Transport and Climate Change

Chapter 4: Recommendations to deliver greater cost-effective carbon savings from transport by 2020

Introduction

4.1 In earlier chapters, we identified transport as a major element of carbon emissions in the UK and as a source of significant cost-effective reduction opportunities. Equally, we have identified a number of shortcomings in the current package of policies aimed at realising carbon savings from transport. In this chapter, we set out ways to improve the costeffectiveness and scale of carbon reductions anticipated under the current approach.

Overall approach

4.2 We have identified scope for an integrated set of measures that builds on the measures included in the Government's Climate Change Programme and proposes some new measures. The combined effect would increase cost-effectively the carbon savings expected from the CCP by 71%, which would mean that transport emissions would fall by 14% against 1990 levels by 2020^[1], instead of stabilising broadly at 2005 levels.

4.3 We felt it appropriate to focus on the period to 2020, given the urgency of securing early cost-effective emissions reduction. We have also focused on measures that have a chance of being delivered, for example in terms of their affordability or public acceptability. Our approach:

• focuses on improving over the medium term the carbon performance of road transport, given its significance within overall transport emissions, with particular focus on cars (responsible for the majority of road transport emissions);
• identifies measures aimed at van and lorry emissions - two important and growing sources of road transport emissions;
• considers action that needs to be taken with regard to air transport. This area accounts for a small part of total UK emissions, but it is a rapidly-growing area and notwithstanding anticipated operational and efficiency improvements is set to become a significant element of the UK's future carbon footprint; and
• puts strong emphasis on measures to encourage behavioural change (for example, as it relates to vehicle purchasing, the way in which vehicles are driven and the amount of movement by motorised travel) as a way of 'locking in' the benefits from technological developments already under way or those that might be further promoted by some of our recommendations.

4.4 While our judgement is that there are hard choices to be made whichever set of measures is adopted across the economy to achieve the scale of carbon reduction needed to address climate change, we have not argued for the most aggressive application of some of the individual measures. We believe our proposals for transport are certainly challenging, but reasonable in view of what needs to be done. In the following sections, we set out:

• five key packages of measures to deliver cost-effective emissions reductions to 2020, addressing the purchase and use of cars, alternatives to car use, tackling emissions from the fleets of vans and lorries, and addressing emissions from aviation;
• gaps to fill in the existing knowledge base, specifically on the carbon impacts and abatement opportunities relating to the exploration of policy packages, international transport, vans and freight; and
• areas where work needs to be done now in order to prepare efficient longer-term responses to the transport challenges posed by climate change, namely on the transition to future transport technologies, the contribution of road pricing to emissions reduction, issues related to land use and adaptation, and the scope for greater use of trading in relation to tackling transport emissions.

4.5 The detail of the evidence behind the calculations and the calculations themselves can be found in Anable and Bristow (2007). A table summarising the main assumptions for each package can also be found in Annex Three.

Five key packages of measures to 2020

Recommendation 1 Adopt a mandatory target for new car sales in the EU to achieve an average 100 g CO2/km by 2020 complemented by a package of supporting measures.

4.6 Carbon savings from improving efficiency in currently-available engine technologies are likely to be among the lowest-cost options that can be delivered from technology in the transport sector over the next 10-20 years (DfT, 2007b). Improving average new passenger car efficiency to 100 g CO2/km is both feasible and can be relatively costeffective if the deadline for achieving the target is set at 2020 and an integrated approach including supporting measures is adopted.

4.7 We welcome the recent Government commitment to pursue 100 g CO2/km as a longterm goal and encourage Ministers to secure early agreement within the EU on this as a mandatory target to be achieved by 2020, and which would succeed the current Voluntary Agreements^[2]. An interim target should also be set as part of this arrangement, to ensure progress is being made. Achieving the target should include contributions from both vehicle and fuel technologies, and the scope for some form of emissions trading between industry players as a further way of reducing the cost of delivering the target should also be explored. However, the difficulties experienced in achieving the VA target to date demonstrate the need not only for a more realistic timescale for achieving the target, but also for a stronger policy framework of supporting measures which, when combined seek to transform the market for new cars in at least three ways through:

• incentivising low carbon vehicle purchase;
• supplementary vehicle technology;
• changing the official vehicle emissions test procedure.

Measures aimed at incentivising low-carbon vehicle purchase

4.8 A set of measures is needed which aims to incentivise the take-up of lower-carbon vehicles. This could include further development of the existing UK system of CO2- related vehicle excise duty bands; strengthening the incentive to buy low-carbon cars in company car tax; and helping motorists to change purchasing behaviour through the use of car labelling and awareness campaigns (see Exhibit 4.1).

Exhibit 4.1 Incentivising demand for more carbon-efficient cars A new approach is needed to replace the existing Voluntary Agreements between the European Commission and vehicle manufacturers as part of a wider market transformation approach for cars. The approach should use a mixture of information, incentives, and regulation to encourage private and public sector car users, as well as players in the car and fuel industries, to play their part. Vehicle excise duty (VED) Developing the current graduated VED system further would generate marginal additional benefits but could be part of a package of measures to support delivery of the target. Options include having a more graduated system (i.e. more bands of smaller width in order to incentivise the choice of 'best vehicle in class') or increasing the differential on certain bands to shift the distribution of new car sales towards more environmentally friendly models. Both should be explored, but our judgement is that the latter would be preferable (in the interests of simplicity) and is likely to require differentials significantly greater than the largest currently envisaged by Government - possibly £300 or more between at least some of the bands. A reinforcing measure could be the introduction of tax discs, colour-coded in line with the CO2 bands to help drivers recognise the link between car type, emissions and the cost of motoring. This would also influence the second hand vehicle market, which currently does not display the eco label when being sold (refer Anable and Bristow 2007 for further information). Company car tax (CCT) A good example of a successful fiscal measure is the reform of CCT so that the lower the emissions of the vehicle, the lower percentage of the list price is taken in tax. This has led to the purchase of more-efficient company cars and, in the absence of a similar incentive in the private car market, new private cars now have higher emissions than new company cars (HMRC, 2006). However, there are signs that the effect is slowing down, not least as the regime was not strengthened in the recent Budget. Further carbon benefits could result from removing the current penalty on diesel existing within the current CCT tax structure. In order to mitigate possible disbenefits to air quality, we recommend this be considered following introduction of Euro V emission standards. CfIT is also aware of a current consultation by HM Treasury on mileage allowance payments. We would encourage reform of the personal mileage allowance system into bands related to CO2. Car labelling Colour-coded fuel efficiency labels matching the graduated VED structure were introduced into UK car showrooms in 2005. However, evidence would suggest that salesroom staff and consumer knowledge is variable. The label needs to be more visible, with significant investment in retailer education. In addition, the scope of the labelling scheme should be widened to cover not only passenger cars but also vans and even second-hand vehicles. Of the 10 million cars sold annually, 76% of these are used vehicles for which there is no labelling scheme (SMMT, 2007a). Technology procurement Public procurement policies could help to move the market in the right direction by creating economies of scale for manufacturers, thereby reducing the costs of production. Central Government procures approximately 9,000 vehicles each year, with more vehicles purchased via its many agencies. The target that all new cars bought by central Government for administrative use should achieve an average 130 g CO2/km emissions by 2010-11 (DfT, 2007b) should be extended to its agencies and local government. We also believe the Government should underline its leadership role as purchaser and user of transport services by encouraging or adopting the wider range of cost-effective initiatives outlined within this report.

Supplementary vehicle technology

4.9 We propose ensuring the 100 g target relates not only to the emissions from the 'tailpipe', but also covers in-car technology, with the potential to deliver carbon savings by encouraging efficient operation of the vehicle. This generally includes instruments that provide information to the driver, such as gearshift indicator lights (GSI), tyre pressure monitoring systems (TPMS) and in-car fuel economy meters.

However, these gadgets are not included in the official test cycle (since their impact on emissions depends on drivers adapting their driving styles), and so manufacturers currently have little incentive to install them. Other options, which can be used on existing as well as new cars, such as low rolling resistance tyres (LRRT) and low viscosity lubricants (LVL) can be reflected under the test cycle, but there is no guarantee that the these tyres will be fitted on the cars sold. The widespread use of these various additional technologies should be encouraged by EU regulation to accompany the new mandatory target for motor manufacturers, including new measurement methodologies and labelling of components.

Changing the official test cycle procedure

4.10 We propose reforming the official test cycle procedure used to support delivery of the new mandatory target. Aside from the limitations of the current procedure in accounting for the emissions-saving potential of the in-car technology highlighted above, a number of other shortcomings need to be addressed as part of a package of measures to support delivery of a new mandatory target (see Exhibit 4.2).

Exhibit 4.2 Improving the official vehicle test cycle The range of opportunities emerging for vehicle manufacturers and fuel suppliers jointly to deliver improved carbon performance in the use of vehicles in turn requires a more sophisticated approach to testing vehicles. By 2020, flex fuel vehicles, plug-in hybrids and electric vehicles will be more widely available, and the current test procedure based purely on the tailpipe emissions will not be able to account for these developments and incentivise their introduction. The current test cycle does not differentiate between carbon emitted from fossil fuels and carbon emitted from biofuels. For 5% blends, this does not lead to large errors. However, for higher biofuel blends, say 85% ethanol (E85) or 30% biodiesel (B30) containing biofuels, which give large greenhouse gas savings, the results from the test cycle will not be representative of the carbon dioxide emissions per kilometre on a 'well or field to wheels' basis. In order to provide a better representation of the tailpipe gCO2/km of new cars, a correction factor(s) needs to be developed for these vehicles. The factor would likely have to use conservative values of the carbon saving potential of the biofuel, and for flexi-fuel vehicles an estimate of the percentage of operations with E85/B30 rather than petrol/diesel. A revised test cycle should also take into account air-conditioning systems in cars, which have a negative effect on fuel efficiency, not reflected in the official test cycle figures for new cars. Additionally, some form of verifiable test cycle will need to be established for vans, large goods vehicles, buses, taxis and trains that reflects the varying contexts within which such vehicles are used.

