Insight

Sector decarbonisation: The future transport energy mix

Sector decarbonisation: The future transport energy mix

Airplane. Landscape with big white passenger airplane is flying in the blue sky over yellow grass field at colorful sunset in summer. Passenger airplane is landing. Business trip. Commercial aircraft

The adoption of low carbon fuels across different transport modes in the period up to 2050 has always been part of the government’s transport decarbonisation plan. Now looking to create a long-term, low carbon fuels strategy to achieve this, the government has recently invited proposals, ideas and areas to be addressed in a call for ideas that summarises the progress made to date and looks at some of the broad opportunities and challenges for low carbon fuels in the transport sector.

We now take a look at the main fuel options that are under consideration.

A range of solutions:

Among other things, the recent COP26 meeting in Glasgow brought into sharp relief the scale of the challenge to be met in order to achieve the temperature rise containment targets set out in the 2015 Paris Agreement and, in particular, carbon neutrality by 2050.

Central to success in this endeavour will be decarbonisation of the transport sector which, on a global basis, accounts for around a quarter of total GHG emissions. Within this sector, road transport accounts for about three quarters of emissions – roughly split 60/40 passengers/ freight, with both aviation and shipping at around 12% and rail at 1-2%. As such, it is the largest single emitting sector and even, in the case of the UK, having overtaken energy supply (now at 21%) in 2016.

It may seem to be a statement of the obvious, but worth re-stating at the outset nonetheless; that, within each sector, there is no one ‘silver bullet’ but rather a range or ‘suite’ of solutions that will need to be pursued as part of the de-carbonisation challenge.

With this backdrop in mind, we will look at progress to date in road transport, rail, shipping and aviation, highlighting the main options which are available / possible.

Road Transport

The past couple of years has seen a sharp acceleration in the Electrification of this sector in developed economies, with December sales of EVs in the UK accounting for just over 20% of total new car sales. Significantly greater penetration (50%+) has been witnessed in Norway and Sweden, supported by generous incentivisation.

There are two technologies available:

Battery power (BEV)

This is now well established as the traction ‘technology of choice’. Issues around cost (cf. ICEs) and range anxiety still need to be addressed. However, the received wisdom is that further reductions in battery cost (currently accounting for around one third of total vehicle cost) as well as technology improvements therein will largely eliminate the cost disparity around the middle of the current decade; although sharply rising costs of the key components; lithium, nickel, cobalt and copper, may delay this levelling up of cost.

One of the greatest challenges, the successful resolution of which will go a long way to addressing the range anxiety issue, will be the establishment of a comprehensive charging network. In the UK there were around 25,000 charging stations at the start of 2021 which, by the end of this year, is projected to grow to circa 40,000. The Competition & Markets Authority last year estimated that the network needs to grow to 250,000 by 2030 to meet expected demand. In addition, there needs to be a material expansion in the availability of ultra rapid chargers, capable of providing an 80% charge in circa 10 minutes.

Hydrogen Fuel Cell (FCEV)

This has, in some circles, been viewed as the better long term option, with support expressed, in particular, by both Toyota and Hyundai. But both of these manufacturers now appear to have accepted that BEVs will be the dominant future energy source. The benefits of easier/ quicker re-fuelling must be weighed against issues around fuel logistics of storage and delivery, as well as the availability and cost of green hydrogen. Further, there is the same ‘chicken & egg’ conundrum, as was the case in the early BEV days, around the rate of adoption and development of supply infrastructure. The technology will have a role to play, especially where considerations around battery weight (HGVs), range (HGVs and long-distance buses and coaches) and route gradient/engine torque are pertinent. 

Two German companies, Bosch and Porshe, have been working on the feasibility of E-Fuels as a future source of transport fuel, offering a drop-in option which would see a future role for the ICE.

In addition, Repsol is planning to establish a synthetic fuels plant near its Petronor refinery, utilising CO2 captured from refinery activity, which would be synthesized with green hydrogen produced in an electrolyser fed with renewably generated electricity.

The longer-term viability of these fuels as an energy source for transport is questionable due to considerations around:

  • Potential production volumes
  • Cost of production
  • Extent of energy loss associated with the process
  • Exhaust pollutants

identifying it as one of the three future fuels of greatest potential and noting the expectation for it to account for around

Biofuels will clearly have an important role to play in the energy transition especially renewable diesel (HVO), which can be readily produced from existing oil refineries as coprocessing or bespoke plants (including conversions of oil refineries). 

