An analysis on strategies to decarbonise fuel and energy use in the transport sector

The transport sector now accounts for about 23% (7.3 Gt) of annual global energy-related CO2 emissions (32 Gt). This is a significant rise (about 120%) from 3.3 Gt/year during the 1970s, and to achieve a two-degree scenario (2DS)[1], CO2 emissions from transport would need to decline to 5.7 Gt annually. By 2015, global road transport CO2 emissions should have already peaked in order to achieve a 2DS, but this is not likely to happen under current trends.  Oil is expected to remain the dominant transport fuel in the coming years, and thus must be offset by a rapid decarbonisation of fuels and scaling up of renewable energy in the transport sector to achieve a proportional contribution to a 2DS.

The SLoCaT Partnership has conducted an analysis to explore current trends and required policies in renewables and fuel uptake in the transport sector. Observed trends and projections include the following:

In 2013, only about 3.5% of renewable energy was consumed in transport sector globally;

• In many non-OECD countries (and especially in Asian countries), petroleum based fuels share in total transport fuel has actually increased in spite of initiation of pro-active policies for decarbonising transport fuels (especially through biofuels);
• From 2000 to 2012, biofuel consumption within the transport sector has seen a six-fold increase globally; during the same period, natural gas use in transport modes (excluding pipelines) has experienced a tenfold increase[2];
• For global energy-related emissions to peak latest by 2020, IEA estimates that the share of petroleum-based fuels among transport fuels needs to be decreased from 94% to 87% between 1990 and 2030;
• Policies in support of decarbonisation of fuel would need to be intensified, as IEA projections[3] reveal that even with current policies, there will still be a gap of 2% to 27% (with an average gap of 12%) by 2035 to achieve a 2DS. (See Figure 1).

Figure 1: Share of Oil in Transport in 2035 Under Current Policies and 2DS Scenario (IEA, 2012)

Therefore, to achieve a reduction in the emissions gap, increases in renewable energy in the transport sector are required and can be implemented with a set of concerted strategies:

 

• First, policies that are currently in place should be fully implemented. For example, in 1992 the United States Energy Policy Act established the goal of having “alternative fuels” replace at least 10% of oil in transport by 2000 and 30% by 2010; however, in 2013 oil remained dominant with a 92% market share[4]
• Second, additional policies must be put into place to increase the diversification of the transport energy mix. IEA believes that to reach a 2DS scenario, sales of electric vehicles will need to exceed 40% of total passenger car sales by 2040, and biofuels will need to support more than 10% of road transport fuel demand by 2040.
• Third, the market attractiveness of policies in favour of decarbonising fuel depends upon the removal of fossil fuel subsidies[5], as current fossil-fuel alternatives are likely to remain uncompetitive in market segments with subsidized fuels.[6]
• Finally, current low oil prices pose a major obstacle to overcoming the current cost of biofuels, and thus the transport sector could also benefit from a low carbon transition in other sectors to help make biofuels more cost competitive.

 

In the process of increasing electrification of transport, for electric vehicles, it is important to consider how electricity is generated (and in addition, to consider the proximity of these emissions to populated areas). Figure 2 shows the variation in grid emission factors for different countries[7].

Figure 2: National Grid Emission Factors

With this knowledge, countries have been in the process of preparing their Intended Nationally-Determined Contributions (INDCs) that will communicate country targets and strategies to reduce carbon emissions for the post-2020 period. As of mid-September 2015, 37 countries[8] had submitted their INDCs. Among all the measures prioritized within transport sector decarbonising fuel had the highest priority among countries in INDCs submitted at this stage, as shown in Figure 3.

Figure 3: INDCs Prioritize Diversification of Transport Fuel Mix

Scaling up and accelerating fuel decarbonisation in the transport sector will require concerted action and innovative practices in a number of key areas, including the following:

Technology and Innovation:

 

 

• Scale up technology transfer through the UNFCCC process (e.g. electric mobility, biofuel technologies) to expand North-South cooperation and accelerate adoption of sustainable approaches to fuel decarbonisation.
• Expand South-South cooperation to further the development of biofuels to reduce carbon emissions while minimizing negative externalities (e.g. deforestation, monocultures).
• Accelerate research in efficient batteries and energy storage systems to reduce prices and increase range in electric vehicles.

Policy Instruments:

 

• Increase focus on policies promoting the linkage between electric vehicles and renewable energy, which have received little attention to date.[9]
• Consider expansion of biofuel blend mandates, as these numbers have remained relatively stable in recent years.[10]
• Further the phase-out of fossil fuel subsidies (i.e. ‘negative’ carbon pricing), building on recent advocacy and monitoring efforts from the Nordic Development Fund, GIZ and others.
• Implement ‘positive’ carbon pricing policies at local, national and global levels, based on successful demonstrations of transport carbon markets and applications of carbon taxes.

Financing:

 

• Create dedicated funding streams for sustainable transport (including transport fuel decarbonisation) during national processes for phasing out fossil fuel subsidies.
• Prioritise fuel decarbonisation in forthcoming sectoral strategies through the UNFCCC and the global process on Financing for Development (FfD).
• Monetize and capture co-benefits of decarbonizing fuel (e.g. reduced air pollution and health care costs) through enhanced market mechanisms.

Finally, it is essential to create expanded partnerships to accelerate the adoption of advanced fuel and vehicle technologies. This will require building multi-stakeholder partnerships that extend beyond core stakeholders and include a greater role for business, as well as leveraging global processes on climate change and sustainable development.

For SLoCaT’s full research brief please click here.

For IEA’s renewable energy information document, please click here.

For IEA’s World Energy Outlook report, please click here.

For REN21’s summary Renewables 2015 Global Status Report, please click here.

 

[1] The two-degree scenario (2DS) involves putting in place an emissions trajectory which would result in at least a 50% chance of limiting average global temperature increase to 2°C.

[2] IEA, Renewables Information (2015 edition)

[3] IEA – World Energy Outlook 2012

[4] An Alternative Transportation Fuels Update: A Case Study of the Developing E85 Industry

[5] Energy and Climate Change – World Energy Outlook Special Report

[6] BP 2014, Energy Outlook 2035

[7] IGES database of Grid Emission factors

[8] Including one submission by the European Union representing 25 EU Member States.

[9] http://www.ren21.net/wp-content/uploads/legacy/2015/07/GSR2015_KeyFindings_lowres.pdf

[10] http://www.ren21.net/wp-content/uploads/legacy/2015/07/GSR2015_KeyFindings_lowres.pdf