Reports:

Transport and climate change - CfIT response to Defra consultation

Section 4: What new measures might we consider at the EU, national, regional or local level to develop cleaner, greener transport and reduce reliance on fossil fuels?

Summary

Future transport and Climate Change policy will involve both 'thinking big' (Emissions Trading and carbon rationing) and thinking small (car labelling and smart measures). There is potential for early 'quick wins' from smart measures, car labelling and speed management. Carbon rationing may be an option for the longer term. Priorities for aviation include modelling of 'green flight' and exploring mechanisms for including all the greenhouse gas emissions in an emissions trading scheme, potentially through the development of flight emission profiles based on variables such as duration, altitude and latitude.

4.1 Introduction

4.1.1 In addition to the policy initiatives highlighted in the above section, this section will outline some potential new measures as follows:

At the EU level:	Emissions Trading for Transport (not aviation) Car Labelling
National:	Road User Charging Scrappage Schemes Carbon Rationing
Local:	Smart Measures Programmes

4.2 Measures at EU level

EU Emissions Trading Scheme (Transport other than aviation)
4.2.1 The EU Emissions Trading Scheme (EUETS) which came into effect on 1st January 2005 includes a range of sectors but it does not yet include transport. Indeed, there is a relative lack of awareness of the potential of this radical environmental tool for transport policy purposes.

4.2.2 The UK Government is in principle in favour of it being included in future phases. The 2004 Transport White Paper stated the Government's commitment to consider the scope for including surface transport in the EU ETS. This will be taken forward across Government, and will be considered as part of this review of the Climate Change Programme.

4.2.3 Essentially, emissions trading ensures that emissions reductions take place where the cost of the reduction is lowest. Participating companies are allocated allowances, each allowance representing a tonne of the relevant emission. Companies can emit in excess of their allocation of allowances by purchasing allowances from the market. A company that emits less than its allocation of allowances can sell its surplus allowances.

4.2.4 There may be a number of advantages to emissions trading compared to other economic instruments:

• Emissions trading ensures that there is always an incentive to reduce emissions.
• A guaranteed environmental target will be met if the ETS is enforced correctly.
• Revenue can be raised if permits are initially auctioned rather than given away free.
• In contrast to regulation which imposes emission limit values on particular facilities, emission trading gives companies the flexibility to meet emission targets according to their own strategy.
• The largest effect that might be expected if a transport mode were to be included in an ETS would be the increase in vehicle turnover, retiring inefficient vehicles earlier and thus reducing CO₂ emissions.

4.2.5 Raux (2004)^[56] studied the opportunity of emissions trading being used in the automotive industry. The main findings from this research were that administration costs on sources are at an acceptable level but only where points of entry and exit are easily controllable. However, the transport sector offers problems that do not exist in other sectors:

• It is very complex to design and politically sensitive.
• Compared with other industries where emissions trading has been used to date, transport systems involve mobile, rather than fixed sources of emissions.
• Administration costs may be high in order to monitor emissions from many mobile sources.
• Implementation might be difficult in the transport industry because it is a fragmented market place with many operators.
• An ETS forces industry to participate in a market and it brings a lot of uncertainty to the market.
• Unlike the case of pollutants such as lead or SO₂ (which form only a relatively minor component of relevant emissions), carbon cannot be removed from the fuel without changing the nature of the fuel. Control of CO₂ through emissions trading is therefore the equivalent of rationing fossil fuels.

4.2.6 This is a complex area requiring further research and negotiation at the highest levels. The following issues should be considered:

The Government should work with business transport users to develop projects through which carbon savings made in the transport sector can be brought within the Government's Emissions Trading Scheme. However, evaluating transport's potential inclusion in the EUETS must not delay real action on climate change. Further research is needed including issues of radiative forcing that impact on transport as it is not only CO2 that is produced by transport vehicles.

Car labelling
4.2.7 A fuel economy label is a means to influence consumer behaviour, as well as to induce a market transformation by encouraging car manufacturers to produce vehicles that are more efficient. Labels enable consumers to make an informed choice and when used in conjunction with other market measures, help move the market towards better performing models. The effect of such a label in the domestic appliance sector has been dramatic.

4.2.8 However, research by MORI suggested that the current passenger car environmental label is not informing or influencing customers. The European Commission is currently reviewing the success of its existing car labelling Directive introduced in 1999, with a view to improving its effectiveness.

4.2.9 The current EU label only displays absolute levels of fuel efficiency. A new label may enable consumers to see clearly how a given model's environmental performance compares with that for the range of similar new car models. The Commission is working to a timetable that should see a revised labelling Directive in force by 2008.

4.2.10 In the interim, the UK is introducing a new voluntary colour-coded fuel economy label for all new passenger cars to be introduced by vehicle manufacturers in September 2005^[57]. The aim is to achieve comprehensive adoption of the label in the market for the start of new registrations in September 2005^[58]. This will use the same A-G labelling as for fridges, freezers and other electrical items as trialled by the DfT with positive response^[59]. This is an interim measure in advance of the similar mandatory European scheme being brought in.

