Transportation and Energy

Authors: Dr. Jean-Paul Rodrigue and Dr. Claude Comtois

1. Energy

Human activities are closely dependant on the usage of several forms and sources of energy used to perform work. Energy is the potential that allows movement and/or modification of matter. Energy content is the available energy per unit of weight or volume for an energy source. Thus, the more energy consumed the greater the amount of work realized. There exist four types of physical work related to human activities [Chapman, 1989]:

Modification of the environment. Includes making space suitable for human activities, like clearing land for agriculture, modifying the hydrography (irrigation), establishing distribution infrastructures, and constructing and conditioning (temperature and light) enclosed structures.
Appropriation of resources. Involves the extraction of agricultural products from the biomass and raw materials (minerals, oil, lumber, etc.) for human needs. It also includes the disposal of wastes, which are in an advanced industrial society very work intensive to safely dispose.
Processing resources. Modifies products from the biomass, raw materials and goods to manufacture according to economic needs. Over the last 200 years, work related to processing was considerably mechanized (e.g. robotized assembly lines).
Transfer. Involves the movement of freight, people and information from one place to another. It aims to attenuate the spatial inequities in the location of resources by overcoming distance. The less energy costs per ton or passenger - kilometer, the less importance have transfers. Overcoming space in a global economy requires a substantial amount of work and thus energy.

Wood, coal, petroleum oils, natural gas are fossil fuels, whereas human and animal power, wind and water power and solar radiation are actual sources of energy. There are enormous reserves of energy able to meet the future needs of mankind. Unfortunately, one of the main contemporary issues is that many of these reserves cannot be exploited at reasonable costs or are unevenly distributed around the world. Through the history of mankind's use of energy, the choice of an energy source depended on a number of utility factors which as time progresses involve a transition in energy systems from solid, liquid and eventually gas energy. Since the industrial revolution, many efforts have been made to have as much work as possible performed by machines, which considerably improved industrial productivity. The development of steam engine and the generation and distribution of electric energy over considerable distance have also altered the spatial pattern of manufacturing industries by liberating production from direct connection to a fixed power system.

Industrial development places enormous demands for fossil fuels. At the turn of the 20th century, the invention and commercial development of the internal combustion engine, notably in transport equipment, made possible the efficient movement of people, freight and information and stimulated the development of global trade network. With globalization, transportation is accounting for a growing share of the total amount of energy spent for implementing, operating and maintaining the international range and scope of human activities. At the beginning of the 21st century, the transition reached a stage where fossil fuels, notably petroleum, are dominant. Out of the world’s power consumption of about 15 terawatts a year, 86% is derived from fossil fuels.

A recent trend has also been a shift on the purpose of energy use. Work related to the transportation of goods, people and information has increased significantly, on par with the globalization of the economy. This implies a growing share of transportation in the total amount of energy spent for maintaining and improving the range and scope of human activities. Energy consumption has a strong correlation with the level of development. Among developed countries, transportation now accounts between 20 and 25% of all the energy being consumed.

2. Transportation and Energy Consumption

The relationship between transport and energy is a direct one, but subject to different interpretations since it concerns different transport modes, each having a specific performance level. There is often a compromise between speed and energy consumption, related to the desired economic returns. Passengers and high value goods can be transported by Economies of scale, mainly those achieved by maritime transportation are linked to low levels of energy consumption per unit of mass being transported, but at a low speed. Comparatively, air freight has high energy consumption levels, linked to high speed services.

A powerful trend that has emerged in the 1950s has been the growing share of transportation in the total oil consumption of developed countries. Transportation accounts for approximately 25% of world energy demand and for more than 55% of all the oil used each year. Transportation is almost completely reliant (95%) upon petroleum products with the exception of railways using electrical power (Lenzen, Day and Hamilton, 2003). While the use of petroleum for other economic sectors, such as industrial and electricity generation, has remained relatively stable, the growth in oil demand is mainly attributed to the growth in transportation demand.

