Across the Nordic countries, this report indicates that the biggest challenges on the path towards climate neutrality lie in the road transport sub-sector. Despite the increased uptake of electrical vehicles, emissions have stagnated or are even rising in some countries.
While electric passenger cars produce significantly lower emissions than Internal Combustion Engine (ICE) cars, due to the high energy efficiency of electric propulsion and the low or declining CO2 emissions from electricity production, there are significant obstacles for a swift reduction in transport emissions.
For the present, in most Nordic countries, barriers remain for consumers on the car markets, in terms of higher purchase prices compared to ICE cars – combined with limited availability of (especially) cheap electric car models – limited driving range of available models, and limited availability of charging points for some user segments, for example dwellers in apartment housing. Those barriers are currently being addressed by market actors and via EU and national policies with Norway as the leading example.
However, even with accelerating uptake of electric cars and future bans on new ICE car registrations in the EU, ICE cars are still widely purchased and a huge number of those cars will remain in the vehicle fleets of the Nordic countries for several years to come, where they will emit and cumulate large amounts of GHG emissions beyond 2030. Policies to curb remaining ICE fleet emissions have so far mostly been limited to the deployment of biofuels though blending mandates or GHG reduction requirements for fuels. This approach follows EU-regulations, supplemented by national measures in most Nordic countries.
However, measures to promote biofuels are now becoming more controversial due to issues like high fuel costs, concerns over indirect climate impacts, alternative uses of scarce raw material and the persistence of pollutant emissions in urban areas. For example, Sweden, which adopted the strongest pro-biofuel policy in the EU so far (reaching a 25% share of renewable fuels in the transport sector by 2021) has recently reversed their position completely, towards compliance at the EU minimum level. In Denmark, the Climate Council has recently advised against the government‘s intentions to fulfill the 2025 climate target via increased biofuel blending, due to the indirect market and land-use effects.
Other alternative fuels based on hydrogen, or even synthetic fuels for combustion engines are not considered by climate and energy policy authorities as realistic alternatives for passenger cars, due to low energy efficiency and very high fuel costs for years to come, meaning that EV’s will deploy before and make those solutions unattractive. Hence, the remaining ICE car fleets represent a huge challenge for climate and environment policies in the Nordic countries and beyond, not least in urban areas where ICE cars in particular create multiple externalities while also taking up urban space and capacity for driving and parking that could be put to other beneficial uses.
While electrification, as above, has penetrated passenger road transport (including both cars and buses) the transition to electric or electricity-based transport has hardly begun in the road freight sector (representing around 20-30% of road transport emissions). Significantly higher vehicle costs, limited market supply of e.g. electric or hydrogen trucks, limited driving range of available models, and so far poorly developed infrastructure represent significant obstacles in this area. Meanwhile, the continued dominance of diesel for freight transport is most urgently felt in urban areas, where freight vehicles represent a much larger proportion of emissions and environmental impacts than their numbers indicate, creating a strong momentum for zero emission alternatives. While there are diverging views and market outlooks regarding the future propulsion systems for long distance trucks, electrification is likely to become the preferred solution for most trucking operations towards and after 2030 as technologies mature and costs are expected to come down. Yet due to the uncertainties involved and the long lead time for this transition, the issue of a role for biobased or synthetic alternatives as possible transition or niche fuels is particularly pronounced in the road freight sector. Business interests in existing or potential new alternatives such as Liquified Biomethane (biogas), HVO, hydrogen and various PtX-based products are currently pushing for government attention and support in Nordic countries and elsewhere. It is a challenge for Nordic governments to define clear strategies and business framework conditions for decarbonising road freight transport and especially to devise a clear role (if any) for biofuels.
Based on these observations, we have singled out the following two cross-Nordic challenges:
These are described in further detail below.