Modelling Energy Technology and Policy 1 Role of alternative fuels and drive systems in the transportation sector
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1 Modelling Energy Technology and Policy 1 Role of alternative fuels and drive systems in the transportation sector Dolf Gielen 2, Lew Fulton, Jacek Podkanski, Giorgio Simbolotti and Fridtjof Unander International Energy Agency, Paris Tel ; Fax ; dolf.gielen@iea.org Abstract Enhanced supply security and CO 2 policies can result in substantial changes in the transportation fuel market by 2050, even at oil prices of 29 to 35 USD/bbl. IEA analysis suggests that synfuels from coal, natural gas and biomass can become technologically and economically feasible substitutes for oil refinery products, while energy efficiency measures have the potential to reduce oil demand even further. The share of transportation fuels from conventional oil can decline to 40% by 2050, if proper new policies are introduced. Hydrogen can play an important role if the capital cost can be brought down sufficiently. 1 Introduction Energy policies are aiming for an environmentally acceptable, secure and affordable energy supply. This combination poses a challenge, and important changes on both the supply side and the demand side will be needed in the coming decades. New energy technologies will be needed. This paper discusses the future role of alternative fuels and drive systems 3 in the transportation sector. The analysis covers issues of great importance for energy policy makers such as supply security and CO 2 emissions. Special attention is paid to the competition between hydrogen and biofuels, and to the need for CO 2 capture and storage (CCS) for transportation fuels production. The analysis illustrates how partial equilibrium models such as the ETP-MARKAL model can be used for energy policy analysis. This study has been carried out within the framework of the activities of the IEA Hydrogen Coordination Group. This analysis is based on the Energy Technology Perspectives (ETP) model of the International Energy Agency. This is a MARKAL-type partial equilibrium model of energy supply and demand (Loulou et al., 2004). The ETP model covers the world split in 15 regions with different natural resource, economic activity, and energy policy goals. Regional differences, e.g. in terms of energy trading and import dependency are accounted for. This affects the perspectives of the technology options. The time period is The energy system is optimized in 5-year steps in a perfect foresight approach. The main result is a quantitative assessment of the potential role of emerging energy technologies. 2 The hydrogen contribution to energy policy targets The recent hike of oil prices has again raised the interest in oil alternatives. While the long-term projections of the IEA suggest an oil price between 29 and 35 USD/GJ for 2030 (IEA 2004a), the 1 Paper prepared for the Risø International Energy Conference Technologies for Sustainable Energy Development in the Long Term. Roskilde, Denmark, May. 2 Corresponding author 3 A drive system encompasses onboard fuel storage, the engine and the transmission from the engine to the wheels Risø-R-1517(EN) 247
2 potential to expand production in the Middle East and the impact of this uncertainty on oil prices is a source of concern. This expansion is critical to meet rising demand. Alternative drive systems and fuels can reduce the need for oil imports from the Middle East markedly. The analysis of oil alternatives focuses on transportation fuels because the transportation fuel market (including international marine bunkers) represents about 53% of the world refinery product demand. If refinery use, bitumen for asphalt and lubricants are included, the share of the transportation sector in the oil market rounds to 60%. This share is projected to increase further in the coming decades. Hydrogen (H 2 ) has received a lot of attention as a potential transportation fuel. Global governmental spending on hydrogen and fuel cells R&D is about 1 billion a year, which represents one eighth of the total public energy R&D budget in the IEA countries (IEA, 2004d). Hydrogen is not a primary energy carrier. It can be produced from natural gas, coal, biomass and electricity. Electricity, in turn, can be produced from many primary energy sources. The fact that oil is not needed and that various types of feedstock can be used for hydrogen production offers important