Manuscript Details

Manuscript number TRA_2019_249

Title Assessing the impacts of setting CO2 emission targets on truck manufacturers:
a model implementation and application for the EU

Article type Research Paper

Abstract
The European Commission introduced, for the first time, CO2 emission standards for truck manufacturers, to incite
additional reduction in the road transport CO2 emissions; trucks represent the second major contributor to CO2
emissions in the EU road transport. This paper presents a model based analysis which simulates the implementation
of such targets in an energy economic framework and assesses the impacts of such standards using the PRIMES-
TREMOVE model. We implement the CO2 emission standards on truck manufacturers as CO2 emission constraints
on the new vehicle choice module. The proposed method is formulated as a mixed complementarity problem. The
analysis reveals a reduction in road transport CO2 emissions and diesel consumption as a result of an uptake of more
efficient truck technologies. In particular, LNG trucks are favored when CO2 standards become more ambitious and
the energy efficiency potential of diesel trucks reaches its technical limit or becomes too expensive.

Keywords CO2 standards on trucks; transport energy modelling; transport CO2 emissions;
road freight transport

Corresponding Author Pelopidas Siskos

Corresponding Author's National Technical University of Athens, NTUA

Institution

Order of Authors Pelopidas Siskos, Yannis Moysoglou

Suggested reviewers E. Sambracos, David McCollum, Alexandros Flamos, Oreane Edelenbosch

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 E3MLab - Energy Economy Environment Modelling Lab.
National Technical University of Athens
School of Electrical and Computer Engineering
9 Iroon Polytechniou Str., Athens 15773, Greece
Tel: 0030-210-7723630
To:
Editor of the Transportation Research Part A
Journal
22 February 2019
REFERENCE: Submission of the Full Length Article entitled “Assessing the impacts of
setting CO2 emission targets on truck manufacturers: a model implementation and
application for the EU”

Dear Editor,

Our paper presents a model based implementation and application of setting CO2 emission
standards/targets on truck manufacturers. Such standards have been in force, for the automotive industry
as part of the CO2 emission reduction objectives for the transport and energy sector to tackle climate
change. The modelling work, presented in this paper, supported the Impact Assessment on the recent
proposal from the European Commission (May 2018), which, for the first time set CO2 emissions targets
on new truck registrations in the EU for 2025 and 2030.
The manuscript provides energy policy evidence and relevant discussion which makes it appealing for
policy makers and regulators. The spectrum also covers stakeholders from the transport sector dealing
with the decarbonisation of the freight transport and road transport sector, the automotive (and truck)
manufacturing industry, truck business operators. The manuscript is also appealing to the energy
modelling scientific audience with a rigorous representation of the methodological aspects.

Best regards,

Dr. Pelopidas Siskos and Dr. Yannis Moysoglou

 CO2 standards for trucks are for the first time implemented in the EU
 We present a model based implementation and assessment using PRIMES-TREMOVE
 We perform scenario analysis with different levels of ambition for 2025 and 2030
 LNG trucks will help compliance with future more ambitious CO2 standards for trucks
 CO2 standards enable the reduction of CO2 emissions in road transport
 Assessing the impacts of setting CO2 emission targets
on truck manufacturers: a model implementation and
application for the EU

Pelopidas Siskos∗, Yannis Moysoglou

School of Electrical and Computer Engineering, National Technical University of Athens, 9
Iroon Polytechniou Street, Zografou, 15773 Athens, Greece;

Abstract

The European Commission introduced, for the first time, CO2 emission stan-
dards for truck manufacturers, to incite additional reduction in the road trans-
port CO2 emissions; trucks represent the second major contributor to CO2
emissions in the EU road transport. This paper presents a model based analy-
sis which simulates the implementation of such targets in an energy economic
framework and assesses the impacts of such standards using the PRIMES-
TREMOVE model. We implement the CO2 emission standards on truck man-
ufacturers as CO2 emission constraints on the new vehicle choice module. The
proposed method is formulated as a mixed complementarity problem. The anal-
ysis reveals a reduction in road transport CO2 emissions and diesel consumption
as a result of an uptake of more efficient truck technologies. In particular, LNG
trucks are favored when CO2 standards become more ambitious and the energy
efficiency potential of diesel trucks reaches its technical limit or becomes too
expensive.

Keywords: CO2 standards on trucks; transport energy modeling;

transport CO2 emissions; road freight transport

∗ Corresponding author. E-mail address: pelsiskos@gmail.com;siskos@e3mlab.eu

1. Introduction

The fleet of heavy duty trucks represents approx. 4% (Muncrief and Sharpe,
2015) of the total number of road vehicles in the EU in 2015; yet, at the same
time, their contribution to the CO2 emissions in road transport was dispropor-
tionally larger (25% EC, 2018). The European Commission took policy action
and came forward with a proposal in May 2018 to set, for the first time ever
in the EU, CO2 targets on truck manufacturers to limit carbon emissions from
the sector. Standards represent a robust policy action that has proven record
in delivering energy efficiency and decreased carbon emissions (e.g. standards
on cars and vans manufacturers in road transport, lighting energy efficiency
standards).
In the U.S. the Environmental Protection Agency and the National Highway
Traffic Safety Administration released in 2016 the second phase of measures for
setting standards on truck fuel efficiency and greenhouse gas emissions for the
2018-2027 period (Sharpe et al., 2018), extending and updating the first phase of
measures which concerned the 2014-2018 period. The two phases are expected
to result in a fuel consumption reduction of approximately 9%-12% (Delgado
and Rodriguez, 2017) relative to 2010. Truck standards are also in place in
Canada (Sharpe, 2017) and Japan. Alternative fuel systems for heavy vehicles
can also help decrease CO2 emissions (see e.g. Lopez et al., 2009 or Arteconi
et al., 2010 and Hao et al., 2010). The experience has shown that setting CO2
emission standards on the vehicles sold by manufacturers will deliver a reduction
in the CO2 emissions of the sector by marketing more fuel efficient technologies
and scaling-up the deployment of alternative fuels. This has been the case of
passenger cars.
Measuring the impact of the implementation of the standards in terms of
CO2 emissions mitigated and the implied energy savings in road freight trans-
port is a complex process, which makes the use energy economic models nec-
essary. The latter are usually employed to quantify the future impacts of such
policy measures on the evolution of CO2 emissions, fuel mix of the sector, vehicle

2
technology/fuel type, costs at a country scale or beyond.
The contribution of the present paper is twofold: i) from an energy system
analysis perspective, we provide a model-based quantified impact assessment of
setting CO2 targets on truck manufacturers in the EU in an energy economic
model. To this end, we utilize the PRIMES-TREMOVE transport model for the
EU which we enhance to simulate the modeling of standards on truck manufac-
turers; ii) we present a mixed complementarity programming framework which
models the simultaneous interaction between the system’s agents, namely the
policymaker who is setting the emission standards, the vehicle manufacturers
who adjust the availability of various vehicle technology options to meet the
standard and the consumers who respond to the new market environment to
create demand using a discrete theory-based vehicle choice mechanism. Hence,
what we model involves seeking an equilibrium of multiple agents decision mak-
ing under constraints. Our method is then demonstrated by presenting the
results of counterfactual scenarios that assume different levels of ambition on
the respective emission targets for 2025 and 2030.
The paper is structured as follows: In the section ‘Background’, we present
the relevant literature review. In the section ‘Methodology’ we present, in brief,
the PRIMES-TREMOVE model and we describe the formulation of trucks stan-
dards in the model. The section ‘Results’ demonstrates the results from the
model implementation of alternative targets on truck manufacturers. The sec-
tions ‘Discussion’ and ‘Conclusions’, offer a short discussion on the topic and
conclude the paper, respectively.

