EN

|| EUROPEAN COMMISSION

Brussels, 28.3.2011

SEC(2011) 358 final

COMMISSION STAFF WORKING PAPER

IMPACT ASSESSMENT Accompanying document to the WHITE PAPER Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system SEC(2011) 359 final SEC(2011) 391 final COM(2011) 144 final

This report commits only the Commission’s services involved in its preparation and does not prejudge the final form of any decision to be taken by the Commission.

TABLE OF CONTENTS

1........... Procedural issues and consultation of interested parties. 5

1.1........ Background in the development of the White Paper on Transport Policy. 5

1.2........ Organisation and timing. 5

1.3........ Consultation and expertise. 6

1.4........ Results of the consultation of the Impact Assessment Board. 7

2........... Problem definition. 9

2.1........ General context 9

2.2........ Description and scope of the problem – Mobility of people and businesses today is not sustainable 10

2.3........ What if present trends continue?. 14

2.3.1..... Reference scenario assumptions. 15

2.3.2..... Reference scenario main results. 16

2.3.3..... Sensitivity analysis. 18

2.4........ The root causes of the unsustainability of transport 19

2.4.1..... Cheap for users, expensive to society: prices do not reflect true costs. 20

2.4.2..... Research and Innovation: transport technologies do not achieve low carbon mobility. 20

2.4.3..... Supply of transport services: not sufficiently efficient 22

2.4.4..... Transport planning: lack of coordination and insufficient awareness of interactions. 23

2.5........ Does the Union have the right to act?. 24

3........... Objectives. 26

3.1........ Policy objectives. 27

3.1.1..... General policy objective. 27

3.1.2..... Specific policy objectives. 27

3.2........ Trade-offs and synergies between sustainability goals. 29

3.3........ Consistency with horizontal objectives of the European Union. 29

3.3.1..... EU 2020 Strategy and Single Market Act 29

3.3.2..... Sustainable Development Strategy. 30

4........... Policy options. 30

4.1........ Preliminary note on methodology. 30

4.2........ Rationale behind a comprehensive and strategically coordinated EU action. 36

4.3........ Description of policy options. 39

5........... Impact analysis of policy options. 53

5.1........ Main modelling results. 54

5.2........ Economic impact 56

5.2.1..... Impact on transport as a business. 56

5.2.2..... Impact of transport dynamics on: 60

5.3........ Social impact 66

5.3.1..... Impact on the degree of citizens’ mobility. 67

5.3.2..... Impact on accessibility and cohesion. 67

5.3.3..... Distributional impacts. 69

5.3.4..... Impact on employment level and conditions (including on gender balance) 70

5.3.5..... Impact on safety. 72

5.4........ Environmental impact 72

5.4.1..... Impact on climate change. 72

5.4.2..... Impact on air and noise pollution. 73

5.4.3..... Impact on efficient use of energy and renewable energy sources. 75

5.4.4..... Impact on biodiversity and other environmental resources. 77

5.5........ Conclusions. 78

5.6........ Sensitivity analysis of policy options. 80

6........... Comparison of the options. 81

7........... Monitoring and evaluation. 87

8........... Reference Documents. 90

9........... Annexes. 93

1. Procedural issues and consultation of interested parties

Identification

Lead DG: Directorate General for Mobility and Transport

Agenda Planning: 2010/MOVE/002

1.1. Background in the development of the White Paper on Transport Policy

1. In the last two decades, EU transport policy has been the subject of periodic assessments and of strategic guidance in the form of White Papers, which have provided policy evaluation and alignment with current priorities and general policy orientations.

2. In 1992, the Commission published a White Paper on the common transport policy, which was essentially dedicated to market opening. Almost ten years later, the 2001 White Paper emphasised the need to manage transport growth in a more sustainable way by achieving a more balanced use of all transport modes.

3. The White Paper accompanied by this impact assessment report identifies the challenges that the transport system is likely to face in the future, based on an evaluation of policies and developments in the recent past and on an assessment of current trends. It then defines a long-term strategy that would allow the transport sector to meet its goals with a 2050 horizon.

1.2. Organisation and timing

4. For the preparation of the White Paper on Transport Policy an inter-service group was set up and meetings were organised between November 2009 and June 2010 in order to collect the views of various services[1].

5. This Impact Assessment was elaborated by DG MOVE in collaboration with DG ENER and DG CLIMA. In this context, an Impact Assessment Steering Group (IASG)[2] was jointly set up and met three times between October 2010 and December 2010. The timing of the proposal development and the key aspects of the proposals (including modelling results) were discussed extensively in the context of these inter-service meetings. The last IASG meeting took place on 14 December 2010. A final version incorporating the comments made during this meeting was circulated on 16 December 2010.

1.3. Consultation and expertise

6. With a view to preparing the ground for later policy developments, the Commission has launched a reflection on the future transport system in 2009, comprising a public consultation from 30 January 2009 until 27 March 2009, an evaluation study on the European Transport Policy (ETP); a debate within three ‘Focus Groups’; a study – ‘Transvisions’ – identifying possible low-carbon scenarios for transport and a consultation of stakeholders, notably through a High Level Stakeholders’ Conference on 9-10 March 2009.

7. The Communication on “A sustainable future for transport: Towards an integrated, technology-led and user friendly system”[3], adopted by the Commission on 17 June 2009, summarises the results of this wide reflection. Through this Communication, the Commission launched an open debate covering the main challenges for EU transport policy, the key objectives for the transport system and the ways how to meet them.

8. In this Communication, the Commission encouraged all interested parties to contribute their views on the future of transport and on possible policy options to address the future challenges of the transport sector. Following the public consultation which has run until 30 September 2009 and had attracted more than 250 respondents, a second High Level Stakeholders’ conference took place on 20 November 2009. It aimed at collecting stakeholders’ views on concrete measures which would need to be considered in the preparation of the new Transport White Paper.

9. The summaries of the stakeholder meetings and the contributions received during the preceding public consultation are available on the Commission website[4].

10. Input from stakeholders has been taken into account in assessing the different possible actions to improve the sustainability of the transport system in the EU. External expertise was used to assess the various options available, including aspects raised during the public consultation.

11. As shown by the detailed assessment presented in Appendix 1 of this report, it can be concluded that the minimum standards for the consultation have been respected.

1.4. Results of the consultation of the Impact Assessment Board

12. Following the submission of a draft report to the Impact Assessment Board (IAB) on 20 December 2010 and a hearing with the IAB (which took place on 26 January 2011), the IAB sent its opinion on 28 January 2011, asking DG MOVE to resubmit the draft report. A revised version of the IA report has been sent to IAB on 31 January 2011.

13. In its opinion of 28 January 2011, the IAB made five recommendations that were addressed in the final version of the IA report in the following manner:

(1) The IA report should better explain how the IA report builds on evaluation of existing policies to better demonstrate the lessons learnt

14. The main conclusions from the ex post evaluation presented in appendix 2 of the IA report have been introduced in the section on the problem definition. The connection has been reinforced between those conclusions and the baseline projection, the problem drivers, the objectives and the definition of policy options.

(2) The IA report should define more clearly the concept of sustainable mobility and how it is reflected in the definition and prioritisation of objectives

15. The concept of sustainable mobility has been clearly defined in the revised version and the specific objectives have been streamlined. A discussion on the prioritisation of the policy objectives and on the possible trade-offs between those objectives and other sustainability goals has been added to the Section 3 of the IA report.

(3) The IA report should provide more clarity about the design, content and differences between the options and the features they have in common

16. The revised version of the IA report provides greater clarity on how the seven policy areas and the policy measures were identified. Further explanation about the content of Table 4 has been provided and its presentation improved. The IA report has clarified how the differences between the various policy options have been reflected in modelling results.

(4) The IA report should provide much greater clarity about the assumptions underlying the modelling results and give more clarity about cost figures, especially as regards the concept of ‘total transport costs’.

17. The revised IA report has further explained the key assumptions that have been made in the modelling exercise. Subsection 5.6 on sensitivity analysis has been added in the section assessing the possible impacts of the various policy measures. The different concepts of costs used in the IA report have been clarified further. Additional modelling results (in particular on costs) have been provided.

(5) The IA report should provide a global assessment of the most affected industrial sectors, social groups and regions, differentiating between short and long term impacts.

18. The revised IA report gives a qualitative assessment about which industrial sectors, social groups, and regions will be most affected by the proposed policies in Section 5 on the assessment of impacts.

19. The revised IA report has also been fine-tuned on the basis of the more technical comments transmitted to DG MOVE.

20. On 2 February 2011, the IAB issued a second opinion on the revised IA report with several recommendations which have been taken into account in the following manner:

(1) Clarify certain baseline issues, define sustainable transport in a more operational way, and reconsider subsidiarity with respect to some urban mobility issues

21. This recommendation has been addressed by clarifying in footnote 25 why some policy initiatives are not included in the baseline, by explaining in point 102 the concept of "society's economic, social and environmental needs" and by reconsidering subsidiarity with respect to some urban mobility issues in point 95.

(2) Further clarify the content of and differences between policy options.

22. This recommendation has been addressed by:

– clarifying further the third specific objective linked to congestion in point 103,

– explaining better the choice of the endogenous variables under each Policy Option in point 136,

– stating clearly that the IA refers to CO2 level in excise duty in footnote 101.

– explaining to what extent the assumptions concerning urban mobility can be the same across options, given that the CO2 shadow price is an endogenous variable in option 4 in footnote 108.

