Alternative cost-optimal pathways for the transport sector of Cyprus

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Master of Science Thesis

KTH School of Industrial Engineering and Management

Energy Technology EGI-2015-092MSC

Division of Energy Systems Analysis

SE-100 44 STOCKHOLM

Alternative cost-optimal pathways for the

transport sector of Cyprus

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Master of Science Thesis EGI EGI-2015-092MSC

Alternative cost-optimal pathways for the transport

sector of Cyprus

Josefin Wiking

Approved 2015-12-07 Examiner

Mark Howells

Supervisor

Constantinos Taliotis

Commissioner Contact person

Abstract

This thesis investigates the possible future pathways for the road transportation sector of Cyprus, in a time horizon from the year 2013 to 2040. The road transportation sector of Cyprus is the most energy consuming sector in the country, completely dependent on the use of diesel and gasoline. In order to comply with the renewable energy target for the transportation sector set by the European Union, Cyprus needs to transform its road transportation sector.

The software MESSAGE (Model for Energy Supply Strategy Alternatives and their General Environmental Impact) is used to model the road transport sector, consisting of passenger and freight transportation. The results of the modelling provides insights into the most cost-effective pathways for Cyprus in the future. In addition to the reference scenario, four different scenarios are examined. These scenarios are focusing on different relevant aspects for Cyprus which are renewable energy, natural gas, public transport and hydrogen. The results of the study indicate that the total numbers of petroleum fueled vehicles will increase in the future, and the freight transport will be particularly difficult to transform. For the passenger transport, there will be a fuel switch from gasoline to diesel, since diesel is less expensive than gasoline. There are possibilities for increasing the numbers of alternative low-carbon emitting vehicle technologies in Cyprus. For the passenger transport, the most cost-effective low-carbon vehicle technologies are hybrid diesel electric cars, plug-in hybrid diesel electric cars and hybrid electric diesel buses. For the freight transport, the most cost-effective low-carbon vehicle technologies are natural gas heavy trycks and electric light trucks. Lastly, the results of the study indicate that it will not be possible for Cyprus to reach the renewable energy target for the transportation sector. The country has to investigate in taxation schemes for increasing the numbers of alternative vehicles as well as increasing the blends of biofuels into gasoline and diesel.

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List of Figures

Figure 1 Energy consumption by sector in 2013 [32] ... 20

Figure 2 Distribution of energy consumption in the transport sector [32] ... 21

Figure 3 Energy consumption by fuel in the road transportation sector in Cyprus in 2013 [32] ... 21

Figure 4 Reference transportation system of Cyprus ... 30

Figure 5 Transportation demand projections for freight and passenger transportation ... 34

Figure 6 The results of the reference scenario for the passenger transport sector ... 41

Figure 7 The results of the reference scenario for freight transport sector ... 42

Figure 8 The future fuel consumption in the reference scenario. ... 43

Figure 9 The results of the renewable energy scenario for the passenger transport sector ... 44

Figure 10 The results of the renewable energy scenario for freight transport sector ... 45

Figure 11 The future fuel consumption in the renewable energy scenario ... 46

Figure 12 The results of the natural gas scenario for the passenger transport sector ... 47

Figure 13 The results of the natural gas scenario for freight transport sector ... 48

Figure 14 Fuel consumption in study period in the natural gas scenario. ... 49

Figure 15 The results of the public transport scenario for the passenger transport sector ... 50

Figure 16 The results of the public transport scenario for freight transport sector ... 51

Figure 17 Fuel consumption in study period in the public transport scenario. ... 51

Figure 18 The results of the hydrogen scenario for the passenger transport sector ... 52

Figure 19 The results of the hydrogen scenario for freight transport sector ... 53

Figure 20 Fuel consumption in study period in the hydrogen scenario. ... 54

Figure 21 Share of renewable energy for all scenarios in the transport sector ... 59

List of Tables

Table 1 Selection of vehicles ... 29

Table 2 Estimated capacity of all vehicles ... 32

Table 3 Assumed average annual vehicle mileage ... 33

Table 4 Bounds on future capacity additions ... 35

Table 5 Fuel prices used in the model ... 36

Table 6 Fuel price projections used in the model ... 37

Table 7 Technological learning of vehicle technologies [43] ... 38

Table 8 Top-down comparison of the energy balance ... 38

Table 9 Fuel blend in the reference scenario ... 39

Table 10 Differences between scenarios ... 39

Table 11 Numbers of passenger cars and buses for all scenarios, in the year 2015 of the study ... 54

Table 12 Numbers of light and heavy trucks for all scenarios, in the year 2015 of the study ... 55

Table 17 Numbers of passenger cars and buses for all scenarios, in the final year of the study ... 58

Table 18 Numbers of light and heavy trucks for all scenarios, in the final year of the study ... 58

Table 19 Licensed vehicles [33] ... 67

Table 20 Import/resource extraction technologies and the data used in MESSAGE... 68

Table 21 Conversion/procession and import technologies and the data used in MESSAGE ... 68

Table 22 Vehicle technologies used in MESSAGE ... 68

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Table 24 Fuel prices used in the model ... 71

Table 25 Electricity input data in MESSAGE without the excise duty [32] ... 71

Table 26 Transportation demand projection. ... 72

Table 27 Top down approach to fuel consumption calculation ... 72

Table 28 Complete results for the passenger transport in MPKM, in the study period for the reference scenario ... 74

Table 29 Complete results for fuel consumption in MWh, in the study period for the reference scenario ... 75

Table 30 Complete results for the freight transport in MTKM, in the study period for the reference scenario76 Table 31 Complete results for the passenger transport in MPKM, in the study period for the renewable energy scenario ... 77

Table 32 Complete results for fuel consumption in MWh, in the study period for the renewable energy scenario ... 78

Table 33 Complete results for the freight transport in MTKM, in the study period for the renewable energy scenario ... 79

Table 34 Complete results for the passenger transport in MPKM, in the study period for the natural gas scenario ... 80

Table 35 Complete results for fuel consumption in MWh, in the study period for the natural gas scenario .... 81

Table 36 Complete results for the freight transport in MTKM, in the study period for the natural gas scenario ... 82

Table 37 Complete results for the passenger transport in MPKM, in the study period for the public transport scenario ... 83

Table 38 Complete results for fuel consumption in MWh, in the study period for the public transport scenario ... 84

Table 39 Complete results for the freight transport in MTKM, in the study period for the public transport scenario ... 85

Table 40 Complete results for the passenger transport in MPKM, in the study period for the hydrogen scenario ... 86

Table 41 Complete results for fuel consumption in MWh, in the study period for the hydrogen scenario ... 87

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List of Abbreviations

BEV Battery Electric Vehicles

BtL Biomass to Liquid

CtL Coal to Liquid

DME Dimethyl Ether

EU European Union

EV Electric Vehicle

FAME Fatty Acid Methyl Esters

FCEV Fuel Cell Electric Vehicle

FT Fischer Tropsch

GHG Greenhouse Gas

GtL Gas to Liquid

HEV Hybrid Electric Vehicle

HFCV Hydrogen Fuel Cell Vehicle

HICE Hydrogen Internal Combustion Engine

HT Heavy Truck

ICE Internal Combustion Engine

LPG Liquid Petroleum Gas

LT Light Truck

NG Natural Gas

NREAP National Renewable Energy Action Plan

PHEV Plug-in Hybrid Electric Vehicle

PKM Road passenger-kilometer

RED Renewable Energy Directive

SMR Steam Methane Reforming

SNG Synthetic Natural Gas

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Acknowledgments

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1 Introduction

The following chapter serves as an introduction to the thesis. The background, the objectives, and an overview of the methodology are presented.

