Executive Speeches

Remarks of Eugene W. Zeltmann, president & chief executive officer of the New York Power Authority, at the EVAA Electric Transportation Industry Conference.

December 11, 2002

I appreciate this opportunity to focus on the vital role of electric-drive vehicles in winning our energy independence and protecting our national security.

We’ve been fighting—and losing—this energy-independence battle for the past 30 years.  But—with continued instability in the Middle East and the prospect of war in Iraq—the stakes have never been higher.

The statistics alone sound a clear call to action: 

• Oil currently accounts for about 40 percent of all U.S. energy consumption—and roughly half of our oil is imported.

• Something like two-thirds of all the petroleum we use goes to transportation.

• And—particularly alarming—the U.S. transportation sector alone now consumes twice the amount of oil that we produce domestically.  That gap will only widen over time if we stay on the current course.

Under any circumstances, it would be dangerous and irresponsible to increase our reliance on foreign oil to meet future needs.  But there’s no guarantee that the oil will even be there for the long term.

A report by Douglas Westwood Limited—a British research firm—forecasts that global oil production will peak in 2011.  In other words, as our transportation sector grows, the supply of oil to fuel it will dwindle.  That’s a Malthusian scenario with dire implications, if true, for fuel prices and energy security in the years ahead.

Yet—for all the warnings—petroleum still accounts for 95 percent of the energy consumed in the U.S. transportation sector.  And much of the conventional wisdom seems to be that the internal combustion engine will continue to dominate the scene for some time to come.

A recent article in a McKinsey and Company publication forecasts that 90 percent of all new vehicles sold in developed countries in 2015 will burn gasoline.  It predicts that internal combustion engines will probably stay front and center for at least a decade after that, although it does note that part of their function in that period will be as a component of hybrid-electric vehicles.

Scenarios like this may or may not be unduly pessimistic.  But they need not be inevitable.  And given the immense potential of electric-drive vehicles to curb our oil consumption—and provide significant environmental benefits—they must not be.

I recently had a hand in initiating an electric transportation study for EPRI—the Electric Power Research Institute.  The study compared impacts on oil displacement, the economy and the environment in 2025 under two very different outlooks.

As a base case, it took a projection by the Energy Information Administration—a unit of the U.S. Department of Energy—that electric-drive vehicles would account for only 10 percent of the nation’s vehicle population.  It compared to that an aggressive scenario in which half of all the vehicles operating in the U.S. would be electric or hybrid-electric—and half of those would be connected to the power grid.

The differences between the two approaches were staggering.

For one thing, if half of all vehicles in 2025 were electric-drive, we’d cut oil demand by more than 4 million barrels a day—or about 20 percent—compared with the base case.  The reduced dependence on oil would benefit our balance of trade and gross domestic product to the tune of billions of dollars each year in comparison with the EIA projection.  It would create hundreds of thousands more jobs.  It would significantly reduce military expenditures to protect Persian Gulf oil supplies, as well as costs related to potential supply disruptions.

Moreover, emissions of greenhouse gases and most pollutants would be far less under the study scenario.  So would related emission-control costs.

Admittedly, this is a hypothetical case.  And some might say that 50 percent EDV penetration by 2025 isn’t realistic.  But what if we could strike even a happy medium between the EIA base and the study model?  The benefits clearly would be substantial.

Now, let’s come back to the present.  We’re obviously not going to retire the internal-combustion engine overnight.  So what should we do?

The supply constraints and threats mean that any sustainable solutions to our oil problems must be on the demand side.  And—in the transportation sector—that means replacing demand for oil with demand for electricity.

To do this, we must focus on all the options—pure electric vehicles; conventional hybrids; plug-in—or grid-connected—hybrids; and fuel-cell-powered EV’s.

You know, in the utility business we often talk about the three words that sum up the best strategy for generating electricity—mix, mix and mix.  And just as we don’t want to rely too heavily on one fuel to produce our power, we shouldn’t concentrate on any one electric transportation approach at the expense of the others.  We need them all.

Although they’re sometimes overlooked these days, pure battery-powered EV’s have a definite role.  They’ve shown they can operate successfully as airport and delivery vehicles; as shuttle buses and station cars; as forklifts, scrubbers and sweepers; and in other niche applications where range isn’t a major concern.

Without question, though, hybrids provide the greatest immediate promise for the accelerated introduction of electric-drive transportation in this country.

At the Power Authority, we’re particularly enthused about the prospects for plug-in models.  We’re part of an EPRI group that’s been evaluating them for several years.  Basically, we’ve found that while all hybrid vehicles provide benefits in terms of fuel efficiency, reduced dependence on oil and lower emissions, the potential benefits are greatest with plug-ins.

Despite their additional cost, we’ve also learned that plug-in hybrids would be attractive to consumers.  People apparently feel that plugging into the grid would beat frequent trips to the gas station.

On the more distant horizon—probably at least 10 to 20 years out—the most dramatic impact of all could come from clean and efficient all-electric vehicles powered by fuel cells.

The Bush Administration’s FreedomCAR program might one day do for this technology what the Manhattan Project did for atomic energy.  Meanwhile, it’s encouraging that the leading auto companies in the U.S. and abroad have unveiled a series of experimental fuel-cell vehicles and are looking to market them on a test basis.

There are, of course, some formidable challenges.  These relate chiefly to production and storage of the hydrogen needed to run the fuel cells and to the creation of the necessary infrastructure.  As with the other electric-drive options, cost inevitably will be a significant factor.