benefits for energy diversification and supply security in case hydrogen is introduced as an oil product substitute. While hydrogen itself is a CO 2 -free energy carrier, the hydrogen-related emissions depend on the primary energy source and the hydrogen production process. Hydrogen production from fossil fuels with CO 2 capture and geological storage (CCS) could become a viable option if large-scale CCS will be proved to be technically and economically feasible in the next decade(s) (IEA, 2004b). Hydrogen from electrolysis is CO 2 -free if it is based on electricity from nuclear and renewable sources. It is evident that for the time being such electricity represents a small share of total electricity production and would be neither available nor sufficient for significant hydrogen production. Such CO 2 -free electricity must first go to the grid, possibly followed by hydrogen production at a later stage. The introduction of hydrogen in the transportation sector is to some extent linked to the introduction of fuel cell vehicles (FCV). Such vehicles would have efficiency two to three times as high as current internal combustion engine vehicles (ICEVs). Fuel cells however are not a precondition for hydrogen use. Hydrogen can be burned in conventional combustion engines as well with efficiency gains with respect to oil products. Yet hybrid cars allow a 20-40% efficiency gain, compared to conventional cars, depending on the drive cycle characteristics. Hydrogen hybrids would therefore increase the vehicle efficiency, compared to existing conventional ICEVs. While hybrid cars can be considered as a proven technology with limited additional cost, FCVs are currently much more expensive and significant technology improvements and time are required to make their cost economically competitive. In addition to the cost of the fuel cell engine, a major technical challenge is onboard hydrogen storage to allow the vehicle a reasonable driving range. Apart from passenger cars, delivery trucks and buses could represent niche markets for hydrogen-fuelled FCVs as they could stand higher investment cost due to the more intense use of the vehicles, and offer more space for hydrogen storage. Hydrogen could also be used as a fuel for airplanes with minor adjustments to the jet turbines. The main challenge here is the storage of liquid hydrogen. Hydrogen instead of jet kerosene would entail an efficiency penalty of 10-25%, and it would reduce the carrying capacity per airplane. Hydrogen would require flying at lower altitudes in order to avoid climate impacts of water emissions at higher altitudes. This increases the fuel consumption and flight time. Hydrogen is also considered as a CO 2 emission free fuel for stationary applications, either centralized or decentralized, in both the residential and industrial sectors. These options however are beyond the scope of this paper. Risø-R-1517(EN) 248
3 3 Alternative ways to meet energy policy targets in the transportation sector Hydrogen is not the only option to meet energy policy targets in the transportation sector. However, only a few options can meet the joint targets of enhanced supply security and CO 2 emissions reduction (figure 1, Gielen and Unander, 2005). Apart from hydrogen and biofuels, energy efficiency measures seem the only viable option. They can be combined with hydrogen and biofuels, for example if hybrid vehicles are used. However the energy efficiency of a hydrogen FCV will be higher than the efficiency of a hybrid vehicle. Supply Security benefits High Heavy oil Oil sands Oil shale FT-coal DME/MeOH coal Enhanced oil recovery Non-conventional oil + CCS FT-coal + CCS DME/MeOH coal + CCS Energy efficiency (e.g. hybrids) Hydrogen ICEs and FCVs (depending on the primary energy source) Bioethanol FT-biomass CO 2 -EOR Low Or none Refinery products from ME oil FT-natural gas CNG vehicles DME/MeOH natural gas FT-natural gas + CCS DME/MeOH natural gas + CCS Hydrogen from natural gas + CCS Emissions increase Low or no reduction Significant emissions reduction Figure 1: Transportation fuel supply options, and their contribution to energy policy targets FT Fischer-Tropsch. DME DiMethylEther. MeOH Methanol. CCS CO 2 capture and storage. ICE Internal Combustion Engine. FCV Fuel Cell Vehicle. A wide range of biofuels can be discerned such as established sugarcane ethanol, biodiesel from oil crops over lignocellulosic ethanol, and more speculative technologies such as Fischer-Tropsch