Energi-, Forsynings- og Klimaudvalget 2015-16
EFK Alm.del Bilag 163
Offentligt
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GREEN ROADMAP 2030
SCENARIOS & TOOLS FOR A CONVERSION OF DANISH TRANSPORT’S
ENERGY CONSUMPTION
January 2016
 EFK, Alm.del - 2015-16 - Bilag 163: Henvendelse af 1/2-16 fra Energifonden om Grøn Roadmap 2030
Published by:
Ea Energy Analyses
Frederiksholms Kanal 4, 3. th.
1220 Copenhagen
T: 88 70 70 83
F: 33 32 16 61
E-mail: [email protected]
Web: www.eaea.dk
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Contents
1
2
3
4
FOREWORD, CONCLUSIONS AND RECOMMENDATIONS .... 4
Main conclusions ............................................................. 8
EU goals and policies ..................................................... 13
Challenges and Opportunities ........................................ 16
4.1 Energy efficiency and renewable energy ......................................... 18
4.2 Analysis methodology ...................................................................... 23
4.3 Assumptions ..................................................................................... 24
5
Scenarios for a green transition .................................... 30
5.1 35% Scenario .................................................................................... 30
5.2 Economic impact assessment ........................................................... 37
5.3 Technology scenarios (40% scenarios) ............................................. 38
5.4 Sensitivity analyses and discussion .................................................. 44
6
Taxation and other instruments .................................... 48
6.1 Taxation of passenger vehicles ......................................................... 48
6.2 Taxation of lorries ............................................................................. 52
6.3 Measures to promote green gas and liquid biofuels........................ 54
7
8
Glossary ........................................................................ 58
References..................................................................... 60
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1
FOREWORD, CONCLUSIONS AND RECOMMENDATIONS
Denmark has a long-term goal to be independent of fossil fuels by 2050. This has
consequences for our transport sector, which is primarily based on oil. At the same
time, society is completely reliant on an efficient network for goods and personal
transport.
2050 may seem in the distant future, but a conversion in the transport sector cannot
be done from one day to the next. It is therefore important to have milestones along
the way, thus avoiding a situation where development quickly has to be accelerated,
and thereby risking higher costs.
Denmark is also committed to the goals established by the EU, including the decision
that the non-ETS sector shall reduce its CO
2
emissions by 30% in 2030. The largest
portion of the emissions in this sector comes from transport and agriculture. Each EU
member will receive a binding target for reductions in the non-ETS sector. The specific
objectives will not be known until 2016, but Denmark is expected to receive a binding
target involving emission reductions of 35%-40% compared to 2005.
The aim of the "Green Roadmap 2030" is to present ideas on how road transport can
contribute its proportionate share of the expected Danish reduction commitment in
2030, i.e., at least 35%.
Green Roadmap 2030 presents a concrete mix of technologies (electric vehicles, plug-
in hybrids, biofuel blending, gas, etc.) and means that can be employed, taking into
account the technologies' maturity, development potential, and societal costs. The
study comprises a main scenario (35% CO
2
reduction), three technology scenarios that
build further on this 35% scenario towards a CO
2
40% reduction, and a reference
scenario.
The scenarios are based on an accelerated phasing in of electric vehicles for passenger
transport, increased blending percentages in biofuels for all vehicles, and the
introduction of biogas (primarily for heavy transport), relative to a situation without
new national initiatives. The roadmap presents the socioeconomic costs of the different
scenarios.
A premise of the project is that the technologies and tools identified are also expected
to play a role after 2030. The project is based on the expectation that electricity will
play a crucial role in transport towards 2050, both in the EU political spectrum and
Danish energy policy. As the focus of the roadmap is 2030, the project has not
encompassed potential technological breakthroughs after 2030 in alternative
technologies such as fuel cells, advanced biofuels, etc.
Green Roadmap 2030 is initiated and financed by the Energy Fund in order to provide
an informed input to the debate on how we can gradually and cost-effectively reduce
road transport CO
2
emissions in a way that will ensure a continuous transition to the
effort that must be made in the period after 2030.
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The project is organised via a steering committee consisting of representatives from
the sector. The report and the analyses were undertaken by Ea Energy Analyses in
cooperation with the analysis department of the Danish Energy Association, whom
assisted with professional sparring.
The scenario analyses and analysis of the Danish road transport taxation system were
presented at two workshops, which saw participation from a wide range of experts and
interested stakeholders. The aim of the workshops was to receive feedback from a
broad spectrum of actors in regards to the project assumptions, analysis approach,
and preliminary results.
We would like to take this opportunity to thank the many who have actively
participated in the two workshops. They have contributed valuable feedback, and as a
result of this feedback, we can with a greater certainty present the analysis results
that were generated in the project.
It is our hope that the analyses and the steering committee’s conclusions and
recommendations can contribute to an overall picture of possible pathways to the
decarbonisation of road transport, and to create a well-documented basis for both
national policies, as well as Denmark's efforts in the EU towards 2030.
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STEERING COMMITTEE’S CONCLUSIONS
Based on the analyses undertaken in "Green Roadmap 2030", the steering committee would
like to highlight a number of
conclusions
that it endorses as essential in the process of
gradually making the transport sector CO
2
neutral – with the first step geared towards 2030.
1.
It is possible to reduce greenhouse gas emissions from road transport by 35 to
40% by 2030 by relying on a mix of technologies and fuels that are considered
available.
2.
A 35-40% reduction will not be realised without political action in Denmark and
the EU.
3.
The socioeconomic cost of reaching a 35% reduction is, even with the current low
oil prices, low compared to the previous government's catalogue of climate
mitigation instruments from 2013.
1
4.
It is socioeconomically cheaper (in DKK/tonne terms) to proceed from a 35%
reduction to a 40% CO
2
reduction, than to achieve the first 35%.
2
5.
Blending of biofuels is the cheapest way to reduce greenhouse gases in the initial
part of the period, while the phasing in of more electric/low emission vehicles is
expected to be more cost-effective when approaching the end of the period
towards 2030.
6.
The analyses concluded that EU regulation is central to achieving the roadmap
goals, and it is particularly important that:
a.
The regulation of passenger and commercial vehicles’ efficiency continue
after 2021, and are made more stringent towards 2030.
b.
Efficiency requirements should also be implemented for lorries and buses.
c.
It becomes mandated that all new gasoline vehicles can run on E20 by 2020
at the latest.
d.
Targets are set for the increased use of advanced biofuels during the 2020-
2030 period.
7.
At the national level, the report highlights that:
A specific effort is required in order to promote biogas in heavy transport.
The current taxation system for personal vehicles should be reformed if it is
to contribute significantly in motivating consumers to select vehicles with
low CO
2
emissions. The steering committee has not taken a stance
regarding the specific taxation changes proposed in the report.
An externality-based taxation system would place a disproportionally high
burden on heavy transport.
1
Catalogue of Danish Climate Change Mitigation Measures – Reduction potentials an costs of climate
change mitigation measures (Inter-ministerial working group, 2013)
2
This may seem counterintuitive but is because the additional CO reductions undertaken in the 40%
2
reduction scenarios primarily take place near the end of the scenario period, when the CO
2
reduction costs
are lowest.
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STEERING COMMITTEE’S RECOMMENDATIONS
1.
The analysis has substantiated that a significant part of the Danish reduction commitments
in the non-ETS sector can be realised in the transport sector. This can be done by utilising
a mix of cost-effective technologies and measures. The analysis suggests that the cost of
reducing road transport CO
2
emissions is lower than those indicated in the previous
government's catalogue of climate mitigation instruments, and that a 35% emissions
reduction will be cost neutral with a marginal CO
2
price of 1,000 DKK/tonne.
2.
Within the EU, Denmark should
work actively for:
More stringent efficiency requirements for passenger cars and vans after 2021,
when the current agreement expires.
Implementation of efficiency requirements for lorries and buses in a manner that
reduces emissions from cross border bus and truck transport without distorting
competition.
Requirements mandating increased blending of advanced biofuels after 2020.
Requirements mandating that all new gasoline passenger vehicles shall be capable
of running on E20 by 2020.
3.
Via supplementary national policies, Denmark should
ensure that road transport
contributes with its proportionate share of non-ETS sector emissions reductions, including:
A special effort being undertaken to promote biogas in heavy transport.
A reform of the current taxation system for personal vehicles so that it contributes
significantly in motivating consumers to select vehicles with low CO
2
emissions.
The establishment of a comprehensive strategy for how emissions from heavy
transport can be reduced, with emphasis on EU regulation.
Copenhagen 16 November 2015:
Anne Grete Holmsgaard, BioRefining Alliance
(Coordinator for the Energy Fund and
Chairman)
Kristine van het Erve Grunnet, Danish Energy
Association (Coordinator for the Energy Fund)
Lærke Flader, Danish Electric Vehicle Alliance
Ove Holm, Danish Transport and Logistics
Association
Peter Stigsgaard, Danish Oil Industry
Association
Torben Lund Kudsk, Federation of Danish
Motorists
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2 Main conclusions
EU climate targets
The EU Commission has stated that relative to 1990, total greenhouse gas
emissions must be reduced by 85% - 90% by 2050. This includes the transport
sector, where CO
2
emissions should be reduced by approximately 60%
compared to 1990. More recently, the EU has set new targets for 2030, which
include a 40% cut in greenhouse gas emissions compared to 1990 levels, a
minimum 27% renewable share in energy consumption, and at least 27%
energy savings compared with the business-as-usual scenario.
Denmark has committed to making significant greenhouse gas emission
reductions both in the ETS and non-ETS sectors. The largest portion of
emissions in the non-ETS sector come from agriculture and transport, and
under a new EU framework, it is expected that Denmark will be obligated to
reduce its non-ETS emissions by 35-40% relative to 2005.
Within this project, five concrete scenarios for potential road transport
development towards 2030 have been established and assessed: a 35%
scenario depicting a path to a 35% CO
2
reduction by 2030 (relative to 2005),
and three ‘technology’ scenarios, each of which result in a 40% CO
2
reduction
by 2030. The technology scenarios are an electric scenario, a biofuel scenario
and a gas scenario. The fifth and final scenario is a reference scenario.
14
12
10
Danish commitments
CO
2
emission reductions
from Danish road
transport
Mill. tons CO
2
8
6
4
Gas scenario
Electricity scenario
Biofuel scenario
35% scenario
Reference scenario
2005
2010
2015
2020
2025
2030
2
0
2000
Figure 1: CO
2
emissions in the five scenarios.
CO
2
emissions encompass emissions from road
transport from 2000 to 2030.
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In all five scenarios, new vehicle efficiency continues to improve, a
development that is primarily based on anticipated decisions taken by the EU
and automotive industry. This means that CO
2
emissions in the reference
scenario also decrease. In fact, improved fuel economy contributes with
roughly half of the total CO
2
reductions realised in the 35% scenario in 2030
(see Figure 2). Electric vehicles, gas vehicles, and biofuels combine for the
other half of the CO
2
emissions reductions.
17%
8%
48%
27%
Energy efficiency
Electric vehicles
Gas vehicles
Biofuels
Figure 2: Contribution to CO
2
emissions reduction in the 35% scenario.
Socio-economic cost
calculations
Socio-economic cost calculations were undertaken for each of the scenarios.
The total discounted cost of implementing the 35% scenario is slightly over
four billion DKK, with an undiscounted average of 400 million DKK annually.
The socio-economic cost calculations are sensitive to price changes in key
parameters such as oil, batteries, biofuels and biogas. It should be noted that
the approach utilised in this study does not include distortionary losses
related to the policies and measures implemented (i.e. taxation, subsidies,
etc.).
Since Denmark is committed to CO
2
reductions in the non-ETS sector,
reductions here have a socio-economic value. As such, the costs of the
scenarios are displayed given three different CO
2
values. If, for example, the
alternative cost of reducing CO
2
emissions outside of the ETS sector in
Denmark is 1,000 DKK/tonne, then the 35% scenario is roughly cost neutral
for Denmark.
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Billions of DKK
NPV 2015-2030
Main findings
35% scenario
0 DKK/tonne
4.1
35% scenario
EU ETS price
3.4
35% scenario
1,000 DKK/tonne
0.0
Sensitivity analyses on key assumptions
Oil prices
+20%
-1.1
-20%
+0.9
2015-level
+2.0
Biofuel prices
+10%
+0.3
-10%
-0.3
Biogas price
+10%
+0.2
-10%
-0.1
Battery prices
+10%
+0.4
-10%
-0.3
-1.1
+0.9
+2.0
+0.3
-0.3
+0.2
-0.1
+0.4
-0.3
-1.1
+0.9
+2.0
+0.3
-0.3
+0.2
-0.1
+0.4
-0.3
Table 1: Costs for main scenario.
Total additional costs for the period 2015-2030 with a 4%
discount rate. The main results vary dependant on the CO
2
price (first row), as well as the
sensitivity analysis (first column). Sensitivity results (rows 2-10) are relative to the main findings
(row 1).
