Innovation Gaps

Transport

Innovation on efficiency technologies and low-carbon vehicles and fuels is particularly important in harder-to-abate modes

Transitioning towards sustainable transport will require improving vehicle efficiency and adopting low carbon vehicle and fuel technologies. Innovation can accelerate the transition by cutting costs, promoting technology learning, and improving performance of both conventional and zero-emission vehicles (electric or fuel cell electric).

Innovation on efficiency technologies and low-carbon vehicles and fuels is particularly important in harder-to-abate modes like heavy-duty vehicles, maritime and aviation, where technologies that are currently commercially available alone cannot deliver the emission reductions seen in the SDS.

Innovation can also play an important role in improving systems-level efficiency. For instance, innovation in digital technologies -- from communications to deep learning algorithms -- can help match and optimise transport supply and demand.

Fuel economy of cars & vans

The car industry is one of the highest spenders on research and development

The car industry is one of the highest spenders on research and development, representing nearly 25% of global R&D spending in 2018 (Auto Alliance, 2018).

Numerous technologies can lead to fuel economy improvements, including:

  • energy efficient tires
  • improved aerodynamics
  • fuel efficient combustion technologies and engine downsizing
  • powertrain electrification

Reducing vehicle weight is a key means to improve fuel efficiency. Lightweighting techniques such as using high-strength steel and aluminium in the chassis can reduce the mass of the vehicle while cutting both fuel consumption and total life-cycle CO2 emissions (Serrenho, 2017).

So far, however, most of the fuel economy benefits of lightweighting have been offset by the increased weight of upscale features, safety enhancements and increased vehicle size in many markets.

Gap 1: Advanced internal combustion engine technologies

Why is this gap important?

Despite the increasing market share of EVs, IEA scenarios show that a large share of the LDV fleet will be powered by internal combustion engines (ICEs) in conventional, hybrid and plug-in hybrid configurations until at least mid-century. Reducing ICE CO2 emissions is thus a key part of a balanced strategy for limiting atmospheric CO2 levels. Improving ICEs is also a cost-effective CO2 mitigation strategy.

ICEs operating on electrofuels generated when excess renewable electricity is available may even promote more rapid decarbonisation of the electricity supply while providing near-zero carbon emissions. Additional CO2 emissions reductions could also be gained through the use of bio-derived or other low-carbon fuels along with ICE design optimisation to take full advantage of their properties.

Reducing local pollutant emissions of particulate matter, unburned hydrocarbons and nitrogen oxides from ICEs remains an important challenge. The move to vehicle hybridisation with start-stop systems can also result in higher pollutant emissions if exhaust after-treatment devices are not operating effectively (SAE, 2018).

Technology solutions

A number of viable technologies are ready or are being introduced into the market, though there is potential for improvement. Many of these TRL 8‑10 technologies are currently being introduced in luxury vehicles.

  • Low-friction cylinder wall finishes, bearings and rings, and electrified accessories such as water pumps, all reduce parasitic losses.
  • Cooled exhaust gas recirculation (EGR); improved air handling and turbocharging.
  • Variable valve actuation technologies (VVA), including both variable timing (VVT) and lift (VVL), particularly important for light-load urban fuel efficiency and emissions.
  • Hybrid technologies range from fully hybrid powertrain topologies (e.g. the Toyota Prius) through more modest partial hybridisation (e.g. the 48V Mercedes S-class) to the now-ubiquitous start-stop systems.
  • Advanced diesel engine combustion designs, e.g. new bowl geometry reduce emissions and improve efficiency (e.g. Volvo).
  • Variable compression ratio (VCR) engines (e.g. Nissan) operate efficiently at low to intermediate loads while preserving high power density and good peak-load performance.
  • Alternative engine architectures that reduce heat losses or minimise combustion duration (high ‘tumble’ air flows and larger engine stroke-to-bore ratios).

Significant advances in our understanding are also needed. These measures are typically characterised as TRL 3‑7:

  • Measures to reduce engine knock and low-speed pre-ignition, which limit compression ratio and powertrain system operations in mainstream downsized, boosted spark-ignition (SI) engine technologies.
  • Approaches to maintain rapid combustion and high-efficiency over the full operating range when VVA is employed.
  • Improved aftertreatment catalyst formulations and strategies to reduce catalyst warm-up time.
  • Strategies to reduce particulate mass and number in direct-injection engines (both diesel and gasoline), without adversely impacting efficiency.
  • Advanced ignition concepts (e.g. plasma-based igniters or turbulent jet igniters) to improve knock resistance and enable more efficient, lower-emission operations for both conventional SI and lean combustion technologies.
  • Reduced heat losses through combustion system design or deployment of thermal barrier coatings (also enhances after-treatment performance and waste heat recovery).
  • Advanced strategies for reducing pumping work or knock, such as water injection, on-board fuel reformation and partial fuel reformation strategies (e.g. SwRI-dedicated EGR).
  • Fuel-lean combustion technologies are a key opportunity for efficiency, but require:
  • Cost-effective HC/NOx aftertreatment adapted to the low exhaust gas temperatures of lean, high-compression/expansion-ratio engines (includes diesels).
  • Reliable ignition for very lean mixtures and improved low-load stability.
  • Effective control strategies for highly efficient kinetically controlled combustion.
  • Control of both NOx and particulate emissions in stratified combustion systems.
  • Alternative engine architectures such as split-cycle (e.g. Volvo or Ricardo), or opposed-piston designs (e.g. Achates).
  • Dual fuel concepts that could provide very high efficiency, low emissions and improved control, but are in the very early stages of development.

What are the leading initiatives?

