ACKNOWLEDGEMENTS

This paper was prepared by the Office of Energy Efficiency, Technology and R&D of the International Energy Agency (IEA). It draws on substantial contributions by Lew Fulton, Madeline Woodruff, Tom Howes and Sally Bogle of the IEA Energy Technology Policy Division and by Martijn van Walwijk of Innas BV, Netherlands.Assistance with preparation of the manuscript was provided by Muriel Custodio, Corinne Hayworth and Bertrand Sadin.

The work benefited greatly from input by the IEA’s technology committees and collaborative R&D programs and by other government and private-sector experts. We are indebted to all contributors and reviewers.

Nonetheless, the paper does not necessarily reflect the views of all contributors or reviewers. All errors or omissions are solely the responsibility of the IEA.

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TABLE OF CONTENTS

Acknowledgments ..................................................................................................................................................... 1

ENERGY TECHNOLOGIES FOR A SUSTAINABLE FUTURE: THE CONTEXT ..............5

A Portfolio Approach ................................................................................................................................................6

Advanced Technologies for a Low-emissions Energy System ........................................................7

TRANSPORT TECHNOLOGIES FOR A SUSTAINABLE FUTURE.......................................... 9

Overview.......................................................................................................................................................................9

Greenhouse Gas Emissions from Transport ...................................................................................................10

Near-term Technologies and Actions ............................................................................................................... 13

Technologies and Actions for the Long Term: Toward a Sustainable Transport System.................19

Transition Steps to a Sustainable Transport System....................................................................................27

Scenarios of Potential CO2 Emissions Reductions Using Near-term and Longer-term Actions .... 30

Challenges and Next Steps: Implications for Research and Development ...........................................33

Putting it all Together: Near-term Steps Toward both Near-term and Long-term Goals.................37

Bibliography ...............................................................................................................................................................40

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Figures

1. Projected Growth in Transport CO2 Emissions to 2030, OECD and Non-OECD Regions ...............11

2. Average New Car Fuel Economy for Selected IEA Countries ......................................................... 13

3. Improving Fuel Economy: Technologies and their Use in Three Countries as of 2000 ................. 14

4. Estimated CO2 Emissions Reduction Costs from In-use Efficiency Measures

in Different Regions and Driving Conditions................................................................................. 16

5. Gasoline and Ethanol Prices in Brazil, 2000-2004 ........................................................................ 18

6. Biofuels: Cost per Tonne of CO2-equivalent Emissions Reduction, Current and Projected ........... 23

7. Steps and Sequence for a Transition to a Near-zero-emissions

Transport System Over the Long Term .........................................................................................29

8. Two Possible Scenarios for Greenhouse Gas Emissions Reduction in Light-duty Vehicles........... 32

Tables

1. Potential Well-to-wheels CO2 Emissions Reduction for Vehicle-related Technologies

(per kilometre of driving)............................................................................................................... 12

2. Potential Well-to-wheels CO2 Emissions Reduction for Alternative Fuels

(per kilometre of driving)............................................................................................................... 12

3. Example Scenarios: Assumptions Regarding Nearer-term and

Longer-term Actions and their Effects on Light-duty Vehicles...................................................... 32

Boxes

Essential Long-term Technologies ................................................................................................24

The IEA’s World Energy Outlook 2004 ........................................................................................... 31

Beyond R&D ..................................................................................................................................36

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THE CONTEXT

Climate change is one of the major challenges of the 21st century. Its effects will increasingly influence the economic prosperity, environmental sustainability and energy security of both OECD and non-OECD countries. Stabilising concentrations of greenhouse gases in the atmosphere, the ambitious goal of the parties to the United Nations Framework Convention on Climate Change, will at the very least require deep cuts in carbon dioxide (CO2) emissions.

Energy is a crucial area for action. Rising emissions of CO2 from energy supply and use are a primary cause of human-induced climate change. Most of today’s energy demand is met by fossil fuels – coal, natural gas and oil – the combustion of which is responsible for over 80% of world CO2 emissions.

Cutting emissions without stifling the economic growth and development that energy makes possible poses a steep challenge for policymakers. Energy is integral to economic prosperity, with demand projected to grow rapidly in developing countries and steadily in the rest of the world. Electricity demand alone is set to nearly double by 2030 and could reach many times that level by the end of the century. The IEA's most recent World Energy Outlook (WEO) projects in its Reference Scenario that, absent strong policy changes, global energy use could grow by 60% over the next 30 years, with 85% of the increase likely to come from fossil fuels (IEA, 2004a). Resulting CO2 emissions from energy could be 60% higher than they are today. The WEO Alternative Scenario shows that, if policies currently being considered by OECD and other countries were implemented, energy use in 2030 could be cut by 11% compared with this reference case, and CO2 emissions could be cut by 17%. But both would still be rising in 2030.

These scenarios already reflect some improvements in technologies for energy supply and use. Much deeper reductions in energy use and CO2 emissions will require more extensive and fundamental technological changes. Aggressive uptake of existing and new technology holds the key to meeting the world’s energy needs over the next 100 years while capping emissions, supporting economic growth and ensuring security of energy supply.

ENERGY TECHNOLOGIES FORA SUSTAINABLE FUTURE

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A portfolio approach

Deep cuts in CO2 emissions will only come about by transforming the ways in which energy is supplied and used. Producing fuels and electricity, transferring them to users, and converting them into useful services will need to rely principally, if not completely, on efficient and cleaner technologies.

No single technology can accomplish this transformation alone. A clean energy system will rely on a host of new technologies – some will be the best examples available today, some will need to be better-performing and much less costly versions of known technologies, and some will be new technologies based on advances stemming from scientific discovery. The infrastructure involved – power plants, pipelines, transport systems, fuelling stations, vehicles, buildings and so forth – will have to be equipped to support advanced technologies. Countries and regions will emphasise varying technologies and fuels in their own paths to a clean energy system. Only a broad technology portfolio will be able to meet all these needs while providing flexibility, reducing costs and hedging against uncertainty.

Accelerating the commercial availability of these technologies will be central to greatly reducing CO2 emissions from energy. A full transformation of the energy system could take place over a century or more. But much of the infrastructure governing energy supply and use that is put into place over the next few decades could last until late in the century (PCAST, 1999). The sooner clean, efficient and cost-effective technologies are available, the greater the prospects for stabilising atmospheric greenhouse concentrations at acceptable cost.

Innovation in energy technology will be integral to meeting this objective. Support will be needed for all components of the innovation system – research and development (R&D), demonstration, market introduction and its feedback to development, flows of information and knowledge, and the scientific research that could lead to new technological advances. Industry participation will be required to ensure the best technologies are brought to market in a timely manner.

Up to 2050, known technologies can be readied to achieve deep cuts in CO2 emissions. Beyond then, more fundamental changes in energy technologies will be required. Even known technologies may require extensive changes to bring their costs within reach. Basic research in areas as diverse as biological processes, plasma physics and nanoscience will be part of an integrated approach to meeting climate change objectives over a 100-year time horizon.

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Advanced technologies for a low-emissions energy system

Three major groups of technologies could provide ways of significantly lowering greenhouse gas emissions while retaining energy security and supporting economic growth. These include efficient technologies for providing energy services, technologies for producing “clean” fuels and energy carriers, and technologies providing the electricity infrastructure that advanced technologies will need to penetrate the energy system. A fourth component, advances in basic science cutting across several technology areas, could make possible even further contributions.

Technologies for using energy efficiently can lessen the CO2 emissions-reduction burden that energy supply technologies and fuels will have to bear, without requiring that users do without energy services. For example:

Vehicles. Dramatic reductions in CO2 emissions from transport can be achieved by using available and emerging energy-saving vehicle technologies coupled with propulsion systems that rely on cleanly produced biofuels, electricity produced centrally without accompanying emissions, and electricity from fuel cells powered by cleanly produced hydrogen.

Buildings. Energy use in residential and commercial buildings can be substantially reducedwith integrated building design – combining measures such as insulation, advanced windows, new lighting technology and efficient equipment so as to cut both energy losses and heating and cooling needs. Solar technology, on-site generation of heat and power, and computerised energy management systems within and among buildings could offer further reductions in energy use and CO2 emissions.

Industry. Making greater use of waste heat, generating electricity on-site, and putting in place ever more efficient processes and equipment could minimise external energy demands from industry. New process designs and direct capture of CO2 could reduce emissions arisingdirectly from industrial operations. Advanced process control and greater reliance on biomass and biotechnologies for producing fuels, chemicals and plastics could further reduce energy use and CO2 emissions.

transforming energy use

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A wide range of technologies can reduce CO2 emissions from energy supply. For example:

Renewable Energy Sources. Renewable energy sources, such as wind, waves, solar flux and biomass, offer emissions-free production of electricity and heat. When coupled with advanced energy storage technologies, intermittent sources can increasingly be integrated into electricity networks.

Advanced Fossil-fuel Combustion Technologies. Advanced fossil-fuel technologies could significantly reduce the amount of CO2 emitted by increasing the efficiency with which fuels are converted to electricity. Such advances would cut the burden on alternative technologies, particularly when combined with CO2 capture and storage. Options for coal include integrated gasification combined cycle (IGCC) technology, ultra-supercritical steam cycles and pressurised fluidised bed combustion. Longer term, fuel cells could be incorporated into natural gas and IGCC plants for further efficiency improvements.

CO2 Capture and Storage. Carbon dioxide can be captured from large point sources (electricity generation, manufacturing processes and fuel processing) and stored in saline aquifers or used, through injection, to enhance recovery of oil, gas and coal-bed methane. Fossil-fuel

transforming energy supply

This paper, which looks at Transport, is the first in a series of IEA Technology Briefs examining the roles various energy technologies can play in reducing CO2 emissions. Each paper assesses the status of individual technologies, the R&D and demonstration needed for their further development, the contributions they could make to a sustainable energy future, and the challenges that lie ahead.