2. Background

Previous work regarding the analysis and modeling of vehicle technology

choice concerns mainly the case of passenger vehicles. Standard approaches
that aim to assess the market penetration potential of low or zero emission ve-
hicles, include those in which a cost index is used, such as the total cost of
ownership, to compare the offered vehicle options and find connections between

3
the cost index and market share (see for example Palmer et al., 2018, Hagman et
al., 2016 and Danielis et al., 2018 for some recent applications). Other modeling
approaches in the literature include the explicit simulation the actions of each
agent of the system - most often consumers (see e.g. Sullivan et al., 2009, Epp-
stein et al., 2011 and McCoy and Lyons, 2014), market diffusion rate and time
series modeling (e.g. Lamberson, 2009, McManus and Senter, 2010, Centrone et
al., 2007 and Cao, 2004), which aims to capture the dynamics of market sales of
a new product over its life cycle and, finally, consumer choice modeling, which
employs discrete choice theory to obtain the market distribution of products
based on certain evaluation formulas of the vehicle characteristics from the con-
sumer perspective. Al-Alawi and Bradley, 2013 offers a comprehensive review
of the previous modeling approaches.
Transport models that utilize discrete choice theory to model consumer de-
mand include Loulou et al. (2004), Leimbach et al. (2010), Fulton et al. (2009)
and Brand et al. (2012). Such models employ logit (Train K., 2009) or Weibull
(Brand et al., 2008, Fosgerau and Bierlaire, 2009; Mattsson et al., 2014) func-
tional forms. These models mainly deal with the choice of a single consumer
when presented with a set of vehicle options and do not take into account the ve-
hicle supply side perspective. Recently the approach of the single consumer has
been extended to account for the heterogeneity of the consumers (see e.g. Mc-
Collum et al., 2018). A different approach is followed by Bishop et al. (2016);
the authors propose a constrained diversity-maximization1 framework, which
outputs the proportions of powertrains per vehicle fuel type.
Another mathematical programming modeling approach is that of Michalek
et al. (2004), in which the authors propose a profit-maximization framework
that integrates consumer demand and regulatory policies (CAFE standards on
cars) with a greater focus on competition between manufacturers. In the same
spirit, Kang et al. (2016), propose a mathematical programming framework to

1 Diversity is an information theoretic measure of variety (Shannon C., 1948) - the rationale
behind its use is that consumers’ behavior tend to maximize the variety of the vehicle fleet.

4
analyze the effect of government policies to electric vehicle market through mod-
eling the decision making of various agents and then apply their methodology
to the vehicle market cases of Ann Arbor and Beijing. Wang et al. (2018), ana-
lyze the impacts of China’s super credit policy from the producers’ perspective
by formulating the problem as a combinatorial optimization one and, then, the
authors use a genetic algorithm to solve it. Mixed complementarity modeling is
a standard practice in energy-economic applications (Gabriel et al., 2013), as it
allows the computation of the equilibrium state of a system resulting from the
interactions of the different actors under constraints.
The impacts of the Clean Truck Program (CTP) to air quality and the
effects on health were studied in the work of Lee et al. (2012). The authors
quantify particular social costs resulting from urban freight transportation in
California for the period 2005-2012 under the effects of CTP which progressively
banned the most polluting trucks and funded the purchase of lower-emission
technologies. The study of Stanley et al. (2018) is concerned with Australia’s
potential to reduce the GHG emissions of passenger and freight transport. The
authors conclude that Australia could reduce the 2030 road transport emissions
by more than 60% with respect to the 2005 levels by employing, among other
policy measures, emission standards that are in line with those of Europe.
The work of Lepitzki and Axsen (2018) assesses the potential of low carbon
fuel standards applied on the passenger and freight transportation sectors for
the case of Canada. Their experiments include policy scenarios in which the
fuel standards are applied in conjunction with other supply-directed policies
such as fuel economy standards and zero emission vehicle quotas. The work
of Axsen and Wolinetz (2018) explores the feasibility of achieving 30% plug-in
electric vehicles in the new sales by 2030 for the case of Canada using as drivers
incentive-based policies and zero emission vehicle quotas.

5
3. Methodology

3.1. Short presentation of the PRIMES-TREMOVE transport model

PRIMES-TREMOVE is a private model developed and maintained by E3MLab/

ICCS of National Technical University of Athens and projects the evolution of
demand for passengers and freight transport by transport mode and transport
mean, energy consumption and emissions. The PRIMES-TREMOVE model is
a satellite model of the PRIMES energy systems model (see Capros et al. (2012)
for a detailed presentation and confirmation of the model). Most recent appli-
cations of the PRIMES-TREMOVE model have been presented in Siskos et al.
(2018) and Karkatsoulis et al. (2017).
PRIMES-TREMOVE is a dynamic system of multi-agent choices under sev-
eral constraints, which are not necessarily binding simultaneously. The model
simulates the equilibrium of the transport market. It has a modular structure,
featuring a module projecting demand for transportation services for passenger
and freight mobility and a supply module deriving ways of meeting the demand.
The supply module projects the optimum technology and fuel mix to produce
transportation services which meet demand.
The supply module of PRIMES-TREMOVE interacts with the demand mod-
ule through the so-called generalized prices of transportation. Different gener-
alized prices are calculated for the various alternative trip possibilities included
in the decision of the demand module (e.g. area, time, distance) by transport
mode. A change in the generalized prices results in a new demand distribu-
tion based on the price differential and the elasticities of substitution (different
among the various options) by respecting the overall budget/expenditure level.
This interaction consists the micro-economic foundation of the model. Figure 1
provides a visualization of the interaction between the models modules.

Figure 1. A simplified representation of the modularity approach and the interaction

of the market actors simulated in the PRIMES-TREMOVE model.

6
 In the context of the present work we are concerned with the vehicle tech-
nology choice module of PRIMES-TREMOVE for trucks. The vehicle choice
module of PRIMES-TREMOVE is presented in Siskos et al. (2015). In the fol-
lowing, we present the modeling work which simulates the setting of a standard
on truck manufacturers and influences the mix of new trucks registered each
time period.
We present the implementation of CO2 standards to trucks in PRIMES-
TREMOVE in section 3.3.

