EN    EN EN 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 8.7.2008 
SEC(2008) 2208 
  
COMMISSION STAFF WORKING DOCUMENT 
 
accompanying the 
COMMUNICATION FROM THE CO MMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMI TTEE OF THE REGIONS 
 
Strategy for an internalis ation of external costs 
  
and the 
 
Proposal for a 
 
DIRECTIVE OF THE EUROPEAN PA RLIAMENT AND OF THE COUNCIL 
 
amending Directive 1999/62/EC on the charging  of heavy goods vehicles for the use of 
certain infrastructures  
  
Impact assessment on the intern alisation of external costs  
  
{COM(2008) 435 final} 
{COM(2008) 436 final} 
{SEC(2008) 2209} 
EN 2   EN COMMISSION STAFF WORKING DOCUMENT 
Impact assessment on the internalisation of external costs  
accompanying  
the proposal for a directive amendi ng Directive 1999/62/EC on the charge 
of heavy goods vehicles for the us e of certain infrastructures  
and a Communication on the internalisation of external costs  
 
{COM(2008) 435 final} 
{COM(2008) 436 final} 
{SEC(2008) 2209} 
Lead DG : TREN 
Other involved services : ECFIN, EMPL, ENTR, ENV, SG, JRC, TAXUD 
Agenda planning or WP reference : TREN/2008/023, TREN/2008/73  
Executive summary 
When amending Directive 1999/62/EC on chargi ng heavy goods vehicles (HGV) for the 
use of infrastructure in May 2006, the Eur opean Parliament and the Council stated1 that: 
“No later than 10 June 2008, the Commission sha ll present, after ex amining all options 
including environment, noise, congestion and health-related costs, a generally 
applicable, transparent and comprehensible m odel for the assessment of all external 
costs to serve as the basis for future calculations of infrastructure charges ”. The 
amending Directive adds that: “ This model shall be accompanied by an impact analysis 
of the internalisation of external costs for all modes of transport and a strategy for a 
stepwise implementation of the model for all modes of transport. The report and the 
model shall be accompanied, if appropriate, by proposals to the European Parliament 
and the Council for further revision of this Directive ”. 
The present impact assessment focuses on the in ternalisation of external costs of noise, 
air pollution, climate change, congestion and accidents from heavy goods vehicles and 
other transport means through pricing instrume nts such as charges,  taxes or tradable 
permits. It analyses the options for internalis ing external costs in HGV tolls in order to 
revise Directive 1999/62/EC and the options fo r internalising external costs in other 
modes of transport such as railways, aviation, maritime and inland waterways. 
The problem definition highlights the following elements: - the diversity of tax and ch arge systems across Member States and across modes of 
transport which generally fails to give  the right price signals to users.  
- implementing an internalisation strategy in road transport may lead to issues such as 
traffic detour, lack of public and impact on the internal market that might mitigate the 
effectiveness of instruments. Therefore, tra ffic diversion, public accep tability, the use of 
                                                
 
1 Article 11 of Directive 1999/62/Ec as amended by Directive 2006/38/EC. 
EN 3   EN new technologies and enforcement aspects should be considered in the analysis of impact 
and the comparison of options. 
- if nothing is done, Member States have limited scope for inte rnalisation since the 
current Directive on infrastructure charging in road transport does not allow to do so for 
heavy goods vehicles (HGV) and the current Directive on infrastructure charging in 
railways allows mark-ups for external cost s under certain conditi ons. The revision of 
Directive on infrastructure charging in road tr ansport should be a firs t step in the strategy 
of internalisation of external costs.  
A set of policy options has been analysed, al so with the help of modelling tools. An 
option analyses the impact of charging extern al costs in road freight transport. This 
policy option would lead to a revision of Directive 1999/62/EC. Three variants have been 
analysed: charging for air pollution and noise costs, charging for air pollution, noise and 
CO2, charging for air pollution, noise and c ongestion. Another pol icy option envisages 
charging air pollution, noise and CO2 in all modes of transport.  
The results of the analysis of impact show th at mobility is practica lly maintained as the 
reduction of traffic in road fr eight transport is almost completely compensated by an 
increase in other modes. The impact on GDP and efficiency varies across policy options 
and can be negative. However, the results of  the models cannot capture some benefits 
such as the improvements in health and huma n well-being derived fr om the reduction of 
environmental emissions and the improvement of safety. The reduction of external costs 
would benefit to citizens and cont ribute to improving welfare.  
The comparison of selected quantitative and qualitative criteria allows identifying 
preferred options. Policy opti on 2C – charging for air pollu tion, noise and congestion in 
road freight transport – allows maintaini ng sustainable mobility while limiting negative 
economic and social impact. Policy option 3B – charging for air po llution, noise, CO2 in 
all modes – gives also evidence of the best combination of these effects. Sensitivity 
analysis and implementation issues also sugge st practical steps to  initiate a stepwise 
strategy of internalisation.  
EN 4   EN 1. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
1.1. Preliminary Remarks on the scop e of the Impact Assessment 
1.1.1.  The request of the EU legislator 
When amending Directive 1999/62/EC on chargi ng heavy goods vehicles (HGV) for the 
use of infrastructure in May 2006, the Eur opean Parliament and the Council stated2 that: 
“No later than 10 June 2008, the Commission sha ll present, after ex amining all options 
including environment, noise, congestion and health-related costs, a generally 
applicable, transparent and comprehensible m odel for the assessment of all external 
costs to serve as the basis for future calculations of infrastructure charges ”. The 
amending Directive adds that: “ This model shall be accompanied by an impact analysis 
of the internalisation of external costs for all modes of transport and a strategy for a 
stepwise implementation of the model for all modes of transport. The report and the 
model shall be accompanied, if appropriate, by proposals to the European Parliament 
and the Council for further revision of this Directive ”. 
The current impact assessment focuses on the in ternalisation of external costs from heavy 
goods vehicles and other transport means thr ough pricing instruments such as charges, 
taxes or tradable permits. It is part  of the Commissions work programme 
(TREN/2008/073 and TREN/2008/023) and of the Green Transport Package. 
The objective of the internalisation of external costs is to provide a clear and correct price 
signal to the transport users so as to infl uence their behaviour. It  should lead to an 
improvement in transport efficiency as tran sport users will base their decisions upon the 
price mechanism in accordance with the principle that the user and polluter pays for the costs they generate. Furthermore, setting the pricing which includes social costs should 
provide incentives that are c onsistent with greater sustainability of transport activities. 
1.1.2.  Scope of the impact assessment 
The request from the EU legislator requires l ooking at the internalisa tion of external costs 
in the charges levied on heavy goods vehicl es, but also mentions the need to analyse 
these issues in other modes. The scope of this impact assessment is limited to pricing based internalisation measures. Internalisation of external costs shou ld lead to a reduction 
of external costs. However, in presence of ri gid demand resulting from, or combined with 
different other market failures (producing lack  of alternatives, low incentive to buy clean 
vehicles…), other tools such as regulation, in frastructure policy or research support can 
be used in complementary and mutua lly reinforcing ways (see box 2).  
1.1.2.1.  Internalisation of external co sts in all modes of transport 
For reasons of fairness and efficiency, the request of the European legislator explicitly 
referred to the need to carry out an analysis not only for road transport but also in other 
modes of transport.  
                                                
 
2 Article 11 of Directive 1999/62/Ec as amended by Directive 2006/38/EC. 
EN 5   EN Internalisation is already foreseen in some  cases. The EU legislation addresses charging 
issues in railways in Directive 2001/14/EC. A ccording to this Direct ive, infrastructure 
managers are obliged to charge all trains for access to infrastructure to recover the costs 
of operating the train service. They have th e possibility to charge for external costs 
(article 7). According to the Directive, " charging of environmental costs which results in 
an increase in the overall r evenue accruing to the infrastr ucture manager shall however 
be allowed only if such char ging is applied at a comparable level to competing modes of 
transport " (article 7). 
The situation is different in other modes of transport. Internalisation of external costs 
within the TENs is not allowed in the curren t Eurovignette if it leads to extra-revenues 
(see below 1.1.2.2). However, Member States are free to apply tolls or user charges on 
roads other than those on the trans-European network, including for th e internalisation of 
external costs. Member States are also equally free to apply charging schemes to 
passenger cars. The Commission cons iders that, for reasons of subsidiarity, the decision 
whether to internalise or not is best left in  these cases to the Member States. Still, the 
existing Eurovignette and railways legisla tion opens new avenues for reflection and 
possible action in other modes of transport.  
In air transport, the Commission has recently proposed to include air transport in ETS, 
which contributes to internalising the cost  of greenhouse gas emissions. In waterborne 
transport, the EU legislation does not pr opose at the moment any measures on 
internalisation. Navigation in the river Rhin e which covers the main part of inland 
waterway transport is subj ect to the revised Mannheim  convention which exempts 
navigation from pricing issues. As regards maritime, the Community has identified many 
challenges to strengthen the competitiveness of European ports, but has left pricing issues to national initiatives.  
This impact assessment will analyse the impact  of internalisation of external costs not 
only for HGV, but also in other modes of tr ansport such as railways, aviation, maritime, 
inland waterways and cars. 
1.1.2.2.  Charging for external cost s in Directive 1999/62/EC 
In some cases, HGV compete with railways. Th erefore, allowing internalisation in the 
framework of the existing di rective on infrastructure charging would give further 
opportunities to internalise external costs in  the railways sector and other modes.  
Directive 1999/62/EC allows but  does not oblige Member Stat es to charge road freight 
vehicles over 3.5 tons on the roads belonging to the trans- European network. Tolls can 
not exceed the recovery of infrastructure cost s. The infrastructure costs are defined as 
being the costs of constructing, operating an d maintaining the infr astructure network 
concerned and may include a pr ofit margin based on market conditions. Tolls can vary no 
more than 50% at constant revenue. 
The amending Directive 2006/38/EC allows a to ll mark-up of up to 25% in mountainous 
areas on an exceptional basis if earmarked to finance the construction of priority 
European projects in the same corridor. It also  allows a higher variati on of tolls of up to 
100%, without fixing a minimum, according to the EURO class of vehicles, the time of 
day, type of day or season to tackle congesti on. However, the variati on is allowed only if 
it does not generate additional tolling revenues. Moreover, th e Directive does not address 
EN 6   EN the variations of tolls between roads crossing areas exposed to  different level of external 
costs (in-built areas and rural areas).  
The current Directive therefore does not a llow levying charges specifically designed to 
reflect external costs, nor does it provide a fr amework for fully varying existing tolls, i.e. 
beyond 100%. Hence the request of the legisl ator to propose a methodology to assess 
external costs and to analyse whether it may serve as the basi s for calculating an external 
cost element in tolls levied on HGVs.  
This impact assessment will anal yse the options to internalise external costs in HGV tolls 
in order to revise Directive 1999/62/EC. The revision of Directive 1999/62/EC is a step 
to allow internalisation in a mode which co mpetes with railways in some networks by 
giving incentives to internalise.  
1.1.2.3.  Internalisation of external  costs in urban transport 
Although many external costs of road transport ar e related to the use of vehicles in cities, 
the current exercise does not deal with this issue. The high diversit y of mobility patterns 
between different cities, both for freight and passenger trans port, makes analysis at an 
EU level much more difficult than that of long  distance transport, which is also at the 
heart of the Common Transport Policy. In a ddition, other instruments such as parking 
policies, public transport or promotion of  walking and cycling are specific to urban 
policies and would need a full separate analys is. Analysis in urba n transport will be 
provided when it comes to congestion. However, the impact assessment will not provide a pricing strategy in cities as it is considered  that in this field policy decisions are better 
taken at a level that is closer to the citi zens and their particular circumstances. The 
forthcoming Action Plan on urban mobility  will cover both passenger and freight 
transport. It will address internalisation in urban areas while respecting the subsidiarity 
principle. Improving the quality of policy ma king in this field through the harmonisation 
of rules and standards and th e interoperability of techno logies could contribute to 
creating a common framework in this field. In addition, the ex change of experiences and 
knowledge can play a role. . 
1.1.2.4.  The treatment of infrastructure costs 
In most cases, the EU legislation allows Member States to recover infrastructure 
maintenance, operation and construction costs through charges for the use of infrastructure, provided that a number of ge neral principles like non discrimination and 
transparency are respected. This possibility is used to some extent by Member States. 
Tolls are levied on only 3% of the total trunk and motorways network.  
The request of the EU legislator  does not question the flexibility left to Member States on 
infrastructure pricing and con cerns only external costs.  
However, in order to assess the impact of charging external costs, existing charges levied 
to recover infrastructure costs in road transport will be taken into account in the analysis of impact of policy options (see part 4 an d 5 below). In the modelling exercise, the 
approach leaves all existing charges for infras tructure as they are and puts internalisation 
charges on top of them.  
EN 7   EN  
Box 1: Infrastructure Costs 
Variable infrastructure costs 
Infrastructure use costs correspond to the variab le part of infrastruc ture costs. Although it 
is often difficult to distingui sh the variable cost from th e fixed costs, it is generally 
considered that variable infrastructure costs cover maintenance and operating costs 
(expenditures for road maintenance, expendi ture for dredging a canal or a harbour). 
These costs vary with traffic volumes, vehicl es weight per axle and weather conditions.  
However, only a part of these va riable costs can be considered as external cost insofar as 
they are imposed by some us ers on other users. Damage costs by vehicles could be 
considered as external costs.  
Infrastructure construction costs  
Traditionally, construction costs have been borne by public authorities or by operators 
linked to public authorities. In most cas es, it is still true nowadays although some 
infrastructures are increasingly provided by th e private sector (subje ct to public-private 
partnership contracts) in some  Member States and some mo des (motorways, airports…).  
The impact assessment assumes that the recove ry of construction cost is independent of 
the internalisation of external costs. This “separation” assumption is quite realistic for 
most external costs (air pollution, noise, acciden ts) as cost recovery payments are weakly 
related to the costs dr ivers of these externalities (e.g. vehicle characteristics, population 
density, etc). However, as to congestion, ch arging for it provides under certain conditions 
(i.e. absence of economies or diseconomies of  scale, absence of indivisibilities) an 
optimal expansion pathway for the infrastruc ture. Conversely, cost recovery pricing may 
integrate in the price a congestion differentia ted signal reflecting the need to provide for 
additional capacities. If infrastructure is correctly dimensioned and planned through cost-
benefit appraisal, cost recovery pricing (e.g. based on two-part tariffs) may not be 
conceptually too different from long term ma rginal cost pricing of congestion in which 
new vehicles are asked to pay not only for th e actual congestion they  produce in the short 
run but also for the long term expansion of the infrastructure they bring nearer. Both 
systems may mesh and complement each  other over the lif e of a project.  
In conclusion, the assumption of separation between efficient infrastructure use and 
efficient infrastructure provision, including cost recovery is needed to allow the 
theoretical analysis of internalisation to proceed. When it comes to implementing 
instruments, it should be acknowledged that there are many linkages between both as for 
example, the differentiation of cost recove ry charges according to EURO class in 
Directive 2006/38/EC.  
1.2. External Expertise 
This impact assessment relies on different works carried out over the past years – EU 
research projects and the IMPACT study.  
EN 8   EN 1.2.1.  Research project under the Research Framework Programme 
For many years, the Commission has financed  research programmes in the field of 
transport pricing3. 
GRACE4 – Generalisation of Research on Account s and Cost Estimation – is a research 
project funded by the EC sixth Framework pr ogramme. This project aims to support 
policy makers to develop sust ainable transport systems by facilitating the implementation 
of pricing and taxation schemes that reflect the costs of infrastructure use. Among the 
areas of research, it proposes  methods of evaluation of ex ternal costs. GRACE project 
has been reviewed in the Handbook on the assessment of external costs.  
An ongoing research project named REFIT5 is aiming at providing a set of sustainability 
indicators for assessing the e ffect of various policies. Th is project is developing a 
“modelling tool-based” methodology that produces data on a set of id entified indicators 
and that enables ex-ante evaluation of th e Transport Policy measures considering the 
economic, environmental and social dimensi ons of sustainability. Some of these 
indicators are being used in the current analys is. In order to be consistent with the whole 
exercise, REFIT has applied its methodology to some policy optio ns of the current 
impact assessment and used the sc enarios defined in the IMPACT study. 
Finally, DIFFERENT6 is reviewing the state of play of  differentiated charges in Member 
States and analyses user reaction from r eal-world cases. DIFFERENT has been used 
when assessing the existing charging situation in Member States.  
1.2.2.  External Study 
The Commission has launched a study – IMPA CT – aiming at reviewing the existing 
methods to estimate external costs in Europe7 which has been published in January 2008. 
On top of the handbook, two other studies have been made available: one on the study of 
infrastructure costs and charging in road tran sport, another one on the analysis of impact 
of pricing scenarios (using transport m odels run by the Commission and ASTRA 
model8). 
1.2.3.  Inter-service group 
An Inter-service group has b een created and comprised tr ansport units of DG TREN 
(maritime and inland waterways, railways, ro ad, air transport, and logistics), ENV, 
ENTR, EMPL, ECFIN, TAXUD, SG, and JR C. The interservice group met 5 times 
between October 2007 and March 2008. The modell ing of transport was carried out by 
                                                 
3 Efficient pricing in transport - overview of Eu ropean Commissions transpor t research programme. 
Catharina Sikow-Magny. Chapter 15. Acceptability of transport Pricing Strategies. 2003, ed by J. 
Schade and B. Schlag, Elsevier. 
4 http://www.grace-eu.org/project.htm 
5 http://refit.bouw.tno.nl/index.htm 
6 http://www.different-project.eu/ 
7 Internalisation Measures and Policies for all external Costs of Transport (IMPACT). Handbook 
on estimation of external costs in the transport sector . CE Delft. 2007.  
8 “Report on internalisation Strategies”. Ongoing work. CE Delft. IWW Institut für 
Wirtschaftspolitik und Wirtschaftsforschung, Universität Karlsruhe, Germany) is modelling ASTRA.  
EN 9   EN JRC (TRANSTOOLS) and ENV (TREMOVE, serv ice contract with the University of 
Thessaloniki) as an input to the IMPACT study.  
1.3. Consultation of stakeholders 
1.3.1.  Consultation on the Handbook 
On 15 March 2007, the Commission held a works hop with stakeholders to test the main 
assumptions and orientations undertaken in the IMPACT study9. The aim of the 
workshop was twofold. The first objective was to  make use of the broad expertise of the 
invitees on the issues presented with a vi ew to incorporating their comments into the 
project deliverables of the IMPACT study. The second objective was to gain support for 
the results of the project, which was deemed  crucial for any further step towards policy 
development on the internalisation of external  costs. The issues discussed included the 
following: which external costs need to be considered; should a pragmatic marginal cost oriented approach with averaged figures for typical traffic situations form the basis for 
the estimation of concrete va lues; are there well establis hed methods to estimate and 
value these external cost s; are there limits to the use of universal methods and to the level 
of accuracy available in practice. 
On 22 November 2007, the Commission organi sed a technical meeting with experts 
nominated in different Member  States. The objective of the meeting was to have a 
diverse panel of scientific and technical expe rts nominated by the Member States to peer-
review the final draft handbook and give th eir comments on how the document could be 
improved before it is published.  
There was a general agreement on the extern al cost categories selected, on their 
definitions, on the suitability of the methodol ogy used and the completeness of the data 
presented. It was generally acknowledged that the handbook provides a comprehensive 
review of the existing state-of-the art re search on the subject and as such creates 
important added value. There were several specific suggest ions made for improvements 
and it was also pointed out by several participan ts that the “How to use the handbook” 
section would benefit from further elaboration as the situation of potential users of the 
handbook will depend a great deal  on the availability of input  and output data for their 
particular countries. The authors have incorpor ated the comments into the final version of 
the Handbook. 
1.3.2.  Consultation on the impact assessment 
A broad Internet consultation has been la unched end October 2007 and stopped on 31 
December 2007. The objective of the consultati on was to get a feedback on the general 
principle of internalisation and on the various policy options  developed in a consultation 
paper
10.  
The Commission received 469 replies and 17 position papers. Annex 1 gives details on 
the results of the consultation. The majority of respondents agreed with the principle of 
                                                 
9 Summary and minutes can be found at: http://www.ce.nl/redirect/Workshop_IECT_index.htm 
10 “Preparation of an Impact Assessment on the In ternalisation of External Costs”. Consultation 
Document. Available at http://ec.europa.eu/transport/white_paper/consultations/index_en.htm. 
EN 10   EN internalising external costs generated by tran sport. In general, participants expect 
internalisation to improve efficiency, fair ness in society and a reduction of nuisances. 
However, some concerns were expressed on  a possible increase in costs which would 
affect overall competitiveness of EU economies.  In addition, stakeholders were asked to 
provide feedback on the choice of economic instruments to tackle external costs.  
On 31 January 2008, a high level conference was organised in order to present the main 
findings of these consultations11.  
This feedback has enriched the analysis and has been taken into account when defining 
policy options on the internalis ation of external costs.  
1.4. Consultation of the Impact Assessment Board 
1.4.1.  Preliminary comments 
An early cooperation has been organised w ith the Impact Assessment Board (IAB) in 
order to get quality support. The IAB had the opportunity to comment on the draft outline 
of the current impact assessment and on the draft handbook. The two sets of comments 
were received on 20 September and 30 October 2007.  
The main comments have been on the need to take into account infr astructure costs, to 
define a level of internalisati on for each mode of transport; and to analyse the effects of 
internalisation on social inclusion. 
Many of the comments of the IAB have been take n into account, in par ticular the level of 
internalisation and the social aspects. As re gards infrastructure costs, the inclusion of 
these costs is part of the analysis. But, th e impact assessment does not deal with cost 
recovery principle and its implementation (see box 1).  
1.4.2.  Opinion of the Impact Assessment Board 
The impact assessment was discussed with the Impact Assessment Board on 2 April 
2008. The IAB published its opinion on 7 April 2008.  
The opinion of the Board listed the follo wing recommendations for improvements: 
- strengthening the economic reasoning underlying the internalisation of  externalities.  
- stressing the limitations of the quantit ative models and complementing with a 
reinforced qualitative analysis.  
- improving the identification and description of policy options 
- strengthening the analysis of earmarking - improving the comparison of options.  
                                                
 
11 See the position papers and the presentations at  
http://ec.europa.eu/transport/c osts/conference/index_en.htm .  
EN 11   EN Following these recommendations, the impact assessment has been revised along these 
lines.  
- The economic reasoning has been reinforced  across the document and a box (box 2) on 
theoretical aspects has been added. This box develops furthe r the theoretical principles 
exposed in the consultation paper on the in ternalisation of exte rnal costs. More 
specifically, it explains how external costs re present a market failure  that would require 
and justify public aut hority's intervention.  
- The limitations of the models have been hi ghlighted in box 6 (section 5). In particular, 
models should be seen as providing indi cations on likely effects rather than 
quantifications of impacts, as they are not able to capture all the effects. Moreover, the aggregation at EU level limits the analysis of local effects and underestimates the positive aspects. A qualitative analysis comple ments the quantitative analysis in section 
5. Results from transport economic literature a nd research projects ar e provided and help 
analyse the overall impact  of internalisation.  
- The process of selection of policy options is explained step by st ep. In addition, the 
reasons why policy option 4 has b een discarded are explained.  
- The analysis of earmarking has been expande d in section 5 and s ection 6. Pro and cons 
arguments are provided and policy choi ces are explained and justified.  
- Finally, the comparison of options has been reinforced and supplemented by a 
qualitative assessment.  
In order to help the reader, a glossary of technical terms has been added in annex 15.  
On 30 April 2008, the IAB published its second opinion and recommended to (1) further 
streamline and clarify section 4 on policy options, (2) to provide some quantitative results when comparing policy option 3A and 3B and (3) to explain why using electronic 
tolling should be the implementation mechanism. 
Following these recommendations, the following amendments have been made: 
- Section 4 has been restructured in order to  clarify the presentati on of the selection of 
policy options. A table (table  4.1) summarising each policy options has been added; 
- A table (table 6.2) on the comparison of po licy option 3A and 3B has been included in 
section 6. It provides some quantitative results from the modelling exercise.  
- The issue of electronic tolling had already be en mentioned in section 2.3.4. It has been 
further developed in section 2.3.4 and section 6 in order to justify why this mechanism is 
preferred.  
2. P
ROBLEM DEFINITION : WHY INTERNALISATION OF EXTERNAL COSTS ? 
While transport choices are influenced by tr ansport prices, the gap between prices and 
underlying costs may lead to an inefficient situation (see box 2). In a number of cases, 
part of the costs generated by transport users is not fully borne by them but is paid for by 
EN 12   EN other transport users or by society. As a cons equence, the "user pays" and "polluter pays" 
principle fails to be applied in transport activities.  
This section will try to assess to which extent external costs are not internalised.  
Box 2: Internalisation of extern al costs: Theory and Practice 
Who pays what? Private costs and External costs 
For efficiency as well as for fairness pur poses, the costs and nuisances related to 
transport activities should be borne by t hose who produce them. Regarding transport 
activities, it appears that quite  often some of these costs ar e not borne by transport users 
and more importantly that ther e is no direct relation betwee n the costs paid by users and 
the cost they impose on the society.  
The costs of transport can be split into private/internal  costs  (those directly borne by the 
person engaged in tr ansport activity) and external costs  (i.e. those that are imposed on 
others but not supported by the user). The sum of private and extern al costs represents 
social costs . The boundary between internal and extern al costs is defined by the costs the 
person takes into account when deciding to use a transport service. This means that when 
engaging in a transport activity, a person will incur private costs linked to the use of a 
mode of transport (vehicle purchase, tolls or  fuel use), but will not be aware of effects 
imposed on others such as pollution or conges tion. His/her decision wi ll not be based on 
the social costs of his/her activity.  
In other words, the costs imposed on othe rs– environmental damages, accidents, 
congestion - generated by transport activities are external costs, more generally referred 
to as externalities . Most of them have increased over the past years despite technological 
progress.  
The table below draws the line between both categories of costs. 
Table Box 2: Classification of the costs of Transport 
Cost of categories Social costs 
 Internal/Private costs: borne by 
transport user External costs: borne by other 
transport users or society 
Transport operating 
expenditure  Fuel and vehicle costs 
Tickets/fares Costs paid by other users or by 
society 
Infrastructure use costs Costs covered by infrastructure 
charge 
Costs covered by tickets/fares Costs partly uncovered  
Accidents costs Costs covered by insurance, own 
accident costs Uncovered accident costs (e.g. pain 
and suffering imposed on others), 
administrative and police costs 
Noise costs Own disbenefits Costs borne by people exposed to 
noise (noise disturbance, health 
effects) 
EN 13   EN Air pollution costs Own disbenefits (depending on 
individual situation) Costs borne by people exposed to air 
pollution (health effects) 
Climate change costs Own disbenefits (including future 
generation, i.e. children) Costs borne by society and by future 
generations 
Congestion costs Own time costs Delays/time costs imposed on others 
Source: Consultation Paper on Internalisation of External Costs (October 2007). Table adapted from Table 
2.1. of the Green Paper "Towards fair and efficient pricing in transport. COM(95) 691 final.  
Internalisation as a way to convey the right economic signal 
If prices do not appropriately reflect social costs, they fa il to convey th e right economic 
signals, thus leading to situations where tran sport activities generate excessive costs as 
compared to an efficient situation. Conse quently, each mode will not be used in an 
optimal way and the final equilibrium will not lead to maximum benefits to society. For 
example, health care due to damage from air po llution or noise will be  paid by others, i.e. 
tax payers in this case. The transport activity being relative ly under-priced in respect of 
its cost, too much of it will take place or mo re often too much transport activity with the 
wrong characteristics (tec hnical, modal, timing). 
Internalisation is a way to ensure that ea ch transport user pays the social costs 
associated to his individual trip . It can be implemented through taxation and user 
charges. Trade permits can also play a role by allowing prices to reflect damages. By this 
way, transport users will have an incentive to  reduce the nuisances/cos ts they generate.  
Internalisation eliminates the market fail ure due to externaliti es and defines a new 
equilibrium in which individual behaviour is  consistent with maximisation of social 
welfare. However, internalisation will only be effective insofar as transport choices are 
sensitive to price signals. In the presence of other market failures that make demand less 
responsive to internalisation charges (lack of alternatives, low incentive to buy clean 
vehicles, bounded rationality  (myopic behaviour)…), in ternalisation should be 
complemented by other policies such as infrastructure policy, research policy, 
competition policy…… If these other market fail ures are removed, the internalisation of 
externalities would probably determine an e quilibrium at which the level of external 
costs would be significantly lower and possi bly better adjusted to politically expressed 
social preferences. 
Which external costs? 
Transport activities generate costs related to th e need to build and maintain infrastructure 
and to the use of these infrastructures. The provision of infrastructu re generates external 
costs on land use, nature (fragmentation of ecosystems) and on landscapes. The current 
impact assessment does not deal with these costs and focuses on cost s related to the use 
of infrastructure. Among external costs of using infrastructure, economic and transport 
literature agrees to identify  congestion, accidents, air pollu tion, noise and climate change 
as the main ones.  
Estimating external costs: providing a common framework 
EN 14   EN The characteristic of externalities is that they are not borne by the user. One of the 
reasons may stem from the fact that it is of ten difficult to identify precisely the physical 
impact as such. Assessment is also made diff icult as there is often no market and no 
monetisation. For example, air pollution and noise affect health; time loss imposes 
adjustments and waste. But these costs are indirect and there is not market as such to 
monetise them. As a result, internalising thes e costs requires making estimates of them.  
In January 2008, a Handbook on estimation of exte rnal costs in transport sector has been 
published. It reviews the recent  methodologies of estimating ex ternal costs and identifies 
best practices. On this basis, the Commi ssion intends to publish in June 2008 a common 
framework to assess external costs. It will provide a common methodology to estimate 
external costs of air pollution, noise a nd congestion. The Comm unication will also 
recommend default values in case such values  would not be availabl e in Member states. 
Finally, recommendations on the application of charging will be made on the basis of 
differentiation.  
Principle of charging: social marginal  cost pricing versus equity approach 
The need to confront each individual transp ort decision-maker with the correct costs he 
imposes on others pleads for the use of a marg inal social cost approach. The choices of 
individuals are made by equating marginal be nefit to marginal cost. By ensuring that 
marginal cost to the user is equal to marginal  cost to society, the overall equilibrium will 
reflect the condition for efficiency that marg inal abatement costs are set equal to the 
marginal damage. Such an approach means that prices in transport should be equal to the 
short-run additional cost created by an additiona l user of the infrastructure. In theory, this 
approach should include price-relevant cost  of use (infrastructure wear and tear, 
congestion, scarcity costs) and marginal exte rnal costs (environmental costs, external 
accidents costs). Marginal social cost pricing wo uld then lead to allocative efficiency for 
the use of existing infrastructure, both static ally and dynamically th rough the provision of 
the right level of incentives. Furthermore, as the user would pay for the additional cost he 
imposes on society, this would contribute to fairness across transpor t users and non users. 
However, this system would not guarantee that  the infrastructure can be financed as the 
revenues it would produce can fall short of the needs or can exceed them.  
Another approach based on full cost pricing is  often perceived as a more appropriate, as 
it ensures that the user will pay for the whole cost of the infrastructure, which sometimes 
may be considered necessary by public authorities. This ap proach – also called equity 
approach – takes all costs into account, incl uding infrastructure investment costs, and 
considers that prices should be equal to aver age costs in order to allow cost recovery*. It 
can be noted that average cost charging may prevent the access to the infrastructure of 
users whose marginal benefit would be larger th an the marginal cost they actually cause, 
thus producing a sub-optimal a llocation. Moreover it also as sumes that the beneficiaries 
of the infrastructure are only the actual users of it, and not the people and firms who 
value the option of using it, which gives to the infrastructure a public good character.  
Both approaches are presented in this imp act assessment. However, when possible, the 
social marginal cost pricing should be favoured  as it gives incentives  to adopt less costly 
behaviour and gives transport users the fr eedom to respond in ways which are most 
efficient in their particular ci rcumstances. In order to be eff ective, such a principle would 
EN 15   EN require that transport users do not receive direct compensation th at would reduce the 
incentives to change the behavi our and thus eliminate the eff ectiveness of internalisation.  
Assessing the current level of internalisation 
In real life, it might be difficult to assess  the true level of inte rnalisation. Modes of 
transport are already faced with charges, ta xes and/or subsidies which are not linked to 
external costs, but contribute to influencing behaviours. The analysis of internalisation 
has to take these elements into account.  
Depending on the approach – equity and effici ency, there are two ways of assessing the 
level of internalisation. The first one – equity – will tend to assess all costs and 
charges/taxes/subsidies while the second one – efficiency – will only take into account 
variable costs linked to the us e of an additional vehicle.  
Both approaches are proposed in this impact assessment as they provide a 
complementary assessment of th e situation (see section 2.2). 
* Average costs are not the only way to reach full cost recovery. Second best schemes such as dual tariffs 
or Ramsey-Boiteux pricing could be preferred.  
2.1. The need to maintain the sustai nability of transport activities 
2.1.1.  Transport growth 
Transport services play a cen tral role in modern society and economy. They account for 
4.3% of EU25 value added and employ about 8.2 million persons in the EU25.  
Over the past decades, transport has increas ed in line with ec onomic growth. Freight 
transport thus grew by 2.8% per year over the pe riod 1995-2005 while real GDP growth 
was by 2.3% per year over the same period; at the same time passenger transport grew by 
1.9% per year. Freight trans port demand has increased more  strongly for modes offering 
greater flexibility, in particular road transpor t (see chart 0a and table 0a and 0b of annex 
2). 
2.1.2.  Evolution of nuisances generated by transport 
Although the benefits of transp ort services are widely ackno wledged, transport activities 
generate nuisances/costs not only  to other transport users, but also to society in general, 
including local population and future generation s. More specifically, transport activities 
have an impact on time – private and prof essional (congestion), on life (accidents), on 
health (pollution, noise) and on climate ch ange (greenhouse gas emissions) among other 
things12. Over the past years, measures to re duce these nuisances – regulatory measures, 
awareness information campaign, research pr ojects and financial support (TENs, Marco 
Polo) have been undertaken at EU and nationa l level. Several economic instruments such 
as infrastructure charging, vehicle taxation, congestion char ging, and fuel taxation have 
also been implemented with various degrees of  intensity and coverage. As a result, some 
                                                 
12 Such as land use, energy supply security and infrastructure maintenance. This impact assessment 
deals with the following external costs: air pollution, noise, climate change, congestion and accidents. See section 4 on the se lection process of policy options. 
EN 16   EN of these nuisances have displayed a signifi cant decrease even t hough they still remain 
important. 
Congestion in Europe 
The density of traffic in Eur ope has increased over the past  years, reflecting the creation 
of an internal market in the EU and consequently increased mobility of individuals, and growing dynamism of the exchange of goods. Th e growth of traffic has been sustained 
while the pace of expansion of infrastructure  network was lower, which exerts pressure 
on its capacity use (see graph 1, annex 2).  
The increase of density of traffic may lead to bottlenecks in corri dors crossing densely 
populated areas or sensitive areas  such as the Alps and the Pyrenees. But, congestion is 
mainly an urban problem (which is no t reflected in the graph 1 in annex 2)
13.  
Accidents in Europe 
Road fatalities have displayed a net re duction (- 21.4% between 2000 and 2004 in EU25. 
See graph 2 in annex 2). However, in 2005, there were still 41 274  persons killed in 
EU25, among which 53.4% involved cars and taxis and 19.6% involved motorcycles and 
moped. In 2006, there were 42953 persons kill ed. In comparison, fatalities in other 
modes are much lower (65 in railways in 2006 and 1 casualty in the activities of EU27 air 
operators in 2006). 
Air pollution generated by transport 
Air pollution emissions from road transport have considerably decreased over the past 
years due to technology pr ogress and regulation. However,  air pollution from road 
transport still remains a challenge in dense and high traffic areas.  
By contrast, in other modes of transport (e xcept railways), the decrease has been much 
slower and emissions have even increased again for car bon monoxide (CO), sulphur 
dioxide (SO2) and non-methane volatile orga nic compounds (NMVOC). Graph 3 (a, b, c, 
d, e, and f) in annex 2 provides evid ence of these contrasted evolutions. 
In international maritime transport, the increase in NOx, SO2 and NMVOC has been 
high (respectively +37.6%, +44.2% and +41.0%  between 1990 and 2005 ). Moreover, the 
Thematic Strategy on air pollution14 shows that emissions of SO2 and NOx from the 
maritime sector should surpass total emissions from land-based sources by 2020. 
In air transport, the increase in NOx has been particularly important between 1990 and 
2005 with an increase of 48.8% for domestic  aviation and +85.5% for international 
aviation.  
                                                 
13 See COMPETE (2006), Annex 2, "Studies, harmonised approach and panorama of congestion in 
Europe and US". It gives estimates of congestio n in cities using the travel time index (ratio 
between the actual average and the free flow travel speed). The travel time index in large cities of 
Europe compares journey times due to congestion between them: 1.34 for Paris Ile de France, 1.40 
for Greater Copenhagen area, 1.84 for Greater Lo ndon, 1.32 on average for other English cities  
14 SEC (2005) 1133, p 30. Annex to the Communication on Thematic Strategy on Air Pollution and 
the Directive on “Ambient Air Quality and Cleaner Air for Europe”. 
EN 17   EN Greenhouse gas emissions generated by transport 
Transport is a large contributor to greenhouse gases emissions, namely CO 2 (27.2% of 
the latter come from tran sport; of which 72.8% are from road transport). CO 2 emissions 
of transport have increased by 32% from 1990 to 2005 while CO 2 emissions in other 
sectors of the economy (industry,  households) have decreased or stabilised. However, the 
evolution is not homogeneous across modes of  transport. Rail has reduced emissions of 
CO2 over the past decade (1990-2005) due to a large extent to a reduction of the share of diesel trains. CO2 emissions growth from  air transport and maritime (international 
bunkers) has been higher than CO2 emission growth from road transport (+49.1%, +51.6% against +27.5%).  
Noise generated by transport 
In 1999, the European Environment Agency es timated that 32% of total EU population 
was exposed to road no ise level above 55 Ldn dB at the front of their house whereas 10% 
was exposed to rail noise level above 55 Ldn dB and another 10% was highly annoyed by aviation noise
15. In 2008, the Commission reports that  the number of people affected 
by aircraft noise, particular ly at night, has increased since 2002 due to the general 
increase in the number of movements, and pr edicts that this number will continue to 
grow although the situation may differ between airports16. More generally, the mid term 
review of the Commissions White Paper on Tr ansport emphasises that attention should 
be paid to noise pollution from road transport and other modes of transport.  
2.1.3.  These nuisances have a cost for other transport users and society 
All these nuisances have  a cost for others in terms of time loss (congestion), life threats 
(accidents), health (acciden ts, air pollution and noise) and climate change. Most of the 
time, these costs are external, meaning that  they are not borne by those who generate 
them, but by other transport users (congest ion, accidents) and society (environmental 
costs)17.  
There have been many attempts to quantify ex ternal costs generate d by transport and, 
depending on the methodology and the scope of analysis, the amount of total external 
costs varies. All these methods have b een reviewed by a Handbook on external costs 
published in January 2008. This handbook revi ews the different methodologies and 
identifies the best practices for each category of external cost. Several conclusions can be 
drawn from it. 
First, there have been large efforts in the research field to propose and use methodologies 
of assessment of external costs. A wide se t of methods are available to monetise these 
externalities. Although the estimation of ex ternal costs has to consider several 
                                                 