(3) Improve transparency about the assumptions underlying the modelling results

23. This recommendation has been addressed by explaining the assumptions concerning fuel price elasticities in footnote 383, by explaining better the role of the modelling specifications in point 148 and Table 4 and by providing more explanations about the contribution of price signals and sensitivity analysis in section 5.6 and footnotes 83 and 160.

(4) Strengthen the presentation of cost categories and clarify remaining inconsistencies

24. This recommendation has been addressed by reinforcing the presentation of cost concept in point 249 and by checking the summary tables.

(5) Procedure and presentation

25. A concise version of Table 4 has been added.

2. Problem definition 2.1. General context

26. On 17 June 2010, the European Council endorsed the Europe 2020 strategy (hereinafter “the EU 2020 strategy”) for smart, sustainable and inclusive growth[5], setting out a vision of Europe’s new social market economy for the 21st century[6]. The EU 2020 strategy rests on three interlocking and mutually reinforcing priority areas: Smart growth, developing an economy based on knowledge and innovation; Sustainable growth, promoting a low-carbon, resource-efficient and competitive economy; and Inclusive growth, fostering a high-employment economy delivering social and territorial cohesion. In order to meet the agreed EU-level targets, the Commission has proposed a Europe 2020 agenda consisting of seven flagship initiatives to catalyse progress under each priority[7]. Among these, the aim of the resource efficiency flagship[8] is to support the shift towards a resource-efficient and low-carbon economy that is efficient in the way it uses all resources. The stated aim is to decouple economic growth from resource and energy use, reduce CO2 emissions, enhance competitiveness and promote greater energy security.

27. The White Paper on Transport Policy accompanied by this impact assessment report falls within the scope of the resource efficiency flagship. In this respect, the assessment of impacts, in particular modelling the effect of various policy options in terms of GHG emissions, was jointly undertaken by the Directorates-General Climate Action, Mobility and Transport and Energy. Therefore the current report is part of a joint impact assessment for the Commission’s initiatives related to the transition to a low-carbon economy by 2050. This ensures consistency not only in the modelling framework, but also in the resulting development of policies. The overall policy goal is to design a path towards a low-carbon, competitive economy that would meet the long-term requirements for limiting climate change to 2 °C.

28. At the same time, the White Paper on Transport Policy addresses also issues related to some other flagships, and notably “Innovation Union”, “An industrial policy for the globalisation era”, “A digital agenda for Europe”, “An agenda for new skills and jobs” and “European platform against poverty” (the territorial cohesion aspect).

2.2. Description and scope of the problem – Mobility of people and businesses today is not sustainable[9]

29. The transport services sector accounted for about 4.6% of total EU gross value added in 2008[10]; this figure excludes other related activities, as the manufacturing of transport vehicles and equipment, the construction and maintenance of transport infrastructure, fuel refining, and own account transport[11].

30. Modern transport systems have given Europe a high degree of mobility with an ever increasing performance in terms of speed, comfort, safety and convenience. Average mobility per person in the EU, measured in passenger-kilometre per inhabitant, increased by 7% between 2000 and 2008, mainly through higher motorisation levels as well as more high-speed rail and air travel. Freight transport demand continued to grow by more than GDP over the last decade (with the exception of the crisis years 2008 and 2009).

31. However, this enhanced mobility has developed over the last decades in a context of generally cheap oil, expanding infrastructure and loose environmental constraints. Now that those framework conditions have changed, the transport system is no longer able to develop along the same path without serious unintended consequences in the form of environmental, economic and social costs.

32. An in-depth ex post evaluation work undertaken by the Commission[12], has shown that, while several features of the transport system have improved in the last decade - notably its efficiency, safety and security - there has been no structural change in the way the system operates. The inability to modify the current transport paradigm, presently founded on the use of fossil fuels and on the dominance of road transport in moving both freight and passengers, is one of the main causes of unsustainable trends: growing GHG emissions, persistent oil dependency and mounting congestion.

33. The ex post evaluation has revealed that past policies have been ineffective in correcting the market failures that determine the present situation and in triggering the necessary transformation:

– Charges and taxes do not fully reflect the societal costs of transport. The attempts at introducing policies to internalise the transport externalities and to remove present tax distortions have been unsuccessful. The road and aviation sector are the main beneficiaries of such distortions;

– EU research policies have not been able to address the full cycle of research, innovation and deployment in an integrated way through focusing on the most promising technologies and bringing together all actors involved. As a result the potential of research and innovation in contributing to EU transport policy objectives has not been exploited to its full extent;

– Investments to modernise the rail network and the transhipment facilities have been insufficient to address the bottlenecks in multimodal transport. Modal networks continue to be poorly integrated. TEN-T policy has lacked financial resources and a true European and multimodal perspective;

– Legislation prescribing market opening in rail freight as of 2007 and in international rail passenger as of 2010 has been implemented slowly and incompletely in the large majority of Member States. Enforcement has been inadequate. National passenger markets, that represent the largest share of the business, are still largely closed. The crossing of national borders continues to cause inefficiencies and additional costs in rail. Also short sea shipping faces higher administrative burden compared to the land-based modes whenever national borders within the EU are crossed. The lack of competition and residual administrative barriers held back the quality and efficiency of the service and partly explain the low appeal of the main alternatives to road transport, particularly on medium and long distances;

– EU policies have not addressed local and urban transport until recently. The concept of helping local government, while respecting subsidiarity, tackle congestion, pollution, and safety problems requires a new and integrated policy approach to urban mobility.

CO2 emissions from transport are still growing

34. Global warming is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of polar ice caps and glaciers, and rising global average sea levels. The dominant factor in the warming of the climate in the industrial era is the increasing concentration of various greenhouse gases (hereinafter “GHG”) in the atmosphere due to human activities. The GHG contributing most to climate change is CO2 and its emission has to be significantly reduced in order to limit climate change to 2 ºC above pre-industrial levels.

35. Today transport accounts for around one-quarter of EU CO2 emissions[13]. CO2 emissions from transport[14] have been growing over the last 20 years. Only in 2008 and in 2009 was there a drop in CO2 emissions from transport, but this was combined with a drop in transport activity[15]. New vehicles have become more fuel efficient and hence emit less CO2 per km than earlier models did in the past, but these gains have been eaten up by rising vehicle numbers, increasing traffic volumes, and in many cases better performance in terms of speed, safety and comfort.

Transport is extremely dependent upon oil

36. The lack of progress in decoupling transport growth from the growth in CO2 emissions results first and foremost from the fact that transport is one sector of the economy where substitution with other energy carriers has been negligible. Transport continues to rely nearly entirely on oil and oil products: for more than 95% of its needs worldwide and 96% in EU-27[16].

37. Gasoline and diesel consumption makes up for 95% of energy use in road transport. Diesel accounts for almost the entirety of the commercial fleet, and a growing proportion of private cars (a third in 2008). Maritime and aviation continue to rely entirely on fuel oil and kerosene, whereas in rail some further electrification has taken place in the last decade.

38. Since Europe imports 84.1% of its crude oil from abroad[17], this makes transport, and hence the wider economy of Europe, very reliant on the availability of oil and petroleum products on world markets. As “…energy supply security must be geared to ensuring the proper functioning of the economy, the uninterrupted physical availability at a price which is affordable, while respecting environmental concerns”[18], oil security is often equated with improving the security of supply for the transport sector.

Rising levels of congestion prevent the EU transport system from keeping pace with the mobility needs and aspirations of people and businesses

39. Whilst people and businesses value mobility highly, they have also become much more concerned about the adverse impacts of transport on health and quality of life and about their own experience as congestion mounts. In this respect, it is interesting to note that the Consumer Markets Scoreboard of October 2010, identified railways as one of the top four services market where consumers experienced most problems[19].

40. In many places, the current capacity of transport networks is not able to meet the demand that is, or will be, regularly placed on them. In those circumstances, the inevitable result is congestion in urban areas and regions, at the entrance of the main cities, and on the key transit roads, overcrowding on some public transport links and lengthy queues at some airports. When networks are overused, journey times lengthen and reliability suffers.

41. Changes in commerce and personal travel patterns have increased the importance of a reliable and efficient transport system because of more complex and inter-related supply chains and increasingly complex scheduled activities. In this context, the unreliability and inefficiency of transport has a marked effect on downstream activities. The expectation from these demand trends is increasingly that transport should provide high levels of reliability and of efficiency.

42. The building of new infrastructure to reduce congestion and accommodate higher levels of traffic is less and less a practicable solution. The impact of infrastructure on the environment is a growing concern. In addition, the current economic crisis reasserts the importance of putting budget accounts into a long-term sustainable path. This implies reducing public deficit and debt and improving the quality of public finance. More cost-effective solutions would have to be found to tackle congestion than relying on expanding ‘hard’ infrastructure.

43. Congestion is not just a problem for the individual user. Congestion that is prevalent in agglomerations and in their access routes is the source of large costs.

44. It has a negative impact on the environment since it results in increased air[20] and noise[21] pollution. Congestion also generates higher fuel consumption[22]: vehicle fuel consumption increases approximately 30% under heavy congestion[23]. The time wasted in traffic jams prevents the benefits of agglomeration effects to fully materialise. The costs of congestion have a negative impact on productivity, competiveness of the economy and quality of life.

45. In light of the above, the Commission is of the opinion that today’s EU transport system does not sufficiently keep pace with the mobility needs and aspirations of people and businesses. High levels of congestion cause large costs to the society, inconvenience and dissatisfaction to people and companies[24]. This could ultimately become a brake on economic growth.

