 Emission Rates by Mode

Source: FTA (2009).

The data on average GHG emissions by mode were used in the Moving Cooler study to 

estimate the GHG reductions that are achieved through the transit services in place today. 

Based on data from the National Transit Database, total GHG emissions from public 

transit vehicle operations in 2007 are estimated to be 11.8 mmt CO2e. It is further 

estimated that urbanized transit systems in 2007 removed 32.0 billion VMT from the 

nation’s roadways, representing 1.6 percent of urban area VMT. The net effect is a 

reduction of 14 million metric tons of GHG emissions.16

Transit also has been credited with achieving indirect effects on emissions as a result of its 

ability to facilitate denser, more mixed land use patterns. Such patterns result in fewer 

and shorter auto trips compared to development patterns without transit and thus 

reduced emissions. A recent study for the American Public Transportation Association 

(APTA) estimated the average reduction of VMT per household by level of transit 

availability, based on household trip data from the 2001 NHTS. This reduction was 

estimated to be 2.2 VMT per household per day with access to transit (Bailey et al, 2008). 

The combined GHG reduction of direct and indirect effects, accounting for emissions from 

public transit, in 2007 results in a total emissions reduction of 39 mmt CO2e.

 

16This figure represents the effect of the substitution of public transit passenger miles with private 

automobile travel. The calculation assumes the following, based on data from the 2001 NHTS: 

1) An average auto occupancy of diverted trips of 1.43, which is lower than the 1.63 average for all 

trips. The 1.43 value assumes that 60 percent of transit trips are home based work with an average 

occupancy of 1.14 and the remaining nonwork trips have an average occupancy of 1.84. 2) The 

current auto based person miles of travel share for all trip types is 88.2 percent—i.e., 88.2 percent 

of transit passenger miles are saved VMT.
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A different study for the U.S. Public Interest Research Group (USPIRG) concluded that 

transit reduced GHG emissions by nearly 26 mmt CO2e in 2006. This study used slightly 

different assumptions than the APTA study, including accounting for lower fuel economy 

of automobile trips removed during congested periods, and additional fuel savings from 

reduced highway congestion. The study also accounted for “leveraged” benefits from 

more compact land use patterns (Baxandall, Dutzkik, and Hoen, 2008).

For any data using national average GHG emissions by mode or total GHG reductions, the 

caveat must be included that the results are heavily influenced by the most heavily used 

and productive services in a few major cities, such as Boston, Chicago, New York, 

Philadelphia, San Francisco, and Washington, D.C. For example, the USPIRG study found 

that nearly half of the GHG reductions from transit—11.8 mmt CO2e—were from New 

York State alone, with another 10.4 mmt from six other States; and that 26 States saw 

reductions of less than 0.01 tonnes or even slight increases in GHG from their transit 

services. It is not clear whether future transit expansion will result in the same level of 

GHG reduction productivity.

The net GHG effect of future improvements to transit will depend on factors including the 

amount of new ridership attracted from automobiles, number of passengers per transit 

vehicle, relative efficiency of transit vehicles and automobiles, and carbon content of fuels. 

Transit ridership growth will also depend on a variety of factors that are difficult to 

predict, such as fuel prices, economic growth, socioeconomic and demographic trends, and 

land use patterns. One recent study developed three possible scenarios for future 

ridership growth: a continued 2.4 percent increase; a 3.52 percent increase, which 

represents a doubling of transit ridership in 20 years, and would require aggressive 

strategies to grow ridership; and a target growth rate of 4.63 percent (TCRP, 2008).

17

Based on these three scenarios, the Moving Cooler study estimated future GHG reductions

from additional transit investment. The study assumed that load factors would increase 

from 10.5 passengers per bus in 2006 to 12 passengers per bus in 2030. Savings were 

estimated separately for three different strategies: reduced fares; improvements to 

headways and level of service; and expanded fixed-guideway services.18

 

17The target growth rate assumes a variety of potential factors that could cause public 

transportation ridership to grow more rapidly, including higher energy prices, implementation of 

policies to promote development around public transportation services, increased concern for the 

impacts of climate change, and stronger emphasis on the relationships between land use and 

transportation.

 The study also 

18Fare reductions range from 25 to 50 percent. For LOS improvements, signal prioritization, 

limited-stop service, and other enhancements are implemented to improve travel speeds by 10 to 

30 percent. Increased service levels and fixed guideway expansion occur at a rate of 2.4 to 

4.67 percent annually, consistent with ridership forecast scenarios; investments are assumed to be 

targeted in areas with at least 4,000 persons per square mile or that otherwise facilitate high 

passenger loads per vehicle revenue-mile.
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accounted for increasing efficiency of both automobiles and transit vehicles.19

Table 5.4 Greenhouse Gas Benefits of Transit Service Improvements

Annual mmt CO2e Reduced

 Table 5.4

shows the range of GHG reductions in 2030 and 2050 estimated for each strategy, with the 

range reflecting the least and most aggressive levels of implementation (Cambridge 

Systematics, 2009).

Year

Fare 

Reductions

Improved 

Headways and LOS

Fixed Guideway 

Expansion

Combined 

Measures

2030 0.5-1.9 1.0-2.1 3.7-14.1 5.7-18.1

2050 0.5-1.8 2.0-3.7 6.5-26.1 9.0-31.6

Source: Cambridge Systematics, 2009.

The annual savings in 2030 are estimated at 6 to 18 mmt CO2e, respectively, for the three 

ridership growth scenarios described above. By 2050, benefits grow to 9 to 32 mmt CO2e 

annually. Figure 5.2 illustrates the growth in benefits over time, reflecting the continued 

expansion of transit services.20

 

19For buses, GHG emission factors are assumed to decline from 0.71 pounds GHG per passenger 

mile in 2006 to 0.35 pounds GHG per passenger mile in 2050, assuming the increased penetration 

of hybrid-electric, alternative fuels, and other advanced technologies. Commuter rail factors are 

assumed to decline from 0.36 to 0.19 pounds per passenger mile. For electric rail vehicles, CO2

emissions of per kilowatt-hour are estimated using EPA’s eGrid database of 1.185 pounds

CO2/kwh in 2006, decreasing at 2.5 percent per year after 2015, which is based on an extrapolation 

of the rate of GHG reduction between 2010 and 2018 from targets set through the Regional 

Greenhouse Gas Initiative (RGGI) in 10 Northeast and Mid-Atlantic States. The net effect is that 

heavy rail emissions decline from 0.28 pounds per passenger-mile in 2006 to 0.10 in 2050, and light 

rail from 0.40 in 2006 to 0.18 in 2050. (These factors also reflect modest increases in load factors.) 

Automobile fuel efficiency is projected to improve at somewhat faster rates than in the AEO 

Reference forecast—1.91 versus 1.61 percent annually.

20The Moving Cooler results for transit strategies as well as for a number of other travel activity 

strategies (including land use, non-motorized travel, and employer trip reduction) consider 

induced demand effects, i.e., an offsetting increase in vehicle-travel as vehicles are removed from 

the roads and congestion is reduced. This effect reduces the estimated benefits of these strategies 

by about 14 percent, as discussed in Appendix A.
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Figure 5.2 Annual GHG Emissions Reduction of Transit Expansion

0

5

10

15

20

25

30

35

2010 2015 2020 2025 2030 2035 2040 2045

Maximum

Aggressive

Expanded Best Practice

GHG Reductions Compared to Baseline, mmt 

Source: Data from Cambridge Systematics, 2009.

Cost-Effectiveness

Expansion of transit infrastructure and service will require significant additional 

investment. In a 2008 report to Congress, the National Surface Transportation Policy and 

Revenue Study Commission estimated baseline transit investment needs based on the 

“Improve Conditions and Performance” scenario (Commission, 2008). The analysis 

estimated total transit baseline needs to be $1.1 trillion through 2020, $2.4 trillion through 

2035, and $4.4 trillion through 2055, based on an annual transit travel growth rate of 

1.57 percent. The average annual investment required through 2055 is $89.8 billion, 

90 percent more than total funding from all sources in 2006. While some transit expansion 

initiatives have been funded through local sources, in most areas, significant expansion 

beyond current levels could require significant additional Federal investment—whether 

for capital or operating expenses. The amount of additional local revenues leveraged by 

this additional Federal investment will depend upon Federal match requirements, as well 

as the ability of local sources to support the match requirements.

The AASHTO Bottom Line report (AASHTO, 2009) includes annual capital cost estimates 

to accommodate new riders for each ridership scenario across four investment strategies 

(Table 5.5). The investment strategy for maintaining physical conditions and improving 

system performance assumes that the public transportation fleet and other assets will 

continue to be replaced following current replacement cycles, and that additional 

improvements are made to reduce passenger densities on the most crowded systems and 

to improve overall speed of service.
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Table 5.5 Average Annual Capital Requirement, 2006-2026

Billions of Dollars

Maintain Physical Conditions, Improve Service Performance

Needs Component

Replacement/

Rehabilitation of 

Existing Assets

Total Including Expansion and Modernization of Assets 

to Accommodate Annual Ridership Growth at:

2.4% 3.5% 4.6% 

Urbanized Area Total $13.9 $40.8 $53.9 $69.9

Rural/Small Urban $0.8 $1.5 $1.5 $1.5

Total Needs $14.7 $42.4 $55.4 $71.4

Source: AASHTO, 2009.

The Moving Cooler study used these estimates of capital investment needs, in conjunction 

with estimates of future annual operating costs, to estimate total cost-effectiveness in terms 

of GHG reduced for transit system expansion.21

Cobenefits

 Considering direct implementation 

(capital and operating) costs only, cost-effectiveness to meet the three ridership growth 

rates is estimated to be about $1,800 to $2,000 per tonne for urban transit expansion and 

$1,200 to $3,000 per tonne for level of service increases. Including vehicle operating cost 

savings to private vehicle owners as a result of a reduction in VMT, cost-effectiveness 

ranges from $800 to $1,000 per tonne for system expansion and -$260 to +$130 per tonne 

for service improvements. Direct cost-effectiveness is not estimated for transit fare 

reductions, as the change in fare is simply a revenue transfer from the public sector to the 

transit rider; vehicle operating cost savings would provide a net savings of about -$900 per 

tonne (Cambridge Systematics, 2009).

A significant co-benefit associated with transit is its ability to reduce the relative degree 

that those who choose not to drive, or who do not own vehicles, are disadvantaged 

compared with drivers (VTPI, 2008d). Transit increases accessibility to economic and 

social opportunities, and helps achieve equity objectives, such as helping physically and 

economically disadvantaged people access public services, education, and employment.

Transit will result in reductions of some criteria pollutant emissions, but may cause 

increases in others. The relative emissions impacts will depend upon the vehicle type 

(small bus, 40-foot bus, light rail, locomotive, etc.); fuel source (diesel, natural gas, electric); 

electricity generation source (for electric rail or trolley bus systems); vehicle emissions 

control technology; and operating characteristics of the vehicle (e.g., average speed, time 

 

21Excluding paratransit services, the estimate for operating costs per unlinked transit trip in 2007 is 

$2.61 (FTA, 2008). The cost per unlinked trip is assumed to increase with inflation through 2050.
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spent idling). Transit vehicles—especially diesel buses without advanced emission 

controls—may actually increase emissions of some air pollutants, such as NOx and PM, 

compared to the offset vehicle traffic. Figure 5.3 shows emissions of various criteria 

pollutants for diesel buses with average passenger loads, including both an average bus 

(as of 2006) and a new (model year 2007) diesel bus, compared with the equivalent 

emissions from 8.72 displaced passenger cars. While an average bus will increase NOx and 

PM emissions compared to an average passenger car, a new bus meeting EPA regulations 

for model years 2007-2009 will result in decreases of all pollutants.22

Figure 5.3 Comparison of Emissions (g/mi) from Buses versus Automobiles 

Displaced

 This relationship may 

continue to change over time as both bus and automobile emissions standards and 

technology progress. 

 

11.8

10.3

0.29 0.002 0.24

7

0.02

7.0

1.15

29

0.66

0

5

10

15

20

25

30

CO NMHC NOX PM

163.1

8.72 autos New Bus (MY07) Existing Bus

165

Source: Ayres (2007).

Note: The “new bus” is a new 40-foot transit bus running on ultra-low-sulfur diesel that meets 2007-2009 EPA 

emissions standards. The “existing bus” is an average diesel bus in service as of 2006. “8.72 autos” is the 

average number of automobiles displaced by a bus, considering an average of 9.97 passengers per bus 

and 1.14 occupants per automobile. Average automobile emission rates are based on 2002 EPA emission 

inventory and FHWA highway statistics data.

Another co-benefit is the impact of fixed guideway transit infrastructure on future land 

development, particularly transit-oriented development. The synergy between transit and 

 

22The automobile emission factors are based on 2002 data and would be lower if evaluated using 

more current data. The conclusion that CO, NMHC, and PM would be decreased with a new bus 

would still hold, given the very large difference in emissions, although NOx levels would 

probably be comparable.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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dense, mixed, transit accessible land uses result in a potential for significantly higher VMT 

reductions as well as reduced infrastructure expansion costs (water/sewer/new roads) 

and avoiding further greenfield development.

Feasibility

As of November 2008, Americans had cut their driving by more than 112 billion miles over 

the past 13 months, a likely result of the combination of a slowing economy and high fuel 

prices. Over the same period (comparing January through June 2008 with the same period 

in 2007), public transportation ridership rose by 3.75 percent (NTD Monthly Database, 

2008). This short-term gain reflects an increased demand for public transportation 

services, largely as a result of economic factors including higher fuel prices and a weak 

economy. The longer-term growth in ridership over the past decade may also reflect the 

influence of other factors, including system expansion (particularly new rail investments 

in some cities) and increasing highway congestion.

Funding is a major barrier, but not the only barrier, to transit expansion. Implementing 

the scenarios discussed above would require a more than doubling of annual funding for 

capital investment and annual operations and maintenance for transit. These funds could 

potentially be raised through a variety of methods including increased transit fares, new 

local and State taxes, or additional Federal funding from gas taxes, VMT fees, carbon fees, 

or other sources.

Another significant barrier is the existing low-density nature of most U.S. urban areas. 

The auto-oriented residential and commercial development patterns prevalent in second 

half of the 20th century are generally unsupportive of transit services. Regions with 

minimal congestion challenges and low-cost parking also present challenges to achieving 

GHG reductions through transit services, since transit is simply not competitive with the 

automobile (as measured in travel time or cost) for most trips. This is reflected in the 

estimates of existing GHG benefits of transit, which, as discussed previously, are 

dominated by a few States with high-density, transit-oriented metropolitan areas.

Transit expansion – particularly via major capital investment projects such as new rail or 

busways—also may face political, environmental, or community hurdles. Project 

community and environmental impacts must be considered and addressed in the project 

planning and development process.
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Intercity Bus and Rail

Description

Intercity bus and rail passenger services, 

including Amtrak and a variety of 

private bus operators, provide an 

alternative to travel between cities by 

automobile or air. Intercity corridor 

service can be defined as frequent service 

operated between major city pairs up to 

500 miles apart, serving both business 

and leisure travel markets. (Intercity 

corridor service can be contrasted with 

“long-distance” service in corridors of 

over 500 miles, which is generally not 

time-competitive with flying and 

therefore serves primarily leisure and 

personal travel markets rather than 

business travel.) If efficiently connected 

to local transit systems at the trip origin 

and destination, intercity service can 

completely replace the need for an 

automobile trip. Intercity bus and rail 

services are most effective in highdensity travel corridors. To date, in the 

U.S., they have been most successful in 

the Northeast Corridor between Washington, D.C., Philadelphia, New York, and Boston.

Amtrak (the National Railroad Passenger Corporation) is a government-owned 

corporation, established by the Federal government in 1971, that operates a national rail 

network of corridor and long-distance trains. Amtrak currently serves 504 stations in 46 

States on more than 21,000 route miles. Amtrak’s ridership and revenue has grown nearly 

20 percent over the last five years, with Federal Fiscal Year (FFY) 2007 totals of 25.8 million 

riders and $1.52 billion in revenue (Commission, 2007). Among the factors contributing to 

growth are corridor service reliability and speed improvements, increased State support 

for enhanced and improved passenger rail corridor service, lack of capacity for parallel 

highway improvements, highway and aviation congestion, and higher fuel costs.

Amtrak relies on an annual Federal appropriation, which in FY 2007 totaled $1.294 billion. 

Fourteen States also provide financial support for intercity rail operations. Statesupported services account for 35 percent of Amtrak’s daily ridership and about half of all 

passenger trains in the system.

Restructuring of intercity bus services in the 1980s and 90s and reorganization of 

Greyhound in 2004 resulted in a shift of intercity bus services away from serving rural 

communities to services that primarily link major cities. Nationwide, intercity bus 

Intercity Bus and Rail

Benefits: Low: 1-6 mmt CO2e in 2030

• Lower estimate is for intercity rail improvements only; higher includes HSR and intercity 

bus expansion

Direct Costs: High: $400 to $1,400 per tonne

Net Included Costs: Net Savings to High: -$600 

to $1,000 per tonne

Confidence in Estimates: Moderate-High

• Achieving benefits depends upon services 

with high ridership productivity

Key Cobenefits and Impacts: Positive

• Mobility benefits for travelers, especially lowincome

• May be environmental/community impacts 

associated with HSR construction

Feasibility: High

• Primary barrier is funding

Key Policy Options:

• Targeted funding
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ridership peaked at about 130 million passengers in 1970 and is currently about 40 million 

annual passengers. Recent increases in scheduled intercity bus service, resulting from 

market demands due to higher fuel prices, led to a 9.8 percent growth in departures in 

2008 (DePaul University, 2008). This marks two consecutive years of robust growth after 

more than four decades of persistent decline.

Intercity bus and rail passenger services could be expanded by:

• Increasing investment in Amtrak’s system, to create new intercity corridor service and 

to increase speeds, service frequencies, and/or reliability on existing routes;

• Investing in high-speed rail systems (whether operated by Amtrak or another carrier) 

that have been identified by the Federal Railroad Administration (FRA) in 12 intercity 

markets around the country; and

• Providing capital and/or operating subsidies to intercity bus service providers, to 

expand service and attract greater ridership.

Magnitude and Timing of Greenhouse Gas Reductions

Figure 5.4 shows average energy consumption for passenger-mile for intercity passenger 

rail, intercity buses, automobiles, and aircraft. The data show that intercity passenger rail 

(Amtrak) consumes 17 percent less energy per passenger-mile than air travel and 

31 percent less energy per passenger-mile than the average private vehicle (automobile or 

light truck) (ORNL, 2007). Based on fuel consumption and operating data from 

Greyhound, intercity buses are approximately 81 percent more efficient than intercity rail

as estimated by ORNL. This chart gives a general indication of the relative GHG impacts 

of these various modes.23

 

23Energy consumption will be roughly but not completely proportional to GHG emissions. GHG 

emissions from electrified intercity rail will depend upon the electricity generation mix, and 

aviation may have additional global warming impacts from contrail formation. There are also 

minor differences in the energy and carbon content of gasoline, diesel, and aviation fuel.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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Figure 5.4 Energy Consumption per Passenger -Mile

Intercity Modes

Source: ORNL (2008); Greyhound (2009).

Note: Automobile and light truck efficiencies were combined based on weighted VMT, and assuming the same 

vehicle occupancy for light trucks as for automobiles (since energy consumption for light trucks is only 

reported per vehicle-mile, not per passenger-mile).

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Auto/Light Truck Amtrak Intercity Bus Air

The Moving Cooler study estimated the net GHG benefits of increased intercity rail service 

as a result of shifting passengers from other modes, subtracting the added GHG from 

increased rail operations. Baseline projections suggest that Amtrak passenger-miles will 

continue to increase at the same rate as the increase between 1996 and 2007 (12 percent 

cumulatively over this period; BTS, 2009).24 Increasing passenger miles at this same rate 

through 2050 would result in 6.78 billion miles in 2030 and 7.72 billion miles in 2050. An 

aggressive future scenario might assume a 20 percent increase in passenger miles over the 

baseline projection by 2025, as a result of additional investment to improve the quality of 

Amtrak’s existing services. Compared to the baseline scenario, the aggressive scenario 

results in a reduction of about 1.2 mmt CO2e in 2030 (Cambridge Systematics, 2009).25

 

24This forecast is also the basis for the AEO baseline GHG forecasts presented in Section 2.0 of this 

report.

 The 

modes new passenger miles shift from, and thus the potential for emission reductions, will 

25This analysis assumes CO2 emissions per kilowatt-hour estimated through EPA’s eGrid database 

of 1.185 pounds CO2/kwh in 2006, decreasing at 2.5 percent per year after 2015, which is based on 

an extrapolation of the rate of GHG reduction between 2010 and 2018 from targets set through the 

Regional Greenhouse Gas Initiative (RGGI) in 10 Northeast and Mid-Atlantic States. For diesel 

rail vehicles, AEO forecasts show rail emissions declining from 0.49 pounds GHG per passengermile in 2006 to 0.26 pounds per mile in 2050; a further 20 percent reduction is assumed to be 

phased in over the 2011-2030 period from the use of regenerative braking technology.
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vary by corridor. This analysis assumes they are shifted proportionally from passenger 

vehicle, air, and intercity bus modes according to shares for long-distance travel from the 

2001 National Household Travel Survey.26

The Moving Cooler study also estimated GHG benefits from the introduction of intercity 

high-speed passenger rail, based on a report published by the Center for Clean Air Policy 

and Center for Neighborhood Policy (2006). This report compiled data on the 11 Federally 

designated high-speed rail corridors (not including the existing Washington to New York 

to Boston corridor), including estimates of passenger-miles from the FRA. The Danish 

IC-3, a diesel powered train that has been demonstrated in the U.S., is identified as the 

primary high-speed rail technology. The IC-3 has lower emissions per train compared to 

other high-speed rail technologies, estimated at 0.26 pounds of CO2 per passenger-mile at 

an assumed 70 percent occupancy (Center for Clean Air Policy and Center for 

Neighborhood Policy, 2006). In 2030, it is estimated that these 11 high-speed rail corridors 

could reduce GHG emissions by 4.0 mmt CO2e.

In 2007, Greyhound—the largest intercity bus operator—operated nearly 5.8 billion 

passenger miles, achieving an estimated 184 passenger miles per gallon of fuel 

(Greyhound 2009). This results in total annual GHG emissions from the operation of 

Greyhound buses of 320,000 tons CO2e. Comparatively, if these passenger miles were 

distributed proportionally to existing intercity shares of vehicle, air, and rail travel, total 

greenhouse gas emissions would be 872,000 tons CO2e. This represents a greenhouse gas 

savings in 2007 by Greyhound alone of 0.55 mmt CO2e. An assumption of an average 

annual 3 percent expansion in intercity bus service (approximately the growth expected 

this decade) would result in a total reduction of 1.2 mmt CO2e in 2030. This assumes 

continued growth at the same level of ridership productivity as current services (which 

might occur, for example, as a result of rising fuel prices); if services were subsidized to 

expand into less productive markets, the GHG benefits would be somewhat lower as well.