15 “Traffic noise: exposure and annoyance”. 1999 . European Environment Agency. According to the 
Directive 2002/49/EC on the assessment and management of environmental noise, Member States 
should report to the Commission more recent data on exposure to transport noise. These data were 
not yet available when drafting this document.  
16 Forthcoming COM(2008)66 final.  
17 Accidents costs are already partially internalised  by vehicle drivers. External accidents costs are 
those costs which are not covered by risk oriented  insurance premiums. The level of external costs 
non internalised depends on the level of acci dents, but also on the insurance system.  
EN 18   EN uncertainties, there is a wide consensu s on the methodological issues and on the 
bandwidths18.  
Second, congestion, accidents, air pollution and noise external costs vary across location. 
In all modes of transport, marginal exte rnal costs are higher in areas with higher 
population density, typically urba n areas. Furthermore, the time of the day during which 
transport takes place leads to strong variati ons of external costs (differences between 
night and day and peak and off-peak periods). The costs of a lorry or  a freight train may 
vary according to time and location (see gra phs and tables from the Handbook in annex 
3). By contrast, greenhouse gas emissions do not depend on location and time and are instead related to fuel consumpti on and the carbon content of fuel. 
Third, the Handbook reviews studies that have as sessed the magnitude of externalities. It 
is widely agreed that road transport accounts for more than  90% of total external costs
19 
imposed by transport on society. Roughly 25% is generated by trucks. Such a situation is 
also explained by the high modal share of road  transport. Road transport is by far the 
biggest mode of transport acc ounting for more than 70% of inland freight transport and 
more than 80% of total passenger transport in  Europe. Despite its high modal share, the 
growth of road transport stil l continues, both in absolute and relative terms. However, 
these figures do not capture the recent evolutio ns of emissions in non road transport. As 
mentioned in section 2.1.2, emissions of non road transport have largely increased, 
especially in maritime and in air transport and will continue to do so. It could be assumed that the share of external costs of non road transport modes could be higher than the past 
estimates.  
2.2. Are external costs already internalised? 
Under some conditions, markets fail to ensure that all costs – private and external – are 
fully reflected in price formation. External costs are a manifestation of market failures 
related to the efficient allocat ion of resources when prices paid by economic actors fail to 
reflect the entire social costs and bene fits of economic activities (see box 2).  
Given its environmental externalities, tran sport is already exposed to a number of 
regulatory measures. In addi tion, transport activities, including vehicle purchase, 
ownership and use, are subject to numer ous taxes and charges, which may overall 
compensate, and in some cases maybe even over-compensate, for some of their social 
costs. It is therefore is necessary to take  into account the existing situation to avoid 
double charging for the same external cost. The question, however, is to  ascertain to what 
extent existing measures allow external costs to be internalised, in other words whether 
the price signals given by these existing ch arges, taxes or subsidies incite the 
development of new technologies, new ways of  transportation or a change in consumer 
behaviour.  
                                                
 
18 See “Handbook on estimation of external costs in the transport sector” published in January 2008 
at http://ec.europa.eu/transport/costs/handbook/index_en.htm 
19 96% in the UNITE study (excluding maritime). 95% in the IMPACT study (based on 
TREMOVE) excluding maritime. However, it is important to note that these figures exclude 
maritime as the emissions of air pollution and CO2 of maritime have increased over the past years.  
EN 19   EN 2.2.1.  Existing taxes/charges and subsidie s in transport: General Overview 
Existing taxes/ charges and subsidies give an indication of what  is being borne by 
transport. The primary objective of these ec onomic instruments was either to finance 
infrastructure or to provide revenues to  the general budget. Few of them aimed at 
reducing negative externalities generated by tran sport. The same can be said on subsidies 
which are not related to an objective of avoi ding external costs or  obtaining external 
benefits (e.g. for public service obligation or else). However, taxes/charges and subsidies 
(targeted or not) cannot be ignored as they in fluence the behaviour of  transport users and 
may have an impact on external costs.  
Environmental taxes and charges 
Compared to 1980, environmental taxes have increased in nominal terms (more than 
quadrupled). The share of envir onmental taxes in GDP has also increased a lot. The main 
increase took place between 1990 and 1994 and was driven by the increase in energy taxes. Since the beginning of this decade, th e share of environmental taxes in GDP has 
been stable. In 2005, environmental taxes represented approximately 2.6% of EU25 
GDP, of which 1.9% were energy taxes (most of  which are taxes levied on motor fuels) 
and 0.6% were transport (or vehicle) taxes (see graph 1 in annex 4)
20. 
On the total revenues of environmental taxes,  more than 90% are supported by transport 
in most EU countries (see graph 2 in annex 4)21. Most of these revenues come from 
petrol and diesel taxes and to a lesser exte nt vehicle tax (ownership and use of motor 
vehicles). Road transport bears the majority of these taxes as some modes of transport are 
exempted from fuel taxation (see below). 
User charges are also applied in transport main ly to recover infrastructure costs, but it is 
more difficult to have a quantitative estimate of these charges (see below for the description in each mode of transport). 
Subsidies 
Subsidies can have different objectives: ec onomic (fostering regional development or 
creating jobs); social (grant  access to different types of services) and environmental 
(reducing pollution or noise for example)
22. Another objective is the compensation for 
high fixed costs of infrastructure if borne by the public budget, but the amount is much 
more difficult to assess. Overall EU state aids  to transport have decreased over the past 
decade. The allocation of aids between modes of  transport has changed: state aids to air 
transport have decreased while state aids to maritime have increased. State aids to 
railways are higher than in other modes of tr ansport. Overall, according to the State Aid 
                                                 
20 2007 Edition of Tax Structures (Eurostat/TAXUD).  
http://ec.europa.eu/taxation_customs/taxation/ge n_info/economic_analysis/tax_structures/index_e
n.htm  
21 This applies to 20 MS. For Lithuania and Malta, 18 and 30% of environmental revenues are paid 
from transport. These figures are ev en lower for Bulgaria and Romania. 
22 These aspects are not taken into account in DG COMP scoreboard. The EEA Technical report (n° 
3/2007) provides estimates on infrastructure subsidies based on the UNITE report. According to 
these figures, in EU15, road tran sport would receive the majority of  infrastructure subsidies (110 
bn euros in 2005 out of a total of 156 bn euros). Rail would recei ve 37 bn euros.  
EN 20   EN Scoreboard published by the European Commi ssion, the share of state aid to transport 
accounts for less than 0.4% of EU25 GDP (exc luding railways, see graph 3 of annex 4). 
Tax exemptions for some transport modes can be considered as subsidies. Although they 
cannot be ignored because they contribute to di storting market signals, it is more difficult 
to assess the revenues loss from tax exem ptions (e.g. international air and maritime 
transport). According to the EEA, fuel tax exemptions and VAT exemptions affecting the transportation sector could reach from 0.35 to 0.58% of GDP in 2005
23.  
2.2.2.  Existing charges and taxes by mode  of transport: stylised facts 
Each mode of transport has its own characte ristics and needs, which leads to different 
external costs (see above). For the same reasons , the level of taxes, charges and subsidies 
vary across modes of transport, but may also vary across Member States, although common minimum levels of taxation apply to motor fuels across the EU (given the EU energy tax harmonisation). There might be a beginning of EU harmoni sation in the field 
of vehicle taxation and char ging, but it does not apply to all modes of transport.  
2.2.2.1.  Road Transport 
Existing charges and taxes 
Several instruments coexist in the EU, mainly  fuel taxes, vehicle taxes and road usage 
charges (see annex 5 for a de scription of charges and taxa tion in road transport).  
Fuel taxation is related to the EU directive on energy taxation which sets mandatory 
minimum values. As a result, fuel taxes are applied in all Member States. Excise fuels and vehicles taxes represent most of trans port taxes (95%). Fuel  tax (72% of total 
revenues paid by transport) and other taxes (such as circulation tax…) may partially 
serve to recover infrastructure costs or other general purpose.  
Directive 1999/62/EC, article 2, sets EU minimum tax leve ls for vehicle (circulation 
taxes) to contribute to fiscal harmonisati on and reduce distortions of competition in the 
road market. But in practice th e range of annual rate s across Member States is well above 
the EU minima and quite wide from € 515 to  almost € 3000 (see graph 1 of annex 5). 
Vehicle taxes are in the order of few cents per vehicle kilometre and proportionally much 
smaller than tolls (usually above >15ct/vkm s). They vary according to the weight per 
axle to reflect the damage to the infrastructure . By contrast, they do not vary according to 
the EURO class, nor do they re flect the real use of vehicle (travelled distance, time and 
location of use).  
The system of road usage charges differs c onsiderably across European countries. Tolls 
are levied on some 56 000 km of motorways and trunk roads (3% of  the total network) 
through either toll barrie rs or electronic pricing. Few countries require a time based fee 
(vignette). Hitherto, variations of user charges accord ing to EURO vehicle class to 
                                                
 
23 Fuel tax exemptions have been estimated between 11 and 36 billions euros in 2005 (8-16 in air 
transport and 3-19 in waterborne  transport). VAT exemptions amount  to 29 billions euros in 2005, 
of which 18 billions come from air transport. EEA Technical Report, n°3/2007. “Size, Structure and Distribution of transport subsidies in Europe”.  
EN 21   EN provide incentives for using cleaner vehicles  or according to time to relieve congestion 
have hardly been applied. 
Box 3: HGVs user charge in the EU 
Some countries have no nationwide road us age charging systems at all (e.g. Finland, 
Estonia and Latvia) while othe r countries have no nationwide road charging systems and 
only toll on a few infrastructure sections (I reland and UK). The map in annex 6 presents 
the diversity of charging systems in the EU. 
Others (e.g. France, Italy, Spain, Portugal,  and Greece) have a l ong tradition of having 
parts of their motorway network operated by concession motorway s. Although the tolls 
are distance based, they are usually not expre ssed in a price per kilometre but in the form 
of a matrix listing motorway entry and exit points. These schemes cover all types of 
vehicles not only HGVs. Slovenia has a similar system in that most motorway roads are 
toll roads with tolls collected at toll stations. 
Several countries have recently introduced in tegrated network-wide electronic road 
charging systems for HGVs. The first EU memb er states to introduce such systems were 
Austria and Germany on 1 January 2004 a nd 1 January 2005 respectively. The Czech 
Republic introduced its own system on 1 Janu ary 2007. Similar systems are envisaged in 
the Netherlands, France, Sloveni a, Hungary and Slovakia. The charging systems are all 
distance based but differ in a number of char acteristics from the technology used to the 
network covered. 
Lastly, there are countries with time base d fees (vignettes). Belgium, Denmark, 
Luxembourg, Netherlands and Sweden have been operating the so -called Eurovignette 
system since 1 January 1995. Germany had also pa rticipated until it st epped out to launch 
its own distance based electronic system. The pr inciple of the Eurovignette system is that 
the certificates issued  are mutually recognised in all pa rticipating countries. The system 
covers the motorway network and certai n other roads and applies to HGVs only. 
In addition to the Eurovignette countries ma ny new Member states (Bulgaria, Hungary, 
Lithuania, Poland, Romania and Slovakia) ha ve their own time based vignette systems 
covering both passenger cars and HGVs. 
EN 22   EN Internalisation tools available under the current Eurovignette Directive 
While the existing Directive 1999/62/EC stipulates that to lls shall be based on the 
principle of the recovery of infrastructure costs only, it does theoretically allow Member States to vary the toll rates for purposes such as combating environmental damage or 
tackling congestion. However, toll variation is subject to a number of conditions, the 
most significant being that it must not be designed to generate additional tolling revenue and any unintended increase in revenue has to be counterbala nced through changes to the 
structure of the variation. 
In practice, only a few Member States have  implemented charging systems that actually 
differentiate the tolls for the recovery of in frastructure charges. Germany and the Czech 
Republic have electronic tolling systems that  apply differentiated ch arges of HGVs based 
on the environmental performance of th e vehicle (as indicated by the EURO 
classification of the engine) while in Fr ance there are examples of time based 
differentiation on the A1 moto rway between Paris and Lill e and on the A14 motorway 
between Orgeval and Paris. The experience from these schemes is positive. Germany has witnessed adjustments in the fleet compos ition with a visible trend towards cleaner 
vehicles and accelerated renewal of the fleet. In contrast, this effect has not been seen in 
neighbouring Austria where the tolling system  on the motorways does not differentiate 
by emissions class. The time based differentia tion on the French motorway sections has 
reduced the traffic flow during rush hour by up to 10%. Despite the encouraging results 
from these existing schemes there are a number of reasons why the current options for differentiation are not more widely used in the Member States: 
- Toll operators face practical difficulties to adjust the differentiated charges to changes 
in traffic demand in a way which respects  the condition that the total tolling revenue 
remains constant on a biennial basis; 
- There is a clear lack of in terest for Member States to introduce differentiated charges 
and increase the complexity and operating costs of the tolling system  if no extra revenue 
is allowed to be generated. The effective re moval of the constant  revenue requirement 
would give the possibility of financial incen tive to the beneficiaries of the tolling 
revenues to introduce the differentiated charges.  
- There are genuine difficulties in controlli ng and enforcing a differe ntiated scheme (e.g. 
accurate identification of the EU RO class of vehicle). This ca n be especially problematic 
in case of non resident hauliers. Often the on ly realistic enforcement method would be to 
carry out costly roadside checks. 
The other internalisation tool available unde r the current Directive is the mark-up in 
mountainous areas. However, it is allowed only in exceptional cases  and in mountainous 
corridors where priority projec ts of the trans-European ne twork are located. In practice 
this limits the application of this instru ment to the two corrid ors crossing the Alps. 
2.2.2.2.  Rail Transport 
Directive 2001/14 obliges to charge for infras tructure variable cost s and allows charging 
for environment or congestion (article 7 of the directive). In  10 Member states, 
infrastructure managers charge according to marginal costs pricing (AT, CZ, DK, FI, FR, 
EN 23   EN NL, PT, SE, UK). Except NL and PT, they allow having mark-ups in order to recover full 
costs. In other Member States (BE, EE, DE , HU, IT, LT, PO, RO, SL), infrastructure 
managers have adopted the principle of rec over full costs minus state subsidies and set 
their charges according to this principle. Ch arges for congestion and scarcity, accidents 
and environment are undertaken in a minority  of countries (see annex 5 table 2).  
2.2.2.3.  Air Transport 
The EU Directive on energy taxa tion establishes the fuel tax exemption of international 
air transport for legal reasons (see annex 5 table 3). At the same time, the Directive, in its 
article 14(2) allows for taxa tion of aviation fuel on domes tic flights and under certain 
conditions for intra-Community transport.  In 2006, the Commission has proposed to 
include aviation in the fight against climate change. As a result, air transport would be 
subject to the Emission Trading Scheme from 2011.  
Many airports are already appl ying differentiated charges for some external costs. The 
situation is not homogeneous, not only acr oss countries, but al so across airports. 
2.2.2.4.  Maritime Transport 
The EU Directive on energy ta xation establishes the fuel tax exemption of maritime 
transport (see annex 5 table 4). The same optional fuel taxation envisaged for aviation 
also applies to navigation within Community waters. 
There is a great variety in port charging pr actices. Port charges can vary by type of 
infrastructure, by charge description and by por t institutional arrangements. At the same 
time, ports tend to be subsidised in order to  make the region more attractive and to induce 
value-added logistic and industrial activities. 
2.2.2.5.  Inland waterways transport 
A large share of EU inland waterway transport is concentrated on relatively few 
watercourses. 70% of all inland waterway tran sport is carried on the river Rhine, Elbe, 
Oder, and Danube. On the river Rhine, ch arges are prohibited (under the Mannheim 
Convention). 20% are subject to  sophisticated charges in LU, FR, DE (under the Mosel 
Convention), FI, UK and NL (see annex 5 table 5). 
2.2.3.  Level of internalisation by mode of transport 
Having the full picture of external costs and existing levies and subs idies, the following 
step would be to analyse the level of in ternalisation in each mode of transport. 
Assessing the level of internalisation requi res comparing costs and payments in each 
mode of transport. When payments are no t sufficient to cover costs, the mode of 
transport does not support all th e costs it generates. Given th e incomplete availability of 
data, this exercise is howeve r quite difficult, in particular  for other modes than road 
transport. There are two ways of assessing ga p between costs and payments (see also box 
2 for theoretical arguments).  
The first approach – account or equity approach  – takes into account the total social costs 
and total resources and analyses the gap betw een both. This approach helps assess cost 
EN 24   EN recovery ratio and to which extent additiona l levies are needed; it neglects however the 
reasons for political choices that are made w ith respect to funding of  infrastructure or 
subsidisation of passenger transport and may lead to extended disputes on the level of 
implicit subsidies in one particular mode. Fu rthermore, the comparison of total costs and 
resources does not help assess whether transp ort users have the right incentives. This 
approach is however presented here as it is  a practical way to report on the level of 
internalisation.  
The second approach – based on efficien cy consideration – w ould be to compare 
marginal social cost and price and the failure of price to cover this cost. Obviously, this 
approach would be the best way to assess  whether transport us ers have the right 
incentives as it reflects the principle of soci al marginal cost pricing. However, such an 
approach is difficult to calculate as the vari ation of marginal costs with time and location 
is not easy to capture24. This is particularly true for noise and congestion costs where the 
relationship between these costs and traffic is  not linear and average and marginal costs 
can be very divergent. Mo reover, the comparison of ma rginal costs and marginal 
revenues is typically done by aggregating averag e variable costs, which will hide specific 
situations.  
Both approaches have their own advantages and limitations. For this reasons, both are 
presented as they give useful indications on the level of internalisation and can be used in 
a complementary way. 
The equity approach has been adopted by REFI T and the following indi cators try to give 
evidence of the level of internalisation as  far as data are avai lable (see annex 7 for 
methodological explanations). The IMPACT study attempts to apply the efficiency 
approach by comparing marginal costs and marginal resources (see annex 8).  
2.2.3.1.  Equity or account approach 
The equity (account) approach  proposed by REFIT leads to an indicator – level of 
internalisation (Lol) designed to specify to which degree market distortions have been 
compensated by subsidies, taxes and charges.  
The equity or account approach is based on co st recovery principle. As a consequence, 
the calculation of the index requ ires average costs in  order to take into  account all costs 
occurred in the mode of tran sport. All relevant component s – including infrastructure 
charges – are included in the calculation of the indicator.  
From this approach, it can be  concluded that transport do es not bear all the costs it 
generates because of subsidies and despite th e existence of taxes/charges. However, the 
equity (account) approach does not allow draw ing conclusions on the efficiency of the 
whole system. In other words, it is hard to  know whether transport users have the right 
incentive and whether the tax/charge stru cture is related to cost drivers.  
                                                 
24 See Nash C et al (2002), The environmental impact  of transport subsidies, Paper presented at the 
OECD workshop on environmentally harmful subsidies, 7-8 November 2002, Paris. 
EN 25   EN Road transport 
A disaggregated perspective hi ghlights the disparities of the situation between types of 
vehicles and country, in par ticular due to strong dispariti es in registration or annual 
circulation taxes. HGVs are respons ible for the largest part of the wear and tear of roads. 
However, infrastructure wear and tears are no t properly reflected in circulation tax.. More 
specifically, passenger cars users are already la rgely paying for the costs of using their 
vehicle (including fixed infras tructure costs) which is no t the case of other types of 
vehicles, notably trucks or motorcycles.  
Graph 2.1: Level of internalisation in  road transport (equity approach) 
Level of Internalisation - Road Transport (passenger) - 2005
0,000,200,400,600,801,001,201,401,601,80
AT BE CZ DE DK EL ES FI FR HU IE IT LU NL PL PT SE SI UK EU25 EU15 EU12Index Level of Internalisati o
Car
Motorcycles
Moped
Source: REFIT 
 
Graph 2.2: Level of internalisation in r oad freight transport (equity approach) 
Level of Internalisation - Road Transport (freight) - 2005
0,000,501,001,502,002,50
AT BE CZ DE DK EL ES FI FR HU IE IT LU NL PL PT SE SI UK EU25 EU15 EU12Index of level of internalisationHDT 1
HDT 2
HDT 3
HDT 4
LDT
Source: REFIT 
HDT1: heavy duty truck 3.5-7.5t; HDT2: heavy duty truck 7.5-16t, HDT3: heavy duty truck 16-32t, HDT4: heavy duty truck > 32t
LDT: Light duty truck
 
EN 26   EN  
Other modes of transport 
The level of internalisation in freight railw ays is higher than in  passenger railways 
(probably due to subsidies in the field of pub lic service obligation). In aviation and inland 
navigation, the availability of da ta is less exhaustive and ther efore, these indexes should 
be considered as rough indications of the level of internalisation. 
Graph 2.3: Level of internalisation in rail transport (equity approach) 
Level of Internalisation - Rail Transport - 2005
0,000,200,400,600,801,001,20
AT BE CZ DE DK EL ES FI FR HU IE IT LU NL PL PT SE SI UK EU25 EU15 EU12Level of internalisationFreight Train
Passenger Train
Source: REFIT 
 
Graph 2.4: Level of internalisation in inland ship transport (equity approach) 
Lev el of Internalisation -Inland  ship  - 2005
0,750,800,850,900,951,001,05
AT BE CZ DE DK EL ES FI FR HU IE IT LU NL PL PT SE SI UK EU25 EU15 EU12Index on the level of internalisation
Source: REFIT  
EN 27   EN Graph 2.5: Level of internalisation in air transport (equity approach) 
Level of Internalisation -Air transport - 2005
0,750,800,850,900,951,00
AT BE CZ DE DK EL ES FI FR HU IE IT LU NL PL PT SE SI UK EU25 EU15 EU12Index on the level of internalisation
Source: REFIT  
2.2.3.2.  Efficiency approach 
The efficiency approach aims at establishi ng how variable user charges compare with 
variable external costs. Under this approach , only the variable co mponent of costs is 
provided. The advantage of the efficiency appr oach is to assess whether the tax/charge 
structure provides the right incentive as it should  be directly related to  the cost drivers.  
From an efficiency perspectiv e, the results of the IMPACT study show that the level of 
internalisation is not achieved, i.e. marginal  resources do not cover marginal costs. The 
analysis only covers road transport. Graph 1 in annex 8 shows the gap between marginal 
external costs and marginal user charges for truck 32 tons. In all Member states, charges 
and tolls are insufficient to cover external cost s. In other words, wh en an additional truck 
travels, it will pay a certain amount of charges/tolls linked to  the distance of trip, but in 
comparison, will generate additional extern al congestion, noise, air pollution and 
accident costs for which it will not pay entire ly. Charges and tolls fail to provide this 
message when decision is made to travel.  
In practice, calculations according to the e fficiency approach lack data at a more 
disaggregated level and as a consequence fail to capture the local dimension of external 
costs. However, differentiated charges help ta ke into account these variations across time 
and location. For example, table 2.1 displays th e lower level of intern alisation in in-built 
areas and in countries wher e no tolls are levied. Comp aring Italy and Germany at 
aggregate level shows that both corridors have  roughly the same leve l of internalisation. 
However, in Germany, total external costs show strong variations between built-up and 
non built-up areas while tolls do not show a ny difference in charging. This leads people 
from built-up areas to pay comparatively less for the nuisance they generate. By contrast, the Italian case shows that differentiation of charging between bot h areas (built-up and 
non built-up) induces a higher level of internalisation in built-up areas.  
EN 28   EN  
Table 2.1: Overview on costs per km (in Euro ct.) 
   HGV EURO III Toll  Total 
external 
costs  Infrastructure 
costs Total 
costs Cost 
coverage  
    €ct/km €ct/km €ct/km €ct/km  % 
IT Genova-Chiasso 16.0 11.5 18.1 29.6 54.7 
 Built-up 39.4 25.3 18.1 43.4 90.7 
 Non-built-up 12.5 9.5 18.1 27.6 45.2 
DE Basel-Venlo 12.0 12.7 7.4 20.1 59.7 
 Built-up 12.0 28.1 7.4 35.5 33.8 
 Non-built-up 12.0 12.3 7.4 19.7 60.9 
NL Venlo-Rotterdam port 1.2 10.6 10.3 20.9 5.7 
UK Felixstowe-Preston 2.6 8.5 17.1 25.6 10.1 
  Average 6.8 9.2 10.2 19.4 35.0 
* Source: IMPACT Study. All costs are calculated for a EURO III HGV. Total external costs include air 
pollution, noise and congestion costs. Infrastructure co sts are average variable infrastructure costs and 
exclude construction costs.  
EN 29   EN 2.2.4.  What can be concluded fr om the existing situation? 
Heterogeneity of internalisation across Member States and modes of transport 
- Existing charges and taxes are far fr om homogeneous across Member States  (except 
minimum fuel tax where there is a Europ ean framework). This situation might be 
justified as the level of infrastructure costs and external costs varies across regions, depending on the density of traffic and also  on the density of popul ation. However, this 
diversity does not reflect the various situations, but the exte nt to which countries tackle 
external costs. Such a variety may give rise to distortions of competition in road transport 
since the road transport market is open to competition at EU level and half of the international road haulage market is  operated by non regist ered hauliers.  
- Existing charges are not homoge neous within Member States
. The variety of situation 
also exists within Member States. For exam ple, a typical HGV from Hamburg to Bilbao 
pays a toll of around 15 ct/km to use the German primary roads and the concession 
motorways in France and Spain and pays a daily vignette of 8 € (2-6 ct/km) to cross the Benelux. However, when this truck crosses the Paris area it generates considerably 
higher external costs but pays  no usage charge at all.  
- Existing instruments are not homogeneous across vehicles and modes of transport
. User 
charge, tax exemptions on fuel use, emissions  trading scheme and fuel taxes lead to a 
variety of situation between  modes of transport which might compete on certain 
segments or routes. In the road sector, the situation differs between categories of 
vehicles. Graphs 2.1 and 2.2 show that, from  an account/equity approach, the level of 
internalisation is higher in pr ivate cars than in trucks.  
The market signal given by existing charges and taxes could be improved 
- Existing charges are user pays instrume nts which primarily aim at recovering 
infrastructure costs. Except minor variati ons according to vehicle types under revenue 
neutrality constraints as far as HGVs are c oncerned or environmental charges in Swedish 
harbour, current user charges rarely address external costs. Few Member States apply 
differentiated charges to take  external co sts into account , also because the Community 
legislation limits them in doing so. The effi ciency approach shows that vehicles do not 
have the right incentive when travelling. Charge s fail to reflect the a dditional social costs 
generated by one trip.  
- Existing levies do not relate to the key cost  drivers of external costs which make them 
quite inefficient because they are unable to capture the variations of time and location. 
However, they are already borne by transport users and may induce some changes in behaviour. Existing levies or subsidies should be considered when implementing 
internalisation of external cost s in order to avoid double charging.  
- By contrast, fuel taxes are directly related to fuel consumption, which is the cost driver 
of CO 2 emissions. This makes this instrument the most appropriate to internalise the cost 
of CO 2 emissions. Independently of other objectiv es that fuel taxes pursue, the minimum 
level of excise duties correspond to a shadow price of 159 euros per ton of CO 2 for petrol 
(see box 4). 
EN 30   EN Box 4: CO2 emissions and fuel tax 
CO2 emission is related to fuel consumption. Therefore, increasing th e price of fuel may 
induce a change of behaviour from consumer s when they purchase a vehicle and to a 
smaller extent a change in the way they use it. 
For many years, fuel taxes have increased in Europe, making them the first private 
expenditures of transport users (mainly ro ad transport as some other modes are 
exempted). Taking into account the minimum ex cise duties as fores een in the Directive 
2003/96/EC on energy taxation and the CO2 cont ent of fuel, the shadow price of CO2 
could be estimated to 159 euros per ton fo r petrol and 115 euros per ton for diesel. 
Despite this level of taxati on, CO2 emissions are the only nu isances that have not been 
reduced over the past years in particular in air and road transport. This is however not 
surprising since traffic in these modes has risen more than CO2 and is very much linked 
to the economic growth and to the (limited) development and availability of alternative 
modes of transport which are less CO2 intensive and provide the same utility for 
transport user. The effectiveness of fuel taxes – and of internalisation measures in general 
– in curbing the growth of road emissions is doubtful to the extent that they have a low 
capacity to influence the demand of transport in the short run. This is not to say that this 
instrument has not been effectiv e at all. Compared to the US where fuel taxation is much 
lower, European cars display higher perfor mance in fuel efficiency (ICCP, 2007). Some 
recent studies highlight the increase in car dependency and ther efore the very low 
elasticity of demand. Short run pr ice elasticities (within 1 year ) had been assessed to be 
around -0.25 (Goodwyn (2002)) but recent eviden ces found that these elasticities could 
drop to about -0.04 between 2000 and 2006. Thes e studies refer to the US market. 
However, they could also confirm the low short term impact of fuel taxes on CO2 
emissions. In a longer term, fuel consumption is more sensitive to prices. Long run 
elasticities (5 years) are estimat ed to be around -0.6 (Goodwyn, (2002). 
Therefore, the use of other in struments such as regulation, st andard settings  or trade of 
emission permits cannot be ignored. 
In conclusion, although there is some eviden ce that some degree of  internalisation of 
external costs is already in place, transport user s do not bear all these costs or they pay in 
ways not related to external costs. In most cases, governme nt measures are fragmented 
and do not tackle explicitly these market failu res. The problem is that the structure of 
existing levies does not give a price signal efficient enough to influence the mobility behaviour.   
2.3. Why and how to implement the internalis ation of external costs in the road 
freight transport sector? 
The sections below will discuss about chargi ng HGV and explore in more details few of 
the concrete implementation issues raised by charging external co sts for trucks. These 
issues may impact the ways of these questi ons should be tackled in  the review of the 
Directive. 
EN 31   EN 2.3.1.  Why charging HGV? 
As mentioned above, road transport accounts  for more than 90% of external costs25. 
Given the forecast for a continued steady growth  of road freight transport (estimated at 
more than 50% between 2000 and 2020) these ne gative impacts are likely to increase. 
The specific features of road freight transport make them more sensitive to prices. It has 
to be pointed out that taking into consider ation all the existing taxes and charges the 
current average degree of internalisation is substantially lower for trucks than for cars 
(see 2.2.3.1). Compared to private motorists, commercial road haulag e operators respond 
more efficiently to price signals due to thei r capacity to plan the route in advance and 
make rational decisions about how to optimise their operating costs. In this respect the 
incidence of occasional and unplanned use s eems lower for HGV. In addition, more than 
one quarter of trucks regularly  crosses internal borders in the EU which raises the issue 
of internal market (see below). In contrast, as studied in the GRAC E project, drivers of 
passenger are less likely to adapt in the short term their behaviour to complex changes in 
prices as they do not perceive their ve hicle operating costs accurately and usually 
underestimate trip dist ances to start with. 
The initial conditions for inte rnalisation seem to be in place for HGVs. Tolling systems 
are more widely implemented for heavy goods vehicles than for passenger cars and as a 
result the tolling technology used to charge trucks is more mature. Pursuant to the 
Directive 1999/62/EC a number of Member St ates have already in troduced electronic 
tolling systems to recover from heavy goods ve hicles the infrastructu re costs related to 
the use of certain infrastructures. Data pr otection and privacy i ssues which may be a 
potential obstacle to implement road pricing for cars are also considered less severe for 
truck as demonstrated by the wide spr ead use of on-board computers and fleet 
management applications in the road haul age sector. As an example, Germany has 
already gained practical experience on the use of electronic devices to implement 
internalisation schemes.  
Of course there would be a dditional benefits if other ve hicles including passenger cars 
would also be charged, but th e additional complexities and public acceptance issues may 
justify a stepwise approach st arting with heavy goods vehicl es. National strategies to 
develop road pricing based in a first step on electronic tolling systems for trucks make 
therefore sense from both an economic poi nt of view, technology point of view and 
probably from a public acceptability point of view.  
When defining a strategy at EU level, subsidia rity considerations need to be taken into 
account. National and local au thorities are better placed to decide on ways of 
implementing road pricing for cars provided that general Treaty principles like non 
discrimination on the basis of the nationality  are respected. Conversely for road freight 
transport, which includes an important a nd growing international transport segment 
playing an important role in the internal mark et, the questions appear to be mainly which 
actions can be relevant both to encourage an efficient pricing and to maintain a smooth 
functioning of the internal market. The review of the Directive 1999/62/EC should 
therefore seek to tack le these questions.  
                                                 
25 See footnote 19 
EN 32   EN 2.3.2.  The base and differentiation of variations of charges: limits posed by 
information and transaction cost 
The difficulty of the identific ation of external costs in all times and places imposes a 
trade-off between the level of differentiati on and the cost and feasibility of its 
implementation. In theory, an in ternalisation charge should be  levied on the aspect(s) of 
transport decisions that drive the externalit y being addressed, and hence vary with the 
size of the eternality. In practice, however , externalities and their drivers cannot be 
perfectly determined or mon itored, and charges cannot be set accurately and without 
transaction costs on the driver of the externality. These inform ation and cost issues have 
informed the shape of existing internalisat ion charge schemes which only approximate 
(more or less precisely) the theoretically prescribed charges and charge levels.  
A first important type of differentiation is per vehicle type. Current  truck usage charges 
vary in general according to the weight per axle to better approximate infrastructure 
damages. The Directive adopted in 1999 introdu ced the possibility to vary tolls according 
to the environmental performance up to 50% , the amending Directive adopted in 2006 
widened this possibility by allowing a higher variation of up to 100%. This possibility has been used in Germany and Czech Republic which introduced differentiated rates according to a simple Euro classification for using their network wide toll system. This 
possibility has however not been used in th e Member States with tolls on individual 
sections or small network (usually con cession tolls). Toll operators wishing to 
differentiate the rates according to vehicle types have to design a classification which 
reflects the various costs, infrastructure, air pollution and noise costs mainly and at the 
same time a classification which is enforceab le, i-e which allows an automatic or easy 
vehicle identification by toll managers and by road enforcers.  To be effective in sending 
price signals understood by th e EU freight transport opera tors and indirectly the 
manufacturing industry, such classificati on should be kept simple and preferably 
harmonised at EU level.  
Another type of differentiation is according to the type of roads and the areas which are 
crossed as external costs in in-built areas are significantly higher th an in other areas due 
notably to the higher population exposed to tr affic air pollution and noise. Most external 
costs estimates suggest a rather simple differentiation between agglomeration, urban 
roads, and other roads. The toll rates s hould therefore be set according to such 
classifications. As to congestion, the issue is more complex as it requires a differentiation according to time and theoretically a rather disaggregated approach to calculate the 
charge segment per segment. A simple time variation distinguishing peak, off-peak 
should be a minimum common requirement  to justify a congestion charge.  
Overall it should be remembered  that variation of tolls are already allowed by the current 
Directive but at the condition that revenu es remain constant to reflect only the 
infrastructure costs. Section 2.2.2.1 has already described the main reasons why 
variations are in general not applied. Such va riation is relatively complex to manage for 
tolling operators and particularly when regul ar adjustments of the charge structure are 
required to keep the revenues constant. The additional revenues raised by charging external costs could give the possibility to reimburse toll or infrastructure operators for 
the additional costs incurred due to the in creased complexity created by variation of 
rates. In addition, by promoting the use of in teroperable electronic tolling systems, the 
control and enforcement issue would also be effectively addressed.  
EN 33   EN 2.3.3.  Setting the geographical scope: diversion of traffic and charging all roads or 
only motorways? 
Tolling motorways may divert traffi c to parallel roads with lower or no charge at all. This 
has a particularly negative impact when lo rries use secondary roads which are usually 
less safe than tolled motorways and which may cross areas more sensitive to pollution and noise (e.g. small towns). Such traffic di version is well known on roads parallel to 
concession motorways (e.g. between Zaragoz a and Barcelona), on roads in Alsace 
bordering the German tolled network or on se condary roads in Austria. There, when 
implementing charging, there is a need to see whether the diversion effect does not 
mitigate the effect of the measure.  
Additionally, unless charges ar e introduced simultaneously throughout the EU, there may 
be undesirable cross-border effects due to tr affic diversion from one Member State to 
another as road users try to avoid the use of tolled infrastructure. Although the causal 
relation is hardly measurable, Austria uses to  claim that the introduc tion of a high Swiss 
kilometre charge has generated traffic detours on its territory. At EU level the phasing-in of a truck kilometre charge  would require coordination mechanisms between Member 
States to prevent traffic diversion with undesi rable cross-border effects or to mitigate its 
effect.  
2.3.4.  Technology and interoperabili ty: implementation costs 
Levying user charge requires co ntrolling the access to the network in order to avoid free 
riders. Unlike other modes of transport, it ma y entail relatively high implementation costs 
and local environmental nuisances (e.g. queues at manual toll barriers at each entry/exit, visual intrusion of tollbooths). Advanced electronic toll systems can reduce these costs 
while avoiding obstacles to the free flow of traffic. The system implemented in Germany 
for heavy goods vehicles costs 20-22% of th e revenue levied with it (excluding 
enforcement) while in Austria, th e costs/revenues ratio is around 10-12%
26. The 
Netherlands have a target of 5% costs/revenues ratio for its future distance charging. The 
Swiss system has a lower ration of 6-8%. As it applies to the full network, it requires 
fewer facilities to control entry/exit points. Th e variety of electronic systems is also not 
fully interoperable in spite of Directive 2004/52/EC and users are currently obliged to 
subscribe to different systems and with differe nt operators for an international transport. 
Implementing an EU wide external cost ch arging system would require ensuring a full 
interoperability to both reduce high transac tion costs and gain higher acceptance by the 
road haulage industry. It should be noted that an important part of the toll operation costs 
are caused by the need to provide for adequa te facilities for occasional users, whose 
vehicles may not be equipped with  the required On Board Unit.  
2.3.5.  User orientation: acceptability and intelligibility of the system 
The implementation of a pricing scheme n eeds to take account of the needs of the 
targeted transport users in order to warrant it s effectiveness and fairness. Several research 
                                                 
26 Austria [Asfinag] has a DSRC-based toll for vehicle > 3,5 tonnes and toll stations or stickers for 
lighter vehicles. According to Autria,, costs/revenue ratios range between 10-12 %. Switzerland 
uses tacho/GPS/DSRC technologies and claims 6-8% costs/revenue ratio. All these figures include capital costs.  
EN 34   EN projects have analysed these aspects and have  derived conclusions on the conditions to be 
successful. More particularly, it appears that a pricing stra tegy should be complementary 
to other measures such as extending the po ssibility of choice of consumers by offering 
alternatives of transport and using the revenues in a transparent way27. As a result, 
earmarking of revenues to transport may increase the public acceptability.  
A fair and effective charge scheme should include the following elements:  - Link prices and external cost . The user should be able to understand the link between 
the charge and the (driver of the) externality. For instance , a congestion charge on road 
users at off-peak periods where there is no congestion will not be understood and 
accepted.  
- Transparency . The derivation of the charges must be sufficiently transparent so that 
the user can be confident no over-charging takes place. A similar transparency requirement seems to apply to the size of the revenues and where they are used for. The user must also be able to see the charge's unit rate(s) and the amount actually paid as this 
would allow making better informed choices. This again points to the need for an 
adequate communication. 
- Intelligibility . The scheme must not become ove rly complex. A much differentiated 
scheme is likely to approximate the marginal external costs more accurately but also risks 
to become unintelligible for many users and so hinder their effective response to the 
given price signal. Next to the implementation and operationa l costs, this suggests that 
the best internalisation scheme needs to ha ve a simpler structure than suggested by 
theory. It also points to the n eed to assist the users to learn and adapt when internalisation 
schemes are being implemented.  
- Transport alternatives . Both user acceptance and changes in transport decisions 
would be enhanced when there are transport a lternatives, such as di fferent routes to the 
destination or other transport modes. For ex amples, commuters may want to respond to 
congestion charges by going to work by metr o instead of by car or taking a less 
congested route respectively.  
It has also been argued that the revenues of  the internalisation charges would help to 
making the transport alternatives available (the  so-called "earmarking" of the revenues). 
This issue will be further discussed in sec tion 5.7. Some earmarking of the revenues to 
the transport sector may be required to obtain political acceptability.  
2.3.6.  Preserving the EU internal market : non discrimination and transparency 
International road freight traffic plays an impor tant role in the internal market. This role 
will become even more significant as the fo recast growth rate of international road 
freight transport is twice as high as that of  domestic road freight transport. Between 2000 
and 2020 international road freight tr affic volume is forecast to double.  
                                                
