EUROPEAN COMMISSION Brussels, 20.7.2016 SWD(2016) 244 final COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

A European Strategy for Low-Emission Mobility {COM(2016) 501 final}



Table of Contents 1. General context and policy framework 2. Existing EU policies for sustainable transport 2.1. Low emission vehicles 2.2 Switching towards low emission alternative energy for transport 2.3 Efficiency of the transport system 2.4 Cross-cutting initiatives 2.4.1 Transport research and innovation 2.4.2 EU financing and co-operation instruments 2.4.3 Support to cities and local communities 2.5 Action in international aviation and maritime 2.5.1 International developments 2.5.2 EU level action in international aviation and maritime 2.6 Taxation 3. Developments under current trends and policies 3.1 Identifying the GHG emissions gap for transport 3.2 Key assumptions of the Reference Scenario 3.3 Reference Scenario main results

4. Pathways towards low-emission mobility 4.1 Policy measures 4.1.1 Moving towards zero-emission vehicles 4.1.2 Switching towards low emission alternative energy for transport 4.1.3 Efficiency of the transport system 4.1.4 Transport fuels in the EU ETS 4.1.5 Cross-cutting initiatives 4.2 Description of the pathways/scenarios 4.2.1 Central scenarios 4.2.2 More ambitious pathways/scenarios for low-emission mobility 4.3 Analysis of impacts of the pathways/scenarios 4.3.1 Moderation of energy demand 4.3.2 Energy security 4.3.3 Decarbonisation 4.3.4 Other environmental impacts 4.3.5 Research, innovation and competitiveness 4.3.6 Impacts on transport as a business 4.3.7 Economic impacts 4.3.8 Social impacts 5. Conclusions

ANNEX I: Historical developments in transport activity, energy use and emissions ANNEX II: Analytical work on low-emission mobility ANNEX III: Overview of policy measures ANNEX IV: Models and model-based scenarios used in preparing the analytical work Table of Figures Figure 1: Passenger and freight transport projections (average growth rate per year) Figure 2: Evolution of total final energy consumption and GHG emissions between 1995 and 2050 Figure 3: Evolution of final energy use in transport by type of fuel 28 Figure 4: Decomposition of CO2 emissions in the Reference scenario (2005-2030) Figure 5: Energy savings relative to Reference scenario 2016, in Mtoe (left side) and change in energy intensity for 2010-2030 and 2010-2050, in % (right side) Figure 6: Final energy demand in transport by fuel in 2030 (in % of total) Figure 7: Alternative fuels and energy carriers in transport in 2030 (in % of total energy demand) Figure 8: Share of electricity in road transport energy demand (in %) and total electricity demand in transport (in Mtoe) Figure 9: Oil products used in transport (difference to REF2016, in Mtoe) and oil dependency (in %) Figure 10: Decomposition of CO2 emissions for passenger transport for 2005-2030 (% change) Figure 11: Decomposition of CO2 emissions for passenger transport for 2005-2030 (in Mt of CO2) Figure 12: Decomposition of CO2 emissions for freight transport for 2005-2030 (% change) Figure 13: Decomposition of CO2 emissions for freight transport for 2005-2030 (in Mt of CO2) Figure 14: Evolution of well to wheel CO2 emissions for 2005-2030 and 2005-2050 (in %)

Figure 15: Evolution of NOx and PM2.5 emissions for 2010-2030 and 2010-2050 (growth rates, in %) Figure 16: External costs of air pollution and noise for 2010-2030 and 2010-2050 Figure 17: Light duty vehicles by type of powertrain in 2030 and 2050 (in %) Figure 18: Liquid and gaseous biofuels in 2030 and 2050 (in % of total liquid fuels and in Mtoe) Figure 19: Gross average costs, average co-benefits and net average costs of emission reductions in the decarbonisation pathways/scenarios Figure 20: External costs of congestion and accidents for 2010-2030 and 2010-2050 Figure 21: Share of transport energy demand by mode in 2014 (%) Figure 22: Specific consumption of passenger cars (EU fleet average) Figure 23: Share of transport energy demand by energy carrier in 2014 (%) Figure 24: Share of transport energy demand by energy carrier in 2014, by mode (%) Figure 25: Evolution of greenhouse gas emissions by sector (1990=100), EU28 Figure 26: Greenhouse gas emissions from transport by mode in 2013 Figure 27: Shares in EU transport CO2 emissions in 2015 (model estimates) Figure 28: Domestic transport emissions and emissions from international aviation, EU28 Figure 29: Cabotage in the EU in 2014 by host country Figure 30: Inter-linkages between models Figure 31: EU28 Gross Inland Consumption (Mtoe, left; shares (%), right) Figure 32: EU28 energy production (Mtoe) Figure 33: Gas - production, net imports and demand (volumes expressed in bcm) Figure 34: EU power generation (net) by fuel (Mtoe – left, shares – right)

Figure 35: Net power capacity investments by plant type (MWh – for five year period) Figure 36: Decomposition of electricity generation costs and prices (€'2013 MWh) Figure 37: Investment expenditures (5-year period) - demand side, million €'2013 (left, excluding transport) and supply side, million €'2013 (right) Figure 38: Decoupling of EU energy use and intensity from GDP (2005=100) Figure 39: Evolution of final energy demand by sector (Mtoe – left, shares – right) Figure 40: Evolution of final energy demand by fuel (Mtoe – left, shares – right) Figure 41: Industrial energy demand versus activity (value added) Figure 42: Final energy demand in the residential sector Figure 43: Trends in transport activity and energy consumption Figure 44: Evolution of CO2 emissions (Mt) by sector Figure 45: Non CO2 GHG emissions (Mt CO2 eq.) Figure 46: Development of the EU28 emissions/removals in the LULUCF sector in Mt CO2 until 2050 Figure 47: Illustrative levelized cost of electricity (expressed in €'2013/MWh-net) Figure 48: Evolution of activity of light duty vehicles by type and fuel Figure 49: Projected evolution of energy system costs Figure 50: Changes in the excise duty rates for diesel by Member State from 2025 onwards Figure 51: Final energy demand in transport by fuel in 2050 (in % of total) Figure 52: Alternative fuels/energy sources in transport in 2050 (in % of total energy demand)

1. General context and policy framework

Transport is the backbone of the economy, an enabler of growth and jobs, essential for the functioning of the single market and the free movement of goods and people. Market integration, economic growth and transport activity are strongly related. The global transition towards a low-carbon economy has started, supported by the Paris Climate Agreement. Transport will need to play an important role in this transition. The transition towards a low-carbon economy also represents a major opportunity for jobs and growth in the transport sector, as markets for low-emission mobility grow globally. This transition will be supported by a number of disruptive trends, such as digitalisation and new technologies. Transport is increasingly becoming an on-demand service as consumer needs and perceptions of mobility solutions evolve. Taken together, these trends also imply important competitiveness challenges and significant effort will be required from businesses and regulators to turn them into growth and employment opportunities for Europe. A forward looking and long-term policy approach with the aim of ensuring a regulatory and business environment that is conducive to meeting the competitiveness challenges that the transition to low-emission mobility implies is a vital precondition. The analysis carried out in this paper provides insights on the necessary tools to do this. It is estimated that the transport industry at large accounts for 7% of the European gross value added and for 7.06% of total employment in the EU, corresponding to more than 15 million people in absolute terms (2014 figures). Greenhouse gas emissions in transport did not show the same decline as those in other sectors, increasing until 2007 and only since reducing as a result of periods of higher oil prices, increased road vehicle efficiency and slower growth in activity due to the crisis. Transport emissions include both those in the EU Emissions Trading System (at present domestic and intra-EU aviation, and electricity consumed in the sector) and in sectors outside the EU ETS, where it accounts for around a third of emissions. EU transport is responsible for 33% of final energy consumption (353 Mtoe) and 23% of total EU emissions (excluding international maritime). Aviation and maritime contribute an increasing share to the total transport emissions over time, going up from 19 to 23% during 1990-2014. Today, transport still relies on oil for 94% of its energy needs. Europe imports around 87% of its crude oil and oil products from abroad, with a crude oil import bill estimated at around €187 billion in 2015, and additional costs to the environment. Progress has been made with the EU share of renewable energy in transport reaching 5.9% in 2014 and the opening of first production facilities for advanced biofuels. However, the development of large-scale production capacity for advanced biofuels in the EU is likely to be slow, hampered by technological challenges and feedstock availability. Transport also represents an environmental concern in terms of air pollution. Whilst significant progress has been made since 1990 in reducing the emissions of air pollutants from transport, it is still responsible for more than half of nitrogen oxide (NOx) emissions, and contributes significantly (around 15% or more) to the total emissions of other pollutants. Road transport represented the largest source of NOx emissions in 2013, accounting for 39% of total EU28 emissions, and an important source of particulate matter PM2.5 emissions (13%). 2. Existing EU policies for sustainable transport Since 2007 overall emissions from transport have continuously decreased. This section discusses the most important EU policies for reducing greenhouse gas (GHG) emissions and other transport externalities, covering three main areas: (1) low emission vehicles; (2) switching towards low emission alternative energy for transport and (3) efficiency of the transport system. Many of these policy measures were adopted in the context of the 2020 Energy and Climate Policy Framework and the 2011 Transport White Paper. The 2020 Energy and Climate Policy Framework was agreed by the European Council in March 2007. It set three targets to be attained by 2020: 20% GHG emissions reduction compared to 1990, 20% of all EU primary energy to be provided by renewables, and a 20% improvement in energy efficiency. The transport sector plays a role in the implementation of these headline targets, and four main pieces of legislation have relevance for the EU transport sector: (I)The revised Directive on the European Emissions Trading System (EU ETS Directive); (II)The Effort-Sharing Decision (ESD) introducing national GHG reduction targets for non-ETS sectors (including transport) for all Member States; (III)The Renewable Energy Directive (RED) laying down targets for the overall use of renewable energy and for its use in transport; (IV)The Energy Efficiency Directive (EED) establishing a set of binding measures to help the EU reach its indicative 20% energy efficiency target (for the whole energy system, including transport). New specific transport-related measures were also included to curb GHG emissions from road transport. The Fuel Quality Directive was revised to require a reduction in the GHG intensity of EU transport fuels and CO2 emissions performance standards for cars and vans were adopted, also contributing to energy efficiency improvements. The 2011 Transport White Paper defined a long-term vision until 2050 for a transport sector that continues to serve the needs of the economy and of the citizens while meeting future constraints: oil scarcity, growing congestion and the need to cut CO2 and pollutant emissions in order to improve air quality particularly in cities. The White Paper covers four broad areas of intervention: internal market, innovation, infrastructure, international aspects. For each of these areas, a ten-year programme was defined with 40 specific action points, containing within each point a handful of specific initiatives of different nature, different time horizon and different economic/political relevance. An implementation report of the 2011 White Paper has been concluded in 2016. 2.1. Low emission vehicles