Not all technologies will be appropriate for every country – their ultimate applicability will depend on national resource endowments and on the strategies chosen by individual governments. By considering the span of technologies, these briefs equip policymakers with a view of the range of technology options that can help fulfil economic, environmental and energy security needs.

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transforming electricity networksAdvanced Electricity Networks. Advanced electricity infrastructure and storage technologieswould enable an electricity system featuring integrated, low-emissions distributed and intermittent electricity generation to emerge. “Smart” system controls and advanced hardware will allow management of higher and more complex loads and increasing co-mingling of energy and communication systems. Advances in electricity storage technologies will improve the efficiency of network operations, help with maintaining high power quality and support the use of intermittent energy sources.

basic researchBasic Research. Basic research could transform the world’s portfolio of energy technologies into one that can make deep cuts in CO2 emissions over the next 100 years. Scientific progress could lead to new materials, bio-processes, nanotechnologies and sensors that could radically reduce costs for today’s technologies, create new technologies for supplying, storing and using energy, and reveal completely new approaches to providing energy services.

dependent pathways to a low-emissions future are strongly dependent on CO2 capture and storage technologies, which would enable fossil fuel use to be reduced gradually as new options become available.

Hydrogen. Use of hydrogen, an energy carrier like electricity, would enable distributed and centralised generation of electricity and heat using fuel cells and hydrogen gas turbines. Hydrogen can also provide flexible electricity storage and, when used in fuel cells, emissions-free vehicle propulsion. It can be produced using technologies that result in few or no emissions of CO2, such as natural gas reforming or coal gasification with accompanying CO2 capture and storage, and electrolysis of water using emissions-free sources of electricity.

Advanced Nuclear Fission Technologies. Nuclear fission can provide large-scale, centralised production of electricity with low CO2 emissions. Its use depends on public acceptance, enhanced safety, greater resistance to proliferation of nuclear materials, progress in dealing with radioactive wastes, and reduction in investment costs.

Nuclear Fusion. Still at the threshold between science and basic research, nuclear fusion could contribute to large-scale, low-emissions electricity generation over a 100-year horizon.

TRANSPORT TECHNOLOGIES FORA SUSTAINABLE FUTURE

Overview

This IEA Technology Brief describes technologies and actions that could provide the foundation for a sustainable1 transport system in OECD countries, in particular a system with low or near-zero emissions of carbon dioxide (CO2) and other greenhouse gases (GHGs). Such a system would probably no longer rely on petroleum fuel. The paper looks at technologies that can contribute in the near term, and at how further technology developments could build on these over the next few decades to produce a very-low-emissions transport system in the long term – a goal that might not be reached until 2050 or later. The primary focus is on road transport, although some consideration is also given to other transport modes.

The analysis in this paper leads to two important conclusions:

l Many of the actions available now to reduce greenhouse gas emissions stemming from transport will also be important steps for a much longer transition to a low-emissions, affordable and secure transport system.

l To achieve this long-term transition, it will indeed be necessary to take certain actions very soon.

Many technologies and strategies are available today that can significantly reduce transport CO2 emissions and oil use over the short to medium term (one to ten years). Three technology groups are likely to be particularly important during this time frame:

l “Incremental” technologies to both make vehicles more technically efficient than they are now and lessen their fuel consumption per kilometre of driving.

l Technologies to make transport systems and infrastructure more efficient, reducing the need for vehicle travel. These can enable more efficient routing, better in-use fuel efficiency, and switching among travel modes. (This paper does not consider outright reductions in travel demand.)

l New, lower-carbon fuels and fuels lower in greenhouse gas emissions on a “well-to-wheels”2 basis. In some cases, new or modified vehicles will be required that can run on these fuels.

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1. In this paper, “sustainable” signifies very low emissions of greenhouse gases and low use of oil and other fossil fuels.

2. “Well-to-wheels” refers to the full fuel chain, from feedstock production (the “well”) to fuel use in vehicles(“the wheels”) .

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The combination of lower-carbon, lower-emissions fuels and better vehicle and system efficiency holds the potential for substantial reductions in both greenhouse gas emissions and oil consumption over the next ten years across OECD countries.

Looking farther ahead, a logical goal is to move toward a near-zero-emissions transport system in the long term. Such a system would likely have very low consumption of oil and perhaps of all fossil fuels.

There are only three known fuels or “energy carriers” around which such a transport system could plausibly be built: electricity, hydrogen and very-low-emissions biofuels. The discussion of the longer term later in this paper highlights technologies and transition strategies that will be important for one or more of these fuels, without picking a winner from among them. Among the most important are:

l Electric propulsion and powertrain systems.

l Hydrogen fuel-cell propulsion systems.

l Technologies that allow for production and use of biofuels havingnear-zero emissions on a well-to-wheels basis.

Although at first glance it may appear that the main near- and long-term technologies do not align very closely, there is actually a great deal of overlap, and near-term strategies can be designed that will provide important benefits in spurring a transition to a transport system with very low emissions of greenhouse gases.

After briefly reviewing today’s greenhouse gas emissions from transport and the potential reductions in emissions associated with various strategies, the paper describes near-term and then longer-term technologies and actions that can reduce emissions. It then compares these and identifies steps that can help achieve both near-term and long-term goals.

Greenhouse gas emissions from transport

The IEA's most recent World Energy Outlook (WEO) projects in its Reference Scenario that, between 2002 and 2030, transport oil use and CO2 emissions in OECD countries will increase by nearly 50% (Figure 1), despite recent and continuing policy initiatives intended to dampen this growth (IEA, 2004a). World wide, the increase is projected to be more than 80%. Transport currently accounts for 21% of world energy-related CO2 emissions; this fraction is expected to reach 23% by 2030. Stabilising atmospheric greenhouse gas concentrations, the goal set by the parties to the United Nations Framework Convention on Climate Change, may eventually require deep reductions in energy-sector CO2 emissions, including emissions from transport.

Source: IEA, 2004a.

Carbon dioxide emissions from today's transport systems stem predominantly from energy conversion in the propulsion system. For aeroplanes this is the combustion of kerosene in the (jet) engine. For rail transport it is either stationary generation of power for electric trains and trams, or combustion of diesel fuel in diesel locomotives. Ships, road vehicles and off-road vehicles are propelled primarily by gasoline and diesel fuel (and for large ships, heavy fuel oil) used in internal combustion engines. Except for electric rail transport, the fact that the energy is consumed in a mobile device puts high demands on the energy carrier. The energy for propulsion has to be carried on-board the vehicle, so on both a mass basis and a volume basis, the energy density of the energy carrier must be high. Because of their high energy density, coupled with abundant supply, easy refuelling and very reliable engines, liquid fossil fuels have become the dominant fuels in transport.

For a fair comparison of the emissions associated with different energy carriers, the total well-to-wheels fuel chains must be considered. The use of fuel in vehicles is only the last stage in this chain. The total fuel chain consists of five stages: feedstock production (the “well”), feedstock transport, fuel production, fuel distribution, and fuel use in vehicles (the “wheels”). In current fossil-fuel chains, the first four stages are greenhouse gas emitters, just like the vehicle. In the crude-oil-to-gasoline and -diesel chains for road vehicles, the first four stages account for approximately 10% of the total greenhouse gas emissions from the full fuel cycle. Emissions from the vehicle dominate, accounting for the other 90%.

The potential contributions of various vehicle technologies and fuels to CO2 emissions reduction are shown in Tables 1 and 2. Only electricity, hydrogen and biofuels can yield a near-zero-emissions transport system, although

figure 1.Projected Growth in Transport CO2 Emissions to 2030,

OECD and Non-OECD Regions

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efficiency technologies can play an important role in reducing energy demand. The net CO2 emissions produced by electricity, hydrogen and biofuels can vary widely, depending on how the fuels are produced. The more efficient vehicles are, and the less fuel they need, the better the chances that all of this fuel can be provided from sources having very low emissions of CO2 .

Notes: R Criterion can be met. £ Criterion may be met. Q Criterion cannot be met.

Notes: R Criterion can be met. £ Criterion may be met. Q Criterion cannot be met.

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Potential Well-to-wheels CO2 Emissions Reduction for Alternative Fuels(per kilometre of driving)

table 2.

table 1. Potential Well-to-wheels CO2 Emissions Reduction for Vehicle-related Technologies

(per kilometre of driving)Well-to-wheels CO2 emissions

reduction potential

Technology Condition > 10% > 50% > 90%

Higher gasoline engine efficiency R Q Q

Higher diesel engine efficiency R Q Q

Hybrid vehicle Biggest efficiency gains in urban traffic R £ Q

Lightweight vehicle R £ QElectric vehicle When using electricity produced from renewable or

nuclear energy or from fossil energy withCO2 capture and storage

R R R

Fuel-cell vehicle When using hydrogen produced from renewable or nuclear energy or from fossil energy withCO2 carbon capture and storage

R R R

“Intelligent” transport system R Q Q

Well-to-wheels CO2 emissions reduction potential

Fuel Condition > 10% > 50% > 90%

Liquified petroleum gas (LPG) £ Q Q

Natural gas £ Q Q

Dimethyl ether (DME) Produced from natural gas £ Q QEthanol, methanol (current technologies)

Produced from starchy crops (e.g., wheat, sugar beets); significant fossil energy in fuel chain R Q Q

Biodiesel (current technologies) Produced from oil-seed crops; significant fossil energy in fuel chain R £ Q

Advanced biofuels – ethanol, diesel, DME

Produced from ligno-cellulosic biomass; primarily renewable energy in fuel chain R R £

Hydrogen Produced from fossil energy (e.g., from fossil-powered electricity or directly from natural gas) R £ Q

Hydrogen Produced from renewable or nuclear energy or from fossil energy with CO2 capture and storage R R R

Electricity Produced from renewable or nuclear energy or from fossil energy with CO2 capture and storage R R R

Near-term technologies and actions

Numerous technologies are available today that can improve the efficiency of vehicles and transport systems, and help develop and refine alternative fuels, so as to significantly lower the expected growth in CO2 emissions over the next ten years. These fall into five categories: improvements in the rated fuel economy of new cars, reductions in vehicle “in-use” fuel consumption, reductions in vehicle travel, increased use of alternative fuels, and improvements in freight transport efficiency.