Conclusion

In light of the above, it can be concluded that the European Union has not succeeded in containing the growth of the economic, environmental and social costs of mobility while simultaneously ensuring that current and future generations have access to safe, secure, reliable and affordable mobility resources to meet their own needs and aspirations.

The Commission is therefore of the opinion that the EU transport system today is not sustainable enough.

Firstly, it is not sufficiently resource efficient so as to promote sustainable growth in the meaning of the EU 2020 strategy. Transport is extremely dependent upon oil whereas CO2 emissions from transport-related activities account are still growing.

Secondly, with congestion growing, it does not sufficiently keep pace with the mobility needs and aspirations of people and businesses.

2.3. What if present trends continue?

46. The Commission has carried out an analysis of possible future developments in a scenario at unchanged policies, the so-called baseline scenario or “Reference scenario”. The Reference scenario is the same with the one used in the Impact Assessment of the “Low-carbon economy 2050 roadmap” and in the forthcoming 2050 Energy Roadmap. The Reference Scenario to 2050 is presented in more detail in Appendix 3 of the present Impact Assessment Report, whereas the inventory of the policy measures included in this scenario is provided in Appendix 4.

47. The Reference scenario is a projection, not a forecast, of developments in absence of new policies beyond those adopted by March 2010[25]. It therefore reflects both achievements and deficiencies of the policies already in place. This projection provides a benchmark for evaluating new policy measures against developments under current trends and policies. The Reference scenario builds on a modelling framework including PRIMES, TRANSTOOLS, PRIMES-TREMOVE transport model, TREMOVE and GEM-E3 models[26], [27].

2.3.1. Reference scenario assumptions

48. The projection is built on a set of assumptions related to population growth, macro-economic projections, developments in oil price and technology improvement.

49. Demographic change is transforming the EU with inevitable consequences also on the transport sector. In the Reference case, the population projections draw on the EUROPOP2008 convergence scenario (EUROpean POPulation Projections, base year 2008) from Eurostat, which is also the basis for the 2009 Ageing Report (European Economy, April 2009)[28],[29]. The key drivers for demographic change are: higher life expectancy, low fertility and inward migration. The EU-27 population is expected to grow by 0.2% per year by 2035 and slightly decline afterwards, remaining fairly stable in number at around 500 million in the next 40 years.

50. Elderly people, aged 65 or more, would account for 24% of the total population by 2020 and 29% by 2050 as opposed to 17% today. Around one in six people in the EU has a disability. Over 20% of elderly people aged over 75 are severely restricted. Ageing and the extended longevity of people can be expected to lead to increasing numbers of elderly people with a severe disability[30].

51. In the Reference scenario, the average GDP growth rate for EU-27 is only 1.2% per year for 2000-2010, while the projected rate for 2010-2020 is assumed to recover to 2.2%, similar to the historical average growth rate between 1990 and 2000. In the medium run the higher expected growth rate is due to higher productivity growth assumed in Member States that are catching up. GDP growth rate in the EU-27 is projected to fall to 1.6% during 2020-2050, mainly due to demographic ageing which, with a reduction in the working-age population, is expected to act as a drag on growth[31].

52. The Reference scenario assumes a relatively high oil price environment compared with previous projections, and similar to projections from the International Energy Agency (IEA)[32], with oil prices of 59 $/barrel in 2005 rising to 106 $/barrel in 2030 and 127 $/barrel in 2050 (in year 2008-dollars) [33], [34]. As a result, total fuel costs for the transport sector would be about 300 billion euro higher in 2050 relative to 2010 which represents more than 70% increase over the period under review.

53. In terms of technological developments, battery costs for plug-in hybrids and electric vehicles are assumed to remain high by 2050, at about 560-780 €/kWh[35], but further improvements in the efficiency of both spark ignition gasoline and compression ignition diesel are assumed to take place. In addition, the market share of internal combustion engine (ICE) electric hybrids is expected to increase due to their lower fuel consumption compared to conventional ICE vehicles.

2.3.2. Reference scenario main results

54. Modelling projections show that, in a no policy change scenario, the unsustainable features of the EU transport system identified in the ex-post evaluation are likely to worsen in a context of growing demand for transport. Total transport activity is expected to continue to grow in line with economic activity even though a decrease is visible for 2008-2009 as a result of the recent economic crisis. The recovery foreseen starting with 2010 is reflected by transport activity returning to its long term trends. Total passenger transport activity would increase by 51% between 2005 and 2050 while freight transport activity would go up by 82%[36].

55. Transport accounts today for over 30% of final energy consumption. In a context of growing demand for transport, final energy demand by transport is projected to increase by 5% by 2030 and an additional 1% by 2050 to then 32% of total final energy consumption, driven mainly by aviation and road freight transport. At the same time, however, the energy use of passenger cars would drop by 11% between 2005 and 2030 due to the implementation of the Regulation setting emission performance standards for new passenger cars[37].

56. Renewables would represent 10% of total energy consumption in transport by 2020, reflecting the implementation of the Renewables Directive[38]. Their share would gradually increase to 13% by 2050[39]. However, the pace of electrification in the transport sector is projected to remain slow in the Reference scenario: electric propulsion in road transport does not make significant inroads by 2050[40].

Source: PRIMES and projections based on TRANSTOOLS for maritime

Figure 1: Evolution of total final energy consumption and CO2 emissions between 1990 and 2050 in the Reference scenario[41]

57. As a consequence, the EU transport system would remain extremely dependent on the use of fossil fuels. Oil products would still represent 90% of the EU transport sector needs in 2030 and 89% in 2050 in the Reference scenario.

58. In a no policy change scenario in which pricing mechanisms remain inadequate and in which the way the transport system operates is not improved substantially, people and businesses would not receive sufficient incentives to shift away from road transport. In this context, road would remain the dominant mode in both freight and passenger transport. In this context, whereas transport today accounts for about one fourth of total CO2 emissions[42], the share of CO2 emissions from transport would continue increasing, to 38% of total CO2 emissions by 2030 and almost 50% by 2050, following a relatively lower decline of CO2 emissions from transport compared to power generation and other sectors. This is due to the higher cost of abating emissions in the transport sector. Overall, CO2 emissions from transport would still be 31% higher than their 1990 level by 2030 and 35% higher by 2050, mainly owing to the fast rise of transport emissions during the 1990s[43]. Aviation and maritime would contribute an increasing share of emissions over time. This trend is not compatible with the objective of a low-carbon, competitive economy that would meet the long-term requirements for limiting climate change to 2 °C.

59. External costs of transport would continue increasing. The increase in traffic would lead to a roughly 20 billion € increase of noise-related external costs by 2050 and external cost of accidents would be about 60 billion € higher[44]. The external cost of accidents in urban areas would increase by some 40%. Only the external costs related to air pollutants would decrease by 60% by 2050.

60. In particular, congestion would continue to represent a huge burden on the society. Congestion costs are projected to increase by about 50%, to nearly 200 billion € annually.

2.3.3. Sensitivity analysis

61. Considering the high degree of uncertainty surrounding projections over such a long time horizon, especially for such a complex system as transport, a sensitivity analysis has been carried out with respect to developments in oil prices[45]. An evaluation is also provided below for the effects of higher GDP growth on transport activity by 2030.

62. If oil prices in 2050 were almost 70% higher than in the Reference scenario (212 $/barrel in 2050 in year 2008-dollars, compared to 127 $/barrel in the Reference scenario), this would have only moderate effects on transport activity: passenger transport activity would be some 5% lower than in the Reference scenario in 2050 and freight transport activity would be almost 8% lower. However, some modal shift would take place in favour of rail, which is expected to be largely electrified by 2050: the modal share of rail in passenger transport would increase by some 3 percentage points while in freight transport rail’s share would be more than 1 percentage point higher in 2050 than in the Reference scenario[46]. The high oil price environment triggers the uptake of electric propulsion vehicles on a large scale but conventional ICE cars would still represent about 26% of the total passenger transport activity in 2050. High oil prices would only lead to about 20% lower CO2 emissions by 2050[47]. CO2 emissions from maritime transport would decrease by about 20% relative to the Reference scenario in 2050.

63. An estimate of the impact of higher GDP growth on transport activity can be provided by comparing the Reference scenario with a similar scenario from the Impact Assessment of the 2008 Climate and Energy Package, which assumes higher GDP (pre-crisis) projections[48],[49]. In this scenario, GDP in 2030 is some 11% higher than in the Reference scenario. With higher GDP, both passenger and transport demand would be higher relative to the Reference scenario, although the effect is more pronounced for freight transport: passenger transport demand would be some 3% larger by 2030 compared to the Reference scenario, while freight transport would add some 5% over the same time period. Without additional policies in place, CO2 emissions from transport would be higher in this scenario than in the Reference scenario. The fact that in the Reference scenario the lower GDP growth translates into a less than proportional decrease in transport volumes reflects the view that transport is becoming less responsive to changes in overall economic activity. Indeed, we have already observed the decoupling of passenger traffic from GDP in recent years, possibly due to high congestion levels and the high car ownership in some EU-15 Members States where passenger car activity is close to saturation levels. A similar, though less pronounced development may occur in freight transport owing to the fading out of the effects of the enlargement, to the impact of growing oil prices and to the ever increasing weight of the service sector in the economy, but also due to the restructuring of logistics systems, the realignment of supply chains and the rescheduling of product flows.

Conclusion

It is clear from the above that, factoring in all the indicators, today’s unsustainable system of mobility is not likely to become sustainable if present trends continue.

2.4. The root causes of the unsustainability of transport

64. This section analyses why the transport system is not capable to adjust to changing external circumstances – such as climate change, infrastructure constraints and oil scarcity – and take a sustainable path.