The potential GHG reductions outlined above are for each system individually. The 

estimates suggest that a combination of interconnected intercity rail service with highspeed rail in select corridors and parallel and feeder intercity bus service would reduce 

GHG emissions by a total of about 6.4 mmt CO2e in 2030. Again, this figure will depend 

heavily on factors including the ridership productivity of the expanded services, prior 

mode (if any) of riders, and relative advances in the energy efficiency of each mode.

Cost-Effectiveness

Intercity passenger rail is expensive to build and operate. According to Amtrak financial 

reporting for January to September 31, 2008, there were 6.16 billion passenger miles with 

total operating costs of $762 million (operations, fuel, utilities, and materials). Amtrak 

 

26This assumption may overstate the GHG benefits of these services, as it is likely that in the 

absence of such services, some intercity trips simply would not be taken. However, the added 

trips reflect a mobility benefit even if they do not provide a GHG reduction benefit.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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recovers only a portion of its operating expenses through ticket revenue (48 percent in 

2007).27

Expanding intercity passenger services will require significant additional funding. The 

National Surface Transportation Policy and Revenue Study Commission intercity 

passenger rail vision includes a recommendation for the creation of an Intercity Passenger 

Rail Program. To implement the national and regional corridor vision, the Passenger Rail 

Working Group of the Commission recommends initial funding of $5 billion annually for 

intercity passenger rail, including Amtrak funding and grants to States. This 

recommendation is 3.9 times more than Federal funding support for Amtrak in 2007. The 

total capital cost estimate for maintaining and expanding the national intercity passenger 

rail network between 2008 and 2050 is $357.2 billion in 2007 dollars, an annualized cost of 

$8.1 billion (Commission 2007b). This results in an average capital cost through 2050 of 

$0.20 per passenger-mile.

 The combined Federal and State subsidy needed to operate the entire system is 

very high: in 2001, Amtrak estimated that it would need about $16 billion (in 2000 dollars) 

in Federal capital support from 2001 to 2020 just to maintain current operating levels of 

service (GAO 2002).

The Moving Cooler study estimated the cost-effectiveness of expanding intercity rail, 

considering capital and operating costs only, to range from $420 per tonne CO2e for the 

base investment scenario identified in the Commission report to $1,500 per tonne CO2e for 

a passenger-mile growth scenario 20 percent beyond the baseline, considering total costs 

and GHG benefits over the 2010 to 2050 period. These costs, however, may be offset by 

reductions in personal vehicle operating costs; including these savings, cost-effectiveness 

ranges from -$600 per ton CO2e for the base investment scenario identified in the 

Commission report to +$360 per ton CO2e for the highest passenger-mile growth scenario. 

Additional costs to implement high-speed rail in 12 corridors result in high-speed rail costeffectiveness of $1,000 to $1,400 per ton CO2e considering capital and operating costs only; 

or $700 to $1,000 per ton CO2e including personal vehicle operating cost savings

(Cambridge Systematics, 2009).

28

Cost-effectiveness estimates for intercity bus service are difficult to develop due to the lack 

of a formal process for reporting passenger-mile, cost, and revenue data by intercity bus 

operators. According to data from the Federal Motor Carrier Safety Administration 

(FMCSA, 2001), intercity bus services carried 32.2 million passengers in 2001 with total 

operating expenses of $1.04 billion, resulting in an operating cost of $32 per passenger. 

 

27This is based on ticket revenues of $1.52 billion versus total expenses of $3.18 billion (NRPC 2008).

28The high-speed rail costs are estimated based on an average capital cost of $4.08 per passenger 

mile, and annual operating costs at 2.5 percent of total capital costs. The $4.08 figure is the 

weighted average capital cost per passenger mile for three high speed rail corridors with 

environmental documentation and cost estimates: California (California High Speed Rail 

Authority, 2009), Midwest (Transportation Economics & Management Systems, Inc., 2004), and 

Southeast (Georgia Rail Consultants, 2004; Georgia Rail Passenger Authority, 2004). The 

California system would be on new right-of-way while the Midwest and Southeast systems would 

be upgrades to existing rights-of-way.
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Assuming an annual 3 percent increase in ridership 2010 through 2050 at the same 

operating cost would result in a cumulative operations cost of $740 per ton CO2e reduced. 

This cost-effectiveness calculation excludes bus replacement costs and vehicle operating 

cost savings.

Cobenefits

Cobenefits from intercity passenger service expansion include user benefits that accrue to 

passengers, such as shorter journey times and improved personal comfort while traveling. 

These services provide additional alternatives that some travelers may prefer, and can 

support mobility for low-income populations who may benefit from economical intercity 

bus travel. Intercity passenger service also has the potential to complement urbanized 

area public transportation as well as land use patterns that reduce car travel. Improved 

intercity passenger rail service could potentially benefit national security by increasing 

redundancy in the transportation system and facilitating mass evacuations, since a 

disruption that has major effects on one mode might still allow travel by other modes.

Feasibility

While costs represent a primary barrier to the expansion of intercity bus and rail services, 

interactions with existing freight railroads also represent a constraint on rail service 

expansion or reliability improvement. About 95 percent of Amtrak’s 22,000 route miles of 

service are on track owned by the private freight railroads. The rail industry is already 

straining to meet the growing demand for rail freight transportation, and it must add 

capacity to handle a projected 60 percent more tonnage and 73 percent more ton-miles by

2035 (Cambridge Systematics 2007a). With capacity tightening on most freight rail lines, 

the freight railroads may be less willing or able to accommodate expansion of the intercity 

rail program.

High-speed rail lines may be built on new right-of-way in order to avoid conflicts with 

existing freight users as well as to provide grade-separated trackage that supports high 

operating speeds. However, construction of new rail lines may have potentially significant 

environmental and community impacts, and must proceed through the NEPA 

environmental review process like any major Federally project. Major upgrades to existing 

rail lines—for example, straightening curves, separating grade crossings, or electrifying 

track—may also encounter environmental or community constraints.

The American Recovery and Reinvestment Act (ARRA) allocates $9.3 billion for the 

development of intercity and high-speed passenger rail. ARRA provides a significant 

funding opportunity to potential intercity and high-speed rail project sponsors. Of the 

total identified, $1.3 billion is available for capital improvements and security upgrades for 

Amtrak. The remaining $8 billion is provided for the development of new intercity and 

high-speed rail passenger service.

Since intercity bus operators will be reluctant to operate services that are not profitable, the 

primary Federal policy lever for expanding intercity bus service would be subsidies to 

serve additional markets or improve the frequency or quality of service in existing 
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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markets. As previously noted, however, such service expansions would likely be less 

productive than current services in terms of reducing GHG emissions. Services targeted at 

premium or “choice” travel markets (such as business travelers who otherwise would have 

driven or flown) would have the greatest GHG benefits, although they may be less 

effective at achieving other objectives such as increasing mobility for low-income 

populations. Another potential Federal role in supporting intercity bus services is to 

support the construction and operation of intermodal transportation centers to provide 

convenient access for travelers between intercity bus, rail, urban transit, and automobile 

modes for local access. In the past, some intermodal facilities have been constructed using 

funds from existing FTA and FHWA programs.

Nonmotorized Transport

Definition

Nonmotorized transport strategies seek 

to make walking, bicycling, and other 

nonmotorized modes more attractive 

and competitive with automobile travel. 

Examples of nonmotorized strategies 

include: infrastructure improvements 

such as sidewalks, pedestrian crossings, 

traffic calming, on-street bicycle lanes, 

and off-street/shared-use paths; 

destination-based facilities including 

secure bicycle parking and lockers and 

showers for changing; land use policies 

to promote pedestrian-friendly site 

design; and information and education, 

such as wayfinding programs, bicyclist 

training programs, and other safetyfocused programs.

Pedestrian facilities are extensive in 

areas developed prior to the mid-20th

century and are generally being included 

in most recent development (within the past decade), but are lacking in many areas 

developed in the second half of the 20th century. Many transportation agencies, including 

about three-fifths of State DOTs (Wilkinson and Chauney, 2003), are now working to 

include pedestrian accommodations in new or reconstructed roads; many are also making 

improvements in targeted areas (such as school zones, through U.S. DOT’s Safe Routes to 

School program). Bicycle facilities are very limited in all but a few smaller U.S. cities with 

high college student populations. Dill and Carr (2003) found that a sample of 42 U.S. cities 

had an average of 0.66 miles of lanes or paths per square mile—meaning that the average 

bike route would be spaced three miles apart. However, in the past few years a number of 

major cities—including Chicago, Miami, New York, Philadelphia, Portland (Oregon), and 

Nonmotorized Transport

Benefits: Low-Moderate: 4-12 mmt CO2e in 2030

Direct Costs: Moderate-High: $80 to $210 per 

tonne

Net Included Costs: Net Savings: -$600 to -$700

per tonne

Confidence in Estimates: Low-Moderate

• Uncertain analytical basis for benefits estimates

• Uncertain ability to achieve cultural acceptance

required to realize bicycling benefits

Key Cobenefits and Impacts: Positive

• Mobility benefits to travelers, especially lowincome

• Physical activity/health benefits

Feasibility: Moderate to High

• Primary barrier is funding

• Some bicycle improvements may require 

compromises with automobile mobility

Key Policy Options:

• Targeted funding
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Washington, D.C.—have developed and have begun to implement aggressive plans to 

expand bicycling infrastructure as well as supportive programs. In addition, a growing 

number of State and local transportation agencies are adopting “complete streets” policies 

or revising design practices to ensure that all modes are accommodated in future street 

construction and reconstruction. According to FHWA, between Fiscal Years 1992 and 

2005, the number of new Federally funded stand-alone pedestrian and bicycle projects 

grew significantly, from 50 in 1992 to over 1,000 in 2005, with total annual obligations for 

these projects of nearly $400 million (FHWA, 2005). This was a direct result of policy and 

funding changes under the Intermodal Surface Transportation Efficiency Act of 1991 

(ISTEA). In addition, the U.S. DOT’s Safe Routes to School program has provided funding 

for pedestrian and bicycle safety improvements near schools, increasing from $54 million 

in FY 2005 to $183 million in FY 2009. Federal-aid obligations for pedestrian and bicycle 

projects were $1.2 billion in FY 2009. This figure does not include all FHWA or FTA 

spending on bicycle and pedestrian facilities. Bicycle and pedestrian projects are broadly 

eligible for almost all FHWA and FTA program funds. See 

http://www.fhwa.dot.gov/hep/bkepedtble.htm.

Magnitude and Timing of GHG Reductions

Pedestrian improvements are likely to have only minor impacts unless they are 

implemented in conjunction with land use strategies to promote compact, mixed-use 

development. This is because the primary factor in choosing to walk is the distance to the 

destination, and walk trips are short (0.7 miles on average, according to the 2001 National 

Household Travel Survey). Nevertheless, pedestrian improvements can help to reduce 

VMT and GHG especially in areas where destinations are relatively close together, but 

wide streets or a lack of sidewalks or safe crossings discourage pedestrian activity. Nearly 

25 percent of all trips are less than one mile, yet approximately 75 percent of these trips are 

made by automobile; and less than 30 percent of trips to school (children ages 5 to 15) less 

than one mile are made by walking or bicycling (U.S. DOT, 1999).

Substantial investments in bicycle infrastructure have been demonstrated to lead to very 

high bicycle mode shares in college towns. For example, 14 percent of commuters bicycled 

to work in 2000 in Davis, California, which has a comprehensive network of off-street and 

on-street paths. Larger cities have recently begun to make significant bicycle 

improvements and are beginning to gather evidence on the impacts of these 

improvements. For example, in Portland, Oregon, 8 percent of city residents reported 

bicycling as their primary commute mode in 2008, up from 6 percent in 2007 (City of 

Portland, 2008), and compared with 2 percent in the 2000 Census. Additional evidence is 

available from Europe. Countries with little investment in bicycling infrastructure 

(including the U.K. and France) report bicycle mode shares of 2 to 3 percent; this share 

increases to 9 to 10 percent for Germany and Sweden, 18 percent for Denmark, and 

27 percent for the Netherlands, which has a particularly extensive cycling infrastructure. 

Another comparison can be made by examining time-series data on bicycling in German 

cities, which found mode shares of 2 to 6 percent in the 1970s versus 6 to 20 percent in the 

1990s and early 2000s, after major infrastructure improvements were made (Pucher, 2008). 

Bicycling is most competitive for shorter trips, and in areas where automobile travel is 

relatively slow (due to traffic congestion) and/or expensive (due to high fuel and/or 
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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parking prices). Therefore, it is likely that similar mode shifts might be seen in the U.S. 

only in the higher density portions of U.S. cities, and under conditions of high fuel prices.

The Moving Cooler study estimated the potential benefits of comprehensive programs of 

bicycle and pedestrian improvements implemented between 2010 and 2025 in all U.S. 

metropolitan areas. Pedestrian improvements focused in areas of higher population 

density, as well as around schools, business districts, and transit stations, were estimated 

to reduce GHG emissions by 2.2 to 6.6 mmt CO2e in 2030, depending upon the extent of 

the improvements. Bicycle improvements, including comprehensive networks and 

supporting factors such as parking and cyclist training, were estimated to reduce 

emissions by about the same amount—2.0 to 6.1 mmt CO2e in 2030—depending upon the 

density of the bicycle network and extent of on-street versus off-street or protected routes 

(Cambridge Systematics, 2009). Because of the limited evidence on pedestrian and 

bicyclist response to such improvements, however, there is considerably uncertainty in 

these estimates.

The GHG benefits of nonmotorized investment should increase over time, as facilities are 

deployed. Substantial progress on pedestrian improvements and limited bicycle 

improvements (such as on-street facilities) can be made over a 10- to 15-year timeframe, if 

resources are deployed aggressively. More significant transformations (such as the 

establishment of an extensive network of bicycle facilities separated from traffic) will likely 

require at least 20 to 25 years.

Cost-Effectiveness

For new development areas, pedestrian and bicycle enhancements can be implemented at 

relatively low-cost (and bicycle parking costs may be offset through reduced automobile 

parking). Retrofitting existing developments and roadways may in some cases incur 

higher costs because of right-of-way or other constraints. A review of the literature for 

Moving Cooler identified cost estimates for a variety of improvements. Bike lanes were 

found to cost as little as $5,000 per mile for signing and striping only, or up to $50,000 per 

mile for designing a roadway with additional width to accommodate a lane. Conversion 

of minor streets to “bicycle boulevards” was estimated to cost $250,000 to $500,000 per 

mile. Construction of an off-street shared-use path ranges from $500,000 to as high as $2 

million per mile. These costs can be compared with typical local road construction costs of 

about $2 million per mile (Burchell et al., 2002).29

 

29Assumes a two-lane road in a developed area with moderate population densities.

 Similarly, pedestrian improvements can 

be as little as $1,000 for a painted and signed crosswalk to in the range of $10,000 to $20,000 

for a traffic calming device; while sidewalk construction may range from $200,000 to 

$800,000 per mile. The total costs of bicycle and pedestrian facilities are relatively small 

compared to the costs of roadway investment for motor vehicles. A review of 

comprehensive bicycle plans in five large U.S. and Canadian cities found total costs of 

implementing the plans to range from $70 to $240 million over a 10- to 20-year period, or 
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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an average cost of $211 per person. Pedestrian plans in four cities were on the same order 

of magnitude.

Moving Cooler developed three hypothetical scenarios of nationwide pedestrian 

improvements which were estimated to cost between $20 and $55 billion over a 15-year 

period, with three scenarios of bicycle improvements costing between $6 and $59 billion. 

The funding range amounts to an annual Federal investment in bicycle and pedestrian 

facilities of approximately $760 million to $3 billion.30

http://www.fhwa.dot.gov/hep/bkepedtble.htm

 The low end is actually lower than 

current Federal-aid obligations for pedestrian and bicycle projects of $1.2 billion in FY 

2009. The $1.2 billion figure does not include all FHWA or FTA spending on bike/ped 

facilities. Bike/ped projects are broadly eligible for almost all FHWA and FTA program 

funds. See . Additional maintenance 

costs are anticipated beyond this initial investment period. The resulting cost-effectiveness 

estimates range from $180 to $200 per ton CO2e reduced for the pedestrian improvements, 

and $80 to $210 for the bicycle improvements, averaged over the 2010-2050 period. 

Considering vehicle operating cost savings, net cost-effectiveness is in the range of -$600 to 

-$700 per tonne (Cambridge Systematics, 2009).

The costs of bicycle and pedestrian improvements will largely be borne by the public 

sector, including municipalities as well as regional and State agencies. However, for new 

development, they often can be recouped from the private developer. For example, many 

cities require developers to include sidewalks and other pedestrian enhancements as part 

of their project. Local street and trail improvements in new developments may also be 

paid for through impact fees or other developer contributions.

Cobenefits

Nonmotorized improvements will provide increased opportunities for and encourage 

recreational activity as well as nonmotorized transportation, thereby increasing physical 

activity and improving public health. Estimates suggest that nearly 70 percent of 

American adults do not obtain recommended physical activity levels (U.S. Department of 

Health and Human Services, 1996). Similarly, sedentary lifestyles are associated with the 

rapid increase in the percentage of adults that are overweight and obese; 64 percent of 

 

30 The $114 billion over 15 years ($55 billion + $59 billion) high end figure reflects all spending on 

bicycle and pedestrian improvements, from Federal, State, local, private developer, and other 

sources. $114/15 years is $7.6 billion per year. According to the U.S. DOT Conditions and 

Performance Report, 44% of capital funding for highways comes from Federal sources while 56% 

comes from State, local, and other sources. 44% of $7.6 billion would be $3 billion per year in 

Federal spending on bike/ped facilities. (Data is not immediately available on the percent of 

bike/ped funding from Federal versus other sources. However, it is likely lower than 44% as 

these facilities are often placed on local roads and private developers often bear the cost of 

providing sidewalks and other amenities as part of their development.) The $26 billion low end 

figure over 15 years amounts to $1.7 billion annually. A 44% Federal share would be $760 million 

annually. 
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American adults are now overweight and nearly one in three is obese (Flegal et al., 2002). 

Many researchers believe that the design of most communities in the latter half of the 20th

century has contributed to environments that are unsafe and inconvenient for walking and 

bicycling, thereby influencing decisions not to adopt those behaviors for transportation or 

recreation (Cambridge Systematics and Killingsworth, 2006). The evidence from many 

studies on walking and bicycling demonstrate that regular participation in these activities 

provides a health benefit for people of all ages, genders, and races (Dunn et al., 1999).

Bicycle and pedestrian strategies can improve mobility by providing people with increased 

travel options, at a lower cost. Bicycle and pedestrian improvements and programs should 

also increase safety for nonmotorized travelers. At more aggressive levels, however, some 

bicycle and pedestrian strategies may require compromises in vehicle operating conditions 

and therefore vehicular mobility, e.g., reduced traffic capacity if general purpose lanes are 

reduced to create bike facilities, or traffic calming in business districts which slows 

vehicular movement.

Feasibility

Pedestrian improvements have proven to be popular in many cities, and the benefit of 

pedestrian-supportive design is gaining fairly wide acceptance. Widespread 

implementation of such improvements, however, can be a challenge for financially 

strapped municipalities. The extent to which walk trips can reduce VMT and GHG is 

primarily driven by the arrangement of land uses, and in particular, having dense, mixeduse environments where people can walk to destinations or to transit.

Bicycle improvements are also gaining in popularity, but still face political, institutional, 

and technical challenges especially when compromises are required with traditional 

roadway designs oriented towards motor vehicles. The ability to implement bicycle 

facilities—whether on-street or off-street—is also often limited by physical constraints on 

right-of-way availability. The extent to which people will be willing to bicycle for 

transportation is limited by practical constraints (e.g., need to carry packages, transport 

children, travel long distances, weather issues) as well as cultural factors, although some 

European countries have managed to make bicycling a widely acceptable mode of 

transport.
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 5.4 Land Use and Parking

Unlike most strategies discussed in this report, which directly involve transportation 

infrastructure, services, vehicles, or operations, land use indirectly affects the demand for 

transportation. The spatial arrangement of homes, workplaces, and other activity 

locations, as well as the design of the built environment, affect the total amount of travel as 

well as the most efficient means of traveling. Land use policies are largely under the 

control of local governments and influenced by the private sector (property owners and 

developers), although regional and State transportation agencies may indirectly influence 

land use policy. Parking management is also discussed in this section, as parking policies 

(in particular, off-street parking associated with new developments) are developed within 

the same local planning framework as other land use decisions.

Land Use

Description

This strategy includes coordinated 

regional transportation and land use 

planning to develop and implement 

growth policies, in conjunction with 

supportive infrastructure investment, to 

reduce vehicle-travel. The goals of such 

policies would be to increase the amount 

of new residential development in 

attached or small-lot detached units in 

pedestrian- and bicycle-friendly 

neighborhoods with sidewalks, bike 

facilities, good connectivity, mixed-use 

commercial centers, and high-quality 

transit; and to locate most jobs in dense, 

mixed-use activity centers connected by 

high-quality transit.

Compact, mixed-use, and pedestrianfriendly development contributes to 

reduced vehicle-travel by: 1) decreasing 

vehicle trip-lengths, as destinations are 

closer together; 2) supporting transit, by 

placing more people and jobs within 

walking distance of transit stations or 

stops; and 3) supporting nonmotorized 

travel, by placing more destinations 

within walking or bicycling distance and creating a safe and pleasant walking 

environment. Redevelopment of infill sites in existing urban neighborhoods, as an 

Land Use

Benefits: Moderate-High: 24-84 mmt CO2e in 2030

• Growing over time – potentially double in 2050

Direct Costs: Low: < $10 per tonne

Net Included Costs: Net Savings: -$700 to -$800

per tonne

Confidence in Estimates: Moderate

• Primary uncertainty is ability to achieve 

significant changes to land use patterns

Key Cobenefits and Impacts: Positive

• Mobility benefits to travelers, especially lowincome

• Reduced infrastructure investment needs

• Environmental/land consumption benefits

Feasibility: Low-Moderate

• Modest changes likely to be supported by 

market forces

• Political ability to achieve significant changes 

highly uncertain

Key Policy Options:

• Federal funding incentives/assistance for 

compact/transportation-efficient land use 

planning and implementation
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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alternative to new development on far-flung “greenfields,” is another component of this 

strategy that has been demonstrated to reduce vehicle-travel through shorter trip lengths 

and better access to travel alternatives.

Although land use policies are typically under local authority, regional, State, and Federal

agencies can support regional growth objectives through funding policies, fiscal 

incentives, and technical assistance to local agencies. Some recent examples are described 

in the sidebar on page 5-53. Additional Federal leverage could be provided through 

strategies such as:

• Establishing Federal transportation funding programs targeted at land use planning 

and/or supportive implementation strategies that meet particular objectives (e.g., 

pedestrian improvements in compact, mixed-use development areas);

• Changing U.S. DOT Statewide and metropolitan planning regulations to require 

greater consideration of land use (e.g., the development of regional transportation and 

land use scenarios in long-range planning);

• Expanding technical assistance programs such as EPA’s Smart Growth 

Implementation Assistance program;

• Including “smart growth” criteria in evaluating candidates for grant or loan programs 

related to transportation, housing, economic development, etc.;

• Providing additional funds, or other incentives such as grant criteria, specifically for 

brownfields cleanup and redevelopment; and

• Making Federal transportation funding at least partially based on performance or 

incentive criteria for regional and local achievement of land use planning or 

implementation objectives.

