Transport figures prominently on the green growth agenda for two reasons. First, transport has major environmental impacts in terms of greenhouse gas emissions, local air emissions and noise. Managing congestion more effectively is also part of the broader agenda for more sustainable development and better use of resources invested in infrastructure. Second, a large part of public expenditure to stimulate green growth has been directed at transport sector industries. This concerns most notably alternative vehicles, and particularly electric cars, a key part of strategies to decarbonise transport.
Several countries also financed car scrapping and replacement schemes as a short term response to the 2008 financial crisis.
The primary goal was to stimulate the car manufacturing industry with, in most cases, a secondary goal of reducing CO2 emissions and fuel consumption through fleet renewal. As a central element of longer term green growth policies, some governments also invest in high speed rail, aiming to shift in passenger traffic from cars and short haul aviation to rail.
Green growth re-frames several existing concepts, including durable economic activity, reduced environmental impact and sustained growth in high quality jobs, under one banner. It does so in such a way as to identify coherent, cross-sectoral policies. But governments should also consider tradeoffs among various policy objectives. Reducing emissions, for example, may increase costs to current road users in the short run. As green growth policies spread, it may be necessary to review the way the transport sector is taxed and contributes to aggregate tax revenue.
Key transport policies to achieve green growth include supporting electric vehicles, vehicle replacement schemes and high speed rail. To achieve this, it is necessary to consider the political economy of introducing congestion charges from experience to date with charging systems around the world, and establish indicators to assess transport investments and policies.
Assessment methodology is relatively mature in this sector and the tools developed to support transport sector decision-making in some countries provide a good basis for the assessment of green growth policies across the economy.
Low Carbon Vehicles
If deep cuts are to be made to greenhouse gas emissions from transport, it is necessary to reduce the carbon-intensity of travel. Reducing travel itself is sometimes justified but it is extremely unlikely that under expected global economic development patterns overall demand will decline. Technological change is therefore crucial. The emerging view is that the focus for decarbonising transport should be first to improve the fuel efficiency of conventional engines and then gradually introduce alternative technologies.
Designing effective and affordable policies to ensure the deployment of lower carbon technologies in accordance with policy aspirations requires an understanding of how markets for fuel economy work and especially:
- What do consumers take into account in deciding what vehicle to buy?
- What drives manufacturers’ decisions on the range of vehicles to offer?
- To what extent does the interaction of supply and demand lead to unsatisfactory fuel economy in relation to climate change objectives?
Accelerated Vehicle Replacement Schemes
Car scrapping schemes have been introduced in many countries in periods of economic downturn. These programs can have direct effects such as supporting the automobile industry or stimulating increased consumer spending, or indirect effects through replacing or removing poorer performing older vehicles, resulting in reduced dependence on foreign oil, reduced CO2 emissions, better air quality and increased road safety.
Very little work has been done on the value of the schemes in terms of employment and stimulus to the economy. However, it seems that small scale systems focussing on removing the very worst vehicles from circulation perform best. Scaling up to provide significant stimulus to the car industry destroys cost-effectiveness in terms of environmental benefits. Much better alternative instruments are available for implementing policies for environmental protection, safety and energy security.
If the last three decades are a guide, accelerated vehicle renewal programs can be expected to feature in many future economic stimulus programs. Designing them to contribute to greener growth is therefore important. It is especially important to consider include the gap in performance and safety standards between the vehicles scrapped and the replacement vehicles.
High Speed Rail Investments
High speed rail can compete effectively with transport by passenger car and, more significantly, air over distances up to 1000 km where traffic is sufficiently dense, i.e. between major centres of population. In general, where rail journey times can be brought close to three hours, high speed rail has the potential to take a major share of origin-destination aviation markets But proposals are being developed where traffic is very much less dense. The construction cost will determine whether a proposal will break even, but this varies enormously according to circumstances.
Investment in high speed rail is under most circumstances likely to reduce greenhouse gases from traffic compared to a situation when the line was not built, but the reduction is small and it may take decades for it to compensate for the emissions caused by construction. The wider economic benefits of high speed rail, including stimulation of employment, could be significant, but can vary widely from case to case.