65. Transport is a complex system that is based on the interaction of many components all of which need to evolve together: vehicles, infrastructure, behaviour etc. This explains the strong inertia of the system and the need for addressing several problem areas in order to determine a paradigm shift.

66. As indicated in point 33 above, the Commission has identified four main areas in which market and regulatory failures prevent the EU transport system to develop into a sustainable system. These drivers are relative prices, technology deployment, conditions of supply and planning.

67. At this stage, it is important to note that, whereas the drivers identified below are the root causes explaining why the EU transport system is not sustainable, it is not possible to strictly map a particular driver to a specific problem given the complexity of a system such as transport.

2.4.1. Cheap for users, expensive to society: prices do not reflect true costs

68. In transport, like in any other sector, there cannot be economic efficiency unless the prices reflect all costs - internal and external – to the society actually caused by the users. By providing information on the relative scarcity of goods or services, prices convey essential information to users, operators and investors.

69. Today, as highlighted in section 1.1 of the ex post evaluation, most of the external costs of transport are still not internalised[50]. Where existent, internalisation schemes are not co-ordinated between modes and Member States. Many taxes and subsidies directly affecting modal choices have been designed without the internalisation goal in view, rather pursuing traditional fiscal aims: the internalisation part of fuel taxation for instance is not clearly identified against other components of the tax. There are inconsistent taxation rules between transport modes and fuels, between and within Member States. In the worst case, tax systems subsidise environmentally unsustainable choices: for example, the favourable company car taxation rules give incentives for an artificially high car use[51].

70. On the other hand, public support to the transport sector can be justified to the extent that transport brings about positive externalities to society – for example by connecting an isolated region and contributing to its economic growth – or in case of infrastructure that has the characteristics of a public good.

71. As long as the total costs to society induced by transport activities (including the cost of infrastructure provision and maintenance) are not correctly reflected in the costs borne by transport users, the demand for transport stays above its optimal level and the pricing system fails to steer the customers towards most efficient and sustainable mobility choices[52].

2.4.2. Research and Innovation: transport technologies do not achieve low carbon mobility

72. The ex post evaluation undertaken by the Commission has shown that transport research and innovation in Europe today are progressing in supporting the development and deployment of key technologies that are needed to develop the EU transport system into a modern, decarbonised efficient and user-friendly system[53]. However, bringing the products and services to the market to attain this objective is not fast enough.

73. This situation is due to a wide variety of market and regulatory failures, such as non-appropriability of research, coordination failures, and path dependency[54]. These are manifested as:

– Weak innovation process resulting from the often missing direct link between research and development and deployment;

– Lack of sufficient coordination of efforts between the EU, Member States, public and private actors related to insufficient data and information and lack of common setting of strategic priorities;

– Excessive time to bring the technology to market, even though long lifetime of vehicles and infrastructure requires action now to meet our long term policy objectives; and

– The complexity of technology options, which makes difficult to choose between a ‘broad portfolio’ approach and strategic technology targeting of scarce financial, managerial and scientific resources.

74. The continued oil dependence of transport-related activities is a clear manifestation of the problem[55].

75. User behaviour plays a determining role in the success or failure of new technologies. Users, apart from ‘early adopters’, are often unwilling to change their customary way of travelling and transporting goods, and accept alternative solutions. Lack of properly presented and reliable[56] information and uncertainty may also influence decisions, as, for example, in the case of underestimation of fuel savings over the life time of an energy efficient vehicle.

2.4.3. Supply of transport services: not sufficiently efficient

76. Whereas the EU has opened to competition most of its transport markets since the 90’s, a number of obstacles to a smooth and efficient functioning of the internal transport market persist. In this respect, a more detailed analysis of this driver, which is based upon the result of the ex post evaluation, is provided in Appendix 6 of the present Impact Assessment report[57].

77. The level of integration of the EU transport market remains low in comparison to other parts of the economy. A genuine EU-wide internal market exists only in air transport, while other transport modes suffer from different degrees of fragmentation along national borders; this concerns in first place rail and inland waterways, but road and short sea shipping are also affected.

78. Cross-border transport and competition in national markets is hindered by protectionist regulations or attitudes, often defending the interest of incumbents and restricting access to domestic markets by foreign operators and new market entrants. In some liberalised market segments, a complete and correct implementation and enforcement of EU legislation by Member States is still missing. This is particularly the case for rail freight transport, which has been open to competition since January 2007.

79. Besides, transport infrastructure has been historically designed to serve national rather than European goals and cross border links constitute bottlenecks that are likely to become increasingly costly as the EU economy continues integrating.

80. The lack of universally approved standards on, for example, traffic management and data exchange systems, on power supplies, and on educational requirements for transport workers are further obstacles to cross-border traffic and in some cases preclude the reduction of production costs achievable with a larger scale of production.

81. Integration between transport modes is still far from being achieved. Multimodal infrastructure such as multimodal transhipment platforms for freight and integrated rail-air-public transport nodes for passengers is not sufficiently developed. Exchanging data between the modes is difficult because of the co-existence of non-interoperable modal IT systems.

82. In addition, the EU transport system suffers from an uneven level playing field regarding national health, social, safety and security standards, which is particularly felt in some market segments such a road transport.

83. Finally, the human factor is a crucial component in transport to create a higher quality and more reliable transport system with a higher sensitivity to customers’ needs. In this respect, the EU transport system has suffered in normal demographic and economic conditions from skill shortages and a tight labour supply, not least given the difficulties inherent to the working conditions of mobile workers (working far from home often at asocial working hours, safety and security risks…)[58]. The sector will be particularly vulnerable as it is ageing more than the economy-wide average and it is a sector where women’s participation is much lower than the average. These traits are particularly relevant in railways, inland waterways and short sea shipping which would receive traffic from the more energy intensive modes such as road transport and aviation.

84. All these elements induce suboptimal modal choices, delayed adoption of new technologies, slower renewal of the fleet, and lack of investment in renewable energy sources and in certain types of infrastructure. These inefficiencies translate then into lower resource efficiency, higher transport externalities and higher overall transport costs to the society.

2.4.4. Transport planning: lack of coordination and insufficient awareness of interactions

Insufficient transport planning at local level…

85. When taking land-use planning or location decisions, public authorities and companies often do not properly take into account the consequences of their choices on the operation of the transport system as a whole, which typically generates inefficiencies. The problem is particularly acute in urban areas[59]. Urban transport systems are integral elements of the European transport system and therefore are also of concern for the Common Transport Policy. They have a large influence on the achievement of European-wide goals such as those related to GHG emissions, biodiversity, oil-dependency and resource efficiency.

86. Significant changes in urban mobility require comprehensive actions that bring together land-use planning, road use and parking, transport pricing, infrastructure development, public transport policy and much more. Achieving integrated and sustainable urban transport is an increasingly complex task which touches many stakeholders and interests. A greater coordination of all authorities having an influence on the transport system is highly desirable, possibly bringing together the responsibilities for land-use and transport planning, public transport, road use and transport infrastructure. Equally desirable is an extension of the co-ordination of such authorities beyond the strict city borders, so to cover entire metropolitan areas or regional transport systems.

…and at continental scale

87. Weaknesses in transport planning are also present with respect to the Trans-European Transport Network. TEN-T planning and implementation has so far not been driven sufficiently by a coherent European design. National infrastructure planning remains to a large extent disconnected from planning at EU level, and is mainly done at a modal level rather than in an integrated way across countries and modes of transport. The lack of international cooperation and coordination typically produced a number of inefficiencies: lack of joint traffic forecasts leading to differing investment plans; disconnected or even contradictory timelines; lack of joint investment calculation and joint financial structures; incompatible technical characteristics; inadequate joint management of cross-border infrastructure projects.

88. Moreover, national and European infrastructure projects have largely focused on developing individual priority projects rather than on creating a network. Infrastructure planning and assessment of individual projects failed to give an accurate representation of wider effects of infrastructure projects and of how these projects contribute to the overall infrastructure network.

Conclusion

89. The consideration of transport needs and of shifting transport flows is currently not sufficiently integrated in land-use planning decisions, resulting in excessive or sub-optimally distributed transport demand. Consequently, the negative environmental and socio-economic impacts of transport are aggravated.

2.5. Does the Union have the right to act?

90. The right for the EU to act in the field of transport is set out in several articles of the TFEU, especially in Title VI, which makes provisions for the Common Transport Policy and in Title XVI on the trans-European networks. Article 192 TFEU also provides a legal basis for addressing the environmental sustainability of the transport system.

91. Pursuant to Articles 90 and 91 TFEU, the Common Transport Policy should contribute to the broader objectives of the treaties. The goal of the common transport policy is to remove obstacles at the borders between Member States so as to facilitate the free movement of persons and goods. To this end, its prime objectives are to complete the internal market for transport, ensure sustainable development, promote a better territorial cohesion and integrated spatial planning, improve safety and develop international cooperation.

92. All transport and environment policy proposals are decided by qualified majority, except for taxation measures which are decided by unanimity. As regards trans-European networks, the Commission’s financing proposals have to be approved by the Member States, who are responsible for the planning and construction of projects. The Union has shared competence in the field of transport safety as set out in Article 4 of the TFEU and only limited competence in the field of urban mobility.

93. In areas which do not fall within EU exclusive competence, EU action has to be justified. In the present case, it is therefore necessary that the subsidiarity principle set out in Article 5 (3) of the Treaty on the European Union is respected. This involves assessing two aspects.

