Lotus Rental Car'S

Lotus Rental Car's - Alternative Fuel Vehicles

COMM 215

LMH

Instructor

6 December 2004

Alternative Fuel Vehicles

As a quick statement prior to beginning this assignment I thoroughly enjoyed researching this topic. It has been of personal interest to me for years. I have, in the past (as far back as the 1970's), invested my personal time researching designs and building prototypes, which utilize alternative fuels for vehicle propulsion and various mechanical motion applications with a practical approach.

This assessment is submitted for the consideration of Lotus Rental Cars Chief Financial Officer, the topic covered is to assist in answering the question of the feasibility of adding alternative fuel vehicles to the rental vehicle fleet.

An Alternative Fuel Vehicle (AFV), by design, is intended to improve air quality and the environment by lowering (or eliminating) ozone-depleting emissions. In addition to reduced emissions a more recent socially accepted benefit is less dependence on foreign supplied oil products by the Organization of Petroleum Exporting Countries (OPEC).

There are various types of AFV designs in commercial use today, to include hybrid and flexible fuel designs. The most common are powered by compressed natural gas (CNG), liquid petroleum gas (LPG), propane, hydrogen, alcohol (in the form of methanol or denatured alcohol), gasohol (blends of gasoline and up to 85% alcohol) and electric. These AFV types have been commercially available and in use by fleet applications in the U. S. since the 1960's. Consumer availability of electric, propane and gasohol products for personal vehicle use began in the 1970's. Currently, three main types of vehicles operating on alternative fuels are readily available:

* Vehicles contain a single fuel tank capable of operating on alcohol, gasoline or a

combination of both (gasohol).

* Bi-Fuel Vehicles, which have two fuel systems allowing the driver to switch between gasoline and compressed natural gas or propane.

* Dedicated Fuel Vehicles, which can only run on a single alternative fuel source.

The publics perceived advantages of these vehicles are that they will be environmentally friendly and will help reduce the dependency of foreign oil imports. Additional advantages are that numerous states permit the use of these vehicles in high occupancy vehicle (HOV) lanes and offer a tax rebate for the purchase. The United States Government Services Administration provides matching funds to government agencies that participate in the Federal Government's AFV User Program. This is for purchase, lease and rental vehicles. The claims of environmental friendliness and a reduced dependency on foreign oil product imports need to be carefully considered.

Of the claim that AFV will reduce dependency on foreign petroleum imports will be discussed next. Substituting LPG, propane or CNG for gasoline use in vehicles would reduce crude oil imports. However, it would lead to the requirement for importing these products from foreign sources. The U. S. supply of LPG is relatively small when compared to other energy sources, primary consumption is in the chemical and agricultural industries. A large change of vehicle fuels to LPG will result in competition with the current users eventually leading to the need for importing. Ironically, the same countries where the U. S. imports crude oil are also the same countries that would supply LPG.

A viable long-term option for AFV is CNG. Current Unites States production levels have upside potential as well as Canadian import options due to Canada's surplus of CNG production. The United States Geological Service reports that the North America has substantially undeveloped natural gas sources available, should the demand arise. If the demand were to increase rapidly, the timing of developing new sources locally would not fill consumer needs. Short-term imports of liquid natural gas (used to make CNG) would be required; also from the same OPEC nations. In effect, the United States would trade import dependency on crude oil for LPG or LNG.

Another AFV energy source is methanol, a type of alcohol. Methanol can be produced from a variety of sources such as coal or natural gas, natural gas being the least costly source. The overall effect of import dependency is relatively the same as that of LNG. Denatured alcohol, or ethanol, can be made from corn and other biomass products. The supply within the United States is very limited at best and foreign supply would be required to fill the demands if ethanol AFV numbers increase. Ethanol is used to reformulate gasoline in California as a substitute for the recent reversal of state guidelines to add Methyl Tertiary-Butyl Ether (MTBE) to gasoline. The total demand within California requires approximately 10% of all ethanol consumed must be imported. Increased demand will increase the need for importation due to California and the United States current production capacity levels. No new ethanol production plants are scheduled for construction at this time therefore guaranteeing the import demands.

Hydrogen, as an energy source for AFV can be used in the form of either an internal combustion engine or a fuel cell where hydrogen is mixed with oxygen to produce electrical power. Current experimentation, testing and development are in process from all major automotive manufacturers in North America, Europe and Japan. There is no infrastructure for the refueling of hydrogen powered vehicles, nor are any readily available hydrogen powered vehicles being produced for the Lotus Rental Cars industry application at this time.

The most common and available AFV type today is the gasoline-electric hybrid. These are vehicles, which have gasoline engines and electric motors to power the vehicle. The electric motor will power the vehicle during low demand periods and both the internal combustion gasoline engine and electric motor will power the vehicle during high power demands. The gasoline engine also serves as the method to run an onboard generator to replenish the electrical batteries for powering the electric motor. Overall gasoline consumption reduction claims by the vehicle manufacturers range from 15% - 50% depending on driving conditions. Theoretically, foreign oil import demands will be reduced using this type of technological approach.

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