3.2. Formulation of trucks CO2 standards in the PRIMES-TREMOVE model

3.2.1. Nested decision tree: alternative truck categories

The vehicle choice is formulated as a decision tree with different levels re-
ferring to technology level, fuel type and size (see figure 2). At the first level of
the decision tree, trucks are disaggregated according to the gross vehicle weight
(GVW) category, based on the TRACCS database. Four weight categories are
considered, namely the 3.5-7.5 tons, the 7.5-16 tons, the 16-32 tons and those
over 32 tons.

Figure 2. Schematic representation of the heavy duty truck segment new vehicle choice
modeling in the PRIMES-TREMOVE transport model.

At the second level, we split the trucks of above 16 tons by wheel configura-
tion, into rigid or tractors, and into long-haul or regional purpose trucks. For
a rigid truck, the tractor and the trailer form one solid unit while for a tractor
truck the trailers are attached and there is articulation between the tractor and
the trailer. The wheel configuration determines the total number of truck wheels
and specifies how many of them are powered. For instance, a 6x2 configuration
denotes 6 wheels out of which 2 are powered.
The disaggregation into long haul and regional is done according to the pur-
pose of the truck; a long haul truck is used for long trips that require the driver
to spend a significant amount of time driving, while a regional truck is used

7
for shorter trips. Typically, long-haul trucks are associated with higher annual
mileages that take place on motorways compared to regional delivery trucks.
This influences the unit cost calculations of the model. Trucks with GVW be-
tween 16-32 tons are classified as rigid ones with a regional purpose. Trucks
with GVW above 32 tons include the rest of the possible combinations. For the
rest of the paper, we will refer to the various combinations of the second level
simply as wheel configuration. The modeled truck types include conventional
diesel trucks, hybrid trucks, trucks running on LPG or LNG, battery electric
propulsion trucks and fuel cell electric propulsion trucks using hydrogen.
Cost-efficiency improvement curves are introduced at the third level for each
of the nodes of the second level. These curves associate higher efficiency poten-
tial of the truck with additional costs. Higher efficiency improvements always
come at an additional capital cost. The curves are represented as 9 individual
points denoted as J0 , ..., J8 , following an order of increasing fuel efficiency and
additional cost. The additional cost and efficiency improvement are considered
with respect to a base truck of 2005 (see figure 3). The cost curves used in this
study were obtained from Tansini et al., 2018 and from Krause and Donati, 2018.

Figure 3. Typical cost-efficiency improvement curve for new 6x2 regional delivery

tractors for 2025.

3.2.2. MCP preliminaries

A number of conditions need to be met simultaneously in the modules so-
lution. Those conditions represent the interaction between the systems agents:
the policy maker setting the emission standard, the truck manufactures adjust-
ing their portfolio of trucks offered to the market in their effort to comply with
the level of the regulation and, finally, the truck business operators purchas-
ing trucks. Hence, what we model involves seeking an equilibrium of multiple
agents’ decision making under constraints. Such kind of problems are usually
formulated as a mixed complementarity problem (mcp) which involves a set of
equality and inequality constraints.

8
 In short, a mixed complementarity problem is defined as follows. Consider
the, potentially unbounded, n-dimensional parallelepiped R = {x ∈ Rn |xi ∈
[li , ui ]} with −∞ ≤ li < ui ≤ ∞ and 0 ≤ i ≤ n. Let F : R → Rn be
a continuously differentiable function. A mixed complementarity problem is
defined as the problem of finding a vector x∗ ∈ R for which the following are
true:

x∗i = li ⇒ Fi (x∗ ) ≥ 0

x∗i ∈ (li , ui ) ⇒ Fi (x∗ ) = 0

x∗i = ui ⇒ Fi (x∗ ) ≤ 0

We use the standard notation for the above complementarity conditions, i.e.
Fi (x) ⊥ xi . We denote by F eas(mcp) the corresponding feasible region. There
are algorithms that can solve a mixed complementarity problem efficiently, e.g.
the PATH algorithm in GAMS (Ferris and Munson, 2000).

3.2.3. Complementarity formulation of CO2 emission constraints on new truck

registrations
This section presents the mathematical formulation of the model implemen-
tation.
We identify two levels of competition between the vehicle tree nodes: (i) the
choice among the various levels of efficiency progress for each truck fuel type;
(ii) the choice among the different truck fuel types. The progress along the
efficiency-cost curves of the lower level nodes influences the relative performance
of the nodes at the fuel choice level.
We denote by V the set of different truck fuel types as defined by the first
level of the vehicle tree. By A we denote the set of wheel configurations defined
by the second level. The set of the different powertrain technologies of the third
level is denoted by J. Elements of V , A and J are denoted by v,a,j respectively.
Table 1 summarizes the relevant notation.
CO2 standards take the form of a constraint (1); the average CO2 emissions
of new registrations over all truck groups should not exceed the value of the stan-

9
 Set - Element Description
V -v truck group
A-a wheel configuration
J -j powertrain technology
Parameters Description
shv,a shares of wheel configurations per truck group
co2v,a,j CO2 label per truck group and wheel configuration
S CO2 standard on average truck emissions
cv,a,j total cost per vkm
mv,a,j maturity of powertrain technologies
Variables Description
shv,a,j market shares of powertrain technologies
pv,a,j emission penalties for powertrain technologies
co2v average CO2 label per truck group
c̄v,a,j generalized total cost per vkm
c̄v generalized total cost per vkm
pv average emission penalties per group
shv market shares per group

Table 1: Summary of the relevant notations.

dard S. The latter denotes the target of average truck emissions in gCO2 /km
for a specific year. The dual variable of 1 is λ. We give λ the intuitive meaning
of a generic effort made to push the vehicle choice towards less carbon intensive
technologies and towards more efficient points along the cost-efficiency curve.
X
S≥ shv · co2v ⊥λ≥0 ∀a (1)
v

with co2v denoting the CO2 emissions label per truck in gCO2 /km; this label
is endogenously calculated considering the potential efficiency improvement of
each truck. This label is not to be confused with the real-world emissions; the
latter derive as a result of the use/operation of the truck, using the COPERT

10
methodology (first presented in Ntziachristos and Samaras, 2000). We develop
a rule for calculating the emission penalties pv,a,j per truck fuel type, wheel
configuration and powertrain technology whose CO2 label exceeds the standard.
Note that the penalties depend linearly to λ. We come back to this point in
Section 3.2.4.