European Regulations set CO2 targets for new passenger cars and vans (collectively LDVs) as follows: (I)2015 car target: New cars registered in the EU must not on average emit more than 130 grams of CO2 per kilometre (gCO2/km) by 2015 in the official test, corresponding to a fuel consumption of around 5.6 litres per 100 km (l/100 km) of petrol or 4.9 l/100 km of diesel. The average emissions of a new car sold in 2014 were 123.4 gCO2/km. Provisional data for 2015 indicate 119.6 gCO2/km. (II)2017 light commercial vehicle target: New vans registered must not emit more than an average of 175 gCO2/km by 2017, corresponding to a fuel consumption of about 6.6 l/100 km of diesel. In 2014, the average van sold in the EU emitted 169.1 gCO2/km. (III)2020 light commercial vehicle target: by 2020, the fleet average to be achieved by all new vans is 147 gCO2/km, which corresponds to around 5.5 l/100 km of diesel. (IV)2021 car target: by 2021 the fleet average to be achieved by all new cars is 95 gCO2/km. This means a fuel consumption of around 4.1 l/100 km of petrol or 3.6 l/100 km of diesel. An important complementary measure to help car manufacturers to meet their specific CO2 emission targets is the Car Labelling Directive. It requires EU Member States to ensure that relevant information is provided to consumers, including a label showing a car's fuel efficiency and CO2 emissions. It aims to raise consumer awareness on fuel use and CO2 emissions of new passenger cars which may influence consumers' choice in favour of cars that use less fuel and emit less CO2. An evaluation of the existing Regulations setting standards for light duty vehicles identified that the Regulations have been largely effective and have delivered CO2 reductions at lower cost than originally foreseen. However, there are a number of areas where they could be improved, including to better take into account the gap between CO2 emissions and fuel consumption values measured during laboratory tests at type approval and those encountered in real use. They are being addressed by the Worldwide harmonized Light vehicles Test Procedure (WLTP) that is in the process of being put in place at EU level (see box: "More reliable fuel consumption and CO2 figures for consumers and regulators" in section 4.1.1). In addition, there are significant discrepancies between the real-driving emissions of certain air pollutants and the values measured in the laboratory at test procedure. In particular the NOx emissions of diesel cars – which form a large share of the EU market – often drastically exceed the laboratory values in real driving. This has a significant negative impact on air quality, especially in urban areas. The evaluation of the Car Labelling Directive shows that the Directive was successful in increasing consumer awareness of the fuel economy and CO2 emissions of new passenger cars. However, the report identified a number of issues that prevented the Directive from being more effective in stimulating the uptake of vehicles with lower fuel consumption and CO2 emissions. For Heavy Duty Vehicles (HDVs), the first initiative to tackle GHG emissions in the EU was a strategy adopted in 2014. Despite the economic importance of fuel consumption, CO2 emissions from HDVs are currently neither measured nor reported. The strategy focuses on short-term action to certify, monitor and report HDV emissions - an essential first step towards reducing them. To support this, the Commission has developed a computer simulation tool, VECTO, to calculate fuel consumption and CO2 emissions from new vehicles (trucks and buses). In addition, the Clean Vehicles Directive mandates public procurers to consider fuel consumption, CO2, and pollutant emissions when purchasing road transport vehicles, giving them various options to do so. The conclusions of the evaluation of the Directive show that it is relevant, and that it resulted in a benefit/cost ratio of 1.2. However it has had limited effectiveness and efficiency and as such reduced CO2 emissions much less than originally expected. Heavy goods vehicles, buses and coaches in the EU must comply with certain rules on weights and dimensions for road safety reasons and to avoid damaging roads, bridges and tunnels. The impact assessment of the Directive estimated that these measures will contribute to 7 to 10% of GHG emissions reduction in 2030 compared to the baseline. Tyres sold in the EU are subject to energy labelling requirements through Regulation (EC) No 1222/2009. Tyre labels help consumers choose vehicle tyres that are more fuel efficient, have better wet braking and are less noisy. As tyres account for 20 to 30% of a vehicle’s fuel consumption, choosing energy efficient tyres results in significant fuel cost savings. 2.2 Switching towards low emission alternative energy for transport Europe is still heavily dependent on liquid fuels and therefore on imported oil for transport. While oil prices have recently reduced, long term prices are projected to remain high. Furthermore, the supply of oil is to a large degree sourced from politically unstable regions raising concerns relating to security of supply, future price volatility and the potential results of price shocks. Policies have been adopted at EU level to reduce the GHG intensity of fuels, increase the supply of low emission alternative fuels including renewables, and introduce enabling infrastructure. In the future, as market penetration of electric vehicles is expected to grow the challenges that this may impose for the electricity network may need to be addressed. The use of renewable energy is promoted by the Renewable Energy Directive (RED) requiring that the share of renewable energy in the EU is 20% of gross final energy consumption by 2020, reflected through national targets. It also contains a target for each Member State to have a 10% share of renewable energy in transport by 2020. This provision is complemented by Article 7a of the Fuel Quality Directive (FQD) obliging fuel suppliers to reduce the GHG intensity (gCO2/MJ) of fuels supplied by 6% in 2020 compared to 2010. The 2015 renewables energy progress report indicated that achieving the target for renewable energy in transport is challenging but feasible, with some Member States making good progress. At EU level, the share of renewable energy in transport reached 5.9% in 2014. A mid-term evaluation of the RED indicated that in transport the mandatory target has been important for the deployment of renewable energy in the sector, mainly through implementation of national blending obligations. However, progress has been slow; the main reason has been policy uncertainty at the EU level regarding biofuels, low competitiveness of biofuels in terms of prices and the increasing awareness that certain biofuel production pathways may increase overall GHG emissions when emissions from indirect land use change (ILUC) are taken into account. In addition, there has been a lack of commercially available alternative, advanced biofuels. There have been concerns about the sustainability of biofuels supplied in the EU, particularly with regards to their indirect impacts and potential to cause ILUC. In order to mitigate these impacts, both the RED and the FQD were amended by Directive 2015/1513/EU (the "ILUC Directive") which introduced a cap on the amount of food or feed based biofuels (7%) that can be counted towards the 2020 target for renewable energy in transport. Member States also have the option of applying this cap towards obligations to meet the FQD. The legislation introduced an indicative sub-target for ‘advanced’ biofuels that is to be set by Member States by April 2017, and increased the contribution that renewable electricity in transport makes to the RED targets. For aviation, biofuels meeting the sustainability criteria of the RED are exempted from obligations under the EU ETS and aviation fuels can also contribute towards the FQD target. In addition, the European Advanced Biofuels Flightpath, launched in 2011 by the European Commission, aims to achieve 2 million tonnes of sustainable biofuels in aviation by 2020., However, due to the current price gap with conventional jet fuel demand for sustainable alternative fuels in aviation has so far been limited and there has been no regular production of aviation alternative fuels in Europe.