Once investments in achieving a 35% emissions reduction have been
undertaken, the additional costs of increasing this emissions reduction to 40%
via the three technology scenarios ranges from 1.1 to 1.4 billion DKK. The
average CO
2
displacement cost of doing so varies between 925 to 1,000 DKK
per tonne. With a CO
2
price of 1,000 DKK/tonne, both the electricity and
biofuel scenarios result in lower additional costs (measured on a per tonne of
CO
2
basis) by increasing from a 35 to 40% emissions reduction.
3
Billions of DKK
NPV 2015-2030
35% scenario
0 DKK/tonne CO
2
4.1
EU ETS price
3.4
1,000 DKK/tonne CO
2
0.0
Technology scenarios - Additional cost (NPV) relative to 35% scenario:
Electricity scenario
Gas scenario
Biofuel scenario
+1.2
+1.4
+1.1
+1.0
+1.2
+0.8
-0.4
-0.0
-0.4
Table 2: Costs for the 35% scenario and the three 40% technology scenarios.
Total NPV costs
for the period 2015-2030 with a 4% discount rate, given three different CO
2
values. For the
technology scenarios, the table displays the additional cost of extending from a 35% emissions
reduction to a 40% emissions reduction.
3
This may seem counterintuitive but is because the additional CO
2
reductions undertaken in the 40%
reduction scenarios primarily take place near the end of the scenario period, when the CO
2
reduction costs
are lowest.
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Policies and measures
Policies and measures (taxation)
When looking outside of the ETS sector, a 2013 catalogue of climate
mitigation instruments published by the Danish government found that
alternatives to CO
2
emission reduction measures from the transport sector are
primarily to be found in the agricultural sector. As a general rule, it stated that
new policies and measures focused on the agriculture sector were on the
cheap end of the mitigation instruments scale, while transport initiatives were
to be found at the higher end. For example, when looking at measures with a
cost of under 2,500 DKK/tonne, the agricultural sector could contribute with
total emissions reductions of over 3.6 million tonnes, while the transport
sector could only contribute with 0.5 million tonnes. (Inter-ministerial working
group, 2013).
Transport related policies and measures included in the catalogue included:
increases in fuel taxes, higher blending requirements for biofuels, the
promotion of gas in heavy transport, as well as a mileage-based road tax. As
such, it is many of the same types of policies and measures that are
investigated in the current analysis, but where this study finds significantly
lower CO
2
emission reduction costs. The higher emission reduction costs
found in the catalogue are partly due to the inclusion of distortionary losses,
including for example the anticipated loss of state revenues due to increased
cross-border trade.
If transport sector CO
2
emissions are to be reduced at the lowest possible cost
to society, it is important that distortionary effects are minimised. Low
distortionary effects are achieved if the societal costs associated with road
transport are made visible to the user, i.e. the externality costs from transport
(costs related to noise, air pollution, etc.) are internalised.
If such an externality principle was to be pursued fully, it would have a
considerable influence on the purchase and usage cost of vehicles that private
persons and business are currently experiencing. Particularly small cars and
trucks would see significant price increases compared to today's level. The
consequences for businesses and private persons must therefore be assessed
closely before such a change in the taxation model could be recommended.
Meanwhile, in order to ensure continued growth in the sales of low-emission
vehicles (EVs), some form of transitional arrangement to the new taxation
model would be required for at least 10 years (until EV battery costs can be
expected to have reduced significantly).
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The political agreement from October 9
th
, 2015 between the government
(Venstre), the Social Democrats, the Danish People's Party and the Danish
Social-Liberal Party established a phase-in process into the existing tax system
for electric vehicles, plug-in hybrid vehicles, and fuel cell vehicles. Electric and
plug-in hybrid vehicles will be phased in over a 5-year period starting in 2016,
resulting in full taxation in 2020. Fuel cell vehicles will meanwhile start a 5-
year phase-in period in 2019.
The price development of batteries assumed in this report indicates that a
phase-in period of five years is likely not sufficient to ensure the growth in
sales of low-emission vehicles. Furthermore, it is problematic that the vehicle
taxation system was developed at a time when vehicles had poorer fuel
economy than they have today. A slight adjustment of the tax system could
comprise an update of the registration taxation calculations, for example
having it based on litres per km, rather than the current km per litre. In
addition, it would be assumed necessary to extend the phase-in period
beyond the currently proposed 5 years.
For biofuels, the study finds that a continuation of the mandated blending
targets is adequate, including those for 2nd generation biofuels, as they are
considered to be effective policy instruments.
With respect to gas, the most effective instrument is deemed to be a
combination of a lower tax on gas for transport, along with a partnership
approach with relevant stakeholders. Relevant stakeholders in this context are
gas companies, petrol station companies, municipalities and fleet owners.
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3 EU goals and policies
EU: Long-term CO
2
& RE goals
In its roadmap for transitioning to a competitive low carbon economy in 2050,
the EU Commission indicated that relative to 1990, total greenhouse gas
emissions must be reduced by 85% - 90% by 2050. This includes the transport
sector, where CO
2
emissions should be reduced by approximately 60%
compared to 1990.
More recently, the EU has set new targets for 2030, which include a 40% cut
in greenhouse gas emissions compared to 1990 levels, a minimum 27%
renewable share in energy consumption, and at least 27% energy savings
compared with the business-as-usual scenario.
EU: 2020 CO
2
& RE legislation
According to the EU's climate and energy package adopted in 2009, in
particular the Renewable Energy Directive, member states must reach a target
of 10% renewable energy (RE) in transport by 2020. The RE Directive sets out
a number of sustainability requirements for biofuels, with these requirements
to be tightened starting in 2018. In addition, the EU's Fuel Quality Directive
states that suppliers of road transport fuels must reduce greenhouse gas
emissions from these fuels by 6% no later than 2020.
4
The two directives are quite complex, and in the period since 2012 there have
been lengthy discussions and negotiations regarding a number of issues,
including limiting the use of 1G biofuels
5
, the importance of indirect land use
change (ILUC)
6
, the role of biofuels after 2020, etc.
EU: Alternative fuels
In October of 2014, the EU adopted a directive on the establishment of
infrastructure for alternative fuels. Amongst other things, member States
have committed to adopt national objectives and measures for infrastructure
development, with one example being EV charging stations (European
Commission, 2015a).
In 2015, the EU decided that the maximum amount of 1G biofuels that may
count towards the 10% target shall be 7%. In addition, it established an
4
The percentage targets in both directives are on an energy basis. In the Fuel Quality Directive, the target is
measured on a well to wheel’s basis, i.e. the upstream emissions are also included.
5
Biofuels based on corn and other edible crops are generally classified as first generation biofuels (1G).
Biofuels based on residues from agriculture or industry are meanwhile classified as second-generation
biofuels (2G) or advanced biofuels. 2G biofuels count double towards the RE Directive target of 10%
renewable energy in transport, but not in the fuel quality directive
6
Indirect Land Use Change can lead to so-called indirect greenhouse gas emissions.
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‘indicative’ sub-target for advanced biofuels of 0.5%, as well as expressed a
desire to see a greater role for advanced biofuels after 2020 (T&E, 2015a).
EU: CO
2
emissions
A key regulatory tool for the EU is mandatory emission reduction targets for
passenger cars and vans. These are implemented via requirements for falling
CO
2
emissions, measured in CO
2
per kilometre (g CO
2
/km), towards 2021.
In October of 2014, the European Council agreed on a
2030 Climate and
Energy Policy Framework.
The decision means that the non-ETS sector must
reduce its greenhouse gas emissions by 30% by 2030 (relative to 2005). The
30% target has yet to result in individual national reduction targets, but there
is a consensus that national goals will be in the range of 0% to 40%. Denmark
can be expected to have a reduction target between 35% and 40%. (European
Council, 2014).
The European Council also invites the EU Commission to “further examine
instruments and measures for a comprehensive and technology neutral
approach for the promotion of emissions reduction and energy efficiency in
transport, for electric transportation and for renewable energy sources in
transport also after 2020.” (European Council, 2014). In the subsequent
communication regarding the Energy Union Package (February 25, 2015), the
Commission outlined a need for the EU to increase the energy efficiency of
vehicles, decarbonise the transport sector, increase the use of electricity in
transport, undertake a gradual shift to alternative fuels, and further integrate
energy and transport systems (European Commission, 2015b).
The EU has therefore set an overall goal of increasing the number of
technologies and instruments that can be used in reducing emissions from
transport, a sector that accounts for over 30% of EU final energy
consumption. However, concrete policies and measures are not yet on the
table.
The non-ETS sector in Denmark
Denmark: CO
2
emissions
In 2005, roughly 39 million tonnes of CO
2
were emitted in the non-ETS sector
in Denmark, with a distribution as displayed in Figure 3.
As can be seen from the figure, 35% of these emissions came from the
transport sector, 33% from agriculture, 10% from households and 22% from
other sectors.
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4% 1%
10%
3%
9%
6%
Energy sector
Supply sector
Transportation
35%
Agriculture
Manufacturing incl
construction
Services
Households
33%
Waste and sewage
Figure 3: Distribution of greenhouse gas emissions in the non-ETS sector in Denmark in 2005.
With the new EU framework, Denmark will be obligated to reduce its non-ETS
emissions by 35-40% relative to 2005, equivalent to a reduction of 13-15
million tonnes. There has already been some reduction since 2005, and in
2012, emissions had fallen to roughly 33 million, corresponding to a reduction
of approximately 14%. This also means that distribution between sectors has
changed, and as of 2012, the transport and agriculture shares had risen to
37% and 36% respectively. According to the Danish Energy Agency’s baseline
scenario from 2014 (see figure below), emissions from the non-ETS sector are
expected to continue to decline towards 2025.
45
Mill. tons CO
2
equivalent
40
35
30
25
20
15
10
5
0
Projection
Non ETS BF2014
40% reduction target
35% reduction target
EU 2020 target
Non-ETS 2025-2030
Figure 4: Danish greenhouse gasses in the non-ETS sector.
The projection from 2015-2025 is
based on the Danish Energy Agency’s baseline scenario 2014 (BF2014), while the projection
from 2025-2030 is a linear extension of the 2015-2025 trend.
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4 Challenges and Opportunities
Transport's share of Denmark's total CO
2
emissions rose from 15% in 1990 to
26% in 2013. In 2013, road transport comprised 75% of the transport sector’s
total CO
2
emissions (92% when international aviation is not included).
7
18
16
Mill. tons CO
2
per year
14
12
10
8
6
4
2
-
Road transport
Domestic aviation
Rail transport
International aviation
Domestic shipping
Defense
Figure 5: Danish CO
2
emissions from transport, 1990-2013.
Source: Danish Energy Association,
Energy statistics 2013 (ENS, 2014a)
Danish CO
2
emissions from road transport peaked in 2007 at roughly 12.6
million tonnes, and have since decreased by approximately 2 million tonnes.
Biofuel blending has reduced emissions by approximately 0.6 million tonnes.
Other major factors have been a slowdown in heavy transport, and improved
fuel economy prompted by stricter EU requirements. In addition, changes in
the Danish car taxation system have provided incentives to purchase fuel-
efficient cars and vans.
Although the actual CO
2
emissions from road transport have fallen in recent
years, it is deemed a challenge to significantly reduce the transport sector's
CO
2
emissions by 2030. This is due to several factors: Demand for transport
services is expected to increase in the coming decades, there are technical
limits on the efficiency that traditional internal combustion engines can reach,
2G biofuels from straw, wood, etc. are on the way, but they are still at an
early developmental phase, and lastly, electric vehicles and plug-in hybrids
7
CO
2
emissions from international aviation are not included in Denmark's reduction commitments in the
non-ETS sector.
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have gained considerable market shares in some countries, but still have
significantly higher import costs relative to traditional vehicles.
Transport demand in the ’National transport model’
The
Landstrafikmodel
(National transport model) from 2014, developed by
the transport department at the Technical University of Denmark (DTU),
provides the starting point for the transport demand projections. These
projections are based on historical data, combined with assessments of
factors including future economic growth and demographic developments.
The GDP projection is based on the Danish Ministry of Finances’ convergence
program from 2013. During the period from 2010-2020 the average annual
GDP growth is projected to be 1.6%, and after 2020 it is projected to be 1.2%.
The population projection is based on analyses carried out by Statistics
Denmark.
Figure 6 below displays the resulting projected demand for passenger
transport, heavy transport, and light duty transport.
80,000
70,000
60,000
20,000
25,000
50,000
40,000
30,000
20,000
10,000
0
15,000
10,000
5,000
-
Passenger transport (mill. pkm)
Heavy duty transport (mill. tonkm)
Light duty transport (mill. vkm)
Figure 6: Projected transport demand.
(pkm – personal transport km, tonkm – tonne transport
km, vkm – vehicle km). Source: Ea Energy Analyses based on statistics and projections from the
National transport model.
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mill. vkm/year - mill. tonkm/year
mill. pkm/year
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4.1 Energy efficiency and renewable energy
CO
2
emissions from road transport can be reduced via a number of different
types of initiatives. Generally speaking, emissions can be reduced by:
1. Switching from fossil fuels to renewable energy
2. Increased vehicle energy efficiency
3. Reduction in transport demand
4. Shifting transport demand from private vehicles to bus, train or
bicycle, and higher utilisation and/or occupancy rates of transport
modes.
