Institute for Transport StudiesFACULTY OF EARTH AND ENVIRONMENT

Policy Instruments for Reducing Greenhouse Gas Emissions from Transport

Chris Nash

Changes in EU-27 greenhouse gas emissions by sector, 1990-2006

Data source: EEA 2008. Annual European Community greenhouse gas inventory 1990-2008http://dataservice.eea.europa.eu/PivotApp/pivot.aspx?pivotid=455

EU27 passenger km (1995-2007 % growth)

Car 21.4

2 wheeler 24.8

Bus and coach 6.9

Rail 12.7

Tram and metro 20.1

Air 70.4

Sea -7.7

Total 22.3

Source: Eurostat

EU27 freight tonne km (1995-2007 % growth)

Road 49.6

Rail 17.1

IWW 15.6

Pipelines 12.1

Sea 37.0

Air 55.0

Total 38.0

Source: Eurostat

Transport demand growth Britain 1977-2007 (% change over preceding 10 years)

Freight Passenger

1987 16 31

1997 20 22

2007 9 12

Source: Transport Statistics Great Britain 2008

Transport demand growth by mode Britain1997-2007 (% change)

Freight Passenger

Road 10 car 9

bus 14

Rail 24 41

Source Transport Statistics Great Britain 2008

Energy Consumption by Mode, inter city passenger transport 2010

Intercity train High speed train

Air (500 km) Diesel car on motorway

Seating capacity 434 377 99 5

Load factor 44% 49% 70% 36%

Primary energy (MJ per seat km)

0.22 0.53 1.8 0.34

(MJ per passenger km)

0.5 1.08(0.76*)

2.57 0.94

*At 70% load factor

Source: Derived from CE Delft (2003)

Energy consumption by mode – city commuting 2010

Metro Tram City bus Diesel car

Seating capacity 120 180 48 5

Load factor 35% 30% 33% 23%

Primary energy (MJ per seat km)

0.24 0.21 0.30 0.52

(MJ per passenger km)

0.69 0.70 0.91 2.26

Source: derived from CE Delft (2003)

Energy consumption by mode – long distance non bulk freight 2010

HGV Electric train Diesel train Inland Waterway

Capacity tonnes 27 790 790 2575

Load factor 62% 44% 44% 32%

Primary energyMJ per tonne km

0.86 0.49 0.56 1.11

Source: CE Delft (2003)

Policy Instruments - price

•Road transport already subject to:

•Value added tax

•Fuel tax

•Annual licence duty

•Sales tax

•And in some cases

•Road pricing

•Heavy goods vehicle kilometre charge

Impact of road fuel price on demand

Elasticities with respect to fuel price

Short run Long run

Road transport fuel demand 0.25 0.77

Car km 0.15 0.31

Source: Graham and Glaister (2004)

Air transport elasticities with respect to fare

Business 0.5

Leisure 1.3

Source: Riddington (2006)

EU Policy

•Adopted short run marginal cost cost-pricing as basis of policy (White Papers in 1998 and 2001)

•Legislation exists on rail and heavy goods vehicles

•Subsidiarity applies in the case of cars

•International agreements on air and water transport preclude fuel tax or VAT (strictly only for international transport but often applies to domestic as well)

Road pricing

•Several Norwegian cities, Central London and Stockholm have implemented urban road pricing

•London and Stockholm achieved a 20% reduction in traffic

•Funding used to improve roads and/or public transport

•But extension difficult in terms of acceptability (Edinburgh, Manchester)

•Several countries (Switzerland, Austria, Germany) have a km charge for goods vehicles

•Some countries considering country wide road pricing for all vehicles (Netherlands)

Marginal social cost

•The Marginal social costs of road transport depend on:

•Congestion, which varies with vehicle type and traffic volume;

•Road damage, which is sensitive to axle load and road quality;

•Environmental and accident costs, which vary widely with vehicle type and geographical location.

Marginal social costs for car transport (example) (euros/km)

Basel-Duisberg

Interurban petrol GRACE car petrol EV

Peak Off-Peak

Noise 0.005 0.009

Congestion 0.123 0.002

Accident 0.008 0.008

Air pollution 0.001 0.001

Climate change 0.005 0.005

Wear and tear 0.019 0.019

0.161 0.044

Source: GRACE (2008) D7 www.grace-eu

Cost and charges for car transport (euros/km)

Basel-Duisberg

Tolls 0.046

Fuel tax 0.056

Vehicle excise duty 0.012

Total 0.114

Peak cost 0.161

Off peak cost 0.044

Source: GRACE (2008) D7 www.grace-eu

Marginal social costs for heavy goods vehicles (example) (euros/km)

Basel-Duisberg

Interurban diesel GRACE HGV>18 Euro II

Peak Off-Peak

Noise 0.036 0.059

Congestion 0.657 0.009

Accident 0.050 0.050

Air pollution 0.031 0.031

Climate change 0.021 0.021

W&T 0.151 0.151

0.946 0.321

Source: GRACE (2008) D7 www.grace-eu

Cost and Charges for heavy goods vehicles transport (euros/km)

Basel-Duisberg

Tolls 0.092

Fuel tax 0.050

Vehicle excise duty 0.021

Total 0.163

Peak costs 0.946

Off peak costs 0.321

Source: GRACE (2008) D7 www.grace-eu

Modelled impact of road pricing Europe-wide (IASON/TIPMAC)

•Biggest traffic reduction in core countries – they benefit more than periphery

•Reassignment of traffic from urban to rural areas

•Higher proportion of large trucks

•6% of road tonne km diverted to rail and water

•But 50% of traffic reduction comes from changing distribution systems and more local sourcing of inputs and consumer goods

Charging for externalities in other modes

•Rail

•Electricity part of the emissions trading scheme

•Tax on diesel for rail transport very variable

•Air

•Fuel untaxed

•Departure taxes in some countries

•To join emissions trading scheme in 2012

•Water?

Policy instruments - regulation

•New vehicle standards

•Why needed given fuel tax?

•Payback period

•Discount rates

•Second hand market

•Land use controls

•Is higher density developments one reason for the success in restraining traffic growth in Britain?

•Are other European countries still in the phase of urban sprawl?

Policy Instruments - investment

•Roads

•Reduced congestion means less CO2 but

•Roads generate traffic

•Investment needs to be combined with efficient pricing

•Airports

•Investment needed but combined with efficient pricing

•Public transport

•Of extra rail traffic following urban investment,

•41% from bus

•33% from car

•1% from walking/cycling

•24% generated

•Alternative technologies

•Do need start up funding (e.g. distribution networks, refuelling)

Conclusions

•The most obvious policy instrument is price

•But does need to be combined with regulation (mainly new vehicle standards) and appropriate investment

•Alternative fuelled vehicles important; in the meantime rail and other public transport offer the best hope of a rapid switch to low carbon fuel (but depends on how electricity is produced)

•Second best methods such as public transport promotion relatively ineffective, unless they use low carbon electricity

•Raising price impacts not just on mode split but number and length of motorised journeys

•Decoupling of transport demand and GDP growth IS possible!