Modeling cost-optimal fuel choices for truck, ship, and airplane fleets: The impact of sustainability commitments

For the next 25 years, numerous transport operators have introduced sustainability commitments to mitigate carbon emissions. However, static goals to reduce fossil fuel usage and adopt renewable fuel technologies pose economic risk. This study analyzes the costs of strategic fleet replacement through a mixed integer linear program. Comparing three Norwegian transport operators, we determine cost-optimal investments in fossil and renewable fuel technologies for two approaches: One integrating and the other neglecting sustainability commitments. Our findings reveal that the truck operator's sustainability commitments incur minimal additional costs, with battery-electric trucks proving cost-effectiveness early. In contrast, ship and airplane operators exhibit significant differences in fleet replacement decisions, resulting in additional costs ranging from +6% to +31% for ships and +4% to +11% for airplanes, across fuel cost and carbon price scenarios. Norwegian carbon price regulations fall short in incentivizing a cost-competitive technology transition for ships and airplanes. Additional policies are needed to encourage gradual fleet replacement.