1. INTERNATIONAL ENERGY AGENCY © OECD/IEA - 2009 Transport, Energy and CO 2 : Moving Toward Sustainability Lew Fulton, IEA/SPT 3rd INTERNATIONAL TAXI FORUM 9 October, 2009

2. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability IEA and transport Relevant publications World Energy Outlook (WEO) Horizon 2030, all energy sources Scenarios depicting different developments on the basis of policy actions One underlying assumption for GDP and population growth Includes a thorough analysis on the oil supply availability Energy Technology Perspectives (ETP) Horizon 2050, all energy sources Scenarios that pay particular attention to the role of technology, especially on the demand side One underlying assumption for GDP and population growth Transport, energy and CO 2 Moving towards sustainability “Transport book” Horizon 2050, all energy sources Builds and expands the work done on ETP

3. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 198019902000201020202030 Mtoe Other renewables Hydro Nuclear Biomass Gas Coal Oil World energy demand expands by 45% between now and 2030 – an average rate of increase of 1.6% per year – with coal accounting for more than a third of the overall rise Where are we headed? World Energy Outlook 2008 World primary energy demand in the Reference Scenario: an unsustainable path World primary energy demand in the Reference Scenario: an unsustainable path

4. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability WEO 2008 Reference Scenario: Incremental oil demand, 2006-2030 -200 0 200 400 600 800 TransportIndustryNon-energy use Other Mtoe Rest of world Other Asia India China OECD Around three-quarters of the projected increase in oil demand comes from transportation

5. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability 0 20 40 60 80 100 120 19902000201020202030 mb/d Natural gas liquids Non-conventional oil Crude oil - yet to be developed (inc. EOR) or found Crude oil - currently producing fields World oil production by source in the Reference Scenario 64 mb/d of gross capacity needs to be installed between 2007 & 2030 – six times the current capacity of Saudi Arabia – to meet demand growth & offset decline

6. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability We need a global 50% CO2 cut by 2050 IEA ETP 2008: Where reductions come from

7. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability IAE Transport book: Key Findings Baseline (WEO Reference Case) transport fuel use 80% higher by 2050; a new High Baseline reaches 25% higher energy use in 2050 Mainly dependent on car sales projections and freight sensitivity to economic growth Fuel economy improvement remains among the most cost-effective measures Can reach 50% improvement for LDVs and 30-50% for other modes by 2050 or before Alt fuels still critical, though biofuels concerns growing; electrification may be key Biofuels will be important but concerns about sustainability are growing; a roadmap for achieving 2050 levels in BLUE is needed Costs for batteries and fuel cells are dropping; EVs may reach commercial production very soon PHEVs appear to be a promising transition strategy

8. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Key Findings (cont.) Additional reductions can come from changes in the nature of travel Modal shift analysis suggests that a 25% reduction from 2050 Baseline is feasible (almost 50% compared to High Baseline), though more work is needed on the costs and policies to get there Technologies such as Bus Rapid Transit will be important, but ultimately its about land use planning and a comprehensive approach to travel policies. Together modal shift, efficiency improvements and alt fuels could cut transport CO2 by 70% compared to baseline in 2050 (30% below 2005) More technology cost work is needed for aviation and shipping, but initial assessment suggests that many relatively low cost opportunities may be available. For LDVs, 80% reduction in CO2 by 2050 at under 200 USD/tonne in that year

9. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability ETP Transport Energy use by scenario In BLUE Map, transport energy use returns nearly to 2005 level, with more than 50% very low CO2 fuels

10. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability ETP BLUE: Advanced technologies must play a major role Unprecedented rates of change in market penetration of advanced technologies

11. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability What about taxis?

12. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability What Makes Sense for Taxis? Taxis are: Very high mileage vehicles Fleet vehicles, so often centrally refueled But range/refueling time are critical issues Efficiency should be step 1 Electricity – questions of range PHEVs may be an interesting option Biofuels – good blendable fuels, but some feedstock/sustainability issues CNG/LPG – very clean fuels but can be expensive and have limited GHG benefits

13. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability IEA work on vehicle efficiency The Global Fuel Economy Initiative (GFEI) Launched on 4 March 2009 in Geneva by IEA, ITF, UNEP, and the FIA Foundation GOAL: reduction in fuel consumption per km of 50% by 2050 (for the vehicle stock) Roughly equivalent to an implementation of a 50% improvement by 2030 for new sales Can be reached with full hybridisation, weight reduction, optimized accessories Will work with governments to develop individual targets and policies to get there

14. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability EVs and Plug-in Hybrids (PHEVs) – do they make sense for taxis? EV – battery cost, range limitations and long recharge times seem like major problems Perhaps battery swapping at central locations is a viable solution PHEVs can offer a small amount of electric range at relatively low battery cost No range issue with full petrol range preserved Excellent for urban air quality Good for CO2 if electricity is from low-CO2 generation But… Is 30-50km of electric range “worth it” for taxis? Helpful if taxi stands have electric recharging?

15. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability A typology of liquid biofuels FuelFeedstock Regions where commercially produced GHG reduction v. petroleum fuelCosts Biofuels yield per hectare of land 1 st Gen Ethanol Grains (wheat, maize) US, Europe, Chinalowmoderate Quasi- 2 nd Gen EthanolSugar cane Brazil, India, Thailandhighlowhigh 2 nd Gen Ethanol biomass (cellulose)nonehigh 1 st Gen Biodiesel (FAME) oil seeds (rape, soy)US, Europemoderate low 2 nd Gen Biodiesel (BTL)biomassnonehigh High 3rd Gen Biodiesel (algae)algaenonehigh Very high

16. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Biofuels compatibility with vehicles All major types of liquid biofuels work (or can work) with today’s ICE vehicles Ethanol and biodiesel: minor modifications needed to go above 10-15% blend rates Hydro-treating of biodiesel should ensure full compatibility Brazil already well above 10%; U.S. may reach blends above 10% within a few years Advanced biodiesel fuel should be 100% compatible with engines BTL biodiesel, algae-derived oils with hydro-treating Ligno-cellulosic ethanol will be like today’s ethanol

17. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Biofuels use growing rapidly, but mainly 1 st generation (grain and sugar cane) ethanol

18. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Biofuels life cycle GHG abatement potential (w/o Land Use Change) Source: IEA&UNEP for OECD (2008) based on several LCA studies

19. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Biofuel demand by fuel/feedstock type… BTL diesel dominates after 2030 due to demand in truck/air/shipping sectors Estimated land requirements if all fuels come from crop feedstocks… 2 nd generation crops and cane much more land efficient IEA ETP 2008: Biofuels Use in BLUE Map 26% of Transport Fuel Use in 2050

20. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Second generation biofuels – key messages First commercial plants appear likely in 2012-15 time frame Significant contribution targeted by 2020 United States and EU policies will be important to watch Current estimated costs – 0.80 – 1.00 USD/l retail gasoline equivalent cost for ligno-cellulosic ethanol, perhaps slightly higher for biomass-to-liquids (BTL) fuel – Long-term cost reduction target of USD 0.60-0.70 USD/lge Key requirements – Market uncertainties mean high-risk investments; need for government support – Biofuels policy must be part of a comprehensive strategy on sustainable bioenergy development – Improved understanding of feedstock availability and cost on a sustainable basis

21. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability 2nd Generation Biofuels: demonstrations are underway US DOE Project investments and locations of demonstration 2 nd generation biofuel plants

22. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Key RD&D Issues A better understanding of feedstocks, their geographic distribution and costs is required Feedstock optimisation will take many years Optimisation of plant scale in conjunction with required crop growing area and distance from plant Feedstock pre-treatment technologies are inefficient and costly New and/or improved enzymes are still being developed Conversion of all C5 and C6 sugars into ethanol a key challenge Increased process efficiencies and cost reduction

23. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Algae biofuels – promise of high yields but still a long way to go

24. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Prospects for algae-based biofuels Benefits include: Does not require use of cropland Can produce a wide range of fuels Prospect of CO2-neutral production But… Many start-ups but difficult to measure progress Cost effectiveness is highly uncertain May be limited number of sites where it makes sense to deploy Widespread deployment before 2015 seems unlikely Strong R&D programs are needed to develop new strains of algae, optimize systems, develop scale-up strategies

25. © OECD/IEA - 2009 TRANSPORT, ENERGY AND CO 2 Moving Toward Sustainability Biofuels summary First generation biofuels – okay for near term oil displacement, but not a good long-term strategy Questions about sustainable production, land use change, greenhouse gas reductions. With the exception of sugarcane ethanol, 1st generation biofuels are costly- $/t CO2 avoided. 2nd generation biofuels hold high hopes but are probably 5-10 years away from commercialization Still some important technical issues to work out Investment risks in 2 nd gen biofuels are high and investors are currently wary. Time frame for commercialisation of algae biofuels is quite uncertain, but may be post 2020 before large volume production is achieved Still, with strong policy support, IEA ETP BLUE Map has advanced biofuels reaching 5 - 7% share of world transport fuels by 2030 and 25% by 2050. Sufficient, sustainable feedstock supplies will be critical