Magnitude and Timing of GHG Reductions

The impacts of land use patterns at a site or neighborhood level can be significant. A 

recent review of the literature concluded that vehicle-travel was reduced by approximately 

20 to 40 percent for residents of “compact” neighborhoods compared to residents of 

“sprawl” neighborhoods (Ewing et al., 2007). Infill sites have been shown to reduce VMT 

by 15 to 50 percent compared to greenfields locations (CCAP, no date). However, the net 

benefits with respect to GHG reduction are tempered by the long-term nature of land use 

changes. Land use change can occur as population in a region grows, and as obsolete 

building stock is replaced. Nelson (2006) estimates that 6 percent of the U.S. housing stock 

and 20 percent of the commercial building stock is torn down and rebuilt, each decade. 

Figure 5.5 shows the impacts of population density (as well as other factors) on carbon 

emissions per household – households in high-density neighborhoods produce about half 

the annual CO2 emissions as those in the lowest-density neighborhoods.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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Figure 5.5 Household Characteristics and Estimated Annual CO2 Emissions 

from Travel

 

 

Source: FHWA (2009).

Three or More Workers

Three or More Vehicles

Two Workers

Very Low Density 

(50-250 HH/square miles)

Two Drivers

More than 1⁄4 mile from Transit

Two Vehicles

Lower Density 

(250-1,000 HH/square mile)

One Worker

Medium Density 

(1,000-3,000 HH/square mile)

High Density 

(3,000-5,000 HH/square mile)

1⁄4 mile or less to Transit

Very High Density 

(5,000-9,999 HH/square mile)

One Driver

Zero Workers

One Vehicle

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

Average Kg of Carbon Dioxide per Year

This report to Congress analyzed the literature to develop a range of potential GHG 

reductions from land use strategies. Three studies were particularly instructive: Growing 

Cooler, authored by academic and industry researchers and published in 2008 by the Urban 

Land Institute; Moving Cooler, authored by Cambridge Systematics and published by the 

Urban Land Institute in 2009; and Transportation Research Board Special Report 298: Driving 

and the Built Environment, published by the National Academy of Sciences in 2009. All 

three studies, conducted independently and using different assumptions and analysis 

methods, found GHG reductions from land use strategies of the same order of magnitude. 

Taking the middle section of the study ranges and adjusting them to the same baseline as 

that used in this report to Congress, yields a reduction of U.S. transportation GHG 

emissions of 1.2 to 3.9 percent in 2030 and 2.5 to 7.7 percent in 2050. Table 5.6 below shows 

a comparison of assumptions and findings of recent studies.
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Table 5.6: Comparison of Recent Studies on Land Use and Greenhouse 

Gas Reduction

TRB Special Report 

298

Moving Cooler Growing Cooler

% of development on the 

ground in 2050 that will 

be developed or 

redeveloped between 

present and 2050

41-55% 64% 67%

(Population growth 

plus 6% housing 

stock and 20% 

nonresidential 

redeveloped per 

decade)

% of new development 

that is “compact”

25-75% 43-90% 60-90%

Definition of “compact” 1.98 DU/acre 

(roughly 4 units/ 

residential acre)

>4000 persons per 

square mile (roughly 

> 5 units/residential 

acre)

Density, diversity, 

design, destination 

accessibility, and 

distance to transit

VMT in compact 

development 

5-25% lower 23% lower 30% lower

Other key assumptions New development 

will more likely be on 

urban fringe, VMT 

adjusted upward. 

VMT of those who 

live in existing 

housing will remain 

the same.

VMT of those who 

live in existing 

housing will continue 

to grow.

GHG reduction 

discounted by 10% to 

account for increased 

cold starts and 

reduced vehicle 

speeds with compact 

development.

Overall urban light duty 

vehicle VMT reduction

1-11% 1.7–12.6% 12-18%

Overall U.S. 

transportation GHG 

reduction below baseline 

(baselines vary)

0.6-6.5%

(1-11% reduction in 

light duty GHGs)

2-3.4% 7-10%

The Moving Cooler study found that U.S. transportation GHGs could be reduced by 2 to 

3.4% below baseline in 2050 if 43-90% of new urban development occurred in areas of 

4,000 persons per square mile or more, which roughly corresponds to 5 dwelling units per 

residential acre (if half of developed land is devoted to residential purposes) (Cambridge 

Systematics 2009). Under 1990-2000 trends, 34% of new development took place in these 

areas. As such the low end of the range considers a scenario with a modest shift, which 

may be below market demand for this type of housing, while the high end is a significant 

shift, which may be above market demand for this type of housing.

31

 

31 See feasibility section below for discussion of market trends.

 Greater than 4,000 

persons per square mile (ppsm) is used as a proxy for “compact” development. Estimated 
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GHG reductions are based on the differences in VMT for individuals living in areas of 4000 

ppsm or more versus individuals living in lower density areas, according to the 2001 

National Household Travel Survey (NHTS), and modeled by the Center for Urban 

Transportation Research (CUTR). As such, the proxy only incorporates the current 

difference in VMT between different density levels and does not incorporate additional 

policies that could be pursued such as mixing land uses.

The analysis only considers new development in metropolitan areas. It does not assume 

any changes in rural areas. The pie charts in Figure 5.6 compare the distribution of the 

U.S. metropolitan area population in 2030 and 2050 under the most aggressive Moving 

Cooler scenario to the year 2000 actual population distribution.

Figure 5.6 Distribution of U.S. Urban Population

New development in metropolitan areas at greater than 5 units per residential acre could 

take the form of small lot single family homes, townhomes, apartments, condominiums, or 

combinations of these with large lot single family homes. The photographs in Figure 5.7 

and 5.8 show examples of housing at various numbers of units per acre.

Vehicle miles traveled (VMT) reductions under the scenarios are calculated based on a 

VMT model developed by the Center for Urban Transportation Research (CUTR) at the 

University of South Florida. The base data for the model is from the 2001 National 

Household Travel Survey (NHTS). The VMT reductions in the model are shown in the 

table below. As shown, those in areas with greater than 5 dwelling units per acre travel 

28% fewer miles than those in areas with less than 0.6 dwelling units per acre.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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Table 5.7: CUTR VMT Forecasts by Census Tract Density (Annual VMT 

per Capita) 

Persons per 

square mile 

(ppsm)

~Dwelling 

units/ 

residential 

acre

2005 VMT 2035 2055 VMT VMT compared 

to <500 ppsm

0-499 <0.6 11,422 13,798 16,191 0.0%

500-1,999 .6-2.5 10,083 12,196 14,359 -11.3%

2,000-3,999 2.5-5 9,345 11,345 13,406 -17.2%

4,000-9,999 5-12.5 7,986 9,782 11,651 -28.0%

10,000+ >12.5 4,437 5,651 5,940 -63.3%

Source: Cambridge Systematics, 2009.

The recent Growing Cooler study estimated that changes in land use patterns to focus most 

new development into compact, walkable, transit-accessible communities could reduce 

total U.S. GHGs from transportation sources by 7 to 10 percent from forecast levels by 

2050, or urban VMT by 12 to 18 percent (Ewing et al., 2007). If the VMT reduction is 

divided by two to represent approximate VMT and GHG reduction benefits in 2030 

(assuming that land use benefits increase in roughly linear fashion over time) and applied 

to the Annual Energy Outlook Reference case forecast, this provides a 4.8 to 7.2 percent 

reduction in total light-duty VMT in 2030 (assuming 80 percent of VMT in urban areas), 

corresponding to an emissions reduction of 56 to 84 mmt CO2e in that year. The Growing 

Cooler estimates were based on 60 to 90 percent of new development being located in 

“compact” neighborhoods, and findings from literature review and structural equations 

modeling that VMT per capita with compact development is approximately 30 percent 

lower relative to sprawl. 

The Transportation Research Board’s Special Report 298: Driving and the Built Environment, 

released after most of the writing for this report to Congress was complete, found results 

in the same range. Special Report 298 estimated that the reduction in vehicle miles 

traveled (VMT), energy use, and CO2 emissions resulting from more compact, mixed use 

development would be in the range of less than 1 percent to 11 percent by 2050 (TRB, 

2009). 

The estimated GHG reduction range in Special Report 298 is based on 25 to 75 percent of 

new residential development taking place at double the average density of new acres 

developed between 1987 and 1997. Development between 1987 and 1997 was significantly 

less dense than existing development. As such, under the low end scenario, average 

densities would continue to decline. Under the most aggressive scenario, average 

densities would increase from current levels to densities on the ground in the early 1990s. 

Committee members for the TRB report disagreed about whether the changes in 

development patterns and public policies necessary to achieve the high end of these 

estimates are possible.
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Table 5.8: Key Density Data from TRB Special Report 298

Density of average acre: 1987 1.86 DUs/acre

Density of average acre: 1997 1.66 DUs/acre

Density of average new acre developed 1987-1997 0.99 DUs/acre

Study assumption for density of 25% - 75% of new 

development

1.98 DUs/acre, with remainder at 

0.99 DUs/acre

Density of average acre: 2050, study baseline 

(100% of new development at 0.99 DUs/acre)

1.29 – 1.39 DUs/acre

Density of average acre: 2050, low end 1.43 – 1.49 DUs/acre

Density of average acre: 2050, high end 1.69 – 1.7 DUs/acre

Note: DUs/acre above refers to dwelling units per acre of developed land, including developed 

land use for residential, commercial, transportation, and other purposes. As such, in a community 

in which half of the developed land is used for residential purposes, a density of 2 DU/acre would 

translate into 4 DU/residential acre, or about quarter acre average lot size. The report uses three 

different methods for calculating density, all of which show the same trends. The method 

portrayed above uses the U.S. Department of Agriculture’s Natural Resources Inventory and the 

U.S. Census.

Source: TRB, 2009.
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Figure 5.7: Examples of Housing Densities

Source: Lincoln Institute of Land Policy, Visualizing Density: Image Gallery Search,

http://www.lincolninst.edu/subcenters/visualizing-density/gallery/index.aspx

Beauford, SC, 1 unit / acre Longmont, CO 2.6 units / acre

Levittown, NY, 5 units / acre Sandusky, OH, 5.4 units / acre

Huntersville, NC, 6.3 units / acre Fresno, CA 8.1 units / acre 
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Tampa, FL, 8.6 units / acre Kansas City, KS, 11.1 units / acre

Longmont, CO, 12.3 units / acre Detroit, MI 13.7 units / acre

Boulder, CO, 19.7 units / acre Washington, DC, 21.8 units / acre
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Baltimore, MD, 28.6 units / acre Addison, TX, 55.2 units / acre 

Oakland, CA, 85.3 units / acre San Francisco, CA, 222 units / acre
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Figure 5.8: Examples of Communities at Different Density Ranges

The aerial photographs below provide examples of the different density ranges. Note that 

even in the highest densities shown below, single family homes dominate the landscape.

Concord, MA: 

500-2,000 ppsm (0.6 - 2.5 DU/acre)

Watertown, MA:

4,000-10,000 ppsm (5 – 12 DU/acre)

Lexington, MA: 

2,000-4,000 ppsm (2.5 – 5 DU/acre)

Somerville, MA:

>10,000 ppsm (>12 DU/acre)
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Federal, State, and Local Programs to Influence Land Use

Land use planning may ultimately be a matter of local authority, but regional and State entities 

have increasingly worked to influence land use patterns through voluntary and incentive-based 

measures. For example:

• Numerous metropolitan planning organizations (MPOs) and other regional and local public 

and nonprofit agencies are leading, or have led, “scenario planning” or “visioning” efforts 

that attempt to achieve a regional consensus on desired future land use and transportation 

patterns, and work to identify implementation steps and commitments. A recent review for 

FHWA found 80 examples of scenario planning efforts in more than 50 metropolitan areas 

nationwide (Bartholomew, 2005). Examples include Denver Metro Vision 2020; the Eastern 

Planning Initiative in Charlottesville, Virginia; and MyRegion in Orlando, Florida.

• California’s Blueprint process is a State-led initiative that provides grants and other 

resources to support regional scenario planning throughout the State. This process has been 

further strengthened by Senate Bill 375, adopted in September 2008, which requires the 

California Air Resources Board to establish GHG emission reduction targets for 

metropolitan planning areas and for regional transportation plans to include sustainable 

communities strategies as part of the plan to achieve the emission reduction targets.

• State and regional agencies can support implementation of the visioning and scenario 

planning outcomes in a number of ways. One is alignment of the long-range transportation 

plan with the resulting regional vision. Another is through extensive outreach to local 

governments to encourage implementation of plan objectives in local comprehensive plans 

and zoning. MPOs have also provided transportation funds for local plan and code revision 

consistent with the regional plan, or revised project selection criteria to include consistency 

with the regional land use vision.

• Even without a regional land use vision plan, MPOs have provided funding incentives for 

local land use plans and transportation projects that support “smart growth” objectives. 

One example is the Atlanta Regional Commission’s Livable Centers Initiative, which has 

provided $10 million over 10 years for planning studies and $500 million for funding of 

priority transportation projects resulting from these studies.

• At the Federal level, the EPA’s Smart Growth Implementation Assistance program is a 

competitive program that provides a team of technical experts to assist municipalities or 

other entities with policy analysis or public participatory processes to support “smart 

growth” implementation. In its first few years of funding, the Federal Highway 

Administration’s Transportation and Community and System Preservation Program (TCSP) 

supported a number of innovative regional efforts to link transportation and land use 

planning. In March 2009, the U.S. DOT and the Department of Housing and Urban 

Development (HUD) announced the creation of a high-level interagency task force to better 

coordinate Federal transportation and housing investments.
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Scenario planning studies using travel forecasting models have estimated that land use 

changes, combined with supportive transit investments, could reduce metropolitan VMT 

by a median of 16 percent below forecast levels over a 40-year time horizon (Rodier 2009), 

which is in the same range as the Growing Cooler results. Because land use change occurs 

slowly over time, the impact over a shorter timeframe will be proportionately less; the 

Rodier study found a median VMT reduction of 8 percent over a 20-year time horizon. 

Again applying this result to the AEO reference case, the estimated emission reduction 

would be 75 mmt CO2e in 2030. The potential benefits depend upon the projected growth 

in the region, aggressiveness of assumed land use and transit changes, as well as the 

forecasting model’s capabilities and specific methodological assumptions. Forty-year 

VMT reductions in the Rodier review ranged from a low of 3 percent to a high of 

28 percent across all studies.

Cost-Effectiveness

Land use planning and infrastructure planning activities will incur administrative costs for 

the development and implementation of incentives, regulations, etc. Based on a review of 

past and ongoing regional and Statewide planning efforts, the Moving Cooler study 

estimated the costs of a regional visioning and scenario planning effort (planning activities 

only) to be on the order of $1 million per year in a large metropolitan area or on a 

Statewide level. Extrapolating to all metropolitan areas and also allowing for municipal 

code revision, the total planning costs could be on the order of $500 million per year 

nationwide. It is likely that these costs would need to be sustained over at least a decade, 

with some additional ongoing costs to support plan implementation. These costs are 

relatively minor compared to the GHG reductions, and the cost-effectiveness of land use 

planning, considering administrative costs alone, has been estimated to be in the less than 

$10 per ton of GHG reduced, considering cumulative costs and GHG reductions over the 

2010-2050 period. Considering vehicle operating cost savings, a net savings in the range of 

-$700 to -$800 is estimated (Cambridge Systematics, 2009).

The calculations cited above did not incorporate other cost savings such as reduced 

infrastructure expenditures, which are potentially significant, but also subject to a high 

range of uncertainty. There is good evidence that more compact development can lead to 

significant savings in infrastructure costs through reductions in the length of local roads 

and utility connections that must be provided. Burchell (2005) finds a potential 11 percent 

nationwide reduction in local road and water/sewer costs from a future scenario 

emphasizing compact development over sprawl, or $126 billion over the 2000-2025 

timeframe. Scenario planning studies in locations such as Sacramento, Salt Lake City, and 

Charlottesville, Virginia, have also shown a significant reduction in regional road 

investment needs because of reduced traffic, although these savings are partially offset by 

the need for increased transit investment. For example, Envision Utah (2000) found that a 

regional “quality growth scenario” would add $1.5 billion over 20 years in transit costs, but 

save $2.6 billion in regional road costs, for a net savings of $1.2 billion. Additional 

subregional infrastructure cost savings—including roads, water, and other utilities—

would total $3.3 billion or 26 percent. The savings will accrue both to State and regional 

governments (for regional infrastructure) and to local governments, developers, and 

consumers (for local infrastructure). However, some public-sector costs will increase—
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notably investment in transit and nonmotorized infrastructure. The overall impact on 

public infrastructure costs will depend upon the specific program of investments in a 

given metropolitan area.

Achieving the benefits of infill development may in some cases involve the cleanup and 

reuse of “Brownfields” sites (contaminated) or “greyfields” sites (subject to prior use). 

Greater short-term costs may be incurred by the public and/or private sectors for 

Brownfields infill development, compared to a unit of “greenfields” development; median 

Brownfields cleanup costs run about $57,000 per acre according to a Center for Urban 

Economic Development study cited in Paull (2008). A U.S. Conference of Mayors survey 

also cited in Paull (2008) found that an estimated 2.8 million people could be 

accommodated on Brownfields sites in 82 cities. Extrapolating this estimate to the central 

city of all 363 U.S. metropolitan areas and assuming a development density of 15 units per 

acre, the total nationwide cost would be just under $20 billion. Land assembly, demolition 

of existing structures, and more involved permitting processes can also increase the costs 

of infill versus greenfields development. Cost differentials may require subsidies or tax 

incentives by government agencies to stimulate private investment in particular areas. For 

example, the City of Portland, Oregon, provides a residential tax exemption for qualifying 

new construction in transit station areas.

Cobenefits

More compact growth patterns have been cited as having a number of cobenefits. In 

addition to benefits related to reduced VMT, these include improved mobility/

accessibility for populations without access to an automobile, and potentially safety 

benefits related to lower travel speeds and therefore less severe crashes. One study found 

that U.S. metropolitan areas with high levels of “sprawl” have higher traffic fatality rates 

than “nonsprawling” regions (Ewing, Pendall, and Chen, 2003). Another focused on 

Hawaii found that higher population densities were associated with lower crash rates 

(Kim and Yamashita, 2002). Dumbaugh and Rae (2009), using data from San Antonio, find 

that neighborhoods with traditional design features (higher densities, pedestrian-oriented 

retail uses, interconnected streets) have fewer serious crashes than suburban 

neighborhoods. Public health benefits may be realized due to higher levels of physical 

activity as walking and bicycling become more viable options (Frumkin, 2002). Land use 

planning undertaken with meaningful public participation can also improve the 

environmental and social quality of an area as perceived by its users. Many of the cobenefits of land use strategies can be summarized in the term “livability,” which includes 

promoting mobility for all users, whether they are children walking or biking to school or 

commuters riding transit or driving motor vehicles; improved traffic flow; shorter trip 

lengths; safer streets for pedestrians and cyclists; lower emissions; reduced dependence on 

fossil fuels; increased trip-chaining; lower household transportation budgets; and 

independence for those who prefer not to or are unable to drive.

On the other hand, while overall emissions of air pollutants will decrease because of VMT 

reductions, concentrated land use has the effect of concentrating air and water emissions in 

areas of potentially greater population exposure.
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Compact growth patterns also should reduce land conversion for urban uses, helping 

preserve agricultural land, forests, open space, wetlands, and species habitat. For 

example, the Seattle region’s VISION 2020, adopted in 1990, was forecast to reduce loss of 

open space from 750 square miles under trend conditions to 400 square miles under a 

preferred alternative focusing growth in centers and within an urban boundary (Puget 

Sound Council of Governments, 1990).

A variety of both social benefits and ills have been assigned to “sprawl” versus “compact”

land use patterns (Burchell et al., 1997). For example, some have argued that land use 

controls could reduce consumer welfare by constraining consumer choice (e.g., requiring 

smaller dwelling units and/or yards). To the extent that land use policy changes allow 

development desired by consumers that was previously not legally permitted (many local 

zoning codes prohibit mixed-use compact development) and simply accommodate latent 

market trends for more compact development, this should not be a concern. However, 

more aggressive policy changes that restrict development desired by the market, beyond 

incorporating externalities, could potentially lead to net welfare losses. The factors that 

influence residential and neighborhood quality are complex and there is not a consensus 

on the extent to which compact land use may increase or decrease overall social welfare.

To the extent that growth management policies constrain the supply of land, consumers 

and businesses may experience higher land costs and therefore higher housing and 

floorspace rents. Some have argued that growth management laws have had significant 

impacts on affordability. For example, Staley and Gilroy (2002) conclude that Florida’s 

Growth Management Act (GMA) may have contributed to a 15 percent decline in 

affordability between 1994 and 2000, and that Washington State’s GMA may have added 

about 0.7 percentage points to the housing inflation rate for each year the county had a 

comprehensive plan in place. Other studies, however, have found that growth 

management effects are minor after controlling for other factors. For example, an analysis 

of the urban growth boundary in Portland, Oregon found that the boundary has created 

upward pressure on housing prices, but the effect is relatively small in magnitude, 

contributing no more than $10,000 compared to an overall cost appreciation of $144,000 

over their study period (Phillips and Goodstein, 2000). A broader literature review 

concluded that market factors including increased housing demand, increased 

employment, and rising incomes are much more significant influences; and furthermore, 

that policy changes to allow increased densities and smaller units have mitigated any 

affordability impacts by allowing housing supply to be increased within the growth 

boundary (Nelson et al., 2002).

Effects on the overall economy are unclear. The effects of land use patterns on the 

economy will depend upon: 1) accessibility benefits – in particular, business access to 

workers, suppliers, and customers within a given travel time, and the implications for 

business costs and productivity; 2) land costs, which affect the cost of doing business; and 

3) net infrastructure and transportation cost savings. The implications of compact land use 

for accessibility are not clear as there are two offsetting effects—greater proximity (which 

will increase accessibility) and greater congestion and lower travel speeds (which will 

decrease it). Land costs are likely to be higher, but infrastructure and transportation costs 
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lower (as discussed above). Overall the balance of these factors has not been well 

documented.

Feasibility

In numerous metropolitan areas nationwide, plans to change future patterns of land use 

and infrastructure investment are already in various stages of development or 

implementation. For other areas such a process may take five to 10 years to develop 

because of the time needed to develop the necessary data and analysis tools, conduct 

outreach, forge public consensus, etc. State and Federal incentives can provide valuable 

support for such processes, but to be successful they ultimately must reflect locally 

determined preferences.

