Cost-effectiveness and potential of greenhouse gas mitigation through the support of renewable transport fuels in Iceland

Abstract

The system dynamics model of Iceland's energy systems (UniSyD_IS) is used to explore the potential transition paths towards renewable transport fuels with implications for greenhouse gas (GHG) emissions and mitigation costs. The study focuses on Iceland's potential fuel pathways including renewable electricity, hydrogen from electrolysis, biogas from municipal wastes, bioethanol from lignocellulosic biomass, and biodiesel from oil seeds and waste oils. The vehicle fleet is divided into light- and heavy-duty vehicles, and each fleet consists of different alternative fuel vehicles. The model allocates the forecasted fleet growth among different vehicle types based on consumers' preferences towards vehicle attributes and social network influences. Oil price, carbon tax, renewable fuel supply-push, and government incentives are selected as the fundamental factors for scenario analysis. The results show that the transitions to renewable transport fuels seem to be feasible economically, initially, through biogas and then through uptake of hydrogen and electric vehicles. The cost-effectiveness analysis in UniSyD_IS indicates that the initial momentum of alternative fuels will not only mitigate GHG emissions but also could provide net benefits from an overall energy system and consumer perspective.