ENERGY TECHNOLOGIES FOR A SUSTAINABLE FUTURE: THE CONTEXT...5. Advanced Technologies for a Low-emissions Energy System...7

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2 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. 1

3 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 Technologies and Actions for the Long Term: Toward a Sustainable Transport System...19 Transition Steps to a Sustainable Transport System...27 Scenarios of Potential CO 2 Emissions Reductions Using Near-term and Longer-term Actions 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

4 Figures 1. Projected Growth in Transport CO 2 Emissions to 2030, OECD and Non-OECD Regions Average New Car Fuel Economy for Selected IEA Countries Improving Fuel Economy: Technologies and their Use in Three Countries as of Estimated CO 2 Emissions Reduction Costs from In-use Efficiency Measures in Different Regions and Driving Conditions Gasoline and Ethanol Prices in Brazil, Biofuels: Cost per Tonne of CO 2 -equivalent Emissions Reduction, Current and Projected Steps and Sequence for a Transition to a Near-zero-emissions Transport System Over the Long Term Two Possible Scenarios for Greenhouse Gas Emissions Reduction in Light-duty Vehicles Tables 1. Potential Well-to-wheels CO 2 Emissions Reduction for Vehicle-related Technologies (per kilometre of driving) Potential Well-to-wheels CO 2 Emissions Reduction for Alternative Fuels (per kilometre of driving) Example Scenarios: Assumptions Regarding Nearer-term and Longer-term Actions and their Effects on Light-duty Vehicles Boxes Essential Long-term Technologies...24 The IEA s World Energy Outlook Beyond R&D

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6 ENERGY TECHNOLOGIES FOR A SUSTAINABLE FUTURE THE CONTEXT Climate change is one of the major challenges of the 21 st 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 (CO 2 ) emissions. Energy is a crucial area for action. Rising emissions of CO 2 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 CO 2 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 CO 2 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 CO 2 emissions could be cut by 17%. But both would still be rising in These scenarios already reflect some improvements in technologies for energy supply and use. Much deeper reductions in energy use and CO 2 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. 5

7 A portfolio approach Deep cuts in CO 2 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 betterperforming 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 CO 2 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 CO 2 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. 6

8 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. transforming energy use Technologies for using energy efficiently can lessen the CO 2 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 CO 2 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 reduced with 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 CO 2 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 CO 2 could reduce emissions arising directly 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 CO 2 emissions. transforming energy supply A wide range of technologies can reduce CO 2 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 CO 2 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 CO 2 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. CO 2 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 7

9 dependent pathways to a low-emissions future are strongly dependent on CO 2 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, emissionsfree vehicle propulsion. It can be produced using technologies that result in few or no emissions of CO 2, such as natural gas reforming or coal gasification with accompanying CO 2 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 CO 2 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. transforming electricity networks Advanced Electricity Networks. Advanced electricity infrastructure and storage technologies would 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 research Basic Research. Basic research could transform the world s portfolio of energy technologies into one that can make deep cuts in CO 2 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. 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 CO 2 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. 8

10 TRANSPORT TECHNOLOGIES FOR A SUSTAINABLE FUTURE Overview This IEA Technology Brief describes technologies and actions that could provide the foundation for a sustainable 1 transport system in OECD countries, in particular a system with low or near-zero emissions of carbon dioxide (CO 2 ) 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: 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. 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 CO 2 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: Incremental technologies to both make vehicles more technically efficient than they are now and lessen their fuel consumption per kilometre of driving. 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.) New, lower-carbon fuels and fuels lower in greenhouse gas emissions on a wellto-wheels 2 basis. In some cases, new or modified vehicles will be required that can run on these fuels. 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 ). 9

11 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 verylow-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: Electric propulsion and powertrain systems. Hydrogen fuel-cell propulsion systems. Technologies that allow for production and use of biofuels having near-zero emissions on a well-to-wheels basis. Although at first glance it may appear that the main near- and longterm 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 CO 2 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 CO 2 emissions; this fraction is expected to reach 23% by 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 CO 2 emissions, including emissions from transport. 10

12 figure 1. Projected Growth in Transport CO 2 Emissions to 2030, OECD and Non-OECD Regions 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-oilto-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 CO 2 emissions reduction are shown in Tables 1 and 2. Only electricity, hydrogen and biofuels can yield a near-zero-emissions transport system, although 11