synthesis to produce gasoline and diesel, and hydrothermal liquefaction. There is no single best option, and biofuel cost will depend on the production volumes, technological progress and the availability of feedstocks. A major advantage of biofuels is their compatibility with the current supply infrastructure, and the need for limited vehicle adjustments. It is clear that a non negligible potential exists for low-cost biofuels, but it is not yet clear how substantial this potential is. In 2003, world fuel ethanol production amounted to 28 billion litres. At 21.1 MJ/l (LHV), that equals 0.4 mb/d (about 0.5% of global oil consumption). The production is mainly concentrated in Brazil and the United States. Our preliminary estimate for sugar cane ethanol potential is a maximum of percent of world gasoline demand in 2050, at current projected gasoline demand levels in that year. This would require a very aggressive expansion of cane and cane ethanol production in those countries that grow cane. The primary biomass and the land that is needed for biofuels production can also be used for other purposes, e.g. biomass can be used for electricity production or for residential heating. Moreover Risø-R-1517(EN) 249
4 biomass plantations should not be expanded at the expense of existing forests and wetlands because of the CO 2 impact 4 and the environmental consequences of such expansion. Therefore, biofuels have various competitors for biomass and land use, as well as they have competitors (e.g., hydrogen) as transportation fuels. Given such complex interactions, an energy systems approach is needed for assessing different fuel and vehicle alternatives. Here we describe the systems approach we take for hydrogen. 4 Hydrogen in the ETP model The model structure for hydrogen production, distribution and use in the ETP model is shown in figure 2. A large number of supply options have been considered. A key issue for the transition to hydrogen is that the cost of these options will depend on the scale of production. For the sake of this study, only the optimal scale of production has been considered in the analysis. So this analysis does not account for certain transition issues such as the chicken-or-egg problem. This will be a next step in the analysis. The goal here is to explore the long term potential of a hydrogen energy system and what such a system should look like. Coke Ovens Liquef. + H2 truck ICE mobile applications Natural gas Fuel oil Coal Biomass Nuclear Solar Renewables Ren. ele Nuclear Fossil+CCS Natural gas Pyrolysis/ Gasifier/ Reformer plant Future Gen CO2 removal SI cycle Biological/ Direct solar Electrolysis at fuel station (3 types) Reformer at fuel station H2 pipeline H2 storage 10% Figure 2: Hydrogen supply and demand in the ETP model Natural gas pipeline H2 distrib. H2 gas storage 350 bar H2 gas storage 700 bar MeH2 storage LH2 storage Heating/ cooking Industry MCFC/SOFC Res/Com MCFC/PEM FC/ SOFC Refinery/NH3 etc. ICE mobile applications Fuel cell mobile applications SI cycle Sulfur-Iodine thermochemical cycle. CCS CO 2 capture and storage. MeH2 Metal hydride. LH2 Liquid hydrogen. ICE Internal Combustion Engine. MCFC Molten Carbonate Fuel Cell. SOFC Solid Oxide Fuel Cell. PEM FC Proton Exchange Membrane Fuel Cell. 4 Biomass plantations may enhance the annual yield per hectare, compared to natural forests. However this causes undesirable environmental impacts such as a reduction of biodiversity. Risø-R-1517(EN) 250
5 In the ETP model, the transportation sector module builds on previous work carried out by the IEA together with the World Business Council on Sustainable Development (WBCSD, 2004). Cars, SUVs and Pick-ups, medium sized freight trucks, heavy trucks, airplanes and a number of other modes are modeled separately. Within each category, competing drive/fuel combinations have been considered, which differ in energy efficiency, emissions and cost. The model selects options based on least lifecycle cost. Hurdle rates have been applied to the vehicle cost to reflect consumer time preferences. They range from 12% in Japan to 28% in Africa. The discount rates are lower for industrial investment in fuels production processes. This reflects actual decision making rationale. A consequence is that capital intensive options on supply side are favoured compared to capital intensive options on the consumer side. Also, the annual vehicle kilometrage has been specified by region, based on the current distances