Improvements in new car fuel economySubstantial near-term improvements in the fuel economy3 of new light-duty vehicles (LDVs) can be achieved using available, cost-effective technologies. The IEA (2001) and others (e.g., NRC, 2002) have estimated that, by 2015, new car fuel consumption can be reduced by up to 25% at low cost by fully exploiting available technologies. In some cases these have negative costs to consumers, because the (time-discounted) value of fuel savings is greater than the cost of the technologies. Technologies include direct injection systems, other engine and drive-train improvements, lightweight materials, and better aerodynamics. Although stock-turnover considerations mean that the full effect of these improvements would not be realised until 2020-2025, they could still reduce the average fuel use per kilometre for the entire stock of cars by 10-15% over the next 10 years in IEA countries. This is a greater improvement than has occurred in some regions over the past 10 years (Figure 2). As shown in Figure 3, a variety of efficiency-improving technologies are available that have not yet penetrated the new car market to any great extent (as of 2000). Greater use of these and other technologies on an incremental basis over the coming decade can make a significant contribution to improving vehicle fuel economy.

Source: IEA, 2004b.

figure 2.Average New Car Fuel Economy for Selected IEA Countries

3. In this paper, fuel economy means fuel consumption per kilometre of travel. In some countries, this is expressed as kilometres per litre or miles per gallon. “Efficiency” refers to technologies and their effects on fuel economy.

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Source: Saving Oil and Reducing CO2 Emissions in Transport (IEA, 2001).Note: each technology provides a gain relative to a less advanced technology. For example, a 4-speed automatic transmission is more fuel efficient than the 3-speed automatic transmission that was present on most cars with automatic transmissions in 2000.

Some efficiency-improving technologies, such as hybrid-electric propulsion systems, are still fairly expensive. Hybrid cars on the market today cost several thousand U.S. dollars more than their conventional-engine counterparts, although costs are falling and there is some indication that companies such as Toyota (with global sales of over 100,000 hybrid vehicles as of 2004 and a significantly improved Prius model recently introduced) are now at least breaking even on cost. In North America and Japan, consumers have shown enthusiasm for hybrids, although sales are low due to small production volumes and the availability of only a few models. In Europe, interest appears to be lower, perhaps because there are many diesel vehicles on the market that already fulfill the demand for high-efficiency vehicles to some extent. Although some governments (such as Japan and the United States) provide consumers with financial incentives to purchase hybrid vehicles (up to US$ 2,000 in tax rebates in both countries), most do not. For these vehicles to emerge from niche markets, they may need to gain much greater attention and consumer acceptance as a worthy investment. Governments can play an important role here in highlighting “green” vehicle choices and encouraging their purchase through information and incentive programmes.

The past 15 years have seen consumers increasingly choose larger, heavier and more powerful vehicles. Vehicle efficiency improvements in many countries (such as the United States) have only just kept up with this trend, resulting in flat or even slightly deteriorating average fuel economy over this period. Therefore, even a strong uptake of efficient technologies may not significantly reduce

figure 3.Improving Fuel Economy: Technologies and their Use in Three Countries as of 2000

(percentage of new cars equipped with each technology)

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average vehicle fuel consumption per kilometre unless these trends turn around. The European voluntary agreements and the Japanese Top Runner programme are good examples of policies that encourage technical improvements, but neither has an explicit mechanism to discourage consumers from migrating to ever-larger, more powerful vehicles. Nether do the current U.S. and Canadian fuel economy regulatory systems discourage purchase of larger vehicles except through a modest (sales-weighted) fuel economy floor that has remained relatively unchanged since 1985. (Note that vehicle size is less important than weight and power in determining fuel consumption – consumers need not be forced to purchase smaller vehicles for substantial fuel economy gains to occur.)

There are several steps governments can take to maximise the efficiency gain from technology. For example, they can adopt more effective information campaigns to educate consumers about the fuel-economy implications of their choices. Because similarly-sized vehicles can have widely varying fuel economies, an important step is developing fuel-economy labelling systems that reflect this. A recently adopted labelling system in the Netherlands highlights differences among similarly-sized vehicles, which may be a more effective approach than simply pointing out that large cars, vans and “sport-utility vehicules” use more fuel than small cars.

Another promising approach to dampen shifts to heavier, more powerful vehicles is a system of fuel-economy-based vehicle fees or revenue-neutral fees/rebates (“feebates”) that encourage consumers to put greater emphasis on fuel economy in the vehicles they purchase. Denmark and the Netherlands recently adopted such systems and these appear already to be having significant effects on consumers' vehicle choices4.

Reductions in vehicle in-use fuel consumptionLight-duty vehicles on the roads in IEA countries typically use 20-25% more fuel per kilometre than indicated by their tested, rated fuel economy. While much of this gap is inevitable owing to traffic congestion and other factors, there are several measures that can reduce it considerably. The IEA, in co-operation with the European Conference of Ministers of Transport (ECMT), recently completed a study of technologies and measures to improve the “in-use” or “on-the-road” fuel economy of LDVs (ECMT/IEA, 2004). The IEA estimates that a 10% reduction in average fuel consumption per kilometre could be achieved for LDVs across IEA countries through a combination of the following measures: stronger inspection and maintenance programmes that target fuel economy; on-board technologies that improve in-use fuel economy as well as driver awareness of efficiency, such as adaptive cruise control systems and fuel economy computers; better and more widespread driver training programmes; and better enforcement and control of vehicle speeds. External control of vehicle speeds, though controversial, is being looked at closely in some countries (for instance, the United Kingdom) for its potential safety benefits. Safety is the main driver, but speed control can also provide significant fuel savings.

4. The Netherlands' system of tax rebates for the most efficient vehicles in each size class had a strong effect on sales of these vehicles during 2002, but this system was suspended in 2003.

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Cost estimates for the CO2 emissions reductions offered by in-use technologies and measures are shown in Figure 4. Costs are given for both warm and cold environments, since technology performance can vary significantly with the ambient temperature. Cost estimates vary, but many technologies show low or negative cost per tonne of avoided emissions in some situations. The effects of technologies and measures on fuel consumption (not shown) also vary, but as noted earlier, a package of these can be developed that provides a 5-10% improvement in vehicle fuel economy on-the-road, even if the tested fuel economy doesn’t change as a result.

Source: ECMT/IEA, 2004. Note that estimates are shown for the United States and the European Union (reflecting different average fuel economy and travel levels) and are given separately for hot and cold ambient conditions (and thus can be applied to northern and southern countries and regions). The estimates are based on a social cost analysis that assumes a fuel cost of US$ 0.40/litre (untaxed, but with externalities reflected). Both technology costs and fuel savings are included in net cost estimates. “Low RR Tyres” are low rolling-resistance tyres; “Shift Ind Light” is a shift indicator light that shows the driver the optimal point to shift gears in a manual transmission.

Reductions in vehicle travel growthEfforts to stem the growth in vehicle travel are often related to goals other than saving energy or reducing CO2 emissions, but they can of course also have important benefits in these areas. Technologies and measures are available that can reduce the demand for vehicle travel while improving the general efficiency of the transport system. These include improvements in transit systems (see the IEA’s book, Bus Systems for the Future: Achieving Sustainable Transport Worldwide, 2002), “intelligent transport” technologies, better routing systems, measures to reduce congestion, information systems that can help to reduce the need for travel, and road-pricing programmes (such as the one introduced recently in London). Aggressive application of such measures could cut car travel (or at least, travel growth) on a national basis by at least 10% over a ten-year period (IEA, 2001).

figure 4.Estimated CO2 Emissions Reduction Costs from In-use Efficiency

Measures in Different Regions and Driving Conditions

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Efforts to reduce vehicle travels are normally undertaken at the local or regional government level, but national governments can put in place incentive programmes to encourage adoption of strong approaches. Although it is often the transport ministry that spearheads a country’s efficiency policies, greater consideration of the effects of transport policies on energy use can be championed by energy agencies.

Increased use of alternative fuelsA number of obstacles have prevented non-petroleum fuels from playing a larger role in the transport sector in IEA countries. These include a lack of fuelling infrastructure; high vehicle or fuel costs; poor consumer acceptance of other vehicle attributes, such as range and refuelling time; and generally risk-averse behaviour on the part of consumers. But change is possible – for example, the IEA estimates that a 5% displacement of transport motor fuels across OECD countries could be achieved by 2010 with stronger national programmes, particularly those targeting liquid biofuels (IEA, 2004c). Biofuels have the advantage (compared with gaseous fuels or electricity) that they can be blended with petroleum fuels, avoiding the need for changes to the vehicle stock or major investments in fuelling infrastructure.

The ethanol and biodiesel produced in IEA countries today are much more expensive than conventional fuels. It may be less cost-effective to displace oil with these fuels than to reduce oil use by other means (such as by improving fuel economy). But biofuels offer an opportunity for rapid reductions in oil dependence that could be of high value to IEA countries. As discussed in the IEA’s recent book, Biofuels for Transport: An International Perspective (2004), with further research and development (R&D) and expanded production, costs, especially for advanced, very-low-emissions biofuels technologies, will very likely come down. Furthermore, low-cost ethanol is already being produced in large quantities by Brazil using sugar cane as a feedstock. As of mid-2004, Brazilian ethanol prices were below those of Brazilian gasoline, even when adjusted for energy content and excluding taxes (Figure 5). Other developing countries are ramping up production capacity for the same (sugarcane-to-ethanol) fuel chain. If they can achieve similarly low costs, which appears likely, the opportunities for global trade in inexpensive, low-CO2-emissions biofuels should expand rapidly. The cost of the rapid reductions in oil use offered by these fuels would fall accordingly.

