Winning the Oil End Game -- Technical Annex …

Winning the Oil End Game -- Technical Annex                          www.oilendgame.org

Chapter 10

TRAINS

1. Summary
In rail transport we expect a Conventional Wisdom technology portfolio to save 13.3% of
rail fuel use versus AEO 2025 (EIA, Annual Energy Outlook 2004 with Projections to
2025) rail fuel use, or some 0.08 Quads, at a cost of saved energy (CSE) of $0.14 per
gallon of saved diesel. We expect a State of the Art technology portfolio to be able to
save 30.3%, or 0.2 Quads, beyond the AEO 2025 baseline at a CSE of $0.26 per saved
gallon of diesel.


2. Detailed Assessment and Results
In our assessment of the efficiency potential for the railroad sector, we rely mainly on the
outlook provided by the CEF report and Abacus Technology Corporation [1], Argonne
National Labs [2] and [3], and by the Association of American Railroads [4]. We note
that very little research and original materials have emerged since 1991, with the
exception of [2] and [3]. We expect a Conventional Wisdom technology portfolio to save
13.3% of rail fuel use versus AEO 2025, or some 0.09 Quads, at a cost of saved energy of
$0.14 per gallon of saved diesel. We expect a State of the Art technology portfolio to be
able to save 30.3%, or 0.2 Quads, beyond the AEO 2025 baseline at a CSE of $0.26 per
saved gallon of diesel. These findings are summarized in Table 10-1.

Brief overview of industry energy use: U.S. railroad transport has relatively modest
relative energy use consumption, using about 10% of diesel fuels and about 2.3% of U.S.
transportation fuels [2]. In 2000 U.S. railroads spent some $2 billion on fuel, or about 7%
of total operating expenses [2], burning approximately 0.74 Quads of energy. Freight
carriers consumed some 0.57 Quads, or 77%, of this total. Rail passenger service
therefore plays a very small role in U.S. transportation energy use, serving some 26
billion passenger miles, or approximately 0.4% of passenger travel [1].

Baseline: In 1999, AEO projected a 0.5%/yr growth in rail energy efficiency between
1997 and 2020 [1], a modest rate in comparison to the historic (197096) rate of 2.4%/yr,
and the more recent rate of 2.7%/yr (198696) [1]. The CEF report argued that this rate
appeared low in light of the remaining potential for efficiency gains, and postulated that
government policy that encourages remaining consolidation, coupled with an increased
R&D budget and tax incentives for energy-efficiency measures, should be able to boost
efficiency gains to 1.0%/yr in the moderate case [1]. We note that at the time of this
writing (2004), AEO now projects a 1.0% growth in rail energy efficiency between 2000
and 2025. This projection is therefore the baseline used here.

Efficiency outlook: The railroads, their suppliers, and the federal government have
embarked on a cooperative effort to further improve railroad fuel efficiency. The stated


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target is to improve efficiency by 25% between now and 2010 and by 50% by 2020, on
an equivalent gallon per revenue ton-mile basis [2].
This is more aggressive thatn the CEF Advanced case projection of a 1.5%/yr efficiency
improvement, especially since a continuation of the high historic rate of increase would
be unlikely based on analysis of the importance of increased loadings in the more recent
efficiency gains. CEF also postulated that policies that help freight railroads add to
capacity and improve their multimodal operations, in addition to the consolidation
mentioned above, will draw added traffic into rail from trucks, with a corresponding net
reduction in freight energy use and greenhouse emissions. We adopt the CEF Advanced
case as our Conventional Wisdom technology portfolio effect, i.e. a 0.5 percentage point
improvement relative to the baseline used here. We also note that CEF assumed 2 percent
of truck freight in their Moderate case and that 5 percent in their Advanced scenario
would be shifted to rail by 2020. For the year 2020, the shifts are approximately 33
billion ton-miles for the Moderate scenario and 83 billion ton-miles for the Advanced
scenario.

For our State of the Art technology portfolio we assume that railroad average fuel
efficiency will increase by 50% by 2020. This is achieved via the detailed R&D
inventory in [2], covering (i) the four main engine-related areas of in-cylinder
combustion and emission control, aftertreatment, thermal (exhaust gas) management, and
sensors and controls, and comprising 25 detailed R&D initiatives, plus (ii) main
locomotive systems comprising idling reduction, energy recovery, and motor and drive
development, (iii) train system optimization comprising operations optimization,
consistent management, fleet management, wheel/rail friction, aerodynamics, and rolling
resistance, and (iv) advanced power plants and fuels, covering homogenous charge
compression ignition (HCCI) engine technology, fuel cells, gas turbines, locomotive
electrification, and advanced fuels.

