In Conversation
August 2018

In Conversation with: Ms. Tammy Klein

In this issue of our “In Conversation with”, we are pleased to share some insights into the activities of Future Fuels Strategies, a US-based consultancy company which provides fuels market and policy intelligence services to its clients. We had the pleasure to talk to Tammy Klein, Principal of Future Fuels Strategies, and we would like to thank Ms. Klein for her efforts in comprehensively answering our questions and sharing her valuable views on future fuels developments with us.

Profile:

Ms. Tammy Klein
Principal
Future Fuels Strategies

Tammy Klein, Principal of Future Fuel Strategies, provides market and policy intelligence with unique insight and analysis drawn from her global network in the fuels industry through the consulting services she provides and the membership-based Future Fuels Outlook service. She is an expert on conventional, biofuels and alternative fuels market and policy issues. Tammy serves clients in the auto, oil and associated industries, as well as governments and NGOs and helps them understand current and future fuels trends and issues; or in the case of government and NGOs, the best policies to develop and implement. She holds a J.D. from the Georgetown University Law Center and a B.S. in Journalism from the University of Florida.

Q: In which countries and regions do you see the most evolution and progression for electric vehicles? What are the drivers behind it?

A: My research has showed that, in addition to the political will to combat climate change and decarbonize transport, a country's wealth is the other important factor of whether an EV market will take off. And that list is pretty short as it turns out. I have projected that EV markets will progress the most in countries such as China, Canada, South Korea, Japan, the U.S. and some EU countries. The drivers include the need to reduce transport-related air pollution and climate change. However, another driver that no one is really talking about is competitiveness. It is no accident that some of the countries that have pledged to ban or limit the internal combustion engine are also major producers of automobiles. Car bans, EV mandates and incentives are ways to grow this new industry, and everyone wants in on the Chinese car market which is growing 20% a year. It's a huge market opportunity for manufacturers and one that I think the Chinese government wants to corner, not just for its market but globally as well. The race is on.

Q: Can you share your quantitative and qualitative view and outlook on these markets with us? From today’s point of view, how do you see consumer acceptance developing over time?

A: I provide a more detailed outlook for clients, but here I will say that the market in these "high potential" countries are going to grow at a faster rate than the rest of the world. Consumer acceptance will continue to grow in these countries as people become more comfortable with driving and recharging EVs, and as the number of model choices and infrastructure continues to grow. The infrastructure part of this is key. If the consumer doesn't have confidence that they can quickly and easily recharge an EV, they will not buy. Public fast charging is essential, especially in urban areas. Right now, there are about 110,000 fast-charging outlets globally and I expect that to grow quickly. I think this is another metric to watch closely in terms of assessing how much these markets are growing.

Q: What are the main challenges for the electric vehicle industry? What are the main reasons for why successful mass production has not made any serious breakthroughs till now?

A: There are many challenges for the industry, one of which I just discussed, which is infrastructure limitations. I wouldn't say there haven't been serious breakthroughs. Seven or eight years ago, no one was really talking seriously about EVs as a transport option and/or a policy solution. Now, we have over 3 million EVs on the roads and that number continues to grow. We are talking about an entire revolution in our energy/transport system and it just does not happen overnight. That said, along with infrastructure, another factor that slows market development is the cost of these vehicles. For most of us, these vehicles are simply out of reach economically compared to an ICEV (internal combustion engine vehicle). A big part of the vehicle cost is the battery. Battery prices have decreased tremendously over the last few years, and I think they will continue to, but to really reach parity with a traditional ICEV, the battery has to be less than US$100/kWh.  

Q: Lifespan/weight/charging times are still the main concerns for battery banks in electric vehicles. What are the environmental concerns regarding the disposal of old batteries?

A: Disposal of batteries is a big concern but countries are starting to act. For example, China recently adopted technical requirements for recycling and legal responsibility and is starting a recycling program. Decomposition of dumped EV batteries could release a range of heavy metals and other toxic chemicals that could end up in water supplies globally, for example. Recycling and reuse supply chains are being developed.

Q: How do electric vehicle technology compare to hybrid fuel cell technology, in terms of acquisition cost and depreciation and also in terms of ecological matters?