The current analysis has elected to focus on the first two points, and therefore
does not investigate options for reducing transport demand or shifting
transport demand to another mode (modal shift).
A shift to renewable energy (RE) includes the following options:
Electrification of cars, vans and buses (the analysis calculations
assume that the electricity used is produced from RE sources).
Phasing in of gas vehicles in heavy transport (the analysis calculations
assume that the gas used is biogas)
Blending of liquid biofuels for use in conventional vehicles, with an
eventual shift to 100% biofuel (it is assumed that all new petrol cars
can run on E20 by 2020).
The technological and cost development potential of hydrogen and fuel cell
vehicles have been investigated, but these vehicles are not included in the
scenarios as there is great uncertainty regarding whether these vehicles can
become economically competitive by 2030.
More energy efficient vehicles
Since 2007, the EU has implemented energy efficiency targets for passenger
cars, starting with a fleet maximum of 130 g CO
2
/km for new cars in 2015, and
falling to 95 g CO
2
/km for new cars in 2021 (and 147 g CO
2
/km for new vans in
2021). These EU requirements have driven a significant reduction in CO
2
emissions from new passenger cars.
In Denmark, new cars emitted 25% less CO
2
per km in 2013 relative to 2007,
even after taking into account the fact that car manufacturer’s stated fuel
economy figures continue to deviate more and more from actual real world
consumption figures. As a result, the entire car fleet has already experienced a
slight decline in the average g CO
2
/km emissions (see figure below).
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250
200
g CO
2
/ km
150
100
50
0
2000
2005
2010
2015
2020
2025
2030
Car stock - statistics
Car stock - projection
New cars - projection
Car stock - model
New cars - statistics
Figure 7: Energy efficiency development for all passenger cars in the 35% scenario.
The
development is shown for both new cars, and the entire fleet of passenger cars. All types of
passenger vehicles are included, and energy consumption from EVs are converted to CO
2
emissions using the same CO
2
factor as for petrol (73 g/MJ). For 2015-2020, fluctuations due to
model calibration have been levelled out for new passenger cars.
There are no EU targets for heavy-duty vehicle (HDV) transport similar to
those for passenger cars and vans. However, on behalf of the European
Commission, DELFT University has estimated that it is also possible to achieve
considerable cost-effective emissions reductions for HDVs. The EU
Commission is currently in the process of developing tools and systems for the
measurement of new HDVs’ fuel efficiency, the so-called Vehicle Energy
Consumption Calculation Tool - Vecto.
The scenario calculations assume continued improvements in fuel efficiency
for both light-duty and heavy-duty vehicles through to 2030.
Biofuels
Global biomass resources are significant, but also limited. In the long term,
the International Panel on Climate Change (IPCC) has estimated that, on a
global level, there are 100-300 Exajoule (EJ) of biomass that can be used for
energy purposes, including transport. To put this into perspective, the total
global energy consumption from the transport sector today is roughly 100 EJ.
As a result, resource constraints will necessitate that biofuels can only be
expected to be part of the solution within the transport sector, and these
biofuels must therefore be prioritised in areas where it is difficult to find
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alternatives. Such areas include aviation, as well as parts of the shipping and
HDV transport sectors.
Generally speaking, liquid biofuels are currently produced either from oil-
based raw materials such as rapeseed, sunflower, soybean and palm oil
(added to diesel), or from starch or sugar-based raw materials such as grain,
maize and sugar cane (added to petrol). These are the so-called 1G
technologies, which to some extent are in competition with food.
Biofuels can also be produced from waste products from agriculture and
forestry, or based on organic waste from industry and households (2G
biofuels). Some 2G technologies are well developed, including for example
biofuels produced from used cooking oil and animal fat from slaughterhouses.
These resources are however limited, and much of this potential is already
being utilised. Therefore, the potential for increased production of 2G biofuel
of this latter type is not deemed to be particularly large.
The so-called advanced 2G technologies include bioethanol production from
straw and other plant residues, or biodiesel produced from forestry residues.
These technologies have significantly higher raw material potentials, but they
are still at a relatively early stage of development, either in the form of pilot
or demonstration projects. At present, there are a handful of larger plants in
Europe (Italy and Finland), the United States and Brazil, but economic and
production data for these plants has not been available to this project.
A breakthrough for
gasification is not
expected prior to 2030
Although somewhat of an oversimplification, advanced 2G technologies can
generally be categorised as either biological/enzyme based (bioethanol and
biogas), or thermal gasification based (e.g. Fischer-Tropsch diesel).
The technical challenges associated with gasification have proven to be
significant when the input material is biomass. An eventual commercial
breakthrough therefore requires a dedicated and long-term development
effort, one that is best borne via international cooperation. It is highly
uncertain whether there will be significant commercial production of
gasification-based biofuels by 2030.
2G bioethanol on
the way
In recent years, considerable efforts have focused on developing 2G
bioethanol plants, and there are plans to establish a full-scale plant in
Denmark with straw as the raw material, and the by-products to be re-used in
biogas and combined heat and power (CHP) production. Via integration with
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the biogas and CHP processes, the total energy output from the straw is
expected to be significantly higher in comparison to energy output from a
plant that solely produces bioethanol.
Benefits
The primary advantage associated with biofuels is that they can immediately
displace fossil fuels across the entire vehicle fleet. This is because biofuels can
be blended in petrol and diesel, which also means avoiding significant
additional investments in new fuel distribution infrastructure.
Challenges related to biofuels involve the limited available of sustainable
biomass resources, and that a number of 2G technologies are still immature.
Green gas
Biogas technology is a well-known and mature technology in both Denmark
and internationally. Biogas production in Denmark is largely based on residues
from the agricultural and food industries, and is thus essentially a 2G
technology. Due to improved support schemes, Danish biogas production is
expected to grow significantly in the coming years. The majority of this biogas
is expected to be purified, upgraded and injected into the natural gas grid. In
addition, there is the possibility of increasing gas production by adding
hydrogen, but due to the costs associated with hydrogen production, it is still
uncertain to what extent this hydrogen upgrading will be utilised.
Other green gases include so-called SNG (Synthetic Natural Gas), which is
based on the thermal gasification of biomass. However, as outlined above, the
authors of the current report deem it unlikely that gasification technology will
achieve a commercial breakthrough prior to 2030.
Benefits
In addition to biogas being a well-developed technology in Denmark, the
majority of which is 2G biogas, another benefit of increased gas use in
transport is that Denmark has a well-developed gas infrastructure. This
reduces the distribution cost for gas used in transport, where gas vehicles also
represent a well-known and mature technology.
On the challenges side, the use of gas in transport requires investments in
new filling infrastructure. In addition, there may be barriers related to
encouraging the general public to purchase a new vehicle technology.
Electrification of the vehicle fleet
Electric vehicle technology in this report encompasses both pure battery-
powered vehicles (EVs) and ‘range extender’ plug-in hybrid vehicles (PHEVs).
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Drawbacks
Drawbacks
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This type of PHEV is essentially an EV with an internal combustion engine (ICE)
to power the battery when needed. As such, both of these vehicle types rely
on an electric motor to power the wheels, and it is assumed that the vast
majority (roughly 80%) of the PHEV km will be powered by electricity.
A PHEV in this context should not to be confused with a ‘classic hybrid’, which
is a conventional car with an ICE, where an electric motor and battery have
been integrated in order to increase the overall efficiency of the vehicle.
With an ever increasing portion of electricity production coming from
renewables, in the future, electricity for use in the transport sector can be
based on renewable energy.
Technological
development
According to a number of estimates, including work carried out by the US
Department of Energy (DOE), the period from 2010 to 2013 saw the cost of
batteries reduced by nearly 50%, while at the same time, battery energy
density has increased by nearly 50% (DOE, 2015). These trends are expected
to continue, supported in part by DOE efforts, which in 2012 set a 10-year
target of reducing battery prices to ¼ of their former price, and their weight
and size by 50% by 2022. The latest update from 2014 indicated the price
trend is on pace to meet these development goals (DOE, 2015).
In Denmark, electric vehicles are exempt from registration taxation until the
end of 2015. This tax exemption has driven EV sales of roughly 3,000 during
the period from 2011-2014 (Dansk Elbil Alliance, 2015), and resulted in EVs
representing approximately 0.8% of new vehicle sales in 2014. Internationally
speaking, EV sales are also increasing, but these increases are typically seen in
countries where EVs are supported by favourable framework conditions.
Due to the very high efficiency of electric motors (85-95%), the energy losses
in EVs are significantly lower than those from conventional vehicles, thus
resulting in reduced driving costs. Another benefit of EVs relates to the
integration of RE in the electricity sector, which is occurring at a rapid pace.
With Denmark soon to surpass 50% of its electricity production coming from
wind and solar, EVs can assist in the integration of this fluctuating production
into the electricity system. Assuming that flexible charging options become
viable, this could for example involve charging during the night.
As is the case with gas vehicles, EV development requires the establishment of
new infrastructure. Relative to conventional vehicles, another drawback
EV sales
Benefits
Drawbacks
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relates to the higher upfront costs of EVs, which is largely due to the EV
battery costs. In addition, EVs have a limited driving range, and even with
rapid charging, take longer to refuel. As a result, particularly for longer trips,
and for those with a large daily driving requirement, EVs are less attractive.
8
4.2 Analysis methodology
The analysis involved the formation and evaluation of five different scenarios
for potential road transport development towards 2030 (with CO
2
emissions
reductions relative to 2005). The scenarios include a 35% scenario that
illustrates the path to a 35% CO
2
reduction by 2030, three ‘technology
scenarios’ that each deliver a 40% CO
2
reduction by 2030, and lastly, a
reference scenario. By combining the main scenario 35% with contributions
from one or more of the technology scenarios, Danish road transport CO
2
emissions can be reduced by 35-40% by 2030.
35% scenario
The 35% scenario is constructed given the following three criteria:
I.
II.
It must achieve a 35% reduction in CO
2
emissions from road transport
in 2030 compared to 2005.
It must utilise a range of technologies that support a development
towards 2050 (which is assumed to be dominated by electric
mobility). Furthermore, the scenario shall be robust with regards to
technology development and the potential for alteration of priorities
along the way.
Minimisation of socioeconomic costs - given that I and II are fulfilled.
III.
Three technology
scenarios
The three technology scenarios go beyond the 35% scenario in each of their
respective technology field: Increased electrification, increased use of liquid
biofuels, or increased use of gas (biogas). Each of the three technology
scenarios take their point of departure in the 35% scenario, and build further,
so as to reach a 40% reduction in CO
2
emissions from road transport.
In the reference scenario there is no shift to gas, sales of EVs stagnate, and
biofuel blending levels at a level necessary to reach the 2020 RE targets are
assumed, but they are not increased further.
The socioeconomic costs are determined by calculating the total road
transport costs for each scenario. The total costs are comprised of four main
components: Vehicle procurement, vehicle operation and maintenance, fuel
Reference scenario
Economics
8
There are also pure battery-electric vehicles with a longer range, but these cars are significantly more
expensive due to the larger battery.
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costs, and emissions and other externality costs. Externality costs include for
example costs related to congestion, local pollution, road maintenance, etc.
Prices for each of these elements are measured in so called ‘factor’ or import
prices, i.e., the cost of producing/importing the item. These prices don’t
include taxes and/or rebates etc., and should therefore not be confused with
the consumer price, which is to a large extent determined by taxes.
In addition to projections for fuel and emission costs, for each vehicle
segment (personal vehicles, LDVs, HDVs and busses) projections were made
regarding technical data such as vehicle weight, engine efficiency, driving
patterns and O&M costs for each drivetrain type.
4.3 Assumptions
Socioeconomic fuel prices
Fossil fuel price projects are based on the methodology used by the Danish
Energy Agency in its socioeconomic fuel price assumptions, but using more
recent price projections from the 2014
World Energy Outlook
(IEA, 2014).
9
300
260
220
2015 DKK / GJ
180
øre/Wh
140
100
60
20
-20
2015
2020
2030
2015
2020
2030
2015
2020
2030
2015
2020
2030
2015
2020
2030
2015
2020
2030
2015
2020
2030
2015
2020
2030
Diesel
1G
2G
Bioethanol Bioethanol
1G FAME
2G FAME
HVO
Biogas
RE Electricity Batteries
Production cost
System value
Battery cost
Prices used
Figure 8: Socioeconomic prices of fuels and electric car batteries.
Costs are shown as import
costs or at refinery/factory gate (2015 DKK/GJ). EVs electricity price includes a ‘system value’
that increases to 5 øre/kWh in 2030. Battery prices shown on the right axis (2015 øre/Wh)
9
Biogas prices are based on a report entitled:
Biogas i Danmark – status, barrierer og perspektiver med
tillæg for positive sideeffekter beregnet af Institut for Fødevarer og ressourceøkonomi
(ENS, 2014b). A price
fall of roughly 10% was assumed from 2015 to 2030.