In January 2013, the European Commission adopted the European Alternative Fuels Strategy for all modes of transport indicating action was required on alternative fuels infrastructure, common technical specifications, consumer acceptance and technological development, including advanced biofuel production. The Directive on the deployment of alternative fuels infrastructure, part of the 2013 Strategy, requires Member States to submit to the Commission national policy frameworks for the market development of alternative fuels and their infrastructure by November 2016. It specifies the required coverage and the timing by which specific infrastructure in the different modes must be put in place, the development of harmonized EU-wide standards for recharging points for electric vehicles and refuelling points for natural gas (LNG, CNG) and hydrogen, and the provision of consistent and clear consumer information. The impact assessment showed that investing in a minimum recharging/refuelling network is the most efficient way to promote alternative fuel vehicles., The implementation of the Directive will also be a driver for the market uptake of natural gas and biogas vehicles and vessels in the EU. The level of ambition in Member States will be crucial for the deployment of alternative fuels in the EU. What are the barriers to faster road transport electrification? Recharging infrastructure and its integration within the electricity grid: - Users need to be able to charge their vehicles anywhere in Europe. The three main challenges to solve are: (i) defining clear interoperability rules; (ii) ensuring pan-European coherent and equivalent service levels; (iii) ensuring harmonisation of data collection and accessibility to real time traffic information. - Local grid connection and capacity. Smart charging and – in the longer term – vehicles to grid electricity supply need to be enabled and encouraged within the electricity system. Electricity storage needs to be fully enabled. - Connection cost for high power capacity. Transparency with respect to distribution tariff design is needed in order to avoid discrimination against high power charging points. - Availability of recharging points in private buildings. About 90% of electric vehicles are charged at home or at work. However, Directive 2014/94/EU does not mandate private recharging points although Member States should take measures to promote them. - Clarify the business case for high power charging points given the current low number of electric vehicles. Users awareness and acceptance to support electric vehicles' commercialisation: - Lack of customer information and awareness of the benefits of electric vehicles. - Lack of coordinated effort. It is crucial that: Member States are ambitious and propose supportive National Policy Frameworks, car manufacturer propose more vehicle models at affordable prices, car dealers actively propose electric propulsion powertrains to potential buyers. - Electro-mobility is not fully considered in urban mobility policies. Actions are needed to: fully integrate electric vehicles in urban mobility policies (e.g. promote electric car-sharing, recharging points at train stations), to support the market uptake of electric buses and other electric vehicles through e.g. public procurement. Technical development of batteries to meet higher range and lower vehicles cost: - The improvement of the range of electric vehicles to 400–500 km will be a key success factor in the coming years. However, it is also important to develop short range (up to 150 km) low cost electric vehicles, including light electric vehicles such as two wheelers (scooters and motors), which can be very effective in city environments. To keep European competitiveness in this market, the deployment of European based battery "competence centres" (material, production and manufacturing) is critical. Missing common technical specifications at the EU or global level: - Common connector interfaces between electric vehicle and infrastructure have been set in Directive 2014/94/EU but the development of a common protocol for charging has not been addressed. Common interfaces for e-buses and for inductive charging are still to be developed. - The work on smart charging standardisation, communication protocols and related test procedures needs to be completed and harmonization of rules for type approval of electric vehicles at United Nations Economic Commission for Europe (UNECE) needs to continue, including upgrading of current batteries to more efficient ones. Adding new loads – such as electric vehicles – brings additional challenges to the electricity network that at certain times, and in certain segments, already operates at its limits. Efficiently integrating those new loads will only be possible if full use of flexibility is made, with charging done at high production times and during those periods when there is no network congestion. For this to happen, consumers need to have access to the technical tools to manage demand (smart meters) and have a financial incentive to shift demand. The Electricity Market Directive contains provisions for Member States to analyse the costs and benefits of the roll out of smart meters, and roll out those meters to at least 80% of all consumers by 2020 if the cost-benefit analysis is positive. In addition, the European Commission is actively pursuing greater international cooperation and the global harmonisation of the technical requirements and tests for alternative propulsion vehicles, including electric vehicles. Global standards for motor vehicles are the responsibility of the World Forum for Harmonization of Vehicle Regulations, a permanent working party (WP.29) under the United Nations Economic Commission for Europe (UNECE). The resulting rules are not only applicable in the EU but also in some 60 other countries. This reduces development costs, avoids duplication of administrative procedures, improves industry's competitiveness and increases the attractiveness of the EU market as an investment destination. Work on a new Global Technical Regulation on the safety of electric vehicles is under way and the European Commission is one of the key sponsors of this project. In addition, work in the UNECE framework is also ongoing on the environmental aspects of electrified light duty vehicles. This includes the development of a number of technical elements for inclusion in the Worldwide harmonized Light vehicles Test Procedure (WLTP), such as the determination of the electric driving range. 2.3 Efficiency of the transport system

Acknowledging that an integrated system approach is required to put the transport sector on a sustainable path, several initiatives have been designed to address the overall efficiency of the sector, support multimodal integration, and address negative externalities – including CO2 emissions. CO2 emissions are one of the main negative externalities caused by transport along with air pollution, congestion, noise, accidents, etc. The 2011 White Paper on Transport set a roadmap for gradually internalising external costs in the sector to move towards full internalisation in all modes by 2020. In monetary terms, currently the most important measure having the effect of internalising external costs in transport is the taxation of fuel, which represented around 1.4% of GDP in 2012 (about €188 billion). Infrastructure charging, regulated through the "Eurovignette" Directive, is another important measure in internalising transport externalities. According to the 2013 evaluation of EU road charging policies , reducing air pollution has been achieved by Euro class-differentiation of network-wide tolls, more than through the use of vignette systems. However, the effect on decarbonisation has been limited so far, as tolls remain low compared to the overall costs of road transport and concern only a small portion of road traffic, and also because road transport is characterised by low price elasticity. However, according to a 2013 analysis by Ricardo-AEA improvement in the functioning of the Eurovignette and European Electronic Tolling System (EETS) system in the EU could lead to a decrease of 1.7% in CO2 emissions from the road sector in the EU. Intelligent Transport Systems (ITS) can significantly contribute to a cleaner, safer and more efficient transport system. The ITS Action Plan suggested a number of targeted measures with the goal to create the momentum necessary to speed up market penetration of ITS applications and services in Europe. A legal framework was adopted to accelerate the deployment of ITS across Europe. The impact assessment for the Action Plan estimated that it could decrease fuel consumption and CO2 emissions by up to 4.1%, road congestion by 2.5% and accident costs by 7.2% compared to the baseline by 2020. The 2013 mid-term evaluation showed that large scale deployment must still take place, and without it these impacts will remain limited. Benefits are expected to be mainly generated from further implementation of the ITS Directive that entered into force in 2010. A number of measures adopted in this context put in place mechanisms to share real time road traffic data and travel data to reduce congestion and increase efficiency, as well as more sustainable behaviour through more accurate multimodal passengers travel information services. Better travel and traffic information would also result in modal shift from taxis to local public transport at airports and stations. The Combined Transport Directive establishes common rules for promoting combined transport in an effort to curb the negative externalities of road transport, and thus contributing to reduced congestion and environmental pollution, road traffic safety, as well as better management of transport resources. According to its evaluation, it continues to be an effective tool to support modal shift. The shift from road to rail/road combined transport has saved in 2011 (compared to road only transport) 7.3 Mt of CO2, while the shift to inland waterways has saved 0.96 Mt of CO2. However, there are shortcomings in its transposition and implementation caused by somewhat ambiguous language, the diverging transposition and implementation at Member State level and outdated provisions. The Energy Efficiency Directive contains several provisions of importance to energy demand reduction and management, as well as increased use of renewable electricity, including in the transport sector. A number of Member States have already envisaged actions in the transport sector (e.g. measures targeting the rail transport, promotion of modal shift and encouragement of use of public transport or cycling and walking; measures supporting the use of electric, hydrogen or more fuel-efficient cars, behaviour measures like driver training) in view of reaching their national energy efficiency targets by 2020. The majority of Member States have, however, excluded transport from the application of Article 7 of the Directive which requires that energy distributors or retail energy sales companies achieve 1.5% energy savings per year through the implementation of energy efficiency measures. Other existing EU policies and measures to meet a range of different objectives for the transport sector have important co-benefits in terms of CO2 emissions reduction. They include: Regulations providing for the market access to the international road freight and passenger market; by optimizing transport operations they can lead to reduced fuel consumption and carbon emissions. According to research by the Dutch Institute for Transport Policy , , increased market access could lead to a reduction of empty trips by up to 1.9% vehicle-km and a decrease in the EU CO2 emissions of up to 1.6% (as percent of total road transport CO2 emissions). Regulation for the establishment and organization of international Rail Freight Corridors, aiming to boost rail freight in terms of volume, market share, quality and reliability; by shifting traffic from road to rail freight the Regulation was estimated to result in emissions reductions of 0.7 to 1.1 Mt CO2 by 2020 and contribute to reduction in air pollutants. The River Information Services (RIS) Directive, establishing a framework for the deployment and use of harmonized RIS in the EU in order to support inland waterway transport and to facilitate interfaces with other transport modes. According to the evaluation of the RIS Directive, implementation by 2011 has brought annual benefits in terms of fuel and CO2 emissions savings of 1 to 2%; due to differences in the pace of RIS implementation, the full benefits have not yet materialized. Directive establishing the initial qualification and periodic training requirements for EU drivers of certain road vehicles for the carriage of goods or passengers; its environmental impacts come from fuel and corresponding emission savings as a result of eco-driving courses, estimated at 2 to 4% reduction in fuel use and CO2 emissions. Directive 2002/85/EC, requiring all heavy commercial vehicles to be equipped with speed limiters; the analysis showed that for the EU as a whole the introduction of speed limiters resulted in a reduction of the total CO2, NOX and PM emissions of heavy commercial vehicles of about 1% (between 0 and 2% as function of posted speed limit). International cooperation is fundamental in the area of connected and automated driving. International cooperation with US and Japan on aspects related to security and harmonisation of standards is already taking place since 2009 and 2011, respectively. In addition, new rules for the approval of automated and connected vehicles as well as traffic rules are being developed in the framework of UNECE. Learning from collaboration with international partners represents a key asset for future progress; enhancing cooperation in the area of communications and spectrum, security and data protection is a must. Therefore, the C-ITS Platform recommended the Commission to enlarge cooperation on deployment practices at government level with countries like Canada, Australia, South Korea and others. 2.4 Cross-cutting initiatives 2.4.1 Transport research and innovation The transition needed in the transport sector for its decarbonisation can only be achieved through extensive research and innovation. A major emphasis of the €6.4 billion transport research and innovation programme under Horizon 2020 is aimed at projects addressing energy use issues, both directly and indirectly. In 2014, for example, 57% of budget expenditures from the Transport Challenge calls were related to climate action, representing a clear over-achievement against the overall target set for mainstreaming of climate action in Horizon 2020 by 35%. In addition, a number of key programmes have been established for transport decarbonisation, including to support the development of light and heavy duty electric vehicles (contractual public-private partnership on European Green Vehicle Initiative) and fuel cells (Fuel Cells and Hydrogen Joint Undertaking), to promote low carbon and non-polluting transport for cities (Horizon 2020 funding for urban mobility and smart cities), to facilitate the market uptake of liquefied natural gas (LNG) for heavy duty vehicles (LNG Blue Corridors project funded under the 7th Framework Programme ‘European Green car initiative’), to facilitate more efficient road use, rail innovation (Shift2Rail Joint Undertaking) and more efficient air transport (SESAR Joint Undertaking) and energy efficient aircrafts (Clean Sky 2 Joint Undertakings), with the JU's co-financed by the EU from Horizon 2020. These programmes are complemented by research and innovation activities related to key enabling technologies in the areas of new materials (e.g. lightweight materials, composites) and advanced manufacturing (e.g. additive manufacturing) contributing to development and production of new low-emission vehicles. The SET-Plan promotes research and innovation efforts across Europe by supporting technologies with the greatest impact on the EU's transformation to a low-carbon energy system, including fuels and electricity supply to the transport sector, and a number of SET-Plan actions for research and innovation are of particular importance for promotion of electro-mobility and the use of renewable energy in transport. 2.4.2 EU financing and co-operation instruments The Connecting Europe Facility (CEF) and the European Structural and Investment Funds (ESIF) are the main EU funding instruments during 2014–2020 for development of infrastructure, providing €24.04 billion and €70 billion respectively for the transport sector. The Trans-European Transport Network (TEN-T) policy implementation and CEF mobilize investment in Europe to boost jobs and growth, contribute to the development of a connected digital single market and to a resilient Energy Union, while supporting the decarbonisation of the transport sector. The CEF call 2014 allocated 92% of the total envelope of €13 billion of grant co-financing, to environmentally friendly modes, innovative technologies and investment on multimodality and ITS, and about 82% for rail and inland navigation investment alone. Financing is also key for the development of alternative fuels: €225 million in EU funding was allocated to projects related to alternative fuels under the CEF call 2014.

