Energy Technology Perspectives 2020: a Focus on Transport Jacob Teter, Jacopo Tattini 2 November, 2020

Energy Technology Perspectives 2020: A focus on transport Jacob Teter, Jacopo Tattini 2 November, 2020

Page 1 Recent IEA analyses

Reports from the Energy Technology and Policy (ETP) Division ETP Special Report on Clean Energy Innovation Energy Technology Perspectives 2020 ETP Clean Energy Technology Guide CCUS in Clean Energy Transitions: ETP Special Report Global EV Outlook 2020; Entering the decade of electric drive?

Other analyses Article: Batteries and hydrogen technology: keys for a clean energy future Article: Clean energy progress after the Covid-19 crisis will need reliable supplies of critical minerals Commentary: As the Covid-19 crisis hammers the auto industry, electric cars remain a bright spot Commentary: Changes in transport behaviour during the Covid-19 crisis Tracking Clean Energy Progress 2020; Transport; Hydrogen The Covid-19 Crisis and Clean Energy Progress: Impact on sectors and technologies

Government net-zero targets Carbon or climate neutrality target

100% 10 /yr

2 No target 80% 8

Under discussion GtCO 60% 6 In policy document 40% 4 Proposed legislation 20% 2 In law 0% 0 Total emissions (right axis)

Net-zero emissions targets from China, Japan and South Korea have been announced subsequent to the publication of ETP 2020 More and more sub-national, national, and supra-national governments are setting targets to attain net-zero greenhouse gas emissions in the coming decades.

Global CO2 emissions reductions in the Sustainable Development Scenario, relative to baseline trends

2019 2030 2040 2050 2060 2070

/yr 2 Power generation

GtCO -10 Electric cars Airplanes, ships, trucks, -20 buses, etc.

Industry -30 Buildings & other Net-zero emissions -40

Clean energy technology progress in the power sector and with electric cars is encouraging, but alone not sufficient

to reach climate goals. About half of all CO2 emissions today are from industry, transport and buildings.

Global CO2 emissions reductions in the Sustainable Development Scenario, relative to baseline trends

2019 2030 2040 2050 2060 2070

yr /

2 Mature

- 5 GtCO - 10 Early adoption

- 15

- 20 Demonstration - 25 Large prototype - 30 Net-zero - 35 emissions Technologies at prototype or demonstration stage today contribute almost 35% of the emissions reductions to 2070; a further 40% comes from technologies that are at early stages of adoption.

Global CO2 emissions in transport by mode in the Sustainable Development Scenario

/yr 2 9 Aviation Light GtCO 8 commercial Shipping vehicles 7 Medium- and heavy trucks 2&3-wheelers 6 Buses and minibuses

Passenger Passenger cars 5 Rail cars, 4 Buses and Light commercial vehicles minibuses 3 Rail

2 2&3-wheelers 1 0 2000 2010 2020 2030 2040 2050 2060 2070

Most modes of transport are decarbonised by 2070 in the Sustainable Development Scenario, but trucking, shipping and aviation continue to emit due to challenges decarbonizing these modes.

Transport final energy demand in the Sustainable Development Scenario, 2019-2070 100% 90% Ammonia 80% Synthetic fuels Hydrogen 70% Advanced biofuels 60%

Final energy share energy Final Conventional biofuels 50% Electricity 40% CNG / LPG Residual fuel 30% Fossil fuel-based jet fuel 20% Diesel 10% Gasoline 0% 2019 2030 2040 2050 2060 2070

In the Sustainable Development Scenario, electricity accounts for more than 35%, and hydrogen and hydrogen derived fuels account for more than 30% of final energy demand in the transport sector by 2070

Share of vehicle sales in regions that have adopted fuel economy and/or CO2 emissions standards

100% Others 90% Others with recent LDV regulations 80% India 70% European Union 60% Canada 50% United States 40% China 30% Japan 20% 10% 0% LDVs HDVs LDVs HDVs LDVs HDVs 2005 2016 2019e

Vehicle efficiency and CO2 emissions standards for heavy-duty vehicles are catching up with those for light-duty vehicles.