94. Firstly, it is important to be sure that the objectives of the proposed action could not be achieved sufficiently by Member States in the framework of their national constitutional system, the so-called necessity test.

95. Given the fact that the overall concept is to create an EU-wide sustainable and integrated transport system, the Member States per se are not able to meet these challenges individually for the following reasons:

– The issues being addressed by the Transport White Paper, namely CO2 emissions, oil dependency and overall efficiency of the transport system, have transnational aspects which cannot be dealt with satisfactorily by Member States. These aspects, which concern for instance the cross-border connections between national infrastructure networks, need to be coordinated at EU level. International transport represents a significant and growing share of transport and can not be properly regulated at Member State level[60].

– The lack of EU action or the individual actions by Member States alone may hinder the development of the single market; give a competitive advantage to some players against the others and therefore negatively impact the free circulation of both goods and people, especially for transnational services. Coordinated action at EU level could overcome these disadvantages.

– The issues identified above have different spatial effects and a strong variability, meaning that impacts across the EU could vary considerably. There is a need to ensure that solidarity is enshrined in the future transport policies. Similarly, it has to be ensured that the ones who are hit hardest by the problems identified will be able to adapt. Cohesion policy can further contribute to address the consequences of new disparities between those regions which suffer most and those that can more easily cope with their impacts.

– Due to its scale, action at EU level can leverage greater results and magnify the efforts in many domains such as capacity building, research, information and data gathering, exchange of best practice, development and cooperation. In particular, only EU action would ensure that all EU citizens benefit from a resource efficient and competitive transport system.

– Because it will be more effective, EU action on transport emissions and oil dependency will produce clear benefits compared with actions at the level of Member States.

– As regards external action, the increased negotiating power of the EU, rather than individual Member States, may confer a leading role to the EU in some sectors. Moreover, since the unsustainable mobility has consequences for the EU economy and the EU supply of energy, there is a need for oversight and responsibility at EU level to complement the actions at national level and to avoid free riding.

– In the field of urban mobility, there are several examples confirming the necessity to take action at EU level. One of the problems related to urban mobility and transport are emissions from road traffic, including emissions that contribute to climate change. This is a problem with a clear transnational dimension, where action by individual Member States, for example to set new limit values, introduce financial incentives or implement their own access restriction rules, could be in violation of EU legislation. Urban congestion affects enterprises from other Member States. No action by the EU in this field, or action by just a few individual Member States, could lead to less informed decisions and damage the financial and policy interests of Member States[61].

96. Secondly, it has to be considered whether and how the objectives could be better achieved by action on the part of the EU, the so-called “test of European added value”. The rationale for a European action in the field of transport stems from the trans-national nature of the identified problem. However, it has to take into account that a ‘one size fits all’ approach would not be an adequate response. Therefore, an action at EU level coupled with actions at all administrative levels would yield significant added value.

97. As regards urban mobility, dissemination of information and knowledge, expansion of the knowledge base and exchanges of best practice in the area of urban mobility are best carried out at EU level. This will avoid duplication of work and fragmentation of resources and allow decision-makers to benefit from the broadest, most diverse experience possible. In addition, emission and noise limits are best set at EU level in order to avoid an adoption of different standards in different Member States, which would add to the regulatory burden. Other examples include setting technical standards, e.g. for intelligent travel information and payment systems, including Galileo-based applications. There is also clear added value in action at EU level on information and data collection and monitoring. Based on the above observations, there is a basis to conclude that there is “added value” in EU action in the field of urban mobility and transport[62].

98. For these reasons, the policy objectives set out in section 3 of the present Impact Assessment report cannot be sufficiently achieved by actions of the Member States alone, but can rather, by reason or scale of the proposed action, be better achieved with high involvement of the EU. A thorough subsidiarity analysis will be performed for the specific policy measures contained in the proposed initiative.

3. Objectives

99. Section 2 has shown that the EU transport system is not sustainable to the extent of supporting smart, sustainable and inclusive growth in the meaning of the EU 2020 Strategy. More specifically, it has been explained that the efficiency of the EU transport system in the use of natural resources and its ability to respond to the mobility needs and aspirations of people and businesses are not satisfactory.

100. This section defines the general and specific policy objectives of the proposed initiative, discusses possible trade-offs and synergies between sustainability goals and verifies their consistency with other EU horizontal objectives.

3.1. Policy objectives 3.1.1. General policy objective

101. A sustainable transport system is a crucial element for achieving smart, inclusive and resource efficient growth in Europe as defined in the EU 2020 strategy. To this end, as indicated under the resource efficiency flagship, the scale of the change that a resource-efficient agenda implies requires a massive technological improvement and a radical change in the transport system.

102. Based on the assessment of the problem and its root causes, the general policy objective of this initiative is to define a long-term strategy that would transform the EU transport system into a sustainable system by 2050. The Renewed Sustainable Development Strategy of the European Union (hereinafter SDS) of the European Union[63] defines a sustainable transport system as the one that “meets society’s economic, social and environmental needs whilst minimising its undesirable impacts on the economy, society and the environment”. More specifically, the main “undesirable impacts on the economy, society and the environment” caused by transport are: congestion, oil dependence, accidents, emissions of GHG and of other pollutants, noise, and land fragmentation caused by infrastructure. The following section formulates specific policy objectives in relation to the main sustainability concerns.

3.1.2. Specific policy objectives

103. The general objective of achieving a sustainable transport system by 2050 can be translated into more specific goals:

(1) A reduction of GHG emissions that is consistent with the long-term requirements for limiting climate change to 2 °C[64] and with the overall target for the EU of reducing emissions by 80% by 2050 compared to 1990. Transport-related emissions of CO2[65] should be reduced by around 60% by 2050 compared to 1990[66]. This target has been derived from the results of the “Effective and widely accepted technology” scenario from the Impact Assessment on a “Low-carbon economy 2050 roadmap”[67]. It includes aviation, but excludes international maritime[68].

(2) A drastic decrease in the oil dependency ratio of transport-related activities by 2050 as requested by the EU 2020 Strategy for transport calling for “decarbonised transport”.

(3) Limit the growth of congestion.

104. The three specific policy objectives could be broadly summarised as the prescription to ‘use less energy, use cleaner energy and better exploit infrastructure’. The first two objectives overlap to a large extent, and should be considered the absolute priority in line with the Resource Efficiency Flagship of the EU 2020 Strategy. There are, however, also significant synergies with the third objective that would typically call for a more extensive use of non-motorised and of public transport, which reduces both the use of space and the use of energy.

105. At the same time, the achievement of the specific policy objectives identified above should not prevent that “current and future generations have access to safe, secure, reliable and affordable mobility resources to meet their own needs and aspirations.”[69] More specifically, this means, as suggested by the EU Transport Council[70], that the EU transport system should:

– in terms of accessibility: allow the basic access and the development of mobility needs of individuals and companies;

– in terms of equity: promote equity within and between successive generations;

– in terms of quality of services: offer safe, secure and reliable transport services of high quality;

– in terms of provision of services: be affordable, operates fairly and efficiently, offers a choice of transport mode, and supports a competitive economy, as well as balanced regional development; it should promote high quality employment;

– in terms of external costs to society: minimise the external costs of accidents, noise and air pollution, biodiversity loss and increased land use.

3.2. Trade-offs and synergies between sustainability goals

106. It is generally accepted that sustainable transport implies finding a proper balance between (current and future) environmental, social and economic sustainability goals[71]. Two main trade-offs between sustainability goals can be highlighted.

– First of all, there could be a conflict between cheap transport and GHG abatement. Fossil fuels have the great advantage of energy density. This is a valuable characteristic in mobile applications and the reason why fossil fuels are currently the cheapest option for transport. Clearly it will cost more to replace them. The trade-off is solved by setting a goal for emissions (the priority objective) and by devising a cost minimising strategy to achieve it.

– Secondly, there could be a conflict between improving accessibility and lowering congestion, which could imply additional infrastructure, and land use. This trade-off is more severe in the EU-12, where catching up with EU-15 makes certain infrastructure development a necessity. This trade-off is solved by giving priority to the upgrade of infrastructure over new construction and to ‘green infrastructure’[72], but each project would have to be assessed individually on its own merits.

107. This being said, there are also substantial synergies between sustainability goals. Policies to reduce GHG emissions can also be expected to reduce local pollutants, noise and energy consumption, thanks to new vehicles and clean fuels. Lower utilisation of road transport would also reduce the number of accidents.

3.3. Consistency with horizontal objectives of the European Union

108. The EU 2020 strategy, the Single Market Act and the Sustainable Development Strategy have set the scene for the transport sector.

3.3.1. EU 2020 Strategy and Single Market Act

109. The objective of the White Paper on Transport Policy clearly contributes to the objectives laid down in the EU 2020 Strategy.

110. The EU 2020 Strategy, under the flagship initiative “Resource efficient Europe”, aims at supporting the shift towards a resource efficient and low carbon economy through the reduction of CO2 emissions as well as through increased competitiveness and energy security. The specific objectives set out in section 3.1 above are clearly in line with the aim of the above-mentioned flagship. The objectives of the White Paper on Transport Policy are also consistent with other objective defined in priority areas of the EU 2020 strategy such as innovation, high employment, social and territorial cohesion.

111. The objectives of the White Paper on Transport Policy are also fully in line with the ambition to create a stronger, deeper and extended Single Market as set out in the Single Market Act[73].

3.3.2. Sustainable Development Strategy

112. The overall objective of the SDS, regarding sustainable transport is “to ensure that our transport systems meet society’s economic, social and environmental needs whilst minimising their undesirable impacts on the economy, society and the environment”. The related operational objective is to achieve sustainable levels of transport energy use and reduce transport’s GHG emissions.