The impact of transport on energy consumption is diverse, including many that are necessary for the provision of transport facilities:

Vehicle manufacture, maintenance and disposal. The energy spent for manufacturing and recycling vehicles is a direct function of vehicle complexity, material used, fleet size and vehicle life cycle.
Vehicle operation. Mainly involves energy used to provide momentum to vehicles, namely as fuels, as well as for intermodal operations. The fuel markets for transportation activities is significant.
Infrastructure construction and maintenance. The building of roads, railways, bridges, tunnels, terminals, ports and airports and the provision of lighting and signaling equipment require a substantial amount or energy. They have a direct relationship with vehicle operations since extensive networks are associated with large amounts of traffic.
Administration of transport business. The expenses involved in planning, developing and managing transport infrastructures and operations involves time, capital and skill that must be included in the total energy consumed by the transport sector.
Energy production and trade. The processes of exploring, extracting, refining and distributing fuels or generating and transmitting energy also require power sources. The transformation of 100 units of primary energy in the form of crude oil produces only 85 units of energy in the form of gasoline. Any changes in transport energy demands influence the pattern and flows of world’s energy market.

Energy consumption has strong modal variations:

Land transportation accounts for the great majority of energy consumption. Road transportation alone is consuming on average 85% of the total energy used by the transport sector in developed countries. This trend is not however uniform within the land transportation sector itself, as road transportation is almost the sole mode responsible for additional energy demands over the last 25 years. Despite a falling market share, rail transport, on the basis of 1 kg of oil equivalent, remains four times more efficient for passenger and twice as efficient for freight movement as road transport (Bonnafous and Raux, 2003). Rail transport accounts for 6% of global transport energy demand.
Maritime transportation accounts for 90% of cross-border world trade as measured by volume (UNESCAP, 2002). The nature of water transport and its economies of scale make it the most energy efficient mode. This mode uses 7% of all the energy consumed by transport activities.
Air transportation plays an integral part in the globalisation of transportation network. The aviation industry accounts for 8% of the energy consumed by transportation. Air transport has high energy consumption levels, linked to high speeds. Fuel is the second most important budget for the air transport industry accounting for 13-20% of total expenses (Vellas, 1991). This accounts for about 1.2 million barrels per day. Technological innovations, such as more efficient engines and better aerodynamics, have led to a continuous improvement of the energy efficiency of each new generation of aircrafts.

Further distinctions in the energy consumption of transport can be made between passenger and freight movement:

Passenger transportation accounts for 60 to 70% of energy consumption from transportation activities. The private car is the dominant mode but has a poor energetic performance, although this performance has seen substantial improvements since the 1970s, mainly due to growing energy prices and regulations. Only 12% of the fuel used by a car actually provides momentum. There is a close relationship between rising income, automobile ownership and distance traveled by vehicle. The United States has one of the highest levels of car ownership in the world with 488 cars per 1 000 persons in 1999. About 60% of all American households owned two or more cars, with 19% owning three or more. A more disturbing trend has been the increasing rise in ownership of minivans, sport utility vehicles and light-duty trucks for personal use and the corresponding decline in fuel economy (Schipper and Fulton, 2003). Fuel consumption is however impacted by diminishing returns, implying that higher levels of fuel efficiency involve declining marginal gains in fuel consumption.
Freight transportation is dominated by rail and shipping, the two most energy efficient modes. Coastal and inland waterways provide an energy efficient method of transporting passengers and cargoes. A tow boat moving a typical 15-barges tow holds the equivalent of 225 rail car loads or 870 truck loads. The grounds for favouring coastal and inland navigation are also based on lower energy consumption rates of shipping and the general overall smaller externalities of water transportation. The United States Marine Transportation System National Advisory Council has measured the distance that one ton of cargo can be moved with 3.785 litres of fuel. A tow boat operating on the inland waterways can move one ton of barge cargo 857 kilometers. The same amount of fuel will move one ton of rail cargo 337 kilometers or one ton of highway cargo 98 kilometers (MTSNAC, 2001).