co2v,a,j
pv,a,j = λ · ⊥ pv,a,j ≥ 0 ∀co2v,a,j > S (2)
S

Intuitively, it is as if the manufacturers have to offer to the market vehicle

technologies which on average comply with the target and make sure that the
non-complying ones do not penetrate the market. To do so, the emission penalty
increases the price of the non-complying technologies to deter freight transport
businesses from purchasing them. This takes place in the following.
A total unit cost indicator cv,a,j is calculated for all the individual alter-
native technologies. Costs include the annuity payment for the vehicle capital
cost, the fuel costs depending on the trip type and vehicle’s characteristics and
other fixed and variable cost divided by the annual mileage of the truck. The
generalized unit cost cv,a,j accounts for the modified unit cost including the
emission penalties. Here, the use of MCP allows to use a dual variable of the
CO2 emission constraint on the rhs of the cost formulation. The calculation of
the generalized cost c̄v,a,j of a (v, a, j) tuple is performed in equation 3. The
dual variable of 3 is c̄v,a,j .

c̄v,a,j = (1 + pv,a,j ) · (cv,a,j ) ⊥ c̄v,a,j ≥ 0 ∀v, a, j (3)

The market shares shv,a,j of each (v, a, j) tuple derive from the generalized
costs by employing a discrete choice modelling (equation 4). A Weibull func-
tional form is used to determine the frequency of choice of truck powertrain
technologies. The technology maturity parameters mv,a,j take values between
0 and 1 and represent market acceptance and technology readiness factors.

mv,a,j · c̄−γ
v,a,j
shv,a,j = P ⊥ shv,a,j ≥ 0 ∀v, a, j (4)
j0 mv,a,j 0 · c̄−γ
v,a,j 0

11
 In the following, we perform similar calculations from the perspective of the
parent level nodes (fuel type level).
The penalty factors pv at the level of vehicle fuel type are calculated as a
weighted average of the respective penalty factors per wheel configuration and
powertrain technology pv,a,j (equation 5). The shares of wheel configurations
per truck type shv,a are assumed to remain constant through the simulated
period and were calibrated in the model using 2016 data provided by Tansini et
al., 2018. Our rationale is that vehicles of different wheel configuration are used
to satisfy specific needs in freight transport and their shares remain relatively
constant over time.
X
pv = shv,a · shv,a,j · pv,a,j ⊥ pv ≥ 0 ∀v (5)
a,j

Similarly, we derive the generalized cost c̄v at the fuel type level with respect
to c̄v,a,j (equation 6).
X
c̄v = (1 + pv ) · shv,a · shv,a,j · c̄v,a,j ⊥ c̄v ≥ 0 ∀v (6)
a,j

We calculate the CO2 label co2v at the fuel type level by averaging over the
co2v,a,j in equation 7.
X
co2v = shv,a · shv,a,j · co2v,a,j ⊥ co2v ≥ 0 ∀v (7)
a,j

Naturally, the market shares per fuel type derive from discrete choice model
formulation, where choices are driven by the generalized costs c̄v (equation 8).
c̄−γ
shv = P v −γ ⊥ shv ≥ 0 ∀v (8)
v 0 c̄v 0

The dual variables of equations 5,6,7 and 8 are pv , c̄v , co2v and c̄v respec-
tively.

3.2.4. Modeling rules for setting penalty factors for technologies exceeding the
CO2 target
This section presents an evaluation of alternative penalty implementation
mechanisms.

12
 As part of the model validation process, we identified that for the same wheel
configuration, the original implementation (equation 2) was penalizing certain
truck categories and leaving the rest unaffected. For instance, we identified the
case where only the powertrain technologies of conventional trucks larger than
32 tonnes were penalized. Such behavior was leading to an overestimation of
the effort of certain truck categories, while leaving the rest unaffected, without
implementing any effort. Of course, this would constitute an artificial model
outcome. We would expect that all truck types under regulation would need
to shift towards improved technologies (along the cost efficiency curves), albeit
not necessarily at the same rate. We had to consider an alternative rule for
determining the penalties. Constraint 9 (substituting 2) implements a different
penalizing policy.

co2v,a,j
pv,a,j = λ · ⊥ pv,a,j ≥ 0 ∀v, a, j (9)
S

The new constraint is now defined over a larger domain; instead of penaliz-
ing only the (v, a, j) tuples whose CO2 label exceeds the standard, it introduces
penalties for all tuples. The penalties are proportional to the ratio of the CO2
label of the truck over the value of the standard S, as in the implementation of
eq. 2. Despite resolving the previous problematic behavior, the new implemen-
tation still did not prove sufficient. The limitation we observed is that despite
the increasing effort, denoted as large values of the penalty factors, the relative
shares of the vehicle technologies would not exceed certain thresholds. In par-
ticular, for every pair (j, j 0 ) of powertrain technologies, there is an upper bound
U such that the relative ratio of the shares does not exceed a certain threshold:
sh(v,a,j)
sh(v,a,j 0 ) ≤ U holds true for any feasible solution of the problem and any value
of the emission standard S. See observation 1 for a formal statement and proof
of this limitation.

Observation 1. 2
For any feasible solution s0 of M CP2 the following is true:

2 Deferred proofs can be found in the Appendix

13
 sh0v,a,j
∀j1 , j2 , sh0v,a,j
1
≤ U where U is a positive constant depending only on input
2

parameters.

To tackle the limitations above, we assumed differentiated rate for the evo-
lution of the penalty factors as the value of λ increases. Thus, as λ increases in
an effort to satisfy the emission standard, the ratio of the penalties of any two
(v, a, j) tuples will quickly diverge. This kind of implementation ensured that
the cost-efficiency improvement of a conventional truck was exhausted before
the model taking up much more expensive zero emission trucks (at the parent
level of the decision tree). The final form of the proposed mcp that resolves the
previous issues consists of constraints 1,3,4,5,6,7,8 and 10:

co2v,a,j λ
pv,a,j = (1 + ) −1 ⊥ pv,a,j ≥ 0 ∀v, a, j (10)
S
Observe that the penalties in equation 10 no longer dependent linearly to λ.
Here λ acts as an elasticity of the factor (1 + pv,a,j ) that modifies the costs in
co2v,a,j
equation 3 to the term (1 + S ). Proposition 1, that follows gives a proof of
correctness of the proposed mcp in the sense that any feasible solution satisfies
the equality constraints.

Proposition 1. 3
For any feasible solution s∗ of the mcp the following are true:

• s∗ satisfies the equalities of the complementarity constraints 3,4,5,6,7,8

and 10.

• if λ∗ > 0, then λ∗ = minλ0 ∈R≥0 {λ0 |∃s ∈ F eas(mcp) s.t. λ = λ0 }. In

particular, 1 is satisfied with equality in that case.