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2015
2020
2030
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Production costs for the various liquid biofuels are derived from calculations
undertaken by Ea Energy Analysis based on a literature review. Calculations
regarding fuel production, distribution and infrastructure costs are described
in a separate report (Ea Energianalyse, 2015a). An important input for biofuel
prices in this analysis are price projections of the respective raw materials
(straw, wheat and rapeseed oil). Straw price projections are based on the
DEA's most recent cost projections, while wheat and rape seed cost
projections are based on a combination of forward prices and projections
from the Food and Agriculture Organization of the United Nations (FAO).
In addition, the analysis calculations assume that there will always be a higher
willingness to pay for green biofuels (biodiesel, bioethanol and biogas),
compared to fossil fuels. As a result, the import price to Denmark (or
alternatively the export price) for biofuels will always be higher than the
corresponding fossil fuel price, regardless of the actual production costs
derived in the analysis.
10
The level of this price premium is quite difficult to
pinpoint, and the current analysis has elected to base it on the general
willingness to pay for RE in Denmark (roughly 0.15 DKK/kWh electricity, or 40-
60 DKK per GJ of heat). With this as a reference point, the price premium
selected is just over 40 DKK/GJ for 2
nd
generation biofuels, and half of this for
1
st
generation biofuels. (This price premium only impacts the final results in
sensitively analyses with high oil prices).
The electricity price utilised in this study is based on the costs associated with
new RE electricity
generation, including system costs. In 2015 it is assumed
that the price of new RE is set via 50% onshore and 50% offshore wind, giving
an average production and system cost of roughly 600 DKK/MWh. Meanwhile,
the 2030 new RE price is assumed to be set by a combination of 60% offshore
wind and 40% solar power, resulting in a price of roughly 700 DKK/MWh.
By 2030 it is also assumed that EVs will have a system value in the order of 50
DKK/MWh (i.e. via their ability to charge at times with low prices), thus
bringing the RE cost utilised in 2030 to 650 DKK/MWh.
Infrastructure and distribution
In addition to the above wholesale prices, costs related to fuel infrastructure
(i.e. refuelling) and distribution were also calculated and utilised (Ea
Energianalyse, 2015a).
10
Given the assumption that biofuels are preferable to fossil fuels, then biofuels could be sold at a higher
price than fossil oil products, regardless of production costs. At the same time, biofuels will displace the
most expensive oil production, and thus should put downward pressure on oil prices.
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For vehicles that use liquid fuel, the point of departure is the DEA economic
assumptions, where the cost of distribution & refuelling for diesel and petrol
are 28.7 and 34.8 DKK/GJ respectively.
For electric and gas vehicles, cost estimates for charging/fuelling stations were
undertaken for each of the four vehicle segments. These cost estimates also
factored in the anticipated utilisation rates of the fuelling infrastructure for
each vehicle segment. As a result, the total fuel costs for both gas and
electricity (in per GJ terms) are considerably higher during the first years
compared to later in the period, when the infrastructure is assumed to have a
higher utilisation rate. In determining the infrastructure costs for all fuel
types, the depreciation costs of existing networks are considered to be ‘sunk
costs’, and are therefore not included. For the electricity distribution net, this
may result in the costs being slightly underestimated during the end of the
study period when the large number of EVs could contribute to a need for
local grid reinforcements. This is however uncertain, and it is been assessed to
only have a minor impact on the scenario results.
The impact of infrastructure costs are shown in Figure 10, where
infrastructure costs are included under ‘fuel – distribution cost’. The figure
illustrates that the distribution costs of gas at the beginning of the period are
significantly higher than those of gasoline and diesel. However, going forward
towards 2030, as the network of gas stations is expanded, the distribution
cost for gas actually becomes lower than for liquid fuels.
Externalities
Externality costs are indirect costs on the environment and/or people who are
not directly participating in a market. Transport on the road network gives rise
to a number of externality costs that must be priced in order to get an
accurate picture of the total cost.
The main externalities here relate to congestion, accidents, CO
2
, noise, air
pollution and road wear. The cost of some of the most important
externalities, such as accidents and congestion, greatly depend on where and
when vehicles are on the road. Generally speaking, externality costs are
higher in the city and when driving during rush hour, than driving in rural
areas.
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It should be noted that there is considerable uncertainty associated with
quantifying the cost of externalities. Methodologically speaking, it is
challenging, and the calculations depend on controversial factors such as the
value of a human life. The externality costs used in this analysis are primarily
based on calculations undertaken by the Economic Council (DØRS, 2013), as
well as own assessments regarding various car segments’ share of the overall
maintenance cost of the road network.
80
70
60
400
350
300
øre / km
øre / km
50
40
30
20
10
0
Gasoline+
Diesel+
Biogas
EV
HDV -
Diesel+
Bus -
Diesel+
250
200
150
100
50
0
CO2 emissions
Accidents
Access to road network
Local air pollution
Road wear
Noise
Congestion
Figure 9: Externality cost for selected vehicles.
Calculated with a CO
2
cost of 1,000 DKK/ tonne.
Gasoline+ and Diesel + are with today's biofuel blending %’s. NOTE: Trucks and buses are shown
on the right y-axis.
More recently (autumn 2015), there have been questions raised regarding the
extent to which diesel vehicles are meeting the applicable standards,
particularly with respect to NO
x
emissions. These concerns have been backed
by new analyses undertaken by, amongst others, the International Council on
Clean Transportation (ICCT) and the General German Automobile club (ADAC).
If this proves to be an ongoing challenge, externalities from diesel passenger
cars in this report may be underestimated by 1 to 1.5 øre/km.
Total driving costs for passenger vehicles
For use in the scenarios, the total per km driving cost was calculated for each
vehicle type and segment. These per km costs served as both inputs to an
iterative process of scenario development, as well as inputs for the total
annual transport costs of each scenario. Due to variations in development
paths of the various automotive technologies, fuel prices, and infrastructure
utilisation rates, the cost per kilometre evolves quite differently for the
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various vehicle models (see Figure 11). A more comprehensive description of
the various vehicle’s energy consumption and cost calculations is provided in
a separate report (Ea Energianalyse, 2015b), while the externality cost
calculations are described in another working paper (Ea Energianalyse, 2015c).
Total costs
The figure below compares the costs of various passenger vehicles in 2015. All
vehicles in the figure correspond to a standard sized vehicle (though not the
‘EV large’), with an annual driving demand of 18,000 km. The calculations
assume a 15-year vehicle lifetime and utilise a discount rate of 4%.
400
350
300
CO2 emissions
Other externalities
Fuel - distribution cost
Fuel - wholesale cost
O&M
Replacment battery
50
0
øre / km
250
200
150
100
Initial battery
Vehicle costs w/o battery
Figure 10: Total driving costs for passenger vehicles in 2015.
The calculations are based on
18,000 km/year. For Gasoline+ and Diesel+, the ‘+’ indicates inclusion of biofuels. *The ‘EV large’
is not used in the scenarios, but included here to present a pure EV with a range that is
comparable with other vehicles. It is a much larger car (i.e. Tesla S) than the others, all of which
are roughly equivalent to a VW Golf. ** Unlike the other vehicles, hydrogen vehicles are not yet
sold in significant quantities, and therefore there are few publicly available prices.
The figure highlights the fact that the hydrogen vehicle (as well as the large
EV), is significantly more expensive than the other technologies. As was noted
previously, it also illustrates that the cost associated with gas distribution in
2015 (natural gas and biogas) is noticeably higher than that for liquid fuels and
electricity. The total externality costs for EVs and biogas vehicles are slightly
lower because their fuels are deemed to be CO
2
neutral.
While the figure above displayed the passenger vehicle costs in 2015
according to the various cost components, Figure 11 below displays the
projected total passenger vehicle costs from 2015 to 2030. Please note that
the y-axis does not start at 0.
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200
195
190
185
øre / km
180
175
170
165
160
155
150
2015
Natural gas
2020
E85
2025
Gasoline+
Diesel+
2030
Biogas
Plug-in hybrid
EV
Hydrogen
Figure 11: Evolution in driving costs for passenger vehicles from 2015 to 2030.
The total
socioeconomic cost of driving is based on 18,000 km/year. NOTE: Y-axis starts at 150 øre/km.
*Unlike the other vehicles, hydrogen vehicles are not yet sold in significant quantities, and
therefore the total costs are more uncertain, and only the point in 2030 is shown above
The figure shows that electric and gas based vehicles (costs for hydrogen are
only displayed for 2030) have significantly higher per km socioeconomic costs
in the beginning of the period. According to the projection however, EVs
become the cheapest alternative well before 2030, primarily due to
assumptions regarding significant reductions in battery technology costs.
Natural gas vehicles briefly have the lowest socioeconomic cost prior to 2025,
but shortly thereafter EVs become cheaper than both the natural gas and
gasoline vehicles. That gasoline and diesel vehicles do not fall in price after
2020 is primarily due to the assumption of rising oil prices, which are largely
offset by improvements in fuel efficiency (particularly for the gasoline vehicle
up to 2020).
Lastly, the rapid decline in the per km cost of gas-powered cars during the first
half of the period is primarily due to the assumption that the utilisation rate of
gas fuelling infrastructure will improve over time.
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5 Scenarios for a green transition
The scenario work employed the spreadsheet model PETRA, which based on a
number of inputs and assumptions, projects the development path for road
transport’s energy consumption, CO
2
emissions and total costs. The overall
method utilised in PETRA is illustrated in Figure 12.
Figure 12: Overall methodology utilised in the PETRA model.
Please note that this is a
simplification, as in practice a number of different inputs and assumptions feed into the model.
The model includes passenger cars, vans, trucks, buses and motorcycles. The
PETRA model and scenario assumptions are described in greater detail in a
separate working paper (Ea Energianalyse, 2015d).
Main assumptions
Vehicle lifetimes follow a ‘lifetime curve‘, which describes what percentage
of a model year is 'alive' after X number of years. For example, roughly 97%
of passenger vehicles are alive after 5 years, and approximately 50% are
still alive after 16 years.
An age-dependent driving factor is implemented that factors into account
that as vehicles age, they drive less km. I.e. after 5 yrs. a passenger vehicle
drives 95% of the km it drove while new, and after 16 yrs. this falls to 68%.
The model incorporates an efficiency factor that adjusts for the fact that a
vehicle’s energy consumption per kilometer driven increases with the age
of the vehicle.
Total traffic demand follows projections from the National Transport
Model, which takes into account infrastructure expansions.
It is assumed that in 2015, new diesel and gasoline vehicles drive roughly
20,000 and 16,000 km annually respectively. Transport demand per new
vehicle is assumed to fall going forward, and in 2030, it is assumed that
new diesel and gasoline vehicles drive approximately 18,000 and 15,000 km
annually respectively.
5.1 35% Scenario
The main assumptions utilised in the 35% scenario are displayed in Table 3.
With respect to biofuels, it is assumed that there will be an increased used of
2G biofuels, as it is assumed that 1G biofuels can contribute with a maximum
of 7% of fuel demand.
S-curves
Within the scenarios, the phasing-in of new vehicle technologies, such as
electric or gas vehicles for example, is assumed to take place in a smooth
fashion according to so called ‘S-curves’ (logistic growth). This means that in
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the beginning of the period there is a specific growth rate applied to the
number of new vehicles sold each year for a particular technology, with this
growth rate fading off as the particular technology reaches a saturation point.
The growth rates utilised were determined via iterative scenario calculations,
which were adjusted in order to achieve the desired 2030 objectives.
As electric vehicles still have a modest market share, and/or a limited driving
range, it is reasonable to assume that a large portion of private consumers
may still be hesitant to purchase electric vehicles, even if they have a
comparable total cost of ownership. It is difficult to predict various consumer
segments preferences between EVs or PHEVs, but in the scenario calculations
the number of the two electric vehicle options are split evenly.
For electric vehicles (EVs and PHEVs), the result of the iterative calculations
were a growth rate of 30% per year during the beginning of the period (sales
of new electric vehicles increased by 30% per year). As such, sales of electric
vehicles (and gas vehicles) increase despite the fact that the socioeconomic
costs of diesel and gasoline vehicles are lower during the beginning of the
period.
Based on an initial growth rate of 30% in
new vehicle
sales, and a saturation
point in 2050, in the 35% scenario, 12% of the passenger
vehicle stock
in 2030
is either an EV or PHEV, with this figure growing to almost 80% in 2050. This
same S-curve methodology was applied to gas vehicles. The table below
displays the distribution of
new vehicle
sales in 2030 for each of the various
technologies according to transport segment.
New vehicle sales
(2030)
Electric - EV
Electric - PHEV
Flexi-fuel
Gas (Biogas)
Diesel
Gasoline
Personal
vehicles
17%
17%
0%
2%
27%
37%
Heavy-duty
vehicles
Light-duty
vehicles
10%
10%
0%
5%
62%
13%
Route
buses
(70%)
55%
0%
25%
20%
Tourist
buses
(30%)
0%
15%
85%
0%
15%
85%
Table 3: Distribution of new vehicle sales in 2030 in the 35% scenario
Electrification
Heavy-duty vehicles (HDVs) are not anticipated to convert to electricity prior
to 2030 due to battery cost and energy density considerations. In the short
term, it is also anticipated that light-duty vehicles (LDVs) will be slower to
convert to electricity, again because it is assumed that challenges associated
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with driving range will play a role. However, some segments of the LDV
market are well suited to electrification (i.e. short fixed routes, city driving),
and by 2020 it is assumed that roughly 20% of new LDVs will be electric.