The ability to implement changes to land use patterns and infrastructure investment 

priorities is highly dependent upon local public and political support, which varies from 

region to region. In most areas, it has been easier to develop a regional vision regarding 

such priorities than to actually achieve changes at the local level. To date, no State or 

metropolitan area has been able to fully implement the changes proposed through a 

regional visioning or scenario planning process. This is due to a variety of factors that 

inhibit adoption of policy and zoning changes at a local level, such as concerns over 

density and fiscal impacts; as well as market barriers in some areas (e.g., low land prices 

and limited demand for higher-density, more urban-style development). One of the few 

areas—Seattle—that has both adopted and tracked regional policy targets found that 

continuation of rates of growth from 1990-2000 would lead to the achievement of about 

70 percent of planned 2012 targets for population growth in designated “growth centers”

by 2020, although the rate of growth in centers was increasing (Puget Sound Regional 

Council, 2002).

There is evidence that market and demographic trends are supporting a move towards 

more compact development patterns. Some of these supportive factors include increasing 

shares of population in households with no children (singles, young couples, “empty 

nesters,” and seniors), a renewed interest in urban living, and transportation constraints 

(congestion and high fuel prices) that provide incentives to live in walkable or closer-in 

communities where less driving is needed. Nelson (2006) estimates that current demand 

for development that could be “compact” in nature (attached and small-lot detached) is 

estimated at 46 percent of the market and could increase to 60 percent in 2025. A 2004 

report by the Center for Transit-Oriented Development estimated that that at least a 

quarter of all new households—14.6 million households—over the next 25 years could be 

looking for housing in transit station areas (within a half-mile radius of rail transit), 

compared to only 6 million households in these areas today (CTOD, 2004). A recent EPA 

report examined building permit data from 1990 through 2007 in the 50 largest U.S. 

metropolitan areas and concluded that in several regions of the country there has been a 

dramatic increase in the share of new construction built in central cities and older suburbs, 

with a particularly dramatic increase over the past five years (Thomas, 2009). However, 

the report also found that the trend has not been consistent everywhere. For example, in 

seven regions, infill development (i.e., in the central city and older suburban communities) 

accounts for between one-quarter and one-half of new construction (it is greater than one-
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half in New York). In 13 regions, infill development significantly increased but accounted 

for less than one-quarter of new residential units, while in 12 regions, there was very little 

change in the distribution.

Impediments, particularly zoning regulations, have resulted in an apparent undersupply 

of higher density, mixed use developments (TRB, 2009). Impediments include street 

designs that emphasize the needs of motorized travel at the expense of other modes, local 

zoning regulations in many U.S. communities that prevent compact and mixed use 

development, and minimum parking requirements. Developers report considerable 

market interest in compact developments but an inadequate supply (Levine and Inman 

2004).

One conclusion from these findings is that some level of land use change is likely to be 

supported by market factors; but more significant change approaching the more 

aggressive levels assumed in Growing Cooler or Moving Cooler is likely to require stronger 

policy intervention.

Parking Management

Definition

Parking management involves changes 

to parking supply, pricing, or other 

management techniques to create 

disincentives to driving. Examples 

include: reducing parking requirements 

for new development; designing and 

locating parking to encourage pedestrian 

travel for short local trips; charging 

workers for parking or allowing them to 

“cash-out” the value of parking if they 

do not use it; “unbundling” residential 

parking costs from the cost of a lease or 

purchase; pricing to encourage “parkonce” behavior; pricing to maintain 

vacant spaces in order to reduce parking 

search time;32

 

32Studies around the world have found that between 8 and 74 percent of the traffic present in some 

congested business districts is due to cruising for parking, which can be greatly reduced by 

pricing parking sufficiently high to ensure availability (Shoup, 2005).

reducing on-street parking 

to make room for wider sidewalks 

and/or bike lanes; and using 

information technology to help drivers 

Parking Management

Benefits: Low: 4 mmt CO2e in 2030

Costs: Not estimated

Confidence in Estimates: Low

• Benefits will depend upon what types of 

parking management, scale of application, 

supportive land use context

Key Cobenefits and Impacts: Mixed

• Potential cost savings for developers and

reduced land consumption for parking

• Mobility losses for drivers if parking is priced 

or restricted

Feasibility: Low

• Very limited applications (e.g., parking reductions in transit station areas) proven feasible

• No mechanism for or U.S. examples of regionwide parking pricing or supply restriction

Key Policy Options:

• Tax policy to discourage parking provision
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efficiently locate spaces.

Most parking management strategies are under the domain of local government. In most 

U.S. cities, parking supply is constrained or priced only in the central business district 

(CBD) and possibly a few other major activity centers, primarily as a result of market 

forces that establish a strong premium on land costs. Outside of these areas, parking 

supply is generally plentiful, due to long-established planning and zoning regulations that 

require developers to provide ample parking, and free (Shoup, 2005). However, some 

cities, such as Charlotte, Portland, Oregon, and Pasadena, have taken steps to reduce 

parking supply in transit-oriented developments or other urban neighborhoods. Active 

management of parking pricing to regulate demand is being tested in New York and 

Washington, D.C. and considered in other cities including Chicago, Los Angeles, and San 

Francisco (Nguyen, 2009). Parking cash-out and worksite parking pricing can be 

implemented by employers or property managers, and are considered a subset of 

employer commute measures (Section 5.5) in this report.

Magnitude and Timing of GHG Reductions

Both the cost and supply of parking are significant determinants of travel behavior. (These 

factors tend to be closely related, as parking tends to be priced when – and only when – its 

availability is limited.) Most studies of parking pricing have focused on commuting 

behavior. Cervero (1993) found that rail transit mode shares in the San Francisco Bay Area 

increased by about 50 percentage points (e.g., 64 versus 14 percent transit mode share) if 

the employee had to pay for parking, compared to those that were given free parking. A 

study of employers in California found that parking cash-out programs reduced vehicle 

trips an average of 11 percent (Shoup, 1997).

Information on the potential nationwide GHG reductions from parking pricing or other 

parking management strategies is very limited. Two recent estimates have focused on 

commute travel in particular. Nationwide, only 5 percent of employees pay for parking, 

so in theory there is great potential for expanding the scope of worksite-based parking 

pricing. On the other hand, market prices for parking usually exist only in CBDs and other 

densely built activity centers, and, according to data from the 2000 U.S. Census, less than 

10 percent of a typical metropolitan area’s workforce is located in the CBD. Assuming that 

an additional 5 percent of workers nationwide could have parking priced at market rates, 

reducing SOV use per worker by 20 percent, and further assuming that work trips make 

up 30 percent of total VMT, the total reduction in VMT on a nationwide basis would be 

approximately 0.3 percent (EEA, 2008). This represents a reduction of 3.5 mmt CO2e in 

2030. A nationwide fee of $5 daily per parking space levied on all worker-utilized parking 

spaces (or the equivalent, such as a $5 cash-out incentive offered to all workers who choose 

not to drive) is estimated to reduce emissions much more substantially—by nearly 40 mmt 

CO2e in 2030 (Cambridge Systematics, 2009). However, it is not clear how such a broadbased fee would be implemented or enforced.

Some parking management strategies, such as market-rate pricing of on-street spaces or 

offering a cash-out option to employees, can be implemented within one or two years. 

However, others (such as reducing parking requirements in zoning) take many years to 
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have widespread effects, because they involve changes to new development which occur 

over time. The extent to which such zoning changes will have an effect will depend upon 

the rate of development in an area.

One risk associated with constraining or pricing the supply of parking in limited 

geographical areas is that activity will shift towards areas in which parking is not 

constrained. For example, some U.S. cities have adopted policies to expand the supply of 

parking in their CBDs, to help these areas compete with the suburbs for companies. 

Achieving the full benefits of parking management will be strongly dependent upon land 

use strategies to develop attractive high-density activity centers, creating higher land 

values that support a market for parking and supporting travel alternatives. Since 

implementing policies to reduce parking supply or increase the price of parking is 

dependent upon compact, transit-supportive land use environments, it would be difficult 

to develop unique estimates of the GHG reduction benefits of these parking management 

strategies.

Cost-Effectiveness

Some parking management strategies, such as changes to minimum and maximum 

parking requirements, can be implemented with minimal administrative cost. Pricing of 

parking that was previously free requires the establishment of a system for monitoring 

parking and collecting revenues; the cost of such a system relative to revenues will depend 

upon the technology used, parking rates, and other factors. The administrative costs of 

parking pricing implemented on a widespread basis have not been estimated, and 

therefore, reliable cost-effectiveness estimates cannot be made.

Parking pricing represents a transfer payment that costs drivers while increasing revenue 

for local governments and/or property owners. Nondrivers may benefit from lower 

housing costs if the cost of parking is not included in the lease, or through lower tax rates.

Cobenefits

Parking management will result in some social cost savings. In particular, reductions in 

parking requirements will reduce costs associated with new development, especially in 

areas of high land value—benefiting developers as well as tenants. The cost of structured 

parking typically ranges between $15,000 and $30,000 per space (Johnson, 2006), and 

nonprofit developers in San Francisco have estimated that parking requirements add 

20 percent to the cost of each unit (Shoup, 2005). Surface parking is considerably cheaper, 

with costs depending upon land values (Shoup, 2005).

Depending upon how they are implemented, parking strategies may lead to 

improvements or declines in mobility for specific segments of the traveling public. For 

example, reducing the amount of land devoted to parking will make areas more 

pedestrian-friendly, supporting pedestrian and transit mobility; but vehicular mobility 

will be reduced if parking is made more costly or scarce. Pricing and information 

strategies to manage demand and match demand with supply will have the benefit of 

reducing local traffic congestion.
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Feasibility

Managing demand via parking policies has met considerable political resistance in most 

locations. Parking is typically priced only in the limited places where there is a market for 

it (CBDs and other major activity centers), and examples of businesses offering cash-out or 

residential developers unbundling parking costs are relatively rare. Furthermore, the 

potential role of the Federal government in encouraging parking management has not 

been investigated. Incentives (for example, in the form of Federal transportation funding) 

could perhaps be provided as part of a broader set of incentives for local governments to 

implement “compact development” land use strategies aimed at reducing vehicle-travel 

and facilitating alternative mode use. It is also conceivable that the Federal government 

could implement a tax on parking spaces. However, this would be a major change in U.S. 

tax policy, which typically leaves property taxes to the local government.
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 5.5 Commute Travel Reduction

Efforts to reduce commute trips by single-occupancy vehicle (SOV) have long been a staple 

of transportation demand management (TDM). Commute-focused trip reduction 

initiatives have included alternative mode information, transit subsidies, ridesharing/ride 

matching programs and incentives, vanpools, parking management (including pricing and 

cash-out), telework, and alternative work schedules. This section first discusses general 

commute-focused worksite trip reduction programs, which are intended to promote a 

variety of alternatives; and then discusses the potential for specific individual measures 

such as ridesharing and telework.

Worksite Trip Reduction Programs

Definition

Worksite trip reduction programs may 

include either requirements for 

employers to reduce single-occupancy 

vehicle (SOV) trips by their employees, 

or outreach, assistance, and incentive 

programs to encourage them to do so. 

Transportation agencies began to 

implement demand management 

programs in the 1970s, with the energy 

crisis, and have continued to do so, to 

varying degrees, since then. Employer 

trip reduction requirements exist in 

Oregon and Washington States and in 

the Phoenix and Tucson, Arizona 

metropolitan areas; they were 

introduced in Southern California in the

early 1990s but later rescinded. A few 

cities and counties also require 

employers to reduce trips or implement 

TDM programs. A number of State, 

regional, and local transportation 

agencies coordinate voluntary demand 

management programs, with some of the most active programs in the largest, most 

congested regions such as Atlanta, Washington, D.C., and Southern California.

A moderately aggressive expansion of worksite trip reduction programs could include the 

widespread provision of voluntary/outreach-based programs by MPOs and/or State

DOTs. A more aggressive expansion could include the nationwide imposition of 

employer-based trip reduction requirements, combined with supportive programs such as 

regional ridematching and vanpooling programs and assistance in developing worksiteWorksite Trip Reduction Programs

Benefits: Low-Moderate: 2-14 mmt CO2e in 2030

Direct Costs: Low to Moderate: $30 to $180 per 

tonne

• Public sector costs only

Net Included Costs: Net Savings: -$1,000 per 

tonne

Confidence in Estimates: Moderate

Key Cobenefits and Impacts: Positive

• Most worksite trip reduction programs will 

result in additional mobility options for 

commuters

Feasibility: Moderate to High

• Primary barrier is obtaining widespread 

employer participation/support

Key Policy Options:

• Targeted funding

• Tax incentives to support commute trip 

reduction/alternative mode use
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level trip reduction plans. Of the various worksite-based strategies, financial incentives 

and disincentives, such as free or discounted transit passes and parking pricing or cashout, generally have the greatest impact (COMSIS, 1993; VTPI, 2009). This means that 

programs focused on encouraging employers to offer subsidized or pre-tax transit benefits, 

parking cash-out, and/or other incentives are likely to have a greater impact than those 

focused simply on providing information and coordination services. Transit agencies are 

typically key partners in making transit benefits easily available to employers and 

employees.

Magnitude and Timing of GHG Reductions

The impacts of worksite-based TDM have generally been modest although not negligible. 

One review of the literature on commute-focused TDM programs concluded that an 

overall areawide reduction in SOV work trip mode share on the order of 5 percent may be 

realistic, which translates into net regional VMT impacts of around 1 percent (EEA and 

Cambridge Systematics, 1999). The U.S. EPA evaluated the effectiveness of the Best 

Workplaces for Commuters (BWC) program, a program to encourage businesses to offer 

travel alternatives to their employees. EPA’s study estimated that a comprehensive 

program of employer benefits, including financial incentives, services, and informational 

campaigns, reduces SOV mode share at the worksite by at least 15 percent (Herzog et al.,

2004). A recent report for U.S. DOE (EEA, 2008) estimated that if it reached the entire U.S. 

metropolitan workforce, a Best Workplaces for Commuters-type program could reduce 

total nationwide VMT by 0.2 to 1.1 percent, resulting in a reduction of 1.6 to 8.6 mmt CO2e 

annually.

The Moving Cooler study estimated that a nationwide voluntary outreach program targeted 

at employers, along with provision of regional support services, could reduce emissions by 

6 mmt CO2e in 2030, while a program that included trip reduction requirements for 

employers with at least 50 employees (coupled with regional support services) could 

reduce GHG by 14 mmt (Cambridge Systematics, 2009). These estimates bracket the 

higher end of the DOE estimate cited above.

Demand management programs can be implemented in a short period (one to two years to 

develop the administrative and institutional infrastructure), with maximum benefits being 

realized over the course of a few years with aggressive implementation. Factors such as 

higher fuel prices could increase the future effectiveness of demand management 

programs. Commuter demand management strategies overlap with some of the strategies 

discussed elsewhere in this section (e.g., ridesharing, telecommuting, compressed work 

week) and therefore the benefits of these strategies are not additive.

Cost-Effectiveness

The costs of demand management strategies include administrative costs to coordinate 

programs, which will be borne by employers and local or regional agencies; as well as 

capital costs for telecommuting equipment, vans, etc. Many demand management 

programs also involve transfer payments, such as transit fare subsidies provided by an 

employer or regional agency, or additional revenue gathered through parking charges, 
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which may benefit or impact different people in different ways. The FY 2008 budget for 

the Metropolitan Washington Council of Governments’ (MWCOG) regional Commuter 

Connections program was approximately $5 million, of which the largest expenses were 

$2.2 million for marketing and $1.0 million for employer outreach; other expenses included 

ridematching coordination and technical assistance ($0.6 million), a guaranteed ride home 

program ($0.5 million), a telework program, information kiosks, and evaluation. Other 

major State and regional TDM programs typically employ five to 10 full-time staff

equivalents, in addition to program expenses (Cambridge Systematics for Utah DOT, 

unpublished data). A 2002 review of the Federal Congestion Mitigation and Air Quality 

Improvement (CMAQ) Program, which is a common source of funding for trip reduction 

programs, identified annual costs ranging from $170,000 to $3.5 million per year for eight 

regional TDM outreach and promotion programs. Costs ranged from $20 million to $376 

million per year for regional employer trip reduction requirements such as California’s 

Regulation XV, including private-sector costs (TRB, 2002).

Subsidies or incentives for alternative modes represent a transfer payment rather than a 

net social cost, but nonetheless represent a public-sector expense. A regionwide program 

of transit subsidies of $30 per month, reaching 10 percent of the workforce, might incur a 

public-sector cost on the order of $30 million annually for a metropolitan area with a 

population of two million.

Cost-effectiveness estimates for employer TDM programs have varied widely, depending 

upon which costs are included and which types of programs are evaluated. Studies that 

only include public-sector program costs (and not private costs or transit subsidies) have 

produced the most favorable cost-effectiveness estimates. The Moving Cooler study 

estimated a direct cost-effectiveness of less than $40 per ton for mandatory trip reduction 

requirements coupled with regional support services, or a savings of nearly -$1,000 per 

tonne when vehicle operating cost savings are considered. MWCOG, which has 

sponsored some of the most rigorous evaluations of its TDM programs, has estimated the 

cost-effectiveness of the Commuter Connections program to be $0.01 per VMT reduced or 

$32 per ton CO2e (MWCOG, 2009). A calculation based on data in the 2002 CMAQ 

evaluation report developed a median cost-effectiveness estimate for worksite-based TDM 

projects of $180 per ton, considering only CMAQ program funding (i.e., public sector 

costs). However, there is considerable uncertainty in this estimate because it was backcalculated from cost-effectiveness data on criteria pollutant reductions, and also because 

individual project cost-effectiveness ranged from as low as $18 per ton to over $4,300 per 

ton (Cambridge Systematics, 2009).

Including private sector costs—such as costs to businesses of hiring a transportation 

coordinator, preparing TDM plans, etc., to comply with a TDM requirement, or hardware 

and software costs for telecommuting—produces much less favorable cost-effectiveness 

estimates. A review of studies of California’s trip reduction requirements estimated a 

typical cost-effectiveness of $10.30 per vehicle round-trip avoided, with the vast majority 

of costs borne by the employer (Apogee, 1994). At the commute average of 24 miles per

trip, current vehicle efficiencies, and inflating to 2008 dollars, this translates into about 

$1,400 per tonne of CO2e reduced ($2,000 with projected 2030 vehicle efficiencies). A 

different study that reviewed 22 employer TDM programs nationwide found average costs 
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of $2.66 per vehicle round-trip avoided (COMSIS, 1993); this provides a somewhat more 

favorable cost-effectiveness estimate of $350 per tonne of CO2e reduced for current 

vehicles, or $570 per tonne for 2030 vehicle efficiencies.

Feasibility

The primary barriers to worksite trip reduction are 1) developing and adopting programs 

that are both politically acceptable and effective; 2) ensuring that information and 

incentives reach the level of the individual traveler; and 3) factors such as transit 

availability, work schedules, personal preferences, etc., that make it difficult for 

individuals to switch modes. Requirements-based strategies such as trip reduction 

ordinances generally result in a broader base of employers being reached than voluntary 

and incentive-based demand management strategies, but are politically more difficult to 

implement. States and local jurisdictions that have adopted trip reduction requirements 

have typically not assessed penalties for failing to meet targets, although they may 

penalize employers or property managers for failing to implement an approved plan. This 

represents a compromise of program effectiveness in order to achieve political 

acceptability.

Reaching the majority of commuters requires a concerted outreach effort by a State, 

regional, or local agency, as well as the cooperation of businesses, schools, and other local 

stakeholders. The extent to which individuals are willing to shift modes will be affected 

by other factors such as fuel prices and the quality of alternatives provided. The 

effectiveness of trip reduction measures will therefore depend in part upon future land use 

patterns, transit investments, and/or pricing policies that support the use of alternative 

travel modes.

Telework

Definition

Teleworking, also known as 

telecommuting, is the practice of 

working from a location other than the 

regular workplace and using modern 

telecommunications and computer 

technology to bridge the resulting 

distance. In the U.S., the majority of 

teleworkers work from their homes, 

while a much smaller number of 

individuals work from telecenters—

smaller offices in closer proximity to the 

employee’s home with direct 

communications access to the regular 

workplace (U.S. EPA, 2005).

Telework

Benefits: Low-Moderate: 10-13 mmt CO2e in 2030

Direct Costs: High: $1,200-$2,300 per tonne

• Likely to decline in future

Net Included Costs: Moderate: $180 per tonne

Confidence in Estimates: High

• For benefits only – costs uncertain

Key Cobenefits and Impacts: Positive

• Mobility/quality of life benefits for workers 

(as long as telework is voluntary)

Feasibility: High

• Generally supported by private-sector trends

Key Policy Options:

• Employer outreach/technical support 

programs, tax incentives
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Estimates of the proportion of U.S. workers who telework on a regular basis have varied, 

but this number has clearly been rising substantially as the technology to support 

teleworking has advanced and fuel prices have risen. According to one recent national 

survey, the number of employees in the U.S. (i.e., those working for a company) who 

teleworked at least once a month has more than doubled since 2001, rising from about 8 

million in 2001 to 17 million in 2008. Including self-employed and contract workers, this 

figure has risen from 17 million in 2001 to 34 million in 2008. Of the employee teleworkers, 

72 percent – a total of 24.2 million Americans—worked remotely at least once a week in 

2008 (WorldatWork, 2009). This figure represents about 18 percent of the employed 

American workforce. The 2008 State of the Commute survey in the Metropolitan 

Washington, D.C. region estimated that 19 percent of regional employed workers 

teleworked at least occasionally, of which 56 percent teleworked at least once a week. 

Data from King County, Washington suggest that as of 2007, between 1.7 and 4.3 percent 

of commute trips on an average workday (varying by geographic area) were eliminated by 

telework, which implies a telework share of between 6 and 14 percent of workers at an 

average of 1.5 days per week (Washington State DOT, unpublished data). This again 

represents roughly a doubling since 2000, consistent with the WorldatWork survey, 

although with a somewhat lower proportion of workers teleworking.33

Employers may adopt either formal or informal policies to support telework. Technology 

investment may be required to support file transfer, home Internet and voice connectivity, 

and adequate hardware and software for employees, although some employers may work 

at home occasionally without the need for any additional infrastructure. The growth of 

telework has primarily been driven by the private sector, although Federal and State

government agencies have led the adoption of telework policies.

Magnitude and Timing of GHG Reductions

Employees who telework typically see a considerable decrease in daily VMT as a result of 

eliminating commute trips. However, evidence suggests that some of this decrease is 

offset through a “rebound effect.” This is because workers may make trips from home on 

their telework day (e.g., shopping, school drop-off) that were previously chained with 

their work trip. One review finds a lack of conclusive evidence on the magnitude of this 

effect, but estimates it to be about six miles per day (Kitou and Horvath, 2003), which 

would represent about one-quarter of the average worker’s round-trip commute distance. 

