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Transportation Innovation Can Reduce America's Oil Dependence

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Global energy consumption is expected to increase 53 percent by 2035. Much of the new demand is from developing countries that are experiencing rapid economic growth and the emergence of a middle class. In India alone, 1.5 million vehicles a month are added to the nation's total, increasing pressure on an often volatile petroleum market.

As the need for energy and oil surges, nations like India -- as well as Germany, China and Japan -- are adopting strong national policies to capture billions of dollars in private capital to develop and deploy clean energy systems -- some of which can help limit their dependence on imported oil. These countries recognize that clean energy can enhance their energy security, create domestic jobs and businesses, and protect the environment by reducing pollution.

The United States shares these goals. We too must implement our own clean energy policy solutions if we hope to reduce our dependence on foreign oil and stop the transfer of $1 billion daily from our economy -- some of which flows to countries hostile to our national interests.

Along with fuel efficiency and other conservation measures, electric vehicles offer an opportunity for the United States to reduce our oil consumption, help consumers and businesses lower fuel costs, and become a global leader in the production, deployment, and export of new technologies. In 2011, the transportation sector accounted for more than 70 percent of U.S. oil consumption, and the cost of imported oil totaled more than $300 billion. The typical American household spent a record $4,155 on fuel costs last year, according to the Oil Price Information Service.

Moving toward cleaner, cost-effective, domestic fuels such as electricity can help address the economic and national security consequences of U.S. oil dependence. For example, electricity is generated through diversified, domestic sources. And fueling an electric vehicle (EV) is much cheaper than a vehicle using gas: It costs 2 or 3 cents to drive one mile in an EV and about 15 cents to travel the same distance in a gasoline-powered vehicle.

But EVs are not just about lowering fuel costs and reducing our oil imports. Investment in technologies like the advanced batteries that power EVs offers an opportunity for the United States to lead in an explosive new market and create jobs. Bloomberg New Energy Finance, which analyzes clean energy markets, has estimated that the advanced battery industry alone could reach $100 billion annually by 2030.

Nations such as South Korea, Japan, and China are aggressively investing billions of dollars in research and development and incentivizing deployment of EVs to capture large shares in this growing worldwide sector. We should too. While private capital plays a key role, the support of policymakers at the federal, state, and local levels is critical to unleashing the power of America's manufacturers and private-sector investment. In particular, two tax provisions supporting EV deployment expired in 2011 and should be reinstated by Congress:
  • Section 30C. Alternative fuel vehicle refueling property credit. This provision provided a tax credit against the cost of investments made in alternative fuel infrastructure placed in service during the same tax year. It applied to infrastructure deployed in business or residential settings. It was technology-neutral and supported numerous fuels, including electric drive, that would reduce U.S. dependence on petroleum.
  • Section 30B. Credits for Hybrid Medium- and Heavy-Duty Trucks. Hybrid and electric drive technologies are ripe for deployment in medium- and heavy-duty trucks, especially those in stop-and-go urban, port, and industrial sites. Hybrid and electric drives can increase fuel efficiency in trucks from 20 to more than 50 percent. Medium- and heavy-duty vehicles are second only to automobiles in oil consumption and are responsible for 20 percent of U.S. transportation-based greenhouse gas emissions. These incentives sought to accelerate the development and deployment of more efficient and cleaner vehicles and to help create domestic jobs.

These two near-term solutions would help support the U.S. electric vehicle market. These incentives are critical signals to investors and essential factors to increase American jobs, support businesses, and accelerate the adoption of EVs and plug-in hybrids.

America must manufacture and export clean energy technologies around the world if we are to effectively compete in the fierce 21st-century clean energy race. Electric vehicles are one avenue to reducing dependence on foreign oil and helping manage the increasing energy needs of the world's burgeoning middle class -- and competing globally for private investment, jobs, and exports.

learn more at pewenvironment.org


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