4.11 We also recognise that low-carbon fuels have a crucial role to play alongside, and must be joined up with, developments in vehicle technology to deliver a mandatory target for the performance of new cars. This is currently a major area of debate and we have not reached a view on what the relative contributions towards the target/s of vehicle- and fuel-based technologies should be.

4.12 On the specific issue of biofuels, we note the Government's approach set out under the current RTFO, its ambitious attempts to develop sustainability reporting and the active interest being taken in trialling the use of biofuels in different transport applications (e.g. in road haulage, public transport and even aviation), but we believe it is premature to move towards greater biofuels penetration of the transport fuels market^[3]. There is a significant debate about the true life-cycle carbon benefits of biofuels, the extent to which greater demand might accelerate deforestation (with negative climate change and biodiversity impacts) and crowd out food crops, and about the relative merits of using biofuels for transport as opposed to meeting other energy needs. We believe further work is needed to resolve these questions before committing to more ambitious policy goals for the use of biofuels.

Carbon savings: 2.4 MtC in 2020

4.13 We have calculated that the 100 g CO2/km target will achieve carbon reductions from passenger cars of 2.4 MtC in 2020 (including potential savings attributable to in-car driver information technologies). The efficiency savings are calculated by extrapolating from the recent analysis undertaken for the Energy White Paper (DTI, 2007c). The trajectory for the period is not linear - starting at a 2% per annum improvement in efficiency from 2009 (the current rate of progress is 1.5% p.a.) and working up to 5.0% later in the period (by 2017).

Cost-effectiveness

4.14 There is uncertainty regarding the technology costs of fuel efficiency improvements. The Energy White Paper presented analysis using two sources of technology cost estimates. Using Ricardo cost estimates, the analysis suggests a continuation of historical rates of progress would cost £105/tC saved, while the same scenario modelled using TNO cost estimates implies a benefit of £85/tC saved. The analysis estimates that more rapid fuel efficiency improvements (reaching 104 g CO2/km in the UK 2020) would cost £151/tC (Ricardo estimates) or £36/tC (TNO estimates)^[4].

4.15 Measures to influence and support the purchasing of lower-carbon vehicles can increase the savings and lower the costs significantly. In addition, cost-effectiveness studies of the VA have shown that if traffic generation and congestion effects due to the 'rebound effect' are included, cost-effectiveness is reduced significantly. We have recommended a framework to support the delivery of the target, one that relies on incentivising low-carbon car purchase and 'locking-in' the efficiency gains.

4.16 The in-car driver information technologies by themselves are estimated to have a net benefit per tonne of carbon saved of £192 for GSI and £123^[5] for TPMS, at an oil price of around £34 a barrel^[6]. Low rolling resistance tyres are estimated to have a net cost of £180 per tonne of carbon saved and fuel-efficient air conditioning systems £59 to £91 per tonne carbon saved^[7]. At lower oil prices, such as those used by Government in the analysis of their policies, the measures become more costly as the fuel savings have a lower value, but they are still estimated to yield a net benefit at oil prices as low as £24 a barrel.

Recommendation 2 Reinforce positive driver behaviour through a combination of measures to sustain fuel prices, encourage eco-driving techniques and promote greater adherence to road speed limits.

4.17 Earlier sections of this report highlighted how one consequence of improved vehicle fuel efficiency can be to reduce the cost of road travel and so has the potential to counter the carbon savings otherwise achieved. We believe the carbon reductions possible under Recommendation 1 need to be 'locked-in' through a carrot and stick approach aimed primarily at influencing driver behaviour, implemented as three integrated measures as follows.

Ensure stable, sustained fuel prices

4.18 The price of fuel can be a significant and visible element of overall costs of road transport - up to 40% per mile for car users and accounting for 30% of hauliers' operating costs, depending on the type of operation and vehicle mileage (AA, 2007; FTA, 2007). Fuel prices for unleaded petrol and diesel have increased substantially since 1990, during which time total road fuel sales have grown but at a significantly slower rate than before - and where falling sales of petrol have been offset by rising sales of diesel (with its superior performance in terms of efficiency).

4.19 Even though abandoned in 2000, the fuel duty escalator is still one of the most significant policies in the CCP in terms of the degree to which carbon emissions are lower than they would otherwise have been. Although the demand response to price changes is limited in the short run, in the longer run behavioural shifts do occur to secure fuel savings by changing car purchasing and/or travel habits.

4.20 Price rises in recent years have been due more to fluctuations in the world price of oil than higher taxation. If world prices were to drop substantially, this would serve to encourage greater vehicle use and so higher CO2 emissions. In fact, while fuel prices are forecast to increase by 3% between 2003 and 2025, fuel costs are forecast to fall by 26% between 2003 and 2025, due to a 28% improvement in fuel efficiency over the same period (Eddington, 2006). We believe that a steady increase in fuel price is essential to help control CO2 emissions and 'lock in' the benefits of the efficiency improvements we are looking for in the vehicle fleet.

4.21 We therefore advocate that the new Climate Change Committee (CCC) proposed by Government in its draft Climate Change Bill should fulfil an important function by advising Government on whether and by how much fuel duty may need to increase as a part of its anticipated annual review of progress towards carbon targets. The CCC should be explicitly remitted to advise Government on the appropriate fuel duty level to ensure that carbon reductions gained through improvements in vehicle technology, purchasing and driving are supported by proportionate increases in fuel costs. We anticipate that in periods of high oil prices, fuel duty may not need to rise in order to ensure carbon reductions.

4.22 In carrying out this role, the CCC would need to consider a range of factors, such as the impact on UK hauliers^[8] and potentially vulnerable categories of road user (e.g. in some rural communities), as well as the effect of any intervention on public finances. The CCC could also fulfil an important function in building motorist acceptance for such a measure by ensuring that fuel duty is used as part of a wider package of measures designed to help road users respond to the effects of higher prices (e.g. through promotion of eco-driving). We acknowledge that the ultimate decision on fuel duty will remain with HM Treasury.

4.23 A further area which the CCC should consider is how fuel duty and National Road User Charging (RUC) might work in a complementary way. CfIT believes that RUC will be integral to our management of vehicle emissions in the future. Although, as highlighted earlier in this report, the design of RUC needs careful consideration if it is to support rather than detract from wider efforts to reduce CO2 emissions, it can ensure more efficient management of the network, improvements in travel time, and more considered travel planning (e.g. car sharing, public transport). This is why we believe there is a role for co-managing CO2 emissions through both the price we pay for fuel and how we pay for use of the road network.

4.24 We note the Government's Transport Innovation Fund encourages local authorities to consider strategies to tackle congestion. We also recognise there are proposals (for example, in London) to link congestion charges or residential parking fees to vehicle carbon efficiency. Where local congestion charging schemes are being designed, we believe environmental goals should be considered alongside congestion benefits. However, it is important that a coordinated and consistent signal is provided to motorists across different local authorities and that schemes should also be assessed for cost-effectiveness.

4.25 There is an additional option to introduce a fuel duty differential to stimulate the uptake of diesel-based vehicles which are more fuel efficient. There are a number of issues, such as air quality and security of supply, which may mitigate the carbon benefits from introducing a differential. We therefore have not pursued this option further but would recommend considered analysis.

Encourage eco-driving

4.26 There are a number of measures that private and commercial drivers can employ to keep the costs of driving to a minimum. The principle of 'smart' or eco-driving encapsulates a number of principles and practices aimed at optimising the performance of modern engine technology which, when adopted together, can lead to average fuel savings of 5-10% (Exhibit 4.4). This would translate into a saving of around £100 per year to a motorist driving 10,000 miles in a medium-sized family car^[9].

Exhibit 4.3 What is eco-driving? Aspects of eco-driving include: accelerating gently, keeping speed constant and changing gear at the optimal time (between 2,000 and 2,555 rpm); adhering to speed limits; limiting the use of air conditioning (estimated to add 10-14% to fuel consumption); reducing drag by driving with the windows closed and empty roof racks removed; avoiding idling the engine; not warming the engine up before starting off; ensuring the tyres are filled to the optimum pressure; shedding excess weight from the car; keeping a safe distance from the car in front, as sharp braking wastes fuel. These principles can be applied to passenger cars, vans, buses and large goods vehicles - as well as to rail, in some cases.

4.27 Savings from eco-driving may be secured across a range of modes at the cost of a few hours' training and can be augmented by technical measures used to influence behaviour, such as in-car information systems and tyre pressure monitoring systems. For instance, Department for Transport (2006b) figures from the introduction of safe and fuel-efficient driver training (SAFED) in the freight industry point to fuel savings of between 2% and 12% across 15 case studies.

Exhibit 4.4 Examples of carbon savings from eco-driving UK - cars The Driving Standards Agency found that eco-driving training for car drivers yields immediate results, with an average 8.5% improvement in fuel efficiency for drivers on a set course after two hours of training (DSA, undated). Finland - cars and vans The Finland eco-driving program was introduced in 1995 and is expected to cut average fuel consumption by 10-16 %. Training courses were planned for 1,000 bus and truck drivers and 15,000 car drivers in 2005-06. New drivers are an important target: 200,000 driving school students, as well as over 3,500 drivers who already have a driving licence, received training during 2003-05 (Harmsen et al., 2007). Netherlands - cars In 2002 a study was undertaken with the car panel of the Dutch Consumer Organisation, which consists of approximately 6,000 drivers, mostly private consumers. Based upon their own self-reported driving behaviour, the participants were divided into those who displayed eco-driving behaviours and those who did not. Over the year-long duration of the study, the eco-drivers consumed 7% less fuel per km (EST, 2005). Germany - vans Towards the end of 2003, 91 delivery van drivers employed by Hamburger Wasserwerke (HW) received eco-driving training. Monitoring over the following six months demonstrated that fuel consumption fell by an average of 5.8%, saving HW approximately 10,000 litres of fuel per year, and accident rates fell by 40% (EST, 2005). Germany - rail Deutsche Bahn (DB) has trained 14,000 engine drivers in energy-saving techniques and claims that 100,000 tons CO2 were saved during 2002-04. DB suggest that simply switching off the power early and rolling into stations can save around 8% of the energy consumed between stations for ICE routes (Deutsche Bahn, 2005). Europe - rail The GENESIS project (Milton and Greensmith, 2001) modelled and tested changes to driver behaviour on metro and rail networks, focusing on the use of coasting. It found that, for a marginal (3%) increase in journey times, around 10% savings could be gained; if journey time increases of 9% were acceptable, then the potential saving is between 32% and 38% (compared with flat-out running). Europe - buses Various bus operators have found savings in fuel consumption, as well as other benefits, such as less wear and tear on brakes and hence less maintenance, reductions in driver stress and improved on-board comfort. (See Anable and Bristow, 2007.)