3. Combustion of Hydrocarbons

Since almost all transportation modes depend on the internal combustion engine, it is worth investigating the chemical combustion principle of hydrocarbons. For the majority of internal combustion engines, gasoline (C₈H₁₈; four strokes Otto-cycle engines) serves as fuel, but other sources like methane (CH₄; gas turbines), diesel (mostly trucks) and kerosene (turbofans of jet planes) are used. In a complete and perfect combustion of gasoline the following chemical reaction is achieved:

(2) C₈H₁₈ + (25) O₂ = (16) CO₂ + (18) H₂O + energy

Gasoline produces around 46,000 Btu per kilogram combusted, which requires from 16 to 24 kg of air. The energy released by combustion causes a rise in temperature of the products of combustion. Several factors and conditions influence the level of combustion in an internal combustion engine to provide momentum and keep efficient operating conditions. The temperature attained depends on the rate of release and dissipation of the energy and the quantity of combustion products. Air is the most available source of oxygen, but because air also contains vast quantities of nitrogen, nitrogen becomes the major constituent of the products of combustion. The rate of combustion may be increased by finely dividing the fuel to increase its surface area and hence its rate of reaction, and by mixing it with the air to provide the necessary amount of oxygen to the fuel.

If all internal combustion engines worked according to the above equation, emissions and thus local environmental impacts of transportation would be negligible (except for carbon dioxide emissions). The problem is that combustion in internal combustion engines is imperfect and incomplete for two reasons:

First, the fuel and the oxider are not pure, causing an imperfect combustion. Although the refining process provides a "clean" fuel, gasoline is known to have impurities such as sulfur (0.1 to 5%), sometimes lead (anti-knock agent being phased out) and other hydrocarbons (like benzene and butadiene), while air is composed of 78% nitrogen and 21% oxygen. Thus, significant other chemical components are part of the combustion process.
Second, in part because of the first reason and in part because of the technology of the engine, incomplete combustion emits other residuals. Combustion in an engine occurs at an average rate of 25 times per second, leaving limited time for a complete combustion process. Besides carbon dioxide and water, a typical internal combustion engine will produce carbon monoxide (CO), hydrocarbons (benzene, formaldehyde, butadiene and acetaldehyde), volatile organic compounds (VOC), sulfur dioxide (SO₂), particulates, and nitrogen oxides (NO_x). These combustion products are the main pollutants emitted in the environment by transportation.

In addition to the imperfect and incomplete combustion of hydrocarbons, three major factors influence the rate of combustion and thus emissions of pollutants, which are the characteristics of vehicles, driving characteristics, and atmospheric conditions.

4. Transportation and Alternative Fuels

All other things being equal, the energy source with the lowest cost will always be sought. The dominance of petroleum fuels is a result of the relative simplicity with which they can be stored and efficiently used in the internal combustion engine vehicle. The transportation sector is heavily dependent on the use of petroleum fuels for obvious reasons. Other fossil fuels (natural gas, propane, and methanol) can be used as transportation fuels but require a more complicated storage system. The main issue concerning the large-scale uses of these alternative vehicle fuels is the large capital investments require in distribution facilities as compared with conventional fuels. Another issue is that in terms of energy density, these alternative fuels have lower efficiency than gasoline and thus require greater volume of on-board storage to cover the equivalent distance as a gasoline propelled vehicle.

