Consultant report

Transportation carbon intensity targets for the European Union: Road and aviation sectors

Increasing the use of renewable transport fuels is a key element of the European Union’s (EU) decarbonization goals in the “Fit for 55” package released in July, 2021. The European Commission’s proposal for a revision of the Renewable Energy Directive introduces a 13% greenhouse gas (GHG) intensity reduction target for the EU transport fuels mix by 2030, along with subtargets for advanced renewable fuel technologies. The Commission has also proposed a 5% target for sustainable aviation fuels (SAF) in 2030 as part of its ReFuel EU regulation. These new targets will require dramatic change within the renewable fuels industry, including the rapid development of new technologies that have not yet been commercialized.

This consultant study introduces a partial equilibrium model to project the mix of renewable fuels most likely to be used to comply with the Commission’s set of proposed targets for the road and aviation sectors. The Commission also proposed a 6% GHG intensity reduction target for maritime fuels as part of its Fuels EU Maritime regulation, but that is outside the scope of this study. The model represents a market in which obligated parties may trade GHG reduction credits generated from the use of renewable fuel and use those GHG reduction credits to achieve compliance with the policy targets. The model finds the most cost-effective solution for obligated parties. This study reports the resulting mix of renewable fuels used for compliance, the GHG credit price, overall costs of the policies, and overall GHG impacts. This study also assesses 9 other scenarios representing modifications that could be made to the Commission’s proposals.

By comparing results from the different scenarios, shown in the Table below, this study has several findings relevant to the ongoing policy process as the European Parliament and Council both consider changes to the “Fit for 55” package. The study finds that a GHG intensity reduction target results in greater GHG benefits and a lower cost of carbon abatement compared to a renewable energy target. Importantly, it finds that higher targets do not necessarily increase climate benefits because they incentivize greater amounts of high-GHG fuels, such as soy biofuel, when indirect land use change emissions are considered. The highest GHG savings and the lowest cost of carbon abatement are realized when all food-based biofuels are excluded, and when this exclusion also applies to food-based biofuels grown as intermediate crops. Renewable fuel policy is complex, and the impacts of potential policy changes are not always obvious. This study seeks to untangle these impacts in order to inform policymakers and stakeholders about the consequences of various policy options.


Fuels GHG emissions