4.28 The Government should pursue an intensification of eco-driver training programmes, as a way not only of augmenting emissions savings from technical improvements, but also to secure additional safety and air quality benefits, as well as saving money for motorists and public transport operators.

4.29 So far, eco-driving for car users has been promoted in the UK through some awareness campaigning ('Act on CO2') and a compulsory element into the theory aspect of the driving test (from September 2007). We suggest a combination of some or all of the following additional actions, ideally as a joint initiative between Government and key bodies such as the motoring organisations, the Low Carbon Vehicle Partnership and the Motorists Forum:

• A comprehensive subsidised driver-training programme to target existing drivers. In the Netherlands, the eco-driving programme has a target of 100% of all licence holders by 2010 to have been trained in eco-driving, five years after the start of the programme (Harmsen et al., 2007);
• The principles of eco-driving could be incorporated into the practical examination procedure of the standard driving test as well as into other driver training initiatives such as: 'Pass Plus'^[10]; safety training^[11], the Advanced Driving Test^[12] and periodic training requirements for professional drivers^[13]. Some of these initiatives could enable participants to benefit from cheaper car insurance;
• The Energy Efficiency Commitment imposes a statutory obligation upon electricity and gas suppliers to meet a target for the promotion of improvements in energy efficiency among household consumers through the promotion of measures such as cavity wall and loft insulation, energy efficiency light bulbs, boilers and appliances. We propose a similar obligation be placed on fuel companies to promote eco-driving using opportunities at the point of sale of fuel and other promotional means;
• In-car devices to assist eco-driving (econometers, gear-shift indicators, cruise-control) could be exempt from VAT, as they were in the Netherlands until early 2005. Research by the automotive industry estimated 45-60% of in car devices would not have been purchased without the tax exemption over a four-year period when penetration in the whole car fleet increased from 13-33% (Harmsen et al., 2007).

Exhibit 4.5 Insurance company initiatives Norwich Union Norwich Union is looking at ways to making its products more environmentally friendly. Their 'Pay-As-You-Drive' package allows customers to fit a black box in their car that will track mileage and type of journeys, and the amount of insurance they pay will be based on how much they use their car. Royal & SunAlliance R&SA announced in April 2007 two new green products as part of their campaign aimed at encouraging individual action on climate change: A telematics car insurance policy that uses GPS technology to help people drive in a greener way to save money and fuel; An eco car discount of up to 15% and free carbon offsetting for the first 3,000 miles.

Promote greater adherence to the 70 mph speed limit

4.30 The importance in terms of environmental impacts of adhering to the 70 mph speed limit on motorways and dual carriageways should form part of any driving training. Currently, 56% of drivers exceed the motorway speed limit, 19% at speeds over 80 mph (DfT, 2006c). The case for enforcing speed limits is based on increasing fuel efficiency, by helping to keep average speeds closer to the optimum. For instance, a medium-sized diesel car will emit up to 14% more CO2 per kilometre at 80 mph compared to 70 mph (NAEI, 2003).

4.31 Anable et al. (2006) estimate that effective enforcement of the 70 mph speed limit in the UK could save around 1 MtC a year; reducing the limit to 60 mph would almost double this to 1.88 MtC. The figures assume no impact on travel demand due to possible slower journey times, but significant safety benefits would also be observed. A full discussion of the options and calculation of carbon savings can be found in the supporting technical documentation (Anable and Bristow, 2007).

4.32 Enforcing speed limits, while doing no more than ensuring road users obey the law, is in practice a contentious political issue. We do not underestimate this, but believe a sophisticated approach to enforcement that is more effective at demonstrating the benefits of compliance, including safety, network capacity and environmental benefits, could win wide public acceptance. This could involve demonstrating speed-limit enforcement as part of a wider package of measures (including awareness campaigns, real-time information, controlled motorway speed programmes, better infrastructure management and research and regulation for in-car instrumentation) that smooth traffic flow (thus improving journey time reliability) and enhance safety. The recycling of part of the revenue from speeding fines in some way to the benefit of compliant drivers is a further option to consider.

Exhibit 4.6 Controlled motorway speed limit trials Active Traffic Management systems using variable speed limits as low as 40 mph have been introduced on the M25 and more recently on the M42 near Birmingham, where speed is controlled to smooth traffic flow, reduce congestion, improve journey times and prevent crashes and associated disruption. Speed limits are strictly enforced, in part using automated camera technology with adherence reaching up to 95%. Reported benefits included smoother and more reliable journey times, improved driver behaviour, reduction in stress for drivers, reduction in the number and severity of crashes, noise and emissions. A survey of users on the M25 system showed that the majority (68%) of drivers liked it and wanted to see it extended to other sections of motorways. Similar results were found in a survey of M42 users, where 72% wanted variable speed limits expanded to elsewhere on the motorway network.Source: Highways Agency, 2004 and Harbord et al., 2006. Source: Highways Agency, 2004 and Harbord et al., 2006.

4.33 CfIT and the Motorists' Forum (MF) are jointly considering the effects that the introduction of a Voluntary Intelligent Speed Adaptation (ISA) system across the road network would have in reducing deaths and injuries on the UK roads and in reducing carbon emissions, other pollutants, and fuel consumption. The Speed Limit Adherence and Its Effects on Climate Change and Road Safety research project will be completed in summer 2008.

Carbon savings: 0.7 MtC in 2020

4.34 In the case of ensuring sustained and stable fuel prices, we have not included an estimate of savings, as any intervention would depend, among other things, on future pre-tax fuel prices and as such its scale is impossible to anticipate. The supporting document (Anable and Bristow, 2007) offers some calculations if carbon prices are increased by certain amounts. However, given the uncertainty in the underlying market price, we have not included savings here.

4.35 For eco-driving, on the basis of the evidence presented in this chapter, we have used traffic growth figures and emissions factors to 2020 and assumed that the proportion of drivers practising eco-driving will start slowly in 2008 with 5% of drivers and gradually increase, reaching 40% in 2020. At any time, as a result of this initiative we assume that drivers are achieving 4.5% efficiency savings^[14]. This delivers savings of around 0.3 MtC in 2020 and applies to cars only; savings made by driver-training programmes in the lorry and van fleet are included under the freight section (Recommendation 4).

4.36 On speed limits, we have used as a basis the Government's own figures for the savings to be achieved from enforcing the 70 mph limit on motorways and dual carriageways (Defra, 2007a). As a stand-alone measure, the Defra calculation assumes 100% compliance from the outset by drivers of all classes of road vehicles currently breaking the law on 70 mph limit roads. This results in an estimated saving of 0.6 MtC per year. We have assumed only 75% of these savings pertain to car and motorcycle traffic and that compliance will start out at 50% in 2009 and reaching a maximum 80% compliance by 2015. This results in 0.4 MtC in 2020.

Cost-effectiveness

4.37 In the case of stabilising fuel prices, although the process of implementing this would be very different from the approach adopted under the old fuel duty escalator, we note that the Government's own assessment identified this now-abandoned measure as a very cost-effective way of reducing carbon emissions with a net benefit per tonne of carbon of £250t/C (Defra, 2006a).

4.38 For eco-driving, drivers should see a benefit in terms of fuel savings. Research by the Energy Saving Trust showed that 36% of drivers would consider paying £50 for a twohour eco-driving lesson if this were to pay for itself in fuel savings within 8 months - a realistic period for a typical car and private driver (EST, 2005). Although the impact of promoting eco-driving is relatively small, these measures are cost-effective as long as savings are maintained in the longer term. The costs of promotion vary widely depending on the efforts put in place: while an introduction to eco-driving as part of the driving licence tuition may be cheap to implement, a large-scale campaign to raise awareness amongst all drivers, notably those that would not voluntarily participate in training courses, would require more financial input. In the Netherlands, eco-driving has formed part of the driving test since 2001, plus about 1.5% of existing drivers had been reached by training programmes by 2004. Together with an information campaign, the cost is estimated to be around £13 per tonne of carbon saved (Eco-drive, 2005) although a recent estimate by Harmsen et al. (2007) put it at around £22 per avoided tonnes of carbon, based on eco-driving programme costs of about £1.4 million annually (including subsidised training programmes and communication campaigns). This rises to to £169-246 per tonne of carbon if the costs of the tax exemption on in-car devices is included, and depending on assumptions about usage levels.

4.39 On speed limits, Government assessments of a blanket enforcement of the 70 mph limit (as well as a reduction to 60 mph) suggest a very high cost for this policy compared to other measures. Assuming 100% compliance, enforcement at 70 mph could save 0.6 MtC in 2010 at £410 t/C; enforcement at 60 mph saving 0.9 MtC at £190 t/C (Defra, 2007a). This is partly because the Government assumed this measure would be enforced comprehensively using blanket coverage of SPECs (time-over-distance) speed cameras in order to deliver the carbon saving with a very high degree of certainty. The cost assumptions are based on the latest-type approved technology for enforcement, but future developments in this area look likely to reduce these costs (see Anable and Bristow, 2007 for a discussion). However, it may be possible to achieve a high level of certainty in this policy by a combination of measures to raise awareness of the link between speed and carbon emissions, real-time messaging, controlled speed zones on congested parts of the network as well as police and camera enforcement. This policy will also have clear safety and network capacity benefits that need to be factored into any cost assessment. More work is needed to assess the costs of a combination of measures and their expected carbon benefits, which would vary according to the levels of compliance achieved and the methods employed, but such an approach may show significant potential over time as public attitudes towards excessive speed moderated.

