Of all the sectors of global energy use, renewable energy currently contributes the least to the transport sector. Often, efforts to promote renewable energy focus heavily on the power-generation sector. While renewable power is critical to a sustainable global energy future, achieving this calls for a far more integrated approach, taking into account all of the ways we consume energy in our diverse economies and daily lives.

The analysis presented in this report – the latest in an expanding series of cost studies from the International Renewable Energy Agency (IRENA) – suggests that the outlook for renewable energy in transport to 2020 could be very positive, as long as current policy support is enhanced and expanded.

Significant policy efforts across a wide-range of countries have resulted in rapid growth for conventional biofuels since 2000, starting from very low levels. The growth rate has slowed lately, with production costs for conventional biofuels – linked to food-based feedstocks – rising in line with global food prices.

However, policy support for advanced biofuels, including a wider range of feedstock sources, has prompted research, development and demonstration projects that have led to the construction of the first commercial-scale advanced biofuels plants. With as many as 15 commercial-scale advanced biofuels plants to come online within a few years, more meaningful cost data is starting to emerge. The signs are promising: a range of technology pathways are being explored, amid competition to prove the efficiency, reliability and "up-scalability" of innovative new renewable transport fuels. These plants, if successful, will lead to larger more economic plants that could provide large reductions in greenhouse gas emissions at costs equal to or less than fossil fuels by 2020 if policy support is expanded.

Electric vehicles are also part of the intensifying competition, with mass-produced plug-in hybrids and pure electric vehicles appearing from a range of manufacturers, amid encouraging signs for mass commercialisation. Costs will come down with further deployment, making the outlook for electric vehicles in 2020 promising, as long as support policies are enhanced and investment in the necessary recharging infrastructure grows. Biomethane could be an important transport fuel, but similarly may need investment in refueling infrastructure to promote uptake.

These rapid developments in transport are mirrored in other sectors and IRENA's costing work - notably on power generation, but in the future for stationary applications as well – is designed to ensure policy and investment decisions are based on up-to-date, verifiable data. We are deepening our engagement with industry through the IRENA Renewable Costing Alliance in an effort to collect the data that will allow more comprehensive and detailed analysis of these issues in the future.

The findings for the transport sector are preliminary, given we are only just seeing commercial deployment of advanced biofuels and electrification for road transport. The next 18 months will reveal critical information about these technologies and their costs. IRENA will follow these exciting developments closely and will revisit the costs of these technologies once more data emerges.

However, what is clear is that these important breakthroughs can only be achieved if support policies are enhanced and expanded. Delaying, or rolling back, support for advanced biofuels would endanger the progress made towards aspirational targets for future years. Yet the growing body of cost data and analysis is highly encouraging. While the road just ahead is challenging, we can now see the beginnings of widely available, competitive renewable options for transport.

Adnan Z. Amin

Director-General, IRENA