Support low-carbon fuel infrastructure
Low-carbon fuels for transport are transport fuels/energy vectors with low well-to-wheel carbon emissions. Key examples include liquid fuels (e.g. biofuels or synthetic and paraffinic fuels from renewable origin), gaseous fuels (e.g. renewable methane, ammonia and hydrogen) and electricity. Low-carbon liquid fuels may or may not be suitable for blending with petroleum fuels and use in existing vehicles. In their blendable (drop-in) form, they rely on existing fuel distribution infrastructure and, most frequently, do not require changes in vehicle powertrain technologies. Non‑blendable low-carbon liquid fuels, gaseous fuels and electricity require the deployment of new infrastructure for their distribution. They are also deployed concurrently with the introduction of low- or zero- (tailpipe) emission vehicles (LZEVs). The concurrent deployment of LZEVs and low-carbon fuels that require new distribution infrastructure involves investment risks, especially for technologies requiring fuel stations. This is because infrastructure providers are reluctant to invest without a substantial market share, while vehicle users would like to have the confidence of a reliant, widespread and interoperable supply infrastructure before they purchase an alternative fuel vehicle. This is often termed a “chicken and egg” problem.
Governments can promote increasing availability of electric charging spots and of sustainable fuels stations. The objective is to encourage the adoption of cleaner vehicles, such as electric vehicles (EVs). For electric charging stations, policies include easing the adoption of charging options in-house and at the workplace, as well as facilitating the construction of public charging stations. Charging time can be programmed in order to better adapt it to the grid or the user’s characteristics. For sustainable fuels, policies focus on increasing the availability of more sustainable fuels in fuel stations.
To reduce the investment risk (see the below section on costs), public authorities may use incentives such as tax credits, grants or subsidies to encourage investors to deploy low-carbon fuel infrastructure. They may also use regulatory instruments, such as a minimum numbers of alternative fuel stations or chargers, to encourage transport fuel/energy vector distributors to invest in low-carbon fuel infrastructure. Governments and authorities can also invest directly in the expansion of the network.
Increasing the availability of charging and refuelling stations for alternative fuels can increase adoption of cleaner vehicle technologies and, therefore, reduce CO2 emissions. For example, the implementation of 50 000 fast-charging stations in the United States can be linked to a projected 7.4% decrease in CO2 emissions by 2050 compared with the baseline.
The CO2 mitigation potential will depend on various factors. First, it will depend on the density of previously existing alternative fuel infrastructure. Where alternative fuel infrastructure has already been put in place to a significant degree, the effectiveness of additional infrastructure for decreasing emissions is likely to be lower. The CO2 mitigation potential will also depend on the attractiveness of the charging infrastructure for the user. For the previously mentioned US study, the impact of putting 50 000 fast-charging stations nationwide is seen to be more attractive than making available 500 000 slow-charging stations. The mitigation potential will further also depend on where the charging is done and at which period of the day. Workplace charging is seen as a particularly attractive option in the United States, where it is associated with as much as 20 times more purchase of EVs than non‑workplace charging.
The impact on CO2 emissions of alternative fuel infrastructure will ultimately also heavily depend on the carbon content of the respective alternative fuel/energy vector (e.g. the energy mix used for power generation in case of electricity/EVs) and its comparison to conventional fuels at the moment of charging.
Costs related to the roll-out of infrastructure for low-carbon fuels vary greatly by low-carbon fuel/energy vector, fuelling/recharging speed and the extent of the work that is required to connect a refuelling/charging station to a wider energy supply network.
The initial deployment of a new fuel distribution infrastructure may prove uneconomical for investors, especially when this is coupled with a change in vehicle powertrain technology. This is due to the uncertain utilisation rate of such infrastructure and the related risks for ensuring a return on the investment. This is especially relevant for station-based models, such as those characterising gaseous fuels, and is also important for publicly accessible charging stations for EVs (especially in the case of fast chargers). It is much less relevant for the distributed charging model required by EVs, especially in the case of slow charging at home or at the workplace.
The main costs linked to increasing the availability of electric charging infrastructure are building costs. These costs depend on the type of infrastructure built. Public authorities can subsidise part or all of the installation costs. In Norway, for instance, the national government invested around EUR 5 million (euros) for electric charging stations between 2009 and 2011 to cover 100% of the installation costs of public charging stations. The UK government made GBP 5 million (British pounds) available in the financial year 2019/20 through its on-street residential charging scheme.
The deployment of low-carbon fuel/energy vector infrastructure can create new revenue streams, industry branches and related employment opportunities. Additional co‑benefits can include:
- Reducing pollutant emissions in areas with high exposure, such as urban centres (hereby improving air quality and bringing health benefits). This is primarily possible for vehicles using electric motors (including battery electric and fuel cell electric vehicles) and can be facilitated by fuels with high-quality characteristics (such as synthetic fuels), provided that they are coupled with adequate after-treatment technologies.
- Supporting the development of renewable energy sources. If properly managed, the batteries of EVs can provide a range of different services to the power system, such as grid balancing, frequency regulation and peak shaving; hydrogen can also be used as a storage medium to help maximise the energy output of intermittent sources of electricity, such as solar or wind energy, and contribute to the provision of other grid services.
- Increasing energy diversification and/or enhancing the trade balance of countries (e.g. by reducing their oil import bill).
The deployment of alternative fuel infrastructure can put pressure on public space where such infrastructure is installed in public areas.
In general, when promoting alternative fuels, it is important to ensure their sustainable production. This is especially relevant for fuels requiring biomass as a feedstock, in particular with regard to the carbon impact of their production and their impacts related to direct and indirect land-use change (such as competition with food production, and therefore potential impacts on food prices, and deforestation).
In the case of EV charging infrastructure, managing the power demand from charging is important to make sure that transport electrification becomes an asset rather than a liability for the power grid (the maximisation of slow charging and the use of demand management is especially relevant, since fast chargers come with greater stresses for the power system). EVs also tend to incur higher energy use and greenhouse gas emissions than combustion engine vehicles during manufacture and end-of-life disposal.
In the case of hydrogen, it is important not only to ensure production from zero-carbon sources (such as renewable electricity), but also to consider the sheer size of electricity supply that producing it on a large scale would require. The same caveats apply to synthetic fuels, with the additional requirement for carbon derived from biomass or air capture, or the use of non‑carbon molecules for fuel manufacturing (as in the case of ammonia). Hydrogen as a fuel is less cost-effective and also has limitations in thermodynamic efficiency in production and use compared with direct electrification.
Additional reverse effects relate to investment risks and the need to co‑ordinate policies on vehicles with powertrains using alternative fuels/energy vectors and measures stimulating the deployment of the production and distribution infrastructure that they require. For example, policies related to the hydrogen supply, the installation of hydrogen stations and the roll-out of fuel cell vehicles cannot be developed in isolation.
ITF (2020) Transport Climate Action Directory - Support the deployment of low carbon fuel infrastructure
https://www.itf-oecd.org/policy/support-low-carbon-fuel-infrastructure
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