Kyle Datta

Senior Director

Rocky Mountain Institute

www.rmi.org

Can India Win The Oil End Game?

June 29 2006

Copyright © 2006 Rocky Mountain Institute. All rights reserved.

The United States can get completely off oil and revitalize its economy—led by business for profit

There are some skeptics….

Getting off oil, you say?

Winning the Game: restoring competitive-ness and eliminating oil dependence

National competitiveness and national security at risk

Why should the U.S. care?

Japan, European Union, China will eat Detroit’s jobs for lunch

Energy insecurity, price volatility, and climate concerns

Save net US$70 billion/y by 2025, create 1 million net jobs

How do we win?

1. Efficient end-use can save half the oil at US$12 a barrel

◊ Biofuels substitute for another fourth

◊ Saved gas can displace the rest, preferably via hydrogen

A profitable U.S. transition beyond oil within 20 years

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government projection (extrapolated after 2025)

end-use efficiency @ $12/bbl

plus supply substitution @<$26/bbl

plus optional hydrogen from leftover savednatural gas

U.S. oil use and imports, 1950–2035

Petroleum use

Petroleum imports

)

plus optional hydrogen from leftover saved natural gas and/or renewables (illustrating 10% substitution; 100%+ is feasible)

Globally, the U.S., China, India and Asia drive 58% of incremental demand for oil

25-Year Growth in Oil Demand: 44 Mbbl/d (1.9% p.a)2001 to 2025: From 77 to 121 Mbbl/d

U.S.8.7

China7.8

India3.2

ROW8.2

Asia5.8

Brazil& FSO

5.2

Industrial5.2 58%

Source: World Energy Outlook, IEA, 2004.

India dependence on imported crude oil will grow from 75% to 88%, raising security concerns

I ndia's Oil Consumption

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Source: World Energy Outlook, IEA, 2004.

Transport fuel will be primary driver for future demand for oil

Crude Oil Demand

49%

12%

12%

12%

15%

transport Industrial fuel LPG+kerosene Naptha Others

Transport Fuel Demand

30%

10%

18%8%

34%

HCV+LCV Cars/ PV 2W + 3W Aviation Others*

Source: World Energy Outlook, IEA, 2004. *: Defense, Railways, Shipping, Tractors etc.

India’s auto growth is driven by increased affluence and urbanization

Double digit growth in near term

8% CAGR for next 10 years

Two wheelers

GDP growth of 8% yoy

Strong rural demand driven by agriculture sector

Demographics- Youth power

Double digit growth in near term

6-8% CAGR for next 10 years

Cars/MUV

More disposable income; smaller families

Rationalization of tariffs, presence of global players

Easy financing

6-8% growth in short term

Road freight competing with railways

LCV/HCV

Urbanization- growth in towns and cities

Infrastructure debottleneck- Golden Quadrilateral

Safety- Ban on overloading

Number of vehicles on road will quadruple by 2025

Vehicles by Segment

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Two-wheelers Cars/MUV LCV/HCV

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Unlike the US, heavy vehicles and motorcycles account for most of the growth in oil demand

Vehicles by Segment

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India to become the second largest auto market by 2035

Young demographics

Ageing car population

High Economic growth

Price sensitive

Technology savvy

Small and medium cars are the norm (hatchbacks)

Two-wheelers market (7:1)

Strong domestic industry

Govt. focus on developing public transport

Ease of bank financing

Technology transfer and strong supplier industry

Cross subsidization of domestic fuels (problem of adulteration)

Aspire to be globally competitive

Customers Collaborators CompetitionContext Regulation

CARS: save 69% at 57¢/gal

BLDGS/IND: big, cheap savings; often lower capex

Integrating low mass & drag with advanced propulsion saves ~2/3 of demand very cheaply

QuickTime™ and aTIFF (Uncompressed) decompressor

are needed to see this picture.

TRUCKS: save 65% @ 25¢/gal

TWO-WHEELERS: save 20%

Technology is improving faster for efficient end-use than for energy supply

Where does a car’s gasoline go?