Numerous programmes within government research laboratories, universities, engine design consultancies and car-part suppliers are working to close the science and technology gaps identified above. The following are the key institutes or programmes funded either by governments or large industrial consortiums (for-profit organisations have been omitted):

European Union

  • FVV (Forschungsvereinigung Verbrennungskraftmaschinen) is a large consortium of companies, universities, research centres and funding organisations that funds ICE research in numerous areas that impact both efficiency and emissions.
  • IFP Energies nouvelles (Institut français du pétrole) is a public research organisation that researches a broad range of transportation technologies.

Japan

  • The government-funded Strategic Innovation Program (SIP) ended successfully in May 2018 after demonstrating a peak SI engine thermal efficiency of 51.5% (including waste heat recovery).
  • The Association of Internal Combustion Engines (AICE) is an industry consortium of 8 OEMs and more than 80 suppliers that funds JPN 200 million (USD 2 million) worth of university research on LDVs.
  • The New A.C.E. Institute, funded by a consortium of approximately ten OEMs and suppliers, focuses on advance diesel research with a budget of roughly JPN 200 million (USD 2 million).
  • Japan Automobile Research Institute (JARI) researches a variety of transportation technologies, including ICEs, EVs, and FCVs.

United States

  • The US Department of Energy funds engine research at the US national laboratories as well as at universities and in industry through a competitive proposal process, with an approximate budget of USD 64 million per year.
  • The Southwest Research Institute performs in-house contractual research and operates two industry-funded consortiums focused on clean and efficient gasoline engines (HEDGE) and diesel combustion (CHEDE).

Recommended actions

  • Industrial producers should in the next 5 years ensure continued R&D funding; and in the next 5 to 10 years formulate policies that: incentivise consumer acceptance of higher initial product costs in return for lower total ownership costs; are technology-neutral; provide enough lead time for robust product development that will be accepted by consumers and give companies profit-making opportunities; and ensure transportation access to all sectors of society by promoting cost-effective solutions.
  • Industry/companies should in the next 5 to 10 years onvest in R&D and rollout-proven technologies in vehicle fleet

Gap 2: Lightweighting of light duty vehicles (LDVs)

Why is this gap important?

Although the average weight of new LDVs remained relatively stable globally during 2015‑17, in more than two-thirds of countries average LDV weight actually increased – with increases in three-quarters of countries in 2016‑17 alone. This is the result of three counterbalancing trends: first, growth in the market share of large LDVs (SUVs and pick-up trucks) raised vehicle weight.

At the same time, however, an increasing volume (and share) of vehicles were being sold in emerging economies. These vehicles tend to be smaller and lighter than new vehicles sold in advanced economies, which tempered the effect of higher large-LDV sales.

Finally, lightweight materials such as advanced high-strength steel, aluminium, thermoplastics and even carbon fibre composites are used more widely in new LDVs sold in all markets because they have the potential to improve safety, performance and fuel economy while making the vehicle lighter.

Technology solutions

Reducing vehicle weight is a key means to improve fuel efficiency. Lightweighting techniques such as using high-strength steel and aluminium in the chassis can reduce the mass of the vehicle while cutting both fuel consumption and total life-cycle CO2 emissions (Serrenho, 2017). So far, however, most of the fuel economy benefits of lightweighting have been offset by the increased weight of upscale features, safety enhancements and increased vehicle size in many markets.

In recent decades, advanced (high-strength) steel architectures has successfully incorporated lighter, stronger and more durable composites into car bodies, chassis and closures. Many of these elements are already fully commercial (TRL 10‑11), but more advanced designs at lower technology readiness are also being developed. Aluminium components have also been used for car bodies and other parts. As with steel, aluminium producers are constantly developing stronger alloys, and sheet improvements are especially pronounced. Depending on fuel economy policies and the competitiveness of raw material prices, it is likely that aluminium will be increasing used to make hoods, doors, trucks, roofs and fenders in the upcoming decade.

Thermoplastics and composites are more recent additions to the structural and weight- and stress-bearing components of automobiles. Their application will depend on whether material and manufacturing process innovations allow them to be adopted cost-effectively in large-scale car manufacturing, whether their production can be made less energy-intensive, and whether recycling processes can be designed.

What are the leading initiatives?

  • Many national governments are introducing fuel economy standards into their regulatory frameworks. Most fuel economy standards use a target curve to accommodate the origins of various car makers, and the main metrics for target curves are either weight-based or footprint-based. Governments that opt for a weight-based fuel economy standard reduce the necessity for car makers to reduce vehicle weight, however, as a higher average weight allows higher average fuel consumption to meet the target.
  • Car manufacturers and part suppliers are developing materials and designing cars that weigh less for a similar size.
  • Materials scientists and other researchers are developing innovative materials and production processes, for instance novel ways to mass-produce and recycle carbon fibre-reinforced polymer composite materials. Such materials could make cars and trucks safer and more efficient, and they also show promise for other transport modes such as aviation.

Recommended actions

  • National governments should in the near-term adopt footprint-based fuel economy standards to incentivise weight-reduction technology developments and meet corporate average fuel economy targets that would partially offset impaired fuel economy improvements in many countries. Another solution could be to implement a direct weight-reduction target; consider life-cycle energy, emissions and sustainability impacts when designing regulations; and support basic materials science research in academic and government laboratories, and design policies to promote innovation in industry.
  • Car manufacturers and part suppliers should in the next 5-10 years develop materials and design cars that weigh less for a similar size. 
  • Researchers and industry scientists should in the next 5 years and continuously design materials and components that are easily disassembled and recycled.
Electric vehicles

Innovation in EVs fundamentally needs to focus on continued improvements of the battery technology itself

Innovation in EVs fundamentally needs to focus on continued improvements of the battery technology itself, including advancing alternative chemistries, to reach the cost, density and efficiency needed to reach the levels of deployment in the SDS.

These innovation efforts can also support more sustainable manufacturing and value chains for the large volumes of batteries produced under the SDS.