Gaseous fuels (such as compressed natural gas and liquefied petroleum gas) can also play an important near-term role, although all of these fuels require new, relatively expensive vehicles and new fuelling infrastructure. A major issue has proven to be attracting consumers to new types of vehicles that have certain drawbacks, such as limited retail fuel availability and few choices (in terms of models). This type of problem may continue to be a major challenge, but countries have had some success with highly targeted efforts to both develop fuelling infrastructure and offer multiple vehicle choices in specific areas (e.g., the U.S. “Clean Cities” programme). But real success, in terms of developing and sustaining large markets and displacing a significant amount of oil, will probably require even larger efforts, with a long-term commitment on the part of national and local governments – and it is still unclear whether the obstacles these fuels face can ever be fully overcome.

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Source: Laydner, 2003, as cited in IEA, 2004c. Hydrous alcohol is not taxed in Brazil. Gasoline prices are shown with and without Brazilian taxes. Prices shown for ethanol are per gasoline-equivalent litre, accounting for the differences in energy density between ethanol and gasoline.

Improvements in freight transport efficiencyA variety of technologies and policies could improve freight transport efficiency. These include improvements in vehicle efficiency, improvements in the system-wide efficiency of freight transport, and shifts of freight movement from trucks to much more efficient modes such as rail and water-borne. The IEA estimates that, for most countries, adoption of an aggressive freight transport efficiency programme could yield a 10% reduction in the fuel used for freight movement over the next ten years (IEA, 2001).

The efficiency of new trucks has improved steadily over time. Nevertheless, several recent studies indicate that trucking companies have not implemented many of the technical measures that could increase efficiency. Measures that encourage maximum uptake and use of efficient technology could reduce average fuel consumption per tonne-kilometre for new trucks by up to 5% by 2010 (beyond what is expected to occur autonomously), which translate to a 3% reduction for all trucks. Measures to promote more efficient driving habits, such as providing technical assistance to trucking companies in monitoring the fuel use of their trucks (as undertaken in the Netherlands and the United Kingdom) and in cutting truck idling, could produce a similar, 2-3% reduction in fuel consumption per tonne-kilometre by 2010 (IEA, 2001).

Technologies that improve transport system efficiency, such as better logistics systems to combine shipments and make sure trucks use the most efficient routes, could also have a large effect on fuel use. When used along with more aggressive development of inter-modal facilities, these types of measures could cut energy use for freight transport by 5-7% in urban settings and 2-3% for

figure 5.

Gasoline and Ethanol Prices in Brazil, 2000-2004

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a country as a whole. Finally, more aggressive measures to promote rail and shipping, including pricing and infrastructure development, at a level that yields a 5% shift away from truck-based freight movement, would yield (once again) at least a 2-3% reduction in energy use for freight transport (IEA, 2001).

Overall, the freight efficiency measures outlined here could, together, save on the order of 10% of the energy used for freight transport in most IEA countries. Development of a new, aggressive package of measures would require a strong push – such a package would require a combination of pricing, infrastructure development, and technical assistance to companies that might not be simple to construct. However, most countries have programmes in place that could be expanded, with perhaps a stronger focus on energy savings to increase their effectiveness. Many of these measures could be carried out at relatively low cost, taking into account both the fuel savings and the improvements in operating efficiency of freight systems that such measures would provide.

In sum, reductions in energy use and CO2 emissions on the order of 25-30% across freight transport modes appear attainable over the next 15 to 20 years, if aggressive actions are taken to promote maximum uptake of existing, often fairly low-cost, technologies.

Technologies and actions for the long term:toward a sustainable transport system

This section turns to a longer-term perspective, exploring what would be required to achieve a sustainable, near-zero-GHG-emissions transport system that also improves energy security and supports economic growth.

As was mentioned in the introduction, there are only three basic approaches to achieving a transport system with very low emissions of greenhouse gases and low reliance on fossil fuels: converting to a hydrogen fuel-cell system, moving to a purely electric vehicle system, or relying on liquid fuels that are derived from biomass, with advanced technologies to ensure that the biofuels are produced with very low well-to-wheels GHG emissions.

A transition to a near-zero-emissions transportation system will likely take four decades or more. Widespread use of purely electric vehicles or of fuel-cell vehicles will require technological improvements and dramatic cost reductions, plus market development and growth, all of which will take time. Over an assumed fifty-year time horizon for a complete transition, the entire vehicle stock in IEA countries will be replaced at least two to three times. Because cumulative CO2 emmissions play an important role in climate change, it will be important for the new vehicles brought into use during the transition period to take advantage of the many features available today that can help reduce emissions.

There are numerous technologies, and types of technologies, that are candidates or logical components for inclusion in a low-emissions transport system. Some of

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these, such as fuel cells, will take many years to develop and put into use. Others, such as technologies to improve the efficiency of new cars, are available today. The basic building blocks are laid out below, with some discussion of whether they are likely to be near-term or longer-term components of a sustainable transport system.

Electric vehicles and sources of electricity

Although some electric vehicles are being built today, the main focus in recent years has shifted to hybrid-electric vehicles running on gasoline. But electric vehicles are by no means “dead” and may play an important role in the future. Today’s electric vehicles still suffer from important drawbacks, including limitations in energy storage volume and density (and thus driving range and power), high cost, and low component durability. Hybrid vehicles overcome most of these problems and may eventually pave the way for purely electric vehicles, with “pluggable” hybrids (which can be recharged using external sources of electricity) a possible intermediate step. Many trains are already electric, but for trains electricity is provided directly from a grid, so energy storage is not a concern.

A major area of concern for purely electric vehicles is energy storage. Battery systems still fall far short of the power and energy density that would be required for electric vehicles to have the same performance and range as today’s conventional (and hybrid) vehicles. Batteries continue to improve, however. For example, the recent generation of nickel-metal-hydride and lithium-ion batteries is significantly improved over batteries available just a few years ago. Other energy storage devices, such as ultra-capacitors and flywheels, are also undergoing further R&D. If any of these technologies experiences large improvements over the next 10 to 20 years, electric vehicles may re-emerge as the preferred long-term solution for achieving a sustainable transport system.

Fuel supply and upstream GHG emissions are also a concern for electric vehicles. For any vehicle reliant on the electricity grid for its fuel, the extent to which it provides well-to-wheels emissions reductions will depend primarily on the upstream emissions from the electricity supply system. Electric vehicles running on electricity produced from coal, for example, will not provide significant emissions reductions compared with gasoline vehicles unless CO2 capture and storage are also used. To meet both expected stationary electricity demand and the demand arising from vehicles in a world where electric vehicles dominate, it will be necessary to develop substantial amounts of new, low-emissions generating capacity. It would likely require as much or more new capacity to provide electricity for EVs as it would to provide hydrogen for fuel-cell vehicles, if all of the hydrogen were produced using electrolysis.

Hydrogen and fuel cells

Many analysts now believe that hydrogen fuel-cell vehicles are the most likely long-term, low-CO2-emissions transport outcome. If transport systems eventually come to be dominated by fuel-cell vehicles, it increasingly appears that these vehicles will rely on on-board hydrogen storage and off-board hydrogen

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production, due to the relative simplicity, better end-use efficiency, lower emissions, and lower cost of this approach compared with on-board reforming of hydrogen from another fuel5. On-board storage of hydrogen means that vehicles would have virtually zero tail-pipe emissions of any pollutants or greenhouse gases (only water would be emitted). Producing hydrogen on board by reforming other fuels – such as gasoline or methanol – results in some pollutant emissions from the vehicle and adds considerable complexity. Whether on-board reforming is used or not, some CO2 (or perhaps a lot) could still be emitted during fuel production and distribution.

As with electricity, a principal question for hydrogen is how and where it will be produced, what energy sources will be used to produce it, and what upstream emissions will occur from its production. To have a truly near-zero-emissions transport system based on fuel cells, it will be necessary to have a near-zero-emissions system of producing and transporting hydrogen. There are many ways to do this, such as by electrolysing water at fuelling stations, using electricity generated renewably or by nuclear power or by fossil fuels with accompanying CO2 capture and storage. But whether enough near-zero emissions hydrogen can be produced to meet transport demand, and whether this should take precedence over other uses (for the hydrogen or the electricity used to produce it), is an open question. If, in 2050 and beyond, all road vehicles in IEA countries ran on hydrogen fuel, the amount of hydrogen required could be quite large. Even assuming that fuel-cell vehicles in 2050 were 50% more efficient than conventional vehicles are today, the IEA estimates that it could require 40 exajoules of hydrogen per year to power these vehicles. If derived from electricity, this would require over two terawatts of power, or more than 2,000 power plants, each with a capacity of one gigawatt.

Biofuels

In the section on near-term technologies and actions, the potential for securing near-term reductions in CO2 emissions using biofuels was discussed. Ethanol and biodiesel, as typically produced today in IEA countries, can reduceCO2 emissions per litre of fuel by 20% to 50% compared with gasoline and diesel fuel, respectively, on a “well-to-wheels” basis6, but they are not near-zero-emissions fuels. Technologies now under development will help produce advanced biofuels with near-zero net CO2 emissions. These include technologies for producing ethanol using enzymatic hydrolysis of cellulosic feedstock (see box, “Essential Long-Term Technologies”) and technologies for producing various liquid fuels, such as synthetic diesel fuel, using biomass gasification or pyrolysis. Hydrogen can also be produced through biomass gasification, with the possibility of sequestering the resulting CO2 – in essence extracting CO2 from the atmosphere and storing it in geological formations. But these methods of

5. See, for example, NRC, 2004, The Hydrogen Economy: Opportunities, Costs, Barriers and Needs, for a discussion of on-board versus off-board production of hydrogen and of many other hydrogen and fuel cell issues.

6. Well-to-wheels estimates take into account all vehicle and upstream emissions of CO2 and other greenhouse gases. In the case of biofuels, this assessment includes CO2 absorbed by plants during their growth and emissions arising from the energy used in crop and biofuels production.

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production are not yet commercial and may require considerable additional R&D, demonstration, and cost reduction through experience and learning, before they reach a commercial state. Even before they reach the market, however, they may provide GHG emissions reductions at a lower cost per tonne than today’s approaches, since they provide much larger reductions per unit of fuel produced.