The Political Economy of Congestion Charges
Managing congestion is central to sustainable transport infrastructure policies. This issue is most prominent on the roads, where charges can bring congestion closer to efficient levels. The key to successful implementation of congestion charges is to get the policy accepted; and lessons from the successful introduction of congestion charges in London, Stockholm and Singapore and value pricing on some US highways may provide insights for the development of green growth policies in other sectors. Reasons for the withdrawal of plans for national congestion charging systems in the UK and the Netherlands are equally relevant.
The issues faced by congestion charging are user acceptance, the cost of running the systems, and transparency and accountability in revenue use. However, there are cheaper ways to raise revenues and to protect the environment.
Many of these lessons are relevant to green growth policies more widely, particularly when they concern pricing the use of resources or otherwise improving systems of taxation.
Indicators and Assessment
The development of economic and environmental appraisal techniques is relatively mature in the transport sector, due to the potential impact of transport infrastructure, at least in the countries where appraisal is routine. Strategic environmental assessment was developed in large part for the evaluation of major transport infrastructure programs. Evaluation techniques and decision-making support tools are now employed systematically for transport projects, programs and policies in the countries of North West Europe, Japan, Korea and in Australasia.
Tensions between the broad policy planning level and the appraisal level can and do arise in every country. What happens, for example, to projects that pass a cost-benefit assessment (CBA) test but that lead to increased carbon emissions (e.g. extra capacity at severely congested hub airports), when the strategic policy choice is to decarbonise the transport sector? Or to projects that do not pass a CBA test but are thought to contribute to decarbonisation (e.g. some high-speed rail projects)? It seems unreasonable to halt every project that increases CO2-emissions even when the broad goal is to reduce the transport sector’s emissions, just as it seems unreasonable to accept all projects that reduce carbon-emission irrespective of cost. Assessment methods can be extremely useful in quantifying this tension between an individual project’s merits and the broad thrust of policy. Appraisal summary tables of the kind routinely employed for publicly funded transport projects and policies in the UK provide a model for assessing the effectiveness of green growth policies.
International Transport Forum website: www.internationaltransportforum.org
International Transport Forum Discussion Papers
Transport and Environment: www.oecd.org/env/transport
- The Automobile Industry in and beyond the Crisis, Economics Department Working Papers, no. 745 (2010)
- Car Fleet Renewal Schemes: Environmental and Safety Impacts: Report, ITF (2011)
- Environmental and Climate Change Issues in the Shipbuilding Industry (2010)
- Environmental Impacts of International Shipping: A Case Study of the Port of Busan: Report (2010)
- Environmental Impacts of International Shipping: A Case Study of the Port of Vancouver: Report (2010)
- Environmental Impacts of International Shipping: The Role of Ports (2011)
- The Future for Interurban Passenger Transport: Bringing Citizens Closer Together - 18th International ITF/OECD Symposium on Transport Economics and Policy (2009)
- Globalisation, Transport and the Environment (2010)
- Green Growth and Transport, ITF Discussion Paper no. 2 (2011)
- How the Transport System can Contribute to Better Economic and Environmental Outcomes in the Netherlands, Economics Department Working Papers, no. 804 (2010)
- Implementing Congestion Charges, ITF (2010) (pictured)
- International Transport Forum 2008: Transport and Climate Change (Conference papers)
- Moving Freight with Better Trucks, ITF (2011) (pictured)
- Reducing Transport Greenhouse Gas Emissions: Trends and Data, ITF (2010)
- Stimulating Low-Carbon Vehicle Technologies, ITF (2010)
- Transport Outlook 2012, ITF (2012)
- Do car scrapping schemes help the environment and increase safety? ITF Policy Brief (2011)
- What Sustainable Road Transport Future? Trends and Policy Options, Joint Transport Research Centre Discussion Paper no. 14 (2010)
OECD work on green growth