Also, VMT reductions may also be offset if teleworkers choose to live farther from their 

worksite, or continue working in a remote relationship if the employer relocates. Research 

in the U.K. has found that telework is quite likely to cause individuals to choose a location 

farther from their employer’s premises when moving (Lyons and Hickford, 1998). In 

general, telework favors more dispersed settlement patterns as well as irregular travel 

behavior, both of which work to the disadvantage of public transit (Garies and Kordey,

1999). Finally, telework energy and GHG reductions may also be partially offset by 

 

33The proportion of workers teleworking is likely to vary by region depending upon the types of 

jobs and the mix of employers in the region.
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increased home energy use; one study suggests that this may represent 11 to 25 percent of 

the travel energy savings (Handy and Mokhtarian, 1995).

Considering daily “rebound” travel but not considering broader relocation effects, VMT 

and emission reductions in 2008 attributable to current levels of teleworking by employed 

workers are estimated to be approximately 28.9 billion VMT and 10 to 13 mmt CO2e.34 

Telework has the potential to grow further and therefore generate additional GHG 

reductions. An examination of national survey data as well as surveys in Phoenix, 

Arizona and metropolitan Washington, D.C. suggests that telework has the potential to 

approximately double compared to current levels.35

While the growth of telework has primarily been the result a result of private sector 

initiative, a few public sector programs seem to have had some effect on encouraging 

private sector telecommuting adoption. One recent study in metropolitan Washington, 

D.C. estimated that telework in the region reduced CO2 emissions by about 0.5 mmt in 

2008, of which about 10 percent could be directly attributed to the Maryland and Virginia 

Telework program (MWCOG, 2009).

 If this were the case, the potential 

GHG benefits from additional teleworking would be about 10 to 13 mmt CO2e in 2030.

Cost-Effectiveness

The cost of teleworking to employers and employees typically is not negligible. 

Employers must determine which employees are eligible to telework; provide additional 

training and technical support for teleworking employees and their managers; provide or 

share the cost of purchasing computer equipment, communications equipment, and 

software for teleworking employees; and, in some cases, set up telecenters, or satellite 

offices for teleworkers’ use (U.S. EPA, 1992). According to a recent Federal study that 

surveyed 18 agencies, the total annual cost of teleworking ranges from $310 to $5,420 per 

 

34This estimate assumes a telecommuting rate of between 12 and 15 percent of employed workers, 

an average frequency of 1.5 days per week (Cambridge Systematics, 2007; MWCOG, 2008), an 

average round-trip length of 25 miles, a 75 percent prior SOV mode share, a 25 percent rebound 

effect, and an employed workforce of 134 million (2007 Bureau of Labor Statistics data).

35A 2006 study in Phoenix found that 31 percent of employers currently offer telework options to 

their employees; among the remaining 69 percent who do not, 37 percent would consider 

implementing a telework program in the future (WestGroup, 2006). Optimistically assuming that 

all employers who might consider doing so would actually do so, this would represent an increase 

from current teleworking levels of 120 percent. The metropolitan Washington State of the 

Commute survey found that 37 percent of employed nonteleworking respondents said that it 

would be possible for them to telework at least occasionally; over three-quarters said they would 

be interested in doing so. These interested respondents represent about 24 percent of all 

commuters (MWCOG, 2008). Similar to the Phoenix results, this represents a 126 percent increase 

in teleworking compared to current levels. The WorldatWork survey found that 38 percent of 

nonteleworkers claimed that at least part of their job could be done from home, and 50 percent 

rated a high interest in doing so, for a net of 19 percent of nonteleworkers or 16 percent of all 

employed commuters—slightly less than a doubling.
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employee, with a median cost of $1,088 per teleworker and an average cost of $1,920 per 

teleworker (GSA, 2006). With an estimated 16 to 20 million teleworkers in 2008 consistent 

with the benefit estimates provided above, this translates into a cost-effectiveness of about 

$2,300 per tonne CO2e reduced. In the Moving Cooler study, a set of employer TDM 

strategies that included telecommuting was estimated to cost $1,200 per ton (averaged 

over the 2010-2050 period) considering only direct costs (including telecommunications 

equipment and services), or $180 per tonne including vehicle operating cost savings to 

commuters.

It is likely that teleworking costs will continue to decrease in the future due to 

technological improvements and the ubiquitous adoption of broadband technology; 

however, projections of future telework costs could not be identified.

Cobenefits

A variety of cobenefits have been associated with telework, including enhanced worker 

productivity and morale, improved employee attraction and retention, and reduced 

overhead expenses (U.S. EPA, 1992; U.S. EPA, 2005; U.S. Congress, 1994). Telework can be 

considered a mobility enhancement, in the sense that workers have the option to perform 

activities without incurring the time and cost of travel. To an extent, with handheld 

devices and wireless-enabled facilities and vehicles, telework can be conducted on trains 

and in vanpools—thereby enhancing the productivity of travel. Teleworking may 

contribute to national security by enhancing the ability to operate during emergencies 

(telework.gov, 2008).

Feasibility

While telework has not yet reached its full potential, a number of barriers will ultimately 

limit the growth of teleworking. For example:

• Not all jobs are suitable for telework—many require face-to-face communication with 

clients or co-workers and would therefore be difficult to perform from home or a 

telecenter (U.S. EPA, 1992; U.S. EPA, 2005). The surveys cited above suggest that about 

35 to 40 percent of jobs not currently offered a telework option may be suitable for 

teleworking.

• For a number of reasons, some employers remain reluctant to offer employees the 

option of teleworking. Managers, for example, have expressed concerns over whether 

they would be able to effectively supervise work that is done remotely. Concern over 

information and data security has also made some employers hesitant to allow 

employees to telework (GAO, 2001; telework.gov, 2008).

• The additional cost of working from home may be prohibitive for some individuals or 

employers.

• Some individuals may not be interested in working from home. The surveys cited 

above, as well as other evidence, suggest that between half and three-quarters of all 
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workers offered the option of telecommuting (and whose job is amenable to it) would 

be interested in doing so.

Some government agencies have instituted outreach programs, technical assistance, or 

incentives (such as tax credits or recognition) to encourage and assist private businesses in 

adopting telework. Examples include Oregon’s business energy tax credit (which includes 

tax credits for telecommuting equipment), the Denver Regional Council of Governments’

RideArrangers program, and the Maryland and Virginia Telework program. The EPA’s 

Best Workplaces for Commuters program included telework as one of three “primary”

strategies that could be used to achieve certification under the program. The impact of 

public-sector programs on telework appears to be quite modest, however. For example, 

the 2007 State of the Commute survey in metropolitan Washington, D.C. found that only 

9 percent of telecommuters gained information about telecommuting through a regional 

program or advertising, compared to 55 percent through their employer and 36 percent on 

their own or through word of mouth (MWCOG, 2008). The office of Personnel 

Management has initiated actions to increase teleworking by Federal employees, as only 

about 5 percent currently telework (Orenstein, 2009).

Compressed Work Week

Definition

Compressed work weeks refers to a 

scheduling system whereby a regularly 

scheduled number of hours are worked 

in a shortened span of time. Often, 

compressed work weeks refer to 40 

hours worked over the course of only 

four days (4/40) or 80 hours worked 

over the course of nine days (9/80). 

Under a compressed work week, each 

day worked is often longer than a 

standard 9:00 a.m. to 5:00 p.m. schedule. 

The 4/40 and 9/80 schedules are among 

the most common forms of compressed 

work weeks, and they give employees 

one day off every week or every other 

week, respectively. Compressed work 

weeks have been applied successfully in 

the commercial, public, and 

manufacturing sectors for many years 

(U.S. EPA, 1992). With recent energy 

cost concerns some agencies and 

companies have expressed renewed interest in compressed work weeks; for example, in 

August 2008 the Utah State government implemented a mandatory four-day workweek.

Compressed Work Week

Benefits: Low: 3-7 mmt CO2e in 2030

• Low estimate = government 4-day workweek; 

high estimate includes doubling of private 

sector levels

Direct Costs: Low: Minimal

• Potential government cost savings from 

mandatory 4-day week

Net Included Costs: Not estimated

Confidence in Estimates: Moderate

• Magnitude of future private sector adoption 

uncertain

Key Cobenefits and Impacts: Positive/Mixed

• Mobility/quality of life benefits if voluntary; 

potential disbenefits if mandatory

Feasibility: Moderate

• Widespread acceptance unclear

Key Policy Options:

• Government “lead by example”

• Tax incentives for private sector adoption
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Magnitude and Timing of GHG Reductions

As long as employees drive less on their days off than they otherwise would on their 

normal commute, compressed work weeks will result in GHG reductions. One study 

found that workers on 4/40 schedules drove, on average, 20 fewer miles each week than 

did employees on standard schedules, while employees on 9/80 schedules drove 13 fewer 

miles (CARB, 1995). Another study reported that employees who had adopted 

compressed work weeks reduced their total commute VMT by roughly 15 percent (U.S. 

EPA, 1992). Using a U.S. average commute distance of 24 miles round-trip (from the 2001

National Household Travel Survey) and a “rebound effect” representing day-off travel of 

25 percent similar to telecommuting, the average VMT reduced per worker who formerly 

drove would be 18 miles per week for a 4/40 schedule or 9 miles per week for a 9/80

schedule.

Limited data is available on either the extent of current compressed work week 

participation or the potential for expanded participation. Surveys in the Phoenix, Arizona 

metropolitan area (which has a trip reduction ordinance in place) have found that 

8 percent of workers work a 4/40 week and 2 percent a 9/80 week (Valley Metro, 

unpublished data). Monitoring conducted for the Washington State Commute Trip 

Reduction law in different parts of King County (Seattle and suburbs) show that between 

1.6 and 3.1 percent of commute trips were avoided on any given day of the week as a 

result of workers working a compressed work week; this figure has changed little since the 

mid-1990s (Washington State DOT, unpublished data). Since 10 percent of workers 

working a 4/40 week would result in an average daily reduction of 2 percent of all 

commute trips, this data appears to be roughly consistent with the Phoenix data. If the 

Phoenix estimates of current participation are assumed, along with the weekly VMT 

reductions shown above and a prior SOV mode share of 75 percent, it is estimated that 

current use of the compressed work week reduced nationwide VMT by 7.0 billion and 

GHG emissions by 3.1 mmt CO2e in 2006.36

While compressed schedules could in theory be implemented very quickly, the extent to 

which compressed schedules might be further adopted—and the policy mechanisms or 

incentives for bringing this about—have received little study. Currently it is estimated 

that between 33 and 44 percent of private employers offer compressed work weeks.37

 

36This may be an overestimate, if companies in Phoenix and King County were more likely to 

implement compressed work weeks due to trip reduction requirements.

 If 

this amount were doubled and employees participated at the same rate, 14.0 billion VMT 

would be reduced each year leading to a greenhouse gas reduction of 4.4 mmt CO2e in 

2030. Compressed work weeks may be easier to implement in the public sector, which 

represents 14 percent of employment nationwide. If 75 percent of all government 

employees were required to take a 4/40 workweek, the resulting reduction would be 9.5 

billion VMT annually or 3.0 mmt CO2e in 2030. There may be a combined upper limit to 

37Based on survey data from Mellon Financial Corporation (2003) and Society for Human Resource 

Management (2005), as cited in Canadian Telework Association (2009).
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the number of employees that can either take advantage of a compressed work week or 

telework.

Cost-Effectiveness

The cost of implementing compressed work weeks to employers is typically minimal. 

Program development and administration typically make up the largest portion of the 

total cost. Compressed work weeks may also lead to increased facility and energy costs if 

the workplace remains open over longer hours (U.S. EPA, 1992; U.S. EPA, 1998; VTPI,

2008), but may lead to decreased costs if an agency-or company-wide policy is 

implemented that allows facilities to close entirely on certain days.

Cobenefits

Offering the option of a compressed work week can provide employees more flexibility in 

scheduling work and personal commitments. This can lead to increased job satisfaction, 

reduced stress, shorter commute time, and more free time on weekdays for employees. 

Employees may use this time to become more engaged in their families and communities, 

leading to stronger family support and a deeper level of civic engagement. However, not 

all employees will prefer longer work days or have compatible personal schedules. 

Therefore, if compressed work weeks are made mandatory, some employees are likely to 

be made better off while others are worse off.

Compressed work week schedules can support mobility objectives by relieving traffic 

congestion during peak periods, since participating employees work longer hours than a 

traditional 9 to 5 schedule. For example, peak-hour commuters saved an average of 1.08 

minutes in travel time on certain roadways after one large employer in the area 

implemented a 9/80 schedule for 260 of its employees (Kelley, 2006).

Feasibility

While some companies have successfully applied compressed work weeks for many years, 

there may be barriers to further adoption of compressed work weeks on both an 

individual and a firm level. The extent to which there is potential for additional adoption 

of compressed work weeks has not been widely studied, and may depend in part upon 

other factors such as fuel costs and congestion that drive interest in travel alternatives. 

Some particular barriers include:

• Increased facility and energy costs when workplaces need to operate or remain open 

over longer hours.

• Perception or evidence that employee productivity may decrease as a result of working 

longer days (U.S. EPA, 1992; U.S. EPA, 1998; VTPI, 2008).

• Incompatibility with some occupations, where employees are needed most during 

normal business hours and on every work day.
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• Perception or evidence that offering compressed work week scheduling will not yield 

emissions benefits in all cases. As with telework, it is possible that reductions in 

commute VMT will be offset by an increase in nonwork travel on the day-off or inhome energy use; or that over the longer term, employees with compressed work 

weeks will choose to move farther from their place of employment (U.S. Congress,

1994; VTPI, 2008).

• Lack of interest in compressed schedules if employees do not want to work longer 

hours on fewer days or find it disruptive of their schedules. As a result, mandatory 

policies may meet greater resistance than simply providing the option of a compressed 

schedule.

While Federal and State government agencies could take a leadership role in promoting 

compressed work weeks by offering such schedules to their own employees, there has 

been little investigation of potential incentives for encouraging greater adoption in local 

government or the private sector. Some options may include leading by example 

(government agency adoption); outreach and promotion, such as through broader 

employer TDM outreach programs; and tax credits or other incentives (such as recognition 

programs) for businesses who adopt or allow compressed work weeks.

Flexible Work Schedules

Definition

Flexible work schedules refer to 

employer-facilitated alternatives to a 

standard 9:00 a.m. to 5:00 p.m. work 

schedule for commuting employees. 

Employees are given more discretion 

over when they work so that they can 

accommodate other obligations and/or 

commute during less congested off-peak 

periods. Typically, so long as they are 

working a set number of hours each day, 

week, or month, employees with flexible 

work schedules are allowed to choose 

the times they begin and end work each 

day. Often employers that offer flexible 

work schedules require all employees to 

be present in the office for pre-specified “core” hours. Historically, employees in 

managerial and professional occupations have been the most likely to have flexible work 

schedules (Beers, 2000; BLS, 2005a).

Flexible Work Schedules

Benefits: Unknown

Direct Costs: Low: Minimal implementation cost

Net Included Costs: Not estimated

Confidence in Estimates: N/A

• No quantitative estimates developed

Key Cobenefits and Impacts: Positive

• Mobility/quality of life benefits

Feasibility: Moderate

• Ability to implement beyond current levels 

unclear

Key Policy Options:

• Government “lead by example”

• Tax incentives for private sector adoption
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Magnitude and Timing of GHG Reductions

The potential contribution of flexible work schedules to GHG mitigation in the 

transportation sector is determined by three factors: 1) the number of commuters who can 

adopt flexible work schedules; 2) mode shift achieved through deployment of flexible 

work schedule arrangements; and 3) the potential fuel savings these commuters would 

achieve by commuting off-peak as a result of flexible work schedule opportunities.

1. Number of Commuters – An estimated 27.5 percent of all full-time workers in the U.S. 

report having some flexibility in their work hours, down from 28.6 percent in 2001 

(BLS, 2005b). Given that the types of employees who can take advantage of flexible 

work schedules is limited, the emissions reduction potential is also limited until more 

categories of employees can gain flexibility through either technologies that facilitate 

remote work or new and emerging industries that can accommodate flexible work 

schedules. In the long term, as the economy becomes more and more service-oriented 

and handheld telecommunications and computer devices become more powerful and 

prevalent, more employees will likely be able to take advantage of flexible work 

schedules.

2. Modal Shift – In some cases, offering flexible work schedules appears to have 

increased transit use and/or ridesharing, ostensibly because workers were better able 

to coordinate their schedules with transit schedules or with others for ridesharing 

(FHWA, 2003; U.S. EPA, 1992; VTPI, 2008a). However, sometimes flexible work 

schedules have led to a decrease in the use of public transit and ridesharing among 

employees who had flexible work schedules, as existing ridesharing arrangements and 

transit schedules could no longer accommodate the employees’ new (e.g., perhaps 

earlier) schedules (FHWA, 2003; U.S. EPA, 1992; VTPI, 2008a). To minimize these 

impacts, employers, transit agencies, and rideshare organizations need to coordinate to 

attract and retain commuters with new schedules. Quantitative data on the magnitude 

or direction mode shift impacts of flexible work schedules is not available.

3. Potential Fuel Savings per Commuter – Employees who start work either earlier or 

later in order to avoid the worst peak period traffic congestion should experience a 

modest reduction in the duration of their commute trips, gasoline consumption, and 

GHG emissions. For example, three studies found savings of 5 to 9 minutes per trip for 

commuters with flexible schedules (Picado, 2000; U.S. EPA, 1998; Kelley, 2006). If the 

shift in trips due to flexible work schedules is significant enough to measurably affect 

congestion, fuel use by other commuters should be reduced as well. One study 

estimated that the first 3 percent reduction in peak period vehicular volume results in a 

35 percent decrease in minutes of delay per vehicle per mile resulting in associated fuel 

savings and GHG emissions reductions (Ungemah, 2008).

Because of the uncertainty in associating delay reductions with fuel savings, as well as the 

uncertainty in the potential future increase in the use of flexible work schedules, an 

estimate of GHG reductions could not be generated for this study. Furthermore, it is 

possible that workplaces may see an increase in building energy consumption and 

therefore GHG emissions after implementing flexible work schedules, if employees are 
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present over longer hours. The potential magnitude of this increase has not been 

estimated.

Cost-Effectiveness

The net cost of offering flexible work schedules to employers and the U.S. Government is 

minimal. The most significant cost typically incurred is the time required to develop and 

administer the program (U.S. EPA 1992).

Cobenefits

Flexible work schedules offer a potential host of cobenefits to employers, employees, and

society as a whole. Documented benefits include reduced absenteeism and tardiness; 

improved employee attraction, retention and morale; lower overtime costs; and, in some 

cases, increased employee productivity (U.S. EPA, 1992; VTPI, 2008a). One workplace, for 

example, saw employee productivity increase by 3 percent and average annual sick time 

decrease by 3.5 days per employee after it began offering flexible work schedules (U.S. 

EPA, 2003).

Feasibility

Thousands of government agencies, private sector companies, and organizations already 

offer flexible work schedules without problems. However, there may be significant 

barriers to further expansion of flexible work schedules, including:

• Commitments outside of work, such as driving children to and from school, prevent a 

significant portion of the labor force from changing their work schedules from the 

standard 9 to 5 (Picado, 2000);

• Resistance by management to offer flexible work weeks also prevents widespread 

implementation of flexible work schedules. Workplaces may also see an increase in 

facility and energy costs after implementing flexible work schedules if employees are 

present over longer hours; and

• Incompatibility with occupations that require that work begin and end at set times, 

such as teaching, nursing, emergency response, and manufacturing (Beers, 2000).

While Federal and State government agencies could take a leadership role in promoting 

flexible work schedules by offering such schedules to their own employees, there has been 

little investigation of potential incentives for encouraging greater adoption of flexible 

schedules in local government or the private sector. Some options may include leading by 

example (government agency adoption); outreach and promotion, such as through 

broader employer TDM outreach programs; and tax credits or other incentives for 

businesses who adopt or allow flexible schedules.
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Ridematching, Carpool, Vanpool

Definition

Ridematching, carpooling, and 

vanpooling—which may collectively be 

termed “ridesharing”—are typically

commuter-oriented strategies that seek 

to reduce VMT by increasing vehicle 

occupancies for work trips. Carpooling 

involves formal or informal 

arrangements between two or more 

people to share a ride in a private 

vehicle. Vanpools generally consist of 5 

to 15 people, including a volunteer 

driver-member, that elect to commute 

together in a van. Ridematching 

involves assisting travelers with finding 

suitable partners for carpooling or 

vanpooling through on-line databases or 

other mechanisms. New technologies 

utilizing the Internet and mobile phones 

are facilitating the expansion of ridesharing to nonwork trips, by allowing people to find 

suitable ride-sharing partners for trips that do not follow regular patterns. The concept of 

forming carpools on very short notice is known as “dynamic ridesharing.” Guaranteed 

ride home (GRH) programs, which reimburse employees for the cost of a taxi ride or rental 

car if they need to stay late or leave early in an emergency, are an important strategy to 

support ridesharing.

Carpooling represents the second most common commuting mode in the U.S., with a 

mode share of 12.2 percent according to the 2000 Census. However, the majority of 

carpooling is informal—over 60 percent is in two-person carpools with family members 

(Pisarski, 2006). Vanpooling has a much lower mode share, at 0.3 percent, and is primary 

done only in niche markets serving relatively long-distance commuters to large employers 

(the average vanpool trip length according to the 2001 National Household Travel Survey 

was 20.4 miles, compared to 12.2 miles for all work trips). Carpooling and vanpooling 

both reached a peak in the late 1970s with the oil crisis, then declined after 1980 as gasoline 

once again became cheap and less emphasis was placed on ridesharing programs (Evans 

and Pratt, 2005). The 2000 carpool commute mode share represents a decline from 

13.6 percent in 1990 and 19.8 percent in 1980.

Formal carpool and vanpool programs with the objective of increasing carpooling and 

vanpooling were implemented in the 1970s and widely studied in the 1970s and 1980s. 

Public sector support for these programs has varied, with more aggressive programs 

typically implemented in larger metropolitan areas with significant congestion problems. 

Regional vanpooling and ridematching programs are sometimes operated by MPOs, State

DOTs, or transit agencies. Local programs may be operated by municipalities, 

Ridematching, Carpool, Vanpool

Benefits: Low: 1-5 mmt CO2e in 2030

Direct Costs: Moderate: $80 per tonne (areawide 

rideshare matching)

• Higher for vanpools

Net Included Costs: Not estimated

Confidence in Estimates: Low-Moderate

Key Cobenefits and Impacts: Positive

• Mobility benefits through expanded commute 

options for workers

Feasibility: High

• Primary ridesharing barrier is providing 

adequate incentives (financial or otherwise) 

for commuters to participate

• Vanpooling market is limited

Key Policy Options:

• Funding for program support
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transportation management organizations (nonprofit employer associations focused on a 

particular geographic area), or large employers.

Magnitude and Timing of GHG Reductions

While program-specific evaluations have been conducted more recently, some of the most 

comprehensive and rigorous assessments of rideshare programs were performed in the 

late 1970s when these programs were being implemented as an energy reduction measure. 