Busses used in public transport and/or defined routes (within this report
referred to as ‘Route buses’) are deemed to be the most suitable form of road
transport to switch to electricity (or gas). Already today, there are number of
electric buses in major cities, which have their own independent
environmental and climate goals. In the 35% scenario, this development is
expected to continue, and by 2030, it is assumed that 55% of new route buses
will be electric.
Gas (Biogas)
Gas in the scenarios is deemed to be biogas. For the heavy transport sector, a
switch from diesel to gas plays a crucial role because the potential for 2G
biodiesel towards 2030 is limited. In 2030, the 35% scenario contained new
gas vehicle sales of 15% for HDVs and tourist buses, and 25% for route busses.
This trend is expected to continue towards 2050 as gas infrastructure is
expanded, and the price difference between gas and diesel vehicles falls.
In the 35% scenario, it is assumed that Denmark will continue to blend
biofuels in both diesel and gasoline. The 2030 blending assumptions utilised in
the scenario are displayed in Table 4.
Vehicle segment
Personal vehicles
B7
HDVs
- 90% use B7
- 10% use B30
LDVs
B7
Buses
- 90% use B7
- 10% use B30
10.1%
3.1%
- From 2020, all new
gasoline cars are
capable of using E20
- In 2030, this
corresponds to 60%
of the fleet using E20
- The remaining 40%
run on E10.
100% (energy)
3.1%
3.1%
- From 2020, all new
gasoline LDVs are
capable of using E20
- In 2030, this
corresponds to 72%
of the fleet using E20
- The remaining 28%
run on E10.
100% (energy)
3.1%
Average
%*
Biofuel blending
Biofuel
Blending
options
B7/B30
(FAME)
Diesel drop-
ins (HVO, F-
T Syndiesel)
Biodiesel/
Drop-in
syndiesel
Ethanol
E20/E10
N/A
N/A
10.6%
Biogas
Biogas
100% (energy)
100% (energy)
100%
Table 4: Biofuel blending in the 35% scenario in 2030.
*Average percentage indicates the
blending mixture on an energy basis.
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The blending assumptions utilised in the 35% scenario are based on E4techs’s
2013 roadmap,
A harmonised Auto-Fuel biofuel roadmap for the EU to 2030
(E4tech, 2013). Towards 2030 it is assumed that Denmark will reply on the EU
blending standards and not develop new national standards. However, it is
assumed that the EU will develop a new standard prior to 2020, and this will
be implemented in Denmark.
Biodiesel/Syndiesel
As indicated above, there are two main categories of diesel blends in the
study. The first follows the EU standards B7 and B30, which involve blending
diesel with Fatty Acid Methyl Ether (FAME) where the maximum FAME
content (on a volume basis) of the blended fuel is 7% and 30% respectively.
For some vehicle models, there are limits on how much FAME can be in the
fuel blend without risking damage to engine components. The second type of
diesel blends are ‘drop-in’ fuels, which are Hydro treated vegetable oil (HVO)
or Fischer Tropsch produced syndiesel. These drop-in fuels don’t have a ‘blend
wall’ (i.e. there is no limit on the amount they can be blended) because the
product is very similar to conventional diesel. The 35% scenario therefore
makes a distinction between FAME, which is blended at levels according to
applicable EU standards, and drop-in fuels, which are blended according to
Danish political wishes, or EU requirements.
In the 35% scenario, the majority of the diesel blends will be 1G, as it is
assumed that the resources for 2G biodiesel are limited. The combined
potential of waste oils, fats and tall oil in Europe is estimated to be
approximately 150 PJ, or approximately 2% of EU diesel consumption in 2012.
(E4tech, 2013), (Eurostat, 2014). 2G resources can either be used to make
FAME or HVO. In the scenario calculations, it is assumed that 2G resources are
used to produce FAME, with Denmark having access to 2G resources
corresponding to the EU average of 2% of diesel consumption. All drop-in
fuels are therefore based on 1G HVO.
Today, all diesel vehicles in Denmark run on B7, and for passenger vehicles
and LDVs, this is not anticipated to change towards 2030. The 35% scenario
supplements this with 3.1% diesel drop-in fuels (on an energy basis), which is
modelled as HVO.
The vast majority of the HDV fleet can run on B30 today, however new lorries
that meet the Euro VI
11
standard for heavy transport may not be compatible
11
Euro VI sets air quality standards related to exhaust emissions by establishing specific limits for CO
2
NO
x
,
So
x
and particulate matter
.
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with B30. It will be possible for these new Euro VI compliant lorries to run on
B30, but it will potentially increase vehicle costs and reduce fuel efficiency
because they will require additional equipment. There is uncertainty
regarding whether lorries will be required to run on B30 in the future, and it is
therefore assumed that 10% of lorries in Denmark will run on B30 in 2030,
with the remaining running on B7.
Bioethanol
Today, all gasoline vehicles run on E5. It is expected that meeting the EU’s
2020 target of 10% renewable energy in the transport sector will primarily be
done by ensuring that all new gasoline vehicles run on E10 by 2020. As such, it
is assumed that a new E20 standard will be developed, and by 2020 all new
gasoline vehicles are capable of using E20. By 2030, this will result in 60% of
the gasoline vehicle fleet running on E20, with the remaining 40% running on
E10. This assumption is based on E4tech’s analysis, which stated that an EU
standard typically takes 3 years to develop. In their analysis, E4tech assumed
that this standard would be in place by 2018, but as this standard has not yet
been agreed upon within the EU, the current analysis assumes a 2020
implementation year (E4tech, 2013). For the 35% scenario, this results in an
average ethanol blend of 10.6% (measured on an energy basis) in 2030.
In the scenario calculations, gas for transport purposes is assumed to be
biogas. Projections indicate that by 2030 there will be a significant amount of
biogas upgraded and fed into the Danish natural gas network. With a well-
functioning certification system, it will be possible to ensure that the gas used
in transport is certified as biogas. As a general rule, biogas qualifies as a 2G
biofuel, and is therefore eligible for double counting when calculating
Denmark’s progress towards its 2020 RE transport target.
Results of the 35% scenario
In the 35% scenario, energy consumption from road transport continues to
decline. During the 2012-2030 period, energy consumption falls by 20%, from
156 PJ in 2012, to 124 PJ in 2030. This decline takes place despite a growing
transportation demand, and is primarily due to enhanced fuel economy. This
improved fuel economy is the result of fleet renewal and the continued
increase in energy efficiency of new cars. In addition, electric vehicles
contribute to increased energy efficiency in of themselves, as the efficiency of
an electric motor is significantly higher than that of an internal combustion
engine.
In 2030, when all biofuels and electricity are counted (excluding double
counting), 15.7% of Danish road transport comes from renewable energy. The
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Energy use
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largest RE contributor in 2030 continues to be liquid biofuels (8 PJ), while
electricity (3.7 PJ) and biogas (3.8 PJ) have similar lesser contributions.
During the scenario period, gasoline consumption falls considerably more
than diesel consumption. This is largely because passenger vehicles and LDVs,
many of which use gasoline today, convert to electricity, while only a small
portion of the HDVs that currently use diesel convert to biogas. Furthermore,
the blending ratio (on an energy basis) in 2030 is higher for bioethanol than
for biodiesel.
200
180
160
140
Projection
PJ/year
120
100
80
60
40
20
0
Diesel
Gasoline
Biodiesel
Bioethanol
Electricity
Biogas
Figure 13: Energy consumption from Danish road transport 1990-2030 in the 35% scenario.
CO
2
emissions
CO
2
emissions from road transport decrease from 10.8 million tonnes in 2012,
to 7.7 million tonnes in 2030, corresponding to a 29% reduction (see Figure 14
on the following page). When compared with 2005, which is the base year for
the EU targets in the non-ETS sector, then the reduction in road transport
emissions in 2030 would be 35%.
During the 2012-2030 period, CO
2
emissions from HDVs remain largely
unchanged, despite a growing freight demand. This is due to assumed gains in
energy efficiency, and the phasing in of biogas, which is deemed to be CO
2
neutral. The bulk of the CO
2
emissions reductions come from passenger
vehicles and buses, as these two segments realise the greatest shift to RE, and
where continued improvements in energy efficiency are expected.
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14
12
10
Projection
Mill. tons CO
2
8
6
4
2
0
Passenger cars
Busses
Heavy duty vehicles
Motor cycles
Light duty vehicles
Total road transport
Figure 14: CO
2
emissions from Danish road transport 1990-2030 in the 35% scenario.
Figure 15 illustrates how the 35% CO
2
emissions reduction target is reached
according to contributions from: energy efficiency improvements of new
vehicles, biofuels, electrification, and conversion to biogas.
17%
8%
48%
27%
Energy efficiency
Electric vehicles
Gas vehicles
Biofuels
Figure 15: Contribution to CO
2
emission reductions in the 35% scenario.
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5.2 Economic impact assessment
12
The economic assessment of the 35% scenario is implemented by comparing
it to the reference scenario. In the socioeconomic calculations presented
below, the CO
2
cost is set to 0 DKK/tonne and all figures are in 2015 DKK.
Figure 16 below displays the total annual economic impact of the 35%
scenario relative to the reference scenario. Both total costs and total savings
increase throughout the scenario period, which is primarily due to growing
sales volumes of electric and gas vehicles.
The net additional costs increase up to 2028, when the annual net costs peak
at 735 million DKK. In 2030, the net annual costs fall to roughly 664 million
DKK. The figure illustrates that it is primarily the higher vehicle purchase cost
(electric and gas), as well as additional distribution and infrastructure costs,
that are responsible for the additional costs when compared to the reference
scenario.
2.0
1.5
1,000
800
600
400
200
0
-200
-400
-600
-800
-1,000
Net cost in mill. DKK (2015 prices)
Bill. DKK (2015 prices)
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
Fuel costs
Vehicle costs
Externalities total
Infrastructure and distribution
O&M
Total (Right axis)
Figure 16: Total additional socioeconomic costs associated with the 35% scenario.
The
additional costs are calculated by comparing the total costs from the reference scenario. The
columns (annual costs/savings) are measured on the axis to the left, while the sold line (net
annual cost) is measured on the right axis. All figures are in 2015 DKK. Externalities include all
related costs such as noise, air pollution, congestion, etc. NOTE: Within this figure, the CO
2
externality cost is set to 0 DKK/tonne.
12
The economic impact assessments undertaken are described in detail in a separate working paper (in
Danish), entitled “Notat om samfundsøkonomiske konsekvensberegninger” (Ea Energianalyse, 2015e).
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On the other hand, the figure highlights the fact that the operation and
maintenance (O&M), externality, and fuel costs all fall over the period. The
externality costs savings are primarily the result of less noise and local air
pollution as electric vehicles replace conventional vehicles.
Relative to the reference scenario, the upfront vehicle costs are higher
throughout the entire period. This is primarily owing to the higher costs
associated with electric vehicles (due to the battery cost) and, to a lesser
extent, gas vehicles. From 2020 through 2026, the fuel costs are also higher in
the 35% scenario, which is attributable to increased biofuel usage. However,
by 2027, the high efficiency of EVs and the resulting fuel savings more than
offset the additional biofuel costs. This trend quickly accelerates as EV sales
increase during later years of the period.
O&M costs are lower throughout the entire scenario period, which is due to
an assumption that O&M costs are lower for electric vehicles relative to their
conventional counterparts. Lastly, the costs related to additional gas and
electricity infrastructure play a rather minor role in the overall picture, which
is partially due to the fact that a portion of this infrastructure development is
also present in the reference scenario.
When the externality cost of CO
2
is set to zero, the accumulated additional
socioeconomic costs in 2030 are roughly 4.0 billion DKK (in present value
terms). This corresponds to an average additional cost of approximately 400
million DKK per year during the 2015-2030 period (not discounted). This
results in an average CO
2
reduction cost of 1,003 DKK per tonne for the 35%
scenario.
13
5.3 Technology scenarios (40% scenarios)
In addition to the 35% scenario described above, three additional technology
scenarios that each bring about a 40% CO
2
emissions reduction were also
developed: an electricity scenario, a gas scenario, and a biofuel scenario.
Each of the technology scenarios take their point of departure in the 35%
scenario, and only one aspect is changed, i.e. the degree of electrification, the
number of vehicles running on gas, or the biofuel blending percentages (also
the addition of a flexi fuel vehicle in the biofuel scenario). For each technology
scenario, the changes are devised in order to bring about additional CO
2
13
I.e. this is the CO
2
price that yields the 35% scenario a net present value of zero.
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emissions savings of 600,000 tonnes in 2030, equivalent to moving from a
35% to 40% emissions reduction.
