Abstract:

This consultant study introduces a partial equilibrium model to project the mix of renewable fuels most likely to be used to comply with the Commission’s set of proposed targets for the road and aviation sectors. The Commission also proposed a 6% GHG intensity reduction target for maritime fuels as part of its Fuels EU Maritime regulation, but that is outside the scope of this study. The model represents a market in which obligated parties may trade GHG reduction credits generated from the use of renewable fuel and use those GHG reduction credits to achieve compliance with the policy targets. The model finds the most cost-effective solution for obligated parties. This study reports the resulting mix of renewable fuels used for compliance, the GHG credit price, overall costs of the policies, and overall GHG impacts. This study also assesses 9 other scenarios representing modifications that could be made to the Commission’s proposals.