driven. For example for cars, these range from 17,600 km in North America to 8,000 km in India. A higher mileage implies that capital costs are less important. The combination of different fuel prices, fuel taxes, investment cost and mileage make that certain options would seem attractive in certain regions while they are not attractive in other regions. In many countries transportation markets are subject to major government intervention through regimes that favor or tax certain fuel types. This includes VAT, excise tax, and taxes on certain drive systems (e.g. diesel engines) or progressive taxes on engine volumes. For example gasoline taxes (excise tax plus VAT) range from 3 USD/GJ in the US to 29 USD/GJ in the UK, a difference of one order of magnitude (IEA 2004c). The UK tax represents a threefold increase of gasoline supply cost. In many countries the tax on diesel fuel is lower than on gasoline, thus favoring the use of diesel. Also, ethanol fuel and natural gas is exempt from fuel taxes or subject to preferential tax regimes in many countries. Such tax exemptions pose a strong incentive to use such alternative fuels. In principle, tax revenues are needed, e.g. to pay for the transport infrastructure, and exemptions should reflect externalities such as enhanced supply security or reduced environmental impacts. Obviously energy efficiency measures and smaller cars will be much more attractive in a regime with high fuel taxes. This is evident from the efficiency gap between the US and Europe, where US cars use 40% more fuel. For the model analysis it is assumed that the regional taxes remain at their current levels in absolute terms through the period The diesel tax in Europe is set at 75% of the gasoline tax. For alternative fuels (CNG, LPG, DME, ethanol, methanol) it is assumed that the tax is gradually introduced and reaches 75% of the gasoline tax by Synthetic gasoline and diesel (fuels produced via so-called Fischer-Tropsch synthesis) are assumed to be taxed like gasoline and diesel from oil, as it will be very difficult to make a difference. This approach of gradually increasing taxes ensures that governments continue to receive revenues as the use of alternative fuels expands. Finally CO 2 capture and storage was considered for all major transportation fuel production processes. This is of critical importance for the environmental impact of a number of fuel options. The largescale feasibility of underground CO 2 storage is currently being explored by industrial demonstration projects. This is a key issue that deserves detailed analyses. 5 ETP model analysis Key assumptions The model analysis includes four parameters: Security policy targets; CO 2 reduction incentives; Biomass availability; and The hurdle rate for investments in the transport sector; Various measures can be envisaged for improving energy security. For the sake of this analysis, the maximum share of transport fuels from imported oil was varied. This reflects possible concerns Risø-R-1517(EN) 251
6 regarding the oil dependency on the Middle East. This constraint could reflect policies that promote indigenous production of transportation fuel alternatives, or indigenous production of conventional and non-conventional oil. While such targets can be varied by region, for the sake of this analysis the target were identical constant across all model regions. It was assumed that constraints would be gradually introduced from 2005 onwards, and they attain their maximum level in Either 50% of 67% of total transportation fuels is not derived from imported oil. This means at most 50% and 33%, respectively, of all transportation fuels is based on imported oil. Policies for CO 2 mitigation have been simulated through an emissions reduction incentive. The 50 USD/t CO 2 incentive level was chosen for more detailed discussion because it roughly represents emission stabilization in the period , or a halving the emissions by 2050, compared to the BASE scenario (IEA, 2004b). In the industrialized countries, the introduction of incentives is assumed to start in 2005, reach the level of 50 USD/t CO 2 by 2015, and stabilize thereafter. In developing countries, the policy is delayed by 15 years and the penalty reaches its maximum level by While a 50 USD/t CO 2 penalty is a high burden for developing countries, it could likely be applied in the long term, given the environmental concerns and the fast rate of economic development of many such countries. In