3.3. Implementation in PRIMES-TREMOVE and modeling of impacts of the

policies on the travel demand
The freight transport sector is simulated as market equilibrium problem,
where demanders and suppliers are modeled as individual agents. Choices of

3 Deferred proofs can be found in the Appendix

14
decision makers result from micro-economically founded agent-based minimiza-
tion of businesses’ costs. PRIMES-TREMOVE consists of: (i) a travel demand
and (ii) a vehicle supply module; the resulting equilibrium between the two
modules is driven by the generalized prices of transportation.
In the travel demand module, solving the dual micro-economic problem,
businesses aim to maximize output q and choose the allocation of their resources
across the transport services (let x(i,j) denote demand for freight activity by
transport mode in ton-km). The latter are distinguished according to transport
mode i and trip type j (i.e. region, distance, time). A nested constant elasticity
of substitution (CES) production function with multiple levels is employed to
capture the substitution possibilities among the various options. The elasticities
of the CES production function come from the TREMOVE model.

M ax Q = q(x(i,j) ) (11)

Expenditures (C) constraints hold in the form of the following equation; p(i,j)
represent the generalized prices of transportation
X
p(i,j) · x(i,j) ≤ C (12)
i,j

The supply module projects the optimum technology and fuel mix to produce
transportation services which meet demand. The supply module includes a ve-
hicle stock submodule which considers stock of transport means inherited from
previous time periods and determines the necessary changes to meet demand.
The model also tracks vehicle vintages and formulates the dynamics of vehicle
stock turnover by combining scrapping and new registrations. The supply mod-
ule also projects the need for new vehicle investments (i.e. new registrations)
and the relative market share of new technologies and fuels. Decision making
implies expenditures on purchasing new transport equipment, on fuel and vari-
able costs. The CO2 standards on trucks, as presented, are embedded within the
vehicle supply module and in particular within the new vehicle choice module.
The model calculates the generalized prices p(i,j) (in Euro/tkm) by mode

15
and trip type, inclusive of all actual costs c(i,j) and the cost of time ct(i,j) .

p(i,j) = c(i,j) + ct(i,j) (13)

The interaction through the generalized prices of transportation ensures

equilibrium between demand and supply of transport services. The actual unit
costs c(i,j) comprise of fixed and variable cost elements. The calculation of unit
costs follows by averaging costs over the respective freight transport activity
P P
k,a vc(i,k,a,j) · m(i,k,a,j) k,a f c(i,k,a) · s(i,k,a)
c(i,j) = + P (14)
x(i,j) j x(i,j)

,where variable costs vc include fuel costs and other variable costs (e.g. tolls),
s(i,k,a) denotes the available stock of vehicles (old and new registrations) dis-
aggregated by (by age a and technology k and transport mode i. The average
annual mileage of vehicles is denoted as m(i,k,a,j) . The fixed part of the costs
f c includes the annuity payments for vehicle acquisition costs, taxes, mainte-
nance and insurance costs. For instance, if a policy becomes in force, leading
to the purchasing of more capital intensive, yet more energy efficient, vehicle
technologies, the fixed cost element of the generalized prices increases, while the
variable cost decreases.

4. Results

4.1. Targets of scenarios

This section demonstrates the functionality of the model implementation

by quantifying alternative scenarios which assume progressively tightening CO2
targets. To do so, we assume three different sets of targets which apply in 2025
and 2030. We also consider a baseline scenario where no targets are assumed and
the emission reduction from trucks which takes place is driven by some limited
autonomous progress. This baseline scenario, which we simply call baseline,
uses as a basis the key assumptions as presented in the Reference scenario 2016
(Capros et al, 2016).

16
 The policy scenarios include a low target scenario 10%-20% with 10% and
20% emission reduction targets on new registrations relative to 2019 emission
level for 2025 and 2030, scenario 15%-30% with targets of 15% and 30% and
scenario 20%-35% with targets of 20% and 35% respectively. The rest of the
section is devoted to the presentation of the scenario results on the evolution
of the total truck fleet activity, on truck CO2 emissions, energy consumption,
derived efficiency improvement and vehicle composition over the time horizon
from 2020 to 2030 separated into 5-year intervals.

Scenario 2025 2030

10%-20% 10% 20%
15%-30% 15% 30%
20%-35% 20% 35%

Table 2: Emission targets for trucks per policy scenario with respect to 2019 level.

4.2. Scenario results

4.2.1. Impact on road freight transport activity

The overall activity of trucks remains relatively unchanged in the 4 scenar-
ios as the policy assumed primarily concerns the shift to more efficient truck
technologies rather than shifts between modes of freight transportation. Modal
shifts, which take place in the model, are driven by changes in the unit costs
of freight transport of the competing transport modes. Figure 4 displays the
evolution of truck activity per wheel configuration in the unregulated case of
the baseline scenario. We observe that the activity of every wheel configuration
is steadily increasing and, in all periods, the configuration with the highest ac-
tivity is the 4x2 long haul tractor, displaying an activity of 815 Gtkm in 2015
and reaching 1056 Gtkm activity in 2030. This is followed by the activity of
the 4x2 regional rigid trucks which deliver 356 Gtkm in 2015 and 445 Gtkm in
2030. The 6x2 long haul tractors and regional rigid trucks and all the other
configurations display lower levels of activity.

17
Figure 4. Trucks freight transport activity per wheel configuration for the baseline

scenario for 2010 to 2030.

In figure 5 the truck activity of the policy scenarios is given relative to the
baseline scenario. Trucks transport activity is found to slightly increase as the
target on the trucks manufacturers intensifies. In particular, the activity of
the 10%-20% scenario increases by approx. 11 Gtkm relative to the baseline
scenario, while the activity in the 20%-35% scenario increases by 21 Gtkm com-
pared to baseline in 2030. This observation finds its explanation in how the
overall transportation cost per ton km is affected. As the standard becomes
more optimistic, the more capital intensive and efficient technologies are pro-
moted and enter the market. The unit cost of trucks is found to decrease as
the standard intensifies. The new trucks, being more energy efficient, lead to
savings in the fuel bill of truck operators. Fuel savings outweigh the annuity of
the additional capital cost of the more expensive trucks. The net impact leads
in a reduction to the respective unit costs. This outcome is strongly correlated
with the assumptions on the techno-economic characteristics of the trucks (i.e.
the cost-efficiency improvement curves).

Figure 5. Change in trucks freight transport activity for the policy scenarios relative
to the baseline scenario for 2025 and 2030.

4.2.2. Energy consumption

The energy consumption of the whole truck fleet in the baseline scenario
follows an increasing trend as the limited improvement in truck efficiency is not
able to offset the increase in energy demand due to the increasing activity. In
2020 the energy consumption of the total trucks fleet is around 69.9 Mtoe. In
2025 the consumption is found to increase by approximately 2% (71.3 Mtoe)
with respect to 2020 and in 2030 an additional increase of 2% (72.7 Mtoe) is

18
observed (figure 6).

Figure 6. Heavy duty trucks energy consumption in the counterfactual scenarios.