113. The policy objectives of the White Paper on Transport Policy are in line with the renewed SDS by contributing to more sustainable mobility. Making mobility more sustainable would facilitate achieving other sustainable development goals.

4. Policy options

114. As described above, the current transport system is fundamentally unsustainable and major, not just incremental, changes are required to implement next generation transport solutions.

115. In this context, this section will explore alternative policy options aimed at transforming the EU transport into a sustainable system by 2050.

4.1. Preliminary note on methodology

116. As described in the first section of this report, the identification of these policy areas is the result of a long, intense and interactive process of internal and external consultation. The input of this consultation process, together with the findings of two external studies undertaken by the Commission (one on the evaluation of the Common Transport Policy, undertaken by DG Energy and Transport, the other on “EU Transport GHG: Routes to 2050?”, undertaken by DG Environment), has allowed the Commission to identify more precisely the problem to be solved, the four main underlying drivers and the corresponding policy areas and instruments that would be appropriate to address those issues.

117. On that basis, the Commission has identified seven policy areas in which concrete policy measures could have a key role in stimulating the expected shift of the transport system to another paradigm. These policy areas are: pricing, taxation, research and innovation, efficiency standards and flanking measures, internal market, infrastructure and transport planning.

118. The policy areas taken into consideration incorporate a broad range of policy instruments that can be implemented at EU level from softer instruments to more prescriptive ones including communication/awareness raising, research and development (innovation), guidelines, governance and co-ordination, market-based instruments, private and EU financing schemes, new regulation and standards. As regards transport planning in urban areas, EU action is limited to soft measures for subsidiarity reasons. EU action on taxation is also limited by the requirement of unanimity among Member States in the decision making process.

119. These policy instruments are not mutually exclusive. In transport, the existence of multiple market failures – as indicated in the analysis of problem drivers – suggests the adoption of a combination of individual instruments that complement each other and create a comprehensive policy mix.

120. The table below gives a mapping between the drivers identified in section 2.4 above and the policy areas. It also provides in the second column an indication of possible policy measures in each of the specified policy areas that would be referred to in the White Paper on Transport Policy as component of the overall strategy. The list of possible policy measures presented below is not exhaustive and will be finalised by the adoption of the White Paper by the Commission.

121. Given the nature of the White Paper as a strategic document, the individual initiatives are broadly defined. The precise specification of the policy measures referred to in the White Paper will be done at a later stage, following a more specific analysis and an individual Impact Assessment[74]. Accordingly, it is outside the scope of the present Impact Assessment report to evaluate each initiative in detail.

122. In this context, the Commission has undertaken a modelling exercise to provide a stylised quantitative assessment of the effectiveness and efficiency of possible initiatives in each policy area, giving illustrative evidence on their relative importance, on the way they interact and on the required intensity of the intervention. The Commission has modelled the impact of the possible policy measures assuming a specification – indicated in the third column and in Table 4 – that does not necessarily correspond to what would actually be proposed at a later stage.

Table 1: Mapping drivers, policy areas, possible policy measures envisaged in the White Paper and modelling hypothesis

Policy Areas || Possible policy measures envisaged in the White Paper || Modelling hypothesis

Driver 1: Cheap for users, expensive to society: prices do not reflect true costs

Pricing || Strategy for the gradual phasing in of a coherent internalisation system for local externalities in all transport modes on the whole network || Internalisation of local externalities for all modes of transport according to the values specified in the handbook on internalisation[75]

Taxation || Establish a link between vehicle fuel taxation and the environmental performance and full internalisation of the cost of GHG emissions for all modes of transport in a co-ordinated and stepwise manner || Elimination of distortions in energy taxation by establishing an energy and CO2 component in excise duties and abolition of exemptions[76],[77]

|| Establish a link between vehicle taxation and the environmental performance || Introduce a CO2-related element in the registration and annual circulation taxes[78]

|| Assess the possibility of introducing VAT on all international passenger transport services inside the EU || Introduction of VAT on all international passenger transport services inside the EU[79]

|| Promote a revision of company car taxation to eliminate distortions or, as a second best, to provide incentives for clean vehicles. || Elimination of favourable taxation regime for company cars[80]

Driver 2: Innovation: transport technologies do not achieve low carbon mobility

Research and Innovation || Conduct a screening to identify key innovative technologies, with a view to better target existing resources, define a governance structure for organising their development and enhance coordination of European and national (private and public) efforts and funding Bring together all relevant actors within the transport system, to develop research and deployment agendas, to design standards and to build demonstration projects, including bilateral cooperation frameworks in research and innovation with the main transport partners || Improvement of the cost of batteries and of other critical technological components Deployment of supporting infrastructure (charging points, refuelling stations)

Efficiency standards and flanking measures || Use standards for controlling energy efficiency as well as air pollution for all vehicles which have proven to be an effective way of providing the industry with certainty concerning long-term objectives Encourage deployment of clean energy carriers by establishing the necessary supporting infrastructures Improve the effectiveness of fuel efficiency labelling, promote eco-driving and support eco-driving dissemination || Implementation of CO2 standards for all vehicles (cars, vans, trucks, locomotives, vessels, barges, aircrafts)

Driver 3: Supply of transport services: not sufficiently efficient

Internal market || Railways: develop corridors, strengthen the European Railway Agency and ensure convergence of technical standards, reinforce the network of rail regulators and further pursue the opening of markets (domestic passengers). Aviation: effective implementation of the Single European Sky project - from the designation of a network manager, via the integration of national air traffic control to the deployment of the next generation of air traffic management system (SESAR). Maritime transport: simplification of the formalities for ships travelling between EU ports; a single electronic environment for all port/maritime transport related information exchanges and management; and a review of restrictions on provision of port services. Road transport: phase out of restrictions in the internal market like cabotage and of non-harmonised enforcement of social legislation. Promote quality jobs and uniform working conditions || Increase in the efficiency of all transport modes as a result of the removal of regulatory, administrative and technical barriers Wide deployment of Intelligent Transport Systems

Infrastructure || Propose a core network consisting of nodes and links relying primarily on the efficient use of existing infrastructure via ITS/smart mobility solutions and aiming at bridging missing links, facilitating multimodality and creating links to third countries. Establish a firm long-term infrastructure plan for the completion of the core network together with EU Member States detailing the projects to be completed as well as the modalities. || Increase in the capacity and performance of the network resulting from the elimination of bottlenecks and addition of missing links

Driver 4: Transport planning: not sufficiently integrated from the first to the last mile

Transport planning || Encourage the establishment of urban mobility plans and implementation of related measures to manage demand in non-collective motorised transport modes || Shadow carbon pricing[81] as a proxy for locally determined policies (pricing, support to public transport and non-motorised modes, integrated land planning)

4.2. Rationale behind a comprehensive and strategically coordinated EU action

123. Given the high level of complexity of transport system, the interaction between multiple actors, also at international level, and the global relevance of transport and of its effect on the economy, society and the environment, the Commission considers that – besides the reasons explained in section 2.5 above – EU intervention is fully justified to reach the objectives and complement the action of stakeholders and Member States.

124. To determine appropriate EU policy action, in a first step, the Commission has considered the possible application of an isolated intervention in each of the seven policy areas identified in section 4.1 above. Each of the instruments seems particularly suited for addressing some of the raised issues:

– market-based instruments such as charging and taxation can ensure efficient allocation of resources and efficient modal choices;

– efficiency standards have produced a significant acceleration in the introduction of more efficient vehicles, by providing clear targets for the industry and avoiding ‘wait and see’ strategies of manufacturers;

– research and development programs appear necessary to solve other types of market failures in innovation, as for example, the coexistence of multiple technical standards;

– internal market measures and an effective enforcement of EU competition rules are needed to solve instances of regulatory failure and insufficient competition and to derive benefit from scale economies;

– infrastructure policy is required to address coordination failures and the existence of network and cross-border externalities;

– planning policies can take into account the interaction of transport with other policy areas, such as housing.

125. It appears though that none of the categories of instruments alone would be capable of tackling at the same time and in a satisfactory way all the various problem drivers and all the elements of the specific policy objective. A mix of actions would be needed.

126. For example, while pricing and taxation can bring economic efficiency, on their own they are not suited to bring more competition into a market characterised by regulatory failures, or to assist in the definition of technical standards. Market-based instruments are also relatively ineffective in the presence of ‘split incentives’[82], where the party paying for the production of externalities does not have control over the investments needed to abate those externalities[83].

127. This is particularly the case for many transport modes, as indicated by McKinsey &Company (2009), where it is suggested that transport has negative costs for GHG abatement, but can require relatively high investments. In other words, the graph below shows that implementing GHG abatement measures in the transport sector would demand greater capital intensity than would abatement in any other sector. This may be an indicator that the transport sector requires significant upfront capital investment, and in case of market failures there is a need for complementary public action in addition to the economic instruments.

Source: McKinsey & Company (2009)

Figure 2: Capital intensity and abatement cost[84]

128. A balanced use of several policy instruments can also mitigate the trade-offs and exploit the synergies between sustainability goals. For example, technologies that improve the fuel efficiency of vehicles can lower the cost of transport and generate more travel – inducing thereby a so-called rebound effect[85] – and more congestion. As shown in the table below, the rebound effect can partially offset the effect of a policy measure aimed at improved fuel efficiency. Similar effects exist for improved utilisation of infrastructure capacity. While new technologies or innovation will nevertheless provide higher utility for fewer resources, the absolute improvement in resource efficiency can be lower unless appropriate measures are applied to manage demand. Therefore combining action in several policy areas is all the more important.