1.1 Motivation

The reduction of greenhouse gas (GHG)-emissions is an urgent global matter, to mitigate climate change. The atmospheric concentrations of greenhouse gases have increased to levels not seen in the last 800 000 years. There are already observed effects of the global warming on the planet due to these anthropogenic GHG-emissions. Examples of global effects are that the sea level has risen, the atmosphere and ocean has warmed and the amounts of snow and ice have been reduced [1]. This development will continue and most likely worsen in the future as the global surface temperature increases. Nevertheless, to stop the increase of the global temperature, extensive GHG-emission reductions are called for [2]. The most important greenhouse gas is carbon dioxide which represents 70 % of the global emissions. The sectors that contribute most to the carbon dioxide emissions in the world are the heat and electricity sector, the industry sector and the transportation sector [3].

A transformation of the transportation sector will be necessary to mitigate climate change [4]. If no mitigation policies are applied for this sector it is projected that the emissions will grow with 80 % to 2050 [5]. This growth is due to the increased activity in the passenger and freight transport in developing countries as the incomes are increasing and the infrastructure develops. The Intergovernmental Panel on Climate Change (IPCC) suggests that the emissions from the transport sector can be reduced by several measures. For example, increasing the numbers of vehicles with improved fuel economy, fuel switching to low-carbon fuels, reduced transportation demand by behavioral changes and investments in infrastructure [4].

Energy systems modelling of the transportation sector is an important tool for investigating in the most cost-effective pathways to mitigate emissions. Energy system models such as MARKAL/TIMES, and MESSAGE represent the entire transportation system from imports and production of fuels to the transportation service demands of the country. Moreover, they are especially well adapted to assess the potential of alternative vehicle technologies such as fuel cell electric vehicles or electric vehicles, and to explore synergies between different sectors [6].

In the European Union (EU) the transportation sector represents 24.3 % of the total carbon dioxide emissions. It is the sector that has increased its emissions most between the years 1990 to 2007 in spite of improved fuel economy. This growth is due to an increased transportation activity [7]. Nevertheless, the EU has set a minimum binding target for the transportation sector in the Renewable Energy Directive 2009/28/EC. All member states are required to achieve a share of 10 % renewable energy in the road transportation sector by the year 2020 [8]. However, the progress towards this target has been slow amongst the EU member states, currently reaching a share of 5.7 % of renewable energy. The slow progress of increased renewable energy is due to an increased awareness in the EU of the negative consequences of biofuel production, as biofuels can increase the overall GHG-emissions when the indirect land use change is taken into account. Also, the lack of commercial second generation of biofuels has been a barrier for reaching the target [9].

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the future for the transportation sector in Cyprus can develop, from an energy perspective. Moreover, the feasibility of the renewable energy targets in the transportation sector will be examined. In order to investigate this, an energy system analysis of the transportation sector in Cyprus will be performed.

1.2 Objectives

The purpose of this thesis is to investigate how the future of the transportation sector in Cyprus will develop, and examine the possibilities for fuel switching and increasing the uptake of low-carbon emitting vehicles. The focus of the assessment will lie on the most cost-effective measures to achieve this.

The aims of this thesis are to:

(I) Develop the future business as usual scenario for the transportation sector, showing the most cost-effective pathway.

(II) Provide insight into the most cost-effective ways to increase the renewable energy in the transportation sector, and investigate if it is possible for Cyprus to comply with the EU-target of 2020.

(III) Provide insight into how the domestic resources of natural gas can be utilized in the transportation sector (IV) Provide insight into how the public transport can be utilized in the transportation sector

(IV) Provide insight into the future of hydrogen as a fuel in the transportation sector

The research question is: what is the future development of the transport sector in Cyprus given different relevant pathways for the transportation sector?

1.3 Methodology

The first step of this master thesis was an extensive literature review of many different topics regarding the

transportation sector. First, existing energy system models of the transportation sector were reviewed. The experience from these models created an understanding of the opportunities and difficulties for energy systems models of the transportation system. Moreover, this experience also enabled the establishment of the system boundaries of the study and the creation of the reference transportation system. Secondly, literature on most common fuels and vehicle technologies were reviewed to gain an understanding of the transportation system. This information regards for example the fuels’ production processes and the characteristics of different vehicle technologies. Thirdly, the current and the future state of the transportation sector on Cyprus were reviewed, regarding for example the fuels, vehicle stock, grants and subsidies utilized in the country.

The second step of this master thesis was the data collection. The data needed for the modelling can be divided

into bottom-up data on the technologies and specific data regarding the transportation sector on Cyprus. The bottom-up data needed includes data on technical, economic and environmental characteristics of the conversion and procession technologies for the fuel production, the import of fuels and the available vehicle technologies. The specific data from Cyprus includes the characteristics of the vehicle stock such as the average fuel consumption, average annual vehicle mileage, occupancy rate of passenger cars and load capacity for road freight vehicles. Moreover, data on the current transportation demand as well as future projections of the demand for the road transportation sector were also needed.

The third step was the creation of the model of the road transportation system in Cyprus. It was developed

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2 Overview of the Road Transportation Sector

The following chapter offers a brief presentation of the road passenger and freight transport, and an overview of some alternative renewable fuels and low-carbon emitting vehicle technologies.

2.1 Passenger and Freight Transport

The road transportation sector is normally divided into the categories road passenger transport and freight transport by road. Similarly, this division will be used in this thesis.

 Passenger road vehicle

A passenger road vehicle is designed to carry passengers, as its name indicates. Included in this category are passenger cars, motorcycles, vans, taxis, rental cars, buses, motor coach and trams. The number of persons that can be seated in these vehicles varies. Up to nine persons including the driver can be seated in a passenger car, whereas a bus is designed to carry more than 24 passengers [11].

 Goods road vehicle

A goods road vehicle is designed to carry goods. Included in this category are light goods road vehicles, heavy goods road vehicles, road tractors and agricultural tractors. The difference between light and heavy goods road vehicles are that the first have a gross weight of maximum 3500 kg whereas the latter have a minimum weight of 3500 kg. Examples of light goods road vehicles are vans, pick-ups and small lorries. Heavy goods vehicles can be for example lorries which are rigid road motor vehicles, road tractors which are road motor vehicles designed to haul other road vehicles like semi-trailers (excluding agricultural tractors). Moreover, a semi-trailer is a goods road vehicle with no front axle and must consequently rest the majority of it loaded weight onto a road tractor. Also, the articulated vehicle is a road tractor attached to a semi-trailer [11].