We also assume that the simple average annual 3.33% rate of efficiency improvement
implied by this 200520 shift continues until 2025, for a total of 66.7% improvement by
2025 versus the 2000 baseline. This implies a 2.07% compounded annual efficiency
improvement rate between 2000 and 2025, or 1.07% above the 1.0% annual improvement
in the AEO 200025 baseline. In total, this amounts to a 30.3% efficiency-gain by 2025
over the AEO estimate. The savings-estimates exclude effects from a shift of freight from
trucks to rail. Such a shift would further increase energy efficiency and improve cost-
effectiveness. Additional global benefits will accrue from the sales of (1) advanced
locomotives and train systems overseas and (2) engines for marine applications.

Discussion of costs: The research objective of improving total railroad average fuel
efficiency by 50% by 2020 (savings are to begin in 2005) implies that to bring funding on
a level consistent with that of heavy trucks, the government's portion of funding for
locomotive and railroad R&D is estimated to be about $20 million annually for about 14
years [2]. In this R&D program about $0.46 of government funding is expended per
barrel of oil saved [2]. With an estimated average industry cost-share of 25%, total R&D
funding is about $0.58 per barrel saved. To this we would add cost of capital equipment,
infrastructure, and production costs needed to implement the technologies.


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One way to account for these cost categories would be to assume that they average to the
cost of conserved energy for the Conventional Wisdom and State of the Art truck
technology portfolios. In other words, the railway and locomotive R&D spending plus the
cost of saved energy from the truck technology portfolio would equal the total rail CSE.
This assumption has its limitations, especially given that there are only about 800
locomotives built in the United States annually [2], versus about 170,000 tractors and
possibly twice the number of trailers. However, if the locomotive roadmap and associated
program were able to piggyback on the experience of the trucking industry, which is a
stated goal of the program, it is possible that the costs of the additional categories would
be mitigated somewhat. For CW we assume the average cost of saved energy will be that
of the CSE for trucks, plus the R&D component. For SOA we assume the average rail
CSE will be double that of the CSE for trucks plus the R&D component.


REFERENCES

1 Interlaboratory Working Group. 2000. Scenarios for a Clean Energy Future (Oak
   Ridge, TN: Oak Ridge National Laboratory and Berkeley, CA: Lawrence Berkeley
   National Laboratory), ORNL/CON-476 and LBNL-44029, November. Available
   online at http://www.ornl.gov/sci/eere/cef/

2 Frank Stodolsky et. al, "Railroad and Locomotive Technology Roadmap," Center for
   Transportation Research, Energy Systems Division, Argonne National Laboratory,
   December 2002. Available online at
   http://www.climatevision.gov/sectors/railroads/pdfs/roadmap.pdf

3 Mohumad F. Alzoubi, George R. Fenske, Robert A. Erck, and Amrit S. Boparai,
   "USDOE Top-of-rail lubricant project," Final Report to U.S. Department of Energy,
   Office of Transportation Technology, Office of Heavy Vehicles Technologies,
   Argonne National Laboratory, February 2000. Available online at
   http://www.climatevision.gov/sectors/railroads/pdfs/toprail.pdf

4 American Association of Railroads, "Railroads and Greenhouse Gas Emissions", Jan
   2003. Available online at http://www.aar.org/ViewContent.asp?Content_ID=1220




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Table 10-1: Instantaneous potential rail fuel use under Conventional
Wisdom and State of the Art technologies


                                   Baseline CW 2025 SOA 2025
                                                               Units
Summary
  Total use                         0.740   0.642    0.516     Quads
                                    0.346   0.300    0.241     Mbbl/d

Savings
  Techn. Pot. vs. baseline                  13.3%    30.3%     % of baseline
                                            0.098    0.224     Quads
                                            0.046    0.105     Mbbl/d
  Savings with stock turnover               13.3%    30.3%     % of baseline

Cost of Saved Energy (CSE)                  $0.58    $0.58     $/bbl crude (R&D only)
                                            $0.14    $0.26     $/gal diesel (at nozzle)
                                            $5.98    $10.92    $/bbl diesel

Details
EIA 2025 passenger                  0.170                      Quads
                                    0.080                      Mbbl/d
                                    23%                        % of total use
EIA 2025 freight                    0.570                      Quads
                                    0.267                      Mbbl/d
                                    77%                        % of total use

Eff. Impr. vs. baseline, pass.      1.0%     0.5%     1.1%     % per year
Eff. Impr. vs. baseline, freight    1.0%     0.5%     1.1%     % per year

Post-measure diesel use, pass.              0.147    0.118     Quads
                                            0.069    0.055     Mbbl/d
Post-measure diesel use, freight            0.494    0.397     Quads
                                            0.231    0.186     Mbbl/d