The transportation sector is one of the largest contributors to global greenhouse gas (GHG) emissions, responsible for approximately 24% of the world’s energy-related emissions. With the sector accounting for about 60% of global oil demand, the challenge of reducing emissions is significant and complex. As global populations grow and economies expand, the demand for mobility and transport services is expected to rise, making the decarbonization of transport a critical element in the fight against climate change.
Understanding the Scope of the Challenge
Over the past three decades, emissions from transport have grown faster than those from any other sector, according to the International Energy Agency (IEA). This trend underscores the urgency of implementing effective decarbonization strategies. The World Bank has stated that stabilizing climate change is impossible without an aggressive approach to reducing transport emissions. This means that significant changes are required across the transport sector, which can be broadly categorized into three areas: road, shipping, and aviation.
Road Transport: The Shift Towards Electrification
Current Status and Future Projections
Road transport is the largest single contributor to oil demand within the transport sector, accounting for approximately 40 million barrels per day (b/d), or about 40% of global oil consumption. The electrification of road transport, particularly through the adoption of electric vehicles (EVs), is a key strategy for reducing emissions.
- Electric Vehicles (EVs): EV adoption has been growing rapidly, especially in developed regions like Europe and China. By 2025, it is expected that EVs will make up 25% of all car sales globally. This figure is projected to rise to 40% by 2030 and 80% by 2040. Despite this rapid growth, it is estimated that only one-third of the global car fleet will be electric by 2040. This means that traditional gasoline-powered vehicles will still number more than 1 billion units globally.
- Challenges to EV Adoption: The transition to EVs faces several challenges, including the high costs associated with shifting away from established automotive supply chains. Car manufacturers outside China have committed half a trillion dollars to developing and rolling out new EV models. Moreover, the required infrastructure for EVs, such as charging stations, represents a significant investment. BloombergNEF (BNEF) expects cumulative global investment in charging infrastructure to exceed $360 billion by 2030 and more than $1 trillion by 2040.
- Developing Markets: In developing countries, the adoption of EVs is expected to be slower due to economic constraints and insufficient infrastructure. For example, fleet ownership in low-income regions is projected to grow from 106.4 million units in 2022 to 250.8 million units by 2040, with a substantial portion of these vehicles still relying on internal combustion engines (ICEs).
- Heavy Trucks: Decarbonizing heavy-duty vehicles, such as trucks, presents additional challenges. Battery technology for larger vehicles is currently limited by factors such as longer charging times, shorter driving ranges, and the need for significant grid upgrades. In the short to medium term, alternative fuels such as liquefied natural gas (LNG), hydrogen fuel cells, and biofuels are being considered as transitional solutions.
Shipping: Navigating Towards Sustainable Fuel Options
The Role of Shipping in Global Emissions
Shipping plays a crucial role in global trade, handling around 90% of internationally traded goods, which amounts to approximately 11 billion tons of cargo per year. However, this sector is also a significant emitter of GHGs, contributing nearly 2% of global emissions.
- IMO’s GHG Strategy: The International Maritime Organization (IMO) has revised its GHG strategy, setting more ambitious targets to reduce emissions from international shipping. The 2023 IMO GHG Strategy aims for net-zero emissions by 2050, with interim targets of reducing emissions by 20% by 2030 and 70% by 2040, compared to 2008 levels.
- Alternative Fuels: The shipping industry is exploring various alternative fuels to reduce its reliance on heavy fuel oils (HFO). Potential options include bioLNG, e-ammonia, e-methanol, and biomethanol. Additionally, there is interest in nuclear propulsion for certain applications. Improvements in ship design and operational efficiencies are also expected to play a key role in reducing emissions.
Aviation: Sustainable Fuels and Future Technologies
Current and Future Outlook
Aviation is another critical sector where decarbonization efforts are gaining momentum. The International Air Transport Association (IATA) has identified Sustainable Aviation Fuel (SAF) as the most viable near-term solution for reducing aviation emissions.
- Sustainable Aviation Fuel (SAF): SAF is produced from renewable resources such as cooking oils and agricultural waste. It can reduce carbon emissions by an average of 80% compared to traditional jet fuel and is compatible with existing aircraft and infrastructure. However, the widespread adoption of SAF is hindered by the limited availability of feedstocks and the high cost, which is currently four to six times that of conventional jet fuel.
- Long-Term Solutions: In the longer term, new propulsion technologies such as battery-powered and hydrogen-fueled aircraft are being considered. While these technologies hold promise, they are not expected to be commercially viable on a large scale in the near future. Continued research and development, along with significant investments, will be necessary to bring these technologies to market.
Economic and Infrastructure Challenges
The transition to a decarbonized transport sector involves substantial economic and infrastructural challenges. For instance, the automotive industry is facing a monumental shift, requiring a complete overhaul of supply chains, manufacturing processes, and consumer behavior. The global investment needed to support the EV transition, particularly in charging infrastructure, is projected to be in the trillions of dollars over the next two decades.
In shipping, the adoption of alternative fuels will require significant changes to fuel supply chains, port infrastructure, and ship designs. Similarly, the aviation sector will need to navigate the high costs and supply chain complexities associated with SAF, while also preparing for the eventual introduction of new propulsion technologies.
Policy and Regulatory Support
Governments and international bodies are playing a critical role in driving the decarbonization of transport.
- Legislation and Incentives: In the European Union, the “Fit for 55” legislative package aims to achieve a 55% reduction in emissions by 2030, with measures targeting zero emissions from new cars and vans by 2035. In the United States, the Inflation Reduction Act (IRA) provides funding and tax credits to support the development of zero-carbon technologies, including hydrogen and electric vehicles.
- Global Cooperation: The success of transport decarbonization will depend on coordinated efforts across nations. International agreements, such as the Paris Agreement, provide a framework for collective action, but more targeted policies and regulations at the national and regional levels will be essential to drive progress.
Conclusion: The Path Forward
Decarbonizing the transport sector is one of the most complex and urgent challenges in the global effort to combat climate change. While significant progress has been made, particularly in the adoption of electric vehicles and the exploration of alternative fuels for shipping and aviation, much work remains to be done.