Global CO2 emissions from trucks by abatement measure (left) and technology readiness level (right) in the Sustainable Development Scenario versus the Stated Policies Scenario

For heavy-duty trucks, operational and technical efficiency together contribute nearly 45%, electricity an additional 31%, and

hydrogen and biofuels together almost 35% of cumulative CO2 emission reductions in the Sustainable Development Scenario.

Global heavy-duty trucking energy demand and average vehicle efficiency in the Sustainable Development Scenario, 2019-70

800 4.0 Synthetic fuels

700 3.5 Hydrogen Electricity 600 3.0 Biomethane 500 2.5 Ethanol Biodiesel 400 2.0 Natural gas

Final energy demand (Mtoe) demand energy Final 300 1.5 Gasoline

200 1.0 Diesel

100 0.5

0 0.0 2019 2030 2040 2050 2060 2070

The fuel mix diversifies first to liquid fuels, before ultimately shifting to electricity and hydrogen. Vehicle efficiency improvements by 40-45% as more trucks electrify or are equipped with fuel cells.

Heavy-duty truck fleet by powertrain in the Sustainable Development Scenario 100 FCEV

80 BEV Million Million units

60 PHEV

HEV 40

CNG/LNG 20

ICE 0 MFTs HFTs MFTs HFTs MFTs HFTs 2019 2040 2070

Nearly half of medium-freight trucks have hybrid or full electric powertrains by 2040, while most medium- and heavy-freight trucks operate with batteries or hydrogen fuel cells in 2070 in the Sustainable Development Scenario.

The effect of battery and fuel cell prices on total cost of ownership of heavy-duty trucks in long-haul operations 1.00 160 USD/kWh 0.95

0.90

0.85 80 USD/kWh 0.80

0.75 176 USD/kW

Total cost of ownership (USD/km) ownership of cost Total 0.70 60 USD/kW 0.65 BEV 0.60 200 400 600 800 1000 FCEV Vehicle range (km)

The prospects for competing powertrain options hinge on improvements in the cost and performance of batteries and fuel cells.

Total cost of ownership of heavy-duty trucks by low-carbon fuel in the Sustainable Development Scenario, 2040 and 2070

1.4 Synthetic fuel (best case)

1.2 Biofuels (best case) USD/km Low utilisation of infrastructure 1.0 Refuelling, charging

0.8 Electricity, hydrogen, fuel: supply + T&D

Operations and maintenance 0.6 Battery, fuel cell 0.4

0.2 Base truck cost FCEV BEV 700 Hybrid Diesel FCEV BEV 700 Hybrid Diesel catenary hybrid catenary hybrid 2040 2070

Prospects for competing powertrain options hinge on the future costs and performance of batteries and fuel cells as well as accompanying infrastructure.

1. Future trajectories of cost and performance (energy and power density, durability, charging speed) of batteries and fuel cells • Future progress in battery chemistries and production processes • Scale economies in fuel cell production 2. Future trajectories of cost and performance of producing and delivering electricity and hydrogen. (Variable renewables like solar and wind, batteries and other technologies for energy storage, electolysers to make “green” hydrogen) 3. Operating and purchase costs will also be influenced by: • The policy environment • Costs and utilisation rate of the infrastructure (charging / hydrogen refuelling stations) • The well-to-wheels efficiency of competing pathways

Global freight activity, energy consumption and CO2 emissions in international maritime shipping by vessel type and fuel, 2019

140 250 800

2 km - 700 120 Mtoe 200 Mt CO Mt 600 100 500 80 150

Trillion tonne Trillion 400 60 100 300 40 200 50 20 100 0 0 0 By vessel By fuel By vessel By fuel By vessel By fuel type type type Activity Final energy demand CO₂ emissions Vessel types: Fuels:

Bulk carriers and container ships dominate in international shipping, together accounting for about 60% of

total energy use in the sub-sector – almost entirely in the form of oil – and CO2 emissions.

Global CO2 emissions reductions in shipping in the Sustainable Development Scenario relative to the Stated Policies Scenario, 2019-70

Biofuels and energy efficiency are the main contributors to shipping emission reductions in the Sustainable Development Scenario in the short term, while hydrogen and ammonia contribute more in the long term.

