Several countries have set reduction targets for the transportation sector and the EU has an emission target for the ESR sector, which includes the transport sector. Carbon emission reduction targets in the road transport sector can be achieved through a combination of reduced traffic (VKT), an increased share of biofuels, and decreased vehicle emissions per kilometer. This paper explores cost-efficient contributions from different adaptation mechanisms by determining the optimal fossil fuel tax and biofuel share needed to meet climate emission targets in the EU and Sweden. Cost-efficient scenarios, or roadmaps, are important not only for for climate policy; they have implications for traffic planning, biofuel production and the transformation of the vehicle industry. 

We first forecast the traffic increase for cars, vans, and heavy vehicles from 2020 to 2050, as well as the average emissions per VKT for the future vehicle fleet. This is based on a vintage model that accounts for how new vehicles enter the fleet and how VKT vary by vehicle age. We consider the emission requirements for new vehicles as binding in the EU, though not in individual countries. Based on the forecasted transport demand and average emissions per VKT by year, we project emission reductions for 2030 and 2050 in the baseline scenario. We then calculate the optimal combination of a carbon tax increase and biofuel share that ensures the emission targets are met and determine the traffic response.