Freight Transportation Energy Use and Greenhouse Gas Emission

Abstract

Freight transportation is a vital and important part of the United States economy. However, it is currently powered almost exclusively by petroleum. As efforts to curb US greenhouse gas emissions take effect, the freight transportation system is sure to come under increasing pressure to reduce its greenhouse gas emissions. The amount of energy-and thus greenhouse gases emitted-needed to transport freight varies greatly from mode to mode. Railroads, barges, and pipelines are all significantly more efficient than trucks. Airplanes are by far the least efficient freight transportation mode.

Given these facts, reducing greenhouse gases emitted by freight transportation might appear simple. However, other measures indicate that efficiency winners are not so clear cut. When energy use is compared with transportation value added-as measured by rates-the modes become much more competitive. Trucks and railroads-the two most important modes in the US are very close in this measure.

This is because the less fuel efficient modes offer the best quality of service. Railroads and barges provide cheap, fuel efficient transportation, but they are unable to provide services such as door to door delivery required by many businesses.

This fact has segmented the freight transportation market. Railroads and barges carry the majority of the bulk commodities since they are the lowest cost carrier, but trucks carry the majority of manufactured goods and high value freight. Many truck shippers might not find it worthwhile to even ship their goods if they had to settle for railroad service quality.

For this reason, models using current price sensitivities and price increases associated with fuel cost increases, do not predict large mode transfers in the case of significantly higher fuel prices. Some freight will move from trucks to railroads, but many shippers requiring high quality service will have to swallow the cost of trucking or not ship their goods at all if fuel prices rise substantially. Another important point to keep in mind is that the most energy intensive industries often require the least energy intensive freight transportation and vice versa. Efficient modes such as barges serve energy intensive heavy industries such as steel mills and sawmills.

Less efficient trucks service the light industries and service sector businesses which will have an important role to play in an economy trying to reduce greenhouse gas emissions.

For these reasons, this paper maintains the best way to combat greenhouse gas emissions in the freight transportation sector is through a market based cap and trade system. This system will best be able to determine whether greenhouse gas emission reductions can come most cost effectively from improving the efficiency of modes such as trucks or improving the service level of fuel efficient modes such as railroads to meet the needs of industries vital to the future economic health of the US.