IVL Swedish Environmental Research Institute

Renewable fuels for transport are needed to reach future climate targets. However, the potential future role of different biofuels, hydrogen, and electrofuels (produced by electricity, water, and CO2) in different transportation sectors remains uncertain. Increased knowledge about the preconditions for different renewable fuels for road and air transport to contribute to the transformation of the transport sector is needed to ensure the transformation is done in a climate- and cost-effective way. The CO2 abatement cost, i.e., the cost of reducing a certain amount of greenhouse gas (GHG) emissions is central from both a societal and business perspective, the latter partly due to the design of the Swedish reduction obligation system.

The abatement cost of a specific fuel value chain depends on the fuel production cost and the GHG reduction provided by the fuel. This report provides an updated summary of the CO2 abatement costs for various types of biofuels and electrofuels for road transport and aviation, relevant in a Swedish context. Fuel production costs and GHG performance (well to wheel) for the selected renewable fuel pathways are mapped based on published data. The estimated CO2 abatement cost ranges from -0.37 to 4.03 SEK/kg CO2-equivalent. Methane from anaerobic digestion of sewage sludge and ethanol from fermentation of sugarcane and maize end up with negative CO2 abatement cost given the assumptions made, meaning it is more economically beneficial to use than its fossil counterpart.

Electrofuels pathways (particularly diesel and aviation fuels) have, on the other hand, relatively high CO2 abatement costs. Also, so-called bio-electrofuels produced from biogenic excess CO2 from biofuel production and electricity linked to biofuel production generally have higher CO2 abatement costs than the corresponding forest biomass-based biofuel pathway. For forest biomass-based biofuels, bio-electrofuels and electrofuels, methanol, and methane pathways in general have somewhat lower CO2 abatement costs than hydrocarbon-based fuels (gasoline, diesel, and aviation fuel).Since most of the assessed renewable fuel pathways achieve substantial GHG emission reduction compared to fossil fuels, the fuel production cost is, in general, more important than the GHG performance to achieve a low CO2 abatement cost. The production cost for fossil fuels also influences the CO2 abatement cost to a large extent. More estimates of cost and GHG performance for gasification of waste-based pathways are needed and for certain pathways under development (e.g., including hydropyrolysis).