A Least-cost Approach to Reduce Co2-emissions in Passenger Car Transport: This Time Economics Will Kill the Electric Car

Reducing CO2 emissions (note that CO2 refers to CO2-equivalents) in road passenger car transport is a major objective of many governments world-wide. To meet this goal various types of policy strategies – fuel or registration taxes, promotion of biofuels, technical efficiency improvements of conventional cars as well as introduction of hybrid and battery electric vehicles (BEV) – are considered. A very important issue in this context is to achieve specific objectives – e.g. (-20%) to 2020 in the EU – with a minimum of costs. All of the policies mentioned above are associated with corresponding costs for the customers and for society as a whole. The core objective of this paper is to analyse the costs – and the corresponding CO2 reduction potential – of the policies documented above for the EU-15 countries. Furthermore, we aim for identifying the cost-minimal portfolio of measures to meet the EU’s 2020 target. This work is based on the outcomes of the EU-funded project ALTER-MOTIVE, see Ajanovic et al., 2011a and www.alter-motive.org. Introduction The major challenges for EU climate and energy policy are to implement effective policies and measures to mitigate global warming, to improve air quality and to reduce energy consumption. The 20-20-20 targets provide concrete goals which state that • at least 20% renewable fuels should be used in the energy sector; • at least 20% CO2 emission reduction (compared to the 1990 level); • at least 20% energy efficiency improvements by 2020; • at least 10% renewable fuels for transport (attached to the 20-20-20-target (EC, 2008; EC, 2009)). GREENHOUSE GAS EMISSIONS EU-27 Energy sector 40% Industry 16% Service 4% Residential 11% Others 4% Railways 0% Ships 1% Other 0% Civic Aviation 1% Road transport 23% Transport 25% TOTAL ENERGY 2007: 4000 Mio tons CO2_equ Figure 1. Share of greenhouse gas emissions in EU-27 by sector in 2007 (only domestic transport considered) (EU, 2010) Since road transport contributes with about 23% to the EU's total greenhouse gas (GHG) emissions a large part of these EU-targets must be directed to this sector, see Figure 1. Passenger cars alone contribute to 70% of road transport GHG emissions in the EU (EU, 2011). So a wide range of EU policies to lower emissions from passenger car transport is already in place, such as emissions targets for new cars, targets to reduce the greenhouse gas intensity of fuels, labelling requirements etc. It is obvious that urgent actions are required to meet EU energy and environmental targets. The core objective of this paper is to analyse the costs – and the corresponding CO2 reduction potential – of the policies documented above for the EU-15 countries. Furthermore, we aim for identifying the cost-minimal portfolio of measures to meet the EU’s 2020 target. This work is based on the outcomes of the EU-funded project ALTER-MOTIVE, see Ajanovic et al., 2011a and www.alter-motive.org. Methods To get a reliable appraisal of the effect of different policy measures on the CO2 reduction it is very important to recognise what are the major factors that finally influence CO2 emissions. Figure 2 shows how CO2 emissions in passenger car transport come about and how they can be reduced in principle. On-road power-specific fuel efficiency Test-cycle fuel intensity CO2 emissions CO2 emissions coefficient = x Energy