As the share of EVs increases, their impact on electricity networks, particularly on distribution grids, will become larger. If EV charging is deployed and managed smartly however, EVs can become a flexibility resource able to aid in their own integration and that of higher shares of variable renewables or other distributed energy resources into the grid.

Gap 1. Advancing technologies and reducing battery costs

Why is this gap important?

In the SDS, annual EV battery deployment is 30 times higher by 2030. Reaching this level of deployment will require continued cost reductions, and battery efficiency and density improvements beyond what can be achieved with current technologies.

Electric cars currently cost more to purchase than similar-sized conventional cars, and even from a total cost of ownership perspective (including operational costs such as fuel), the economic advantages of electrification are limited to a relatively narrow range of cases. The cost challenges related to EVs are primarily linked to the battery, one of the major cost components. Technological advances allowing for more compact batteries with longer ranges, extra durability (the capacity to withstand a large number of charge/discharge cycles without performance being affected) and the capacity to charge at very high power (fast/ultra-fast charging, from 100 kW to 1 MW), will also influence level of EV adoption.

Technology solutions

EV batteries currently focus on Li-ion technologies with a range of chemistries (e.g. nickel cobalt aluminium oxide [NCA], nickel manganese cobalt [NMC] and lithium iron phosphate [LFP], the last being the most used today).

With growing volumes of EVs on the market, battery costs and technology evolutions are happening rapidly, and two trends are currently being observed:

  • Lithium-ion battery costs per kWh are decreasing every year thanks to economies of scale in manufacturing and larger battery packs per vehicle.
  • Increasingly, EV manufacturers offer various battery sizes for the same model to meet consumer needs as much as possible and thus optimise vehicle price for the consumer.

Indications from recent assessments of battery technologies suggest that Li-ion is expected to remain the technology of choice for the next decade. The main developments in cell technology that are likely to be deployed in the next few years include:

  • For the cathode, the reduction of cobalt content in existing cathode chemistries, aiming to reduce cost and increase energy density, i.e. from today’s NMC 111 to NMC 622 by 2020, or from the 80% nickel and 15% cobalt of current NCA batteries to higher shares of nickel (Meeus, 2018; Nitta et al. 2015; Chung and Lee, 2017).
  • For the anode, further improvement to the graphite structure, enabling faster charging rates (Meeus, 2018).
  • For the electrolyte, the development of gel-like electrolyte material (Meeus, 2018).

The next generation of Li-ion batteries entering the mass production market around 2025 is expected to have low cobalt content, high energy density and NMC 811 cathodes. Silicon can be added in small quantities to the graphite anode to increase energy density by up to 50% (Meeus, 2018), while electrolyte salts able to withstand higher voltages will also contribute to better performance.

Cathode chemistries in Li-ion NMC batteries are already moving rapidly towards higher shares of richer nickel chemistries (422 and 532, and to a lower extent up to 622 and 811). The intention is to reduce the quantity of cobalt in NMC batteries, recently associated with unstable prices.

In the 2025-30 period, technologies that promise significantly higher energy densities are likely to begin entering the market and will push the limits of Li-ion batteries (advanced Li-ion). For example, lithium metal cathodes are a promising technology for Li-ion batteries with improved performance without relying on cobalt, and anodes made of silicon composite might also enter the design.

In the longer term, the research community is particularly investigating solid-state batteries and post-Li‑ion technologies, such as lithium-sulphur and lithium-air. Solid-state batteries use solid electrolytes to accommodate faster charging and have a higher energy density and better durability. However, the fact that this technology operates better in high temperatures (solid electrolytes have lower conductivity at low temperatures) is a challenge for their suitability in automotive applications, especially in temperate to cold climates, so materials and innovations capable of overcoming this are at the centre of research. Lithium-sulphur and especially lithium-air batteries are options for which the theoretical energy density would be maximised, but they are quite a few years away from reaching mass market deployment.

While lithium-ion batteries with NMC cathodes are in phase IV of technology readiness development, solid-state batteries are aimed to enter phase III by 2028 and phase IV by 2030. Post‑Li-ion technologies are currently considered to be at TRL 3, and the EC's goal is to reach TRL 7 by 2030 and TRL 9 by 2035, according to their TRL scale (EC, 2018).

What are the leading initiatives?

  • Half of the battery cells production for electric light-duty vehicles is concentrated in China, with the rest divided among the United States, Korea and Japan. Large private sector stakeholders (such as BYD and CATL, which account for more than half of the Chinese market, and LG Chem, Panasonic, Samsung SDI and SK Innovation) are at the core of automotive battery development, both in terms of scale and technology improvement.
  • Other stakeholders involved in advancing costs reductions and technology performance of automotive batteries include government institutions and research laboratories. For example, the European Battery Alliance proposed an implementation plan to create a common understanding of state-of-the-art battery technology development, define the main innovation targets for upcoming years (relative to energy density, fast-charging capability, battery durability, pack cost and manufacturing volumes), and define a pathway for achieving specific TRLs in the future (EC, 2018).
  • Large investments in solid-state battery research are also being made in Japan, where an alliance of Japanese manufacturers is joining forces (with public support from Japan’s New Energy and Industrial Technology Development Organization) to develop solid-state batteries (Nikkei, 2018). Recently, Toyota and Panasonic also created a joint venture with the aim of developing solid-state batteries in the first half of the 2020s, and they intend to do so for various automakers (Toyota, 2019).