Alternative fuels in the form of non-crude oil resources are drawing considerable attention as a result of shrinking oil reserves, increasing petroleum costs and the need to reduce emissions of harmful pollutants:

Biogas such as ethanol, methanol and biodiesel can be produced from the fermentation of food crops (sugar cane, corn, cereals, etc) or wood-waste. Their production however requires large harvesting areas that may compete with other types of land use. Besides, it is estimated that one hectare of wheat produces less than 1,000 liters of transportation fuel per year which represents the amount of fuel consumed by one passenger car traveling 10,000 kilometers per year. This limit is related to the capacity of plants to absorb solar energy and transform it through photosynthesis. This low productivity of the biomass does not meet energy needs of the transportation sector. In 2007, the US government proposed to reduce oil consumption by 20% by using ethanol. As the US is currently producing 26 billion liters of ethanol each year, this objective would require the production of nearly 115 billion liters of ethanol by 2017 which amounts to the total annual US maize production. Besides, the production of ethanol is an energy-intensive process. The production of 1 thermal unit of ethanol requires the combustion of 0,76 unit of coal, petroleum or natural gas. Biodiesel can be obtained from a variety of crops. The choice of biomass fuel will largely depend on the sustainability and energy efficiency of the production process.
Hydrogen is often mentioned as the energy source of the future (Khare and Sharma, 2003). The steps in using hydrogen as a transportation fuel consist in: 1) producing hydrogen by electrolysis of water; 2) compressing or converting hydrogen into liquid form; 3) storing it on-board a vehicle; and 4) using fuel cell to generate electricity on demand from the hydrogen to propel a motor vehicle. Hydrogen fuel cells are two times more efficient than gasoline and generate near-zero pollutants. But hydrogen suffers from several problems. A lot of energy is wasted in the production, transfer and storage of hydrogen. Hydrogen manufacturing requires electricity production. Hydrogen-powered vehicle requires 2-4 times more energy for operation than an electric car which does not make it cost-effective. Besides, hydrogen has a very low energy density and requires very low temperature and very high pressure storage tank adding weight and volume to a vehicle. This suggests that liquid hydrogen fuel would be a better alternative for ship and aircraft propulsion.
Electricity is being considered as an alternative to petroleum fuels as an energy source. A pure battery electric vehicle is considered a more efficient alternative to hydrogen fuel propelled vehicle as there is no need to convert energy into electricity since the electricity stored in the battery can power the electric motor. Besides an all electric car is easier and cheaper to produce than a comparable fuel-cell vehicle. The main barriers to the development electric cars are the lack of storage systems capable of providing driving ranges and speed comparable to those of conventional vehicles. The low energy capacity of batteries makes the electric car less competitive than internal combustion engines using gasoline. An electric car has a maximum range of 100 kilometers and speed of less than 100 kph requiring 4-8 hours to recharge.
Hybrid vehicles consisting of propulsion system using an internal combustion engine with an electric motor and batteries provide interesting opportunities combining the efficiency of electricity with long driving range. A hybrid vehicle still uses liquid fuel as the main source of energy but the engine provides the power to drive the vehicle or is used to charge the battery via a generator. Alternatively the propulsion can be provided by the electricity generated by the battery. When the battery is discharged, the engine starts automatically without intervention from the driver. The generator can also be fed by using the braking energy to recharge the battery. Such a propulsion design greatly contributes to overall fuel efficiency. Given the inevitable oil depletion, the successful development and commercialization of hybrid vehicles appears the most sustainable option to conventional gasoline engine powered vehicles.

The penetration of non fossil fuels in the transportation sector has serious limitations. As a result, the price of oil will certainly continue to increase as more expensive fuel-recovery technologies will have to be utilized with soaring demand for gasoline. But high oil prices are inflationary leading to recession in economic activity and the search for alternative source of energy. Already, the peaking of conventional oil production is leading to the implementation of coal derived oil projects. Coal liquefaction technology allows the transformation of coal into refined oil after a series of processes in an environment of high temperature and high pressure. While the cost-effectiveness of this technique as yet to be demonstrated, coal liquefaction is an important measure in the implementation of transportation fuel strategies in coal-rich countries, such as China and South Africa.

