In the EU the transport sector is the only economic sector whose greenhouse gas emissions are constantly increasing, especially with respect to road transportation. Using a well balanced mix of instruments, though, the transport sector’s contribution to climate change could be reduced, according to economic researchers of the Technical University of Berlin (TU) and of the Potsdam Institute for Climate Impact Research (PIK). They especially highlight two measures.
Firstly, for the admission of new cars their energy consumption instead of their CO2 emissions should be the criterion for setting efficiency standards. Secondly road traffic could be incorporated into the European emissions trading scheme. These conclusions were reached under the supervision of Felix Creutzig and Ottmar Edenhofer at the department of Climate Economy of the TU Berlin. The department is co-financed by the Michael Otto Foundation. The double study was recently published in the Energy Policy journal.
One of the central findings of this study is that EU regulations – according to which new cars may on average only emit a certain amount of CO2 – have proven successful for the current vehicle fleet. These regulations are an effective instrument for reducing CO2 emission of gasoline-powered cars. “However with respect to alternative energy for cars, e.g. electricity or biofuels, the present repertoire of instruments needs to be enhanced”, explains Felix Creutzig of the TU Berlin, lead author of the first article. “With these alternative fuels the majority of emissions are not produced while driving but during fuel production.” Electric cars for example might be powered by C02-intensive electricity from coal-fired power plants. As for biofuels, high greenhouse-gas emissions might result from changing landuse with the accompanying use of fertilizers or rainforest logging landuse change.
“This reduces the significance of regulations based solely on C02-emission per kilometer”, says Creutzig. “Instead vehicles should be regulated according to their energy consumption per kilometer.” This would make it possible to apply a uniform standard to different vehicle technologies. In contrast, the EU quota system for biofuels – the reason for the recent introduction of E10 in Germany – is inefficient and maybe even counterproductive for climate targets.
A different instrument, however, could provide direct incentives for reducing emissions during fuel production as well as in the car engine: emission trading. “Emissions trading is the most efficient way to set a uniform standard for different kinds of emissions in the transport sector”, says Christian Flachsland from the Potsdam Institute for Climate Impact Research (PIK), lead author of the second article. This concept envisages the establishment of a climate-target-oriented limit for emissions at the fuel production level and the subsequent issuing of tradable emissions certificates. So far the transport sector is excluded from the European emission trading scheme. If the transport sector were integrated into this scheme, CO2 emissions during the production process of biofuel or electricity and direct car emissions could be treated equally. Here again, it is all about a level playing field.
A frequently cited counterargument to this incorporation is the huge effort needed to involve millions of motorists in certificate trade at the petrol station. “However, if the incorporation of road traffic into the emission trading system is shifted to the fuel production level, the same target can be met with significantly less effort”, Flachsland emphasizes. “This very approach is adopted in the Californian emission trading scheme starting in 2015.” Another argument against the incorporation of constantly growing road traffic emissions is the fear of rising certificate prices and associated international competitive disadvantages for industries which are already participants of emissions trading. “We have looked at cost data from multiple studies and compared them with regard to the rise of certificate prices in the EU system by 2020 caused by the incorporation of road traffic”, Flachsland explains. “As long as beneficial mitigation options in other parts of the world are exhausted through international instruments, contrary to all concerns there will be no rise in certificate prices.”
By combining emissions trading and efficiency standards the transport sector could make its own contribution to CO2 reduction and promote the ambitious 2020 EU climate target.
Article: Creutzig, F., McGlynn, E., Minx, J., Edenhofer, O.: Climate policies for road transport revisited (I): Evaluation of the current framework. Energy Policy (2011) [doi: 10.1016/j.enpol.2011.01.062]
Article: Flachsland, C., Brunner, S., Edenhofer, O., Creutzig, F.: Climate policies for road transport revisited (II): Closing the policy gap with cap-and-trade. Energy Policy (2011) [doi: 10.1016/j.enpol.2011.01.053]
For further information please contact:Felix Creutzig, Economics of Climate Change Department, Technical University of Berlin
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