Substantial funding for the TEN-T network comes from the European Structural and Investment Funds (ESIF) and from the European Investment Bank (EIB). Cohesion policy financial support is concentrated on cohesion countries and less-developed regions of the EU, where there are still significant needs for sizeable public investments into transport. It is expected that close to 20% of the overall cohesion policy envelope for 2014-2020 will go towards supporting transport investments, amounting to almost €70 billion. This includes an estimated €39 billion for supporting environmentally friendly modes, innovative technologies and investment on multimodality and ITS by Member States, of which €18.8 billion for rail. Sustainable urban mobility investments are supported with €12 billion, based on integrated urban strategies, of which €1.8 billion for walking & cycling. In addition, the transport sector will receive support, e.g. for research and innovation, technical development, and entrepreneurship, under the Smart Growth pillar of cohesion policy. 2.4.3 Support to cities and local communities In December 2013, the European Commission adopted the Urban Mobility Package comprising of a Communication and Guidelines on Sustainable Urban Mobility Plans (SUMPs), and four Staff Working Documents on City Logistics, Access Regulation, Urban Road Safety and Urban Intelligent Transport Systems. The actions/initiatives announced in the Urban Mobility Package are currently under implementation and cover various non-binding measures that would help and encourage cities in designing and implementing ambitious measures through SUMPs, in particular to increase the share of public transport, cycling and walking. Improving urban mobility has a high potential to reduce the CO2 emissions from transport, as cities account for 23% of transport CO2 emissions, and especially high exceedances of air pollutants that are widespread over European urban areas. A study estimated that the potential CO2 emissions reductions of 21 policy measures found in SUMPs ranges between 15 and 18 Mt of CO2 for 2030, equivalent to 7-8.8% emissions reduction compared to 2010 if all measures were implemented in the whole of the EU. The Partnerships under the Urban Agenda for the EU will offer a framework for cities, Member States and other stakeholders to exchange experiences and best practices for the urban mobility dimension, will involve cities in the design of policies and the delivery on the ground by establishing a new working method based on a multilevel and cross sectoral multilevel approach. Through initiatives such as the Covenant of Mayors, the European Innovation Partnership on Smart Cities and Communities, CIVITAS or Urban Innovative Actions, the Commission supports cooperation of public and private actors: The European Innovation Partnership on Smart Cities and Communities, launched in 2012, is Europe's main initiative to foster the roll-out of innovative integrated smart city solutions at the intersection of transport, energy and ICT at large scale. So far, over 4,000 partners from public authorities, companies, research and other organisations have signed up to the joint market place. The Covenant of Mayors was launched in 2008 by the European Commission as a bottom-up initiative to endorse and support the efforts deployed by local authorities in the implementation of sustainable energy policies; over 55% of around 3,500 signatories' Sustainable Energy Action Plans analysed in 2015 included measures on transport,, mainstreaming sustainable mobility into local authorities' strategic planning. The CIVITAS Initiative, launched in 2002, supports cities in testing new technologies and innovative concepts for better and more sustainable urban transport and for incorporating them into integrated and sustainable local transport strategies. So far more than 800 urban mobility measures have been implemented in 60 cities. The CIVITAS Forum network has today more than 250 cities. The Urban Innovative Actions (UIA) initiative has been created to test new approaches to address the challenges faced by urban authorities. The second call will be launched in autumn 2016 and one of the topics supported is sustainable urban mobility. Action by cities The EU has an important role to play in supporting cities and local communities, but inevitably a lot of action will depend on the local level. Pioneering cities can offer not only inspiration for other city leaders, but also early lessons learnt about the initial introduction of the urban low-emission mobility measures. Local incentives, such as taxes, subsidies or preferential treatments (e.g. possibility to drive on bus lanes), play a major role, including in the consumer's choice of the type of car purchased. For example, Amsterdam and Utrecht offer financial incentives for electric vehicles on top of what is paid by central government or provinces. Electric vehicles in Paris have been entitled to free parking since 1993, which was also immediately followed by the creation of public charging points. In the same spirit, the Rotterdam Electric Programme has supported the first 1,000 electric vehicle owners with an electric charging point. There are systems of congestion charges in a number of cities. London is proposing an extra charge on the most polluting cars. A good practice example is Gothenburg's system applying to vehicles registered in and outside Sweden. It is designed to use a time-of day dependent cordon pricing, in combination with an investment package, to strengthen public transport multimodality and make traffic smoother. Public transport fleets can be shifted from fossil-based engines to electricity or fuel cell, depending on the latest technologies available on the market. For example, Rome's entire bus system, which carries 945 million passengers per year, has been running all-electric buses since 1989. With over 23,000 bicycles covering the city, Paris has pioneered the public bicycle system, which offers an alternative way to move around the city. Local authorities can also make sure that low-emission mobility is always taken into account in all infrastructure plans. Many cities aspire to move away from car-oriented planning. For example, Barcelona's new strategy will restrict traffic to a number of big roads, expected to reduce pollution, with the co-benefit of turning secondary streets into spaces for culture, leisure and the community. Greater Copenhagen's new network of cycle lanes offers people an easier time cycling to work or study. Such "cycle super highways" are continuous high-standard paved bicycle routes reserved for safe, direct and fast commuting by (electric) bicycles over longer distances (more than 5 km). Local intelligent transport systems can be designed to ensure smoother road traffic flow and thereby reduce stop and start (especially for lorries), through adaptive traffic management and real-time traffic information. An intelligent transport system solution tested in Helmond included intersection control system with priority for a fleet of trucks, and speed advice for approaching the intersection. The City of Stuttgart partly finances the city's innovative car-pooling system, which is to a great extent a consequence of intensive use of information and communication technology. It has also implemented dynamic speed limits to reduce air pollution. 2.5 Action in international aviation and maritime 2.5.1 International developments Aviation is one of the fastest-growing sources of GHG emissions. Direct emissions from aviation account for about 3% of the EU’s total GHG emissions and more than 2% of global GHG emissions. If the non-CO2 climate impacts of aviation are taken into account (e.g. contrails and cirrus cloud formation), the total climate impact of aviation is even larger. The large majority of these emissions come from international flights. The International Civil Aviation Organization (ICAO) projects that CO2 emissions could grow by 300-700% by 2050 in a business as usual scenario. The EU has addressed aviation CO2 emissions through the EU ETS since 2012, while it is, at the same time, committed to develop a global measure to address international aviation emissions at ICAO. In the 38th General Assembly in 2013, ICAO member states agreed to work towards the achievement of the collective goal of keeping net CO2 emissions from international aviation at 2020 levels, and to develop a global market-based measure (GMBM) to be part of the ‘basket’ of measures to achieve this goal. In February 2016, ICAO's Committee on Aviation Environmental Protection (CAEP) agreed on a CO2 standard for aircraft, which should guide their development towards greater fuel efficiency. For large new aircraft the standard will apply as of 2020. Existing aircraft will have to apply the new standards by 2028 at the latest.