 
27 See C. Sikow-Magny, quoted in footnote 3. . Three Research Programmes deals with acceptability 
issues: AFFORD, PRILA and PATS.  
EN 35   EN The main thrust of the current Directive 1999/62 /EC is in fact to ensure that the charges 
set by Member States to recover the infr astructure costs are non-discriminatory 
proportional and therefore transparent. The same principle should apply when giving 
Member States the possibility to cover ex ternal costs. More specifically, mandatory 
checks and controls at Community intern al border should also be avoided.  
External cost charging should not discriminate between local  and international transit 
traffic as the damage caused by the individua l vehicle in a partic ular location does not 
depend on its destination. The same applies to  the issue of regular versus occasional 
users. Users should pay for the damage cause d by each individual trip and there should 
not be any “frequent polluter discounts”. Similarly the occas ional users should not be 
subject to higher charges although toll operato rs considering the higher implementation 
costs created by this category of users (see 2.3.4) may be tempted to charge them more. 
Non discrimination principles may also lead to measures to discourage national or local 
charging policies which are limited and targeted  exclusively at roads with international 
traffic.  
External cost charging shoul d also be proportional. Ther e is however a risk that 
infrastructure monopolies set charges at a leve l higher than what is justified. The charge 
setting should therefore be done by organisatio ns independent of those which collect and 
use the toll revenues. The conflict between local and general interest gi ves rise to the risk 
that some local or national authorities set excessive charges in those sections of infrastructure that bear heavy transit traffic with a view to extracting rents from users. 
Moreover the variability of external costs according to time and place gives rise to a 
rather complex pattern of information needs to calculate these costs. The lack of a 
common method to set the external cost charge  may lead to a situ ation of asymmetric 
information between Member States and between  infrastructure operators and users, in 
which possible abuses would be difficult to detect.  
2.4. What happens if nothing is done? 
Leaving the situation unchanged would mean th at transport would continue to generate 
nuisances that would not be bo rne by transport users. However,  this is not to say that 
nothing would be done as there are other inst ruments either in ex istence (e.g. vehicle 
taxes, Euro classes) or bei ng discussed at the EU institut ions (e.g. ETS for aviation, CO2 
and cars rules) to fight external costs. W ithout internalisation, transport price would 
continue to give a wrong signal to users who would not have enough incentives to use 
cleaner vehicles and avoid conge sted routes at peak times. 
2.4.1.  Incentives to internalise external costs 
As described above, the EU legislation does not  allow charging for external costs in road 
freight transport and allows it in railways subject to certai n conditions. Accordingly, the 
heterogeneity of charging across Member Stat es and across modes of  transport will be 
maintained and the use of price si gnals will be barely exploited. 
2.4.2.  External costs will c ontinue to increase 
The Community has already propos ed measures to reduce environmental emissions or to 
vary charging in sensitive zones. These actions are expected to reduce nuisances generated by transport. Some of these meas ures are approved but not yet implemented 
EN 36   EN while others are still unde r scrutiny (Commission proposals aiming at fighting CO2 
emissions from transport). These measures  will be assumed to be approved and not 
subject to appraisal here. Taking into  account existing and envisaged measures28, most 
external costs will continue to increase.  
Interestingly, air pollution trends show a sh arp decrease, at least till 2020. The decreasing 
trend is even stronger when taking into acc ount the impact of EURO VI (see graph 2.6). 
These trends do not include evolution in ma ritime transport and may thus underestimate 
the evolution of air pollution in  all modes of transport.  
By contrast, climate change costs displa y a high increase after 2020. However, the 
inclusion of air transport in ETS (referen ce scenario IMPACT, graph 2.6) has obviously a 
positive impact on the evolution of CO2 compared  to scenario which does not include it 
(Baseline of TREMOVE, graph 2.6). Here again, these projecti ons do not include 
maritime transport.  
Graph 2.6: Projections of climate change and air pollution costs  
Projections of BC* and IMPACT1* Climate Change and Air Pollution
0,0010,0020,0030,0040,0050,0060,0070,0080,0090,00
2000 2005 2010 2015 2020 2025 2030M€
BC- Climate Change
IM PACT1-Climate change
BC/IM PACT1-Air pollution
BC/IMPACT1 + Euro VI-Air pollution
* BC: Reference scenario of TREMOVE. IMPACT1: Reference scenario of IMPACT
** Maritime not included. Well to tank emissions excluded 
Source: TREMOVE baseline and IMPACT baseline 
The increase in transport traffic will lead to an increase of noise and accident costs.  
                                                 
28 The reference scenario of this impact assessment will include these measures (see part 4 for the 
full description of the policy option “no new action”). However, the proposal to reduce air 
pollution for EURO VI has not been included in th e reference scenario as the impacts were not yet 
analysed when defining the current reference scen ario (see part 4). Gra ph 2.6 shows the positive 
impact on air pollution when including this proposal. Another possibility would have been to take 
a “business as usual” scenario as it is the case in the pre-existing TREMOVE baseline derived from the 2005 ASSESS study. Compared to the reference scenario of the current impact 
assessment, the TREMOVE scenario displays less positive trends regarding environmental 
external costs, in particular climate change costs which is the externality addressed by the measures in the pipeline. 
EN 37   EN Graph 2.7: Projections of accident and noise costs 
Evolution Mar ginal external costs Noise and Accidents 
Road transport (€2000)
020.00040.00060.00080.000100.000120.000
2000 2005 2010 2020M€
05.00010.00015.00020.00025.000M€
Accidents
Noise
Source: IM PACT 
Source: IMPACT 
Projections also show that congestion will not improve. Graph 2.8 shows projections of 
congestion in morning peak in 2020. It provide s the ratio between average speed and free 
speed. The lower the ratio becomes, the higher the congestion is. The map below identifies bottlenecks in some parts – UK, BE, NL
29.  
Graph 2.8: Evolution of interu rban congestion in Europe 
 
Source: TRANSTOOLS  
                                                 
29 TRANSTOOLS projections. Another way of presenting congestion has been to compare the share 
of driving below free speed with the total driving time. Following this approach, it appears that 28.6% of EU27 network will be congested in 2020.  
EN 38   EN 2.4.3.  The level of internalisation will not improve 
The level of internalisation will not im prove if no new actions are taken. Annex 7 
provides the evolution of the level of internal isation (equity approach ) in road transport 
and other modes and it clearly appears that th e situation will not improve. As a result, 
external costs will increase following the foreseen increase in transport volumes.  
2.4.4.  Who is affected 
Transport users and society at large will be affe cted as the level of internalisation will not 
be improved and external costs will continue to increase. Densely populated areas with 
dense interurban networks and sensitive zones will be mostly affected. Low-income classes are likely to suffer the most since they tend to inhabit the areas where 
externalities (congestion, air pollu tion, noise) are more severe.  
2.5. EU right to act 
The internalisation of external costs cont ributes to achieving th e objectives of the 
Common Transport Policy set out in  article 71 of the Treaty.  
The internalisation of external costs is a wa y to apply the “polluter-pays” principle as it 
has been requested by the Eur opean Parliament. The “pollute r-pays principle” is treaty-
based: article 174 of the Treaty states that, “en vironmental damage shoul d as a priority be 
rectified at source” and that  “the polluter should pay” . The Directive on charging HGV 
and the Railways directive also provide the pos sibility for Member States to apply the 
“user pay” principle in recoveri ng the cost of infrastructure.  
Box 4: Polluter Pays Principle and Cheapest Cost Avoider Principle 
During the public consultation, some stak eholders mentioned that any policy on 
internalisation of external costs should be based on the "cheapest cost avoider principle" 
rather than on the polluter pays  principle. Such an approach  consists in taking into 
account possible action from pollutees as well as from polluters when defining a strategy 
to internalise external costs.  
The cheapest cost avoider principle has been inspired by the economis t R. Coase, who, in 
his article of 1960, highlighted the reciprocal nature of the externality problem. A 
possible interpretation is that there can be circumstances in which the cost to society of 
abating externalities can only be minimised if  responsibility for actio n is placed on the 
party which could prevent the nuisance at the lo west cost. Crucial to this result is the 
presence of sufficiently high transaction costs.  
The EU Treaty establishes the "polluter pays principle" for environmental externalities, 
which amounts to entitling the ci tizens with the right to a proper environment (clean air, 
silence, etc) and which is closer to the Pigouvian principle according to which the 
polluter that generates the nuisance should bear  the costs of the effects he imposes on 
others. This principle has been acknowledged as the pr inciple of action of EU 
sustainability policy. While the polluter pa ys principle always puts the burden of 
adjustment on the polluter side, it is not opposed to a negotiated settlement that could 
reduce the overall cost to society. However, it mu st be said that transport externalities are 
generally so diffuse that the transaction cost s to reach an agreement would be very high 
EN 39   EN due the number of possible participants (tra nsport users and the affected population). On 
the other hand, technical solutions would generally be chea per if applied to the polluter 
side than to the exposed populat ion which is very large in cas e of air pollution, accidents 
and noise and even more so in the case of climate change. Accordingly, in the case of 
transport externalities, it is to be expected that the Polluter Pays Principle and Cheapest 
Cost Avoider Principle would lead to the same result. In the case of congestion the 
distinction is not relevant sinc e the same category of actors that generate the externality, 
suffer from its consequences. It should also  be stressed that th e Pigouvian tax leaves 
incentives to the pollutees to take private ac tions to avoid the externalities, but at an 
efficient level.  
The Community has to ensure the proper f unctioning of the internal market and the 
absence of distortions of competition between  transport undertakings in the Member 
States. The current situation as regards taxati on and charging in transport reflects a wide 
variety between Member States approach an d between different modes of transport. 
Charging for external costs may also make mo re difficult the control of possible abuses 
by setting charges at a dispropor tionate level or in an arb itrary manner, which would be 
incompatible with the general treaty principl es, notably its Articles 23 to 31 and with the 
Common Transport Policy (article 79 on non discrimination on national grounds). 
Harmonisation should continue as it has starte d with a number of directives on taxation 
and infrastructure charging (Directive 2003/96/EC (energy taxation), Directive 
2006/38/EC (road), Direc tive 2001/14/EC (rail)30).  
As mentioned above, the EU legislation does not  allow, in most cases, to charge heavy 
duty vehicles for external costs while it allows  infrastructure manage rs to charge railways 
undertakings for external costs under limited conditions  (no extra revenues for 
infrastructure managers unless there is sim ilar charging in competing modes). Obviously, 
as long as the EU legislation does not explicitly authorize ch arging road freight transport 
for external costs, Member States can not in itiate the reforms of charges structure which 
would be required to internalise ex ternal costs in land transport.  
3. OBJECTIVES  
3.1. General and specific objectives 
The general objective for the EU is to “ to ensure that our transport systems meet 
society’s economic, social and environmenta l needs whilst minimising their undesirable 
impacts on the economy, society and the environment31“. 
However, this impact assessment is only concern ed with a specific objective of the 
Commission which, following the precise reque st of the legislator, is to propose a 
strategy to internalise external costs generated by transport . By internalising external 
costs, transport prices are exp ected to give the right signal to  transport users, to improve 
                                                 
30 COM(2007)52 Proposal for a Council Directive amending Directive 2003/96/EC as regards the 
adjustment of special tax arrangements for gas oil used as motor fuel for commercial purposes and 
the coordination of taxation of unleaded petrol and gas oil used as motor fuel. 
31 Council European Union. June 2006. Renewed EU Sustainable Development Strategy. 
http://ec.europa.eu/sustainable/docs/renewed_eu_sds_en.pdf. 
EN 40   EN the efficiency of infrastructure use and cont ribute to reducing negative externalities such 
as congestion, accidents and environmental emissions. This objective should not hamper the competitiveness of the economy and shoul d avoid any undue burden on transport.  
This objective would ensure consistency with ot her transport policies, but also with other 
Community policies. For many years, th e Commission has been advocating the 
internalisation of external tr ansport costs through fair a nd efficient pricing. The Green 
Paper published in 1995 opened the debate wh ile the White Paper in 1998 outlined an 
initial strategy for transport infrastructure  charging. The White Paper of 2001 on the EU 
general transport policy and its mid-term review in 2006 conf irmed the need to 
implement fair and efficient pricing.  
The internalisation of external costs is also consistent with the EU agenda by contributing 
to improving efficiency (Lisbon Agenda) an d sustainability (Sustainable Development 
Strategy). More specifically, the Integrated Gu idelines 16 of the Growth and Jobs agenda 
recommends to " consider the case for appropriate infrastructure - pricing systems to 
ensure the efficient use of  infrastructures and the development of a sustainable modal 
balance, emphasizing technology shift and innovation and taking due account of 
environmental costs and the impact on growth "
32.  
3.2. Operational objectives 
As already mentioned, EU legi slation does not authorise Memb er States to levy directly 
from heavy goods vehicles external costs wh ile it allows infrastructure managers to 
charge railways undertakings for external costs under limited conditions. Nor does it 
provide incentives to Member State to vary  the charges according to location and time 
and deal with charges on roads other than the trans-European network. Accordingly, 
there is a need to revise EU legislation to unlock the possibilities left to Member States 
for internalising external costs and to ensure  consistency in the way external costs are 
treated.  
The following operational objectives are therefore to: 
– propose a stepwise strategy to promote the in ternalisation of external costs for all 
modes of transport, creating incentives for users to make efficient use of transport 
infrastructure.  
– as a first step, and taking into account the fact that a proposal for introducing an ETS 
in air transport has already been formulat ed enable and encourage Member State to 
implement in a consistent way on motorw ays and other roads efficient road usage 
charges leading to a more sustainable mob ility. This would lead to the revision of 
Directive 1999/62/EC.  
4. POLICY OPTIONS  
Policy options will envisage the use of di fferent market based instruments for each 
external cost and different spans or combinations of external costs.  
                                                 
32 COM(2007)804. Proposal for a Community Lisbon Programme 2008-2010. 
EN 41   EN 4.1. Preliminary remarks: sele ction of policy options 
4.1.1.  Taking into account the various dimensions of internalisation 
When defining a strategy to internalise extern al costs, several dimensions have to be 
considered.  
- Which external costs? : As explained in box 2, transpor t activities generate different 
types of externalities linked to the provision a nd the use of infrastructure. There are some 
generally recognised externali ties caused by the use of infrastructure – CO2 emissions, 
air pollution and noise. Conges tion and accidents are also exte rnalities, but the "victims" 
are other transport users ("club " effects). Other external costs are sometimes referred to, 
such as space occupancy, landscape, security of supply or biodiversity. 
- Which modes of transport?  The Commission had a clear manda te to tackle all modes of 
transport – road, rail, air, waterborne. But the various ex ternalities have different 
relevance across modes and it may not be oppor tune to tackle all externalities in all 
modes.  
- Which economic instruments?  As discussed in box 2, internalisation can be 
implemented with taxation, user charges or  trading systems. The most appropriate 
instrument needs to be selected depending on the externality and the mode of transport.  
- EU level of intervention  Given the local nature of exte rnal costs, policy action can be 
better tackled at local or national level. However, mobility of goods and persons across 
Europe is a key principle and the Community level may be the appropriate level for policy action when defining common char ging principles in  Member States. 
On this basis, the public consultation
33 sought comments on the po ssible use of different 
economic instruments for each external cost , i.e. congestion, accidents, noise, air 
pollution and climate change and for each mode of transport, i.e. road, rail, aviation, maritime and inland waterway. 42 individual  options were submitted to public 
consultation (see table 1 annex 9).  
4.1.2.  Determination of policy options 
Selecting dimensions 
The determination of policy op tions with respect to the various dimensions of the 
problem has been done on the basis of the prescriptions of the economic literature 
(summarised in the Handbook) and the opinion of stakeholders. Selected combinations of 
policy options have then been tested thr ough economic modelling in order to provide 
additional indications on their possible joint implementation. 
                                                
 
33 See consultation paper (footnote 19 and 20) at  
http://ec.europa.eu/transport/c osts/consultations/index_en.htm .  
EN 42   EN External costs:  the current impact assessment focu ses on external costs which are 
related to the use of infrastructure.  According to research and studies34, congestion, air 
pollution, noise and accidents account for a large share of extern al costs (excluding 
infrastructure costs). The share of climate change costs is lower, but relies heavily on the assumptions made on its calculations
35. These findings have been corroborated by 
preliminary results using the TREMOVE model.  The total marginal external cost of 
climate change, air pollution, noise and accident s for all modes in the EU-19 in 2010 are 
estimated at 158 billion Euros. (excluding co ngestion cost and the cost of maritime 
shipping and intercontinental aviation)36. Accidents account for mo re than half of these 
costs; air pollution account for one fifth and climate change and noise respectively for 14 
and 11%.  
The present analysis covers congestion, accidents, air polluti on, noise and climate change 
costs. While different studies may change the relative weight of these externalities between each other, they are generally accepted as the most important transport external costs. Other external costs such as land fr agmentation and visual intrusion are more 
related to the provision of infrastructure than to its use and are as such controlled at project appraisal level. Howeve r, although accidents are part of the current analysis, the 
internalisation of these extern al costs has not been considered in the policy options for 
the reasons described below.  
Transport mode
: All the larger motorised transport modes are being examined but not 
all the five external costs are relevant for all of them.  Accidents have not been considered 
in non road transport as these costs are very  low in aviation, rail and almost zero in 
maritime and inland waterways. Air pollution and climate change costs have been analysed for all modes. Congestion is percei ved by stakeholders as an important nuisance 
only in road transport. Moreover, congestion charging is already foreseen in the current 
railways legislation 2001/14/EC. In air tran sport, the European Commission has adopted 
a Communication on the a pplication of the slot  allocation Regulation
37 which clarifies a 
number of issues in order to ensure a bette r implementation of the existing rules and to 
improve the efficient use of scarce capacity  at congested Community airports. In 
maritime, ports don't operate at full capacity38 and when congestion is a problem, it is to 
some extent dealt through planning and por t charges. Accordingly, in the present 
document, congestion is analysed only for road transport. 
                                                 
34 UNITE – Unification of accounts and marginal costs for Transport Efficiency. November 2003. 
Project funded by 5th Framework – Transport RTD. INFRAS. External costs of transport. October 
2004. 
35 The share of climate change costs vary between 4% to 28% depending on the assumptions on the 
shadow price of CO2. Climate change costs have been estimated with a high reduction targets (-
50% between 1990 and 2030). UNITE's shadow value is €20 euros per tonne CO2. The INFRAS 
study use a range of shadow value from €20 to €135 euros per tonne CO2. 
36 The TREMOVE results of scenario 1 also provi de data on the summarized marginal external 
costs, based on the estimates made in the handbook. These sums can not be interpreted as total 
external costs, because of the difference betw een marginal and average external costs (in 
particular for noise, accidents and congestion costs).  
37 COM(2008)X.  
38 COMPETE (2006). Analysis of the Contribution of  transport policies to the competitiveness of 
the EU economy and comparison with the United States.  
EN 43   EN Economic instruments: The choice of economic instrument s is dictated by the nature of 
the externality. Air pollution and noise costs are heavily related to the type and 
characteristics of the vehicle use and the lo cation and time of the day. Congestion is also 
dependent on the location and time of the da y. Accordingly, these externalities require 
differentiated charges in order to provide in centives to change behaviour (more silent 
vehicles, less polluting vehicles, change of dr iving style, postpone or cancel travel). By 
contrast, CO2 emissions are related to fuel consumption and a simpler economic 
instrument, such as fuel taxes can provide the right signal to user s (see box 4 in section 
2). When fuel tax is not possi ble, emission permits can be another way to internalise.  
EU level of internalisation:  In general, stakeholders favou r an action at EU level, but 
many respondents also stressed the need to ta ke into account the local character of some 
nuisances (for example congestion or accidents). As a result, th e EU should play a role of 
enabler by providing a common framework wh ile tackling global nuisances such as 
climate change. For these reasons, the role  of the EU should be different and its 
implication should vary from providing a common framework to establishing more 
binding rules. 
Internalisation of exte rnal accident costs  
It is widely acknowledged that accidents acco unt for an important share of total external 
costs. In principle, accident costs causing real financial flows are covered by insurances. 
However, a large part of the costs associat ed with accidents ar e non financial and are 
often not yet covered by insurances.  
A differentiate kilometre charge system c ould be implemented, but would hardly meet 
costs drivers. Accident costs drivers are very complex and rely on parameters like 
location, time and vehicle type, but they are also related to driver characteristics and 
accidents history. These factors may materializ e in different kinds of behaviour as to 
speed, alcohol driving, use of seat belts and other risk factors rela tively independent from 
the distance travelled and which are ot herwise subject to regulation and police 
enforcement. To take into consideration all of these aspects is co mplex and may be hard 
to implement because of privacy reasons. As a result, internalisation of accident costs is 
not easy. An alternative would be to charge  the insurance company a lump sum at the 
level of the estimated external costs for each accident as they have detailed information 
on cost drivers and differences  in the risk rates between drivers. Insurance companies 
would be able to pass on these costs to driv ers and to differentiate these costs according 
to the characteristics of drivers. 
The results of the public consultation displa y a strong support to an  internalisation of 
external accidents costs thr ough liability insurances (see  annex 1). However, such a 
system would be complex to elaborate as insurance companies would be faced with 
increased uncertainties. Moreover, it would be  even more difficult to design at EU level 
given the diversity of insu rance systems in Europe.  
For these reasons – complexity and subsidia rity – external accid ent costs have been 
discarded from the analysis. 
EN 44   EN Use of economic modelling to identify policy options 
Because of the strong interaction betw een transport modes and between various 
externalities, it is desirable to test the join t implementation of polic y choices with respect 
to the various aspects of in ternalisation. Since the number of the possible combinations 
of policy actions is very large, a few scen arios that bundle together selected uses of 
policy instruments have been developed and tested with modelling tools.  
Because of modelling resource constraints only  6 combinations were tested. These are 
the ones that were considered more realistic and operational. An additional scenario had been tested, but has been excluded at an early stage (see below section 4.1.3). 
4.1.3.  Exclusion of policy option "Integrated approach of inte rnalisation according to 
the principle of social marginal costs pricing" 
A possible approach would be to charge for al l external costs in all modes of transport 
applying social marginal cost pricing. This approach would allow the internalisation of 
all external costs, i.e. congestion, accident s and environmental costs in all modes of 
transport, freight and passengers, including private cars. In addi tion, the approach 
represented in this scenario would be based on applying th e concept of marginal costs 
pricing as strictly as possible. As a conseque nce, marginal infrastructure costs would be 
charged on all roads, replacing all existing charges, including infrastructure charges on 
the sections currently tolled.  
Finally, this scenario would not only consider  that existing fuel tax already internalise 
CO2 in road freight transport, but also take  into account – within  the limits of tax 
legislation – the excess with re spect to an estimated CO2 price. Accordingly, road fuel 
taxes would be lowered to minimum. ETS in  air transport would be considered as 
internalising CO2 emissions. Fuel tax/ETS woul d be applied in other mode of transport, 
i.e. maritime, IWW, railways. 
Although attractive, this scenario has been dropped for the following reasons: 
- Political feasibility
: 
Charging marginal infrastructure costs can not be sufficient to allow cost recovery of 
infrastructure construction costs. This would go against the existing EU legislation in the 
road freight transport (Directive 1999/62/CE) and would require an extensive revision of 
this Directive which would go far beyond the request of the EU legislator.  
In addition, the inclusion of a decrease in fu el taxes to minimum in road transport would 
be difficult to implement as Member States are free to use fiscal charges provided they respect the minima set by the EU legislation. 
- Lack of sustainability of transport
 
Moreover, preliminary modelling results show that the decrease in fuel tax in road 
transport contribute to increasing traffic, wh ich generates an increase in external costs 
(air pollution and CO2) and fatalities. M obility is improved at the expense of 
sustainability which goes agains t the objective set by the EU.  
EN 45   EN For these reasons, this strict marginal cost scenario has been discarded as the results 
reflect a trade off between higher mobility, and less sustainability.  
In conclusion, the policy options suggested  below take into account the practical 
implementation of internalisati on and its political and practic al feasibility. They propose 
alternative strategies of internalisation by combining differently: 
– the scope of modes of transport taking into account their freight or passenger transport 
activities,  
– a variable span of external costs (envir onmental costs excluding climate change, all 
environmental costs, congestion),  
– the use of different economic instruments (charges, taxes or emission trading),  
– and the extent to which policy instruments should bind Member States or just enable 
them to internalise external cost. 
4.2. Scenario 1: No new actions 
The reference scenario (No new actions) does not consider any new proposal to ensure 
the internalisation of external costs, but takes into account the forthcoming measures aimed at reducing environmental nuisances. These relate mostly to climate change 
external costs; they are not part of a comp rehensive strategy for internalisation and do not 
cover all modes of transport.  
The reference scenario includes, notabl y, the following proposed measures by the 
Commission: 
– The proposal for a binding fuel efficien cy target for new passenger cars (130 CO2 
g/km target + 10% biofuel target), which largely repl aces the pre-existing voluntary 
agreement. 
– The proposal
39 to include aviation in the EU emission trading schemes (ETS), which 
would allow airlines to purch ase allowances for all emissi ons of aircraft above the 
historic emission levels of 2004-2006. 
– The proposal on the harmonisation of commercial diesel40, which aims at reducing 
distortions of competition and environmental damage in the transport haulage by reducing fuel tank tourism. 
– The passengers' car taxation. According to this proposal
41 by 2008, at least 25% of the 
total revenue from annual circ ulation taxes and registratio n taxes shall come from a 
carbon-dioxide based element in the tax stru cture. This share should be 50% by 2012. 
By 2016, it is proposed that all regi stration taxes should be abolished. 
                                                 
39 COM(2006) 818 
40 COM(2007)52 
41 COM(2005)261 
EN 46   EN As mentioned in part 2, this reference scen ario assumes that all these measures will be 
implemented. Compared to the baseline scenario of TREMOVE, it incorporates additional measures and shows a more favourable  evolution of CO2 costs. It is therefore 
more optimistic as it considers that various  measures proposed by the Commission to 
fight CO2 from transport are already in pl ace; these measures are not subject to 
assessment in this document. As the referenc e scenario assumes a certain reduction of 
CO2 emissions, the calculations of impact c ould be larger if such measures were not 
implemented.  
By contrast, it should be noted  that the reference scenario does not include the proposal 
for further reducing emissi on limits for HGV (Euro VI)
42. Such a proposal help reduce 
air pollution emission. Therefore, impacts of ch arging air pollution in the current analysis 
could be lower if such a proposal was im plemented following the rythm of market 
penetration of the new trucks from 2013 on.  
4.3. Scenarios 2: Efficient chargi ng of heavy goods vehicles  
The analysis in the second pa rt of this impact assessmen t shows that road transport 
accounts for the very large majority of external costs. Within road tr ansport, the level of 
internalisation is lower for heavy goods vehicles than for cars.  
Road transport is regulated at EU level in the field of heavy goods vehicles by a 
legislation whose initial main aim was to avoi d distortions within the internal market by 
disproportional and discriminatory charges.  
This set of scenarios analys es charging only heavy goods vehi cles in the framework of 
the EU legislation. It would en sure that external costs can be charge d in road freight 
transport and focus on a modification of Di rective 1999/62/EC. As me ntioned before, the 
Directive provides a framework on infrastructu re charging. With resp ect to the current 
situation, Member States would be allowed to  charge for external costs on top of their 
current charges.  
The framework for the possible charging of external costs would be extended beyond the 
Trans-European networks (TENs) in order to  avoid inconsistent pricing which may lead 
to traffic diversion and impediments to the inte rnal market. This enta ils a change of scope 
of the current Directive, whic h only applies to TEN roads. 
Three main variants are envisaged: 2.A. Charging for air pollution and noise whil e considering CO2 internalised through 
existing fuel taxes  
A road user charge for air po llution and noise would be levied  for all Member States. It 
would add to the current infrastructure tolls wh ere they exist. The charge would be set at 
recognised median values of air pollution a nd noise costs generated by lorries and would 
                                                 
42 Impact Assessment of the Proposal for a Regulation on the approximation of the laws of the 
Member States with respect to emissions from  on-road heavy duty ve hicles and on access to 
vehicle repair information. SEC(2007)1718. 
EN 47   EN vary according to the EURO class of vehicle, and the location (urban/interurban). 
Existing fuel taxes are consider ed to cover climate change.  
Annex 10 describes the different  assumptions made. A sensitive analysis has been carried 
out with:  
– charging higher values of external costs 
– optional charging, meaning that, in the m odelling, only some Member States charge 
for external costs 
The analysis of these policy options is de tailed in annex 10 and 12. The analysis below 
deals with PO2 assuming all Member States charge on the basis of median values of 
external costs. This allows comparison with  other policy options in a consistent way.  
2.B Charging for air pollution, noise and CO2  
A similar system as in 2.A (median values of external costs, all Member States) would be 
applied. In addition a CO2 charge would be added on top of the air pollution and noise 
charge. Member States may choose to add this CO2 charge in th eir fuel tax or in the tolls. 
Those above the EU average fuel tax level coul d be inclined to opt for an increase of 
tolls.  
Annex 10 describes the assumptions made on the level of fuel tax.  
2. C. Charging for air pollution, noise and congestion  
Here again, a similar system as in 2.A (med ian values of external costs, all Member 
States) would be applied. On top of the e nvironmental costs, a congestion mark-up would 
be applied on some sections/l inks (basically, when marginal infrastructure costs are 
higher than average infrastructure costs,  reflecting the pre ssure on the use of 
infrastructure). Due to model limitations, the implementation of congestion charges is 
simulated in an extremely rudimentary way as they would not vary according to peak and off-peak. 
Here again, a variant on the scope of conge stion charge will be tested (inclusion of 
passenger cars) and is de scribed in annex 10.  
4.4. Scenarios 3: Efficient charging  in all modes of transport 
This set of scenarios would ensure that exte rnal costs can be charged, not only in road 
freight transport like in scenarios 2, but also  for all other modes of transport, i.e. rail, 
aviation, maritime and inland waterways in orde r to ensure equal tr eatment in all modes 
of transport.  
Scenarios 3 would not only consider exte rnalities for HGV on all roads requiring 
modification of Directive 1999/62/EC as in scenarios 2, but also imply legislative 
changes in other modes of transport.  
EN 48   EN Two main variants are envisaged 
3.A. Charging for air pollution and noise in a ll modes and charging for CO2 in maritime,  
IWW and railways (diesel)  
In this option, charging for air pollution and noise is made po ssible in all modes. Climate 
costs are considered to be internalised by exis ting fuel excise duties in road transport and 
by the proposal to include air transport in the ETS. Maritime, IWW and diesel trains would be subject to a fuel tax. 
3.B Charging for air pollution, noise and CO2 in maritime, IWW, railways (diesel) and 
road freight transport  
In this case, a similar system would be applied. In addition, a CO2 charge would be 
added on top of air pollution and noise charge in road freight transport. 
Table 4.1: Summary table on scenarios 
Modes 
Policy option Road freight 
transport 
 Road Passenger 
cars All modes of transport
 
Policy option 2A  - Charging for air 
pollution  and noise  
on top of current infrastructure cost.  
- Charging on all 
roads 
- Charging in all 
Member States*.  - 
Policy option 2B - Charging for air 
pollution and noise  
on top of current infrastructure cost.  
- CO2  mark-up. 
- Charging on all 
roads 
- Charging in all 
Member States  - 
Policy option 2C - Charging for air 
pollution  and noise  
on top of current infrastructure cost 
- Charging on all 
roads 
- Charging in all Sensitivity 
analysis: congestion charging in bottlenecks (PO2Call)  
EN 49   EN Member States 
- Congestion  
charging in bottlenecks.  
Policy option 3A - Charging for air 
pollution  and noise  
on top of current infrastructure cost.  
- Charging on all 
roads 
- Charging in all 
Member States.   - Air pollution  and 
noise  charging in short 
sea shipping, inland waterways, railways, air transport. . 
CO2 charge (fuel tax) 
in maritime, IWW, railways (diesel).  
- ETS assumed to 
already internalise CO2 in air transport and railways (electric). 
- Charging in all 
Member States  
Policy option 3B - Charging for air 
pollution and noise  
on top of current infrastructure cost.  
- CO2  mark-up. 
- Charging on all 
roads 
- Charging in all 
Member States   - Air pollution  and 
noise  charging in short 
sea shipping, inland waterways, railways, air transport. . 
- CO2  charge (fuel tax) 
in maritime, IWW, railways (diesel).  
- ETS assumed to 
already internalise CO2 in air transport and railways (electric). 
Charging in all Member 
States 
* A sensitivity analysis has been made on this polic y option, considering some only some Member States 
charge for air pollution and noise costs (see annex 10). 
5. ANALYSIS OF IMPACT  
The analysis of impact is supported by qua ntitative and qualitative analysis. Three 
models – TRANSTOOLS, TREMOVE43 and ASTRA – have been used in order to assess 
the impact on transport demand and on the rest of the economy (see annex 11 for the description of the models and their use in the analysis of impact). The reference scenario 
                                                
 
43 TREMOVE has been used in the context of the IMPACT study and some comparisons can be 
made with the TREMOVE results. 
EN 50   EN is described in annex 12 as all policy options  are compared against it. Annex 13 describes 
the various modelling exercises that have b een made for each set of policy options and 
gives additional details on the results of modelling.  
Different impacts have been assessed: th e impact on transport, the impact on the 
economy, the impact on environment and the impact on society. In addition, implementation costs of charging in road tr ansport have been estimated. Administrative 
costs have also been assessed. Finally, the use of revenues ha s an influence on the overall 
impact and alternative use of those revenues is discu ssed in the last section.  
All the results provided by the models give useful indications of the impact. However, 
the models can neither capture all the situ ations (time or location differentiation of 
charges and taxes) nor the imp act of local passenger traffic (see box 6). Accordingly, the 
improvement of the level of internalisation is likely to be higher than it is estimated and 
the reduction of external cost s could also be greater. In addition, the economic effects do 
not capture the economic positive impact of the reduction of fatalities or the improvement of health (due to a reduction of air pollution). As a result, the modelling 
results have to be combined with quali tative analysis and complemented by other 
empirical studies.  
Box 6: Limitations of modelling in ternalisation of external costs 
The complexities of the transport sector re quire the use of models for a comprehensive 
analysis to be carried out. M odels of course simplify the r eal world and thus have their 
limitations. The negative effect these limitations can have on the quality of the analysis 
can be alleviated by complementary qualitative analysis but it is important to be clear 
about what economic models can contribute to  an analysis (and what they cannot).  
The transport sector comprises two very di fferent markets: passengers and freight. In 
addition, many modes of transport often compet e for the same infrastructure e.g. trucks 
and cars. Moreover, urban traffi c conditions are very different from interurban ones. Cost 
is determined not only in money terms but al so by time spent travelling. Interactions are 
complex e.g. an increase in aviation kerosene prices (or taxes) can have a negative 
impact on rail freight competitiveness through increased high speed train demand. 
External costs further complicate the analysis as they depend on cha nging situations and 
on the characteristics of the infrastructure. Human activity patterns produce rush hours. 
Wind direction or strength determines polluti on impacts. Moreover, th ere are interactions 
between different types of external costs:  a worsening of congestion could improve 
safety. The interactions among the different markets, populations and infrastructures are 
so complicated that models – which are simplif ications of the realit y – can provide very 
useful insights. 
The current Impact Assessment covers the whol e European transport sector with all its 
diversity. The key element in pricing for external costs is that internalisation charges are 
targeted at the actions that produce them, th us they have to be highly differentiated 
according to time and place. But to  facilitate things (and also for lack of information), 
models tend to be highly aggregated. The po ssibility of differentiating charges is quite 
limited and models cannot capture all the derived be nefits. It must be said that in real life 
the more differentiated pricing is, the more difficult and expensive it becomes to 
EN 51   EN implement it. The downside of aggregation is that the impacts are also aggregated and 
lose most of their visibility. In these conditi ons, models should be considered as useful 
tools that may confirm the predictions of theory and often show the direction of 
interactions.  
The economic model used in this impact assessment is a standard, well-known and tested 
model. It does not capture pos itive benefits such as health  improvement, the reduction of 
CO2 emissions, the decrease in fatalities, the improvement of the qual ity life of citizens 
and the incentive to innovate and change the fl eet mix to cleaner vehicles. Most of these 
effects will improve GDP in the long run, an as pect not included in the modelling results. 
Economic theory would suggest that internal isation improves social welfare since when 
"polluters" are confronted with correct prices reflecting true costs, society ends up with a 
level of pollution it considers optimal (see also box 2). . The application of a Pigouvian 
tax leads to an improvement of efficiency pr ovided each goods/service is sold at its social 
price (including external cost) and that re venues are promptly and properly used.  
In the current impact assessment, the model estimates that the negative impact of an 
increase in transport prices outweighs other positive effects of internalisation. Taking a 
longer term horizon could have  helped identify the adapta tion of the economy: private 
investments do not happen in the ASTRA mode l as a time delay is implemented in the 
model. A simulation until 2030 would lead  to much stronger impacts on private 
investments. This would lead to a boost in GDP. Hence, the model results are likely to 
understate the long term net benefits and they  should be taken as an indication only, since 
they do not capture the entire complex mechanism and interactions of internalisation. 
Finally, as explained in annex 11, because of the comparative static nature of 
TRANSTOOLS, starting and end values for tr ansport volumes and travel times have 
been fed into the economic model ASTRA.  The inputs from Trans-Tools have been 
linear interpolated to derive  the input for the whole simu lation period from 2000 to 2020. 
This technical limitation does not allow analysis on how quickly the economy adapts and 
the initial costs are recoup ed in social benefits.  
5.1. Impact on transport  
Charging for external costs has an impact on transport costs which in turn influences 
transport volumes (trips, tons lifted and passenger and ton kilometres). This impact is expected to be different across modes wh ich would modify the share of modes of 
transport and lead to modal shift. The magn itude of these impacts varies across policy 
options. Finally, the impact on congestion will be assessed as it influences the time spent 
in transport.  
5.1.1.  Impact on transport costs 
Increase in transport user charges 
The principle of internalisation is that tran sport users bear the costs they generate – 
private and external. In order to make transpor t users pay for these external costs, all the 
policy options have envisaged a user charge  based on the estimati on of those external 
costs.  
EN 52   EN The level of pricing measures aimed at intern alisation of an extern ality should ideally be 
based on the corresponding marginal external co sts. The estimation of  marginal costs for 
the various cost categories has been ela borated from the Handbook on external cost 
estimates44. These results have been taken as starting point. The value transfer procedures 
presented in the Handbook have been applied to retrieve values for all Member States.  
Table 5.0 describes the increase in charging in all modes of transport. The increase 
depends on the scope of external cost s covered - air pollution, noise, CO2 and 
congestion.  
The internalisation of external costs will l ead to the following increase in charges 
according to the different scenarios. As an  example, under scenario 2A, a truck would 
have to pay 0,037 euros corresponding to a marg inal external cost of air pollution and 
noise for each kilometre it would travel.  
                                                 
44 Climate change costs and air pollution costs pe r tonne of emission, accidents and noise costs 
estimates per vehicle-kilometre (differentiated to urban/interurban, vehicle size, Euro standard) or 
LTO, congestion costs per vehicle-kilometre, as function of the capacity use of the road (used for 
TRANSTOOLS runs only). For the translation of the changes in taxes and charges per tonne of 
emission to changes per vehicle-kilometre, LTO or litre of fuel, data from the TREMOVE reference scenario output has been used (fuel consumption, vehicle-kilometre and emissions). The 
result of this translation was a set of input da ta for EU-19. The Joint Research Centre has 
extrapolated the input data for the other 6 EU Member States, in order to run the TRANSTOOLS model for EU-25. 
EN 53   EN  
Table 5.0: Summary of simulation res ults – Increase in charges in 2020 
 Road 
freight transport Rail 
freight  Short-sea 
shipping** Inland 
waterways Passeng
er rail Air 
(passenger) 
 €/vkm €/vkm €/port call €/vkm €/vkm €/LTO**
* 
PO 2A 
Charging Air pollution and Noise 0,037 Not 
relevant Not 
relevant Not 
relevant Not 
relevant Not 
relevant 
PO 2B 
Charging Air 
pollution, noise and CO2 0,064 Not 
relevant Not 
relevant Not 
relevant Not 
relevant Not 
relevant 
PO 2C 
Charging air 
pollution, noise and congestion 0,076 Not 
relevant Not 
relevant Not 
relevant Not 
relevant Not 
relevant 
PO 3A 
Charging air 
pollution and noise. CO2 in non road.  0,037 1.20 2012** 2.88 0.58 306 
PO 3B 
Charging air 
pollution, noise and CO2 in all modes 0,064 1.20 2012** 2.88 0.58 306 
* Charges are expressed in €2000. It is assumed that all roads would be charged and that all Member States 
would charge for external costs. Annex 12 shows th e impact when only some  Member States charge 
external costs in road freight transport.  
** 2012 is an average. The range is between 755 to 4080 euros per port call. For maritime transport, the 
application of charges per port call was the only charging option that could be modelled with the 
TRANSTOOLS model. In addition, the lack of reliable data on international maritime transport led to the 
limitation of the scope of the internalisation to that of local impacts only, in a radius of 60 miles from the port. The resulting additional charges used in the simula tions therefore represent on ly a fraction of the real 
external costs of maritime transport. 
Source: TRANSTOOLS 
Increase in transport costs 
An increase in transport costs is to be expected  due to the fact that some natural resources 
(air, silence) were used and some nuisan ces caused (health, lower air quality, noise, 
increased time) and they were not paid for.  Although the magnitude of the costs of the 
internalisation for transport depends on the im portance of the nuisance, it will be reduced 
by the response of transport users.  
The response of transport users will involve a re-organisation of trav el whilst continuing 
to use the same mode, better logistic organisation (reducti on of empty running, increase 
in load factors) or the c hoice of alternative corridors45. As the EU FP5 CAPRI project 
explained: "Modelling studies for urban and inter-urban ro ad pricing indicate that 
                                                 
