Skip to main content

Advertisement

SpringerLink
Log in

The potential for CO2 emissions trading in transport: the case of personal vehicles and freight

  • Published:
Energy Efficiency Aims and scope Submit manuscript

Abstract

Transport currently accounts for around 25–30% of global CO2 emissions and this contribution is growing rapidly. Moreover, road transport holds by far the major part in these emissions. Because of the social and political reluctance to increase fuel taxation, it is of some interest to explore the inclusion of road transport in emission trading schemes. Starting from the theory about tradable permits, their relevance in transport emissions, their appropriate targets and their potential for practical implementation are analysed. Two proposals of “tradable rights for fuel consumption” are presented, the one for drivers of private vehicles, the other for freight transportation. Finally, potential pitfalls and implementation issues are also discussed. It is concluded that the cost of operating markets of fuel rights would be the price to be paid for an effective involvement of the transport sector in the effort to reduce emissions.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. The terms “quota”, “permit” or “right” will be used interchangeably in what follows.

  2. For example, a 10% increase in price would lead to a 3% reduction in fuel demand.

  3. As the permits will have a value on the market, the opportunity cost for a fuel supplier would consist in not selling on the market the permits received for free, or not recovering their value in the form of extra costs to their consumers.

  4. Unless this revenue is taxed, from which arises a new complexity.

  5. This idea was firstly developed by David Fleming (http://www.dtqs.org/ Accessed in December 2008).

  6. Currently in France, 2.4 kg CO2 for a litre of gasoline and 2.6 kg CO2 for a litre of diesel. Strictly speaking, this value should vary according to the type of fuel: diesel fuel contains more carbon than gasoline, gasoline with ETBE can have different emissions than gasoline without ETBE. A conversion factor would apply for each kind of fuel. For the purpose of simplicity of exposition and evaluation in this paper, we have assumed that one right unit corresponds to one litre of any fuel.

  7. In order to attribute national responsibilities UNFCCC greenhouse gases inventories per country are based upon fuel sales within the country, excluding fuels used in ships or aircrafts for international transport.

References

  • Banfi, S., Filippini, M., & Hunt, L. C. (2005). Fuel tourism in border regions: the case of Switzerland. Energy Economics, 27(5), 689–707.

    Article  Google Scholar 

  • Baumol, W., & Oates, W. (1988). The theory of environmental policy (p. 299). Cambridge: Cambridge University Press.

    Google Scholar 

  • Brons, M., Nijkamp, P., Pels, E., & Rietveld, P. (2006). A meta-analysis of the price elasticity of gasoline demand. A system of equations approach. Tinbergen Institute Discussion Paper, TI 2006-106/3.

  • CEC. (2002). Proposal for a Council Directive amending Directive 92/81/EEC and Directive 92/82/EEC to introduce special tax arrangements for diesel fuel used for commercial purposes and to align the excise duties on petrol and diesel fuel. COM(2002) 410 final, Brussels, Commission of the European Communities, November 2002.

  • CEC. (2006). Proposal for a Directive of the European Parliament and of the Council of 20 December 2006 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community COM(2006) 818. Brussels: Commission of the European Communities.

    Google Scholar 

  • Coase, R. (1960). The problem of social cost. Journal of Law and Economics, 3, 1–44.

    Article  Google Scholar 

  • Dales, J. H. (1968). Land, water and ownership. Canadian Journal of Economics, 1, 797–804.

    Article  Google Scholar 

  • Foster, V., & Hahn, R. (1995). Designing more efficient markets: lessons from Los Angeles Smog Control. Journal of Law and Economics, 38, 19–48.

    Article  Google Scholar 

  • German, J. (2006). Reducing vehicle emissions through cap-and-trade schemes. In D. Sperling, & J. S. Cannon (Eds.), Driving climate change. Cutting carbon from transportation (pp. 89–105). Elsevier.

  • Godard, O. (2000). L’expérience américaine des permis négociables. Économie Internationale, 82, 13–43.

    Google Scholar 

  • Godard, O. (2005). Politique de l’effet de serre—Une évaluation du plan français de quotas de CO2. Revue française d’économie, XIX(4), 147–186.

    Article  Google Scholar 

  • Goodwin, P. B. (1988). Evidence on car and public transport demand elasticities 1980-1988. TSU Ref 427, Oxford, June 1988.

  • Graham, D. J., & Glaister, S. (2002). The demand for automobile fuel. A survey of elasticities. Journal of Transport Economics and Policy, 36(Part 1), 1–26.

