Three ways Europe can clean up its transport

Transport is the only sector in which Europe's CO2 emissions are now higher than in 1990 and is becoming a key obstacle to the EU meeting its decarbonisation targets, as laid out in the Paris Agreement. The author recommends a three-pronged strategy for a clean-up of the sector: ban diesel and petrol vehicles, reform transport taxation and focus on early-phase technologies.

In the last decade, the European Union’s greenhouse gas emissions have decreased significantly in all sectors of the economy – all, that is, except transport, which has seen a 20% increase. With the EU having pledged further significant emissions cuts under the Paris Agreement, transport has thus become a key obstacle to decarbonisation.

More aggressive policies are needed to reform this sector. A particular focus should be placed on decarbonising road transport, because it is responsible for more than 70% of overall transport emissions. Decarbonising road transport will also be decisive in improving air quality in cities – a fundamental challenge for public health in Europe. Air pollution is responsible for more than 400,000 premature deaths each year in Europe, and pollution from road transport is a key contributor to this problem.

So far, national and EU policies have failed to clean up road transport. Decarbonising the sector is indeed challenging, as it requires fostering technological innovation and the deployment of clean vehicles. Electric vehicles today represent only 0.2% of the EU’s total vehicle fleet. Meanwhile, policymakers must find ways of reducing demand for transport – but that necessitates changing people’s daily habits.

The EU has the potential to encourage innovation in low-carbon transport technologies and promote a reduction in demand for transport. But to do so it needs to reshape its transport policies, by adopting a new post-2020 road-transport strategy structured on three key pillars.

Firstly, the EU needs to encourage its countries and cities to adopt plans to ban diesel and petrol vehicles. In 2017, France and the United Kingdom announced plans to ban the sales of diesel and petrol cars and vans by 2040; there is no reason why the EU could not commit to a similar phase-out timetable. Driven by a political commitment to reduce air pollution, these plans can provide a strong signal to the EU automotive industry, encouraging it to innovate and become a global player in clean vehicles. From Paris to Copenhagen, from Madrid to Athens, cities are also starting to move in this direction. The more EU countries and cities that make these commitments, the stronger the signal will be to the automotive industry that it should invest more in the development of clean vehicles.

The EU can incentivise the adoption of such plans, by creating an EU Clean Transport Fund to provide financial support to countries and cities committed to the phase-out of diesel and petrol vehicles. This fund should allow cities to bid for EU money to support measures such as the deployment of infrastructure for alternative fuels, the use of zero-carbon public buses, the development of car-sharing and car-pooling solutions to allow a reduction in car ownership, or the promotion of more sustainable modes of transport such as cycling. Such a fund could be created by making better use of existing EU financial resources devoted to transport (around €100 billion for the period 2014-2020).

Beyond the phase-out of diesel and petrol vehicles, the EU needs to stimulate a continent-wide reflection on the future of transport taxation. Taxation is a key policy tool, the second strategic pillar to support road-transport decarbonisation. Taxes can be used to influence decisions made by citizens, but could also influence the automotive industry’s strategies. For instance, to promote the deployment of clean vehicles, taxes could be differentiated on the basis of vehicles’ carbon emissions, or they could simply allow for deductions.

European countries still have very different transport taxation regimes. Given the importance of this policy tool in delivering decarbonisation, the EU should promote a new discussion among EU countries on the future of transport taxation, as is being done in the field of digital taxation.

In the longer term, the EU should strive to deliver more focused and meaningful research and innovation funding to its transport sector. Careful allocation of this money constitutes the third vital pillar in the cause of decarbonisation. The EU should target areas in which it can truly have leverage, and funding should become mission-oriented or directed at solving specific problems.

The EU should focus its post-2020 transport-related research and innovation funding on early-phase technologies, such as hydrogen or solid-state batteries. This would be the most sensible way to invest the limited available resources (equivalent to 0.2% of the European automotive industry’s total investment in research and innovation) in areas that otherwise might not find adequate private funding.

Cleaning up road transport is a fundamental prerequisite if the European economy is to be decarbonised, if air quality is to be improved and if – indirectly – the European automotive industry is to have a sustainable future. Given the still-limited ambition at national level, Europe would greatly benefit from stronger EU action on road transport.