An early evaluation of over 100 Federally funded carpool demonstration projects found 

that approximately one out of six employees exposed to a program submitted applications 

for carpool assistance; of these, 16 percent were influenced to join or expand carpools as a 

result of carpool matching efforts – representing just under 1 percent of total areawide 

employment. Including others who were influenced by marketing and promotion 

campaigns, 2.8 percent of the areawide commuter population in six evaluated areas had 

formed or expanded rideshare arrangements. These impacts translated into an estimated 

reduction of 0.3 percent of areawide work trip VMT for carpool matching, or 1.2 percent 

for broader programs (Wagner, 1978). Considering that work trips are just under onethird of total VMT, this represents a reduction in areawide passenger VMT of 0.1 to 

0.4 percent. A more recent literature review found that areawide ridesharing programs 

have led to a reduction in regional VMT ranging from 0.1 to 2.0 percent, with the authors 

developing a “maximum reasonable estimate” of 0.4 percent (Apogee, 1994). Considering 

that metropolitan VMT represents about four-fifths of total U.S. VMT, the cited range of 

0.1 to 0.4 percent would translate into a nationwide reduction in GHG from automobiles of 

about 0.9 to 3.7 mmt CO2e in 2030.

Vanpooling programs have been effective at reducing VMT in niche markets. At its peak 

in the late 1970s, about 15,000 vanpools operated in the U.S., with perhaps 10,000 

operating recently. The five largest U.S. transit provider programs in 2002 had from 204 to 

686 vanpools each, serving 2,400 to 7,200 average weekday passenger trips, with average 

vehicle loadings of 5.2 to 7.0 passengers (Evans and Pratt, 2005). Vanpooling is currently 

most prevalent in the Puget Sound region, where 2 percent of workers commute by 

vanpool, although this is in part a result of unique geographic and institutional factors, 

including water crossings with ferries with priority vanpool access, an extensive HOV lane 

system, and employer trip reduction mandate. One study estimated the theoretical market 

potential of vanpooling, based on the number of employees working for larger employers 

and commuting longer distances, to be about 5 percent (COMSIS and ITE, 1993, in Evans 

and Pratt, 2005).

Estimates of GHG emission benefits of vanpools must account for not only the reduction in 

single-occupancy VMT but also the increase in GHG emissions from van operations and 

the additional circuity of the trip. Furthermore, not all vanpool passengers are drawn out 

of single-occupant vehicles. When vanpools serve central area employment in corridors 

with heavy transit service, a substantial proportion of the vanpoolers may be drawn away 

from carpools or transit use. One study of an early program in Massachusetts found an 

average reduction in fuel use of 66 percent per participant (Evans and Pratt, 2005). The 

State of Connecticut’s vanpool program registered over 3,000 commuters in 2006, 

68 percent of whom are new to carpooling and transit. The State estimates that over 2.8 
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million passenger miles were reduced, resulting in the reduction of 1,250 tons of GHG 

emissions (State of Connecticut, 2007) or 0.42 tons per vanpooler. If this benefit were 

extrapolated to a hypothetical participation of 2 percent of the workforce in the 50 largest 

metropolitan areas, and netting out the current participation of 0.3 percent, the result 

would be 1.22 million new vanpoolers and a reduction in greenhouse gas emissions of 

0.5 mmt CO2e at current vehicle efficiencies. An alternative calculation using the same 

hypothetical 2 percent participation rate, combined with other generic assumptions about 

participation, mileage, and trips displaced, yields an estimated reduction of 1.3 mmt 

CO2e.

38

Ridesharing and vanpooling programs can be established quickly, within less than a year 

to develop appropriate ridematching tools and marketing/outreach materials. Successful 

programs should grow over time; however, maximum benefits should be realized within a 

few years.

Cost-Effectiveness

Ridesharing program costs consist primarily of administrative expenses along with 

marketing and outreach to promote the program. Results of carpool program evaluations 

from the 1970s found a project cost of $47 per new carpooler captured, or $0.024 per 

vehicle-mile reduced over the project life (Wagner, 1978), or $0.08 per mile in 2008 dollars. 

The 1994 literature review estimated a cost-effectiveness of $0.60 per vehicle round-trip 

avoided for areawide ridesharing programs (Apogee, 1994), which at an average of 12 

miles per one-way trip and inflating to 2008 dollars translates into $0.04 per vehicle-mile 

reduced. Based on this estimate the cost-effectiveness of areawide ridesharing programs 

would be about $80 per ton CO2e reduced. A net cost savings would be realized if private 

vehicle operating cost savings are included.39

Vanpool costs include purchase and operating costs for the vehicle as well as 

administrative expenses. Costs are offset by vehicle operating cost savings to individuals, 

meaning that vanpool programs can cover most, if not all, of their costs through 

 The administrative costs associated with 

rideshare matching programs are quite small compared to the costs that are required for a 

broadly effective marketing and outreach campaign, and are likely to have declined 

further with the advent of Internet technology.

 

38The alternative calculation assumes an average vanpool occupancy of six persons, one-way 

vanpool trip length of 35 miles versus 20 miles for previous solo drivers, average mpg of 12.0 for a 

van versus 20.6 for a car, 75 percent prior SOV mode share, and four days per vanpooler per week. 

The fuel savings per occupant is about 50 percent of their daily commute fuel use (0.97 gallons per 

vanpooler per day).

39At a round-trip length of 24 miles and a cost of $0.55 per mile per current Internal Revenue Service 

(IRS) guidance (as of January 2009), the typical commuter could theoretically save about $13 per 

day (although the actual savings may be less as this includes some fixed costs such as insurance). 

Even at half the IRS value per mile, user cost savings are still considerably greater than the $0.04 

per-mile cost estimate.
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subscription fees (Winters and Cleland, no date). Some State and regional agencies have 

subsidized vanpools to increase viability and ridership. For example, the Denver Regional 

Council of Governments’ FY 2009 budget includes about $500,000 for vanpool subsidies, 

and the Washington State DOT allocated $8.6 million to vanpool programs in the 2005-

2007 biennium. A review of vanpool programs found a median operating cost of about 

$10 per vehicle-mile in 1995 (Winters and Cleland, no date), which translate into a costeffectiveness of over $20,000 per tonne CO2e reduced; including vehicle operating cost 

savings to former drivers would reduce this figure somewhat but not entirely.40

Cobenefits

Ridesharing and vanpooling can constrain schedules and lengthen commutes, which may 

be considered a reduction in mobility. As long as participation is voluntary, however, 

travelers will not be made worse off by the program (i.e., the benefit of reduced costs more 

than offsets the additional travel time). The typical vanpooler sacrifices 10 to 12 minutes of 

travel time compared to driving alone, trading time off against other attributes such as 

reduced travel cost and stress (Evans and Pratt, 2005).

Feasibility

One significant barrier to ridesharing and vanpooling is the inconvenience to travelers 

associated with identifying appropriate travel partners and undergoing longer commutes. 

The popularity of ridesharing and vanpooling over time has been directly related to 

energy prices. As gasoline becomes more expensive, travelers are more willing to trade 

commuting time for reduced vehicle operation. The need for flexibility in work schedules, 

as well as to travel to other activities outside of work, also limits the potential for 

ridesharing; many ridesharers only do so a limited number of days per week when they 

are traveling from home to work and back.

The market for vanpooling is limited to longer-distance commuters at large employers or 

in large employment centers; as of the early 1990s less than 8 percent of the U.S. workforce 

both worked for a company with at least 100 employees and lived at least 15 miles from 

work (COMSIS and ITE, 1993). Employer vanpools would in most cases be operated by 

employers with hundreds or thousands of employees at a single location.

Another barrier involves ensuring that information about programs make it to the level of 

the individual traveler. An aggressive, regionally coordinated marketing and outreach 

program is generally required in order to ensure that information and programs are 

 

40The cost-effectiveness calculation assumes 2.8 billion new vanpool vehicle-miles per year 

(1.22 million new vanpoolers * 80 percent utilization (4 days/week) * 250 days/year operation/

6 persons/vanpool), or $28 billion in total new vanpool operating costs. Assuming 7.3 billion 

annual displaced VMT by auto drivers (1.22 million new vanpoolers * 75 percent former SOV * 

(250 * 0.8) days/year * 40 miles/round-trip), the vehicle operating cost savings would be $4.4 billion

at an average cost of $0.55 per mile, for a net cost-effectiveness of $18,800 per tonne.
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targeted at a broad population of workers. Financial incentives have been found to be a 

significant benefit in promoting ridesharing and vanpooling. For example, the San Diego 

Association of Governments and Pima Association of Governments (in Tucson, Arizona) 

provide $400 in monthly subsidies for vanpools meeting 80 percent occupancy. Other 

agencies have noted that providing gas cards has been an effective incentive for new riders 

to join carpools or vanpools.
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 5.6 Public Information Campaigns

Public information campaigns have been directed at affecting a number of aspects of 

consumer transportation behavior that influence GHG emissions. Information has been 

directed at affecting not only travel choices, but also driving habits, maintenance habits, 

and vehicle purchase decisions. Three sets of strategies are discussed in this section:

1. General mass marketing and individualized marketing campaigns, directed at 

affecting travel behavior;

2. Provision of information directed at affecting vehicle purchase decisions;41

3. “Eco-driving” efforts to teach efficient driving and vehicle maintenance practices.

and

Consumers make large and small decisions regarding transportation every day based on 

millions of messages they absorb from a variety of sources. These sources provide 

information that is largely biased and intended to sway opinion and behavior toward 

specific modes and products. Providing the public with unbiased, factual information on 

the full cost of driving and flying, as well as providing comprehensive information about 

the range of travel alternatives available and how to use them, may affect transportation 

choices and behavior in a way that reduces greenhouse gas emissions. For example, by 

raising public awareness of the full costs of transportation choices (not just the upfront 

costs associated with retail fuel prices or tickets for driving or flying, respectively), the 

public may elect to avoid trips or use alternate modes. In addition, people who are used to 

traveling by car may be unfamiliar with the alternatives available to them; for example, 

they may not be familiar with how to ride transit, or may not realize that they could reach 

their destination just as quickly on a bicycle as by driving. Finally, people may be 

unaware that they could easily save fuel by driving more smoothly or keeping their 

vehicle maintained properly.

Better informing the public of the costs of their choices, as well as the full range of 

alternatives available and how to use them, may influence consumer behavior in a way 

that leads to emissions reductions. Examples of how behavior may be affected include 

traveling by alternative modes; “chaining” trips together; forgoing trips altogether or 

shifting them out of highly congested periods; purchasing more efficient vehicles; and 

driving more efficiently.

 

41Vehicle purchase is not technically a “travel activity” strategy but is included in this section for 

convenience.
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Information on Travel Choices

Description

Two programs—It All Adds Up to Cleaner 

Air and Best Workplaces for Commuters—

are directed at affecting travel choices to 

reduce fuel consumption and emissions. 

It All Adds Up to Cleaner Air emphasizes 

simple and convenient actions that 

consumers can take. The Best Workplaces 

for Commuters program (discussed in 

Section 5.5, Commute Travel Reduction) 

provides public recognition for 

employers that offer their employees 

commuter-related benefits. Public 

information has also been an important 

component of local and regional 

commuter TDM programs. Mass 

marketing campaigns have been used to 

inform commuters about the availability 

of travel alternatives and incentives and 

direct them to more specific information 

on options for their commute.

A new form of public information campaign, known as individualized marketing, shows 

promise for reducing GHG emissions through travel behavior changes. Individualized 

marketing programs utilize survey tools to identify individuals who are open to 

alternative modes of transportation, and provide individualized contact and customized 

information on modes favored by targeted respondents. The concept of individualized 

marketing was first developed and tested in Europe and Australia. U.S. pilot projects have 

been undertaken in selected neighborhoods in a number of cities including Bellingham, 

Washington; Cambridge, Massachusetts; Cleveland, Ohio; Durham, North Carolina; 

Portland, Oregon; and Sacramento, California (FTA, 2006; ACT, 2008).

Magnitude and Timing of Greenhouse Gas Reductions

Public information campaigns directed at travel behavior have had mixed success, with 

individualized marketing showing somewhat greater promise than mass marketing as a 

travel and GHG reduction strategy. The benefits of mass marketing programs are difficult 

to quantify, but appear to be modest. Two factors must be determined – how many people 

recalled the message of the campaign; and of those, how many switched changed their 

travel behavior as a result. Public information campaigns that have focused solely on 

better informing the public of the environmental costs of their transportation choices (such 

as driving alone) have not always produced noticeable behavioral changes (Tordella, 

2007). Providing motorists in The Netherlands with information on the environmental and 

Information on Travel Choices

Benefits: Low: 6 to 9 mmt CO2e in 2030

Direct Costs: Moderate-High: $90 to $270 per 

tonne

Net Included Costs: Not estimated

Confidence in Estimates: Low

• Benefits of mass marketing difficult to 

quantify; individualized marketing still in 

demonstration stages

Key Cobenefits and Impacts: Positive

• Improved awareness and understanding of 

travel options

Feasibility: High

• Primary barrier to mass marketing is funding

• Broad-scale acceptance of individualized 

marketing unproven

Key Policy Options:

• Larger-scale demonstration programs for 

individualized marketing
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economic costs of driving had no effect on their travel behavior over an eight-week period, 

although it was found to have increased their general environmental awareness (Tertoolen 

et al., 1998). Program staff have been unable to document the benefits of It All Adds Up to 

Cleaner Air, in part because of the difficulty of separating the campaign’s effects from the 

many other factors that affect people’s travel behavior. A public information campaign in 

Atlanta in 1998, designed to raise awareness of air pollution and its health consequences 

and decrease the amount of driving on ozone alert days, was found to significantly reduce 

VMT on these days (Henry and Gordon, 2003), although it is not clear that such short-term 

changes could be sustained into longer-term behavior changes that reduce GHG.

At least one study has examined the impact of mass marketing campaigns specifically on 

commuter behavior. An evaluation of the Commuter Connections program in the 

Washington, D.C. region used a regional survey to examine the impacts three public 

information strategies – a mass marketing campaign, information kiosks, and a Commute 

Operations Center to provide information and other tools (ridematch lists) for alternative 

modes (MWCOG, 2009). The Mass Marketing campaign was estimated to result in 

35 percent recall and 0.1 percent mode shift for those who recalled the message (this mode 

shift compares with a 1 percent mode shift in an earlier 2004 survey). The survey further 

found that only 19 percent of shifters permanently shifted modes. The result was an 

estimated regional emissions reduction of 8,200 tons of CO2 in 2008. InfoExpress kiosks in 

the District of Columbia and Northern Virginia were estimated to reduce CO2 emissions 

by 6,200 tons, and the Commute Operations Center was estimated to reduce CO2

emissions by 83,000 tons. Despite the uncertainty in survey results it probably can be 

concluded that the annual regional impacts of all information strategies were on the order 

of 0.1 mmt CO2e. If this impact were extrapolated to the 50 largest metropolitan areas in 

the U.S. (representing just over half the country’s population), the benefits would be 

approximately 3.0 mmt CO2e annually.

Individualized marketing shows potentially greater promise as a travel and GHG 

reduction strategy. Pilot individualized marketing programs that target both work and 

nonwork travel have reported VMT reductions in the U.S. of 2 to 8 percent for targeted 

populations (FTA, 2006), and GHG reductions should correspond. The net effect across 

the entire population will depend upon the proportion of the population that is: 1) willing 

to participate in individualized marketing programs, and 2) willing and able to make 

meaningful and permanent travel behavior shifts. No evidence is currently available on 

these parameters. However, if individualized marketing campaigns could effect a 

5 percent VMT reduction in between 5 and 10 percent of the U.S. population, the net effect 

would be an 0.25 to 0.5 percent reduction in VMT or 3 to 6 mmt CO2e in 2030. Combining 

the individualized marketing and mass marketing impacts provides an overall estimate of 

6 to 9 mmt CO2e annually.

As noted, public information campaigns can be implemented in a short timeframe but 

must be sustained over time in order to have a lasting impact. There impact is likely to be 

greater under conditions of higher fuel prices, where travelers have more of an incentive to 

change their behavior in a way that reduced fuel consumption and emissions.
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Cost-Effectiveness

The costs of public information campaigns can be modest in relation to investment in 

transportation infrastructure or services. Costs for broadcast advertising are not 

insignificant, however, and costs for individualized marketing may also be significant if 

expanded to a broad population base. Campaign developers must know their audience 

well enough so that they can deliver a message that will be understood and that is capable 

of impacting behavior, which requires a substantial time investment. The FY 2008 budget 

for MWCOG’s Commuter Connections program included $2.2 million for mass marketing, 

nearly half the total program budget. With an estimated emissions reduction of 8,200 tons, 

this works out to a cost-effectiveness of about $270 per ton. Other major metropolitan 

areas have invested similar amounts in marketing—for example, the Atlanta Regional 

Commission budgeted $2.6 million in FY 2009 for “advertising and public relations” to 

support its regional TDM program.

For individualized marketing campaigns, one source describing Portland’s SmartTrips 

program suggests that a typical 20,000-household program costs $570,000, or $29 per 

household (Pedestrian and Bicycle Information Center, no date). An individualized 

marketing program in Seattle cost $10-19 per participant (ACT, 2008). Assuming a 

program cost of $15 per participant, a VMT reduction of 5 percent per participant, and 

7,500 annual per-capita VMT,42

Cobenefits

cost-effectiveness can be estimated to be approximately 

$0.03 per VMT reduced or $90 per ton CO2e.

Public information campaigns will provide benefits to travelers and consumers by helping 

them make more informed choices, which should increase welfare. Individualized 

marketing helps travelers better understand the travel options available to them, meaning 

that it may help improve mobility as well as reducing the costs of travel for individuals. 

Documented air quality benefits from regional mass marketing campaigns include a 

reduction of 0.032 tons per day NOx and 0.017 tons per day VOC in the Washington, D.C. 

region (MWCOG, 2009).

Feasibility

Public information campaigns have been implemented in the past and do not face any 

significant feasibility constraints. For individualized marketing campaigns, institutional 

capability (as well as potential customer interest) to implement this type of program on a 

broad scale, reaching a large segment of the population, has not yet been determined.

 

42A number lower than the national average of about 10,000 VMT per capita was selected to reflect 

that these programs have been conducted in more densely populated urban neighborhoods which 

are likely to exhibit lower VMT per capita.
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Information on Vehicle Purchase

Description

The U.S. EPA and Department of Energy 

(DOE) have spearheaded a number of 

the Federal government initiatives aimed 

at influencing consumer decisionmaking behavior related to consumer 

products, including vehicles (EEA, 2008). 

Transportation-focused programs 

include:

• SmartWay, a voluntary collaboration 

between EPA and the freight 

industry to reduce greenhouse gases 

and air pollution by conferring a 

special designation to vehicles that 

perform well;

• EPA’s Green Vehicle Guide, first launched in 2001 to give consumers information 

about the environmental performance of different vehicles using a rating system; and

• The DOE’s Web site, www.fueleconomy.gov, a similar effort that provides visitors 

with readily accessible, nontechnical information on fuel economy ratings and fuel 

economics, estimated annual petroleum consumption, GHG emissions data, air 

pollution scores, and gas-saving tips for vehicles 1985 through the present. The site 

also contains a variety of fact sheets explaining why fuel economy is important.

Magnitude and Timing of Greenhouse Gas Reductions

Public information campaigns appear to have had some success at reducing fuel 

consumption. Fuel economy data has, in the past, had more of an impact on behavior than 

information on other environmental concerns (ORNL, 2003). DOE credits 

www.fueleconomy.gov with inspiring behavior changes that reduced U.S. petroleum 

consumption by about 200 million gallons in 2006, which would have resulted in a 2 mmt 

reduction in CO2 emissions for the year (DOE, 2007). EPA has also quantified the success 

of its SmartWay program. Nationally, over 2500 partners, including ones with large 

trucking operations like Wal-Mart Stores and Tyson Foods, have joined the SmartWay

program. According to EPA, since 2004, SmartWay Partners have saved a total of 16 

million metric tons of CO2, 1.4 billion gallons of diesel fuel, and $3.5 billion in fuel costs. 

Most public information campaigns can likely be implemented within one or two years or 

less, but must be sustained over time to have a lasting impact. Programs that affect vehicle 

purchases will have an impact that starts low but grows over time, with most benefits 

being realized within a 15- to 20-year timeframe as the vehicle fleet turns over.

Information on Vehicle Purchase

Benefits: Low: 2-5 mmt CO2e in 2030

• Based on quantified benefits of existing 

campaigns

Costs: Not estimated

Confidence in Estimates: Moderate

Key Cobenefits and Impacts: Positive

• Improved information for consumers resulting

in potential cost savings

Feasibility: High

Key Policy Options:

• Funding for education/outreach programs
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Cost-Effectiveness

The costs of public information campaigns can vary widely, but can be modest in 

comparison to emissions reduction strategies that require investment in infrastructure or 

services. Costs are dependent on how the information is disseminated. If the information 

can be distributed on a web site that has already been established (such as 

www.fueleconomy.gov), then overall costs will be relatively low. Broadcast advertising is 

more expensive. Establishing a channel to deliver information to the public on the real 

costs of travel is useful for delivering new or different messages to the same audience later. 

Once a campaign becomes known and establishes trust with the public, then it can be 

adapted and enhanced with marginal effort. Programs such as SmartWay and Best 

Workplaces for Commuters have relied on direct outreach to target populations (shippers, 

employers) which requires somewhat more significant program resources, primarily to 

support the staff time required to conduct the targeted outreach.

Cobenefits

Public information campaigns will provide benefits to travelers and consumers by helping 

them make more informed choices, which should increase welfare and reduce 

transportation-related costs. EPA’s SmartWay program has been credited with saving 

truckers money and reducing fuel consumption and air pollution. EPA estimates that in 

2004–2005, SmartWay projects saved 298 million gallons of fuel per year, saving truckers 

$850 million in fuel costs, and reduced NOx emissions by 25,000 tons and PM by 841 tons.

Feasibility

Public information campaigns have been implemented in the past and do not face any 

significant feasibility constraints.
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Driver Education/Eco-Driving

Definition

Eco-driving programs are directed at 

increasing vehicle fuel efficiency by 

affecting both driver behavior and 

vehicle maintenance.

• Driver Behavior – Driver training 

programs are used to teach new or 

experienced drivers how to alter 

their driving behavior to increase 

their fuel efficiency and thus reduce 

greenhouse gas emissions. This 

includes measures such as avoiding 

rapid accelerations and braking, 

avoiding speeding, proper gear 

shifting, and the usage of cruise 

control. In-vehicle instrumentation 

to provide real-time feedback on fuel 

economy can be used as a standalone eco-driving strategy, or in 

combination with driver training 

programs.

• Vehicle Maintenance and Equipment – Public awareness campaigns or other methods 

can be used to teach drivers how to properly maintain and equip their vehicle to 

achieve the greatest fuel efficiency and to lower greenhouse gas emissions. Such 

measures include proper tire inflation, lower rolling resistance tires, and lower 

viscosity motor oil.

