Assessment of transport fuel taxation strategies through integration of road transport in an energy system model — the case of Sweden

Journal article, 2012

Road transport is responsible for a large and growing share of CO2 emissions in most countries. A number of new fuel-efficient vehicle technologies and renewable transport fuels are possible alternatives to conventional options but their deployment relies strongly on different policy measures. Even though a future higher use of transport biofuels and electric vehicles is likely to increase the interaction between the transportation sector and the stationary energy system (heat, power, etc.), these systems are often analysed separately. In this study, a transport module is developed and integrated into the MARKAL_Nordic energy system model. The transport module describes a range of vehicle technologies and fuel options as well as different paths for conversion of primary energy resources into transport fuels. The integrated model is utilized to analyse the impact of transport fuel tax designs on future cost-effective fuel and technology choices in the Swedish transportation sector, as well as the consequences of these choices on system costs and CO2 emissions. The model, which is driven by cost-minimization, is run to 2050 with various assumptions regarding transport fuel tax levels and tax schemes. The results stress the importance of fuel taxes to accelerate the introduction of fuel-efficient vehicle technologies such as hybrids and plug-in hybrids. Tax exemptions can make biofuels an economically favourable choice for vehicle users. However, due to limitations in biomass supply, a too strong policy-focus on transport biofuels can lead to high system costs in relation to the CO2 abatement achieved. The modelling performed indicates that the effects caused by linkages between the transportation sector and the stationary energy system can be significant and integrated approaches are thus highly relevant.