International maritime shipping is a large and growing source of GHG emissions and is not covered by the EU's emissions reduction target. International maritime transport accounts for about 2.1% of global GHG emissions and a further increase in the range of 50 to 250% by 2050 (1.1 to 3.4% per year) is projected in a business as usual scenario. Significant reduction (25–75%) of these emissions is technically feasible even with today's technologies, and is to a large extent cost effective due to reduced fuel bills. Due to the nature of shipping, international shipping emissions are best addressed at the global level and the EU is supportive of the IMO’s work in this area. In 2011 IMO adopted the Energy Efficiency Design Index (EEDI), which sets compulsory energy efficiency standards for new ships, and the Ship Energy Efficiency Management Plan (SEEMP), a management tool for ship owners. These measures are expected to substantially dampen expected further emissions growth albeit not reducing emissions from today's levels. Therefore, further measures are needed to reduce emissions from international shipping. It is expected that this year the IMO will adopt a mandatory international data collection system allowing access to fuel consumption and GHG emissions from ships. Also, the IMO will discuss this year the possible revision of the EEDI requirements and a work plan for establishing a GHG emissions reduction target for international shipping, to contribute towards the objective of the Paris Climate Agreement. 2.5.2 EU level action in international aviation and maritime Aviation in the EU ETS . Since the start of 2012, emissions from all flights from, to and within the European Economic Area (EEA) - the 28 EU Member States, plus Iceland, Liechtenstein and Norway - have been included in the EU Emissions Trading System (EU ETS). These emissions form part of the EU's internal 20% and 40% greenhouse gas (GHG) emission reduction targets for 2020 and 2030 respectively. In view of the implementation by 2020 of an international agreement applying a single global market-based measure to international aviation emissions, the EU ETS’s application has been restricted to intra-EEA flights until 2016., The EU ETS is being implemented in its current intra-EEA scope in a satisfactory manner. Verified CO2 emissions from ETS aviation activities between airports amounted to 56.9 million tonnes of CO2 in 2015. Taking into account an annual allocation close to 39 million allowances, it can be concluded that the EU ETS contributes to more than 17 million tonnes of emission reductions annually, partly within the sector (i.e. by airlines reducing their emissions to avoid paying for additional units) or in other sectors (by airlines purchasing units from other sectors, which would accordingly have to reduce their emissions). Compliance rates are very high. Aircraft operators, including from third countries, representing more than 99% of the emissions covered by the EU ETS adequately report emissions and surrender the corresponding allowances. Monitoring, reporting and verification (MRV) of shipping emissions. The European Commission adopted in 2013 a staged strategy for progressively including GHG emissions from maritime transport in the EU's policy for reducing its overall GHG emissions. As a first step, the European Union adopted in 2015 a Regulation establishing an EU-wide system for the monitoring, reporting and verification of CO2 emissions and other relevant information from EU-related maritime transport activities (MRV Regulation). Robust MRV is the basis for designing and implementing any measure reducing GHG emissions of ships and facilitates results-based monitoring of progress. It contributes to the removal of market barriers to cost-effective mitigation measures by providing comparable and reliable information on energy efficiency. This MRV system will be applied from 2018 covering all voyages from and to EU ports by ships covered by the technical scope of the MRV Regulation and regardless of their flag. Annual data of emissions and ships' efficiency will be verified by independent verifiers before they are submitted to the Commission and subsequently published. MRV alone is expected to reduce emissions by 2% compared to business as usual. As highlighted in the 2013 strategy, a mandatory international scheme to collect data regarding the fuel consumption and energy efficiency of the shipping sector would be preferable; the Commission will review the MRV Regulation after the expected adoption of the global scheme by IMO in 2016 for which technical rules still need to be developed and for which reporting is expected to start in 2019. 2.6 Taxation The Energy Taxation Directive (ETD) stipulates minimum rates for excise duties for unleaded petrol of €359 per 1000 litres and €330 per 1000 litres for diesel (gasoil) used in transport. Excise duty rates differ between Member States. For petrol, they range from just over the minimum to €766 per 1000 litres in the Netherlands. For diesel actual rates are generally lower and closer to the minimum, the highest rate reaching €674 in the United Kingdom. In 2011, the European Commission proposed a revision of the Energy Taxation Directive, which distinguished a CO2-related component and an energy-related component in the excise duty. Applying this principle would have implied a minimum rate on diesel of €390 if the minimum rate on petrol would have been €359 per 1000 litres. The analysis accompanying the Commission proposal showed that CO2-based taxation drives consumption away from fossil energy sources. As far as the motor fuel market is concerned, detailed modelling confirmed that removing the price advantage for diesel both in the EU minima and in national rates would have a rebalancing effect on the supply and demand on the fuel market. Currently all EU Member States, except the UK, tax diesel at lower rates than petrol per litre. Taking into account that the energy and carbon content of a litre of diesel is higher than of a litre of petrol, all countries analysed tax petrol higher than diesel per unit of energy or carbon emissions. From decarbonisation of transport perspective, the lower tax rate on diesel fuel is not justified, given the relative environmental costs associated with the use of diesel and petrol. Diesel has higher emissions of carbon and of harmful air pollutants, notably particulate matter and NOx, per litre of fuel used. Hence, from a decarbonisation of transport perspective, the level of tax needed to reflect these environmental costs should be higher for a litre of diesel than for a litre of petrol. A proposal on passenger car taxation aimed to improve the functioning of the internal market by removing existing tax obstacles to the transfer of passenger cars from one Member State to another. It also aimed to promote sustainability by restructuring the tax base of both registration taxes and annual circulation taxes, as well as by including elements directly related to carbon dioxide emissions of passenger cars. It would not have harmonized tax rates or obliged Member States to introduce new taxes, but only included an EU structure on car taxes. The negotiations showed that the proposed abolition of the registration tax was too ambitious, as it represents a non-negligible source of revenues for the Member States. However, the incorporation of an adequate environmental element (e.g. CO2, air pollutants) in the registration and circulation taxes could be a possible option for unanimous support, as 24 Member States have already introduced such element (i.e. CO2 emissions, exhaust emissions, Euro standards, fuel consumption) into their national tax systems. The European Commission has decided to withdraw the proposal to revise the Energy Taxation Directive as well as the proposal for a Directive on passenger car related taxes. In the case of the Energy Taxation Directive, the draft compromise text was de facto void of all constituting elements of the original Commission proposal. There was no agreement in the Council even on the draft compromise text. For the directive on passenger car related taxes, no agreement was reached in the Council. Favourable tax treatment of company cars creates significant losses of revenues but also significant social and environmental costs such as increased contributions to climate change, local air pollution, traffic congestion and road accidents. Advantageous company car taxation schemes tend to affect the choice of mode and driving habits. They also risk counteracting the incentives provided by energy and vehicle taxes (registration and circulation taxes) to reduce fuel consumption. A recent OECD Study and OECD Brief show that under-taxing company cars encourages company car owners to drive up to three times as much as people with private cars, with all consequences this may have for environment. A number of Member States subsidise the private use of company cars, in most cases by not differentiating between the use of a company car for business and private purposes. Concretely, eleven Member States have been identified as having poor performance in the design of their company cars taxation. Moreover, a small number of Member States allow partial deduction of the VAT charged on the purchase of company cars intended for private use by employees. 3. Developments under current trends and policies 3.1 Identifying the GHG emissions gap for transport Building on the 2008 Climate and Energy package and in line with the cost-effective pathway described in the 2050 roadmaps , in 2014 the European Council endorsed a binding EU target of an at least 40% domestic reduction in GHG emissions by 2030 compared to 1990. This target will be delivered collectively by the EU in the most cost-effective manner possible, with the reductions in the ETS and non-ETS sectors amounting to 43% and 30% by 2030 respectively compared to 2005. An EU target of at least 27% was agreed for the share of renewable energy consumed in the EU in 2030; this target is binding at EU level. An indicative target at the EU level of at least 27% was agreed for improving energy efficiency in 2030 compared to projections of future energy consumption based on a 2007 baseline. This will be reviewed by 2020, having in mind an EU level of 30%.

The reduction effort for the non-ETS sectors (transport, buildings, agriculture and waste management) is distributed between Member States through the Effort Sharing Regulation for the period 2021 to 2030. Transport needs to contribute to the 2030 targets and, in particular, to the 30% emissions reduction effort set for the non-ETS sectors. The Commission has undertaken analysis exploring the impact of current trends, including the implementation of policies that were adopted at EU and Member State level by December 2014, in the so-called ‘EU Reference scenario 2016’. The projection shows that the declining trend in transport emissions is expected to continue, leading to 12% lower emissions in 2030 than in 2005. Building on the EU Reference scenario 2016, two additional central scenarios (so-called ‘EUCO27’ and ‘EUCO30’) have been developed to reach all the 2030 targets agreed by the October 2014 European Council (see section 4) and the 2050 decarbonisation objectives, continuing and intensifying the current policy mix. The difference between the two scenarios lies in the level of ambition to be achieved for the energy efficiency goal (27% or 30% primary energy savings in 2030 compared to the 2007 baseline). These polices have been modelled in a stylised manner (see section 4). The central scenarios show emissions reductions of: 18-19% for transport, 38-43% for residential and tertiary (mainly buildings), 35-37% for industry and 29%-35% for non-CO2 sectors (mainly agriculture and waste) by 2030 relative to 2005. For transport, the emissions reductions are in line with the 2011 White Paper which established a goal of 20% by 2030 relative to 2008 levels (equivalent to 19% emissions reduction compared to 2005). No sectoral target has been established for the transport sector. However, comparing developments under current trends and adopted policies (i.e. the EU Reference scenario 2016, achieving 12% emissions reduction in transport) with the central scenarios (18-19%), shows that additional policies could be needed, especially post-2020, in order to close the gap of 6-7 percentage points and provide a cost-effective transport contribution to the 2030 Climate and Energy policy framework (taking into account all targets agreed for 2030 and existing policy mix). Action would be needed on three key levers: low- and zero-emission vehicles, low emission alternative energy for transport, and efficiency of the transport system. However, if lower emissions reductions than currently set out in the two scenarios reflecting the EU’s 2030 targets (EUCO27 and EUCO30) were to take place in other non-ETS sectors (e.g. buildings, agriculture, small industry and waste), even higher emissions cuts will be required in the transport sector to reach the 30% emissions reduction effort set for the non-ETS sectors. The expected gap shows that current transport policies need to be reinforced to ensure the achievement of the EU’s 2030 targets. The European Council recognised the need to reduce GHG emissions from transport and risks related to fossil fuel dependency, and therefore invited the Commission to further examine instruments and measures for a comprehensive and technology neutral approach for the promotion of emissions reduction and energy efficiency in transport, for electric transportation and for renewable energy sources in transport also after 2020. The European Council also recalled that a Member State can opt to include the transport sector within the framework of the ETS. While reducing its energy use and GHG emissions, transport also needs to continue to meet society's needs, and reduce its other negative impacts. The analysis in section 4 shows that curbing GHG emissions from transport reduces the EU's dependence on fossil fuels and brings clear co-benefits leading to reductions of costs related to air pollution, accidents, congestion and noise pollution. While not demonstrated by modelling, it is clear that such developments result in more liveable cities, improve quality of life and contribute to maintaining the competiveness of EU industry. The remaining part of section 3 provides more detail on the key assumptions and main results of the Reference scenario 2016. The two scenarios additionally developed to reach all the 2030 targets agreed by the October 2014 European Council (EUCO27 and EUCO30) are described further in section 4. 3.2 Key assumptions of the Reference Scenario The Reference scenario is a projection, not a forecast; it has been developed building on a modelling framework including PRIMES (i.e. PRIMES-TREMOVE model for transport), GEM-E3, GAINS and other related models, and benefited from the comments of Member States experts. The projections build on a set of assumptions related to population growth, macroeconomic and oil price developments, technology improvements, and policies described below. Demographic change is transforming the EU with inevitable consequences for the transport sector. In the Reference scenario, the population projections draw on the EUROPOP2013 (EUROpean POPulation Projections 2013) from Eurostat, which is also the basis for the 2015 Ageing Report. The key drivers for demographic change are: higher life expectancy, convergence in the fertility rates across Member States in the long term, and inward migration. The EU28 population is expected to grow by around 0.2% per year during 2010-2030 (0.1% for 2010-2050), to 516 million in 2030 (522 million by 2050). Elderly people, aged 65 or more, would account for 24% of the total population by 2030 (28% by 2050) as opposed to 18% today. GDP projections mirror the joint work of DG ECFIN and the Economic Policy Committee, presented in the 2015 Ageing Report. The average EU GDP growth rate is projected to remain relatively low in the short to medium term at 1.2% per year for 2010-2020, down from 1.9% per year during 1995-2010. In the medium to long term the higher expected growth rates (1.4% per year for 2020-2030 and 1.5% per year for 2030-2050) are taking account of the catching up potential of countries with relatively low GDP per capita, assuming convergence to a total factor productivity growth rate of 1%. Oil prices have fallen by more than 60 percent since mid-2014, to an average of around 40 $/barrel for Brent crude oil in the first four months of 2016. The collapse of oil price has been driven by low demand and sustained oversupply, due in particular to tight oil from North America and to the decision of the Organization of Petroleum Exporting Countries (OPEC) countries not to cut their output to rebalance the market. The Reference scenario assumes a gradual adjustment process with reduced investments in upstream productive capacities by non-OPEC countries. Quota discipline is assumed to gradually improve among OPEC members. Thus, oil price is projected to reach 87 $/barrel in 2020 (in year 2013-prices). Beyond 2020, as a result of persistent demand growth in non-OECD countries driven by economic activity and the increased ownership of passenger cars, oil price would rise to 113 $/barrel by 2030 and 130 $/barrel by 2050., In terms of technological developments, battery costs for electric vehicles and plug-in hybrids are assumed to go down to 320-360 $/kWh by 2030 and 270-295 $/kWh by 2050; further improvements in the efficiency of both spark ignition gasoline and compression ignition diesel are assumed to take place. In addition, the market share of internal combustion engine (ICE) electric hybrids is expected to increase due to their lower fuel consumption compared to conventional ICE vehicles. The key policies included in the Reference scenario 2016 that are relevant for transport decarbonisation are: –The Renewable Energy Directive (Directive 2009/28/EC) and Fuel Quality Directive ( Directive 2009/30/EC ) including ILUC amendment (Directive 2015/1513/EU): achievement of the renewables legally binding transport target for 2020, taking into account the cap on the amount of food or feed based biofuels (7%). –The EU Emissions Trading System (Directive 2003/87/EC and its amendments) is fully reflected in the modelling, including the linear reduction factor of 1.74% for stationary installations and the recently adopted Market Stability Reserve. –The Effort Sharing Decision (Decision No 406/2009/EC) including achievement of the legally binding 2020 targets for non-ETS emissions at aggregated EU level. –Implementation of the Energy Efficiency Directive (Directive 2001/27/EU). –CO2 standards for cars and vans regulations ( Regulation (EC) No 443/2009 , amended by Regulation (EU) No 333/2014 and Regulation (EU) No 510/2011, amended by Regulation (EU) No 253/2014); CO2 standards for cars are assumed to be 95gCO2/km as of 2021 and for vans 147gCO2/km as of 2020 in line with current legislation. Standards are assumed constant after 2020/2021. –The Directive on the deployment of alternative fuels infrastructure ( Directive 2009/30/EC ).

