1. STEPs Scenarios for the Transport System and Energy Supply and their Potential Effects Framework Programme 6, Call 1A Thematic Priority 1.6.2, Area 3.1.2, Task 1.10 Instrument: Co-ordination Action + Additional Research Gothenburg, Sweden, 15 June 2006 Carlos Marques TIS.PT, Portugal Carlos.marques@tis.pt STATE OF THE ART IN TRANSPORT AND ENERGY

2. Gothenburg, 15 June 2006Slide 2 Background context Road transport technologies Other transport modes Prospects on Transportation Fuels Energy Supply to the Transport System Policies on transport and energy Conclusions STRUCTURE OF PRESENTATION Developing long term scenarios on the future of the European Transport System requires a thorough understanding of the context to which transportation is subject.

3. Gothenburg, 15 June 2006Slide 3 ENVIRONMENTAL PERFORMANCE OF THE TRANSPORT SECTORENVIRONMENTAL PERFORMANCE OF THE TRANSPORT SECTORBACKGROUND EU-25 TOTAL EMISSIONS OF GREENHOUSE GASES Source: EUROSTAT, Energy, Transport, and Environment Indicators, ed.2005[1], p.137[1] http://epp.eurostat.cec.eu.int/pls/portal/url/page/PGP_MISCELLANEOUS/PGE_DOC_DETAIL?p_product_code=KS-DK-05-001 transportation is clearly a fundamental cause of climate change (EC, 2004)

4. Gothenburg, 15 June 2006Slide 4BACKGROUND UNDERSTANDING THE TRANSPORTATION DRIVING FORCESUNDERSTANDING THE TRANSPORTATION DRIVING FORCES Projected Evolution of Mobility (pass.km) and GDP (EU-15), 1980 … 2010 Source: Eurostat, 2001; EEA, 2000

5. Gothenburg, 15 June 2006Slide 5BACKGROUND UNDERSTANDING THE TRANSPORTATION DRIVING FORCESUNDERSTANDING THE TRANSPORTATION DRIVING FORCES Car ownership rate vs. GDP per capita Source: UNEP Report 2002 [1] [1] [1] http://www.acea.be/ACEA/20020518PublicationUNEPReport.pdf

6. Gothenburg, 15 June 2006Slide 6BACKGROUND UNDERSTANDING THE TRANSPORTATION DRIVING FORCESUNDERSTANDING THE TRANSPORTATION DRIVING FORCES On a world wide base the growth of the car industry and the world car fleet is a key vector for increasing energy- particularly oil The world's car fleet now stands at about 775 million units and is increasing at a world-wide average of about 6%/year, with the most rapid growth taking place notably in China and India Through 1990-2002 the Chinese car fleet has increased at an average of more than 13% per year, growth of the car fleet attained more than 50% in 2001-2002, and national production is reaching 6 Million units/year. According to McKillop (2003), increasing oil consumption at over-coupling rates has been virtually axiomatic for the development process of industrialisation and urbanisation The time taken to evolve from 'early' oil-based and oil-intensive economic development, to more mature stages has been typically more than 20 years.

7. Gothenburg, 15 June 2006Slide 7BACKGROUND EVOLVING CAR MANUFATURING CONTEXTEVOLVING CAR MANUFATURING CONTEXT Source: Eurostat, 2001; EEA, 2000 Disruptive technologies come at high cost The challenge for vehicle manufacturers is about making winning bets on technology, at high risk. The emerging strategies that each car manufacturer adopts along the evolving pathway will therefore play a crucial role There is a strong interdependency between Car Manufacturers Strategies and Energy Sources and Costs

8. Gothenburg, 15 June 2006Slide 8 STATE OF THE ART IN TRANSPORTATION TECHNOLOGIES ROAD TRANSPORT Internal Combustion Engines Natural gas vehicles Hybrids Electric vehicles Fuel Cells and hydrogen RAILWAYS MARITIME AIR TRANSPORT

9. Gothenburg, 15 June 2006Slide 9 PROSPECTS ON TRANSPORTATION FUELS Transport fuel pathways Source: World Business Council for Sustainable Development, 2004 - Sustainable Mobility Project

10. Gothenburg, 15 June 2006Slide 10 PROSPECTS ON TRANSPORTATION FUELS Matrix of possible fuel/propulsion system combinations Source: Frost & Sullivan in WBCSD[1], 2004[1] [1] World Business Council on Sustainable Development, 2004