4.2.11 The UK has displayed leadership in improving the effectiveness of the CO₂ label. This is particularly important as we are at a crucial stage in the car market and car labelling has the potential to get efficiency standards for private cars back on track in the UK. It is clear that there is considerable potential for a shift to more fuel efficient vehicles within most vehicle model ranges.

Future developments in this area should:

Take account of the European evaluation of the car label due to report early 2005. The introduction of the interim voluntary car label this year should be accompanied by appropriate publicity to ensure that consumers realise that a more helpful scheme has been introduced, and to ensure that dealers know how to explain it.

4.3 Measures at the national level

Scrappage schemes
4.3.1 Older vehicles contribute disproportionately to total emissions from road transport in comparison to their numbers. By encouraging the early scrappage of the worst polluting vehicles, it could be possible to reduce overall transport emissions.

4.3.2 There are at least two measures which could be used to achieve such an aim: (i) scrappage schemes and (ii) vehicle restriction schemes. Government backed vehicle scrappage schemes have not been used in the UK, but they have been used in a number of other countries. They offer incentives to owners of older vehicles to replace with newer car or a public transport pass. Vehicle restriction schemes force older cars off the road by either restricting their use from environmentally sensitive areas or banning their use completely. Whilst schemes such as the London Low Emission Zone will prohibit the use of older goods vehicles in parts of London, no schemes have been proposed that would prohibit the use of older passenger cars.

4.3.3 Such schemes can be effective in improving the average emissions performance of the national fleet. Depending on its exact nature, a scrappage scheme may lead to a slight reduction in overall CO₂ emissions as some people will choose not to replace their vehicle whilst others will switch to newer, less polluting ones. However, there are some real disadvantages to such a scheme:

• it is not thought likely that any effect in CO₂ will be significant.
• if such schemes are permanently in operation or are repeated over time, they shorten the average life of a vehicle and consequently increase the amount of energy used in vehicle construction, dismantling and reprocessing operations.
• restriction schemes would disproportionately affect the least wealthy sections of society as around 46% of cars owned by those in the lowest income quintile are more than 10 years old. Consequently, there is a question over the public acceptability of such a scheme.
• enforcing the scheme would incur significant costs as widespread use of Automatic Number Plate Recognition cameras would be required.

The following issues could be considered in relation to this policy:

It appears that scrappage schemes may not have a large potential to reduce carbon emissions from road vehicles. A lifecycle emissions analysis of scrappage and restriction schemes are needed before policy recommendations can be made. In addition, this policy would require scrutiny as to its distributional impacts and its cost effectiveness.

Carbon rationing
4.3.4 Carbon rationing is an alternative mechanism to limit carbon emissions from the domestic sector and would necessitate a radical and dramatic changing role for energy efficiency. Politically, it is unlikely to be introduced in the next 10 - 30 years. However, it is worth considering as a potential long term policy in order that its potential can be assessed and interim policies designed as part of a long term climate change strategy.

4.3.5 Personal Carbon Allowances (PCA) or Domestic Tradeable Quotas (DTQ) propose a national market in carbon units where individuals and organisations buy and sell additional units within a nations carbon budget. The budget is set as the maximum quantity of greenhouse gases that a nation can emit in a year and is reduced annually towards achieving emissions reductions targets. These initiatives represent an electronic system of rationing as virtually all transactions would be carried out electronically using the technologies and systems already in place for direct debit systems and credit cards.

4.3.6 Unlike an emissions trading scheme (ETS), PCAs and DTQs are intended for application within an economy - not for trading between nations. However, as with an emissions trading scheme, individuals who want or need to exceed their personal annual allowance would be able to purchase carbon credits from those who have a surplus. Every individual would be allocated an equal annual allowance of carbon emissions (a carbon account). A proportion of the budget is allocated free and on an equal per capita basis to all adult citizens and the remaining units are allocated to manufacturing and other organisations. Within such a scheme, all fuels would be rated for their greenhouse gas emissions and individuals and organisations purchasing them would have to surrender carbon units accordingly.

4.3.7 The strong emphasis of such schemes is on equality with all citizens becoming equal stakeholders in the environment.

CfIT may wish to explore this policy area with these main points in mind:

Carbon rationing through PCAs or DTQs is worthy of further study and investigation. The environmental, equity and public acceptance considerations should be assessed comparatively to other policies such as road user charging. In particular, there is a need to assess the fairness of the allocation of emissions rights, the technological feasibility of implementing carbon rationing and the likely efficiency and effectiveness of such schemes.

4.4 Measures at the local level

Smart measures
4.4.1 So called 'smart' measures are not new measures. The recent assessment of smart measures for the DfT^[60] evaluated a series of measures (workplace and school travel plans; car clubs and car sharing; individualised marketing; public transport information and marketing; telcommunications, teleconferencing and teleshopping) that had been undertaken in the UK in some cases for the last 10 years.

