How to tackle energy efficiency in transport?

By Ximena Bénard-Tertrais

The global transport sector consumes about a quarter of the world’s energy. In the European Union (EU), the transport sector is the most energy-consuming sector, being responsible for 34% of final energy consumption (FEC) (European Environmental Agency Database, 2020). With 70% of the EU’s oil FEC driven by the transport sector, fossil fuels remain the main energy supply for the region’s transportation. This leads the transport sector to account for about a quarter of the EU’s greenhouse gases (GHG) emissions (Enerdata, 2022).

Figure 1 – FEC and GHG emissions in the transport sector in the EU, 2000-2018.

Source – Tsemekidi Tzeiranaki et al. (2023)

Between 2000 to 2018, both energy consumption and emissions increased in the EU, with an approximate 11% increase in the sector’s FEC (Figure 1). Yet, in the same period, the sector’s energy consumption intensity decreased by 17.5% (Tsemekidi Tzeiranaki et al., 2023). In fact, energy efficiency (EE) in transport improved by 10% since 2000 – that is, cumulated EE savings in 2018 since 2000 represent 10% of transport consumption (ODYSEE-MURE, 2021).

Figure 2 – Energy efficiency progress in transport in the EU

Source – ODYSEE-MURE (2021). Note: buses, motorcycles, water and rail are not shown on the graph.

As illustrated in Figure 2, trucks and light-duty vehicles are over-represented in EE progress, responsible for half of the savings while their share of consumption is at 31%. Contrarily, cars are under-represented as their share in savings (26%) is much lower than their share of consumption (53%). Indeed since 2014, the EE progress for new cars is limited (sometimes reversed) given the growing share of SUVs and the decline in the share of diesel cars. The technical efficiency of the car fleet has also been quite poor (at 0.4% per year) and partially offset by lower car occupancy, with no significant impact of the change in the fuel mix. This is even more striking considering most policies target cars (ODYSEE-MURE, 2021).

While these trends highlight that EU policies have significantly contributed to reduce energy consumption compared to a BAU scenario, it also exacerbates that implemented policies were insufficient in curbing transport’s FEC over the past two decades. This is further highlighted by the underrepresentation of the transport sector in EU energy savings relative to the residential or industrial sectors, with a share of total savings in 2019 (16%) twice lower than its share in consumption (31%) (ODYSEE-MURE, 2021).

This current situation stresses the need for significant policy changes and technical progress in upcoming years for the EU to reach its 2030 objectives – including the 32.5% target for energy efficiency (Directive (EU) 2018/2002). Given there is currently no specific EE goal set for the transport sector (ODYSEE-MURE, 2020), the first recommendation to tackle EE in transport should be to set sector-specific EE objectives at the EU level according to available estimations of EE potentials in transportation. For instance, the sEEnergies project estimated that – keeping vehicle technology improvements apart – the consistent application of EE measures to refrain from constructing/ or expanding motorways, to pursue dense and concentrated urban development and to apply economic transportation demand measures can bring average annual energy savings of about 1,650 PJ (approximately 12% of the total 2020 energy use for transport in the EU/ EFTA area) (Næss et al., 2020).

Moreover, EU transport policymaking should follow the A-S-I approach to advance EE policies in transport. As embedded in the EU’s Energy Efficiency First principle, the A-S-I approach prioritizes demand-side policies instead of the traditional supply-side ones that tend to focus on the provision of additional road infrastructure. The approach is based on 3 pillars ranked by order of prioritization: (A) avoid more/ or reduce the need for travel through transport-oriented and compact urban planning to better manage transport demand; (S) shift to cleaner and more efficient modes of transport (nonmotorized and mass public transport, sustainable individual or shared solutions); and (I) improve transport efficiency thanks to vehicle or fuel technologies, while optimizing the operational efficiency of public transport through traffic flow management or economic measures (GIZ- STUP, 2019). 

Focusing exclusively on road transportation – including passenger traffic, freight traffic, and urban mobility – given that it accounts by far for the largest share of the transport’s FEC in the EU (94% excluding international air) (ODYSEE-MURE, 2021), recommendations on how to tackle EE in transport will be given regarding how policymakers should approach this sector.

Transport sector governance at the EU level

Unlike the residential and services sectors, EU legislation is not the major driver for the implementation of energy savings policies. In 2012, it was estimated that EU transport measures represented only 20% of all ongoing transport policies, highlighting the predominance of national measures in the transport sector (ODYSEE-MURE, 2012). However, the examination of the National Energy Efficiency Action Plans (NEEAPs) that EU member states (MS) are required to submit every 3 years under the Energy Efficiency Directive (EED) show that transport is not the most prioritized sector for national EE strategies and not all MS anticipate energy savings in transport. This is mostly because implementing efficient transportation policies is complex and expensive with large infrastructure investments compared to the implementation of EE policies in the buildings sector for instance (Ntovantzi et al., 2015). Transport is only included in a few EE obligation schemes (EEOS), and when it is included, transport fuel suppliers are not targeted by the EEOSs (except in France) and only a very limited amount of transport EE projects are carried out through the schemes (ibid). In 2021, most (67%) transport-related energy savings policies implemented by MS under Article 7 of the EED were energy and CO₂ taxes, hence mobilizing mostly ‘improve’ policies options and not acknowledging the whole range of policy solutions (ENSMOV, 2021).

