Institute for Transport Studies FACULTY OF EARTH AND ENVIRONMENT Policy Instruments for Reducing Greenhouse Gas Emissions from Transport Chris Nash

Changes in EU-27 greenhouse gas emissions by sector, Data source: EEA Annual European Community greenhouse gas inventory

EU27 passenger km ( % growth) Car wheeler24.8 Bus and coach6.9 Rail12.7 Tram and metro20.1 Air70.4 Sea-7.7 Total22.3 Source: Eurostat

EU27 freight tonne km ( % growth) Road49.6 Rail17.1 IWW15.6 Pipelines12.1 Sea37.0 Air55.0 Total38.0 Source: Eurostat

Transport demand growth Britain (% change over preceding 10 years) FreightPassenger Source: Transport Statistics Great Britain 2008

Transport demand growth by mode Britain (% change) FreightPassenger Road10car 9 bus 14 Rail24 41 Source Transport Statistics Great Britain 2008

Energy Consumption by Mode, inter city passenger transport 2010 Intercity trainHigh speed train Air (500 km)Diesel car on motorway Seating capacity Load factor44%49%70%36% Primary energy (MJ per seat km) (MJ per passenger km) (0.76*) *At 70% load factor Source: Derived from CE Delft (2003)

Energy consumption by mode – city commuting 2010 MetroTramCity busDiesel car Seating capacity Load factor35%30%33%23% Primary energy (MJ per seat km) (MJ per passenger km) Source: derived from CE Delft (2003)

Energy consumption by mode – long distance non bulk freight 2010 HGVElectric trainDiesel trainInland Waterway Capacity tonnes Load factor62%44% 32% Primary energy MJ per tonne km 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 runLong run Road transport fuel demand Car km Source: Graham and Glaister (2004)

Air transport elasticities with respect to fare Business0.5 Leisure1.3 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 PeakOff-Peak Noise Congestion Accident0.008 Air pollution0.001 Climate change0.005 Wear and tear Source: GRACE (2008) D7

Cost and charges for car transport (euros/km) Basel-Duisberg Tolls0.046 Fuel tax0.056 Vehicle excise duty0.012 Total0.114 Peak cost0.161 Off peak cost0.044 Source: GRACE (2008) D7

Marginal social costs for heavy goods vehicles (example) (euros/km) Basel-Duisberg Interurban diesel GRACE HGV>18 Euro II PeakOff-Peak Noise Congestion Accident0.050 Air pollution0.031 Climate change0.021 W&T Source: GRACE (2008) D7

Cost and Charges for heavy goods vehicles transport (euros/km) Basel-Duisberg Tolls0.092 Fuel tax0.050 Vehicle excise duty0.021 Total0.163 Peak costs0.946 Off peak costs0.321 Source: GRACE (2008) D7

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 CO 2 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!