2.2 Fuels

Some alternative low-carbon fuels which are considered as sustainable options for vehicles are presented shortly in this section.

 Biofuels

Biofuels can be characterized by the different generations that they belong to, the so called first, second and third generation. The first generation of biofuels consists of bioethanol, biodiesel and biogas, and they are produced with well-established technologies. The costs of these biofuels depend mainly on the cost of the feedstock, but the oil price is also a factor that affects the costs. The future costs of these biofuels are not expected to be reduced since the technologies are already developed. Furthermore, any cost projection is difficult to make since the price is dependent on the feedstock. The second and third generations of biofuels are produced from feedstock that offers higher emissions reductions than the first generation of biofuels. Moreover, the feedstock has not been produced in competition with food production. The feedstocks utilized are for example lingo-cellulosic residues from agriculture and forestry, and microalgae production. The future technological development is expected to lead to reduced costs of generating second and third generation biofuels [12].

Bioethanol is an example of the first generation of biofuels. It is produced from many different feedstocks such as sugarcane, corn, sugar beets, wheat and potatoes. Currently, bioethanol leads to the greatest GHG-emission reductions of all the available biofuels. Specifically, bioethanol from Brazil produced from sugarcane can save up to 90 % of the GHG-emissions [12].

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that can be used for the production of biodiesel are for example soybeans, rapeseed, palm seeds, sunflowers and animal fat or waste oils [12].

Biogas also belongs to the first generation of biofuels. It is produced by the anaerobic digestion of organic feedstock, such as organic waste, sewage sludge, wastewater and human and animal manure, in digesters or landfills. The end-products of the anaerobic digestion are digestate and biogas. The produced biogas can be used directly for example in heating, lightning or cooking applications. However, in order to be able to use the biogas for transportation, it is necessary with upgrading to biomethane. In the upgrading process, impurities in the gas are removed and the methane content is increased [13].

 Hydrogen

Hydrogen is a fuel that can be used for transportation purposes. It is already used in many applications in the chemical and refining industry. There are many ways of producing hydrogen, utilizing different feedstocks such as natural gas, biomass or coal. The most common process for hydrogen production is called natural gas steam reforming (SRM), which has a market share of 48 %. Other processes are partial oxidation of hydrocarbons or renewable fuels, coal and biomass gasification, water electrolysis, thermo-chemical water splitting and biological production [14].

The costs for producing hydrogen depends on the process, feedstock and the production capacity. The least expensive method of producing hydrogen is SRM, whereas electrolysis is the most expensive. Furthermore, hydrogen is often referred to as a sustainable option in the transport sector. However this depends on the feedstock and the process used for the production of the fuel. For example, electrolysis is seen as an interesting option for hydrogen production since the only GHG-emissions from the process are related to the electricity use. However, in order to reduce the emissions from hydrogen production by SRM, carbon capture and storage will be necessary in the future [14].

2.3 Vehicle types

This section gives a brief introduction to some of the vehicles that are currently on the market today. These are gasoline- or diesel-powered vehicles, natural gas-powered vehicles, hybrid electric vehicles, plug-in hybrid electric vehicles, battery electric vehicles and fuel cell electric vehicles.

 Gasoline- or diesel-powered vehicles

The internal combustion engine technology (ICE) can be classified after the type of ignition: either compression-ignition (CI) engine or spark-compression-ignition (SI) engine, where the first is designed to run on diesel and the second on gasoline. The gasoline engine powers mostly light duty vehicles i.e. passenger cars, light trucks and motorcycles. The diesel engine on the other hand, is used especially for heavy duty vehicles i.e. heavy trucks and buses. These types of engines are the most common in the transportation sector today. Most vehicles sold are powered by either a gasoline or a diesel engine [15].

Today, the gasoline and diesel-powered vehicles are the vehicles on the market today that emit most GHG-emissions, although the diesel engine has a slightly better fuel economy than the gasoline engine. However, there are expected future improvements of the ICE in terms of improved fuel economy. It has been suggested as a cost-effective method to reduce GHG-emissions, to invest in developing more advanced gasoline and diesel engines with improved fuel economy [16].

 Natural Gas-powered vehicles

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there are 22 million natural gas powered vehicles in the world [18], and they are used in many different market segments. For example natural gas is used in passenger cars, city buses, and heavy and light trucks [17]. The GHG-emission reductions from using natural gas-powered vehicles can be up to 25 % compared to conventional gasoline-powered cars. The future prospects for natural gas powered vehicles depend on the development of infrastructure for fuel distribution and refueling of natural gas, which has been a barrier for the use of these vehicles. Moreover, the prices of these vehicles are still higher than gasoline powered vehicles. The high prices have also been a barrier for the use of natural gas in vehicles. However, if the oil price increases it can be a driver of natural gas powered vehicles in the future [17].

 Hybrid Electric Vehicles (HEV)

The Hybrid Electric Vehicle (HEV) belongs to the first generation of electric vehicles. They are equipped with an ICE and electric motor which is powered by electric batteries. The fuel economy of the HEV is better than the fuel economy of conventional petroleum powered vehicles. This improvement is due to that the vehicle is powered by a smaller and more efficient ICE together with an electric engine and electric storage (battery). Moreover, on long distance drives the ICE contributes with the main part of the power but for city driving it is possible to drive using only the electric motor. The battery is charged by regenerative braking and from excess energy from the ICE [19].

In the market today, the most common and economically competitive hybrids are those combining a gasoline or a diesel combustion engine with an electric motor [19]. Furthermore, light trucks is a market segment that is especially well adapted for the HEV because of the regenerative breaking technology, and it offers GHG-emission reductions of about 18-22 %. Buses is another segment which shows promise and the achievable GHG-emissions reduction reaches between 25-40 % compared to conventional gasoline buses. The main barriers for the HEVs is the higher purchase price compared to conventional ICE-vehicles, because of the high costs for the battery [19]. The next generation of HEVs includes batteries that can be recharged from the grid, also known as plug-in hybrid electric vehicles (PHEVs).

 Plug-in Hybrid Electric Vehicles (PHEVs)

Plug-in hybrid electric vehicles (PHEVs) are equipped with batteries that can be recharged directly from the electricity grid, as well as an ICE that can complement the battery when the charge has been depleted [20]. The main differences between the HEV and the PHEV, is that the latter has a larger battery and the ability to recharge the battery straight from the electricity grid. The configuration of the PHEV allows driving ranges equal to those of petroleum powered vehicles [21].

The fuel economy of the PHEV is improved with 40-55 % compared to a conventional petroleum powered vehicle [20]. A barrier for the use of PHEV is the high cost of the battery, like for the HEV. However, electric vehicles can actually have lower energy-use costs than conventional gasoline or diesel powered vehicles due to that there might be less wear on the engine and since the cost for electricity is normally lower than for gasoline or diesel [21].