Recommended actions

  • Environment, energy and resource ministries should in the next 5 years facilitate exploratory research, developing combinatorial materials for radically novel systems, including metal-air, solid-state, magnesium-based, fluoride or chloride-ion, etc; develop awareness in R&D strategies about using raw materials that will not be considered scarce or environmentally problematic; develop and expand strategies for research and demonstration on the use of second-hand batteries provided by the transport sector for stationary storage, which could alleviate some of the pressures of reaching lower cost targets for the power sector; and governments should strengthen industrial leadership through accelerated research and innovation support, particularly for advanced lithium-ion and solid-state technologies.
  • Multilateral Development agencies should in the next 5 to 10 years promote funding and collaborative activities for innovative low-carbon technologies in the battery storage industry.
  • NGOs and think tanks should in the next 5 to 10 years raise awareness of environmental and social impacts of the battery supply chain; and raise awareness on the relevance of electric mobility and battery storage for the clean energy transition.
  • Industry should in the next 5 to 10 years co‑operate with the public sector to better understand which policies should be prioritised for the development of battery industry value chains, maximising the benefits available from cases in which industries already have a competitive advantage and helping public authorities understand which conditions would facilitate investments in other areas of the battery value chain; join forces and co‑operate across the battery value chain to reduce investment risks and facilitate the emergence of mutual benefits, e.g. due to scale and asset sharing; increase international collaboration to identify and raise awareness of the key challenges in taking key early-stage battery technologies to the market, focusing particularly on the long-term view beyond current Li-ion technology; and reduce balance-of-system and integration costs for the new generation of low-cost batteries.

Gap 2. Allowing EVs to become a flexibility resource for the grid

Why is this gap important?

High EV uptake with unmanaged charging can pose a challenge for the power system if charging coincides with the high-demand periods of the main power system, resulting in greater peak demand and requiring additional peak generation capacity. Increasing EV uptake can also overload distribution networks and necessitate local power grid upgrades such as transformer replacements and cable reinforcement.

Conversely, if adequately managed, EVs can also provide demand-side response (DSR) solutions across a wide range of timescales. Unlocking DSR opportunities from the participation of EVs would help integrate a higher share of variable renewables such as wind and solar power as well as other distributed energy resources. This is a major opportunity given the challenges of electricity system operators to conciliate supply and demand while integrating greater shares of variable renewable energy and other distributed energy resources.

Technology solutions

Reaping this potential requires digital platforms and mechanisms to unlock the DSR capability of EVs. In most countries, however, the necessary elements have not been developed enough to optimally accommodate increased EV uptake. This includes smart-meter deployment and other advanced metering infrastructure; electricity markets operating at various time-scales (from the second to the year); regulations that allow distributed generators to participate in the market and aggregate their flexibility capacity; and the physical ability to control vehicle charging and/or allow for bidirectional electricity flows.

Fundamentally, a charging system is needed that allows control over power delivery, potentially able to change the charging current. Open-charge protocols can overcome the lack of charging current control in today's chargers by acting between the operator and the charging point (TRL 8). Progress in advanced metering infrastructure is uneven across countries, even if strong growth is expected in key regions such as India and Southeast Asia by 2025. 

Crucially, interoperability is needed between the grid and charging infrastructure, e-mobility control and management systems, and vehicle and consumer interfaces. Arrangements for smart charging may be complex and involve third parties, distribution system operators (DSOs), utilities, car manufacturers and other stakeholders: ICT standards and protocols need to facilitate communication between all parties and the DSO responsible for overseeing and co‑ordinating grid operations. Most of these protocols have not been tested at scale.

Vehicle-to-grid systems cost three to five times more than standard smart charging (IRENA, 2019). There is currently no standard technology to monitor the state of a vehicle’s charge, and V2G communication protocols for intelligent devices and electrical substations are yet to be deployed and standardised at scale.

Forms of smart charging are multiple but generally require that dynamic electricity pricing be directly available to the consumer (so that the consumer can choose when to charge the vehicle). More importantly, aggregators (the interface between the individual EV consumer and electricity markets or grid operators) need to be allowed to provide a range of services. Aggregators are essential to a system with distributed flexibility sources. If they are empowered to pool together EVs (and/or other electrical devices) at a large enough scale, they can trigger effective demand-side responses by aggregating the monetary benefits available from differentiated electricity prices (e.g. across times of the day) from participating in different power markets.

Finally, numerous countries lack competitive arrangements in wholesale, balancing and capacity markets, which are essential to maximise the benefits of EV flexibility services. If EVs do not have access to price-based, dynamic control of their charging time (or to more complex forms of smart charging such as vehicle-to-grid), the only visible EV impacts on the grid may be overloads of local networks (or the entire system at peak times).

What are the leading initiatives?

Countries with high EV penetrations, such as those in Northern Europe, have already gained experience in pooling together and co‑ordinating the charging of many EVs, with a visible positive impact on the power grid. The figure below shows how the charging capacity of 1 000 EV charging sessions in the Netherlands are pooled by the aggregator Jedlix and respond to price signals, resulting in a significant change in the power draw of EVs to off-peak demand hours – in comparison with 1 000 charging sessions not subject to the price signals.

Additionally, China, the United States, Japan and a number of European countries lead in smart-meter deployment, with China having deployed close to 500 million by 2017 and several countries poised to reach full rollouts over the next several years (IEA, 2018b).

The Parker project in Denmark is developing smart charging services to a fleet of electric vehicles to provide grid-balancing services.