11. Gothenburg, 15 June 2006Slide 11 1. Continuous improvement of cleaner improved diesel engine, remaining for some time as the backbone of road transport (up to a limit) 2. Increase in the share of NGVs, Biofuels and Hybrid Vehicles (possibly pointing at serial-type) 3. Improvements in on-board energy storage system for electric based vehicles 4. Diffusion of innovative light weight Private vehicle concepts 5. Use of alternative fuels and driveline systems for congested urban areas (urban buses, garbage collection, delivery). 6. Alternative fuels: main choices will be Petrol, Diesel,Natural Gas, Biofuels sometimes combined in Hybrid Electric, and appearance of synthetics Likely developments for the next 5-10 years PROSPECTS ON TRANSPORTATION FUELS

12. Gothenburg, 15 June 2006Slide 12 ENERGY SUPPLY TO THE TRANSPORT SYSTEM Primary Energy Sources ENERGY PRODUCTION IN THE EU-30 Source: EC Green paper of Security of Energy Supply, 2000 The situation as of 2000 was already acknowledged to be far from promising. It was clearly stated that …even if the EU has managed to reduce its energy intensity (the quantity of energy needed to produce a unit of wealth), all the warning lights are flashing. Energy consumption is rising by 1 to 2% a year. Dependence on EU countries is starting to rise above 50% again. Our scarce domestic resources are beginning to run out; in the case of coal, we talk about economic depletion, as it is far too expensive to mine…

13. Gothenburg, 15 June 2006Slide 13 ENERGY SUPPLY TO THE TRANSPORT SYSTEM Primary Energy Sources DISCOVERY OF REGULAR OIL CURRENT AND FUTURE (based on Exxon Mobil Data, 2002) Source: CAMPBELL C.J., 2005 EU CRUDE OIL SUPPLY

14. Gothenburg, 15 June 2006Slide 14 ENERGY SUPPLY TO THE TRANSPORT SYSTEM Well-to-Wheel Fuel Energy Balances To shift from a oil based transport system will require adapting infrastructure of supply depending on choice of technology. Besides the cost of any changes in the supply infrastructure, the most important balance will be the well to wheel balancing, ensuring that effective improvements in energy dependence from fossil fuels and their external consequences are taken into account PROBLEMS WITH PRODUCTION OF ENERGY CARRIERS, SUCH AS HYDROGEN

15. Gothenburg, 15 June 2006Slide 15 ENERGY SUPPLY TO THE TRANSPORT SYSTEM Energy Supply Infrastructure Conventional Fossil Fuels (Diesel, Petrol, LPG) have established a dense network Natural Gas is growing its network through pipelines across Europe and represents a relatively cheap alternative for distribution. NG supply infrastructures growth is experienced in several EU countries, specially Germany and Italy Electricity fails not in the network but in the existence charging points. Should electric energy storage problems be overcome, supply networks would emerge quickly The pitfalls associated to most other networks are significant: e.g. H2 supply network is not at all implemented. All transport related initiatives on Hydrogen buses depend on facilities that produce H2 either locally through hydrolysis (expensive and insufficient) or through compressed H2 transported from production centres (BP, Air Liquid, Linde Gas, etc..)

16. Gothenburg, 15 June 2006Slide 16 Improved DIESEL Price Refuel Investments Security of supply Cost-effective and commercial potential N/A None in terms of infrastructure Lower Energy use & emissions Slightly Less imports Biofuels Somewhat Expensive Potentially 100% indigenous Can be mixed in the current diesel or gasoline Energy/ Environment May share current distribution channels Advantageous CO 2 balance ENERGY SUPPLY TO THE TRANSPORT SYSTEM

17. Gothenburg, 15 June 2006Slide 17 NGVs Cost-effective and with commercial potential Limited places to refuel Can be used in many existing cars with modifications. Investment is needed Potentially 20-25% less consumption and CO 2 emissions than gasoline Is also imported and similar to oil supply constraints. Hydrogen Expensive New cars needed. Investment needed in storage and distribution. Need investments in production and distribution Depending on how electricity is produced. No emissions from the car. Depending on type of energy used to produce electricity. Price Refuel Investments Security of supply Energy/ Environment ENERGY SUPPLY TO THE TRANSPORT SYSTEM

18. Gothenburg, 15 June 2006Slide 18 Electric cars Batteries are costly Slow but easy recharging More efficient. Emissions depending on how electricity is produced. Zero Local emissions Depending on type of energy used to produce electricity Hybrid cars Still expensive. Trend is to decrease price/Scale Prod. Few in Energy Supply Some decrease in Fuel Dependence. Up to 30% fuels savings and corresponding emissions, in particular Urban Everywhere (Diesel, NGV…) Few, apart from vehicles Price Refuel Investments Security of supply Energy/ Environment ENERGY SUPPLY TO THE TRANSPORT SYSTEM