Recommendation 3 Secure more intensive application of smarter choices to reduce car use, reinforced by improvements to the carbon efficiency of public transport.

Smarter choices

4.40 Smarter choices aim to encourage use of less carbon-intensive alternatives to the car for passenger travel. These can include:

• destination-based measures to reduce car use, e.g. workplace or school travel plans;
• changing access to cars, e.g. car clubs and car-sharing schemes;
• action to increase individual awareness of alternatives to the car, e.g. public transport information and marketing, travel awareness campaigns and personalised marketing; and
• measures to reduce the need to travel, e.g. teleworking or home shopping.

4.41 The Smarter Choices study (Cairns et al., 2004) reports case study evidence of what can be achieved. Its assessment suggests that, within approximately ten years, smarterchoice measures have the potential to reduce national traffic levels by about 11%, with reductions of up to 21% in peak period urban traffic.

4.42 Research on the impact of Smarter Choices found significant modal shift is possible: 50% of all local car trips in non-metropolitan towns could be replaced by walking, cycling and/or public transport (Sustrans/Socialdata 2005). The potential offered by cycling and walking as a means of transport is often underestimated, because the bicycle is primarily a mode of transport for short distances. However, nearly a quarter of car journeys are less than 2 miles and over half of all journeys made by car are less than 5 miles (DfT, 2006j), a distance over which use of walking and cycling can bring time advantage over the car. Also, vehicle emissions are particularly high over short journeys because fuel consumption is disproportionately high because of the cold engine and because the catalyst is not yet working at full efficiency. For these reasons, the emissions reduction effect, including for local air quality, when journeys otherwise made by car are made on foot or by bicycle, is particularly high. There are also significant health benefits from the uptake of non-motorised modes.

4.43 The Cairns et al. study and more recent experience on the ground has demonstrated the scale and rapidity with which Smarter Choices are being implemented. The DfT has funded three Sustainable Travel Towns to assess the results of the intensive implementation of packages of Smarter Choices in one locality. The emerging results appear to be in line with the Cairns et al. 2004 study (Exhibit 4.7).

Exhibit 4.7 Smarter Choices and Sustainable Travel Towns Teleconferencing Replacing business travel with teleconferencing has allowed British Telecom (BT) to avoid more than 860,000 face-to-face meetings worldwide and saved at least 97,000 tonnes of carbon emissions. Air travel accounted for only 8% of avoided trips but 48% of avoided miles (James, 2007). Workplace travel plans Percentage reductions in car use achieved by workplace travel plans at 40 companies showed a median reduction in car use is 14%. Typical companies achieve reductions of 10-25% (Cairns et al., 2002). Car clubs The commercial car-club sector in the UK is expanding at a rate of 200% per year - a much higher estimate than assumed in the Cairns et al. analysis. Approximately 200,000 members are projected by 2012. Despite increasing access to car ownership for some, reduced car ownership, increased public transport usage and the use of more efficient cars means carbon savings per member are significant (Haefeli et al., 2006; Millard et al., 2005). Commercial operators in the UK are concentrating resources on mainly city-based, middle-class areas in London and other major towns. There is a need for national support for a network to seed-corn other areas, including rural areas, and to make links with public transport operators. A recent assessment calculated annual carbon savings of 0.03 MtC p.a. by 2010 from publicly-supported wider rolling-out of car clubs and a high benefit: cost ratio (UKERC, 2007). Sustainable Travel Towns The Government has allocated £10m over 5 years to fund three Sustainable Travel Towns to become showcases of 'smarter choice' packages. Interim results indicate the scope for encouraging a shift to less carbon intensive forms of transport from a more significant application of Smarter Choices. Darlington is both a Sustainable Travel Town and a Cycling Demonstration Town, so receives an additional £1.5 million for the development of new cycle routes. Research has monitored progress in the specific target areas for the 'individualised marketing' programmes (which involve travel advisors visiting households offering travel information tailored to that household, and collecting comments from residents about how their experience of local travel could be improved) and in the rest of the Darlington urban area. In the whole town, walking has increased by 11%, cycling by 54% and trips as a car driver have reduced by 6%. Isolating these wider effects, the individualised marketing has resulted a 14% increase in walking and cycling, a small increase in public transport patronage and a corresponding reduction in trips as a car driver (-5%) and as a passenger (-12%). In addition, individualised marketing is resulting in a relative reduction of 5% car kilometres against baseline levels. These are impressive results from monitoring after two years of implementation (Socialdata/Sustrans, 2007).

4.44 Measures aimed at promoting Smarter Choices need much greater policy emphasis than hitherto to galvanise and mainstream their potential to secure travel behaviour change through relatively low cost and publicly acceptable measures. To date, only 27% of local authorities have significantly implemented Smarter Choices packages (DfT, 2007g). Transport research based on case study evidence defined the 'highintensity' scenario as 'an expansion of activity, commitment and resources to a substantially higher level than that in place at the time of the report, which would still be consistent with practical and realistic experience, and feasible levels of expenditure, given the known constraints of staffing and funding generally' (Cairns et al., 2004). We believe this high-intensity scenario to be achievable if the Government's recent activity is rolled out more widely across the country and in the supportive policy environment provided by the other measures included in our recommendations.

Exhibit 4.8 Actions to help mainstream Smarter Choices Anable et al. (forthcoming) canvassed opinion from policy makers and researchers in this area of policy and identified a number of areas as having the greatest potential to lead to a major change in the priority accorded to all smart measures at the local level: More flexible use of capital funding, as smart choice programmes mainly require revenue funding, rather than capital funding; Grant funding to facilitate the allocation of staff resources; Changes to the planning system to make widespread implementation of Workplace Travel Plans far more rigorous and effective, coupled with fiscal changes to make the adoption of travel plans attractive to companies; Priority to personalised travel planning, since this appears to have substantial potential to deliver change. Here, the priority should be to assist local authorities in building internal capacity to deliver large-scale personalised travel planning programmes; Support for the development of the newer smart measures, such as car clubs, residential travel plans and visitor travel planning. At present, the potential for these newer measures to reduce car travel either appears insignificant or is completely unknown (and hence, assumed to be insignificant). This is exactly how workplace travel planning looked a decade ago. In the case of workplace travel planning, the Government provided funding for workplace travel advisers, made changes to the tax system, and funded research on the effectiveness of the intervention. The same combination of support is likely to be needed in the case of the newer smart measures. The Transport Innovation fund (TIF) makes £18 million available between 2005-06 and 2007-08 for local authorities to support planning for local demand management schemes where road pricing is a major element. From 2008-09, the fund is forecast to grow from £290 million to over £2 billion by 2014-15 (DfT, 2006k). This funding could potentially support and increase the effectiveness of large-scale Smart Choice programmes, if these were implemented alongside road pricing. Likewise, smart choices could support the implementation of demand management schemes, by increasing travel choices and information about these choices. This could speed-up the implementation of the harder 'stick' measures, such as road pricing by influencing the public acceptability of these measures.

Carbon savings: 1.0 MtC in 2020

4.45 We have calculated savings based on a much wider implementation of present good practice - i.e. a high implementation scenario. Using traffic growth figures and emissions forecasts to 2020 and a start date for intensification of activity of 2008, we estimate a total reduction in car traffic below a base of 7% in 2020 (11% in urban areas and 5% in rural areas and motorways). This compares to the estimation by Cairns et al. of a 15% reduction in car traffic nationally after 10 years of high intensity implementation and the Defra analysis of a 5.3% reduction (central scenario) after 15 years (Cairns et al., 2004; Defra, 2007a). Our calculation results in a saving of 1.2 MtC in 2020. As explained in Chapter 3, the CCP baseline already accounts for a low-intensity roll-out of these measures equating to 0.2 MtC. We have calculated a net saving by subtracting the 0.2 MtC savings from the high-intensity scenario to provide an estimate of 1.0 MtC in 2020.

Cost-effectiveness

4.46 The case study evidence reviewed in the Cairns et al. study revealed that, on average, these measures represent very good value for money, with schemes potentially generating benefit: cost ratios which are in excess of 10:1. A recent Government assessment of Smarter Choices - assuming implementation at less intense levels than in Cairns et al, but more than current levels - produces a net benefit of £6 t/C (Defra, 2007a).

Public transport measures

4.47 Measures to improve the attractiveness of modes such as bus and rail are an important part of strategies to reinforce Smarter Choices. Although modal shift from private road transport or domestic air travel to public transport offers limited potential for carbon savings, and while public transport emissions represent a small share of overall UK transport emissions, where growth in public transport does occur it should be as carbon efficient as is cost-effectively possible. Opportunities for reducing emissions include action in three areas - technological (covering engine and vehicle design, as well as power source), operational and improved passenger loadings.

4.48 In the case of buses, diesel-electric hybrids can reduce CO2 emissions by 25-35% in urban bus operations, compared to an equivalent diesel (Overgaard and Folkesson, 2007; LEK, 2007): there would also be significant air pollution benefits in urban areas. Options such as these, however, are expensive in the short to medium term. The CCP baseline also incorporates savings from the move to 5% biodiesel, and we have not assumed any further developments in this area. Trials are currently under way by some bus operators using higher blends of biodiesel, but National Express has recently announced its withdrawal from first-generation biofuel trials on environmental grounds, preferring to wait until second-generation fuels are available or 'issues relating to the sustainability of the production have been addressed' (National Express Group, 2007).