 Battery Electric Vehicles (BEVs)

A Battery Electric Vehicle (BEV) relies completely on the use of the battery for powering the vehicle. The Lithium-ion is the most promising battery technology, but it needs development of its performance and cost, as well as an increase of its lifetime. The limitations of the battery also makes the driving range of electric vehicles today inferior to the driving range of conventional fossil-fuel powered vehicles, reaching in average 100 to 200 km.

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vehicle [20]. The barriers of all the electric vehicles, the BEV, the PHEV and the HEV are the costs of purchasing the vehicle, which is linked to the cost of the battery. However, there are expected cost reductions in the future, due to mass production and technology learning. The battery has already evolved greatly over the past 15 years and will continue to do so in the future. Furthermore, as for natural gas powered vehicles the lack of infrastructure and charging stations has hindered the market penetration of electric vehicles, and remains an important challenge to solve for most countries [20]. However, an advantage of the battery electric vehicle is that it typically requires lower maintenance costs compared to a conventional vehicle. This is due to that the electric motors requires no periodic oil changes and very little maintenance overall, since only the battery pack needs inspection [21].

The BEV-market is developing rapidly, with the launching of new vehicles and new contenders entering the market. Tesla launched in 2015 their latest electric vehicle Model X costing up to $130 000 [22]. The Model X has a long driving range for an electric vehicle, reaching up to 400 km [23]. This vehicle, and Tesla’s plans for starting a mass production of BEVs might revolutionize the market and result in faster cost reductions than expected for the batteries [23].

 Fuel Cell Electric Vehicles (FCEVs)

The Fuel Cell Electric Vehicle (FCEV) uses a fuel cell to convert the chemical energy in hydrogen and oxygen to electrical energy. The fuel cell is more similar to a battery than a normal heat engine since they are both electrochemical devices. In the fuel cell, hydrogen is supplied from an onboard storage tank and oxygen is supplied from the air for the production of electrical energy. Furthermore, the storage of hydrogen is an important issue. Hydrogen needs to be transformed for the on-board storage of a vehicle, by compression, liquefaction or reaction with or containment in other materials. The most economical way for hydrogen storage is compression to high pressures [21].

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3 The Transportation Sector in the EU

This chapter introduces the most important regulations and directives of the transportation sector in the EU. Since Cyprus is a member state of the EU, the country has to comply with these regulations and directives.

3.1 Emission standards

The emissions of different gases or particles such as nitrogen oxides (NOx), carbon monoxide (CO), particulate matter (PM), total hydrocarbon (THC) and non-methane hydrocarbons (NMHC) are regulated by standards in the European Union. For light duty vehicles i.e. light commercial vehicles and passenger cars the standards are labelled Euro 1-6. For heavy duty vehicles i.e. heavy trucks and buses, the standards are called Euro I to VI. The standards have since when they first entered into force, in 1992 for light duty vehicles and in 1992 for heavy duty vehicles, required extensive emission reductions of new vehicles. For example the current standard Euro 6 requires emissions reductions from 68 % carbon monoxide and 96 % particulate matters compared to Euro 1 [25].

There is a discrepancy between the real world performance driving on-road and the official values measured in laboratories for some of the vehicles. Especially the NOx emissions from diesel cars show a remarkable difference, where some vehicles produce emissions that are seven times higher than the Euro 6 limit. Similarly, the emissions of carbon dioxide also differ in the real-world performance compared to the laboratory values with 31 % in 2013 compared to 8 % in 2001 [25].

3.2 Vehicle Market

In the European Union, most sold vehicles are gasoline or diesel powered. Diesel is the most common fuel with a share of 53 % of the new registrations in 2013. In other parts of the world like in China or the US, gasoline is the most commonly used fuel for vehicles [25].

Other vehicle technologies such as BEV, PHEV and HEV also have a small and growing share of the market in the EU. The new registrations of electric vehicles are increasing, with a share of 1.4 % for HEV and 0.4 % for PHEV and BEV combined in 2013. In some European countries, the market penetration of electric vehicles has been particularly successful. For example in the Netherlands 5.7 % of all vehicles are HEV, 4.1 % PHEV and 1.4 % BEV. Also in Norway (although not a member state) the share of PHEV and BEV is the highest in the world. The reasons for the success of electric vehicles in these countries are effective taxation schemes which encourage the purchase of electric vehicles [25].

The vehicle market in the EU was affected by the economic crisis in 2008. The new registrations decreased considerably, and are still 20 % lower than before the crisis. It was especially in southern Europe that this took place. Furthermore, the vehicle market for light duty vehicles and for heavy duty vehicles in the EU works differently. There is a greater diversity of brands for light duty vehicles, for example the seven most popular brands for passenger cars represent 50 % of the market. However, for heavy-duty vehicles five manufacturers represent almost all new registrations on the market in the EU [25].

3.3 Renewable Energy Directive

The Directive 2009/28/EC or the Renewable Energy Directive (RED) dictates the targets for renewable energy in the European Union. For the transportation sector, there is a mandatory target of 10 % share of fuels from renewable sources. Moreover, the member states are required to make national renewable energy action plans (NREAPs), where they show how the targets will be met. Every two years, the progress towards the national targets is measured, when the member states publish their NREAPs [8].

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renewable energy sources for road transport are counted 2.5 times. In the denominator, for the total amount of energy consumed in the transportation sector only gasoline, diesel, and biofuels consumed in road and rail transport, and electricity must be taken into account. The exclusion of off-road signifies that machinery for forestry, agriculture and construction are not being taken into account. Furthermore, CNG and LPG is not considered in the denominator. The electricity mix used in calculating the RED-target for transport can be both the EU-mix or the country’s domestic mix of renewable energy sources [8].

The equation for calculating the overall RED of renewable energy in transport:

𝐀𝐥𝐥 𝐭𝐲𝐩𝐞𝐬 𝐨𝐟 𝐞𝐧𝐞𝐫𝐠𝐲 𝐟𝐫𝐨𝐦 𝐫𝐞𝐧𝐞𝐰𝐚𝐛𝐥𝐞 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐮𝐬𝐞𝐝 𝐢𝐧 𝐚𝐥𝐥 𝐦𝐨𝐝𝐞𝐬 𝐨𝐟 𝐭𝐫𝐚𝐧𝐬𝐩𝐨𝐫𝐭

𝐆𝐚𝐬𝐨𝐥𝐢𝐧𝐞,𝐝𝐢𝐞𝐬𝐞𝐥,𝐛𝐢𝐨𝐟𝐮𝐞𝐥𝐬,𝐞𝐥𝐞𝐜𝐭𝐫𝐢𝐜𝐢𝐭𝐲 𝐜𝐨𝐧𝐬𝐮𝐦𝐞𝐝 𝐢𝐧 𝐫𝐨𝐚𝐝 𝐚𝐧𝐝 𝐫𝐚𝐢𝐥 𝐭𝐫𝐚𝐧𝐬𝐩𝐨𝐫𝐭,𝐛𝐮𝐭 𝐞𝐱𝐜𝐥𝐮𝐝𝐢𝐧𝐠 𝐨𝐟𝐟−𝐫𝐨𝐚𝐝 (1)

The RED also requires that all biofuels produced or consumed in the EU must meet the minimum sustainability criteria and the minimum GHG-emission savings. An example of these criteria is that a minimum 35 % reduction of GHG-emissions is required which increases to 50 % from the year 2017. Furthermore, biofuels cannot be produced from feedstock from biodiverse land [8].

