The Benefits and Costs of New Fuels and Engines for Cars and Light Trucks

This report examines the benefits and costs of three alternative automobile fuel technologies — gasoline-electric hybrid technology, advanced diesel technology, and vehicles powered continuously by a mixture of 85 percent ethanol and 15 percent gasoline (E85) — for the 2010-2020 period, for different types of vehicles and from the perspectives of both the individual consumer and society. In their analysis from the consumer perspective, the authors take into account technology cost, fuel savings, mobility, and performance and find that advanced diesel technology offers the most value for the three types of vehicles examined (passenger cars, sport utility vehicles, and pickup trucks), with hybrid technology being a close second and E85 a distant third. The analysis from the societal perspective accounts for a much larger range of factors, including conventional tailpipe pollutants, greenhouse gas emissions, and energy security, but produces remarkably similar results, with advanced diesel technology offering the most value. The authors also examine how different assumptions affect the analysis: For example, if the cost of gasoline were to remain very high or if the cost of producing ethanol were to significantly decrease, E85 would become about as valuable as the other two technologies. The report concludes with a discussion of market developments and public policies that are influencing the development of these three technologies.