4.49 We would favour greater focus on two other areas instead. Research suggests that adoption of eco-driving in the bus industry could yield savings in fuel consumption of between 2 and 10% (Allen, 2007). There is as yet little evidence of this in practice in the UK bus sector, but it should be promoted through professional driver schemes as with the van and lorry sectors.

4.50 A further opportunity lies with reform of the Bus Service Operators Grant (BSOG). CfIT has elsewhere argued that replacing BSOG - which effectively gives bus operators a rebate of 80% on fuel duty paid, amounting to a subsidy of around £400 million each year in the UK - with an incentive per passenger subsidy, would be a better way of using public support to increase bus patronage^[15]. If successful, this could improve bus loadings and thus operational carbon efficiency. It could also help remove some of the current cost penalty for hybrid buses relative to conventional diesel; additional measures such as capital grants and VED linked to CO2 emissions by class of bus could help further in this respect. CfIT continues to examine the implementation issues related to an incentive per passenger scheme.

Exhibit 4.9 FirstGroup's Climate Change Strategy The UK's largest transport provider, FirstGroup plc, and the parent company of local bus operator First, is looking to reduce its carbon dioxide emissions by 25% throughout its UK bus and rail operations by 2020. Plans include reducing emissions from buildings and the bus fleet, investments in new technology including trialling alternative fuels and encouraging employees to rely less on private transport.

4.51 In the case of rail, ATOC estimate that longer-term growth could see energy per passenger halved through a mix of technological developments combined with increased load factors (ATOC, 2007). The Government's recent White Paper Delivering a Sustainable Railway and supporting Rail Technical Strategy anticipate that both hybrid and lighterweight trains could be operational in the near term (DfT, 2007d and e). Trials and projects are either in hand or planned over the next five years within the industry and also cover other areas, such as the use of existing capacity for regenerative braking^[16] and use of biofuels. Options beyond then include energy metering on the electric fleet, new-generation electric and diesel train units, accelerated development of hybrid traction and exploration of hydrogen trains. One review of longer-term measures identified as having most potential suggests that these sorts of initiatives could yield total annual saving in emissions of under 0.1 MtC (Peckham, 2007).

4.52 We believe that savings in rail emissions could also be secured in the short-to-medium term through changes in operational behaviour (see Table 4.1). From the evidence, it would seem reasonable to conclude that savings of 10% in CO2 emissions from rail yielding a net benefit to operators could be achieved and maintained in the short term, a view expressed in the DfT's The Case for Rail (2007f). The measures in the table themselves are expected to yield savings of 0.16 MtC per annum by 2015. Two reasons why these measures (with their positive paybacks) have not already been taken up by the rail industry may be linked to how Network Rail charges the train operators for electricity consumption and how franchise contracts are designed. We recommend the Government considers these issues and the need for any appropriate action.

Table 4.1: Short-run, easily implemented measures to reduce energy consumption in rail operations

Measure	Savings to operator	Savings, MtC
Disconnect electric vehicles from supply when stabled	+ within one year if unplug, 2.5 years if add intelligent control	0.040
Running shorter trains when existing capacity not required	+ within one year	0.035
Reduce diesel engine idling	+ payback 2 to 3 years	0.026
Energy-efficient driving and train regulation	+ 3 to 4 year payback	0.041
Additives to increase diesel engine efficiency	Net 1 to 2% saving in fuel bill	0.021

Source: Adapted from material in Peckham, 2007.

Carbon savings: 0.3 MtC in 2020

4.53 The supporting analysis (Anable and Bristow, 2007) outlines three scenarios for emissions savings from bus and rail, depending on the emissions savings assumed per hybrid bus and whether or not regenerative breaking is included in this package. In view of the uncertainties involved and in some cases the high cost of implementing new technologies, we have adopted a conservative set of assumptions.

4.54 For buses, calculating potential carbon savings depends on the rate of fleet replacement assumed, the emissions factors used and the efficiency gains secured from hybridisation. The average age of the bus fleet has fallen in recent years to 8-9 years, but this may not be sustainable in the long run (SMMT, 2007b). We assume a 15-year turnover of the fleet, commencing in 2008, thus we do not see the full benefit by 2020. Carbon savings from buses are secured by accelerating the uptake of hybridisation in the urban bus fleet from the policies outlined above - and we have modelled these as 25% saving over 2005 emissions for each new bus. Vehicle efficiency improvements in the rural, coach and minibus fleets of 10% by 2020 are assumed. No savings are included for eco-driving.

4.55 For rail, savings from both short and longer-term measures covered in recent Government announcements are not apparent in the baseline. We have included some savings as part of our package in order to emphasise what can be achieved by promoting savings from this sector. We have not included savings from regenerative braking.

Cost-effectiveness

4.56 Encouraging take-up at scale of new technological options in buses and trains does not represent a cost-effective way of reducing emissions in the short term, but demonstration projects, such as the newly announced Government initiative on public procurement for small fleet demonstration programmes (DfT, 2007c), or introduction by Transport for London of trials of fuel cell and diesel-electric hybrid single and double deck buses, provide opportunities to accelerate developments in this area and potentially drive down costs for the longer term. Other fiscal incentives might include excise duties related to CO2 emissions and grants for clean vehicles, which would again increase competitiveness and, as market penetration increases, costs would be expected to fall. Low carbon buses are currently considerably more expensive than standard vehicles, though the price differential is expected to fall as the technology matures. Although the capital costs are partly off-set by lower fuel costs, low carbon buses currently perform poorly in terms of cost-effectiveness - around £452 per tonne of carbon in the medium term at current rates of fuel subsidy (E4tech, 2006).

Recommendation 4 Secure carbon savings through technological, purchasing and operational changes in the fleets of van and lorry vehicles.

4.57 Work done for CfIT by McKinnon (2007) highlights the significance of seven key ratios in determining the relationship between freight tonnage and CO2 emissions:

• number of specific journeys made by individual products (the handling factor);
• mean length of each link in the supply chain (average length of haul);
• modal split;
• average load carried when laden;
• proportion of distance running empty;
• fuel efficiency with which vehicles are operated (such as driving style); and
• fuel source.

4.58 Notwithstanding the overall increase in emissions linked to moving freight (although there is some question of the precise scale of increase - see Chapter 2), McKinnon says that, between 1990 and 2004, trends in most of these key ratios moved in a direction which reduced the carbon intensity of the freight transport system per tonne of freight moved (e.g. reduced empty running, net consolidation of loads, and improved fuel efficiency). The Government's Freight Best Practice initiative highlights case studies^[17] of the savings in fuel, CO2 and money that hauliers can make through a range of measures: aerodynamic styling (7 to 15% saving), lower rolling resistance tyres (5 to 13%), consolidation (38%) and the provision of independent site-specific advice (18%). To date, over 7000 lorry drivers have received training under the UK Government's Safe and Fuel Efficient Driving scheme (known as SAFED), achieving variable savings (DfT, 2006 e, f, g and h and 2003b).

4.59 However, particularly in view of the Government's own analysis of the relative costeffectiveness of measures to promote sustainable distribution, we feel that more can be done in these areas to achieve greater carbon savings than are currently assumed in the CCP baseline. McKinnon sets out two scenarios (see Exhibit 4.10): one characterised as 'steady state' where there is relatively significant growth in freight movement but little positive change in the key ratios; and another more 'aspirational' one where growth in freight movement involves more significant modal shift and reasonable uptake of improvements in areas such as vehicle utilisation and energy efficiency.

4.60 The essence of McKinnon's outlook is that improvements over many aspects of freight distribution could in aggregate generate significant emissions reduction. He also highlights that the freight sector is quite diverse in terms of performance: similar companies competing in the same market can require widely varying amounts of fuel to move the same quantity of product the same distance. In the case of the food distribution, for example, a government-funded benchmarking survey in 2002 revealed that, if all companies could raise the energy-efficiency of their truck fleets to the mean achieved by the top third of companies in their sub-sector, overall fuel savings of 19% could be secured. Incorporating road freight transport as part of proposals for surface transport in the EU emissions trading scheme could provide a further impetus for change.

4.61 Further opportunities to promote emissions savings might be possible through public policy measures such as taxation - for example, vehicle excise duty. Incentives to purchase more fuel-efficient or alternatively-fuelled vans and large goods vehicles are, at present, solely through the fuel price. For example, VED for lorries could account for CO2 alongside size and number of axles. An additional measure could be to establish a mandatory regime to improve the carbon performance of new lorries. However, the need to consider the freight being carried by such vehicles (and in some cases the desirability of lorries capable of taking heavier and/or larger loads to maximise carrying capacity) make measuring the carbon efficiency of lorries more complicated than for cars and vans. The first step towards any such agreement would be to establish a database of lorry fuel and carbon performance.

4.62 We have already noted the significance of growth in van traffic for road transport emissions. Very little is known about the composition of this demand and, up until recently, data have not been collected on the carbon performance of vans sold, because there has been no standard test cycle for these vehicles. For the first time, the latest CEC proposals (2007b) propose targets for light vans of 175 g CO2/km by 2012 and 160 g by 2020, from 201 g in 2002^[18]. This is a vital part of the proposals for the successor to the current Voluntary Agreements that should be supported, as in the case of cars, with a package of measures to help transform the market and encourage optimal use of these vehicles on the road. This will include the restructuring in VED, labelling of vans and components, and driver training programmes. In addition, more than half of all vans exceed the speed limit on motorways, with almost a fifth exceeding the limit by more than 10%. Our speed calculations above do not include emissions from vans, but the stricter enforcement of the 70 mph speed limit should play an important role in helping to secure efficiency gains here.