The picture changes when the standard is in place. In the case of the 10%-
20% scenario, the energy consumption displays an increase of 1.3% in 2025
relative to 2020 and remains essentially stable in 2030 showing a slight further
increase of less than 0.1% relative to 2025. The 15%-30% scenario displays
a decrease of -1.7% in 2030 relative to the levels of 2020 and indicates that
at this point the effect of the emission standard to the energy consumption
over-mitigates the effect of increased activity. In the 20%-35% scenario a slight
decrease of -0.3% appears already in 2025 and a further, more apparent, decrease
of -2.6% is observed in 2030, relative to 2020.
The savings in energy consumption are achieved primarily by the emission
standards leading to the adoption of more efficient technologies and secondar-
ily by a change in the fuel type mix. Regarding the efficiency improvement of
trucks, an interesting aspect of our findings is that the percentage improvement
is relatively uniform over all truck categories. Figure 7 displays the efficiency
improvement for the new registrations of 4 wheel configurations in 2030, (incl.
both long haul and regional delivery trucks altogether in each category). We
note here that the uniformity in trucks efficiency improvement is a feature of the
models solution and not an exogenous requirement, as the CO2 standards are
implemented at an aggregate level and not at the level of the wheel configuration.

Figure 7. Improvement in the energy efficiency of new 4x2 and 6x2 tractor and rigid
truck registrations for the counterfactual scenarios in 2030.

Table 3 provides the values of the penalty factors that the model assigns
to three selected powertrain technologies (J0 , J4 , J8 ) of the conventional 4x2 re-
gional tractors in the 15%-30% and 20%-35% scenarios. Recall that the emission
penalty represents a % increase to the unit cost per truck technology in the new

19
vehicle choice model. For example, the cost of the worst powertrain technology
J0 faces a penalty factor of 2.2 in 2030 and in the 20%-35% scenario. At the
same time, the value of the penalty factor decreases when the technology un-
der consideration is less carbon intensive (when moving towards the technology
J8 ). At the powertrain technology level of competition, these penalty factors
push the market shares from less to more efficient technologies. Of course, the
intensity of the value of the penalty factor depends on the optimism of the tar-
get. The respective values of the penalty factors are always higher for the more
ambitious 20%-35% scenario compared to 15%-30%. At the level of competi-
tion between truck fuel types, the average emission penalties over all powertrain
technologies of conventional diesel truck push the truck fuel type market shares
towards less carbon intensive types such as LNG trucks. This is shown in the
results on the fleet composition.

2025 2030 2025 2030

Powertrain 15%-30% 15%-30% 20%-35% 20%-35%
J0 0.165 0.674 0.263 2.206
J4 0.075 0.386 0.157 1.197
J8 0.034 0.092 0.048 0.218

Table 3: Penalty factors for the J0 (most carbon intensive), J4 and J8 (least carbon intensive)
powertrain technologies for 4x2 regional tractors in scenarios 15%-30% and 20%-35% .

4.2.3. CO2 emissions

The evolution of the CO2 emissions in road transport in the alternative
scenarios is driven by the level of ambition of the standards on truck manufac-
turers. Figure 8 shows the total road CO2 emissions for the 4 scenarios which
follow a decreasing trend, mainly because of the projected emission reduction
from cars and vans. The total CO2 emissions from road transport reach 811
Mtons in 2020. The baseline scenario shows the highest levels of CO2 emissions
among all the scenarios, even though the levels per se are decreasing relative

20
to 2020 (i.e. 772 Mtons in 2025 and 740 Mtons in 2030). As expected, when
the target on the truck manufacturers intensifies, the respective emissions are
found to decrease. The highest decrease in the CO2 emissions takes place in
the 20%-35% scenario (i.e. 767 and 727 Mtons in 2025 and 2030, respectively).
The 10%-20% scenario shows the lowest reduction in CO2 emissions relative to
the baseline scenario. Namely the total road transport CO2 emissions reach 770
and 733 Mtons, in 2025 and 2030, respectively.

Figure 8. Total road transport CO2 emissions for the counterfactual scenarios.

While, CO2 standards on truck manufacturers incite the market penetration

of less carbon intensive technologies, the overall emissions of the heavy duty
truck sector decrease with a relative inertia, since the fleet also comprises of
vehicles purchased from previous time periods where no standard was in place.
When comparing the 15%-30% scenario against the baseline, we observe a sim-
ilar reduction in the CO2 emissions by truck type. The CO2 emissions refer
to the whole fleet of trucks and not only to the new registrations. The highest
reduction takes place in the 4x2 and 6x2 tractor types (approx. 8.5% reduction
relative to baseline in 2030) which operate mostly on long-haul trips. The re-
duction in emissions is found to be slightly lower for the rigid trucks (approx.
7.1% reduction relative to baseline in 2030) which also operate in regional de-
liveries. The absolute levels of the CO2 emissions obtained are provided in the
following figure.

Figure 9. Evolution of CO2 emissions per wheel configuration in the 15%-30% and the
baseline scenario.

4.2.4. Evolution of the fleet of heavy duty trucks

The fleet of heavy duty trucks comprises, in its vast majority in the EU,
by diesel engines. While the presence of standards in the case of cars and vans

21
incites the market uptake of technologies like plug-in hybrids, battery and fuel
cell electric cars, this is not the case for heavy trucks, for the horizon until
2030. Unlike the case of cars, advanced vehicle technologies are only expected
to emerge in niche markets for trucks by 2030, due to higher costs, issues with
the available range autonomy and infrastructure availability.
From the quantification of the alternative scenarios, we identify a strong
market uptake of LNG trucks. Notably, as the targets on truck manufacturers
become more ambitious, the market shares of LNG trucks in the new truck sales
are increasing (figure 10). The uptake of LNG trucks is driven by the standards
favoring this less carbon intensive fuel choice as the liquefied natural gas has
approximately 24% lower carbon content than diesel. The new LNG truck reg-
istrations in the baseline scenario hold a share of 2.4% in 2025 and 3.7% in 2030.
LNG new truck registrations see their share reach to 6.0% and 10.4% in 2025
and 2030, respectively, in the 10%-20% scenario. The market uptake of LNG
trucks peaks in the 20%-35% scenario, where the relative shares reach values of
12.8% and 22.5% in 2025 and 2030 respectively.

Figure 10. Share of LNG trucks in new truck registrations in the counterfactual sce-

narios.