With fuel cells—and the other options—the federal government must play a key role.  This includes helping to advance the technologies by providing substantial support for research and development.  And it means lowering costs for consumers and building public acceptance through tax incentives.

Seeing Dave Goldston on the panel reminds me of the vital leadership in this regard of Congressman Sherry Boehlert—the chairman of the House Science Committee and, I’m pleased to say, a representative from my own state of New York.  Dave, please convey our thanks to the Congressman.  His efforts have been invaluable both in Washington and in working with Governor George Pataki, the Power Authority and others in New York State to promote the cause.

The states, in fact, have much to contribute in designing and implementing policies that will help to put electric-drive vehicles into the hands of consumers and on our nation’s roads.

I’ll leave the discussion of California and other states to people more directly involved, and focus on what I know best—New York State’s array of incentives.

In New York, we’ve earmarked $35 million thus far in Bond Act funding for clean bus programs—including hybrid transit buses—and clean-fueled vehicles in government fleets.

Earlier this year, Governor Pataki signed legislation that makes it easier for purchasers of hybrid vehicles to receive tax credits or exemptions.

And the Governor has issued an executive order requiring that—by 2010—all new light-duty vehicles obtained by state agencies and authorities be clean-fueled—except for emergency, police and certain other vehicles.  The intent is to increase the percentage of clean-fueled vehicles each year until then—with a 50 percent requirement in 2005.

I take considerable pride in the fact that the Power Authority is a major asset in New York State’s efforts to promote the use of electric-drive transportation.

To date, we’ve been involved in deploying about 375 EDV’s in our own fleet and those of our customers. These vehicles have covered a total of more than 2.3 million miles.  We’re the only utility in the Northeast to have passed the million-mile mark.

Our lineup ranges from electric school buses, delivery trucks for the U.S. Postal Service and passenger cars to electric bicycles and three-wheel urban Cushmans.  We’ve also helped to put 10 hybrid transit buses in service on New York City streets—with another 325 on the way.

Elsewhere, we’ve had a big part in a truck-stop electrification program that got under way last month in the Bronx at the world’s largest wholesale food distribution center.  Drivers in 28 parking spaces can now plug in for electric heating, air-conditioning, refrigeration and other services—including cable TV and the Internet.  This prevents air pollution from idling engines.

The Power Authority is also helping to obtain eight electric shuttle buses that will operate in New York City’s Wall Street area.  And we’ve established a number of Green Zones—where EDV’s of all types are replacing gasoline-fueled vehicles.

In addition, we’ve enlisted New York State’s municipal and rural electric cooperative systems as partners in promoting electric and hybrid-electric vehicles.  A great thing here is that hydroelectric power from the Power Authority is the major electricity source for these systems.  So the EDV’s run by New York’s community-owned electric systems will be powered by emission-free energy.

Another of our major initiatives is the “NYPA/Think Clean Commute”—the nation’s largest electric vehicle station-car demonstration program.

This program features Ford’s Think City EV, a two-passenger car with a range of about 50 miles—ideal for travel to and from commuter train stations.

Ford has made available 100 vehicles for lease at $199 a month—and almost all have been spoken for.

Participants use equipment at seven train stations in the New York City suburbs to charge the vehicles while they’re off at work.  And because the area’s commuter and subway trains run on electricity—most of it supplied by the Power Authority—it’s a clean, all-electric commute.

We believe this demonstration has just scratched the surface of a very viable application for battery EV’s.  Certainly, the comments from participants in our program have been extremely positive.

There are 250 commuter rail stations in the New York metropolitan area alone.  Extrapolating from the nearly 100 EV’s we’ve deployed at the seven stations, there is a potential market for some 3,500 EV station cars in the New York metro region.

You’ve probably heard that Ford is considering whether to end its involvement with the Think City EV.  We hope it sticks with it—while also developing hybrid-electric and fuel-cell vehicles.

Whatever its decision, Ford has pledged to continue to service the cars in our program for the 34-month lease terms.  If necessary, we’ll try to find other partners to help us continue the program.  In fact, we hope to quadruple its scope next year by adding another 300 vehicles and more train stations.

I’ve tried to touch on some of what the Power Authority and New York State are doing to advance clean electric transportation.  Such ongoing efforts—multiplied many times to encompass other states, the federal government, the auto industry and research centers—make it possible to envision a new world of transportation—a world beyond oil.

The challenges—as I’ve indicated—are great.  But they need not be insurmountable.

Don’t forget—there were tremendous obstacles as well to the widespread introduction of the internal combustion engine.

Few believed the Tin Lizzy would ever eclipse the horse and buggy—which was far more reliable.  Early automakers were often ridiculed—as in this cartoon in which a banker meets with the young Henry Ford.

“Do you realize, sir,” the banker asks Ford, “that if your invention should gain popular acceptance, we should have to provide paved roads, thousands of pumping stations to supply ready access to fuel and innumerable vacant lots in every city in which to park these vehicles?  Take my advice and forget this folly, Henry.”

Well, Henry didn’t take that advice.  And neither should those of us who see a promising—and essential—future for electric-drive vehicles.

Already it’s clear that EDV’s can meet many transportation needs while improving both our energy security and our environment.  Our goal must be to spread the word and to ensure that ED-based systems will, over time, become a significant mover of vehicles in this country.

It’s a worthy goal.  And—thanks to the commitment and talents of people like those in this room—I’m confident we’ll make excellent mileage toward meeting it in the years ahead.

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