4.4.2 However, smart measures are only just beginning to get the attention that they perhaps deserve. In addition, up until now, smart measures have been implemented on a fragmented, ad hoc basis with little understanding of their potential effectiveness and the potential for synergistic effects between different smart measures and between smart and 'harder' measures. In order to take smart measures seriously, a step change in priorities and resources would be needed at both national and local levels. Thus, packages of smart measures (or programmes) supported by national guidelines and more substantial and secure funding streams than hitherto constitute a renewed approach to combat transport and climate change.

4.4.3 The main conclusions of the recent study were:

• Taken together, these policies could reduce traffic nationwide by about 11%, by active implementation over ten years;
• Under the 'high intensity' scenario, traffic in urban areas could be cut by 14% overall, and 21% at peak times. Traffic in non-urban areas could be cut by 8% overall, and 14% at peak times. Nationally (that is, across both urban and nonurban areas), traffic could be cut by 11% overall, and 17% at peak times;
• Under the 'low intensity' scenario, traffic in urban areas could be cut by 3% overall, and 5% at peak times. Traffic in non-urban areas could be cut by 2% overall, and 3% at peak times. Nationally, traffic could be cut by 2-3% overall, and 4% at peak times;
• For the different soft factors, the cost of facilitating choices by individuals to reduce their car use in most cases ranged from about 0.1 pence to 10 pence per vehicle kilometre saved. Thus, on average, every £1 spent on well-designed soft measures could bring about £10 of benefit in reduced congestion alone, more in the most congested conditions.

4.4.4 The study also concluded that 'thinking big' in terms of larger scale programmes comprising packages of smart measures would be the most efficient way forward. Such programmes would ensure synergistic benefits, more secure funding streams and more rapid results from voluntary behaviour change.

4.4.5 In addition, some preliminary analysis has been carried out to attempt to quantify the carbon reduction savings over 10 years from these policies in line with the high and low intensity scenarios used in the report^[61]. This analysis found that soft factor interventions have the potential to save 2.76MtC nationally after 10 years if the high intensity scenario is realised. The majority (58%) of these savings come from policies related to the journey to work. This is a substantial saving especially given that transport (excluding aviation) is expected to account for around 43MtC in 2010.The 2.76MtC saving therefore amounts to 7% of this total. It is also around than half of the projected savings from transport by 2010 estimated to come from the voluntary agreements and other sustainable transport policies. However, caution must be taken when using these figures to compare between policies as different assumptions and parameters may have been used.

Therefore, in the light of the recent evidence on smart measures, the following recommendations can be made:

Smart measures should begin to be seen as having potential for early emissions savings in the transport sector. Smart measures 'programmes' are a potential way to secure funding for these policies, ensure complementary effects are maximised and these measures are mainstreamed.

4.5 Aviation

4.5.1 As was noted above, further research into modelling 'green flight' should be a priority.

4.5.2 In terms of cutting all greenhouse gas emissions from aviation, consideration must also be given to how NO_x, sulphates, soot particles and contrails can be included in an EU/ global emissions scheme. As the EU is committed to the GWP 100 metric for its trading scheme for the foreseeable future the impacts of relatively short lived pulses must be integrated into the existing hundred year metric for short and long haul flights.

4.5.3 One way to do this would be to develop flight emission profiles based on variables such as duration, altitude and latitude. Specifically:

• Individual flights could be categorised into a set number of emission bands (similar to insurance bands for different sizes of car).
• This would require Defra scientists to develop a range of scenarios to describe the net impact of NO_x, sulphates, soot, H₂O and contrails etc over a 100 years timescale.
• Using these scenarios, the emission profiles for different types of flight (based on duration, altitude. Latitude, etc.) would be established and assigned to a limited number of emission bands.
• Each emission band could be ascribed a suitable climate change GWP100 multiplier. For example, a domestic flight might have a CO₂ multiplier of 1, while a long haul flight might have a GWP emissions multiplier of 3, so that an airline that is short on CO₂ would have to buy three tonnes of CO₂ for every tonne emitted on that flight.
• Emission band multipliers would have to be kept simple in order to ensure simplicity and market liquidity.

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56: Raux, C. (2004) The use of transferable permits in transport policy; Transportation Research Part D 9, pp 185 - 197.
57: DfT News Release 'Darling unveils cleaner vehicle labelling scheme' 10/02/05.
58: Passenger Car Working Group 2004 Colour Coded fuel car label - update 10 December 2004 PCWG-04-021.
59: DfT 2003 Comparative Colour Coded Labels for Passenger Cars available at www.dft.gov.uk/pgr/roads/environment/research/consumerbehaviour/comparativecolourcodedlabels3819.
60: Cairns, S; Sloman, L; Newson, C; Anable, J; Kirkbride, A and Goodwin, P (2004) Smarter Choices - Changing the way we travel report for the UK Department for Transport July 2004.
61: Anable 2005 (forthcoming) Soft Measures - soft option or smarter choice for early energy savings in the transport sector? paper to be presented to European Council for an Energy Efficient Economy (ECEEE) 2005 Summer Study 30th May - 4th June 2005, Mandelieu, France.

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