45 See "Third Annual Thematic Research Summary- Pricing, Taxation and Financing Tools" Paolo 
Delle Site pages 13 and 15. EXTRaWEB Project DG Energy and Transport  
EN 54   EN proposed price changes can induce small but si gnificant changes in behaviour (e.g. a 5% 
to 10% demand reduction) which can make a major contribution to the reduction of 
congestion and other externalities. In some studies a small reduction in demand has been 
shown to result in the margin al external cost of congestion falling to 20% of the pre-
charge level46. Thus the increase in transport costs is to some extent self-correcting 
through the behavioural changes it induces which in turn allow a reduction in user 
charges.  
Therefore, the consequence of internalisation on transport costs is not straightforward. 
First, the increase in charges impacts directly  on transport costs. But, a reduction of time 
costs due to freer flow traffic can compensate for the user itself the increase in charges. 
As a result, one needs to c onsider both effects in order to assess the magnitude of 
impacts. 
The modelling results show that the increas e in charges leads to an increase in 
generalised costs which is generally lower than the first one. This is likely to be due to a 
reduction of time costs which slightly compen sate the increase in charges (see graph 
5.147). Charging would induce an increase in  operational costs between 3 and 7%. 
However, the reduction of time costs (between -0.04 and -0.14%) compensates a bit the increase in generalised costs. The level of a ggregation of the model hides to some extent 
the real effect, although it point s at the right direction.  
Graph 5.1: Increase in road charges and gen eralised costs in road  freight transport 
Average increase in road charges and generalised costs
0,000 0,010 0,020 0,030 0,040 0,050 0,060 0,070 0,080PO 2APO 2BPO 2CPO 3APO 3B
€/v eh*km - Changes relativ e to reference scenarioAverage increase in
road charges
Average change in
generalised costs
 
Source: IMPACT/TRANSTOOLS  
                                                 
46 Concerted action on transport pricing research integration CAPRI C. Nash, T.Sansom, B. 
Matthews and alt. Page 17. Transport RTD programme 4th FP 
47 Note that the evolution of generalised costs is not so straightforward in other modes as the model 
cannot capture the impact of  capacity constraints. As a result, it is more relevant to display these 
results only for road.  
EN 55   EN 5.1.2.  Impact on traffic and performances 
The increase in transport cost will therefore give a clear sign al to transport users. Those 
who value their trip below this cost will c hoose not to travel at that moment in time 
and/or to use alternatives mean s. By contrast, those who value their trip above this cost 
will continue to travel. As a result, a change  in traffic flows should be expected. Most 
important is to see whether mobility is reduced, maintained or increased. In addition, the mobility pattern is expected to be different, whether road freight transport is charged alone or if other modes are charged.  
Mobility of goods 
The reference scenario assumes that, from  2000 and 2020, transport growth will be +66% 
in freight transport (all mode s), including +91% for internati onal road freight transport, 
and +35% in passenger (all modes). The evol ution of the share of road transport would 
be negative: -4% in freight transport, -3 % in passenger transport (see annex 11).  
The implementation of charges/taxes would lead to a decrease in tons lifted. The 
decrease in volumes in all modes is mostly  explained by the decrease in road freight 
transport.  
Graph 5.3 shows that the stronge r impact on road freight tran sport per ton-kilometre are 
caused in scenario 2C (cha rging air pollution, noise and congestion). Changes are 
positive for other modes of transport, but the increase of ton lifted in other modes of transport is not sufficient to fully compensate th e decrease of ton lifted in road transport.  
EN 56   EN Is there detour of traffic?  
Detour of traffic can be one of the adverse eff ects of pricing as vehicles can be incited to 
take alternative road s to avoid charging. When compar ing with a scenario where only 
motorways are tolled48, tonne-km reduce less than tonnes lifted (-0.44% versus -1.10%) 
which indicates that some detour from tolle d motorways to non tolled  secondary roads is 
taking place which results in the average trip length going up. 
Real life example from Germany also indicated that there was this detour effect 
especially in the first month after the intr oduction of the toll (but then it gradually 
reduced). It has to be noted that the quality of the availa ble secondary road network is 
crucial as it makes a big difference to the willingness to take the detour what is the 
subsequent time incurred on the secondary ro ad. Also one would expect professional 
drivers to make a pragmatic economic decision balancing the cost of the toll and the time 
loss and extra running costs (fuel) to  decide which road to take.  
Here, all the policy options assume that all ro ads are charged in orde r to avoid any detour 
of traffic in road transport. The divergent evolution of ton-km and ton lifted shows that 
the average length of trips could increase or decrease, which might indicate that alternatives for road transpor t require a longer travelling di stance. Depending on the type 
of goods, other modes may not be perfect substitute for road which can offer more flexibility and responsivene ss to industrial needs. 
Graph 5.2: Changes in freight volumes in  tons lifted per tr ansport mode in 2020 
with respect to the reference scenario 
-4,00%-2,00%0,00%2,00%4,00%6,00%8,00%10,00%12,00%
Maritime Rail Road IWW All modes
Freight modesChange in tonnes lifted relative to scenario 1PO 2A-central estimates
PO 2B- existing fuel tax
PO 2C
PO 3A
Po 3B
 
Source: IMPACT-TRANTOOLS 
                                                 
48 Scenario 5B of the IMPACT study analyses charging on mo torways. See annex 11 for the 
description of the scenario of the IMPACT study (Deliverable 3).  
EN 57   EN Graph 5.3: Changes in freight volumes in ton-kilometres per transport mode in 
2020 with respect to the reference scenario 
-10,00%-5,00%0,00%5,00%10,00%15,00%
Maritime Rail Road IWW All modes
Freight modesChange in tkm relative to scenario 1PO 2A-central estimates
PO 2B- existing fuel tax
PO 2C
PO 3A
Po 3B
 
Source: IMPACT/TRANSTOOLS Modelling 
Modest impact in passenger transport 
In general, passenger transport would not be affected as freight transport is charged. 
Scenarios 3 includes par tial charging for passenger transpor t (air, maritime and railways). 
Modelling results confirm this. 
Graph 5.4: Changes in passeng er trips per transp ort mode in 2020 with respect to 
the reference scenario 
-1,00%-0,50%0,00%0,50%1,00%1,50%2,00%2,50%3,00%
Aviation Rail Road All modes
Passenger modesChange in number of trips relative to scenario 1PO 2A-central estimates
PO 2B- existing fuel tax
PO 2C
PO 3A
PO 3B
 
Source: IMPACT/TRANSTOOLS Modelling 
EN 58   EN Graph 5.5: Changes in passenger volumes (measured in passenger-kilometres) per 
transport mode in 2020 with res pect to the ref erence scenario 
-0,50%0,00%0,50%1,00%1,50%2,00%2,50%3,00%
Aviation Rail Road All modes
Passenger modesChange in pkm relative to scenario 1PO 2A-central estimates
PO 2B- existing fuel tax
PO 2C 
PO 3A
PO3b
 
Source: IMPACT/TRANSTOOLS Modelling 
5.1.3.  Impact on modal shift 
The various evolution of traffic in all mode s of transport has consequences on modal split 
as the share of non road transp ort increases, especially in fr eight transport. Which of the 
non-road modes profits most from the modal shift, depends on the policy option. This has 
mainly to do with rather detailed networ k effects and cannot easil y be explained by the 
price changes as such. The impact on modal sh ift is likely to be related to many other 
factors than transport cost like reliability and quality of alternat ive to road freight 
transport. Moreover, it probably depends on th e market segments as certain transport like 
long distance transport, or transport of raw materials, are more likely to be sensitive to 
changes in cost structure 
The impact on modal shift in freight transpor t is higher in scenarios 2 (charging only in 
road freight transport) than in other polic y options where the other modes are charged. 
This is expected as the increase in road charging may give incentive to use alternative modes of transport, and even more so if they are not charged. Maritime and railways 
shares increase. Charging for congestion and ot her external costs (air pollution and noise) 
has a strong impact and leads to an increase in other modes of transport, especially in railways (see annex 12 for additional results on PO2 and 3).  
EN 59   EN Table 5.1: Modal split in freight transport 
EU25 – 2020 – bn t-km Short-Sea Rail Road IWW 
Reference Scenario. Modal split 36,8% 13,5% 44,6% 5,1% 
Evolution of modal shares relative to reference s cenario (in percentage points)  
PO2A.  2.0 1.1 -3.2 0.1 
PO2B 2.1 1.3 -3.6 0.2 
PO 2C 1.7 1.2 -3.0 0.1 
PO2C (all) 1.8 1.7 -4.0 0.6 
PO 3A 2.0 1.1 -3.2 0.1 
PO 3B 2.1 1.3 -3.6 0.2 
Source: IMPACT-TRANTOOLS 
Table 5.2: Modal split in passenger transport 
EU25- 2020-pass-km Air Rail Road 
Reference scenario. Modal split 11,6% 8,0% 80,4% 
Evolution of modal shares relative to reference s cenario (in percentage points)  
PO2A. 0.0 0.1 -0.1 
PO2B 0.0 0.1 -0.1 
PO 2C 0.0 0.1 -0.1 
PO2C (all) 0.2 0.4 -0.6 
PO 3A 0.0 0.1 -0.1 
PO 3B 0.0 0.1 -0.1 
Source: IMPACT-TRANTOOLS 
5.1.4.  Congestion 
Forecasts of congestion for most European c ountries assume a rise in congestion levels 
(see section 2). To the direct costs of su ffering congestion one s hould add the costs of 
avoiding it by adding a precautionary margin to th e trip start as well as the costs derived 
from the loss of reliability in front of clients. The "COMPETE" study on competitiveness 
and congestion points out that the size of relia bility costs is about 10 to 20% of the value 
of time costs49, but it can be much more. Charging fo r congestion is expected to have 
strong impact on traffic flows.  
Congestion is mainly located in cities, in roads of densely populated areas and in some 
corridors on a seasonable basis. Since a few years, there have been many experiences of congestion charging in cities in Europe . In February 2003, London has imposed a 
congestion charging. Three years later, traffi c was 21% lower than before charging in 
2002 and congestion was 8% lower compared to 2002
50. Similar situation was 
experienced in Stockholm where traffic decreased by 23% si x months after the 
application of a conge stion charge in 200651.  
                                                 
49 Compete Final report (2006). Analysis of the Contribution of transport policies to the 
competitiveness of the EU economy a nd comparison with the United States 
50 BESTUFS II. Deliverable 2.3. October 2007. 6th framework programme for research and 
technological development. 
51 Idem. 
EN 60   EN In France, variation of motorways tolls on A1 Lille Paris according to peak and off-peak 
periods suggests a possible reduction of rush  hours of 10% (about 2000 cars less during 
rush hours for 4 hours each week-end)52. 
In the Netherlands the government is pr eparing the introduction of a nation-wide 
kilometre charge for all road vehicles. Sin ce 2005, various studies have been carried out 
assessing the various impacts, social costs and social benefits of vari ous variants for this 
system. These studies have been based on extensive model runs with the national 
transport model LMS (LandelijkModel Systeem) . The most important variants include a 
charge per kilometre which is differentiated to vehicle type, location and time of the day in order to give incentives for reducing c ongestion. The modelling shows that the overall 
congestion levels can be more than halved
53. The net social benefits of the scheme are 
estimated at 1.0 to 1.6 billion Euros a year . The main benefits are from congestion 
reduction and are valued at 1.6  billion Euros per year (in variants with 35% congestion 
reduction) up to 2.3 billion Euros per year (in variants with 55% congestion reduction)54. 
All these case studies show the effectiveness of a congest ion charge in reducing traffic. 
Moreover, congestion also lead s to the reduction of other nui sances such as air pollution 
or CO2. According to some studies55, vehicle fuel consumpti on increases approximately 
between 10 and 30% under he avily congestion. Reducing co ngestion impacts positively 
on time saving and fuel consumption. 
Results are more limited in the current modellin g exercise due to the aggregation at EU 
level. On average, the percentage of c ongested network in Europe would decrease. 
However, an analysis at local level is likel y to proved stronger impacts in dense and/or 
urban areas.  
Unexpectedly, the results of the modelling ex ercise show a higher decrease in congestion 
in scenario 2C. In addition, charging for pa ssenger and freight road vehicles leads to a 
higher reduction of congestion. Due to  important model limitations (no time 
differentiation, partial modelli ng of local traffic important on congested links), these 
results do not fully show the theoretical bene fits expected from congestion charging. One 
could assume that the impacts of congest ion charging are much stronger than the 
modelling results suggest.  
                                                 
52 Note on Tolling Variations and Measures for op timizing use of road network in France. 2008. 
Ministry of transport. France.  
53 Ecorys & MuConsult, 2007. Effecten vormgeving kilometer-prijs bij variabilisatie van BPM, 
MRB en Eurovignet. Rotterdam : Ecorys & MuConsult, 2007 
54 CPB (2005). Ex ante economic assessment of va rious road pricing schemes. Paul Besseling, Wim 
Groot and Rik Lebouille. Summary executive.  
55 Quoted in Transportation cost and benefit analys is – Congestion costs. Vi ctoria Transport Policy 
Institute. It refers to studies that have analysed the link between congestion and fuel consumption. In particular, Greenwood I.D. and Bennett C.R., "The effects of traffic congestion on fuel 
consumption", Road and Transport Research, Vol 5, n°2, June 1996; Johansson O., "Optimal 
roald pricing: simultaneous treatment of time losses, increased fuel consumption and emissions". Transportation research, Vol 2, n° 2, June 1997.  
EN 61   EN Table 5.3: Congestion indicato r (whole road network) - 2020  
Scenario Degree of 
congestion network Difference 
Reference 28,62%   
PO 2A-central 
estimates 28,35% -0,27% 
PO 2B- existing fuel 
tax 28,39% -0,23% 
PO 2C 27,38% -1,25% 
PO 2C (all- 26,56% -2.06% 
PO 3A 28,43% -0,19% 
PO3b 28,40% -0,22% 
Note: differences are computed with respect to Impact1 
Source: TRANSTOOLS 
5.2. Economic impact of transport dynamics 
The previous section has analysed the increase in charges in all modes and the impact on 
generalised costs and on traffic. All these evolutions have an economic impact as 
transport plays a central role in the excha nges of goods and services as well as in the 
efficiency of the economy.  
The primary objective of intern alisation is to imp rove overall economic efficiency, i.e. 
the use of resources, and the extent to whic h costs and resources coincide should be re-
assessed. Improved efficiency and fairness in society was also one of the major 
expectations expressed in the public consultation.  
In addition, the macro-economic effect should be considered as tran sport costs increase 
due to the imposed transfer of funds to  the public sector resulting from the 
internalisation. The results of the public consu ltation showed some concerns about 
possible loss of competitiveness. It is t hus important to look at  the effects on the 
economy at large. The way in which the eco nomy will be affected depends from the 
magnitude of that increase after the adaptation methods a nd from the way and the timing 
in which the recycling of funds takes place. Furthermore, a sectoral analysis of the 
impact on industry should be scrutinised as tr ansport is part of the cost structure of 
industrial sectors. Charging fr eight transport might have ne gative effects on industry and 
services.  
5.2.1.  Impact on efficiency 
Internalisation will give  stronger and more beneficial impact  if charges are related to cost 
drivers. The first best option would be to al low high differentiation of charges to reflect 
the variation of external costs. There are some practical limits to such implementation due to technology feasibility. Charges could not vary over time, place, route chose, 
driving style… However, assuming differe ntiation of charging according to location 
(urban, non urban), to vehicl e characteristics and time (peak, off-peak, day, night) would 
help make a direct link between charges a nd costs and would probably improve optimum 
welfare. Transport users would have the incen tive to make efficient use of transport 
infrastructure, and then to base their decision on the right prices. Only the transport 
EN 62   EN activities which were more valuable than th eir external costs would remain after the 
internalisation. Scarce road space would be allocated to the most valuable uses.  
One of the shortcomings of the current modelling exercise is the inability to assess the 
improvement of efficiency, due to the li mited differentiation allowed by the model, 
which is a key element in a social marginal co st pricing system. As a result, the impact of 
efficiency is difficult to measure, and one can  rely on other experien ces in this field.  
ECMT research estimates56, on the basis of 2000 data for the three biggest economies in 
Europe (Germany, France and the UK), that by re forming prices for inland transport and 
even without expanding infrastructure, net ga ins for society of 30 billion Euros per year 
could be achieved through improved efficien cy. The changes in prices modelled would 
yield 100 billion Euros of additional revenues that  could be used to cut taxes or invest in 
infrastructure inside the tr ansport sector or elsewhere in the economy. The study also 
analysed potential welfare gains in Finland where population density and the number of 
cities are lower and roads are less congeste d. The annual welfare increase would be 300 
millions euros. The largest part of the economic gains would come from reducing congestion to optimal levels  on the roads (with the rest related to improved 
environmental performance and better use of  rail and public trans port). These findings 
show the positive role of congestion by reducing fuel consumption and time spent in transport.  
5.2.2.  Macroeconomic impact 
Economic impacts of transport pricing de pend on the type of charging and the 
interactions between the different sectors of the economy. For example, one can expect 
that congestion charges would not affect e xports while all other charges imposed on long 
distance transport may cause significant reducti on of exports if behaviour is not adapted. 
As a result, congestion charging tends to  impact GDP less nega tively than other 
charges
57.  
In a medium term, internalisation can impr ove productivity as tran sport users may be 
incited to use vehicles more efficiently. This has been one of the positive results of the Swiss experience. Since Switzerland has implemented a charging scheme for HGV, 
productivity has increased and has compen sated the short term increase in prices
58.  
In the current analysis, the modelling exercise using ASTRA model shows the 
macroeconomic impact of transport evolut ions. The time horizon is 2020 and the model 
                                                 
56 Reforming Transport Taxes and charges, ECMT, May 2003. The gain in welfare record ed is a net gain after 
substracting the reduction in consumer surplus of moto rists from the various elements of the welfare gain 
such as the increase in revenues, the reduction of trav el times or the reduction in pollution and accidents, and 
so on. The research undertaken modelled the optimum w ith the replacement of all existing taxes by a new 
externality tax (similar to a differentiated km charge).  The research suggests significant higher charges for 
cars, trucks and vans in urban areas and on some inter-u rban routes. Price increase in peak periods can be 
around 100% for small petrol cars in cities such as Munich, Ile de France (compared with the prices 
prevailing in 2000). These increase suggests why the modelling exercise has larger effects.  
57 W. Schade, C. Doll. Macroeconomic analysis of transport pricing regimes for the EU. Advanced 
OR and AI methods in transportation.  
58 The charging scheme has been implemented with an increase of weight limitations on heavy 
traffic from 28 tons to 35 tons and then to 40 tons in 2005. Bundesamt für Raumentwicklung 
ARE. Schweizerische Eidgenossenschaft. Volksw irtschaftliche Auswirku ngen der LSVA mit 
höherer Gewichtslimite", 2007. 
EN 63   EN may not be able to capture the long term ad justment of the economy. In addition, ASTRA 
does not compute market e quilibria and does not deliv er welfare impacts.  
The reference scenario assumes a favourab le competitive situation of EU27 economies 
(see annex 10). Exports and investments ar e dynamic while industrial sectors display 
good performances. GDP, Gross value adde d, consumption and TFP (total factor 
productivity) grow by an averag e annual growth rate of about 2%. Against this reference 
scenario, the evolutions of macroecono mic variables have been assessed.  
The impact of the policy options analysed  is negative on the m acro-economic dynamics 
as these policy options envisage a net increas e in charges and taxes. It should also be 
noted that the graph below measures the ch anges relative to the reference scenario. 
Therefore, all the options assume an increas e of the macro-economic variables, but at a 
lower pace than foreseen in the reference scenario. 
The increase in transport costs leads to a negative evolution of exports and consumption 
(households have to face increased costs of transport). Investments and gross value added 
also display negative trends although investments exhibit a temporarily growth after 
introduction of road charges, which could be explained by an improvement of national 
budget leading to a decrease of interest rates which support investment activities. The 
evolution of total factor productivity (TFP) is  negative apart in sc enario 2C. Option 2C 
charges for congestion and environmental cost s, which leads to a reduction of congestion 
(see table 5.3) and an improvement in freight  time. Here again, the evolution of TFP is 
probably limited by the limitations of the model which cannot capture all positive effects. 
Congestion charging allows goods to flow faster, which should be  reflected in the 
evolution of TFP.  
The evolution of employment is affected by th e negative trends of th e economy even if in 
the short term, there is a temporar ily growth in some policy options. 
EN 64   EN Graph 5.6: Impact on Gross val ue added for EU-27 (in € 2000) 
Impacts on gross value added without refunding for EU27 
-0,4%-0,3%-0,2%-0,1%0,0%0,1%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA  
Graph 5.7: Impact on expo rts for EU-27 (in € 2000) 
Impacts on ex ports without refundin g for EU27 
-0,9%-0,8%-0,7%-0,6%-0,5%-0,4%-0,3%-0,2%-0,1%0,0%0,1%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA  
EN 65   EN Graph 5.8: Impact on consum ption for EU-27 (in € 2000) 
Impacts on consum ption without refundin g for EU27 
-0,5%-0,4%-0,3%-0,2%-0,1%0,0%0,1%0,2%0,3%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA  
EN 66   EN Graph 5.9: Evolution of total factor  productivity for EU27 (in € 2000) 
Impacts on total factor productivity without refunding for EU27 
-1,0%-0,8%-0,6%-0,4%-0,2%0,0%0,2%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA  
Graph 5.10: Impact on GDP for EU-27 (in € 2000) 
Impacts on GDP without refunding for EU27 
-0,6%-0,5%-0,4%-0,3%-0,2%-0,1%0,0%0,1%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA 
EN 67   EN Graph 5.11: Impact on employment for EU27 
Impacts on employment without refunding for EU27 
-0,7%-0,6%-0,5%-0,4%-0,3%-0,2%-0,1%0,0%0,1%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA 
5.2.3.  Macroeconomic impact if taxes are lowered 
The use of revenues (i.e. the tax/charge recy cling pattern) has an influence on the impact 
of charging. Section 5.7 will discuss about  the different uses of revenues.  
In the modelling exercise, all the scenarios ha ve been modelled with the assumption that 
revenue goes to the general budget and is not  refunded to some specific objectives. 
Another assumption has been made on the us e of revenues to d ecrease other taxes 
(lowering direct taxes). Revenue s from road charges can be fe d back into the system via 
refunding the revenues for dir ect tax reductions. In this ca se, the expenditures are given 
back to all private households balanc ing their total disposable income.  
In this case, investment and consumption would display positive changes compared to 
the situation where the ref unding does not take place. Refunding revenues induces 
positive growth of employment, investment and consumption which softens the impact 
on GDP (see annex 12 for other macroecono mic evolutions). In policy option 3B, 
refunding revenues has a positive impact on employment. The impact remains nevertheless slightly negative with respect to baseline. This is because transport activity 
as a whole is reduced and modelling does not take into account the positive impact on 
GDP of reduced externalities.  
EN 68   EN Graph 5.12: Impact on GDP for EU27 with refunding (in € 2000) 
Impacts on GDP with refundin g for EU27 
-0,3%-0,2%-0,1%0,0%0,1%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA 
5.2.4.  Impact on Industry and Services 
Transport is part of the cost structure of industry and may ra nge from 1% to 9% of final 
product value59.  
In general, transport costs are an instrument for adaptation as firms have to adjust quickly 
to changing competitive situations. The incide nce of transport costs on industrial sectors 
depends on raw material prices (transpor t costs matter as thes e products are often 
imported through sea transport), the overall va lue added, the overall production costs and 
the distribution network. Recent trends such as  the fragmentation of the value chain that 
goes beyond the simple relocation of production to  low cost countries show that transport 
has become a lower component of the ove rall cost of produc ing and distributing60. One 
expectation expressed during the public cons ultation was that internalisation would 
increase the incentives to produce locally in Europe leading to a reduction of relocation 
to third countries. At this stage, the imp acts are too small to trigger such effects, 
especially in sectors where tran sport costs are not the major pa rt of the cost structure.  
Based on an analysis of sele cted sectors – processed food, automotive, coffee and textile- 
the conclusion is that transport is not so critical for the competitiveness of the EU as 
transport modifications are rather a cons equence of strategic choices. The overall 
incidence of transport costs on the final prices of goods on average ranges between 5 and 
10% for the processed food, is under 4% for the automotive and 1-3% in the textile sectors
61.  
                                                 
59 9.5% for tomato versus 3.9% for auto. Energy use and Cost in freight Transport Chain. TRT 
Trasporti e Territori o. December 2005.  
60 Idem 
61 Idem 
EN 69   EN Accordingly, the way services and goods might  be affected by transport pricing is not 
straightforward as an increase in transport prices may not be transferred to clients. 
In the modelling results, the introduction of  transport charging would have a negative 
impact on consumption, gross value added (GVA)  and employment in industrial sectors. 
The impact varies across sectors.  
Annex 12 describes extensively the impact  on consumption, gross value added and 
employment of industrial sectors. 
5.3. Environmental impact of transport dynamics 
Internalisation is a way to influence behaviour and is expected to decrease externalities. 
It should be noted that the model results canno t capture some major impacts that are to be 
expected with regard to emissions, in particular shift to cleaner vehicles within each mode. Based on the evidence from the Swiss an d German charging schemes, charges that 
are effectively differentiated on the emission class of the vehicle will accelerate fleet 
renewal and will therefore deliver a significantly improved environmental performance of the vehicle fleet resulting in a subs tantial reduction of air pollution costs.
62 
As a result, the overall impacts on emissions that are to be expected from the various 
internalisation policy options are much la rger than shown in the graphs below. 
5.3.1.  Air pollution and CO2 
The evolution of external costs under the refe rence scenario has been described in part 2 
“what happens if nothing is done”. The trends display an increase of external costs, 
which is not linear over the years (in pa rticular for air po llution and CO2).  
CO2 emissions would increase. However, th e reference scenario displays a more 
favourable evolution of CO2 costs (see part  2). This shows the positive impact of 
pipeline measures if they are to be adopted (i n particular the inclusi on of air transport in 
ETS). Air pollution projections exhibit a decrease.  
Internalisation of external costs is expected to decrease those external costs as transport 
users will have incentive to maximise their ut ility at the lowest costs (including external 
costs). According to pricing experience, a decrease in air pollution and CO2 happens 
when charging for these external costs. Th e research undertaken by ECMT shows that 
optimal charging would lead to a reduction of  air pollution and CO2 by 54% in United 
Kingdom, 50% in France and 42% in Finland (see footnote 56 for the scope of the research)..  
In the modelling exercise, the implementatio n of a charging scheme leads to a more 
modest reduction of air pollu tion costs due to the model lim itations previously described. 
The reduction of environmental external costs is estimated at about 1 billion euros per 
                                                
 
62 Presentations on the German case by W. Rothen gatter and the Swiss case by  C. Küng at Transport 
and Environment Conference on road pricing on 9 April 2008.  
http://www.transportenvironment .org/News/2008/2/9_april_2008_eurovignette_conference_road_
charging/ .  
EN 70   EN year. Obviously, charging all modes reduces mo re external costs rather than charging 
only road transport. ). 
Graph 5.14: Impact on PM emissions in 2020  
E v olution of PM10 external costs
-10,00%-5,00%0,00%5,00%10,00%15,00%
Gaso lin e
passengers
(road)Diesel
passengers
(road)Road freight Rail
passengerR ai l frei g ht IWW TOTAL Changes of PM10 emissions relative to reference scenario (bn 
euros)PO 2A-central estimates
PO 2B- existing fuel tax
PO 2C
PO 3A
PO3b
 
Source: IMPACT/TRANSTOOLS Modelling 
Graph 5.15: Impact on Nox emissions in 2020  
Evolution of NOx external costs
-10,00%-5,00%0,00%5,00%10,00%15,00%
Gasoline
passeng ers
(road)Diesel
passeng ers
(road)Road
freightRail
passeng erRail freig ht IWW TOTAL Changes in Nox emissions relative to reference scenario (bn 
euros)PO 2A-central estimates
PO 2B- existing fuel tax
PO 2C
PO 3A
PO3b
 
Source: IMPACT/TRANSTOOLS Modelling 
EN 71   EN Graph 5.16: Impact on CO2 emissions in 2020  
Evolution of CO2 external costs
-10,00%-5,00%0,00%5,00%10,00%15,00%
Gasoline
passengers
(road)Diesel
passengers
(road)Road
freightRail
passengerRail freight IWW TOTAL Changes in emissions relative to reference scenario (bn 
euros)PO 2A-central estimates
PO 2B- existing fuel tax
PO 2C
PO 3A
PO3b
 
Source: IMPACT/TRANSTOOLS Modelling 
5.3.2.  Noise 
Charging for noise costs should l ead to a reduction of exposure  to noise, es pecially in 
areas with heavy traffic. The impact on noise of the alternative policy options is difficult to assess at an aggregate EU level. REFIT pr ovides indicators on the level of exposure of 
people to road noise. The leve l of population exposed to no ise varies across Europe from 
3% to 9%, the average at EU25 level being 6%. The figure is quite low compared to 
other estimates made by the European Environmental Agency, but here it is used to assess the variation due to th e impact of charging. The re sults show that no changes 
across scenarios seem to appear when charging for external costs
63. However, one could 
expect an improvement of the situation at lo cal level when some people are particularly 
exposed to noise.  
5.4. Social impact of transport dynamics 
When charging for external costs, mobility is  expected to be pres erved while improving 
safety in transport. How the cost increases  distribute among people and across regions is 
also important to analyse.  
The analysis of social impact will have severa l dimensions. First, the impact on mobility 
should be assessed as keeping mobility is a key dimension of the EU transport policy. 
Second, the impact on income should be scru tinised as it gives an indication of the 
increase/decrease in wealth of the national economies. Third, the impact on equity needs to be analysed. The results of the cons ultation had shown that respondents were 
expecting increased equity in society. And finally, the impact on safety will be assessed.  
                                                
 
63 Note that this indicator has some limits due to model limitations. Vehicle-kilometres on the 
motorways and main roads are extracted from TRANSTOOLS, while the vehicle kilometres on 
urban roads are calculated by TREMOVE. Both baselines are therefore not correlated, which may influence the reliability of the indicator. See REFIT January 2008.  
EN 72   EN 5.4.1.  Mobility of persons 
Overall mobility would be slightly reduced (see graph on number of trips), but those who 
keep travelling have longer trips (see graph 5.5). The chan ges in passenge r kilometres 
would induce relative changes in  favour of railways. As a result, the impact on mobility 
would be modest and charging would not hamp er mobility of the society as a whole.  
5.4.2.  Health effect 
One aspect the models cannot capture is the po sitive effect of the reduction of external 
costs on health. The reduction of air pollu tion will have a positive impact on health, 
especially in dense populated areas and in alpine and othe r populated mountain valleys. 
Transport is one of the main sources of air pollution, notably for NOx (the main source), 
VOC and PM2.5 but also for SO2 in the cas e of shipping. There are, however, many 
other domestic (heating) and industrial sources which are also respons ible of the health 
damages produced by air pollution64. Nevertheless transport measures are an important 
element of the EU thematic strategy on air pollution. While the main measures concern 
improved standards they have been so far backed by fiscal incentives, their effectiveness would be much improved by internalisation charges which are also mentioned in the 
thematic strategy. Increasing dieselisation an d growing traffic and congestion will all 
raise emissions. On the other hand social vulne rability will also increase due to growing 
urbanisation and to the ageing of the population. Ther efore transport measures in this 
field are urgent notably the kick adopti on of cleaner standards supported by the 
application differentiated charges.  
5.4.3.  Impact on income per employees 
The reference scenario assumes that disposab le income for EU27 w ill increase in real 
terms until 2020 by an average annual growth rate of about 2%. 
Graph 5.17 shows the evolution of income per employee in the two recycling cases 
(refunding and not). Obviously, the impact of different options on both is very modest. 
The income per employee would increase te mporarily (likely due to a decrease in 
employment). Interestingly, the impact incr eases strongly if reve nues are refunded to 
lower direct taxes.  
                                                
 
64 The effects on life expectancy of exposure to particulates were estimated at over 300 000 
premature deaths equivalent in year 2000 and those associated with ozone at some 21 000 
premature deaths (SEC(2005)1133 Impact Assessment of the Thematic Strategy on Air Pollution. 
EN 73   EN Graph 5.17: Impacts on income per employee in the EU-27 until 2020 
(without refunding) (in € 2000) 
Impacts on income per  em ployee without refundin g for EU27 
-0,10%-0,05%0,00%0,05%0,10%0,15%0,20%0,25%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT-ASTRA 
Graph 5.18: Impacts on income in the EU-27 until 2020 (with refunding) (in 
€ 2000) 
Impacts on income per employee with refunding for EU27 
-0,2%0,0%0,2%0,4%0,6%0,8%1,0%1,2%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT-ASTRA 
5.4.4.  Distributional impacts 
The distributional impact of the policy op tions can be assessed in at least two 
fundamentally different ways: on the one ha nd the REFIT calculates indicators like the 
Gini-coefficient or the affordability index which inform about changes in the overall income distribution. On the other side is a ma inly descriptive analysis of the impacts the 
internalisation might have on the most vulnerable groups. 
EN 74   EN The Gini-coefficient is an indicator whic h comprises the whole income distribution. 
Because of this macro-economic perspective, it is not surprising, that results do not differ 
much between the different options furthe rmore the REFIT results for the baseline 
scenario still show some devi ation from the figures provided by Eurostat. In so far this 
indicator has not been used  in the current analysis. 
The affordability index is defined as the fare expenditure made by household as a 
percentage of its income. It indicates that the share of income to be spent on mobility will 
slightly increase when s cenario 5a of the IMPACT study will be realised65. Overall these 
changes will be minor. Still it does not cove r the question how diffe rent income groups 
might be affected.  
Graph 5.21: Affordability index 
Affordab ility index*
0,00%5,00%10,00%15,00%20,00%25,00%
AT BECZDEDKEL ES FI FRHUIEITLUNLPLPT SE SI
UKEU15
EU12
EU27Scenario 5a
Reference S cenario
Source: REFIT Indicators * pass-km*weighted average cost per mode/ per capita income 
From a social point of view the question wh ether there are groups which might be cut off 
from mobility and by that socially excluded is very important. In that respect most 
significant will be the impact of the internal isation on private cars. The proposed policy 
options do not charge passenger cars, except in  the variant of PO2C where passenger and 
freight can be charged for congestion.  
Beyond that, the existing charging of passenge r car is not primarily oriented towards 
internalisation of external effects, but more  towards raising revenues. In so far moving 
towards an internalisation strategy might coincide with a) shifts of the payments and b) with increases. The exact extent will differ among the Member States and between different types of vehicles and mobility patterns. Overall simulations show that prices in urban areas will increase more significantly than in rural areas as congestion and noise are more problematic in agglomerations. This  also means that on average price increases 
are more likely to occur where public  transport is better developed. 
                                                
 
65 The REFIT indicators are based on scenario 5a of the IMPACT study described in annex 10. 
Compared to Policy Option 3A, scenario 5A includes accident costs and applies marginal 
infrastructure costs. The increase in the affordability index would be lower under policy option 3A. 
EN 75   EN On average lower income people tend to use more public transport although in some 
countries the proportion of low income people owning a car is almost half of households. 
When they use public transpor t, they will not feel impacted by charging private cars. 
According to a study carried out by Gallup in  2007, the predominant profile of the owner 
of private car is a man, 25-39, li ving in a rural area and having  a high level of education. 
Studies tend to show that low-income people are less numerous to own their car. It might 
be added that respondents of the public cons ultation have suggested that low-income 
people are typically more exposed to externalities, as  they tend to live in  areas where real 
estate prices are lower often due to externalities. Accordingly, they might benefit proportionally more from the reduction of external ities – an effect that is not captured in 
modelling.  
Although in most cases social inclusion will as far as foreseeable not be compromised, 
there might be specific situations where a fu ll internalisation of external costs leads – 
without compensating efforts – to a socia lly undesirable situation (e.g. unduly limiting 
the mobility of physically handicapped, preventing low-income earners to work). In such exceptional cases which are – given the regiona l type of changes – better assessed on the 
Member States or regional level compensa tory measures are to be put in place.  
Finally the social impact of the internalis ation will vary very much with the way the 
revenues are used.  
5.4.5.  Fatalities 
The change in mobility patterns is expected to lead to a decrease in fatalities as most of 
accidents occur in road transport mode. Unsu rprisingly, fatalities would decrease as 
compared to the reference scenario.  
Graph 5.22: Fatalities 
Evolution of fatalities in road 
-9,00%-8,00%-7,00%-6,00%-5,00%-4,00%-3,00%-2,00%-1,00%0,00%1,00%
PO 2A-central
estimatesPO 2A- only
MS with tollsPO 2A- high
estimatesPO 2B- existing
fuel taxPO 2B- low er
fuel taxPO 2C PO2C (all) PO 3A PO3bchanges relative to reference scenarioPassengers
Freight
Total
 
Source: TRANTOOLS 
EN 76   EN 5.4.6.  Welfare and regional impact 
Internalisation should improve welfare as the reduction of external co sts is expected to 
compensate the increase in transport co sts (see section on efficiency above).  
In the current modelling exercise, the positive impact of the decrease in externalities is 
higher than the loss of welfare due to the incr ease in transport costs. Table 4 in annex 13 
reports the distributional eff ect of charging across region s and shows that congestion 
charging leads to higher net welfare. Welf are gains range between 800 millions and 2 
billions euros.  
However, the distribution of welfare is not equal across Europe and some regions might 
lose from it.  
Obviously, the impact on regions will be different across Europe according to their 
geographical situation. Some regions are losin g, but overall the negative impact is quite 
moderate across Europe. The results pr ovided by TRANSTOOLS provide evidence of 
the evolution of welfare across regions in Europe. The welfare gains/losses depend on the 
increase in the generalised cost s of transport and the change in external cost (see annex 
12 for methodology).  
The GRACE study on socio economic effects pr icing uses the CG Europe model to 
analyse the welfare effect in regions. Three s cenarios are analysed: (1) fuel tax for cars 
and flat km tax for trucks covering air pollu tion, congestion, accidents, noise and wear 
and tear, (2) fuel tax to internalise climate cha nge and flat km tax for other external costs, 
(3) combination of fuel tax and km tax with differentiation by count ry, time, zone, road 
type and vehicle. The overall effect on regions  is negative for all scenarios as transport 
prices are raised, which affects products s upply (reduced product dive rsity) and welfare. 
The percentage of real income reduction is  maximum -0.11% in EU27, but would need to 
be corrected for gains in congestion, environment and accident costs of more than 2%66. 
The gains/losses vary across regions. The most negative effects accrue to the peripheral 
regions (northern Sweden and Finland), Greece, southern Spain, Baltic states).  
5.5. Sensitivity analysis 
The analysis above has described the impact of the three broad policy options – 
represented in scenarios 2, 3 and 4. In order to deepen  it, the variants of scenario 2 have 
been tested against other assumptions (descr ibed in annex 12). Thes e different tests aim 
at checking:  
– the EU approach to charging (binding or optional for Member States) 
– the impact of having high values of external costs 
– the impact of the level of fuel tax 
– the impact of including passenger cars in congestion charging as congestion is caused 
by both cars and freight vehicles.  
                                                 