3.4 The Fuel Quality Directive

The Fuel Quality Directive (FQD) establishes the environmental requirements for gasoline and diesel fuel for the purpose of reducing their intensity. The FQD puts the responsibility for reducing the life-cycle GHG-emissions of fuels on the fuel suppliers. A 6 % reduction in the GHG-intensity of fuels traded in the EU by 2020 compared to the EU-average level of life cycle GHG-emissions per unit of energy from fossil fuels in 2010 is required. This target will be reached by increasing the share of biofuels or other alternative fuels in diesel and gasoline, and reducing the flaring and venting at production sites [26].

Furthermore, the FQD states that the gasoline vapor pressure should be controlled. The vapor pressure is affected by the blending of ethanol into gasoline, whereby it increases in the resulting fuel. However, increasing vapor pressures increases the air pollutant emissions. Consequently, it is important to ensure that the ethanol blends do not exceed acceptable vapor pressure limits. The member states must require that the suppliers of gasoline provide a maximum ethanol content of 5 % until 2014. The European Standards which describe the requirements and test methods for ethanol and Fatty Acid Methyl Esters (FAME), when blending into gasoline or diesel are called EN15376 and EN14214 [26].

3.5 Regulations on fuel economy

The EU has set mandatory emission reduction targets for new cars and light trucks in order to encourage improved fuel economy of new vehicles. If the vehicle manufacturers fail to comply with the new emission standards, they will have to pay a fine [27]. The main regulations are presented shortly below.

By 2015, new passenger cars registered in the EU cannot emit more than an average of 130 grams of CO2 per kilometer, which corresponds to a fuel consumption of 5.6 l of gasoline per 100 km or 4.9 l of diesel per 100 km. By the year of 2021, the average to be reached for new cars is decreased further to 95 grams of CO2 per kilometer, corresponding to a fuel consumption of 4.1 liter of gasoline per 100 km and 3.6 l of diesel per 100 km. Compared with the emissions in year 2007 of 158.7 g per km, the fuel consumption targets will have decreased the consumption with 18 % and 40 % for 2015 and 2021 [27].

By 2017, new vans registered in the EU cannot emit more than an average of 175 grams of CO2 per kilometer, which corresponds to 6.6 l of diesel per 100 km and there will be a reduction of 3 % compared to the 2012 value of 180.2 g CO2 per km. By 2020, the target is reduced further to 147 grams of CO2 per kilometer, corresponding to 5.5 l of diesel per 100 km [28].

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4 Cyprus

This chapter introduces the country of the study, Cyprus, and the state of the transportation sector in the country regarding the vehicle stock, fuels and renewable energy.

4.1 Country presentation

Cyprus is the third largest island in the Mediterranean Sea, and the largest island state with a population of 1.19 million people in July 2015. The country is divided into two autonomous entities since 1974, the internationally recognized Republic of Cyprus and a Turkish-Cypriot community in the northern part of the island. This thesis discusses about the Republic of Cyprus when referring to Cyprus [30].

The economy on the island was heavily affected by the financial crisis. After joining the EU in May 2004, Cyprus had a continuous growth of the economy and a low unemployment. However, due to the ties with Greece in the banking sector, the country has experienced economic problems since the crisis. Nevertheless, the recent discoveries of natural gas belonging to Cyprus in the Mediterranean Sea might help boost Cyprus’s economy. Current proven reserves are estimated at 140 billion cubic meters [30].

4.2 Transportation sector

The transportation sector is the largest energy consuming sector in Cyprus. It is divided into road transport, aviation and sea transport, since there are no railway or inland water infrastructure. The main part of the energy consumption in the transportation sector is in the road transportation. Actually, Cyprus has a very developed and dense road network with a density of 28 km per 1000 km2_{, which is almost 80 % higher than the average in} the EU-28 [31]. Figure 1 shows the energy consumption by sector in Cyprus for the year 2013.

Figure 1 Energy consumption by sector in 2013 [32]

Figure 2 below shows the distribution between the sectors dominating the domestic energy consumption in the transport sector in Cyprus, and constitute the share of 63 % in Figure 1.

Transport 63% Household 20% Agriculture 2% Service 15%

Energy consumption by sector

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Figure 2 Distribution of energy consumption in the transport sector [32]

The main automotive fuels used in the road transport sector in Cyprus are diesel and gasoline, having a share of almost 97.7 %. Imported biofuels account for 2.3 % of the total fuel consumption in the road transport sector in 2013 [32]. Gasoline is mainly used for light duty vehicles i.e. passenger cars and motorcycles. Diesel is primarily used for heavy duty vehicles i.e. buses and freight transportation by heavy goods road vehicles and road tractors [33]. Figure 3 below shows the energy consumption by fuel in the road transportation sector in the year 2013.

Figure 3 Energy consumption by fuel in the road transportation sector in Cyprus in 2013 [32]

The passenger transport is dominated by the use of the passenger car in Cyprus. The car ownership has increased the past decades with 30 % from the year 2003 to 2012. The current ownership is 549 cars per 1000 habitants [33], which is 12 % higher than the EU-28 average [34]. Moreover, a majority of the passenger cars on Cyprus are relatively old. In fact almost 50 % of the cars are over 10 years old, the second largest part is between 5-10 years old (36 %), and the rest are less than 5 years old (15 %) [33]. At the same time as the car ridership has increased the public transport has seen a steady decrease in its share of the total transportation. This phenomenon can be explained by the fact that the public transport in Cyprus is performed by vehicles that are relatively old and that the conditions are in general quite poor [35].

The biggest part of the goods in Cyprus are transported by heavy trucks or road tractors. Light trucks only carry a small part of all the goods on the island [33]. This is also the case for other countries in the EU, where 85 %

Road transport 73% Aviation

27%

Energy consumption in transport sector

Road transport Aviation

Biofuels 2% Diesel 41% Gasoline 57%

Energy consumption by fuel

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of the goods transportation is performed by heavy vehicles with a permissible laden weight over 30 tonnes. Light vehicles account for less than 3 % of the goods transportation in TKM in all reporting countries in the EU [36]. Furthermore, the goods transport journeys in Cyprus are shorter than the average in Europe. Actually, 95 % of all journeys are less than 50 km. Also, Cyprus has a rather high share of empty running of goods vehicles compared to other countries in the EU. The reason for the short journeys and the high share of empty running are that the country is an island, and much of the deliveries of goods come from the ports. After the delivery of goods, the goods vehicle will be empty which accounts for the high share of empty running. Moreover, like passenger cars a majority of the freight goods vehicles are older than 10 years old (41 %) [33].