5. Discussion

Opting for more ambitious targets on truck manufacturers could naturally

lead to the market uptake of even more efficient conventional diesel, but also,
LNG trucks, for the horizon beyond 2030. Yet, from a certain level of ambition
and beyond, the standards on truck manufacturers are likely to incite the pene-
tration of low or zero emission truck models in the market such as hydrogen or
electric. The levels of ambition that will trigger such development are estimated
to be beyond the levels of ambition quantified in this paper (i.e. 35% emission
reduction relative to 2019). To assess these levels, further research is required

22
in the future by also factoring in the possibilities of the efficiency improvements
of the conventional trucks.
From the perspective of the road freight transport, the modeling analysis
does not indicate reductions in the activity by 2030; the significant fuel savings
offset the additional capital costs. It remains uncertain whether this will still be
the case if more ambitious targets are in place after 2030. Typically, when ap-
proaching the limit of the potential of the efficiency improvement, the additional
engineering costs increase in a non-linear way, which may lead to significantly
higher purchasing costs. The penetration of zero emission trucks, if triggered
by the standard, is also likely to lead to increased upfront costs. The extent of
the increase in the capital costs depends on the technological development of
batteries and fuel cells for truck applications.
Standards on truck manufacturers may act complementary to other truck
CO2 emission mitigation options like road charges. The latter act as price signals
which aim to shift transportation of cargo away from road and towards railways
and inland waterways. Modal shifts result in lower CO2 emissions from road
transport, since railways and inland navigation are less carbon intensive options
than trucks; this may also result in lower congestion levels in the road network.
While road charges for trucks are efficient up to a certain extent, they cannot
lead to a profound transformation of the sector towards decarbonization. On
the other hand, overtaxing trucks would result in significantly increased road
freight costs which would lead to a disproportional increase in the total system
cost compared to the mitigated CO2 emissions (Siskos et al., 2018 and Edelen-
bosch et al., 2017). Carling et al. (2017) assess the environmental net effects
of taxing freight transportation by distance in retail transports and conclude
that the environmental net effect of the tax is unclear. Setting standards will
deliver CO2 emission reduction, but does not tackle congestion. A balanced
approach combining fiscal measures and truck standards could potentially lead
the developments of the sector towards decarbonization beyond 2030.
The improvements in the fuel efficiency of the new trucks, as mandated by
the standards, can lead to significant fuel savings which will quickly offset the

23
additional upfront cost of the truck. Naturally, the industry would be willing to
accept new technologies provided that they increase the competitive advantages
in the market, since fuel cost represents a major part of the truck operating
costs. The question is why these developments do not take place regardless
of the presence of the standard or not. This question resembles the classical
energy paradox observation where decision makers undervalue future savings
in fuel expenditures when faced with increased upfront costs (see for example
Ansar and Sparks, 2009; Hassett and Metcalf, 1993). The energy paradox has
mostly been associated with households decisions where the present value of the
future energy savings are strongly influenced by the household myopic behavior
and high discount rates.
Truck business operators, from their perspective, need credible information
as regards the potential efficiency gains from new technologies and the estimated
reduced fuel expenditures bill. Businesses consider the opportunity cost of their
capital funds and need assurance as regards the future fuel savings. The hetero-
geneity of the trips performed by trucks will not lead to the same fuel savings
for all the truck operators, since certain new technologies may perform differ-
ently depending on the trip conditions (e.g. type of road, speed fluctuations,
hilly terrains, etc.). This kind of information is not always available. Liquidity
constraints may arise, especially to small truck operating companies or compa-
nies operating in less developed countries or in countries facing economic crisis.
Concerns about the reliability and durability of new technologies compared to
proven and trusted existing technologies also influences truck operators decisions
(Klemick et al., 2014). Risks associated with new and not-yet-proven technolo-
gies or fears for unexpected maintenance issues can result in decisions favoring
the trusted old technologies. Such hidden costs, which result in uncertainty
about the return of investment, are often neglected in net present value or cash
payback types of analysis.
Typically, the decision for purchasing and the operating a truck does not
always fall under the jurisdiction of the same decision maker. A principal-agent
problem (Gillingham et al., 2009) arises when the truck driver does not fully

24
exploit the potential of the new technology with regard to the fuel savings,
despite the fact that the latter were considered during the purchasing decision
by the company managers. Lack of information from the driver side may result
in increased fuel consumption due to an under-exploitation of the potential of
the new technology capabilities. This principal-agent problem yields rebound
effects, in the sense that despite purchasing a more energy efficient equipment,
truck businesses do not benefit from the expected fuel savings. Modeling such
rebound effects is not straightforward due to the large heterogeneity of truck
drivers profiles and different trip types. Relevant analysis needs to be carried
out on a case-by-case basis. Such rebound effects, that may arise after the
marketing of more technologically advanced and energy efficient trucks, were
not included in the present modeling.
From a policy-making perspective, standards provide a clear policy signal to
manufacturers as regards the future emission targets and the marketing of more
efficient trucks. Often, economic analysis underestimates the true costs and ne-
glects the hidden costs. The standard will ensure that the new technologies will
need to be picked anyhow by the truck businesses and operators, since no other
less energy-efficient options will be available on the market for new trucks. Stan-
dards, of course, do not apply on trucks sold on the second-hand market. Setting
standards will provide reassurance and investment certainty to truck manufac-
turers to develop and market the new more efficient technologies. Nevertheless,
new technologies or improvements of existing ones (e.g. engines, aerodynamics,
drivetrain optimization) will, undoubtedly, involve significant R&D spending
from the truck manufacturers side in order to ensure affordability of their prod-
ucts. The present modeling analysis, which covers the transport system, does
not consider the R&D spending when accounting the transport system costs. In
the end, the effort required might turn out to be higher than what the results
of such studies indicate if evolution is not optimal (Anable et al., 2012)

25
6. Conclusions

This paper provides a presentation of the modeling of standards on the EU

trucks manufacturers under an energy economic framework; we implement this
methodology within the new vehicle choice module of the PRIMES-TREMOVE
transport model. The implementation of the simulated mechanism has been
concatenated within the classical discrete choice modeling and has been formu-
lated as a mixed complementarity problem.
The conclusions of the manuscript are drawn from the comparative analysis
of 4 scenarios implementing standards of varying optimism. The model-based
analysis confirms that the implementation of CO2 emissions targets on truck
manufacturers will lead to a reduction in the emissions of the trucks in the EU
road freight transport sector. The model reveals that standards will significantly
reduce the energy consumption and, consequently, the fuel expenditures of the
truck operators. LNG trucks are found to be favored from the presence of
standards considering that the emission factor of natural gas is significantly
lower than that of diesel.
There is no doubt that this kind of modeling has limitations and the present
paper is not an exception. A limitation of the present study is that the mod-
eling has not assessed potential rebound effects, as presented in the Discussion
Section, which may result in less reduction in final energy demand than the
modeling indicates. Another limitation, that would need further research, is
that the modeling analysis has not quantified the necessary R&D investment
expenditures for truck manufacturers to market the more energy efficient truck
technologies. Finally, this exercise has not considered the contribution from
advanced truck powertrain technologies such as electric and fuel cell ones.

Acknowledgments

The research leading to this study has received funding from the European
Union Horizon 2020 research and innovation program under grant agreement
No 73040 (INNOPATHS).