6% accelerates the car, <1% moves the driver

2/3 to 3/4 of the fuel use is weight-related

Each unit of energy saved at the wheels saves ~7–8 units of gasoline in the tank (or ~3–4 with a hybrid)

So first make the car much lighter!

0% 20% 40% 60% 80% 100%Braking resistance Rolling resistance Aerodynamic dragEngine loss Idling loss Drivetrain lossAccessory loss

87% of the fuel energy is wasted

13% tractive load

Baseline Vehicle (2004 Audi

AllRoad 2.7T)

51% Mass Reduction *

Reduced Power From Better

integration, Aero, Tires, Powertrain

Hybridization Gallons Per Year used by

Lightweight Hybrid Vehicle

Critical insight: light weight before aerodynamics and powertrain creates

68% of a typical SUV’s fuel savings

956 461

105

111279

Issues: crashworthiness and manufacturing cost

US gallons per year

Three technology paths: aluminum, light steels, carbon composites (the

strongest & lightest)

◊ Opportunity: Advanced Materials Lightweight Steel Alloys

› Ultra-Light Steel Auto Body (ULSAB):

– Mass savings of 25% over the benchmark at no cost penalty

– 80% improvement in torsional rigidity

– 52% improvement in bending rigidity

– 58% improvement in first body mode

– Meets all mandated crash requirements Aluminum Titanium Alloys: 40% lighter, 3–4x cost Carbon Composites: 50% lighter, absorbs 6–12x crash energy per lb.

vs. steel; cost and manufacturing speed improving Advanced materials could integrate into existing processes

› BMW applying carbon composites to roofs and hoods 60% of the high-performance steel materials in automotive use today

were not available 10 years agoSource: Fiberforge, Winning the Oil Endgame

A diesel hybrid has the same Well-to-Wheels Efficiency as a FCV

88

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5838

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30

16

*1

*2

*2

Source: Toyota Motor Corporation, 2003; US EPA efficiency labels and US fuel systems

Heavy trucks: save 25% free, 65% @ 25¢/gallon

Better aero & tires, better engines etc., less weight

6.2 to 11.8 mpg with 60% IRR by improving aero drag, tires, engines, mass, driveline, acces. loads & APU; then ~16 mpg via operational improve-ments; being built 2005

PACCAR high-eff. concept truck

Colani/Spitzer tanker (Europe), reportedly 11.25 mpg

Big haulers’ margins double from 3% to 6–7%…so create demand pull — currently underway, led by major customers

Two recent concept trucks

Basic physics: Overcoming aerodynamic resistance consumes the majority of truck fuel

on a typical highway

◊Aerodynamics = ~2/3 of tractive load on highway

◊To lead:Need to pay attention to COMBINATION of (tractor + trailer)

ETR = Inertia + Rolling resistance + Air resistance

* Approximate valuesSource: Technology Roadmap for the 21st Century Truck Program (DOE 2000)

Power Used to Overcome Resistance

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Speed (mph)

Hors

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Rolling resistance Aerodynamic drag

*

* Assuming driver utilizes engine at 95% of max efficiency due to driving habits (it’s probably much less in reality)Source: Technology Roadmap for the 21st Century Truck Program (DOE 2000), RMI analysis

Where a long-haul Class 8 truck’s diesel fuel goes

Focus: End of Chain [Fuel] [Engine] [Drivetrain] [Tractive Loads]

0.02

1.00 0.070.93 0.56

0.02 0.030.30 0.19

0.11 0.050.06

• ~38% efficient today: Engine & drivetrain

• Represents >100 years’ R&D: Engine efficiency is more difficult to improve further than is end-use efficiency