4.3 Renewable energy in transport

As a member state of the EU Cyprus has to reach the targets described in the Renewable Energy Directive. Thus, the country must achieve at least 10 % of renewable energy in the road transportation sector by 2020. The path towards the 2020-target for the transportation sector is described in the National Renewable Action Plan (NREAP). The most important ways for reaching the target are considered to be to increase the utilization of biofuels and electricity in the road transportation [37].

To support biofuels a multi-annual programme for the promotion of biofuels was launched in Cyprus. This programme took place between the years 2007-2010 and support was given to companies that were constructing plants for biofuels production. There has been interest from investors for the production of biodiesel by using imported oilseeds and used edible oils. A consequence of this programme is that there is a tax exemption on biofuels [38]. Moreover, customers who bought low-carbon emitting vehicles received grants for their purchase. In the purchase of a dual propulsion vehicle fueled with either CNG or LPG as well as for hybrid electric vehicles, a sum of 1200 euros could be received. For electric vehicles and low GHG-emitting vehicles, a sum of 700 euros could be received [37].

The government created a national action plan for the development of the public transport in 2011. The action plan calls for an upgrading of the public transport system, and the purchase of new and more fuel-efficient buses (1200 buses are currently being replaced). The target is to increase the utilization of the public transport from 2 % in 2008 to 10 % in 2015. The full implementation of the action plan has been delayed due to the economic crisis, since extensive investments are needed [39].

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5 Overview of energy systems modelling of the transport sector

In this chapter, some previous energy systems modelling experience of the transport sector are presented in order to give a picture of the current research. The purpose with showing this previous research is to put the modelling of Cyprus into perspective and motivate some choices that are made in the model.

5.1 Models of the transport sector system in different countries

In this section, some articles regarding the transportation sector for different countries are reviewed.

5.1.1 Biofuel futures in road transport – A modeling analysis for Sweden

An energy systems model of the Swedish road transportation system was published in 2014 by the authors Börjesson, Ahlgren, Lundmark, and Athanassiadis. The transportation system is modelled using the software MARKAL, in a time horizon from 1995 to 2050. MARKAL delivers the welfare maximizing system solution which meets the constraints that have been set. The purpose of the study is to investigate in the cost-efficient use of biofuels in the road transportation sector under constraints of the Swedish carbon dioxide targets for the year 2030 and 2050. These targets include a phase out of fossil fuels by 2050 in the road transport sector. The model enables linkages between different sectors of the energy system such as between transportation and power generation [42].

The focus of the study is the transportation sector including road transport, aviation, railway, shipping and working machines. However, the road transport sector is the most detailed subsector in the model. Furthermore, the fuels included are primarily different biofuels (both first and second generation) and electricity. The biofuels included are ethanol, biodiesel, synthetic natural gas (SNG), methanol, dimethyl ether (DME) and Fischer Tropsch (FT) liquids (synthetic gasoline, diesel and kerosene). For the second generation of biofuels, wood is the main feedstock. It is assumed that the domestic production of biofuels will supply the majority of biofuels. For the vehicle technologies, many different technologies are included such as ICEV, HEV, PHEV and BEV, although not for all segments. In the model, some technologies have been excluded such as hydrogen, electrofuels, fuel cell vehicles, electrified roads and algae biofuels. Hydrogen has been excluded since it is considered as a technology that will not mature within the study period and will have difficulties to enter the Swedish market since Sweden has too low population density [42].

The transportation demand projections are based on forecasts of the travel demand made by a Swedish authority. The number of travelled vehicle-kilometers are projected to increase with 65 % from 2006 to 2050. The end-use demands are divided into eight different vehicle classes: small and large cars, long and short distance buses, long and short distance heavy trucks, light trucks and motorcycles [42].

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5.1.2 Assessment of transport fuel taxation strategies through integration of road transport in

an energy system model — the case of Sweden

A previous energy systems model of the Swedish road transport sector was published in 2011 by the authors Ahlgren and Bo. In this study MARKAL_Nordic was used in a time horizon to the year 2050. The purpose of the study is to analyze the impacts of transport fuel taxation schemes on the future fuel and technology choices in the Swedish transportation sector. The consequences of these choices in terms of system costs and carbon dioxide emissions are examined in the article [43].

The focus of the study is the road transportation sector. Thus other sectors like aviation and sea transport are excluded in the model. In the model, the conventional fuels such as gasoline and diesel are included. The alternative commercial fuels included are methane (including natural gas, biogas and SNG), ethanol from wheat and biodiesel. Moreover, some technologies which are not yet commercial are also included such as woody biomass-to-liquid (BtL), coal-to-liquid (CtL), gas-to-liquid (GtL), hydrogen and electricity. Moreover, the domestically produced fuels are of most interest in the study, and consequently imports of biofuels are not taken into account. For the vehicle technologies, the conventional ICEVs are included and also HEVs, PHEVs, FCEVs and BEVs. Moreover, carbon capture and storage is not a possible option in the model [43].

The end-use demand is divided into different vehicle classes: passenger cars, buses, light trucks, heavy trucks and motorcycles. A further division is made for buses, where a distinction is made between city buses (short distance) and intercity buses (long distance). This distinction is also made for heavy trucks which are divided into city distribution trucks (short distance) and long-haul distribution trucks (long distance) [43].

The results show that fuel taxation is important for increasing both the penetration of fuel-efficient vehicle technologies and alternative fuels. For the vehicle technologies, the most common technologies are HEV and PHEV which are included in all scenarios. Nevertheless, higher taxation will encourage the usage of BEV and FCEV. For fuels BtLs and biomethane from anaerobic digestion of organic waste were largely used with tax exemptions. However, tax exemption can encourage the use of biofuels, but since the supply is limited undesired consequences can be high costs in relation to the achieved carbon dioxide reduction. Furthermore, the study shows that it is important to combine strong biofuels policies with strategies for improved fuel economy in vehicles and limiting emissions from stationary energy systems. The consequences might otherwise be high system costs compared to the achieved CO2 reductions [43].

5.1.3 Combining hybrid cars and synthetic fuels with electricity generation and carbon capture

and storage

An energy systems model of the Dutch road transportation system was published in 2011 by the authors Vliet and Turkenburg. In this study MARKAL is used in a time horizon to the year 2050. The purpose of the study is to examine the future linkages between the transportation and power generation sector in the Netherlands. Moreover, the aim is to project the future mix of fuels, vehicles and electricity generation capacity under a set of carbon dioxide constraints in the Netherlands [44].

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The transportation demand projections are based on forecasts of the travel demand made in the Netherlands. The end-use demand is divided into different vehicle classes: buses, cars, trucks including semi-trailers and vans including very light trucks. The technologies included are 36 types of cars, buses, trucks and vans that can use 9 different fuels produced with 23 fuel conversion technologies. New fuel conversion technologies are introduced up to the year 2020 and new vehicle technologies up to the year 2030 [44].