5. Transportation and Peak Oil

“Cheap oil, the lubricant of quick, inexpensive transportation links across the world, may not return anytime soon, upsetting the logic of diffuse global supply chains that treat geography as a footnote in the pursuit of lower wages.” L. Rohter, New York Times.

The extent to which conventional non-renewable fossil fuels will continue to be the primary resources for nearly all transportation fuels is subject to debate. Some studies estimate global resources for oil at about a trillion barrels. This represents 30 years of reserves at present rate of consumption. But the gap between demand and supply, once considerable, is narrowing, an effect compounded by the peaking off of global oil production. The steady surge in demand from China and India requires an additional output of 2-3 million barrels a day. This raises concern about the capacity of major oil producers to meet this rising world demand. The producers are not running out of oil, but the existing reservoirs may not be capable of producing on a daily basis the increasing volumes of oil that the world requires. Reservoirs do not exist as underground lakes from which oil can easily be extracted. There are geological limits to the output of existing fields. This suggests that an additional 4-5 million barrels a day need to be found to compensate for the declining production of existing fields. Reserves additions in Alaska, off-shore West Africa or the Caspian sea basin are not enough to offset this growing demand (Mass, 2005). The bitumen reserves in Alberta, Canada for instance are estimated at 170 billion barrels, second in the world in terms of oil reserves, behind Saudi Arabia. But extracting heavy oil from sands bitumen necessitates much energy and water. The production of 1 barrel of bitumen requires burning 10-20% of the energy content of the resulting crude oil in the form of natural gas.

Other studies argue that the history of the oil industry is marked by cycles of shortages and surplus (Johansson, 2003). The rising price of oil will render cost effective oil recovery in difficult areas. Deep water drilling or extraction from tar sands should increase the supply of oil that can be recovered and extracted from the surface. But there is a limit to the capacity of technological innovation to find and extract more oil around the world. Technological development does not keep pace with surging demand. The construction of drilling rigs, power plants, refineries and pipelines designed to increase oil exploitation is a complex and slow process. The main concern is the amount of oil that can be pumped to the surface on a daily basis. Some studies predict that carbon sequestration in the form of CO2 capture and storage, if technically and economically viable, could enhance the recovery of oil from conventional wells and prolong the life of partially depleted oil fields when into the next century (Evans, 2007).

The costs of alternative energy sources to fossil fuels are higher in the transportation sector than in other types of economic activities. This suggests higher competitive advantages for the industrial, household, commercial, electricity and heat sectors to shift away from oil and to rely on solar, wind or hydro-power. Transportation fuels based on renewable energy sources might not be competitive with petroleum fuels unless future price increase is affected by different fuel taxes based on environmental impacts. Excessive fuel price could stimulate the development of alternatives. But economists have demonstrated that automotive fuel oil is price inelastic. Higher prices result in very marginal changes in demand for fuel. While $100 per barrel was for a long time considered a threshold that would limit demand for automotive fuel and lead to a decline in passenger and freight-km, evidence suggests that higher oil prices had limited impact on the average annual growth rate of world motorization. The analysis of the evolution of the use of fossil fuels suggests that in a free market economy the introduction of alternative fuels is leading to an increase in the global consumption of both fossil and alternative fuels and not to the substitution of crude oil by bio-based alternative fuels. This suggests that in the initial phase of an energy transition cycle, the introduction of a new source of energy complements existing supply until the new source of energy becomes price competitive to be an alternative. The presence of both renewable and non-renewable types of fuels stimulates the energy market with the concomitant result of increasing greenhouse gas emissions. The production of alternative fuels adds up to the existing fossil fuels and does not replace it. World market consumption of all primary energy forms has grown by 40% during the period 1980-2000.

