Transportation and Energy

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

1. Energy

Human activities are closely dependent on the usage of several forms and sources of energy to perform work. Energy is the potential that allows movement and/or the modification of matter (e.g. making steel by combining iron and carbon). The energy content of an energy source is the available energy per unit of weight or volume, but the challenge is to effectively extract and use this energy. Thus, the more energy consumed the greater the amount of work realized and it comes as no surprise that economic development is correlated with greater levels of energy consumption. There are four types of physical work related to human activities:

Modification of the environment. All the activities involved in making space suitable for human activities, like clearing land for agriculture, modifying the hydrography (irrigation), and establishing distribution infrastructures, as wells as constructing and conditioning (temperature and light) enclosed structures.
Appropriation of resources. Involves the extraction of agricultural resources 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 of (e.g. collection, treatment and disposal).
Processing resources. Concerns the modification of products from the biomass, of raw materials and of goods to manufacture according to economic needs. Over the last 200 years, work related to processing was considerably mechanized (e.g. assembly lines).
Transfer. Involves the movement of freight, people and information from one location 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 and has consequently been subject to massive economies of scale.

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, such as solar energy, or are unevenly distributed around the world, such as oil. Through the history of mankind's use of energy, the choice of an energy source depended on a number of utility factors which involved a transition in energy systems from solid, liquid and eventually to gas sources of energy. Since the industrial revolution, efforts have been made to have work being performed by machines, which considerably improved industrial productivity. The development of steam engine and the generation and distribution of electric energy over considerable distances have also altered the spatial pattern of manufacturing industries by liberating production from a direct connection to a fixed power system. While in the earlier stages of the industrial revolution factories located close to sources of energy (a waterfall or a coal field) or raw materials, mass conveyances and new energy sources (electricity) enabled a much greater locational flexibility.

Industrial development places large demands on 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 the 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. Energy consumption has a strong correlation with the level of development. Among developed countries, transportation now accounts between 20 and 25% of the total energy being consumed. The benefits conferred by additional mobility, notably in terms of a better exploitation of comparative advantages, have so far compensated the growing amount of energy spent to support it. At the beginning of the 21st century, the transition reached a stage where fossil fuels, notably petroleum, are dominant. Out of the world’s total power production, 87.1% is derived from fossil fuels.

2. Transportation and Energy Consumption

Transportation and energy is a start a standard physics application where giving momentum to masses (people, vehicles, cargo, etc.) requires a proportional amount of energy. The relationship between transport and energy is a direct one, but subject to different interpretations since it concerns different transport modes, each having their own performance levels. 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 fast but energy intensive modes since the time component of their mobility tends to have a high value, which conveys the willingness to use more energy. 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 lower speed. This fits relatively well freight transport imperatives, particularly for bulk. Comparatively, air freight has high energy consumption levels linked to high speed services. Transportation markets are particularly impacted by these three energy issues:

The price level and volatility of energy sources which are dependent on the processes used in their production. Stable energy sources are obviously preferred.
Technological and technical changes in the level of energy performance of transport modes and terminals. An important goal is thus to improve this energy performance since it is linked with direct economic benefits for both operators (lower operating costs) and users (lower rates).
Environmental externalities related to the use of specific modes and energy sources and the goal to reduce them.

A trend that emerged since the 1950s concerns the growing share of transportation in the world's total oil consumption; transportation accounts for approximately 25% of world energy demand and for about 61.5% of all the oil used each year. The impacts of transport on energy consumption are 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 are well developed.
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. This is particularly the case for public transit.
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 the world’s energy markets.

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. Rail transport accounts for 6% of global transport energy demand.
Maritime transportation accounts for 90% of cross-border world trade as measured by volume. The nature of water transport and its economies of scale make it the most energy efficient mode since it uses only 7% of all the energy consumed by transport activities, a figure way below its contribution to the mobility of goods.
Air transportation plays an integral part in the globalization of transportation networks. 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 cost for the air transport industry accounting for 13-20% of total expenses. 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 movements:

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 one car for every two people. About 60% of all American households owned two or more cars, with 19% owning three or more. Another 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. Fuel consumption is however impacted by diminishing returns, implying that higher levels of fuel efficiency involve declining marginal gains in fuel consumption. Also, the growth of vehicles-miles travelled is correlated with changes in energy prices and is entering a phase of maturity in several developed countries.
Freight transportation is dominated by rail and maritime shipping, the two most energy efficient modes. Coastal and inland waterways also provide an energy efficient method of transporting passengers and cargoes. A tow boat moving a typical load of 15 barges in tow holds the equivalent of 225 rail car loads or 870 truck loads. The rationale for favoring coastal and inland navigation is 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 liters 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.

3. Petroleum: The Transport Fuel

Almost all transportation modes depend on a form of the internal combustion engine, with the two most salient technologies being the diesel engine and the gas turbine, since they are the lynchpin of globalization. While ship and truck engines are adaptations of the diesel engine, jet engines are an adaptation of the gas turbine. Transportation is almost completely reliant (95%) upon petroleum products with the exception of railways using electrical power. 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. What varies is the type and the quality of petroleum derived fuel being used. While maritime transportation relies on low quality bunker fuel, air transportation requires a specialized fuel with additives.

It is worth having a closer look at 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), bunker fuel (for ships) 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, 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 (where technological improvements can play a role), driving characteristics (where planning and regulation can play a role), and atmospheric conditions. The internal combustion engine, mostly due to friction, converts less than a third of the energy they consume into momentum. For electric motors, this figure is above 80%.

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-derived fuels is a result of the relative simplicity with which they can be stored and efficiently used in the internal combustion engine vehicle. 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 if performance is kept constant.

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. The most prevalent alternatives being considered are:

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 the 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 also 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. The steps in using hydrogen as a transportation fuel consist in: 1) producing hydrogen by electrolysis of water or by extracting it from hydrocarbons; 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 vehicles require 2-4 times more energy for operation than an electric car which does not make them 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. Yet, as technology improves, cost effective batteries will become available.
Hybrid vehicles consisting of propulsion system using an internal combustion engine supplemented by an electric motor and batteries, which provides opportunities combining the efficiency of electricity with the long driving range of an internal combustion engine. 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 on the medium term the most sustainable option to conventional gasoline engine powered vehicles.

The diffusion 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, particularly if demand for gasoline continues to grow. But high oil prices are deflationary leading to recession in economic activity and the search for alternative sources of energy. Already, the potential 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.

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.

5. Transportation and Peak Oil

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. 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 developing economies, particularly China and India, requires additional outputs. 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 reserves 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. 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.

Others argue that the history of the oil industry is marked by cycles of shortages and surplus. The rising price of oil will render cost effective oil recovery in difficult areas. Deep water drilling, extraction from tar sands and oil shale 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 and the related risks can be very high. 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 well into the next century.

High fuel prices could stimulate the development of alternatives, but automotive fuel oil is relatively 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 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.

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 rise 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. 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 other transport alternatives. The existing spatial structure could also start to show signs of stress as the unsustainability of car dependent areas become more apparent. There is already evidence that peak car mobility may have been reached in the United States. 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, reflected in jet fuel, is likely to impact discretionary air travel (mainly tourism), but air freight, due to its high value, may be less impacted. Technological developments are helping maintaining the competitiveness of air transportation with more fuel efficient planes.
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 (slow steaming), 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 (near-sourcing). 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 towards regionalization.