Eco-driving programs are becoming common in Europe, with some of the most extensive 

programs being implemented in the Netherlands due to their lack of compliance with 

European air quality standards. The Netherlands program is called the New Driving 

Campaign, and was started in 2000 by the Ministry of Transport, Environment, and 

Economic Affairs. It aims to increase fuel efficiency through driver training and energy 

usage labels for tires and vehicles (ICF, 2008). In Sweden, eco-driver training became 

mandatory in driver education program for new drivers starting in 2006, and for taxidrivers’ licenses in 2007. There are no known mandatory eco-driving training programs in 

the U.S., although there are some public education campaigns such as 

www.DriveSmarterChallenge.org, which is being led and evaluated by the Alliance to 

Save Energy. Also, the Michigan Department of Environmental Quality (DEQ) is currently 

evaluating a proposed eco-driving program.

Driving practices can also have an impact on truck fuel economy. Even highly 

experienced drivers can enhance fuel economy using techniques such as cruise control, 

Driver Education/Eco-Driving

Benefits: Moderate-High: 18-94 mmt CO2e in 2030

Direct Costs: Not estimated

Net Included Costs: Net Savings: $0 to -$230 per 

tonne

Confidence in Estimates: Low-Moderate

• Benefits will depend upon widespread and 

sustained implementation over time

Key Cobenefits and Impacts: Positive

• Reduction in air pollutants and vehicle 

operating costs

Feasibility: Moderate

• Unproven ability to implement widespread 

education/training campaigns

Key Policy Options:

• Requirements for in-vehicle feedback 

instrumentation and revisions to driver 

education curricula

• Funding for education programs
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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coasting whenever possible, limiting use of cab accessories, smooth and gradual 

acceleration, progressive shifting (up shifting at the lowest rpm possible), reducing 

maximum freeway speeds, and limiting truck idling and stops. Driver training can reduce 

fuel consumption by 5 percent or more, saving more than $1,200 in fuel costs and 

eliminating about eight metric tons of greenhouse gas emissions per truck each year. 

Driver training may generate larger efficiency gains for vehicles in urban service, where 

shifting practices have more influence on fuel economy (U.S. EPA, 2004).

Magnitude and Timing of GHG Reduction

Two U.S. studies have been performed comparing fuel consumption under standard 

versus more aggressive driving cycles. One, by the U.S. EPA, found that aggressive 

driving can reduce gas mileage by 33 percent at highway speeds. Another, by the 

California Air Resources Board, found an increase in fuel consumption of 5 to 14 percent 

for a more aggressive urban driving cycle (IEA, 2005). However, these studies did not 

assess the actual effects of eco-driving campaigns on driver behavior.

Eco-driving campaigns have been directly evaluated in Europe. Short-term savings have 

been found to be higher than long-term savings, since effects of education wear off over 

time. An eco-driving course in Europe found that reductions in fuel consumption of 15–

25 percent were quite possible for drivers in the first year. However, this improvement 

typically decreases as old driving habits return, so subsequent years had an average of 

6.3 percent reduction in fuel consumption (Ecodrive, 2007). Evaluation of the Netherlands 

program found a 10 percent overall long-term reduction from the program (Lucke and 

Hennig, 2007). Another European source suggests an overall potential reduction from 

cars, buses, and trucks of 5 to 15 percent. This source suggests a reduction of 5 percent 

over the long term only through education programs, or 5 percent only with in-car 

instrumentation to provide driver feedback; combined effects will be greater (Crist, 2008). 

Results from European studies may not be directly transferable to the U.S., however. Since 

“upshifting as soon as possible” is one eco-driving strategy, U.S. benefits are likely to be 

lower than European benefits because of the greater prevalence of automatic transmissions 

in the U.S. The effects of other factors, such as different engine technologies, vehicle 

weights, and driving conditions, have not been investigated in such a way as to inform 

how European study results could be adjusted to U.S. conditions.

Regarding the benefits of maintenance and equipment practices, the U.S. EPA and DOE 

cite fuel savings of 4 percent for keeping an engine properly tuned, 3 percent for keeping 

tires properly inflated, and 1 to 2 percent for using the recommended grade of motor oil 

(DOE and EPA, 2009). IEA (2005) estimates that properly inflating tires could reduce total 

U.S. fuel consumption from road transport use by 1.6 percent, accounting for program 

implementation effectiveness.

The IEA source suggests a “consensus estimate” of a 5 percent reduction in total on-road 

fuel use in the U.S., as a result of eco-driving campaigns aimed at both driving and 

maintenance habits (IEA, 2005). This would equate to 94 mmt CO2e in 2030. Another 

national estimate of potential benefits in the U.S. suggests that eco-driver training 

programs could reduce GHG emissions by 11 to 53 mmt CO2e and that public education 
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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campaigns to encourage proper vehicle maintenance could reduce emissions by 7 to 

17 mmt CO2e annually by the year 2020 (Cambridge Systematics, 2009).43

Eco-driving programs can begin immediately and can be modeled after current programs 

already in place in Europe. Depending on the methods of implementation, it may take 

some time to reach all drivers and gain the maximum amount of benefits. For example, if 

eco-driver training programs are provided only to new drivers it is possible to reach about 

2 percent of the driving population each year. The benefits are proportional to the number 

of drivers reached and providing training to existing drivers will greatly speed the 

realization of benefits. While in-vehicle feedback instrumentation will increase the 

effectiveness of eco-driving programs (and likely provide some benefit even in the absence 

of such programs), the benefits will only be realized over a 15- to 20-year period as policies 

are adopted to require instrumentation in new vehicles, and the vehicle fleet turns over. 

Currently, only a few vehicles, primarily hybrids, provide in-vehicle feedback to drivers 

on the efficiency of their driving habits.

 The combined 

results for both programs would be a range of 18 to 70 mmt CO2e reduced.

Cost-Effectiveness

According to one European study (Lucke and Hennig, 2007), cost-effectiveness may range 

from 17 to -128 euros per tonne CO2e ($22 to $-163 per tonne) for eco-driving programs 

and 5 to -98 euros per tonne CO2e ($6 to $-124 per tonne) for optimal tire pressure 

measures. This range is mainly a cost savings because the benefits of reduced fuel usage 

outweigh the costs of the programs. Another European source (Crist, 2008) concurs with 

this range and gives a cost savings of 69 euros per tonne CO2e ($88 per tonne) for 

providing eco-driver training to new drivers and 45 euros per tonne CO2e ($57 per tonne) 

by providing it to existing drivers.

The Michigan Climate Action Council and Center for Climate Strategies (2008) estimate 

that an eco-driver training program that reaches about 3 percent of the Michigan driving 

population per year will cost $93.3 million per year to implement. Including fuel savings 

they estimate a cost-effectiveness of -$211 per tonne CO2e by 2020. A public information 

campaign to encourage proper tire inflation that reaches 1.2 percent of the Michigan 

driving population per year would cost $2.7 million per year to implement, which yields a 

cost-effectiveness of -$233 per tonne CO2e by 2020.

 

43The eco-driving estimates assume 10-50 percent of the population is reached, half of those that are 

reached will implement the new driving behaviors, and those that do will realize a 19 percent 

individual fuel use reduction. The range of population reached accounts for different levels of 

implementation, such as requiring eco-driver training courses to only half of newly licensed 

drivers versus requiring the courses to all new drivers and some current drivers. The vehicle 

maintenance estimates account for different mixes of implementation methods, such as public 

awareness campaigns, new driver education, and working with the tire industry, oil change 

shops, and refueling stations. These calculations assume 12.5 percent individual fuel use 

reduction, 20-50 percent of the population is reached, and 25 percent of those that are reached will 

implement the vehicle maintenance suggestions.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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Cost-effectiveness considering direct implementation costs alone was not estimated in the 

Moving Cooler study. Considering vehicle operating cost savings, cost-effectiveness was 

estimated to range from -$50 to -$190 per tonne, cumulatively over the 2010-2050 period. 

These estimates are in the same range as the European and Michigan estimates.

Cobenefits

Eco-driving can have benefits for reducing air pollution, both as a result of smoother 

driving patterns with less hard acceleration, and improved vehicle maintenance. The 

focus of eco-driving studies has been primarily on fuel savings and GHG reductions, and 

air pollutant emission reductions have not been quantified.

Feasibility

Eco-driving programs are very feasible and have no technological barriers. European 

programs have already demonstrated the feasibility and effectiveness of these programs. 

Outreach to the driving public can be in the form of training courses, which become a 

portion of mandatory driver education before new drivers can obtain a driver’s license or 

before existing drivers can renew their licenses. Outreach to the driving public for vehicle 

maintenance can be incorporated into the training courses mentioned above, but more 

often takes the form of a public information campaign. In the U.S., EPA’s SmartWay has 

included information on eco-driving practices targeted at truck operators.

The primary barriers to eco-driving programs in the U.S. are likely to be institutional; in 

particular, revising State driver training curricula to incorporate eco-driving practices, and 

working with automobile manufacturers to incorporate in-vehicle feedback systems in 

new cars. Incentives may be needed to encourage private truck fleet operators to promote 

eco-driving practices by enrolling drivers in training programs and providing information 

and feedback. UPS is undertaking an initiative to test the use of vehicle instrumentation to 

provide feedback to drivers on how to reduce fuel use and otherwise improve their 

driving practices (e.g., for greater safety) (UPS, 2009).

No data is available on the effectiveness of training new versus existing drivers, but as 

previously noted, education must be continuously provided or habits can erode over time. 

It is therefore not clear whether it will be feasible to sustain the initial gains observed from 

eco-driving programs. The interest in consumers in making use of this information on a 

broad scale also has not been determined.
Transportation’s Role in Reducing U.S. Greenhouse Gas Emissions: Volume 2

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Appendix A. Methodological

Issues

This Appendix provides a discussion of some key methodological issues 

underlying the data and conclusions presented in this report, including:

• Criteria for inclusion of literature in this report—how the research team 

determined which sources to use and cite;

• Basis for calculating greenhouse gas emission reductions;

• Treatment of cost-effectiveness—what is included and not included in the 

cost and cost-effectiveness estimates;

• Analysis of life cycle emissions from fuels; 

• Induced demand——the phenomenon of increased travel in response to 

improvements in transportation conditions, which affects the reported 

benefits of some of the system efficiency and travel activity strategies;

• Price elasticities and vehicle operating costs—the parameters used to 

estimate the impacts of transportation system pricing measures; and

• The rebound effect—the extent to which increased travel (due to reduced 

cost per mile of driving) may offset vehicle fuel efficiency gains.

Criteria for Inclusion of Literature in This Report

This report draws from over 400 references that provide information either 

directly or indirectly related to the impact of transportation strategies on 

greenhouse gas emissions. A broad range of literature is available on 

transportation GHG emissions and related topics (such as vehicle travel 

reduction, air pollutant emissions reduction, and energy savings), which is of 

varying usefulness and validity. The research team that produced this report 

applied its professional judgment to select studies that appear to have sound, 

unbiased methodology and credible results. Sources include: 

• Peer-reviewed academic articles published in journals or as conference 

proceedings;
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• Research documents prepared for research programs such as the National 

Cooperative Highway Research Program (NCHRP), Transit Cooperative 

Research Program (TCRP), or Transportation Research Board (TRB);

• Government reports and other publications prepared by Federal, state, or 

local agencies such as U.S. Department of Transportation (DOT), U.S. 

Environmental Protection Agency (EPA), U.S. Department of Energy (DOE), 

or State DOTs;

• Internet sites that are credible sources (such as a government agency or 

think-tank) and have data than can be validated; and

• Research reports from private and non-profit organizations, as long as they 

appear to be of sound methodology and unbiased.

It is difficult to assert than any source is truly unbiased, since all authors and 

research sponsors work from a particular personal or organizational viewpoint. 

However, it is important that the methodology used in the source is presented 

in a transparent manner, so that any potential biases can be determined and the 

results of the analysis appropriately caveated if necessary. The research team 

excluded any sources that appear to make unreasonable assumptions or apply 

questionable methodologies. Sources which are not peer-reviewed received 

particular scrutiny. 

A Note on the Moving Cooler Study

A number of the strategies discussed in the system efficiency and travel 

behavior chapters cite results from the Moving Cooler study. This study 

(Cambridge Systematics, 2009) conducted a comprehensive evaluation of a 

broad range of transportation measures that influence greenhouse gas 

emissions by reducing the amount of driving, reducing fuel consumption, and 

improving the performance of the transportation system. It was intended as a 

complement to previous studies, such as the 2007 McKinsey & Company and 

Conference Board report, Reducing U.S. Greenhouse Gas Emissions: How Much at 

What Cost?, which primarily focused on technology and fuels strategies in the 

transportation sector. 

The Moving Cooler study is not the only study to address travel activity and 

system efficiency strategies, and other literature is cited in this report as 

available. However, it does help to fill a critical knowledge gap and is unique 

in its comprehensive and consistent treatment of these strategies. The report 

was developed between August 2008 and July 2009 through a collaborative

process that included extensive review by a wide range of stakeholder groups, 

including the Environmental Protection Agency, Intelligent Transportation 

Society of America, Shell Oil, Urban Land Institute, Federal Transit 

Administration, Natural Resources Defense Council, Federal Highway 

Administration, American Public Transportation Association, and the 
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Environmental Defense Fund. In addition, the study was peer-reviewed by a 

panel of three leading transportation researchers.

Moving Cooler developed GHG reduction estimates for each of 50 strategies for 

the years 2020, 2030, and 2050, as well as cumulative reductions over the 2010 to 

2050 period. In addition, costs were estimated for each year and cumulatively 

over this period. Both direct implementation costs and vehicle operating cost 

savings were estimated. In some cases, more detailed data developed as part of 

the Moving Cooler study was referenced or utilized in this report that was not 

presented in the final Moving Cooler report. However, the findings referenced 

are consistent with those presented in the final Moving Cooler report.

In addition, the cost-effectiveness results (measured in $/tonne GHG reduced) 

in this Report to Congress that reference the Moving Cooler study data were not 

presented as cost-effectiveness numbers in the Moving Cooler report, but rather 

were obtained by dividing total costs by total GHG benefits. These costeffectiveness figures must be interpreted with caution, as discussed below in 

“treatment of cost-effectiveness.” Finally, Moving Cooler uniquely accounted for 

induced demand effects. These are also discussed in more detail below under 

“induced demand.”

One difference between the Moving Cooler study and this report is that rather 

than using the Annual Energy Outlook (AEO) 2009 Reference case as a baseline 

for future transportation GHG emissions (as described below), the Moving 

Cooler study developed its own baseline GHG forecasts for on-road sources 

using projections of annual fuel efficiency and VMT increases. Total on-road 

transportation GHG emissions in 2030 are forecast in Moving Cooler to be 1,688 

million metric tons carbon dioxide-equivalent (mmt CO2e) emissions under the 

baseline scenario, compared with 1,593 mmt CO2e based on the AEO 2009 

Reference Case—a difference of six percent. Since most of the Moving Cooler 

results were developed on a percentage basis (i.e., a percent reduction in VMT 

and emissions was estimated, then applied to the total baseline emissions), the 

implication is that if the Moving Cooler methodologies were applied to the AEO 

baseline GHG emissions used in this report, the GHG benefits (tons reduced) 

would be about six percent smaller. This is not true for certain strategies that 

do not affect VMT, such as truck idle reduction, for which emission reductions 

were calculated on an absolute basis.

Basis for Calculation Emission Reductions

For all strategies analyzed in this report, baseline GHG emissions and the 

baseline level of alternative fuel use through 2030 are taken from the April 2009 

Annual Energy Outlook (AEO) Reference case developed by the DOE. The 

AEO forecast accounts for the expected impacts of the Renewable Fuels 
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Standard (RFS) established under the Energy Independence and Security Act 

(EISA) of 2007, as well as the Corporate Average Fuel Economy requirements 

promulgated under EISA in November 2008, but not any changes to either of 

these standards that were being discussed during 2009. Adjustments were 

made to the Reference case by Cambridge Systematics to account for 

greenhouse gas emissions in addition to CO2, including nitrous oxide (N2O), 

methane (CH4), and hydrofluorocarbons (HFC). The effect is to increase total 

CO2e by about six to seven percent from the AEO Reference case. Forecast 

emissions through 2030 as based on the AEO Reference case are presented in 

Volume 1, Section 2.0. In cases in which 2050 benefits are presented, the 

transportation sector’s 2030 baseline emissions per the AEO Reference case are 

used as a baseline. 

Market penetration, GHG reductions, and fuel savings for low-carbon fuels and 

vehicle energy efficiency strategies are all calculated incremental to any vehicle 

technology and alternative fuel penetration already included in the Reference 

case. All vehicle modification and fuel costs are calculated relative to 

conventional vehicle/fuel combinations. Cost estimates attempt to account for 

the volume production levels and associated economies of scale for the time 

period in question.

It is generally agreed that cumulative GHG emissions reductions over a future 

time period (for example, 2010 through 2050) are the most important measure of 

a strategy’s success, rather than emissions in any particular year. Since 

cumulative emission benefits are not available for all the strategies in this 

report, however, common “snapshot” years are presented instead. The year 

2030 is viewed as a reasonable “average” representation for the 2010-2050 

period for strategies whose benefits increase over time (such as land use change 

or new vehicle technologies that are phased in). 

Treatment of Cost-Effectiveness 

The text and summary tables of this report include quantitative estimates of the 

cost-effectiveness (cost per tonne of GHG emissions reduced) for each strategy 

for which such estimates are available. Cost-effectiveness can potentially 

include a very narrow or wide range of costs, including:

• Monetary implementation (“direct”) costs. These include the cash outlay 

needed to put in place a strategy—infrastructure construction costs, capital 

costs, ongoing maintenance and operations costs, program administrative 

costs, etc. This category defines the funding levels that public agencies or 

the private sector will need to achieve in order to implement these GHG 

reduction strategies.
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• Monetary user costs. These are the costs or savings to private vehicle 

operators. These include fuel costs (savings), vehicle maintenance, and 

other vehicle ownership costs for private modes. 

• Non-monetary user costs. The value of time to the traveler is a primary 

non-monetary user cost, which is often monetized for transportation project 

cost/benefit calculations. Travelers may also receive additional welfare 

benefits or disbenefits (e.g., improved access to destinations, reduced 

vehicle functionality).

• Externalities. These include non-monetary costs that are more difficult (or 

controversial) to monetize, such as health benefits, fatality reductions, air 

quality improvements, energy security, impacts from land use changes, etc. 

Taxes, fees, and rebates are not included in cost-effectiveness calculations, since 

they are regarded as a transfer payment (from the private sector to the public 

sector). However, the imposition of taxes, fees, and rebates may create welfare 

changes that are difficult to monetize but nonetheless represent a real cost or 

benefit to consumers. If taxes and fees are used for financing transportation or 

other GHG reduction strategies, they may have secondary effects on GHG 

emissions. 

For vehicle and fuel technology strategies, both the implementation costs and 

the monetary cost savings are borne primarily by the same group—the vehicle 

purchaser/owner. An automotive manufacturer or fuel producer will pass on 

development and production costs through the purchase price of the vehicle or 

fuel. The owner will also realize the benefits of fuel cost savings from more 

efficient vehicles, or incur increased fuel costs for alternative fuels. Therefore, 

only one set of cost-effectiveness estimates is shown for these strategies. 

Welfare impacts may be significant in some cases, but are difficult to measure or 

monetize and are not included in the cost-effectiveness estimates shown in this 

report.

For system efficiency and travel activity strategies, both the direct 

implementation cost (as usually borne by the public sector), and the net social 

cost/benefit (including private sector costs or savings) are of interest. However, 

estimating and presenting net social costs or benefits can be problematic, 

because the non-monetary costs and benefits of many of these strategies (e.g., 

time savings, increased or decreased mobility) can be quite significant in 

comparison to the monetary user costs or savings. Direct implementation costs 

have been estimated for most strategies discussed in this report, and monetary 

user cost savings have been estimated for some, but non-monetary user costs or 

savings have rarely been quantified and monetized. Therefore, for the system 

efficiency and travel activity strategies, this report presents two separate costeffectiveness estimates:
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• Direct (implementation) cost per tonne—for most strategies, an indicator of 

the GHG benefit that will be achieved with a given level of public-sector 

investment; and

• “Net included cost” per tonne. This includes both direct costs and whatever 

other costs or cost savings the references cited in the report have chosen to 

monetize—usually vehicle operating costs.

With some exceptions, costs in this report are expressed in present-year real 

dollars (as cited in the data source or reference) without any inflation or 

discounting. In a few cases, when cost estimates were particularly old (e.g., 

prior to year 2000), the consumer price index was applied to inflate values to 

current year dollars. When calculating cost effectiveness, future-year operating 

cost savings for on-road vehicles (but not for off-road vehicles) were discounted 

using a discount rate of seven percent. The cost-effectiveness estimates 

computed from the Moving Cooler study data are also based on discounting

future vehicle operating cost savings at a rate of seven percent. Costeffectiveness estimates from other studies cited in this report that included 

future cost savings may have used other discounting assumptions.

The cost-effectiveness estimates should be read with caution because they 

reflect monetary costs only, and in many cases may not reflect other very 

significant benefits or disbenefits to consumers.

Life-Cycle Fuel Emissions Analysis 

The analysis of fuel emissions presented in Volume 2, Section 2.0 considers 

“well-to-wheel” (WTW) emissions, which includes all three stages of the life 

cycle of a transportation fuel (first, feedstock extraction and distribution, and 

second, fuel production and distribution, which are collectively known as 

“upstream” or “well-to-pump” emissions; and third, vehicle operation, also 

known as “downstream” emissions). 

The proportion of GHG use associated with vehicle operation versus upstream 

emissions can vary significantly be the type of fuel. For example, hydrogen fuel 

cells and electric vehicles have no operating emissions since there is no fuel 

combustion in the vehicle. The properties of selected fuels and GHG emissions 

by life cycle stage are shown in Table A.1. The results shown in the table are 

based on an analysis using the Greenhouse Gas, Regulated Emissions, and 

Energy Use in Transportation (GREET) model, version 1.8b (released May 

2008). This model, developed at Argonne National Laboratory, is one that is 

commonly used by EPA and DOE to assess total fuel cycle emissions of 

alternative fuel vehicles. The GREET model calculates WTW emissions, which 

takes into account emissions from all phases of production, distribution, and 

use of transportation fuels (Chien, 2009). A strength of GREET is that the user 
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can match a vehicle technology with a variety of different fuel options. In fact, 

GREET includes more than 100 fuel production pathways and more than 70 

vehicle systems. The GREET model is based solely on fuel type and vehicle 

technology, whereas other transportation models (such as TAFV, MiniCam, and 

NEMS) project transportation emissions based on an expected economic 

situation and/or likely consumer behavior.

This analysis uses the default values found in GREET in order to assess the 

lifecycle impacts of alternative fuels relative to conventional gasoline and diesel. 