The results of the study show there will be a switch in the transportation sector from petroleum to biofuels such as bioethanol and synthetic fuels combined with CCS. The use of petroleum decreases in all scenarios. Diesel, biodiesel, and FT diesel are primarily used in buses, trucks and vans whereas bioethanol is the preferred choice for passenger cars. With high carbon dioxide constraints, the results indicates a great use of co-firing of biomass in electricity generation plants combined with coal-based FT fuel production with CCS. The potential of biomass and CCS is used to the fullest extent in all scenarios. The results show that the most competitive abatements of GHG-emissions and the least expensive for the total system costs will be investments in alternative fuels rather than in low-carbon vehicles due to the high costs of building the needed infrastructure. Furthermore, the results indicate that HEV and PHEV are the preferred vehicle technologies in the study. BEV and FCEV are only used when forced into the solution.

5.1.4 Assessing wood-based synthetic natural gas technologies using the SWISS-MARKAL

model

An energy systems model of the Swiss transportation system was published in 2007. MARKAL is the software used for the study, in the study period of the year 2000 to 2050. The purpose of the study is to investigate in the competitiveness of the production of syntethic natural gas (bio-SNG) from wood in a methanation plant. Moreover, the effects of increasing fossil fuel prices, subsidies to methanation plants, and the competition between methanation plants and biomass-based Fischer-Tropsch synthesis are examined [45].

The focus of the study is the transportation sector, including for example road transportation, railway and aviation. Also, five end-use sectors exist in the model: agriculture, commercial, industrial, residential and transportation which are subsequently divided into sub-categories representing their respective uses. The study includes fuels such as diesel and gasoline, bio-SNG, natural gas, electricity, FT diesel and aviation gasoline. There are three wood-based processes that are included in the study. These are bio-SNG and FT liquids which are used in the transportation sector; processes related to CHP production from wood and lastly technologies for heat production from wood [45].

The results of the study indicate that there might be possible synergies between bio-SNG and natural gas. The development of an infrastructure for the transportation and distribution of natural gas can encourage the market penetration of bio-SNG. Thus, strategies for the introduction of gas-powered vehicles in the transportation sector should be examined. The results indicate that bio-SNG is not competitive compared to the current dominating energy generation technologies. Cost reductions of methanation plants are required, high prices for oil and natural gas as well as subsidies for methanation plants in order to encourage the development. Moreover, the results indicate that a potential and promising market for SNG is the transportation sector where bio-SNG can take a leading role. Up to 37 % of the total fuel for transportation could be coming from a combination of natural gas and bio-SNG in 2050. To conclude, the results of the study show that there are synergies between bio-SNG and natural gas, and that bio-SNG might be a competitive alternative for the Swiss transportation sector [45].

5.1.5 Market penetration analysis of hydrogen vehicles in Norwegian passenger transport

towards 2050

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the future utilization of hydrogen. Factors such as differences in available resources, energy demand, population density, vehicles costs and carbon taxation schemes will be focused on in the article [46].

The focus of the study is the road passenger transportation in Norway. The fuel of interest is hydrogen, and many different processes for hydrogen production are included such as SRM, electrolysis and gasification of biomass. Moreover, other fuels are also included in the model, like diesel and gasoline, biofuels, natural gas and electricity. For the vehicle technologies, many different technologies are included such as the conventional ICE-vehicles running on both fossil fuels and hydrogen, HEV, PHEV, BEV and FCEV. The model distinguishes between the utilization of a car in urban and rural areas for the purpose of considering variations in drive cycles [46].

The results of the study indicates that a future utilization of hydrogen in the passenger transportation sector is possible in the long-term. With substantial hydrogen distribution efforts, the FCEV can become competitive compared to other technologies both in urban and rural areas at earliest in the year 2025. Policies to support the development of the FCEV are needed as well as technological progress and cost reductions. In addition, the results shows the importance of the availability of local energy resources for hydrogen production, like the advantages of a location close to a chemical industry or a surplus of renewable electricity. Otherwise, constraints on carbon dioxide will be needed to encourage the introduction of hydrogen vehicles. Furthermore, increasing fuel prices and strict carbon dioxide constraints favors the utilization of HFCV. This is due to that the HFCV has a better fuel economy than the ICE. In the specific case of Norway, the country might have appropriate conditions for production and use of hydrogen due to the high amount of renewable energy in their electricity mix.

5.1.6 Cost-effective energy carriers for transport – The role of the energy supply system in a

carbon-constrained world

The transportation sector was modelled as a part of a global energy systems model using the software GET 7.0 which contains five end-use sectors. The least-cost solution for the modelling period of 2000-20150 is found in the model. The purpose of the study is to investigate in how the production of electricity, fuels and heat with strict carbon constraints impacts the cost-effectiveness of different fuels and vehicle technologies. A constraint of an atmospheric level of 400 ppm carbon dioxide in the year 2100 has been set [47].

The focus of the study is the transportation sector including road transport, aviation, railway, and sea transport. However, the road transport sector is the most detailed subsector in the model. It is divided into cars, buses and trucks. The study includes five fuels: gasoline/diesel, synthetic fuels (methanol, DME, Fischer-Tropsch diesel), hydrogen, natural gas and electricity. For the vehicle technologies, many different technologies are included such as ICEV, HEV, PHEV, BEV and FCEV although not for all segments [47].

The results of the study show that when the electricity largely is produced from solar or nuclear power, PHEV is the most cost-effective solution for the transportation sector. When electricity is produced mainly from coal combined with CCS, the most cost-effective solution is hydrogen-fueled vehicles instead of PHEV. Nevertheless, with extensive reductions of the battery price PHEV might be the most cost-effective choice even if coal with CCS dominate the energy supply. Moreover, a large-scale use of bioenergy combined with CCS makes synthetic fuels from biomass and coals a cost-effective transportation fuel instead of hydrogen [47].

5.2 Review of methodology for modelling transport sector

In this section, the methodology for modelling the transportation sector are examined. Results from scientific articles are summarized to illustrate the difficulties and opportunities with modelling of the transport sector.

5.2.1 Transportation demand

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in this thesis, by [47] and [48]. The vehicle technologies compete to meet demand on the basis of cost over the time horizon, in order to minimize the total energy system cost. The model considers technology, capital, operating and fuel costs in order to calculate the most cost-efficient solution [6].

5.2.2 Choice of sectors

There is a great variance to the approach of including sub-sectors of the transportation sector in the models, if all sub-sectors such as aviation, shipping, rail transport, road transport and two-wheelers should be included. Furthermore, it also varies if the authors chose to include both the passenger and freight transport. For example [42] chose to include road transport, aviation, railway, shipping and working machines. [44] on the other hand excluded aviation and shipping with the reason that these categories are dominated by international travels and not included in the targets of the GHG-mitigation treaties. They also chose to exclude rail, two-wheeled traffic and tractors since they represent a very small share of the GHG-emissions in the transportation sector.

5.2.3 End-use demand

Moreover, another important aspect of transport demand is the division of end-use demands into vehicle classes. [42] chooses to divide the transport demand into eight different categories for road transportation: small and large cars, long- and short-distance buses, long- and short-distance heavy trucks, light trucks and motorcycles. [44] choose to aggregate the vehicles into: buses, cars, trucks including semi-trailers, vans including very light trucks. Furthermore, the selection of vehicle types is an aspect that is of great importance for the result. Many energy system modelers choose to exclude different types in order to reduce the model complexity [6].

