4 Reversing Europe’s failure in decarbonising transport
The EU has the potential to encourage innovation in low-carbon transport technologies and promote a reduction in road-kilometres. But to do so, it needs to reshape its transport policies.
The EU has mainly tried to promote road transport decarbonisation by introducing mandatory emissions standards for new cars and light commercial vehicles, and by introducing a 10 percent renewable energy target for transport fuel by 2020 (Table 2).
However, emissions reductions have been much less than intended and tighter vehicle fuel economy standards have not delivered. In terms of renewable fuels, the use of food-based biofuels might even have led to a net increase in CO2 emissions if indirect emissions (ie emissions generated from indirect land-use change) are taken into account (Valin et al, 2016).
In November 2017, the European Commission (2017c) proposed the ‘Clean Mobility Package’, a new set of policies to decarbonise transport, including new CO2 emission standards, new rules for public procurement of clean vehicles, new rules to promote the combined use of different modes for freight transport and measures on batteries. These measures, which are at time of writing under discussion in the European Parliament and Council of the EU, represent a positive attempt to make EU policies more effective.
Table 2: EU transport targets and emissions standards, year of adoption and enforcement
|
130 gCO2/km target by 2015
95 gCO2/km target by 2021
|
2009
2014
|
Non-compliant manufacturers can be fined
|
|
175 gCO2/km target by 2017
147 gCO2/km target by 2020
|
2011
|
|
60% greenhouse gas emissions reduction for transport in 2050 compared to 1990
|
2011
|
Not binding
|
|
20% greenhouse gas emissions reduction for transport in 2030 compared to 2008
|
2011
|
|
10% of transport fuel to come from renewable sources by 2020
|
2009
|
Source: Bruegel based on European Union (2009a, 2009b, 2011, 2014), European Commission (2011a, 2011b). Note: gCO2/km = grams of carbon dioxide per kilometre.
The measures should be promptly approved and implemented.
However, this set of rules might still not be sufficient to ensure road transport decarbonisation. In the past, the Council has resisted stricter car emission standards because of resistance from some countries, such as Germany (Carrington, 2013). Europe needs to overcome this political barrier, allowing some member states to move ahead in decarbonising road transport – and allowing cities in all EU countries to also move ahead, and to take advantage of incentives put in place by the EU. The EU therefore needs to develop a new post-2020 road transport strategy. This strategy should have three pillars:
4.1 Encourage EU countries and cities to adopt plans to ban diesel and petrol vehicles
More EU countries should follow the example of France and the United Kingdom, and adopt plans to ban diesel and petrol vehicles by 2040 or, even better, by 2030.
The more EU countries that make these commitments, the stronger the signal will be to the European automotive industry that it should invest more in the development of clean vehicles.
That is, these commitments should also be seen as a simple but effective tool to provide investment certainty to the European automotive industry, and to foster its focus on clean vehicles. Clear planning of these commitments would leave the automotive industry a window of 10-20 years to fully switch from the traditional internal combustion engine business model to the new clean vehicles and clean mobility business models.
Cities should also be encouraged to adopt plans to ban the circulation of diesel and petrol cars, which could be a major factor in inducing behavioural change on behalf of citizens and promoting modal shift.
For example, an EU Clean Transport Fund could be established to provide dedicated financial support to countries and cities committed to the phase-out of diesel and petrol vehicles. This fund should allow cities to bid for EU money to support measures such as the deployment of alternative fuels infrastructure, zero-carbon public buses, sharing and pooling solutions allowing a reduction in car ownership or the promotion of more sustainable modes of transport such as cycling4.
Such a fund could be created by making better use of existing financial resources, such as from the Connecting Europe Facility for Transport (CEF-T) or from the Structural and Cohesion Funds. For the period 2014-20, CEF-T has a budget of €24 billion (European Commission, 2018a), while the Cohesion Fund and the European Regional Development Fund have a budget for transport and energy network infrastructure of €71 billion5.
4.2 Stimulate an EU-wide reflection on the future of transport taxation
Taxation is a key policy tool to foster road transport decarbonisation. Different taxes apply throughout the transport system, from the initial purchase of a vehicle, to ownership taxes (eg annual registration tax, company car taxation) and usage taxes (eg taxes on fuel, tolls, roadspace, parking, commuter tax deductions) (Green Fiscal Commission, 2010).
These taxes can be used to influence user decisions, and possibly also to influence the automotive industry’s strategies. For instance, to promote the deployment of clean vehicles, taxes can be differentiated on the basis of vehicles’ carbon emissions, or simply allow for deductions or other special provisions (eg subsidies, grants, tax credits, tax exemptions).
European countries still have very different transport taxation regimes. For example, only ten countries take into account CO2 emissions in the composition of their vehicle registration taxes (ACEA, 2017b). Fuel cost savings – which largely arise from the different taxation of gasoline and electricity – provide EVs with an important cost advantage. Savings are significant in Norway where running an electric vehicle can cost 64 percent less than running a diesel or petrol vehicle. In Germany, by contrast, the difference is only 25 percent (Lévay et al, 2017).
Given the importance of this policy tool in delivering decarbonisation, the EU should promote a new discussion among EU countries on the future of transport taxation, as is being done in the field of digital taxation (European Council, 2017).
4.3 More focused and impactful research and innovation funding for transport
After 2020, the EU should improve its transport research and innovation funding. In particular, it should carefully allocate this money, targeting areas in which it can truly have leverage. EU transport research and innovation funding should become mission-oriented, or directed at solving specific problems, as more generally suggested by Mazzucato (2018).
The introduction of bans on diesel and petrol vehicles by countries and cities could lead to a quick take-up of already commercially-viable clean vehicles, such as EVs. Though necessary to foster road transport decarbonisation in the short-to-medium term, this should not prevent currently less-mature technologies from developing and demonstrating their longer-term potential to contribute to road transport decarbonisation.
To avoid this risk, the EU should focus its post-2020 transport-related research and innovation funding on early-phase technologies, such as hydrogen, solid-state batteries or electrofuels (liquid fuels produced from CO2, water and electricity). This would be the most sensible way to invest the limited available resources (equivalent to 0.2 percent of the European automotive industry’s total investment in research and innovation) in areas that otherwise might not find adequate private funding.
