Costs for reducing greenhouse gas emissions from road and air transport with biofuels and electrofuels

Cost-effective GHG reduction with several renewable fuels

This project provides an updated summary of the CO₂ abatement costs for different types of biofuels and electrofuels for road transport and aviation, relevant in a Swedish context. The results can be used as a basis for the design of policies, investment decisions, technology and product selection and as guidance for research specializations.

Renewable fuels for road and air transport are needed to achieve future climate goals. However, the future role of various biofuels, hydrogen, and electrofuels (produced from electricity, water, and carbon dioxide, CO₂) in different transport sectors is still uncertain.

By presenting calculations of abatement costs, i.e., the cost of reducing a certain amount of greenhouse gas with different fuels, the results of this study can contribute relevant knowledge to decision-makers. The calculations are based on the entire fuel value chain for 39 different renewable fuels, from raw material to use, and rely on published data.

The abatement cost depends on the production cost of different fuels, as well as the reduction of greenhouse gases that the specific fuel entails. Given the study’s assumptions, the abatement cost varies from -0.37 to 4.03 SEK per kg CO₂ equivalent.

Negative abatement costs are achieved with methane from anaerobic digestion of sewage sludge and with ethanol from fermentation of sugarcane and corn. This means that with the assumptions made in the study, these are more economically benificial to use than their fossil counterparts.

The highest costs for reducing CO₂ emissions are associated with electrofuels, especially diesel and aviation fuels.

So-called bio-electrofuels, produced from surplus biogenic CO₂ from biofuel production and electricity, show slightly lower CO₂ reduction costs, but generally still higher costs than corresponding forest biomass-based biofuel pathways.

For forest biomass-based biofuels, bio-electrofuels, and electrofuels, methanol and methane pathways generally have slightly lower costs for CO₂ reduction than hydrocarbon-based fuels (gasoline, diesel, and aviation fuel).

Since most of the studied renewable fuel pathways result in a significant reduction in greenhouse gas emissions compared to fossil fuels, the production cost is generally more important than the greenhouse gas performance to achieve a low CO₂ emission abatement cost.

The cost for reducint CO₂ emissions is central both from a societal perspective and for companies, the latter partly due to the design of the reduction obligation system.