Recommended actions

  • Think tanks/governments/energy regulators should in the next 5 years create new market participants (non-existent in a traditional electricity market configuration) such as aggregators and virtual power plants, capable of pooling flexibility resources from distributed electrical devices; empower participants that can provide early aggregation capacity: as ‘natural’ aggregators, managers of EV fleets are well placed to explore the flexibility solutions their EV fleet could provide to the grid; open current electricity markets to a larger panel of participants (such as aggregators and, to some extent, individuals) and adapt regulations when needed to facilitate market access; where absent, create electricity markets to provide system services, capacity or reserves, enabling EVs to bid on demand-response services; governments, regulators and utilities should revise grid codes to reduce the impacts of high, localised EV loads on power quality. Empower DSOs to better understand and design standards
  • Utilities, grid owners and operators should in the next 5 to 10 years expand investment in grid-wide monitoring and big data analytics when necessary through changes in regulatory incentives.
  • Standards bodies, equipment manufacturers and regulators should in the next 5 to 10 years develop software and interoperability protocols allowing communication among EVs, aggregators, grid markets and operators at all levels.
  • Energy and Resource Ministries should in the next 5 to 10 years study the cost impact of technical elements for EVs and the related charging infrastructure needed for controlled, bi-directional charging, and develop technologies able to minimise this impact (costs will also fall as technology deployment accelerates).
  • Technical research organisations (industry, academia, research institutes) should in the next 5 to 10 years study the impact of controlled and bi-directional charging on battery durability, and develop technologies to minimise this impact.
Transport biofuels

Advanced biofuels need to command a more significant share of transport biofuel consumption by 2030 in the Sustainable Development Scenario

Advanced biofuels need to command a more significant share of transport biofuel consumption by 2030 in the SDS. However, currently only biodiesel and HVO production from fat, waste oil and grease feedstocks is commercialised, and there are limits on the availability of these feedstocks.

Therefore, scaling up advanced biofuel production volumes significantly needs innovation so other less mature advanced biofuel technologies reach commercial production. Cellulosic ethanol and biomass-to-liquid (BtL) synthetic fuels are important in this respect. This is because they can be produced from feedstocks with higher availability and potentially lower cost, such as municipal solid waste, forestry and agricultural residues. 

Gap 1. Commercialisation of cellulosic ethanol

Why is this gap important?

Cellulosic ethanol offers significant CO2 emissions reductions compared with fossil-based transport fuels for internal combustion engine (ICE) passenger vehicles, as well as for trucks and buses when used as ED95 (95% fuel ethanol with lubricants and additives). Although regular vehicles can accommodate ethanol at low blend rates, CO2 emissions reductions are maximised when it is used at high blend shares or unblended in flexible-fuel vehicles. Higher cellulosic ethanol production would also provide the additional benefit of curtailing agricultural residue-burning in fields, which deteriorates air quality. 

Technology solutions

Cellulosic ethanol is one of the advanced biofuels closest to commercialisation, currently at TRL 8 level. Commercial-scale plants in Brazil, Europe and the United States came online during 2013‑16, but their performance has so far been mixed.

Some of these plants are offline due to non-technical issues, while others demonstrate progress in scaling up output but production remains below rated capacity. These plants are in an extended commissioning phase because of the intensive learning curve required to raise yields and utilisation rates through core-process optimisation, design improvements and further modifications to improve process reliability. Important breakthroughs in pre-treatment have been made by several of these plants in the last two years, and improved performance will reduce investment and operational costs for the next generation of projects.

What are the leading initiatives?

The United States, Europe, Brazil and India lead cellulosic ethanol development owing to a combination of complementary industry and agricultural sectors as well as policy support.

For example, the US Renewable Fuel Standard has a dedicated requirement for cellulosic biofuels, while India has pledged to develop 12 commercial-scale cellulosic ethanol plants.

Recommended actions

  • Government energy and transport departments should in the next 5 years introduce or sustain policy measures to guarantee long-term demand (e.g. advanced biofuel mandates) and encourage existing cellulosic ethanol plants to persevere with activity to raise yields and utilisation rates; and provide policy support to encourage investment, e.g. financial de-risking measures. Key countries/regions: As ethanol can be transported globally demand from any country would support commercialisation efforts. However, at current costs advanced economies are likely to have a key role.
  • Industry should in the next 5 years continue to improve yields and utilisation rates to meet investment criteria for replication plants; and exploit synergies between conventional and cellulosic ethanol production to form integrated facilities that cost less and build on existing feedstock availability, infrastructure and expertise. Key countries/regions: Europe, Brazil and the United States, as they already have commercial-scale cellulosic ethanol facilities.
  • Academia should in the next 5 years undertake benchmarking studies on cellulosic ethanol CO2 emissions reductions, and analyse potential production volumes in different regions based on current and future feedstock availability. Key countries/regions: Globally, although institutions in countries with significant agricultural residue availability, e.g. China and India, are especially relevant.
  • NGOs and think tanks should in the next 5 years provide clear and balanced information on cellulosic ethanol and other advanced biofuels, highlighting the benefits they can offer and sustainability concerns they mitigate.

Gap 2. Development of biomass-to-liquids fuel production from thermochemical processes

Why is this gap important?

Biomass-to-Liquids (BtL) synthetic fuels produced from thermochemical processes, such as gasification and pyrolysis, offer the potential to convert low value biomass and waste feedstocks (including municipal solid waste) to low carbon transport fuels. The high availability of these feedstocks means that fully commercialised thermochemical technologies could open the door to significant volumes of advanced biofuels for the transport sector, providing diesel substitutes in sectors that are hard to electrify.

Technology solutions

There are various BtL technology pathways to produce transport biofuels. These are generally at a technology readiness level between 5-7 e.g. development and demonstration. However, one BtL technology has reached TRL 8 first-of-a-kind commercial scale.

BtL fuel production remains low. Some plants have failed to successfully operate once built and multiple announced projects have not been developed. Several challenges slow technology development, such as:

  • Tar formation causing operational problems with downstream equipment.
  • Slagging and fouling with certain feedstocks limiting plant availability.
  • Difficulties with handling, storage and transportation of certain biomass and waste feedstocks. 

There is also the need to lower BtL fuel production costs.

What are the leading initiatives?

One plant is producing methanol and ethanol from municipal solid waste in Canada, with replication projects in development. In the United States two commercial scale projects based on gasification and FT to produce aviation biofuels are in the later stages of development. Sweden and Finland are also at the forefront of project development in the area of BtL fuels.