Thus the development of a biofuels infrastructure today will set the stage for use of increasingly “green”, low-emissions biofuels tomorrow. Apart from fuel production facilities, the infrastructure investment required to support use of advanced liquid biofuels may be relatively small, since these fuels can be blended with conventional fuels and transported using today’s fuel systems. In the future, synthetic diesel fuel should be “blendable” anywhere from 0% to 100% with petroleum diesel fuel and used in conventional diesel vehicles. Cellulosic ethanol, like all fuel ethanol, will be compatible with today’s gasoline vehicles at blends up to at least 10%, and up to much higher levels with relatively minor changes to engines and fuel systems. But there are important hurdles that must be overcome, such as convincing manufacturers to warrant their vehicles for higher blend levels and to produce truly flexible-fuel vehicles that can run on blended fuels, if use of biofuels is to increase substantially. Efforts to surmont these hurdles have begun in some countries, such as Brazil and the United States.

Once advanced biofuels are being produced on a commercial scale, the benefits of learning-by-doing and scale economies can begin to be realised. Although certain countries have produced ethanol from grain crops (such as wheat and corn, or maize) for dozens of years, and have achieved some reductions in production costs, far more cost-reduction potential exists with new technologies. Commercial use of such technologies as enzymatic hydrolysis to convert cellulose to sugar, biomass gasification, and Fischer-Tropsch conversion of synthesis gas to transport fuels will likely drive costs down substantially over the first few decades of production. So although most of the benefits of R&D, scale economies and learning-by-doing have already been realised for conventional biofuels, this process is only just beginning for advanced biofuels. The process of commercialising certain biofuels technologies will take time and may require a fairly long period of pre-commercialisation experience. But moving from laboratories to larger-scale testing must begin in earnest very soon. This appears to be happening– construction of the first large-scale cellulosic ethanol conversion plant is expected to occur (in North America) by 20067.

The IEA’s estimates of the current and projected cost per tonne of avoided CO2-equivalent emissions reduction for different biofuels, technologies and regions are shown in Figure 6. If costs for advanced technologies come down through R&D, scale economies and learning-by-doing, as appears to be quite possible, the cost per tonne of avoided emissions could drop below US$100 after 2010 (based on an oil price of US$30 per barrel).

7. As indicated in announcements by Logen Corporation –e.g., in EV World, April 2004: http://www.evworld.com/view.cfm?section=article&storyid=735.

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Source: IEA, 2004c.

Even if very-low-CO2-emissions biofuels become commercially viable, however, a key question will remain: how much of these fuels can be produced, given land availability and other constraints? Today, producing biodiesel from oil-seed crops requires up to five times as much land per unit of usable energy as producing ethanol. For a high-volume approach, ethanol appears to be a better choice (at least to the extent that the same land can be used to produce either fuel). In the future, producing both cellulosic ethanol and other liquid fuels through biomass gasification will be able to achieve much higher yields of useable energy per hectare of land.

The IEA’s book, Biofuels for Transport: An International Perspective (IEA, 2004c), reviews several studies of the global potential for biofuels production. These studies give a wide range of estimates, but all indicate that it may eventually be possible for biofuels to provide a high share of transport fuel, with 50% to 100% well within the range of several studies. Such estimates depend on assumptions covering many factors, including population growth, food demand, demand for alternative uses of biomass, and demand for transport fuel.

The higher the future fuel demand, the harder it will be for biofuels (or any energy source) to fully meet this demand. Given the WEO 2004's projection of transport fuel demand (IEA, 2004a), and the range of biofuels production potentials estimated in the reviewed studies, it seems reasonable to conclude that at least 20% of future transport fuel demand, and possibly much more, could be met by biofuels in the 2050 time frame. Whether this can be done cost effectively is another matter. Other concerns include the effects of intensive biofuels production on ecosystems and the possible effects of developing genetically modified organisms. The latter might be important for improving productivity and lowering costs, but is controversial.

figure 6.

Biofuels: Cost per Tonne of CO2-equivalent Emissions Reduction, Current and Projected

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Essential long-term technologiesElectric and Hybrid Vehicle Systems: Hybrid vehicles are nearly commercial, but substantial cost reductions are still needed for these vehicles to eventually become “standard equipment” on new light-duty and heavy-duty road vehicles. Improvements that allow systems to provide greater power while preserving the fuel efficiency benefit are also needed. Purely electric vehicles and “pluggable” hybrid electric vehicles (which can be recharged using external sources of electricity) are unlikely to become commercial without improvements in batteries (below).

Fuel Cell Systems: Although much R&D and testing of fuel-cell propulsion systems for vehicles is underway world wide, these systems are still in the early stages of development. Needed advances include greater power density, less costly and lighter materials, and streamlined system designs, the ability to mass-produce propulsion systems, and improvements in system reliability and in ability to handle real-world driving conditions.

Electricity Storage Technologies: The energy density of batteries remains relatively low. Better batteries with higher energy storage density at lower cost will be important to hybrid vehicles, electric vehicles, and probably fuel-cell vehicles as well. (The latter are likely to include regenerative breaking and even full hybrid systems for maximum efficiency.) Fundamental research is focusing increasingly on alternatives to batteries, such as ultra-capacitors and flywheels. A major breakthrough in one of these areas will provide an important boost to virtually all “next-generation” vehicle technologies.

Hydrogen Storage Technologies: As mentioned above for batteries, a major shortcoming of advanced vehicle technologies, compared with today’s conventional vehicles, is the need for energy storage on board the vehicle. For hydrogen and electric vehicles, the required storage volume may be twice the size of that used in today's gasoline-powered vehicles, for a similar driving range. New hydrogen storage systems, involving much higher pressures or dissolution in a ceramic matrix, are being researched with the hope that, eventually, much higher storage densities can be achieved.

Hydrogen Production and Distribution Technologies: A key consideration “upstream” of hydrogen-powered vehicles will be where this hydrogen comes from and how it is delivered to vehicles. There are many possibilities, ranging from reforming hydrogen on-board vehicles to producing it at fuelling stations (from natural gas or electricity) to producing it at central stations and shipping it to fuelling stations using trucks or pipelines. All options have strengths and weaknesses and need to be tested and compared, although some approaches, such as reforming hydrogen from natural gas without accompanying CO2 capture and storage, clearly will not result in near-zero upstream emissions. Even for zero-emissions options (such as electrolysis using renewably-generated electricity), it is unclear whether a zero-emissions approach to producing hydrogen for transport makes sense when there is still the opportunity to replace non-zero-emissions generation of electricity for other purposes. Integrated system studies of transitions to zero-emission electricity systems are needed to address this question.

Cellulosic Ethanol Production Technologies: Today, most ethanol in IEA countries is produced from starch or sugar crops. Much greater overall efficiency, and lower greenhouse gas emissions, could be achieved if the cellulosic parts of plants (or plants composed mainly of cellulose) could be converted to alcohol. A variety of approaches are being researched to do this, and to increase the net efficiency and lower the costs of known processes. Approaches include acid hydrolysis and enzymatic hydrolysis. The concept of “bio-refineries” is being developed, whereby industrial plants are designed to make use of all parts of a plant (sugar, starch, and cellulose), and co-products are used to the maximum extent possible. Resulting products can include fuels, chemicals, plastics and electricity. This approach could reduce net costs for ethanol production substantially. It could even reduce net CO2 emissions to below zero, if, for example, co-generated electricity displaced high-emissions electricity from other sources.

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In the nearer term, through 2020, the most cost-effective liquid biofuel world wide is likely to be ethanol produced from sugar cane, with production taking place in warm climates, particularly in developing countries where costs of production are low. For example, ethanol produced from sugar cane in Brazil is cost-competitive with gasoline in that country (excluding taxes and taking into account differences in energy content per unit volume). One of the studies reviewed in IEA, 2004c, estimates that, by 2020, 10% of the world’s gasoline consumption could be displaced cost-effectively by ethanol produced from sugar cane (and molasses). The countries and regions with abundant sugar cane do not typically have very high levels of gasoline demand, however, so reaching 10% globally would likely require a large-scale international trade in ethanol, which does not yet exist.

Vehicle efficiencyJust as for short and medium-term reductions in CO2 emissions, a key element of the ultimate goal – a sustainable, very-low-emissions transport system – will be the efficiency of vehicles.

If hydrogen or electricity-powered vehicles become the norm, average vehicle energy consumption per kilometre of travel will likely be half of what it is today, or even lower. Even without fuel cells, it appears feasible to reach a 30-50% reduction in average energy consumption per kilometre with hybrid-electric engines and other advanced technologies. Not only will this be feasible, but it will also be necessary in order to optimise vehicle design and lessen production costs. For both electric and fuel-cell vehicles, the smaller the power system and the energy storage requirements, the less expensive vehicles will be to produce (since batteries and fuel-cell system components are expensive, and are sized based on vehicle energy requirements). In addition, with lower energy demand, vehicles will be able to travel farther per fuelling, and their fuel costs per kilometre will be much lower. All of these improvements will be central to the success of advanced vehicles.

Some efficiency measures can be taken in incremental steps over the next decade, with existing vehicles (including hybrid-electric vehicles). These will also provide benefits for “next generation” vehicles. They include:

l Improved drive-train efficiency and the introduction of more electric-drive-train components, such as “drive-by-wire” (fully electric) steering.

l Hybrid-electric propulsion systems (with many components, such as motors and controllers, also likely to be used in fuel-cell vehicles).

l Regenerative braking.

l Lightweight materials (including very advanced materials such as composites and carbon-fibre-based materials).

l More efficient accessory equipment (such as air conditioners).

l Low-rolling-resistance tyres.