Rail

The key decarbonisation challenge for rail is the phasing out of diesel-powered trains, which currently account for 29% of the total UK fleet. The Govt. has set 2040 as the date by which this should be achieved. Full electrification of the network must clearly be the long term aim but only 42% is currently electrified (cf. 70%+ in a number of European states such as Spain, Italy and the Netherlands). With this in mind, the Network Rail Decarbonisation Strategy recommends that the non-electrified parts of the network are converted as follows: to electric traction (85%), to hydrogen traction (8%) and to battery traction (5%), calculated by track km, with the least busy routes relying principally on the latter two sources.

Battery powered trains are already tried and tested and are particularly suited to short journeys, and French company, Alstom, has recently introduced a hydrogen-powered service in Germany with no range issues. This suggests that both sources of traction will have a supporting, albeit relatively minor, role to play.

Shipping

While shipping only accounts for about 2.5% of global GHG emissions, the regulatory body, the IMO (International Maritime Organisation), has set targets of a 40% reduction by 2030 and at least 50% by 2050 cf. 2008 levels.

One of the zero carbon possibilities attracting increasing interest is green ammonia, with a recent Lloyds List survey of shipowners and managers identifying it as one of the three future fuels of greatest potential and noting the expectation for it to account for around 7% in 2030, rising to 30% by 2050.

Similar levels of interest and expected future usage were expressed for hydrogen, with ammonia having the advantage of being able to be stored in liquid form at -34 DegrC vs -253DegrC for hydrogen. Ammonia also has a slightly higher energy density, albeit half that of fuel oil. Its main drawbacks are the emission of nitrous oxides, requiring exhaust cleaning, and its toxicity, requiring careful handling and storage.

Another possibility is methanol, with Maersk recently announcing plans to build its first methanol-powered vessel.

In the nearer term, as transitional options, biodiesel and LNG will have roles to play in decarbonising the sector with a number of LNG powered vessels and a supporting fuelling infrastructure already in place.

Aviation

Aviation also accounts for around 2.5% of global GHG emissions (as of 2019 with the current figure likely closer to 2.1%)  and, while modest relative to those from road transport, it is widely viewed as the most difficult sector to decarbonise.

Short-haul journeys with small passenger loads will offer opportunities for either battery power or hydrogen fuel cells (powering electric motors). The biggest challenge presented is long-haul journeys (those over 7 hours duration) which, while comprising less than 10% of total flights, account for 52% of total aviation emissions. Recognising this, some countries have begun to set mandates for sustainable (SAF) content; Spain @2% by 2025 and Sweden @0.8% in 2021, rising to 27% by 2030. The EU has proposed a minimum of 8% SAF by 2030.

Over the past 10-12 years there have been a number of trials, by various airlines, using biojet blends of up to 50% with Jet A-1. At the end of last year, BA entered into a multi-year agreement, starting this year, with Phillips 66 for the supply of SAF from co-processing at the latter’s Humber refinery, which will see the first production of the drop-in material, at scale, in the UK. In Scandinavia, SAS has entered in to an agreement with Preem to replace 100% of its Jet A-1 consumption on domestic routes with SAF by 2030.

Both Preem and Finnish refiner, Neste, are very much in the vanguard of developing SAF production capacity, but global capacity is currently probably no more than around 2-3 million Mt/year. This must be seen in the context of global jetfuel demand of around 270 million Mt in 2021 (down from the 2019 peak of 355 million MT). Clearly, there will be a huge challenge to scale up SAF production, dramatically so, as part of the solution to decarbonise aviation, especially long-haul traffic.

Quantum improvements in jet engine combustion efficiency will also be needed.

The challenge constitutes a stern test

To achieve carbon neutrality in transport by 2050 the momentum evident over the past couple of years in the fast rising adoption of BEVs in passenger cars needs to be not just maintained but accelerated and an optimum solution for HGVs must be established.

Although the aviation and shipping sectors only account for fairly small shares of global GHG emissions (cf. road transport) there remain a number of daunting challenges to be faced in finding low or zero carbon solutions for their decarbonisation.

The above will constitute a stern test, as well as a significant resource commitment, for the developed economies; for developing economies the test will be of a magnitude many times greater!