66 The socio economic impacts of transport pricing reforms. GRACE, Deliverable 9, January 2008. 
EN 77   EN These variants are described in annex 10.  
Variant PO2A has differentiated between op tional and binding char ging for air pollution 
and noise. Therefore, optiona l charging has onl y been modelled fo r some countries 
having already tolls. In addition, another va riant tests the same charging taking high 
value of external costs.  
Variant PO 2B has assumed two levels of fuel tax to reflect CO2 mark-up.  
Variant PO2C has tested two ways of ch arging for congestion. The first one would 
charge congestion only for freight trans port. The second one would extend congestion 
charging to passenger cars.  
Assuming that only Member States with existin g tolls charge for external costs reduces 
the decrease in road freight traffic. The tw o variants of PO2C display the strongest 
impact in terms of modal sh ift and reduction of  road freight traffic. Obviously, 
congestion charging for passenger cars ha s a negative impact on their mobility. 
Interestingly, the reduction of  environmental costs is stronger in PO2B with existing fuel 
tax (-2.14% of CO2 costs, -1,29% of PM10 co sts) and PO2C all (-2.84% of reduction of 
CO2 costs, -1,27% of PM10 costs). This mean s that charging for congestion in freight 
and passenger leads to the same range of re duction of environmenta l external costs as 
charging for CO2 (see annex 13 for graphs).  This finding is not surprising and is 
consistent with empirical literature. The st rong reduction of CO2 em issions in PO2C(all) 
is mostly due to the reduction of fuel consumption (see section 5.1.4 on congestion).  
Graph 5.22: Analysis of impact on freight transport (ton km) 
Impact of charging road freight transport (PO 2 variants)
-10,00%-5,00%0,00%5,00%10,00%15,00%
Maritime Rail Road IWW All modesChanges in tkm relative to reference scenarioPO 2A-central estimates
PO 2A- only MS with tolls
PO 2A- high estimates
PO 2B- existing  fu el tax
PO 2B- lower fuel tax
PO 2C
PO2C (all)
 
Source: IMPACT/TRANSTOOLS  
EN 78   EN Graph 5.23: Analysis of impact on passenger transport (passenger-km) 
Impact of charging road freight transport  on passenger transport (PO 2 variants)
-2,00%-1,00%0,00%1,00%2,00%3,00%4,00%
Aviation Rail Road All modesChanges in number of trips relative to reference scenarioPO 2A-central estimates
PO 2A- only MS  w ith tolls
PO 2A- high estimates
PO 2B- existing fuel tax
PO 2B- lower fuel tax
PO 2C
PO2C (all)
 
Source: IMPACT/TRANSTOOLS  
All the variants induce a reduc tion of congestion except scenario 2B with a lowering of 
fuel tax. The reduction of congestion with opti onal charging is almo st zero (-0.04%) 
compared to the other varian ts (see annex 12 table 2).  
5.6. Implementation Costs 
Implementing a charging system would lead to  implementation costs. Obviously, most of 
the costs would arise in road transport.  
5.6.1.  Implementing charging in road transport based on a GPS based technology 
Road freight transport 
In scenario 2, no kilometre charging is introduced for passenger cars, but only for HGV 
(on all roads). Such a wide geographic scope for HGV km-charging would be more 
efficient if carried out through a GPS ba sed technology, and for that reason the 
implementation costs of such a system will be estimated with the help of the cost figures 
found for the HGV charging in Germany. Based on these figures the investment costs of 
HGV km-charging on all roads in the EU-29 would be equal to 5 billion euros, and the operational costs would be 4 billion euros. The GPS base d technology installed in lorries 
can also be used for other road freight regu latory (e.g. tachograph) or commercial (fleet 
management) applications.  
Extending the system to passenger cars 
To estimate the implementation costs for pa ssenger cars of applying congestion charging 
in Europe the costs per user found by Mini stry of Transport of  Germany (2005) are 
multiplied by the total number of passenger cars in Europe. In this way the 
implementation costs are probably overestimat ed, because not all European passenger 
cars are confronted with bottleneck charges. Therefore, if it is assumed that 50% all 
European passenger cars are confronted w ith congestion charges, the implementation 
EN 79   EN costs of the congestion charging for passenger cars would be around 8 billion euros 
(investments) and 5 billion euros (operational costs). 
Table 5.4: implementation costs in road transport 
Mode Internalisation m easure Investment costs 
(billion €) Operating costs 
(billion €) 
Road Kilometre charges for HGVs, 
bottleneck charges for all vehicles 5 
8 4 
5 
Source: IMPACT 
Overview of costs as % of revenues fr om tolls according to policy options 
Taking the revenues from tolls from different policy options, operational costs would 
vary from 12 to 25% of revenues in EU25.  
Table 5.5: Operational costs as percentage of revenues from tolls – Road transport  
2020 Revenues from road 
tolls in bn € Operational costs as % of 
revenues from tolls 
Reference Scenario 
3,6   
PO 2A 15,7 31,81% 
PO2A only MS 14,1 20.53% 
PO 2B 24,4 20,51% 
PO 2C 27,4 18,24% 
PO 2C (all) 35,6 25,30% 
PO 3A 15,7 31,85% 
PO 3B 24,4 20,49% 
Source: TRANSTOOLS and IMPACT study. 
Obviously, the estimates of implementation costs are high and do not consider existing 
schemes (especially for PO2A with only Memb er States). In some countries such as 
Germany, Austria or Czech Republic, an elect ronic system is already in place and 
operational costs range between 15 and 20% of  revenues. Accordingly, the estimates 
provided above might be lower in some Member States.  
At the same time there are un certainties on the cost-effectiv eness of the charging systems 
in Member States with low traffic densities. Given the technological complexity and the level of implementation costs i nvolved, it would be reasonable to start the rollout of any 
new charging technology with pilot projects that allow experience a gradual build-up of 
experience in both system implementation and operation 
5.6.2.  Implementing charging in ot her modes of transport 
In comparison, implementation costs in other modes would be lower as they would not 
require additional investment.  
EN 80   EN Table 5.6: implementation costs per transport mode 
Mode Internalisation measure Investment costs  Operating costs  
Rail Mark-up on existing infrastructure 
charges, increased fuel duty, ETS Low Low 
Aviation LTO charges Low Low 
Inland shipping Kilometre charge Low Low 
Maritime shipping Harbour charges, ETS pm Pm 
Source: IMPACT  
5.7. Impact of the use of revenue s: earmarking to transport 
Charging transport users for th e negative consequences on ot hers in society of their 
transport decisions leads to revenues. The issu e of the recycling of these revenues must 
be considered in the appraisal of internalisation strategies: firstly, the overall net welfare effects of internalisation a nd their distribution over variou s groups in society depend 
considerably on the destination of the revenue s; secondly, as already discussed in section 
2.3.4, the revenues can be used to enhance s imultaneously the user acceptability and 
effectiveness of the intern alisation scheme, namely through helping making available 
suitable transport alternatives. Moreover, the decisions on how to spend the revenues 
may affect the political accepta bility of internalisation. 
5.7.1.  How to use revenues from internalisation? 
The revenues of internalisation can  get the following destinations: 
- Government debt reduction.  
Member States are often recommended to reduce their government debt so as to arrive at 
more sustainable public finances
67. Paying off government debt relieves pressure on the 
annual government budget arising from the in terest payments on outstanding debt, and 
hence allows for reduction of the deficit in a ll future years or for more productive use of 
government spending. In the short term govern ment debt reduction has a deflationary 
impact on the economy as the revenues are ta ken out of effective demand (more precisely 
said, the former holders of the government bonds  are generally less likely to spend than 
the charged transport users or  the government would).  
However three countervailing effects should out weigh this negative demand effect on the 
medium and long term. Firstly, public finan ces become more sustainable allowing for 
more productive government spending. Second ly, the reduction of government debt 
exerts a downward pressure on the interest rate  on national capital ma rkets (depending on 
the share of government debt service and roll -over on these markets) . Thirdly, the private 
sector faces less the prospect of future tax increases needed to finance and pay off the 
government debt. The second and third effect  together will lead  to more private 
investments and durable consumption.  
                                                 
67 See for instance the Broad Economic Policy Guid elines which are drafted by the Commission and 
subsequently approved by Council. 
EN 81   EN The net outcome has been estimated through model calculations (s ee section 5.2 for 
results and box 6 for model limitations).  
- Reduction of taxation, specifically wage taxation 
The revenues of the internalisation charges can be used as an alternative way to finance 
government spending as compared to the taxes already in place. This option would leave 
government deficit (or surplus) and gove rnment spending (both total amount and 
destinations) unaltered. It allows for lower taxes elsewhere. 
The most logical way to recycle the intern alisation revenues is through a wage tax 
reduction, both on equity and efficiency ground s. The equity argument is that the wage 
tax is a broad tax (i.e. paid by many in societ y as opposed to other in come taxes, wealth, 
profit or capital (gains) taxation). It could th us be seen as giving the revenues back to 
society in general68. However, it excludes the possi bilities to further reduce the 
externalities and to help transport service pr oviders and transport us ers more concretely 
to adapt to the internalisation charges. 
- General increase of government spending  
The additional revenues for the government can  be used as well to  increase government 
spending. This option assumes this will happen without any "earmarking", i.e. set-asides 
or reservation for specific purposes. Hence the new spending items would be selected 
through the standard budget select ion procedure. The advantage is that this enhances the 
likelihood that out of all the ca ndidate items those will be sele cted that offer the prospects 
to further enhance social welf are. However, it should be pointed out that this option 
amounts to an overall general tax increase wh ich has disadvantages from both equity and 
efficiency perspective.  
- Financing of existing transport infrastructure 
The revenues from the internalis ation charge can be used to  recoup the costs of existing 
transport infrastructure. This would help to sh ift some of these costs from the tax payers 
to the actual users of the infrastructure. Howe ver, this option has serious disadvantages as 
there is no clear relation between the envir onmental cost revenues and the infrastructure 
costs and it finances those pieces of transport infrastructure that enable the occurrence of 
the externalities; moreover it makes the introduction of more efficient infrastructure financing in the future less necessary. These three disadvantages do not apply for congestion charges which represent a payment for scarce infrastructu re capacity. Under 
the current Eurovignette regime this opti on is the only available as the tolls on 
motorways are allowed to be differentiate d according to environmental damage and 
congestion as long as the infrastructure cost recovery condition is respected. However, because there is no reas on why the internalisation revenues  should be lower or equal to 
the infrastructure costs, it is doubtful whether the allowe d variation within the toll 
schemes allows for adequate internalisation charges.  
                                                
 
68 However, the literature on Pigovian taxes points out that compensating the "victims" lessens their 
incentives to avoid the externalities and hence undermines the rationale for internalisation. Only a 
lump sum transfer unrelat ed to the actual damage would avoid doing so, but such a transfer is 
unattractive from the equity perspective, 
EN 82   EN - Compensating charged transport users  
Sluicing the money back to the charged transp ort users (individually or as group) would 
have as advantage that the burden to th is group would not go up. The polluter pays 
principle would take into account the exis ting taxation burden. A re structuring of the 
taxation could be made in order to give the right incentive.  
- Compensating externality victims 
Direct compensation could be envisaged in cas e a selected group of individuals affected 
could be identified. However, in many cases, the nature of the externality renders it 
difficult to identify exactly the individual affected.  
- Spending on mitigating measures 
This type of "earmarking" aims to use the revenues to reduce the transport externalities 
through collective ac tions. It has the adva ntage of enhancing bot h user and political 
acceptability as it helps both the transport users and the "victims" of transport externalities. It will t hus generally been seen as being equitable as well. 
Mitigating measures do not affect the proper incentives for transport users as long as they 
keep on being properly charged for the actual marginal external costs. This implies 
among other things that if the mitigatin g measures reduce an externality the 
internalisation charge should be adapted so as to reflect the new marginal external costs.  
- Financing transport alternatives  and promoting interoperability 
This type of "earmarking" aims to use the revenues to promote transport alternatives to 
the charged transport users. This may vary from providing different routes for the same 
transport mode, other transport modes, promo ting interoperability (i.e. the use of more 
than one transport mode for the travel), and innovative efforts to reduce the externalities 
of the transport in question (for instance to enhance the fuel economy of engines). It may 
also include efforts to help transport users to learn how to "cope" with differentiated charges. 
The potential significant advant age of this option is  that it boosts the efficiency of the 
transport system (in case of congestion) and helps to reduce th e magnitude of the 
externalities.  
In conclusion, except for opti on related to the direct comp ensation of charged transport 
users, all options have their rationale, strong points and risk s. Depending on the specific 
circumstances and the local social and political  preferences, they may be on their own or 
combined the best way forward. Hence, the final choice on how to spend the revenues 
should be left is to the governments r eceiving the revenues of  internalisation.  
5.7.2.  Rationale for earmarking: 
Political acceptability 
For analytical purposes it is assumed in this appraisal th at the governments involved will 
use these revenues in ways which is socia lly optimal. This is likely to include 
EN 83   EN "earmarking" parts of there revenues to mitig ating measures and to (innovative) transport 
alternatives69, because - as the discussion above has demonstrated - these options tackle 
the root of the problem of the externalities a nd so complement the incentives to transport 
users provided by the internal isation charge; because they are equitable towards the 
"victims" and because they boost user and political acceptability. 
Some of the main arguments for earmarking internalisation revenues to transport 
investments come from the international aspect s of transport and the fact that different 
political jurisdictions are involved which should not necessarily trust each other. 
Efficient charges will tend to be nefit more countries at the ce ntre where traffic including 
transit one is heavier than at the periphery. If the proceeds from internalisation are used 
to reduce labour taxes in the cen tral or transit countries, th eir employment and GDP will 
grow while their environmental conditions will improve. However, this kind of double 
dividend effect would only be reaped by the countries where transport took mostly place. 
As a result of internalisation the accessi bility costs of peripheral countries would 
increase, even if they would benefit from c ongestion reductions in the transit countries, 
which could damage the Union's cohesion objec tive. These Member States could require 
some kind of compensation as their welfare w ould be likely to suffer from the change in 
respect of the current situati on where external costs of use were not taxed. Although this 
would be a logical way to defend their national interest, from an overa ll EU perspective it 
can be asked what could be their ra tionale for asking such compensation. 
It is important to realize that "earmarking" is just a possible instrument for an objective 
which is providing compensation to the party that is damaged by the change in the law. 
This compensation could be interpreted as a part of a cohesion obj ective, as cohesion 
could suffer the effects of the new internalisati on rules. But it can also  be legitimate from 
an efficiency point of view, as argued below. 
International traffic, adequate infrastructure and Community interest 
The use of the revenues from charging ex ternalities should take into account the 
advantages for the community of international traffic. In the case of road transport, the 
share of EU27 international in total road freight traffic is 27% . However, in seven 
Member States, it is higher than 50% with  a peak of 84% in Estonia and 77% in 
Luxembourg. Given the increase in internationa l road traffic, the EU27 share is expected 
to reach 33% with a peak of 90% in Estonia.  
In the absence of earmarking, Member States  would tend to maximise their national 
welfare without taking full account  of the benefits of sustai nable mobility at Community 
level.  
From the polluter pays point of view, it woul d be clear that when the peripheral country 
trucks use the central country infrastructure they will have to pay for the external costs 
they produce, once efficient pricing for th e use of the infrastructure is applied. 
                                                 
69 This is line with the policy recommendations fr om the researcher of the GRACE project (Nash 
and Matthews, ITS, University Leeds): "smart use of  the revenues is as important as the design of 
the pricing reform." 
EN 84   EN However, peripheral Member Stat es could be entitled to request  from an efficiency point 
of view that the central countries apply a po licy of infrastructure provision which lives up 
to the efficiency and environmental obj ectives sought through the new pricing for 
infrastructure use policy. 
In fact the infrastructure polic y of the central state carries al so a "polluter" responsibility 
because the user-polluter can only choose among the existing infrastructure options 
provided by the Member State where transport takes place. A truck driver may be obliged 
to use the streets of a town because ther e are no by-passes; a transport firm may be 
obliged to use road transport because rail se rvices offer poor quality. This would amount 
to acknowledging that transport is a joint pr oduct between the infrastructure and the 
vehicle. Although in the short term it is the vehicle which triggers the externality and 
should pay for it, in the longer term the re sponsibility for the pr ovision of the right 
infrastructure corresponds to the state. 
Thus, peripheral states could feel entitled to request as compensation for increase user 
costs, that the infrastructure situation is im proved, so that external cost payments are not 
larger that what reasonable practice in infrastructure provision would require. The 
extreme case is the one in which the central country is deliberatel y keeping bottlenecks 
as a way to collect revenues.  
Therefore, peripheral Member States could ask for some kind of assura nce that the effort 
their transport firms pay as users will be ma tched by the effort of central Member States 
as reasonable infrastructure providers. A way to ensure a perfect match is through earmarking, but other kind of more political assurances could be provided, which could 
be monitored by the EU.  
Maximising welfare 
Doubts have been expressed
70 that budgetary allocation pr ocedures would always be 
responsive to welfare maximising objectives as  decisions could be biased in favour of 
particular political interests. This fear of a buses would be more rele vant in a system with 
various levels of government (European, nationa l, regional). In this  situation earmarking 
could be superior to normal budgetary de cision-making precisely because it would 
reduce the margin for political choice and guara ntee the provision of  a specific good or 
service – unless funds from other sources are reduced in an offsetting way. Apart from this, in case infrastructure has to be finan ced, it is a superior alternative to do it through 
earmarking of funds from marginal cost c ongestion charging than through levying new 
taxes, as the disutility from transport charges will be lower for transport users than that of 
taxes for the general taxpayer. Earmarking ma y require the creation of a fund to allow 
choices of best investment opportunities, to a dopt a network approach instead of a link by 
link one, and also to minimise admi nistrative and financial costs.  
                                                
 
70 "The economics of Earmarked taxes" James Buchanan Journal of Political Economy 1963, vol 71. 
The REVENUE project on the use of revenues from transport pricing (5th Framework 
Programme) provides a further discussion of these and other arguments on earmarking, as well as 
an overview of the different case s of earmarking in Europe. See deliverable 6 (pages 37 and 61) 
in: http://www.revenue-eu.org/deliverables.htm . 
EN 85   EN 5.8. The need to provide an EU framework 
Given the role of transport in the internal  market and the importance of international 
transport for the trade between Member States, an EU framework is needed to ensure the 
respect of basic principles like non-discrimination between users and proportionality of 
the charges. The possible traffic detours from  one Member State to another in case of 
uncoordinated tolling also plead for coordi nation mechanisms between Member States. 
Various measures can be envi saged ranging from simple a pos teriori controls leaving a 
great flexibility to Member States when sett ing and collecting the charges to more precise 
EU rules ensuring transpar ency and accountability.  
The absence of such rules could also result in some cases in overcharging international 
transport, which in turn may impact negative ly the mobility within the internal market. 
Overcharging may also have negative impacts at local level. First experiences of tolled 
motorways in Hungary in the 90' have for inst ance failed because of charges set at a level 
beyond the capacity to pay of users. The mo delling results in Annex 12 gives some 
indication of the impact of ch arging external costs on the basi s of high estimates (variant 
of Policy option 2). It has to be taken into  account that Member  states are already 
allowed to charge tolls that make the full rec overy of infrastructure  costs possible, which 
can have a significant effect on the operating costs of transport users. 
Moreover the approach taken in Directiv e 1999/62/EC as far as  the recovery of 
infrastructure costs is concerned was to set such types of EU rules ensuring transparency 
and accountability. Modifying th e Directive to enable exte rnal cost charging without 
similar rules would constitute a radical cha nge which would go beyond the request of the 
EU co-legislator. 
5.9. Administrative costs 
Administrative costs have been assessed in road freight transport as a revision of the 
Eurovignette directive is proposed. Admini strative costs would be related to the 
implementation of the revised Directiv e 1999/62/EC and would concern national 
administration and the need to enforce this di rective. It should not entail administrative 
costs to companies.  
Table 2 in annex 14 gives indications of administrative costs for Germany (data 
available). Assuming that 10 Memb er States will decide to apply an external cost charge, 
administrative costs related to enforcemen t and reporting would amount to 11 500 euros 
per year (on the basis of German labour costs) . Costs related to the setting of an authority 
to estimate the charges would lead to ex tra costs of 137000 euros (on the basis of 
German labour costs). 
6. COMPARISONS OF POLICY OPTIONS  
The analysis of impact described above has relied on quantitative re sults and qualitative 
analysis. The comparison of scenarios shoul d allow identifying the policy option of 
internalisation which could better contri bute to achieving the general objective of 
sustainable transport. It should also lead to  a selection of policy options implementing the 
operational objective, i.e. proposin g a strategy of internalisati on of external costs for all 
modes of transport and allowing the revision of Directive 1999/62/EC.  
EN 86   EN 6.1. Comparing Policy options 
Which policy options ensure sustainable mobility? 
As mentioned above, internalisation helps prov iding a correct price si gnal to the transport 
users. Improved social efficiency is expe cted to modify behaviours and hopefully to 
decrease externalities. This impact assessm ent has also established the limits to assess 
correctly social efficiency and the extent to wh ich the level of internalisation is efficient.  
The comparison of options looks at several criteria based on mobility, competitiveness, 
environment and social cohesion. First, as stressed in the White Paper of 2001 and its 
mid term review in 2006, mobility should be main tained in order to en sure the circulation 
of goods and persons. Second, sustainability  is crucial when promoting mobility. 
Therefore, the decrease of environmental nuisa nces will be another important aspect of 
the comparison. Third, sustainable mobility shou ld be consistent with the objectives set 
by the Lisbon agenda which is to promote the competitiveness of EU economies. As a 
result, economic impacts of  internalisation sh ould be taken into account. Fourth, 
internalisation should not threaten social cohesion. Finally, implementation costs of a 
charging system should not burden too muc h. Otherwise, they would water down the 
benefits of the exercise.  
These elements should be reflected in the different patterns of mobility which in turn 
influences the decrease in external costs.  Welfare should be im proved as long as the 
reduction of external costs compensates the increase in transport costs. This positive 
circle should affect positively competitiveness in a longer term.  
From the comparison of options, some trends can be identified. 
In all policy options, internalis ation of external costs does no t hamper mobility in Europe 
although charging modifies the choice of transport users and influences modal split. However, it appears that charging for congestio n in road transport leads to more positive 
effects as it contributes to saving tim e while decreasing fuel consumption and 
environmental nuisances. As congestion is main ly concentrated in road transport, the 
positive effects are largely captured when char ging congestion in road transport only and 
not in other modes. The economic impact of in ternalisation of external costs is negative 
in the short term as the increase in transpor t costs overbalances the other effects. On the 
whole, one could think that the reduction of  external costs – c ongestion, environmental 
costs, and the reduction of fatalities will im prove the overall competitiveness of Europe 
as these costs are currently borne by the European society at large. Moreover, charging for congestion induces savings in time which will be translated in productivity gains for 
business.  
EN 87   EN Table 6.1: Comparison of policy options ba sed on selected criteria: Revising the 
Eurovignette Directive  
 PO 2A  
Charging for Air 
pollution and noise 
in road freight 
transport  PO2B  
Charging for Air 
pollution, noise and 
CO2 in road freight 
transport  PO2C 
Charging for Air 
pollution, noise and 
congestion in road 
freight transport 
Mobility Mobility is 
maintained in freight and passenger transport: + 0.33% 
The sensitivity 
analysis has shown 
that impacts are reduced if only some Member States charge (freight mobility increases by +0.09%). Mobility is 
maintained in freight and passenger transport: +0.38% Mobility has the 
stronger increase as modal shift is higher in this scenario. +0.77% in freight. 
Congestion charging 
for passenger and freight induces a decrease in passenger traffic (-0.42%).  
 
Congestion Low impact Low impact Congestion charge 
reduces congestion. 
Charging for all transport users (passenger and freight) strengthens the positive impacts.  
Sustainability Reduction of air 
pollution (-1.17%) 
and co2 costs (-
1.81%).     In this scenario, the 
reduction of CO2 is 
comparatively higher 
as a CO2 charge is applied (-2.14%). Air pollution costs decrease by -1.33%. 
 Congestion charges 
have positive effects 
on the reduction of air 
pollution (-0.76%) and CO2 (-2.09% and -2.84% if passenger and freight are 
charged for 
congestion). Interestingly, the impacts are similar to applying a CO2 charge.  
Competitiveness In the short run, the 
impact on GDP is 
negative (-0.2%) as transport costs have increased.   In the short run, the 
impact on GDP (-
0.03%) is slightly negative as transport costs have increased.  Charging for 
congestion increases 
time savings which may have positive impact on efficiency. The reduction of GDP is slightly (-0.04%) 
Employment Almost no effect (-
0.14%) Negative effects (-
0.02%) Negative effects (-
0.04%) 
Equity No impact No impact This policy option 
would have impact on 
equity as passenger would be charged. 
EN 88   EN However, the example 
of London shows that improving alternatives 
may have also 
positive impacts.  
Fatalities The reduction of road 
traffic induces a decrease in fatalities (-0.8%).  Decrease in fatalities 
(-1.07%)  Congestion charges 
induce a higher modal shift. As a result, the reduction of fatalities would be higher (-
1.06%).  
Welfare Net welfare gains 
(+0.8 bn euros, 2020) Net welfare gains 
(+0.8 bn euros, 2020) Net welfare gains 
(+1.8 bn euros, 2020). 
Implementation costs High. 
However, if some 
Member States having already toll system to implement such charging, 
implementation costs 
would be lower.   High.  
 Lower as revenues 
from congestion 
would be higher. However, charging for passenger will increase costs.  
Public acceptability Environment is seen 
as an importance nuisance.  Environment is seen 
as an importance nuisance.  Congestion is seen as 
an importance nuisance in road transport.  The results of the 
consultation show 
strong support to charging congestion for passenger and 
freight. 
(44.8% for 
all respondents, of which 64.2% are citizens and 35.7% are organisations)
 
EU value added Current restrictions to 
internalisation have to 
be raised.  
Internal market freedoms require coordinated approach. Current restrictions to 
internalisation have to 
be raised.  
Internal market freedoms require coordinated approach. Current restrictions to 
internalisation have to 
be raised.  
Internal market freedoms require coordinated approach. 
Technical feasibility Learning period 
required for some countries and interoperability issues.Learning period 
required for some countries and interoperability issues.Learning period 
required for some countries and interoperability issues. 
Implementation more 
difficult if passenger charging is foreseen. 
Regulatory feasibility Proposal to revise 
Directive 1999/62/EC Proposal to revise 
Directive 1999/62/EC Proposal to revise 
Directive 1999/62/EC 
* % corresponds to % of change in 2020 relative to reference scenario. 
EN 89   EN From the quantitative and qualitative analys is, the option including congestion charges 
seems to offer the best results. First, the reduction of time spent induces positive effects in the economy as transport goods flow  more easily. Second, congestion charging 
induces strong reduction of external costs.  Freer flows impact on fuel consumption, 
which in turn induces less CO2 emissions. For these reasons, welfare e ffects are higher in 
this scenario. 
As regards the other modes of transport, policy options 3A and 3B show the positive 
impact of including all modes of transport. The difference between 3A and 3B comes 
from the application or not of a CO2 mark-up in road freight transport. As a result, the 
decrease in CO2 and air pollutio n is stronger when road frei ght transport is charged for 
CO2. However, the comparisons of all vari ants of PO2 (charging in road freight 
transport) has shown that congestion chargi ng had roughly the same magnitude of impact 
on environment and was contributing to improving overall efficiency.  
Policy option 3 shows that when charging all modes of transpor t, mobility is maintained 
while environmental emissions and fatalitie s decrease. Congestion is not analysed, 
therefore all the positive impact s due to congestion charging are not provided in this case. 
From an acceptability point of view, the publ ic consultation has s hown strong support to 
charge for all modes of transport. However,  the international dimension of maritime and 
air transport needs to be considered when  implementing an inte rnalisation strategy. 
Table 6.2: Comparison of policy options based on selected criteria: Strategy 
to internalise external cost s in all modes of transport 
 PO3A 
Charging for air pollution, noise 
and CO2 in non road transport. Charging for air pollution and noise in road transport PO3B 
Charging for air pollution, noise and 
CO2 in all modes.  
Sustainability Reduction of air pollution costs (-
1.5%) and CO2 costs (-2.2%).   Reduction of air pollution costs (-1.5%). 
The reduction of CO2 (-2.3%) is comparatively higher as a CO2 charge is 
applied in road transport.  
Mobility Mobility is maintained in freight  (+0.3%) and passenger (+0.1).  
 
Competitiveness In the short run, the impact on GDP (-0.2%) is negative as transport costs 
have increased.  
 
Employment Negative effects (-0.14%) 
Equity No impact 
Fatalities Reduction of fatalities (-1.2%) 
Welfare Net welfare gain (+0.8 bn euros in 2020 for 3A, 0.9 bn euros in 2020 for 3B) 
Implementation 
costs High. 
Public 
acceptability High as all modes of transport would be treated on the same ground. 
EU value added Need of a coordinated approach. 
Regulatory 
feasibility Need to take into account the intern ational regulatory framework for air 
transport and maritime.  
 
EN 90   EN Preferred options: Strategy to internalise external costs in all modes 
For reason of fairness, all m odes of transport should be co ncerned by internalisation. 
However, given the international framework of maritime, aviation and inland waterways, the strategy will be developed in  a longer term perspective.  
The comparison of scenarios gives some indica tion of the preferred policy option. Option 
3 covers other modes and would involve inte rnalising air pollution, noise and CO2 in the 
other modes. Enlarging internalisation to other modes of transport improves overall 
sustainability.  
On this basis, a work programme would be  elaborated, taking into consideration the 
convenience of charging for ex ternal costs (air pollution, noi se, CO2) in other modes of 
transport.  
In railways directive, this impact assessm ent has already mentioned that charging 
external costs was already foreseen in  the existing EU legislation (Directive 
2001/14/EC).  
In air transport, the inclusion in ETS is an important step to fight against CO2 emissions. 
Ongoing work on the reduction of Nox emissions  would give the opportunity to analyse 
pricing mechanism in this context.  
In maritime, the growth of CO2 and air po llutants emissions shows the need to have 
actions in this field. Given the international framework for maritime, a solution such as ETS could be one of the outcomes of the analysis.  
Finally, reflection will also be carried out in  inland waterways, taking into account that 
many of them have their specific regu latory environment,  e.g, the Mannheim 
Convention. 
Preferred options: Revision of Directive 1999/62/EC in June 2008 
As mentioned above, road freight transport cont ributes to a large shar e of external costs. 
Internalising these costs, which requires  a modification of Directive 1999/62/EC is 
therefore an essential component of the broader strategy to inte rnalise external costs in all 
modes of transport.  
Tackling road freight transport ex ternal costs is not the first step of this broader strategy 
since a proposal has already been made for in clusion of aviation in ETS. The revision of 
Directive 1999/62/EC provide fu rther opportunities to  internalise external costs in rail 
transport.  
Acting in road transport while other policy in itiatives in other mode s are being developed 
would not negatively affect the trend in externalities, since it would be consistent with 
higher relative charging of the mode  with larger externalities.  
In this framework of analysis, the policy op tions corresponding to 2C seem to offer the 
best combination in terms of mobility and sustainability. Differentiated charging scheme 
based on the costs of air pollution and noise allows taking into account local 
environmental externalities. Integrating into  such schemes a conge stion charge produces 
EN 91   EN time savings which lead to a positive imp act on the economy at large. Congestion 
charging is more efficient if passenger a nd freight transport ar e concerned as both 
compete for the same infrastructure. This el ement is supported by the result of the public 
consultation which gave support to an option "charging for freight and passenger cars”. 
In addition, the reduction of travel time al so contributes to reducing CO2 emissions. 
Interestingly, charging for freight an d passenger cars lead s to a reduction of 
environmental costs similar to policy opti ons that include a specific CO2 mark-up.  
The analysis has assumed that all Member Stat es are charging. Howeve r, the benefits and 
drawbacks of a mandatory versus and opt ional/empowering approach have been 
considered together with the link to subsid iarity issues. A number of considerations 
suggest considering first an empowering approach: 
- There may still be uncertainties related to th e costs, benefits and the enforcement of the 
required tolling systems on the networks of so me Member States with lower traffic hence 
with low levels of externalities.  
- A binding approach based on a mandatory charge would constitute a radical change 
compared with the current Directive and could hardly be envisaged without a transitional 
period.  
- Member States have traditionally followed differing approaches regarding infrastructure 
charging and consequently have different levels of experience  with the tolling technology 
involved. Interoperability i ssues are not yet solved. 
- A flexible and gradual phasing in approach  would allow the new charging schemes and 
tolling technology to be trialled in Member  States where the geogr aphical conditions are 
the most appropriate. 
- The actual implementation and operational e xperience gathered in the early adopter 
Member States would allow at a later stag e to carry out a thorough stocktaking. A joint 
assessment of the pros and cons of making external cost charging mandatory for all 
Member States and the required degree of EU  co-ordination can be reassessed then.  
Member States which experience an increa se of traffic diverted from charging 
neighbouring countries would have an incentive to start charging for external costs. This 
incentive could also exist under th e current Directive 1999/62/EC.  
Such a policy option, based on an enabling approach, would entail the revision of 
Directive 1999/62/EC as a first step of the strategy of intern alisation. The main 
modifications would be: to authorize the calcu lation of road charges on the basis of the 
external costs, namely air po llution, noise and congestion and to differentiate the charges 
accordingly. Such charging schemes would be  subject to a number of conditions to 
improve their efficiency and their chance of success like the use of electronic free flow tolling technologies to faci litate implementation by reducin g costs, local inconveniences 
and allow a subsequent extension to all roads.  For subsidiarity reasons, the Directive will 
not cover passenger cars. However, charging to  reduce congestion is more effective if 
other road users outside the scope of this Directive are also covered by a scheme of 
similar nature. This positive impact should be acknowledged.  
EN 92   EN 6.2. Common principle: earmarking of the revenues 
Earmarking revenues to transport 
Part 5 has shown that the use of revenues contributes to improving the economic impact 
in the short term as it compensates for the draining of resources that has taken place 
through charging. Recycling revenues in  the economy boosts investment and 
consumption in the short term, which induces smoother impact on employment and GDP. It may be through lowering direct taxes, earma rking to transport and/or to the reduction 
of externalities. In all cases,  public expenditure has to be subject to appr aisal with the 
same quality benchmarks. 
Transport economists agree on the importance of acceptability when implementing a new 
pricing scheme
71. Earmarking to transport is one asp ect that can contribute to improving 
the acceptability by transport users. Such pr eference was also expressed during the public 
consultation (see annex 1). 
Earmarking in the context of th e revision of Directive 1999/62/EC 
In the case of road transport, the use of the revenues from chargi ng externalities should 
take into account the advantages for the comm unity of international traffic. In section 
5.7, it has been stressed that the share of intern ational road traffic is expected to grow and 
could reach one third of the tota l road traffic. For this reasons, Member States could be 
tempted to ignore the benefits of this tra ffic and invest in pr ojects that would not 
correspond to the Community interest.  
It should also be considered that in the part icular case of congesti on charging, it has to be 
recalled that payments reflect the capacity scarcity and indicate the need and provide 
resources for further expansion.  
The argument for earmarking of charges to in frastructure funding as an alternative to 
relying on traditional budgetary allocation is particularly rele vant when considering road 
transport in the European Union. In this cas e road charges will be borne initially by the 
transport firm and at the end by the consumer, but in the case of transit flows, it is quite 
clear that both the transport firm and the final consumer are residents in other countries. Therefore, there is no particular reason why they (and their Member States) should be 
confident at all that the budgeta ry processes in the transit c ountry will provide them with 
any kind of satisfactory expend iture programme. While they may admit that their trucks 
should be obliged to pay, they will be asked to  accept a loss with respect to the situation 
currently established by the Eurovignette Di rective without any kind of guaranteed use 
for the new charges they will have to pay  
As a result, earmarking of the revenues will be  proposed in the context of the revision of 
Directive 1999/62/EC and in th e broader strategy of intern alisation in all modes of 
transport. 
                                                
 
71 See I. Mayeres, Taxes and Transport Externa lities, WPn°2002-11. See also research projects 
AFFORD, PRIMA described in . Sikow Magny (footnote n° 26). 
EN 93   EN 6.3. Ensuring EU coordination 
The EU should oversee that th e introduction of charging for external costs is done in a 
coordinated way to preserve the integrity of  the internal market and the freedom of 
circulation for people and goods.  
As said before, the most important provisions  in the current Directive on charging trucks 
aim at ensuring the proportionality (avoid overcharging) and non- discrimination, hence 
transparency and accountability of the charging schemes used to recover infrastructure costs. These provisions are the recourse of common charging principles, including a 
common method to calculate the costs. Member States can decide to recover only parts of 
the costs calculated accordi ng to this common methodology.  
As to external cost charges, a similar appr oach appears a reasonable way of ensuring the 
required accountability whilst leaving some flexibility to Member States.. The new 
Directive would therefore allow external cost  charging provided that the external costs 
are calculated according to a common method. Other measur es like the designation of 
independent authorities and re porting mechanisms would reinforce the transparency and 
the accountability. 
7. M
ONITORING  
7.1. Monitoring of external costs 
In line with the general, the specific and the operational objec tives of the impact 
assessment it is proposed that the effectivene ss of the implemented measures is evaluated 
through the monitoring of the le vel of negative externalities generated by the transport 
activities. It is suggested that as much as possible existing indicators  are to be used for 
the monitoring. 
Congestion levels will be monito red only on the road or other in frastructure sections that 
are subject to congestion char ging measures implemented in the framework of this 
proposal. 
Accident levels will be  monitored using the number of road fatalities. 
Air pollution generated by transport will be monitored within the framework of Council 
Directive 96/62/EC on ambien t air quality assessment and management and Commission 
Decision 2004/461/EC specifying the format and content of member States Annual 
Report on ambient air quality in their territo ries. This directive describes the basic 
principles as to how air quali ty should be assessed and managed. Monitoring will focus 
on NOx, PM10 and SO2 emissions. Furthermore the EEA and Eurostat have developed 
indicators to monitor the impact s of air po llution on human health and the environment. 
Greenhouse gas emissions generated by trans port will be monitored using the fuel 
consumption statistical figures. 
Measurement of noise generated by transport will be done in the framework of the 
Directive on Environmental Noise (Dir ective 20002/49/Ec of 25 June 2002) which 
requires the competent authorities in Member st ates to draw up “strategic noise maps” for 
EN 94   EN major roads, railways, airports and agglom erations, using harmonised noise indicators. 
These maps can be used to assess the numb er of people annoyed and sleep disturbed. 
It is acknowledged that, as the internalisation of  external costs of tran sport is likely to be 
used in combination with ot her policy instruments such as  regulation, infrastructure 
policy or research support, it will not always  be possible to clearly establish to what 
extent a particular impact is due  to any specific policy measure. 
7.2. Reporting on the Directive 1999/62/EC 
Furthermore, to ensure that any tolls or us er charges introduced pur suant to the proposed 
Directive amending Directive 1999/62/EC on th e charging of heavy goods vehicles for 
the use of certain infrastructures function in a transparent and non-discriminatory 
manner, it is proposed that the Member States  which levy an external cost charge shall 
draw up a report on the application of the exte rnal cost charge every two years. This 
report will show the total revenue raised in  the Member State thr ough the external cost 
charge, the total number of vehi cle kilometres travelled on the road sections subject to 
the charge (with both indicators calculated fo r the vehicles to which the external cost 
charge applies) and the specific amounts of th e external cost char ge levied for each 
combination of class of vehicle, type of roads and period of time. 
7.3. Extending the analysis to  other external costs 
A mid term review could be ca rried in order to update, if n eeded, estimates of external 
costs. In addition, the mid term review could also comprise other external costs such as 
space occupancy, biodiversity, landscape use, etc.  
EN 95   EN Annex 1: Results of public consultation  
1 B ACKGROUND  
The Commission is currently developing a mode l for the assessment of external costs of 
transport. This was requested by the Eu ropean Parliament when it approved the 
Eurovignette Directive in Ma y 2006 which states that: “ No later than 10 June 2008, the 
Commission shall present, after examining all options including environment, noise, 
congestion and health-related costs, a generally applicable, transparent and 
comprehensible model for the assessment of all external costs to serve as the basis for 
future calculations of infrastructure charges ”. The Directive adds that: “ This model shall 
be accompanied by an impact analysis of the internalisation of external costs for all 
modes of transport and a strategy for a step wise implementation of the model for all 
modes of transport. The report and the mode l shall be accompanied, if appropriate, by 
proposals to the European Parliament and the Council for further revision of this 
Directive ”. 
The Commission is now carrying out an im pact assessment which will support the 
strategy on internalisation of external costs. To this end, a consultation paper (available at 
http://ec.europa.eu/tran sport/costs/con sultations/index_en.htm) has been prepared and an on-
line questionnaire was submitted. 
The consultation started on 29 October 2007 and closed on 31 December 2007. The 
questionnaire received 469 replies and 16 position papers on the matter were submitted in the meantime.  
2 G
ENERAL INFORMATION ON RESPONDENTS  
Out of the 469 respondents, 68% were individual respondents and 31% were 
organisations. Among the individuals, many ar e young people. Most come from the EU. 
The majority of the respondents live in citie s (metropolitan or towns). They use car and 
public transport for their daily mobility and us e train, car and planes for longer journeys.  
As regards organisations, most of them ar e professional organisations. All modes of 
transport are represented. 
3 E XTERNAL COSTS OF TRANSPORT  
The questionnaire72 asked the participants to ra nk the following external costs – 
congestion, accidents, noise, air pollution, clim ate change – accordin g to their magnitude. 
According to respondents, environmental co sts – air pollution, climate change, noise – 
are the most important nuisances in transport (in all modes).  
The picture slightly differs across modes of tr ansport. In road transport, air pollution and 
congestion appear as the most important nui sance for the majority of respondents. In 
railways, noise is seen as the most serious one. In aviation, environm ental costs – noise, 
air pollution and climate change – are cons idered as the most important while air 
pollution and climate change have been ranke d first in maritime and inland waterways. 
                                                 
