Reduction of fossil fuel consumption by transport can be achieved by reducing energy use per transport movement (through improvement of energy efficiency and by shifting transport demand towards less energy consuming modes, like for example rail, public transport and shipping) and by increasing the share of alternative sources of energy.

The European Commission has set a compulsory minimum rate of biofuel consumption at 2% in 2005, which should by 2010 reach 5,75% (aviation is excluded).

It is estimated that improving energy efficiency could reduce energy consumption by more than 18 % across all sectors, through breaking down the market barriers, which prevent satisfactory diffusion of energy-efficient technologies and efficient energy use. For the transport sector, policy priorities include incentives for optimal occupancy of vehicles, the promotion of new and alternative infrastructure and subsequently modal shifting and improving intermodal transport systems, and changing behaviour regarding mobility.

The priorities set in the transport sector are to optimise combustion technologies using cleaner hydrocarbon fuels and other alternative fuels, such as hydrogen and to develop and demonstrate alternative fuels.

The penetration of RES in transport (by the production and use of liquid biofuels) faces limitations worldwide. The greatest barrier for the introduction of new fuels and technologies are economic. Low demand and immature techniques make the new technologies very expensive in the short term. Taxation of new fuels is also a barrier.

Biodiesel, bioethanol and biomethanol are all fuels included in the category of biofuels. Biodiesel is derived from vegetable oils, for example rapeseed. It can replace diesel entirely or it can be mixed with it in different proportions for running diesel engines which require little or no modification. Bioethanol is oxygenated products, produced from a range of agricultural feedstocks (starch and sugar crops). It can be used in existing, slightly modified, petrol engines, although cold starting requires the addition of a small amount of a volatile fuel component - usually petrol. Biomethanol can be produced from wood, and used in existing petrol engines in the same way as bioethanol. It can also be used as a feedstock in the production of biodiesel.

The technology to produce biofuels is well known and mature, but the production costs are high compared with diesel (1.5-3 times).

Another perspective around the world is the introduction of hydrogen – fuel cells for use in transport sector. Within a few years there will be commercially produced vehicles with fuel cell technology. The new technology is likely to be used first mainly in busses and larger vehicles. It is an expensive and complex process to establish production distribution and logistics for the new fuel – hydrogen.