Global energy consumption and CO2 emissions in international shipping in the Sustainable Development Scenario, 2019-70

300 900

2 Hydrogen Mtoe

250 750 CO Mt Ammonia

200 600 Electricity

150 450 Gas

100 300 Biofuels

50 150 Oil

CO₂ emissions 0 0 2019 2020 2030 2040 2050 2060 2070

Emissions from international shipping fall by more than four-fifths between 2019 and 2070 in the Sustainable Development Scenario, mainly due to switching to biofuels and hydrogen-based fuels.

Total cost of ownership of hydrogen, ammonia and electric vessels by ship type, 2030 180 160

USD/km 140 120 100 80 60 40 20 0 VLSFO FC ICE Electric VLSFO FC ICE Electric VLSFO FC ICE Electric hydrogen ammonia hydrogen ammonia hydrogen ammonia Tanker Container ship Bulk carrier Base vessel ICE / Fuel cell Storage Infrastructure H2 / NH3 / electricity Battery Fossil fuel Carbon price (USD 100/t CO2) The high cost of storing hydrogen makes it less economical than ammonia. The economics and technical performance of electric vessels need to improve to become a competitive technology for long-distance shipping.

Passenger aviation activity by region in the Sustainable Development Scenario, 2019-70

35 Africa 30

Trillion rpk Trillion Latin America and Caribbean 25

Middle East 20

Europe 15

North America 10

5 Asia and Pacific

0 STEPS 2000 2010 2020 2030 2040 2050 2060 2070

Despite strong policy measures, including taxes that reduce overall demand, air passenger traffic increases by about 350% through to 2070 in the Sustainable Development Scenario.

IEA 2020. All rights reserved. Page 24 Long-term efficiency and fuel opportunities depend on distance Example efficiency opportunities Technology potential for CO emissions reduction declines as distances increase 2 in operations and technology

Flights Current generation • Single engine or electric taxiing • Cabin weight reduction Fuel • Congestion management • Optimised departures / approaches • Reduced cruise inefficiency • Increased engine / aero maintenance • Increased use of composites Next gen • Ultra-high bypass ratio • Double-bubble Blue: ASSB battery (400 Wh/kg, pack level) • Open rotor Orange: li-S battery (800 Wh/kg, pack level) Disruptive (likely 2040 at earliest) • Hybrid-electric aircraft (Boundary layer ingestion) Full electrification • Blended wing-body aircraft • Full electric aircraft Hybrid electric • Hydrogen jet engine aircraft • H2 fuel cell aircraft IEA 2020. All rights reserved. Advanced aircraft and engines, SAF Page 25 Sustainable Aviation Fuels are critical to reducing aviation emissions

Global aviation fuel consumption in the Sustainable Development Scenario and total fuel use in the Stated Policies Scenario, 2019-70

800

STEPS Mtoe/yr

600 Synthetic fuels

400 Biofuels

200 Fossil jet kerosene

0 2020 2030 2040 2050 2060 2070

Rigorous policies to promote the development and adoption of sustainable aviation fuels play the leading role in reducing the climate impacts of aviation in the Sustainable Development Scenario.

Global CO2 emissions in aviation by abatement measure (left) and technology readiness level (right) in the Sustainable Development Scenario relative to the Stated Policies Scenario

Rigorous polices that promote sustainable aviation fuels, efficiency and shifts to alternative transport modes reduce emissions substantially in the Sustainable Development Scenario.

Levelised production costs of sustainable aviation fuels in 2050 2.5

2.0 USD/L 1.5 1.0 0.5 0.0 -0.5 -1.0 $50/bbl crude HEFA BTL BTL w CCUS Synthetic fuels from Synthetic fuels from Fossil jet kerosene biogenic CO₂ and DAC CO₂ and electrolysis electrolysis CAPEX OPEX Fossil fuel cost Biofuels feedstock cost - low Biofuel feedstock cost - high Electricity cost - low Electricity cost - high CO₂ feedstock CO₂ price impact USD 150/tCO₂ With a carbon price of USD 150/tonne, sustainable aviation fuels begin to compete with oil-based jet kerosene, though policy support will need to account for the volatility and uncertainty of future feedstock costs and oil prices.