72 See Annex 1 the full Questionnaire. 
EN 96   EN Graph 1a 
1.1 - 1.5: Which external costs impose nuisances on other users and society?
air pollutioncongestionaccidentnoiseclimate change
0 , 01 , 02 , 03 , 04 , 05 , 0Road
average rate
* 409 respondents - Scale 0 (low  nuisance) to 5 (high nuisance) Road Transport*
 
Graph 1b 
1.1 - 1.5: Which external costs impose nuisances on other users and society?
noiseair pollutionclimate changecongestionaccident
0,0 1,0 2,0 3,0 4,0 5,0Rail
average rateRail Tr ans port*
* 228 respondents - Scale 0 (low  nuisance) to 5 (high nuisance)  
Graph 1c 
1.1 - 1.5: Which external costs impose nuisances on other users and society?
noiseair pollutionclimate changecongestionaccident
0,0 1,0 2,0 3,0 4,0 5,0Air
average rate
* 370 respondents - Scale 0 (low  nuisance) to 5 (high nuisance) Air Trans port*
 
EN 97   EN Graph 1d 
1.1 - 1.5: Which external costs impose nuisances on other users and society?
air pollutionclimate changeaccidentnoisecongestion
0,0 1,0 2,0 3,0 4,0 5,0Maritime
average rate* 175 respondents - Scale 0 (low  nuisance) to 5 (high nuisance) Maritime Transport*
 
Graph 1e 
1.1 - 1.5: Which external costs impose nuisances on other users and society?
air pollutionclimate changenoisecongestionaccident
0 , 01 , 02 , 03 , 04 , 05 , 0Inland Waterw ay s
average rate* 127 respondents - Scale 0 (low  nuisance) to 5 (high nuisance) Inland Waterways Transport*
 
4 W HAT ARE THE MAIN EXPECTATIONS OF INTERNALISATION OF EXTERNAL 
COSTS ? 
The primary objective of the internalisation of ex ternal costs is to ensure that the prices 
paid by transport users reflect the costs they ge nerate, including extern al costs. More than 
80% of all respondents agree or agree strongly with the principl e of internalising external 
costs generated by transport.  
EN 98   EN Graph 2 
2.1. Do you agree that it is important to internalise the external costs generated by transport?
53%
28%10%6%3%
Strongly agree
Agree
Disagree strongly
Disagree
No opinion
* 469 respondents
 
Participants were asked to express their view s on the main expectations they have with 
regards to internalisation. More specifically, they were asked to describe advantages and disadvantages of internalis ation for the economy, society and the environment. 
Advantages/Disadvantages for the economy 
According to respondents, increased efficiency  is one of the most important expectations. 
The internalisation of external costs is seen to allow the elimination of market failures 
and the improvement of the allocation of re sources. It would decr ease distortions of 
prices created by the fact that users do not al ways bear the full cost s of their decisions. 
Efficiency is also considered to mean more efficient use of transpor t and then a decrease 
in logistics costs.  
Respondents also expect local production to increase . In other words, the 
internalisation of external co sts could lead to the reloca tion of activities from third 
countries to EU, which would benefit to the whole economy.  
Among the concerns expressed, appears the increase in costs of transport  which could 
affect European competitiveness. It could al so favour inflation and have negative effects 
on the aggregated demand. In addition, a reduc tion of mobility could also affect the 
freedom of circulation of people and goods.  
Some of the respondents highlighted the need  to make a thorough impact assessment on 
these effects. Moreover, they stressed the need  to take into account existing charges and 
taxes.  
Advantages/Disadvantages for society 
In general, respondents think th at the advantages for society would be important. Most of 
them expect a reduction of nuisances and an impr ovement of the quality of life, as well as 
positive effects on public health and road safe ty. The internalisation of external costs 
would lead to promote fairness in society  to the extent that transport users would bear 
all the external costs they generate.  
EN 99   EN Some respondents have highlighted that lo w income social categories are the most 
affected by nuisances (living near noisy a nd polluted areas). If those nuisances are 
reduced, these categories would benefit the most from it.  
As regards social effects, on one hand, res pondents think that th e development of new 
activities (due to increased at tention to environment) could create new jobs. On the other, 
if is feared that the loss of competitiveness due  to increased costs could lead to job losses. 
Investment in public transport is considered  to improve equity and favour low revenue 
social categories.  
Advantages/Disadvantages for the environment 
Respondents expect environmental nuisances to  decrease. It is hoped air pollution, noise, 
congestion and accidents could be reduced and th at the use of cleaner modes of transport 
– public transport, cycling and walking – would also contribute to reducing 
environmental nuisances.  
According to participants, the internalisation of  external costs could lead to modal shift in 
favour of cleaner modes of transport. Ther efore, the impact on environment would be 
positive and a reduction of externalities could be expected. 
Not all respondents, however, agree that in ternalizing external costs would have a 
positive impact on environment. Some of them consider that increased transport prices would not imply a significant decrease of traffic flows; therefore, the impact on 
environment would be negligible. 
How could the negative effects be reduced?  
Very often, respondents consider that prici ng is a good instrument. However, for many of 
them pricing should be part of a combina tion of other policies.  Technology policy is 
identified as an important one as innovati on is one of the key drivers to reduce 
externalities. Many think the policy mix shoul d also include “classi c” instruments such 
as traffic management, provision s for car-free city centres, etc. Standards also play an 
important role. In addition, it has been empha sized that one should not underestimate the 
positive role of investing in infrastructure and in public transport.  
Public transport, especially in urban areas, is considered a key poi nt to develop clean 
transports and sustainability.  
4 H
OW TO INTERNALISE ? POLICY OPTIONS TO INTERNALISE  
The consultation paper descri bes possible ways to intern alise using options to use 
economic instruments for each external costs – charge, tax and tradable permits. All these 
instruments have their own advantages and disadvantages and can be adapted to deal 
with specific external costs. 
Congestion costs 
Most of respondents welcome th e internalisation of congesti on costs. They stress that 
congestion is mostly a local or  regional problem and this need s to be taken into account. 
EN 100   EN Respondents also highlighted the need of harmonisation at  EU level. Complementary 
instruments such as the development of th e infrastructure network and information 
technology were also mentioned in the co mments. As regards congestion in road, 
participants seem to prefer charging for a ll users – passenger and freight – rather than 
charging only freight. In scheduled transpor t, participants recalled that congestion 
charging is already implemented in some airports or within the existing railways 
directive.  
Some of the respondents, however, did no t agree on congestion costs being an 
externality, as they claim these costs (time loss) are already inte rnalized amongst road 
users themselves. 
Graph 3 
3.1.2-3.1.6 Which actions would you favour to tackle congestion and scarcity cost?
0%10%20%30%40%50%60%70%80%90%100%
road rail air maritime iwwNo opinion
No new action
Tradable permit (for freight)
Congestion charges for passenger (including cars)
Congestion charges for freight
Congestion charges for freight + passenger (including cars)
Congestion / Scarcity charge
* 469 respondents for road, rail, air, maritime, inland w aterw ays (iw w )
Accident costs 
In general, respondents favour taking into  account accidents when internalising. 
Moreover, the majority would like this interna lisation in all modes of transport, and not 
only in road transport.  
However, some participants were opposed to this arguing that these costs are already 
internalised through insurance prices. Some st ressed that instruments such as controls, 
penalties and information campaigns would be  more efficient to deal with accidents. 
EN 101   EN  
Graph 4 
3.2.6. Which action w ould you favour for accidents in road transport?
41%
23%15%10%
Liability insurance
Safety charge
No new  action
No opinion
* 469 respondents 
Noise costs 
Participants welcome the internalisation of external costs in the field of noise. Many of 
them stressed that noise restric tions or charges were  already applied in some airports or 
by infrastructure managers in  railways. Technolo gy was also mentioned as a key element 
to fight against noise. Some respondents have  the feeling that noise costs are already 
internalized via lower land prices in the pr oximity of noisy trans port infrastructures. 
Graph 5 
3.3 Which action would you favour to tackle NOISE  costs?
0%10 %20%30%40%50%60%70%80%90%1 00%
road rail airNo opinion
Ot her
Tax
Dif f erent iat ed charge
* 469 respondents 
Air pollution costs 
Most of respondents think that differentiate d charges are the best way to take into 
account the characteristics of air pollution (which depend on time, location, etc…). Some 
of them raise the issue of technology a nd innovation which help limit air pollution 
emissions. Other respondents claim more st ringent legislative standards on emissions 
from vehicles. 
EN 102   EN Graph 6 
3.4 Which action would you favour to tackle AIR POLLUTION costs?
0%10%20%30%40%50%60%70%80%90%100%
road rail air m aritim e iw wNo opinion
Other
Tax
Differentiated charge
* 469 respondents 
Climate change costs 
As regards climate change, re spondents would prefer the appl ication of ETS in all modes 
of transport or some of them  (railways, maritime). Other participants favour the use of 
taxation which is seen as the best way to  influence CO2 emissions. Most respondents 
highlight the global aspects of climate change costs and the need to have an action at EU 
level.  
Graph 7 
3.5 Which action would you favour to tackle CLIMATE  CHANGE  costs?
0%10%20%30%40%50%60%70%80%90%10 0 %
road rail air maritime iwwNo opinion
Other
E m ission trading schem e
Tax
* 469 respondents 
Other instruments? 
Many of the participants highl ighted the advantages of electronic charging. Electronic 
charging is seen as the best way to encapsula te all the external co sts and make the user 
pay in an effective way. At the same time, other instruments such as norms, standards, 
EN 103   EN research policy, information campaigns, in telligent transport system (ITS) were 
mentioned. 
Chart 8 
3.6.1. Would you favour electronic charging in road transport?
40%
33%14%10%4%
Strongly agree
Agree
No opinion
Disagree strongly
Disagree
* 414 respondents 
In addition, some respondents highlighted the ne ed to take into account the specific case 
of regions such as the Alps. Other tools such as transit pe rmits could be effective to 
tackle nuisances.  
5 T HE NEED FOR EUROPEAN ACTION  
In general, the need for European action is acknowledged and the vast majority of 
participants expect the EU to act in this fi eld. At the same time, participants mentioned 
that most of these costs ar e local and this sh ould be reflected in the way economic 
instruments are applied.  
Graph 9 
3.1.7, 3.2.7, 3.3.5, 3.4.7 and 3.5.7: Do you think the EU should do something in the field 
of internalistion costs in general?
0%10%20%30%40%50%60%70%80%90%100%
congestion accidents noise air pollution climate changeNo opinion
Disagree strongly
Disagree
Agree
Strongly agree
* 469 respondents 
EN 104   EN  
6 S HOULD TRANSPORT REVENUES GO TO TRANSPORT ? 
The questionnaire asked to wh ich purpose the revenues of in ternalisation should go. 
Most respondents think that revenues should go to transport, more specifically to the 
mode that is taxed or charged. Many respondents stressed the need to avoid cross-subsidisation between m odes of transport; some of them , however, stressed the need for 
investing in intermodal transpor t. Revenues should be used to  improve infrastructures if 
needed and above all to invest in cleaner  technologies and deve lop environmentally 
friendly transport. The development of public transport and the promotion of cycling and 
walking are also considered a good way to improve the sustainabi lity of transport. 
Revenues could be used to this end.  
The majority of participants consider that  revenues should be used to reduce negative 
externalities.  
Chart 10 
4.1. In your opinion, revenues from external costs should go to...
40%
33%22%5%
Transport in general
The mode of transport that  has been
charged or taxed
The general public budget
No opinion
* 427 respondents
 
Chart 11 
4.2-4.3 How should revenues of external costs be used? 
0%10 %20%30%40%50%60%70%80%90%1 00%
Use revenues to compensate victims Use revenues to reduce external effectsNo opinion
Disagree st rongly
Disagree
Agre e
St rongly agree
* 469 respondents 
EN 105   EN  
7 F INANCING INFRASTRUCTURES  
The majority of respondents think that infrastr ucture should be financed – mostly if not 
entirely – by the general budget. The comme nts allowed giving more details on the way 
infrastructures could be fina nced. Many participants highli ghted that both – users and 
general budget – should contribute to financ ing the building of infrastructures. In 
addition, most of them suggested promote pub lic-private partnershi p (PPP) as a viable 
way of financing. 
Chart 12 
5.1. The construction of infrastructure should be paid by...
56%35%10%
the general public budget (i.e. paid
by the taxpayer)
the user
No opinion
* 421 respondents
 
8 S UMMARY OF POSITION PAPERS  
In response to the Public Consultation on th e Internalisation of external costs launched 
by DG TREN in December 2007, 17 position papers were sent to the Commission. 
Internalisation of external costs 
The majority of stakeholders agree on internalisation at di fferentiated prices, mentioning 
road and air transport as priorities and ba sed on the following assumptions: it should aim 
at modal shift towards more sustainable mode s of transport; it should lead to a fairer 
competition among transport operators and modes; it should be a chance for a “double dividend”.  
In some cases a step by step approach dealing with individual externalities is preferred as 
well as a double-tier approach taking into account also externalities induced by 
insufficiently maintained infrastructure; in others a full recovery of externalities is envisaged. In no case interna lisation should evolve into a dditional taxation or introduce 
forced changes in the modal split. 
Differentiation is often menti oned, stating the need of taking into account: existing 
charges and/or taxes already internalising so me externalities; variations in domestic 
policy and variations of external cost s both regionally and among modes and flows 
(transit and local). 
EN 106   EN It is also stressed that external costs and decisions on transport policy should be reflected 
in pricing mechanisms and in the appraisal processes used to support the policy decision-
making process; furthermore charging should be fair and understandable to achieve a 
higher acceptance. 
Only two position papers disagree on the merits  of internalisation, showing scepticism on 
the possibility of internalising external cost s for all modes of transport, of having a 
common model for assessing exte rnal costs and of reducing externalities through pricing. 
It is also stated that internalisation ri sks penalising home/work commuting lower income 
categories, reducing employment and lead ing to environmental degradation.  
Expectations 
Expected advantages include an increased sustainability in transport through modal 
shifts; fairer competition between different modes, removing current taxation inequalities; availability of revenues to i nvest on modes generating less externalities and 
to reduce existing taxes; rearrangement of production and retail sy stems in favour of 
proximity locations to cut down transport distances; improvement of environment, 
quality of life, road safety, employme nt, public transport; technological innovation 
leading to fleet renewal and prom otion of less polluting vehicles. 
In such a scenario, a uniform system integrating and charging the external costs of all 
transport modes in accordance to co-modality and as part of general mobility policy is 
envisaged by some respondents. 
On the other hand, it is widely  feared that charges will re sult into increased costs and 
prices - especially when no a lternative modes are available - and into risks for European 
competitiveness.  
It is also underlined that internalisation i nvolves pricing external costs but not reducing 
externalities. However, the aim of the exer cise should also be considered from the 
environmental point of view, rather than the economic aspects alone. 
Policy options 
It is generally agreed  that tackling externalities requi res a combination of technological, 
regulatory and pricing measures, including investments in environmentally friendly 
modes of transport, enhanced network capac ity, land use policies, availability of co-
modality and promotion of public transport,  trading schemes as well as taxation, 
incentives and subsidies. Such combination should take into account the complementarity of the different modes, the specificity of each one and the global frame 
of mobility policies. 
Measures suggested to tackle each externality vary though.  
Congestion  is mostly seen as a local problem - especially related to road transport - 
which therefore requires local solutions. Anti-congestion measures mentioned include 
pricing such as differentiated charging and non- pricing tools such as improvement of the 
infrastructure in terms of capacity and conn ections, smart Intelligent Transport Systems, 
parking and traffic control policies, provision of public transport alternatives to allow 
EN 107   EN modal shifts, as well as the rearrangement of logistics in terms of locations and short-
distance trips.  
Internalisation is not considered a proper instrument to reduce accident costs as they are 
already internalised by insura nces, whose liabilities are en visaged to be expanded in 
order to cover them totally. Road safety ch arges are also suggested, being composed by a 
fixed part (annual insurance) and a variab le part according to distance (charge). 
On noise  reduction, positions are divided between those who suggest to tackle this 
externality with differe ntiated charging and th ose who rather support regulatory measures 
such as land use or new technologies for engines and screens (e.g. use of low-noise 
rolling material in urban areas). Mountainous areas are particularly aggravated by this 
externality; therefore noise charges are suggested by some to reflect this peculiarity. 
In order to tackle air pollution  some are in favour of differentiated charging (according 
to location, day or week time, Euro class) , whilst others rather support regulations and 
fleet renewals, stressing that air polluti on strongly depends on local meteorological 
conditions and emissions, as well as be ing to some extent a global issue. 
Climate change is considered a global and inte rdisciplinary issue to be connected with air 
emission schemes and global warming. Taxati on and permits are mostly suggested, in 
addition to technical and legislative measur es; in particular the following tools are 
envisaged for air transport: a homogeneous ai r traffic control system (Single European 
Sky) and fleet renewal. 
As far as integrated charging is concer ned, the use of electr onic tools allowing 
differentiation as well as the uniformity of met hods (or the interoperability of systems) is 
often proposed by respondents. 
Role of European revenues 
Although there is a general cons ensus on harmonisation at Europ ean level, positions vary 
from disagreement on the need for a generalised  or statutory EU model for internalising 
external costs (due to national, regional and local differe nces) to wishing strict regulation 
for all transport modes in terms of level and composition of the charges at EU level. On 
the one hand it is suggested that European Union should limit its role to non-binding 
guidance and legal proposals in accordance wi th the principle of subsidiarity, on the 
other it is believed that it should intervene in the internalisation of ex ternal costs in order 
to create a level-playing fiel d between the different modes and to foster modal shift.  
Revenues 
It is generally agreed that revenues from charges should be earmarked to the transport 
mode that has generated them and used to decrease external costs through infrastructure construction or upgrading as well as th rough technological i nnovation. Although cross-
subsiding is much less accepted, it is also mentioned that revenues should go to those modes of transport genera ting less externalities. 
Differentiation in revenues is also suggest ed, locally distinguishing revenues generated 
by transit traffic from those generated by exch ange or local traffic. In one case, it was 
stressed that a distinction should be made  for revenues generated by urban congestion 
EN 108   EN charging – which should be us ed for all modes of transport of the city - and those 
generated by non urban congestion charging, wh ich on the contrary should be used to 
infrastructure adaptation in the mode of transport that has been charged. 
When the victims of the externalities cannot be clearly identified, re venues are suggested 
to go to public budget and be used  to reduce burden on society. 
Other comments 
The aim of internalisation is stressed not to  be the payment of ch arges but the reduction 
of externalities, ther efore paying for externalities should be used as an instrument to 
achieve this goal. 
Other significant issues identif ied by respondents as needing de bate concern the extent to 
which the external cost charging approach is applied in other important branches of the 
economy and the extent to which it may be possi ble to apply the “po lluter pays” principle 
as distinct from the “user pays” principle. 
It is underlined by many that in rail the prim ary source of energy and its impact in terms 
of CO2 emissions should be considered; in this  perspective it is rema rked that European 
railway sector is working hard on the electrification of the re maining diesel lines in order 
to reduce air pollution. 
The need for extending port capacity a nd improving access roads and intermodal 
connections has also been stressed in strong terms. 
EN 109   EN ANNEX TO THE QUESTIONNAIRE  
GENERAL INFORMATION  
Your Profile 
Citizen 
Organisation  
(for Citizens) Gender 
Male 
Female 
Age 
<24 
25-34 
35-44 
45-54 
55-64 
>65 
Current occupation 
Employee  
Manual worker  
Self-employed  
Without a professional activity 
Other 
Would you say you live in a ... ? 
Metropolitan zone  
Other town/urban centre  
EN 110   EN Rural zone  
Other 
What is the mode of transport you  use most for you r daily mobility? 
Car 
Public transport 
Powered two wheelers 
Bicycle 
Walking 
Other 
What is the mode of transport you use most when travelling over 500 kilometres? 
Car 
Train 
Plane 
Ship 
Coach 
Other 
(for Organisations) 
Organisation name  
Organisation type 
Associations/non-governmental organisations 
Chamber of Commerce 
Consultancy/Lobbying 
Educational establishment 
Employers organisation 
European institution or body 
EN 111   EN Government, Ministry 
Industry, business 
International organisation 
Library 
Local government 
National government 
Not-for-profit association 
Parliament 
Press 
Private company 
Public sector body 
Publishing 
Regional government 
Scientific/research institute 
Trade union 
University 
Other 
Main field of activity 
Freight trans port services 
Fuels 
Infrastructure 
Policy and legislation 
Public transport services 
Taxi services 
Transport equipment 
Users associations 
EN 112   EN Other 
Which mode of transport do you represent? 
Air transport 
Inland waterways transport 
Maritime transport 
Rail transport 
Road transport 
Urban transport 
Other 
Region 
European Union (list of countries) 
Europe outside EU (list of countries) 
Other 
EXTERNAL COSTS  
External cost is a cost that is not included in the mar ket price, e.g. a cost that is not incurred by those who 
generate it. This means that when engaging in a transport activity, a person will incur private costs linked 
to the use of a mode of transport (tolls or fuel use), but will not be taking into account nuisances imposed on others such as congestion, accidents, noise, pollution and emissions of CO2.  
1.1. In your opinion, do you think that r oad transport imposes nuisances on other 
transport users and society? 
Yes  
No 
No opinion 
IF YES  
Could you please rank the five following nuisances generated by road transport in 
order of magnitude (1=smallest nuisance, 5=greatest nuisance) 
Congestion, Accident, Noise, Ai r pollution, Climate Change. 
Comments (if any) on road external costs 
EN 113   EN 1.2. In your opinion, do you think that ra il transport imposes nuisances on other 
transport users and society? 
Yes  
No 
No opinion 
IF YES  
Could you please rank the five following nuisances generated by rail transport in 
order of magnitude (1=smallest nuisance, 5=greatest nuisance) 
Congestion, Accident, Noise, Ai r pollution, Climate Change. 
Comments (if any) on rail external costs 
1.3. In your opinion, do you think that ai r transport imposes nuisances on other 
transport users and society? 
Yes  
No 
No opinion 
IF YES  
Could you please rank the five following nuisances generated by air transport in 
order of magnitude (1=smallest nuisance, 5=greatest nuisance) 
Congestion, Accident, Noise, Ai r pollution, Climate Change. 
Comments (if any) on air transport external costs 
1.4. In your opinion, do you think that ma ritime transport imposes nuisances on 
other transport users and society? 
Yes  
No 
No opinion 
EN 114   EN IF YES  
Could you please rank the five following nuisances generated by maritime transport 
in order of magnitude (1=smalles t nuisance, 5=greatest nuisance) 
Congestion, Accident, Noise, Ai r pollution, Climate Change. 
Comments (if any) on ma ritime external costs 
1.5. In your opinion, do you think that  inland waterways transport imposes 
nuisances on other transport users and society? 
Yes  
No 
No opinion 
IF YES  
Could you please rank the five followin g nuisances generated by inland waterway 
transport in order of magnitude (1=sma llest nuisance, 5=greatest nuisance) 
Congestion, Accident, Noise, Ai r pollution, Climate Change. 
Comments (if any) on inla nd waterway external costs 
1. Internalisation of costs 
Internalisation is a way to attribute external costs (such as pollution, congestion, noise, …) to users and to 
ensure that prices paid by transport users reflect  social costs, i.e. private and external costs. 
The cost of transport can be split into private/internal costs (those directly borne by the person engaged in 
transport activity) and external costs (i.e. those that are imposed on others but not supported by the user). 
The sum of private and external co sts represents social costs. 
2.1. Do you agree that it is important to in ternalise the external costs produced by 
transport?  
Strongly agree Agree Disagree Disagree strongly No opinion 
 
ADVANTAGES /DISADVANTAGES EXPECTATION  
Assuming that full internalisation if po ssible in all modes of transport, some 
patterns of transport may become more expe nsive, the effects may not be the same 
on all modes of transport, thus making some forms of transport more or less 
attractive than others. What are the main  advantages/disadvantages you expect on 
the following: 
EN 115   EN 2.2. What are the main advantages/disad vantages you expect on the economy? 
2.3. What are the main advantages/disadvantage s you expect on the social situation? 
2.4. What are the main advantages/disadvan tages you expect on the environment? 
2.5. In your opinion, how could the negativ e effects of congestion, accidents and 
environmental nuisances be reduced? 
2. Policy Options 
Policy options will envisage the use of different market based instruments for each external cost – tax, 
charge and trading scheme. A tax is a required payment of money to governments that are used to provide 
public goods and services for the benefit of the commun ity as a whole. Examples are fuel tax, circulation 
tax, registration tax. A charge is a proportional payment required in exchange for a clearly defined 
service. For example, a toll charge will give access to the use of a specific infrastructure (bridge, 
motorway, etc…). A tradable permit scheme is a me chanism by which the authorities set a maximum level 
of pollution or use of an infrastructure and assign to individuals/operators a quantity of permits that 
corresponds to this level. The indivi duals/operators can then trade permit s, improving the efficiency in the 
distribution of efforts or in the use of the infrastructure.  
3.1. Congestion Costs 
3.1.1. In general, which instrument would you favour to tackle congestion costs?  
Charge Tax Tradable permit Other   
      
3.1.2. In road transport which action you wo uld favour to tackle congestion costs?  
No new action Congestion Charges 
for freight Congestion 
Charges for passenger 
(including cars) Congestion 
Charges for freight + 
passenger 
(including cars) Tradable 
permit No 
opinion 
      
3.1.3. In rail transport which action you wo uld favour to tackle congestion costs?  
 No new action Scarcity charge No opinion   
      
3.1.4. In air transport which action you wo uld favour to tackle congestion costs?  
 No new action Scarcity charge No opinion   
      
3.1.5. In maritime transport which action you would favour to tackle congestion 
costs?  
EN 116   EN  No new action Congestion 
charge No opinion   
3.1.6. In inland waterway transport which action you would favour to tackle 
congestion costs?  
 No new action Congestion 
charge No opinion   
      
3.1.7. Do you think the EU should do someth ing in the field of internalisation of 
congestion costs?  
 Strongly agree Agree Disagree Disagree 
strongly No 
opinion 
 
Comments (if any) on congestion cost 
3.2. Accident Costs 
Accidents are mainly a road problem (in 2005, there were 10 5 killed in rail accide nts) even though the 
number of road fatalities has considerably decreased since 1990. In general, insurance companies do not 
cover total costs of accidents but only partial ones. The remaining part is not borne by transport users. 
3.2.1. Do you agree that accidents costs shou ld be internalised only for road 
transport?  
 Strongly agree Agree Disagree Disagree 
strongly No 
opinion 
3.2.2. Should accident costs also be internalised in rail transport?  
 Strongly agree Agree Disagree Disagree 
strongly No 
opinion 
3.2.3. Should accident costs also be internalised in aviation?  
 Strongly agree Agree Disagree Disagree 
strongly No 
opinion 
3.2.4. Should accident costs also be in ternalised in maritime transport?  
 Strongly agree Agree Disagree Disagree 
strongly No 
opinion 
3.2.5. Should accident costs also be int ernalised in inland waterway transport?  
 Strongly agree Agree Disagree Disagree 
strongly No 
opinion 
EN 117   EN       
3.2.6. Which action you would favour fo r accidents in road transport?  
  No new 
action Safety 
charge Liability 
insurance No 
opinion 
      
3.2.7. Do you think the EU should do someth ing in the field of internalisation of 
accident costs in road transport?  
 Strongly agree Agree Disagree Disagree 
strongly No 
opinion 
 
Comments (if any) on accident cost 
3.3. Noise Costs 
3.3.1. In general, which instrument woul d you favour to tackle noise costs?  
 Differentiated 
charge Tax Other No 
opinion  
      
3.3.2. Which action you would favour to ta ckle noise costs in road transport?  
 No new 
action Differentiated 
charge Tax No 
opinion  
3.3.3. Which action you would favour to ta ckle noise costs in rail transport?  
 No new 
action Differentiated 
charge Tax No 
opinion  
3.3.4. Which action you would favour to ta ckle noise costs in air transport?  
 No new 
action Differentiated 
charge Tax No 
opinion  
      
3.3.5. Do you think the EU should do someth ing in the field of internalisation of 
noise costs?  
 Strongly 
agree Agree Disagree Disagree 
strongly No 
opinion 
 
EN 118   EN Comments (if any) on noise cost 
3.4. Air pollution costs 
3.4.1. In general, which instrument would yo u favour to tackle air pollution costs?  
 Differentiated 
charge Tax Other No opinion  
3.4.2. In road transport, which action you  would favour to tackle air pollution 
costs?  
 No new 
action Differentiated 
charge Tax No opinion  
3.4.3. In rail transport, which action you wo uld favour to tackle air pollution costs?  
 No new 
action Differentiated 
charge Tax No opinion  
3.4.4. In air transport, which action you wo uld favour to tackle air pollution costs?  
 No new 
action Differentiated 
charge Tax No opinion  
3.4.5. In maritime transport, which action you would favour to tackle air pollution 
costs?  
 No new 
action Differentiated 
charge Tax No opinion  
3.4.6. In inland waterway transport, which ac tion you would favour to tackle air 
pollution costs?  
 No new 
action Differentiated 
charge Tax No opinion  
      
3.4.7. Do you think the EU should do somethin g in the field of internalisation of air 
pollution costs?  
 Strongly 
agree Agree Disagree Disagree 
strongly No opinion 
 
EN 119   EN Comments (if any) on air pollution cost 
3.5. Climate Change Costs 
3.5.1. In general, which instrument would you favour to tackle climate change 
costs?  
 Emission 
trading scheme Tax Other No opinion  
      
3.5.2. In road transport, which action you would favour to tackle climate change 
costs?  
 No new 
action Emission 
trading 
scheme Tax No opinion  
3.5.3. In rail transport, which action you would favour to tackle climate change 
costs?  
 No new 
action Emission 
trading 
scheme Tax No opinion  
3.5.4. In air transport, which action you would favour to tackle climate change 
costs?  
 No new 
action Emission 
trading 
scheme Tax No opinion  
3.5.5. In maritime transport, which action  you would favour to tackle climate 
change costs?  
 No new 
action Emission 
trading 
scheme Tax No opinion  
3.5.6. In inland waterway transport, whic h action you would favour to tackle 
climate change costs?  
 No new 
action Emission 
trading scheme Tax No opinion  
      
3.5.7. Do you think the EU should do someth ing in the field of internalisation of 
climate change costs?  
EN 120   EN  Strongly 
agree Agree Disagree Disagree 
strongly No opinion 
 
Comments (if any) on climate change cost 
3.6. Integrated charging 
3.6.1. Would you favour electronic charging in road transport?  
 Strongly 
agree Agree Disagree Disagree 
strongly No opinion 
 
3.6.2. Are there other policy options you would suggest? 
3.6.3. Are there other pricing in struments you would suggest for congestion, noise, 
accidents, air pollution  or climate change? 
3.6.4. Are there other non-pricing instrument s you would suggest for congestion, 
noise, accidents, air poll ution or climate change? 
Comments (if any) on integrated charging 
1 Use of revenues 
4.1. In your opinion, revenues from  external costs should go to… 
The mode of transport that ha ve been charged or taxed  
Transport in general 
The general public budget 
No opinion 
4.2. In your opinion, revenues should be us ed to compensate the victims of the 
negative effects 
 Strongly 
agree Agree Disagree Disagree 
strongly No opinion 
4.3. In your opinion, revenues should be used to reduce external costs 
 Strongly 
agree Agree Disagree Disagree 
strongly No opinion 
Comments (if any) on the use of revenues 
EN 121   EN 2 Infrastructure 
5.1. The construction of infras tructure should be paid by… 
The general public budget (i.e . paid by the taxpayer)  
The user 
No opinion 
Comments (if any) on infrastructure 
1 General comments 
Are there other comments that you would lik e to make on the “internalisation of 
external costs” topic not covered by the above questions? 
EN 122   EN Annex 2: Evolution of nuisances in Transport  
Graph 0a: Evolution of transport and GDP growth 
Passengers, Goods, GDP 
 1995-2006  
100105110115120125130135140
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20061995=100
Passengers (1) (pkm) Goods (2) (tkm) GDP (at constant 1995 prices) 
Source: DG TREN Pocketbook (2007)  
EN 123   EN Table 0a: Performance per mode of transport (freight) 
Sea Air
1995 1 289  386  121  115 1 150 2,0 3 062 
1996 1 303  392  118  119 1 162 2,1 3 096 
1997 1 352  409  126  118 1 205 2,3 3 213 
1998 1 414  392  130  125 1 243 2,4 3 307 
1999 1 470  383  127  124 1 288 2,5 3 394 
2000 1 519  401  133  126 1 348 2,7 3 529 
2001 1 556  385  132  132 1 400 2,7 3 607 
2002 1 606  382  132  128 1 417 2,6 3 668 
2003 1 625  391  123  130 1 445 2,6 3 717 
2004 1 747  413  136  131 1 488 2,8 3 918 
2005 1 800  413  138  136 1 530 2,9 4 020 
2006 1 888  435  138  135 1 545 3,0 4 143 
1995 -
200646,5% 12,6% 14,5% 17,2% 34,3% 50,0% 35,3%
per 
year3,5% 1,1% 1,2% 1,5% 2,7% 3,8% 2,8%
2005 - 
20064,9% 5,2% 0,0% -0,7% 1,0% 3,4% 3,1%EU-27 Performance by Mode
Freight Transport
1000 mio tonne-kilometres
Road RailInland 
Water- 
waysPipe- 
linesTotal
 
Source: DG TREN – Pocket book 
Table 0b: Performance per mode of transport (passenger) 
1995 3 855  123  501  348  65  335  44 5 271
1996 3 923  125  505  346  66  352  44 5 361
1997 4 001  127  504  348  67  385  44 5 475
1998 4 098  130  511  348  81  410  43 5 621
1999 4 202  134  511  356  80  424  43 5 749
2000 4 283  136  514  368  82  456  42 5 880
2001 4 366  139  516  369  83  453  42 5 968
2002 4 441  139  514  362  84  445  42 6 027
2003 4 470  144  515  358  79  462  42 6 070
2004 4 533  147  521  363  82  493  41 6 181
2005 4 524  150  523  374  82  526  40 6 220
2006 4 602  154  523  384  84  547  40 6 333
1995 -
200619,4% 24,6% 4,3% 10,4% 28,7% 63,3% -10,1% 20,1%
per 
year1,6% 2,0% 0,4% 0,9% 2,3% 4,6% -1,0% 1,7%
2005 - 
20061,7% 2,5% -0,1% 2,7% 1,8% 4,0% -0,3% 1,8%EU-27 Performance by Mode
Passenger Transport
1000 mio passenger-kilometres
Pass -
enger 
CarsP2WBus & 
CoachRail -wayTram & 
MetroAir Sea Total
 
EN 124   EN Source: DG TREN – Pocket book 
Graph 1: Evolution of passenger and frei ght transport and of the length of 
infrastructures 
Evolution of passenger and freight transport and of the length of infrastructures
40, 060, 080, 010 0 ,012 0 ,014 0 ,0
1 994 1 995 1 996 1 997 1 998 1 999 2000 2001 2002 2003 2004 2005Lenght of Motorways Length of rails Length of IWW Road freight traffic
Road passenger traffic Rail freight traffic Passenger rail traffic IWW freight traffic
Source: EU Energy and Transport in Figures. 20061995=100
 
Graph 2: Road Safety Evolution in EU 
Road Safety Evolution in EU
010000200003000040000500006000070000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Fatalities
05000001000000150000020000002500000
Accidents, Injured
Source: CARE (EU road accidents database) or national publications. DG Transport and Energy
EN 125   EN Graph 3a: Evolution of air pollutants (road) 
Road
020406080100120140
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Indexed Pollutant Emissions (1990 = 100)
NOx CO NMVOC SO2 CO2
Source: TERM 2007 
Graph 3b: Evolution of air pollutants (rail) 
Rail
020406080100120140
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Indexed Pollutant Emissions (1990 = 100)
NOx CO NMVOC SO2 CO2
Source: TERM 2007 
EN 126   EN Graph 3c: Evolution of air pollutan ts (Civil aviation - domestic) 
Civil Aviation (domestic)
7090110130150170190210230
1990 1992 1994 1996 1998 2000 2002 2004Indexed Pollutant Emissions (1990 = 100)
NOx CO NMVOC SO2 CO2
Source: TERM 2007 
Graph 3d: Evolution of air pollutants  (Civil aviation - international) 
Civil Aviation (International)
7090110130150170190210
1990 1992 1994 1996 1998 2000 2002 2004Indexed Pollutant Emissions (1990 = 100)
NOx CO NMVOC SO2 CO2
Source: TERM 2007 
EN 127   EN Graph 3e: Evolution of air poll utants (Navigation- national) 
Navigation (national)
708090100110120130140150
1990 1992 1994 1996 1998 2000 2002 2004Indexed Pollutant Emissions (1990 = 100)
NOx CO NMVOC SO2 CO2
Source: TERM 2007 
Graph 3f: Evolution of air pollut ants (Navigation- international) 
Navigation (International)
708090100110120130140150160
1990 1992 1994 1996 1998 2000 2002 2004Indexed Pollutant Emissions (1990 = 100)
NOx CO NMVOC SO2 CO2
Source: TERM 2007 
EN 128   EN Annex 3: Unit External Costs per cost  categories and per traffic situation  
- ROAD TRANSPORT  
Graph 1: Passenger cars: Unit Values per cost category in €ct/vkm (in €2000) based 
on unit values for all cost componen ts from Table 47 of the Handbook. 
 
0.8
0.0 0.04.1
1.0
0.0 0.10.70.4 0.510.0
0.7 0.60.4 0.4 0.50.9
0.1 0.21.5 1.6
0.1 0.21.4
0.01.02.03.04.05.06.07.08.09.010.0
Urban, day
Urban, night
Interurban, day
Interurban, night
Urban, peak
Urban, off-peak
Interurban, peak
Interurban, off-
peak
Urban
Interurban
Urban Petrol
Urban Diesel
Interurban Petrol
Interurban
Diesel
Urban, petrol
Urban, diesel
Interurban, petrol
Interurban,
diesel
Urban, petrol
Urban, diesel
Interurban, petrol
Interurban,
diesel
Urban
Interurban
Urban/interurban
Noise Congestion Accidents Air pollution Climate change Up- and downstream
processesNature &
landscape Soil &
water€ct/vkm
Unit cost value Min Max30.050.020.0
 
Notes: Unit cost value in bold . Source: Handbook (IMPACT) 
Graph 2: Passenger cars (petrol): Unit Valu es per traffic situation in €ct/vkm (in 
€2000) based on unit values for all cost co mponents from Table 47 of the Handbook 
 
4.2 4.114.1
8.638.4
7.9
1.8 1.7 1.74.13.58.4
6.826.7
14.863.9
13.3
6.7
0.010.020.030.040.050.060.070.0
Peak Off-Peak Off-Peak Peak Off-Peak Off-Peak
Day Night Day Night
Urban Interurban€ct/ vkm
Unit cost value Mi n Max 
Notes: Note: for pricing purposes not a ll cost components might have to be c onsidered (e.g. costs for nature and 
landscape). Source: Handbook (IMPACT) 
EN 129   EN Graph 3: Heavy goods vehicles: Unit cost  per cost category in €ct/vkm (in €2000) 
based on unit values for all cost comp onents from Table 47 of the Handbook. 
 