    Google Scholar 

  • Hahn, R., & Hester, G. (1989). Marketable permits: lessons for theory and practice. Ecology Law Quarterly, 16, 361–406.

    Google Scholar 

  • Hivert, L. (1999). Le parc automobile des ménages. Etude en fin d’année 1997. Rapport de convention INRETS-ADEME. INRETS, Arcueil, Juin 1999

  • Lyons, A., & Chatterjee, K. (Eds.). (2002). Transport lessons from the fuel tax protests of 2000. Ashgate: Aldershot

  • Montgomery, W. D. (1972). Markets and licenses and efficient pollution control programs. Journal of Economic Theory, 5, 395–418.

    Article  MathSciNet  Google Scholar 

  • Nordhaus, W. D. (2006). After Kyoto: alternative mechanisms to control global warming. American Economic Review, 96(no. 2), 31–34.

    Article  Google Scholar 

  • Nordhaus, R. R., & Danish, K. W. (2003). Designing a mandatory greenhouse gas reduction program for the U.S (p. 66). Arlington: Pew Centre on Global Climate Change.

    Google Scholar 

  • OECD. (1997). Putting markets to work. The design and use of marketable permits and obligations. Organisation for Economic Cooperation and Development, Public Management Occasional Paper 19, Paris.

  • OECD. (1998). Lessons from existing trading systems for international greenhouse gas emissions trading. Paris: Organisation for Economic Cooperation and Development, Environment Directorate.

    Google Scholar 

  • OECD. (2001). Domestic transferable permits for environmental management. Design and implementation. Paris: Organisation for Economic Cooperation and Development.

    Google Scholar 

  • OECD. (2007). Cutting transport CO 2 emissions. What progress? Paris: OECD-ECMT.

    Google Scholar 

  • Open Europe. (2007). Europe’s dirty secret: why the EU Emissions Trading Scheme isn’t working (p. 57). London: Open Europe.

    Google Scholar 

  • Parry, I. W. H., Walls, M., & Harrington, W. (2007). Automobile externalities and policies. Discussion paper 06-26 (p. 37). Washington: Resources for the Future.

    Google Scholar 

  • Raux, C. (2004). The use of transferable permits in transport policy. Transportation Research Part D, 9/3, 185–197.

    Article  Google Scholar 

  • Raux, C., & Marlot, G. (2005). A system of tradable CO2 permits applied to fuel consumption by motorists. Transport Policy, 12, 255–265.

    Article  Google Scholar 

  • Rietveld, P., Bruinsma, F. R., & van Vuuren, D. J. (2001). Spatial graduation of fuel taxes; consequences for cross-border and domestic fuelling. Transportation Research Part A: Policy and Practice, 35(5), 433–457.

    Article  Google Scholar 

  • Roberts, M. J., & Spence, M. (1976). Effluent charges and licenses under uncertainty. Journal of Public Economics, 5(3–4), 193–208.

    Article  Google Scholar 

  • Salon, D., & Sperling, D. (2008). City carbon budgets: a policy mechanism to reduce vehicle travel and greenhouse gas emission. OECD / ITF, pp. 17.

  • SESP. (2006). Les comptes des transports en 2005 (tome 1). http://www.statistiques.equipement.gouv.fr/.

  • Stavins, R. (1995). Transaction costs and tradable permits. Journal of Environmental Economics and Management, 29, 133–148.

    Article  MATH  Google Scholar 

  • Stern, N. (2006) Stern review on economics of climate change. Executive Summary. http://www.hm-treasury.gov.uk/media/4/3/Executive_Summary.pdf.

  • Weitzman, M. L. (1974). Price vs. quantities. The Review of Economic Studies, 41(No. 4), 477–491.

    Article  Google Scholar 

  • Winkelman, S., Hargrave, T., & Vanderlan, C. (2000). Transportation and domestic greenhouse gas emission trading. Center for Clean Air Policy, pp. 32.

Download references

Acknowledgement

The research on tradable permits in freight transportation has been subsidised by the ADEME (French Environment and Energy Conservation Agency), Grant no. 0303c0013.

Author information

Authors and Affiliations

  1. Laboratoire d’Economie des Transports, CNRS, Université de Lyon, ENTPE, ISH, 14 avenue Berthelot, 69363, Lyon, Cedex 07, France

    Charles Raux

Authors
  1. Charles Raux
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Charles Raux.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Raux, C. The potential for CO2 emissions trading in transport: the case of personal vehicles and freight. Energy Efficiency 3, 133–148 (2010). https://doi.org/10.1007/s12053-009-9065-7

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s12053-009-9065-7

Keywords

Search

Navigation