19. Gothenburg, 15 June 2006Slide 19 EU POLICIES EUROPEAN POLICIES ON TRANSPORTS AND ENERGY Common Transport Policy Vehicle Taxation Fuel Taxation EC Policy on Biofuels Alternative Fuels Support Policy EC Procurement of Cleaner Transport Technologies ENERGY SECURITY POLICY EU Priorities on Oil Security (EC Green Paper) Constraints to Security of Energy Supply Disruption Risk Mitigation Strategies

20. Gothenburg, 15 June 2006Slide 20 EU POLICIES The EC GREEN PAPER expressed the following 3 major constraints to the SECURITY OF ENERGY SUPPLY: GEOPOLITICAL constraints weigh heavily on the energy sector, hence with a strong impact in transportation. Europe imports 50% of its needs. Around 2030 this figure will have risen to 70%., concerning almost exclusively fossil fuels if nothing is done. ENVIRONMENTAL constraints are making themselves felt in daily life. It is necessary to lay the groundwork to produce energy or to travel in a way which is more sustainable. Fossil fuels give rise to many environmental problems connected with their combustion and transport applications GEOLOGICAL constraints in 50 years, there will be almost no more oil or gas. Alternatively, it will be very costly to extract these products, in a way which bears no relation to current prices. In other words, these natural resources exist in finite quantities and we are just squandering them.

21. Gothenburg, 15 June 2006Slide 21 BRIEF OVERVIEW OF CURRENT SITUATION IN THE US AND ASIA technological development in innovative alternative fuels and policies on its implementation Policy mechanisms and regulation of those technologies US Several States do have strict emission Regulations Desire to reduce reliance on foreign oil

22. Gothenburg, 15 June 2006Slide 22CONCLUSIONS Through 2010 I nitiatives will be taken to slow the growth rate of oil use / CO2 as much as possible. To do that, NGVs (ICE), Biofuels and HYBRID vehicles seem promising alternatives right from today, with the particularity that HYBRIDs may clear the way to fully electric vehicles relying either on improved energy storage capacity or on Fuel Cells running on Hydrogen After 2010 E xpectations seem to be towards a more sustainable transport system, featuring near-zero CO2 emissions in urban contexts and decreased relative dependence on oil (but perhaps not in absolute values), based on a growing share of an improved generation of EVs and HYBRID based on NG, Biofuels and Diesel, as well as ICE improvements. Fuel cells hold a potential, yet to be released, depending on large scale clean production and distribution of Hydrogen.

23. Gothenburg, 15 June 2006Slide 23CONCLUSIONS STEPs scenarios need to take account not only of current technological trends, and policy in place but also their expected projection into the future. What might be unexpectedly and dramatically determined in terms of EU policy or Oil Market behavior from now until 2010, represents a significant challenge for modeling. That will be a crucial period to prepare and shape the next decade in terms of deeper structural changes, as the EC's post-Kyoto policy strategy needs to deliver a clear and inspirational long-term perspective to promote innovation by means of an ambitious framework, covering all transports modes, but specially road transportation. Policies adopted elsewhere, namely USA and Japan will also play an important role, as together with EU policy they have the potential to set the stage for a deeper change in the global transportation technology solutions and active energy supply sources research.

24. Gothenburg, 15 June 2006Slide 24CONCLUSIONS HENCE, the challenge is not only to consider what we know already today, but also what might result from influencing key drivers such as growing evidence of climate change consequences, including in the economy itself, rising oil prices in result of a possible shift from a mild demand driven context to a more severe oil supply driven context. STEPS acknowledged the existence of worrying signals regarding conventional energy availability and severe environmental consequences, as underscored by key international organizations. The RECOMMENDATION of this preliminary part of the study was that the usually seen as BAU trends and perspectives should rather be seen as optimistic viewpoints in the development of scenarios, as worrying signals are consistently pointing at the emergence of disruptive developments in the ENERGY / TRANSPORTATION conventional relationship.

25. STEPs Scenarios for the Transport System and Energy Supply and their Potential Effects Framework Programme 6, Call 1A Thematic Priority 1.6.2, Area 3.1.2, Task 1.10 Instrument: Co-ordination Action + Additional Research Gothenburg, Sweden, 15 June 2006 STEPs Project – Scenarios for Transport and Energy Supply and their Potential Effects Thank you