The role of modal shift in decarbonising the Scandinavian transport sector: Applying substitution elasticities in TIMES-Nordic

In the Nordics, transportation accounts for almost 40% of energy-related CO2 emissions, a higher share than most European countries. The International Energy Agency identifies modal shift as pivotal for a sustainable transition of the transport sector. This study analyses the role of modal shift in the decarbonisation of the Scandinavian energy system with TIMES-Nordic, the TIMES (The Integrated MARKAL-EFOM System) model depicting the national energy systems of Denmark, Norway and Sweden. For the first time, passenger and freight modal shift is modelled through substitution elasticities for a real case study. Transport elasticities from the literature are discussed in light of the modelling environment, and long-term direct elasticities are identified as suitable for the purpose. The results obtained with TIMES-Nordic and its version equipped with modal shift are compared under an increasing CO2 tax. For passenger, car is mainly substituted by rail and non-motorised modes, while for freight, rail replaces truck and ship. Modal shift results in a cost-effective mitigation measure, responsible for 26 PJ of lower fuel consumption in 2050, and 2.2% lower cumulative CO2 emissions from transport. A sensitivity analysis on the investment costs for electric cars reveals the ineffectiveness of the CO2 tax in stimulating car substitution in a future where electric cars are more competitive and the power sector almost decarbonised. Estimates of modal shift potentials from alternative methodologies are comparable to the results obtained, highlighting the methodology solidity. Lastly, a well-balanced technology characterization among modes is identified as crucial when enabling modal shift.