Federal Energy and Fleet Management:

Plug-in Vehicles Offer Potential Benefits, but High Costs and Limited Information Could Hinder Integration into the Federal Fleet

GAO-09-493: Published: Jun 9, 2009. Publicly Released: Jun 9, 2009.

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The U.S. transportation sector relies almost exclusively on oil; as a result, it causes about a third of the nation's greenhouse gas emissions. Advanced technology vehicles powered by alternative fuels, such as electricity and ethanol, are one way to reduce oil consumption. The federal government set a goal for federal agencies to use plug-in hybrid electric vehicles--vehicles that run on both gasoline and batteries charged by connecting a plug into an electric power source--as they become available at a reasonable cost. This goal is on top of other requirements agencies must meet for conserving energy. In response to a request, GAO examined the (1) potential benefits of plug-ins, (2) factors affecting the availability of plug-ins, and (3) challenges to incorporating plug-ins into the federal fleet. GAO reviewed literature on plug-ins, federal legislation, and agency policies and interviewed federal officials, experts, and industry stakeholders, including auto and battery manufacturers.

Increasing the use of plug-ins could result in environmental and other benefits, but realizing these benefits depends on several factors. Because plug-ins are powered at least in part by electricity, they could significantly reduce oil consumption and associated greenhouse gas emissions. For plug-ins to realize their full potential, electricity would need to be generated from lower-emission fuels such as nuclear and renewable energy rather than the fossil fuels--coal and natural gas--used most often to generate electricity today. However, new nuclear plants and renewable energy sources can be controversial and expensive. In addition, research suggests that for plug-ins to be cost-effective relative to gasoline vehicles the price of batteries must come down significantly and gasoline prices must be high relative to electricity. Auto manufacturers plan to introduce a range of plug-in models over the next 6 years, but several factors could delay widespread availability and affect the extent to which consumers are willing to purchase plug-ins. For example, limited battery manufacturing, relatively low gasoline prices, and declining vehicle sales could delay availability and discourage consumers. Other factors may emerge over the longer term if the use of plug-ins increases, including managing the impact on the electrical grid (the network linking the generation, transmission, and distribution of electricity) and increasing consumer access to public charging infrastructure needed to charge the vehicles. The federal government has supported plug-in-related research and initiated new programs to encourage manufacturing. Experts also identified options for providing additional federal support. To incorporate plug-ins into the federal fleet, agencies will face challenges related to cost, availability, planning, and federal requirements. Plug-ins are expected to have high upfront costs when they are first introduced. However, they could become comparable to gasoline vehicles over the life of ownership if certain factors change, such as a decrease in the cost of batteries and an increase in gasoline prices. Agencies vary in the extent to which they use life-cycle costing when evaluating which vehicle to purchase. Agencies also may find that plug-ins are not available to them, especially when the vehicles are initially introduced because the number available to the government may be limited. In addition, agencies have not made plans to incorporate plug-ins due to uncertainties about vehicle cost, performance, and infrastructure needs. Finally, agencies must meet a number of requirements covering energy use and vehicle acquisition--such as acquiring alternative fuel vehicles and reducing facility energy and petroleum consumption--but these sometimes conflict with one another. For example, plugging vehicles into federal facilities could reduce petroleum consumption but increase facility energy use. The federal government has not yet provided information to agencies on how to set priorities for these requirements or leverage different types of vehicles to do so. Without such information, agencies face challenges in making decisions about acquiring plug-ins that will meet the requirements, as well as maximize plug-ins' potential benefits and minimize costs.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In 2010, we reported that agencies efforts to incorporate plug-in hybrid vehicles into the federal fleet face a challenge posed by the patchwork of existing federal requirements that cover energy usage and vehicle acquisitions. In deciding whether to acquire plug-ins, agencies must also consider how this decision will affect their ability to meet these requirements. These requirements are intended to further several important objectives, including reducing petroleum consumption, decreasing greenhouse gas emissions, improving energy efficiency in facilities, and encouraging the use of alternative fuel vehicles and alternative fuel in the federal fleet. However, the current set of requirements (1) does not provide agencies with a means to set priorities for these objectives, (2) can be costly, and (3) are sometimes in conflict with one another. Therefore, we recommended that the Department of Energy (DOE) propose legislative changes that would resolve these conflicts and set priorities. In response, DOE developed a legislative proposal identifying conflicts and overlaps in policies and proposed language that it submitted to the Office of Management and Budget (OMB) to resolve these conflicts. As a result, OMB has been given language to share with Congress that could resolve statutory conflicts for the federal fleet and clarify congressional and executive priorities regarding agencies' energy use, fleet management, and vehicle acquisition decisions.