For each of the technology scenarios, the increased phasing in of RE comes at
the expense of the conventional technologies (gasoline and diesel), while the
relative distribution between diesel and gasoline vehicles remains the same as
in the 35% scenario.
Electricity scenario
In the electricity scenario, the additional CO
2
reductions are brought about by
increased electrification of the vehicle fleet. For passenger vehicles, electric
drive vehicles represent 66% of new passenger vehicle sales in 2030 (up from
34% in the 35% scenario). New vehicle market share figures are also higher for
route busses (80% vs. 55%), and for LDVS (36% vs. 20%) in 2030.
New vehicle sales
(2030)
Electric - EV
Electric - PHEV
Flexi-fuel
Gas (Biogas)
Diesel
Gasoline
Personal
vehicles
31%
35%
0%
2%
13%
19%
Heavy-duty
vehicles
Light-duty
vehicles
18%
18%
0%
5%
49%
10%
Route
buses
(70%)
80%
0%
20%
0%
Tourist
buses
(30%)
0%
15%
85%
0%
15%
85%
Table 5: Distribution of new vehicle sales in 2030 in the electricity scenario.
The blue figures
indicate which parameters differ significantly from the 35% scenario. Shares of gasoline and
diesel also change, but the relative distribution between the two remains the same.
Gas scenario
Within the gas scenario, each vehicle segment sees an increase in new gas
vehicle sales. In 2030, 40% of new lorries and buses, and 32% of new LDVs run
on gas. The expanded gas infrastructure is also assumed to affect the
passenger car segment, where 15% of new vehicle sales are assumed to be
gas powered.
New vehicle sales
(2030)
Electric - EV
Electric - PHEV
Flexi-fuel
Gas (Biogas)
Diesel
Gasoline
Personal
vehicles
17%
17%
0%
12%
30%
24%
Heavy-duty
vehicles
Light-duty
vehicles
10%
10%
0%
32%
40%
8%
Route
buses
(70%)
50%
0%
50%
0%
Tourist
buses
(30%)
0%
40%
60%
0%
40%
60%
Table 6: Distribution of new vehicle sales in 2030 in the gas scenario.
The blue figures indicate
which parameters differ significantly from the 35% scenario. Shares of gasoline and diesel also
change, but the relative distribution between the two remains the same.
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A 40% CO
2
reduction in the gas scenario requires a significant increase in the
number of new gas vehicles sold annually relative to the 35% scenario. This is
not deemed to be feasible without the establishment of some form of
incentive or support system. For lorries, it is also doubtful whether the 40% of
new vehicle sales figure can be reached without involving lorries that
transport goods internationally, a market segment that entails particular
challenges with regards to private economy, international filling
infrastructure, etc.
Biofuel scenario
The biofuel scenario involves increasing the number of buses and HDVs that
can run on B30, additional diesel drop-ins, and the introduction of an E85
vehicle in the personal vehicle and LDV segments. The E85 vehicles run on the
EU E85 standard, which on average contains 72% ethanol and 28% gasoline
(on an energy basis). The blending limits for gasoline are not altered in the
scenario, and it is assumed that the additional bioethanol use in the scenario
(due to the introduction of E85 vehicles) is 2G bioethanol.
Vehicle segment
Personal vehicles
B7
HDVs
-
50% use B7
- 50% use B30
LDVs
B7
Buses
- 50% use B7
- 50% use B30
17.7%
7.1% (energy)
- From 2020, all new
gasoline cars are
capable of using E20
- In 2030, this
corresponds to 60%
of the fleet using E20
- The remaining 40%
run on E10.
100% (energy)
7.1% (energy)
7.1% (energy)
- From 2020, all new
gasoline LDVs are
capable of using E20
- In 2030, this
corresponds to 72%
of the fleet using E20
- The remaining 28%
run on E10.
100% (energy)
7.1% (energy)
Average
%*
Biofuel
Blending
options
B7/B30
(FAME)
Diesel drop-
ins (HVO, F-
T Syndiesel)
Biodiesel/
Drop-in
syndiesel
Ethanol
E20/E10
N/A
N/A
10.6%
Biogas
Biogas
100% (energy)
100% (energy)
100%
Table 7: Biofuel blending in the Biofuel scenario in 2030.
*Average percentage indicates the
blending mixture on an energy basis.
For all diesel vehicles, the blending % of drop-ins is increased to 7.1% (on an
energy basis). As gasification technologies are not expected to realise a large-
scale technological breakthrough prior to 2030, HVO is assumed to be the
drop-in fuel. Encouraging a larger percentage of the heavy transport segment
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to run on B30 could for example be brought about by introducing a
requirement that all lorries meeting the euro VI standard be capable of
running on B30.
14
Given the above assumptions, the average biofuel blending
for diesel in 2030 would be 17.7%. To put this into perspective, in its
aforementioned report, E4tech estimates that the maximum EU biodiesel
potential in 2030 is 10.1% of diesel demand (which is the biofuel blending
percentage assumed in the 35% scenario).
Biodiesel consumption in the Biofuel scenario would result in the use of more
than 7% 1G biofuel. If the other EU countries were to follow a similar
development path, this would lead to a total EU consumption that exceeds
the EU potential described in the E4tech report (E4tech, 2013).
New vehicle sales
(2030)
Electric - EV
Electric - PHEV
Flexi-fuel
Gas (Biogas)
Diesel
Gasoline
Personal
vehicles
17%
17%
20%
2%
26%
18%
Heavy-duty
vehicles
Light-duty
vehicles
10%
10%
20%
5%
46%
9%
Route
buses
(70%)
55%
0%
25%
20%
Tourist
buses
(30%)
0%
15%
85%
0%
15%
85%
Table 8: Distribution of new vehicle sales in 2030 in the biofuel scenario.
The blue figures
indicate which parameters differ significantly from the 35% scenario. Shares of gasoline and
diesel also change, but the relative distribution between the two remains the same.
Technology scenario results
The CO
2
emissions development path from Danish road transport in the 35%
scenario, three technology scenarios, and the reference scenario, are
displayed in Figure 17 on the following page.
Over the course of the entire scenario period, there is little difference in total
CO
2
emissions between the three technology scenarios. In 2030, annual CO
2
emissions in the technology scenarios are roughly 600,000 tonnes less than in
the 35% scenario, and the 35% scenario CO
2
emissions are approximately 1
million tonnes less than those in the reference scenario.
14
E4tech estimates that there would potentially be 51% of all lories that could run on B30 if such a
requirement was implemented (E4tech, 2013).
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14
12
10
Mill. tons CO
2
8
6
Gas scenario
Electricity scenario
Biofuel scenario
35% scenario
Reference scenario
4
2
0
2000
2005
2010
2015
2020
2025
2030
Figure 17: CO
2
emissions from Danish road transport 2000-2030 in the 35% scenario, three
technology scenarios, and the reference scenario.
The socioeconomic costs associated with the above CO
2
emission reductions
are displayed in Table 9.
Billions of DKK
NPV 2015 -2030
35% scenario
0 DKK/
tonne CO
2
4.1
EU ETS price/
tonne CO
2
3.4
1000 DKK/
tonne CO
2
0.0
Technology scenarios - Additional cost (NPV) relative to 35% scenario:
Electricity scenario
Gas scenario
Biofuel scenario
+1.2
+1.4
+1.1
+1.0
+1.2
+0.8
-0.4
-0.0
-0.4
Table 9: Costs for the 35% scenario and the three 40% technology scenarios.
Total NPV costs
for the period 2015-2030 with a 4% discount rate, given three different CO
2
values. For the
technology scenarios, the table displays the additional cost of extending from a 35% emissions
reduction to a 40% emissions reduction.
The table shows that the total discounted cost of implementing the 35%
scenario is 4.1 billion DKK, which corresponds to an average cost of
approximately 400 million DKK per year (not discounted). The bottom portion
of the table displays the additional cost for each of the technology scenarios
relative to the 35% scenario, i.e. the additional cost of going from a 35%
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reduction to a 40% reduction. When no value is placed on the CO
2
savings, the
total additional cost varies between 1.1 and 1.4 billion DKK.
However, since CO
2
emission reductions undertaken in the transport sector
represent an alternative to reducing emissions in alternative non-ETS sectors,
the cost of realising emissions savings in the transport sector should be
compared with the cost of doing so in these alternative sectors. Optimally
speaking, in a socioeconomic analysis it would be preferable to incorporate
the benefit associated with reducing CO
2
emissions. However, as it is not
possible to place a direct value on this benefit, the current analysis instead
applies alternative values equal to the cost of reducing CO
2
emissions in other
sectors. Table 9 displays this comparison given the EU ETS price, or a price of
1,000 DKK per tonne CO
2
.
If it is assumed that the alterative cost of reducing CO
2
emissions is roughly
1,000 DKK per tonne, then the emission reduction costs associated with the
35% scenario would quite likely be lower than those from the majority of the
remaining non ETS sectors. It is therefore socioeconomically desirable to
reduce CO
2
emissions in the transport sector compared to other non-ETS
sectors (agriculture, households, industry, etc.).
With a CO
2
emission savings value of 1000 DKK/tonne, the cost of the three
technology scenarios (on a per tonne CO
2
saved basis) are on par, or cheaper
than, the 35% scenario. This is because the additional CO
2
reductions
undertaken in the electricity, gas and biofuel scenarios primarily take place
near the end of the scenario period, when the CO
2
reduction costs are lowest.
CO
2
emissions towards 2050
The 35% scenario, and all three technology scenarios, can pave the way
towards a CO
2
neutral transport sector in 2050. In order to achieve CO
2
neutrality by 2050, the remaining fossil fuels used in non-gas/electric-
powered vehicles will have to be replaced with various forms of biofuels.
Cost projections carried out to 2050 point to the electricity scenario being the
cheapest, however these projections are associated with a great deal of
uncertainty, and rely heavily on forecasted prices for batteries, biofuels and
oil.
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14
12
10
Mill. tons CO
2
8
6
Gas scenario
4
Electricity scenario
35% scenario
2
Biofuel scenario
Reference scenario
0
2000
2010
2020
2030
2040
2050
Figure 18: CO
2
emissions from Danish road transport for all 5 scenarios up to 2050.
5.4 Sensitivity analyses and discussion
Sensitivity analyses were undertaken for the 35% scenario and technology
scenarios, regarding the price development for oil, batteries, biogas, and
biofuels. The oil price sensitivities involved a situation where oil prices
developed in such a fashion that they are 20% higher/lower in 2030 than
otherwise forecast, and a situation where the oil price was maintained at the
2015 level. The results of the sensitivity analyses are displayed in Table 10.
Not surprisingly, the table shows that lower oil prices increase the
socioeconomic cost of implementing CO
2
emission reduction efforts that
phase out fossil fuels from the transport sector. For example, with an
unchanging oil price through to 2030, the cost of implementing the 35%
scenario increases to over 6 billion DKK. However, it is important to note that
the calculations in the table do not include a valuation of the CO
2
savings (i.e.
CO
2
price is 0).
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Billion DKK
NPV 2030
Main result
Sensitivity analyses NPV 2015-2030
Oil price
+20%
-20%
2015 level
Biofuel price
+10%
-10%
Biogas price
+10%
-10%
Battery price
+10%
-10%
35%
scenario
4.1
Electricity
scenario
+1.2
Gas
scenario
+1.4
Biofuel
scenario
+1.1
-1.1
+0.9
+2.0
-0.5
+0.4
+0.9
-0.4
+0.4
+0.8
-0.4
+0.4
+0.8
+0.3
-0.3
0.0
0.0
0.0
0.0
+0.4
-0.3
+0.2
-0.1
0.0
0.0
+0.3
-0.3
0.0
0.0
+0.4
-0.3
+0.3
-0.3
0.0
0.0
0.0
0.0
Table 10: Socioeconomic costs of the 35% scenario and additional costs incurred in the three
40% technology scenarios.
The table shows the total socioeconomic costs of the 35% scenario
compared to the reference scenario. The sensitivity analyses for the 35% scenario display the
additional cost relative to the main result. Sensitivity analyses for the technology scenarios are
relative to the corresponding sensitivity analysis for the 35% scenario (i.e. with a 20% higher oil
price, the electricity scenario has a total cost that is 0.5 billion less than a 35% scenario with
20% higher oil prices).
In addition to oil, the scenario analyses include price projections for a number
of other parameters, the most important of which include biofuels, biogas and
batteries for electric vehicles. Production costs for various liquid biofuels are
highly dependent on the price development of input materials such as straw,
wheat and rapeseed oil. For electric vehicle batteries, the price development
his highly dependent on the technological development (often expressed via
learning curves).
Catalogue of climate change mitigation measures & CO
2
reduction costs
As was discussed previously, EU countries have committed to reducing CO
2
emissions, also outside of the quota sector. If the trend from the recent
Danish baseline projection is forecast to 2030, then Denmark will have a CO
2
emission reduction shortfall of 3-5 million tonnes in 2030.
