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Downstream Emissions Trading for Transport

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Transport Moving to Climate Intelligence

Part of the book series: Transportation Research, Economics and Policy ((TRES))

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Abstract

This chapter addresses the issue of downstream emission trading within the transport sector. It is argued that emission trading may be relevant in this sector, and that hybrid instruments combining tradable permits with taxation may be particularly efficient. Moreover, there is no sound reason to dismiss downstream trading in principle on the basis of their potentially high transaction costs because of the large number of mobile sources to deal with. Downstream schemes are presented, which are feasible both on technical and institutional grounds. Regarding the need to coordinate transport emissions reduction at the international level, and especially regarding international transport, it is argued that emission trading in transport could be quickly implemented contrary to harmonisation of fuel taxation. It is concluded that the urgency now is to design and test fine-tuned practical schemes to actually implement policy aiming at deep reduction of fossil fuel consumption.

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Notes

  1. 1.

    The terms “quota”, “permit” or “right” will be used interchangeably thereafter.

  2. 2.

    That is, a 10% increase in price would lead to a 3% reduction in fuel demand.

  3. 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 which they received for free, or not recovering their value in the form of extra costs to their consumers.

  4. 4.

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

  5. 5.

    This idea was first developed by David Fleming (http://www.dtqs.org/ Accessed Dec 2008).

  6. 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, we have assumed that one right unit corresponds to 1 L of any fuel.

  7. 7.

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

  8. 8.

    It is argued that a tax combined with a direct fixed compensation would achieve the same objective. However, such a scheme would be subject to the same set-up and administrative costs as tradable permits.

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Authors and Affiliations

  1. LET (Laboratoire d’Economie des Transports),, CNRS and University of Lyon, ISH, 14 Avenue Berthelot, 69007, Lyon, France

    Charles Raux

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  1. Charles Raux
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Correspondence to Charles Raux .

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Editors and Affiliations

  1. Institut für Wirtschaftspolitik und, Wirtschaftsforschung, Universität Karlsruhe, Karlsruhe, Germany

    Werner Rothengatter

  2. Graduate School of Environmental Studies, Nagoya University, Nagoya City, 464-8603, Japan

    Yoshitsugu Hayashi

  3. Fraunhofer Institute Systems and Innovat, Breslauerstrasse 48, Karlsruhe, 76139, Germany

    Wolfgang Schade

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Raux, C. (2011). Downstream Emissions Trading for Transport. In: Rothengatter, W., Hayashi, Y., Schade, W. (eds) Transport Moving to Climate Intelligence. Transportation Research, Economics and Policy. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-7643-7_14

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