–The Energy Efficiency Design Index (EEDI) and the Ship Energy Efficiency Management Plan (SEEMP) for maritime transport. –Relevant national policies for instance on fuel and vehicle taxation. 3.3 Reference Scenario main results EU transport activity is expected to continue growing under current trends and adopted policies, albeit at a slower pace than in the past. Freight transport activity for inland modes is projected to increase by 35% between 2010 and 2030 (1.5% per year) and 58% for 2010-2050 (1.2% per year). Passenger traffic growth would be slightly lower than for freight at 22% by 2030 (1% per year) and 40% by 2050 (0.9% per year). The annual growth rates by mode, for passenger and freight transport, are provided in Figure 1 . Road transport would maintain its dominant role within the EU. The share of road transport in inland freight is expected to remain relatively stable by 2030 at 71% and only slightly decrease to 70% by 2050. For passenger transport, road modal share is projected to decrease by 4 percentage points by 2030 and by additional 3 percentage points by 2050. Passenger cars would still contribute 70% of passenger traffic by 2030 and about two thirds by 2050, despite growing at lower pace relative to other modes due to slowdown in car ownership increase which is close to saturation levels in many EU15 Member States. Source: EU Reference scenario 2016, PRIMES-TREMOVE transport model (ICCS-E3MLab) Note: For aviation, domestic and international intra-EU activity is reported, to maintain the comparability with reported statistics. Rail transport activity is projected to grow significantly faster than for road, driven in particular by the effective implementation of the TEN-T guidelines, supported by the CEF funding, leading to the completion of the TEN-T core network by 2030 and of the comprehensive network by 2050. Passenger rail activity goes up by 39% between 2010 and 2030 (76% for 2010-2050), increasing its modal share by 1 percentage point by 2030 and an additional percentage point by 2050. Rail freight activity grows by 47% by 2030 and 84% during 2010-2050, resulting in similar increases in modal share as for passenger rail. Domestic and international intra-EU air transport would grow significantly (by 59% by 2030 and 118% by 2050) and increase its share in overall transport demand (by 3 percentage points by 2030 and by additional 2 percentage points by 2050). Overall, aviation activity including international extra-EU flights is projected to go up by 61% by 2030 and 125% by 2050, saturating European skies and airports. Transport activity of freight inland navigation also benefits from the completion of the TEN-T core and comprehensive network and the recovery in the economic activity and would grow by 22% by 2030 (1% per year) and by 39% during 2010-2050 (0.8% per year). International maritime transport activity is projected to continue growing strongly with rising demand for oil, coal, steel and other primary resources – which would be more distantly sourced – increasing by 37% by 2030 and by 71% during 2010-2050. Transport accounts today for about one third of final energy consumption. In the context of growing activity, energy use in transport is projected to decrease by 5% between 2010 and 2030 and to slightly increase post-2030, resulting in levels of energy demand by 2050 similar to those observed in 2010 (see Figure 2 ). These developments are mainly driven by the implementation of the Regulations setting emission performance standards for new passenger cars and vans. LDVs are currently responsible for around 60% of total energy demand in transport but this share is projected to significantly decline over time, to 53% by 2030 and 51% by 2050. Heavy goods vehicles and aviation are projected to increase their share in final energy demand from 2010 onwards, continuing the historic trend from 1995. Energy demand by heavy goods vehicles would grow by 15% between 2010 and 2030 (24% for 2010-2050). Bunker fuels for air and maritime transport are projected to increase significantly: by 17% by 2030 (33% for 2010-2050) and 24% by 2030 (42% for 2010-2050), respectively. Source: EU Reference scenario 2016, PRIMES model (ICCS-E3MLab) Electricity use in transport is expected to increase steadily as a result of further rail electrification and the uptake of alternative powertrains in road transport; its share increases from 1% currently to 2% in 2030 and 4% in 2050. Battery electric and plug-in hybrid electric vehicles are expected to see faster growth beyond 2020, in particular in the segment of LDVs, driven by EU and national policies offering various incentives. The share of battery electric and plug-in hybrid electric vehicles in the total stock of LDVs would reach about 5% by 2030 and 12% by 2050. The uptake of hydrogen would be facilitated by the increased availability of refuelling infrastructure, but its use would remain limited in lack of policies adopted beyond the end of 2014. Fuel cells would represent about 2% of the light duty vehicle stock by 2050. LNG becomes a candidate energy carrier for road freight and waterborne transport, especially in the medium to long term, driven by the implementation of the Directive on the deployment of alternative fuels infrastructure and the revised TEN-T guidelines which represent important drivers for the higher penetration of alternative fuels in the transport mix. In the Reference scenario, the share of LNG is projected to go up to 3% by 2030 (8% by 2050) for road freight and 4% by 2030 (7% by 2050) for inland navigation. LNG would provide about 4% of maritime bunker fuels by 2030 and 10% by 2050 – especially in the segment of short sea shipping.