Exhibit 4.10 Carbon savings from freight McKinnon sets out two scenarios looking ten years out from a base year of 2004 to illustrate the combined effect on CO2 emissions of changes in key freight transport parameters. The 'steady state' scenario envisages CO2 staying broadly at today's levels. The volume of freight movement is assumed to rise by over 11%, including a 10% increase in tonne-kilometres carried by large goods vehicles, a doubling of the freight moved in vans and a 15% increase in rail tonne-kilometres. Operational improvements which help reduce emissions are limited to increased loading factors on vans, a 5% improvement in both lorry and van energy efficiency, and some switching to less carbon intensive fuels for both lorries and vans. A second, 'aspirational', scenario envisages instead an emissions cut of around 28% (2.7 MtC) over ten years. This assumes a more modest increase in freight movement of 7%, but rail and waterborne freight play a bigger role than in the 'steady state' scenario (growing by 30% and 10% respectively). This scenario envisages a much wider (and in some cases more intensive) implementation of carbon reduction initiatives, based on: operators taking the initiative in increasing vehicle utilisation, modal shift and improvements in fuel efficiency through driver training, idling reduction, speed enforcement, raising the standards of vehicle maintenance and the deployment of fleets to maximise efficiency; greater assistance being given to operators to operate more efficiently with higher uptake of the Freight Best Practice programme and its possible extension. For example, the Dutch government has run a programme called 'transport prevention', which provides companies with consultancy advice on how to reduce their total demand for freight transport, not just how to secure efficiency gains; incentives to buy differently: for example through VED incentives to purchase lower-carbon or alternatively-powered vehicles and grant programmes. In Sweden, vans that operate on electricity or electric hybrid vans are exempt from annual vehicle tax for the first five years; the carbon intensity of lorry and van fuel will decline by, respectively, 10% and 20% for lorries and vans by 2015. Source: McKinnon, 2007.

Carbon savings: 2.7 MtC in 2020

4.63 This is a sector with significant potential for emissions savings, using existing technology and in many cases delivering financial benefits to the operators. We have based our calculations on the analysis by McKinnon, but, taking a conservative approach and assuming only a 5% bio-diesel take-up to be consistent with our caution on this issue, we have assumed that a carbon reduction of 20% between 2008 and 2020 for both the van and lorry fleet (as opposed to his estimation of 28% in the decade to 2015). These changes intensify towards the end of the period to allow time for restructuring and logistical developments to filter through the fleet. Altogether, measures to support changes in vehicle efficiency and operation of vans and large goods vehicles could save 2.7 MtC in 2020.

Cost-effectiveness

4.64 Available data suggest that the measures currently being applied are relatively costeffective in terms of CO2 saved per £ of public expenditure. The analysis recently reported by Defra (2007a) shows a net benefit per tonne of carbon saved of £130 for an extension to the sustainable distribution programme, estimated to save 0.5 MtC by 2020. Given the evidence to date on the effectiveness of the activities in this domain and the value for money for operators, this policy deserves stronger support.

Recommendation 5 Extend EU-ETS to cover aviation as early as possible, and actively consider other options for reducing emissions from aviation.

4.65 Opportunities to reduce emissions from aviation, as elsewhere, lie in three broad areas - technological improvements (e.g. related to engines, aircraft design and fuel type), operational improvements (e.g. different routing of services or increased passenger loading of aircraft) and behavioural change (e.g. modal shift by users to alternative forms of travel).

4.66 Chapter 3 highlighted the lack of information on the cost-effectiveness of possible measures to reduce emissions from aviation and the prevailing wisdom that action is likely to be expensive relative to other transport and non-transport options for carbon abatement. Nevertheless, the aviation sector has a long track record of fuel efficiency improvements, and there are currently a number of aviation initiatives in the UK and abroad that seek to address climate change impacts (see Exhibit 4.11).

Exhibit 4.11 Aviation industry initiatives The Advisory Council for Aeronautics Research in Europe (ACARE) brings together EU policy makers, the aerospace industry, airlines, airports academia and others. ACARE has set improvement targets for fuel efficiency and NOx emissions of 50% and 80% for new aircraft in 2020 against a 2000 baseline, as well as a target to cut noise levels. In the UK, the Sustainable Aviation initiative was launched in June 2005, with eight main goals and three priority areas for action, including climate change. The initiative includes organisations and companies representing some 90% of UK airlines, airports and air navigation service providers, as well as all major UK aerospace manufacturers. Apart from contributing towards ACARE goals and taking other collective action, members of Sustainable Aviation are also engaged in individual initiatives: Virgin has committed £1.66 billion over the next 10 years to help combat global warming. It has said that future dividends and proceeds from the sale of assets, including shares in Virgin's airline and train operations, will be invested in renewable energy initiatives; European regional airline Flybe has invested more than £2bn in new state-of-theart relatively efficient aircraft and provides its customers with data showing fuel use, CO2 emissions and the noise patterns of its planes. This data helps passengers choose which route or aircraft is the least environmentally damaging and whether they wish to carbon-offset emissions from that journey; British Airways, which has improved its fuel efficiency by 28% since 1990, has recently announced a new target to improve fuel efficiency further by 25% by 2025, and has been an active promoter of the use of emissions trading in aviation. Recent and on-going initiatives include refined take-off and landing procedure, more direct routings and replacing older aircraft; BAA has a target to reduce CO2 emissions from fixed sources (e.g. related to their buildings) by 15% on 1990 levels by 2010 and by 30% by 2020, while also seeking to have a positive influence on the energy efficiency of other organisations at their sites. Improvements in air traffic management could deliver emissions reduction of up to 12%, though initiatives such as the development of a streamlined European-wide approach to air traffic control; operational improvements could save a further 2-6% (IPCC, 1999; DfT, 2004a). Further progress in this area requires international agreement and is strongly supported across the international aviation industry.

4.67 We very much welcome the initiatives currently being taken forward. But there is a strong case to strengthen the public policy framework relating to aviation, both to maintain the incentive for pursuing these initiatives and to stimulate further opportunities for reducing the carbon impact of aviation. While this is often regarded as a politically contentious area, public opinion research commissioned by CfIT suggests there is some public appetite for change (see Exhibit 4.12).

Exhibit 4.12 Ipsos MORI survey on attitudes to aviation and climate change Ipsos MORI, commissioned by CfIT, conducted over a thousand face-to-face interviews and a subsequent one and a half day deliberative event involving members of the public, with stakeholders from the aviation industry, environmental lobby and academia: Nearly three-quarters of survey respondents thought the UK should 'set an example' on tackling climate change, rather than wait for international agreement. The idea that people in the UK should not be expected to reduce their air travel because 'we cause less damage than other countries' received more opposition than support. Most (59%) saw it as Government's responsibility to take the lead in addressing the climate impacts of aviation; There was most support for measures that do not restrict individual action, such as education and support for teleconferencing, though rationing on the basis of a carbon tax received qualified support. In the qualitative discussions, a system where everyone would be able to fly once a year free of environmental taxes and then be taxed for further flights according to their environmental impact was seen as equitable; Other measures that did not have 50%+ support, but did show significantly more support than opposition, included refusing planning permission for additional airports, runways or airport terminals, and increasing the costs of flights to be at least as high as rail; Half of the respondents thought that it would be acceptable to pay higher prices to cover the environmental damage caused by flights and that increasing the costs of air travel was seen as likely to have the biggest effect on individual behaviour of all the policy measures considered in the survey; For short-haul leisure flyers, a price rise from £100 to £124 would discourage 25% of people from flying, while the same percentage increase for long-haul leisure flyers (from £500 to £620) would discourage 60% from flying. The higher implied fare elasticities for long-haul (-2.5) than for short-haul (-1.04) leisure trips runs counter to the existing technical literature, but may be explained by people considering substitution of a long distance destination for a short-haul one if price rises are significant; Support for increased taxes or charges on aviation are greatest if the money is hypothecated for environmental purposes (echoing numerous studies of road pricing and previous studies on attitudes to aviation and taxation). Source: Ipsos MORI, 2007.

4.68 In our view, there are essentially two broad options that need to be considered. First, tax or charges to air transport users or operators could play a role in influencing demand or other (e.g. operational) changes. We note the Government's efforts to work through the International Civil Aviation Organisation to reach agreement on the tax treatment of aviation fuel. However, international agreement is unlikely for some time. Other options might include:

• increasing current levels of Air Passenger Duty. One effect of this could be to dampen growth in demand for air travel: given fare elasticities of demand, such an effect would be expected to be more pronounced for leisure (particularly short-haul) travel - which accounts for 75% of air travel to and from UK airports - than for business travel. However, such an approach would have its limitations, as it sends an imperfect signal to passengers (e.g. the tax is not really linked to distances flown) and it does not incentivise the airlines, airports or air traffic control to become more efficient (e.g. APD is still paid at the same rate even if airlines improve passenger loadings or replace aircraft with more fuel efficient ones);
• impose VAT on tickets. Many of the existing exemptions in VAT are designed to help social and environmental objectives and as such the rationale does not exist for the lack of VAT on air tickets. VAT could be added to domestic tickets without international agreement as a straightforward way of implementing the 'polluter pays' principle for air travel and as an instrument to influence demand for domestic flights. But, again, such a tax is poorly linked to actual emissions, and adding VAT to international tickets is logistically and legally complex;
• link air navigation charges and other infrastructure charges (e.g. airport charges) to CO2 and NOx emissions in a revenue-neutral way. The recent Civil Aviation Bill enables airports to include an element within their landing charges to reflect local environmental issues: Heathrow and Gatwick already do this (in regard to NOx and noise), while others, such as Manchester and BAA's Scottish airports, have noise-related surcharges. However, work would need to be carried out to establish how such changes might effectively be designed and remain compliant with the Chicago Convention and other ICAO guidance.

Exhibit 4.13 EU en-route emissions charging A feasibility study carried out in 2002 looked at en-route emissions charging implemented at EU level and levied on all flights connecting to EU airports (Wit and Dings, 2002). The study identified that the resulting reduction in forecast CO2 ranged from almost 2% at the lowest charge level (€10 (£7) t/CO2) to 13% at the highest charge considered (€50 (£34)) in comparison, road transport fuels are currently taxed at around £200 t/CO2, although this tax does cover the cost of other externalities such as congestion, accidents and local air quality. The emissions reductions were made up equally from reduced demand and technical and operational improvements. The EU Commission's evaluation of the study concluded that these charges would have a progressive redistributive (not detrimental) effect on GDP; would not adversely affect the competitive position of EU and non EU carriers, provided the charge was levied on both; would have a marginal effect on air freight; and would favour short-distance tourist destinations (CEC, 2006c). Source: CEC, 2006c; Wit and Dings 2002.

