#Transportation

The transportation sector includes many separate segments, from on-road personal light-duty vehicles (the largest in terms of base year energy consumption) to on-road medium- and heavy-duty vehicles (i.e., trucks and busses) to non-road segments, including aviation, rail, and maritime.

#On-road Transportation

Figure 36 shows a break-out of current final energy use by on-road segment. Candidate technologies for these segments include conventional ICEV (which is assumed to transition toward a non-plug-in hybrid electric drivetrain over time), battery electric vehicle (BEV), plug-in hybrid electric vehicle (PHEV), and a hydrogen fuel cell vehicle (HFCV). Costs of both battery and fuel cell systems are projected to decline significantly over time, and although both electricity and hydrogen are more expensive per delivered MMBtu than liquid fuels, BEVs and HFCVs offer significant efficiency advantages as well as lower maintenance costs compared to ICEVs. The relative competitiveness of alternative vehicles varies across transportation segments and customer classes based on factors such as vehicle utilization, access to charging, and energy to power requirements of the vehicle type. Heavier vehicles require a higher energy-to-power capacity ratio, which—all else equal—tends to favor HFCVs over BEVs because fuel cell costs scale more with power capacity. In contrast, battery costs scale more with energy capacity.^[1] However, even accounting for this factor, based on the model’s current assumptions, the projected total costs of ownership for BEVs are generally lower than for HFCVs in all on-road segments, including medium- and heavy-duty vehicles. Nonetheless, there is substantial uncertainty regarding future cost trends for both battery and fuel cell systems, particularly in larger vehicles.

One key factor influencing the trade-offs between alternative vehicle technologies is the utilization pattern or duty cycle. In general, BEVs entail higher upfront costs than conventional ICEVs but have lower operating costs, both in terms of delivered fuel and maintenance. For this reason, vehicles that are used more frequently have stronger incentives for BEV adoption. Vehicle survey data suggests that there is a broad distribution of vehicle utilization (e.g., vehicle miles traveled per vehicle per year) for both personal and fleet vehicles, although more data is needed in this area, especially for medium- and heavy-duty segments. The economic analysis in this study suggests that segments with lower utilization could continue to use ICEVs even as the majority of vehicles and vehicle miles are supplied by electricity. For example, older conventional vehicles could cost-effectively be shifted to lower utilization duty cycles while new vintage electric vehicles are used more heavily. This pattern could be consistent with a net-zero target as long as the liquid fuels used are carbon neutral, for example, produced from bioenergy or offset by negative emissions.

In the Net-Zero All Options scenario, the production of biofuels with the capture of process emissions leads to delivered liquid fuel prices that are roughly equivalent to Reference scenario prices (see Figure 18 and Table 2). In the Net-Zero Limited Options scenario, prices for delivered fuels are higher, and in particular the price of liquid fuels is much higher due to limitations on bioenergy supply and opportunities for negative emissions. This drives additional electrification and deployment of fuel cell vehicles in MD/HD sectors, so that liquid fuel demands are nearly eliminated. For example, the low utilization segment demand met with biofuels in the All Options scenario is met with hydrogen instead.

As shown in Figure 37 and Figure 38, electric vehicles represent around 80–90% of vehicle miles traveled (VMT) in most on-road segments by 2050. Because of the efficiency advantage of BEVs over ICEVs, total final energy declines significantly despite increasing total VMT, and the share of liquid fuels in final energy is higher than that of ICEVs in VMT. For light-duty vehicles, plug-in hybrid electric vehicles (PHEVs) provide around 10% of VMTs, while for most drivers, an all-electric option is more cost-effective. HFCVs provide about 5% of VMTs in the Net-Zero Limited Options scenario, displacing liquid biofuels when they become more expensive.

#Non-Road Transportation

Non-road transportation covers a range of segments from both the transportation and industry sectors. These include the aviation, maritime, and rail segments of the transportation sector as well as non-road vehicles and equipment in construction, agriculture, and mining (i.e., non-manufacturing industrial sectors). The opportunities and challenges for low-carbon technologies vary across each of these segments. Final energy use by fuel and segment in the transportation sector is summarized in Figure 39. Industrial non-road vehicles are discussed in the Industry section and shown in Figure 40.

#Aviation

Demand for air travel can be divided into segments, including short-haul (defined here as less than 600 miles), long-haul domestic, long-haul international, and military and other aviation. Currently, demand across all segments is entirely met with conventional (i.e., petroleum-based) jet fuel. While service demand for air travel is projected to increase in the coming decades, there is also potential for efficiency improvements to offset this growth, resulting in relatively flat or slightly declining demand for jet fuel as final energy in the Reference Scenario. With a decarbonization target, it is possible for substitution of battery electric or fuel cell aircraft for short-haul trips, although this segment accounts for relatively little final energy use and is projected to grow more slowly than long-haul service demand.

Apart from this limited substitution opportunity, there are two primary options for decarbonization of jet fuel use. The first is substitution of conventional jet fuel with either renewable or synthetic drop-in equivalent fuels. The second is to offset conventional jet fuel with negative emissions from elsewhere in the economy. In the Net-Zero scenarios where CCS and negative emissions are available, the model takes advantage of the latter option. In the Net-Zero All Options and Higher Fuel Cost scenarios, a portion of jet fuel demand is met with a bio-based alternative and the remainder with conventional jet fuel, while in the Net-Zero Limited Options case, all supply is from synthetic jet fuel, i.e., the so-called “e-fuels” pathway in which hydrogen produced from electricity is combined with carbon captured from the atmosphere to synthesize a climate-neutral hydrocarbon fuel. This pathway is potentially feasible, but—based on the assumptions in this analysis—it is considerably more expensive than using conventional jet fuel with negative emissions offsets if available. In the Net-Zero Limited Options scenario, there is also some deployment of battery electric technologies in the short-haul segment, with electricity accounting for roughly a third of final energy in that segment. However, this translates to only about 3% of total aviation final energy demand. Finally, note that the use of synthetic jet fuel and electrification of short-haul aviation entail very high marginal cost of emissions reductions and are only deployed in 2050 once the target is fully binding.

#Maritime

The largest energy use within the maritime sector is bunker fuels for international shipping. This demand is currently met with a mix of residual fuel oil and distillate or diesel fuel. The largest domestic maritime segment is recreational boats, which primarily use gasoline, with smaller demands for domestic shipping and passenger ferries. For small recreational boats, electrification is possible, although the capital cost of the vehicle is significantly higher than conventionally powered boats. For larger craft, there is the possibility to use compressed natural gas, hydrogen, or ammonia as alternative technologies, or as in the case of aviation, to use renewable or synthetic drop-in equivalent liquid fuels with conventional engines. In the Net-Zero All Options and Higher Fuel Cost scenarios, substitution with renewable diesel is the most cost-effective action in the maritime segment to contribute to an economy-wide net-zero target. Only in the Net-Zero Limited Options scenario are alternative technologies deployed, such as ammonia, because of their higher up-front cost and the higher cost of ammonia compared to biofuels, except in the most restrictive case.

#Rail

Although some light rail and commuter trains are electrified, most final energy for rail is used by diesel locomotives. Increased electrification can be cost-effective for smaller systems, and hydrogen fuel cell locomotives are a potentially cost-effective alternative for larger systems. But similar to the other non-road segments, use of renewable diesel is the lowest cost approach to decarbonization in this segment, especially with optimistic assumptions about bioenergy production and the availability of negative emissions offsets. In the Net-Zero Limited Options scenario, there is increased use of hydrogen and electricity, though some diesel demand remains.