The grams per vehicle mile traveled values in Table A.1 account for key GHGs, 

converted to CO2 equivalents using a 100 year (default) global warming 

potential (GWP). Results from the model vary significantly depending on 

various assumptions related to fuel production technology and end-use. In 

addition, GREET does not account for indirect land use changes or other 

indirect effects that may significantly impact final results for biofuels in 

particular. Other key limitations of GREET’s “direct attributional approach”

include (U.S. EPA, 2009a):

• The economic impact of biofuel coproducts on other sectors, such as 

livestock feed markets and associated indirect GHG impacts, were not 

adequately assessed;

• Specific policy measures could not be evaluated in detail as a function of 

different production targets, especially with regard to agricultural sector 

impacts;

• Fuel replacement impacts were assessed on an average gallon of fuel basis, 

rather than evaluating the specific alternative fuel production and 

conventional fuel replacement emissions at the margin; and 

• The RFS1 evaluation methodology did not account for the effects of falling 

U.S. petroleum demand on world fuel prices, and subsequent increases in 

international petroleum consumption.

Depending upon the nature of the analysis, GREET grams per mile outputs 

were frequently converted to equivalent grams per gallon values, in order to 

compare the potential GHG impacts of alternative fuels compared with 

conventional gasoline and diesel. In this way the impact of changing fuel 

efficiencies over time could be accounted for without having to re-run the 

GREET model for each time period of interest. In addition, in most cases this 

analysis assumes that alternative fuel vehicles accrue fuel efficiency 

improvements at the same rate over time as the comparable conventional 

baseline vehicle. This simplifying assumption is not made for fuel cell and 

battery electric vehicles, as the source of motive power and drive train 

configurations can be fundamentally different than conventional internal 

combustion engine vehicles.
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Table A.1 Energy Content and Life Cycle GHG Emissions for 

Selected Transportation Fuels

Heating Value 

(Btu/gal unless 

noted) Carbon 

Content

(% by wt)

g CO2e per VMT for LDVs,

by Life-Cycle Stage

(GREET 1.8b)

Lower Higher Feedstock Fuel Operation Total

Gasoline 116,090 124,340 86.3% 29 71 384 484

No. 2 Diesel 128,450 137,380 86.5% 30 45 330 405

Compressed 

Natural Gas(CNG)

20,268

Btu/lb.

22,453

Btu/lb.

72.4% 60 33 316 410

Liquefied Natural 

Gas (LNG)

74,720 84,820 75.0% 42 50 318 410

Liquefied 

Petroleum Gas 

(LPG)

84,950 91,410 82.0% 38 22 341 401

Liq H2 at Central 

Plantb

51,585

Btu/lb

61,013

Btu/lb

0% 18 316 0 334

Gaseous H2 at 

Central Plantb

18 239 0 257

Liq H2 at 

Refueling Stationb

25 432 0 457

Gaseous H2 at 

Refueling Stationb

25 232 0 257

Gaseous H2 at 

Refueling Stationelectrolysis w/ 

avg grid

719 0 0 719

Table A.1 Energy Content and Life Cycle GHG Emissions for 

Selected Transportation Fuels (continued)

Heating Value 

(Btu/gal unless 

noted) Carbon 

Content

(% by wt)

g CO2e per VMT for LDVs,

by Life-Cycle Stage

(GREET 1.8b)

Lower Higher Feedstock Fuel Operation Total

Gaseous H2 at 

Central plant 

(Nuclear)

10 52 0 62

Liq H2 at Central 

plant (Nuclear)

10 5 0 15

Electricity 3,414 3,414 20 303 0 323
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Heating Value 

(Btu/gal unless 

noted) Carbon 

Content

(% by wt)

g CO2e per VMT for LDVs,

by Life-Cycle Stage

(GREET 1.8b)

Lower Higher Feedstock Fuel Operation Total

(U.S. avg grid) Btu/kWh Btu/kWh

b Results are for steam reforming of natural gas.

Price Elasticities and Vehicle Operating Costs

An “elasticity” is a percent change in one value with respect to a percent change 

in another. For measures that affect the cost of travel, one important elasticity is 

the percent change in fuel use with respect to a percent change in the cost of 

that travel (e.g., cents per mile). The value of the elasticity will be different 

depending upon whether the change in travel cost is measured relative to just 

one component of travel (e.g., fuel price) or all relative to the full cost of travel 

(including vehicle operating costs, user-borne crash costs, and time savings). 

Elasticities were used in this report to estimate response to some travel pricing 

measures, using a methodology consistent to that applied in the Moving Cooler 

study. 

There is an extensive body of literature on elasticities for travel costs. Much 

recent work has focused on responses to changes in motor fuel prices, since 

motor fuel prices have been highly volatile, and since overall prices for travel 

are less volatile. While there is an extensive body of literature on transportation 

price elasticities, Small and Van Dender (2007) provide a review of previous 

studies as well as recent estimates using data through 2004. The authors 

estimate elasticities of VMT, fuel intensity (gallons/mile), and total fuel 

consumption (VMT multiplied by fuel intensity) with respect to fuel price 

changes. Elasticities are estimated both over a historical time period (1966 to 

2004) and within the past few years (2000 to 2004) to examine how elasticities 

might be changing. These findings are shown in Table A.2. 

Table A.2 Historical and Recent Long-Run Elasticities With 

Respect to Fuel Price

Calculated Long-Run Price Elasticities With 

Respect to Fuel Price of: Elasticity 1966 to 2004 Elasticity 2000 to 2004

Vehicle Miles Traveled -0.210 -0.057

Fuel Intensity -0.193 -0.191

Fuel Consumption -0.363 -0.237

Rebound Effect (Percentage) 21.0% 5.7%
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Source: Small and Van Dender (2007). The values shown in this table are “long-run”

elasticities—i.e., response over a multi-year period after the price change. Long-run 

elasticities will be greater than the immediate or short-term response since travelers are 

able to make more fundamental adjustments to their activity patterns, such as 

changing residence or worksite locations or changing the number and types of vehicles 

owned. The rebound effect is discussed in the following section.

The findings imply, for example, that based on data from the 1966 to 2004 

period, a 100 percent increase in fuel price should lead to a 21 percent reduction 

in VMT, and 19 percent increase in the fuel efficiency of vehicles, for an overall 

net decrease in fuel consumption of 36 percent. For the more recent period of 

2000 to 2004, the elasticity of VMT with regard to fuel price declined 

substantially, such that a 100 percent increase in fuel price would lead to only a 

6 percent long term decline in VMT. For the pricing measures analyzed in

Volume 2, Section 5.0, which apply charges based on distance traveled rather 

than fuel consumed, it is the VMT response that is of interest. Table A.2 shows 

that historically, about half of the impact of a fuel price increase would be on 

VMT reduction and the other half on fuel efficiency; but that in recent years, the 

VMT response to price increases has become much lower—less than one-third 

the magnitude of the fuel efficiency effect. 

Another recent review of elasticities by Sperling (2008) suggests that elasticity 

values are higher, but also reaches a similar conclusion that elasticities with 

respect to VMT have declined in recent years. Sperling found that long run 

elasticities of fuel consumption with regard to fuel price “may be as low as -0.2.” 

The Small and Van Dender and Sperling studies provide the most recent 

estimates of those in the literature, and therefore are used as the primary basis 

for this report and the Moving Cooler study. Depending on the basis on which 

elasticities are applied, such as to “total operating costs” or to estimated “out of 

pocket costs” or to fuel costs, different elasticity values will be appropriate. 

FHWA includes in its Highway Economic Requirement System (HERS) model 

estimates for the operating costs of light duty and heavy duty vehicles. The 

latest HERS costs for 2006 included operating costs of 40 cents per mile for all 

vehicles and crash costs of 15 cents per mile for all vehicles. The crash costs 

include both insurance costs and uncompensated accident costs. Travel time 

costs for all vehicles were 54.5 cents per mile, and taxes paid were 2.4 cents per 

mile. Using the HERS estimates of only the monetary costs, the 2006 number 

would be 40 cents plus 15 cents plus 2 cents or 57 cents. Adjusting for fuel price 

to 2008 ($2.27 per gallon in 2006 versus $3.25 per gallon in 2008, at a fleet 

average of 17 mpg) would add 6 cents to the HERS estimate, making it 63 cents 

per mile. HERS also uses lower safety costs such as a lower cost of lives lost 

than is used by other agencies such as EPA and that adjustment would add 

several cents per mile.

The cost assumptions underlying the analyses present in the Moving Cooler 

study and this report were developed during a time in which costs have 

changed. The IRS had estimated costs of 58.5 cents per mile for light duty 

vehicles in 2008, and lowered that estimate to 55 cents when fuel prices 
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dropped. It is expected that this figure will be adjusted again. Using the 2008 

IRS allowed operating cost of 58.5 cents per mile, future light duty vehicle 

operating costs were estimated at 60 cents per mile, based upon an assumption 

of somewhat higher future fuel prices (starting at $3.70 per gallon and 

increasing over time) than the average fuel price for 2008.

Future total fleet operating costs were estimated at 69 cents per mile. The latter 

figure is based on the impacts of heavy trucks on the total operating costs of the 

vehicle fleet. Heavy trucks have over twice the operating cost per mile of light 

duty vehicles and including them in the calculations increases the average 

operating costs by 15.4 percent, according to the HERS operating cost factors. 

This yields 60 cents times 1.15 equals 69 cents per mile. Of this element, with 

fuel prices of $3.70 per gallon for the AEO high case in 2008 and a fleet overall 

average of 17 mpg, fuel costs would be about 22 cents per mile, or about one 

third of total estimated costs.

For the purposes of the Moving Cooler study and this report, converting the 

Small and Van Dender long term elasticity for VMT or the Sperling elasticity for 

fuel prices to an elasticity for overall operating expenses would imply about a 

three or four times higher elasticity (since fuel cost represents only about onethird to one-fourth of total operating costs), or up to around three to four times -

0.057 (-0.17 to -0.23) for Small and Van Dender and up to around three to four 

times -0.2 (-0.6 to -0.8) for Sperling. No representation is made that the 

referenced researchers agree with this conversion. The overall elasticity 

selected for Moving Cooler and this study was -0.45, which is in the middle of 

these calculated conversions. This elasticity is close to the long-run fuel price 

elasticity of about -0.4 used in a 2008 Congressional Budget Office analysis of 

gasoline price effects. The -0.45 elasticity was applied for the response of VMT 

to total vehicle costs for all pricing measures. This elasticity is also comparable 

to the long-term elasticity used in the HERS model. The HERS input elasticities 

total to -0.65, but because of the way HERS is set up this results in a total 

elasticity of about -0.8. This applies to the total of all costs, including travel time 

costs. Since HERS assumes travel time costs of about 50 percent of total costs 

(54 cents out of $1.07 per mile), the -0.45 elasticity is just slightly higher than the 

equivalent in HERS.

The Rebound Effect

The “rebound effect” can be characterized as the extent to which fuel savings 

(and corresponding GHG reductions) from vehicle fuel efficiency 

improvements are offset by increased travel, because travel is made cheaper 

per-mile due to reduced fuel costs. It is related to the price elasticity effect 

discussed above. In particular, it is the same magnitude as the elasticity of VMT 

with respect to fuel price—only it works in the opposite direction, i.e., reflecting 

an increase in the amount of driving in response to a price decrease, rather than 

vice-versa.
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The National Highway and Traffic Safety Administration (NHTSA), in its 

preliminary regulatory impact assessment for the CAFE standards rulemaking, 

reviewed 22 studies of the rebound effect and found effects ranging from 10 to 

30 percent (i.e., the gains from regulated vehicle efficiency improvements

would be reduced by this amount over the long run due to increased travel) 

(NHTSA, 2008). Table A.1 also shows Small and Van Dender’s estimate of the 

rebound effect. Consistent with the NHTSA review, they estimate that this 

effect is about 21 percent historically; however, they also find a significant 

reduction (to about 6 percent) based on data from the most recent time period. 

Small and Van Dender note that the estimates of the rebound effect are very 

sensitive to the time period considered and treatment of CAFE regulations, and 

further, that there is no agreement on how to control for CAFE standards in 

these studies. 

The NHTSA study also acknowledges and places credibility on the findings that 

the rebound effect has become smaller over time. The NHTSA used a 10 

percent rebound effect in its analysis of fuel savings and other benefits from 

higher CAFE standards for MY 2012-2016 vehicles. The Agency’s judgment is 

that the apparent decline over time in the magnitude of the rebound effect 

justifies using a value for future analysis that is lower than historical estimates, 

which average approximately 25 percent. Because the lifetimes of vehicles 

affected by the alternative CAFE standards considered in the rulemaking will 

extend from 2012 until approximately 2050, a value that is significantly lower 

than historical estimates appears to be appropriate. Recognizing the uncertainty 

surrounding the 10 percent estimate, the Agency analyzed the sensitivity of its 

benefits estimates to a range of values for the rebound effect from 5-to-15 

percent (NHTSA, 2009). 

Induced Demand 

Induced travel demand can be defined as any increase in travel resulting from 

improved travel conditions (Hunt, 2002). These improved conditions include 

reduced travel time, reduced costs, improved safety, or improved comfort. 

Since most roads are empty at most times of day—the average density of traffic 

on all U.S. roads over 24 hours per day is one vehicle per lane every 90 

seconds—induced demand is an issue that is applicable to a small minority of 

road miles and only during a portion of the day. These capacity issues, 

however, are important because they arise on the most heavily traveled roads at 

the most heavily-traveled times. 

Induced demand is related to the basic economic concept of elasticity: if the 

price of something falls, its consumption will increase. Thus, if congestion is 

reduced (for example, because highway capacity is increased, or some people 

have chosen to work from home instead of commute), travel times and traveltime costs will decrease, and an induced increase in vehicle miles traveled 
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(VMT) will result. The induced VMT is likely to come partly from shifts of 

travelers from other modes (particularly transit) and partly from changes in 

travel patterns (more trips and longer trips). Also, in some cases, there may be 

shifts in the time of travel from off-peak periods to peak periods.

There are two basic types of transportation GHG reduction measures that can 

result in induced demand: 

• System efficiency improvements that reduce congestion and delay, thereby 

improving travel times (as well as reducing fuel consumption and GHG

related to delay); and 

• Travel behavior strategies that reduce VMT by increasing the attractiveness 

of alternatives to auto travel (or single-occupancy-vehicle travel). 

For example, policies that cause diversion to transit reduce highway congestion 

and thereby reduce highway travel times, making highway travel more 

attractive to non-transit users who, in turn, increase somewhat the number 

and/or length of their highway trips. Travel behavior strategies will only result 

in induced demand to the extent that they reduce VMT during congested travel 

periods, and therefore reducing delay and decreasing travel times. This is 

sometimes referred to as a “rebound effect,” since traffic volume rebounds as 

the traffic that is diverted off the road is partially replaced by new traffic from 

other sources. (Strategies that reduce VMT by making highway travel more 

expensive—such as mileage-based fees or increased gas taxes—do not produce 

a rebound effect, since they apply comprehensively to all highway travel.)

The offsetting effects of induced demand apply to any VMT or 

congestion/delay-related metric such as fuel consumption or criteria pollutant 

emissions. The magnitude of these effects depends upon the elasticity of travel 

demand with respect to a change in travel time or travel cost—i.e., the percent 

change in travel for a given percent change in time/cost. Both short-term 

(about one year) and long-term (multi-year) elasticities have been estimated, 

since rebound effects can be greater over the long term as people make more 

significant changes to their travel habits such as living farther from work.

The magnitude of the induced demand effect from both system efficiency and 

travel activity strategies was estimated in work performed for the Moving Cooler 

study. The effects are quite different:

• For travel activity strategies, the system-wide “rebound effect” was 

estimated to be about 14 percent, using the Federal Highway 

Administration’s (FHWA) Highway Economic Requirements System 

(HERS) model. That is, for any measure that would reduce VMT by making 

alternatives to auto travel (or single occupancy vehicle travel) more 

attractive, the initially estimated reduction in VMT and GHG is reduced by 

14 percent to reflect the rebound effect. This reduction is reflected in the 

travel activity strategy results cited from the Moving Cooler study for transit, 

land use, non-motorized travel, and employer trip reduction.
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• For system efficiency strategies, the increase in GHG emissions resulting 

from increased VMT (as a result of reduced congestion and delay) is 

relatively more significant. In fact, the net effect in the Moving Cooler study 

was to essentially offset the cumulative GHG benefits of bottleneck relief 

strategies over the 2010-2050 period, and to significantly reduce the benefits 

of traffic management strategies (by up to 90 percent or more in 2030). 

Some benefit would be seen in the short- to mid-term (10-20 years), but over 

time the induced demand effects would increase and in later years, more 

than offsetting the benefits of delay reduction. Again, the induced demand 

effects were modeled using the same relationships contained in FHWA’s 

current version of the HERS model. 

As noted, the analysis used the same elasticity for induced demand as that used 

in the HERS model. The HERS model includes a demand elasticity that 

quantifies the response of total VMT to a general increase or decrease in the cost 

of road travel. The negative value for this elasticity reflects that the demand for 

road travel declines in response to an increase in “generalized cost” per mile of 

travel. Similarly, demand for road travel increases in response to a decrease in 

costs (induced demand). The generalized cost sums the average per mile costs 

associated with travel time, road crashes, and vehicle operation (fuel, 

maintenance, etc.). 

Evidence suggests that response of VMT to a sustained increase in generalized 

cost - due, say, to a permanent increase in the federal gas tax- grows over time 

as people have more time to adjust—for example, by relocating their residence 

to be closer to the workplace. Similarly, a long term decrease in the cost of 

travel because of improved conditions such as shorter travel times leads to an 

increase in demand that is larger over the long term as people have more time 

to adjust. For the HERS model, the FHWA accordingly specifies separate 

demand elasticities for the short run and long run. These elasticities were 

derived from a review of estimated elasticities of travel demand with respect to 

fuel prices and other components of travel cost (Federal Highway 

Administration 2005). In 2004, HERS used values of -0.6 for the short run 

elasticity and -1.2 for the long run. These were reduced in the 2006 and 2008

HERS model runs to -0.4 for the short run (meaning that a 10 percent increase in 

the generalized cost reduced VMT by approximately 4 percent) and -0.8 for the 

long run because of new evidence suggesting that travel demand responses 

were smaller than previously thought.

The HERS elasticity is for VMT with respect to total travel costs. To compare 

this elasticity to elasticities in the literature of VMT with respect to fuel costs (or 

any other portion of total travel costs) one must account for the share of total 

travel costs represented by fuel (or other subset of cost). FHWA estimates the 

different component shares of total highway travel costs as shown in the table 

below.
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Component Shares in Total Price

Component Low 

Share

High Share

Fuel 8% 36%

Maintenance 9% 48%

Accidents and Insurance 7% 37%

Vehicle wear & ownership 18% 54%

Tolls and fees 0% 10%

Parking 1% 10%

Travel time 40% 62%

Source: Federal Highway Administration 2005, Highway Economic Requirements 

System—State Version, Technical Report, FHWA-HIF-08-017.

To compare an elasticity for fuel prices to an elasticity for total travel costs, one 

would need to multiply the fuel price elasticity by a factor of three to ten, since 

fuel cost represents only about a tenth to a third of total operating costs, as 

shown in the table above. 

Based on the earlier literature review, FHWA estimated the elasticity of VMT 

with respect to fuel prices at -0.17 for the short run and -0.33 for the long run. 

In contrast, the Congressional Budget Office (2008) relied on alternative 

estimates from Small and Van Dender (2007) of a near-zero elasticity for the 

short-run (between -0.02 and -0.03) and of an elasticity between -0.11 and -0.15 

for the long-run. For short- to medium-run responses of VMT to changes in fuel 

prices, Ewing et al. (2008) estimated an elasticity of -0.17 using data for U.S 

urban areas from 1985 through 2005. The question of how strongly VMT 

responds to changes in fuel prices is far from settled, with ongoing research 

continuing to produce new estimates. 

A number of uncertainties are noted regarding the induced demand impacts. In 

particular, there is considerable uncertainty and debate over the magnitude and 

timing of induced demand. A range of plausible estimates from the literature 

could produce results that show either a net increase or decrease in GHG 

emissions over time. Furthermore, the estimates were performed using delay—

fuel consumption relationships for today’s vehicle fleet. The evolution of 

vehicle technology in the future could lead to very different effects. For 

example, the widespread adoption of electric-drivetrain vehicles (hybridelectrics, battery-electrics, or fuel cells) would greatly reduce the fuel and GHG 

reduction benefits of delay reduction, since these vehicles are much more 

efficient in low-speed operation.
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References

Cambridge Systematics, Inc. (2009). Moving Cooler: An Analysis of Transportation 

Strategies for Reducing Greenhouse Gas Emissions. Urban Land Institute, 

Washington, D.C.

Chien, D. (2009). “U.S. Transportation Models Forecasting Greenhouse Gas 

Emissions: An Evaluation from a User’s Perspective.” http://www.bts.gov/

publications/journal_of_transportation_and_statistics/volume_08_number_02/

html/paper_04/index.html, accessed June 15, 2009.

Congressional Budget Office (2008). Effects of Gasoline Prices on Driving Behavior 

and Vehicle Markets. Washington, D.C.

http://www.cbo.gov/ftpdocs/88xx/doc8893/01-14-GasolinePrices.pdf

Ewing, R.: Bartholomew, K.; Winkelman, S. ; Walters, J.; and Chen, D. 2008, 

Growing Cooler: The Evidence on Urban Development and Climate Change, report to 

the Urban Land Institute. 

Federal Highway Administration 2005, Highway Economic Requirements System—

State Version, Technical Report, FHWA-HIF-08-017. Hunt, J.D. (2002). “Induced 

Demand in Transportation Demand Models.” In Working Together to Address 

Induced Demand. Eno Transportation Foundation, Washington, D.C.

National Highway and Traffic Safety Administration (2009). Corporate Average 

Fuel Economy for MY 2012-2016 Passenger Cars and Light Trucks: Preliminary 

Regulatory Impact Analysis.

National Highway and Traffic Safety Administration (2008). Corporate Average 

Fuel Economy for MY 2011-2015 Passenger Cars and Light Trucks: Preliminary 

Regulatory Impact Analysis. 

Small, K. and K. Van Dender (2007). “Long Run Trends in Transport Demand, 

Fuel Price Elasticities, and Implications of the Oil Outlook for Transport Policy.”

Discussion Paper No. 2007-16, December 2007.

Small, K. A. & Van Dender, K. 2007, Fuel Efficiency and Motor Vehicle Travel: The 

Declining Rebound Effect, Energy Journal, vol. 28, no. 1, pp.25–51; and corrections 

posted at www.socsci.uci.edu/~ksmall/Rebound_Paper _Correction.pdf

Sperling, D. (2008). “Consumer Response to Fuel Price Changes: Implications for 

Policy.” January 15, 2008.

U.S. Environmental Protection Agency (2009a). Draft Regulatory Impact Analysis: 

Changes to the Renewable Fuel Standard Program, EPA-420-D-09-001, May 2009.
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U.S. Environmental Protection Agency (2009b). Regulation of Fuels and Fuel 

Additives: Changes to Renewable Fuel Standard Program, 40 CFR Part 80.