Table 2: Estimates of the long-run direct rebound effect for consumer energy services in the OECD[86]

End-Use || Range of values in evidence Base || ‘Best Guess’ || No. of studies || Degree of confidence

Personal automotive transport || 5-87% || 10-30% || 17 || High

Space heating || 1.4-60% || 10-30% || 9 || Medium

Space cooling || 1-26% || 1-26% || 2 || Low

Other consumer energy services || 0-49% || <20% || 3 || Low

129. As regards GHG emissions, individual measures or policies that focus exclusively on either the technological or the organisational and regulatory aspects would come short of the target of setting the EU transport sector on a sustainable path and of reducing GHG emissions by close to 60% below 1990 levels by 2050. This conclusion is confirmed by other research work: a recent project funded by the European Commission showed that for the EU, on tank-to-wheel basis, technical options can deliver a 42% reduction in GHG emissions by 2050, compared to 1990. For OECD Europe, IEA (2010) estimates that technical options can deliver about 50% over the same time horizon[87]. The same sources show that the potential of organisational and regulatory measures taken in isolation would be lower than that of technical options.

130. In light of the above, the Commission concludes that a holistic approach that comprises all elements considered so far is therefore needed.

Conclusion

Only a long-term and overarching strategy established for all identified policy areas has a reasonable chance of achieving the EU objectives. It should combine policy initiatives targeted at enhancing the efficiency of the system through better organisation, infrastructure and pricing with those that are more focused on technology development and deployment. It should also provide a framework for action at all levels of government. This conclusion is in line with the Europe 2020 Strategy which highlights that a resource-efficient agenda implies a massive technological improvement and a radical change in the transport system.

Therefore, taking also into account the fact that the Commission has adopted in June 2009 a Communication on “A sustainable future for transport: Towards an integrated, technology-led and user friendly system”, the Commission is of the opinion that a White Paper is the most appropriate sui generis document, in terms of simplicity and coherence with the objectives set out in section 3.1 above, to lay down a comprehensive and strategically coordinated EU action.

4.3. Description of policy options

131. In light of the above, the Commission has identified three policy options – besides the baseline scenario – that combine specific EU actions across the seven policy areas described above. The design of policy options build on the achievements and deficiencies of current policies outlined in section 2 and in Appendix 2. All three policy options have been designed to reach the same CO2 emission reduction target, i.e. 60%[88] over 1990 levels.

132. All three options envisage action in all seven policy areas and have in common a certain number of initiatives. What distinguishes them is the intensity of intervention that, depending on the option, is higher in some specific field and lower in others.

133. Policy Option 3 is designed to show the effect of policies that emphasise the rapid deployment of new powertrains, by imposing very stringent CO2 standards on new vehicles and by accompanying them with appropriate innovation policies putting in place the necessary framework conditions. It is assumed that this approach would be the most effective in reducing the costs and the time of introduction of new technologies.

134. Policy Option 2 is designed to show the effect of policies that rely less on performance standards and on active technological deployment and more on managing mobility and on carbon pricing. It is assumed that the industry will not outperform the less stringent CO2 standards for road and rail vehicles and that the necessary reduction in emission is achieved – in addition to the full pricing of externalities and to the elimination of tax distortions – by letting the carbon price rise by the necessary amount. This could be taken to represent the effect of high carbon taxation or of the introduction of a transport specific cap and trade system. In case of a very high carbon price, the effect would be equivalent to restrictions in “fossil fuel” mobility and forced modal shift to clean modes.

135. Policy Option 4 represents an intermediate approach. It has values for CO2 standards and technology deployment in between those of Option 2 and 3. It has full pricing of externalities and elimination of tax distortions as in Option 2, but the additional carbon price element is only applied in the urban context in the form of a shadow price acting as a proxy for a wide-range of possible demand management measures.

136. A detailed description of the content of each policy option is presented in Table 4 below. The policy areas where assumptions are the same are shown in italics. For each policy option, an endogenous variable was identified and derived by the model to ensure that the reduction target of 60% is achieved. These variables are displayed with bold underlined font in Table 4: for Policy Option 2 – the CO2 tax component of motor fuel excise duties[89]; for Option 3 – the stringency of CO2 standards for road passenger transport[90]; and for Option 4 – the CO2 shadow price on urban transport.

Policy Option 1: No additional EU action

137. Policy Option 1, which is presented in detail in Appendix 3 of this Impact Assessment report, represents the future without any additional policy intervention to change current trends.

Policy Option 2

138. Policy Option 2 includes policies with a strong focus on the completion of the internal market, infrastructure development, pricing and taxation. The 60% CO2 emission reduction target is achieved largely through improved efficiency within each mode, better logistics, modal shift and reduced mobility.

139. With respect to other options, support for R&D and deployment of technologies is more limited. This has been translated into higher cost of batteries and more limited range[91] for passenger cars and trucks. The range limitations act as a barrier to the diffusion of technology. This results in a more modest uptake of new powertrains, despite high price signals. Progress in efficiency is realised with conventional technologies, but up to a limit: although CO2 standards are put in place for road and rail vehicles with targets in place for 2020, they do not become stricter after 2020. Only autonomous, pricing-driven efficiency improvement follows in the period of 2020-2050. In this scenario, as slower developments in clean transport technologies is assumed, strong pricing signals are required to alter the mobility patterns to an extent sufficient for achieving the required abatement in greenhouse gas emissions.

140. These strong price signals go beyond the full internalisation of externalities and the elimination of existing distortions in taxation, which are assumed to be an integral part of Policy Option 2 and would be justified by economic theory to improve the economic efficiency in the overall economy. In effect, as technology development is assumed to be limited due to inadequate policies to address the failures identified in Section 2 for research and innovation, the achievement of the 60% CO2 emission reduction target requires that the CO2 externality is internalised at a much higher rate than in any other sectors of the economy. This will necessarily affect the cost and transfer payments resulting from this option set-up.

141. The system improvement measures are front loaded in this policy option to allow gradual changes in the transport system.

Policy Option 3

142. Policy Option 3 relies heavily on developing and deploying technologies in particular in the long-term (2030-2040) through the universal introduction of rigorous standards for all vehicles[92]. The crucial element of fuel shift is addressed through the promotion of R&D policies into the development and subsequent deployment of alternative fuel use. This is reflected in the assumption of the lowest battery costs for electric vehicles among all policy options.

143. While transport activities are optimised in the period 2010-2020 to eliminate crucial regulatory and market failures, transport demand in the long-term is satisfied through technological solutions. Internalisation of externalities is not complete over the EU and some distortions in taxation, in particular concerning VAT on international passenger transport and company car taxation, remain beyond 2020. In such an economy where market and regulatory failures are not fully addressed, the achievement of the 60% CO2 emission reduction target is made possible by very ambitious technological developments triggered by technology improvement measures.

Policy Option 4

144. Policy Option 4 also covers all policy areas identified above (see section 4.1 above), but the intensity of the measures is intermediate with respect to Policy Options 2 and 3, thus envisaging a balanced contribution of system improvement and technology measures to achieve the objectives set out in Section 3. Measures influencing transport activity and modal choice, as well as those improving energy efficiency in a given mode and the carbon intensity of transport fuels are applied throughout the period gradually, reflecting the tightening constraint on CO2 emissions.

145. Policy Option 4 assumes full internalisation of externalities and elimination of distortions in taxation, in particular concerning VAT on international passenger transport, vehicle taxation and company car taxation. Similarly to Policy Option 2, it also includes policies with a strong focus on the completion of the internal market, infrastructure development. Like Policy Options 2 and 3, this policy option also relies on locally determined policies (pricing, support to public transport and non-motorised modes, integrated land planning) in urban areas. The intensity of the policy measures in urban transport is derived residually to achieve the 60% reduction target.

146. The main difference in the design of this policy option comes from the assumption that vehicles in all modes will be subject to CO2 standards up until 2050. Battery costs for electric vehicles are assumed to be half way between Policy Options 2 and 4, to reflect an intermediate level of intensity of R&D policies.

147. Policy Option 4 can be described as eliminating distortions through pricing, CO2 taxation and internalisation measures, but can also be characterised by investment in non-road infrastructure, relatively stringent CO2 standards for all vehicles and relatively high investment in R&D.

148. As said above, the Commission has undertaken a modelling exercise to provide a stylised quantitative assessment of the effectiveness and efficiency of the identified Policy Options. To this end, the Commission has modelled the impact of the possible policy measures assuming a specification that does not necessarily correspond to what would actually be proposed at a later stage. Indeed, the precise specification of the policy measures referred to in the White Paper will be done at a later stage, following a more specific analysis and an individual Impact Assessment[93]. Accordingly, it is outside the scope of the present Impact Assessment report to evaluate each initiative in detail. The table 3 displayed below presents an overview of the modelling assumptions whereas table 4 provides a detailed description of the modelling specifications used for each Policy Option.

