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We examined the co-evolution of the transportation, and electricity and heat generation sectors in the Netherlands until 2040 using a MARKAL bottom-up cost optimisation model. All scenario variants investigated indicate a switch away from crude oil-based diesel and petrol for transportation. Lowest overall CO2 abatement cost is achieved by accommodating transportation first and using relatively expensive options for emissions reduction in electricity generation if needed. Biomass and carbon capture and storage (CCS) are used to full potential. Transportation CO2 emissions are reduced by switching to ethanol or bio-based synthetic fuels combined with CCS, and series hybrid cars if needed. Depending on the availability of biomass and carbon storage capacity, electricity is produced from biomass, coal with CCS, or wind complemented with natural gas. Indirect greenhouse gas emissions rise to 34–54% of national emissions in 2040. The difference in annual investment required between the scenario variants with and without CO2 emissions reductions of 68% by 2040 is 4–7 billion euro/year, or 0.5–1.2% of projected GDP. Investment costs are mostly determined by the cost of cars and electricity generation capacity. We observe competition for limited biomass supply and CO2 storage capacity between the transportation and power sectors.

Globally, our road transport sector is powered almost exclusively by internal combustion engines (ICE) and more than 90% of these engines are powered by fuels derived from crude oil. Both the current cost and projected future costs of crude oil have risen sharply in the last years. Doubts about of security of imported crude oil supplies remain, and prices are expected to remain volatile but higher than in the past. Road transport is also a major source of greenhouse gases (GHG) and air pollutants such as NOx, PM10 and volatile organic compounds. In the European Union (EU), it is responsible for 18% of GHG emissions. Changing the cars, fuels and related infrastructure we use today is a complicated and expensive transition. To reduce dependence on crude oil in transport, the use of electricity and hydrogen in cars has been advocated. However, hydrogen and battery powered cars were found to be uncompetitive by a large margin: even if the cost of fuel cells would come down to 120 €/kW or the cost of batteries to €150/kWh, advanced hybrid cars are found to have a lower cost of driving. Due to increased efficiency, series hybrid cars can reduce emissions of CO2 by 34%-47% compared to regular diesel and petrol cars. Plug-in hybrid cars and fully battery powered cars can further reduce GHG emissions, depending on the source of electricity used. Based on the generation capacity projected for the Netherlands in 2015, electricity for electric vehicle (EV) charging would be generated using natural gas, and this would mean a reduction of GHG emissions of 51%-78% compared to current cars and fuels. If off-peak charging is successfully introduced, electric driving need not strain infrastructure even in case of a 100% switch to electric vehicles. Reduction of oil dependence and, possibly, GHG emissions can also be achieved by using alternative fuels. Synthetic fuel may be competitive with oil-based diesel, and for gas-to-liquids (GTL), coal-to-liquids (CTL) and biomass-to-liquids (BTL) oil price should be above 33, 60 and 75 $/bbl, respectively. However, CTL is found to increase our transport-related GHG emissions per km driven by 25%-110%. Diesel from synthetic crude oil (SCO) increases GHG emissions by 13%-60% and GTL chains without CCS by 10%. GTL with CCS is found to reduce GHG emissions by around 5% compared to fossil diesel. The net emissions from BTL can be an order of magnitude smaller and can even be made negative by application of CCS. When necessary GHG reductions in road transportation and electricity generation are considered together, lowest overall costs are achieved by using hybrid cars and both biomass and CCS to maximum potential, and by using the least-cost CO2 emissions reduction options in road transportation, even if that reduces biomass and CO2 storage capacity available for electricity generation. However, significant uncertainties remain in the cost of alternative fuels, as well as fuel cells and batteries. EU regulation on car emissions will presumably force a shift to hybrid vehicles by 2020 unless fuel cells or batteries become very cheap very soon, with additional GHG emissions reductions achieved through use of biofuels if sufficient supply of sustainable biomass feedstock can be secured. However, non-cost barriers, such as lack of familiarity and impact on car performance, to public adoption of alternative fuels remain. Simulations of the co-evolution of motorist demand and production capacity indicate that multiple barriers to adoption of alternative fuels reinforce each other. All else being equal, sustainable biofuels and hybrid cars may be adopted by motorists on grounds of GHG emissions reductions and economic arguments. Furthermore, these alternatives can also be implemented without dramatic changes in vehicle fleets and energy infrastructure.

We examine the competitiveness of series hybrid compared to fuel cell, parallel hybrid, and regular cars. We use public domain data to determine efficiency, fuel consumption, total costs of ownership and greenhouse gas emissions resulting from drivetrain choices. The series hybrid drivetrain can be seen both as an alternative to petrol, diesel and parallel hybrid cars, as well as an intermediate stage towards fully electric or fuel cell cars. We calculate the fuel consumption and costs of four diesel-fuelled series hybrid, four plug-in hybrid and four fuel cell car configurations, and compared these to three reference cars. We find that series hybrid cars may reduce fuel consumption by 34–47%, but cost €5000–12,000 more. Well-to-wheel greenhouse gas emissions may be reduced to 89–103 g CO2 km−1 compared to reference petrol (163 g km−1) and diesel cars (156 g km−1). Series hybrid cars with wheel motors have lower weight and 7–21% lower fuel consumption than those with central electric motors. The fuel cell car remains uncompetitive even if production costs of fuel cells come down by 90%. Plug-in hybrid cars are competitive when driving large distances on electricity, and/or if cost of batteries come down substantially. Well-to-wheel greenhouse gas emissions may be reduced to 60–69 g CO2 km−1.

We calculated carbon and energy balances and costs of 14 different Fischer–Tropsch (FT) fuel production plants in 17 complete well-to-wheel (WTW) chains. The FT plants can use natural gas, coal, biomass or mixtures as feedstock. Technical data, and technological and economic assumptions for developments for 2020 were derived from the literature, recalculating to 2005 euros for (capital) costs. Our best-guess WTW estimates indicate BTL production costs break even when oil prices rise above $75/bbl, CTL above $60/bbl and GTL at $36/bbl. CTL, and GTL without carbon capture and storage (CCS), will emit more CO2 than diesel from conventional oil. Driving on fuel from GTL with CCS may reduce GHG emissions to around 123 g CO2/km. Driving on BTL may cause emissions of 32–63 g CO2/km and these can be made negative by application of CCS. It is possible to have net climate neutral driving by combining fuels produced from fossil resources with around 50% BTL with CCS, if biomass gasification and CCS can be made to work on an industrial scale and the feedstock is obtained in a climate-neutral manner. However, the uncertainties in these numbers are in the order of tens of percents, due to uncertainty in the data for component costs, variability in prices of feedstocks and by-products, and the GHG impact of producing biomass.