0.0 0.08.5
0.035.0
1.1 1.22.73.1
2.2 2.610.6
2.710.5
2.0 1.112.8
7.0
0.05.010.015.020.025.030.035.040.045.050.0
Urban, day
Urban, night
Interurban, day
Interurban, night
Urban, peak
Urban, off-peak
Interurban, peak
Interurban, off-
peak
Urban
Interurban
Urban Petrol
Urban Diesel
Interurban Petrol
Interurban
Diesel
Urban, petrol
Urban, diesel
Interurban, petrol
Interurban,
diesel
Urban, petrol
Urban, diesel
Interurban, petrol
Interurban,
diesel
Urban
Interurban
Urban/interurban
Noise Congestion Accidents Air pollution Climate change Up- and downstream
processesNature &
landscape Soil &
water€ct/vkm
Unit cost value min max75.0125.0
70.0
 
Notes: Unit cost values in  bold. Source: Handbook (IMPACT) 
Graph 4: Heavy goods vehicles : Unit values per traffic situation in €ct/vkm (in 
€2000) based on unit values for all cost co mponents from Table 47 of the Handbook. 
 
19.4 20.340.654.4
34.8107.3
13.6 13.3 13.328.2
22.533.7109.0
80.9
67.0
39.9 39.0187.4
0.020.040.060.080.0100.0120.0140.0160.0180.0200.0
P eak O ff-P eak O ff-P eak P eak O ff-P eak O ff-P eak
D a yN i g h tD a yN i g h tUrban Interurban€ct / vkm
Unit  cost  value min max 
Notes: Note: for pricing purposes not a ll cost components might have to be c onsidered (e.g. costs for nature and 
landscape). Source: Handbook (IMPACT) 
EN 130   EN  
- RAIL TRANSPORT  
Graph 5: Rail passenger transport: Unit val ues per cost category in €ct/train-km (in 
€2000) based on unit values for all cost co mponents from Table 48 of the Handbook. 
 
23.778.0
20.6 20.0
8.00.0144.8
0.090.7
0.011.4
0.08.624.8
13.8 15.910.323.2
0.334.4
050100150200250300350
Urban, day
Urban, night
I nt erurban, day
I nt erurban,
night
Peak
Urban,
inte rurba n
Urban, electric
Urban, diesel
I nt erurban,
el ect ri c
I nt erurban,
di esel
Urban, electric
Urban, diesel
I nt erurban,
el ect ri c
I nt erurban,
di esel
Urban, electric
Urban, diesel
I nt erurban,
el ect ri c
I nt erurban,
di esel
Inte r ur ba n
Urban/ interurban
N ois e S ca rcity
costsA ccide nts A ir P ollution C lim ate change Up- and downstream  processes N ature &
landscapeSo i l  &
wat er€/ train-km
Unit cost  value Mi n Max 
Source: Handbook (IMPACT) 
Graph 6: Rail passenger transport: Unit value s per traffic situation in €ct/train-km 
(in €2000) based on unit values for all co st components from Table 48 of the 
Handbook. 
 
202
111256
88
68
48 48192
103
51145 149442
422
160454
107316
121
57162222
77182 176
82192246
27 27121 121129 127329 336
050100150200250300350400450500
Peak O ff-Peak Peak Off-Peak O ff-Peak O ff-Peak Peak O ff-Peak Peak O ff-Peak Off-Peak O ff-Peak
Electric Diesel Electric Diesel Electric Diesel Electric Diesel
Day Night Day Night
Urban Interurban€ct/ train-km
Unit cost value Mi n Max 
Notes: Note: for pricing purposes not a ll cost components might have to be c onsidered (e.g. costs for nature and 
landscape). Source: Handbook (IMPACT) 
EN 131   EN Graph 7: Rail freight transport: Unit value s per cost category in €ct/train-km (in 
€2000) based on unit values for all cost co mponents from Table 48 of the Handbook. 
 
41.9 40.120.08.0 0.0 0.0305.8
0.028.9
0.028.944.434.844.434.8
7.5 1.0366.8
171.1
67.7
0100200300400500600700800
Urban, day
Urban, night
Inte r ur ba n, da y
Int erurban,
night
Peak
Urban,
int erurban
Urban, el ect ri c
Urban, diesel
Int erurban,
el ect ric
Int erurban,
di esel
Urban, el ect ri c
Urban, diesel
Int erurban,
el ect ric
Int erurban,
di esel
Urban, el ect ri c
Urban, diesel
Int erurban,
el ect ric
Int erurban,
di esel
Inte r ur ba n
Urban/ i nt erurban
N ois e S ca rcity
cost sAccidents Air Pollution C lim ate change Up- and downstream  processes N ature &
landscapeS oil &
wat er€/ train-km
Unit cost  value min max 
Source: Handbook (IMPACT) 
Graph 8: Rail freight transport: Unit values per traffic situation in €ct/train-km (in 
€2000) based on unit values for all cost co mponents from Table 48 of the Handbook. 
 
482
224611
12110173 73457
2022451'0271'007
2951'077
172893
199
129454446
115502
426
95 99421374 374
52 52586
457913920
192225
020040060080010001200
Peak Off-Peak Peak O ff-Peak O ff-Peak Off-Peak Peak O ff-Peak Peak Off-Peak O ff-Peak O ff-Peak
Electric Diesel Electric Diesel Electric Diesel Electric DieselDay Night Day Night
Urban Interurban€ct/ train-km
Unit cost  value min max 
Notes: Note: for pricing purposes not a ll cost components might have to be c onsidered (e.g. costs for nature and 
landscape). Source: Handbook (IMPACT) 
EN 132   EN - AIR TRANSPORT  
Table 1: Air transport: Unit values per cost component in €/ flight in €2000 
Air passenger Cost component 
weighted EU-19 average values  
Noise costs  228 
Peak n.a. Scarcity costs  
Off-Peak n.a. 
Accident costs 118 
Air Pollution 117 
Climate change 530 
Up- and downstream processes 612 
Additional external costs 
(nature & landscape) n.a. 
Total external costs 993 
Explanations by cost category: 
Noise costs: Value can also be expressed in €/LTO si nce noise costs only occur during take-off and landing of 
an aircraft, Model results of TREMOVE model (EU-19 average values). 
Scarcity costs: Not available. 
Accident costs: Model results of TREMOVE model (EU-19 average values). 
Air pollution: Distance class 1.000-1.500 km, Model results  of TREMOVE model (valuation factors for Germany 
used). 
Climate change: Distance class 1.000-1. 500 km, costs correspond to the costs of a whole flight (from origin to 
destination), costs are without clim ate impacts of non-CO2 emissions, Mode l results of TREMOVE model (EU-19 
average values). 
Up- and downstream: Distance class 1.000-1.500 km, costs correspond to the costs of a whole flight (from 
origin to destination), Model results of TREMOVE model ., valuation of air pollutants with valuation factors for 
Germany. 
Nature&Landscape: Not available. 
- WATERWAYS TRANSPORT  
Table 2: Inland waterways: unit values per cost component in €ct/ship-km (only 
comprehensive data for air pollution and climate change cost s available) in €2000 
Waterborne freight transport  Cost component  
weighted EU-19 average values  
Noise  (–)  
Scarcity  (–)  
Accidents  (–)  
Air pollution  89-1260  
Climate change  8-114  
Up- and downstream processes  8-108  
Nature & landscape  (–)  
Soil & water pollution  (–)  
Total external costs  105-1482  
Explanations by cost category: 
Air pollution: Ranges correspond to costs of different ship types acc. to Error! Reference source not found.  
(Model results of TREMOVE model (valuation factors for Germany). 
Climate change:  Ranges correspond to costs of different ship type s acc. to Table 30, using the central value for 
climate change costs from Table 26, Model results of TREMOVE m odel (EU-19 average values). 
Up- and downstream: Ranges correspond to costs of different  ship types acc. to Table 40 (p. 95), Model results 
of TREMOVE model, valuation of air pollutants with valuation factors for Germany.  
Total Total bandwidths are calculated by adding up bandwidths of all categories. 
EN 133   EN Annex 4: Overview of taxes and subsidies in transport  
Graph 1: Evolution of environmental tax 
00,511,522,533,5
1999 2000 2001 2002 2003 2004 2005Taxes on Pollution/Resources
 Transport tax es
 Energy  t axes
Source: Eurostat/TAXUDEvolution of environmental taxes (%  of GDP)
EU2 5% of GDP
 
Graph 2: Total environmental reve nues and total transport revenues 
010000200003000040000500006000070000
DE UK IT FR NL DK ES SE AT BE EL PL PT FI IE CZ HU SK LU MT EE LT RO BGTotal revenues
Total transportUS$ Total env ironmental rev enues and total transport rev enues
 (av erage 2002-2004) 
Source: OECD 
Graph 3: State aid to tr ansport as a % of GDP 
00,050,10,150,20,250,30,350,40,45
2000 2001 2002 2003 2004 2005
      Land transport and transport via pipelines       Maritime transport       Inland water transport       Air transport RailwaysState aid to transport as % of GDP *- EU25
* Source: DG COMP scoreboard. For railways, COM(2006)761.  Subsidies to railways includes all public subsidies that have been c ommunicated to the 
Commission as well as subsidies that have been notified and authorised by the Commission under relevant State aid rules. Howeve r the figures exclude 
compensation for services of general economic interest.% of GDP
 
EN 134   EN Annex 5: Overview of taxes and subsidies in each mode of transport  
Table 1: Summary table on existing charges and taxes in road transport 
Road Transport 
Existing charges and taxes EU Framework Member States 
Fuel tax Directive 2003/96/EC on energy 
taxation All Member States 
1.9% of EU25 GDP 
Vehicle tax  0.5 % of EU25 GDP 
Infrastructure Charge Directiv e 1999/62/CE as amended by 
Directive 2006/38/CE on the 
charging of heavy goods vehicles for 
the use of certain infrastructures  
No tolls, no vignette  CY, EE, FI, LV, MT 
Traditional Tolled Motorway for 
passengers and HGV  EL, ES, IE, FR, IT, PT, SL 
Time based vignette for passenger and HGV  HU, CZ, LT, SK 
Distance-based electronic road charging system for HGV  AT, DE, CZ 
Time based fee charging (Eurovignette) for HGV  BE, DK, LU, NL, SE. 
Time base vignette for HGV  BG, PL, RO 
Urban congestion: urban tolls  IT  (Parma, Firenze, Ferrara, Reggio 
Emilia, Cesena, Bologna) 
MT (La Valette) SE 
SL (Maribor) 
UK (London) 
Based on DIFFERENT, OECD Dat abase, Eurostat data base. 
Graph 1: Vehicle taxes in Member States (for HGV) 
 
05001'0001'5002'0002'5003'0003'5004'0004'5005'000
AT UK DE CZ SK NL HU BE PL RO ES FR IT DK€
1998 1999 2000 2001 2002 2003 2004 
Source: Road Transport Report n°1 
EN 135   EN Table 2: Summary table on existing charges and taxes in rail transport 
Rail Transport 
Existing charges and taxes EU Framework Member States 
Fuel tax Directive 2003/96/EC on energy 
taxation   
Infrastructure Charge Directive 2001/14/EC on the 
allocation of railway infrastructure 
capacity and the levying of charges 
for the use of railway infrastructure 
and safety certification.  
Maintenance  AT, CZ, DK, EE, FI, FR, DE, HU, 
LT, NL, PL, PT, RO, SL, SE, UK 
Renewals  EE, FI, FR, DE, HU, LT, PL, SL, UK 
Train planning and operations  CZ, EE, FR, DE, HU, IT, LT, NL, 
PL, PT, RO, SL 
Congestion and Scarcity  AT, DK, FR, DE, IT, UK 
Accidents  SE 
Environment  FI, SE 
Based on ECMT (2005), DIFFERENT. 
Table 3: Summary table on existing charges and taxes in air transport 
Air Transport 
Existing charges and taxes EU Framework Member States 
Fuel tax Directive 2003/96/EC on energy 
taxation. Article 14, 1.c.: exemption 
for “energy products supplied for use 
as fuel for the purpose of air 
navigation other than in private 
pleasure-flying”. Directive 2003/96/EC on energy 
taxation gives the possibility to tax 
fuel used on domestic and, under 
certain conditions, intra-EC flights. 
NL (Kerosene tax since 2005 for 
domestic flights) 
Route Charge Guidelines provided by Eurocontrol  
Infrastructure Charge and restrictions   
Landing charge according to maximum 
take-off weight  AT, BE, CY, CZ, DE, DK, FI, FR, 
DE, HU, EL, IE, IT, LV, LT, LU, 
MT, PT, NL, ES, SK, SL, UK 
Noise Directive 2002/30/EC on the 
establishment of rules and procedures 
with regard to the introduction of 
noise-related operating restrictions at 
Community airports BE, CZ, FR, HU, NL, SE, UK, DE 
(Berlin, Munich, Stuttgart) 
(not based on social cost of noise, but 
on cost recovery of alleviation 
measures). 
Night noise charge: DK, (Kastrup), 
FI, DE (Frankfurt, Munich, Berlin),  
Congestion and Scarcity Work on a proposal to develop a secondary market for slots at airports. Peak/off-peak  
AT (Vienna), FI, PT, ES, UK 
 
Night time surcharge  BE (Brussels), CY, FR, IT, LV, 
(Riga), LT (Vilnius), LU, MT, NL 
EN 136   EN Accidents  - 
Air pollution  CZ, HU, IT, ES, SK, SE 
Emission Trading Scheme Proposal for a Directive amending 
Directive 2003/87/EC so as to 
include aviation activities in the 
scheme for greenhouse gas emission 
allowance trading within the 
Community. COM(2006) 818 final  
Based on DIFFERENT. OECD data base, IMPRINT-Net.  
Table 4: Summary table on existing ch arges and taxes in maritime transport 
Maritime Transport 
Existing charges and taxes EU Framework Member States 
Fuel tax Directive 2003/96/EC on energy 
taxation. Article 14, 1.b.: exemption 
for “energy products supplied for use 
as fuel for the purposes of navigation 
within Community waters (including 
fishing), other than private pleasure 
craft, and electricity produced on 
board a craft “.  
Infrastructure Charge   
Ports dues: ship gross tonnage/cargo type  AT, BE, CY, CZ, DK, EE, FI, FR, 
DE; EL, HU, IE, IT, LV, NL, PL, 
PT, SK, SL, ES, SE, UK 
Cargo dues  CY, FR, IT, LV, LU, MT, PT  
Environment  SE 
Based on DIFFERENT, IMPRINT-Net 
Table 5: Summary table on existing charges and taxes in inland waterways 
transport 
Inland Waterways Transport 
Existing charges and taxes EU Framework Member States 
Charge exemption Directive 2003/96/EC on energy 
taxation: Art. 15(1)(f) possibility  to 
exempt fuel used for the purpose of 
navigation on inland waterways (incl. 
fishing) other then in private pleasure 
craft, and electricity produced on 
board of a craft. Rhine, Danube, Elbe Oder 
(Mannheim Convention). 
70% of inland waterway transport.  
Shipping rights  BE,  
Differentiated charge  FR , DE (Mosel convention) 
Port use  NL, HU 
Based on study of Ecorys .Charging and pricing in the area of inland waterways (2005)  
EN 137   EN Annex 6: Eurovignette in Europe  
 
EN 138   EN Annex 7: Equity Approach of the leve l of internalisation (REFIT approach)  
1. METHOLODOGY 
REFIT is a Research project aiming at provi ding a set of sustaina bility indicators for 
assessing the effect of vari ous policies. This project is  developing a “modelling tools-
based” methodology that produces data on a set of identified indicato rs and that enables 
ex-ante evaluation of the European Common  Transport Policy considering the economic, 
environmental and social dimensions of sustainability.  
The level of internalisation (LoI) is the de gree, to which external costs have been 
internalised according to the polluter pays pr inciple. The LoI is designed to assess how 
much policies contribute to the objective of fa ir pricing. According to  theory, pricing and 
taxation is justified if market s are imperfect and distorted.  
For the REFIT calculations the Equity Approach  is eligible. It takes into account total 
and average costs. 
The aim of the Equity Approach (or Full Cost Approach) is to identify the total costs they 
cause and compare these costs with the total charges paid by the category in question. Thus, the Equity Approach defines the Level of Internalisation as follows: 
Figure 1: Basic cost elements of the LoI  
 
The basic cost elements of the LoI are  
Vehicle operation costs (VOC) reflect the cost s derived from the generation of transport 
services. They comprise i.e. driver wages, fuel cost , insurance, etc Value of Time is a mode specific value of  the time of the passenger (or goods) spent in 
the vehicle. 
These are added to both no minator and denominator 
PRIVATE COSTS 
The consumer has to pay taxes, fees and char ges for the service, such as fuel levy, road 
user fees, airport charges, etc. Since the cons umer profits as well from state subsidies to 
the transport sector, these have to be deducted.  
EN 139   EN SOCIAL COSTS 
Infrastructure Costs are costs related to implementation and maintenance of transport 
infrastructures. These costs are borne by the state and are a part of the social costs. 
The sum of taxes and subsidies is deducted from the denominator, as it is assumed that 
taxes are used to pay the social co sts caused by the transport activity.  
External Costs are generated through the tran sport activities and co mprise the costs for 
airborne emissions, global warming, noise a nd accidents. Only the cost components that 
are not internalised according to the po lluter pays principle are external.  
2. INDICATORS 
Graph 1 
Lev el of internalisation of passenger cars - E v olution - E U25
0,000,200,400,600,801,001,20
2005 2010 2020Index Level of internalisation
Source: REFIT 
 
Graph 2 
Level of internalisation -  Evolution - Road freight transport - EU25
0,000,100,200,300,400,500,600,700,800,90
HDT 1 HDT 2 HDT 3 HDT 4 LDTIndex Level of internalisation2005
2010
2020
 
 
EN 140   EN Annex 8: Efficiency approach: Le vel of internalisation (IMPACT)  
00,20,40,60,811,21,41,61,82
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
Costs
Charges
A T-B E-C Z-D E-D K-E S- F I -F R-G R-H U- I E - I T -L U-N L-P L-P T-S E- S I -U K- E U 1 9Cost and charges (Euo/km)Costs
Congestion
Fixed infracosts
Variable infrastructure Costs
Accidents
Noise
Air pollution
Charges
Charges/ toll
 
Source: IMPACT Study (Deliverable 3) . The study also provides similar calculations for other vehicles.  
 
EN 141   EN Annex 9: Screening of policy options  
Table 1: Summary of policy options (without BAU option) 
 Charge Tax Tradable permit Electronic charging 
Congestion 
Road Policy option for 
freight, passenger, 
freight + passenger  Policy option Policy option for 
freight, passenger, 
freight + passenger 
Rail Policy options    
Air Policy option    
Maritime Policy option    
Inland Navigation Policy option    
Accident 
Road Policy option Policy opt ion  Policy option 
Rail 
Air 
Maritime 
Inland Navigation  
 
Noise 
Road Policy option Policy opt ion  Policy option 
Rail Policy option Policy option   
Air Policy option Policy option   
Maritime 
Inland Navigation  
Air pollution 
Road Policy option Policy opt ion  Policy option 
Rail Policy option Policy option   
Air Policy option Policy option   
Maritime Policy option Policy option   
Inland Navigation Policy option Policy option   
Climate Change 
Road  Policy option Policy option  
Rail  Policy option Policy option  
Air  Policy option Policy option  
Maritime  Policy option Policy option  
Inland Navigation  Policy option Policy option  
Source: Consultation Paper on the Internalisation of external costs. Published in October 2007. 
 
EN 142   EN Table 2: Confronting policy choices with Stakeholders vi ews and the need of European action (subsidiary test) 
 Stakeholders views on external 
costs Stakeholders views on 
policy options Stakeholders views on the 
need for European actions  Subsidiarity test Policy options proposed in 
the Impact Assessment 
Congestion in road Congestion is seen as an important 
nuisance/ The majority of people favour 
the option of charging for 
freight and passenger .  Subsidiarity should be respected as 
long as the principle of free circulation 
in the EU is respected. 
EU directive 2006/38/EC 
(Eurovignette) provides a common 
approach on interurban road 
(modulation) 
More complex in urban areas.   
Congestion charge for 
passenger cars : EU common 
framework.  
 
Congestion charge for freight 
road transport : revision of EU 
directive. Policy option 2.  
Congestion in rail The majority of people consider 
congestion is not an important 
nuisance.  The majority favour “no new 
action” Scarcity charge is foreseen in EU 
directive 2001/14/EC. No option for rail. 
Congestion in aviation The majority of people consider 
congestion is not an important 
nuisance. The majority favour “scarcity 
charge”.  Communication on infrastructure 
charge. Common framework.  No option for air  
Congestion in maritime The majority of people consider 
congestion is not an important 
nuisance. The majority favour “no new 
action”  No option for maritime 
Congestion in IWW* The majority of people consider 
congestion is not an important 
nuisance. The majority favour “no new 
action” The majority of people think 
that the EU should do 
something in the field of 
congestion.  
But they stress that congestion 
is a local problem and the EU 
should pay attention to this 
characteristic.  
 
 No option for IWW 
 
Accident in road Accident is not seen as the most 
important nuisance  The majority thinks that 
accident should be 
internalised in road.  
The majority favour liability 
insurance No option. 
Accident in rail Accident is not seen as the most The majority thinks that The majority of people think 
that the EU should do 
something in the field of 
accident. 
 In the field of insurance, need to 
respect the subsidiarity principle.  
 
No option..  
 
EN 143   EN  Stakeholders views on external 
costs Stakeholders views on 
policy options Stakeholders views on the 
need for European actions  Subsidiarity test Policy options proposed in 
the Impact Assessment 
important nuisance  accident should be 
internalised in rail.  
Accident in aviation Accident is not seen as the most 
important nuisance  The majority thinks that 
accident should be 
internalised in aviation.  No option.. 
Accident in maritime Accident comes after air pollution 
and climate change. (but 
interpreted as accidents implying 
water pollution) The majority thinks that 
accident should be 
internalised in maritime.  No option. 
Accident in IWW* Accident is not seen as the most 
important nuisance  The majority thinks that 
accident should be 
internalised in IWW.  No option. 
 
Noise in road Noise is not seen as an important 
nuisance.  The majority favour 
differentiated charge. Noise is charged in all modes 
of transport in policy option 2 
and 3.  
Noise in rail Noise is considered as the most 
important nuisance The majority favour 
differentiated charge. Noise is charged in all modes 
of transport in policy option 2 
and 3. 
Noise in aviation Noise ranks after air pollution and 
climate change.  The majority favour 
differentiated charge. Noise is charged in all modes 
of transport in policy option 2 
and 3. 
Noise in maritime Noise is not considered as the most 
important nuisance.   Noise is charged in all modes 
of transport in policy option 2 
and 3. 
Noise in IWW Noise is not seen as an important 
nuisance.  The majority of people think 
that the EU should do 
something in the field of noise. 
The EU is already harmonising 
data collection (noise map). 
Initiatives in railways and 
aviation.  
 The EU is already harmonising data 
collection (noise map).  
Initiatives in railways: abatement 
measures in retrofitting. 
Directive 2002 on noise in airports: 
report published.  
 
Noise is charged in all modes 
of transport in policy option 2 
and 3. 
 
Air pollution in road Air pollution is seen as the most The majority favour The majority of people think In the field of regulation and Air pollution charge in all 
 
EN 144   EN  Stakeholders views on external 
costs Stakeholders views on 
policy options Stakeholders views on the 
need for European actions  Subsidiarity test Policy options proposed in 
the Impact Assessment 
important nuisance  differentiated charge. modes of transport in policy 
option 2 and 3. 
Air pollution in rail Air pollution ranks second after 
noise.  Half favour differentiated 
charge. Half favour “no new 
action”. . Air pollution charge in all 
modes of transport in policy 
option 2 and 3. 
Air pollution in 
aviation Air pollution second after climate 
change.  The majority favour 
differentiated charge. Air pollution charge in all 
modes of transport in policy 
option 2 and 3. 
Air pollution in 
maritime Air pollution ranks first. The majority favour 
differentiated charge. Air pollution charge in all 
modes of transport in policy 
option 2 and 3. 
Air pollution in IWW Air pollution ranks first. The majority favour 
differentiated charge. that the EU should do 
something in the field of air 
pollution. 
 standardisation, EU can act to ensure 
fair competition.  
 
Air pollution charge in all 
modes of transport in policy 
option 2 and 3. 
 
Climate change in road Climate Change is not considered 
as the most important nuisance  The majority favour taxation. Climate change tax or ETS is 
considered in policy option 2 
and 3.  
Climate change in rail Climate Change is considered as a 
nuisance after congestion and air 
pollution.  Half favour “no new action” 
and half of respondents ETS. Climate change tax or ETS is 
considered in policy option 2 
and 3. 
Climate change in air 
transport Climate Change is considered as 
the most important nuisance.  ETS and tax are the most 
favoured instruments. Climate change tax or ETS is 
considered in policy option 2 
and 3. 
Climate change in 
maritime Climate change is considered as an 
important nuisance and ranks 
second after air pollution. The majority favour ETS Climate change tax or ETS is 
considered in policy option 2 
and 3. 
Climate change in 
IWW Climate change is considered as an 
important nuisance and ranks 
second after air pollution.  No new action and ETS are 
favoured. The majority of people think 
that the EU should do 
something in the field of 
climate change. 
Global approach. EU is entitled 
to act. There is also the need to 
take into account existing 
international agreements in 
maritime and IWW sectors.  
The proposal to put air 
transport into ETS should also 
be taken into account. Climate change is a global problem. 
EU is entitled to act.  
As regards fuel taxation, rule of 
unanimity of Member States.  
Climate change tax or ETS is 
considered in policy option 2 
and 3. 
 
EN 145   EN Annex 10: Description of policy options 2 and 3  
1. POLICY OPTION 2 
Policy Options 2 concerns the revision of the Eurovignette, leaving all other modes of 
transport unchanged. Within each variant 2a, 2b, so me further analysis has been made in order 
to test the impact of different assumptions on fuel tax, estimates of external costs.  
The starting point would be take into account th e existing infrastructure  costs (assumed to be 
implemented through existing tolls) as it is  foreseen in the current directive.  
Policy option 2 envisages charging in all roads in order to avoi d traffic diversion. The current 
directive allows Member States to charge  on motorways (TENs). The IMPACT study 
proposed a scenario (5B) chargi ng only motorways and detour of traffic appeared to be 
important. Therefore, charging in  all roads will be analysed. 
2.A. Charging for air pollution and noise costs while climate change tackled through fuel 
taxes  
Road user charge for air pollution and noise would be allowed. Basi cally, Member States 
would add to the current permissible road toll s (infrastructure cost) an environmental mark-
up. The mark-up would reflect th e air pollution and noise co sts generated by lorries and 
would vary according to the vehicle characte ristics, the location and to the time. The 
differentiation at constant revenue according to time (peak, off-peak) would contribute to 
reduce congestion. Existing fuel  taxes are considered to c over climate change (e.g. by 
labelling a CO2 component).  
Policy option 2A will be analysed with different assumptions.  - The first one would be to take the central  value of external costs as proposed by the 
Handbook. This option is part of the an alysis proposed section 4 and 5.  
- A second option would be to take the high es timates of external costs as proposed by the 
Handbook. This option allows analysing the impact of  taking higher values of external costs. 
The charges would also vary according to th e EURO class of vehicle and the location 
(urban/interurban). Existing fuel taxes ar e considered to cover climate change.  
- Finally, a third option will be tested assuming that only Member States having already tolls 
charge external costs. This  option would envisage optiona l charging by Member States. 
Therefore, in the modelling exercise, Ireland, Finland, Sweden, Denmark, Estonia, Latvia, 
Lithuania, Luxembourg, Malta, Cyprus and United Kingdom have been excluded from the 
scope of the analysis. An EU  coordination including a cap sy stem would ensure that the 
charges are not set above the median values of external costs of air pollution and noise 
generated by lorries. The char ges would also vary according to  the EURO class of vehicle, 
and the location (urban/interurban). Existing fuel taxes are considered to cover climate change. 
2.B Charging for air pollution, noise and climate change
 
A similar system would be app lied, except that in addition a CO2 charge would be added on 
top of the air pollution and noise charge. Member  States may choose to add this CO2 charge 
 
EN 146   EN in their fuel tax or in the tolls. Those above the EU average fuel tax leve l could be inclined to 
opt for an increase of tolls.  
Two possibilities could be explored: - Member States add a CO2 charge on top of the infrastructure charge whatever their current 
level of fuel duties (above or at Community minimum level). 
- Member States add to the tolls a CO2 mark-up with a lowering of fuel tax. 2. C. Charging for air pollution, noise and congestion 
 
On top of air pollution and noi se costs, a congestion mark- up would be applied on some 
sections/links (basically, when marginal in frastructure costs are higher than average 
infrastructure costs, reflecting the pressure on the use of infrastructure). 
As regards congestion charging, two possibilities would be explored: 
- Charging for congestion HGV  - Charging for congestion HGV and private cars. The rationale behind would be to charge 
HGV only if passenger cars are also charged. 
Table 1: Description of modellin g options for the Policy options 2 
Modes
Scope External costs Road freight transport 
Modelling of Policy Option 2 
Air pollution 
Noise CO2  Variant 2a 
External costs on top of existing infrastruct ure cost (as they are currently charged).  
Charges on air pollution, noise.  
CO2 already internalised through fuel taxes. 
2a High estimates 
In this sub-variant, high estimates  of external costs are applied.  
2a Central estimates 
Here, central estimates of external costs are applied.  
2a Some Member States 
Only Member States with tolls (excluding IE, FI, SW, DK, EE, LV, LT, LU, MT, 
CY, UK) 
Air pollution 
Noise 
CO2  Variant 2b . 
Same as variant 2a Central estimates All Member States 
CO2 mark-up. 
2b High fuel tax 
2b Lower fuel tax  
Air pollution 
Noise Congestion Variant 2c .  
Same as variant 2a Central estimates All Member States. Congestion mark-up on some sections. 
2C freight 
Congestion charge would be li mited to freight transport. 
2C all road 
Congestion charge would be extended to freight and passenger cars.  
 
 
EN 147   EN 2. POLICY OPTION 3 
Policy option 3 includes all modes of transport. Charging for road freight transport is similar 
to charging in policy option 2. Variant 3A allo ws charging for air pollution and noise and add 
a fuel tax to non road transport.  
Table 2: Description of modellin g options for the Policy options 2  
Modes
Economic Instruments
Scope External costs All modes of transport 
(PO3) 
Air pollution 
Noise 
CO2  Variant 3a 
External costs on top of existing infrastructure costs cost 
(as they are currently charged).  
Air pollution and noise charging in all modes of transport. 
CO2 assumed to be internalised in road fuel taxes. 
CO2 charge (fuel tax) in maritime and IWW added.  
Air pollution and noise are re flected in an increase of 
circulation tax in cars (converted in flat km-charge in 
Transtools).   
Air pollution 
Noise CO2  Variant 3b 
Same as variant 3a.  
Mark-up for CO2 in road transport (freight and passenger) 
Air pollution 
Noise 
Congestion No variant. Road congestion cannot be internalised 
through circulation tax. Congestion can not be modelled in 
other modes of transport.  
All external costs, i.e. accidents, congestion, air 
pollution, climate change, noise. - 
 
4. SCENARIO OF THE IMPACT STUD Y AND THE LINK WITH THE POLICY 
OPTIONS OF THE IMPACT ASSESSMENT 
The IMPACT study comprises other set of scenario  that has been also useful to build the 
policy options.  
From the IMPACT study (deliverable 3), the re ference scenario has been used to assess the 
impacts of other policy options.  
The other scenarios provide illustration on alte rnative ways of intern alisation. Scenario 2 
assumes internalisation through fuel tax. This sc enario has been discarded as fuel tax cannot 
capture the local dimension of  some external costs.  
Scenario 3 assumes an increase of charges and has not been used.  Scenario 4a assumes a lowering of fuel tax in road transport and has not  been used. Scenario 
4b is the same as 4a, but keeps existing level of fuel tax. Scenario 4c is the same as 4a, but keeps existing level of fuel tax in freight transport.  
Finally, scenario 5a and 5b are close to policy option 3. The difference is that these scenarios 
apply marginal infrastructure costs and charge fo r all external costs. S cenario 5b is interesting 
because it only charges freight road transport on  motorways. It results a detour traffic which 
has been assessed when deciding the scope of policy option 2. 
 
EN 148   EN Annex 11: Description of models  
TRANSTOOLS 
TRANSTOOLS is a European transport networ k model covering passenger and freight, as 
well as intermodal transport. The following innovations are obtain ed from TRANSTOOLS: 
- New set up of a supply and demand model with respect to existing models. - Intermodality for passenger/freight (as Nati onal and European transport policies seek 
to promote intermodality through different measures). 
- Inclusion of intercontinenta l flows (mainly for freight), as some models do not cover 
this segment. 
- Full coverage of Central and Eastern Europe  (Accession Countries and the countries at 
the borders of the enla rged European Union). 
- Integration of the new Member States at a level similar to those of EU-15. 
- Feedback infrastructure development econom y (as the question of indirect effects in 
the economy and on network level is important, es pecially where investment has a substantial 
influence - notably for Accession Countries). 
- Logistics/freight chain explicitly included. - Coupling method between local traffic and l ong-distance traffic in order to address the 
effect of congestion on the later. 
- A software approach is chosen which resu lts in a software modelling tool on network 
level. 
The TRANSTOOLS model, which reference data comes from the ETIS database, is made of 
different modules. These model components exch ange information according to a sequential 
approach (i.e. the origin/destination matrix pr oduced by the passenger mode l is transferred to 
the modal split model, etc.) although feed back effects are taken into account (i.e. transport 
costs and times produced by the assignment model are fed back to the modal split model). In 
brief, the model works in the following way (using a modelling step of 1 year): 
- The freight/logistics model (based on NE AC and SLAM principles) produces the 
freight unimodal transport modal matrices fo r the 10 NST/R commodity groups on the basis 
of the NUTS2 zoning system. 
- The passenger model (based on ASTR A and VACLAV principles) simulates the 
generation and distribution of trips and produces  origin/destination matrices by trip purpose 
and by mode at regional level (NUTS3 zoning system). 
- Main inputs for these two models are the transport network, the socio-economic data 
and the transport Level of Service (cost and times); the latter  is produced by the 
TRANSTOOLS assignment model. 
 