All of these technologies will likely be needed for future electric or fuel-cell vehicles; all are available, to some extent, today. Therefore, there really is no need to wait until advanced propulsion systems are commercial to begin building other

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efficient components into new vehicles. In fact, waiting for fuel cells to solve the transport emissions problem would be unwise because of the remaining time required for technological improvements and dramatic cost reductions to occur and the relatively rapid turnover of vehicle stocks. As was mentioned earlier, over the next 50 years, the entire vehicle stock in IEA countries will be replaced two to three times, offering numerous opportunities to reduce transport sector emissions by bringing efficient, low-emissions technology into play. Above all, whether vehicles are powered by hydrogen, electricity or liquid fuels (or some combination) in 2050, if their demand for fuel can be cut by half or more, the job of achieving a near-zero-emissions system will be that much easier.

Intelligent infrastructure

Views of future vehicles and transport systems often feature “intelligent” infrastructure. There are many longer-term technologies under development for use in such systems, but there is no need to wait for these – several types of “intelligent” infrastructure are already in use or could be put into place over the next decade. These include global positioning systems (GPSs) in vehicles, roadside traffic information systems, and systems offering real-time schedule information for public transit systems. Advances in technologies such as these will improve vehicle driving efficiency in the same way as the automation and computerisation of engines has improved engine efficiency. But much more is possible. Some areas where both near-term and long-term objectives can be met include:

l Intelligent infrastructure for vehicles and systems. Intelligent infrastructure technologies can play an important role, not just for vehicles, but also for the manner in which transport systems are built and operated. Transport systems could eventually rely on external controls strong enough to take over the driving function (for example, on highways). In theory, this would improve both traffic flow and safety. At a much more basic level, the introduction into vehicles of real-time displays of traffic information and maps is already helping drivers avoid congested areas within cities, thus helping to reduce congestion itself. This not only improves travel times but also reduces fuel consumption. Such systems can also be linked with congestion charging to provide real-time pricing that discourages less valuable trips, making way for more valuable ones (as reflected in willingness to pay the charge). Simple congestion charging is beginning to catch on in Singapore, London and some other cities. Looking ahead, more advanced systems will allow a more seamless approach to be taken over wider areas, with better information provided to drivers.

l Technologies for public transit systems. Many new technologies are under development that could lead to much improved public transit services and therefore more demand for them. For example, the use of GPSs to track buses allows bus operators to dispatch buses more efficiently and has led to the introduction of real-time information displays at bus stops that indicate the arrival time of the next bus. Similar displays can be used within buses to indicate upcoming stops. Another intelligent system being introduced in many cities is traffic signal priority for buses, which increases the probability that a bus will have a green light when it arrives at an intersection, speeding trips.

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These improvements are part of a broad array of transit system enhancements that, collectively, have come to be called "bus rapid transit". These systems feature dedicated bus lanes, pre-payment of fares, rapid passenger boarding and alighting, and high-capacity, comfortable buses. Such systems are relatively inexpensive and are being put into place even in some poorer developing countries. If such systems were adopted widely, growth in demand for personal vehicle transport could be slowed dramatically. In addition, the growth in revenues flowing from much higher use of public transit systems would make it easier for transit companies to pay for advanced bus technologies, such as hybrid buses and, eventually, fuel- cell systems. But getting these advanced transit systems into place around the world is proving to be very challenging. This topic is discussed in detail in IEA’s book, Bus Systems for the Future: Achieving Sustainable transport Worlwide (2002).

l Telematics for movement of goods. Intelligent infrastructure technologies can be used to make the movement of goods much more efficient than it is today. One area of improvement is in the manner in which trucks are dispatched and routed around cities when making deliveries. Many trucking systems have begun using telematics (computerised tracking systems) to ensure that the shortest route is taken and to select the best-located vehicles to handle a new delivery or pickup en-route. Having individual trucking companies handle more types of goods could also increase the efficiency of truck deliveries and pickups; this could be facilitated with telematics. Finally, greater ability to track goods would help multimodal distribution centres, where goods are stored and transferred from some modes (such as trains) to others (such as trucks), provide "just-in-time" service. While some of these improvements are being adopted by businesses around IEA countries, more could be done to encourage widespread use of telematics for freight.

Transition steps to a sustainable transport sytem

Only one large transition has thus far taken place in energy supply for the transport sector. It is the transition from muscle power to petroleum fuel (except for trains, which used coal for about 100 years before switching to petroleum and electricity). Some minor transitions – to natural gas or LPG, for example – have taken place locally, but on a world-wide scale they have been negligible. From this perspective, getting to a transport future characterised by a completely different fuel or fuels will not be easy. There are quite a number of challenges. Major ones include:

l Introduction of efficient vehicles capable of running on very-low-CO2-emissions fuel, with high efficiency, at a cost acceptable to consumers and governments and with acceptable performance.

l Introduction of very-low-emissions fuels and provision of such fuels in sufficient quantity to meet the energy demands of the associated vehicles as the stock of such vehicles grows over time.

l Provision of necessary infrastructure to produce and store the appropriate fuels and to transport these fuels to the point of fuelling.

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All three of these challenges must be met more-or-less simultaneously, in a market situation where there are large market risks for all stakeholders (the “chicken-and-egg” problem – see the section, “Putting It All Together”).

Potential steps and timing for the emergence of a sustainable, near-zero-GHG-emissions transport system are outlined in Figure 7. As it indicates, developing the necessary infrastructure for future vehicle and fuel systems, and completing a full transition to these new systems, could require a half-century or more. But it cannot begin in earnest until a pathway becomes clear and many questions are answered. Thus it is essential that R&D, as well as demonstration programmes, be pursued intensely in the near term so as to position countries to begin the long trek toward a sustainable transport system.

The dates shown in the chart are indicative, but certain time requirements are fairly fixed. There will most likely be at least 10 years, and perhaps 20, between the first commercial appearance of a fuel-cell or electric vehicle and the date by which nearly all new vehicles are of this type. Given the tremendous investment required for new production capacity, the six-to-eight year product life cycle (the time between the introduction of a new model and its eventual replacement), and the inertia that must be overcome to change systems and infrastructure, even 20 years may be optimistic for such a transition. Moreover, once all new vehicles are of the new technology type, it will take an additional 15 to 20 years before all vehicles on the road are of this type, as the existing stock of vehicles turns over. Given the amount of work that may be necessary before a serious transition can begin, this process may require many decades.

For commercial sales of fuel-cell or electric vehicles to begin in earnest by (or possibly before) 2030, a host of technologies will need intensive R&D and demonstration over the next 20 to 30 years. The more of them that can be incorporated into new vehicles over the next 10 to 15 years, the sooner that experience with these technologies can be gained, and costs reduced, and the easier the overall transition will be. Progress will be important in such areas as electrification of vehicle drive trains, hybridisation, improved batteries (or other forms of energy storage on hybrid vehicles), and increased blending of liquid biofuels with petroleum fuels in today’s vehicles.

Certain advances will, however, most likely require at least another 10 to 20 years before they can be incorporated into commercial vehicles. Apart from development of fuel-cell systems, the most important areas for work include planning and development of a distribution and fuelling system for hydrogen and/or electricity (including development of adequate zero-emissions sources of each), development of far better and cheaper on-board energy storage systems (for hydrogen as well as electricity), advances in technologies (such as lightweight materials) that can make conventional and future vehicles much more efficient, and improvements and cost reductions in production processes for cellulosic ethanol and other advanced biofuels. Research and development needs over the next 30 years are outlined later in the paper, after a review of some potential transition scenarios.

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figure 7.Steps and Sequence for a Transition to a Near-zero-emissions

Transport System Over the Long Term

Virtually all transport modes (except possibly air travel) are dominated by hydrogen-fuel-cell or electric vehicles, or possibly conventional internal-combustion-engine (ICE) vehicles fuelled with near-zero-GHG-emissions biofuels.

Abundant supply of near-zero-emissions electricity and hydrogen, from renewable or nuclear sources or from fossil-fuel sources with accompanying CO2 capture and storage. Widespread commercial availability of biomass to produce low-cost, very- low-GHG-emissions liquid biofuels or hydrogen.

Vehicles use one-half to two-thirds less energy per kilometre than current vehicles. Widespread adoption of hybrid-electric drive systems, lightweight materials and better aerodynamics.

A low-emissions transport system…

Commercialisation or near-commercialisation of at least one of the three key technology groups: fuel-cell and/or electric vehicles, advanced efficiency technologies (such as hybrid vehicles), and advanced biofuels.

Substantial improvements in the efficiency of conventional vehicles using available, in some cases low-cost, incremental technologies. A reduction of one-third to one-half in energy use per kilometre should be possible with hybridisation.

Initial development of a hydrogen or electric fuelling structure, at least in several "model cities" across IEA countries.

Increased use of conventional and introduction of advanced biofuels. Initially low-level blends with petroleum fuels; higher blends as production capacity grows. Sufficient experience and scale economies are gained to significantly lower costs by 2030.

Phase I2000-2030 ?

The “mass market” of consumers comes to accept the new propulsion technologies and demand for vehicles with them grows rapidly. The combined market share of these vehicles also rises rapidly.

Major investments are made in production facilities for vehicles and fuels and in fuel distribution infrastructure. Large-scale production leads to further learning, scale economies and cost reductions. Upstream changes are made to gradually bring the fuel supply chain toward a zero-emissions state.

Vehicle efficiency continues to improve with use of the new propulsion systems, with a target of reducing energy use per kilometre by 33% beyond that achieved in Phase I. Efficiency reaches one-third that of today’s vehicles by mid-century.

The benefits of long-term transport planning and "intelligent" transport systems begin to manifest themselves in substantial reductions in vehicle travel, at least compared with a reference case level.

Nearly all new vehicles use the final type(s) of propulsion system – electric, fuel-cell, or advanced hybrid ICE/electric.

The total, in-use stock of vehicles becomes dominated by near-zero-emissions vehicles, with a 20 to 30 year time lag after most new vehicles are of this type.

The benefits of 50 years of efforts to introduce technologies and policies to reduce vehicle travel demand are fully reflected in practices of the day: information technologies substitute for travel, more efficient travel modes are increasingly used, land use practices are vastly more travel-efficient, and so on.

A fairly complete system of fuel distribution for hydrogen and/or electricity to retail outlets is in place in most IEA countries. Fuel supplied has near-zero GHG emissions on a well-to-wheels basis.

