  Abatement options for the hard-to-electrify parts of the transport sector are
needed to achieve ambitious emissions targets. Biofuels based on biomass,
electrofuels based on renewable hydrogen and a carbon source, as well as fossil
fuels compensated by carbon dioxide removal (CDR) are the main options.
Currently, biofuels are the only renewable fuels available at scale and are
stimulated by blending mandates. Here, we estimate the system cost of enforcing
such mandates in addition to an overall emissions cap for all energy sectors.
We model overnight scenarios for 2040 and 2060 with the sector-coupled European
energy system model PyPSA-Eur-Sec, with a high temporal resolution. The
following cost drivers are identified: (i) high biomass costs due to scarcity,
(ii) opportunity costs for competing usages of biomass for industry heat and
combined heat and power (CHP) with carbon capture, and (iii) lower scalability
and generally higher cost for biofuels compared to electrofuels and fossil
fuels combined with CDR. With a -80% emissions reduction target in 2040,
variable renewables, partial electrification of heat, industry and transport
and biomass use for CHP and industrial heat are important for achieving the
target at minimal cost. Abatement of remaining liquid fossil fuel use increases
system cost, with a 50% biofuel mandate increasing costs by 128-229 billion
EUR, or 39-82% of the liquid fuel cost. With a negative -105% emissions target
in 2060, fuel abatement options are necessary, and electrofuels or the use of
CDR to offset fossil fuel emissions are more competitive than biofuels. Biomass
is preferred in CHP and industry heat, combined with carbon capture to serve
negative emissions or electrofuel production, thereby utilising biogenic carbon
several times. Sensitivity analyses reveal significant uncertainties but
consistently support that higher biofuel mandates lead to higher costs.
