1. Introduction

Road transport accounts for around a quarter of final energy consumption, and renewable energy technologies and fuels can help countries meet their policy goals for secure, reliable and affordable energy and reduced price volatility. They can also promote social and economic development. However, governments will find it difficult, if not impossible, to accurately assess which renewable options are best for their circumstances without reliable information on the costs and performance of renewable energy technologies available for road transport.

The aim of this report is to assist government decision-making by ensuring that decision makers have access to up-to-date and reliable information on the costs, benefits and relative performance of renewable energy technologies for road transport.

The use of renewable energy sources and technologies in the transport sector is not yet widespread. Renewa-bles accounted for around 3% of road transport energy consumption in 2010, mostly conventional biofuels.1 The range of renewable use for road transport by country varied from a low of zero in many countries to a high of 22% in Brazil (IEA, 2013a).

In the past, the adoption of renewables in transport has been hampered by a number of barriers. These include high costs (Brazil is an exception), misconceptions about the sustainability of biofuels and electric vehicles, and a lack of supporting policies in many countries.

However, the policy support that has been in place over the past decade and the gradual commercialisation of advanced biofuels (e.g. from biomass crops or waste) and electric vehicles mean there is a realistic prospect that renewable solutions could be competitive with incumbent technologies and fuels by 2020, as long as policy support for deployment is reinforced and expanded.

The accelerated deployment of these renewable technologies will lead to significant cost reductions due to progressive learning effects, research and development (R&D) advances and economies of scale in manufactur- ing. The increased production of both advanced biofuels and electric vehicles will help identify the technologies and processes appropriate for different markets, and which biofuel production processes work reliably and efficiently at commercial scale. The increasing size of the global market for renewable transportation technologies and fuels will help encourage a diversity of suppliers. It will also intensify the competitive pressures and beneficial effects this will have on innovation and costs.

In the seven sections that follow, this report outlines the principal findings of the latest analysis by IRENA of options available for road transport. These include a range of biofuel, biogas and electrification options. These results for renewable solutions for road transport are preliminary findings in what is a fast moving and dynamic situation for advanced biofuels and electri-fication of transport. The analysis will be updated in 2013 and integrated into an assessment of the cost of renewable solutions for air and sea transport to provide a more complete picture of the costs for the transport sector. This will also include additional data that is likely to emerge over the coming year from the first-of-a-kind advanced biofuels plants that are just starting up, and from more widespread distribution of plug-in hybrid electric vehicles (PHEVs) and pure electric vehicles (EVs).

The analysis summarised in this paper represents a static analysis of costs. Yet finding the optimal mix of renewable transport solutions in a country's transport energy mix requires dynamic modelling, not just of the transportation system, but of the energy system as a whole. Dynamic modelling takes into account the complexities of energy supply and use, as well as competing demands for bioenergy feedstocks (e.g. from power generation and heat production) and the increasing penetration of renewables in electricity generation. This modelling also needs to take into account the interplay between electricity supply, the grid and the role of PHEVs and EVs as sources of electricity demand, but also system flexibility when these vehicles batteries supply electricity to the grid. This presents challenges but also opportunities to attain higher levels of renewable electricity generation. An energy system approach is the only way to analyse these complex interactions between technologies, users and the system itself.

This analysis of the costs of renewable solutions for road transport – based on the latest available data and information – supports the transparent assessment of the role different renewable solutions for road transport can play in decarbonising the transport sector, improving energy security and promoting economic growth.

1 Biofuel is a generic term that is typically applied to liquid fuels produced from agricultural (e.g. sugar cane, soya beans), forestry (e.g. black liquor, forestry residues) or other organic feedstocks (e.g. animal fats, algae). It can also be used as a term to include biogas and biomethane and, in future, biohydrogen from a variety of renewable sources.