R&D, demonstration and incentive programmes effectiveness to facilitate and secure market introduction of alternative motor fuels

May 2007

PREMIA is a Specific Support Action within the 6th Framework Programme of the European Commission which aims at assessing the effectiveness of measures to support the market introduction of alternative motor fuels, taking into account the national context of member states.
Alternative motor fuels such a biofuels, natural gas and hydrogen have an important role in reducing oil dependency and greenhouse gas emissions from the transport sector. Until now, it is mostly biofuels that have entered the European transport fuel market, reaching a 1% share in 2005. Biofuels have the advantage of combining a mature production process with the compatibility with fossil fuels, which allows their blending with conventional fuels and avoids additional distribution costs. In higher blends, modifications to engines are necessary, but the additional costs remain limited. For this reason, biofuels are the alternative motor fuel that is available in the short term, while hydrogen is considered important in the long term, specifically after 2030.
Following the distinction between biofuel as a short term option and hydrogen as a long term vision, the report is divided into two parts.
Part one of the report describes the PREMIA biofuel model that was developed to assess future policy options, and a number of scenario runs that reflect different policy options. These scenarios estimate the level of biofuel penetration for different levels of fossil fuel prices and different policy options, taking into account the impacts of biofuel production on the energy and agricultural markets as changing the level of biofuel production and consumption leads to reactions of the various sectors of the economy.
Part two of this report focuses on the potential future deployment of hydrogen. As the technologies are much less mature and no experience exists with market introduction instruments, these scenarios focus on techno-economic issues rather than on the assessment of detailed policies and measures like in the biofuel part. The model developed for this part aims to describe the dynamics of the passenger car market and the introduction of new technologies in the sector. It simulates the impact of changes in fuel and car prices, technological development, income, and user preferences on the supply and demand of different passenger car technologies. It is closely interlinked to the world energy outlook model POLES and was also used in the World Energy and Technology Outlook report.

By: PREMIA (European Commission)

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