...and how to get there...

Phase II2030-2050 ?

Final PhasePost-2050 ?

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Scenarios of potential CO2 emissions reductionsusing near-term and longer-term actions

The IEA’s energy scenarios are reported in its World Energy Outlook 2004 (WEO; see box). These project energy use and related factors out to 2030 for a Reference Scenario and an Alternative Policy Scenario.

This paper presents two scenarios for transport (and in particular, for light-duty vehicles) that build on the WEO. Because they are intended to show how very aggressive actions in both the near term and the long term are important to achieving a sustainable transport future, these scenarios incorporate measures beyond those included in the WEO. The projections look at the potential for using new technologies and incorporate a "what-if" analysis of the changes in CO2 emissions and oil use that could result if such technologies as hybrid and fuel-cell vehicles were adopted fairly rapidly around the world.

The assessment below compares one scenario containing only longer-term actions with another scenario that incorporates both near- and longer-term actions. The assumptions used to generate these two scenarios are shown in Table 3.

The table shows assumptions for trends, over the next 30 years (continuing to some extent out to 2050), in four factors affecting vehicle energy use and emissions. The first trend is improving fuel economy, which reflects both technical improvements and changes in the vehicle sales mix (e.g., as a result of policies discouraging purchase of larger, heavier and more-powerful vehicles). The others are increasing sales of hybrid-electric vehicles; increasing blending of biofuels in gasoline and diesel fuel; and slowing growth in light-duty vehicle travel.

In addition to these nearer-term, incremental actions, one longer-term action is characterised: fuel-cell vehicles are introduced around 2020 and grow in sales until they account for virtually all new light-duty vehicle sales in 2050 (and therefore displace all other types of light-duty vehicles, including hybrid vehicles, which show zero sales in 2050). For the fuel-cell vehicles, it is assumed that hydrogen (shown in the table) is produced initially using feedstocks and processes that result in fairly high levels of GHG emissions, but that by 2050 it is produced with net, well-to-wheels emissions 75% below those associated with gasoline vehicles. (This could occur, for example, if most hydrogen were produced from renewable energy sources but some were still produced from natural gas.)

A spreadsheet model developed by the IEA, "Energy Technology Perspectives", was used to convert the assumptions in Table 3 into three projections: a reference case (with no measures included, and calibrated to the WEO); a case with only the longer-term actions (market penetration of fuel-cell vehicles and

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accompanying hydrogen production); and a third case that adds to this all of the nearer-term measures shown in Table 3. For the long-term and combined long- and near-term cases, world emissions of greenhouse gases from light-duty vehicles were calculated, with the measures applied to both OECD and non-OECD regions (the latter with a five-year lag behind OECD countries).The resulting projections through 2050 are shown in Figure 8, in terms of well-to-wheels GHG emissions. These represent GHG emissions directly from vehicles plus emissions from upstream activities related to production of all fuels.

The projections indicate that, in the reference case, GHG emissions from light-duty vehicles increase by more than 100% between 2000 and 2050. In contrast, with strong uptake of fuel-cell vehicles, emissions from these vehicles level off between 2030 and 2040, and begin dropping thereafter, returning to near their 2000 level by 2050. When the nearer-term measures are added, a much greater reduction in GHG emissions is achieved, beginning much sooner. Emissions peak in 2020 and fall to about half of their 2000 level by 2050.

The IEA’s World Energy Outlook 2004

The World Energy Outlook 2004 (WEO) contains IEA’s projections for future energy use and related trends out to 2030. It reports both a Reference Scenario and an Alternative Policy Scenario. The projections presented in this paper should be understood in the context of these two IEA scenarios.

The WEO Reference Scenario makes projections based on current trends. It includes new policies and their potential effects only if the policies were adopted by mid-2004. It does not include any policy initiatives that might be adopted in the future. It assumes gradual technology evolution, not rapid changes in direction that would most likely require strong policy interventions to achieve.

The WEO Alternative Policy Scenario analyses how the global energy market could evolve were countries around the world to adopt a set of policies and measures that they are currently considering or might reasonably be expected to implement over the projection period. The purpose of this scenario is to provide insights into how effective these policies might be in addressing environmental and energy security concerns, and the implications for energy supply, trade and investment.

The Alternative Policy Scenario includes measures such as continued application of policies to improve fuel economy in OECD regions, increased adoption of biofuels in most regions, and investments in transit systems in developing countries. The scenario results in a significant reduction in oil use and CO2 emissions from transport, world wide, by 2030 – both are about 11% lower in 2030 than in the Reference Scenario.

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Not only do the nearer-term measures help pave the way for longer-term measures (e.g., hybrid vehicles provide key components for electric and fuel-cell vehicles), but they can also provide a much steeper reduction path for greenhouse gas emissions from transport.

Although travel modes other than light-duty vehicles are not shown in this example, similar results can be expected for other modes if similar efficiency improvements, travel reductions and use of biofuels can be achieved.

Note: hybrid sales share in 2050 (0%) reflects growth in fuel-cell vehicle sales to 100% of the market.

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figure 8.Two Possible Scenarios for Greenhouse Gas Emissions Reduction in Light-duty Vehicles

table 3. Example Scenarios: Assumptions Regarding Nearer-term

and Longer-term Actions and Their Effects on Light-duty Vehicles

2020 2030 2040 2050

Near-term Actions

Reduction in fuel use per kilometre, gasoline/diesel vehicles (compared with a reference case)

15% 25% 30% 35%

Market (sales) share of hybrid vehicles 20% 35% 50% 0%

Blend share in gasoline and diesel fuel of biofuels having 50% lower well-to-wheelsGHG emissions per kilometre than gasoline

10% 15% 20% 25%

Reduction in growth of light-duty-vehicle travel (compared with a reference case)

5% 10% 15% 20%

Long-term Actions

Market (sales) share of fuel-cell vehicles 1% 10% 50% 100%

Hydrogen – reduction in well-to-wheelsGHG emissions associated with using hydrogen in vehicles (compared with well-to-wheels emissions associated with gasoline vehicles)

10% 25% 50% 75%

Challenges and next steps: implicationsfor research and development

Current R&DAs pointed out throughout this paper, nearly all technologies needed for a low-emissions transport system – fuel cells, hydrogen and electricity storage, fuel efficiency technologies, cellulosic ethanol production, and more – exist today. Furthermore, many of these technologies can be deployed over the next ten years to begin achieving significant reductions in oil use and CO2 emissions.

The main longer-term objectives of publicly funded transport technology R&D are to improve advanced technologies and make them less expensive. Many IEA countries are working in this area. Automakers in the United States, the European Union and Japan are receiving substantial government funding to assist them with research on fuel-cell vehicles and on advanced efficiency technologies such as hybrid electric drive trains. The United States and Canada have extensive programs to develop production processes for cellulosic ethanol, and several European countries are putting considerable effort into biodiesel.

An example of a comprehensive programme is the FreedomCAR program launched recently in the United States. It has new initiatives in the areas of (1) batteries, electronics and motors, (2) fuel-cell vehicles operating on hydrogen, and (3) improved aerodynamics, reduced tire rolling resistance, lighter-weight materials and better vehicle system optimisation8. Other U.S. R&D and demonstration activities include research activities under the 21st Century Truck program (engines, diesel emission controls, aerodynamics) and demonstrations of the viability of powering transit buses with fuel cells. Substantial activities are also underway aimed at helping cities deploy alternative fuel vehicles and associated fuelling infrastructure. The National Renewable Energy Laboratory leads a major effort to develop cellulosic ethanol conversion technologies and Oak Ridge National Laboratory leads the effort to develop feedstocks (and improve their production efficiency) for this program.

The European Union carries out a series of Research Framework Programmes. Under the Fifth Research, Technological Development and Demonstration Framework Programme, a number of projects are supporting research or demonstrations of new technologies, including fuel-cell buses. The CUTE programme, for example, involves demonstrations in nine cities. The CIVITAS programme features a range of technological and traffic-management-efficiency projects in 16 cities. The Sixth Framework Programme(2002-2006), which has just been launched, contains significant funding for technology R&D into clean energy sources and their integration into the energy system; energy savings and efficiency; alternative motor fuels; fuel cells; hydrogen technologies; renewable energy technologies; and novel propulsion systems9.

8. For information on DOE Freedom Car and other programmes, see http://www.eere.energy.gov/vehiclesandfuels/.

9. For information on these and other EU Sixth Framework programmes, see http://europa.eu.int/comm/research/fp6/index_en.html.

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Most of the 15 EU Member States also have major transport research programmes of their own. For example, in the United Kingdom these include the Foundation Programme (for accelerating development of new and emerging technologies), the Foresight Vehicle Programme, and the Powershift and Clean UP programmes.

Applied R&D needsThe IEA has compiled the following list of key applied R&D and demonstration needs for transport (plus, in some cases, needs for assistance with implementation):

l Sustained, long-term improvement in vehicle fuel economy at acceptable cost will require successful R&D on materials cost reduction, energy storage devices (such as batteries, ultracapacitors, hydraulics and flywheels), fuel cells, power electronics, lightweight materials, engine technology, aerodynamics, tyres and auxiliary power units. Understanding consumers’ demands and their willingness to accept various changes in vehicle attributes is also an important area for research.

l Improvement in system efficiencies will require development of automated transport infrastructure (such as electronic/infra-red communication among vehicles and between vehicles and infrastructure and satellite navigation systems).

l Broad reliance on low- and zero-emissions fuels will require successful R&D on biomass production and processing, and development of low-cost technologies for the production and storage of hydrogen.

l Research and development on improvements to multi-fuel distribution and storage systems will lower both costs and the barriers to fuel choices.

l A detailed assessment of the potential role of cellulosic ethanol and other advanced biofuels conversion technologies is needed. This assessment must take into account various estimates for feedstock requirements and for land availability to grow these, and should be done for all OECD countries as well as other major crop-growing countries. The assessment should also investigate the potential effects of expanded production of energy crops on food-crop prices and on the environment (from changes in farming practice).

l Research and development is needed on improvements in the ability to blend biofuels with gasoline and diesel fuels and to replace these fuels entirely. Widespread introduction of vehicles capable of running on high-blend fuels (as is happening in the United States and Brazil) will offer scale economies and learning, lowering the cost of producing such vehicles.

l Continued development of options for the capture and storage of CO2 will enable fossil fuels to be used as feedstocks in a very-low-GHG-emissions transport system. The possibility of capturing CO2 from the exhaust stream of heavy trucks, diesel locomotives and ships should also be given more attention.

l Research into the potential applications for aircraft of biofuels and hydrogen-powered jet engines deserves more attention.

l Detailed modelling and analysis are needed to determine the optimal allocation of the key fuels – biomass, electricity and hydrogen – between the transport and stationary sectors. Whether the "marginal" hectare of land or kilowatt of generating capacity for near-zero-emissions electricity saves more carbon when it displaces other energy supply for mobile applications or for stationary purposes is an important, and relatively unexplored, question.