4.69 A second option is to create a market for carbon reduction in aviation through emissions trading. This approach has the merits of setting a target for emissions reduction, providing flexibility to participants in finding the most cost-effective way of meeting their obligations and is appropriate to international nature of the sector.

4.70 An EU proposal to incorporate aviation into the EU Emissions Trading Scheme from 2011 is actively being discussed and brings with it a reasonable prospect of strengthening the policy framework for aviation regarding carbon emissions. We therefore support the Government's commitment to include aviation within EU emissions trading arrangements (and ultimately to promote the use of trading globally). But the level of emissions savings is dependent on the design of the scheme and the cap set for the sector: the Government therefore needs to encourage EU-wide agreement on some key issues:

• The degree of stringency applied to the sector through a combination of factors such as the emissions level at which the cap is set and the degree to which aircraft operators are able to meet their allocations through the purchase of credits from non-aviation sectors. The latter is potentially important for other parts of the European economy: if, as is widely anticipated, aviation turns out to be a significant net buyer of carbon credits, this could push up the cost of carbon for other sectors, potentially leading to some relocation of industry outside the EU (EAC, 2006). In addition, to the extent that airline operators purchase non-aviation credits, this potentially defers early action and 'locks in' dependency, some of which might be more expensive to address in future;
• Whether supplementary measures should be adopted alongside trading. For example, parallel 'flanking' instruments may be needed to address potential non-CO2 impacts on climate change, such as airport charges based on NOx emissions and flight routing to prevent contrail and enhanced cirrus cloud formation, though there remains considerable uncertainty about, for example, the net benefit of the latter, which needs to be researched more thoroughly;
• Our survey also highlights that there is a job to be done in communicating the mechanics of emissions trading and overcoming public scepticism and concern that it could either lead to monopoly control in the airline industry or that it will not provide enough incentive for meaningful emissions reductions (Ipsos MORI, 2007).

Level and cost-effectiveness of emissions savings from aviation

4.71 We believe the Government should seek to crystallise and develop further the emissions reduction potential from the range of initiatives currently being progressed through the following:

• Secure early agreement on extending emissions trading to aviation in the EU as a priority. Achieving this may mean that the scheme at least initially applies a moderate degree of carbon constraint on aviation. The important point is to establish within the sector the practice of trading and 'learning by doing', and to understand more about the impact in practice on other economic sectors currently covered by trading and the potential for cost-effective emissions reduction within aviation. But there should be a clear signal that, in future allocation periods, greater constraint will be applied through one or other methods such as adoption of more challenging emission caps or use of auctioning etc;
• Consider replacing APD with an emissions charge on aviation fuel when international agreement is reached on this issue and aligning it alongside the future version of ETS, in order that the two combined might send a clear signal to aircraft operators and air travellers about the climate consequences of their decisions to fly;
• Use measures targeted at environmental impacts rather than VAT or increased APD to reflect the carbon impact of aviation. However, if either VAT or increased APD are pursued, any additional revenue should be recycled to reinforce positive change. Thought might be given to providing a financial reward to airlines who deliver on significant commitments now to reduce emissions pre-ETS (i.e. pre-2011); incentivising more rapid take-up of carbon-efficient aviation technologies by appropriate changes to the UK capital allowances scheme; or helping fund other initiatives, (e.g. provision of information to air transport users about the carbon impact of flying). The principle of ring-fencing in this area has already been recognised by Government, which has made clear that the UK contribution to its Millennium Development Goals will be drawn from existing APD revenue; and
• Review the potential to link air navigation charges and other infrastructure charges (e.g. airport charges) to CO2 and NOx emissions in a revenue-neutral way.

4.72 Unlike other recommendations in this report, we have not sought to quantify savings from action we favour, given some of the challenges we have faced in identifying material on the potential cost-effectiveness of measures in this area. Any reductions arising from our priorities in this area would thus be additional to the abatement arising from our favoured programme, specified in the following section of this chapter.

4.73 Nevertheless, while Chapter 3 highlighted that aviation emissions can be expected to grow even with abatement action, various studies have concluded that the impact of emissions trading on ticket prices would be marginal and have little effect on the demand for air travel, with most of the reductions coming from other sectors (DfT, 2004a; Wit et al. 2005). By way of indication, the DfT has estimated that charging air transport users for the social costs of carbon could reduce aviation emissions themselves only by 1.7 MtC in 2050, compared with what would otherwise have been under a central forecast (DfT, 2004a). In further analysis, looking this time to 2020, a partial impact assessment based on all departing flights suggests that savings in the UK across all sectors and credits bought oversees would be 3.2-6.3 MtC by 2020 (Defra and DfT, 2007). The Energy White Paper identified 0.2-0.4 MtC by 2020 as resulting from the inclusion of domestic flights only.

4.74 On cost-effectiveness, again by way of indication, the Commission's (CEC, 2006b) impact assessment of the inclusion of aviation activities in the EU-ETS concluded: if air transport were included in a closed system of trading, permit prices would be between €114 and €325 by 2020, depending on the baseline growth assumptions used. In a completely open system, the permit price would be around ?6. The comparison illustrates the relatively high cost of emissions reduction in air transport and the economic and social benefits of an approach based on emissions trading that allows the market to find the most cost-effective reductions, wherever they can be achieved.

Overall impact of our recommended package by 2020

4.75 The measures identified above have the potential to achieve significant additional carbon savings from the transport sector by 2020 in a cost-effective, efficient and acceptable way. Quantifying the potential carbon savings for each individual measure has been a challenge, but we have relied on published estimates in the literature and informed our assumptions with the best available and most recent evidence. We have also erred on the side of caution with respect to our estimates of potential savings. Our figures should therefore be seen as indicative, rather than definitive, of the types of savings possible.

4.76 The potential reductions delivered by each measure are shown in Table 4.2, yielding additional savings of around 7.0 MtC in 2020 to those anticipated under the CCP. Policies targeted at aviation and shipping would be additional to this. Air travel is treated qualitatively, reflecting its exclusion from the baseline measures and due to issues highlighted earlier (aside from some business-as-usual improvements to domestic flights).

4.77 The evidence and explanation of the numbers may be found in the supplementary document by Anable and Bristow, (2007), as well as a summary in Annex 3 of this report. In all cases, we have generally opted to include the more conservative estimates found in the literature. However, in the supporting evidence we have indicated where we think the potential could be higher than the estimates included in the table.

Table 4.2: Impact of additional measures proposed by CfIT (surface transport)

Measure	Carbon Saving 2010 (MtC)	Carbon Saving 2015 (MtC)	Carbon Saving 2020 (MtC)
Cars
Mandatory EU target on vehicle efficiency (100 g CO2/km): measures to influence car purchase behaviour (steeper VED bands, company car tax, car labelling, procurement, information)	0.1	1.1	2.4
Measures to support changes in driver behaviour (Smarter Choices, eco-driving, speed limit adherence)[19]	0.5	1.2	1.7
Cars total	0.6	2.3	4.1
Public transport
Improved efficiency in bus and rail operations; re-targeting subsidy; revised VED and procurement; demonstration projects in clean bus and rail technologies	0.1	0.2	0.3
Public transport total	0.1	0.2	0.3
Lorries & vans
Vehicle efficiency and operation of large goods vehicles	0.1	0.6	1,7
Vehicle efficiency of vans	0.0	0.4	1.0
Lorries & vans total	0.1	1.0	2.7
Overall savings	0.8	3.5	7.1

4.78 In total, the package of measures outlined above increases the carbon savings expected from the CCP by 71% by 2020. We assume that none of the measures we have put forward can begin before 2008, and that the majority are implemented from 2009 onwards. Consequently, our recommendations result in modest additional savings by 2010, 11% above the CCP, although we believe our measures will also serve to ensure the CCP savings themselves are more likely to be delivered.

4.79 Figure 4.1 illustrates how the favoured scenario would deliver additional savings from car vehicle efficiency whilst complementing these with savings from behaviour change in the private travel and fleet sectors.

4.80 The above chart also shows how the vast majority of savings in the Government's current approach are from passenger vehicles, whereas our approach would place as much additional emphasis on vans and lorries. The proportionate savings are shown in Table 4.3.

Table 4.3: Proportion of savings from each type of measure in 2020

	CCP (%)	CfIT (%)	Total (%)
Vehicle efficiency	54	35	46
RTFO	16	0	9
Behavioural measures (Smarter Choices, eco-driving, speed limit adherence, public transport)	10	28	18
Fuel duty escalator	19	0	11
Sustainable distribution/lorries and vans	1	38	16
	100	100	100

NB: In the CCP, behavioural measures also include sustainable distribution in England at 0.1 MtC.
Figures may not sum due to rounding.

4.81 Figure 4.2 illustrates the CCP baseline to 2020, together with the additional measures proposed by CfIT. Unlike the CCP, the favoured package would ensure emissions from the transport sector start to fall below their 1990 levels, though it does not put the sector fully on a linear path to achieving a 60% reduction. Taken together with the CCP package of measures, the policies we have identified could reduce emissions from the sector to around 29 MtC in 2020 from its present level of around 36 MtC.

Source: Historical emissions from Defra, 2006(a), Table 4: CCP baseline calculated using DTI, 2007b, Table 4.2: Central carbon savings by source; central fossil fuel prices; not including off-road or savings from inclusion of aviation in EU-ETS. In both cases interim years are interpolated (i.e. between 2005 and 2010 etc.).