the model scenarios, per capita GDP in all regions except Africa by 2050 is close to or even higher than the per capita GDP in OECD Europe in The quantities of biomass that will be available in the future constitute a major uncertainty. The reference calculations assume a potential availability that increases gradually to 200 EJ primary biomass per year by This should be compared to the present total primary energy use of more than 400 EJ per year, and a present biomass use of more than 40 EJ per year. The biomass supply potential is split into 11 classes, ranging from dedicated plantations on agricultural land to increased recovery from existing forests. However future biomass availability is a major uncertainty. Competing land use for food production and an uncertain increase of agricultural yields are the main uncertainties. In a sensitivity analysis, the biomass supply potential is reduced to 100 EJ per year. Any option in the transport sector depends critically on capital cost of vehicles. This is elaborated in table 1, where ETP model data are used to compare gasoline ICEs and various hydrogen vehicles. The investment cost has been annualised using an annuity of 15%, which equals roughly a discount rate of 12%. This analysis shows that energy efficiency measures for gasoline cars are cost-effective, but hydrogen vehicles would require an incentive of 130 USD/t CO 2 to break even. However, as the cost of the hydrogen hybrid and hydrogen FCV are dominated by the investment annuity, a lower discount rate would result in a much more favourable valuation. Data in table 1 assume a cost reduction for fuel cell engines to the level of gasoline ICEs. However, a fuel cell vehicle has additional components such as the electric engine and the hydrogen storage system. The data for these components were based on a recent European study (CONCAWE, 2003) including cost reductions over the next 50 years. The fuel cell engine cost decline in this scenario to 50 USD/kW. It is assumed that the cost for a hydrogen tank for a fuel cell vehicle decline to 2000 USD, and the electric engine costs 2000 USD. These two components alone cost almost the same as a conventional ICE drive system, and the whole drive system costs 105 USD/kW. In a separate scenario, more optimistic cost assumptions were used (Ogden et al., 2004). The cost of the fuel cell decline to 35 USD/kW, the cost of the hydrogen storage tank decline to 350 USD/kg and the cost of the electromotor system declines to 1200 USD per vehicle. The total cost of the drive system amounts to 65 USD/kW. It should be noticed that such cost reduction would require major technical breakthroughs. Risø-R-1517(EN) 252
7 Table 1: Comparison of vehicle alternatives, 15% annuity, European fuel taxes, cost data. ETP model data assuming FC cost declining to 50 USD/kW. Per vehicle Additional investment Annualized investment outlays [USD/yr] Fuel cost Fuel tax Total annual cost [USD/yr] CO 2 emissions Cost/t CO 2 reduction [USD/yr] [USD] [USD/yr] [USD/yr] [t/yr] Gasoline ICE Gasoline adv.ice Hydrogen adv.ice with liquid storage Hydrogen hybrid ICE with 700 bar gasstorage Hydrogen FCV with 700 bar gas storage A total of eight scenarios were analysed to accounts for the various options described above. Their acronyms and characteristics and are listed below and in table 2. The following acronyms are used: BASE: base line scenario NFT : no fuel tax : 50 USD/t CO 2 incentive SEC50, : 50% and 67%. Supply security oil import constraints BIO: low biomass potential DISC: low discount rate LCFCV: low cost fuel cell vehicles Table 2: Scenario characteristics BASE NFT BASE SEC50 BIO BIO DISC Fuel tax No Yes Yes Yes Yes Yes Yes Yes CO 2 incentive [USD/t] Supply security target Biomass potential [EJ/yr] Discount rate [%/yr] FCV cost [USD/kW] No No No 50% 67% 67% 67% 67% BIO DISC LCFCV 6 Results Figure 3 shows the use of transport fuels in the eight scenarios for In the first scenario with no fuel taxes, fuel use in 2050 amounts to 198 EJ. If fuel taxes are considered, fuel use declines to 184 Risø-R-1517(EN) 253