In 2013, an inter-ministerial working group published a catalogue of Danish
climate change mitigation measures as a basis for a climate plan (Inter-
ministerial working group, 2013). The catalogue contains a range of initiatives
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in various sectors, including agriculture and transport. Based on this catalogue
of measures, a CO
2
emissions reduction curve has been assembled, where
only measures outside of the quota sector have been included. Some of the
initiatives in the catalogue, for example, heat savings, have effects both inside
and outside of the quota sector. For these measures, estimates have been
made regarding the effect allocation.
3,000
2,500
2,000
1,500
DKK/tonne
1,000
500
0
0
-500
-1,000
-1,500
-2,000
1000
2000
3000
4000
5000
6000
7000
8000
Reduction potential in 2020 (1000 tonnes/year)
Figure 19: Marginal CO
2
emission reduction costs in the non-ETS sector.
Source: Inter-
ministerial working group (Inter-ministerial working group, 2013) and own calculations.
Figure 19 illustrates that the climate catalogue found CO
2
emission reduction
measures with a cost under 1,000 DKK/tonne totalling 3 million tonnes. If the
target becomes a total reduction of 5 million tonnes, then the marginal CO
2
reduction cost increases to 2,500 DKK/tonne. The total non-ETS emission
reductions potential via relevant measures was estimated to be over 7 million
tonnes per year (Figure 19 displays only up to 5.5 million tonnes), with the
most expensive reduction costs being over 10,000 DKK/tonne.
As a general rule, the catalogue stated that new policies and measures
focused on the agriculture sector were on the cheap end of the mitigation
instruments scale, while transport initiatives were to be found at the higher
end. For example, when looking at measures with a cost of under 2,500
DKK/tonne, the agricultural sector could contribute with total emissions
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reductions of over 3.6 million tonnes, while the transport sector could only
contribute with 0.5 million tonnes. (Inter-ministerial working group, 2013).
Transport related measures in the catalogue included raising fuel taxes, higher
blending requirements for biofuels, promotion of gas in heavy transport, as
well as a mileage-based road tax (commonly referred to as road pricing). As
such, it is many of the same types of policies and measures that are
investigated in the current analysis, but where this study finds significantly
lower CO
2
emission reduction costs. The higher emission reduction costs
found in the catalogue are partly due to the inclusion of distortionary losses,
including for example the anticipated loss of state revenues due to increased
cross-border trade.
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6 Taxation and other instruments
The scenario work is undertaken without regard to the specific incentives that
are required in practice to increase the use of biofuels, promote the phasing
in of biogas, and to increase the share of electric vehicles in road transport.
Improved fuel economy is assumed to be most affectively achieved through
EU regulation.
However, taxation and incentive schemes were prominent subject areas at
the two workshops held during the project. Preliminary analyses of the
current taxation system in Denmark and other countries were discussed at the
workshops, with a primary focus on passenger vehicle taxation.
The reduction of CO
2
emissions from the transport sector is a large and long-
term task. It is therefore important that the tax structure and incentives
utilised result in the lowest possible cost. Due in part to the discussions at the
workshops, it was decided to take as a point of departure an ‘ideal’ taxation
system, and thereby not be bound by restrictions found in the current
taxation system.
6.1 Taxation of passenger vehicles
Brief analysis of the current tax system
The current passenger vehicle taxation system is comprised of a high value-
based registration tax, an annual ‘green owner’ tax, and fuel and CO
2
taxes.
On the other hand, passenger transport in general receives indirect support
via a so-called 'transport deduction', which entitles commuters to a tax
deduction.
All of the taxation elements depend on the vehicle’s potential and/or actual
fuel consumption. A deduction in the registration tax is given for vehicles that
can travel many km/l, and the annual green owner tax is also based on how
many km/l a vehicle operates. When fuel and CO
2
taxes are added, the
cumulative financial incentive to reduce CO
2
emissions is in the range of 6,000
to 10,000 DKK/tonne.
The combination of high value-based taxation with significant CO
2
incentives,
results in small energy efficient gasoline and diesel cars being very attractive
for consumers.
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It is apparent that the tax system was developed at a time when vehicles had
significantly poorer fuel economy than today (fewer km/l). For example, the
lowest rate of the green owner tax is already achieved when a gasoline vehicle
can travel over 20 km/l.
Tax deductions for energy efficient vehicles are also calculated based on how
many km the vehicles can drive per litre, rather than their fuel consumption
per km. This noteworthy, because fuel savings (and thereby CO
2
savings) are
considerably smaller with a change from, for example 30 km/l to 31 km/l (a
3% reduction), than with a change from 10 km/l to 11 km/l (a 9% reduction).
The value-based registration tax can result in the cost of CO
2
reduction
elements that increase the vehicle's purchase price (for example, the batteries
of an electric car) becoming 2.8 times more expensive (before deductions are
made for high energy efficiency). EVs and hydrogen vehicles are completely
exempt from registration taxes until the end of 2015. A political agreement
from October 9
th
, 2015 between the government (Venstre), the Social
Democrats, the Danish People's Party and the Danish Social-Liberal Party
established a phase-in process into the existing tax system for electric
vehicles, plug-in hybrid vehicles, and fuel cell vehicles. Electric and plug-in
hybrid vehicles will be phased in over a 5-year period starting in 2016,
resulting in full taxation in 2020. Fuel cell vehicles will meanwhile start a 5-
year phase-in period in 2019. If the assumptions underlying the agreement
change significantly during the phase-in period, the parties will revisit the
phase-in period.
Principles behind an ideal tax system
An economically optimal tax system with low distortionary effects should, to
the greatest extent possible, price the costs (externalities) that road transport
imparts upon society. According to economic theory, the levies related to
these externalities should, where possible, be placed where the costs arise.
For example, CO
2
emissions should be administered via a tax on the fuel that
gives rise to the CO
2
emissions, rather than an annual green ownership tax.
Similarly, a levy that is intended to address congestion, should vary depending
on how much (and preferably also where and when) a car is driving. Based on
previous analyses undertaken by the Ministry of Transport in 2010, the
Economic Council in 2013, and Concito, externality costs for the various
passenger vehicle types have been estimated. As was described in chapter 4,
the calculations show that externalities constitute roughly 50 øre/km for
passenger vehicles. The main costs relate to congestion, accidents and access
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to the road network. Meanwhile, with a CO
2
value of 1,000 DKK tonne, the
vehicle’s climate impact during its use phase is 10-12 øre/km.
An electric vehicle has slightly lower externality costs due to lower costs
associated with local air pollution, noise and CO
2
emissions. For a medium
sized EV, and assuming that the electricity used is CO
2
neutral, the total
externality costs are roughly 12 øre/km less than for a comparable ICE vehicle.
If one compares the current taxation (and deductions) over the lifetime of the
vehicle with the externality costs associated with the same vehicle, the
calculations find that medium and large gasoline vehicles pay considerably
more in tax than their externality costs justify. Conversely, small gasoline cars
pay a good deal less, and electric cars significantly less (assuming EVs are
exempt from registration tax).
(2015 DKK)
Small
gasoline
Medium
gasoline
Small EV
(2015)
Medium EV
(2015)
Current taxation
Externalities
Difference
59,000
89,000
-30,000
179,000
98,000
81,000
-4,000
80,000
-84,000
-4,000
73,000
-77,000
Table 11: Comparison of taxation and externalities.
Climate impact assuming a CO
2
value of
1,000 DKK/tonne.
‘Ideal’ tax should be
based on road pricing
An ’ideal’ tax system would be based on a combination of various taxation
elements, but where the largest share of tax revenues came from
differentiated road pricing. This is because the majority of externality costs
are those associated with congestion, accidents and the use of the road
network, which all depend on how much, when and where a vehicle is used.
In an ideal tax system, the vehicle’s purchase price would have much less
significance than it does under the current system.
However, there are currently a number of technical and economic challenges
related to the introduction of differentiated road pricing. A compromise on
this solution could be to base the vehicle mileage on measurements taken
during the annual vehicle inspection, potentially differentiated according to
vehicle owner residence and workplace information. If this too is not feasible
in practice, then the annual green owner tax could be used as a (very rough)
approximation. However, this tax is not dependent on how much the vehicle
is driven, and is therefore a less effective instrument.
Electric vehicles require
a phase-in period
Regardless of how a differentiated road pricing tax is implemented in practice,
the analysis indicates that the ‘ideal’ tax system alone, would not result in in
electric and other low emission vehicles being economically competitive with
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fossil fuel-based alternatives in the short term. In other words, even with a
high cost placed on externalities, CO
2
emissions and local air pollution,
consumers still lack sufficient incentive to purchase low emission vehicles.
In order to ensure the phasing-in of electric vehicles in the ideal tax system, it
would therefore be necessary to supplement with a deduction for vehicles
with the lowest CO
2
emissions. The deduction could, for example, be given to
EVs, PHEVs and hydrogen vehicles, which under the EU standards, have CO
2
emissions under 50 g/km. This could be applied in a linear fashion, so that
vehicles that emit 0 g CO
2
/km receive a 100%, reduction, those that emit 25 g
CO
2
/km receive a 50% reduction, etc., and would thereby reward pure EVs
more than PHEVs. The table displays an example of the ‘ideal’ tax system with
the inclusion of a deduction for low emission vehicles.
(2015 DKK)
Import price
VAT
Sales price
Annual ‘driving’ taxes*
Fuel/CO
2
tax*
Fuel costs*
Fuel VAT + other fuel and CO
2
taxes*
Operations and maintenance*
Cost during vehicle lifetime
Deduction in ’driving’ taxes*
Total cost during vehicle lifetime
Small
gasoline
Medium
gasoline
Small EV
(2015)
Medium
EV (2015)
59,000
15,000
74,000
73,000
17,000
39,000
28,000
58,000
289,000
289,000
108,000
27,000
135,000
78,000
20,000
48,000
32,000
58,000
371,000
371,000
149,000
37,000
186,000
73,000
12,000
12,000
35,000
318,000
-65,000
253,000
204,000
51,000
255,000
76,000
-
18,000
13,000
35,000
397,000
-65,000
332,000
Table 12: Comparison of vehicle lifetime costs.
Comparison of gasoline and electric vehicles
under the ‘ideal’ tax system inclusive a temporary deduction to promote electric vehicles. Based
on 2015 prices.*Indicates that the values are totals accumulated over the vehicle’s lifetime.
In the calculations in the table it is assumed that the EVs receive a registration
fee deduction of roughly 15,000 DKK, and a 50,000 DKK discount on annual
‘driving’ taxes over the course of the vehicle’s lifetime. This results in both the
small and medium EVs becoming economically competitive with their gasoline
counterparts.
Annual support pool
From the Danish state’s point of view, it can be challenging to predict the
appropriate level of deduction for low emission vehicles going forward. A
potential solution could be to set aside an annual pool with a maximum of, for
example, 200 million DKK for the promotion of EVs and other low emission
vehicles up to 2025. Assuming that the required support is roughly 65,000
DKK per EV as in the example above, this would allow for support to roughly
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3,000 EVs per year given today's prices. As the cost of low emission vehicles
fall, this would allow for the individual deduction amount to be reduced, and
thereby enable the annual pool to support a growing number of low emission
vehicles. It will likely be necessary to adjust the individual deduction amount
on an annual basis. If rates are set too low for one year, thereby resulting in
the pool’s funds not being fully utilised, these funds could be transferred to
the following year, thus ensuring a steady increase in low emission vehicle
sales until the annual deductions are phased out.
State revenue losses
It is difficult to forecast the ’ideal’ tax system’s fiscal effects, but a rough
estimate points to a revenue loss for the Danish state in the range of 15-25%.
Relative to today, the ‘ideal’ system would result in higher revenues from
small vehicles, while larger and more expensive vehicles would generate less
tax revenue.
In order to maintain State revenues at current levels, one could choose to
impose a higher registration or annual owner tax on the most expensive
vehicles. In order to avoid encompassing small electric vehicles within this tax
(as they are significantly more expensive than their ICE counterparts due to
battery costs), it would be necessary that such a registration tax would only
be applicable to vehicles over a certain import price, for example 200,000
DKK, thus essentially being a targeted ‘luxury tax’. If the level were set much
lower than 200,000 DKK, then it would be necessary to give a larger deduction
for low emission vehicles.
6.2 Taxation of lorries
Lorries pay the same fuel and CO
2
tax rates as passenger vehicles. In addition,
lorries pay a road utilisation tax (vejbenyttelsesafgift) and weight tax. For a
lorry that drives 50,000 km/year, total annual taxes are roughly 60,000 DKK.
(2015 DKK)
Fuel taxes
15
CO
2
taxes
16
‘Road utilisation’ tax
Weight taxes
Total
Annual costs based
on 50,000 km/year
39.325
6.270
9.318
3.500
58.413
Table 13: Taxation of lorries.
Annual costs based on 50,000 km per year.
15
A lorry uses roughly 11 MJ per km, corresponding to approximately 550 GJ per year. The energy tax on
diesel is 71.5 DKK/GJ, resulting in an annual tax payment of 39,325 DKK.
16
A lorry uses roughly 11 MJ per km, corresponding to approximately 550 GJ per year. The CO tax is 11.4
2
DKK/GJ, corresponding to an annual tax payment of 6,270 DKK.