    Recommendation: To enable agencies to more effectively meet congressional requirements, the Secretary of Energy should, in consultation with Environmental Protection Agency (EPA), General Services Administration (GSA), Office of Management and Budget (OMB), and organizations representing federal fleet customers such as Interagency Committee for Alternative Fuels and Low-Emission Vehicles (INTERFUEL), Federal Fleet Policy Council (FEDFLEET), and the Motor Vehicle Executive Council, propose legislative changes that would resolve the conflicts and set priorities for the multiple requirements and goals with respect to reducing petroleum consumption, reducing emissions, managing costs, and acquiring advanced technology vehicles.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: In our June 2009 report "Federal Energy and Fleet Management: Plug-in Vehicles Offer Potential Benefits, but High Costs and Limited Information Could Hinder Integration into the Federal Fleet" we found that with the advent of electric and plug-in vehicles, agencies lack information critical to making informed vehicle acquisition decisions that will help them to meet various federal requirements and goals related to reducing greenhouse gas emissions and petroleum consumption. We recommended that Department of Energy (DOE) develop guidance for agencies that specifies the elements that agencies should include in their plans for acquiring the mix of vehicles that will best enable them to meet their requirements and federal energy-conservation goals. In June 2010, DOE issued the Comprehensive Federal Fleet Management Handbook, which contains guidance for agencies with regard to identifying optimal electric vehicle strategies. The Handbook includes guidance to federal fleet managers to consider whether electric or plug-in vehicles are suitable based on fleet location and characteristics, whether charging stations are available or can be installed, and whether such vehicles are competitive with other alternatives on a life-cycle cost basis. The guidance also asks agencies to consider whether coal-based electricity is used in an area in order to evaluate the emission reduction potential of using such vehicles. This guidance will help agencies make vehicle choices that will both meet the requirements of the agency, and have the biggest impact on agency goals of reducing emissions and petroleum consumption.

    Recommendation: The Secretary of Energy should begin to develop guidance for when agencies consider acquiring plug-in vehicles, as well as guidance specifying the elements that agencies should include in their plans for acquiring the mix of vehicles that will best enable them to meet their requirements and goals. Such guidance might include assessing the need for installing charging infrastructure and identifying areas where improvements may be necessary, mapping current driving patterns, and determining the energy sources used to generate electricity in an area.

    Agency Affected: Department of Energy

  3. Status: Closed - Implemented

    Comments: In our June 2009 report "Federal Energy and Fleet Management: Plug-in Vehicles Offer Potential Benefits, but High Costs and Limited Information Could Hinder Integration into the Federal Fleet," we found that requirements for reducing energy at federal facilities and requirements for reducing petroleum use in federal fleets may come into conflict with the advent of electric or plug-in vehicles. We recommended that Department of Energy (DOE) develop guidance for agencies on how electricity should be measured and accounted for in meeting energy-reduction goals related to federal facilities and alternative fuel consumption. In April of 2010, DOE issued "Guidance for Federal Agencies on E.O. 13514 Section 12, Federal Fleet Management," which contains directions for agencies on how to measure and report electric vehicle electricity consumption. The guidance states that electricity used to charge vehicles will be counted toward agencies' alternative fuel use requirements. Further the guidance states that "electricity consumption for EVs must be metered separately from facility consumption" or "electricity consumption may be monitored on the vehicle itself and then subtracted from a facility's electricity consumption totals" so that such electricity usage does not count against a facility's requirement to reduce its overall energy intensity. This guidance clarifies for agencies how to account for electricity relative to goals for their facilities and for their fleets, and encourages the use of electric and plug-in vehicles where they may have the biggest impact on reducing emissions and petroleum consumption.

    Recommendation: The Secretary of Energy should continue ongoing efforts to develop guidance for agencies on how electricity used to charge plug-ins should be measured and accounted for in meeting energy-reduction goals related to federal facilities and alternative fuel consumption. In doing so, the Secretary should determine whether changes to existing legislation will be needed to ensure there is no conflict between using electricity to charge vehicles and requirements to reduce the energy intensity of federal facilities, and advise Congress accordingly.