8 EJ. This is close to the WBCSD result that is 175 EJ for 2050 (WBCSD, 2004). Oil refinery products dominate this scenario (60%) and 30% of them are produced from non-conventional oil. More than half of total transportation fuels (96 EJ) are not derived from conventional oil. Gas-to-liquids and coal-to-liquids play an important role. If a CO 2 incentive is introduced, total fuel use declines by 10%. Coal-to-liquids disappears but gas-to-liquids and ethanol show a significant growth. The introduction of the regional supply security constraints has only limited impact on a global scale. Methanol and DME grow at the expense of oil products. In case the biomass potential is reduced from 200 to 100 EJ, the use of biofuels declines from 30 to 20 EJ. This is compensated by more oil, methanol/dme and CNG use. In case lower discount rates are applied, total fuel use is reduced to 155 EJ because more capital intensive, fuel efficiency measures are introduced. Under this assumption significant amounts of hydrogen emerge (8 EJ). Low cost assumptions for hydrogen FCVs (last scenario) result in a further increase of the hydrogen share (13 EJ) and a further decline of total fuel use to 150 EJ. The analysis suggests that conventional oil remains an attractive fuel option, despite government efforts to reduce oil dependency. The introduction of hydrogen requires a combination of CO 2 policies, supply security policies, and low discount rates. The latter can also be seen as an abstract representation of policies to favour vehicles with low emission of local pollutants Hydrogen CNG [EJ/yr] Methanol/DME FT fuels coal FT fuels natural gas Other biofuels 0.0 BASE NFT BASE SEC50, BIO, BIO, DISC, BIO, DISC, LC FCV Ethanol FT fuels biomass Refinery products nonconventional oil Refinery products conventional oil Figure 3: Fuel use in the transport sector, 2050 While CO 2 policies, low discount rate, etc., make hydrogen attractive for e.g., the bus market, largescale introduction of hydrogen for passenger cars requires both low discount rates and low FCV costs. The results suggest that hydrogen hybrids and hydrogen FCV can co-exist (figure 4). It should be noted that hydrogen consumption in comparison with other fuels does not represent correctly neither the integral number of passenger-kilometres nor the market penetration of hydrogen vehicles because the efficiency of such vehicles is higher and therefore they use less fuel for the same service. In the most optimistic scenario, 30% of all passenger cars are hydrogen fuelled by An important caveat, however, is that the model does not treat transitional issues in a detailed fashion. Given so- Risø-R-1517(EN) 254
9 called chicken-or-egg problems, it may be more difficult for new vehicle types to penetrate the market, and to co-exist, than estimated here. Note that this analysis does not account for modal shift, speed limits or similar behavioural measures that can enhance the energy efficiency. Therefore the energy efficiency potential may be higher than it may seem based on this analysis (IEA, 2004e) [EJ/yr] FCV cars Hybrid cars Hybrid delivery vans Hybrid buses FCV buses 2 0 SEC50, BIO, BIO, DISC, BIO, DISC, LC FCV Figure 4: Hydrogen use in the transport sector, 2050 Figure 5 shows the CO 2 emissions from the transport including the fuel production. In the BASE case, emissions increase fourfold. Almost one third of these emissions are from fuel production processes. This growth of upstream emissions represents a major change from the current situation that deserves more attention. The emissions growth over the period is 75% in case a CO 2 incentive is introduced. The emissions in 2050 are halved, compared to the BASE scenario. The fact that emissions still grow confirms that reducing emissions in transport is a challenge. Especially, measures on the vehicle side are costly. While emission reduction for vehicles is limited to at most 20%, the main reduction occurs in fuel production processes. The results suggest that supply security policies, biomass availability, time preferences and technology assumptions for hydrogen FCVs are not so critical for emission reduction as global CO 2 reduction incentive systems are. However, a set of scenarios where these measures are introduced in a different order may show that each of these steps can have important benefits. This needs to be analysed in more detail. CO 2 capture and storage plays a key role for fuels production processes. Figure 6 shows the total amount of CO 2 that is captured. It ranges from 2.7 to 4.5 Gt of CO 2 per year. For CO 2 capture a key role is played by the IGCC plants that cogenerate electricity and synfuels such as hydrogen and DME. They account for roughly half of total capture. Significant amounts of CO 2 could also be captured from FT-synthesis plants. Risø-R-1517(EN) 255
