Alternative fuels for transport

To improve security of energy supply and reduce greenhouse gas emissions, the EU has set itself the objective of a 10% substitution of traditional fuels in the road transport sector (gasoline and conventional diesel) by alternative fuels before the year 2020. Three alternative solutions are seen as promising: biofuels, natural gas and hydrogen.

Since 2000, the EU has started looking into the issue of replacing traditional transport fuels (gasoline and diesel) with alternative fuels for two reasons: 

  • security of energy supply (oil reserves are finite and are in geopolitically unstable areas of the world); 
  • reduction of greenhouse gas emissions (fossil fuel combustion accounts for 30% of CO2 emissions in OECD countries). 

Policy Developments:

In its Green Paper: Towards an European Strategy for the Security of Energy Supply (2000), the Commission expressed its aim of a 20% substitution of traditional automotive fuels by alternative fuels by the year 2020. 

In November 2001, the Commission presented a communication on alternative fuels, identifying three potential alternative ranges of fuels as promising (see under 'issues').

At the same time, the Commission presented a proposal for a directive on the promotion of the use of biofuels for transport and a proposal for a directive giving member states the possibility to introduce reduced excise duties on mineral oils from biofuels. 

The Commission also set up a Contact Group on Alternative Fuels, which published a final report 'Market development of alternative fuels' in December 2003. 

On hydrogen, the Commission established a high-level group on hydrogen in May 2003 and started a Technology Platform on hydrogen and fuels cells in January 2004. 

Replacing 20% of conventional fuels by alternatives poses a lot of major challenges:

  • the alternatives have to deliver the same kind of ease-of-use, safety and reliability to the car owners, at reasonable prices; 
  • alternatives need to have a lower environmental impact than the current fuels; 
  • they need to have the same level of energy efficiency; 
  • for alternative fuels to penetrate the markets, they need to have acceptable levels of investment in infrastructure and equipment. 

In view of those criteria, the 2001 communication identified three alternative fuel solutions which could together reach 20% substitution: biofuels, natural gas and hydrogen. It also pointed to one technology solution (hybrid cars), which could offer the degree of fuel saving comparable to what alternative fuels have to offer. 



  • Produced from biomass (plant oils such as sunflower, sugar beets or other crops, organic waste): biodiesel and bioethanol
  • Advantages: 
    • less carbon dioxide emissions and less other pollutants
    • biodegradable
    • new markets for agriculture, especially attractive for new member states
    • can be used with existing techologies and no new infrastructure needed
  • Problems: 
    • higher costs than traditional fossil fuels: it would take an oil price of €70/barrel to make biofuels break even with conventional fuels
    • limited availability of land for energy crops if they were to replace fossil fuels

EU state of play:

The 2003 biofuels directive set indicative targets for a minimum proportion of biofuels to be placed on member states' markets. These targets were set at 2% in 2005 and 5.75% in 2010. But, the EU had only reached a 1% market share for biofuels in 2005 and it became clear that it would miss the 2010 target by a long way. The Commission therefore published a new Communication on an EU biofuels strategy in February 2006, preparing for a review of the Directive in 2007. This review might include mandatory instead of indicative targets.

More information in our special LinksDossier Biofuels for transport


Natural Gas


  • Can be used with conventional gasoline engine but special storage and injection equipment needed
  • Advantages:
    • clean, high octane number, lesser CO2 emissions (but not compared to diesel)
    • reduction of noise
  • Problems:
    • has security of supply issues (but less than oil)
    • investments for refuelling stations needed

EU state of play:

The Commission has proposed the following targets for the introduction of natural gas as transport fuel: 2% by 2010, 5% by 2015 and 10% by 2020. The main challenge will be the establishment of new distribution infrastructure. The Commission set up a contact group which will give advice on what types of vehicles to use, which geographical areas, how to establish refuelling stations




  • Hydrogen can be used in fuel cells or as fuel for the conventional gasoline engine, but as hydrogen is not an energy source, but an energy carrier (like electricity), it requires other energy to produce it.
  • Advantages: 
    • can be produced from a large number of other energy sources as hydrogen is the most abundant element on the earth
    • advantages as to security of supply and greenhouse gas emissions are dependent on energy source used (if produced from coal eg then the GHG emissions will increase)
    • allows storage over time
  • Problems: 
    • storage of sufficient hydrogen fuel in cars is still a challenge
    • costly investments in distribution infrastructure will be needed
    • vehicles still very expensive

EU state of play:

The Commission estimates that no substantial market penetration will take place before 2015. A 2% target by 2015 and 5% by 2020 have been set in the Commission's 2001 Communication. The Commission is also co-financing a large demonstration project (CUTE), with 27 hydrogen-powered buses in 9 cities in Europe. Furthermore, it formulated, in July 2006, a draft proposal aimed at facilitating the development and commercialisation of technologically-advanced hydrogen vehicles (EURACTIV 13/07/06).

More information in our special LinksDossier Hydrogen and fuel cells

Other fuels and technologies

Electric cars: 
problems: size and costs of batteries; recharging issues make them suitable for short-distance motoring only, still very expensive

Hybrid cars: 
has two 'engines' (combustion and electric, switches to most efficient mode depending on circumstances (eg. Toyota's Prius) - advantage: fuel savings in urban environment, much less fuel-efficient on motorways

Methanol and Dimethylether (DME): 
both produced from natural gas. Methanol has lower overall efficiency than natural gas and is toxic. DME is replacement for diesel and burns cleaner (but expensive)

Diesel fuel from natural gas: 
Gas-to Liquids (GTL) and Biomass-to-Liquids (BTL) have potential but still major challenges (GHG emissions and land resources)

Liquefied Petroleum Gas (LPG): 
cheap and environmentally-friendly

  • January 2007: Commission presented a comprehensive review of its energy policy
  • Second half of 2007:  The Commission will review the 2003 biofuels directive  
  • 2007: Commission expected to present a Strategic Technology Plan for Energy Use in Transport 
  • 2009: Expected launch of a Commission programme on ‘green-powered vehicles’ 


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