Filling gaps in the current knowledge base

4.82 We have made a number of observations in this report on areas requiring further analysis and have highlighted the following areas of uncertainty. Improving our understanding of these areas, we believe, will add greater focus and clarity to the UK climate change programme.

Policy packages and cost effectiveness

4.83 There is a real need for the assessment of combinations of measures, to identify synergies and enhance the design of carbon reduction measures.

International transport

4.84 Government targets, projections and modelling exclude emissions from international aviation and shipping, which are beyond the scope of current international agreements on greenhouse gas reduction. Yet emissions in these sectors are increasing and, in the case of aviation, are of particular concern because of the greater impact of emissions at altitude. This report attempts to address international movements and makes it clear where these activities are included in the figures. However, we acknowledge that further analysis is urgently needed, to understand both the current contribution to total emissions from aviation and shipping, and the potential effectiveness, including cost-effectiveness, of measures to reduce emissions from these modes. This includes the possibility of introducing shipping as well as aviation into the EU-ETS.

Vans

4.85 Vans are multi-functional vehicles, so it may be misleading to assign their entire output of CO2 to the freight sector. Freight collections and deliveries may only account for only around 35% of total vankilometres (McKinnon 2007). However, these vankilometres produce a substantial proportion of CO2 emissions from the freight sector (around 13%), and this proportion is rising sharply as a result of online retailing. The substitution of van deliveries to the home for conventional shopping trips needs further investigation, alongside the other purposes for which such vehicles are used. CfIT acknowledges this is an area that requires further analysis and is undertaking new research to better understand the light commercial vehicle market.

Freight

4.86 We have already noted in Chapter 2 that trend emissions figures for lorries and vans can vary by a factor of 3, depending mainly on whether industry-derived or official data are used, according to research carried out for CfIT (McKinnon, 2007). There is a need for work to ensure there exists an accurate picture for emissions from freight, and to strengthen the evidence base that currently appears weak on the potential for and cost-effectiveness of technological change in large goods vehicles.

Preparing for the longer term after 2020

Understanding technology pathways

4.87 A common theme among the economy-wide analyses of carbon abatement opportunities highlighted in Chapter 3 is the significant role potentially to be played in the longer term by major technological advances in transport. A wide range of options exists in both vehicle and fuel technologies, in road transport but also in public transport and aviation.

4.88 Less clear is the optimum trajectory from near-term technology change towards the longer term - for example, in the case of road transport, from heavy dependence on internal combustion engines powered by oil-based fuels to potentially hydrogen and/or fuel cell based technologies. Industry players are relying on various transition strategies (e.g. through the development of hybrid, biofuel, flexifuel, and pure electric options). There are, however, significant technical and cost challenges that will need to be overcome if these and other technologies in different modes are to become cost-effective ways simultaneously of satisfying the demand for mobility and reducing carbon emissions from transport.

4.89 In this regard, we welcome the Government's Low Carbon Transport Innovation Strategy (Defra, 2007b). We also welcome the review being led by Professor Julia King to examine vehicle and fuel technologies that, over the next 25 years, could help to decarbonise road transport, particularly cars.

Road pricing

4.90 Road pricing may well play a major role in Government policy, but, as highlighted earlier in this chapter, careful integration with other policies is required with any strategy for reducing CO2 from transport. Further analysis is needed on the potential to design a scheme to deliver both congestion and CO2 reductions.

Land-use planning and adaptation

4.91 The implications of Government land-use policy at micro-level (local co-location of different activities, e.g. housing, employment, shopping, recreation) and at a more macro-level (e.g. intra- and inter-regional distribution of economic activity) on transportgenerated CO2 emissions could be significant but are as yet under-researched. This should be addressed as a matter of priority and could be an early task for the proposed Climate Change Committee. In addition, the consequences of unavoidable climate change (in terms of more volatile weather patterns) have a particular bearing on the UK's transport network. Work has begun in this area, but more needs to be done to improve our understanding of the implications for the resilience of the network and what action needs to be taken.

Behaviour and attitudes

4.92 The success of carbon abatement policy in the transport sector as well as other sectors depends on public acceptance and informed debate of the issues. Public attitudes to the causes, consequences and responsibilities related to climate change are shifting rapidly (DfT, 2007a and see Anable et al., 2006 for a review). Effective policy design requires sufficient understanding of consumer responses to carbon abatement strategies and how these can be better communicated and targeted. This includes monitoring policy changes, such as the recent reforms to VED.

Use of trading mechanisms

4.93 Trading mechanisms in principle offer significant opportunities to cut emissions in the most cost-effective manner, and EU proposals to extend trading to aviation are currently under discussion. Other options exist, such as extending emissions trading to surface transport (where it might apply to one or other of three groups - fuel producers, vehicle manufacturers and individual motorists/hauliers). Research undertaken for this study provides an evaluation of trading options, including the EU-ETS, domestic tradable quotas and personal carbon trading (Watters and Tight, 2007).

4.94 There are significant practical issues associated with all of these mechanisms (including the most advanced proposals, relating to aviation), but we feel further work is needed to establish whether trading could represent an effective solution to surface transport emissions. Personal carbon allowances (PCAs) are a yet further option and again, while this may be something that in the medium to longer term might provide a way of tackling individuals' transport emissions (among others), further work is needed to establish the practicality of such an approach.

Conclusions

4.95 In this chapter we have identified an integrated approach to increase greatly the potential carbon reductions from the transport sector over the short to medium term in a costeffective manner.

4.96 We have identified five key packages of measures to deliver additional carbon savings from transport by 2020:

• A mandatory EU target for new car sales of 100 g CO2/km but with a deadline (2020) that allows a more cost-effective response by the industry, combined with measures to stimulate demand for lower-emission vehicles;
• A carrot-and-stick approach to promoting more efficient use of cars through the price of fuel, greater promotion of eco-driving and better enforcement of speed limits;
• More intensive promotion of Smarter Choices to encourage take-up of alternatives to car travel, supported by improvements to the carbon performance of public transport;
• Measures to capture the significant opportunities for carbon reduction in the van and lorry fleets; and
• Measures to supplement the move towards emissions trading to stimulate carbon savings in aviation.

4.97 The combined effect is to increase carbon reductions from transport by 2020 by 71% over current plans. With regard to surface transport, the proposed package would see a greater balance of contribution towards emissions reduction between technological and behavioural change, and between cars and vans/lorries.

4.98 There are gaps to be filled in our understanding about emissions and international transport, light commercial vans and freight more generally.

4.99 There are issues that need to be tackled now with regard to the longer-term contribution of transport to emissions reduction, such as the pathway for future technological change, and the roles that road pricing, land-use policy and emissions trading can play as part of a longer strategy to address transport emissions.

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1: Reducing from 33.3 MtC in 1990, to 28.8 MtC in 2020.
2: Note this more ambitious target has not yet been adopted as Government policy and therefore the CCP baseline only includes savings attributed to the lower target of 135 g CO2/km. We demonstrate here what could be achieved if an integrated approach was put in place to deliver the more ambitious target.
3: Note, whilst the EU Environment Council recently agreed to a 10% binding biofuels target by 2020, this is sufficiently caveated so as to subject this to competitiveness and sustainability criteria.
4: We have taken the one we considered to be more appropriate for the UK context (by Ricardo). See Chapter 3 and Anable and Bristow (2007) for a discussion.
5: Converted from -€78 and -€50 per tonne CO2 eq. at an oil price of €50 per barrel, as reported in Smokers et al., 2006. It should be noted that long-term fuel price forecasts in the EWP (DTI, 2007b) in 2006 real prices are 2010 = $57 (€42/£28)/bbl, 2015= $50 (€37/£25)/ bbl, 2020 = $53 (€39/£26)/ bbl.
6: See footnote above.
7: Converted from €73 and €24 to 37 respectively again from Smokers et al., 2006.
8: Diesel is taxed at a lower rate in mainland Europe than in the UK. Consideration of fuel price changes would need to take into account the impact on the competitive position of the UK-based freight industry.
9: Calculated on the basis of a car achieving on average 33 mpg, travelling 10,000 miles, achieving an average 8.5% fuel efficiency improvement due to smarter driving and paying 90 pence per litre for fuel.
10: This is for new drivers who are looking to improve their driving skills, while also gaining the benefit of cheaper car insurance. One in six drivers pass the test each year. (www.passplus.org.uk/about_pp.asp).
11: The National Speed Awareness Scheme allows individual police forces the option of putting 'low-end' speeding motorists through a course rather than handing out a fixed penalty (www.driver-improvement.co.uk).
12: Run by the Institute of Advanced Motorists to improve the standard/ability of UK motorists.
13: For all professional light goods (van) and passenger carrying vehicle drivers as per EU Directive 2003/59/EC requiring all drivers to undertake 35 hours of training in any five-year period (www.dsa.gov.uk/Documents/policy/Explanatory_Note.doc).
14: This is almost half of the savings found by drivers practicing eco-driving in the UK (see Chapter 3). However, we feel it is sensible to use a figure of 4.5% efficiency saving in our calculation as this avoids double counting with speed enforcement and allows for the fact that drivers will not continuously achieve optimum savings.
15: Refer to CfIT commissioned research by LEK Consulting (2007) available from www.cfit.gov.uk.
16: Regenerative braking is a way of using the motors as generators and returning the surplus energy, otherwise wasted as unwanted heat, back to the grid via the overhead wire. 60% of the electric train fleet is capable of regeneration, but only 20% uses this capability. However, significant progress is now being made by Network Rail and train operators in enabling a wider range of rolling stock to regenerate.
17: www.freightbestpractice.org.uk.
18: Until the introduction of Directive 2004/3/EC in 2004, there was no requirement for manufacturers of vans to measure emission levels or fuel consumption. Given the scheduling of the voluntary and compulsory compliance timeframes set by the Directive (2005-2008), complete figures on vans may not be available until 2010. There may be some barriers to the immediate implementation of some of our recommendations as a result.
19: Note that some of these measures would also impact on freight, buses and coaches, but are counted here for simplicity.

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