Table 3: Overview of the modelling assumptions in Policy Options 2, 3 and 4

Policy measures || Policy Option 2 || Policy Option 3 || Policy Option 4

System improvement policy measures

Pricing

|| High (full internalisation of external costs) || Low (partial internalisation of external costs) || High (same as in Policy Option 2)

Taxation

Taxation of fuels || High Endogenous variable: CO2 tax component of motor fuel excise duties || Low || Medium

VAT on international passenger transport services || High || Same as in Policy Option 1 || High (same as in Policy Option 2)

Vehicle taxation || High || High (same as in Policy Option 2) || High (same as in Policy Option 2)

Company car taxation || High || Same as in Policy Option 1 || High (same as in Policy Option 2)

Internal Market

Opening transport markets and removing regulatory, administrative and technical barriers || High || High (same as in Policy Option 2) || High (same as in Policy Option 2)

Wide deployment of intelligent transport systems || High || High (same as in Policy Option 2) || High (same as in Policy Option 2)

Infrastructure || || ||

Create a core backbone of high performing infrastructure in terms of environmental impact || High || Same as in Policy Option 1 || High (same as in Policy Option 2)

Transport Planning

Better integrate urban mobility in the EU transport policy || Medium (same as in Policy Option 4) || Medium (same as in Policy Option 4) || Medium Endogenous variable: Shadow price on urban transport acting as a proxy for a wide-range of possible demand management measures in urban areas

Technology improvement policy measures

Research and Innovation

Battery costs, power density and speed of charge for electric vehicles || Low || High || Medium

Efficiency standards and flanking measures

CO2 standards || Low || High Endogenous variable: Level of CO2 standards for road passenger vehicles || Medium

Standards for controlling air pollution || High || High (same as in Policy Option 2) || High (same as in Policy Option 2)

Deployment of less GHG intense energy carriers || High || High (same as in Policy Option 2) || High (same as in Policy Option 2)

Eco-driving || High || High (same as in Policy Option 2) || High (same as in Policy Option 2)

Fuel efficiency labelling || High || High (same as in Policy Option 2) || High (same as in Policy Option 2)

Internalisation of NOx emissions in aviation || High || High (same as in Policy Option 2) || High (same as in Policy Option 2)

Table 4: Detailed content of Policy Options 2, 3 and 4

The common features between Policy Options are displayed in italic.

Policy measures || Policy Option 2 || Policy Option 3 || Policy Option 4

System improvement policy measures

Pricing

Internalise local externalities for all modes of transport || 100% internalisation of all external costs for heavy duty vehicles (HDV), passenger cars, motorcycles, passenger and freight rail, inland navigation and aviation for all Member States by 2050, according to the central value from the Handbook on estimation of external costs in the transport sector[94],[95]. || 100% internalisation of external costs for heavy duty vehicles (congestion, air pollution, noise, infrastructure wear and tear), passenger and freight rail (air pollution and noise) by 2020, for Member States that currently have in place a distance related infrastructure charging system or have officially announced their intention to introduce such a system in the near future, according to the central value from the Handbook on estimation of external costs in the transport sector. After 2020, the coverage of charges remains unchanged. || Same as in Policy Option 2

Taxation

Taxation of fuels || Phase I (2013-2019)[96]: · revised structure of the Energy Taxation Directive and of national taxes and introduction of a CO2 tax component; · diesel rates based on the 2007 commercial diesel proposal[97], but CO2 component included; · current exemptions left unchanged; · exemption of compressed natural gas (CNG), liquefied petroleum gas (LPG) and biofuels from the energy component. Taxation of biodiesel increased gradually; · CO2 tax component: 10 € per tonne of CO2. Phase II (from 2020 onwards): · elimination of exemption for diesel use in rail, local public passenger transport; · commercial and non-commercial diesel use is taxed at the same rate; · abolition of exemption of kerosene for aviation and diesel for navigation. For aviation, given that it would be covered by the Emission Trading Scheme starting with 2012, the energy taxation would only consist of the energy component, but not the CO2 component. The taxation of kerosene for aviation only applies to intra-EU flights, in line the provisions of the Chicago Convention. · energy component for CNG, LPG and biofuels aligned with other fuels. The CO2 tax component is derived endogenously to achieve the 60% CO2 emissions reduction by 2050 compared to 1990. || Phase I (2013-2019) as in Policy Option 2. After 2020 the taxation level is kept unchanged. || Phase I (2013-2019) same as in Policy Option 2. Phase II (from 2020 onwards): same as in Policy Option 2 but the CO2 tax component is equal to 20 € per tonne of CO2 from 2020 onwards, instead of being endogenously derived as in Policy Option 2.

VAT on international passenger transport services || Introduction of a minimum VAT rate of 19% on all intra-EU international passenger transport services[98] || Same as in Policy Option 1 (No additional EU action) || Same as in Policy Option 2

Vehicle taxation || Establish a link in vehicle taxation with the environmental performance by introducing a CO2-related element in the annual circulation tax and the registration tax[99],[100]. In Member States that did not introduce a CO2-related element, we assume that at least 25% of the total tax revenue from registration and annual circulation taxes should originate in the CO2-based element of each of these taxes starting with 2015. From 2017 at least 50% of the total tax revenue from both the annual circulation tax and the registration tax would originate in the CO2 based element[101]. || Same as in Policy Option 2 || Same as in Policy Option 2

Company car taxation || Elimination of favourable taxation regime for company cars, reflected through changes in car ownership, vehicle size in the fleet and fuel consumption[102]. || Same as in Policy Option 1 (No additional EU action) || Same as in Policy Option 2

Internal Market

Opening transport markets and removing regulatory, administrative and technical barriers || Increase in the efficiency of all transport modes as a result of the removal of regulatory, administrative and technical barriers, reflected through decreases in the ticket price for passenger rail and operation costs and time costs for freight (10% to 25%, depending on mode) [103] and higher load factors for road freight. || Same as in Policy Option 2 || Same as in Policy Option 2

Wide deployment of intelligent transport systems || Deployment of Intelligent Transport Systems reflected through a reduction in congestion and improvements in energy efficiency, due to more efficient use of infrastructure, vehicle capacity and mode[104]. || Same as in Policy Option 2 || Same as in Policy Option 2

Infrastructure || || ||

Create a core backbone of high performing infrastructure in terms of environmental impact || Effects of the increase in the capacity and performance of the network resulting from the elimination of bottlenecks and addition of missing links, and increase in the train length (to 1.5 km) and maximum axle load (to 22.5 tonnes), reflected through decreases in operation costs and time costs (6% to 20%, depending on mode) and higher load factors for freight[105],[106],[107]. || Same as in Policy Option 1 (No additional EU action) || Same as in Policy Option 2

Transport Planning

Better integrate urban mobility in the EU transport policy || Same as in Policy Option 4[108] || Same as in Policy Option 4 || Effects of shadow carbon pricing as a proxy for locally determined policies (pricing, support to public transport and non-motorised modes, land planning) The value of the CO2 shadow price is derived endogenously to achieve the 60% CO2 emissions reduction by 2050 compared to 1990 in this Policy Option.

Technology improvement policy measures

Research and Innovation

Battery costs, power density and speed of charge for electric vehicles || Assumed specific battery costs per unit kWh[109] in the long run: 595-640 €/kWh for plug-in hybrids and 415-530 €/kWh for electric vehicles, depending on range and size[110], and range limitations for passenger cars and trucks. || Optimistic assumptions on specific battery costs per unit kWh in the long run: 240-260 €/kWh for plug-in hybrids and 160-210 €/kWh for electric vehicles, depending on range and size, and other critical technological components[111], [112]. || Assumed specific battery costs per unit kWh in the long run: 390-420 €/kWh for plug-in hybrids and 315-370 €/kWh for electric vehicles, depending on range and size, and other assumptions on critical technological components[113].

Efficiency standards and flanking measures

CO2 standards || Implementation of CO2 standards for passenger cars (95 g CO2/km), light commercial vehicles (135 g CO2/km), heavy duty vehicles (15% compared to 2005), powered two-wheelers (70 g CO2/km) and trains (20% compared to 2005) by 2020. Starting with 2020 assume autonomous efficiency improvements as in Policy Option 1 (No additional EU action). || Derived endogenously to achieve the 60% CO2 emissions reduction by 2050 compared to 1990, by triggering the large scale uptake of electric propulsion vehicles. || Implementation of CO2 standards for all vehicles (cars, vans, trucks, locomotives, vessels, barges, aircrafts). CO2 standards by 2020 are the same as in Policy Option 2. In addition, for cars they go down from 95g CO2/km in 2020 to 20 g CO2/km in 2050 [for light duty vehicles: 135g CO2/km in 2020 to 55 g CO2/km in 2050; for heavy duty vehicles, trains, ships and aircrafts 40% , 40%, 45% and 60% improvement in energy efficiency, respectively, by 2050].

Standards for controlling air pollution || Starting with 2030 implement standards for controlling air pollution. For passenger cars: 0.025 g/km for CO; 0.03 g/km for NOx and 0.0025 g/km for particulate matter[114]. For heavy duty vehicles: assumed halving of the EURO VI limit values. || Same as in Policy Option 2 || Same as in Policy Option 2

Deployment of less GHG intense energy carriers || Share of blending of biofuels and carbon intensity for electricity in line with the Effective and widely accepted technology scenario from the Impact Assessment on “Low-carbon economy 2050 roadmap”. || Same as in Policy Option 2 || Same as in Policy Option 2

Eco-driving || Assumptions on reduction in vehicle energy consumption (MJ/km) by 2050, relative to Policy Option 1: 1.6% for cars and motorcycles; 2.1% for buses; 3.2% for vans; 1.9% for medium and heavy trucks; 2.2% for passenger rail and 1.3% for freight rail[115]. For road and rail, virtually all drivers are assumed to be trained by 2050. || Same as in Policy Option 2 || Same as in Policy Option 2

Fuel efficiency labelling || Fuel efficiency labelling would have limited effect with mandatory CO2 standards enforced, but it w