    Agency Affected: Department of Energy

  4. Status: Closed - Implemented

    Comments: In June 2009, we found that, plug-ins have high upfront costs, but could become comparable to gasoline vehicles over the life of ownership if certain factors change, such as a decrease in the cost of batteries and an increase in gasoline prices. However, agencies are not required to use life-cycle costing in evaluating which vehicle to purchase, and consequently vary in the extent to which they do. Furthermore, since plug-in hybrids and all-electric vehicles are new to the marketplace, much of the information about their lifetime ownership costs is unknown and costs will vary greatly depending on how agencies plan to use them. For example, plug-in hybrids used only within the all-electric range will use no gasoline at all, while plug-in hybrids used for long-distance driving may not offer fuel economy much better than a conventional hybrid or highly fuel-efficient gasoline-powered vehicle. We therefore recommended that, for plug-in vehicles that are newly offered, the Administrator of the General Service Administration (GSA) should provide guidance for how agencies should address uncertainties about the vehicles? future performance in estimating the life-cycle costs of plug-ins, so agencies can make better-informed decisions in acquiring vehicles. In response to our recommendation, GSA conducted a workshop on March 17, 2011 with fleet managers to go over issues preventing the acquisition of such vehicles, and, according to GSA, has provided forums to educate federal fleet managers on the upfront and life-cycle costs of plug-ins and all-electric vehicles. In addition, cost comparison data and information on these vehicles has been included in GSA?s product guide and acquisition package. The Fiscal Year 2012 product guide contains such information for several plug-ins and all-electric vehicles. Finally, GSA is conducting a pilot to evaluate the usage of 116 plug-ins, which should provide the agency with additional information regarding the comparative costs of these vehicles. With the additional information made available and being collected, agencies will be able to make better-informed decisions regarding the acquisition of plug-ins and all-electric vehicles.

    Recommendation: The Administrator of GSA should consider providing information to agencies regarding total cost of ownership or life-cycle cost for vehicles in the same class. For plug-in vehicles that are newly offered, the Administrator should provide guidance for how agencies should address uncertainties about the vehicles' future performance in estimating the life-cycle costs of plug-ins, so agencies can make better-informed, consistent, and cost-effective decisions in acquiring vehicles.

    Agency Affected: General Services Administration

  5. Status: Closed - Implemented

    Comments: In June 2009, we found that plug-ins and all-electric vehicles will be expensive relative to other vehicles until battery costs come down and challenges such as achieving economies of scale are met. These high upfront costs will prevent agencies from including them in large numbers in their fleets without additional funding. Furthermore, agencies will also be hindered from incorporating these vehicles because of uncertainties regarding their performance, the maintenance and reliability associated with the vehicles? batteries, and the resale value of the vehicles. In order to mitigate these risks and allow agencies to experiment with how well the vehicles perform within their fleet, we recommended that the Administrator of the General Service Administration (GSA) explore the possibility of arranging pass-through leases of plug-in vehicles directly from vehicle manufacturers or dealers. However, GSA was unable to find any non-government sources able to provide these vehicles. In addition, GSA determined that, due to the Statutory Price Limitation, which dictates that GSA award vehicle contracts to the lowest price vehicle in each category, these vehicles would not be available to the government to purchase. An amendment to the Continuing Appropriations bill in May 2011 allowed an exemption from the Statutory Price Limitation, and GSA was able to provide initial awards for several plug-ins and all-electric vehicles. In response to the recommendation, these vehicles are now available for agencies to purchase through GSA Automotive, lease through GSA Fleet, or lease directly from a commercial vendor. Furthermore, in response to the recommendation, GSA ordered 116 plug-in vehicles for a pilot program. GSA has worked to identify potential locations and infrastructure needs for the vehicles and noted agencies and areas that have expressed interest. GSA?s efforts to make these vehicles available in multiple ways will allow agencies to experiment with how well the vehicles meet their fleet needs, while reducing the risks associated with high upfront costs, and uncertain performance and reliability.

    Recommendation: Once plug-in hybrids and all-electrics become available to the federal government but are still in the early phases of commercialization, the Administrator of GSA should explore the possibility of arranging pass-through leases of plug-in vehicles directly from vehicle manufacturers or dealers--as is being done with DOD's acquisition of neighborhood electric vehicles--if doing so proves to be a cost-effective means of reducing some of the risk agencies face associated with acquiring new technology.

    Agency Affected: General Services Administration

 

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