Emission Trading System for Road Transport. An exploratory study on possible impacts and policy interaction

On 14 July, 2021 the European Commission presented its Fit for 55 Package: a package of legislative proposals with the aim of reducing CO2 emissions in the EU by 55% in 2030 with respect to 1990. One of the proposals includes a separate emissions trading system for buildings and road transport (ETS-BRT). In preparation for this proposal, the Dutch Ministry of Infrastructure & Water Management asked CE Delft to assess the implications of the introduction of a separate European ETS for road transport (ETS-RT), focusing on three topics:

  1. the interaction of an ETS-RT with existing policies
  2. the potential price level of allowances in an ETS-RT
  3. the anticipated impacts for the Netherlands.

Overall main conclusion
An ETS-RT can help achieve the more ambitious climate targets set out in the European Green Deal. These targets will increase fuel prices and transport costs substantially, however, particularly for private transport users, and compensatory measures will be needed to avoid growing income disparities and public resistance to an ETS-RT. As an ETS-RT and existing (national and EU) policies are in several respects complementary, they will need to be duly aligned if the EC intends to roll out an ETS-RT.