Countries with advanced biofuel policy frameworks e.g. several European Union member states and the United States are likely to lead future BtL development. These may open the door for future technology leapfrogging in other countries with significant feedstock availability should costs reduce. 

Recommended actions

  • Industrial producers should in the next 10 years demonstrate long term operation of demonstration and first-commercial BtL facilities. This will facilitate commercialisation and an improved indication of BtL fuel production costs; optimised methods to convert or remove tars including identification of suitable scrubbing liquids and cracking measures Key countries/regions: Regions with active BtL project development e.g. Europe, North America; and demonstrate the co-processing of biomass feedstocks and the upgrading of fuel precursors in refineries.
  • Academia should in the next 10 years research on the optimisation of BtL processes for different biomass and waste feedstocks. Key countries/regions: Focusing on regions with significant feedstock availability. Continued R&D on syngas/pyrolysis oil cleaning and upgrading to transport fuels.
  • Standardisation bodies, with vehicle original equipment manufacturers (OEMs) should in the next 5 years establish recognised standards for BtL fuel use and production. Key countries/regions: Focused on key markets e.g. countries and regions with supportive policies for advanced biofuels.
Trucks & buses

There is a need for alternative infrastructure and operational models for long-haul trucking

With the exception of the long-range Tesla semi variant and the prototype Nikola trucks, the range of zero-emission trucks is limited to below 600 kilometres. Together with the time required to recharge depleted batteries (or the high amperage, voltage, and power draw requirements of very fast charging), this points to the need for alternative infrastructure and operational models for long-haul trucking.

To date, three competitors seem most promising: dynamic charging on Electric Road System (ERS) corridors; continuing improvements in the performance, capacity, and costs of advanced lithium batteries; and hydrogen.

Gap 1. Cost-competitive hydrogen fuel cell systems for FCEVs

Why is this gap important?

There are two main types of zero-emissions vehicles: BEVs and FCEVs. Because of the long charging time and short range of EVs, FCEVs hold promise as a complementary technology, but they remain costly and their availability is limited. Transport modes such as trucks, buses, maritime and locomotive applications, may particularly benefit from fuel cell rather than pure electric, battery-based drivetrains. Several steps can be taken to reach cost targets: reduce precious metal use by downsizing the fuel cell stack; boost production of fuel cells and all ancillary components to obtain economy-of-scale cost reductions; and deploy targeted refuelling infrastructure tailored to specific modes and applications.

Technology solutions

In 2018, around 4 000 FCEVs were sold around the world (TRL-8). Toyota Motor is currently the world's leading FCEV producer and plans to increase its production tenfold to 30 000 FCEVs per year in 2020. Hyundai Motor has also stated plans to ramp up annual production to 40 000 FCEVs per year in 2022. FCEV costs are anticipated to fall with greater production; for example, a significant drop in fuel cell system costs is expected once annual production reaches 100 000 units. Raising the popularity of mid- and heavy-duty applications (in buses and trucks), especially in China, is essential to create sufficiently high demand. Expanding hydrogen refuelling infrastructure is also important to assuage consumers’ refuelling concerns. Recharging infrastructure deployment plans should focus on heavy-duty vehicles, as higher volumes can create a robust revenue stream. Reducing fuel cell costs by deploying more passenger vehicles, and hydrogen costs by putting more heavy-duty FCEVs on the road, would be a plausible approach to make FCEVs cost-competitive.

What are the leading initiatives?

  • The California Fuel Cell Partnership targets 1 million FCEVs in 2030.
  • The Government of Korea announced a roadmap to produce 1.8 million fuel cells by 2030.
  • The Japanese government has developed a revised roadmap to make FCEVs cost-competitive with hybrid vehicles around 2025. They target 800 000 FCEVs in 2030.
  • Toyota plans to introduce 600 FCEV "Mirai" taxis in Paris by the end of 2020.
  • The FCH-JU (Fuel Cell Hydrogen Joint Undertaking) is targeting fuel cell bus cost reductions through joint purchasing, and plans to introduce 360 fuel cell buses under the programme.
  • China has a roadmap to deploy 50 000 FCEVs (including 10 000 commercial vehicles) in 2025 and 1 million in 2030.

Recommended actions

Governments

Next 5-10 years:

  • Support FCEV and hydrogen refuelling station incentives.
  • Consider policies to decarbonise captive fleets (bus, taxi, truck).

Automotive industry

Next 5 years:

  • Reduce fuel system and hydrogen storage tank costs.
  • Expand FCEV model choices.
  • Enhance technology collaboration among OEM's to accelerate FCEV deployment

Energy industry

Continuously:

  • Continue hydrogen refuelling station deployment.


Gap 2. Deploying Electric Road System (ERS) corridors

Why is this gap important?

With the exception of the long-range Tesla semi variant and the prototype Nikola trucks, the range of zero-emission trucks is limited to below 600 kilometres. Together with the time required to recharge depleted batteries (or the high amperage, voltage, and power draw requirements of very fast charging), this points to the need for alternative infrastructure and operational models for long-haul trucking. To date, three competitors seem most promising: dynamic charging on Electric Road System (ERS) corridors, continuing improvements in the performance, capacity, and costs of advanced lithium batteries, and hydrogen.

Technology solutions

Conductive dynamic charging is much closer to market. Catenary systems have been operating for a few years, and are currently at TRL 6-7. In-road conductive systems, currently at TRL 5-6, are more expensive to build in existing roads, but may be cheaper to install at scale on new roads. Inductive charging, at TRL 4-5, is likely to be too costly relative to batteries and static charging solutions to merit adoption on any applications other than buses and heavily trafficked truck routes.

What are the leading initiatives?

