Industry Market Trends

The Damage Done Down the Road -- Can Green Energy Reduce Environmental Damage in Transportation?

Feb 27, 2012

Traffic in Riverside, CaliforniaFor the last few months, I've been writing a series of articles about the "Damage Done" environmentally by the production and consumption of energy. The first 10 articles in the series focused on electricity generation and examined the environmental effects of electrical generation sources, both conventional (coal, gas, nuclear) and renewable (hydro, wind, solar, etc.).

(Photo: Riverside, Cal. Credit: Daniel Orth, CC BY-ND 2.0.)

For the next few weeks, I plan to continue the series, this time with particular focus on the environmental effects of transportation energy. On the conventional side, most of the focus will naturally be on petroleum. However, advocates are pushing for cleaner alternatives to replace the use of petroleum products in transportation -- natural gas, biofuels, electricity, and hydrogen. The argument is that these alternatives are less polluting and will not contribute as much to greenhouse gas (GHG) emissions and human-caused climate change. While these alternatives currently represent a very small part of transportation energy, they will likely grow in importance over the coming decades.

The question arises, then, whether alternative energy sources for transportation will also have their environmental downsides. Is green really greener? We'll be answering that question over the next few weeks.

Transportation and Its Environmental Effects

According to the U.S. Energy Information Administration's (EIA) Annual Energy Outlook, the U.S. consumes about 99.46 quadrillion Btus of total energy annually. About 28 percent of that is for transportation. Globally, the percentage used for transportation is similar, about 27 percent.

The following pie charts show that in the U.S. and worldwide, transportation is powered by liquid fuels. The global transportation sector makes a little better use of natural gas than that of the U.S., 3.4 percent as opposed to 2.4 percent. The global system gets 1.1 percent of transportation energy from electricity, the U.S. only .07 percent, not enough to register on this chart.

Chart showing US and world energy consumption by energy source

The Union of Concerned Scientists says:

Transportation is the largest single source of air pollution in the United States. It causes over half of the carbon monoxide, over a third of the nitrogen oxides, and almost a quarter of the hydrocarbons in our atmosphere in 2006...

Air pollution is associated with the full life-cycle of cars and trucks. This includes air pollution emitted during vehicle operation, refueling, manufacturing, and disposal. Additional emissions are associated with the refining and distribution of vehicle fuel. Motor vehicles cause both primary and secondary pollution. Primary pollution is emitted directly into the atmosphere; secondary pollution results from chemical reactions between pollutants in the atmosphere.

The following chart from the U.S. Environmental Protection Agency (EPA) shows the percentages of various air pollutants by source. The red bar represents highway vehicles, but the "Non-Road Mobile" category, represented by the light blue bar, is also important for our purposes here, as that includes such sources as recreational and construction equipment, marine vessels, aircraft, and trains (see Our Nation's Air: Status and Trends Through 2010, EPA).

Bar chart showing percentages of various pollutants by source

As you can see, these transportation-related sources vary in their contributions to the different pollutants. Their contributions to some pollutants are relatively small, such as ammonia (NH3) and sulfur dioxide (SO2). However, the contributions to other pollutants can be quite large -- for example, over 80 percent in the case of carbon monoxide (CO) and nearly 60 percent for nitrogen oxide (NOx).

Line chart showing GHG emissions by economic sector

In the U.S., transportation as an economic sector is the second-highest source of greenhouse gas emissions, as you can see from the chart above (from Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2009, EPA, April 15, 2011).

Pie chart showing percentages of GHG emissions by sourceThe chart to the right shows the percentages of transportation GHGs by source (according to Greenhouse Gas Emissions From the U.S. Transportation Sector: 1990-2003, EPA, March 2006).

Measuring the Environmental Externalities of Transportation

In previous articles of this series, I've discussed the concept of environmental externalities. Externality is an economics term referring to the unintended external effects of economic activities.

Externalities can be positive or negative. If we are neighbors and you paint your house, the house prices in our neighborhood might go up slightly, so my house becomes more valuable -- a positive externality of your paint job. However, if you paint your house pink, the value of my house might go down -- a negative externality. If lead paint chips scraped off of your house make their way into the water supply, they could cause someone else to get sick -- that would be an environmental externality; someone else's health suffered, but that damage was not included in the cost of the painting project.

The National Academy of Sciences (NAS) has produced one of the most useful reports about the environmental externalities of energy production, the 2010 report Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use. In discussing externalities, the authors of the report write,

An externality, which can be positive or negative, is an activity of one agent (for example, an individual or an organization, such as a company) that affects the well-being of another agent and occurs outside the market mechanism. In the absence of government intervention, externalities associated with energy production and use are generally not taken into account in decision making.

Environmental externalities matter, NAS says, because "failure to account for them can result in distortions in making decisions and in reductions in the welfare of some of society's members."

The NAS report investigates the environmental harm that is caused by energy production, distribution, and use, and assigns a dollar value to that damage. Monetizing environmental harm is a challenging prospect, the report's authors acknowledge:

It is relatively straightforward to monetize goods that are routinely traded in markets, as the market prices give direct information about their monetary worth... However, many of the externalities that we are interested in for this report do not trade in markets, so information on people's preferences is not readily available. Nonetheless, such "nonmarket" goods may have as much or more value to people as goods that do trade in markets (that is, if required, they would be willing to give up a lot to have them). The main goal in monetizing the impacts of externalities is to place externalities on equal footing with other goods and services.

Traffic in Delhi, IndiaNAS applies life cycle analysis, or assessment (LCA), to study the environmental effects of energy production and consumption. In identifying "the key pathways by which energy sources for transportation lead to impacts," NAS finds that "most of the emissions occur as a result of burning fossil fuels in the life cycle of transportation fuels." Impacts occur "across the supply chain, including fuel use for drilling oil wells or farming biomass fields, to transporting feedstocks and fuels to and from refineries, the refining process, transporting fuel to and from consumers, and the use of the fuels by consumers." (Photo: Delhi, India. Credit: jenspie3, CC BY 2.0.)

The NAS report subjects the primary energy sources for transportation to analysis of GHG emissions, and emissions of six key pollutants: volatile organic compunds (VOCs), CO, NOx, particulate matter smaller than 10 microns (PM10), particulate matter smaller than 2.5 microns (PM2.5), and sulfur oxides (SOx). The analysis estimates damage in terms of mortality, morbidity, and other kinds of damage, such as "recreational damages related to visibility and crop damage related to ozone."

This kind of analysis assigns dollar values to environmental damages in part based on a concept called value of a statistical life (VSL). VSL allows researchers to monetize damages to people's health and reduction in their life spans. (Previously discussed in The Damage Done, Part 3 - Is Coal Really So Bad for the Environment?)

In the next article of this series, I will examine the environmental effects of petroleum-based fuels, then go on to consider emerging transportation energy sources, such as natural gas, biofuels, electricity, and hydrogen.