A least-cost approach to reduce CO2-emissions in passenger car transport:

This time economics will kill the electric car

Amela AjanovicEnergy Economics Group

Vienna University of Technology

30th USAEE/IAEE North American Conference Washington, 2011

Content

1. Introduction

2. Method of approach

3. Results- Which measures contribute to CO2 reduction and to

which costs?

4. Conclusions

1. Introduction

GREENHOUSE GAS EMISSIONS EU-27

Energy sector40%

Industry16%

Service4%

Residential11%

Others4%

Railways0%

Ships1%

Other0%

Civic Aviation1%

Road transport23%

Transport25%

TOTAL ENERGY 2007: 4000 Mio tons CO2_equ

2. Methods

Impact factors on CO2 emissions in the car passenger transport sector

On-road power-specific fuel efficiency

Test-cycle fuel intensity

CO2 emissions

CO2 emissions coefficient

=

xEnergy

Total vkmdriven

Driving coefficientbehaviour

=

x

=

x

lower coefficient for biofuels or electricity

to be improved by automobile manufacture

to be reduced byeco-driving

to be influenced byfuel taxes or fuel intensity improvements

x

x Power (capacity)of car

to be reduced e.g. by kW-specific registration tax

Standards Education Fuel tax Registration taxSubsidies,

quotas

Policy instruments

On-road power-specific fuel efficiency

Test-cycle fuel intensity

CO2 emissions

CO2 emissions coefficient

=

xEnergy

Total vkmdriven

Driving coefficientbehaviour

=

x

=

x

lower coefficient for biofuels or electricity

to be improved by automobile manufacture

to be reduced byeco-driving

to be influenced byfuel taxes or fuel intensity improvements

x

x Power (capacity)of car

to be reduced e.g. by kW-specific registration tax

On-road power-specific fuel efficiency

Test-cycle fuel intensity

CO2 emissions

CO2 emissions coefficient

=

xEnergy

Total vkmdriven

Driving coefficientbehaviour

=

x

=

x

lower coefficient for biofuels or electricity

to be improved by automobile manufacture

to be reduced byeco-driving

to be influenced byfuel taxes or fuel intensity improvements

x

x Power (capacity)of car

to be reduced e.g. by kW-specific registration tax

Standards Education Fuel tax Registration taxSubsidies,

quotas

Policy instruments

2. Methods

So we can reduce CO2 emissions by influencing :

vkm (by increasing the price by taxes) or

FI (by introducing various measures for technical efficiency improvement) or

fCO2 (by using fuels with less carbon, e.g. biofuels or electricity).

2. Methods

The method of approach is finally based on calculation of total costs for society and resulting CO2 reductions:

For taxes these costs are the welfare losses for society; For the technologies we consider the additional investment costs of the technology and the energy cost reduction respectively the increased producer surplus if the technology is produced in the region; For alternative fuels we have to consider the additional production costs minus the increased producer surplus if the fuel is produced in the region.

3. Results

Policy measures implemented in transport sector could be put in three main categories:

Switch from fossil fuels to alternative fuels, in the first line to biofuels;

Improve efficiency of cars including switch to alternative and more efficient powertrains;

Reduce energy consumption with taxes and standards.

3. Results

Switch

0

10

20

30

40

50

60

0 20 40 60 80 100gCO2equ/MJ

EU

R/G

JCOSTS & CO2 EMISSIONS OF BIOFUELS 2010 VS 2020

2010 --> 2020

BE-1

BD-1

BE-2

CNG

Diesel

BM

Gasoline

BD-2

Fossil fuels vs. biofuels production costs (exclusive taxes) and WTW CO2 emissions,2010 and 2020

3. Results

Improve

Comparison of specific CO2 emissions and driving costs of conventional and hybrid

gasoline and diesel vehicles with pure BEV and FCV

CONVENTIONAL VS ALTERNATIVE VEHICLES

0

0.5

1

1.5

2

2.5

0 50 100 150 200gCO2/km

EU

R/k

m

BEV (electr. RES Mix)

BEV (electr. New NG)

BEV (electr. UCTE-Mix)

FCV (H2 NG)FCV (H2 RES Mix)

Gasol.-Hybrid-ICE

Diesel-Hybrid-ICE

Gasol.-ICE

Diesel-ICE

3. Results

Reduce

140 gCO2/km140 gCO2/km

0 0.5 1 1.5 2

ATBEBGCYCZDKEEFI

FRDEGRHUIRIT

LVLTLUMTNLPLPTROSKSI

ESSEUK

Price excl. VAT & Excise tax Excise tax VAT

Price structure of gasoline in EU-27 (data source: EEP, 2011 - effective March 2, 2011)

Evolution of CO2 emissions from new passenger cars by manufacturer associations (EC, 2010)

3. Results

Which measures contribute to CO2 reduction and to which costs?

Least-cost curve for CO2 reduction in passenger car transport in the EU-15 in 2010

LEAST-COST CURVE FOR CO2 REDUCTION

0200400600800

100012001400160018002000

0 20 40 60 80 100CO2 reduction (Mill tons CO2)

EU

R/t

on

CO

2

TAX 1: Fuel tax AF-1: BD-1 AF-2: BE-1

AF 3: BM ETA-4: Conv. ICE impr. TAX 2: Registr. Tax

ETA-1: Start-Stop auto ETA-3: Power split ETA-2: Power assistant

4. Conclusions

• The major conclusion of this analysis is that technological solutions alone are a very expensive strategy for reducing CO2 emissions.

• Regarding BEV and fuel cell cars up to 2020 no CO2 savings at reasonable costs for society will be achieved.

4. Conclusions

• In the long-term only a very broad portfolio of policy instruments (taxes, standards, quotas, emissions free-zones…) and new technologies (BEV, FCV …) can reduce energy consumption and straightforward CO2 emissions significantly.

• It is currently of urgent importance that there is a clear focus on implementing the two instruments with highest short-term effects: standards and taxes.

Thank you!