  • Scania and Siemens began demonstration segments on stretches of highways in Sweden and Germany, and the length of trials in both countries has steadily increased. California started a trial in 2017 and in 2018 construction began on a trial in Northern Italy.
  • The eRoadArlanda project, conceived by a consortium of public, private and research members, uses an in-road conductive charging system and a retractable arm extending from the bottom of a truck.
  • The technology that is furthest from market uses induction coils and alternating electromagnetic fields to achieve contactless, inductive dynamic charging. Tests of technology have been limited; Utah State University publically demonstrated dynamic inductive charging on a test track in 2016, Qualcomm has successfully charged vehicles at 20 kW at highway speeds outside of Paris, and the Israeli company ElectRoad have tested a bus route outside of Tel Aviv.

Recommended actions

The industry

Next 5 years:

  • Develop further demonstration projects supplemented by studies using vehicle telematics

Governments and regulators

Next 5 years:

  • Support and set up demonstration projects, for instance at ports
  • Advance fiscal policy frameworks that e.g. tax diesel fuels and commercial trucks using the fuel, as well as road pricing measures. 
  • Implement zero-emission vehicle (ZEV) mandates which can impel truck and bus makers to offer electric models. 

Next 5 to 10 years:

  • Implement cost- and risk-sharing policies to address barriers that block initial deployment, financed by dedicated funding streams, such as fuel tax revenues, or other climate policy linked revenues

Gap 3. Improving the cost and performance of lithium-ion batteries

Why is this gap important?

For trucks operating on regional delivery and long-haul segments, the suitability of electrification will depend upon continuing energy density improvements and cost reductions in lithium-based batteries.

There is a broad consensus that the ‘floor’ costs of current lithium-ion technologies may be around 80 USD/kWh. Going beyond that threshold is necessary in the SDS after around 2030, and will require the development of technologies that are currently in very early stages of development.

In long-haul, heavy-duty applications, gravimetric energy density is an important performance criterion on which advanced lithium-ion batteries will have to continue to improve in order to compete with fossil (diesel and natural gas) powered trucks. Advanced solid state chemistries may be able to achieve energy densities of 300-400 Wh/kg, and even more advanced chemistries (such as Lithium-Air) may have the potential to reach densities as high as 1000 Wh/kg or more. 

Rail

Digital technologies can be used to help integrate rail with other transport modes

Expanding high-quality urban rail transport depends on political champions, thorough project viability and costs assessments and effective funding, as much as it does on technical issues. Equally important are sound construction, installation of the necessary equipment and hardware, and well-managed operations.

Digital technologies can be used to help integrate rail with other transport modes, provide superior service and increase utilisation to raise revenues and reduce costs.

Gap 1. Digitalisation of rail: automation, management and control systems

Why is this gap important?

By reducing the time and distance between trains, digital technologies can facilitate more intensive use of rail infrastructure, which increases capacity and boosts investment returns while improving user convenience and maintaining high safety standards.

Technology solutions

Advanced traffic management and control systems (TRL 10) help ensure safe and efficient rail operations. These systems include Communication-Based Train Controls (CBTC), used extensively for urban rail, combined with Driver Assistance Systems (DAS) to maximise use of the network. These technologies can maximise network utilisation by reducing the headway between trains, and they have also demonstrated effectiveness in reducing energy consumption by up to 15% (Dunbar, Roberts and Zhao, 2017).

Automated trains (TRL 9) promise improved safety, lower costs and greater energy efficiency than advanced traffic management and control systems. Under International Electrotechnical Commission (IEC) Standard No. 62267, the rail subsector defines Grades of Automation (GoA) ranging from fully manual operations, such as a tram-operating in street traffic (GoA-0), to unattended, fully automated operations (GoA-4). 

Other digital technologies such as big data analytics (TRL 9) and artificial intelligence (TRL 8) could significantly improve end-user services through seamless integration across different modes and other measures, and they could also improve energy efficiency and reduce costs for operators.

What are the leading initiatives?

  • The European Railway Traffic Management System (ERTMS), uses control, command, signalling and communication systems to ensure the interoperability of trains across the region, primarily on conventional and HSR networks.
  • The first fully automated metro (GoA-4) opened in 1981 in Kobe, Japan, and there are now over 1 000 km of GoA-4 lines in 42 cities worldwide – around 7% of total installed metro networks (UITP, 2018a; UITP, 2018b). While the number of driverless metros is expanding rapidly on closed and secured lines, there are significant challenges to deploying fully autonomous trains on open, uncontrolled or unsecured lines (such as tram, intercity and freight lines). Nevertheless, a handful of autonomous tram-, intercity- and freight-line demonstration projects are in commercial operation.\

Gap 2. Establishing and expanding urban rail networks in existing and future large cities

Why is this gap important?

A rich literature finds that the provision of reliable, convenient, and affordable public transit, and in the case of large cities, metro and light rail, not only reduces the per capita transport emissions in these cities, but can also contribute substantially to reducing levels of pollutants associated with road vehicles, and also enables reductions in the macro- and micro-economic costs of providing urban mobility.

Other studies identify economic and equity benefits that come from urban rail systems.

Technology solutions

Even the more advanced technologies employed in rail, such as those covered in Gap 3, range in readiness from TRL: 10-11, as they have been widely rolled out.

What are the leading initiatives?

Land value capture is a proven practice for securing capital to finance urban rail project construction, expansion and refurbishment, and operations. This opportunity arises where the rail transport network developers purchase land at pre-railway prices and develop residential, commercial and tertiary facilities, enabling them to capture the increase in property value induced by the railway operations. Governments may share in the risks and rewards by direct investment or through the taxation of higher value properties. The anticipated change in property value can mobilise debt financing. Such schemes have been used to finance urban rail projects in cities throughout the world.