Biofuels uptake is driven by the legally binding target of 10% renewable energy in transport (Renewables Directive), as amended by the ILUC Directive, and by the requirement for fuel suppliers to reduce the GHG intensity of road transport fuel by 6% (Fuel Quality Directive). Beyond 2020, biofuel levels in EU28 remain relatively stable at around 6%. Renewable energy in transport would represent about 11% in 2020, increasing to 14% by 2030 (21% by 2050). In the Reference scenario, oil products would still represent about 90% of the EU transport sector needs in 2030 and 86% in 2050, despite the renewables policies and the deployment of alternative fuels infrastructure which support some substitution effects towards biofuels, electricity, hydrogen and natural gas (see Figure 3 ). Source: EU Reference scenario 2016, PRIMES-TREMOVE transport model (ICCS-E3MLab) The declining trend in transport emissions is expected to continue, leading to 12% lower emissions by 2030 compared to 2005, and 11% by 2050. However, relative to 1990 levels, emissions would still be 13% higher by 2030 and 15% by 2050, owing to the fast rise in the transport emissions during the 1990s. The share of transport in total GHG emissions would continue increasing, going up from 23% currently (excluding international maritime) to 25% in 2030 and 32% in 2050, following a relatively lower decline of emissions from transport compared to power generation and other sectors (see Figure 2 ). Aviation would contribute an increasing share of transport emissions over time, increasing from 14% today to about 18% in 2030 and 20% in 2050. Maritime bunker fuel emissions are also projected to grow strongly, increasing by 22% during 2010-2030 (38% for 2010-2050). The overall trend in transport emissions is determined by three broad components: transport activity levels (expressed in passenger or tonne-kilometres), the energy intensity of transport (defined as energy consumption per passenger or tonne-kilometre) and the carbon intensity of the energy used (given by the CO2 emissions divided by energy consumption). Following this approach, it has been evaluated how much the projected transport emissions will increase/decrease (in percentage terms or Mt of CO2) between 2005 and 2030 due to transport activity growth, improvements in energy intensity and carbon intensity (see Figure 4 )., Overall, CO2 emissions from passenger transport decrease by 16% (127 Mt of CO2) between 2005 and 2030 in the Reference scenario. The 16% decrease in CO2 emissions from passenger transport is due to transport activity growth (+24%, equivalent to 198 Mt of CO2), improvements in energy intensity (-35%, equivalent to 281 Mt of CO2) and in carbon intensity (-5%, equivalent to 44 Mt of CO2). The trend for the three components and their contribution to emissions is different by transport mode. Efficiency gains play a decisive role in reducing emissions in road transport, while in aviation they would not offset the activity growth leading to higher fuel use and emissions. The use of less CO2 intensive fuels contributes to a reduction of emissions for road and rail passenger transport with no effect on aviation by 2030. For freight transport, the 2% (5 Mt of CO2) decrease in CO2 emissions between 2005 and 2030 is the result of transport activity growth (+27%, equivalent to 73 Mt of CO2), improvements in energy intensity (-21%, equivalent to 56 Mt of CO2) and in carbon intensity (-8%, equivalent to 22 Mt of CO2). The efficiency gains and the uptake of alternative fuels for road freight transport are just sufficient to offset the effects of activity growth. The electrification in rail has positive effects on emissions, despite the growth in traffic volumes. For inland navigation, efficiency gains and to some lower extent the uptake of LNG has significant positive effects on emissions reduction. Source: EC elaboration based on the EU Reference scenario 2016, PRIMES-TREMOVE transport model (ICCS-E3MLab) Note: The figures report the changes in CO2 emissions due to the three broad components (transport activity levels, energy intensity of transport and carbon intensity of the energy used) in two ways: in levels and in relative terms compared to 2005. The size of each column bar, read on the left axis, represents the change in terms of CO2 emissions compared to 2005, expressed in Mt of CO2. The percentage changes reported above the column bars represent relative changes in these emissions compared to their respective 2005 levels. Provided that CO2 levels for 2005 corresponding to each transport mode are not comparable in size, the percentage changes reported in the figures are not directly comparable. The figures above include only tank to wheel emissions. NOx emissions would drop by about 56% by 2030 (63% by 2050). The decline in particulate matter (PM2.5) would be less pronounced by 2030 at 51% (64% by 2050). Overall, external costs related to air pollutants would decrease by about 56% by 2030 (65% by 2050). Congestion costs are projected to increase by about 24% by 2030 and 42% by 2050, relative to 2010. Congestion on the inter-urban network would be the result of growing freight transport activity along specific corridors, in particular where these corridors cross urban areas with heavy local traffic. Noise related external costs of transport would continue to increase, by about 18% during 2010-2030 (26% for 2010-2050), driven by the rise in traffic. Thanks to policies in place, external costs of accidents are projected to go down by about 47% by 2030 (-44% for 2010-2050) – but still remain high at €100 billion in 2050. Overall, external costs are projected to decrease by about 10% by 2030 and to increase post-2030; by 2050 they stabilise around levels observed in 2010. 4. Pathways towards low-emission mobility In line with scientific findings reported by the International Panel on Climate Change (IPCC) in its fourth Assessment Report, the European Council stated in 2009 that the EU's objective, in the context of necessary reductions by developed countries as a group, is to reduce GHG emissions by 80-95% in 2050 compared to 1990. Such a reduction would be in line with the international objective to limit climate change to below two degrees.

The 2011 Transport White Paper concluded that, while deeper cuts can be achieved in other sectors of the economy, a reduction of at least 60% of GHGs by 2050 with respect to 1990 is required from the transport sector, including aviation. For maritime transport, the 2011 White Paper established the objective to reduce CO2 emission from maritime bunker fuels by 40% (50% if feasible) by 2050 compared to 2005 levels. In the White Paper, electrification was considered a strong driver for reductions of GHG emissions in the road transport sector to 2050. In the scenarios modelled, electrification was shown to significantly replace fossil fuels in new passenger cars and vans (collectively light duty vehicles (LDVs)). However, low emission alternative fuels (including advanced renewable fuels and sustainable biofuels) would remain necessary for aviation, heavy duty vehicles and shipping. Thus, the White Paper set the goal of halving the use of conventionally-fuelled cars in urban transport by 2030, phasing them out in cities by 2050 and achieving essentially CO2-free city logistics in major urban centres by 2030. For aviation, the objective is for the share of low-carbon sustainable fuels to reach 40% by 2050. Section 3 showed that under current trends and adopted policies, the declining trend in emissions from transport is expected to continue until 2030 (12% reduction for 2005-2030) but greater efforts may be needed after 2020 to deliver the 2030 Climate and Energy policy framework, and reach the White Paper's 60% GHG goal for 2050. This section first identifies measures that could contribute to low-emission mobility and then sets out several stylised pathways/scenarios. The modelling framework used for assessing these pathways/scenarios is described in Annex IV. The central model used for the analysis of the transport system is the PRIMES-TREMOVE Transport Model, developed and maintained by E3MLab/ICCS of National Technical University of Athens, complemented where relevant by other models (e.g. PRIMES energy system model, PRIMES biomass model). 4.1 Policy measures The most important transport policies for low-emission mobility are briefly discussed below, according to three main pillars: moving towards zero-emission vehicles; low emission alternative energy for transport; efficiency of the transport system. They are supported by other cross-cutting initiatives in the area of research and innovation, financing, and also by initiatives covering the urban dimension. 4.1.1 Moving towards zero-emission vehicles Strong action on vehicle efficiency, accompanied by appropriate policies to support innovation, the deployment of recharging/refuelling infrastructure and alternative fuels and powertrains, are a prerequisite for the decarbonisation of the transport system. As acknowledged by the 2011 White Paper, this provides a very effective way of reducing costs and advancing the introduction of new technologies. Consequently, the stylised scenarios explore the impacts of potential future policies acting on this driver. Tightening CO2 emission standards for passenger cars and light commercial vehicles beyond 2020 would be needed so that road transport contributes to the agreed 2030 climate targets and the longer term decarbonisation objectives. The effectiveness of the legislation is dependent on the establishment of CO2 values during type approval tests. As stated in section 2, it has become clear that there are weaknesses in the type-approval procedures underpinning the CO2 emission standards. They are being addressed by the Worldwide harmonized Light vehicles Test Procedure (WLTP) that is in the process of being put in place at EU level, as explained in the box below. More reliable fuel consumption and CO2 figures for consumers and regulators The official figures underpinning the CO2 emission limit values for the new passenger car and van fleets in the EU are produced from a laboratory test. In order to ensure the effectiveness of these limits, reductions achieved in the laboratory test must lead to commensurate reductions in real life. However, it is now generally acknowledged that there has been a large and growing divergence between the two. The most important factor contributing to this divergence is the currently still applicable New European Driving Cycle (NEDC) test cycle. The NEDC driving pattern is outdated and unrealistic and the test procedure includes parameters (e.g. tyre conditioning, ambient temperature, wind speed at road load test), flexibilities and tolerances that are not sufficiently tightly defined. Recognising these shortcomings, the European Commission has played a leading role in the development of the new Worldwide harmonized Light-vehicles Test Procedure (WLTP) within the framework of the United Nations Economic Commission for Europe (UNECE). This procedure brings significant improvements over the NEDC and will provide more realistic values. On 14 June 2016, the technical regulatory committee gathering Member States representatives (Technical Committee of Motor Vehicles) voted in favour of the Commission's draft Regulation to introduce the WLTP in the EU. If the European Parliament and the Council do not object to the current text, the new WLTP test will be mandatory for all new vehicle types from September 2017 and for all new vehicles from September 2018. Moreover, a major overhaul of the so-called EU type approval framework for motor vehicles was proposed by the Commission in January 2016 and is currently being discussed by Member States and the European Parliament. The proposal for a new framework Regulation aims at strengthening the independence of vehicle testing and at introducing a more effective market surveillance system. To complement these measures, further options could be explored to ensure that any remaining gap between laboratory and real world emissions is minimised and to avoid that it is growing over time. These options, whose feasibility will have to carefully assessed, could range from establishing specific rules for independent conformity of production and in-service testing to developing a complementary real-driving test procedure for CO2 emissions. In addition, monitoring systematically a sufficiently large set of real-world data (i.e. the actual on-road fuel consumption of the vehicle fleet) would allow a robust verification of the CO2 emissions determined at type approval. The technical basis for this could be so-called fuel consumption meters (FCM) which are already present in many car models. To obtain further qualified views on potential methods to address this divergence, the Commission also asked for a timely opinion of the so-called Scientific Advice Mechanism. It is an instrument recently put in place to support European policy making with independent scientific evidence under the lead of several eminent scientists from across Europe. Further work is being carried out to ensure the continued relevance and accuracy of the EU's vehicle emissions testing regime. This includes further work on the WLTP (Phases 2 and 3), which should cover the remainder of emission-related light duty vehicle testing, such as evaporative emissions. In addition, the Commission introduced a Real Driving Emissions (RDE) procedure to measure the NOx emissions of light duty diesel vehicles in real driving conditions. This new procedure utilises portable emissions measurement systems (PEMS) and may be further developed and refined. In parallel, in order to accelerate the positive effects on urban air pollution hotspots of the introduction of RDE tests, a voluntary mechanism to identify vehicles with significantly lower air quality related pollutant emissions, including NOx, may also be explored. In addition to providing consumers with more accurate information on cars' NOx emissions, such a mechanism would also support manufacturers who already supply cleaner vehicles. With a view to accelerating the technological shift needed to achieve an ambitious long-term reduction in road transport emissions, zero- and low-emission vehicles may need to be deployed and gain significant market share by 2030. Options to incentivise them may also need to be considered, so to give a clear policy signal to industry to make the next step and to reinforce investment in alternative powertrain technology. As a complementary demand-side measure, it needs to be considered how car labelling can be improved to better support consumers in their choice of more fuel-efficient and low emitting cars. Regarding powertrain technology, accelerating the development and deployment of more efficient hybrid powertrains to reduce the fuel consumption of light duty vehicles without creating negative effects in terms of air pollutant emissions, also needs to be considered. With respect to heavy duty vehicles, the development of the VECTO simulation tool and the implementation of the certification procedure using the VECTO output, briefly described in section 2, will support the envisaged Commission legislative proposal which would require fuel consumption and CO2 emissions from new HDVs to be reported and monitored. This is expected to close the existing "knowledge gap" on HDV emissions that prevents more ambitious actions to reduce them. This could contribute to a more transparent and competitive market and the adoption of the most energy-efficient technologies. Setting up an accurate and reliable monitoring and reporting system could provide fuel consumption and CO2 emissions data from new vehicles to underpin possible future legislation. In the meantime, preparatory work towards possible EU CO2 standards for HDVs has already started.

