The role of electricity in decarbonizing European road transport – Development and assessment of an integrated multi-sectoral model

Despite regulation efforts, CO2 emissions from European road transport have continued to rise. Increased use of electricity offers a promising decarbonization option, both to fuel electric vehicles and run power-to-x systems producing synthetic fuels. To understand the economic implications of increased coupling of the road transport and electricity sectors, an integrated multi-sectoral partial-equilibrium investment and dispatch model is developed for the European electricity and road transport sectors, linked by an energy transformation module to endogenously account for, e.g., increasing electricity consumption and flexibility provision from electric vehicles and power-to-x systems. The model is applied to analyze the effects of sector-specific CO2 reduction targets on the vehicle, electricity and power-to-x technology mix as well as trade flows of power-to-x fuels in European countries from 2020 to 2050. The results show that, by 2050, the fuel shares of electricity and power-to-x fuels in the European road transport sector reach 37% and 27%, respectively, creating an additional electricity demand of 1200 TWh in Europe. To assess the added value of the integrated modeling approach, an additional analysis is performed in which all endogenous ties between sectors are removed. The results show that by decoupling the two sectors, the total system costs may be significantly overestimated and the production costs of power-to-x fuels may be inaccurately approximated, which may affect the merit order of decarbonization options.