26
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32
Appendix

Proof of Observation 1.
Proof. The proof is obtained by showing that, as the dual variable λ of con-
shv,a,j1
straint 1 tends to infinity, shv,a,j2 tends to a constant U .

shv,a,j1
lim = (by constraint 4)
λ→∞ shv,a,j2
c̄−γ
v,a,j1
lim = (by constraint 3)
λ→∞ c̄−γ
v,a,j2
1 + pv,a,j1 −γ
lim k · [ ]
λ→∞ 1 + pv,a,j2
c 1 −γ
where k = [ cv,a,j
v,a,j
] . Finally, by constraint 9 we get
2

1 + pv,a,j1 −γ co2v,a,j1 −γ
lim k · [ ] =k·[ ]
λ→∞ 1 + pv,a,j2 co2v,a,j2
co2
1 −γ
The proof is concluded by setting U equal to k · [ co2v,a,j
v,a,j
] . Observe that
2

U depends only on values of exogenous parameters. 

Proof of Proposition 1.
Proof. For the first property, in the case of equality 10 we distinguish between
two possibilities for the value of λ. If λ = 0 then pv,a,j = 0 and the complemen-
co2v,a,j λ
tarity condition is trivially satisfied. If λ > 0, then pv,a,j = (1+ Stda ) −1 >0
and the complementarity condition is trivially satisfied.
In the case of equality 3, since the positive variable c̄v,a,j is not bounded from
above, it cannot be the case that c̄v,a,j < (1 + pv,a,j ) · (cv,a,j ). Now assume,
for the sake of contradiction, that c̄v,a,j > (1 + pv,a,j ) · (cv,a,j ). Then, by the
complementarity condition we would have that c̄v,a,j = 0. But (1+pv,a,j )·(cv,a,j )
is always positive as the exogenous cost parameter cv,a,j is positive. We conclude
that c̄v,a,j = 0 > (1 + pv,a,j ) · (cv,a,j ) > 0, a contradiction. So the only possible
way of satisfying the complementarity requirement of 3 is by satisfying the
equality in which case c̄v,a,j > 0. The proof for the rest of the equations is
similar.

33
 For the second property, consider the lhs of inequality 1 written in the form
F (λ) ≥ 0 after eliminating all the other variables using the equalities of the
constraints 1,3,4,5,6,7,8 and 10; by the previous property we know that they
are satisfied as equalities. It is easy to see that F (λ) is increasing in λ. Since
the dual variable λ is not bounded from above, then, by the complementarity
condition, it can only be the case that constraint 1 is satisfied with equality in
s∗ , i.e. F (λ∗ ) = 0. Since F (λ) is increasing in λ, λ∗ is indeed the minimum
value for which the mcp is feasible. 

34
 Demand Module
for transport activity
High Traffic:
Increased
cost of
Passenger transport activity time Freight transport activity

Private transport modes: Freight transport modes:

 Cars Max Production = q(Acti,y)  Heavy trucks >3.5ton
Max Utility = u(Acti,y)  2wheelers Road s.t.  Light trucks<3.5ton
s.t. Public transport modes: network 
 Bus/Coach ΣActi,y· genpri,y Expend

Rail
Σ Acti,y· genpri,y Budget  Rail
Sea

 Metro/tram
Part of the expenses cover
 Aviation passenger business trips
Low
 Sea
Traffic:
Decreased
cost of
time

Demand
for cost of
Activity time
Acti,y
New vehicle equipment
choice module
Operators Vehicle
Househo Business
of public manufacturing
lds es
transport industry

Equilibrium
Generalised price of
transportation
genpr i,y=pri,y+cost of
timei,y Demand for New equipment:
(i) Market shares of vehicle types/ Supply of New equipment:
technologies subject to prices and (i) Menu of vehicles
available menu (ii) Pricing of equipment

Influences predictability
Prices pri, by car manufacturers
depending on (e.g. learning rates of
operation and Influences acceptance of battery costs)
equipment electric vehicles
choice
Developers of
recharging
infrastructure
Vehicle Equipment Supply Operation
Module Measures:
Regulations,
Self supply (for cars and Operator of public transport and Taxation, etc.
2wheelers): freight transport businesses:
Min Cost = c(New  Fixed costs (purchasing of new  Determines ticket fares/unit costs
equipment, Operation of equipment) for freight transport by
equipment)  Variable costs (e.g. fuel costs) minimizing capital and operating
 Other price signals (e.g. taxation) costs
s.t.  Perceived costs (low market  Determines expansion of its
Meeting transport activity acceptance of certain vehicles) equipment and optimal operation
 Average cost pricing across different transport markets
 Different pricing rules exist

Figure 1: A simplified representation of the modularity approach and the interaction of the
market actors simulated in the PRIMES-TREMOVE model.

35
Figure 2: Schematic representation of the heavy duty truck segment new vehicle choice mod-
eling in the PRIMES-TREMOVE transport model.

18000

16000
Additional cost (Euros)

14000

12000

10000

8000

6000

4000

2000

0
5% 10% 15% 20% 25% 30% 35% 40%
% reduction in specific CO2 emissions

Figure 3: Typical cost-efficiency improvement curve for new 6x2 regional delivery tractors for
2025.

36
 1200

1000

800
Gtkm

600

400

200

0
2015 2020 2025 2030
4X2 Tractor long haul 4X2 Rigid regional 6X2 Tractor long haul 6X2 Rigid regional Others

Figure 4: Trucks freight transport activity per wheel configuration for the baseline scenario
for 2010 to 2030.

25.00

21.36
20.00
19.86

15.00
Gtkm

10.00 10.97

9.01

5.00 6.05

3.29

0.00
2025 2030
10%-20% 15%-30% 20%-35%

Figure 5: Change in trucks freight transport activity for the policy scenarios relative to the
baseline scenario for 2025 and 2030.

37
 75

70

65
Mtoe

60

55

50

45
2010 2020 2025 2030
baseline 10%-20% 15%-30% 20%-35%

Figure 6: Heavy duty trucks energy consumption in the counterfactual scenarios.

4X2 Tractor 4X2 Rigid 6X2 Tractor 6X2 Rigid

0%

-5%

-10%

-15%

-20%

-25%

-30%
baseline 10%-20% 15%-30% 20%-35%

Figure 7: Improvement in the energy efficiency of new 4x2 and 6x2 tractor and rigid truck
registrations for the counterfactual scenarios in 2030.

38
 2030

2025

2020

2010

650 700 750 800 850 900

Mton CO2
20%-35% 15%-30% 10%-20% baseline

Figure 8: Total road transport CO2 emissions for the counterfactual scenarios.

Figure 9: Evolution of CO2 emissions per wheel configuration in the 15%-30% and the baseline
scenario.

39
 25.0%

20.0%

15.0%
% shares

10.0%

5.0%

0.0%
2025 2030
baseline 10%-20% 15%-30% 20%-35%

Figure 10: Share of LNG trucks in new truck registrations in the counterfactual scenarios.

40