Basic research needsBasic research needs relevant to transport include:

l Nano-technologies. Nano-technologies can have broad utility for transport, especially for the storage of hydrogen. Special attention should be paid to the question of whether this technology can meet the energy density requirements that hold for vehicle applications.

l Materials research. High strength and low weight is the combination that is important for materials used in vehicles. The total materials life cycle must be addressed to make sure that the reduction in vehicular energy consumption is not offset by increases in other stages of the material life cycle.

l Basic electrochemistry. Creative, "trial and error" research is needed that could lead to wholly new battery technologies. For this exploratory research, no guarantees for the outcome can be given. Still, this type of research must go on.

l Energy supply capacities. Research is needed into whether the domestic and world-wide production capacity for clean and renewable energy carriers is sufficient to fulfil all world energy needs (of which transport is just part). What are the priorities for allocating available clean energy?

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Beyond R&D

This paper covers a wide range of technologies that can contribute to the reduction of greenhouse gas emissions from transport in the near term and the development of a near-zero-emissions transport sector in the long term. For the longer term, much of what is needed appears to be more government and industry R&D. As described in this section, much of what is needed is applied, not basic, research that is relevant to existing but non-commercial technologies. Resulting improvements in efficiencies and reductions in cost can speed market uptake of such technologies. In addition, the market and government policy context will be important in encouraging the use of such technology.

But beyond R&D, what is needed is more direct support for bringing technologies to a commercial state and introducing them into the marketplace. For example, substantial improvements in vehicle fuel economy can be achieved by applying incremental technology improvements to today’s vehicles. This can be accomplished without much additional R&D – but steps will be needed to encourage full use of existing technologies, and to avoid having the benefits of these technologies offset by increases in vehicle size, weight and power.

Historically, the trend has not been promising. The many technical improvements applied to vehicles over the past ten years have mostly been lost through increases in average vehicle size, weight, and power. What net efficiency gains have occurred have been overwhelmed by growth in transport overall, ensuring that greenhouse gas emissions continue to rise. Such a trend is even worse in developing countries, where technology tends to be older and private transport growth faster.

For these reasons the technology issues discussion in this paper need to be addressed in a systems context, where policies support the commercialisation and adoption of new transport technologies. To use such a systematic approach, governments will need to take steps falling into such broad categories such as:

l Adjusting rules.l Setting standards and regulations.l Amending planning guidelines.l Providing financial incentives.

Such steps will help promote commercialisation of technologies and encourage manufacturers to make the needed (but risky) investments. Support also must be geared to making sure that new fuels are widely available, that fuel systems and vehicles themselves are very safe, that they perform as well as or better than conventional vehicles, and that they are cost competitive. If consumers are confident that they will benefit from switching, and costs are not excessive, a “mass-migration” could occur as quickly as manufacturers can develop and produce new models.

Getting supporting financial incentives in place is also clearly important. From 1975 through 1985, a period of supply shocks, high oil prices and strong policies to promote efficiency, vehicle efficiency improved in most countries. Since 1985, as real fuel prices have declined significantly and without the right fiscal incentives, consumers have become disinterested in efficiency and have shifted to buying much larger, more powerful vehicles. One benchmark of good practice is to adjust fiscal measures to reflect the GHG-emissions-reduction potential of each fuel type (as is occurring with vehicle taxation and fuel excise duties in some countries, such as the United Kingdom).

Putting it all together: near-term stepstoward both near and long-term goals

Regardless of the final, low-emissions (and low-petroleum) transport system that ultimately emerges – whether based on hydrogen fuel-cell propulsion systems, electric propulsion and powertrain systems, or liquid biofuels, or possibly some mix of the three, depending on the region and country – certain actions can be undertaken over the next decade that will benefit them all:

l Securing substantial increases in vehicle efficiency from incremental improvements and existing technologies, particularly in the areas of light-weighting, hybridisation and increasing use of electric drive systems.

l Increasing deployment of intelligent infrastructure and other technologies that assist individuals and companies in finding alternatives to vehicle travel (and to truck-based movement of goods). Increasing investment in transit systems and efficient freight modes such as rail and shipping are also important. Assisting developing countries in improving their transport systems, before cars become the dominant mode of travel, can yield particularly large global benefits forCO2 emissions reduction, while improving mobility for millions of people.

l Increasing use of bio-components in transport fuels, and introducing advanced conversion technologies and feedstocks that allow a steady reduction in the well-to-wheels GHG emissions from these fuels. Even if a clean transport system features vehicles powered by hydrogen or directly by electricity, these energy carriers can be produced from biomass, so experience gained today will provide dividends in the future.

Not only can steps taken in these areas help to speed the eventual transition to a sustainable transport system, but they can also provide substantial reductions in oil use and CO2 emissions in their own right. In the scenarios shown earlier, more than 50% of the reduction in CO2-equivalent GHG emissions from light-duty vehicles seen through 2050 stems from near-term measures.

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At the same time, the adoption of technologies and policies to dampen vehicle travel growth must be much more strongly encouraged. High-quality mass transit, inter-city transport and “intelligent” infrastructure will be necessary if aggregate transport levels are to be reduced through greater use of lower-emissions modes of transport. For developing countries, similar support with a different focus will be necessary. Developing countries have very different markets, cost structures, and needs. The adoption of local fuel sources and lower-technology, clean mass transit systems may be most appropriate (IEA, 2002).

For more detailed policy analysis, see Saving Oil and Reducing CO2 Emissions in Transport: Options and Strategies (IEA,2001); Policy Instruments for Achieving Environmentally Sustainable Transport (OECD, 2002a); Bus Systems for the Future: Achieving Sustainable Transport Worldwide (IEA, 2002); Transport Logistics: Shared Solutions to Common Challenges (OECD, 2002b); and Transports urbains durables: la mise en oeuvre des politiques: Rapport final (ECMT, 2004).

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On the other hand, some steps are needed to prepare for the long-term transition itself. Apart from the R&D and technology-related needs above, there are several more general options that policymakers should consider:

l Beyond the need to develop technologies and bring down their costs, perhaps the single greatest barrier to an energy future featuring significantly new fuels and systems of vehicle propulsion will be the "chicken and egg" problem. This refers to the inherent problem of convincing vehicle manufacturers to produce and sell new vehicle types when there is no fuel available to run them on, and simultaneously convincing fuel providers to provide the necessary fuel when there are few vehicles yet on the road that use the fuel. A third part of the problem comes in convincing consumers to buy both the vehicles and fuel if made available. This set of inter-related requirements has proven a huge barrier to many past efforts to promote alternative fuels. Governments must be prepared to take strong measures, such as offering price incentives, providing loan guarantees (to reduce risks to vehicle producers and fuel providers), and investing directly in infrastructure, if they are to induce a rapid transition to new vehicle and fuel systems.

l Although some things can be done ahead of time, there will come a point (probably sometime between 2010 and 2030) when IEA governments will need to work together to initiate and manage this transition. Much co-operative work will also be needed before a "full-blown" transition begins. One of the most important things early in this transition will be the testing of various vehicle, fuel, and infrastructure configurations. Initial testing and demonstration work is already underway in many countries. To maximise learning and avoid repetition of effort, it will be necessary for countries to co-ordinate these efforts. For example, a ten-city trial involving about three fuel-cell buses in each city is currently underway in Europe. A study is co-ordinating this effort across the ten cities. If other countries or cities are interested in running trials, it is imperative that they learn from the current trials and undertake a project that is complementary or otherwise builds on the learning that will come from the current effort.

l The amount of energy required to fuel even a much more efficient transport system in 2050 and beyond will be formidable – perhaps 40 exajoules or more for just road transport in IEA countries (assuming the full adoption of very efficient fuel-cell vehicles). To improve the chances that very-low-GHG-emissions fuel can be provided for all transport needs, governments will need to redouble their efforts to identify and implement measures to dampen growth in travel demand, particularly demand for personal vehicle travel, which is the most energy-intensive travel mode.

l Along the same lines, countries will need to conduct detailed analysis, individually and together, to better understand the energy, emissions and cost implications of different energy future scenarios and transition pathways. For example, it may be possible to achieve nearly as much GHG emissions reduction through 2030 (and perhaps even through 2050) using a combination of improved vehicle fuel economy (including hybridisation), increased use of biofuels, and slower growth in travel demand, as from a transition to fuel-cell or electric vehicles (though

ultimately it may not be possible to get to a zero-CO2-emissions system with this pathway). In any case, it may be possible to delay the point before which a major transition must begin through aggressive use of these other options. Such tradeoffs and choices are still poorly understood and deserve more co-operative research. Otherwise there is a strong risk that there will be mis-timed investments and over- or under-investment in some options and pathways.

l And of course, as with all "sustainable" technologies whose development and adoption are not adequately supported or stimulated by the market, policies that internalise the cost of using oil and emitting greenhouse gases into the cost of all competing technologies would be a powerful, "no-regrets" policy option to produce a transport system with low greenhouse gas emissions while improving energy security and supporting economic growth.

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