In a context where petroleum prices are relatively low substitution to alternative fuels in the transportation sector will require very strong government interventions forcing energy suppliers to purchase available green energies on the market at a fixed price. Without strong regulatory controls conventional oil substitution by renewable vehicle fuel requirements (ethanol and biodiesel) will be relative and marginal. Only under the conditions of price equilibrium between conventional and alternative fuels supply could the market become an effective transitional force. Answering the energy demand of the transportation sector will rest on a delicate balance between technological improvements, behavioral changes and environmental policies. Without presuming on the outcome, a major trend is already apparent. The energy crisis imposes capital rationing with greater emphasis on quality of transport infrastructures.

The main concern is the amount of oil that can be pumped to the surface on a daily basis, especially where major oil fields have reached peak capacity. Under such circumstances, oil prices are bound to raise in a substantial way, sending significant price signals to the transport market. How the transport system will respond and adapt to higher energy prices is obviously subject to much debate and interpretations. The following potential consequences can be noted:

Road. As far as the automobile is concerned, higher oil prices could trigger changes in several phases. Initially, commuters would simply absorb the higher costs either by cutting on their discretionary spending and/or going further into debt. Depending on their level of productivity, many economies could show a remarkable resilience. The next phase would see changes in commuting patterns (e.g. carpooling), attempts to use public transit, a rapid adoption of vehicles with high gasoline efficiency (in the United States, this could mark the downfall of the SUV) and a search for alternatives (discussed above). The existing spatial structure could also start to show signs of stress as the unsustainability of car dependant areas become more apparent. As high commuting costs and the inflationary effects of high oil prices on the economy become apparent many would no longer be able to afford living in a suburban setting. Cities could start to implode. The trucking industry would behave in a similar way, first by lowering their profits and their operating expenses (e.g. scheduling, achieve FTL), but at some point, higher prices will be passed on to their customers.
Rail. This mode is set to benefit substantially from higher energy prices as it is the most energy efficient land transportation mode. Rail is about three times more energy efficient than trucking. The level of substitution for passengers and freight remains uncertain and will depend on the current market share and level of service they offer. In North America, passenger rail has limited potential while in Europe and Pacific Asia passenger rail already assume a significant market share. For rail freight, North American freight distribution has an advantage since rail account for a dominant share of tons-km while this figure is less significant for other regions of the world, mainly due to the distances involved and the fragmentation of the system. In many cases, there could a pressure towards the electrification of strategic long distance corridors and the development of more efficient cargo handling facilities. Thus, growing energy prices are likely to affect long distance rail transportation differently depending on the geographical setting and the conditions of the existing system.
Air. This mode could be significantly impaired, both for passengers and freight. Air transportation is a highly competitive industry and the profit margins tend to be low. Fuels account for about 15% of the operating expenses of an air carrier, but because most of the other costs are fixed any variations in energy prices is reflected directly on air fares. A long term increase in energy prices is likely to impact discretionary air travel (mainly tourism), but air freight, due to its high value, may be less impacted.
Maritime. This mode is likely to be relatively unaffected as it is the most energy efficient, but fuel is an important component of a ship's operating costs. The response of maritime shippers over higher energy prices tends to be lowering speed, which may have impacts on port call scheduling. On the long run, higher energy prices may however indirectly impact maritime transportation by lowering demand for long distance cargo movements and incite port calls at ports having the most direct and efficient hinterland connections. In addition, this context may favor the development of short coastal and fluvial services where possible.

As the reality of peak oil steps in, the next stage is likely to be a growing level of unreliability in the supply system as shortages become more prevalent and common. At least, higher prices will trigger notable changes in usage, modes, networks and supply chain management. From a macro perspective, and since transportation is a very complex system, assessing the outcome of high energy prices remains hazardous. What appears very likely is a strong rationalization, a shift towards more energy efficient modes as well as a higher level of integration between modes to create multiplying effects in energy efficiency. As higher transport costs play in, namely for containers, many manufacturing activities will reconsider the locations of production facilities to sites closer to markets. While globalization was favored by cheap and efficient transport systems, the new relationships between transport and energy are likely to restructure the global structure of production and distribution.