A: Hydrogen fuel cells have a lot of potential, especially if the hydrogen can come from a renewable resource. The fuelling experience would be similar to what we're used to now and there are no range issues. Renewable hydrogen would avoid some of the sustainability concerns we see with rare earths and minerals for battery electric vehicles (BEVs). Sure, the BEV has no tailpipe emissions, and depending on the power source can greatly reduce GHG emissions and is fossil-free, but I am also concerned that we are just switching dependencies. I call it "moving the coconuts around." Instead of being dependent on fossil fuels, we are now dependent on rare earths and minerals such as cobalt which comes from unstable areas of the world. In my view, if sustainability is truly a policy or national priority, then it has to be thought through the entire chain. Hydrogen has benefits, but right now is expensive. The vehicles are more expensive and the infrastructure is less present. It is a high priority in countries such as Japan, but I do wonder whether the policy focus will stay on BEVs and plug-in electric hybrid vehicles (PHEVs), therefore outpacing hydrogen. That is something I continue to watch for clients.

Q: Given the abundance of cheap natural gas availability in some parts of the world, i.e. in the United States, why is natural gas not breaking through as the cheapest, cleanest and easiest alternative to gasoline, and as a surely viable alternative to electric vehicles? What are the road blocks for i.e. CNG developments?

A: It's an interesting question. There actually was legislation in Congress at one time that would have required the auto industry to produce other types of vehicles that could run on different alternative fuels, including natural gas. Of course, that never passed. Natural gas has always been a niche fuel in the U.S., most often used in public and private fleets. It has never really "broken through" in the light-duty market. Honda had a natural gas vehicle a few years ago, but stopped offering it for sale because of the lack of sales and consumer interest. We can point to the lack of infrastructure as a reason. But the real answer to me is that at the end of the day policymakers didn't want it and neither did the auto and oil industries. What about EVs then? Policymakers in some U.S. states and cities want EVs and so they are making that market happen in various ways with incentives, funding and installing infrastructure, purchasing fleet vehicles, reducing vehicle registration fees and the like.  

Q: What other alternative energy concepts for road transportation are being looked at? And, are they being promoted? Are they viable against electric vehicles and hybrid fuel cell technology?

A: Along with zero emission vehicle incentives and mandates, another strategy governments continue to pursue is next generation biofuels. There is a lot of research going on in Europe looking at diesel alternatives, such as Power-to-X fuels. The reality is that we will have a large legacy fleet of light- and heavy-duty vehicles that we have to figure out how to both fuel and meet air pollution and climate targets. That's what is driving some of these and other alternatives. However, the real challenge as I see it is not necessarily decarbonizing the global light-duty fleet, but other sectors such as marine, aviation and heavy-duty. There will need to be alternatives because I don't believe those sectors can be electrified, at least not for the foreseeable future.

Q: Which role will other Clean Fuels play during the long transition phase from fossil fuels to alternative energy solutions?

A: I think this is the key question, because I think clean conventional fuels are going to be critically important as time goes on. I keep asking this question at conferences and other venues where I speak: if we assume that 50%+ of new vehicle sales by 2040 will be EVs (one of the more progressive projections out there), then what is going to fuel the other 50%? There is so much focus in the media, in some governments and even in industry on the first 50%, but not many are even thinking about the other 50%. So, what do those fuels need to look like? What kinds of parameter changes do we need to consider? I'm not just talking about octane. What is an ICEV in 2040 in different markets going to look like? Those are the kinds of conversations we need to be having now.

Q: We very much appreciate your contribution to this interview. How should our readers stay adequately informed about global future fuels developments? What publication services does Future Fuels Strategies offer?  

A: Readers can visit my website, futurefuelstrategies.com, where I have a blog and a podcast where I interview government, industry, academics, trade groups and NGOs on future fuels issues. Readers can also sign up for my free biweekly newsletter. I wanted to give back something to the industry which has done so much for me. I have also created a service, the Future Fuels Outlook, where I cover many of the issues we've discussed here for clients: zero emission vehicle, biofuels, other alternative fuels, vehicle technology and fuel economy trends, among other issues, as well as their drivers. My thought was that I could put together an offering for clients that was compelling but also cost effective for them, building on and leveraging my global network, and the response has been amazing.

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