13 efficiency technologies can play an important role in reducing energy demand. The net CO 2 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 CO 2. table 1. Potential Well-to-wheels CO 2 Emissions Reduction for Vehicle-related Technologies (per kilometre of driving) Well-to-wheels CO 2 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 Q Electric vehicle Fuel-cell vehicle When using electricity produced from renewable or nuclear energy or from fossil energy with CO 2 capture and storage When using hydrogen produced from renewable or nuclear energy or from fossil energy with CO 2 carbon capture and storage R R R R R R Intelligent transport system R Q Q Notes: R Criterion can be met. Criterion may be met. Q Criterion cannot be met. table 2. Potential Well-to-wheels CO 2 Emissions Reduction for Alternative Fuels (per kilometre of driving) Well-to-wheels CO 2 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 Q Ethanol, methanol (current technologies) Biodiesel (current technologies) Advanced biofuels ethanol, diesel, DME Hydrogen Hydrogen Electricity Produced from starchy crops (e.g., wheat, sugar beets); significant fossil energy in fuel chain R Q Q Produced from oil-seed crops; significant fossil energy in fuel chain R Q Produced from ligno-cellulosic biomass; primarily renewable energy in fuel chain R R Produced from fossil energy (e.g., from fossilpowered electricity or directly from natural gas) R Q Produced from renewable or nuclear energy or from fossil energy with CO 2 capture and storage R R R Produced from renewable or nuclear energy or from fossil energy with CO 2 capture and storage R R R Notes: R Criterion can be met. Criterion may be met. Q Criterion cannot be met. 12

14 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 CO 2 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 economy Substantial near-term improvements in the fuel economy 3 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 , 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. figure 2. Average New Car Fuel Economy for Selected IEA Countries Source: IEA, 2004b. 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. 13

15 figure 3. Improving Fuel Economy: Technologies and their Use in Three Countries as of 2000 (percentage of new cars equipped with each technology) Source: Saving Oil and Reducing CO 2 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 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 14

16 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 (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 choices 4. Reductions in vehicle in-use fuel consumption Light-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

17 Cost estimates for the CO 2 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. Estimated CO 2 Emissions Reduction Costs from In-use Efficiency Measures in Different Regions and Driving Conditions figure 4. Source: ECMT/IEA, 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 growth Efforts to stem the growth in vehicle travel are often related to goals other than saving energy or reducing CO 2 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). 16

18 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 fuels A 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- CO 2 -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. 17

19 figure 5. Gasoline and Ethanol Prices in Brazil, 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 efficiency A variety of technologies and policies could improve freight transport efficiency. These include improvements in vehicle efficiency, improvements in the systemwide 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 18

20 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 CO 2 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 CO 2 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 19

21 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 longterm 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 CO 2 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-co 2 -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 20

22 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 fuel 5. 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 CO 2 (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-zeroemissions 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 CO 2 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 CO 2 emissions using biofuels was discussed. Ethanol and biodiesel, as typically produced today in IEA countries, can reduce CO 2 emissions per litre of fuel by 20% to 50% compared with gasoline and diesel fuel, respectively, on a well-to-wheels basis 6, but they are not nearzero-emissions fuels. Technologies now under development will help produce advanced biofuels with near-zero net CO 2 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 CO 2 in essence extracting CO 2 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 CO 2 and other greenhouse gases. In the case of biofuels, this assessment includes CO 2 absorbed by plants during their growth and emissions arising from the energy used in crop and biofuels production. 21

23 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 largerscale 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 The IEA s estimates of the current and projected cost per tonne of avoided CO 2 - 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: view.cfm?section=article&storyid=

24 figure 6. Biofuels: Cost per Tonne of CO2-equivalent Emissions Reduction, Current and Projected Source: IEA, 2004c. Even if very-low-co 2 -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. 23

25 Essential long-term technologies Electric 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 ultracapacitors 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 CO 2 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 CO 2 emissions to below zero, if, for example, co-generated electricity displaced high-emissions electricity from other sources. 24

26 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 efficiency Just as for short and medium-term reductions in CO 2 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: Improved drive-train efficiency and the introduction of more electric-drivetrain components, such as drive-by-wire (fully electric) steering. Hybrid-electric propulsion systems (with many components, such as motors and controllers, also likely to be used in fuel-cell vehicles). Regenerative braking. Lightweight materials (including very advanced materials such as composites and carbon-fibre-based materials). More efficient accessory equipment (such as air conditioners). 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 25

27 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: 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. 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. 26

28 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). 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: Introduction of efficient vehicles capable of running on very-low-co 2 -emissions fuel, with high efficiency, at a cost acceptable to consumers and governments and with acceptable performance. 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. Provision of necessary infrastructure to produce and store the appropriate fuels and to transport these fuels to the point of fuelling. 27

29 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-andegg problem see the section, Putting It All Together ). Potential steps and timing for the emergence of a sustainable, near-zero-ghgemissions 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. 28