10 20 BASE NFT BASE 15 [Gt CO2/yr] SEC50, BIO, BIO, DISC, BIO, DISC, LC FCV Figure 5: CO 2 emissions from the transport sector and from the production of transportation fuels, [Gt CO2/yr] BASE SEC50, BIO, BIO, DISC, BIO, DISC, LC FCV Figure 6: CO 2 capture in transportation fuels production, Conclusions Enhancing supply security and reducing CO 2 emissions is particularly challenging in the transport sector. A number of competing options have been analysed. Our analysis suggests some 60% of all Risø-R-1517(EN) 256
11 transportation fuels will still be oil-derived by 2050 but only 40% from conventional oil. Efficiency measures, biofuels but also synfuels from coal and gas, methanol/dme and CNG may have an important role. The fact that a range of options emerge suggests that a future transportation system may differ from the current one. CO 2 capture and storage can be applied in order to reduce emissions in synfuels production. The cost-effective potential for emissions reduction in fuels production is higher in comparison with the reduction potential for vehicles. A key role in this respect is played by the IGCC plant for cogeneration of electricity and hydrogen from coal with CO 2 capture and storage. The analysis suggests that hydrogen technology will gain significant market share if cost of hydrogen vehicles will be substantially reduced (65 USD/kW) and if environmental and security policies will be implemented. Cost of hydrogen production should also be reduced. It should be noted that hydrogen consumption in comparison with other fuels does not represent adequately the integral number of passenger-kilometres or the market penetration of hydrogen vehicles, because the efficiency of such vehicles is higher and therefore they use less fuel for the same service. Fuel cells are not necessarily needed for a transition to hydrogen fuels as advanced hydrogen ICE or hydrogen hybrid vehicles could provide part of the efficiency and environmental benefits of hydrogen-fcvs. The cost of the vehicle in combination with the relatively low annual use of passenger cars results in high CO 2 emission mitigation costs for any option that increases vehicle cost substantially. However, in the most optimistic scenario, 30% of all passenger cars are hydrogen fuelled by Public and commercial transport vehicles with high annual use such as buses and trucks can be more attractive niche markets to start the development of a hydrogen fueled transport system. In Western Europe, where three quarters of retail fuel costs are in fact taxes, hydrogen introduction could be facilitated by waiving these taxes during a transition period. A large-scale transition to hydrogen seems unlikely to occur before Such a transition could be accelerated by policies that reduce investment cost. A successful hydrogen policy strategy should be flexible so it can make timely corrections to reflect technical progress, consumer needs and social context. It is unlikely that hydrogen and other transport options will develop without strong government intervention and commitments. Achieving significant improvements in the transportation sector will require stable long-term policies to speed up technology development and orient the market towards secure and environmentally benign solutions. 8 References CONCAWE (2003) Well-to-wheel analysis of future automotive fuels and power trains in the European context. Version 1, November. Gielen, D.J., Unander, F. (2005) Alternative Fuels: An Energy Technology Perspective. IEA working paper ETO/2005/01. Internet: Gielen, D.J., Podkanski, J. (2005) Prospects for CO 2 capture and storage. Paper presented at the Clearwater Coal Conference, Florida, April IEA (2004a) World Energy Outlook IEA/OECD, Paris. IEA (2004b) Prospects for CO 2 capture and storage. IEA/OECD, Paris. IEA (2004c) Energy prices & taxes. Fourth quarter statistics IEA/OECD, Paris. IEA (2004d) Hydrogen & fuel cells. Review of national R&D programs. IEA/OECD, Paris. IEA (2004e) Transport. Energy Technologies for a sustainable future. IEA Technology briefs. IEA, Paris. Loulou, R., Goldstein, G., Noble, K. (2004) Documentation for the MARKAL family of models. IEA Energy Technology Systems Analysis Programme. Internet: Ogden, J., Williams, R.H., Larson, E. (2004) Societal lifecycle cost of cars with alternative fuels. Energy Policy 32, pp WBCSD (2004) Mobility 2030: meeting the challenges to sustainability. Internet Risø-R-1517(EN) 257
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