To determine the real cost of CO2 emission abatement in the transport sector is difficult because this sector is characterised by many market inefficiencies. There are important negative externalities that are addressed by inefficient instruments like fuel taxes. First a transport model is used to estimate the effect on transport flows of a better internalisation of the other externalities like congestion, accidents and the emission of non-greenhouse gases by switching from fuel taxes to road pricing. Technological progress will make this switch feasible. Next the new transport flows are used as inputs in a partial equilibrium model for the energy sector to estimate more correctly the cost effective contribution of the transport sector in the national CO2 reduction required. It is shown that, under these conditions, the potential for cost effective CO2 reductions in the transport sector is very limited. (Author/publisher)
Abstract