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The main externality costs from lorries relate to wear on roads, CO
2
emissions,
congestion and accidents. Other externality costs include local air pollution,
noise and access to the road network (see Figure 20).
In total, the externality costs amount to roughly 3.3 DKK/km for diesel lorries
(assuming a CO
2
price of 1,000 DKK/tonne). For a lorry running on biogas total
externality coasts are roughly 2.6 DKK/km. For an average lorry traveling
50,000 km per year, annual externality costs therefore total roughly 180,000
DKK if running on diesel, and 140,000 DKK if running on biogas. As such, the
externality costs associated with lorry transport are approximately three
times higher than the taxes lorries pay.
350
300
250
øre / km
Access to road network
Congestion
200
150
100
50
0
Road wear
Accidents
Noise
Air pollution
CO2 emissions
Figure 20: Externality costs for a lorries running on diesel and biogas in 2015.
The ’ideal’ lorry
taxation system
For lorries, the ’ideal’ taxation system would be comprised of two main
components:
A fuel tax of roughly 74 DKK/GJ which reflects CO
2
emissions costs
assuming a value of 1,000 DKK/tonne. This level corresponds to the
current fuel tax.
A differentiated road tax, averaging roughly 2.55 DKK/km, which
covers the remaining externality costs.
Previously there were plans to introduce km-based road pricing for lorries in
Denmark, but the plans were abandoned in 2013. According to the
government at the time, this was due to the high costs associated with the
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establishment and operation of the toll system. If there is a desire to have
lorry freight transport cover their externality costs, this could be achieved
with less targeted measures than differentiated road pricing. More simple
solutions could for example include a kilometre-based charge, based on
odometer measurements or a higher road utilisation tax.
The above discussion has not assessed the negative commercial effects of
restructuring the freight taxation system in a manner that requires the road
freight sector to cover their externality costs. It should also be noted that the
externality-based taxation of road freight is not a prerequisite for achieving
the CO
2
reductions realised in the scenarios.
6.3 Measures to promote green gas and liquid biofuels
The 35% scenario includes an increased phasing-in of both liquid biofuels and
green gas in road transport.
Promotion of liquid biofuels
It is assumed that liquid biofuels will continue to be blended with gasoline and
diesel. In 2020 or thereabouts, it is assumed that the current E5 and B7
standards will be supplemented by E10, E20 and B30. By 2030, it is assumed
that the E5 standard can be completely phased out.
By 2020, it is assumed that all new cars can run on E20, and a portion of the
heavy duty vehicle fleet will use B30. Today, most lorries are capable of
running on B30, but new diesel vehicles that meet the Euro VI standard will
require additional modifications before they can use B30. There is uncertainty
regarding the extent to which the EU is willing to impose such a requirement.
Biofuel blending requirements are assumed to continue to be the main
instruments that ensure the phasing in of biofuels. Where there are different
standards available, the oil companies can be responsible for ensuring that
the total blending requirements (on an energy basis) are obtained. Biofuel
blending requirements are assumed to continue to be EU driven, and it is
assumed that the EU will place a requirement on automobile manufacturers
ensuring that that all new passenger vehicles can run on E20 by 2020.
Blending of more expensive drop-in diesel does not require a blending
standard. Requirements for the addition of drop-in fuels is an important tool
for oil companies to ensure that the total blending % target for biofuels is
reached. These can be adjusted annually depending on how much of the fuel
purchased is E20 or B30. Relative to today, where there is only one diesel
standard (B7) and one gasoline standard (E5), the task of ensuring the sale of
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the relevant quantities of biofuels will become more challenging for the oil
companies.
Promotion of green gases
Biogas is supported in Denmark today by, amongst other measures, a subsidy
when it is added to the natural gas network. Thereafter, biogas can in
principle be sold to customers at the same price as natural gas.
The task of ensuring a phasing in of green gas in the transport sector requires
different measures than the phasing in of liquid biofuels. The use of natural
gas (and green gas) in transport is currently very limited, so it is not sufficient
to only require the blending of green gas into the natural gas network.
The phasing-in of green gas for use in transportation is conditional on the
establishment of a gas filling infrastructure, and that relevant stakeholders in
the transport sector (initially, owners of vehicle fleets within heavy transport
in particular) invest in gas-powered vehicles. A number of studies have
examined the possibilities for promoting gas in the transport sector, the most
recent of which being a report by the Danish Energy Agency and COWI,
"Framework conditions for gas in heavy road transport" from 2014. (COWI,
2014). The main findings included:
That from a private sector perspective, it is not economically viable to
operate with natural gas in buses or trucks.
That there is uncertainty regarding the overall economics for fleet
owners, particularly regarding the resale value of vehicles, and in
relation to contract lengths that can safely be entered into (for
example municipal bus services).
The report also suggests that either the purchase price of gas vehicles to be
dropped by 40,000 to 75,000 DKK, the gas engine energy consumption must
be reduced by about 5-10%, or the gas price lowered by between 0.4 and 0.9
DKK per m³ (excl. VAT), in order for gas vehicles to be competitive. The energy
tax on biogas and natural gas for transport are currently 2.87 DKK/m
3
, which is
at the same level as diesel.
Experience from abroad has revealed that it is difficult to promote gas in the
transport sector, even when the framework conditions are relatively
favourable, as is the case in Germany, the Netherlands and Sweden. The
report points out that although gas vehicles are exempt from taxes in
Germany until 2018, the gas vehicles sales trend has stagnated.
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1594267_0056.png
Possible measures
If the Danish state is interested in promoting the use of gas in the transport
sector, this can be done via several different types of instruments, including,
for example:
Infrastructure grants
Subsidies for vehicles (or tax deductions)
Lower taxes on gas for transportation
In addition, local authorities and transport companies have the opportunity to
promote the use of gas through the tendering of bus services, etc.
The most targeted measure to ensure the phasing-in of gas is deemed to be a
lower tax on gas for use in transportation, as the desired outcome is the
increased use of gas at the expense of diesel (and gasoline). This measure can
then provide motivation for relevant stakeholders to invest in gas
infrastructure and vehicles.
However, as was stated above, the evidence from abroad indicates that
stakeholders in the transport sector will not necessarily invest in gas-powered
vehicles, even if it appears to be commercially attractive. One possibility could
therefore be to supplement this lowered tax on gas for use in transport with a
partnership approach with relevant stakeholders, including for example:
Stakeholder
Gas companies
Municipalities / Transport companies
Fleet vehicle owners
Service stations
Role
Establish and connect filling stations
Tendering of bus and waste collection
vehicles, & placement of filling stations
Investment in gas-powered vehicles
Placement of filling stations in
connection with existing tank systems
Compared to many other countries, Denmark has a strong history of
cooperation between public and private actors, which can be vital in the
promotion of gas-powered vehicles. The Danish Energy Agency already
supports a number of regional partnerships. There is therefore an effort
underway that may be possible to build further upon.
Measures to promote
green gas
The question then becomes, how to ensure the phasing-in of green gases at
the expense of natural gas? It is our assessment that it is unlikely to require
additional measures to do so. This is because the majority of Danish biogas
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can be expected to be produced from waste products, for example from
livestock manure, industrial waste, municipal waste and straw. The majority of
biogas can therefore be regarded as a 2G biofuel, and is thus eligible for
double counting when calculating Denmark’s progress towards its 2020 RE
transport target. Oil and gas companies will therefore have an economic
interest in ensuring that the gas sold in the transport sector is a green gas.
The above of course assumes that enough biogas can be produced in
Denmark. The 35% scenario requires 2 PJ of green gas in 2030 (rising to 15 PJ
in 2050). To put this into perspective, the Danish Energy Agency’s biogas task
force anticipates that biogas production, due to the existing production side
subsidies, will increase from approximately 4 PJ in 2012, to 14 PJ in 2020, and
18 PJ in 2025. That is to say, an increase of approximately 14 PJ from 2012 to
2025. The vast majority of this new biogas production is anticipated to be
upgraded to natural gas quality, and thereby could be used in the
transportation sector.
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7 Glossary
1G biofuel:
Biofuels based on corn and other edible crops
2G biofuel:
Biofuels based on residues from agriculture, forestry,
industry or households
Advanced biofuels:
2G biofuels with the exception of biofuels
produced from used cooking oil or animal fat.
Biofuel standards (B7, B30, E10, and E20):
Biofuels standards are a
mixture of diesel or petrol with biofuels. B standards indicate blends
of diesel with biodiesel, and E standards specific mixtures of gasoline
and ethanol. The number indicates the percentage by volume.
Blend wall:
A cap on the proportion of biofuel that can be added to
fuel without damaging the engine.
Distortionary effects/losses:
Occur when market actors change their
behaviour due to a tax, charge, subsidy, etc.
Drop-in fuel:
A biofuel product that can be directly blended with
conventional fuels (diesel and gasoline) in any ratio. The analysis
refers primarily to drop-ins for diesel.
EJ:
Exajoule - One billion (10
9
) Gigajoules (GJ)
Energy efficiency:
in this report, energy use per km driven. Energy
efficiency is presented according to EU regulation, and also in g CO
2
/km.
Externality costs:
Externality costs are secondary costs, in this case
related to transport and include noise, road wear, congestion, air
pollution, CO
2
and access to the road network.
FAME:
Fatty Acid Methyl Ether – a biodiesel product that can be
blended with diesel. FAME does not have the same chemical
properties as diesel, and therefore there are restrictions on the
proportion different diesel engines can tolerate.
Fischer Tropsch:
Catalytic processes that converts a mixture of
hydrogen and carbon monoxide to liquid fuels.
Flexi-fuel:
Vehicles that can run on several different types of fuels,
including high blending % biofuels
Fuel directive:
EU Directive that stipulates that suppliers of road
transport fuels must reduce greenhouse gas emissions from transport
fuels by 6% by 2020, measured on a well-to-wheel basis.
GJ:
Gigajoule - One billion (10
9
) joules
Heavy transport:
Transport with lorries and busses
HVO:
Hydro treated vegetable oil – a drop-in fuel for diesel
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Methanisation:
Synthesis of CO
2
and H
2
to methane (CH
4
) and water
(H
2
O)
NPV:
Net Present Value (sum of all discounted costs)
Non-ETS sector
- The EU distinguishes between the ETS sector and the
non-ETS-sector, with varying CO
2
emission reduction targets. The
quota sector comprises the majority of electricity and heat production
in the EU, and quotas can be traded within the ETS sector. The non-
ETS sectors include agriculture and transport.
O&M:
Operation and maintenance
PJ:
Tera joule – one million (10
6
) Gigajoule (GJ)
Plug-in hybrid:
Essentially an electric car with a small internal
combustion engine that is used to produce electricity and thus acts as
a ‘range extender'
RES Directive:
EU Directive, which establishes a target of 10%
renewable energy (RE) in transport fuel by 2020 for Member States.
Road transport:
Road transport includes cars, vans, lorries, buses and
motorcycles. (Trains, ships and aircraft are thus not included).
Socioeconomic costs:
Cost without taxes and subsidies. The current
analysis does not include distortionary losses/gains of the existing tax
system, but does include related costs (externalities) from noise, road
wear, congestion, air pollution, CO
2
and access to the road network.
Sunk cost:
Costs that cannot be changed by new decisions.
TJ:
Tera joule – one thousand (10
3
) Gigajoule (GJ).
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8 References
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Rammevilkår for gas til tung vejtransport.
Kongens Lyngby:
COWI.
Dansk Elbil Alliance. (2015).
Bestand af elbiler i Danmark.
Retrieved from
Dansk Elbil Alliance:
http://www.danskelbilalliance.dk/Statistik/Bestand_modeller.aspx
DOE. (2015).
Vehicle technologies office: Batteries.
Retrieved from
Department of Energy: http://energy.gov/eere/vehicles/vehicle-
technologies-office-batteries
DØRS. (2013).
Økonomi og Miljø 2013.
København: De Økonomiske Råd.
E4tech. (2013).
A harmonised Auto-Fuel biofuel roadmap for the EU to 2030.
London: E4tech.
Ea Energianalyse. (2015a).
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Vehicle energy use and cost - Methodology used in
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Energianalyse.
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Scenarieforudsætninger og modelbeskrivelse.
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konsekvensberegninger.
København: Ea Energianalyse.
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ENS. (2014c).
Forudsætninger for samfundsøkonomiske analyser på
energiområdet.
København: Energistyrelsen .
European Commission. (2015a).
Clean transport, Urban transport.
Retrieved
from European Commission:
http://ec.europa.eu/transport/themes/urban/cpt/index_en.htm
European Commission. (2015b).
Energiunionspakken.
Retrieved from
http://eur-lex.europa.eu/resource.html?uri=cellar:1bd46c90-bdd4-
11e4-bbe1-01aa75ed71a1.0022.01/DOC_1&format=PDF
European Council. (2014).
2030 Climate and Energy Policy Framework.
Retrieved from
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/e
n/ec/145397.pdf
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Eurostat. (2014).
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Luxembourg: European
Union.
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Mitigation Measures – Reduction potentials an costs of climage
change mitigation measures.
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Climate, Energy and Building.
T&E. (2015a).
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