End-use: Consider what would happen if we halved aerodynamic drag and mass

Total PrimaryEnergy

IdlingLosses

Used in Hauling

EngineLosses

Driver Losses*

AuxiliaryLoads

DrivetrainLosses

Reachesthe Wheels

Aero-Dynamic

Drag RollingResistance

Moves thePlatform

Hauls the Freight

0.01

0.47 0.46 0.28

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0.06 0.02 0.04

Cut aerodynamic drag and rolling resistance by 50%

Focus on fuel end-use: Reducing air drag & roll-ing resistance by 50%, and idling by 80%, saves ~50% of

fuel—without engine improvements

• Eliminate >50% of fuel use• No change in engine &

drivetrain: same 38% efficiency

0.01

* Assume no change in driver behavior from previous slideSource: Technology Roadmap for the 21st Century Truck Program (DOE 2000), RMI analysis

Total PrimaryEnergy

IdlingLosses

Used in Hauling

EngineLosses

Driver Losses*

AuxiliaryLoads

DrivetrainLosses

Reachesthe Wheels

Aero-Dynamic

Drag RollingResistance

Moves thePlatform

Hauls the Freight

Efficient vehicles can save 1.4 mbpd by 2025

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CW SOA Vehicle Stock

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End-UseEnd-UseEnd-UseEnd-Use

Fuel Cell VehiclesFuel Cell Vehicles

Gasoline VehiclesGasoline Vehicles

Diesel VehiclesDiesel

Vehicles

Biofuels Technologies are maturing

FeedstocksFeedstocksFeedstocksFeedstocks

Consumer Residues

Consumer Residues

Agricultural Residues

Agricultural Residues

Fiber Residues

Fiber Residues

Cellulosic Peren. Crops

Cellulosic Peren. Crops

Energy Crops

Energy Crops

Oil CropsOil

Crops

Biochemical Conv.Biochemical Conv.

ConversionConversionConversionConversion

Thermochemical Conv.Thermochemical Conv.

AnaerobicDigestionAnaerobicDigestion

Fermentation & DistillationFermentation & Distillation

Microbial DigestionMicrobial Digestion

ExtractionExtraction

GasificationGasification

Pyrolysis Liquif & HTU

Pyrolysis Liquif & HTU

Syn

gas

Syn

gas

FuelFuelFuelFuel

HydrogenHydrogen

MethanolMethanol

Bio-Oil (Fischer-Tropsch)

Bio-Oil (Fischer-Tropsch)

BiogasBiogas

EthanolEthanol

Biodiesel (Veg. Oil Methyl

Esters)

Biodiesel (Veg. Oil Methyl

Esters)

Cellulosic ethanol is on the horizon

Process Description Pilot plants

Fermentation Conventional ethanol from sugars (corn, sugarcane) are marginally energy positive. 100-110 gal/ton

2% of U.S. gasoline demand currently comes from ethanol made this way from 7% of corn

Acid hydrolysis Strong acids are used to break down cellulose into sugars. Dilute and concentrated acid processes exist; dilute process requires high temperature and pressure. 70-80 gal/ton

Commercial plants in operation. Used mainly in niche markets for waste disposal.

Thermal gasification High temperatures convert biomass into synthesis gas of carbon oxides and hydrogen. In the presence of a catalyst, these gases are converted to ethanol. 70=>140 gal/ton

Arkansas and Colorado

Enzymatic reduction Enzymes turn woody biomass into sugars. Novozymes recently announced a 30-fold reduction in enzyme cost. 90=>120 gal/ton

Ontario

su

gar

cellu

lose

Jatropha has potential to rival Palm Oil as biodiesel feedstock

High yield, 7.5 tonnes seed/hectare = 2.5 tonnes oil converts to 2,750 l biodiesel

Drought tolerant, perennial, grows on marginal lands

Multiple products (oil, seed cake)

Market acceleration needed to win the game

Pubic Private Consortium to for RD&D advanced composite material manufacturing

Feebates to drive innovation in industry based on customer demand

Technology collaboration and making India as global manufacturing hub for small fuel efficient cars

Rationalization of fuel subsidies to assure quality fuel

India’s Energy Future is Choice, Not Fate