Recommended actions

  • City governments: Integrate transport and land use planning divisions. Conduct feasibility studies to inform metro construction, improvement, and expansion plans, focusing on near-term (e.g. 10 years) and longer term (up to 30 years) potential. Develop appropriate plans to upgrade public transit (including BRT, bus, and rail), integrating analysis of co-benefits.
  • Rail construction companies: Focus on strategies to incorporate energy-efficient and customer friendly technologies.
  • Public transit operators: Identify operation strategies and technologies that can draw more customers, improve levels of service and reliability, and cut cost. Develop effective and informative public awareness and communication campaigns on the benefits of public transit.
Aviation

Aviation is likely to be the most difficult transport sector to decarbonise.

Aviation is likely to be the most difficult transport sector to decarbonise.

The largest potential efficiency gains can be obtained by completely redesigning aircraft. Considering the long lead times and investment required, such measures are unlikely to be commercialised by 2030. However, “clean sheet” wing and tube aircraft have the potential to reduce fuel burn by 40% (Kharina, 2017).

In addition to research and trials of new, more efficient aircraft designs, adoption of alternative, low-carbon jet fuels will be needed to reduce CO2 emissions. Technology and scale-up barriers in producing such fuels can be best addressed through direct support from governments, incentives and standards.

Nearer term solutions, such as improving flight routing systems and switching to hydrogen and/or electricity during taxiing, can also improve the overall efficiency of the sector. 

Gap 1. Shortening flight distances through better routing

Considerable fuel is wasted due to inefficient routing. While providing the same service, better flight routing could limit inefficient passenger activity growth and cut consumption by as much as 10% (IEA, 2018).

Technology solutions

  • The European Space Agency’s IRIS Programme is a new technology for routing aircraft that uses satellites to complement traditional radio transmission for air traffic management. As aircraft currently have to fly over ‘checkpoints’ to interact with ground-based radio transmissions, they often cannot take the shortest route between airports, adding an average 42 km to each flight. By using satellite navigation, however, IRIS will be better able to route flights and manage congestion in the skies. These routing improvements are projected to reduce fuel use by 5‑10% for a typical European journey (SESAR, 2015).
  • A similar scheme to improve aircraft routing was introduced in 2018 by ENAV, the Italian agency overseeing flight routing. It frees aircraft flying above 9 000 m to take a more efficient route than normal, saving an estimated 22.8 km per flight and a total of 37 000 tonnes of fuel and 116 000 tonnes of CO2 in 2017 (ENAV, 2018).
International shipping

Low and zero-carbon fuels barely figure in the maritime fuel mix

To put international shipping on the SDS trajectory, it is essential to switch to low- and zero-carbon fuels, as they barely figure in the maritime fuel mix.

Interest in using alternative fuels such as ammonia, hydrogen or advanced biodiesel and ammonia mounted significantly after the IMO adopted its initial strategy to reduce GHG emissions from ships by 2050. This agreement happened shortly before the implementation of Emission Control Areas (which limit sulphur oxide [SOx] and particulate matter [PM] emissions near ports) and tighter sulphur emission regulations, which will come into force in 2020.

Although advanced biofuels, hydrogen and ammonia are potential low-carbon options to replace conventional fuels, an important uptake barrier is their high cost compared with conventional fuels. In the cases of ammonia and hydrogen, another barrier is the lack of infrastructure.

Gap 1: Transitioning to low-carbon ammonia or hydrogen fuel

Why is this gap important?

In addition to diversifying the sources of maritime fuel supplies, adopting alternative fuels would help meet the tighter sulphur standards coming into effect in 2020; alternatives to bunker fuel will also be needed to meet SOx and PM emissions limits near a growing number of the world's ports (Emission Control Areas). These near-term air pollution targets can generally be met by switching to low-sulphur diesel or investing in scrubbers, and liquefied natural gas (LNG) is also an option because it does not emit SOx.

Oil demand in this fast-growing sector is set to rise 20% (to 6 million barrels per day) by 2030 unless measures are taken to enforce the IMO’s long-term GHG emissions target. Ship owners must therefore make some important decisions very soon.

In the long term, GHG emissions from international shipping must be cut by at least 50% by 2050. A challenge to meeting this IMO target is that ship lifetimes generally span two to three decades. However, depending on eventual costs and incentives, using ammonia or hydrogen could be a solution.

Technology solutions

Current deployment plans for ammonia or hydrogen focus on relatively small-scale applications, but there is considerable scope for direct and indirect hydrogen use in shipping.

Using hydrogen and ammonia in shipping is especially advantageous because of port infrastructure, particularly when ports are linked with large industrial clusters that have on-site refineries or chemical facilities that already use and produce hydrogen. Scaling up hydrogen (and ammonia) production in such coastal industrial hubs would therefore provide alternative fuel for ships, and these ships could then be used to deliver hydrogen to other parts of the world, establishing maritime trade routes for potentially larger future demand.

What are the leading initiatives?

A few smaller ships have been equipped with fuel cells in the 100‑kilowatt (kW) to 300‑kW range. Fuel cell applications with low electrical power output (up to 100 kW) have also been deployed in maritime applications (DNV GL, 2018); these rely mostly on PEMFC technology (E4tech, 2018). Fuel cell technologies are currently at TRL-4.

In the near to medium term, implicit or explicit carbon pricing or mandates will be necessary to promote the development and adoption of low-carbon fuel alternatives in shipping. Ammonia produced through low- or zero-carbon methods and used on ships with conventional internal combustion engines currently appears to be the most cost-competitive option. The carbon price needed to make this option break even with very-low-sulphur oil (VLSFO) is highly sensitive to the delivered cost of hydrogen to make ammonia, which is determined by the cost of producing it with a steam methane reformer (SMR) fitted with carbon capture and storage (CCS), and/or electricity costs for hydrogen production via electrolysis. Reducing ammonia and hydrogen supply costs at each step of the value chain will be critical to make these low- and zero-carbon fuels competitive.