The 2023 recast of the EED might be the opportunity to integrate to the EED’s article 7 the obligation to implement EEOSs to the transport sector to make EE a core policy consideration for transport. This would be economically viable as the potential savings from MS measures in the next obligation period could deliver enough energy savings to compensate for the savings linked to the removal of the transport exemption from Article 7 (Ricardo Energy & Environment, 2017). This would be a way for the EU to consider in priority ‘shift’ and ‘improve’ EE transport policies given they are more relevant at this governance level. For instance, supporting modal shifts to public transport requires a combining several policies to drive the change from different other modes, and encouraging technological progress like the promotion of clean fuels is more comprehensive when coordinated by industry-wide standards. Both require a policy coherence that can be steered at the EU level (ODYSEE-MURE, 2020).

Transport sector governance at the local level

Regarding ‘avoid’ policies, capacity building and responsibility should be explicitly transferred to regions and cities given that by nature these policies come under the authority of urban planners and therefore can be better implemented at the local urban level (e.g., public transport or local congestion charges). The approach should be a bottom-up one, in the sense that ‘avoid’ EE policies should be implemented from the city, and then gradually integrated into provincial, regional and national policies networks (Ntovantzi et al., 2015). This would be an opportunity to enhance the adoption of EE transport polices in smaller cities that tend to have been underrepresented in mitigation initiatives (ibid). These initiatives are usually a great space to develop innovative energy savings transport measures, especially for passenger transport, as it the case for the Covenant of Mayor Initiative. Cleaner vehicles and energy mobility options will be more greatly used by citizens as a result of local regulatory and awareness-raising programs (Tsemekidi Tzeiranaki et al., 2023). Furthermore, adopting this governance scale can enhance the growth of urban micro-mobility solutions and the strengthening of synergies between local cities. This can partly overcome the issue of limited funding of these small-scale cities to engage in costly ‘avoid’ measures (e.g., public transport infrastructure development) by promoting the cooperation in building provincial networks in EU metropolitan areas (Ntovantzi et al., 2015). Finally, this would also guarantee that the administrative burden of implementing EE measures such as fiscal policies for modal shift (e.g., tax deduction for the purchase of seasonal passes for public transport) is not assumed at the MS level while the profit actually goes to local transport companies (ODYSEE-MURE, 2012).

Additionally, the upcoming changes in the road transportation stakeholder arena should be taken into account to improve the current governance model of the transport sector. Disruptive innovations are and will affect the automotive market as well as mobility demands – these include for instance the large-scale automation of road vehicles and public transport, battery improvements changing the status quo between electric and traditional vehicles, the switch to mobility-as-a-service, the automation of logistical processes…(Chen et al., 2016). New stakeholders must be integrated into road transportation policymaking. The private sector, for instance from the information and communication technology industry, should be involved in roadmap discussions to guarantee the interoperability of systems or the coherent articulation of smart vehicles with current infrastructure upgrades in order to avoid inefficient energy or financial expenditures (ibid). The growing interdependency of transport with other sectors therefore calls for the decentralization of EU transport governance towards locally networked, multi-level, and multi-stakeholder models where transport is more integrated, and the advancement of EE policies is driven by cities and regions.

EE policies for freight traffic

As one of the segments of road transportation that is hardest to decarbonize due to its near total reliance on fossil fuels, freight transportation should be a priority target for EE transport policies. Some brief recommendations to tackle EE in road freight will be made given it tends to receive less policy attention than passenger traffic. For instance, more attention should be given to the mature technology of electric road systems (ERS), as it can offer an energy-efficient substitute to synthetically made liquid fuels when battery electrification is unfeasible. The sEEnergies project underlines how promising ERS is for heavy electrification as it combines with battery electric vehicles by providing small onboard batteries which enable charging while traveling through ERS (Abid et al., 2021). Moreover, another focus for freight transport efficiency should be the optimization of the supply chain and trade through multimodal transport networks, as per the A-S-I approach. In this transition to multimodality, the private sector including the insurance industry should be engaged to promote market confidence in the feasibility of a multimodal delivery chain (Sustainable Mobility for All, 2021).

To conclude, the EU should tackle EE in transport firstly by setting sector-specific targets for energy efficiency, in collaboration with each MS and their respective regional authorities to make sure these objectives are coherent with local contexts. A clear policy signal would also be to remove the transport exemption from Article 7 of the EED. EE transport policies should be implemented from the EU level when it makes more sense to have a high-level and coordinated approach. The local governance level should be given more policymaking capacity to implement EE transport policies, particularly those that are related to urban planning. This scale of implementation can help to integrate more cities in rising energy efficient transport networks. It will also permit a better inclusion of the new stakeholders that ongoing disruptive innovations in the transport sector are putting forward, and that have a key role in the pursuing of EE transport strategies in the region.

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