EN 149   EN - The freight and passenger trip matrixes ente r in the assignment stage. Freight matrixes 
have to be brought on the level of NUTS III, a level which is appropriate to describe 
congestion. 
- From the assignment module the transport co sts will enter (in logsum) into the SCGE 
model, which is based on CG Europe principles. The change in transport costs/accessibility is a driving force for indicating the indirect effect s (change in regional GDP), which are then fed 
in the freight and passenger model. 
TREMOVE 
TREMOVE is a policy assessment model to st udy the effects of different transport and 
environment policies on the emissions of the transport sector. The model estimates the transport demand, the modal shifts , the vehicle stock renewal, th e emissions of air pollutants 
and the welfare level. The model can be applie d for environmental and economic analysis of 
different policies as road pric ing, public transport pricing, emission standa rds, subsidies for 
cleaner cars, etc.  
TREMOVE models both passenge r and freight transport, and covers the period 1995-2020. 
TREMOVE includes in fact 2 models: a land transport model, and a maritime model. The 
maritime model has not been used for IMPACT si nce it is not able to model the impacts of 
pricing policies. The land transport model has b een set up to model all transport within one 
country. The TREMOVE modelling used for IMPACT  covers 19 countries: the EU-15 plus 
Czechoslovakia, Hungary, Poland and Slovenia. 
The TREMOVE model has been developed by Transport & Mobility Leuven and the K.U. 
Leuven, for the European Commission, DG Environment. 
The first version of the model dates 1997-19 98. At that time, the model covered nine 
countries and focussed on road transport. The K.U. Leuven and DRI developed the first model 
as an analytical underpinning for the European Auto-Oil II programme. 
TREMOVE consist of twenty-one parallel count ry models. Each country model consists of 
three inter-linked core modules : a transport demand module, a vehicle turnover module and 
an emission and fuel consumption module, to wh ich a welfare cost module and a well-to-tank 
emissions module has been added. 
The transport demand module describes transpor t flows and the user's decision making 
process when it comes to making their modal c hoice. Starting from the baseline level of 
demand for passenger and freight transport per mode, period, region, etc., the module 
describes how the implementation of a policy measure will affect the users and companies choice between these 240 different transport t ypes. The key assumption here is that the 
transport users will select the volume of transport and their pr eferred mode, period, region etc. 
based on the generalized price for each mode: cost, tax or subsidy and time cost per km 
travelled. The output of the demand module cons ists of passenger kilo metres (pkm) and ton 
kilometres (tkm) that are demanded per transp ort type for a given po licy environment. The 
pkm and tkm are then converted  into vehicle kilometres. 
The vehicle stock turnover modul e describes how changes in de mand for transport or changes 
in vehicle price structure influence the share of  age and type of vehicles in the stock. The 
 
EN 150   EN output of the vehicle stock module is twofold: both the total fleet and the number of km for 
each year according to vehicle type and age. 
The fuel consumption and emissions module is  used to calculate fuel consumption and 
emissions, based on the structure of the vehicl e stock, the number of kilometres driven by 
each vehicle type and the driving conditions.  
Outputs from the vehicle stock and fuel cons umptions and emissions modules are fed back 
into the demand module. As fuel consumpti on, stock structure and usage influence usage 
costs, they are important determinants of transport demand and modal split.  
In addition to the three core modules, the TREMOVE model includes a well-to-tank 
emissions and a welfare cost module.  
The well-to-tank emissions module enables to calculate emissions dur ing production of fuels 
and electricity. 
The welfare cost module has been developed to compute the cost to so ciety associated with 
emission reduction scenarios in European urban and non-urban areas. The welfare effect of a 
policy change is calculated as the discounted sum of cha nges in utility of households, 
production costs, external costs of congestion and pollution and benef its of tax recycling. 
These benefits of tax recycli ng represent the welfar e effect of avoiding public funds to be 
collected from other sectors, when the tr ansport sector generates more revenues. 
ASTRA 
The ASTRA model is an integrated simulation model which consists of eight modules. The 
modules are linked by a series of feedback loops  and the model can be run over the appraisal 
period required for a cost benefit analysis (CBA). For example, trade flows, private 
consumption decisions, investments, produc tion relationships modelled by input-output 
tables, government revenues and technical progress are influen ced by transport behaviour and 
transport policies. 
The 8 modules describe the structure and deve lopment of population, the macro-economy, the 
regional economy, foreign trade, transport, vehicle fleet composition, the environment and 
add a welfare module for aggrega ting results by means of welfar e indicators. While the first 
idea for ASTRA development was to bring together transport, the economy and the environment on a common platform of analysis  the recently presented advanced version 
ASTRA-D includes covers now all 25 EU countri es plus Bulgaria, Romania, Switzerland and 
Norway, and 25 economic sectors. 
(1) The population module (POP) provides th e population development for all modelled 29 
European countries with one-year age cohorts.  Demographic trends, wh ich result from the 
population module, strongly affect the outcomes of the other modules . This is particularly true 
for ageing societies with shri nking populations but also holds for intra EU and rural-urban 
migration, which is of prior importance with regard to social integration.  
The model depends on exogenous country-specifi c factors like fertility, death and infant 
mortality rates as well as migration into th e 29 modelled European countries. Based on the 
age structure given by the one-year-age cohorts important information is provided for other 
modules like the number of persons in working age or the number of persons in age classes 
 
EN 151   EN that permit to acquire a driving licence. Th e population in ASTRA is calibrated to fit the 
EUROSTAT baseline population predictions until 2050 (Ponti et al., 2002).  
(2) The national economic framework in which the other modules are embedded is provided 
by the macro-economic module (MAC). The MAC cannot be categorised explicitly into only 
one economic category of models, for instance a neo-classic model. In stead it incorporates 
neo-classical elements, like pr oduction functions, but also Keynesian elements as the 
dependency of investments on consumption. Thes e have been extended  according to the 
requirements of the ASTRA objectives e.g. such that investments are also made dependent on 
exports.  
The macro-economic module provides several im portant outputs to other modules. The most 
important one is, obviously, gross domestic pr oduct acting as one of the major drivers for 
exports. Labour productivity is another element among factors that driv e the foreign trade 
module. Finally, disposable income per adult affects car purchasing in the vehicle fleet 
module. The following five major elements  constitute the functionality of the 
macroeconomics module.  
The sectoral interchange model reflects th e economic interactions  between 25 economic 
sectors of the national economies by an Input-O utput table structure. The structure of 25 
economic sectors is based on the NACE-CLIO system established by EUROSTAT for input-
output data. The input-output tabl es are driven by changes of final demand. The structure of 
the tables can either change due  to shifts between sectors of final demand and due to changes 
in transport and energy costs that  are part of the intermediate inputs in the input-output table. 
The main output taken from the input-output m odel are the sectoral production value (total 
output) and the sectoral gross va lue added. The sectoral producti on value is the major driver 
for the generation of domestic freight. 
The second element, the demand side model de picts the four major components of final 
demand: consumption, investment s, exports-imports (which is modelled in detail in the 
foreign trade module) and the government consump tion. All indicators of the demand side are 
modelled on the basis of 25 economic s ectors, including 10 service sectors. 
The basic element of the supply side is a production function of Cobb-Douglas type 
calculating potential output that  incorporates the three majo r production factors labour supply, 
capital stock and natural resources as well as t echnical progress referred to as total factor 
productivity (TFP) Total factor productiv ity is endogenised depending on sectoral 
investments, freight transport time-sav ings and labour productivity changes.  
The fourth element of MAC consists in the em ployment model that is  based on value-added 
as output from input-output ta ble calculations and labour productivity. Employment is 
differentiated into full-time equivalent employme nt and total employment in order to capture 
the growing importance of part-time employ ment. In combination with the population 
module, unemployment can be estimated via re gulation of activity rate of labour force. 
The fifth element of MAC describes govern ment behaviour. Government revenues are 
differentiated into revenues from  social contributions, direct, indirect and other taxes and 
additionally transport pricing revenues. Transfers to house holds, subsidies, government 
consumption and investments form expenditure s. Categories that ar e endogenised comprise 
VAT and fuel tax revenues, direct taxes, impor t taxes, social contri butions and revenues of 
transport charges on the revenue si de as well as transport investments, interest payments for 
 
EN 152   EN government debt, government consumption, unemplo yment payments, transf ers to retired and 
children, on the expenditure side.  
(3) The regional economics module (REM) mainly provides the generation of passenger trips 
and freight transport volume repr esenting the first of four stages  of the classical four-stage 
transport modelling approach. The number of passenger trips is driven by the number of 
people belonging to different age classes, thei r employment and car-ownership situation. 
Passenger trip generation is performed indi vidually for each of the 75 functional zones 
implemented in the ASTRA model. Each of  the modelled 29 European countries is 
subdivided into up to four zones composed  of groups of homogenous NUTS-II zones. The 
functional zones were identified by analysis of settlement patterns  and GDP per capita. 
Domestic freight transport depends  on sectoral production values th at are translated into flows 
for the fifteen sectors, which produce goods by m eans of value-to-volume ratios. International 
freight transport is generated by sectoral trade, output of the foreign trade module, and value-
to-volume ratios are used agai n to compute the correspondent traffic volume. ASTRA uses a 
development trend of value-to-volume ratios as  experts project highe r growth of exported 
values than amount of goods, which implies an  appreciation of exported goods. For freight 
distribution and the further calculations in th e transport module the demand volumes of the 
fifteen sectors are aggregated into thr ee goods categories: bulk goods, general cargo goods 
and unitised goods. 
(4) The foreign trade module (FOT) is subdivide d into an INTRA-Europe and a Europe to 
rest-of-the-world (RoW) countries model. The rest-of-the-world countries were aggregated 
into nine regions, consisting of: NAFTA, Latin and Middle America, Japan, China, India (e.g. 
India, Pakistan), East Asian Tigers (e.g. Sout h Korea, Thailand, and Malaysia), Oceania (e.g. 
Australia, New Zealand), Turkey and Rest-of- the-world countries. Both, INTRA-Europe and 
Europe-RoW models are mainly driven by the development of relative productivity between 
the 29 European countries or between the 29  European countries and rest-of-the-world 
countries, GDP growth of importing country and world GDP growth as external factors to 
trade. Additionally the INTRA-Europe trade flows depend on the development of averaged 
generalized cost of transport between each of the country pa irs. The resulting export-import 
flows of these two trade models then are fed b ack into the macroeconomics module as part of 
the final demand. Secondly, the INTRA-Eur ope trade model provides monetary flows 
between countries that were transformed via value-to-volume ratios into international freight demand within the REM module. 
(5) The major input of the Transport Module (TRA) is the link based transport demand for 
passenger and freight transport. Using individual  transport costs for each transport mode in 
Euro per km and individual tr ansport time matrices per mode the transport module calculates 
the modal split based on a classical Logit functions depending on generalised costs (Ortuzar/Willumsen, 1998). The development of passenger transport costs per mode is modelled similar for all modes and starts from exogenously calculated initi al costs per km for 
each passenger mode, differentiated into coun tries and the three trip purposes business, 
personal and holiday. An exogenous trend for th e cost development is constituted for each 
mode. Furthermore the development of costs per km for the usage of cars is influenced by the endogenous calculated fuel price development and by the introduction of  road pricing in 
several countries. Similar to the calculati on of costs per km for each passenger mode the 
transport times per mode and km are generated based on initial time matrices for each mode. 
For national transport the generation and distri bution steps of a classical 4-stage transport 
model are ruled by the REM module, while for th e international freight transport, generation 
 
EN 153   EN and distribution are replaced by i nput from the foreign trade model.  In the final stage all flows 
are assigned to domestic networks  to model capacity limitations and time reactions of the 
various modes. 
As the assignment stage and the resulting cong estion effects on transport times and therefore 
transport behaviour can only be  modelled by a highly detailed transport network model, the 
transport module in ASTRA can be combined th rough an interface with the transport network 
model VACLAV. VACLAV uses a regional classificat ion on the NUTS3 level, i.e. with about 
1,300 regions for West Europe and the acces sion countries to the European Union. 
(6) The major input for the Environment module (ENV) are the vehicle-kilometres-travelled 
generated by the TRA module pe r transport mode and distance band respectively. Based on 
these traffic flows and the information from  the vehicle fleet model on the drives, car 
categories and emission standards, the environm ental module calculates the most important 
transport emissions - CO2, NOx, CO, VOC and soot particles - for each distance band. 
Emission generation is differentiated according it s source in: emissions from vehicle and fuel 
production, emissions caused by cold  starts and the hot emissions . Other than the emissions 
also fuel consumption and fuel tax revenues from transport are computed by this module. 
Traffic flows and accident rates for each mode form the input to calculate the number of 
accidents in the European countries. The expend itures for fuel, the revenues from fuel taxes 
and value-added-tax (VAT) on fuel consump tion are transferred to the macro-economic 
module and provide input to the economic sect ors covering fuel products and the government 
revenues. 
(7) The Vehicle Fleet Module (VFT) calculates the vehicle fleet composition for all road 
modes for the modelled 29 European countries. Vehi cle fleets are differen tiated into different 
age classes based on one-year-age  cohorts and into different emission standard categories. 
Additionally, the car vehicle fleet is differentiate d into gasoline and diesel powered cars with 
different cubic capacity categories. The car vehi cle fleet develops according to the income 
changes, the development of population and the development of the fuel prices. The vehicle 
fleet composition of bus, light-duty vehicles and heavy-duty vehicles mainly depends on the driven kilometres and the de velopment of average annual m ileages per vehicle of these 
modes. The purchase of vehicles is translated  into value terms and forms an input of the 
economic sectors in the MAC that covers th e vehicle production. Th e vehicle fleet model 
considers also scrapping of a certain share of vehicles during the average lifetime. 
(8) Finally in the Welfare Measurement Module (WEM) major macro-economic, 
environmental and social indicators can be co mpared and analysed. Also different assessment 
schemes that combine indicators into aggregated  welfare indicators for instance an investment 
multiplier are provided in the WEM. In some cases, e.g. to undertake a CBA, the functionality 
is separated into further tools to avoid ex cessive growth of the core ASTRA model by 
including the assessment framework directly within the model. 
HOW THE MODELS COMPLEMENT 
The analysis of impacts relies on different m odels. All these models have been used in a 
complementary ways. TRANSTOOLS results have been used in Astra modelling. 
TREMOVE and TRANSTOOLS have also been used to support the REFIT indicators. 
 
EN 154   EN Table 1: Use of models fo r the analysis of impact 
Analysis of Impact Model  
Transport 
Cost 
Traffic Modal shift TRANSTOOLS 
 
Economic  
Macroeconomic evolutions 
(GDP, investment, exports, 
consumption, TFP, employment)  
ASTRA 
Level of internalisation REFIT, based on TREMOVE 
Environment  
Environmental costs TRANSTOOLS 
 
Noise REFIT (based on TREMOVE 
and TRANSTOOLS) 
Social  
Safety TRANSTOOLS 
REFIT (based on 
TRANSTOOLS) 
Equity REFIT (based on EDIP) 
Regional welfare TRANSTOOLS 
 
 
EN 155   EN Annex 12: Description of the reference scenario  
The development of the reference scenario (N o New Actions) considers the policy framework 
set by already taken decisions as well as Europe an strategy documents. The reference scenario 
is built on the current s ituation. So for all modes all curren tly existing taxes, charges and 
regulation remain. This includes ex isting infrastructure charges, fu el taxes, harbour dues, etc. 
In addition to the current situation, the refere nce scenario assumes that all policy proposals 
that are in the pipeline are implemented as we ll as the options offered by 2006/38/EC are used 
by all Member States (see part 4 of the impact assessment). 
1. TRANSPORT EVOLUTIONS 
Table 1: Evolution of freight transport 
EU-25, 2020, billion ton*kms  
  Short-Sea Rail Road IWW All 
modes 
Reference 2000 1363 465 1800 224 3851 
Reference 2020 2350 864 2853 325 6392 
Growth 2000-2020 72,5% 85,8% 58,5% 45,0% 66,0% 
Table 2: Evolution of passenger transport 
EU-25, 2020, billion pass*km*  
  Air Rail Road Total 
Reference 2000 440 423 4197 5060 
Reference 2020 795,8322962 550,9763 5512,47 6859,279 
Growth 2000-2020 80,9% 30,3% 31,3% 35,6% 
* Combined TRANSTOOLS-TREMOVE result s. As TRANSTOOLS does not include intra-NUTS 3 traffic, a combination 
with TREMOVE has been made. Reference 2000 is using the Pocket book figures.  
 
EN 156   EN Graph 1: Evolution of the share of internatio nal road freight transport in total traffic 
Share of international road freight transport in total traffic
0,00% 10,00% 20,00% 30,00% 40,00% 50,00% 60,00% 70,00% 80,00% 90,00% 100,00%EELUBELVLTNLSIATDKCZPTSWESEUFRITDEFIHUSKPLIEELUK
bn ton-kilometresinternational share 2020
international share 2000
 
Source: IMPACT/TRANSTOOLS 
2. THE BRIDGE BETWEEN ASTRA AND TRANSTOOLS 
The Trans-Tools model is based on traffic ne twork and simulates interzonal traffic between 
NUTS3 regions for passenger (respective NUTS2  regions for freight) transport. Due to 
computation constraints ASTRA is not able to simulate on a similar spatial level and therefore uses functional zones instead of real NUTS regions. Thus in ASTRA every country is 
subdivided in up to four functional zones (c luster of NUTS II regions according similar 
population density and other variables). All NUTS z one based trip and time data coming from 
the Trans-Tools model is transformed to the f unctional zone based stru cture of ASTRA. After 
this transformation ASTRA uses passenger trips respective freight volumes and travel times 
from the Trans-Tools model for the base y ear 2000 and for the final year 2020 for the 
reference scenario and for policy option. In comp arison to static models like Trans-Tools, 
ASTRA as a dynamic model requires inputs for all simulation years in between. Hence, the 
inputs from Trans-Tools are linea r interpolated to derive the input for the whole simulation 
period from 2000 to 2020. Thus no significant break  is expected for th e reference scenario 
(where no policy is implemented); but for polic y option 4, where kilometre charges (and at 
the same time revenues) are changed according the marginal cost pricing principle. These 
changes were implemented for 2009 and the following years.  
Passenger trips, freight volumes and infrastruc ture user charges are implemented in the 
ASTRA transport module. In order to provide  feedbacks to the economy ASTRA uses micro-
macro bridges to simulate the impacts of transp ort cost, time and finally behaviour changes. 
Passenger transport performance is used to calc ulate the share of consumption for transport 
products and services. Furthe rmore, ASTRA simulates the impacts on import and export 
flows between the European coun tries by analysing the changes in  transport times and costs. 
Technological improvements and hence increasing total factor productiv ity are induced by 
reductions in total freight transport time. 
Additionally, ASTRA is able to take the use of toll revenues into account. Revenues from 
road charges can be fed back into the system  in terms of balancing the national budget and 
reducing the government debts or in terms of improving the national competitiveness via 
 
EN 157   EN refunding the revenues for direct tax reductions. In the latter the expenditures are given back 
to all private households bala ncing the total disposable in come of private households. 
3. MACROECONOMIC TRENDS 
Graph 2: Macroeconomic trends of Reference Scenario 
Macroeconomic aggregates for EU27 in baseline scenario
100120140160180200220
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Index year 2000 = 100]GDP
Investment
Consumption
Employment
Exports
Gross Value Added
TFP
 
Source: IMPACT/ASTRA 
Graph 3: Average annual investment growth rate investments in the goods sectors of 
EU-27 (in € 2000) 
Growth of investments EU27 by goods sectors until 2020 in the reference scenario [%]
0%20%40%60%80%100%120%140%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing 
Source: IMPACT/ASTRA  
 
EN 158   EN Graph 4: Average annual growth rate of em ployment in the goods sectors of EU-27 (in € 
2000) 
Growth of employment EU27 by goods sectors until 2020 in the reference scenario [%]
-40%-30%-20%-10%0%10%20%30%40%50%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing
 
Source: IMPACT/ASTRA  
Graph 5: Average annual growth rate of exports in the goods sectors of EU-27 (in € 
2000) 
Growth of exports EU27 by goods sectors until 2020 in the reference scenario [%]
0%20%40%60%80%100%120%140%160%180%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing
 
 
EN 159   EN Graph 6: Average annual growth rate of gros s value added in the goods sectors of EU-27 
(in € 2000). 
Growth of gross value added EU27 by goods sectors until 2020 in the reference 
scenario [%]
-20%0%20%40%60%80%100%120%140%160%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing
 
Source: IMPACT/ASTRA  
 
EN 160   EN Annex 13: Analysis of Impact  of Policy options 2 and 3  
1. CHANGES IN TAXES AND CH ARGES IN POLICY OPTIONS 
Table 1: Summarized changes in total taxes and charges per scenario, per mode (2020) 
Total increase 
in charges/taxes in 2020 
(billion €
2000) Freight Passenger 
Scenario Road Rail IWW Total 
freightRoad Rail Aviation Total 
passenger 
PO 2A 
(central estimates) 12 0 0 12 0 0 0 0 
PO 2A- only MS with tools 11 0 0 11 0 0 0 0 
PO 2A (high estimates) 24 0 0 24 0 0 0 0 
PO 2B (existing fuel tax) 22 0 0 22 0 0 0 0 
PO 2B (lowering fuel tax) 17 0 0 17 0 0 0 0 
PO 2C 24 0 0 24 0 0 0 0 
PO 3A 12 1 1 14 0 1 2 3 
PO 3B 22 1 1 24 0 1 2 3 
Source: summarized modelling input data (b ased on TREMOVE 2.44 fleet and mileage data 
for 2020, EU-19). 
1 Including LDT.  
Remark: These data do not show changes in overall re venues, since they are based on traffic 
volumes in the baseline from TREMOVE. TRAN STOOLS runs are limited to inter-NUTS-3 
traffic. 
Source: IMPACT Study 
 
EN 161   EN 2. ANALYSIS OF IMPACT OF VARIANTS OF POLICY OPTION 2 ON MOBILITY 
Graph 1: Analysis of impact on  freight transport (ton lifted) 
Impact of charging road freight (PO 2 v ariants)
-4,00%-2,00%0,00%2,00%4,00%6,00%8,00%10,00%12,00%
Maritime Rail Road IWW All modesChanges in tons lifted relative to reference scenarioPO 2A-central estimates
PO 2A- only MS  with tolls
PO 2A- hig h estimates
PO 2B- existing fuel tax
PO 2B- low er fuel tax
PO 2C
PO2C all
 
Source: IMPACT/TRANSTOOLS  
Graph 2: Analysis of impact on freight transport (ton km) 
Impact of charging road freight transport (PO 2 variants)
-10,00%-5,00%0,00%5,00%10,00%15,00%
Maritime Rail Road IWW All modesChanges in tkm relative to reference scenarioPO 2A-central estimates
PO 2A- only MS with tolls
PO 2A- high estimates
PO 2B- existing  fu el tax
PO 2B- lower fuel tax
PO 2C
PO2C (all)
 
Source: IMPACT/TRANSTOOLS  
 
EN 162   EN Graph 3: Analysis of impact on pa ssenger transport (number of trips) 
Impact of charging road freight transport (PO 2 variants)
-2,00%-1,00%0,00%1,00%2,00%3,00%4,00%
Aviation Rail Road All modesChanges in number of trips relative to reference scenarioPO 2A-central estimates
PO 2A- only MS  w ith tolls
PO 2A- high estimates
PO 2B- existing  fu el tax
PO 2B- lower fuel tax
PO 2C
PO2C (all)
 
Source: IMPACT/TRANSTOOLS  
Graph 4: Analysis of impact on passenger transport (passenger-km) 
Impact of charging road freight transport (PO 2 variants)
-2,00%-1,00%0,00%1,00%2,00%3,00%4,00%5,00%
Aviation Rail Road All modesChanges in passenger km relative to reference scenarioPO 2A-central estimates
PO 2A- only MS  w ith tolls
PO 2A- high estimates
PO 2B- existing fuel tax
PO 2B- lower fuel tax
PO 2C 
PO 2C (all)
 
Source: IMPACT/TRANSTOOLS  
 
EN 163   EN 3. MACROECONOMIC IMPACT: CO MPARISON OF OPTIONS WITH 
REFUNDING 
Graph 5: Analysis of impact on consumption with refunding 
Impacts on consumption with refunding for EU27 
-0,2%0,0%0,2%0,4%0,6%0,8%1,0%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A
central
PO2Bhig h
PO 2C
PO2C(all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA  
Graph 6: Analysis of impact on investment with refunding 
Impacts on investments with refunding for EU27 
-0,2%0,0%0,2%0,4%0,6%0,8%1,0%1,2%1,4%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A
central
PO2Bhig h
PO 2C
PO2C
(all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA  
 
EN 164   EN Graph 7: Analysis of impact  on exports with refunding 
Impacts on exports with refunding for EU27 
-0,9%-0,8%-0,7%-0,6%-0,5%-0,4%-0,3%-0,2%-0,1%0,0%0,1%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A
central
PO2Bhig h
PO 2C
PO2C(all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA  
Graph 8: Analysis of impa ct on GVA with refunding 
Impacts on gross value added with refunding for EU27 
-0,2%-0,1%0,0%0,1%0,2%0,3%0,4%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A
central
PO2Bhig h
PO 2C
PO2C(all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA  
 
EN 165   EN Graph 9: Analysis of impa ct on TFP with refunding 
Impacts on total factor productivity with refunding for EU27 
-0,5%0,0%0,5%1,0%1,5%2,0%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A central
PO2Bhigh
PO 2C
PO2C (all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA  
Graph 10: Analysis of impact  on employment with refunding 
Impacts on emplo yment with refundin g for EU27 
-0,3%-0,2%-0,1%0,0%0,1%0,2%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020[Change to BaU in %PO2A
central
PO2Bhig h
PO 2C
PO2C(all)
PO 3A
PO 3B
 
Source: IMPACT/ASTRA 
 
EN 166   EN 4. SECTORAL IMPACTS OF POLICY OPTION 2A 
Graph 11: Impact on growth of investment  in the goods sectors of EU-27 – PO 2A 
Impact on growth of investments EU27 by goods sectors until 2020 in Policy option 2A 
central  [%]
-0,4%-0,3%-0,3%-0,2%-0,2%-0,1%-0,1%0,0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
Graph 12: Impact on growth of consumptio n in the goods sectors of EU-27 – PO 2A 
Impact on growth of consumption EU27 by goods sectors until 2020 in Policy Option 
2Acentral [%]
-0,3%-0,2%-0,2%-0,1%-0,1%0,0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 167   EN Graph 13: Impact on growth of employmen t in the goods sectors of EU-27 – PO 2A 
Impact on growth of employment EU27 by goods sectors until 2020 in policy option  2A 
central [%]
-0,4%-0,4%-0,3%-0,3%-0,2%-0,2%-0,1%-0,1%0,0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
Graph 14: Impact on growth of gross value added in the goods sectors of EU-27 – PO 2A 
Impact on growth of gross value added EU27 by goods sectors until 2020 in scenario 2Ac [%]
-0,4%-0,3%-0,2%-0,1%0,0%0,1%0,2%0,3%0,4%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 168   EN POLICY OPTION 2B 
Graph 15: Impact on growth of investment  in the goods sectors of EU-27 – PO 2B 
Impact on growth of investments EU27 by goods sectors until 2020 in Policy Option 2b 
High [%]
-0,4%-0,3%-0,3%-0,2%-0,2%-0,1%-0,1%0,0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
Graph 16: Impact on growth of consumptio n in the goods sectors of EU-27 – PO 2B 
Impact on growth of consumption EU27 by goods sectors until 2020 in Policy option 2b 
[%]
-0,25%-0,20%-0,15%-0,10%-0,05%0,00%0,05%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 169   EN Graph 17: Impact on growth of employmen t in the goods sectors of EU-27 – PO 2B 
Impact on growth of employment EU27 by goods sectors until 2020 in policy option 2b 
high [%]
-0,7%-0,6%-0,5%-0,4%-0,3%-0,2%-0,1%0,0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
Graph 18: Impact on growth of gross value added in the goods sectors of EU-27 – PO 2B 
Impact on growth of gross value added EU27 by goods sectors until 2020 in policy option 2b 
high [%]
-0,6%-0,5%-0,4%-0,3%-0,2%-0,1%0,0%0,1%0,2%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 170   EN POLICY OPTION 2C and 2C (all) 
Graph 19: Impact on growth of investment  in the goods sectors of EU-27 – PO 2C 
Impact on growth of investments EU27 by goods sectors until 2020 in policy option 2C 
[%]
-0.2%-0.1%-0.1%0.0%0.1%0.1%0.2%0.2%0.3%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA 
Impact on growth of investments EU27 by goods sectors until 2020 in PO2C (all) [%]
-1,0%-0,8%-0,6%-0,4%-0,2%0,0%0,2%0,4%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA 
 
EN 171   EN Graph 20: Impact on growth of consumptio n in the goods sectors of EU-27 – PO 2C 
Impact on growth of consumption EU27 by goods sectors until 2020 in policy option 2C 
[%]
-0.4%-0.3%-0.3%-0.2%-0.2%-0.1%-0.1%0.0%0.1%0.1%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA 
Impact on growth of consumption EU27 by goods sectors until 2020 in PO2C (all) [%]
-0,4%-0,3%-0,2%-0,1%0,0%0,1%0,2%0,3%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 172   EN Graph 21: Impact on growth of employmen t in the goods sectors of EU-27 – PO 2C 
Impact on growth of employment EU27 by goods sectors until 2020 in policy option 2C 
[%]
-0.6%-0.4%-0.2%0.0%0.2%0.4%0.6%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA 
Impact on growth of employment EU27 by goods sectors until 2020 in PO2C (all) [%]
-0,9%-0,8%-0,7%-0,6%-0,5%-0,4%-0,3%-0,2%-0,1%0,0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 173   EN Graph 22: Impact on growth of gross value added in the goods sectors of EU-27 – PO 2C 
Impact on growth of gross value added EU27 by goods sectors until 2020 in PO2C [%]
-0,8%-0,6%-0,4%-0,2%0,0%0,2%0,4%0,6%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA 
Impact on growth of gross value added EU27 by goods sectors until 2020 in PO2C (all) [%]
-0,7%-0,6%-0,5%-0,4%-0,3%-0,2%-0,1%0,0%0,1%0,2%0,3%0,4%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 174   EN POLICY OPTION 3A 
Graph 23: Impact on growth of investment  in the goods sectors of EU-27 – PO 3A 
Impact on growth of investments EU27 by goods sectors until 2020 in policy option 3A 
[%]
-0,4%-0,3%-0,3%-0,2%-0,2%-0,1%-0,1%0,0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Impact on growth of investments EU27 by g oods sectors until 2020 in policy option 3A 
[%]
-0,4%-0,3%-0,3%-0,2%-0,2%-0,1%-0,1%0,0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 175   EN Graph 24: Impact on growth of consumptio n in the goods sectors of EU-27 – PO 3A 
Impact on growth of consumption EU27 by goods sectors until 2020 in policy option 3A 
[%]
-0,25%-0,20%-0,15%-0,10%-0,05%0,00%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
Graph 25: Impact on growth of employmen t in the goods sectors of EU-27 – PO 3A 
Impact on growth of employment EU27 by goods sectors until 2020 in scenario 3A [%]
-0,45%-0,40%-0,35%-0,30%-0,25%-0,20%-0,15%-0,10%-0,05%0,00%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 176   EN Graph 26: Impact on growth of gross value added in the goods sectors of EU-27 – PO 3A 
Impact on growth of gross value added EU27 by goods sectors until 2020 in policy option 3A 
[%]
-0,4%-0,3%-0,2%-0,1%0,0%0,1%0,2%0,3%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
POLICY OPTION 3B 
Graph 27: Impact on growth of investment  in the goods sectors of EU-27 – PO 3B 
Impact on growth of investments EU27 by goods sectors until 2020 in policy option 3B 
[%]
-0.4%-0.3%-0.3%-0.2%-0.2%-0.1%-0.1%0.0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 177   EN Graph 28: Impact on growth of consumptio n in the goods sectors of EU-27 – PO 3B 
Impact on growth of consumption EU27 by goods sectors until 2020 in policy option 3B 
[%]
-0.3%-0.2%-0.2%-0.1%-0.1%0.0%0.1%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
Graph 29: Impact on growth of employmen t in the goods sectors of EU-27 – PO 3B 
Impact on growth of employment EU27 by goods sectors until 2020 in policy option 3B 
[%]
-0.7%-0.6%-0.5%-0.4%-0.3%-0.2%-0.1%0.0%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
 
EN 178   EN Graph 30: Impact on growth of gross value added in the goods sectors of EU-27 – PO 3B 
Impact on growth of gross value added EU27 by goods sectors until 2020 in policy option 3B 
[%]
-0.7%-0.6%-0.5%-0.4%-0.3%-0.2%-0.1%0.0%0.1%0.2%0.3%0.4%
Agriculture
Energy
Metals
Minerals
Chemicals
Metal Products
Industrial
Machines
Computers
Electronics
Vehicles
Food
Textiles
Paper
Plastics
Other
Manufacturing[Change to BaU in %]
 
Source: IMPACT/ASTRA  
4. IMPACT ON EXTERNAL COSTS OF VARIANTS OF POLICY OPTIONS 2 
Graph 31: Evolution of CO2 ex ternal costs (PO2 variants) 
Evolution of CO2 external costs (PO 2 variants)
-10,00%-5,00%0,00%5,00%10,00%15,00%
Gaso lin e
passengers
(road)Diesel
passengers
(road)Road freight Rail
passengerR ail  freig ht IWW TOTAL Changes in CO2 emissions relative to reference scenario (bn euros)PO 2A-central estimates
PO 2A- only MS  w ith tolls
PO 2A- high estimates
PO 2B- existing fuel tax
PO 2B- lower fuel tax
PO 2C
PO2C (all)
 
Source: IMPACT/TRANSTOOLS  
 
EN 179   EN Graph 32: Evolution of Nox ex ternal costs (PO2 variants) 
Evolution of Nox external costs (PO 2 variants)
-10,00%-5,00%0,00%5,00%10,00%15,00%
Gaso lin e
passengers
(road)Diesel
passengers
(road)Road freight Rail
passengerR ail freig ht IWW TOTAL changes in Nox emissions relative to reference scenario (bn euros)PO 2A-central estimates
PO 2A- only MS  w ith tolls
PO 2A- high estimates
PO 2B- existing fuel tax
PO 2B- lower fuel tax
PO 2C
PO2C (all)
 
Source: IMPACT/TRANSTOOLS  
Graph 33: Evolution of PM10 ex ternal costs (PO2 variants) 
E v olution of PM10 external costs (PO2 v ariants)
-10,00%-5,00%0,00%5,00%10,00%15,00%
Gaso lin e
passengers
(road)Diesel
passengers
(road)Road freight Rail
passengerR ail freig ht IWW TOTAL changes in PM10 emissions relative to reference scenario (bn 
euros)PO 2A-central estimates
PO 2A- only MS with tolls
PO 2A- hig h estimates
PO 2B- existing fuel tax
PO 2B- lower fuel tax
PO 2C
PO2C (all)
 
Source: IMPACT/TRANSTOOLS  
 
EN 180   EN 5. IMPACT ON CONGESTION OF VARIANTS OF POLICY OPTIONS 2 
Table 2: Congestion indicator (whole road network) 
Note: differences are computed with respect to Impact1 
Scenario congestion_network Difference 
Impact1 28,62%   
PO 2A (central) 28,35% -0,27% 
PO 2 Only Member 
States charging 28,58% -0,04% 
PO 2 (high values) 28,23% -0,39% 
PO 2B (same fuel 
taxes) 28,39% -0,23% 
PO 2B (min fuel taxes) 28,87% 0,25% 
PO 2C 27,38% -1,25% 
PO2C (all) 26,56% -2.06% 
PO 3A 28,43% -0,19% 
PO 3B 28,40% -0,22% 
Source: TRANSTOOLS 
 
EN 181   EN 6. REGIONAL WELFARE IMPACTS 
 
 
EN 182   EN 
 
 
 
EN 183   EN 
 
 
 
EN 184   EN 
 
 
 
EN 185   EN 
 
7. METHODOLOGY USED TO ESTIMATE WELFARE 
The analysis below has been provided by JRC who modelled transport evolutions.  
It is based on the estimation of consumers welf are gain/loss and of the change in the total 
external cost of transport. The original theo retical analysis suggested  that these should be 
estimated on a link basis for all transport modes. There is howev er a strong limitation in doing 
so in a multi-modal network model, since modal shift and route choice changes would lead to 
demand curves of unknown shape for each link. 
In order to solve that problem, the analysis focuses on larger geographic areas (NUTS 2 or 
country level) for which the aggregate transpor t demand curves have a more orthodox shape. 
At that geographic level, the influence of moda l split and route choice is less distorting and 
the demand curve is linear and downwards sl oped. With this level of aggregation, the 
customers behaviour is orthodox, with the de mand decreasing when ch arges increase, and 
vice versa. This also simplifies the welfare anal ysis, thus constituting  a logical assertion, 
given that the changes in traffic volumes are assumed to be small and therefore the area below the demand curve can be calculate d as a triangle in first a pproximation. Finally, since the 
represented curve yields the demand as a func tion of generalized cost, it is important to 
remark what cost stands for. As a matter of fact, the cost is in turn a function of several variables.  
More concisely, the generalized cost is defined as follows: 
LG Ck Tk LG CTC
ext ext ) ( ),, ,(2 1 +++=  (€/veh) 
where: 
T and L are time to cross the link (in hours)  and link length (in km) respectively. 
k1 is the value of time (€/h*veh). 
 
EN 186   EN k2 is the driving cost (€/km).. 
Cext is the toll price (€/km). 
G is the generic cost (€/km). 
This definition of generalized cost is base d on the parameters of the TRANSTOOLS model 
that affect demand and route choice. There are of course several other fact ors that affect user 
behaviour, but since they remain constant in a ll scenarios compared they would not influence 
the result. 
The change in the level of exte rnal cost is a function of the change in transport volumes and 
the external cost factor for each mode and link. This external cost factor, C ext (measured in 
€/veh*km), was estimated on the basis of the charges calculated in the IMPACT study, which 
in turn correspond to  external cost of tran sport using the marginal  social cost pricing 
approach. 
The algorithm for the estimation of welfare gains differs in the two main cases of user 
reaction: 
Case 1:  
If an increase in average charges takes place in a certain region, the traffic volume in this 
region will decrease. This fact yields a welf are loss represented by the red triangle. On the 
other hand, this traffic reduction improves the external cost in this region, si nce less traffic 
means less congestion, less fuel consumption, etc, as shown in the blue square.  
Comparing one scenario with the refere nce scenario 1, the colored areas equal: 
) (C- :cost External) )( (21 : Welfare
1 2 ext1 2 1 2
V VC CV V
−−− 
Where C 1, V 1 are the generalized costs and tra ffic volumes in scenario 1 and C 2, V 2 are the 
generalized costs and traffic volumes in the scen ario we want to estimate welfare gains for. 
From the IMPACT study, we have defined that (C 2-C1) ≈Cext. If differences in times and other 
costs are small, one can also assume that T 1≈T2 and G 1≈G2, Consequently, the red area would 
roughly equal half the blue area and the net effect in this region would be positive. 
 
EN 187   EN 
 
Figure 1.Case 1. 
In practice there are some  differences between T 1 and T 2 due to the change in travel times as a 
result of changes in congesti on levels. In most cases however the difference is not large 
enough to change the order of magnitude of th e two areas. Consequent ly, the welfare gain 
from the reduction of externalities is hi gher than the loss in consumer surplus. 
Case 2:  
If a decrease in charges takes place in a cert ain region, the traffic vol ume in this region will 
increase. In this case, there would be a welfar e gain represented by the blue triangle. On the 
other hand, this traffic increase leads to an increase in external cost, as  shown in the red 
square. Therefore, the colored areas equal: 
) (C- :cost External) )( (21- : Welfare
1 2 ext1 2 1 2
V VC CV V
−−− 
As stated in the previous case, if T 1≈T2 and G 1≈G2, we have that (C 2-C1) ≈Cext and the blue 
area would equal half the red area. As a re sult, the net effect would be negative. CC2 
Cext 
V1 V2 
 
EN 188   EN 
 
Figure 2. Case 2. 
8. TOTAL WELFARE 
Table 4: Total net welfare gain 
 Total net welfare gain 
TRANSTOOLS road transport network  
Billion €, year 2020 
PO 2A 0.87 
PO 2Bi 0.84 
PO 2Bii 0.03 
PO 2C 1.83 
PO2Call 2.30 
PO 3A 0.90 
PO 3B 0.85 
Source: TRANSTOOLS C
C2 
Cext 
V1 V 2 
 
EN 189   EN Annex 14: Implementation Cost s and Administrative costs  
Table 1: Overview of implementation  costs of road pricing schemes 
Data source Study or 
real 
figures? Technology 
involved Investments 
per user (€) Operational 
costs per user  
(€ p.a.) 
Road pricing for all vehicles on all roads 
Ministry of Transport, 
2005 (km charging) Study GPS 280 – 507 53 – 147
Ministry of Transport, 
2005 (km charging + 
congestion charging) Study GPS 275 – 513 63 – 138
Ministry of Transport, 
2006 (km charging) Study GPS 163 – 338 31 – 119
DfT (2004) Study GPS 662 – 4,925 128 – 433
Road pricing for HGVs 
only   
Ministry of Transport, 
2005 (GPS) Study GPS 818 – 1,660 156 – 409
Ministry of Transport, 
2005(DSRC) Study DSRC 1,250 – 1,500 250 – 667
Austria Real DSRC 417 – 617 58
Germany Real GPS 500 – 1,000 393- 508
Switzerland Real DSRC 450 – 565 100
Source: CE Delft, 2005; DfT (2004); Ministry of Transport, 2005; 2006; Oehry, 2006. 
Note: The gray labelled data has been used for th e implementation cost estimates in this report. 
 
EN 190   EN  
Table 2: Assessment of administrative Costs 
Amendment of Directive 1999/62 /EC on charging heavy goods 
vehicles 
The main administrative cost wi ll stem from the obligation for 
Member States who decides to char ge external costs to report to 
the EC every year the total revenue of the charge Tariff 
(€ per 
hour)  
Time  
(hour) Price 
(per 
action 
or 
equip) Freq 
(per 
year) Nbr  
of  
entities Total nbr
of  
actions Total  
cost Regulatory 
origin 
(%) 
No. Ass. 
Art. Orig. 
Art. Type of 
obligation Description 
of required 
action(s) Target group i e i e     10 MS can be expected to opt for an external cost 
charge     Int EU Nat Reg 
1 1§1 12 Notification 
of (specific) activities Familiarising 
with the information obligation National 
administration 
27,4*  10,00   274,0 1,00 10 10 2.740   100%     
2     Submission 
of (recurring) reports Retrieving 
relevant information from existing data National 
administration 
27,4  20,00   548,0 1,00 10 10 5.480   100%     
3     Submission 
of (recurring) reports Producing 
new data National 
administration 
27,4  10,00   274,0 1,00 10 10 2.740   100%     
4     Submission 
of (recurring) reports Filling forms 
and tables National 
administration 
27,4  2,00   54,8 1,00 10 10 548   100%     
5   Other Producing 
new data National 
administration 27.4  500  13700 1.00 10 10 137000     
TOTAL                   0,0     0 148508         
* German national public administration hourly labour costs. Eurostat.  
 
EN 191   EN Annex 15: Glossary  
Average cost Average cost consists of total cost divided 
by a measure of output. In the case on 
infrastructure, it would correspond to total cost of infrastructure (fixed and variable) 
divided by vehicle-km.  
Charge A charge is a proportional payment 
required in exchange for a clearly defined 
service. For example, a toll charge will give 
access to the use of a specific infrastructure 
(bridge, motorway, etc…). 
CO2 Carbon dioxide is a major greenhouse gas. 
It contributes to climate change. 
Efficiency Refers to the efficient allocation of scarce 
resources. In this case, marginal social cost 
equals marginal social benefit.  
Elasticity Proportional change in demand in response 
to a price increase or decrease (price 
elasticity).  
External cost External costs are costs which the user of a 
good or service does not pay for.  
Fixed cost Cost which are not dependent on the traffic 
volume.  
HGV Heavy duty vehicles above 3.5 tonne gross 
weight 
Internal cost Internal costs are costs which are directly 
paid by the user 
LDV Light Duty vehicles (vans up to 3.5 tonnes 
gross weight) 
LTO Landing take off 
Marginal cost Marginal costs reflect the additional cost of 
an additional vehicle.  
MOC Motorcycles 
MOPED Low powered motorized vehicles, in 
general two-wheeled (scooters, motorized 
bicycles, small motorcycles). 
pkm Passenger kilometre 
 
EN 192   EN Permit system A tradable permit scheme is a mechanism 
by which the authorities set a maximum 
level of pollution or use of an infrastructure and assign to individuals/operators a quantity of permits that  corresponds to this 
level. The individual s/operators can then 
trade permits, improving the efficiency in the distribution of efforts or in the use of 
the infrastructure. 
Social cost Social cost is the sum of external and 
private cost 
Tax A tax is a required payment of money to 
governments that are us ed to provide public 
goods and services for the benefit of the community as a whole. Examples are fuel 
tax, circulation tax, registration tax.  
Tkm Ton-kilometres 
Vkm Vehicle-kilometre. One kilometre travelled 
by a single vehicle.