Public procurement has the potential to act as a catalyst for industrial and business innovation, and green growth. Adjusting the scope and methodology of vehicle procurement rules and guidance to emphasise CO2 and pollutant emissions could provide effective incentives for the procurement of cleaner vehicles. It would lead to increased demand i.e. a bigger domestic market that would result in falling prices for consumers due to economies of scale and would contribute to the worldwide competitiveness of the European industry. Cohesion policy could also support replacement and renewal of rolling stock and vehicles, primarily for collective transport modes (e.g. urban bus fleet, trams). 4.1.2 Switching towards low emission alternative energy for transport Stronger integration of transport with the energy system and progressive change of the transport fuel mix is essential for low-transport mobility; consequently, the stylised scenarios explore the impacts of potential future policies acting on this driver. The Energy Union strategy acknowledged the need for: fostering the market uptake of alternatively fuelled vehicles/vessels and the deployment of related recharging/refuelling infrastructure; promoting electrification, especially of road and rail transport - making the EU a leader in electro-mobility technologies, as well as the importance of integration within urban mobility policies and the electricity grid. ICT is also needed to support integration of transport with the energy system. To reap the potentials of digitalisation, setting the right standards, ensure interoperability and enable data exchange while at the same time addressing privacy and cyber-security issues, would be necessary. Modelling shows that transport will need to contribute appropriately to achieving the targets within the 2030 Climate and Energy policy framework (see section 3). In addition to the requirement for an at least 40% domestic reduction in GHG emissions by 2030 compared to 1990, transport will need to contribute to the mandatory EU wide target of at least 27% renewable energy in 2030. Taking into account the constraints linked to food-based biofuels, innovation and support for the introduction of advanced renewable fuels into the EU market may be necessary. The development of European Standards is an important element in the creation and expansion of the European market for biofuels. Standardisation work is ongoing within the European Committee of Standardisation (CEN) on E10+ petrol blend, high ethanol blend (E85), biomethane and recently work started on algal biofuels. CEN recently approved a standard for paraffinic diesel fuel and blends and B20-30 for use in captive fleets. Research work is ongoing on E20-25 and on using gasoline in diesel engines under the auspices of CEN. Action to implement existing policies would also need to be taken. This includes the European Alternative Fuels Strategy, which adresses not only decarbonisation and air quality objectives but also security of energy supply and the competiveness of EU industry; it covers all modes of transport and aims at establishing a long-term policy framework to guide technological development and investments in the deployment of alternative fuels, and give confidence to consumers. Specific measures to implement the four priority fields of EU action of the strategy: 1) addressing the technological development, including advanced biofuels production; 2) addressing alternative fuels infrastructure and its integration to the energy system; 3) developing common technical specifications; 4) addressing consumer awareness, acceptance and market uptake, are presented in more detail in Annex III. For example, a methodology of price comparison of electricity and other conventional and alternative fuels may be developed by the European Commission, and a platform could promote the use of this methodology in Members States. The Commission set up an Alternative Fuels Observatory (EAFO) as the reference website for user information. In 2015, the Commission gave a mandate (M533) to CEN and European Committee for Electrotechnical Standardisation (CENELEC) to adopt European standards for alternative fuels infrastructure as set out in the Directive on the deployment of alternative fuels infrastructure. In addition, the Project Committee on fuel labelling CEN/TC 441 has started its work on fuel labelling for all fuels and its final adoption is expected by the end of this year. Work on the well to wheel analysis is undertaken by JRC in cooperation with EUCAR and CONCAWE. The promotion of alternative fuels could also be pursued in urban areas, inter alia by integrating alternative fuels in Sustainable Urban Mobility Plans, using: access regulations (including planned and future air quality low emission zones) - as a mean of promoting alternatively fuelled vehicles in urban centres, developing a CO2 emissions and air pollutants methodology and targets to assess the deployment of alternative fuels in public transport within urban areas, support to cities through Horizon 2020 and Connecting Europe Facility. The efficient integration of electric vehicles into the electricity system is a major challenge for grid stability and can only be managed successfully if charging can be shifted to times of low electricity demand and/or high supply. The electricity market design initiative (MDI) aims at enabling and rewarding consumers to manage their consumption (demand response) and hence – among others – allow for smart charging. This requires access to relevant technologies (smart meters) as well as competitive retail markets. The initiative may also reduce barriers to the self-generation and consumption of renewable electricity. This would facilitate consumers' ability to use electricity generated from their own solar panels for charging vehicles. Within the MDI also new provisions for storage may be envisaged, that aim at incentivising the use of batteries (including electric vehicles batteries) in the electricity system. In the longer term, refuelling infrastructure for hydrogen and renewable fuels of non-biological origin (e.g. methane, methanol and ethanol) could provide an additional source of flexibility to the electricity grid. The refuelling stations would be able to store the energy in form of gas or liquids and absorb excess variable renewables generation, while providing refuelling capacity without adding load to the electricity grid during periods of low renewables generation. These fuels could also be used to generate electricity at times of peak pricing. Measures for further rollout of recharging infrastructure, to support the electrification of transport would also be needed. Consideration may need to be given to facilitating the installation of additional vehicle charging infrastructure when constructing new buildings, as part of the review of the Energy Performance of Building Directive. In addition, facilitating access to existing sockets in private and public buildings is an extremely effective action at zero additional cost that could also be encouraged. Furthermore, it is crucial that these recharging points are interoperable, i.e. that users are able to find, charge and pay without barriers wherever in the EU. 4.1.3 Efficiency of the transport system An integration of all transport modes is needed within the vision of a more efficient, sustainable, competitive, accessible, user- and citizen-friendly transport system. A proper and acceptable policy mix to create an optimal and sustainable multimodal transport system is a prerequisite. Integration of ICT systems across different transport modes would foster seamless door-to-door mobility, integrated logistics and value added services using data from transport. Consequently, the stylised scenarios explore the impacts of potential future policies acting on this driver. Providing correct price signals and reducing disparities in road charging policies across the EU is needed, and would contribute to the further internalisation of local externalities and elimination of discriminatory practices in the internal market. Differentiation of infrastructure charges for heavy goods vehicles according to CO2 emissions could additionally contribute to a faster uptake of more energy-efficient vehicles. The improvement in the functioning of the Eurovignette and Electronic Tolling System (EETS) system in the EU would have positive impacts on CO2 and air pollutant emissions from the road transport sector, achieved through better organisation of transport and reduced congestion. Intelligent Transport Systems (ITS) make transport more efficient and safe and have important co-benefits such as reducing energy use and environmental impacts, reducing congestion, enhancing mobility, increasing service reliability, and supporting economic development. A Master plan for the deployment of cooperative ITS (involving communication between vehicles, between vehicles and infrastructure and/or infrastructure-to-infrastructure) is necessary to ensure coordinated investments, create the necessary economies of scale and ensure EU-wide interoperability and continuity of services. A recent cost-benefit analysis shows that this can have significant impact on fuel consumption (and associated CO2 and pollutant emissions), time saved in transport and safety. Setting technical and functional specifications on multimodal travel information services would provide enabling conditions for developing such services across the EU. These services could help travellers reduce their carbon footprint through optimised travel (choices) and support a shift to sustainable modes of transport. Considering the expected increase in freight transport volumes in the years to come and the relatively low modal share of non-road modes at present, there is a need to handle any increase in road freight transport volumes by using energy efficient means of transport and by optimising their operation. Internal market reforms for road haulage, buses and coaches, and hired vehicles would increase efficiency of road transport and reduce fuel consumption. In addition, the adopted internal market reforms for other modes have significant potential for reducing greenhouse gas emissions, in particular by promoting the efficiency and competitiveness of greenhouse gas efficient modes, such as rail, inland waterways and maritime transport (4th railway package, Ports Service Regulation, NAIADES II programme), or by improvement in flight efficiency (Single European Sky 2+). The EU’s Trans-European Transport Network (TEN-T) policy aims at the development of multimodal core-network corridors, promoting modal shift and sustainable infrastructure and equipment. The second generation of corridor work plans, currently in preparation under the supervision of each European Coordinator, would include the most complex elements of the corridor activity such as measuring the impact on climate change and the promotion of sustainability for instance in urban areas and nodes (e.g. ports). Shifting to sustainable modes like rail transport could also be supported by improving the attractiveness of rail freight corridors. Further simplification of administrative procedures through the use of digital technologies, in particular through the development of an EU maritime single window, the Digital Single Railway Area and the Digital Inland Waterway Area, could also increase the demand for short sea shipping and other sustainable tr