5.2.4 Non-cost factors & consumer preferences

Consumers take several factors into account when purchasing a vehicle such as the cost, size, color, safety, features and design. However, an energy systems model with an optimizing function only takes cost into account, so the model always invest in the least expensive technology. Non-cost factors are especially important for alternative vehicle technologies which have for example worse driving range or refueling time compared to conventional vehicles [6].

Consumer preferences are difficult to take into account in an energy system models. Vehicles might not be directly comparable from a consumer perspective. For example it is difficult to compare electric vehicles that take longer to recharge, natural gas vehicles which take longer to refuel or the demanding requirements on hydrogen storage [47].

5.2.5 Difficulty of building infrastructure for fuel supply

Electric vehicles and FCEV require the building up of an infrastructure for the distribution of fuel for a large scale penetration. These types of infrastructures are difficult to represent in these models because some of the costs for example pipelines are sensitive to the geography of the country and the energy output can be much lower than the maximum [6].

5.2.6 Conclusions

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6 Model of Transportation System of Cyprus

The following chapter serves to present the assumptions behind the model of the transportation system of Cyprus and the methodology used for obtaining the data and parameters necessary for the modelling such as the transportation demand and transportation supply.

6.1 Reference transportation system of Cyprus

The results of the literature review of previous energy system models of the transportation system, combined with the characteristics of the transportation system in Cyprus, form the basis of this model and the basic assumptions made. For a simplified reference transportation system of Cyprus, see Figure 4. Figure 4 shows the assumed selection of fuels combined with their production processes and/or imports and different vehicles in the model. Besides the conventional fuels such as diesel and gasoline, the alternative fuels included in the model are electricity, hydrogen, natural gas, biomethane, bioethanol and biodiesel. Besides the conventional ICE-engine, the alternative powertrain included in the model are HEV, PHEV, BEV and FCEV. The main assumptions made in the model for the different types of technologies included are explained below. For the data used in the model see Appendix II.

 Fuel technologies

In the first level of the energy chain, resources are extracted and imported for subsequent fuel production. As mentioned in Chapter 4, Cyprus possess natural gas resources in the Mediterranean Sea. Natural gas can be used as a fuel in the transportation sector, by transforming it to compressed natural gas (CNG). In this model, the extraction of natural gas is predicted to start in the year 2022 [32] and is available for use also in the transportation sector. Moreover, the possibilities for biofuels production are included in the model. Biodiesel produced domestically from imported biomass (oilseeds), and biomethane by anaerobic digestion of household waste are considered relevant for the country [40]. See Table 20 in the Appendix II for the data used at this level.

In the second level of the energy chain, the imports and transformation of fuels take place. As mentioned previously, Cyprus relies on imported liquid fossil fuels in the transportation sector. In this model, the country continues to import diesel, gasoline, and also biofuels such as bioethanol and biodiesel. Furthermore, it is assumed in the model that no refinery of petroleum products is built on the island; all liquid fossil fuel products are imported directly. Moreover, the possibilities for using hydrogen as a transportation fuel are also explored. The processes of producing hydrogen are limited to SRM of natural gas and electrolysis. SRM is chosen because of the high market share and the availability of inexpensive natural gas. Electrolysis because the only carbon dioxide emission related to the process are from the electricity mix used in the electrolysis. See Table 21 in the Appendix II for the data used at this level.

 Vehicle technologies

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The road vehicles have been categorized into four categories: passenger cars, public buses, light trucks (vans) and heavy trucks (including road tractors). Consequently, some of the vehicles in the road sector have been excluded from the analysis such as motorcycles, taxis and private buses.

Table 1 Selection of vehicles

Powertrain Vehicle

Fuel Cars Busses Light trucks Heavy trucks

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6.2 Transportation supply

The main difference between modelling the transportation system and the power generation system is in the construction of the end-use technologies. A vehicle technology consists of all the vehicles in the fleet that belong to that category, for example gasoline cars. In order to be able to model a vehicle technology, it is necessary to adapt the data. The aim of this section is to present the notion of transportation capacity, and the parameters used in the modelling.

6.2.1 Transportation capacity

The capacity of a vehicle technology that will be referred to many times in this thesis, is the capacity of for example for all gasoline cars to perform a passenger transport service. The capacity of all gasoline cars is based on the assumption that they run in average a certain mileage each year carrying an average amount of passengers. Consequently, any differences between different vehicles in the vehicle technology are disregarded since average values are assumed to be valid. The unit for transportation capacity is passenger-kilometers (PKM) for passenger transportation and tonne-kilometers (TKM) for freight transportation.

To estimate the capacity for each transportation technology, the formula (2) below has been used for passenger vehicles i.e. passenger cars and buses. The formula (3) below has been used to calculate the capacity of freight vehicles i.e. light and heavy trucks [50].

𝑪 = 𝑶 ∙ 𝑴 ∙ 𝑺 (2)

C is the capacity, O is the occupancy rate, M is the average annual vehicle mileage and S is the vehicle stock.

𝑪 = 𝑳 ∙ 𝑴 ∙ 𝑺 (3)

C is the capacity, L is the load factor, M is the average annual vehicle mileage and S is the vehicle stock. The difference between formula (1) and (2) is that the occupancy rate has been used for the passenger transport. For freight transport the load factor has replaced the occupancy rate [50]. In section 6.2.2, the methodology for obtaining the different parameters is presented.

The results of the calculations of the transportation capacity are presented in Table 2 below. For passenger cars, gasoline and diesel cars have the highest capacity. For all other heavy duty vehicles, the main capacity is in diesel vehicles such as heavy trucks, buses and light trucks.

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Table 2 Estimated capacity of all vehicles

Fuel Estimated Capacity

[MPKM] Estimated Capacity [MTKM] Passenger transport Passenger car ICE Gasoline 9623 ICE Diesel 1098 Hybrid Gasoline/Electricity 41.7 Battery electric vehicle Electricity 0.1 Buses ICE Diesel 1936.5 ICE Gasoline 6.8 Freight transport Light trucks ICE Gasoline 133.6 ICE Diesel 2394.6 Heavy trucks ICE Diesel 5466.0 ICE Gasoline 18.6

6.2.2 Transportation parameters

The methodology used for obtaining the different parameters describing a vehicle technology is presented below.

 Costs

The costs for the vehicle technology consist of the capital cost for purchasing the vehicle, the operation and maintenance cost (O&M) per year and the cost of insurance and tax. This also includes the eventual cost of replacing batteries or fuel cell [51]. In this thesis, the insurance and vehicle taxes have been excluded from the O&M costs. The costs for the vehicle technologies, used in the model are taken from peer-reviewed articles on energy system models of the transportation system as well as from the IEA ETSAP (Energy Technology Systems Analysis Program). See Table 22 in the Appendix II for the costs used.

 Fuel economy